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, 2014

 

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.)
X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, UAE
(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 6, 2014, there were 32,005,918 outstanding shares of the Registrant’s Common Stock, $.001 par value.

  

 

 

INDEX

 

		Page
PART I – FINANCIAL INFORMATION		F-1
Item 1. Financial Statements.		F-1
Notes to Financial Statements (Unaudited)		F-6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4
Item 3. Quantitative and Qualitative Disclosures about Market Risk		9
Item 4. Controls and Procedures		9
PART II – OTHER INFORMATION		10
Item 1. Legal Proceedings.		10
Item 1A. Risk Factors		10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		10
Item 3. Defaults Upon Senior Securities		10
Item 4. Mine Safety Disclosure		10
Item 5. Other Information.		10
Item 6. Exhibits		10
SIGNATURES		12

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

  

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

March 31, 2014

(Unaudited)

 

CONTENTS

 

		Page(s)
Consolidated Balance Sheets – March 31, 2014 (unaudited) and December 31, 2013		F-2
Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2014 and March 31, 2013 (unaudited)		F-3
Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and March 31, 2013 (unaudited)		F-4
Consolidated Statement of Stockholders’ Equity (Deficit)		F-5
Notes to Consolidated Financial Statements (unaudited)		F-6

 

  

Global Equity International, Inc. and Subsidiary

Consolidated Balance Sheets

(Unaudited)

 

		March 31, 2014				December 31, 2013
Assets
Current Assets
Cash		$	28			$	48,856
Accounts receivable			2,520				2,520
Prepaids			8,167				33,799
Other current assets			466,027				452,201
Loans receivable			6,000				6,000
Total current assets			482,742				543,376
Investment, cost			5,000				5,000
Fixed assets, net			7,346				7,817
Total assets		$	495,088			$	556,193
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
Current Liabilities
Deferred revenue		$	169,750			$	247,000
Accounts payable and accrued liabilities			50,064				38,989
Accounts payable - related parties			292,285				192,053
Loans payable - related party			57,194				57,194
Accrued interest			238,651				120,918
Notes payable - net of unamortized discount of $6,812 and $16,688, respectively			985,717				996,531
Total current liabilities			1,793,661				1,652,685
Long term liabilities
Convertible loan payable - related party			324,475				324,475
Total long term liabilities			324,475				324,475
Redeemable Series A, Convertible Preferred Stock: 5,000,000 shares authorized and 1,983,332 and 5,000,000 shares issued and outstanding, respectively, $0.001 par value (redemption amount $480,000) (liquidation preference of $0)			1,020,000				1,020,000
Stockholders’ Deficit
Common stock: 70,000,000 shares authorized; $0.001 par value 31,339,679 and 31,044,202 shares issued and outstanding, respectively.			31,340				31,045
Additional paid in capital			2,678,054				2,657,659
Stock payable			82,850				82,850
Accumulated deficit			(5,435,292	)			(5,212,521	)
Total stockholders’ deficit			(2,643,048	)			(2,440,967	)
Total liabilities, redeemable preferred stock & stockholders’ deficit		$	495,088			$	556,193

 

See accompanying notes to financial statements.

 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

For the three months period ended March 31, 2014 and March 31, 2013 (Unaudited)

 

		March 31, 2014				March 31, 2013
Revenue		$	152,250			$	6,849
General and administrative expenses			45,241				58,236
Salaries			164,935				120,000
Professional services			36,767				188,814
Depreciation			471				329
Total operating expenses			247,414				367,379
Net loss from operations			(95,164	)			(360,530	)
Other income (expenses):
Interest (expense)			(122,118	)			-
Amortization of debt discount			(5,489	)			-
Total income (expenses)			(127,607	)			-
Net loss		$	(222,771	)		$	(360,530	)
Weighted average number of common shares outstanding - basic			31,090,179				29,692,422
Net loss per common share - basic		$	(0.01	)		$	(0.01	)
Comprehensive Loss:
Net loss			(222,771	)			(360,530	)
Comprehensive Loss		$	(222,771	)		$	(360,530	)

 

See accompanying notes to financial statements.

