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, 2017

or

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

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 0-54557

 

 

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.)

 

X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, UAE
(Address of principal executive offices)		(Zip code)

 

Registrant’s telephone number: +971 (0) 42767576/ +1 321 200 0142

 

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 13, 2017, there were 473,090,573 outstanding shares of the Registrant’s Common Stock, $0.001 par value.

 

 

 

INDEX

 

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.	F-1
Notes to Financial Statements (Unaudited)	F-5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3. Quantitative and Qualitative Disclosures about Market Risk	11
Item 4. Controls and Procedures	11
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.	13
Item 1A. Risk Factors	13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3. Defaults Upon Senior Securities	14
Item 4. Mine Safety Disclosure	14
Item 5. Other Information.	14
Item 6. Exhibits	14
SIGNATURES	16

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Global Equity International, Inc. and Subsidiaries

Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

CONTENTS

 

	Page(s)
Consolidated Balance Sheets – September 30, 2017 (unaudited) and December 31, 2016	F-2
Consolidated Statements of Operations and Comprehensive Income (loss) for the three and nine months ended September 30, 2017 and September 30, 2016 (unaudited)	F-3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and September 30, 2016 (unaudited)	F-4
Notes to Consolidated Financial Statements (unaudited)	F-5 – F-27

 

 

Global Equity International, Inc. and Subsidiaries

Consolidated Balance Sheets

 

		September 30, 2017				December 31, 2016
		(Unaudited)
Assets
Current Assets
Cash & cash equivalents		$	11,468			$	66,523
Accounts receivable			800				21,800
Marketable securities at fair value			2,536,675				-
Prepaids			4,967				35,788
Other current assets			6,615				8,794
Total current assets			2,560,525				132,905
Investments at cost			419,501				3,085,322
Fixed assets, net			2,654				10,215
Total assets		$	2,982,680			$	3,228,442
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities		$	132,641			$	172,538
Accrued contingencies and penalties			5,000				196,509
Accounts payable and accrued liabilities - related parties			144,610				53,748
Deferred revenue			-				200,000
Accrued interest			202,373				304,569
Notes payable - net of discount of $0 and $70,000, respectively			319,598				840,018
Fixed price convertible notes payable - net of discount of $10,217 and $2,647, respectively			374,933				47,353
Total current liabilities			1,179,155				1,814,735
Total liabilities		$	1,179,155			$	1,814,735
Commitments and contingencies (Note 11)
Stockholders’ Equity
Preferred stock, 50,000,000 shares authorized, $.001 par value Preferred stock series “B” convertible, 45,000,000 designated, 45,000,000 and 45,000,000 shares issued and outstanding, respectively.		$	45,000			$	45,000
Preferred stock series “C” convertible, 5,000,000 designated, 2,400,000 and 0 shares issued and outstanding, respectively.			2,400				-
Common stock: 950,000,000 shares authorized; $0.001 par value: 453,090,573 and 374,475,775 shares issued and outstanding, respectively.			453,091				374,476
Additional paid in capital			9,108,319				8,197,449
Accumulated deficit			(9,494,295	)			(7,203,218	)
Accumulated other comprehensive income			1,689,010				-
Total stockholders’ equity			1,803,525				1,413,707
Total liabilities and stockholders’ equity		$	2,982,680			$	3,228,442

 

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

 

 

Global Equity International, Inc. and Subsidiaries

Consolidated Statement of Operations and Comprehensive Income (Loss)

For the three and nine months ended September 30, 2017 and September 30, 2016 (Unaudited)

 

		For the three months ended,								For the nine months ended,
		September 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
Revenue		$	9,750			$	306,962			$	226,389			$	1,412,213
General and administrative expenses			25,781				32,735				123,621				137,382
Salaries			162,386				240,930				535,752				632,439
Professional services			19,923				41,359				101,285				216,753
Depreciation			3,187				2,873				8,762				8,587
Bad debt expense			45,386				-				65,386				-
Total operating expenses			256,663				317,897				834,806				995,161
(Loss) / income from operations		$	(246,913	)		$	(10,935	)		$	(608,417	)		$	417,052
Other income (expenses):
Interest expense			(1,500	)			-				(4,000	)			-
Amortization of debt discount			(14,635	)			(39,531	)			(117,683	)			(62,865	)
Loss on conversion of accrued salaries and accounts payable into common stock			-				(5,492	)			-				(1,097	)
Gain on transfer of preferred stock			-				-				-				1,454
Gain on sale of subsidiary			-				-				23,052				-
Gain on sale of marketable securities			15,811				-				18,851				-
Impairment loss on investments at cost			(1,181,971	)			-				(1,181,971	)			-
Loss on conversion of notes into common stock			(131,578	)			-				(391,285	)			-
Gain / (loss) on extinguishment of debt and other liabilities			22,375				(8,865	)			(28,886	)			(91,814	)
Exchange rate gain / (loss)			(359	)			(307	)			(742	)			(922	)
Total other income (expenses)			(1,291,857	)			(54,195	)			(1,682,664	)			(155,244	)
Net (loss) / income		$	(1,538,770	)		$	(65,130	)		$	(2,291,081	)		$	261,808
Net (loss) income per common share - basic & diluted		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	0.00
Weighted average number of common shares outstanding - basic			432,760,903				795,548,582				419,266,295				784,687,141
Weighted average number of common shares outstanding - diluted			432,760,903				795,548,582				419,266,295				790,795,964
Comprehensive income (loss):
Unrealized fair value gain on available for sale marketable securities			1,183,782				-				1,689,010				-
Net (loss) / income			(1,538,770	)			(65,130	)			(2,291,081	)			261,808
Comprehensive (loss) income		$	(354,988	)		$	(65,130	)		$	(602,071	)		$	261,808

 

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

 

 

Global Equity International Inc. And Subsidiaries

Consolidated Statement of Cash Flows

For the nine months ended September 30, 2017 and September 30, 2016 (Unaudited)

 

		September 30, 2017				September 30, 2016
Cash flows from operating activities
Net (loss) / income		$	(2,291,081	)		$	261,808
Adjustments to reconcile net (loss) / income to net cash used in operating activities
Depreciation			8,762				8,587
Securities received as payment for services and deferred securities recorded as revenues			-				(730,595	)
Securities paid for services			-				20,568
Gain on transfer of preferred stock			-				(1,454	)
Amortization of debt discount			117,683				62,865
Loss on extinguishment of debt and other liabilities			28,886				91,814
Gain on conversion of accrued salaries and accounts payable into common stock			-				1,097
Loss on conversion of loan notes into common stock			391,285				-
Gain on sale of subsidiary			(23,052	)			-
Gain on sale of marketable securities			(18,851	)			-
Impairment loss on investments at cost			1,181,971				-
Bad debt expense			65,386				-
Changes in operating assets and liabilities:
Accounts receivable			(44,386	)			(51,962	)
Marketable securities at fair value			52,035				-
Prepaids			30,821				43,591
Other current assets			1,628				(812	)
Accounts payable and accrued liabilities			101,558				80,911
Accrued contingencies and penalties			(1,361	)			-
Accounts payable and accrued liabilities - related parties			330,862				299,421
Deferred revenue			(100,000	)			(337,500	)
Accrued interest			4,000				-
Net cash used in operating activities:		$	(163,854	)		$	(251,661	)
Cash Flows used in investing activities:
Office furniture and equipment, net			(1,201	)			(451	)
Net cash used in investing activities		$	(1,201	)		$	(451	)
Cash flows from financing activities:
Proceeds from loans - related parties			17,707				8,974
Repayment of loans - related parties			(17,707	)			(8,974	)
Proceeds from notes payable			110,000				225,000
Net cash provided by financing activities		$	110,000			$	225,000
Net decrease in cash		$	(55,055	)		$	(27,112	)
Cash at Beginning of Period		$	66,523			$	42,163
Cash at End of Period		$	11,468			$	15,051
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Notes payable and interest converted into shares		$	311,850			$	59,500
Debt discount and issuance costs recorded on notes payable		$	55,254			$	103,444
Accounts payable and accrued salaries settled in shares		$	240,000			$	529,915

 

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

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Note 1 - Organization and Nature of Operations

 

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. Global Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. On November 15, 2010, GEP executed a reverse recapitalization with GEI. On August 22, 2014, we formed a Dubai subsidiary of GEP called GE Professionals DMCC. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEP EH”), under the laws of the Republic of Seychelles. On March 14, 2017, the Company´s board of directors unanimously voted to transfer the ownership of GE Professionals DMCC (Dubai) to GEP EH. On June 5, 2017, the Company sold 100% of the issued and outstanding common stock of GEP to a citizen of the Republic of Thailand by entering into a Stock Purchase and Debt Assumption Agreement (See Note 5).

 

Revenue is generated from business consulting services and employment placements.

 

Note 2 - 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 disclosures 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 statements presentation.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2016. The interim results for the period ended September 30, 2017 are not necessarily indicative of results for the full fiscal year.

 

Note 3 - 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.

 

As reflected in the accompanying consolidated financial statements, the Company had a net loss of $1,538,770 and $2,291,081 for the three and nine months ended September 30, 2017 respectively, net cash used by operations of $163,854 for the nine months ended September 30, 2017; and had a working capital of $1,381,370 and stockholders´ equity of $1,803,525 as of September 30, 2017. It is management’s opinion that some of these factors may raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report.

