UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 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 (0) 42767576

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 11, 2014, there were 33,751,752 outstanding shares of the Registrant’s Common Stock, $.001 par value.

 

 

 

INDEX

 

		Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements		3
Notes to Financial Statements (Unaudited)		F-4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4
Item 3. Quantitative and Qualitative Disclosures about Market Risk		11
Item 4. Controls and Procedures		11
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		13
Item 1A. Risk Factors		13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		13
Item 3. Defaults Upon Senior Securities		13
Item 4. Mine Safety Disclosure		13
Item 5. Other Information		13
Item 6. Exhibits		13
SIGNATURES		15

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Global Equity International, Inc. and Subsidiary

Consolidated Financial Statements

September 30, 2014

(Unaudited)

 

CONTENTS

 

		Page(s)
Consolidated Balance Sheets – September 30, 2014 (unaudited) and December 31, 2013		F-1
Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2014 (unaudited) and September 30, 2013 (unaudited)		F-2
Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 (unaudited) and September 30, 2013 (unaudited)		F-3
Notes to Consolidated Financial Statements (unaudited)		F-4

 

 

Global Equity International, Inc. and Subsidiary

Consolidated Balance Sheets

For the interim period ended September 30, 2014 (Unaudited) and the year ended December 31, 2013 (Audited)

 

		September 30, 2014				December 31, 2013
			Unaudited				Audited
Assets
Current Assets
Cash		$	17,152			$	48,856
Accounts receivable			2,520				2,520
Prepaids			62,429				33,799
Other current assets			452,201				452,201
Loans receivable			6,000				6,000
Total current assets			540,302				543,376
Investment, cost			5,000				5,000
Fixed assets, net			22,404				7,817
Total assets		$	567,706			$	556,193
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
Current Liabilities
Deferred revenue		$	250,000			$	247,000
Accounts payable and accrued liabilities			72,324				38,989
Accounts payable - related parties			331,985				192,053
Loans payable - related party			57,894				57,194
Accrued interest			378,979				120,918
Notes payable - net of unamortized discount			1,128,951				996,531
Total current liabilities			2,220,133				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 33,159,418 and 31,044,202 shares issued and outstanding, respectively.			33,160				31,045
Additional paid in capital			2,963,638				2,657,659
Stock payable			82,850				82,850
Accumulated deficit			(6,076,550	)			(5,212,521	)
Total stockholders’ deficit			(2,996,902	)			(2,440,967	)
Total liabilities, redeemable preferred stock & stockholders’ deficit		$	567,706			$	556,193

 

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

 

 

Global Equity International, Inc. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

For the three and nine months period ended September 30, 2014 and September 30, 2013 (Unaudited)

 

		Three Months				Three Months				Nine Months				Nine Months
		September 30, 2014				September 30, 2013				September 30, 2014				September 30, 2013
Revenue		$	209,000			$	165,000			$	555,000			$	171,849
General and administrative expenses			130,263				99,240				226,463				222,634
Salaries			251,657				150,000				639,375				390,000
Professional services			111,215				116,772				211,648				511,042
Depreciation			653				336				1,630				998
Impairment of financial assets			-				-				-				160,000
Total operating expenses			493,788				366,348				1,079,115				1,284,674
Net loss from operations			(284,788	)			(201,348	)			(524,115	)			(1,112,825	)
Other income (expenses):
Interest (expense)			(70,782	)			(23,555	)			(329,432	)			(24,491	)
Amortization of debt discount			(709	)			(18,240	)			(26,567	)			(26,452	)
Gain on settlement of debt			-				-				16,560				13,200
Exchange rate gain / (loss)			(323	)			-				(476	)			-
Total income (expenses)			(71,814	)			(41,795	)			(339,915	)			(37,743	)
Net loss		$	(356,602	)		$	(243,143	)		$	(864,030	)		$	(1,150,568	)
Weighted average number of common shares outstanding - basic			32,474,668				30,784,202				31,866,476				30,370,730
Net loss per common share - basic		$	(0.01	)		$	(0.01	)		$	(0.01	)		$	(0.04	)
Comprehensive Loss:
Net loss			(356,602	)			(243,143	)			(864,030	)			(1,150,568	)
Comprehensive Loss		$	(356,602	)		$	(243,143	)		$	(864,030	)		$	(1,150,568	)

