UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K

 

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

 

For the fiscal year ended December 31, 2016

 

OR

 

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

 

For the transition period from ____________ to ___________

 

Commission File Number 000-54557

 

GLOBAL EQUITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

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

 

X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, UAE

(Address of principal executive offices)

 

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

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of Each Class

Common Stock, $.001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

 

Indicate by check mark whether the registrant: (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that he 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 corporate 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 or post such files). Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

 

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 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 Act). Yes [  ] No [X]

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter (June 30, 2016) was approximately $4,931,027.

 

As of March 23, 2017, there were 379,475,775 shares of our common stock outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE: None

 

 

 

TABLE OF CONTENTS

 

ITEMS				PAGE
		PART I
Item 1.		Business		4
Item 1A.		Risk Factors		11
Item 1B.		Unresolved Staff Comments		14
Item 2.		Properties		14
Item 3.		Legal Proceedings		15
Item 4.		Mine Safety Disclosures		15
		PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		16
Item 6.		Selected Financial Data		19
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 7A.		Quantitative and Qualitative Disclosure About Market Risk		27
Item 8.		Financial Statements and Supplementary Data		27
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		27
Item 9A.		Controls and Procedures		27
Item 9B.		Other Information		28
		PART III
Item 10.		Directors, Executive Officers and Corporate Governance		29
Item 11.		Executive Compensation		33
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		37
Item 13		Certain Relationships and Related Transactions, and Director Independence		39
Item 14.		Principal Accounting Fees and Services		39
		PART IV
Item 15.		Exhibits, Financial Statement Schedules		40

 

 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K (“Annual Report”), in particular the Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 herein (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give expectations or forecasts of future events. The reader can identify these forward-looking statements by the fact that they do not relate strictly to historical or current facts. They use words such as “believe(s),” “goal(s),” “target(s),” “estimate(s),” “anticipate(s),” “forecast(s),” “project(s),” plan(s),” “intend(s),” “expect(s),” “might,” may” and other words and terms of similar meaning in connection with a discussion of future operations, financial performance or financial condition. Forward-looking statements, in particular, include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends of operations and financial results.

 

Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual results and financial condition. The reader should consider the following list of general factors that could affect the Company’s future results and financial condition.

 

Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are:

 

	●	the success or failure of management’s efforts to implement their business strategy;
	●	the ability of the Company to raise sufficient capital to meet operating requirements;
	●	the uncertainty of consumer demand for our products and services;
	●	the ability of the Company to compete with major established companies;
	●	heightened competition, including, with respect to pricing, entry of new competitors and the development of new products or services by new and existing competitors;
	●	absolute and relative performance of our products or services;
	●	the effect of changing economic conditions;
	●	the ability of the Company to attract and retain quality employees and management;
	●	the current global recession and financial uncertainty; and
	●	other risks which may be described in our future filings with the U.S. Securities and Exchange Commission (“SEC”).

 

No assurances can be given that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. We assume no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this Annual Report. The reader is advised, however, to consult any further disclosures we make on related subjects in our filings with the SEC.

 

 

PART I

 

ITEM 1.    BUSINESS.

 

BUSINESS DEVELOPMENT

 

BACKGROUND

 

Global Equity International Inc. (“Company” or “GEI”)) was incorporated on October 1, 2010, as a Nevada corporation, for the express purpose of acquiring Global Equity Partners Plc, a corporation formed under the laws of the Republic of Seychelles (“GEP”) on September 2, 2009. On August 22, 2014, GE Professionals DMCC was incorporated in Dubai as a fully owned subsidiary of Global Equity Partners Plc. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited, under the laws of the Republic of Seychelles.

 

 

 

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

 

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

 

On November 15, 2010, we entered into a Plan and Agreement of Reorganization (“Plan of Reorganization”) with GEP and its sole shareholder, Peter J. Smith, pursuant to which we would acquire 100% of the common stock of GEP. We consummated the Plan of Reorganization effective December 31, 2010, by issuing 20,000,000 shares of our common stock to Peter J. Smith, at which time GEP became our wholly owned subsidiary and Peter J. Smith was appointed as our President, Chief Executive Officer and Director.

 

As a result of our acquisition of GEP, we provide corporate advisory services to companies desiring to have their shares listed on stock exchanges or quoted on quotation bureaus in various parts of the world. We have offices in Dubai and London. We have affiliations with firms located in some of the world’s leading financial centers such as London, New York, Frankfurt and Dubai. These affiliations are informal and are comprised of personal relationships with groups of people or people with whom our Company or our management has done, or attempted to do, business in the past. We do not have any contractual arrangements, written or otherwise, with our affiliations.

 

 

Our Chief Executive Officer, Peter Smith, initially founded Global Equity Partners Plc. in 2009 to assist small to medium size businesses with management restructuring and corporate restructuring, in general, and also to obtain, if requested by its clients, access to capital markets via equity and debt financings. In June of 2016, we incorporated another fully owned subsidiary called GEP Equity Holdings Limited.

 

GEP Equity Holdings Limited and its Dubai subsidiary, GE Professionals DMCC, look for companies that require capital funding and ultimately a listing of their shares on a recognized stock exchange. The Company introduces these clients to private and institutional investors in our network (“rol-a-dex”) of over 100 “financial introducers” around the world. These financial introducers are groups of people or institutions that are presently introducing new clients to us or who have introduced new clients to our management in the past. We do not have any contractual arrangements, written or otherwise, with these financial introducers.

 

Presently, GEP Equity Holdings Limited (incorporated in June of 2016) and its Dubai subsidiary, GE Professionals DMCC, are our only operating businesses. GEI´s present operations are limited to insuring compliance with regional, state and national securities regulatory agencies and organizations. In addition, GEI is charged with (i) handling our periodic reporting obligations under the Securities Exchange Act of 1934; (ii) managing our investor relations; and (iii) raising debt and equity capital necessary to fund our operations, and to enhance, and grow our business. GEI does not offer or conduct any consulting or advisory services, as such services are performed solely by our foreign subsidiary, GEP Equity Holdings Limited.

 

We currently offer the following services to our clients:

 

	●	Corporate restructuring
	●	Management buy outs
	●	Management recruitment
	●	Investor and public relations
	●	Regulatory compliance
	●	Exchange listings
	●	Introductions to financiers

 

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

 

As a Company with less than $1 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (also known as the “JOBS Act”). As an emerging growth company, we are entitled to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

 

	●	Only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
	●	Reduced disclosure about our executive compensation arrangements;
	●	Not having to obtain non-binding advisory votes on executive compensation or golden parachute arrangements; and
	●	Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

 

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenues, if we have more than $700 million in market value of our stock held by non-affiliates, or if we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens in the future. We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant Section 107(b) of the JOBS Act.

 

CORPORATE RESTRUCTURING SERVICES

 

We advise and assist our clients in determining the corporate structure that is most suitable to their business models. We recommend management changes where necessary. We also offer them corporate governance models customized to their specific organizations and desired exchange listings. We also review and analyze their balance sheets and capital structures and make recommendations on debt consolidations, equity exchanges for debt, proper capital structures and viability and timing of equity and debt offerings. We do not presently recommend and we do not intend in the future to recommend that our clients merge or be acquired by shell companies.

 

MANAGEMENT BUY OUTS

 

We assist our clients in every aspect of management buyouts from corporate restructuring to debt financing and also introduce buyers and sellers to financiers for private equity placements.

 

MANAGEMENT RECRUITING

 

We assist our clients with the recruitment of management and board members through our various contacts around the world. Management recruitment and retention is also an important part of our Corporate Restructuring Services and these services often overlap.

 

INVESTOR AND PUBLIC RELATIONS

 

Since our clients and future clients will likely desire to have their shares listed or continue to be listed on a stock exchange or quoted on one of the quotation bureaus, we will advise our clients on the necessary requirements for communicating with their equity holders and stakeholders, their customers and potential customers. We will assist our clients in this area by recommending third party financial professionals and investor relations and public relations organizations to provide them with such services.

 

REGULATORY COMPLIANCE

 

We have organized a cadre of third party securities attorneys and accountants to assist our clients with their compliance with the many reporting and other requirements of stock exchanges, quotation bureaus and securities regulatory agencies and organizations in the states and countries where their shares will be or are listed or traded.

 

EXCHANGE LISTINGS

 

We also assist our clients with the selection of stock exchanges that may be suitable to our clients. Various exchanges have listing requirements and standards that vary from one exchange to another. Typical listing requirements and standards relate to a number of things, such as pre-tax income, cash flows, revenue, net tangible assets, market value of a company’s listed securities, minimum trading prices of a company’s securities, minimum shareholders’ equity, operating history, number of shareholders, number of market makers, and corporate governance. We will try to identify appropriate exchanges for our clients based on the particular client’s operating history, pre-tax income, cash flow, revenue, net tangible assets, shareholder base and other factors described above.

 

We will assist our clients with retention of attorneys and accountants having experience with publicly held companies and stock exchanges in various countries. We will also assist our clients in locating market makers, investment bankers and broker-dealers to assist them with accessing capital markets.

 

INTRODUCTIONS TO FINANCIERS

 

After reviewing the business plans, prospects and problems that are unique to each of our clients, we will use our best efforts to introduce our clients to various third party financial resources around the world who may be able to assist them with their capital funding requirements.

 

As used throughout this Annual Report, references to “Global Equity International,” “GEI,” “Company,” “we,” “our,” “ours,” and “us” refer to Global Equity International, Inc. and our subsidiaries, unless the context otherwise requires. In addition, references to “financial statements” are to our consolidated financial statements contained herein, except as the context otherwise requires. References to “fiscal year” are to our fiscal year which ends on December 31 of each calendar year. Unless otherwise indicated, the terms “Common Stock,” “common stock” and “shares” refer to our shares of $0.001 par value, common stock.

 

HISTORICAL BUSINESS TRANSACTED

 

BUSINESS TRANSACTED IN 2014

 

	During 2014, we gained the following eight clients:
	1.	ATC Enterprises DMCC
	2.	Authenta Trade Inc.
	3.	Duo World Inc.
	4.	Medinas Holdings BV
	5.	Precious Cells International Limited
	6.	Unii Limited
	7.	VT Hydrocarbon Holdings (Pte.) Ltd.
	8.	Your MD AS

 

BUSINESS TRANSACTED IN 2015

 

	During 2015, we gained the following eight clients:
	1.	Advanced Imaging Projects LLC.
	2.	Energy Equity Resources (Norway) Limited.
	3.	Hoqool Petroleum.
	4.	INSCX Exchange (Central Clearing) Limited.
	5.	International FIM SRL.
	6.	Primesite Developments Limited.
	7.	Quartal Financial Solutions AG.
	8.	TAM Mining Limited.