 

The ability for the Company to continue its operations is primarily dependent on:

 

	a)	Continually engaging with new clients, and
	b)	Consummating and executing current engagements.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Whilst the Company´s current engagements are being consummated and executed, the Company may also have to resort to borrowing additional funds with certain related parties, such as management, and also third party funders on a non-discounted basis (if for shares, on a fixed price basis) to sustain the Company’s existence. In addition, in the event that operating cash flows are slowed, the Company would reduce its overheads wherever possible and any monies owed to the management can also be forgiven, if necessary.

 

Note 4 - Summary of Significant Accounting Policies

 

Principles of Consolidation

 

Global Equity International Inc. (GEI) is the parent Company of its 100% owned subsidiary called GEP Equity Holdings Limited (GEP EH). GEI also owned 100% shareholding of its subsidiary called Global Equity Partners Plc until the date it was sold pursuant to a stock purchase and debt assumption agreement on June 5, 2017. GEP EH is the parent company of its 100% owned subsidiary, GE Professionals DMCC (Dubai). All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of consolidated 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. Significant estimates in the accompanying financial statements include allowance for doubtful accounts and loans, estimates of fair value of securities received for services, estimates of fair value of securities held, depreciation of fixed assets, valuation allowance on deferred tax assets and equity valuations for non-cash equity grants.

 

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 & Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2017 and at December 31, 2016, 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. There was no allowance for bad debt at September 30, 2017 and December 31, 2016. However, there were direct write offs of $65,386 during the nine months ended September 30, 2017.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Foreign currency policy

 

The Company’s accounting policies related to the consolidation and accounting for foreign operations are as follows: The accompanying consolidated financial statements are presented in U.S. dollars. The functional currency of the Company’s Dubai subsidiary is the Arab Emirates Dirham (AED). All foreign currency balances and transactions are translated into United States dollars “$” and/or “USD” as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of our stockholders’ equity (deficit) as “Accumulated other comprehensive income (loss)”. Since the AED is pegged to the U.S. dollar, translation gains and losses are always De Minimis. Gains and losses resulting from foreign currency transactions are included in the non-operating income or expenses of the statement of operations.

 

Investments

 

(A) Classification of Securities

 

Marketable Securities

 

At the time of the acquisition, a marketable 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.

 

Any unrealized gains and losses are reported as a component of other comprehensive income (loss). Realized gains (losses) are computed on a specific identification basis and are reflected in the statement of operations.

 

Cost Method Investments

 

Securities that are not classified as marketable securities are accounted for under the cost method. These securities are recorded at their original cost basis and are subject to impairment testing.

 

(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 the statement of operations. 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 recorded a permanent impairment of $1,181,971 during the nine months ended September 30, 2017.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Fixed Assets

 

Fixed assets are 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 are capitalized. Repairs and maintenance expenses are 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 statements.

 

Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

Debt Issue Costs

 

The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as amortization of debt discount.

 

Original Issue Discount

 

If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized over the life of the debt to the statement of operations as amortization of debt discount. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

Valuation of Derivative Instruments

 

ASC 815 “Derivatives and Hedging” requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. Upon conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on debt extinguishment.

 

Revenue Recognition

 

We recognize revenue from the services we provide in accordance with ASC Topic 605, Revenue Recognition. ASC Topic 605 sets forth guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. Generally, the contract terms for these services are relatively short in duration.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

We receive consideration in the form of cash and/or securities. We recognize cash consideration as revenues as the services are performed either on a pro rata basis or on a milestone basis.

 

Securities received as consideration are often earned at a point in time when the specified event occurs and the securities are issued to us. Therefore, we measure and recognize these securities received at fair value on the date of receipt. If securities are received in advance of completion of our services, the fair value will be recorded as deferred revenue and recognized as revenue as the services are completed.

 

All revenues are generated from clients whose operations are based outside of the United States. For the nine months ended September 30, 2017 and 2016, the Company had the following concentrations of revenues with customers:

 

Customer				Location		September 30, 2017				September 30, 2016
	UNI			United Kingdom			0	%			13.10	%
	PDI			United Kingdom			0	%			21.89	%
	QFS			Switzerland			0	%			37.89	%
	INSCX			United Kingdom			0	%			2.83	%
	GPL			Australia			0	%			4.25	%
	UGA			Norway			0	%			4.25	%
	SCL			United Kingdom			4.42	%			1.42	%
	DUO			Sri Lanka			1.33	%			8.11	%
	EEC			United Arab Emirates			11.66	%			5.90	%
	TLF			United Arab Emirates			5.68	%			0.35	%
	SAC			United Kingdom and Norway			44.17	%			0	%
	FAD			Saudi Arabia			10.00	%			0	%
	AGL			United Arab Emirates			1.80	%			0	%
	DHG			United Arab Emirates			15.63	%			0	%
	FAT			United Arab Emirates			1.88	%			0	%
	VME			Oman			1.91	%			0	%
	OCS			Thailand			1.52	%			0	%
							100	%			100	%

 

At September 30, 2017 and December 31, 2016, the Company had the following concentrations of accounts receivables with customers:

 

Customer			September 30, 2017				December 31, 2016
PDI				0	%			91.74	%
DUO				100	%			8.26	%
				100	%			100	%

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Deferred Revenue

 

Deferred revenue represents fees that have been received by the Company for requested services that have not been completed. Following table illustrates the movement in deferred revenue during the nine months ended September 30, 2017:

 

Balance, December 31, 2016		$	200,000
New payments received during the period			-
Cash deferred revenue recognized as revenue during the period			(100,000	)
Deferred revenue eliminated due to the stock purchase and debt assumption agreement (See Note 5)			(100,000	)
Balance, September 30, 2017		$	-

 

Share-based payments

 

The Company recognizes all forms of share-based payments to employees, 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 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 as of the measurement date. Amounts received prior to the measurement date are adjusted to fair value at each reporting period until a measurement date is achieved. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.

 

Share based payments, excluding restricted stock, are valued using a Black-Scholes pricing model.

 

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 is 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 which are based upon our historical volatility.
	●	The forfeiture rate is based on historical experience.

 

Earnings per Share

 

The basic net 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 are computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

As at September 30, 2017 and December 31, 2016, the Company had common stock equivalents of 32,095,853 and 2,941,176 common shares respectively, in the form of fixed price convertible notes, which, if converted, would be dilutive. See Note 8(F). These common stock equivalents were not included in the computation of diluted net loss per share because the effects would have been anti-dilutive due to the net losses.

 

Fair Value of Financial Assets and Liabilities

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability.

 

The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:

 

	●	Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
	●	Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
	●	Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts reported in the balance sheet for prepaid expenses, accounts receivable, accounts payable, accounts payable to related parties and loans payable to related parties, approximate fair value are based on the short-term nature of these instruments.

 

The Company measures its derivative liabilities at fair market value on a recurring basis and measures its non-marketable securities at fair value on a non-recurring basis. Consequently, the Company may have gains and losses reported in the statement of operations.

 

The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at September 30, 2017 and December 31, 2016, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

 

		September 30, 2017				December 31, 2016
Level 1 –Marketable Securities – Recurring		$	2,536,675			$	-
Level 3 – Non-Marketable Securities – Non-recurring		$	419,501			$	3,085,322

 

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Marketable Securities — The Level 1 position consists of the Company’s investment in equity securities of stock held in publically traded companies. The valuation of these securities is based on quoted prices in active markets.

 

Changes in Level 1 marketable securities measured at fair value for the nine months ended September 30, 2017 were as follows:

 

Balance, December 31, 2016		$	-
Securities transferred from long term investments valued at cost			880,850
Unrealized gains (losses)			1,689,010
Sales and settlements during the period			(33,185	)
Balance, September 30, 2017		$	2,536,675

 

Non-Marketable Securities at Fair Value on a Non-Recurring Basis — Certain assets are measured at fair value on a nonrecurring basis. The level 3 position consist of investments accounted for under the cost method. The Level 3 position consists of investments in equity securities held in private companies.

 

Management believes that an “other-than-temporary impairment” would be justified, as according to ASC 320-10 an investment is considered impaired when the fair value of an investment is less than its amortized cost basis. The impairment is considered either temporary or other-than-temporary. The accounting literature does not define other-than-temporary. It does, however, state that other-than-temporary does not mean permanent, although, all permanent impairments are considered other-than-temporary. The literature does provide some examples of factors, which may be indicative of an “other-than-temporary impairment”, such as:

 

	●	the length of time and extent to which market value has been less than cost;
	●	the financial condition and near-term prospects of the issuer; and
	●	the intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

 

Management believes that the fair value of its investment has been correctly measured, as the length of time that the stock has been less than cost is nominal.