 

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

 

 

Global Equity International Inc. And Subsidiary

Consolidated Statements of Cash Flows

For the nine months period ended September 30, 2014 and September 30, 2013 (Unaudited)

 

		September 30, 2014				September 30, 2013
Cash flows from operating activities
Net loss		$	(864,030	)		$	(1,150,568	)
Adjustments to reconcile net loss to net cash used in operating activities
Gain on settlement of debt			(16,560	)			(13,200	)
Consulting revenues received in marketable securities			-				(3,000	)
Depreciation			1,630				998
Common stock issued for services rendered			186,275				459,748
Common stock issued in lieu of notes payable			-				-
Amortization of debt discount			26,567				26,452
Impairment of financial assets			-				160,000
Stock issued for interest			65,785				-
Changes in operating assets and liabilities:
Prepaids, cash			(28,630	)			(2,690	)
Accrued interest			262,448				17,724
Accounts payable and accrued liabilities			49,896				36,214
Accounts payable - related parties			139,932				134,477
Deferred revenue			3,000				60,000
Accounts receivable			-				145,000
Impairment of financial assets			-				-
Net cash used in operating activities:			(173,688	)			(128,845	)
Cash Flows used in investing activities:
Office furniture and equipment, net			(16,216	)			-
Loans given to non-affiliate			-				(6,000	)
Net cash used in investing activities			(16,216	)			(6,000	)
Cash flows from financing activities:
Proceeds from loans - related parties			700				4,819
Convertible loan payable			208,000				125,000
Repayment of notes payable			(50,500	)			(9,500	)
Proceeds from issuance of common stock			-				10,000
Net cash provided by financing activities			158,200				130,319
Net increase in cash			(31,704	)			(4,526	)
Effect of Exchange Rates on Cash			-				-
Cash at Beginning of Period			48,856				4,852
Cash at End of Period		$	17,152			$	326
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		$	186,275			$	75,000
Prepaid expenses paid in stock		$	-			$	104,522
Debt discount recorded on notes payable		$	93,446			$	47,370
Deferred revenue settled in shares		$				$	2,000
Conversion of balance in accounts payable - related party to loans payable		$	-			$	324,475
Notes payable settled in shares		$	121,819			$	-

 

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

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(Unaudited)

 

Notes to financial statements:

 

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 September 30, 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. On August 22, 2014 we formed a Dubai subsidiary, of Global Equity Partners Plc., called GE Professionals JLT.

 

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 net comprehensive loss of $356,602 and $864,030 for the three and nine months ended September 30, 2014 respectively. Net cash used in operations of $173,688 for the nine months ended September 30, 2014; and a working capital deficit of $1,679,831 and stockholders´ deficit of $2,996,902 as of September 30, 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.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(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. and GE Professionals JLT is 100% owned by Global Equity Partners Plc.All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

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

 

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

 

Risks and Uncertainties

 

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

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 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 September 30, 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 September 30, 2014 and December 31, 2013.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 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 September 30, 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

September 30, 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.

 

		September 30, 2014				September 30, 2013
Office equipment		$	25,532			$	6,679
Accumulated depreciation		$	(3,128	)		$	(1,115	)
Net fixed assets		$	22,404			$	5,464

 

During the nine months ended September 30, 2014 and September 30, 2013, the Company expensed $1,630 and $998 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 nine months ended September 30, 2014 and September 30, 2013 the Company received cash only as consideration for services rendered.