 

OUR BUSINESS IN 2016

 

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

 

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

 

 

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

 

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

 

FUTURE PLANS

 

MILESTONES FOR 2017-2018:

 

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

 

To date, we have 10 clients under contract that we deem to be active and are either seeking a listing on a recognized stock exchange or seeking funding for acquisition and growth:

 

		Client:		Sector:		Primary Location:
1		VT Hydrocarbon Holdings (Pte.) Limited		LNG Gas storage		Singapore & Jordan
2		Scandinavian AgriTex Co. Limited		Cotton and clothing industry		United Kingdom and Norway
3		Primesite Developments Limited		Residential and Commercial Development		United Kingdom
4		Hoqool Petroleum		Natural Resources		United Arab Emirates
5		Quartal Financial Solutions AG		Financial Technology		Switzerland
6		Granite Power Limited		Renewable Energy		Australia
7		Majestic Wealth Limited		Property Development		Cyprus
8		The Stakis Collection Limited		Hospitality Sector		United Kingdom
9		Teralight FZ LLC		Telecommunications Industry		United Arab Emirates
10		Blackstone Natural Resources BV		Natural Resources		British Virgin Islands

 

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

 

We currently are relying on introductions to potential clients by the following firms in the Middle East, South East Asia, Europe and the US:

 

	●	Certain Registered and Regulated Investment Houses and Funds in London (United Kingdom).
	●	An Austrian management consultancy firm based in Vienna (Austria).
	●	Various Financial Institutions and also Investment Banks based in Dubai (UAE).
	●	Certain Private Banks based in Amsterdam (The Netherlands), Luxembourg and Zurich (Switzerland).
	●	Various Family Offices in Dubai (UAE).
	●	Various introducers to capital based on the East and West Coast of the US.
	●	Various introducers to capital based in Hong Kong.
	●	Yenom (Pvt.) Limited – An introducer of new business based in Sri Lanka.
	●	MEPEX – A Bahrain Oil and Gas with over 300 members.
	●	Sixfoursixfour Limited and the World Nano Foundation.
	●	The Billbarter Group, a financial partner with offices in Hungary, Romania, Slovakia, Serbia, Austria, Germany and the United Kingdom.
	●	CPM SARL, a financial partner with offices in Beirut (Lebanon).
	●	Various South East Asian financial partners and introducers to new business.

 

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

 

 

ACQUIRE CERTAIN FINANCIAL ADVISORY FIRMS WITH MONEY UNDER ADMINISTRATION

 

Over the next 12 months we intend to acquire several licensed financial advisory firms in UK, Singapore and Hong Kong. The possible targets have been identified. The acquisitions will form part of a new subsidiary we intend to establish in the relevant territory.

 

REBRANDING OF OUR ENTIRE CORPORATE STRUCTURE

 

Over the next 2 to 3 months we intend to rebrand our business and analyze our entire corporate structure. We will adapt a new brand for all finance related companies that will carry through each subsidiary with a uniform image and examine the structure we currently operate to ensure its efficiency as we add new subsidiary companies. The reporting structures of each subsidiary will also be examined for maximum effect.

 

EXPAND OUR HUMAN RESOURCES DEPARTMENT IN DUBAI – KINGSMAN JAMES.

 

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

 

EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY

 

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

 

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

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

 

OPEN A NEW OFFICE IN THE UNITED KINGDOM

 

Due to our growing U.K. and Central European based clientele and also due to our plan to acquire a certain number of U.K. based financial advisory firms with funds under management, we plan to open a new U.K. based office within the next 6 months.

 

 

COMPETITION

 

We face intense competition in every aspect of our business, and particularly from other firms which offer management, compliance and other consulting services to private and public companies. We would prefer to accept a relatively low cash component as our fee for management consulting and regulatory compliance services and take a greater portion of our fee in the form of restricted shares of our private clients’ common stock. We also face competition from a large number of consulting firms, investment banks, venture capitalists, merchant banks, financial advisors and other management consulting and regulatory compliance services firms similar to ours. Many of our competitors have greater financial and management resources and some have greater market recognition than we do.

 

REGULATORY REQUIREMENTS.

 

We are not required to obtain any special licenses, nor meet any special regulatory requirements before establishing our business, other than a simple business license. If new government regulations, laws, or licensing requirements are passed that would restrict or eliminate delivery of any of our intended products, then our business may suffer. Presently, to the best of our knowledge, no such regulations, laws, or licensing requirements exist or are likely to be implemented in the near future that would reasonably be expected to have a material impact on or sales, revenues, or income from our business operations.

 

We are not a broker-dealer. We are not an investment adviser or an investment company. We are not a hedge fund or a mutual fund or any similar type of fund. We are primarily an operating business that offers and performs corporate consultancy services.

 

EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS.

 

The Company’s common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“1934 Act”). As a result of such registration, the Company is subject to Regulation 14A of the “1934 Act,” which regulates proxy solicitations. Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with the rules and regulations of the Commission regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to stockholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide its stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted to the Commission at least 10 days prior to the date that definitive copies of this information are forwarded to stockholders.

 

The Company is also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Commission on a regular basis, and will be required to disclose certain events in a timely manner (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.

 

WE ARE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404 OR IF THE COSTS RELATED TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.

 

The Company is required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which requires that we document and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures for the 2016 and 2017 fiscal years. We are currently evaluating our existing controls against the standards adopted by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). During the course of our ongoing evaluation and integration of the internal controls of our business, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review (see Item 9A, below for a discussion of our internal controls and procedures).

 

We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirement of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated with such compliance exceed our current expectations, our results of operations and the future filings of our Company could be materially adversely affected.

 

DEPENDENCE ON KEY EMPLOYEES.

 

The Company is heavily dependent on the abilities of our President, Peter Smith, our Chief Financial Officer, Enzo Taddei and our Managing Director, Patrick V. Dolan. The loss of the services of Mr. Smith, Mr. Taddei or Mr. Dolan would seriously undermine our ability to carry out our business plan.

 

In the event of future growth in administration, marketing, manufacturing and customer support functions, the Company may have to increase the depth and experience of its management team by adding new members. The Company’s success will depend to a large degree upon the active participation of its key officers and employees, as well as the continued service of its key management personnel and its ability to identify, hire, and retain additional qualified personnel. There can be no assurance that the Company will be able to recruit such qualified personnel to enable it to conduct its proposed business successfully.

 

REPORTS TO SECURITY HOLDERS.

 

The public may view and obtain copies of the Company’s reports, as filed with the Securities and Exchange Commission, at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. Additionally, copies of the Company’s reports are available and can be accessed and downloaded via the internet on the SEC’s internet site at http://www.sec.gov.

 

ITEM 1A. RISK FACTORS.

 

An investment in our Common Stock involves a high degree of risk. Prospective investors should carefully consider the following risk factors and the other information in this Annual Report and in our other filings with the SEC before investing in our Common Stock. Our business and results of operations could be seriously harmed by any of the following risks. You should carefully consider the risks described below, the other information in this Annual Report and the documents incorporated by reference herein when evaluating our Company and our business. If any of the following risks actually occurs, our business could be harmed. In such case, the trading price of our Common Stock could decline and investors could lose all or a part of the money paid for our Common Stock.

 

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.

 

RISKS ASSOCIATED WITH OUR COMPANY

 

THERE IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN THAT CASE INVESTORS COULD LOSE THEIR INVESTMENTS IN OUR COMMON STOCK.

 

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations and you could lose your investment.

 

WE ARE AN “EMERGING GROWTH COMPANY” AND WE CANNOT BE CERTAIN IF WE WILL BE ABLE TO MAINTAIN SUCH STATUS OR IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 or “JOBS Act,” and we may adopt certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive and stockholder approval of any golden parachute payments not previously approved. We may remain an “emerging growth company” for up to five full fiscal years following our initial public offering. We would cease to be an emerging growth company, and, therefore, ineligible to rely on the above exemptions, if we have more than $1 billion in annual revenue in a fiscal year, if we issue more than $1 billion of non-convertible debt over a three-year period, or if we have more than $700 million in market value of our common stock held by non-affiliates as of June 30 in the fiscal year before the end of the five full fiscal years. Additionally, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result of our reduced disclosures, there may be less active trading in our common stock (assuming a market ever develops) and our stock price may be more volatile.

 

AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARE TO BE PROFITABLE.

 

The corporate consulting business is intensely competitive and due to our small size and limited resources, we may be at a competitive disadvantage, especially as a public company. There are several firms offering similar services. Many of our competitors have proven track records and substantial human and financial resources, as opposed to our Company who has limited human resources and little cash. Also, the financial burden of being a public company, which will cost us approximately $50,000 per year in auditing fees and legal fees to comply with our reporting obligations under the Securities Exchange Act of 1934 and compliance with the Sarbanes-Oxley Act of 2002, will strain our finances and stretch our human resources to the extent that we may have to price our Consultancy service fees higher than our non-publicly held competitors just to cover the costs of being a public company.

 

WE ARE VULNERABLE TO THE CATASTROPHIC EVENTS WHICH MAY NEGATIVELY AFFECT OUR PROFITABILITY AND ABILITY TO CARRY OUT OUR BUSINESS PLAN.

 

We are potentially vulnerable to catastrophic events that could affect our profitability and our ability to carry out our business plan. For example, sudden disruptions in business conditions may result from terrorist attacks similar to the events of September 11, 2001 in the United States, the November 2015 Paris attacks, the March 2016 Brussels attacks and the July 2016 Nice attacks, including further attacks, retaliation and the threat of further attacks or retaliation, war, civil unrest in the Middle East, chaotic immigration problems in Europe, adverse weather conditions or other natural disasters, such as hurricanes and tsunamis, pandemic situations or large scale power outages can have a short term or, sometimes, long term impact on spending.

 

BECAUSE OUR BUSINESS MODEL ANTICIPATES OUR RECEIVING EQUITY STAKES IN OUR CLIENTS, MOST OF WHOM WILL BE DEVELOPMENT STAGE COMPANIES, WE MAY NOT BE ABLE TO RESELL SUCH EQUITY AT SUITABLE PRICES, IF AT ALL, WHICH COULD MATERIALLY IMPACT OUR EARNINGS AND ABILITY TO REMAIN IN BUSINESS.

 

Our business model anticipates that we will receive, as partial compensation for our consulting services, equity stakes in our clients, many of whom will be development stage companies. We will have to value those equity stakes at the time we receive them. Investments in development stage companies are risky because many of such companies’ securities are illiquid, thinly traded (if at all) and the value of such securities will be subject to adjustments should the value of such securities decline, should such securities be delisted from an exchange or cease being quoted on a stock quotation medium or should such businesses fail, which could cause us to write-down or write-off the value of such securities and result in a negative impact to our earnings and possibly cause us to cease or curtail our operations.

 

 

WE MAY BE SUBJECT TO FURTHER GOVERNMENTAL REGULATION, INCLUDING THE INVESTMENT COMPANY ACT OF 1940, WHICH COULD ADVERSELY AFFECT OUR OPERATIONS.

 

As part of our business model, Global Equity Partners Plc and GEP Equity Holdings Limited accepts equity securities in our clients as partial compensation for our services. Prior to 2012, 40% or more of our income was derived from the receipt of equity securities and more than 40% of our assets were comprised of equity securities that we received in exchange for some of our services. In 2012, only 9.85% of our income was derived from the receipt of equity securities. As of December 31, 2013, 1.00% of our assets were comprised of equity securities. As of December 31, 2014, 3.69% of our assets were comprised of equity securities. As of December 31, 2015, 94.42% of our assets were comprised of equity securities. As of December 31, 2016, 95.57% of our assets were comprised of equity securities.