 

Changes in Level 3 assets measured at fair value for the nine months ended September 30, 2017 were as follows:

 

Balance, December 31, 2016		$	3,085,322
Securities received for services during the period			-
Sales as part of stock purchase agreement (See Note 5)			(603,000	)
Securities transferred to marketable securities			(880,850	)
Impairment loss			(1,181,971	)
Balance, September 30, 2017		$	419,501

 

Recent Accounting Pronouncements

 

There are no new accounting pronouncements that have any impact on the Company’s financial statements other than discussed below:

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle-based approach. The core principle of the standard is that revenue should be recognized when the transfer of promised goods or services is made in an amount that the entity expects to be entitled to in exchange for the transfer of goods and services. The update also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB voted to defer the effective date of this guidance by one year. On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations, which clarifies how an entity determines if it is a principal or an agent for each specified good or service promised to the customer, the nature of each specified good or service, and how an entity that is principal obtains control of a good and service provided by another party involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing, which clarifies the guidance related to whether goods or services are distinct within the context of contract and therefore a performance obligation and the timing and pattern of revenue recognition for IP licenses. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and added some practical expedients. In December 2016, the FASB issued ASU 2016-20, Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements, which provides clarifying guidance in certain technical areas. The standard and related amendments will be effective for financial statements issued by public companies for interim and annual reporting periods beginning after December 15, 2017. Early adoption of the standard is permitted, but not before the original date of financial statements issued by public companies for interim and annual reporting periods beginning after December 16, 2017. We currently do not plan to early adopt this guidance and are evaluating the potential impact of this guidance on our consolidated financial statements as well as transition methods.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow (Topic 230). This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update provides new guidance regarding the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitized transactions, and separately identifiable cash flows and application of the predominance principle. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2017. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. We have completed an initial evaluation of this standard, which requires cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities. We have determined that there were no cash payments involved in debt extinguishment during the nine months ended September 30, 2017, hence there will be no potential impact on our financial statements due to this update. We will continue to evaluate the potential impact of this guidance on our consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Management currently does not plan to early adopt this guidance and is evaluating the potential impact of this guidance on the consolidated financial statements as well as transition methods.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 amends the guidance on the classification and measurement of financial instruments. Some of the amendments in ASU 2016-01 include the following: 1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value; among others. For public business entities, the amendments of ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted. The Company is currently evaluating the effects of ASU 2016-01 on its consolidated financial statements and disclosures.

 

Note 5 – Sale of Subsidiary

 

On June 5, 2017, the Company completed a corporate divestiture by entering into a Stock Purchase and Debt Assumption Agreement with a non-affiliate individual, pursuant to which the Company sold 100% of the issued and outstanding common stock of its wholly-owned subsidiary, Global Equity Partners Plc., to a citizen of the Republic of Thailand (acquirer). The consideration for the purchase of GEP by the acquirer was his assumption of all liabilities and indebtedness of GEP in the approximate amount of $626,052. No cash consideration was paid to the Company by the acquirer. Under the terms of the agreement, the acquirer also acquired portfolio of following investments in common shares of various companies owned by GEP:

 

Company		No. of Shares				Book value				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				3,000			Private Company
Direct Security Integration Inc.			400,000				-			Private Company
Primesite Developments Inc.			600,000				600,000			Private Company
			10,700,000			$	603,000

 

The Company recorded a gain of $23,052 in connection with this transaction which is included in other income (expenses) in the Consolidated Statement of Operations for the three and nine months ended September 30, 2017. The book values of assets sold and liabilities transferred are presented below:

 

Liabilities assumed by the purchaser
Accounts payable		$	114,780
Deferred revenue			100,000
Accrued liabilities			184,656
Accrued interest			106,196
Note Payable			120,420
		$	626,052
Less: Assets transferred to the acquirer (as stated above)		$	603,000
Net gain on sale of subsidiary		$	23,052

 

 

Note 6 – Investments

 

A.	Marketable Securities at Fair Value
	During the nine months ended September 30, 2017, one of the Company’s investments commenced trading on OTC Markets; hence, we reclassified this investment of 3,481,133 common shares amounting to $880,850 to marketable securities. During the nine months ended September 30, 2017, the Company sold 98,900 common shares of this particular investment at various fair values recognizing a gain on sale of investment of $18,851. At September 30, 2017, the Company revalued the remaining 3,382,233 common shares at their quoted market price of $0.75 per share, $2,536,675; hence, recording an unrealized gain of $1,689,010 into accumulated other comprehensive income, a component of equity.
B.	Investments at Cost
	The Company, through its subsidiary GEP Equity Holdings Limited, holds following common equity securities in private and reporting companies as at September 30, 2017 and December 31, 2016:

 

		September 30, 2017								December 31, 2016
Company		No. of Shares				Book value				No. of Shares					Book value			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				3,000			Private Company
Direct Security Integration Inc.			-				-				400,000				-			Private Company
Primesite Developments Inc.			5,006,521				-				5,606,521				1,781,521			Private Company
Duo World Inc.			-				-				3,481,133				880,850			Reporting Company – OTC
Quartal Financial Solutions AG			2,271				419,365				2,271				419,365			Private Company
			5,008,792			$	419,365				19,189,925			$	3,084,736

 

The Company, through its subsidiary GEP Equity Holdings Limited, holds the following preferred equity securities in private and reporting companies as at September 30, 2017 and December 31, 2016:

 

		September 30, 2017								December 31, 2016
Company		No. of Shares				Book value				No. of Shares					Book value			Status
Duo World Inc.			136,600			$	136				136,600			$	136			Reporting Company – OTC
Primesite Developments Inc.			450,000				-				450,000				450			Private Company
			586,600			$	136				586,600			$	586

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

On June 5, 2017, the Company sold 10,700,000 common securities of different companies having a book value of $603,000 pursuant to the stock purchase and debt assumption agreement. (See Note 5). During the nine months ended September 30, 2017, the Company also reclassified one of its investments in common shares as a short term investment valued at fair value. (See Note 6 (A))

 

At September 30, 2017, out of prudence, management decided to fully impair the investment in Primesite´s common and preferred stock amounting to $1,181,971 due to the fact that Primesite´s management has proven non-responsive during the entire third quarter of 2017.

 

Note 7 – Fixed Assets

 

The following table reflects net book value of fixed assets as at September 30, 2017 and December 31, 2016:

 

		September 30, 2017				December 31, 2016				Useful Life
Furniture and Equipment		$	40,016			$	38,815			3 to 5 years
Accumulated depreciation		$	(37,362	)		$	(28,600	)
Net fixed assets		$	2,654			$	10,215

 

Depreciation expense for the nine months ended September 30, 2017 and September 30, 2016, was $8,762 and $8,587, respectively.

 

Note 8 – Debt & Accounts payable

 

(A)Accounts Payable and other Accrued Liabilities

 

The following table represents breakdown of accounts payable and other accrued liabilities as of September 30, 2017 and December 31, 2016, respectively:

 

		September 30, 2017				December 31, 2016
Accrued salaries and benefits		$	83,365			$	89,184
Accounts payable			49,276				83,354
		$	132,641			$	172,538

 

(B)Accrued Contingencies and Penalties

 

Following is a breakdown of accrued contingencies and penalties as at September 30, 2017 and December 31, 2016, respectively:

 

		September 30, 2017				December 31, 2016
Provision for potential damages - See Note 8(E)		$	-			$	184,656
Provision for late filing fee of 2013 and 2014 Tax return (see below)			5,000				10,492
Other			-				1,361
		$	5,000			$	196,509

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

At December 31, 2016, we accrued an IRS fine of $10,000 plus $492 of interest on account of a late filing of our 2013 IRS Form 5472 Tax Return. After appealing this fine to IRS Appeals Office, this fine of $10,492 was abated in full. We were further subjected to a fine of $10,000 on account of late filing fee of our 2014 IRS form 5472 Tax Return which was also reduced by 50% due to timely submission of subsequent year tax returns. Hence, we accrued $5,000 as a provision for late filing fee for 2014 IRS Form 5472 Tax Return.

 

(C)Accounts Payable and Accrued Liabilities – Related Parties

 

The following table represents the accounts payable and accrued liabilities to related parties as of September 30, 2017 and December 31, 2016, respectively:

 

		September 30, 2017				December 31, 2016
Accrued salaries and benefits		$	141,927			$	52,587
Expenses payable			2,683				1,161
		$	144,610			$	53,748

 

On September 26, 2017, all of the officers and directors of the Company decided to convert their partial accrued salaries balance amounting to $240,000 to the series “C” preferred stock at par value of $0.001 per share. (See Note 9(A)). As a result of this conversion, the Company issued following series “C” preferred stock to its officers and directors:

 

	●	1,000,000 series “C” preferred shares to the Company´s CEO, having a par value of $0.001 per share or $1,000 for his accrued salary balance of $100,000.
	●	1,000,000 series “C” preferred shares to the Company´s CFO, having a par value of $0.001 per share or $1,000 for his accrued salary balance of $100,000, and
	●	400,000 series “C” preferred shares to the Company´s managing director, having a par value of $0.001 per share or $400 for his accrued salary balance of $40,000.

