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EX-31.1 - EXHIBIT 31.1 - GLOBAL EQUITY INTERNATIONAL INCex31-1.htm
EX-32.1 - EXHIBIT 32.1 - GLOBAL EQUITY INTERNATIONAL INCex32-1.htm
EX-32.2 - EXHIBIT 32.2 - GLOBAL EQUITY INTERNATIONAL INCex32-2.htm
EX-31.2 - EXHIBIT 31.2 - GLOBAL EQUITY INTERNATIONAL INCex31-2.htm
EXCEL - IDEA: XBRL DOCUMENT - GLOBAL EQUITY INTERNATIONAL INCFinancial_Report.xls

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

or

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 000-54557

_______________________

 

GLOBAL EQUITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   27-3986073
(State or other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification No.)
     

Al Habtoor Business Tower

Level 28, P.O. Box 29805

Dubai Marina, Dubai, UA

   
(Address of principal executive offices)   (Zip code)

 

Registrant’s telephone number: +971 (7) 204 7593

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 11, 2013, there were 30,784,202 outstanding shares of the Registrant's Common Stock, $.001 par value.

 

 

 

 
 

 

INDEX

 

  Page
PART I – FINANCIAL INFORMATION  
   
Item 1. Consolidated Financial Statements. 3
   
Notes to Consolidated Financial Statements (Unaudited) F-5
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 5
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
   
Item 4. Controls and Procedures 10
   
PART II – OTHER INFORMATION  
   
Item 1. Legal Proceedings. 11
   
Item 1A. Risk Factors 11
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11
   
Item 3. Defaults Upon Senior Securities 11
   
Item 4. Mine Safety Disclosure 11
   
Item 5. Other Information. 11
   
Item 6. Exhibits 11
   
SIGNATURES 11

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

  

Global Equity International, Inc. and Subsidiary
Consolidated Financial Statements
September 30, 2013
(Unaudited)

 

3
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

CONTENTS

 

    Page(s)
     
Consolidated Balance Sheets - September 30, 2013 (unaudited) and December 31, 2012   F-1
     
Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2013 and September 30, 2012 (unaudited)   F-2
     
Consolidated Statements of Stockholder’s Equity (Deficit) - September 30, 2013 (unaudited) and December 31, 2012   F-3
     
Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and September 30, 2012 (unaudited)   F-4
     
Notes to Consolidated Financial Statements (unaudited)   F-5 - F-16

 

4
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Balance Sheets

(unaudited)

 

   September 30, 2013   December 31, 2012 
Assets          
           
Current Assets          
Cash  $326   $4,852 
Accounts receivable   20    145,020 
Prepaid   109,131    1,919 
Loans receivable   6,000    - 
Total current assets   115,477    151,791 
           
Investment, cost   5,000    160,000 
           
Fixed assets, net   5,464    6,462 
           
Total assets  $125,941   $318,253 
           
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit          
           
Current Liabilities          
Deferred revenue  $62,000   $- 
Accounts payable and accrued liabilities   74,071    126,059 
Accounts payable - related parties   231,502    421,500 
Loans payable - related party   52,894    48,075 
Accrued interest   17,724    - 
Notes payable - net of unamortized discount of $47,783 and $0, respectively   151,952    10,000 
Total current liabilities   590,143    605,634 
           
Long term liabilities          
Convertible loan payable - related party   324,475    - 
Total long term liabilities   324,475    - 
           
Redeemable Series A, Convertible Preferred Stock: 5,000,000 shares authorized and 1,533,332 and 5,000,000 shares issued and outstanding, respectively, $0.001 par value (redemption amount $480,000) (liquidation preference of $0)   480,000    480,000 
           
Stockholders’ Deficit          
           
Common stock: 70,000,000 shares authorized; $0.001 par value 30,784,202 shares and 29,627,700 shares issued and outstanding, respectively.   30,785    29,628 
Additional paid in capital   2,590,419    2,070,554 
Stock payable   128,250    - 
Accumulated deficit   (4,018,131)   (2,867,563)
Total stockholders’ deficit   (1,268,677)   (767,381)
           
Total liabilities, redeemable preferred stock & stockholders’ deficit  $125,941   $318,253 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-1
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

 

   Three Months   Three Months   Nine Months   Nine Months 
   September 30, 2013   September 30, 2012   September 30, 2013   September 30, 2012 
                 
Revenue  $165,000   $16,500   $171,849   $409,000 
                     
General and administrative expenses   99,240    231,354    222,634    702,610 
Salaries   150,000    -    390,000    - 
Professional services   116,772    -    511,042    - 
Depreciation   336    -    998    - 
Impairment of financial assets   -    -    160,000    - 
Total operating expenses   366,348    (231,354)   1,284,674    702,610 
                     
Net loss from operations   (201,348)   (214,854)   (1,112,825)   (293,610)
                     
Other income(expenses):                    
Interest expense   (23,555)   (2,444)   (24,491)   (76,968)
Foreign currency transaction income   -    391    -    388 
Amortization of debt discount   (18,240)   -    (26,452)   - 
Realized loss on available for sale marketable securities   -    (975,000)   -    (975,000)
Gain on settlement of liabilities   -    -    13,200    - 
Total expenses   (41,795)   (977,053)   (37,743)   (1,051,580)
                     
Net loss  $(243,143)  $(1,191,907)  $(1,150,568)  $(1,345,190)
                     
