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EX-31.1 - EX-31.1 - ARGENTUM 47, INC.ex31-1.htm
EX-32.1 - EX-32.1 - ARGENTUM 47, INC.ex32-1.htm
EX-32.2 - EX-32.2 - ARGENTUM 47, INC.ex32-2.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2013

 

or

 

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

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 000-54557

 


 

GLOBAL EQUITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   27-3986073
(State or other Jurisdiction of
Incorporation or Organization)
 

(I.R.S. Employer
Identification No.)

     

Al Habtoor Business Tower

Level 28, P.O. Box 29805

Dubai Marina, Dubai, UA

   
(Address of principal executive offices)   (Zip code)

 

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

 

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

 

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

 

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

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 8, 2013, there were 30,644,367 outstanding shares of the Registrant’s Common Stock, $.001 par value.

 

 

 

 
 

  

INDEX

 

    Page
PART I – FINANCIAL INFORMATION  
   
Item 1. Financial Statements and Notes to Financial Statements (Unaudited)   3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   5
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk   11
     
Item 4. Controls and Procedures   11
     
PART II – OTHER INFORMATION    
     
Item 1. Legal Proceedings   12
     
Item 1A. Risk Factors   12
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   12
     
Item 3. Defaults Upon Senior Securities   13
     
Item 4. Mine Safety Disclosure   13
   
Item 5. Other Information   13
     
Item 6. Exhibits   13
     
SIGNATURES   14

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

3
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

CONTENTS

 

    Page(s)
     
Consolidated Balance Sheets – March 31, 2013 (unaudited) and December 31, 2012   F-1
     

Consolidated Statements of Operations and Comprehensive Loss for the quarters ended March 31, 2013 and March 31, 2012 (unaudited)

  F-2
     

Consolidated Statements of Cash Flows for the quarters ended March 31, 2013 and March 31, 2012 (unaudited)

  F-3
     
Consolidated Statement of Stockholders’ Equity (deficit) for the quarters ended March 31, 2013 and March 31, 2012 (unaudited)   F-4
     
Notes to Consolidated Financial Statements (unaudited)   F-5 – F-16

 

4
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Balance Sheets

(unaudited)

 

   March 31, 2013   December 31, 2012 
         
Assets          
Current Assets          
Cash  $3,882   $4,852 
Accounts receivable   20    145,020 
Prepaids   4,359    1,919 
Loans receivable   6,000    - 
Total current assets   14,261    151,791 
           
Investment, cost   163,000    160,000 
           
Fixed assets, net   6,133    6,462 
           
Total assets  $183,394   $318,253 
           
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit          
           
Current Liabilities          
Accounts payable and accrued liabilities  $32,745   $126,059 
Accounts payable - related parties   101,191    421,500 
Deferred revenue   120,000    - 
Loans payable - related party   52,894    48,075 
Notes payable   500    10,000 
Total current liabilities   307,330    605,634 
           
Long term liabilities          
Convertible loan payable - related party   324,475    - 
Total long term liabilities   324,475    - 
           
Redeemable Series A, Convertible Preferred Stock: 5,000,000 shares authorized and 1,533,332 and 5,000,000 shares issued and outstanding, respectively, $0.001 par value (redemption amount $480,000) (liquidation preference of $0)   480,000    480,000 
           
Stockholders’ Deficit          
           
Common stock: 70,000,000 shares authorized; $0.001 par value 29,802,700 shares and 29,627,700 shares issued and outstanding, respectively,   29,803    29,628 
Additional paid in capital   2,232,879    2,070,554 
Stock payable   37,000    - 
Accumulated deficit   (3,228,093)   (2,867,563)
Total stockholders’ deficit   (928,411)   (767,381)
           
Total liabilities, redeemable preferred stock & stockholders’ deficit  $183,394   $318,253 

 

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

 

F-1
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

 

   March 31, 2013   March 31, 2012 
         
Revenue  $6,849   $107,500 
           
General and administrative expenses   367,050    246,948 
Depreciation   329    - 
Total operating expenses   367,379    246,948 
           