 

(D)Loans Payable – Related Parties

 

The Company received short term loans from one of its officers and directors. The loans were non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of September 30, 2017:

 

Balance, December 31, 2016		$	-
Proceeds from loans			17,707
Repayments			(17,707	)
Converted to common stock			-
Balance, September 30, 2017		$	-

 

(E)Notes payable

 

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at September 30, 2017:

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Date of Note			Principal				Accrued Interest				Total payable
October 9, 2013			$	-			$	-			$	-
October 17, 2013				319,598				160,402			$	480,000
November 26, 2013				-				37,971				37,971
October 13, 2016				-				-				-
December 6, 2016				-				-				-
Balance - September 30, 2017			$	319,598			$	198,373			$	517,971

 

	●	On October 9, 2013, the Company secured a two-month loan for GBP 75,000 (equivalent to $120,420) with the understanding that the Company will issue 10,000 common restricted shares, issued to the lender on December 7, 2013, and also repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 common restricted shares and for this the lender agreed to a five-month extension. This stock compensation was issued to the lender also on December 12, 2013. Total accrued interest as at December 31, 2016 was $106,196. The Company also accrued $184,656 provision for potential damages due to the litigation in the Dubai Courts as of December 31, 2016, which was included in “Accrued contingencies and penalties” in the accompanying consolidated balance sheet. (See Note 8(B)).
	●	On June 5, 2017, a citizen of Republic of Thailand assumed the above principal loan amount of $120,420, accrued interest of $106,196 and accrued damages of $184,656 by way of a stock purchase and debt assumption agreement. Hence the Company’s liabilities in respect of this loan were transferred to the acquiring individual. (See Note 5)
	●	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 principal plus 5% per month interest on or before January 18, 2014. The note holder received, as a form of guarantee, 1,600,000 shares of Direct Security Integration Inc. and the note holder is currently trying to sell these shares. The shares used as a form of guarantee formed part of the assets of our Company.
	●	On September 18, 2015, the Company and the note holder agreed to amend the previous terms of the agreement and both parties agreed on the new terms whereby the company is now liable to pay $500,000 as full and final payment of the October 17, 2013 loan principal, accrued interest, and all other related penalties. This repayment will not accrue any further interest or penalties. As a result, the Company has reversed the excess accrued interest and monitoring fee payable amounting to $660,578 recognized as a gain on settlement; leaving the principal loan balance of $319,598 and accrued interest of balance $180,402 as on September 30, 2015.
	●	On December 21, 2015, the company repaid first installment of the accrued interest amounting to $20,000; leaving the accrued interest balance of $160,402 and principal loan balance of $319,598 as on December 31, 2015. The remaining installments totaling to $480,000, as per the amended agreement, have not been paid as of September 30, 2017.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Loan granted in 2013		$	319,598
Interest accrued in 2013			39,602
Balance at December 31, 2013		$	359,200
Interest accrued in 2014			390,197
Balance at December 31, 2014		$	749,397
Monitoring fee accrual			124,175
Interest accrued in 2015			287,006
Interest repayment			(20,000	)
Excess interest and monitoring fee gain			(660,578	)
Balance at December 31, 2015		$	480,000
Interest accrued during the year			-
Balance at December 31, 2016		$	480,000
Interest accrued during the period			-
Balance at September 30, 2017		$	480,000

 

●

On October 13, 2016, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the nine months ended September 30, 2017, $2,917 of the debt issuance costs and $17,500 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.

 

Principal loan amount		$	135,000
Original issue discount			(30,000	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs			35,000
Exchange of Note dated April 13, 2017 (See Note 8(F))			(135,000	)
Balance at September 30, 2017		$	-

 

●

On December 6, 2016, the Company secured a six-month non-convertible loan for $167,500 carrying an original issue discount of $37,500. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the nine months ended September 30, 2017, $4,167 of the debt issuance costs and $31,250 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.

 

Principal loan amount		$	167,500
Original issue discount			(37,500	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs			42,500
Exchange of Note dated June 5, 2017 (See Note 8(F))			(167,500	)
Balance at September 30, 2017		$	-

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

(F) Fixed price convertible notes payable

 

Following is the summary of all fixed price convertible notes, net of debt discount, including the accrued interest as at September 30, 2017:

 

Date of Note		Principal (net of debt discount)				Accrued Interest				Total Payable
July 1, 2016		$	-			$	-			$	-
February 6, 2017			54,839				4,000				58,839
February 23, 2017			-				-				-
April 13, 2017			84,400				-				84,400
June 5, 2017			184,250				-				184,250
August 9, 2017			51,444				-				51,444
Balance, September 30, 2017		$	374,933			$	4,000			$	378,933

 

	●	On August 27, 2015, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs.
	●	On March 18, 2016, the Company entered into an exchange agreement with the same lender whereby original purchase agreement dated August 27, 2015 was exchanged with the new agreement to extend the loan repayment term until April 17, 2016. The total exchange price for $135,000 of principal of the Old Note was as follows:

 

	●	$135,000 principal of New Note, and
	●	an issuance of 1,000,000 common shares to the lender as exchange shares.

 

Also, in the new note, there was an addition of a conversion option that the lender has right at any time after the exchange date until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.025. There was no beneficial conversion feature as the conversion price was higher than the current market value of the Company´s stock at that time. Since a conversion option was added to the note in the March 18, 2016 modification, this modification was accounted for as a debt extinguishment on that date and $25,200 was recognized as loss on debt extinguishment.

 

On April 28, 2016, St. George decided not to opt for converting the principal loan to common shares. Instead, on April 28, 2016, the Company renegotiated the loan terms, further extending the repayment to July 1, 2016. The terms of this further extension were a one-time 10% interest payment of $13,500 to be added to the principal of $135,000 and the issuance of 3,000,000 common shares. The Company accounted for this further extension as a debt extinguishment of previous extension dated March 18, 2016 and $58,200 was recognized as loss on debt extinguishment comprising of $13,500 of interest payment and $44,700 for issuance of 3,000,000 common shares of the Company valued at a fair value of $0.0149 on the date of new exchange.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

On July 1, 2016, after receipt of $148,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by the Company to St. George Investments LLC in the amount of $148,500 dated April 28, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9-month convertible promissory note amounting to $163,350 dated July 1, 2016. The terms of this exchanged note were a one-time 10% increase in the principal loan of $14,850, increasing the principal sum from $148,500 to $163,350. The new lender also has a right, at any time after the issue date of revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.017. The fair value of stock as on the date of exchange was $0.0197. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of the Company´s stock as on July 1, 2016. The Company accounted for the difference arising due to BCF amounting to $25,944 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated April 28, 2016 and $14,850 was further recognized as loss on debt extinguishment.

 

On September 16, 2016, the note holder partially converted $59,500 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,500,000 common shares to Mammoth Corporation.

 

On December 1, 2016, the note holder partially converted $53,850 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,167,647 common shares to Mammoth Corporation.

 

On February 2, 2017, the Company issued 5,000,000 common shares to Mammoth Corporation in order to settle remaining payable balance in full amounting to $50,000. The Company verbally agreed to a conversion price of $0.01 per share other than the contractual fixed price of $0.017 per share, in order to fully settle this obligation; thereby $39,324 was recognized as a loss on conversion of this note and remaining debt discount balance arising due to BCF amounting to $2,647 was fully amortized on the date of final conversion.

 

●

On February 6, 2017, the Company secured from a private individual, a nine-month fixed price convertible loan amounting to $60,000 having an interest at 10% per annum and an agreed fixed conversion price of $0.012 per share. Fair value of the Company´s stock as on the date of exchange was $0.0198. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of the Company´s stock as on February 6, 2017. The Company accounted for the difference arising due to BCF amounting to $39,000 as a debt discount with a corresponding effect to additional paid in capital.

 

During the nine months ended September 30, 2017, the company amortized $33,838 of debt discount balance arising due to BCF, leaving un-amortized debt discount balance of $5,162 as of September 30, 2017. The outstanding convertible note balance amounted to $60,000 as of September 30, 2017.

 

●

On August 25, 2016, the Company secured a six-month non-convertible loan for $167,500 carrying an original issue discount of $37,500. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the nine months ended September 30, 2017, $1,667 of the debt issuance costs and $12,500 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.

 

 

On February 23, 2017, St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by the Company to St. George Investments LLC in the amount of $167,500 dated August 25, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $184,250 dated February 23, 2017. The terms of this exchanged note were a one-time 10% increase in the principal loan of $16,750, increasing the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date of revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.017. Fair value of the Company stock as on the date of exchange was $0.0179. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of the Company stock as on February 23, 2017. The Company accounted for the difference arising due to BCF amounting to $9,754 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated August 25, 2016 and $16,750 was recognized as loss on debt extinguishment.

 

On March 28, 2017, the note holder partially converted $50,000 of the note to the common shares of the Company at a conversion price of $0.0080925 per share, this particular conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As per the agreement, an event of default occurs when the closing bid price of the Company stock falls below the agreed level of $0.0135. This default clause can be remedied by trading over $0.0135 for 4 consecutive trading days. As a result of this conversion, the Company issued 6,178,560 common shares to Mammoth Corporation and $40,305 was recognized as a loss on conversion of this note.

 

On April 13, 2017, the note holder partially converted $67,125 of the note to the common shares of the Company at a conversion price of $0.006565 per share. This conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As a result of this conversion, the Company issued 10,224,676 common shares to Mammoth Corporation and $66,527 was recognized as a loss on conversion of this note based on the fair value of the common shares totaling to $133,652.

 

On May 12, 2017, the note holder partially converted $33,562 of the note to the common shares of the Company at a conversion price of $0.00429 per share. This conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As a result of this conversion, the Company issued 7,823,310 common shares to Mammoth Corporation and $54,981 was recognized as a loss on conversion of this note based on the fair value of the common shares totaling to $88,543.

 

On June 2, 2017, the note holder converted remaining balance of the note amounting to $33,563 to the common shares of the Company at a conversion price of $0.003575 per share. This conversion price was less than the agreed fixed price of $0.017, due to the note entering into temporary default. As a result of this conversion, the Company issued 9,388,252 common shares to Mammoth Corporation and $58,570 was recognized as a loss on conversion of this note based on the fair value of the common shares totaling to $92,133.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

During the nine months ended September 30, 2017, the company fully amortized $9,754 of debt discount balance arising due to BCF, leaving un-amortized debt discount balance of $0 as of September 30, 2017.

 

●

On October 13, 2016, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the nine months ended September 30, 2017, $2,917 of the debt issuance costs and $17,500 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.