 

Although we do not believe we are engaged in the business of investing, reinvesting or trading in securities, and we do not currently hold ourselves out to the public as being engaged in those activities, it is possible that we may be deemed to be an “inadvertent investment company” under section 3(a)(1)(C) of the Investment Company Act of 1940, as amended (“ICA”), if more than 40% of our future income and/or more than 40% of our assets are derived from “investment securities” (as defined in the ICA), and if we are deemed to be, or perceived to be, primarily engaged in the business of investing, reinvesting or trading in securities.

 

If we were deemed or found to be an investment company by the Securities and Exchange Commission or a court of law, then we would face dire consequences and a maze of additional regulatory obligations. For example, registered investment companies are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered investment company, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, in an action by the SEC, that we would be unable to enforce contracts with third parties or that third parties with whom we have contracts could seek to obtain rescission of transactions with us undertaken during the period it was established that we were an unregistered investment company.

 

WE COULD BE SUBJECT TO THE INVESTMENT ADVISERS ACT OF 1940, WHICH WOULD BE DETRIMENTAL TO OUR BUSINESS.

 

Although we do not believe we are engaged in the investment advisory business and we do not hold ourselves out to be investment advisers, it is possible that the SEC could deem or find us to be an unregistered investment adviser due to the types of consulting services offered by us. If we were deemed or found to be an investment adviser by the Securities and Exchange Commission or a court of law, then we would face dire consequences and a maze of additional regulatory obligations. For example, registered investment advisers are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, fees, management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered investment adviser, there would be a risk, among other material adverse consequences, that we could be become subject to monetary penalties or injunctive relief, or both, in an action by the SEC, that we would be unable to enforce contracts with third parties or that third parties with whom we have contracts could seek to obtain rescission of transactions with us undertaken during the period it was established that we were an unregistered investment adviser.

 

OUR SHAREHOLDERS MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING, FUND OUR OPERATIONS AND SATISFY OUR OBLIGATIONS THROUGH ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK.

 

We will likely have to issue additional shares of our Common Stock to fund our operations and to implement our plan of operation. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock issued in lieu of cash. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the 570,524,225 authorized, but unissued, shares of our common stock. Future issuances of shares of our common stock will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value and that dilution may be material.

 

 

FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.

 

The FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, which may limit your ability to buy and sell our stock.

 

OUR ARTICLES OF INCORPORATION AUTHORIZE THE ISSUANCE OF PREFERRED STOCK.

 

Our Articles of Incorporation authorize the issuance of up to 50,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock.

 

We have 45,000,000 shares of Series “B” Preferred Stock outstanding at this time, which shares are owned by our management.

 

THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.

 

These forward-looking statements in this Annual Report are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. When used in this Annual Report, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject to risks and uncertainties that may cause our actual results to differ materially from those contemplated in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.

 

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

 

Not applicable.

 

ITEM 2. PROPERTIES.

 

The Company does not own any property. Our executive offices are located at X3 Jumeirah Bay, Office 3305, Jumeirah Lake Towers, Dubai, U.A.E.; this office consists of 1,400 square feet of office space for which we pay a monthly rent of $2,675. Peter J. Smith, our President and Chief Executive Office, is based in Dubai, and Enzo Taddei, our Chief Financial Officer, is based between Europe and Dubai. Our Managing Director, Patrick Dolan, is permanently based in the United Kingdom.

 

 

ITEM 3.    LEGAL PROCEEDINGS.

 

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

 

The plaintiff, the Able Foundation, is requesting a settlement of $411,272, which is the $226,616 currently owed, and an additional $184,656 accrued in 2015 as a provision for potential damages.

 

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

 

The Company’s Dubai lawyers, Al Safar & Partners, have subsequently appealed this judgment based on the fact that they believe from a legal stand point that:

 

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

 

According to our Dubai lawyers, the judgment issued against the Company (the defendant) by the Dubai First Instance Court bears no legality and is void and, therefore, the Plaintiff´s claim should be rejected in its entirety.

 

These legal proceedings and appeal are currently ongoing. The Company intends to vigorously defend the litigation. At this time, the Company cannot predict the outcome of the litigation.

 

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

 

ITEM 4.    MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

As of December 31, 2016, the Company’s Common Stock was quoted on the Over-the-Counter Bulletin Board under the symbol “GEQU.OB.” The market for the Company’s Common Stock is limited, volatile and sporadic and the price of the Company’s Common Stock could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading volume, sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes in the supply and demand for the Company’s shares, and other factors. The following table sets forth the high and low sales prices for each quarter relating to the Company’s Common Stock for the last two fiscal years. These quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.

 

Fiscal 2016		High				Low
First Quarter(1)		$	0.037			$	0.019
Second Quarter (1)		$	0.030			$	0.011
Third Quarter(1)		$	0.024			$	0.015
Fourth Quarter (1)		$	0.021			$	0.013
Fiscal 2015			High				Low
First Quarter(1)		$	0.009			$	0.002
Second Quarter(1)		$	0.003			$	0.001
Third Quarter(1)		$	0.008			$	0.002
Fourth Quarter (1)		$	0.045			$	0.019

 

(1)

This represents the closing bid information for the stock on the OTC Bulletin Board. The bid and ask quotations represent prices between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have not been adjusted for stock dividends or splits.

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.

 

Our management is aware of the abuses that have occurred historically in the penny stock market.

 

HOLDERS. As of the date of this filing, there were 82 record holders of the shares of the Company’s issued and outstanding Common Stock.

 

DIVIDENDS. The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s business.

 

RECENT ISSUANCES OF UNREGISTERED SECURITIES

 

SECURITIES ISSUED IN 2017

 

On February 2, 2017, the Company issued 5,000,000 shares of restricted common stock valued at an agreed fixed price of $0.01 per share to Mammoth Corporation upon conversion of $50,000 of debt.

 

SECURITIES ISSUED IN 2016

 

On March 18, 2016, the Company issued 1,000,000 shares of restricted common stock valued at a fair value of $0.0252 per share or $25,200 to St. George Investments LLC, as a modification fee for a loan note.

 

On April 25, 2016, the Company issued 250,000 shares of restricted common stock valued at a fair value of $0.0143 per share or $3,575 in lieu of client introduction fee of $3,750.

 

On April 25, 2016, the Company issued 100,000 shares of restricted common stock valued at a fair value of $0.0143 per share or $1,430 in lieu of client introduction fee of $1,500.

 

On April 29, 2016, the Company issued 3,000,000 shares common shares valued at a fair value of $0.0149 per share or $44,700 to St. George Investments LLC, as a modification fee for a loan note.

 

On May 31, 2016, the Company issued 1,000,000 shares of restricted common stock valued at a fair value of $0.0248 per share or $24,800 to our Chief Executive Officer upon conversion of $27,500 of accrued salary.

 

On May 31, 2016, the Company issued 1,000,000 shares of restricted common stock valued at a fair value of $0.0248 per share or $24,800 to our Chief Financial Officer upon conversion of $27,500 of accrued salary.

 

On June 15, 2016, the Company issued 4,500,000 shares of restricted common stock valued at a fair value of $0.0201 per share or $90,450 to our Chief Executive Officer upon conversion of $90,000 of accrued salary.

 

On June 15, 2016, the Company issued 4,500,000 shares of restricted common stock valued at a fair value of $0.0201 per share or $90,450 to our Chief Financial Officer upon conversion of $90,000 of accrued salary.

 

On June 15, 2016, the Company issued 3,500,000 shares of restricted common stock valued at a fair value of $0.0201 per share or $70,350 to our Managing Director upon conversion of $70,000 of accrued salary.

 

On September 16, 2016, the Company issued 3,500,000 shares of restricted common stock valued at an agreed fixed price of $0.017 per share to Mammoth Corporation upon conversion of $59,500 of debt.

 

On September 30, 2016, the Company issued 2,720,120 shares of restricted common stock valued at a fair value of $0.0205 per share or $55,762 to our Chief Executive Officer upon conversion of $54,402 of accrued salary.

 

On September 30, 2016, the Company issued 3,656,697 shares of restricted common stock valued at a fair value of $0.0205 per share or $74,962 to our Chief Financial Officer upon conversion of $73,134 of accrued salary.

 

On September 30, 2016, the Company issued 1,323,863 shares of restricted common stock valued at a fair value of $0.0205 per share or $27,139 to our Managing Director, upon conversion of $26,477 of accrued salary.

 

On September 30, 2016, the Company issued 900,000 shares of restricted common stock valued at a fair value of $0.0205 per share or $18,450 to one of our employees upon conversion of $18,000 of accrued salary.

 

On September 30, 2016, the Company issued 1,599,240 shares of restricted common stock valued at a fair value of $0.0205 per share or $32,784 to one of our employees upon conversion of $31,985 of accrued salary and expenses.

 

On September 30, 2016, the Company issued 783,335 shares of restricted common stock valued at a fair value of $0.0205 per share or $16,058 to one of our employees upon conversion of $15,667 of accrued salary and expenses.

 

On October 10, 2016, the Company sold 10,000,000 common restricted shares to an investor at $0.0135 per share having a fair value of $0.0198 per share.

 

On November 11, 2016, the Company´s CEO exchanged 200,000,000 of his common shares with the Company for 20,000,000 Series “B” preferred shares.

 

On November 11, 2016, the Company´s CFO exchanged 200,000,000 of his common shares with the Company for 20,000,000 Series “B” preferred shares.

 

On November 11, 2016, the Company´s Managing Director exchanged 50,000,000 of his common shares with the Company for 5,000,000 Series “B” preferred shares.

 

On November 17, 2016, the Company issued 500,000 shares of restricted common stock valued at a fair value of $0.015 per share or $7,000 to Prism Digital Holdings, Inc. in lieu of services received by the Company.

 

On November 30, 2016, the Company issued 1,308,900 shares of restricted common stock valued at a fair value of $0.018 per share or $23,560 to Redchip Companies Inc. in lieu of services received by the Company.

 

On December 1, 2016, the Company issued 3,167,647 shares of restricted common stock valued at an agreed fixed price of $0.017 per share to Mammoth Corporation upon conversion of $53,850 of debt.

 

All of the foregoing stock was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section 4.(a)(2) of the 33 Act and/or the exclusion from registration requirements of the 33 Act provided by Regulation S promulgated under the 33 Act.

 

ISSUER REPURCHASES OF EQUITY SECURITIES

 

None.

 

ITEM 6.    SELECTED FINANCIAL DATA.

 

Not applicable.