 

 

Global Equity International Inc. And Subsidiary

Consolidated Statements of Cash Flows

For the three months period ended March 31, 2014 and March 31, 2013 (Unaudited)

 

		March 31, 2014				March 31, 2013
Cash flows from operating activities
Net loss		$	(222,771	)			(360,530	)
Adjustments to reconcile net loss to net cash used in operating activities
Consulting revenues received in marketable securities			-				(3,000	)
Depreciation			471				329
Common stock issued for services rendered			-				114,500
Amortization of debt discount			5,489				-
Changes in operating assets and liabilities:
Prepaids, cash			25,632				(2,440	)
Accrued interest			122,119				-
Accounts payable and accrued liabilities			11,076				(18,314	)
Accounts payable - related parties			100,232				4,166
Deferred revenue			(77,250	)			120,000
Accounts receivable			-				145,000
Other current assets			(13,826	)			-
Net cash used in operating activities:			(48,828	)			(289	)
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
Repayment of notes payable			-				(9,500	)
Proceeds from issuance of common stock			-				10,000
Net cash provided by financing activities			-				5,319
Net increase in cash			(48,828	)			(970	)
Effect of Exchange Rates on Cash			-				-
Cash at Beginning of Period			48,856				4,852
Cash at End of Period		$	28				3,882
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
Conversion of balance in accounts payable - related party to loans payable		$	-				324,475
Notes payable settled in shares		$	20,690				-

 

See accompanying notes to financial statements.

 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statement of Stockholders’ Equity (Deficit)

  

																					Accumulated Other			Total
		Common Stock								Additional				Stock			Retained Earnings				Comprehensive			Stockholders’
		Shares				Amount				Paid-in Capital				Payable			(Accumulated Deficit)				Income (Loss)			Equity (Deficit)
Stock issued for services - related party ($0.005/share)			20,000,000			$	20,000			$	80,000			$	-		$	-			$	-		$	100,000
Net loss - 2009			-				-				-				-			(93,152	)						(93,152	)
Balance - December 31, 2009			20,000,000				20,000				80,000				-			(93,152	)			-			6,848
Stock issued in connection with debt conversion ($0.40/share)			668,000				668				264,866				-			-				-			265,534
Recapitalization			8,000,000				8,000				(8,000	)			-			-				-			-
Net income - 2010			-				-				-				-			1,769,247				-			1,769,247
Unrealized gain on available for sale marketable securities			-				-				-				-			-				166,076			166,076
Balance - December 31, 2010			28,668,000				28,668				336,866				-			1,676,095				166,076			2,207,705
Stock issued for cash ($0.50/share)			103,100				103				51,447				-			-				-			51,550
Common stock issued for services ($0.50/share)			9,600				10				4,790				-			-				-			4,800
Net loss - 2011			-				-				-				-			(1,688,102	)			-			(1,688,102	)
Unrealized gain on available for sale marketable securities			-				-				-				-			-				448,924			448,924
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	)			-			(767,379	)
Common stock issued in lieu of interest payment ($0.12/share)			20,000				20				2,380				-			-				-			2,400
Common stock issued for services ($0.12/share)			120,000				120				14,280				-			-				-			14,400
Common stock issued for services ($0.15/share)			20,000				20				2,980				-			-				-			3,000
Common stock issued in lieu of interest payment ($0.15/share)			10,000				10				1,490				-			-				-			1,500
Common stock issued for services ($0.16/share)			10,000				10				1,590				-			-				-			1,600
Common stock issued for services ($0.17/share)			139,835				140				23,632				-			-				-			23,772
Common stock issued for services ($0.22/share)			10,000				10				2,190				-			-				-			2,200
Common stock issued for services ($0.27/share)			20,000				20				5,380				-			-				-			5,400
Common stock issued for services ($0.25/share)			500,000				500				124,500				-			-				-			125,000
Common stock issued for services ($0.29/share)			150,000				150				43,350				-			-				-			43,500
Common stock issued for services ($0.45/share)			10,000				10				4,490				-			-				-			4,500
Common stock issued for services ($0.55/share)			35,000				35				19,215				-			-				-			19,250
Common stock issued for services ($0.70/share)			10,000				10				6,990				-			-				-			7,000
Common stock issued for services ($0.80/share)			10,000				10				7,990				-			-				-			8,000
Common stock issued for services ($0.95/share)			150,000				150				142,400				-			-				-			142,550
Common stock issued for services and payables ($0.80/share)			100,000				100				79,900				-			-				-			80,000
Common stock issued in settlement of debt ($1.10 per share)			75,000				75				82,375				-			-				-			82,450
Common stock issued in settlement of debt ($1.20 per share)			10,000				10				11,990				-			-				-			12,000
Common Stock issued for cash ($0.60/share)			16,667				17				9,983				-			-				-			10,000
Common stock issuable under commission agreement			-				-				-				82,850			-				-			82,850
Net loss			-				-				-				-			(2,344,958	)			-			(2,344,958	)
Balance - December 31, 2013			31,044,202				31,045				2,657,659				82,850			(5,212,521	)			-			(2,440,965	)
Common stock issued in settlement of debt			295,567				295				20,395				-			-				-			20,690
Net loss			-				-				-				-			(222,771	)			-			(222,771	)
Balance - March 31, 2014			31,339,769			$	31,340			$	2,678,054			$	82,850		$	(5,435,292	)		$	-		$	(2,643,048	)