Weighted average number of common shares outstanding - basic   30,784,202    29,286,135    30,370,730    29,046,211 
                     
Net loss per common share - basic   (0.01)   (0.04)   (0.04)   (0.05)
                     
Comprehensive Loss:                    
Net loss   (243,143)   (1,191,907)   (1,150,568)   (1,345,190)
Foreign currency translation loss   -    -    -    (798)
Comprehensive Loss  $(243,143)  $(1,191,907)  $(1,150,568)  $(1,345,988)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-2
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statement of Stockholders’ Equity (Deficit)

(Unaudited)

 

                       Accumulated Other   Total 
   Common Stock  Additional   Stock   Retained Earnings   Comprehensive   Stockholders’ 
   Shares   Amount   Paid-in Capital   Payable   (Accumulated Deficit)   Income (Loss)   Equity (Deficit) 
                             
Balance - December 31, 2011   28,780,700    28,781    393,103    -    (12,007)   615,000    1,024,877 
                                    
Issuance of warrants for interest on notes payable   -    -    6,968    -    -    -    6,968 
                                    
Issuance of common stock as debt discount on notes payable ($0.50/share)   140,000    140    69,860    -    -    -    70,000 
                                    
Common stock issued in settlement of accounts payable   20,000    20    9,980    -    -    -    10,000 
                                    
Common stock issued for services ($0.50/share)   25,000    25    12,475    -    -    -    12,500 
                                    
Common Stock issued for cash ($0.50/share)   280,000    280    139,720    -    -    -    140,000 
                                    
Common stock issued for settlement of debt ($0.50/share)   40,000    40    19,960    -    -    -    20,000 
                                    
Common stock issued for settlement of debt ($0.25/share)   40,000    40    9,960    -    -    -    10,000 
                                    
Common Stock Issued in lieu of interest payable ($0.25/share)   2,000    2    498    -    -    -    500 
                                    
Common stock issued for services ($0.25/share)   300,000    300    74,700    -    -    -    75,000 
                                    
Contributed capital   -    -    1,333,330    -    -    -    1,333,330 
                                    
Net loss for 2012   -    -    -    -    (2,855,556)   -    (2,855,556)
                                    
Reclassification of other comprehensive losses due to the permanent impairment of available for sale marketable securities   -    -    -    -    -    (615,000)   (615,000)
                                    
Balance - December 31, 2012   29,627,700   $29,628   $2,070,554   $-    (2,867,563)  $-   $(767,381)
                                    
Common stock issued for services ($0.17/share)   139,835    140    23,632    -    -    -    23,772 
                                    
Common stock issued for services ($0.25/share)   500,000    500    124,500    -    -    -    125,000 
                                    
Common stock issued for services ($0.29/share)   150,000    150    43,350    -    -    -    43,500 
                                    
Common stock issued for services ($0.55/share)   25,000    25    13,725    -    -    -    13,750 
                                    
Common stock issued for services ($0.95/share)   150,000    150    142,350    -    -    -    142,500 
                                    
Common stock issued for services and payables ($0.80/share)   100,000    100    79,900    -    -    -    80,000 
                                    
Common stock issued in settlement of debt ($1.10 per share)   75,000    75    82,425    -    -    -    82,500 
                                    
Common Stock issued for cash ($0.60/share)   16,667    17    9,983    -    -    -    10,000 
                                    
90,000 shares of common stock issuable under commission agreement   -    -    -    128,250    -    -    128,250 
                                    
Net loss   -    -    -    -    (1,150,568)   -    (1,150,568)
                                    
Balance - September 30, 2013   30,784,202   $30,785   $2,590,419   $128,250    (4,018,131)  $-   $(1,268,677)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3
 

 

Global Equity International Inc. And Subsidiary

Consolidated Statements of Cash Flows

(unaudited)

 

   For the nine months ended
   September 30, 2013   September 30, 2012 
         
Cash flows from operating activities          
Net loss  $(1,150,568)  $(1,345,190)
           
Adjustments to reconcile net loss to net cash used in operating activities          
           
Impairment loss on available for sale marketable securities   -    975,000 
Consulting revenues received in stock   (3,000)   (60,000)
Bad debts   -    35,000 
Depreciation   998    - 
Gain on settlement of liabilities   (13,200)   - 
Common stock issued to settle accrued salary - related party   -    10,000 
Common stock issued for services   459,748    12,500 
Issuance of options in connection with debt financing treated as interest expense   -    6,968 
Amortization of debt discount   26,452    70,000 
Impairment of financial asset   160,000    - 
           
Changes in operating assets and liabilities:          
Prepaids, cash   (2,690)   (1,368)
Accrued interest   17,724    - 
Accounts payable and accrued liabilities   36,214    (10,891)
Accounts payable - related parties   134,477    201,305 
Deferred revenue   60,000    - 
Accounts receivable   145,000    (30,020)
         
           
Net cash used in operating activities:   (128,845)   (136,696)
           
Cash Flows used in investing activities:          
Loans given to non-affiliate   (6,000)   - 
           
Net cash used in investing activities   (6,000)   - 
           
Cash flows from financing activities:          
Proceeds from loans - related parties   4,819    5,702 
Note payable   125,000    70,000 
Repayments of loans - related parties   -    (18,900)
Repayment of loans   (9,500)   (30,000)
Proceeds from issuance of common stock   10,000    140,000 
           