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

 

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 our financial statements and related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

 

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

 

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

 

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

 

Our MD&A is comprised of the following sections:

 

	A.	Critical Accounting Estimates and Policies
	B.	Business Overview
	C.	Results of operations for the years ended December 31, 2016 and 2015
	D.	Financial condition as at December 31, 2016 and 2015
	E.	Liquidity and capital reserves
	F.	Business Development

 

 

A.	Critical Accounting Estimates and Policies:

 

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

 

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

 

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

 

B.	Business overview:

 

Global Equity International Inc. (“Company” or “GEI”) was incorporated on October 1, 2010, as a Nevada corporation, for the express purpose of acquiring Global Equity Partners Plc., a corporation formed under the laws of the Republic of Seychelles (“GEP”) on September 2, 2009. On August 22, 2014, GE Professionals DMCC was incorporated in Dubai as a fully owned subsidiary of Global Equity Partners Plc.

 

On June 10, 2016, GEI incorporated its wholly-owned subsidiary, called GEP Equity Holdings Limited, under the laws of the Republic of Seychelles.

 

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

 

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

 

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

 

On November 10, 2016, the Company designated 45,000,000 of its authorized preferred stock as Series “B” convertible preferred shares.

 

C.	Results of operations for the years ended December 31, 2016 and 2015:

 

The Company had revenues amounting to $1,511,178 and $3,313,356, respectively, for the years ended December 31, 2016 and 2015.

 

		December 31, 2016				December 31, 2015				Changes
Revenue - Clients		$	1,511,178			$	3,165,356			$	(1,654,178	)
Revenue - Related party clients			-				148,000				(148,000	)
		$	1,511,178			$	3,313,356			$	(1,802,178	)

 

Following is the breakdown of total revenue for the year ended December 31, 2016 which amounted to $1,511,178:

 

	a)	$419,365 was received in equity securities in a private company in exchange for services performed. The valuation was based on 1,815 common shares valued at CHF 160 or $163.89 per share and 456 common shares valued at CHF 261 or $267.34 per share.
	b)	$34,600 was received in equity securities in another private company in exchange for services performed. The valuation was based on 46,133 common shares valued at $0.75 per share.
	c)	$276,630 was recognized as revenue from deferred revenue as we performed related services to a client against shares received in prior quarters.
	d)	$362,500 was recognized as revenue from deferred revenue as we performed related services to the clients against payments received in prior quarters.
	e)	$34,300 was recognized as revenue for services rendered to a couple of clients out of which $21,800 was receivable as at December 31, 2016.
	f)	$383,783 was received in cash for services performed to different clients during the year ended December 31, 2016.

 

The total revenue for the year ended December 31, 2015 amounted to $3,313,356. The breakdown of this amount was as follows:

 

	a)	$865,500 in equity securities in a private company in exchange for services performed. The valuation was based on 3,460,000 common shares at $0.25 per share and 500,000 preferred shares at $0.001 per share.
	b)	$675,450 was received in equity securities in another private company in exchange for services performed. The valuation was based on 4,500,000 common shares at $0.15 per share and 450,000 preferred shares at $0.001 per share. $829,891 (75% of $1,106,521) was also received in equity securities from this private company in exchange for services performed. The valuation was based on 1,106,521 common shares at $1 per share. Remaining $276,630 (25% of $1,106,521) was recognized as deferred revenue as at December 31, 2015.
	c)	$262,015 was recognized as revenue from deferred revenue as we performed related services to the clients against payments received in prior years.
	d)	$680,500 was received in cash for services performed to our new clients during the year ended December 31, 2015.

 

For the years ended December 31, 2016 and December 31, 2015, the Company had the following concentrations of revenues with customers:

 

Customer		December 31, 2016				December 31, 2015
SAC			0	%			1.81	%
MHB			0	%			0.91	%
TAM			0	%			1.81	%
EER			0	%			0.91	%
MGP			0	%			1.81	%
ALP			0	%			4.46	%
UNI			12.24	%			6.10	%
DUO			7.70	%			31.25	%
PDI			20.46	%			49.96	%
QFS			37.06	%			0.38	%
INSCX			2.65	%			0.60	%
GPL			3.97	%			0	%
EEC			5.52	%			0	%
UGA			3.97	%			0	%
SCL			3.31	%			0	%
TLF			1.32	%			0	%
VME			1.17	%			0	%
AGL			0.63	%			0	%
			100	%			100	%

 

The total operating expenditures amounted to $1,322,756 and $1,870,214, respectively, for the years ended December 31, 2016 and 2015. The following table sets forth the Company’s operating expenditure analysis for both years:

 

		December 31, 2016				December 31, 2015				Change
General and administrative expenses		$	183,835			$	454,859			$	(271,024	)
Salaries			825,923				1,071,999				(246,076	)
Professional services			301,520				332,105				(30,585	)
Depreciation			11,478				11,251				227
Total operating expenses		$	1,322,756			$	1,870,214			$	(547,458	)

 

During the year ended December 31, 2016, total operating expenses were reduced by $547,458 from the previous year ended December 31, 2015. The reason for this decrease is mainly due to a general reduction of General and Administrative expenses, salaries, and professional services during the current year ended December 31, 2016.

 

Income from operations for the years ended December 31, 2016 and 2015 was $188,422 and $1,443,142, respectively.

 

The Company´s other income / (expenses) for the years ended December 31, 2016 and 2015 were $(204,424) and $(1,195,708), respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

 

		December 31, 2016				December 31, 2015				Change
Interest expense		$	-			$	(337,106	)		$	337,106
Finance charges			-				(124,175	)			124,175
Amortization of debt discount			(119,964	)			(355,253	)			235,289
Loss on derivative liabilities			-				(407,482	)			407,482
Loss on conversion of notes into common stock			-				(733,922	)			733,922
Loss on conversion of accrued salaries and accounts payables into common stock			(1,097	)			-				(1,097	)
Gain on transfer of preferred stock			1,454				-				1,454
Gain on settlement of debt			-				660,578				(660,578	)
(Loss) / gain on extinguishment of debt and other liabilities			(83,353	)			116,921				(200,774	)
Bad debt expense			-				(13,345	)			13,345
Exchange rate loss			(1,464	)			(1,924	)			460
Total other expenses		$	(204,424	)		$	(1,195,708	)		$	991,284

 

Our total other expenses during the year ended December 31, 2016 were reduced substantially due to the fact that the Company settled all of its discounted convertible debts last year. The settlement of this debt last year resulted in large amounts of interest expense, loss on derivative liabilities, loss on conversion of notes into stock and amortization of debt discount during the year ended December 31, 2015. Loss on extinguishment of debt and other liabilities includes a loss of $83,353 arising due to double exchange of a loan note with the same lender during the year ended December 31, 2016.

 

 

The net (loss) / income for the years ended December 31, 2016 and 2015 amounted to $(16,002) and $247,434, respectively.

 

The Company´s Comprehensive (loss) / income for the years ended December 31, 2016 and 2015 amounted to $(16,002) and $246,389, respectively.

 

		December 31, 2016				December 31, 2015
Comprehensive (loss) / income:
Loss on foreign currency translation		$	-			$	(1,045	)
Net (loss) / income			(16,002	)			247,434
Comprehensive (loss) / income		$	(16,002	)		$	246,389

 

At December 31, 2016 and December 31, 2015, the Company had 374,475,775 and 776,165,973 common shares issued and outstanding, respectively. Basic weighted average number of common shares outstanding for the years ended December 31, 2016 and 2015 was 732,119,702 and 373,102,366 common shares, respectively. Hence, the basic (loss) / earnings per share at December 31, 2016 and 2016 was $(0.00) and $0.00, respectively.

 

D.	Financial condition as at December 31, 2016 and 2015:

 

Assets:

 

The Company reported total assets of $3,228,442 and $2,807,095 as of December 31, 2016 and December 31, 2015, respectively. These mainly include our investment in securities of our clients that we received as part of our consulting fees. At December 31, 2015, we had long term investments amounting to $2,650,471. These long term investments amount to $3,085,322 as of December 31, 2016 representing an increase of 16%. Our fixed assets include office equipment having a net book value of $10,215 and $20,081 as at December 31, 2016 and December 31, 2015, respectively. Furthermore, our current assets at December 31, 2015 totaled $136,543 and at December 31, 2016, these current assets amounted to $132,905 comprising cash of $66,523, accounts receivable of $21,800 and prepaid and other current assets of $44,582.

 

Liabilities:

 

Our current liabilities at December 31, 2015 totaled $2,283,652. Over the last twelve months, we managed to decrease these current liabilities to $1,814,735 which represents a decrease of 21%. All of our liabilities are current and mainly include third party debt which is due to four lenders, payable to related parties and our day to day operational creditors.

 

Following is the summary of all third party notes, net of debt discount, including the accrued interest as at December 31, 2016:

 

Date of Note		Total Debt				Remarks
October 9, 2013		$	411,272			Non-convertible and non-collateralized
October 17, 2013			480,000			Non-convertible and non-collateralized
November 26, 2013			37,971			Non-convertible and non-collateralized
July 1, 2016*			47,353			Fixed price convertible and non-collateralized
August 25, 2016			153,333			Non-convertible and non-collateralized
October 13, 2016			114,583			Non-convertible and non-collateralized
December 6,2016			132,083			Non-convertible and non-collateralized
Balance, December 31, 2016		$	1,376,596

 

* Subsequent to the year ended December 31, 2016, the remaining outstanding principal and interest due under the July 1, 2016 note was fully settled by issuing 5,000,000 common shares at $0.01 per share on February 2, 2017.

 

 

Also, out of the cash fees received from different clients to date, the Company has deferred a total $200,000 from cash fees received from two clients. These deferred cash fees will be reflected on the Company´s income statement once certain milestones and contractual agreements have been completed.

 

Stockholder’s Equity:

 

At December 31, 2015, the Company had stockholders´ equity of $523,443. At December 31, 2016, the Company had stockholders´ equity of $1,413,707, which represents an increase of 170%.

 

The Company had 374,475,775 and 776,165,973 common shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively.

 

E.	Liquidity and Capital reserves:

 

Our consolidated financial statements contained herein have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a net income from operations of $188,422, a total other expenses amounting to $(202,424) and net loss of $(16,002) for the year ended December 31, 2016.

 

The Company had $66,523 in cash; net cash used in operations of $424,028 for the year ended December 31, 2016; working capital deficit of $1,681,830 and stockholders´ equity of $1,413,707 as of December 31, 2016. Some of these factors may raise substantial doubt about the Company´s ability to continue as a going concern.

 

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

 

	a)	Continually engaging with new clients, which, over the years, has become consistent.
	b)	Consummating and executing current engagements.

 

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

 

Over the next 12 months we intend to acquire several licensed financial advisory firms in U.K., Singapore and Hong Kong. The possible targets have been identified. The acquisitions will form part of a new subsidiary we intent to establish in the relevant territory. These acquisitions would be in essences the acquisition of substantial recurring revenues. However, we do not have any verbal or written agreements with anyone to provide us with debt financing to date but we are actively seeking such debt financing in the U.K. and also in the U.S.

 

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

 

	●	The cash retainer fees and cash success fees that we expect to receive during the next 12 months from the clients we currently have under contract.
	●	Receiving 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.
	●	Receiving loans from third party lenders and/ or investors.
	●	Liquidating when necessary any or all assets or investments.