 

See accompanying notes to financial statements.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(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, 2013 and 2012. The interim results for the period ended March 31, 2014 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 $222,771 for the three months ended March 31, 2014. Net cash used in operations of $(48,828) for the quarter ended March 31, 2014; and a working capital deficit of $1,310,919 and stockholders´ deficit of $2,643,048 as of March 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

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

 

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

 

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

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

Note 4 - Summary of Significant Accounting Policies

 

Principles of Consolidation

 

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

 

Use of Estimates

 

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

 

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

 

Risks and Uncertainties

 

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

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31, 2014 and at December 31, 2013 respectively, the Company had no cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. At the quarter ended March 31, 2014, the Company had no bad debt.

 

Marketable Securities

 

(A) Classification of Securities

 

At the time of the acquisition, a security is designated as held-to-maturity, available-for-sale or trading, which depends on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost. The Company recorded unrealized loss on marketable securities of $0 and $0 as at March 31, 2014 and December 31, 2013.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

Cost Method Investment

 

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

 

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

 

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

 

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

 

(B) Other than Temporary Impairment

 

The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in income. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company did not carry out any impairments during the quarter ended March 31, 2014.

 

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.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

Original issue discount

 

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

 

Fixed Assets

 

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

 

		March 31, 2014				March 31, 2013
Office equipment		$	9,316			$	6,579
Accumulated depreciation		$	(1,970	)		$	(446	)
Net fixed assets		$	7,346			$	6,133

 

During the three months ended March 31, 2014 and March 31, 2013, the Company expensed $471 and $329 respectively for depreciation.

 

Revenue Recognition

 

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

 

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

 

For the quarters ended March 31, 2014 and March 31, 2013 the Company received cash only as consideration for services rendered.

 

At March 31, 2014 and March 31, 2013, the Company had the following concentrations of accounts receivables with customers:

 

Customer		March 31, 2014				March 31, 2013
ACI			100	%			3	%
			100	%			3	%

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

For the three months ended March 31, 2014 and March 31, 2013, the Company had the following concentrations of revenues with customers:

 

Customer		March 31, 2014				March 31, 2013
YMD			16	%			0	%
MHB			16	%			0	%
IOA			16	%			0	%
SAC			30	%			0	%
DSI			20	%			0	%
ACI			0	%			100	%
			100	%			100	%

 

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

 

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

 

Deferred Revenue

 

Deferred revenue represents fees that have been received by the Company for requested services that have not been substantially completed. During the year ended December 31, 2013 the Company received $307,000 from two clients for service to be rendered during the year 2013 and 2014. At March 31, 2014, the Company recognized $137,250 of this deferred revenue as revenue; leaving a deferred revenue balance of $169,750.