 

At September 30, 2014 and September 30, 2013, the Company had the following concentrations of accounts receivables with customers:

 

Customer							September 30, 2014				September 30, 2013
ACI			$	2,520				100	%			0	%
			$	2,520				100	%			0	%

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(Unaudited)

 

For the three months ended September 30, 2014 and September 30, 2013, the Company had the following concentrations of revenues with customers:

 

Customer			September 30, 2014				September 30, 2013
ACI				0	%			3	%
SAC				0	%			50	%
ANR				0	%			6	%
YMD				4	%			0	%
IOA				4	%			0	%
STV				4	%			0	%
PCI				5	%			0	%
DSI				9	%			41	%
MHB				41	%			0	%
DUO				30	%			0	%
Total				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 nine months ended the Company received $558,000 from seven clients for service to be rendered during this year 2014 and 2015. At September 30, 2014, the Company recognized $308,000 ($247,000 out of December 31, 2013) of this deferred revenue as revenue; leaving a deferred revenue balance of $250,000.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(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.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(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. 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 September 30, 2014 and as of December 31, 2013 respectively:

 

Loans payable – related party – December 31, 2013		$	57,194
Proceeds from loans			700
Repayments			-
Loans payable – related party – September 30, 2014		$	57,894

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(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 September 30, 2014, $209,475 was due to the Chief Executive Officer and $115,000 was due to the Chief Financial Officer. During the quarter ended March 31, 2013, the Company converted this amount to Convertible Loan Payable. This amount will be advanced for a term of two years and is repayable on demand and will accrue interest at 10% on the loan period. The agreement also gives an option to the officers of the Company to convert all or part of the debt that the Company maintains with them into restricted shares at $1.20 per share. The balance outstanding in the Loan Payable account as at September 30, 2014 is $324,475. The accrued interest payable at September 30, 2014 amounted to $48,762. The Company assessed if there is a beneficial conversion feature cost associated with this transaction, none was noted.

 

(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 September 30, 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 August 8, 2014 it was mutually agreed to convert this convertible loan into a payment on account for services to be rendered in Dubai in the near future.

 

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 $12,000 of this debt in common stock at $0.0406 per share. On April 1, 2014 the Company decided to allow this funder to convert the rest of this debt in common stock at $0.0425 per share

 

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 September 30, 2014 the loan had still not been approved due to technical reasons solely related to the lender.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(Unaudited)

 

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 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 issue stock at 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 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.

 

On June 12 2014, the Company and an investor entered into a two year $250,000 convertible promissory note with an original issue discount of $25,000. The terms of this convertible note were $55,000 upon closing, an 8% interest rate per annum or 0% interest if the note was to be paid back within 90 days of the issuance of the note. The terms of the conversion were agreed at the lesser of $0.30 or a 40% discount to market based on an average price of the lowest bids on the 25 trading days prior to the conversion date.

 

The amounts paid to acquire the debt financing have been treated as a debt discount hence at September 30, 2014 the Company recorded debt discount of $44,113. This will be amortized over the life of the respective loans. During the nine months ended September 30, 2014 and September 30, 2013, the Company amortized $26,567 and $26,452.

 

(D) Accounts payable – related parties

 

The following table represents the accounts payable to related parties as of September 30, 2014 and December 31, 2013, respectively:

 

			September 30, 2014				December 31, 2013
Salaries				331,985				182,080
Expenses				5,473				9,973
			$	337,458			$	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 nine months ended September 30, 2014.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 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

September 30, 2014

(Unaudited)

 

(B) Common Stock

 

During the six months ended September 30, 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			$	12,000			$	0.0406
4/1/2014		Stock issued for payment of debt			501,149			$	109,819			$	0.2190
4/22/2014		Stock issued for services			165,000			$	8,250			$	0.0500
7/22/2014		Stock issued for services			115,000			$	17,250			$	0.1500
7/22/2014		Stock issued for services			50,000			$	7,500			$	0.1500
7/22/2014		Stock issued for services			12,500			$	1,875			$	0.1500
7/22/2014		Stock issued for services			276,000			$	41,400			$	0.1500
8/4/2014		Stock issued for services			200,000			$	30,000			$	0.1500
9/19/2014		Salary Bonus			500,000			$	80,000			$	0.1600
					2,115,216			$	308,094

 

(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. As of the date of the agreement the shares are valued at $43,500. As of September 30, 2014 $77,350 was recorded as stock payable.

 

On June 4, 2013, the Company received $50,000 from Direct Securities Integration, Inc in pursuance of a notes payable agreement. The agreement stipulates a condition for the payment of 10,000 shares in lieu of interest on the day of agreement. Such shares are not issued as of September 30, 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 September 30, 2014. The Company has guaranteed a value of $100,000 for its shares at the time of legend removal. As of September 30, 2014 the legend is still not removed, the Company has accrued for the shortfall of $77,350 as a stock payable.