 

The Company´s deferred revenue, $200,000 at December 31, 2016, is non-refundable hence once certain contractual milestones are achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will become revenue for the Company and therefore no cash outlays are required for these liabilities.

 

It is important to note that the two largest debts (The Able Foundation loan & Eden loan) stated on our current liabilities are non-collateralized and non-convertible loans. The Company has not contractually granted any form of guarantee to the lenders nor can the loans become convertible into Common Shares at any point in time.

 

The Company believes that its Recruitment Business in Dubai, Kingsman James, setup 2015 will commence to become very profitable in 2017. Kingsman James is currently tendering $3.5 million in new business and hope to slowly win these tenders in the coming weeks and months.

 

It is important to point out that for the purpose of improving the Company´s current and future liquidity position and also to mitigate the short term liabilities, $524,665 of management´s and certain employee´s accrued salaries were converted to common restricted stock during the year ended December 31, 2016. The following table depicts the above mentioned conversions:

 

Designation		Accrued Salary				Common Stock issued				Price per share
CEO		$	27,500				1,000,000			$	0.0248
CEO			90,000				4,500,000				0.0201
CEO			54,402				2,720,120				0.0205
CFO			27,500				1,000,000				0.0248
CFO			90,000				4,500,000				0.0201
CFO			73,134				3,656,697				0.0205
Managing Director			70,000				3,500,000				0.0201
Managing Director			26,477				1,323,863				0.0205
Employee			18,000				900,000				0.0205
Employee			31,985				1,599,240				0.0205
Employee			15,667				783,335				0.0205
		$	524,665				24,483,255

 

Finally, on November 11, 2016, the Company´s CEO, CFO and Managing Director jointly decided to retire an aggregate of 450,000,000 of their personally owned Common Shares in exchange for 45,000,000 Series “B” Preferred shares that can be converted back to common shares at the holder´s option one (1) day after the first anniversary of the issuance. As a result of this retirement and exchange, the Company´s issued and outstanding Common Shares were drastically reduced from 819,499,228 to a total of 369,499,228. Management has not sold one single share since inception of the Company; hence, to date, there is no reason to convert any of the Preferred Series “B” back to Common Shares when legally possible.

 

F.	Business Development:

 

To date, we have 10 clients under contract that we deem to be active and are either seeking a listing on a recognized stock exchange or seeking funding for acquisition and growth:

 

		Client:		Sector:		Primary Location:
1		VT Hydrocarbon Holdings (Pte.) Limited		LNG Gas storage		Singapore & Jordan
2		Scandinavian AgriTex Co. Limited		Cotton and clothing industry		United Kingdom and Norway
3		Primesite Developments Limited		Residential and Commercial Development		United Kingdom
4		Hoqool Petroleum		Natural Resources		United Arab Emirates
5		Quartal Financial Solutions AG		Financial Technology		Switzerland
6		Granite Power Limited		Renewable Energy		Australia
7		Majestic Wealth Limited		Property Development		Cyprus
8		The Stakis Collection Limited		Hospitality Sector		United Kingdom
9		Teralight FZ LLC		Telecommunications Industry		United Arab Emirates
10		Blackstone Natural Resources BV		Natural Resources		British Virgin Islands

 

Our Milestones for the next 12 months are as follows:

 

 

a)

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

 

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

 

	●	Certain registered and Regulated Investment Houses and Funds in London (United Kingdom).
	●	An Austrian management consultancy firm based in Vienna.
	●	Various Financial Institutions and also Investment Banks based in Dubai (UAE).
	●	Certain Private Banks based in Amsterdam (The Netherlands), Luxembourg and Zurich (Switzerland).
	●	Various Family Offices in Dubai (UAE).
	●	Various introducers to capital based on the East and West Coast of the US.
	●	Various introducers to capital based in Hong Kong.
	●	Yenom (Pvt.) Limited – An introducer of new business based in Sri Lanka.
	●	MEPEX – A Bahrain Oil and Gas with over 300 members.
	●	Sixfoursixfour Limited and the World Nano Foundation.
	●	The Billbarter Group, a financial partner with offices in Hungary, Romania, Slovakia, Serbia, Austria, Germany and the United Kingdom.
	●	CPM SARL, a financial partner with offices in Beirut (Lebanon).
	●	Various South East Asian financial partners and introducers to new business.

 

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

 

b)

ACQUIRE CERTAIN FINANCIAL ADVISORY FIRMS WITH MONEY UNDER ADMINISTRATION

 

Over the next 12 months we intend to acquire several licensed financial advisory firms in U.K., Singapore and Hong Kong. The possible targets have been identified. The acquisitions will form part of a new subsidiary we intent to establish in the relevant territory.

 

c)

REBRANDINGOF OUR ENTIRE CORPORATE STRUCTURE

 

Over the next 2 to 3 months we intend to rebrand our business and analyze our entire corporate structure. We will adapt a new brand for all finance related companies that will carry through each subsidiary with a uniform image and examine the structure we currently operate to ensure its efficiency as we add new subsidiary companies. The reporting structures of each subsidiary will also be examined for maximum effect.

 

d)

EXPAND OUR HUMAN RESOURCES DEPARTMENT IN DUBAI – KINGSMAN JAMES.

 

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

 

e)

EXPAND OUR NETWORK OF CONTACTS WITHIN THE INVESTMENT COMMUNITY

 

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

 

f)

FURTHER EXPAND OUR RANGE OF BUSINESS AND CONTACTS

 

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

 

g)

OPEN A NEW OFFICE IN THE UNITED KINGDOM

 

Due to our growing U.K. and Central European based clientele and also due to our plan to acquire a certain number of U.K. based financial advisory firms with funds under management, we plan to open a new U.K. based office within the next 6 months.

 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Our financial statements and supplementary data may be found beginning at page F-1.

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

Not applicable.

 

ITEM 9A.  CONTROLS AND PROCEDURES.

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

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

 

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.

 

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management’s report in this Annual Report.

 

IDENTIFIED MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES

 

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Management identified the following internal control deficiency which we had assessed as a material weakness as of December 31, 2016, during our assessment of our internal control over financial reporting as follows:

 

1.

No material weaknesses were found.

 

CONCLUSION

 

Our management concluded that our internal control over financial reporting was effective.

 

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.

 

ITEM 9B.   OTHER INFORMATION.

 

Not applicable.

 

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

OFFICERS AND DIRECTORS

 

Our directors will serve until their successors are elected and qualified. Our officers are elected by the board of directors to a term of one year and serve until their successors are duly elected and qualified, or until they are removed from office. Our board of directors has no nominating, auditing or compensation committees.

 

The names, addresses, ages and positions of our officers, directors and key employees are set forth below:

 

						First Year
Name		Age				as Director				Position
Peter James Smith			48				2010			President, Chief Executive Officer and Director
Enzo Taddei			44				2011			Chief Financial Officer, Secretary and Director
Patrick V. Dolan			58				2015			New Business Development Managing Director and Director

 

The persons named above were elected to hold their offices until the next annual meeting of our stockholders.

 

PETER JAMES SMITH - PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR

 

Mr. Smith has served as the President, Chief Executive Officer and Director of Global Equity Partners, PLC, our now wholly-owned subsidiary, since its formation on September 2, 2009. Mr. Smith has also served as the President, Chief Executive Officer and Director of the Company since December 31, 2010. Between June 1, 2006, and September 2, 2009, when he formed Global Equity Partners Plc., Mr. Smith was not employed and spent his time researching the market for the consulting business in which Global Equity Partners, PLC would be engaged. In 1993, he created an international financial services company in the Middle East and Asia, named Belgravia Financial Management, and served as the Chief Executive Officer of that firm until he resigned in May 2006. Between 1993 and May 2005, he built Belgravia Financial Management to 23 global offices, 5 country licenses, a Company with $2.2 billion under financial management. Belgravia Financial Management merged with Intervest SL and became Belgravia Intervest Group Limited. Belgravia Intervest Group Limited subsequently merged with Tally Ho Ventures, Inc. (TLYH.OB) on May 12, 2005. In 2006, Mr. Smith resigned from his position as Chief Executive Officer of Tally Ho Ventures, Inc. Tally Ho Ventures, Inc. subsequently changed its name to Premier Wealth Management, Inc. on September 26, 2007. Mr. Smith first qualified as a stockbroker in London in 1986 with Rensburg and Co. where he became both a registered equity trader and registered representative of the firm that is a UK registered, full service stockbroker trading equities, options, warrants, gilts and bonds. He also spent 12 months within that firm covering the back office facilities of a brokerage house including sales, purchase, rights, dividends and new issues. He then moved on to the London Traded Options Market where he passed his LTOM open outcry examinations to become an options trader for a subsidiary of ABN Amro bank called International Clearing Services (ICS). As an Options trader, his job was to trade options on behalf of all the firm’s clients and to hedge the positions of the market makers the firm cleared for in the equity market. As the sole dual qualified broker for ICS, he was constantly trading in either equities or options, either by open outcry or screen dealing on the London Stock Exchange Floor on Threadneedle Street.

 

 

ENZO TADDEI - CHIEF FINANCIAL OFFICER, SECRETARY AND DIRECTOR

 

Mr. Taddei was appointed as our Chief Financial Officer and a member of our Board of Directors on September 1, 2011. From November 2010 until December 8, 2011, when he resigned from such offices, Mr. Taddei was a member of the Board of Directors and part-time Chief Financial Officer of Networking Partners, Inc., a social networking company, now known as Sonant Systems Inc. From March 2007 until May 2009, Mr. Taddei served as Chief Financial Officer of Dolphin Digital Media (a company engaged in social networking). From August 2006 until March 2007, Mr. Taddei served as Chief Financial Officer of Plays on the Net Plc. (an E-Commerce firm). From July 1999 until August 2006, Mr. Taddei served as director and partner of Adesso Res Asesores (an accounting firm). In addition to being an accountant and tax consultant by profession, Mr. Taddei is proficient in three languages: English, Spanish and Italian. He obtained a Degree in Economics from EADE University in Malaga (Spain) in 1998 and also a Bachelor in Business Administration (BBA) from the University of Wales in 1996. He also holds a Masters Degree in Spanish and International Taxation granted to him by EADE University in Malaga (Spain) in 2000.

 

PATRICK V. DOLAN – NEW BUSINESS DEVELOPMENT MANAGING DIRECTOR AND DIRECTOR

 

As a senior figure from the software and technology industries with over 20 years’ experience, Mr. Dolan has successfully held numerous senior management positions within large and small enterprises in the U.S., Asia Pacific and in Europe. Often hand selected and recruited, Patrick has proven himself as the right person to correct the issues that typically prevent the success of many companies today. Patrick’s “Make it Work” approach, which has included providing the right amount of capital at the right time, building a focused and dedicated sales force, as well as infrastructure and restructuring changes, has made him standout as one of the best company restructuring professionals in recent times. Patrick possesses expertise and extensive knowledge in managing large global operations, which include such companies as Standard & Poors, Dow Jones, Citibank, State Street and, more recently, Merchant Capital. His overachievements while with Merchant Capital not only produced a tremendous amount of new clientele, but it also allowed him the privilege of being introduced to a broader range of companies and professionals who came to him seeking professional assistance. Utilizing his broad range of business expertise, Patrick often placed himself in the middle of these situations and successfully produced the changes that were necessary to achieve the company’s growth objectives. In the last 12 years, he has also worked within the technology and software sectors with small to medium sized companies, while expanding their operations and increasing revenues as part of their executive teams. Patrick has also worked closely with numerous Private Equity and Venture Capital Firms in Europe and the U.S., principally as an executive retained and placed within companies who were part of their investment portfolios. Patrick brings a wealth of experience from both an operational and capital raising perspective and has significant contacts across the financial markets.