 

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.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

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.

 

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.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

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. This loan is currently in default, the Company plans to speak to Dreamscapes Properties International Inc. with a review to discuss a payment plan over the next 6 months.

 

Recent Accounting Pronouncements

 

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

 

Note 5 - Debt

 

(A) Related Party – short term

 

The Company received loans from related parties. The loans are non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of March 31, 2014 and as of December 31, 2013 respectively:

 

Loans payable – related party – December 31, 2013		$	57,194
Proceeds from loans			-
Repayments			-
Loans payable – related party – March 31, 2014		$	57,194

 

(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, 2013, $209,475 was due to the Chief Executive Officer and $115,000 was due to the Chief Financial Officer. During the quarter ended March 31, 2013, the Company converted this amount to Convertible Loan Payable. This amount will be advanced for a term of two years and is repayable on demand and will accrue interest at 10% on the loan period. The agreement also gives an option to the officers of the Company to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share. The balance outstanding in the Loan Payable account as at March 31, 2014 is $324,475. The Company assessed if there is a beneficial conversion feature cost associated with this transaction, none was noted.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

(C) Notes payable

 

On June 4, 2013, the Company secured a twelve month convertible loan for $50,000 with the understanding that the Company will issue 10,000 common restricted shares in lieu of interest, these shares are not issued as of March 31, 2014 and is accounted for as Stock Payable. The terms of the conversion will be either a $0.50 conversion price or a 25% discount to market based on an average price calculated on the 10 trading days prior to the conversion date, whichever is the lowest.

 

On September 9, 2013, the Company secured a nine month convertible loan for $32,500 with an 8% interest rate due on June 11, 2014. The terms of the conversion will be a 42% discount to market based on an average price calculated on the 10 trading days prior to the conversion date. If the Company opts to pay the loan back on or before the 9 month period ends, hence not converting the debt into equity; borrower shall make payment to the holder of an amount in cash (the “Optional Prepayment Amount”) equal to 130% of total amount due inclusive of principal and interest accrued. On March 17, 2014 the Company decided to allow this funder to convert principal amount of $12,000 of this debt in common stock at $0.0406 per share. As a result total of $20,690 inclusive of debt discount was settled.

 

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 five month extension. This stock compensation as issued to the lender also on December 12, 2013. On February 27, 2014, the Company agreed to pay an extra $50,000 of interest in order to avoid defaulting on the loan. It was mutually agreed that the capital and the interest would be paid once the $3,540,000 loan, applied for on December 9, 2013, from the United Kingdom financial institution was granted.

 

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

 

On November 29, 2013, the Company received a loan in the amount of $450,000 from United Kingdom resident and subsequently the Company issued a Convertible Note due on November 25, 2014 (“Convertible Note”). The Convertible Note will bear interest at the rate of 10% per annum until maturity. The Convertible Note may be converted into shares of the issuer’s common stock at a conversion price of $.50 per share at the option of the holder of the Convertible Note. If the Convertible Note is not paid in full or converted into common stock of the Company prior to its maturity date, then the Convertible Note will accrue interest at the rate of 4.5% per annum from the maturity date until paid in full. This $450,000 loan was used as a guarantee for a loan amounting to $3,540,000 applied for to a United Kingdom financial institution on December 9, 2013. At March 31, 2014 the loan had still not been approved due to technical reasons solely related to the lender.

 

The amounts paid to acquire the debt financing have been treated as a debt discount hence at December 31, 2013 the Company recorded debt discount of $40,200. This will be amortized over the life of the respective loans. During the three months ended March 31, 2014 and March 31, 2013, the Company amortized $5,489 and $0.

 

(D) Accounts payable – related parties

 

The following table represents the accounts payable to related parties as of March 31, 2014 and December 31, 2013, respectively:

 

		March 31, 2014				December 31, 2013
Salaries			274,280				182,080
Expenses			18,005				9,973
		$	292,285			$	192,053

 

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

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

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.