Net cash provided by financing activities   130,319    166,802 
           
Net increase (decrease) in cash   (4,526)   30,106 
           
Effect of Exchange Rates on Cash   -    (798)
           
Cash at Beginning of Period   4,852    2,218 
           
Cash at End of Period  $326   $31,526 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $-   $- 
           
Cash paid for income taxes  $-   $- 
           
Supplemental disclosure of non-cash investing and financing activities:          
           
Accounts payable settled in shares  $75,000   $- 
Notes payable settled in shares  $-   $40,000 
Prepaid expenses paid in stock  $104,522   $- 
Debt discount recorded on notes payable  $47,370   $70,000 
Deferred revenue settled in shares  $2,000   $- 
Conversion of balance in accounts payable - related party to loans payable  $324,475   $- 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Note 1 - Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10k, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the periods ended December 31, 2012 and 2011.  The interim results for the period ended September 30, 2013 are not necessarily indicative of results for the full fiscal year.

 

Note 2 - Nature of Operations

 

Global Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. Global Equity International Inc. (the “Company” or “GEI”), a reporting company since June 21, 2012, was organized under the laws of the state of Nevada on October 1, 2010. On November 15, 2010, GEP executed a reverse recapitalization with GEI.

 

Revenue is generated from business consulting services, introduction fees, and equity participation.

 

Note 3 - Going Concern

 

As reflected in the accompanying financial statements, the Company had a loss of $1,150,568 for the nine months ended September 30, 2013. Net cash used in operations of $(128,845) for the quarter ended September 30, 2013; and a working capital deficit of $(474,666) and stockholders´ deficit of $1,268,677 as of September 30, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue its operations is dependent on Management’s plans, which include the raising of capital through debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements.  The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

 

The Company expects to use its working capital to implement a marketing program to increase awareness of its business model, which includes, but is not limited to, acquisition of private companies, with the intention of taking those companies public in the United States and possibly dual listing those entities abroad. In the event that operating cash flows are slowed or nonexistent, the Company plans to reduce its overhead wherever possible.

 

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected hence there is certain doubt about the Company’s ability to continue as a going concern.

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F-5
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Note 4 - Summary of Significant Accounting Policies

 

Principles of Consolidation

 

Global Equity International Inc. is the parent company of its 100% subsidiary Global Equity Partners Plc. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non confirming events. Accordingly, the actual results could differ from those estimates.

 

Risks and Uncertainties

 

The Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. The risk of social and governmental factors is also a concern since the Company is headquartered in Dubai.

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2013 and at December 31, 2012 respectively; the Company had no cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. At the quarter ended September 30, 2013, the Company had no bad debt. During the year 2012, the Company recorded $35,000 of bad debt expense pertaining to two invoices the Company deemed were uncollectible.

 

Marketable Securities

 

(A) Classification of Securities

 

At the time of the acquisition, a security is designated as held-to-maturity, available-for-sale or trading, which depends on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost. The Company recorded unrealized loss on marketable securities of $0 and $0 as at September 30, 2013 and December 31, 2012.

F-6
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Cost Method Investment

 

At March 31, 2013, the Company had investment in securities of two different Companies, having a cost of $163,000 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 9.2% of the common stock in a private company in which the best evidence of value was the services rendered and a further 9.86% of the common stock in another private company in which the best evidence of value was the services rendered.

 

At June 30, 2013, there were identifiable events or changes in circumstances that had a significant adverse effect on the value of one of the investments hence the Company impaired $160,000 of the investments.

 

Also at June 30, 2013, the Company received 2,000,000 shares from a private company and client having a cost of $2,000 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 8.55% of the common stock in a private company in which the best evidence of value was the services rendered

 

Equity investment in companies is accounted for under the cost method as the equity investments do not have readily determinable fair values. As per ASC codification 320 “Certain Investments in Debt and Equity Securities”, non-marketable equity securities that do not have a readily determinable fair value are not required to be accounted for under the equity method and are typically carried at cost.

 

(B) Other than Temporary Impairment

 

The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company did record a permanent impairment of one of its investments during the quarter ended September 30, 2013; no impairments were carried out during the quarter ended September 30, 2012.

 

Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF would be recorded as a debt discount against the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

 

Debt issue costs and debt discount

 

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

F-7
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Original issue discount

 

For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.

 

Fixed Assets

 

Fixed Assets are to be stated at cost of acquisition less accumulated depreciation. Depreciation is provided based on estimated useful lives of the assets. Cost of improvements that substantially extend the useful lives of assets can be capitalized. Repairs and maintenance expenses are to be charged to expense when incurred. In case of sale or disposal of an asset, the cost and related accumulated depreciation are removed from the consolidated financial statement.

 

   September 30, 2013   December 31, 2012 
Office equipment  $6,579   $6,579 
Accumulated depreciation  $(1,115)  $(117)
           
Net fixed assets  $5,464   $6,462 

 

During the three and nine months ended September 30, 2013, the Company has expensed $336 and $ 998 and $0 and $0 during the comparative period September 30, 2012, respectively for depreciation.

 

Revenue Recognition

 

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

 

The Company’s services do not include a provision for cancellation, termination, or refunds.

 

For the quarters ended September 30, 2013 and September 30, 2012 the Company received marketable securities and cash as consideration for services rendered.