 

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

 

Except as described below, during the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of the Company:

 

(1)

had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

 

 

	(2)	was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
	(3)	was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities:

 

	(i)	acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	(ii)	engaging in any type of business practice; or
	(iii)	engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or

 

	(4)	was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3) (i), above, or to be associated with persons engaged in any such activity;
	(5)	was found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission to have violated a federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended or vacated;
	(6)	was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
	(7)	was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to any alleged violation of:

 

	i.	Any Federal or State securities or commodities law or regulation; or
	ii.	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
	iii.	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

(8)

was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), and registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

 

ABSENCE OF INDEPENDENT DIRECTORS

 

We do not have any independent directors and are unlikely to be able to recruit and retain any independent directors due to our small size and limited financial resources.

 

DIRECTOR QUALIFICATIONS

 

We do not have a formal policy regarding director qualifications. In the opinion of Peter J. Smith, our President and majority shareholder, Messrs. Dolan, Taddei and he have sufficient business experience and integrity to carry out the Company’s plan of operations. Messrs. Dolan, Smith and Taddei recognize that the Company will have to rely on professional advisors, such as attorneys and accountants with public company experience to assist with compliance with Exchange Act reporting and corporate governance matters.

 

DIRECTORSHIPS

 

Not applicable.

 

AUDIT COMMITTEE; AUDIT COMMITTEE FINANCIAL EXPERT

 

Although we have not established an Audit Committee, the functions of the Audit Committee are currently carried out by our Board of Directors.

 

FAMILY RELATIONSHIPS

 

There are no family relationships between or among or officers and directors.

 

CODE OF BUSINESS CONDUCT AND ETHICS

 

On September 2, 2011, we adopted a Code of Business Conduct and Ethics applicable to our officers, including our principal executive officer, principal financial officer, principal accounting officer or controller and any other persons performing similar functions. Our Code of Business Conduct and Ethics was designed to deter wrongdoing and promote honest and ethical conduct, full, fair and accurate disclosure, compliance with laws, prompt internal reporting and accountability to adherence to our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics is posted on our website at http://www.globalequityinternational.com/ in the “Governance” section. We also intend to disclose any future amendments to, and any waivers from (though none are anticipated), the Code of Business Conduct and Ethics in the “Governance” section of our website.

 

 

ITEM 11.

EXECUTIVE COMPENSATION.

 

The following table sets forth the aggregate compensation paid by the Company and/or its subsidiary, Global Equity Partners Plc., to our executive officers and directors of the Company for services rendered during the periods indicated.

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Year				Salary ($)		Note		Bonus / Other compensation ($)		Note		Stock Awards ($)		Note		All other stock compensation (s)		Note		Total ($)
Peter J. Smith			2016			$	210,000	(1)		$	26,233	(2)		$	-			$	-				236,233
President, Chief			2015			$	198,450	(3)		$	131,178	(4)		$	-			$	-			$	331,628
Executive Officer & Director			2014			$	184,500	(5)		$	120,000	(6)		$	-			$	-			$	304,500
Enzo Taddei			2016			$	210,000	(7)		$	25,200	(8)		$	-			$	-			$	235,200
Chief Financial			2015			$	198,450	(9)		$	45,000	(10)		$	-			$	-			$	243,450
Officer, Secretary & Director			2014			$	184,500	(11)		$	45,000	(11)		$	-			$	-			$	229,500
Patrick V. Dolan			2016			$	111,050	(12)		$	-			$	-			$	-			$	111,050
Director			2015			$	132,300	(13)		$	-			$	-			$	-			$	132,300
			2014			$	120,000	(14)		$	-			$	80,000	(14)		$	-			$	200,000

 

	(1)	Represents $77,841 paid in cash, $18,551 was accrued, but unpaid, at December 31, 2016, and $113,608 of the 2016 salary and $58,294 of the 2015 accrued salary was converted into 8,220,120 shares of the Company’s common stock (restricted).
	(2)	This $26,333 represents personal rent on Mr. Smith’s Dubai apartment, which was paid in cash by the Company. This obligation ended on September 30, 2016.
	(3)	Represents $151,374 paid in cash, $51,044 was accrued, but unpaid at December 31, 2015, and $86,311 of the 2015 salary and $19,745 of the accrued 2014 salary was converted into 42,127,492 shares of the Company’s common stock (restricted).
	(4)	This $133,718 represents personal rent on Mr. Smith’s Dubai apartment, which was paid in cash by the Company.
	(5)	Represents $68,136 paid in cash and $116,364 in salary accrued, but unpaid, at December 31, 2014.
	(6)	Represents personal rent on Mr. Smith’s Dubai apartment, which was paid in cash by the Company.
	(7)	Represents $86,272 paid in cash and $17,500 was accrued, but unpaid, at December 31, 2016. $106,228 of the 2016 salary and $59,206 of the accrued 2015 salary was converted into 7,896,697 shares of the Company’s common stock (restricted).
	(8)	Represents $25,200 that was converted into 1,260,000 shares of the company’s common stock (restricted).
	(9)	Represents $112,714 paid in cash and $59,206 was accrued, but unpaid, at December 31, 2015.
	(10)	Paid in cash.
	(11)	Represents $41,556 paid in cash and $142,944 was accrued, but unpaid, at December 31, 2014.
	(12)	Represents $53,199 paid in cash and $3,999 was accrued, but unpaid, at December 31, 2016, and $53,852 of the 2016 salary and $42,625 of the 2015 accrued salary was converted into 4,823,863 shares of the Company’s common stock (restricted). Effective October 1, 2016, the Company modified the employment contract with Mr. Dolan whereby his annual salary was reduced from $132,000 to $48,000.
	(13)	Represents $66,391 paid in cash and $42,625 was accrued, but unpaid, at December 31, 2015. $76,984 of the 2015 accrued salaries and $41,215 of the 2014 accrued salary was converted into 46,951,070 shares of the Company’s common stock (restricted).
	(14)	Represents $25,394 paid in cash and $94,606 was accrued, but unpaid, at December 31, 2014.

 

 

EMPLOYMENT AGREEMENTS SUMMARY

 

PETER JAMES SMITH:

 

Mr. Smith’s employment agreement with the Company’s wholly-owned subsidiary, GEP Equity Holdings Limited, was renewed on September 1, 2016, and the basic terms were as follows:

 

	1.	DUTIES - ASSIGNMENT: Chief Executive Officer (CEO) and Director on Board of Directors.
	2.	COMPENSATION:
		$210,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid on a monthly basis. It was also agreed that the company would pay a bonus of up to 12% of the annual salary in June of each year.

 

3.

EMPLOYMENT:

 

(a)

Employment will continue for 36 months.

 

4.

SEVERANCE PAYMENTS

 

(a)

If Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and Employer shall make, the following severance payments:

 

(i)

continue to pay a sum equivalent to twelve months salary.

 

(b)

If Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall make, the following severance payments:

 

(i)

continue to pay a sum equivalent to five years annual salary via the life assurance scheme.

 

	5.	COMISSION INCENTIVES
		The Company agreed to pay a cash bonus equivalent to 6% of all of the gross cash success fees that the Company receives during the term of the employment agreement.

 

ENZO TADDEI:

 

Mr. Taddei’s employment agreement with the Company’s wholly-owned subsidiary, GEP Equity Holdings Limited, was renewed on September 1, 2016 and the basic terms were as follows:

 

	1.	DUTIES - ASSIGNMENT: Chief Financial Officer (CFO) and Director on Board of Directors
	2.	COMPENSATION:
		$210,000 per annum, subject to annual review and adjustment of no less than a 5% percentage increase. The salary will be paid on a monthly basis. It was also agreed that the company would pay a bonus of up to 12% of the annual salary in June of each year.

 

 

3.

EMPLOYMENT:

 

(a)

Employment will continue for 36 months.

 

4.

SEVERANCE PAYMENTS

 

(a)

If Employer terminates this Agreement for any reason other than Disability, Death, Employee shall be entitled to receive, and Employer shall make, the following severance payments:

 

(i)

continue to pay a sum equivalent to twelve months.

 

(b)

If Employer terminates this Agreement by reason of the Disability of Employee or if this Agreement is automatically terminated upon the Death of Employee pursuant to Section 3(b), Employee or his estate shall be entitled to receive, and Employer shall make, the following severance payments:

 

(i)

continue to pay a sum equivalent to five years annual salary via the life assurance scheme.

 

	5.	COMISSION INCENTIVES
		The company agreed to pay a cash bonus equivalent to 6% of the gross cash success fees that the Company receives during the term of the employment agreement

 

PATRICK V. DOLAN:

 

Mr. Dolan’s employment agreement with the Company’s wholly-owned subsidiary, GEP Equity Holdings Limited, was renewed on October 1, 2016, and the basic terms were as follows:

 

1.

DUTIES - ASSIGNMENT: Managing Director of Global Equity Partners Plc.

 

	2.	COMPENSATION:
		$48,000 per annum. The salary will be paid on a monthly basis.
	3.	EMPLOYMENT:

(a)

Employment will continue for 12 months.

 

	4.	COMISSION INCENTIVES
		The company agreed to pay a cash bonus equivalent to 3% of the gross cash success fees that the Company receives during the term of the employment agreement
	5.	BONUS
		For every new client that signs a consultancy agreement with the Company as a result of the employee´s direct introduction, the employee will have the right to be issued US$10,000 worth of common restricted shares at the closing bid price of the day prior to the issuance.

 

 

STOCK OPTION AND OTHER COMPENSATION PLANS.

 

Aside from the employment agreements with Messrs. Dolan, Smith and Taddei, the Company currently does not have a stock option or any other compensation plan and we do not have any plans to adopt one in the near future.

 

COMPENSATION OF DIRECTORS

 

Our directors do not receive any compensation for serving as a member of our board of directors, as they are compensated pursuant to their employment agreements as officers of the Company.

 

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

 

There are no understandings or agreements regarding compensation our management will receive after a business combination that is required to be included in this table, or otherwise.

 

INDEMNIFICATION.

 

Article VII, Section 7 of the Company’s Bylaws provide that the Company shall indemnify its officers, directors, employees and agents to the fullest extent permitted by the laws of Nevada.

 

The Nevada Revised Statutes allow us to indemnify our officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist.

 

The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action, suit or proceeding, if and only if the officer or director undertakes to repay said expenses to us if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us.