Net loss from operations   (360,530)   (139,448)
           
Net loss  $(360,530)  $(139,448)
           
Weighted average number of common shares outstanding - basic   29,692,422    28,814,546 
           
Net loss per common share - basic  $(0.01)  $(0.00)
           
Comprehensive Loss:          
Net loss  $(360,530)  $(139,448)
Unrealized gain on available for sale marketable securities   -    (465,000)
Comprehensive Loss  $(360,530)  $(604,448)

 

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

 

F-2
 

 

Global Equity International Inc. And Subsidiary

Consolidated Statements of Cash Flows

(unaudited)

 

   For the three months ended 
   March 31, 2013   March 31, 2012 
         
Cash flows from operating activities          
Net loss  $(360,530)  $(139,448)
           
Adjustments to reconcile net loss to net cash used in operating activities          
           
Consulting revenues received in marketable securities   (3,000)   (60,000)
Bad debts   -    35,000 
Depreciation   329    - 
Common stock issued for services   114,500    - 
Issuance of options in connection with debt financing treated as interest expense   -    6,968 
Amortization of debt discount   -    13,111 
           
Changes in operating assets and liabilities:          
Accounts receivable   145,000    (27,500)
Prepaids   (2,440)   - 
Accounts payable and accrued liabilities   (18,314)   32,819 
Accounts payable - related parties   4,166    106,836 
Deferred revenue   120,000    -  
           
Net cash used in operating activities:   (289)   (32,214)
           
Cash Flows used in investing activities:          
Loans given to non-affiliate   (6,000)   - 
           
Net cash used in investing activities   (6,000)   - 
           
Cash flows from financing activities:          
Proceeds from loans - related parties   4,819    5,571 
Proceeds from loans payable   -    50,000 
Repayments of loans - related parties   -    (18,900)
Repayment of loans   (9,500)   - 
Proceeds from issuance of common stock   10,000    - 
           
Net cash provided by financing activities   5,319    36,671 
          
Net increase (decrease) in cash   (970)   4,457 
           
Cash at Beginning of Period   4,852    2,218 
           
Cash at End of Period  $3,882   $6,675 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $-   $- 
           
Cash paid for income taxes  $-   $- 
           
Supplemental disclosure of non-cash investing and financing activities:          
           
Accounts payable settled in shares  $75,000   $- 
Debt discount recorded on notes payable  $-   $50,000 
Conversion of balance in accounts payable - related party to loans payable - related party  $324,475   $- 

 

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

 

F-3
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statement of Stockholders’ Equity (Deficit)

(unaudited)

 

                       Accumulated Other   Total 
   Common Stock   Additional   Stock   Retained Earnings   Comprehensive   Stockholders’ 
   Shares   Amount   Paid-in Capital   Payable   (Accumulated Deficit)   Income (Loss)   Equity (Deficit) 
                             
Balance - December 31, 2011   28,780,700    28,781    393,103    -    (12,007)   615,000    1,024,877 
                                    
Issuance of warrants for interest on notes payable   -    -    6,968         -    -    6,968 
                                    
Issuance of common stock as debt discount on notes payable ($0.50/share)   140,000    140    69,860         -    -    70,000 
                                    
Common stock issued in settlement of accounts payable   20,000    20    9,980         -    -    10,000 
                                    
Common stock issued for services ($0.50/share)   25,000    25    12,475         -    -    12,500 
                                    
Common Stock issued for cash ($0.50/share)   280,000    280    139,720         -    -    140,000 
                                    
Common stock issued for settlement of debt ($0.50/share)   40,000    40    19,960         -    -    20,000 
                                    
Common stock issued for settlement of debt ($0.25/share)   40,000    40    9,960         -    -    10,000 
                                    
Common Stock Issued in lieu of interest payable ($0.25/share)   2,000    2    498         -    -    500 
                                    
Common stock issued for services ($0.25/share)   300,000    300    74,700                   75,000 
                                    