 

On April 13, 2017, after receipt of $135,000 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by GEQU to St. George Investments LLC in the amount of $135,000 dated October 13, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $162,000 dated April 13, 2017. The terms of this exchanged note were a one-time 20% increase in the principal loan of $27,000, increasing the principal sum from $135,000 to $162,000. The new lender also has a right, at any time after the issue date of the revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.012. Fair value of the Company´s stock as on the date of exchange was $0.0106. Hence, there was no beneficial conversion feature (BCF) of the Note, as the agreed conversion price is higher than the fair value of the Company´s stock as on April 13, 2017. The Company accounted for this exchange as a debt extinguishment of previous note dated October 13, 2016 and $27,000 was recognized as loss on debt extinguishment.

 

On July 10, 2017, the note holder partially converted $23,400 of the note to the common shares of the Company at a conversion price of $0.00234 per share. This conversion price was less than the agreed fixed price of $0.012, due to the note entering into temporary default. As a result of this conversion, the Company issued 10,000,000 common shares to Mammoth Corporation and $31,395 was recognized as a loss on conversion of this note based on the 0.0039 per share fair value of the 8,050,000 excess common shares issued.

 

On August 2, 2017, the note holder partially converted $20,400 of the note to the common shares of the Company at a conversion price of $0.00204 per share. This conversion price was less than the agreed fixed price of $0.012, due to the note entering into temporary default. As a result of this conversion, the Company issued 10,000,000 common shares to Mammoth Corporation and $31,540 was recognized as a loss on conversion of this note based on the 0.0038 per share fair value of the 8,300,000 excess common shares issued.

 

On September 11, 2017, the note holder partially converted $33,800 of the note to the common shares of the Company at a conversion price of $0.00169 per share. This conversion price was less than the agreed fixed price of $0.012, due to the note entering into temporary default. As a result of this conversion, the Company issued 20,000,000 common shares to Mammoth Corporation and $68,733 was recognized as a loss on conversion of this note based on the 0.004 per share fair value of the 17,183,333 excess common shares issued. The outstanding convertible note balance amounted to $84,400 as of September 30, 2017.

 

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

●

On December 6, 2016, the Company secured a six-month non-convertible loan for $167,500 carrying an original issue discount of $37,500. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the nine months ended September 30, 2017, $4,167 of the debt issuance costs and $31,250 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.

 

On June 5, 2017, after receipt of $167,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by GEQU to St. George Investments LLC in the amount of $167,500 dated December 6, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $184,250 dated June 5, 2017. The terms of this exchanged note were a one-time 10% increase in the principal loan of $16,750, increasing the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date of the revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.012. Fair value of the Company´s stock as on the date of exchange was $0.0071. Hence, there was no beneficial conversion feature (BCF) of the Note, as the agreed conversion price is higher than the fair value of the Company´s stock as on June 5, 2017. The Company accounted for this exchange as a debt extinguishment of previous note dated December 6, 2016 and $16,750 was recognized as loss on debt extinguishment. The outstanding convertible note balance amounted to $184,250 as of September 30, 2017.

 

●

On August 9, 2017, the Company secured a 9 months fixed price convertible loan for $56,500 carrying an original issue discount of $6,500. Interest will not be accrued on the outstanding principal balance unless an event of default occurs. The lender has a right, at any time after the issue date of the note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.012 subject to change based on certain default provisions as defined in the Note. Fair value of the Company´s stock as on the date of issuance of this note was $0.0045. Hence, there was no beneficial conversion feature (BCF) of the Note, as the agreed conversion price is higher than the fair value of the Company´s stock as on August 9, 2017.

 

During the nine months ended September 30, 2017, $1,444 of the debt discount balance was amortized to income statement, leaving an unamortized discount balance of $5,056. The outstanding convertible note balance amounted to $56,500 as of September 30, 2017.

 

Note 9 - Stockholders’ Equity

 

(A)	Preferred Stock

 

On November 30, 2011, the Company designated 5,000,000 of its authorized preferred stock as Series “A” convertible preferred shares. 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:

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

	●	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;
	●	Rights: None;
	●	Liquidation Rights: None

 

On May 19, 2015, the board of directors agreed to the non-redemption of the redeemable Series “A” Preferred Shares and the officers of the company that held these Preferred Shares, returned all 1,983,332 Shares of the Company to Treasury. Since the preferred shares were vested upon issuance in prior years, the cancellation of these shares was considered a contribution back to the company at zero cost with no gain or loss recognized.

 

On July 15, 2015 the designation of the 5,000,000 Series “A” preferred shares was withdrawn.

 

On November 10, 2016, the Company designated 45,000,000 of its authorized preferred stock as Series “B” convertible preferred shares. The Certificate of Designation stated the following:

 

	●	Voting Rights: 10 votes per share (votes along with common stock);
	●	Conversion Rights: Each share of Series “B” Preferred is convertible at any time, and from time to time, into ten (10) shares of common stock 1 day after the first anniversary of issuance;
	●	Dividend Rights: In the event the Board of Directors declares a dividend on the common stock, each Series “B” Preferred share will be entitled to receive an equivalent dividend as if the Series “B” Preferred share had been converted into common stock prior to the declaration of such dividend.
	●	Liquidation Rights: None

 

On November 11, 2016, certain Officers and Directors of the Company, offered to retire and exchange an aggregate 450,000,000 shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock. The Company permitted Officers and Directors of the Company to exchange 200,000,000, 50,000,000 and 200,000,000 shares of Common Stock, respectively, for 20,000,000, 5,000,000 and 20,000,000 shares of Series “B” Preferred Stock, respectively.

 

On September 18, 2017, the Company designated 5,000,000 of its authorized preferred stock as Series “C” convertible preferred shares. The Certificate of Designation stated the following:

 

	●	Voting Rights: 100 votes per share (votes along with common stock);
	●	Conversion Rights: Each share of Series “C” Preferred is convertible at any time, and from time to time, into one hundred (100) shares of common stock 1 day after the third anniversary of issuance;
	●	Dividend Rights: In the event the Board of Directors declares a dividend on the common stock, each Series “C” Preferred share will be entitled to receive an equivalent dividend as if the Series “C” Preferred stock had been converted into common stock prior to the declaration of such dividend.
	●	Liquidation Rights: None

 

On September 26, 2017, all of the officers and directors of the Company decided to convert their partial accrued salaries balance amounting to $240,000 to the series “C” preferred stock at an estimated fair value of $0.1 per preferred share. (See Note 8(C)). As a result of this conversion, the Company issued following series “C” preferred stock to its officers and directors:

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

	●	1,000,000 series “C” preferred shares to the Company´s CEO, having a par value of $0.001 per share or $1,000 for his accrued salary balance of $100,000.
	●	1,000,000 series “C” preferred shares to the Company´s CFO, having a par value of $0.001 per share or $1,000 for his accrued salary balance of $100,000, and
	●	400,000 series “C” preferred shares to the Company´s Managing Director, having a par value of $0.001 per share or $400 for his accrued salary balance of $40,000.

 

(B)	Common Stock

 

During the nine months ended September 30, 2017, the Company issued 78,614,798 common shares because of conversions of three convertible notes in following manner:

 

	●	5,000,000 common shares were issued to Mammoth Corporation at a verbally agreed conversion price of $0.01 per share as a result of a partial conversion of a convertible note no. 1 amounting to $50,000. See Note 8(F)
	●	6,178,560 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.0080925 per share per share as a result of a partial conversion of a convertible note no. 2 amounting to $50,000. See Note 8(F)
	●	10,224,676 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.006565 per share per share as a result of a partial conversion of a convertible note no. 2 amounting to $67,125 with the common shares valued at their fair value of $133,652 based on the quoted trading price. See Note 8(F)
	●	7,823,310 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.00429 per share per share as a result of a partial conversion of a convertible note no. 2 amounting to $33,562 with the common shares valued at their fair value of $88,543 based on the quoted trading price. See Note 8(F)
	●	9,388,252 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.003575 per share per share as a result of a partial conversion of a convertible note no. 2 amounting to $33,563 with the common shares valued at their fair value of $92,133 based on the quoted trading price. See Note 8(F)
	●	10,000,000 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.00234 per share per share as a result of a partial conversion of a convertible note no. 3 amounting to $23,400 with the common shares valued at their fair value of $54,795 based on the quoted trading price. See Note 8(F)
	●	10,000,000 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.00204 per share per share as a result of a partial conversion of a convertible note no. 3 amounting to $20,400 with the common shares valued at their fair value of $51,940 based on the quoted trading price. See Note 8(F)
	●	20,000,000 common shares were issued to Mammoth Corporation at an agreed conversion price of $0.00169 per share per share as a result of a partial conversion of a convertible note no. 3 amounting to $33,800 with the common shares valued at their fair value of $102,533 based on the quoted trading price. See Note 8(F)

 

Note 10 – Related Party Transactions

 

At September 30, 2017, there were accounts payable and accrued liabilities due to related parties (See Note 8(C & D)).

 

 

Global Equity International, Inc. and Subsidiary

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

 

Note 11 – Commitments and contingencies

 

Contingencies

 

●

On October 9, 2013, the Company secured a two-month loan for GBP 75,000 (equivalent to $120,420) and issued 10,000 restricted shares of common stock to the lender, The Able Foundation, on December 7, 2013, and also repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 restricted shares of common stock in consideration for a for a five-month extension on the loan. This stock compensation was issued to the lender also on December 12, 2013. At March 31, 2017, the Company was in litigation, in the courts of Dubai, regarding the Able Foundation loan.

 

The plaintiff, the Able Foundation, was requesting a settlement of $411,272, which was the $226,616 owed by the Company at that time, and an additional $184,656 accrued in 2015 as a provision for potential damages (see Note 8(E)).

 

On June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Al Safar & Partners. At March 31, 2017, there was a judgment against the Company (the defendant) for the recovery of $411,272.