 

The indemnification and advancement of expenses may not be made to or on behalf of any officer or director if a final adjudication establishes that the officer’s or director’s acts or omission involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.

 

The Nevada Revised Statutes allow a company to indemnify our officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner, which such person believed to be in the best interests of the corporation. A determination may be made by the stockholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist.

 

SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the company, we have been advised by our special securities counsel that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is, therefore, unenforceable.

 

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following tables set forth, as of the date of this Annual Report, the ownership of our common stock and preferred stock by (a) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock and preferred stock; and (b) by all of named officers and our directors and by all of our named executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares and are beneficial owners of the shares indicated in the tables, except as otherwise noted by footnote.

 

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the U.S. Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.

 

(a) Security ownership of certain beneficial owners:

 

Title of Class

Name and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership

Notes

Percent of Class

Common Stock

Peter J. Smith,

279,381,040

1,2

48.21

%

Villa 38 Frond “F” Palm Jumeirah,

Dubai, UAE.

Common Stock

Enzo Taddei,

235,324,145

1,3

40.61

%

Apt. 1105, Building Elite 3,

Sports City,

Dubai, UAE.

Common Stock

Patrick V. Dolan

52,608,267

1,4

12.25

%

24 Harthill Road,

Liverpool L18 6LY,

United Kingdom.

 

(1)

The numbers and percentages set forth in these columns are based on 379,475,775 shares of Common Stock outstanding and the shareholder’s respective beneficial ownership of 45,000,000 shares of Series “B” Preferred Stock outstanding. The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the security holder has sole or shared voting power or investment power and also any shares, which the security holder has the right to acquire within 60 days. On the date of this annual report, each share of Series B Preferred Stock has 10 votes on all matters brought before meetings of shareholders.

 

 

	(2)	Mr. Smith is the direct beneficial owner of, and has sole dispositive or voting power over, these shares. Mr. Smith owns 20,000,000 shares of Series “B” Preferred Stock, each share of which has 10 votes on all matters brought before meetings of shareholders.
	(3)	Mr. Taddei is the direct beneficial owner of, and has sole dispositive or voting power over, these shares. Mr. Taddei owns 20,000,000 shares of Series “B” Preferred Stock, each share of which has 10 votes on all matters brought before meetings of shareholders.
	(4)	Mr. Dolan is the direct beneficial owner of, and has sole dispositive and voting power over, these shares. Mr. Dolan owns 5,000,000 shares of Series “B” Preferred Stock, each share of which has 10 votes on all matters brought before meetings of shareholders

 

(b) Security ownership of management:

 

Title of Class		Name of Beneficial Owner		Amount and Nature of Beneficial Ownership				Percent of Class
Common Stock		Peter J. Smith			279,381,040	(1)			48.21	%
Common Stock		Enzo Taddei			235,324,145	(2)			40.61	%
Common Stock		Patrick V. Dolan			52,608,267	(3)			12.25	%
Common Stock		All officers and directors as a group (3 persons)			567,313,452				68.40	%

 

	(1)	See footnote 2 under table in (a), above.
	(2)	See footnote 3 under table in (a), above.
	(3)	See footnote 4 under table in (a), above.

Security ownership of certain beneficial owners of our Series “B” Preferred Stock by our named executive officers and all other persons who own our Series B Preferred Stock:

 

Name of Beneficial Owner		Number of Shares (1)				Percentage of Ownership (1)
Peter J. Smith
(President, Director and 5% or more beneficial owner)			20,000,000	(2)			44.44	%
Enzo Taddei			20,000,000	(3)			44.44	%
(Chief Financial Officer, Director and 5% or more beneficial owner)
Patrick V. Dolan			5,000,000	(4)			11.12	%
All officers and directors as a group (three persons)			45,000,000				100.00	%

 

 

	(1)	The numbers and percentages set forth in these columns are based on 45,000,000 shares of Series “B” Preferred Stock outstanding and the shareholder’s respective beneficial ownership of 45,000,000 shares of Series “B” Preferred Stock outstanding.
	(2)	Mr. Smith is the direct beneficial owner of, and has sole dispositive and voting power over, these shares.
	(3)	Mr. Taddei is the direct beneficial owner of, and has sole dispositive and voting power over, these shares.
	(4)	Mr. Dolan is the direct beneficial owner of, and has sole dispositive and voting power over, these shares.

 

(c) Changes in control:

 

We are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 

Although we have not adopted formal procedures for the review, approval or ratification of transactions with related persons, we adhere to a general policy that such transactions should only be entered into if they are on terms that, on the whole, are no more favorable, or no less favorable, than those available from unaffiliated third parties and their approval is in accordance with applicable law. Such transactions require the approval of our board of directors.

 

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

INDEPENDENT PUBLIC ACCOUNTANTS

 

	1)	Audit Fees: We paid our auditors, Salberg & Company PA, an aggregate of $29,000 for the audit of our annual financial statements for the year ended December 31, 2016 and quarterly reviews for three quarters.
		We paid Salberg & Company PA a fee of $24,500 for the audit of our annual financial statements for the year ended December 31, 2015 and quarterly reviews for two quarters (June 30, 2015 and September 30, 2015). We also incurred a fee of $10,000 for the re-audit of our annual financial statements for the year ended December 31, 2014 due to the fact that our predecessor auditors, De Joya Griffith, de-registered from the PCAOB. Also, in 2015, we paid a fee of $3,500 for our March 31, 2015 quarterly review that was carried out by our prior auditors, De Joya Griffith.
	2)	Audit-Related Fees: During fiscal years ended December 31, 2016 and 2015, our auditors did not receive any fees for any audit-related services.
	3)	Tax Fees: The company retained the services of a Nevada based tax advisor called Steven C. Kalt for all tax advice and tax planning during the fiscal years ended December 31, 2016 and 2015. We paid Mr. Kalt a total of $3,000 for these services.
	4)	All Other Fees. None.
	5)	Audit Committee’s Pre-Approval Policies and Procedures.

 

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Principal Accountants are engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

	●	approved by our audit committee (which consists of our entire board of directors); or
	●	entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors’ responsibilities to management.

 

Our Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our Board of Directors either before or after the respective services were rendered.

 

Our Board of Directors has considered the nature and amount of fees billed by our principal accountants and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our principal accountants’ independence.

 

During the 2016 and 2015 fiscal years, the Company used the following pre-approval procedures related to the selection of our independent auditors and the services they provide: unanimous consent of all directors via a board resolution.

 

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

	(a) (1) Financial Statements
		Financial statements for Global Equity International, Inc. listed in the Index to Financial Statements on page F-1 are filed as part of this Annual Report.
	(a) (2) Financial Statement Schedule
		Financial Statement Schedule for Global Equity International, Inc. listed in the Index to Financial Statements on page F-1 are filed as part of this Annual Report.
	(a) (3) See the “Index to Exhibits” set forth below.
	(b) See Exhibit Index below for exhibits required by Item 601 of Regulation S-K.

 

 

Global Equity International, Inc. and Subsidiaries

Consolidated Financial Statements

December 31, 2016 and 2015

 

 

CONTENTS

 

	Page(s)
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets – December 31, 2016 and 2015	F-4
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2016 and 2015	F-5
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2016 and 2015	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and 2015	F-7
Notes to Consolidated Financial Statements	F-8

 

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of:

Global Equity International, Inc.

 

We have audited the accompanying consolidated balance sheets of Global Equity International, Inc. and Subsidiaries as of December 31, 2016 and 2015 and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Equity International, Inc. and Subsidiaries as of December 31, 2016 and 2015 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a net loss and net cash used in operations of $16,002 and $424,028, respectively for the year ended December 31, 2016. The Company has a working capital deficit and stockholders’ equity of $1,681,830, and $1,413,707, respectively, at December 31, 2016. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Salberg & Company, P.A. 

 

SALBERG & COMPANY, P.A.

Boca Raton, Florida

March 23, 2017

 

2295 NW Corporate Blvd., Suite 240 • Boca Raton, FL 33431-7328

Phone: (561) 995-8270 • Toll Free: (866) CPA-8500 • Fax: (561) 995-1920

www.salbergco.com • info@salbergco.com

Member National Association of Certified Valuation Analysts • Registered with the PCAOB

Member CPAConnect with Affiliated Offices Worldwide • Member AICPA Center for Audit Quality

 

 

Global Equity International, Inc. and Subsidiaries
Consolidated Balance Sheets
			December 31, 2016				December 31, 2015
Assets
Current Assets
Cash		$	66,523			$	42,163
Accounts receivable			21,800				-
Prepaids			35,788				86,398
Other current assets			8,794				7,982
Total current assets			132,905				136,543
Investments, cost			3,085,322				2,650,471
Fixed assets, net			10,215				20,081
Total assets		$	3,228,442			$	2,807,095
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and other accrued liabilities		$	172,538			$	188,337
Accrued contingencies and penalties			196,509				184,656
Accounts payable and accrued liabilities - related parties			53,748				203,609
Deferred revenue			200,000				839,130
Accrued interest			304,569				304,569
Notes payable - net of discount of $70,000 and $11,667, respectively			840,018				563,351
Fixed price convertible note payable - net of discount of $2,647 and $0, respectively			47,353				-
Total current liabilities			1,814,735				2,283,652
Total liabilities		$	1,814,735			$	2,283,652
Commitments and contingencies (Note 11)
Stockholders’ Equity
Preferred stock: 50,000,000 shares authorized; $0.001 par value, 45,000,000 designated as series “B” convertible preferred shares, 45,000,000 and 0 issued and outstanding, respectively.		$	45,000			$	-
Common stock: 950,000,000 shares authorized; $0.001 par value: 374,475,775 and 776,165,973 shares issued and outstanding, respectively.			374,476				776,166
Additional paid in capital			8,197,449				6,934,493
Accumulated deficit			(7,203,218	)			(7,187,216	)
Total stockholders’ equity			1,413,707				523,443
Total liabilities and stockholders’ equity		$	3,228,442			$	2,807,095

 

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

 

 

Global Equity International, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
		For the years ended,
		December 31, 2016				December 31, 2015
Revenue - Clients		$	1,511,178			$	3,165,356
Revenue - Related party clients			-				148,000
Total revenue			1,511,178				3,313,356
General and administrative expenses			183,835				454,859
Salaries			825,923				1,071,999
Professional services			301,520				332,105
Depreciation			11,478				11,251
Total operating expenses			1,322,756				1,870,214
Income from operations		$	188,422			$	1,443,142
Other income (expenses):
Interest expense			-				(337,106	)
Finance Charges			-				(124,175	)
Amortization of debt discount			(119,964	)			(355,253	)
Loss on derivative liabilities			-				(407,482	)
Loss on conversion of notes into common stock			-				(733,922	)
Loss on conversion of accrued salaries and accounts payables into common stock, net			(1,097	)			-
Gain on transfer of preferred stock			1,454				-
Gain on settlement of debt			-				660,578
(Loss) / gain on extinguishment of debt and other liabilities			(83,353	)			116,921
Bad debt expense			-				(13,345	)
Exchange rate loss			(1,464	)			(1,924	)
Total other expenses		$	(204,424	)		$	(1,195,708	)
Net (loss) / income		$	(16,002	)		$	247,434
Net (loss) income per common share - basic and diluted		$	(0.00	)		$	0.00
Weighted average number of common shares outstanding - basic and diluted			732,119,702				373,102,366
Comprehensive (loss) / income:
Loss on foreign currency translation			-				(1,045	)
Net (loss) / income			(16,002	)			247,434
Comprehensive (loss) / income		$	(16,002	)		$	246,389