Contributed capital   -    -    1,333,330         -    -    1,333,330 
                                    
Net loss for 2012   -    -    -         (2,855,556)   -    (2,855,556)
                                    
Reclassification of other comprehensive losses due to the permanent impairment of available for sale marketable securities   -    -    -         -    (615,000)   (615,000)
                                    
Balance - December 31, 2012   29,627,700   $29,628   $2,070,554   $-    (2,867,563)  $-   $(767,381)
                                    
Common stock issued for services ($0.80/share)   100,000    100    79,900    -    -    -    80,000 
                                    
16,667 Shares issuable under Material Purchase Agreement   -    -    -    10,000    -    -    10,000 
                                    
30,000 shares of common stock issuable under commission agreement   -    -    -    27,000    -    -    27,000 
                                    
Common stock issued for services ($1.00/share)   75,000    75    82,425    -    -    -    82,500 
                                    
Net loss for March 31, 2013   -    -    -    -    (360,530)   -    (360,530)
                                    
Balance - March 31, 2013   29,802,700   $29,803   $2,232,879   $37,000    (3,228,093)  $-   $(928,411)

 

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

 

F-4
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Note 1 – Basis of Presentation

 

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

 

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

 

Note 2 – Nature of Operations

 

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

 

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

 

Note 3 – Going Concern

 

As reflected in the accompanying financial statements, the Company had a loss of $360,530 for the quarter ended March 31, 2013. Net cash used in operations of $(289) for the quarter ended March 31, 2013; and a working capital deficit of $(293,069) and stockholders’ deficit of $928,411 as of March 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

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

 

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

 

F-5
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

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.

 

Note 4 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

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

 

Use of Estimates

 

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

 

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

 

Risks and Uncertainties

 

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

 

Cash

 

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

 

F-6
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. At the quarter ended March 31, 2013, the Company had no bad debt. During the year 2012, the Company recorded $35,000 of bad debt expense pertaining to two invoices the Company deemed were uncollectible.

 

Marketable Securities

 

(A)Classification of Securities

 

At the time of the acquisition, a security is designated as held-to-maturity, available-for-sale or trading, which depends on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost. The Company recorded unrealized loss on marketable securities of $0 and $465,000 during the quarters ended March 31, 2013 and March 31, 2012.

 

Cost Method Investment

 

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

 

There are no identifiable events or changes in circumstances that had a significant adverse effect on the value of this investment.

 

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

 

(B)Other than Temporary Impairment

 

The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company didn’t record any permanent impairments during the quarters ended March 31, 2013 and 2012.

 

F-7
 

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Beneficial Conversion Feature

 

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

 

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

 

Debt issue costs and debt discount

 

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

 

Original issue discount

 

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

 

Fixed Assets

 

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

 

   March 31, 2013   December 31, 2012 
Office equipment  $6,579   $6,579 
Accumulated depreciation  $(446)  $(117)
           
Net fixed assets  $6,133   $6,462 

 

During the quarters ended March 31, 2013 and March 31, 2012 the Company has expensed $329 and $0 respectively for depreciation.

 

F-8
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Revenue Recognition

 

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

 

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

 

For the quarters ended March 31, 2013 and March 31, 2012 the Company received marketable securities and cash as consideration for services rendered.

 

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

 

Customer  March 31, 2013   December 31, 2012 
I   -%   99%

 

For the three months ended March 31, 2013 and 2012, the Company had the following concentrations of revenues with customers:

 

Customer  March 31, 2013   March 31, 2012 
C   100%   26%
E   -%   19%
F*   -%   56%(*)

 

The Company received from customer “C” 56.20% of its revenue in cash and 43.80% in Non-marketable securities.

 


 

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

 


 

During the three months ended March 31, 2013,the Company received $3,000 in equity securities in a private company in exchange for services performed. The valuation was based on 3,000,000 shares at $0.001 per share.

 

Deferred Revenue

 

Deferred revenue represents fees that have been received by the Company for requested services that have not been substantially completed. During the three months ended March 31, 2013 the Company received $120,000 from a client for service to be rendered during the second quarter of 2013.