 

At September 30, 2013 and December 31, 2012, the Company had the following concentrations of accounts receivables with customers:

 

Customer  September 30, 2013   December 31, 2012 
         
ACI   0%   0%
           
SPI   0%   99%

 

F-8
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

For the nine months ended September 30, 2013 and 2012, the Company had the following concentrations of revenues with customers:

 

Customer  September 30, 2013   September 30, 2012 
         
SAC   15%   0%
           
ANR   15%   0%
           
DSI   67%   29%
           
ACI   3%   12%
           
VOZ   0%   15%(*)
           
REG   0%   37%

 

The Company received from customer “ACI” 75% of its revenue in cash and 25% in Non-marketable securities.

 


 

(*) Non-marketable securities, accounted for under the cost method.

  


 

During the nine months ended September 30, 2013, the Company received $3,000 in equity securities in a private company in exchange for services performed. The valuation was based on 3,000,000 shares at $0.001 per share. The company also received $2,000 in equity securities in another private company in exchange for services to be performed. The valuation was based on 2,000,000 shares at $0.001 per share.

 

The company currently holds the following equity securities in private and also reporting companies:

 

Company  No. Shares   Status
        
M1 Lux AG   2,000,000   Private Company
Monkey Rock Group Inc.   1,500,000   Reporting Company – OTC
Voz Mobile Cloud Limited   3,200,000   Private Company
Arrow Cars International Inc.   3,000,000   Reporting Company – OTC
Direct Security Integration Inc.   2,000,000   Private Company
         
    11,700,000    

 

F-9
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Deferred Revenue

 

Deferred revenue represents fees that have been received by the Company for requested services that have not been substantially completed. During the nine months ended September 30, 2013 the Company received $122,000 from a client for service to be rendered during the year 2013. At September 30, 2013, the Company recognized $60,000 of this deferred revenue as revenue; leaving a deferred revenue balance of $62,000.

 

Share-based payments

 

The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants at their fair value on the grant date, which is based on the estimated number of awards that are ultimately expected to vest.

 

Share based payments, excluding restricted stock, are valued using a Black-Scholes pricing model. Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.

 

When computing fair value, the Company considered the following variables:

 

The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the share based payment in effect at the time of the grant.

 

The expected term was developed by management estimate.

 

The Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common stock in the near future.

 

The expected volatility is based on management estimates regarding private company stock, where future trading of stock in a public market is expected to be highly volatile.

 

The forfeiture rate is based on historical experience.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.

 

Earnings per Share

 

Basic earnings (loss) per share are computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period.  Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The Company has no common stock equivalents, which, if exercisable, would be dilutive. A separate computation of diluted earnings (loss) per share is not presented.

 

F-10
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Fair Value of Financial Assets and Liabilities

 

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The three levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

Loans to Third Parties

 

On March 22, 2013 the Company granted a loan to Dreamscapes Properties International Inc. The principal amount lent was $6,000, the agreed interest rate was 5% per annum and finally, the loan would have to be repaid no later than one year from the date that the loan was granted.

 

Recent Accounting Pronouncements

 

There are no new accounting pronouncements that have any impact on the Company’s financial statements.

 

Note 5 - Debt

 

(A) Related Party – short term

 

The Company received loans from related parties. The loans are non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of September 30, 2013 and as of December 31, 2012 respectively:

 

Loans payable – related party – December 31, 2012  $48,075 
Proceeds from loans   4,819 
Repayments   (-)
Loans payable – related party – September 30, 2013  $52,894 

 

F-11
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

(B) Related party – long term

 

The Company has accrued salary to the officers and directors of the Company based on the terms of the employment agreements entered into with each officer. As at December 31, 2012, $209,475 was due to the Chief Executive Officer and $115,000 was due to the Chief Financial Officer. During the quarter ended March 31, 2013, the Company converted this amount to Convertible Loan Payable. This amount will be advanced for a term of two years and is repayable on demand and will accrue interest at 10% on the loan period. The agreement also gives an option to the officers of the Company to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share. The balance outstanding in the Loan Payable account as at September 30, 2013 is $324,475. The Company assessed if there is a beneficial conversion feature cost associated with this transaction, none was noted.

 

(C) Notes payable

 

In February and March 2012, the Company entered into two 90 day bridge loan agreements to raise a total of $70,000; $20,000 from “note holder A” and $50,000 from “note holder B”. The loans had interest rates ranging from 0% - 3%. The loans were unsecured.

 

In connection with these loans, the Company issued 140,000 shares of common stock, having a fair value of $70,000 ($0.50/share), based upon recent third party services rendered at that time, and 20,000 options to one lender having an exercise price of $1, expiring September 2013. The fair value of the options was $6,968.

 

The 140,000 shares of common stock issued in connection with the bridge loans were treated as a debt discount of $70,000. The remaining valuation of the options, $6,968, was recorded as interest expense.

 

The Company applied fair value accounting for the options issued to the lender. The fair value of the options granted was estimated on the date of grant using the Black-Scholes pricing model. (Please refer to note 6 C Stock Options).

 

On June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $10,000 was converted into 40,000 shares of common stock ($0.25/share) in September of 2012, thereby leaving an outstanding balance as of December 31, 2012 of $10,000. There was no gain or loss on conversion. During the quarter ended March 31, 2013 the Company repaid the balance of $10,000.