 

 

Global Equity International, Inc. and Subsidiary

September 30, 2014

(Unaudited)

 

Note 8 - Other current assets

 

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

 

		September 30, 2014				December 31, 2013
Cash collateral paid to secure loan		$	450,000	(1)		$	450,000
Retainers paid to legal counsel			2,201				2,201
		$	452,201			$	452,201
(1) Please refer to Note 5(C) – Notes payable

  

Note 9 - Subsequent Events

 

On October 2, 2014, the Company received $32,500 from a secured a nine month convertible loan signed on September 25, 2014. The loan carried an 8% interest rate and will 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 125% of total amount due inclusive of principal and interest accrued.

 

On October 2, 2014 a note holder converted $8,000 of debt into 86,207 common shares.

 

On October 17, 2014 a note holder converted $4,730 of debt into 162,543 common shares.

 

On October 21, 2014 a note holder converted $4,730 of debt into 162,543 common shares.

 

On October 27, 2014 a note holder converted $4,730 of debt into 162,543 common shares.

 

On November 6 2014 a note holder converted $1,000 of debt into 18,498 common shares.

 

On November 7, 2014 the Company was formally informed that the $3,540,000 loan agreed with a United Kingdom financial institution on December 9, 2013, will be due to commence drawdowns before the end of 2014 subject to our company meeting the conditions precedent stated in the loan agreement.

 

 

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

 

For the three months ended September 30, 2014 and September 30, 2013.

 

The Company had revenues amounting to $209,000 and $165,000 for the three months ended September 30, 2014 and September 30, 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 receivable amounting to $250,000. 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 sponsors 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 September 30, 2014 and September 30, 2013 were $470,304 and $366,348 respectively.

 

		Three Months				Three Months
		September 30, 2014				September 30, 2013
General and administrative expenses		$	130,263			$	99,240
Salaries			251,657				150,000
Professional services			111,215				116,772
Depreciation			653				336
Total operating expenses		$	493,788			$	366,348

 

The operating costs for the three months September 30, 2014 suffered a substantial increase in salaries mainly due to the employment of new staff members in our Dubai office.

 

The net losses from operations for the three months ended September 30, 2014 and September 30, 2013 were $284,788 and $201,348, respectively.

 

Other income (expenses) amounted to $(71,814) and $(41,795) for the three months ended September 30, 2014 and September 30, 2013 respectively. The increase is mainly due a substantial increase in accrued interest on loans received.

 

The net losses for the three months ended September 30, 2014 and September 30, 2013 were $356,602 and $243,143, respectively.

 

 

The Company had 33,159,418 and 30,784,202 shares issued and outstanding at September 30, 2014 and September 30, 2013, respectively. The weighted average of the stock for the three months ended September 30, 2014 and September 30, 2013 was 32,474,668 and 30,784,202, respectively. The loss per share for both periods was $(0.01) and $(0.01), respectively.

 

For the nine months ended September 30, 2014 and September 30, 2013.

 

The Company had revenues amounting to $555,000 and $171,849 for the nine months ended September 30, 2014 and September 30, 2013, which is a 223% increase in comparison with the same period last year; this increase in mainly due to having been engaged by many new clients for US and Dubai listings and also general consultancy work. Also, with our growing team in our Dubai office, we have been able to accomplish certain milestones, called upon in our contracts, in order to allow us to invoice current clients for work completed.

 

The operating costs for the for the nine months ended September 30, 2014 and September 30, 2013 were $1,079,115 and $1,248,674, respectively.

 

		Nine Months				Nine Months
		September 30, 2014				September 30, 2013
General and administrative expenses		$	226,463			$	222,634
Salaries			639,375				390,000
Professional services			211,648				511,042
Depreciation			1,630				998
Impairment of financial assets			-				160,000
Total operating expenses		$	1,079,115			$	1,284,674

 

The total operating costs for the nine months September 30, 2014 decreased by $205,559. We had to increase the salaries due to the employment of new staff but we also managed to decrease substantially our dependence on professional services rendered to the Company.