 

F-9
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Share-based payments

 

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

 

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

 

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

 

 The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the share based payment in effect at the time of the grant.
 The expected term was developed by management estimate.
The Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common stock in the near future.
The expected volatility is based on management estimates regarding private company stock, where future trading of stock in a public market is expected to be highly volatile.
 The forfeiture rate is based on historical experience.

 

Income Taxes

 

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

 

Earnings per Share

 

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

 

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

 

F-10
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Fair Value of Financial Assets and Liabilities

 

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

 

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

 

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

 

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

 

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

 

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

 

Loans to Third Parties

 

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

 

Recent Accounting Pronouncements

 

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

 

Note – 5 Debt

 

(A)Related Party – short term

 

The Company received loans from related parties. The loans are non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity for the quarter ended March 31, 2013 and the year ended December 31, 2012 respectively:

 

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

 

F-11
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

(B)Related party – long term

 

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

 

(C)Notes payable

 

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

 

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

 

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

 

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

 

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

 

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

 

On November 16, 2012, the Company issued 2,000 common restricted shares ($0.25/share) to “note holder A” Mr. Lonergan in lieu of $500 interest due. The balance outstanding for the interest payment of $500 is outstanding as at March 31, 2013.

 

F-12
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

(D)Accounts payable – related parties

 

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

   03/31/2013   12/31/2012 
         
Salaries   84,809    414,034 
Expenses   16,382    7,466 
   $101,191   $421,500 

 

As discussed in note no. 5(B), the Company converted $324,475 of related party accounts payable into a convertible loan payable during the quarter ended March 31, 2013.

 

Note 6 – Temporary Equity and Stockholders’ Equity

 

(A)Preferred Stock

 

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

 

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

 

Voting Rights: 10 votes per share (votes along with common stock);
Conversion Rights: Each share of Series “A” Preferred is convertible into ten (10) shares of common stock 1 day after the second anniversary of issuance;
Dividend Rights: None;
Liquidation Rights: None

 

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

 

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

 

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

 

F-13
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

Redeemable Preferred Stock

 

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

 

Redeemable at a fixed or determinable price on a fixed or determinable date,
Redeemable at the option of the holder, or
Redeemable based on conditions outside the control of the issuer.

 

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

 

(B)Common Stock

 

During the three months ended March 31, 2013, the Company issued the following shares:

 

Type  Quantity   Valuation   Range of Value
per Share
 
             
For settlement of balance in Accounts Payable (1)   75,000   $82,500   $1.10 
Services Rendered (2)   100,000   $80,000   $0.80 
               
Total   175,000   $162,500      

 


 

 (1)The Company has issued 75,000 shares valued at $1.10 per share to settle an account payable. The total value associated with the balance settlement is $82,500, $75,000 in settlement of liability due at December 31, 2012 and $7,500 additional expense booked during the quarter ended March 31, 2013.
   
(2)Common shares issues for services rendered to the Company at $0.80 per share.

 

F-14
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

(C)Stock options

 

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

 

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

 

The weighted average remaining life for all outstanding options at March 31, 2013 is 0.50 years. The fair value of each option granted is estimated on the date of grant using the Black-Scholes pricing model.

 

The Black Scholes assumptions used are as follows:

 

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

 

(D)Stock payable

 

On February 15, 2013, the Company entered into a Securities Purchase Agreement (“SPA”) with Candelara Holdings Limited, a company domiciled in the Chanel Islands (“Candelara”). The SPA covered the potential sale by the Company of up to $1,300,000 worth of our Common Stock.

 

Candelara had the right to purchase up to 916,667 shares of our Common Stock at a price of $.60 per share between the date of the SPA and April 30, 2013, which would have resulted in the Company receiving $550,000 in proceeds from such purchase. In the event that Candelara purchased the entire 916,667 shares of Common Stock by April 30, 2013, Candelara would have had an option (“Option”) to purchase an additional $750,000 worth of our Common Stock at a per share purchase price equal to $.90 or 60% of the average closing price of our Common Stock during the ten (10) trading days immediately prior to Candelara’s written notice to the Company of its intent to exercise the Option.