 

On July 5, 2012, “note holder A”, $20,000 was converted into 40,000 shares of common stock ($0.50/share). There was no gain or loss on conversion.

 

On November 16, 2012, the Company issued 2,000 common restricted shares ($0.25/share) to “note holder A” in lieu of $500 interest due. The balance outstanding for the interest payment of $500 is outstanding as at September 30, 2013.

 

On April 23, 2013, the Company secured a nine month convertible loan for $42,500 with an 8% interest rate due on January 29, 2014. The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior to the conversion date. If the Company opts to pay the loan back on or before the 9 month period ends, hence not converting the debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”) equal to 130% of total amount due inclusive of principal and interest accrued.

 

On June 4, 2013, the Company secured a twelve month convertible loan for $50,000 with the understanding that the Company will issue 10,000 common restricted shares in lieu of interest, these shares are not issued as of September 30, 2013 and accounted for as Stock Payable. The terms of the conversion will be either a $0.50 conversion price or a 25% discount to market based on an average price calculated on the 10 trading days prior to the conversion date, whichever is the lowest.

 

F-12
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

On September 9, 2013, the Company secured a nine month convertible loan for $32,500 with an 8% interest rate due on June 11, 2014. The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior to the conversion date. If the Company opts to pay the loan back on or before the 9 month period ends, hence not converting the debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”) equal to 130% of total amount due inclusive of principal and interest accrued.

 

The amounts paid to acquire the debt financing have been treated as a debt discount hence at September 30, 2013, the Company recorded debt discount of $56,034. This will be amortized over the life of the respective loans.

 

During the nine months ended September 30, 2013 and September 30, 2012, the Company amortized $26,452 and $70,000.

 

(D) Accounts payable – related parties

 

The following table represents the accounts payable to related parties as of September 30, 2013 and December 31, 2012, respectively:

 

   09/30/2013   12/31/2012 
         
Salaries  $205,000    414,034 
Expenses  $26,502    7,466 
   $231,502   $421,500 

 

As discussed in note no. 5(B), the Company converted $324,475 of related party accounts payable into a convertible loan during the nine months ended September 30, 2013.

 

Note 6 - Temporary Equity and Stockholders’ Equity

 

(A) Preferred Stock

 

On November 30, 2011, the Company authorized and designated 5,000,000 Series “A” convertible preferred shares of stock, as a bonus to its Chief Executive Officer for services rendered, having a fair value of $480,000 ($0.096/share), based upon the fair value of the services rendered, which represented the best evidence of fair value.

 

On November 13, 2012, the Company’s board of directors approved an amendment to the Certificate of Designation; to amend the voting rights and conversion rights of the Company’s Series “A” preferred shares as follows:

 

Voting Rights: 10 votes per share (votes along with common stock);

 

Conversion Rights: Each share of Series “A” Preferred is convertible into ten (10) shares of common stock 1 day after the second anniversary of issuance;

 

Dividend Rights: None;

 

Liquidation Rights: None

 

The board of directors subsequently agreed that the Chief Executive Officer of the Company would retire to treasury 3,466,668 of these Series “A” preferred shares and retain, the balance, 1,533,332 shares.

 

F-13
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

On November 21, 2012 the Company’s CEO gave 533,332 of his Series “A” preferred shares to the Company’s CFO (400,000) and two other employees (133,332). As the 533,332 preferred shares will convert into 5,333,320 on December 1, 2014 and the price per common share on November 21, 2012 was $0.25, the contribution by the officer to the Company was calculated at $1,333,330.

 

The Company has determined that no beneficial conversion feature or derivative financial instruments exist in connection with the Series “A”, convertible preferred stock, as the conversion rate was fixed at an amount equal to the market price of the Company’s common stock. Additionally, there are a stated number of fixed shares.

 

Redeemable Preferred Stock

 

Under Regulation S-X, Rule 5-02-28, preferred stock must be classified outside of stockholders’ equity when the stock is:

 

Redeemable at a fixed or determinable price on a fixed or determinable date,

 

Redeemable at the option of the holder, or

 

Redeemable based on conditions outside the control of the issuer.

 

The Series “A”, convertible preferred stock is redeemable on December 1, 2014 and it is presented on the balance sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity. There are no other features associated with this class of redeemable preferred stock, which require disclosure. The carrying amount and redemption amount is $480,000. There are no redemption requirements.

 

(B) Common Stock

 

During the nine months ended September 30, 2013, the Company issued the following shares:

 

Date  Type  Shares   Valuation   Range of value
per share
 
2/15/2013  Stock issued for services and payables   100,000   $80,000   $0.80 
3/12/2013  Stock issued for settlement of debt   75,000   $82,500   $1.10 
4/5/2013  Stock issued for services   150,000   $142,500   $0.95 
4/5/2013  Stock issued for services   500,000   $125,000   $0.25 
4/15/2013  Stock issued for services   25,000   $13,750   $0.55 
4/24/2013  Stock issued for services   150,000   $43,500   $0.29 
5/3/2013  Stock issued for cash   16,667   $10,000   $0.60 
5/17/2013  Stock issued for services   40,000   $6,800   $0.17 
5/17/2013  Stock issued for services   99,385   $16,972   $0.17 
                   
   Totals   1,156,052   $521,022      

 

F-14
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

(C) Stock options

 

The following is a summary of the Company’s options activity:

 

   Number of options   Weighted Average Exercise Price 
         
Balance at December 31, 2012   20,000   $1.00 
           
-          Granted   -   $- 
           
-          Exercised   -   $- 
           
-          Forfeited   20,000   $1,00 
           
Balance at September 30, 2013   -   $- 

 

This options expired on September 13, 2013. The fair value of each option granted is estimated on the date of grant using the Black-Scholes pricing model.