 

During 2015 and 2016, the Company’s Dubai lawyers, Al Safar & Partners, had appealed this judgment various times based on the fact that they believed from a legal stand point that:

 

	1)	the Company (the defendant) has not been heard, which is a violation of the fundamental principle of law “Audi Alteram Partem”.
	2)	there is no legal existence of Global Equity Partners Plc. in Dubai, as it is a Republic of Seychelles corporation; hence, the Courts of Dubai have no jurisdiction in the matter.

 

All prior appeals were rejected by the Dubai Courts, however a new appeal against the formal execution of this judgement was filed in September 2016.

 

On June 5, 2017, a citizen of Republic of Thailand assumed the above total amount of $411,272 by way of a stock purchase and debt assumption agreement; hence, the Company’s liability and respective litigation in respect of this loan was transferred to the acquiring individual (See Note 5).

 

Aside from the above matter, we are not subject to any other pending or threatened litigation.

 

●

From time to time, we may be involved in litigation or disputes relating to claims arising out of our operations in the normal course of business. As of March 31, 2017, we were in dispute with a former client regarding certain payments that we made on behalf of this former client. On June 5, 2017, the underlying deferred revenue liability was transferred to the acquiring individual as part of the stock purchase and debt assumption agreement. (See Note 5)

 

Commitments

 

●

On November 6, 2017, the Company renewed its rent agreement for its head office at Dubai for a further period of one year amounting to a rental of $29,942 per annum (from November 2017 until October 2018). This agreement is further renewable for a period of one year at 5% higher than the current rent.

 

Note 12 – Subsequent events

 

On October 25, 2017, the note holder partially converted $21,600 of the April 13, 2017 note to the common shares of the Company at a conversion price of $0.00108 per share. This conversion price was less than the agreed fixed price of $0.012, due to the note entering into temporary default. As a result of this conversion, the Company issued 20,000,000 common shares to Mammoth Corporation and $38,220 was recognized as a loss on conversion of this note based on the 0.0021 per share fair value of the 18,200,000 excess common shares issued. See Note 8 (F)

 

 

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

 

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.

 

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.

 

Our MD&A is comprised of the following sections:

 

A. Critical accounting estimates and policies

 

B. Business Overview

 

C. Results of operations for the three months ended September 30, 2017 and September 30, 2016

 

D. Results of operations for the nine months ended September 30, 2017 and September 30, 2016

 

E. Financial condition as at September 30, 2017 and December 31, 2016

 

F. Liquidity and capital reserves

 

G. Business development

 

A.

Critical accounting estimates and policies:

 

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which requires management to make estimates and assumptions that affect reported and disclosed amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period.

 

 

We believe that the critical accounting policies set forth in the accompanying consolidated financial statements describe the more significant judgments and estimates used in the preparation of our consolidated financial statements. These critical accounting policies pertain to revenues recognition, valuation of investments, convertible notes and derivatives and; stock based compensation.

 

If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material effect on our results of operations and financial condition.

 

B.

Business overview:

 

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. Global Equity Partners, Plc. (“GEP”), a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. On November 15, 2010, GEP executed a reverse recapitalization with GEI.

 

On August 22, 2014, we formed a Dubai subsidiary of GEP called GE Professionals DMCC. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEP EH”), under the laws of the Republic of Seychelles. On March 14, 2017, the Company´s board of directors unanimously voted to transfer the ownership of GE Professionals DMCC (Dubai) to GEP EH.

 

On June 5, 2017, the Company sold 100% of the common shares of GEP to a non-affiliated third party in consideration of the third party’s assumption of all liabilities and indebtedness of GEP in the approximate amount of $626,052. No cash consideration was paid to GEI by such third party.

 

GEP Equity Holdings Limited and its subsidiary, GE Professionals DMCC, are Dubai based firms that provide consulting services, such as corporate restructuring, management recruitment and development for corporate marketing, investor and public relations, regulatory compliance and introductions to financiers, to companies desiring to be listed on stock exchanges in various parts of the world.

 

Our authorized capital consists of 950,000,000 shares of common stock having a par value of $0.001 per share and 50,000,000 shares of preferred stock having a par value of $0.001.

 

C.

Results of operations for the three months ended September 30, 2017 and September 30, 2016:

 

The Company had revenues amounting to $9,750 and $306,962, for the three months ended September 30, 2017 and 2016, respectively.

 

		September 30, 2017				September 30, 2016				Changes
Revenue		$	9,750			$	306,962				(297,212	)
		$	9,750			$	306,962				(297,212	)

 

During the three months ended September 30, 2017, total revenue was reduced by $297,212 when compared to the same period ended on September 30, 2016. The reason for this reduction was due to the fact that management decided to concentrate on its current clients instead of signing up new clients and over stretch its bandwidth. The other reason for not taking on any new clients was that management has been concentrating on implementing its growth by acquisition model.

 

 

Following is the breakdown of total revenue for the three months ended September 31, 2017, which amounted to $9,750:

 

	a)	$8,950 was received in cash for services performed to different clients.
	b)	$800 was recognized as revenue for services rendered to a client, which amount was receivable as at September 30, 2017.

 

For the three months ended September 30, 2017 and 2016, the Company had the following concentrations of revenues with customers:

 

Customer		September 30, 2017				September 30, 2016
UNI			0	%			60.26	%
UGA			0	%			9.77	%
QFS			0	%			12.22	%
EEC			0	%			9.60	%
SCL			0	%			6.52	%
TLF			0	%			1.63	%
DUO			20.51	%			0	%
VME			44.26	%			0	%
OCS			35.23	%			0	%
			100	%			100	%

 

The total operating expenditures amounted to $256,663 and $317,897, for the three months ending on September 30, 2017 and 2016, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

 

		September 30, 2017				September 30, 2016				Changes
General and administrative expenses		$	25,781			$	32,735			$	(6,954	)
Salaries			162,386				240,930				(78,544	)
Professional services			19,923				41,359				(21,436	)
Depreciation			3,187				2,873				314
Bad debt expense			45,386				-				45,386
Total operating expenses		$	256,663			$	317,897			$	(61,234	)

 

During the three months ended September 30, 2017, total operating expenses were reduced by $61,234 from the previous three months ending on September 30, 2016. The reason for this decrease is mainly due to a decrease in salaries and professional services rendered to our Company that are directly linked with revenue generating activities. The management also decided to write off bad debts amounting to $45,386 during the three months ending on September 30, 2017. There was no such bad debt expense booked during the three months ended September 30, 2016.

 

The losses from operations for the three months ended September 30, 2017 and 2016, were $246,913 and $10,935, respectively.

 

The Company´s other income and (expenses) for the three months ended September 30, 2017 and 2016, were $(1,291,857) and $(54,195), respectively. The following table sets forth the Company’s other expenses analysis for both periods:

 

		September 30, 2017				September 30, 2016				Changes
Interest expense		$	(1,500	)		$	-			$	(1,500	)
Amortization of debt discount			(14,635	)			(39,531	)			24,896
Loss on conversion of accrued salaries and accounts payable into common stock			-				(5,492	)			5,492
Gain on sale of marketable securities			15,811				-				15,811
Impairment loss on investments at cost			(1,181,971	)			-				(1,181,971	)
Loss on conversion of notes into common stock			(131,578	)			-				(131,578	)
Gain / (loss) on extinguishment of debt and other liabilities			22,375				(8,865	)			31,240
Exchange rate loss			(359	)			(307	)			(52	)
Total other income (expenses)		$	(1,291,857	)		$	(54,195	)		$	(1,237,662	)

 

 

Our total other expenses were increased mainly due to the fact that the Company fully impaired one of its investments amounting to $1,181,971 during the three months ended September 30, 2017. There was no such impairment booked during the comparative three months ended September 30, 2016. Also, there were a few partial conversions of fixed price convertible debt at a price less than the contractual price, which resulted in loss on conversion of notes into common stock of $131,578 during the three months ended September 30, 2017. There was no such loss booked during the three months ended September 30, 2016.

 

The net losses for the three months ended September 30, 2017 and 2016 were $1,538,770 and $65,130, respectively.

 

The comprehensive losses for the three months ended September 30, 2017 and 2016 were $354,988 and $65,130, respectively. The Company’s other comprehensive income include an unrealized fair value gain on available for sale marketable securities amounting to $1,183,782 which was recognized during the three months ended September 30, 2017 while revaluing the existing common stock of a reporting entity, held by the Company as at September 30, 2017.

 

The Company had 453,090,573 and 809,499,228 shares issued and outstanding at September 30, 2017 and September 30, 2016, respectively. The change relates to exchange of 450,000,000 common shares to Series “B” preferred stock and issuance of common stock for note conversions. The weighted average number of shares for the three months ended September 30, 2017 and September 30, 2016, was 432,760,903 and 795,548,582, respectively. Net loss per share for both periods was $(0.00) and $(0.00), respectively.

 

D.

Results of operations for the nine months ended September 30, 2017 and September 30, 2016:

 

The Company had revenues amounting to $226,389 and $1,412,213, for the nine months ended September 30, 2017 and 2016, respectively.

 

		September 30, 2017				September 30, 2016				Changes
Revenue		$	226,389			$	1,412,213				(1,185,824	)
		$	226,389			$	1,412,213				(1,185,824	)

 

The total revenue reduced by $1,185,824 due to the fact that we received $419,365 in equity securities in a private company in exchange for services performed during the comparative nine months ended September 30, 2016. Also, during comparative nine months ended September 30, 2016, $276,630 was recognized as revenue from deferred revenue against equity securities received in prior quarters. During the nine months ended September 30, 2017, we didn’t receive any such equity securities which resulted in a decrease in revenues when compared to nine months ended September 30, 2016. The other reason for not taking on any new clients was that management has been concentrating on implementing its growth by acquisition model.