 

F-15
 

 

Global Equity International Inc. and Subsidiary

Notes to Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

On April 26, 2013, Candelara unilaterally decided to not comply with the SPA and notified the Company that it would not buy any shares of our Common Stock because our Common Stock was highly volatile.

 

The Company has issued Candelara with 16,667 common restricted shares on May 3, 2013 for the $10,000 received.

 

On October 8, 2012 the Company entered into a commission agreement with a company called Tempest Holdings Limited where Tempest would receive a finder’s fee for the introduction of new business and also a retainer fee of 10,000 common restricted shares per month for twelve months commencing January 1, 2013. The Company has valued the 30,000 shares due to Tempest using fair market value at $27,000.

 

Note 7 – Subsequent Events

 

On April 5, 2013,the Company issued 150,000 to Tricon Holdings, Inc. for the services to be rendered to the Company over the period of 6 months valued at $0.25 per share.

 

On April 5, 2013, the Company issued 500,000 restricted common shares to Caro Capital LLC, respectively for services rendered to the Company. The Company will book the amount as Consulting Expense.

 

On April 15, 2013 the Company issued 25,000 restricted common shares to Phillip E. Brooks for services rendered to the Company ($0.55 per share). In addition to the 25,000 shares the Company has paid $2,500 as advance for the monthly services.

 

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

 

On April 24, 2013, the Company issued 150,000 shares to Robert Sullivan as a compensation for consulting agreement. In addition the Company has paid $10,000 upon execution of the contract and $20,000 payable within 60 days of the agreement date. The agreement is for a total period of nine months from the date of the agreement.

 

On April 26, 2013, Candelara Holdings Limited unilaterally decided to not comply with the Special Purchase Agreement and notified the Company that it would not buy any shares of our Common Stock because our Common Stock was highly volatile. On May 3, 2013,the Company issued Candelara 16,667 common restricted shares for the $10,000 received during the quarter ended March 31, 2013.

 

F-16
 

 

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

 

For the three months ended March 31, 2013 and March 31, 2012:

 

The Company had revenues amounting to $6,849 and $107,500 for the three months ended March 31, 2013 and March 31, 2012, respectively. The Company recorded deferred revenue amounting to $120,000 and $0 as of March 31, 2013 and March 31, 2012.

 

The general and administrative costs were $367,050 and $246,948 for the three months ended March 31, 2013 and March 31, 2012, respectively. The increase was mainly due to commissions paid to third parties that had introduced new business to the Company.

 

G&A analysis for the period ended March 31, 2013 and March 31, 2012:

 

   March 31, 2013   March 31, 2012 
General and Administrative:          
Advertising and promotion  $996   $- 
Website maintenance   -    1,120 
Rent   3,911    1,226 
Travel   13,332    4,264 
Client entertainment   5,336    3,210 
Bank service charges   147    624 
General office expenses   4,014    5,707 
Total General and Administrative  $27,735   $16,151 
           
Salaries:          
Officers and Directors   90,000   $90,000 
Employees   30,000    19,999 
Total Salaries  $120,000   $109,999 
           
Professional Services:          
Accountants   10,000   $20,000 
Edgar Services   320    1,670 
Legal   8,063    5,600 
Legal (Clients)   27,540    15,640 
Transfers agents   1,200    710 
Investor relations   5,000    - 
Other professional services   65,691    99 
Other professional services (Clients)   71,000    - 
Total Professional Services  $188,814   $43,719 
           
Other:          
Dubai business licenses & local Dubai sponsors   30,500    22,000 
Total Other Expenses  $30,500    22,000 
           
Total Operating Expenditure  $367,050   $191,869 

 

5
 

 

    March 31, 2013    March 31, 2012 
Non-Recurring Expenses:        
Allowance for possible bad debt   -    35,000 
Amortization of debt discount   -    13,111 
Interest expense   -    6,968 
Total Non-Recurring Expenses   -    55,079 
           
Total Expenditure  $367,050   $246,948 

 

The Company accounted for $329 for depreciation for the three months ended March 31, 2013. No depreciation was accounted for in the same period of 2012 as the Company had no tangible assets.