 

The Black Scholes assumptions used are as follows:

 

Exercise price  $1.00 
Expected dividends   0%
Expected volatility   182%
Risk fee interest rate   0.3%
Expected life   1.5 years  
Expected forfeitures   0%

  

(D) Stock payable

 

On October 8, 2012 the Company entered into a commission agreement with a company called Tempest Holdings Limited where Tempest would receive a finder’s fee for the introduction of new business and also a retainer fee of 10,000 common restricted shares per month for twelve months commencing January 1, 2013. The Company has valued the 90,000 shares due to Tempest using fair market value at $45,400.

 

On April 24, 2013, the Company entered into a consulting agreement with Robert Sullivan. As per the agreement the Company will be issuing 150,000 restricted shares to the consultant. The agreement also stipulates a condition where the Company guarantees a minimal value of $100,000 at the time of legend removal and any shortfall will be taken care of by issuance of additional shares. As of the date of the agreement the shares are valued at $43,500. The value of shares as at September 30, 2013 were $22,650 hence the difference of $77,350 is recorded as stock payable.

 

On June 4, 2013, the Company received $50,000 from Direct Securities Integration, Inc in pursuance of a notes payable agreement. The agreement stipulates a condition for the payment of 10,000 shares in lieu of interest on the day of agreement. Such shares are not issued as of September 30, 2013, and are valued at $5,500.

 

F-15
 

 

Global Equity International, Inc. and Subsidiary
September 30, 2013
(Unaudited)

 

Note 7 – Commitments and contingencies

 

On April 24, 2013, the Company entered into advertisement contract with Robert Sullivan. The Company is required to pay $30,000 in cash and issue 150,000 shares. During the second quarter of 2013, the Company paid $10,000 in cash, the balance of $20,000 was due with 60 days of the signing of the agreement; this amount is unpaid as at September 30, 2013. The Company has guaranteed a value of $100,000 for its shares at the time of legend removal. At September 30, 2013 the legend is still not removed, the Company has accrued for the shortfall of $77,350 as a stock payable.

 

Note 8 – Subsequent Events

 

On October 17, 2013, the Company secured a three month bridge loan for 200,000 GBP equivalent to $319,598 with the agreement to repay the principle plus 5% per month interest on or before January 18, 2014.

 

On October 18, 2013, the Company exercised its option to prepay the loan it secured for $42,500 on April 23, 2013.

 

On November 1, 2013 the Company rented a 1400 square foot office located at X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers in Dubai and intends to have the office staffed and fully operational on or before January 1, 2014.

 

F-16
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

For the nine months ended September 30, 2013 and September 30, 2012.

 

The Company had revenues amounting to $171,849 and $409,000 for the nine months ended September 30, 2013 and September 30, 2012. The main reason for the decline is due to the nature of our current contracts with our clients. These contracts call for the Company to accomplish certain milestones in order to be able to invoice work completed hence, to date, we have had to defer $62,000 of revenue received. Management does invest a lot of time on behalf of our clients such as meetings with the Dubai NASDAQ, the DFSA (the Dubai Financial Service Authority), marketing and IR consultants and finally local Dubai DFSA authorized sponsor that have the authority to underwrite a company that wishes to list its equity on the Dubai NASDAQ. This cannot be deemed as billable work in progress but, management considers that this work carried out on behalf of our clients, though not quantifiable, is essential in order to accomplish our mandate from clients that wish to list in Dubai.

 

The operating costs for the for the nine months ended September 30, 2013 and September 30, 2012 were $1,284,674 and $702,610, respectively. The substantial increase is mainly due to an increase in subcontracted professional services, salaries, investor relations, marketing costs and the impairment of $160,000 of financial assets.

 

The net losses from operations for the periods for the for the nine months ended September 30, 2013 and September 30, 2012 were $1,112,825 and $293,610 respectively.

 

Other income and (expenses) amounted to $(37,743) and $(1,051,580) for the nine months ended September 30, 2013 and September 30, 2012 respectively. The substantial decrease is mainly due to the $975,000 of realized loss on available for sale marketable securities that the Company accounted for at September 30, 2012.

 

The net losses for the periods for the nine months ended September 30, 2013 and September 30, 2012 were $1,150,568 and $1,345,190 respectively.

 

The Company had 30,784,202 and 29,627,700 shares issued and outstanding at September 30, 2013 and September 30, 2012 respectively. The weighted averages were 30,370,730 and 29,046,211 shares for both six month periods hence the respective loss per share was $(0.04) and $(0.05).

 

For the three months ended June 30, 2013 and June 30, 2012.