 

The net losses from operations for the nine months ended September 30, 2014 and September 30, 2013 were $524,115 and $1,112,825, respectively. This substantial decrease in losses is due to two main factors: 1) a 223% increase in income and 2) at September 30, 2013, we had to impair $160,000 of financial assets.

 

Other income (expenses) amounted to $(339,915) and $(37,743) for the nine months ended September 30, 2014 and September 30, 2013, respectively. As we have been developing the business, we have not been able to depend solely on the receipt of income to fund our operating costs; hence we have had to incur debt financing which is not inexpensive for early stage companies that are still developing their business model.

 

The net losses for the ended nine months ended September 30, 2014 and September 30, 2013 were $864,030 and $1,150,568, respectively.

 

The Company had 33,159,418 and 30,784,202 shares issued and outstanding at September 30, 2014 and September 30, 2013, respectively. The weighted average of the stock for the nine months ended September 30, 2014 and September 30, 2013 was 31,866,476 and 30,370,730, respectively. The loss per share for both periods was $(0.01) and $(0.04), respectively.

 

 

LIQUIDITY AND CAPITAL RESERVES

 

As reflected in the accompanying financial statements, the Company had a net comprehensive loss of $356,602 and $864,030 for the three and nine months ended September 30, 2014, respectively. Net cash used in operations of $(239,473) for the nine months ended September 30, 2014; a working capital deficit of $1,679,831 and stockholders´ deficit of $(2,996,902) as of September 30, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

As reflected in the accompanying financial statements, the Company had a net comprehensive loss of $243,143 and $1,150,568 for the three and nine months ended September 30, 2013, respectively. Net cash used in operations of $(128,845) for the nine months ended September 30, 2013; a working capital deficit of $(474,666) and stockholders´ deficit of $(1,268,677) as of September 30, 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 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. 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 August 8, 2014 it was mutually agreed to convert this convertible loan into a payment on account for services to be rendered in Dubai in the near future.

 

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 $12,000 of this debt into common stock at $0.0406 per share. On April 1, 2014 the Company decided to allow this funder to convert the rest of this debt in common stock at $0.0435 per share.

 

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 was 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 principal 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 a 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 June 30, 2014 the loan had still not been approved due to technical reasons solely related to the lender. On November 7, 2014 the Company was formally informed that the $3,540,000 loan agreed with a United Kingdom financial institution on December 9, 2013, will be due to commence drawdowns before the end of 2014 subject to our company meeting the conditions precedent stated in the loan agreement.

 

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 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 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 May 1, 2014, the Company secured two 12 month convertible loans 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.

 

On June 12 2014, the Company and an investor entered into a two year $250,000 convertible promissory note with an original issue discount of $25,000. The terms of this convertible note were $55,000 upon closing, an 8% interest rate per annum or 0% interest if the note was to be paid back within 90 days of the issuance of the note. The terms of the conversion were agreed at the lesser of $0.30 or a 40% discount to market based on an average price of the lowest bids on the 25 trading days prior to the conversion date.

 

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.

 

 

On May 28, 2014 the Company announced that it had appointed His Highness Sheikh Rashed bin Ahmed bin Maktoum Al Maktoum (A Member of the ruling royal family of Dubai). This appointment underpinned the Company fully owned subsidiary, Global Equities Partners Plc’s, rapidly increasing advisory work in the UAE as capital market activity returns supported by a wider resurgent economy. For 2014, the IMF has predicted UAE GDP growth of 4.5% driven by robust economic fundamentals, Dubai’s recent Expo 2020 win and Abu Dhabi’s buoyant oil and gas industry and aligned investment. In addition, MSCI’s (Morgan Stanley Capital International) recent upgrade of the UAE to ‘emerging market’ status is expected to facilitate capital inflow into the Emirate of around US$ 370 million according to industry experts.