 

The net loss for the three months ended March 31, 2013 and March 31, 2012 was $360,530 and $(139,448), respectively. The comprehensives losses amounted to $360,530 and $604,448 for the three months ended March 31, 2013 and March 31, 2012. The comprehensive loss for March 31, 2012 was much higher due to the fact that the Company recorded $(465,000) of unrealized losses on available for sale marketable securities.

 

At March 31, 2013, the Company had 29,802,700 shares issued and outstanding, the weighted average was 29,692,422 shares hence the loss per share was $(0.01). At March 31, 2012, the Company had 28,920,700 shares issued and outstanding, the weighted average was 28,814,546 shares hence the loss per share was $(0.00).

 

LIQUIDITY AND CAPITAL RESERVES

 

As of March 31, 2013, the Company had $3,882 in cash and net cash used in operations of $(289). For the three months ended March 31, 2013, the Company had a net and comprehensive loss of $360,530. The working capital deficit amounted to $293,069. Finally, the Company had stockholders’ deficit of $928,411 as of March 31, 2013.

 

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

 

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

 

However, we do not have any verbal or written agreements with anyone to provide us with debt financing. Any short fall in our projected operating revenues will be covered by:

 

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

 

2) Reducing our expenditures; and

 

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

 

6
 

 

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

 

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

 

FUTURE PLANS

 

We currently have following clients under contract, Arrow Cars International Inc., Black Swan Data Limited, RFC KK., Voz Mobile Cloud Limited, Direct Security Integration Inc., Regis Cards Limited, Scorpion Performance Inc., Universal Energy Solutions BV and Innoveas AG.

 

We anticipate signing up an additional ten clients by the end of 2013. However, we cannot guarantee that we will sign up any new clients in 2013 or receive any revenues from new clients in 2013.

 

Our specific plan of operations and milestones for April 2013 to March 2014 are as follows:

  

OUR BUSINESS IN 2013

 

We have three distinct divisions (none of which will be treated as a segment for financial reporting purposes):

 

1. Introducers Network. We have developed and continue to develop a number of finance professionals, accountants, attorneys and financial advisers who will introduce us to their clients. We will review businesses introduced to us through these introducers and we will compensate them on sum “to be determined” based on the event that we are engaged by to assist the companies they introduce to us.

 

2. Project Review. Our management team and advisors will carefully review and vet each business plan and opportunity submitted to us. Our management team and advisors will determine which services we can offer these clients and assess the potential propositions to best assist our clients in achieving their goals.

 

3. Placing. Working with our business associates in Dubai, Europe and the United States, we will use our best efforts to assist our clients with listings on stock exchanges in these cities in order to maximize their exposure to capital markets and to access funding via debt and equity offerings.

 

FUTURE PLANS

 

We currently have nine clients under contract:

 

1.Arrow Cars International Inc.
2.Black Swan Data Limited.
3.RFC K.K.
4.Voz Mobile Cloud Limited.
5.Direct CCTV (Direct Security Integration Inc).
6.Regis Cards Limited.
7.Scorpion Performance Inc.
8.Universal Energy Solutions B.V.
9.Innoveas A.G.

 

7
 

 

MILESTONES THROUGH MARCH 2014

 

Our specific plan of operations and milestones through March 2014 are as follows:

 

DURING THE SECOND QUARTER OF 2013, WE INTEND TO:

 

DEVELOP THE INTRODUCER NETWORK FURTHER AND IN HOPES OF ATTRACTING NEW INTEREST FOR OUR SERVICES.

 

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

 

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

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

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

●  ABN Amro Private Bank based in Amsterdam, the Netherlands

 

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

 

We intend to develop relationships with a further five “introducers” to potential new business for the Company before the end of June 2013. The estimated additional expense of $20,000 to achieve this is mainly travel expenses that will be funded by income receivable from clients currently under contract.