 

 

The following is the breakdown of total revenue for the nine months ended September 30, 2017, which amounted to $226,389:

 

	a)	$80,203 was received in cash for services performed to different clients.
	b)	$800 was recognized as revenue for services rendered to different clients, which amount was receivable as at September 30, 2017.
	c)	$45,386 was recognized as revenue for services rendered to different clients, which amount was written off as a bed debt as at September 30, 2017.
	d)	$100,000 was recognized as revenue from deferred revenue as we performed related services to the clients against payments received in prior quarters.

 

For the nine months ended September 30, 2017 and 2016, the Company had the following concentrations of revenues with customers:

 

Customer		September 30, 2017				September 30, 2016
UNI			0	%			13.10	%
PDI			0	%			21.89	%
QFS			0	%			37.89	%
INSCX			0	%			2.83	%
GPL			0	%			4.25	%
UGA			0	%			4.25	%
SCL			4.42	%			1.42	%
DUO			1.33	%			8.11	%
EEC			11.66	%			5.90	%
TLF			5.68	%			0.35	%
SAC			44.17	%			0	%
FAD			10.00	%			0	%
AGL			1.80	%			0	%
DHG			15.63	%			0	%
FAT			1.88	%			0	%
VME			1.91	%			0	%
OCS			1.52	%			0	%
			100	%			100	%

 

The total operating expenditures amounted to $834,806 and $995,161, for the nine months ending on September 30, 2017 and 2016, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

 

		September 30, 2017				September 30, 2016				Changes
General and administrative expenses		$	123,621			$	137,382			$	(13,761	)
Salaries			535,752				632,439				(96,687	)
Professional services			101,285				216,753				(115,468	)
Depreciation			8,762				8,587				175
Bad debt expense			65,386				-				65,386
Total operating expenses		$	834,806			$	995,161			$	(160,355	)

 

 

During the nine months ended September 30, 2017, total operating expenses were reduced by $160,355 from the previous nine months ending on September 30, 2016. The reason for this decrease is mainly due to a decrease in salaries and professional services rendered to our Company that are directly linked with revenue generating activities. The management also decided to write off bad debts amounting to $65,386 during the nine months ending on September 30, 2017. There was no such bad debt expense booked during the nine months ended September 30, 2016.

 

(Loss) / income from operations for the nine months ended September 30, 2017 and 2016, were $(608,417) and $417,052, respectively.

 

The Company´s other income and (expenses) for the nine months ended September 30, 2017 and 2016, were $(1,682,664) and $(155,244), respectively. The following table sets forth the Company’s other expenses analysis for both periods:

 

		September 30, 2017				September 30, 2016				Changes
Interest expense		$	(4,000	)		$	-			$	(4,000	)
Amortization of debt discount			(117,683	)			(62,865	)			(54,818	)
Loss on conversion of accrued salaries and accounts payable into common stock			-				(1,097	)			1,097
Gain on transfer of preferred stock			-				1,454				(1,454	)
Gain on sale of subsidiary			23,052				-				23,052
Gain on sale of marketable securities			18,851				-				18,851
Impairment loss on investments at cost			(1,181,971	)			-				(1,181,971	)
Loss on conversion of notes into common stock			(391,285	)			-				(391,285	)
Loss on extinguishment of debt and other liabilities			(28,886	)			(91,814	)			62,928
Exchange rate loss			(742	)			(922	)			180
Total other income (expenses)		$	(1,682,664	)		$	(155,244	)		$	(1,527,420	)

 

Our total other expenses were increased mainly due to the fact that the Company fully impaired one of its investment amounting to $1,181,971 during the nine months ended September 30, 2017. There was no such impairment booked during the comparative nine months ended September 30, 2016. In addition, during the nine months ended September 30, 2017, the Company amortized more debt discount on its debt as compared to prior nine months ended September 30, 2016. Also, there were a few partial conversions of fixed price convertible debt at a price less than the contractual price, that resulted in loss on conversion of notes into common stock of $391,285 during the nine months ended September 30, 2017. There was no such loss booked during the nine months ended September 30, 2016. Gain on sale of subsidiary amounting to $23,052 represents the gain arising due the assumption of GEP’s liabilities amounting to $626,052 against its assets of $603,000 by a non-affiliated third party under a stock purchase and debt assumption agreement dated June 5, 2017.

 

The net (loss) / income for the nine months ended September 30, 2017 and 2016 was $(2,291,081) and $261,808, respectively.

 

The comprehensive (loss) / income for the nine months ended September 30, 2017 and 2016 was $(602,071) and $261,808, respectively. The Company’s other comprehensive income include an unrealized fair value gain on available for sale marketable securities amounting to $1,689,010 which was recognized during the nine months ended September 30, 2017 while revaluing the existing common stock of a reporting entity, held by the Company as at September 30, 2017.

 

 

The Company had 453,090,573 and 809,499,228 shares issued and outstanding at September 30, 2017 and September 30, 2016, respectively. The change relates to exchange of 450,000,000 common shares to Series “B” preferred stock and issuance of common stock for note conversions. The weighted average number of shares for the nine months ended September 30, 2017 and September 30, 2016, was 419,266,295 and 784,687,141, respectively. Net (loss) / income per share for both periods was $(0.01) and $0.00, respectively.

 

E.

Financial condition as at September 30, 2017 and December 31, 2016:

 

Assets:

 

The Company reported total assets of $2,982,680 and $3,228,442 as of September 30, 2017 and December 31, 2016, respectively. These mainly include our investment in securities of our clients that we received as part of our consulting fees. We had investments at cost of $419,501 and $3,085,322 as at September 30, 2017 and December 31, 2016, respectively. There was a significant decline in these investments due to the following reasons:

 

	●	The Company sold 10,700,000 common securities of different companies having a book value of $603,000 pursuant to the stock purchase and debt assumption agreement during the nine months ended September 30, 2017.
	●	One of the Company’s investments commenced trading on OTC Markets; hence, we reclassified this investment with an $880,850 cost basis into marketable securities valued at fair market value.
	●	At September 30, 2017, the management decided to fully impair the investment in Primesite´s common and preferred stock amounting to $1,181,971 due to the fact that Primesite´s management has proven non-responsive during the entire third quarter of 2017.

 

Our fixed assets include office equipment having a net book value of $2,654 and $10,215 as at September 30, 2017 and December 31, 2016, respectively. Furthermore, our current assets at December 31, 2016 totaled $132,905 and at September 30, 2017, these current assets amounted to $2,560,525 comprised of cash of $11,468, accounts receivable of $800, prepaid and other current assets of $11,582 and marketable securities valued at fair value of $2,536,675.

 

Liabilities:

 

Our current liabilities at December 31, 2016 totaled $1,814,735. At September 30, 2017, the Company reported its current liabilities amounting to $1,179,155, which represents a decrease of 35%. This reduction was mainly due to the sale of one of our subsidiaries pursuant to a stock purchase and debt assumption agreement whereby a non-affiliated third party assumed all liabilities and indebtedness of the subsidiary sold that amounted to $626,052. All of our liabilities reported at September 30, 2017 are current and mainly include third party debt which is due to various lenders, payables to related parties on account of accrued salaries and expenses and also our, day to day, operational creditors.

 

Following is the summary of all third party notes, net of debt discount, including the accrued interest as at September 30, 2017:

 

Date of Note		Total Debt				Remarks
October 17, 2013			480,000			Non-convertible and non-collateralized
November 26, 2013			37,971			Non-convertible and non-collateralized
February 6, 2017			58,839			Fixed price convertible and non-collateralized
April 13, 2017			84,400			Fixed price convertible and non-collateralized
June 5, 2017			184,250			Fixed price convertible and non-collateralized
August 9, 2017			51,444			Fixed price convertible and non-collateralized
Balance, September 30, 2017		$	896,904

 

 

Stockholder’s Equity:

 

At December 31, 2016, the Company had stockholders´ equity of $1,413,707. At September 30, 2017, the Company had stockholders´ equity of $1,803,524, which represents an increase of 28%. We reported accumulated other comprehensive income of $1,689,010 and $0 as at September 30, 2017 and December 31, 2016, respectively. This represented the unrealized fair value gain on available for sale marketable securities which was recorded while revaluing the existing common stock of a reporting entity held by the Company as at September 30, 2017.

 

The Company had 453,090,573 and 374,475,775 common shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively. The Company also had issued and outstanding 45,000,000 Series “B” convertible preferred shares as at September 30, 2017 and December 31, 2016. The Company further had issued and outstanding 2,400,000 and 0 Series “C” convertible preferred shares as at September 30, 2017 and December 31, 2016, respectively.

 

F.

Liquidity and capital reserves:

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a net loss of $1,538,770 and $2,291,081 for the three and nine months ended September 30, 2017 respectively.

 

The Company had $11,468 in cash; net cash used in operations of $163,854 for the nine months ended September 30, 2017; working capital of $1,381,369 and stockholders´ equity of $1,803,524 as of September 30, 2017. It is management’s opinion that some of these factors may raise substantial doubt about the Company´s ability to continue as a going concern.

 

The ability of the Company to continue its operations is primarily dependent on:

 

	a)	Continually engaging with new clients; and
	b)	Consummating and executing current engagements.