 

On December 12, 2013 the Company issued 450,000 Series “A” preferred shares to the Company’s CFO (200,000), CEO (200,000) and one employee (50,000) having a fair value of $540,000 ($0.12 per share), based upon the fair value of the services rendered, which represented the best evidence of fair value.

 

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

 

Redeemable Preferred Stock

 

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

 

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

 

The Series “A”, convertible preferred stock is redeemable on December 1, 2014 and it is presented on the balance sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity. There are no other features associated with this class of redeemable preferred stock, which require disclosure. The carrying amount and redemption amount is $1,020,000. There are no redemption requirements.

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

(B) Common Stock

 

During the three months ended March 31, 2014 the Company issued the following shares:

 

Date		Type		Shares				Valuation				Range of value per share
3/17/2014		Stock issued for payment of debt			295,567			$	20,690			$	0.070
		Totals			295,567			$	20,690

 

(C) Stock payable

 

On April 24, 2013, the Company entered into a consulting agreement with Robert Sullivan. As per the agreement the Company will be issuing 150,000 restricted shares to the consultant. The agreement also stipulates a condition where the Company guarantees a minimal value of $100,000 at the time of legend removal and any shortfall will be taken care of by issuance of additional shares. $77,350 is recorded as stock payable, as of March 31, 2014.

 

On June 4, 2013, the Company received $50,000 from Direct Securities Integration, Inc in pursuance of a notes payable agreement. The agreement stipulates a condition for the payment of 10,000 shares in lieu of interest on the day of agreement. Such shares are not issued as of March 31, 2014, and are valued at $5,500.

 

Note 7 - Commitments and contingencies

 

On April 24, 2013, the Company entered into advertisement contract with Robert Sullivan. The Company is required to pay $30,000 in cash and issue 150,000 shares. During the current period the Company has paid $10,000 in cash, the balance of $20,000 is due within 60 days of the signing of the agreement; this amount is unpaid as at March 31, 2014. The Company has guaranteed a value of $100,000 for its shares at the time of legend removal. At March 31, 2014 the legend is still not removed, the Company has accrued for the shortfall of $77,350 as a stock payable.

 

Note 8 - Other current assets

 

The following is a summary of the Company’s other current assets:

 

		03/31/2014				12/31/2013
Cash collateral paid to secure loan		$	450,000	(1)		$	450,000
Retainers paid to legal counsel			3,530				2,201
Other prepaid expenses			12,497				-
		$	466,027			$	452,201
(1) Please refer to Note 5(C) - Notes payable

 

 

Global Equity International, Inc. and Subsidiary

Notes to Financial Statements

March 31, 2014

(Unaudited)

 

Note 9 - Subsequent Events

 

On April 1, 2014, the Company received $53,000 from a secured nine month convertible loan signed on March 6, 2014. The loan carried an 8% interest rate due on December 10, 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 equal to 130% of total amount due inclusive of principal and interest accrued.

 

On April 1, 2014 the Company agreed to issue 501,149 shares of common stock in order to pay off the rest of the note signed on September 9, 2013 ($20,500 plus the $1,300 of accrued interest).

 

On April 21, 2014 we were engaged by a US based company called Stream TV Networks Inc. The scope of our engagement was to source the company a Dubai sponsor for a subsequent listing of its stock on the Dubai NASDAQ.

 

On April 22, the Company issued 165,000 common restricted shares in lieu of a $8,250 commission payable for the introduction of a new client pursuant to a commission agreement signed on April 15, 2014.

 

On May 1, 2014, the Company secured two a 12 month convertible loan for $50,000 each with an 8% interest rate due on May 1, 2015. The terms of the conversion were agreed at a 40% discount to market based on an average price of the two lowest bids on the 20 trading days prior to the conversion date. If the Company opts to pay the loan back on or before 90 days after the loans were granted, hence not converting the debt into equity; borrower shall make payment to the holders of an amount in cash equal to 130% of total amount due inclusive of principal and interest accrued. If the Company opts to pay the loan back on or before 180 days after the loans were granted, hence not converting the debts into equity; borrower shall make payment to the holders of an amount in cash equal to 140% of total amount due inclusive of principal and interest accrued. The company also agreed a two collateralized secured promissory notes (backend notes) under the same terms for a further $50,000 from each lender within six months of the first loans.