 

DUBAI EXPANSION

 

We will establish a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. The Dubai operation will be a branch office of the company allowing us a license to trade in the area. With the branch office formed we will recruit three members of staff in Dubai.

 

1) Administration – To assist in the day to day requirements of the business.

2) General Manager Dubai – To assist in the development of new relationships and support existing relationship as well as client liaison duties.

3) Back Office support – Generic support for all elements of the company and due diligence.

 

The expected additional costs for the branch office, the license and the staff is estimated to be $12,000 per month to be funded by additional consultancy fees levied to the client.

 

We have recently completed an agreement with an International consultancy firm, Adam Holdings, to offer our services to their clients; we will explore this relationship further with a focus on seminars and circulars exposing our services to their clients in an effective manner.

  

CREATE A MORE EFFICIENT SYSTEM FOR REVIEWING PROSPECTIVE BUSINESSES.

 

We will concentrate our efforts on the quality of the company that is introduced to us. We will start off by sending the client a standard due diligence list and request that they complete the list and send us the support for review. We will then follow-up the due diligence with a “site visit” in order to properly understand our client’s business model and more importantly meet the principals in person.

 

We will create a deeper Due Diligence program allowing us to dig deep on any prospective client prior to engagement thus protecting the company from any future problems, one of the new staff members will be responsible for the due diligence activities and creating a report for our file on their findings.

 

8
 

 

DURING THE THIRD QUARTER OF 2013, WE INTEND TO:

  

EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.

 

We intend to form relationships with merger and acquisition specialists during 2013 which will hopefully enable us to:

 

1) Find potential merger and acquisition candidates.

 

2) Introduce our clients to brokers and investment bankers.

 

3) Introduce our clients to the appropriate professionals (attorneys and accountants) to assist them in a public offering or exchange listing.

 

The only additional cost for this activity will be a very small administrative burden for telephone calls and communications to be funded out of operational income, mainly income receivable from clients currently under contract.

 

DEVELOP IN HOUSE IT DEPARTMENT

 

Commencing initially with one member we will start to develop a proprietary program allowing us to easily monitor a client’s development status and work in progress. We will also use this tool to manage our pipeline of clients and therefore it will become vital in our cash flow forecasting. Additional anticipated cost is $3,000 per month.

 

DUAL LISTING DUBAI

 

We have already entered talks with some of the major investment banks such as Deutsche Bank Dubai and the Dubai NASDAQ in order to effect a dual listing in Dubai allowing us a more prominent position in the market place and an ability to raise capital for acquisition should we need to from the retail and institutional community in the UAE. We intend to become one of the first companies to dual list on Dubai NASDAQ; our plan is to carry out a public relations campaign alongside the dual listing process with the public relations firm we have selected with a view to prepare a campaign that will have a maximum effect.

 

DURING THE FOURTH QUARTER OF 2013, WE INTEND TO:

 

EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY IN DUBAI

 

Our network of investment companies in Dubai is currently small; however, we intend to substantially expand our Dubai network in order to enable us to make introductions on a more institutional level. We intend to develop our network to at least twelve Investment Institutions who may have interests in minority shareholding in companies from outside of the Middle East Region. We anticipate a small administrative cost to be no more than $10,000 for such development to be funded from operational income, mainly income receivable from clients currently under contract.

 

At present we are being received with open arms by the Dubai and Middle Eastern financial community; hence we have plans to host various hospitality events for our current clients, our key contacts and upper management of the company. The anticipated additional cost will be $15,000.

 

9
 

 

EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

We intend to take our consultancy service outside of the Middle East and Europe into Asia and Sri Lanka. We will expand on a ‘Commission Only’ basis for the individuals or companies who take on our service to offer to their clients. Accountants, lawyers and finance professionals are the target market for overlaying our service into their existing client banks in return for a percentage of fees received. We also intend to add at least one new member to our administration team within the fourth quarter of 2013. We anticipate the cost to be approximately $3,000 per month funded from any new client being attracted as a result of the expansion.