 

The Company had revenues amounting to $165,000 and $16,500 for the three months ended September 30, 2013 and September 30, 2012. The main reason for the decline is due to the nature of our current contracts with our clients. These contracts call for the Company to accomplish certain milestones in order to be able to invoice work completed hence, to date, we have had to defer $62,000 of revenue received. Management does invest a lot of time on behalf of our clients such as meetings with the Dubai NASDAQ, the DFSA (the Dubai Financial Service Authority), marketing and IR consultants and finally local Dubai DFSA authorized sponsor that have the authority to underwrite a company that wishes to list its equity on the Dubai NASDAQ. This cannot be deemed as billable work in progress but, management considers that this work carried out on behalf of our clients, though not quantifiable, is essential in order to accomplish our mandate from clients that wish to list in Dubai.

 

5
 

 

The operating costs for the for the three months ended September 30, 2013 and September 30, 2012 were $366,348 and $231,354, respectively. The substantial increase is mainly due to a substantial increase in subcontracted professional services, investor relations and marketing costs.

 

The net losses from operations for the periods for the for the three months ended September 30, 2013 and September 30, 2012 were $201,348 and $214,854 respectively.

 

Other income and (expenses) amounted to $(41,795) and $(977,053) for the three months ended September 30, 2013 and September 30, 2012 respectively. The substantial decrease is mainly due to the $975,000 of realized loss on available for sale marketable securities that the Company accounted for at September 30, 2012.

 

The net losses for the periods for the three months ended September 30, 2013 and September 30, 2012 were $243,143 and $1,191,907 respectively.

 

The Company had 30,784,202 and 29,627,700 shares issued and outstanding at September 30, 2013 and September 30, 2012 respectively. The weighted averages were 30,784,202 and 29,286,135 shares for both three month periods hence the respective loss per share was $(0.01) and $(0.04).

 

LIQUIDITY AND CAPITAL RESERVES

 

As of September 30, 2013:

 

As reflected in the accompanying financial statements, the Company had a loss of $1,150,568 for the nine months ended September 30, 2013. Net cash used in operations of $(128,845) for the nine months ended September 30, 2013; and a working capital deficit of $(474,666) and stockholders´ deficit of $1,268,677 as of September 30, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

 

The Company expects to use its working capital to implement a marketing program to increase awareness of its business model, which includes, but is not limited to, acquisition of private companies, with the intention of taking those companies public in the United States and possibly dual listing those entities abroad. In the event that operating cash flows are slowed or nonexistent, the Company plans to reduce its overhead wherever possible.

 

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected hence there is certain doubt about the Company's ability to continue as a going concern.

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

6
 

 

On October 17, 2013, the Company secured a three month bridge loan for 200,000 GBP which was equivalent to $319,598 with the agreement to repay the principle plus 5% per month interest on or before January 18, 2014.

 

On October 18, 2013, the Company exercised its option to prepay the loan it secured for $42,500 on April 23, 2013.

 

It is the Company's intention to seek additional debt financing, which we plan to use as additional working capital to implement our marketing program to increase awareness of our business model and also to expand our operations via the acquisition of companies that are in a similar space and industry as ours, although we have not identified any companies that we would consider acquiring.

 

However, we do not have any verbal or written agreements with anyone to provide us with debt financing.

 

Any short fall in our projected operating revenues will be covered by:

 

1) The cash fees that we expect to receive during the next 12 months from the four clients we currently have under contract.

 

2) Reducing our expenditures; and

 

3) Receiving loans from one or more of our officers even though at the present time, we do not have verbal or written commitments from any of our officers to lend us money.

 

Depending upon market conditions, the Company may not be successful in raising sufficient additional capital for it to achieve its business objectives.

 

In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected.

 

As of September 30, 2012:

 

As of September 30, 2012, the Company had $31,526 in cash and net cash used in operations of $136,696. For the nine months ended September 30 2012, the Company had a net loss of $1,345,190 and a net comprehensive loss of $1,345,988. The working capital deficit amounted to $336,643. Finally, the Company had a stockholders´ deficit of $656,643 as of September 30, 2012.

 

In February and March 2012, the Company entered into two 90 day bridge loan agreements to raise a total of $70,000, $20,000 from “note holder A” and $50,000 from “note holder B”. The loans had interest ranging from 0% - 3%. The loans were unsecured.

 

In connection with these loans, the Company had issued 140,000 shares of common stock, having a fair value of $70,000 ($0.50/share), based upon recent third party services rendered at that time, and 20,000 options to one lender having an exercise price of $1, expiring September 2013. The fair value of the options was $6,968. At September 30, 2013 the lender did not exercise the options.

 

The 140,000 shares of common stock issued in connection with the bridge loans were treated as a debt discount of $70,000. The remaining valuation of the options, $6,968, was recorded as interest expense.

 

The Company applied fair value accounting for the options issued to the lender. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes pricing model.

 

7
 

 

The Black-Scholes assumptions used were as follows:

 

Exercise price  $1 
Expected dividends   0%
Expected volatility   200%
Risk fee interest rate   0.35%
Expected life of options    1.5 years  
Expected forfeitures   0%

 

On June 25, 2012, $30,000 was repaid to “note holder B” and the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) subsequent to June 30, 2012. There was no gain or loss on conversion.

 

On July 5, 2012, while in default with “note holder A”, the remaining $20,000 was converted into 40,000 shares of common stock ($0.50/share) subsequent to June 30, 2012. There was no gain or loss on conversion.

 

FUTURE PLANS

 

We currently have the following clients under contract, Arrow Cars International Inc., Black Swan Data Limited, RFC International Inc., Regis Cards Limited, Direct Security Integration Inc., Innoveas AG, Universal Energy Solutions BV, Scorpion Performance Inc., Scandinavian Agritex Co. Limited and Arabian Nubian Resources Limited.