 

On September 24, 2014 we were engaged by a company called VT Hydrocarbons Limited to assist with the raising them between 45 million US and 100 million US in order to acquire an existing storage facility and repurpose it to specialize in wet fuel storage and LPG (Liquid Petroleum Gas) storage in Jordan. Our contractual agreement with our client was a 1.5% cash success fee and a 1.5% equity fee. On November 5, 2014 we announced through a press release that we have we had effectively sourced the 78 million US of funding for our client and that they were in physical possession of a letter of “Proof of Funds” from the potential investors for the first phase of $45 million US. The second phase of $32 million US will be sourced through the same channel of funding.

 

FUTURE PLANS

 

MILESTONES FOR 2014:

 

Our specific plan of operations and milestones through 2015 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).
	(7)	Various finance professionals in South East Asia.

 

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 eight “introducers” to potential new business for the Company before the end of December 2015.

 

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 UAE. This branch office will continue to recruit new members of staff that will allow us to grow and become more efficient in Dubai and to have a firm back office set up allowing as to effectively deal with our prospects and clients

 

 

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.

 

We will perform comparative analysis on any prospective client allowing us to assess the viability of the potential to the company for the time spent.

 

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.

 

We will also utilize various websites and social media to enhance the reputation and service of the Company from our IT division allowing us to cost effectively market our Company and its services.

 

6)

DUAL LISTING DUBAI

 

In 2015, 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 preparing 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 three new members to our administration team before December 31, 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. The first Sri Lanka/ Dubai road show is expected to be held by the company for the Sri Lankan companies in Q1 2015 with plans being made now with the media for the exposure of the event. We intend to perform a similar service for companies out of Thailand and to also invite both country representatives to USA for a similar road show event.

 

10)

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

The foundation for this development was created in 2013. In 2014 and 2015, we intend to cement 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 may attract and give the company a firm foothold in the Asian territory.

 

We will explore both companies who could require our service and companies who can assist us with development in the local market in the chosen location.

 

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, Global Equity Partners Managing Director, Zara V. Clark, our Dubai office anager, 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 have also engaged Mr. Mark Thornton, based in London, who will act as a new business developer and Mr. Patrick Hobbs, also based in London, who has been tasked with client management and general liaison; both are managed in London by Mr. Patrick V. Dolan, Global Equity Partners Plc. Managing Director.

 

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 September 30, 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 payment of debt			295,567			$	12,000			$	0.0406
4/1/2014		Stock issued for payment of debt			501,149			$	109,819			$	0.2190
4/22/2014		Stock issued for services			165,000			$	8,250			$	0.0500
7/22/2014		Stock issued for services			115,000			$	17,250			$	0.1500
7/22/2014		Stock issued for services			50,000			$	7,500			$	0.1500
7/22/2014		Stock issued for services			12,500			$	1,875			$	0.1500
7/22/2014		Stock issued for services			276,000			$	41,400			$	0.1500
8/4/2014		Stock issued for services			200,000			$	30,000			$	0.1500
9/19/2014		Salary Bonus			500,000			$	80,000			$	0.1600
10/2/2014		Stock issued on debt conversion			86,207			$	8,000			$	0.0928
10/17/2014		Stock issued on debt conversion			162,543			$	4,730			$	0.0291
10/21/2014		Stock issued on debt conversion			162,543			$	4,730			$	0.0291
10/27/2014		Stock issued on debt conversion			162,543			$	4,730			$	0.0291
11/6/2014		Stock issued on debt conversion			18,498			$	1,000			$	0.0541
					2,707,550				331,284

 

These shares were issued for debt reductions and general working capital.

 

These shares were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (“1933 Act”) pursuant to Section 4(a)(1) of the 1933 act and Regulation S promulgated thereunder.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

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

 

  

EXHIBIT INDEX

 

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

 

Exhibit No		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
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase
101.DEF**		XBRL Taxonomy Extension Definition Linkbase
101.LAB**		XBRL Taxonomy Extension Label Linkbase
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

 

*	Filed herewith.
**	In accordance with Regulation S-T, the XBRL related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” herewith 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: November 13, 2014	/s/ Peter J. Smith
	Peter J. Smith
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: November 13, 2014	/s/ Enzo Taddei
	Enzo Taddei
	Chief Financial Officer
	(Principal Accounting and Financial Officer)