 

ROAD SHOWS

 

We will commence the first of two “Road shows”, both held in Dubai with the support of the Dubai NASDAQ for companies already listed in Sri Lanka who could be seeking a dual listing in Dubai to provide liquidity and more capital raising options. We have commenced initial conversations with a brokerage house in Sri Lanka to look at their clients they have that would be suitable for the Dubai market. We will initially invite management of selected companies to Dubai for a two day event in conjunction with Nasdaq Dubai and a number of leading Investment Institutions, the anticipated cost of this is to be met by the prospective clients themselves and sponsorship from the institutions and Nasdaq Dubai.

 

DURING THE FIRST QUARTER OF 2014, WE INTEND TO:

 

ROAD SHOWS

 

We will organize a second “Road show” targeted at Chinese companies in conjunction with a major broker dealer, based on the West Coast of the USA, who deals exclusively with Chinese companies; we will follow the same procedure and costing as the Sri Lanka “Road shows”.

 

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

The foundation for this development will be done in fourth quarter of 2013. Within the first quarter of 2014, we intend to cement in the relationships created in prior quarters and appoint a new member of staff, based in each region to manage and nurture the relationships created. The target markets for attracting clients are: Thailand, Sri Lanka, China, Hong Kong and Singapore

 

To service the clients generated from these markets we will spend time creating a network of service companies who we can utilize to assist us on a local basis. We will explore the possibilities of dual listings for our clients in Singapore to allow us a local market for any Asian clients we will attract and giving the company a firm foothold in the Asian territory.

  

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.

 

10
 

 

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

  

Item 3. Quantitative and Qualitative 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 not effective.

 

Management’s Report on Internal Control over Financial Reporting

 

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

 

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

 

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

 

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

 

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

 

At March 31, 2013, we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

 

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

 

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

 

Changes in internal control over financial reporting.

 

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

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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

 

Item 1A. Risk Factors.

 

Not applicable.

 

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

 

On February 15, 2013, the Company entered into consulting agreement with Tricon Holdings Ltd., to provide consulting and advisory services. The Company issued 100,000 common restricted shares valued at $0.80 per share for services rendered during the quarter ended March 31, 2013.

 

On March 12, 2013, the Company has issued 75,000 shares valued at $1.10 per share to settle an account payable. The total value associated with the balance settlement is $82,500, $75,000 in settlement of liability due at December 31, 2012 and $7,500 additional expense booked during the quarter ended March 31, 2013.

 

On April 5, 2013, the Company issued 150,000 shares to Tricon Holdings, Inc. for the services to be rendered to the Company over the period of 6 months valued at $0.25 per share.

 

On April 5, 2013, the Company issued 500,000 restricted common shares to Caro Capital LLC, respectively for services rendered to the Company. To date consideration has not been paid to the company.

 

On April 15, 2013, the Company issued 25,000 restricted common shares to Phillip E. Brooks for services rendered to the Company ($0.55 per share).

 

On April 24, 2013,the Company issued 150,000 restricted common shares to Robert “Sully” Sullivan for services rendered to the Company ($0.49 per share).

 

On May 3, 2013,the Company issued 16,667 restricted common shares to Candelara Holdings Limited in respect of the $10,000 that were invested in our Company ($0.60 per share).

 

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

 

The issuances of the above shares of common stock were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation S promulgated thereunder.

 

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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

 

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

 

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

32.1 *

 

Certification under Section 906 of Sarbanes-Oxley Act of 2002

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

 

101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema Document
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.

 

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SIGNATURES

 

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

 

GLOBAL EQUITY INTERNATIONAL, INC.

 

Date: May 14, 2013 /s/ Peter J. Smith
  Peter J. Smith
  President and Chief Executive Officer
  (Principal Executive Officer)
   
Date: May 14, 2013 /s/ Enzo Taddei
  Enzo Taddei
  Chief Financial Officer
  (Principal Accounting and Financial Officer)

 

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