 

 

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

 

For the three months ended March 31, 2014 and March 31, 2013.

 

The Company had revenues amounting to $152,250 and $6,849 for the three months ended March 31, 2014 and March 31, 2013. Most of our engagements with clients call for the Company to accomplish certain milestones in order to be able to invoice work completed hence, to date, we still have deferred revenue received amounting to $169,750. Management does invest a lot of time on behalf of our clients such as meetings with the Dubai NASDAQ, the DFSA (the Dubai Financial Service Authority), marketing and IR consultants and finally local Dubai DFSA authorized sponsor that have the authority to underwrite a company that wishes to list its equity on the Dubai NASDAQ. This cannot be deemed as billable work in progress but, management considers that this work carried out on behalf of our clients, though not quantifiable, is essential in order to accomplish our mandate from clients that wish to list in Dubai.

 

The operating costs for the for the three months ended March 31, 2014 and March 31, 2013 were $247,414 and $367,379, respectively. The substantial decrease is mainly due to an decrease in subcontracted professional services, investor relations, marketing costs and a substantial increase in revenue that we have recognized.

 

The net losses from operations for the periods for the for the three months ended March 31, 2014 and March 31, 2013 were $95,164 and $360,530 respectively.

 

Other expenses amounted to $127,607 and $0 for the three months ended March 31, 2014 and March 31, 2013 respectively. The increase is mainly due an increase in accrued interest on loans received.

 

The net losses for the periods for the nine months ended three months ended March 31, 2014 and March 31, 2013 were $222,771 and $360,530 respectively.

 

The Company had 31,339,679 and 29,802,700 shares issued and outstanding at three months ended March 31, 2014 and March 31, 2013 respectively. The weighted averages were 31,090,179 and 29,692,422 shares for both three month periods hence the respective loss per share was $0.01 and $0.01.

 

LIQUIDITY AND CAPITAL RESERVES

 

As reflected in the accompanying financial statements, the Company had a loss of $222,771 for the three months ended March 31, 2014. Net cash used in operations of $(48,828) for the quarter ended March 31, 2014; and a working capital deficit of $1,310,919 and stockholders´ deficit of $2,643,048 as of March 31, 2014. 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.

 

On December 9, 2013, the Company signed a 10 year loan facility agreement with Irish company called PPF Capital Source Lending Company 2 Limited domiciled in Dublin (Ireland), for $3,540,000 at 4.5% interest per annum. The interest will be paid on a basis monthly but only on the amounts drawn down on the loan. The company had to guarantee the loan by way of a cash payment of $450,000 which it did by on December 12, 2013 (this amount is reflected on our balance sheet under “other current assets”). The loan agreement was and still is contingent on PPF´s securing a minimum cash collateral of $10,000,000 collectively or individually from all borrowers / subscribers. To date, PPF is $3,000,000 short of this critical mass of $10,000,000 but we understand that a drawdown on this loan can be estimated on or before June 30, 2014.

 

On April 1, 2014, the Company received $53,000 from a secured a nine month convertible loan signed on March 6, 2014. The loan carried an 8% interest rate and will be due on December 10, 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 equal to 130% of total amount due inclusive of principal and interest accrued.

 

On April 1, 2014 the Company agreed to issue 501,149 shares of common stock in order to pay off the rest of the note signed on September 9, 2013 ($20,500 plus the $1,300 of accrued interest).

 

On April 21, 2014 we were engaged by a US based company called Stream TV Networks Inc. The scope of our engagement was to source the company a Dubai sponsor for a subsequent listing of its stock on the Dubai NASDAQ.