 

While the Company´s current engagements are being consummated and executed, the Company may also resort to borrowing additional funds from certain related parties, such as management, and also third party funders, some of which may be on a fixed price conversion basis to sustain the Company’s existence. In addition, in the event that operating cash flows are slowed, the Company would reduce its overhead wherever possible and any monies owed to the management can also be forgiven or converted into equity, if necessary.

 

During the next few months the Company intends to acquire four licensed financial advisory firms, two in U.K. and two in South East Asia. All four currently have an aggregate US$180 million of funds under management. These targeted acquisitions have been identified and the non-binding letters of intent have already been agreed and signed over the summer months. Each acquisition will form part of a new subsidiary we intend to establish in each of the relevant territories. These acquisitions will be, in essence, the acquisition of stable and long term recurring and non-recurring revenues. To date, we have a verbal agreement with a Luxembourg based SICAV Fund to provide the Company with a minimum of 2,000,000 Great Britain Pounds (approximate USD equivalent of $2,680,000) of long term equity financing currently being discussed at various multiples of the Company´s current market valuation. During this month of November 2017, we expect the financing to go to contract and draw down to commence thereafter as we believe that we have now passed due diligence and compliance. This equity financing will allow the Company to execute its plan to grow by acquiring all or some of these licensed financial advisory firms and also repay various outstanding convertible and non-convertible loans.

 

During the Summer months, the Company has assisted in securing funding for a client called Blackstone Natural Resources, we expect our client to be funded during Q4 2017 and when funded, we will be due a cash success commission and also various months of consultancy fees that we agreed to receive once funding was in place.

 

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

 

●

The cash retainer fees and cash success fees that we expect to receive during the next 12 months from the clients we currently have under contract.

 

 

	●	Receiving short term loans from one or more of our directors even though at the present time, we do not have verbal or written commitments from any of our directors to lend us money.
	●	Receiving loans from third party lenders and/ or investors.
	●	Liquidating (selling), when necessary, part or all of our investments and/or Marketable Securities.

 

It is important to note that the Eden loan which is approximately 40% of the debt stated on our current liabilities is a non-collateralized and a non-convertible loan and related accrued interest. The Company did not grant any form of guarantee to these lenders nor can the loans become convertible into Common Shares at any point in time.

 

Finally, the Company´s HR Consultancy Business in Dubai, “Kingsman James” has commenced to invoice clients on a regular basis.

 

G.

Business development:

 

To date, we have 5 clients under contract that we deem to be active and are either seeking to list their shares on an Exchange or seeking funding for acquisition and growth:

 

		Client:		Sector:		Primary Location:
1		VT Hydrocarbon Holdings (Pte.) Limited		LNG Gas storage		Singapore & Jordan
2		Hoqool Petroleum		Natural Resources		United Arab Emirates
3		Quartal Financial Solutions AG		Financial Technology		Switzerland
4		Majestic Wealth Limited		Property Development		Cyprus
5		Blackstone Natural Resources BV		Natural Resources		British Virgin Islands

 

Our specific plan of operations and milestones through September 2018 are as follows:

 

1)

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

 

We currently are relying on introductions to potential clients by various firms and institutions based in the Middle East, South East Asia, Europe and the U.S.

 

We intend to develop relationships with a further six “introducers” to potential new business for the Company within the next 12 months.

 

2)

ACQUIRE CERTAIN FINANCIAL ADVISORY FIRMS WITH MONEY UNDER ADMINISTRATION

 

During the next few months the Company intends to acquire four licensed financial advisory firms, two in U.K. and two in South East Asia. All four currently have an aggregate US$180 million of funds under management. These targeted acquisitions have been identified and the non-binding letters of intent have already been agreed and signed over the summer months. Each acquisition will form part of a new subsidiary we intend to establish in each of the relevant territories. These acquisitions will be, in essence, the acquisition of stable and long term recurring and non-recurring revenues. To date, we have a verbal agreement with a Luxembourg based SICAV Fund to provide the Company with a minimum of 2,000,000 Great Britain Pounds (approximate USD equivalent of $2,680,000) of long term equity financing currently being discussed at various multiples of the Company´s current market valuation. During this month of November 2017, we expect the financing to go to contract and draw down to commence thereafter as we believe that we have now passed due diligence and compliance. This equity financing will allow the Company to execute its plan to grow by acquiring all or some of these licensed financial advisory firms and also repay various outstanding convertible and non-convertible loans.

 

3)

REBRANDING OF OUR ENTIRE CORPORATE STRUCTURE

 

We intend to rebrand our business and analyze our entire corporate structure. We will adapt a new brand for all finance related companies that will carry through each subsidiary with a uniform image and examine the structure we currently operate to ensure its efficiency as we add new subsidiary companies. The reporting structures of each subsidiary will also be examined for maximum effect.

 

 

4)

EXPAND OUR HUMAN RESOURCES DEPARTMENT IN DUBAI – KINGSMAN JAMES.

 

The Company created an in-house human resources department called “Kingsman James” (http://kingsmanjames.com) with a view to be able to provide its existing clients and other new clients with the possibility of restructuring their companies’ management with seasoned professionals, if required. We intend to continue expanding this human resources department throughout the next 12 months. We should add at least 2 new HR consultants to the team of Kingsman James during the next 12 months.

 

5)

EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY

 

During the next 12 months, we intend to substantially expand our Middle Eastern, South East Asian and also our U.S. networks in order to enable us to make introductions on a more institutional level. At present, we are being received with open arms by all of the financial communities with whom we have contact; hence, we have plans to host various hospitality events for our current clients, our key contacts and upper management of the Company.

 

6)

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

We will explore alternative methods of servicing our clients by utilizing contacts already made in Europe to allow us to offer a wider service to our current and future clients. We will have a focus on Singapore, Cyprus and Canada for this expansion

 

7)

OPEN A NEW OFFICE IN THE UNITED KINGDOM

 

Due to the potential of growing our U.K. and Central European based clientele and also due to our plan to acquire a certain number of U.K. based financial advisory firms with funds under management, we plan to open a new UK based office.

 

Item 3. Quantitative and Qualitative Disclosures 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) were effective.

 

Changes in internal control over financial reporting

 

There were no changes in 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.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is not involved in any legal proceedings.

 

On October 9, 2013, the Company secured a two-month loan for GBP 75,000 (equivalent to $120,420) and issued 10,000 restricted shares of common stock to the lender, The Able Foundation, on December 7, 2013, and also repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 restricted shares of common stock in consideration for a for a five-month extension on the loan. This stock compensation was issued to the lender also on December 12, 2013. At March 31, 2017, the Company was in litigation, in the courts of Dubai, regarding the Able Foundation loan.

 

The plaintiff, the Able Foundation, was requesting a settlement of $411,272, which was the $226,616 owed by the Company at that time, and an additional $184,656 accrued in 2015 as a provision for potential damages.

 

On June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Al Safar & Partners. At March 31, 2017, there was a judgment against the Company (the defendant) for the recovery of $411,272.

 

During 2015 and 2016, the Company’s Dubai lawyers, Al Safar & Partners, had appealed this judgment various times based on the fact that they believed from a legal stand point that:

 

	1)	the Company (the defendant) has not been heard, which is a violation of the fundamental principle of law “Audi Alteram Partem”.
	2)	there is no legal existence of Global Equity Partners Plc. in Dubai, as it is a Republic of Seychelles corporation; hence, the Courts of Dubai have no jurisdiction in the matter.

 

All prior appeals were rejected by the Dubai Courts, however a new appeal against the formal execution of this judgement was filed in September 2016.

 

On June 5, 2017, a citizen of Republic of Thailand assumed the above mentioned debt amounting to $411,272 by way of a Stock Purchase and Debt Assumption agreement, hence the Company’s liability and respective litigation in respect of this loan was contractually transferred to the acquiring individual.

 

Aside from the above matter, we are not subject to any other pending or threatened litigation.

 

Item 1A. Risk Factors

 

Not applicable.

 

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

 

On February 2, 2017, the Company issued 5,000,000 common shares valued at an agreed value of $0.01 per share or $50,000 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

 

On March 28, 2017, the Company issued 6,178,560 common shares valued at an agreed value of $0.0080925 per share or $50,000 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On April 13, 2017, the Company issued 10,224,676 common shares valued at an agreed value of $0.006565 per share or $67,125 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On May 12, 2017, the Company issued 7,823,310 common shares valued at an agreed value of $0.00429 per share or $33,562 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On June 2, 2017, the Company issued 9,388,252 common shares valued at an agreed value of $0.003575 per share or $33,563 to Mammoth Corporation upon conversion of remaining portion of a convertible promissory note.

 

On July 10, 2017, the Company issued 10,000,000 common shares valued at an agreed value of $0.00234 per share or $23,400 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On August 2, 2017, the Company issued 10,000,000 common shares valued at an agreed value of $0.00204 per share or $20,400 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On September 11, 2017, the Company issued 20,000,000 common shares valued at an agreed value of $0.00169 per share or $33,800 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

On October 25, 2017, the Company issued 20,000,000 common shares valued at an agreed value of $0.00108 per share or $21,600 to Mammoth Corporation upon conversion of a portion of a convertible promissory note.

 

The above securities were issued by the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

 

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.

 

 

EXHIBIT INDEX

 

Exhibit No.

Description

 

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

 

*       Filed herewith.

 

 

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, 2017	/s/Peter J. Smith
	Peter J. Smith
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: November 13, 2017	/s/ Enzo Taddei
	Enzo Taddei
	Chief Financial Officer
	(Principal Accounting and Financial Officer)