 

Our specific plan of operations and milestones for November 2013 through April 2014 are as follows:

 

CONTINUE TO DEVELOP THE INTRODUCER NETWORK FURTHER IN HOPE OF ATTRACTING NEW INTEREST FOR OUR SERVICES.

 

We currently are relying on introductions to potential clients by the following firms in Asia and Europe:

 

1.Merchant House Group (London), a United Kingdom registered investment house;

 

2.TAP 09 Gmbh, an Austrian management consultancy firm based in Wien, Vienna;

 

3.Mashreq Bank, an Asian retail bank based in Dubai, U.A.E.; and

 

4.ABN Amro Private Bank based in Amsterdam, the Netherlands.

 

5.Various other professionals and introducers in the United Kingdom that are not linked to any specific firm.

 

We do not have any verbal or written agreements with the four firms identified above, as our relationship with each of them has been developed over the past year or so.

 

EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.

 

We intend to continue forming relationships with merger and acquisition specialists during 2013, which, hopefully, will enable us to: 1) find potential merger and acquisition candidates, 2) introduce our clients to brokers and investment bankers, and 3) introduce our clients to the appropriate professionals (attorneys and accountants) to assist them in a public offering or exchange listing. The only additional cost for this activity will be a very small administrative burden for telephone calls and communications to be funded out of operational income, mainly income receivable from clients currently under contract.

 

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SIGN CONTRACTS WITH A MINIMUM OF SIX NEW CLIENTS.

 

We hope that we will gain at least four new consultancy contracts before December 31, 2013 and a further two new clients during the first quarter of 2014.

 

At present we are in advanced negotiations with seven companies that wish to list their stock either on a US market or on the NASDAQ Dubai.

 

 

OFFICE IN DUBAI

 

On November 1, 2013 we rented a 1400 square foot office located at X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers in Dubai and we intend to have the office staffed and fully operational on or before January 1, 2014.

 

This section of the quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

 

Cautionary Forward - Looking Statement

 

The following discussion and analysis of the results of operations and financial condition of Global Equity International, Inc. should be read in conjunction with the unaudited financial statements, and the related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

 

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

 

·the volatile and competitive nature of our industry,
the uncertainties surrounding the rapidly evolving markets in which we compete,
the uncertainties surrounding technological change of the industry,
our dependence on its intellectual property rights,
the success of marketing efforts by third parties,
the changing demands of customers and
the arrangements with present and future customers and third parties.

 

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Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934) not effective.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

(1)pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

(2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

 

(3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

At September 30, 2013, we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act") under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

 

Based upon such evaluation, such person concluded that as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level because, due to financial constraints, the Company does not maintain a sufficient complement of personnel with an appropriate level of technical accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial accounting and reporting requirements. In the event that we may receive sufficient funds for internal operational purposes, we plan to retain the services of additional internal management staff to provide assistance to our current management with the monitoring and maintenance of our internal controls and procedures.

 

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

 

Changes in internal control over financial reporting.

 

We did not change our internal control over financial reporting during our last fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company is not aware of any threatened or pending litigation against the Company.

 

Item 1A. Risk Factors.

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Date   Type     Shares       Valuation       Range of value 
per share
 
2/15/2013   Stock issued for services     100,000     $ 80,000     $ 0.80  
3/12/2013   Stock issued for services     75,000     $ 82,500     $ 1.10  
4/5/2013   Stock issued for services     150,000     $ 142,500     $ 0.95  
4/5/2013   Stock issued for services     500,000     $ 125,000     $ 0.25  
4/15/2013   Stock issued for services     25,000     $ 13,750     $ 0.55  
4/24/2013   Stock issued for services     150,000     $ 43,500     $ 0.29  
5/3/2013   Stock issued for cash     16,667     $ 10,000     $ 0.60  
5/17/2013   Stock issued for services     40,000     $ 6,800     $ 0.17  
5/17/2013   Stock issued for services     99,835     $ 16,972     $ 0.17  

 

The proceeds from the sales of the Company’s common stock were used as working capital and for repayment of debt.

 

The issuances of the above shares of common stock were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation S and/or Section 4(a) (2) promulgated thereunder.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

See Exhibit Index below for exhibits required by Item 601 of regulation S-K.

 

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EXHIBIT INDEX

 

List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:

 

Exhibit   Description
31.1   Certification under Section 302 of Sarbanes-Oxley Act of 2002*
31.2   Certification under Section 302 of Sarbanes-Oxley Act of 2002*

32.1

 

Certification under Section 906 of Sarbanes-Oxley Act of 2002*

32.2   Certification under Section 906 of Sarbanes-Oxley Act of 2002*
     
101.INS   XBRL Instance Document**
101.SCH   XBRL Taxonomy Extension Schema Document**
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB   XBRL Taxonomy Extension Label Linkbase Document**
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document**

 

* Filed herewith.

 

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  GLOBAL EQUITY INTERNATIONAL, INC.
   
Date: November 13, 2013 /s/ Peter J. Smith
  Peter J. Smith
  President and Chief Executive Officer
  (Principal Executive Officer)
   
Date: November 13, 2013 /s/ Enzo Taddei
  Enzo Taddei
  Chief Financial Officer
  (Principal Accounting and Financial Officer)

 

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