 

On May 1, 2014, the Company secured two a 12 month convertible loan for $50,000 each with an 8% interest rate due on May 1, 2015. The terms of the conversion were agreed at a 40% discount to market based on an average price of the two lowest bids on the 20 trading days prior to the conversion date. If the Company opts to pay the loan back on or before 90 days after the loans were granted, hence not converting the debt into equity; borrower shall make payment to the holders of an amount in cash equal to 130% of total amount due inclusive of principal and interest accrued. If the Company opts to pay the loan back on or before 180 days after the loans were granted, hence not converting the debts into equity; borrower shall make payment to the holders of an amount in cash equal to 140% of total amount due inclusive of principal and interest accrued. The company also agreed a two collateralized secured promissory notes (backend notes) under the same terms for a further $50,000 from each lender within six months of the first loans.

 

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

 

  

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

 

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

 

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

 

2) Reducing our expenditures; and

 

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

 

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

 

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

 

As of March 31, 2014, the Company had $28 in cash and net cash used in operations of $(48,828). For the three months ended March 31, 2014, the Company had a net and comprehensive loss of $222,771. The working capital deficit amounted to $1,310,919. Finally, the Company had stockholders’ deficit of $2,643,048 as of March 31, 2014.

 

FUTURE PLANS

 

MILESTONES FOR 2014:

 

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

 

1)

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:

 

	(1)	Certain registered investment houses in London (United Kingdom).
	(2)	An Austrian management consultancy firm based in Vienna (Austria).
	(3)	Various investment banks based in Dubai (UAE)
	(4)	Certain Private Banks based in Amsterdam (Holland) and Zurich in Switzerland.
	(5)	The Colombo Stock Exchange in Sri Lanka.
	(6)	Various family offices in Dubai (UAE).

 

We do not have any verbal or written agreements with the 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 six “introducers” to potential new business for the Company before the end of June 2014.

 

2)

DUBAI EXPANSION

 

We will continue to establish a firm presence in Dubai, UAE where we are attracting clients, relationships and awareness. Our Dubai operation is currently a branch office of the company allowing us a license to trade in the area. This branch office will continue to recruit new members of staff that will allow us to grow and become more efficient in Dubai.

 

  

3)

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 by employing one new staff member that will be responsible for the due diligence analysis and creating a report for our file on their findings.

 

4)

EXPAND OUR CONSULTANCY TO INCLUDE MORE MERGER AND ACQUISITION ACTIVITY.

 

We intend to form relationships with merger and acquisition specialists during 2014 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.

 

5)

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.

 

6)

DUAL LISTING DUBAI

 

In 2014, we intend to become one of the first foreign 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.

 

7)

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.

 

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.

 

8)

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 second quarter of 2014.

 

 

9)

ROAD SHOWS

 

We will continue the “Road shows”, in Dubai with the support of the Dubai NASDAQ for companies already listed in Sri Lanka and other parts of Asia 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.

 

10)

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

The foundation for this development was created in 2013. In 2014, we intend to cement in 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.

 

11)

EMPLOYEES; IDENTIFICATION OF A SIGNIFICANT EMPLOYEE

 

We currently have five employees: Peter J. Smith, Enzo Taddei, Patrick V. Dolan, Zara V. Clark and Shoaib Rasool Peter J. Smith, our President, and Enzo Taddei, our Chief Financial Officer and Patrick V. Dolan, new business managing director, Zara V. Clark, our Dubai office manager, Shoaib Rasool, our in house analyst and accountant, each have an employment agreement with the Company. All are full time employees of the Company. We intend to hire additional employees in 2014 such as a person to assist our new business managing director in London.

 

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.

 

  

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934) 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, 2014, we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

 

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

 

  

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

 

Changes in internal control over financial reporting.

 

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

 

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.

 

Stock sales and issuances since January 1, 2014

 

Date			Type		Shares				Valuation				Range of value per share
3/17/2014			Stock issued for repayment of debt			295,567			$	20,690			$	0.070

 

No underwriter was involved in connection with the issuance of the above shares. The shares issued were exempt from the registration provisions of the Securities act of 1933, as amended, pursuant to section 4(a)(2) of the Securities act and/or Regulations.

 

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

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

   

 

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, 2014	/s/ Peter J. Smith
	Peter J. Smith
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: May 14, 2014	/s/ Enzo Taddei
	Enzo Taddei
	Chief Financial Officer
	(Principal Accounting and Financial Officer)