 

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

 

 

Global Equity International, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the years ended December 31, 2016 and 2015

 

		Series “B” Preferred Stock								Common Stock								Additional Paid-in				Stock				Accumulated				Accumulated Other Comprehensive				Total Stockholders’
		Shares				Amount				Shares				Amount				Capital				Payable				Deficit				Income / (Loss)				Equity
Balance - December 31, 2014			-			$	-				36,271,148			$	36,271			$	3,472,904			$	82,850			$	(7,434,650	)		$	1,045			$	(3,841,580	)
Common stock issued in settlement of debt and accrued interest			-				-				557,956,997				557,957				1,222,927				-				-				-				1,780,884
Common stock issued in settlement of accrued salary and commission			-				-				175,297,274				175,297				1,071,210				-				-				-				1,246,507
Common stock issued for services provided			-				-				6,640,554				6,641				147,452				-				-				-				154,093
Cancellation of preferred stock			-				-				-				-				1,020,000				-				-				-				1,020,000
Stock payable written back			-				-				-				-				-				(82,850	)			-				-				(82,850	)
Net income			-				-				-				-				-				-				247,434				-				247,434
Other comprehensive loss			-				-				-				-				-				-				-				(1,045	)			(1,045	)
Balance - December 31, 2015			-			$	-				776,165,973			$	776,166			$	6,934,493			$	-				(7,187,216	)		$	-			$	523,443
Common stock issued for accrued salaries and accounts payable			-				-				25,833,255				25,833				505,181				-				-				-				531,014
Common stock issued as partial conversion of a loan note			-				-				6,667,647				6,668				106,682				-				-				-				113,350
Common stock issued as exchange fee for loan notes			-				-				4,000,000				4,000				65,898				-				-				-				69,898
Common stock issued for cash subscription			-				-				10,000,000				10,000				125,000				-				-				-				135,000
Common stock issued for services provided			-				-				1,808,900				1,809				29,251				-				-				-				31,060
Common stock exchanged with series “B” convertible preferred stock			45,000,000				45,000				(450,000,000	)			(450,000	)			405,000				-				-				-				-
Beneficial conversion feature recorded on a loan note			-				-				-				-				25,944				-				-				-				25,944
Net loss			-				-				-				-				-				-				(16,002	)			-				(16,002	)
Balance - December 31, 2016			45,000,000			$	45,000				374,475,775			$	374,476			$	8,197,449			$	-				(7,203,218	)		$	-			$	1,413,707

 

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

 

 

Global Equity International Inc. And Subsidiaries

Consolidated Statement of Cash Flows

             

		For the years ended,
		December 31, 2016				December 31, 2015
Cash flows from operating activities
Net (loss) / income		$	(16,002	)		$	247,434
Adjustments to reconcile net (loss) / income to net cash used in operating activities
Depreciation			11,478				11,251
Securities paid for services			20,568				-
Securities received as payment for services and deferred securities recorded as revenues			(730,595	)			(2,647,471	)
Stock compensation			31,060				155,827
Gain on transfer of preferred stock			(1,454	)			-
Loss on conversion of notes into common stock			-				733,922
Loss (gain) on embedded conversion option derivative liabilities			-				407,482
Gain on settlement of debt			-				(660,578	)
Loss (gain) on extinguishment of debt and other liabilities			83,353				(116,921	)
Loss on conversion of accrued salaries and accounts payables into common stock			1,097				-
Amortization of debt discount			119,964				355,253
Bad debts			-				13,345
Changes in operating assets and liabilities:
Accounts receivable			(21,800	)			-
Prepaids			50,610				(80,150	)
Other current assets			(812	)			1,499
Accounts payable			69,997				445,780
Accrued liabilities			11,853
Accounts payable and accrued liabilities - related parties			309,155				240,704
Deferred revenue			(362,500	)			377,115
Accrued interest and finance charges			-				441,358
Net cash used in operating activities:		$	(424,028	)		$	(74,150	)
Cash Flows used in investing activities:
Office furniture and equipment, net			(1,612	)			(1,108	)
Net cash used in investing activities		$	(1,612	)		$	(1,108	)
Cash flows from financing activities:
Proceeds from loans - related parties			5,974				48,422
Repayment of loans - related parties			(5,974	)			(5,500	)
Proceeds from issuance of common stock			135,000				-
Proceeds from notes payable			450,000				100,000
Repayment of notes payable			(135,000	)			(43,482	)
Net cash provided by financing activities		$	450,000			$	99,440
Net increase in cash		$	24,360			$	24,182
Effect of Exchange Rates on Cash			-				(1,045	)
Cash at Beginning of Year		$	42,163			$	19,026
Cash at End of Year		$	66,523			$	42,163
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	30,981
Cash paid for income taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Notes payable and interest converted into shares		$	113,350			$	637,820
Debt discount and issuance costs recorded on notes payable		$	180,944			$	35,000
Accounts payable and accrued salaries settled in shares		$	529,915			$	552,958
Cancellation of redeemable series A preferred stock		$	-			$	1,020,000
Cancellation of common stock in exchange for series B preferred stock		$	(450,000	)		$	-

 

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

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Note 1 - Organization and 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 GEP called GE Professionals DMCC. On June 10, 2016, GEI incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEPEH”), under the laws of the Republic of Seychelles. On March 14, 2017, GEPEH became the parent company of GE Professionals DMCC (Dubai).

 

Revenue is generated from business consulting services and employment placements.

 

Note 2 - Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All amounts in the consolidated financial statements are stated in U.S. dollars.

 

Note 3 - Going Concern

 

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

 

As reflected in the accompanying consolidated financial statements, the Company had a net loss of $16,002 and net cash used in operations of $424,028 for the year ended December 31, 2016; and a working capital deficit of $1,681,830 and stockholders´ equity of $1,413,707 as of December 31, 2016. It is management’s opinion that some of these factors may raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

a) Continually engaging with new clients which over the years have become consistent.

 

b) Consummating and executing current engagements.

 

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

 

The Company´s deferred revenue, $200,000 at December 31, 2016, is non-refundable hence once certain contractual milestones are achieved or contractual terms pass over time, as applicable, on each individual engagement a proportion of deferred revenue will become revenue for the Company and therefore no cash outlays are required for these liabilities.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

The two largest debts (The Able Foundation loan & Eden loan) stated on our current liabilities are non-collateralized and non-convertible loans. However, Able Foundation has a judgment against the Company, which is currently under appeal (See Note 11).

 

Note 4 - Summary of Significant Accounting Policies

 

Principles of Consolidation

 

Global Equity International Inc. is the parent company of its two 100% subsidiaries called Global Equity Partners Plc. and GEP Equity Holdings Limited. GEP Equity Holdings Limited is the parent company of its 100% subsidiary, GE Professionals DMCC (Dubai). All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

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

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-confirming events. Accordingly, the actual results could differ from those estimates. Significant estimates in the accompanying financial statements include allowance for doubtful accounts and loans, estimates of fair value of securities received for services, estimates of fair value of securities held, depreciation of fixed assets, valuation allowance on deferred tax assets, derivative valuations, and equity valuations for non-cash equity grants.

 

Risks and Uncertainties

 

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

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2016 and at December 31, 2015 the Company had no cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. There was no allowance for bad debt at December 31, 2016 and 2015.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Foreign currency policy

 

The Company’s accounting policies related to the consolidation and accounting for foreign operations are as follows: The accompanying consolidated financial statements are presented in U.S. dollars. The functional currency of the Company’s Dubai subsidiary is the Arab Emirates Dirham (AED). All foreign currency balances and transactions are translated into United States dollars “$” and/or “USD” as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of our stockholders’ equity (deficit) as “Accumulated other comprehensive income (loss)”. Since the AED is pegged to the U.S. dollar, translation gains and losses are always De Minimis, therefore a statement of comprehensive income (loss) is not presented. Gains and losses resulting from foreign currency transactions are included in the statement of operations.

 

Investments

 

(A) Classification of Securities

 

Marketable Securities

 

At the time of the acquisition, a marketable security is designated as held-to-maturity, available-for-sale or trading, which depends on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported at fair value, while securities classified as held-to-maturity are reported at amortized cost.

 

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

 

Cost Method Investments

 

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

 

(B) Other than Temporary Impairment

 

The Company reviews its equity investment portfolio for any unrealized losses that would be deemed other than temporary and require the recognition of an impairment loss in income statement. 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 record any permanent impairment during the years ended December 31, 2016 or 2015.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Fixed Assets

 

Fixed assets are stated at cost of acquisition less accumulated depreciation. Depreciation is provided based on estimated useful lives of the assets. Cost of improvements that substantially extend the useful lives of assets 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 statements.

 

Beneficial Conversion Feature

 

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

 

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

 

Debt Issue Costs

 

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

 

Original Issue Discount

 

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

 

Valuation of Derivative Instruments

 

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

 

Revenue Recognition

 

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

 

We receive consideration in the form of cash and/or securities.

 

We recognize cash consideration as revenues as the services are performed either on a pro rata basis or on a milestone basis.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

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

 

All revenues are generated from clients whose operations are based outside of the United States.

 

At December 31, 2016 and 2015, the Company had the following concentrations of accounts receivables with customers:

 

Customer		December 31, 2016
PDI			91.74	%
DUO			8.26	%
			100	%

 

For the years ended December 31, 2016 and 2015, the Company had the following concentrations of revenues with customers:

 

Customer		December 31, 2016				December 31, 2015
SAC			0	%			1.81	%
MHB			0	%			0.91	%
TAM			0	%			1.81	%
EER			0	%			0.91	%
MGP			0	%			1.81	%
ALP			0	%			4.46	%
UNI			12.24	%			6.10	%
DUO			7.70	%			31.25	%
PDI			20.46	%			49.96	%
QFS			37.06	%			0.38	%
INSCX			2.65	%			0.60	%
GPL			3.97	%			0	%
EEC			5.52	%			0	%
UGA			3.97	%			0	%
SCL			3.31	%			0	%
TLF			1.32	%			0	%
VME			1.17	%			0	%
AGL			0.63	%			0	%
			100	%			100	%

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Deferred Revenue

 

Deferred revenue represents fees that have been received by the Company for requested services that have not been completed. Following table illustrates the movement in deferred revenue during the years ended December 31, 2016 and 2015:

 

Balance, December 31, 2014		$	462,015
New payments received in 2015			2,099,520
Revenue recognized during 2015			(1,722,405	)
Balance, December 31, 2015		$	839,130
New payments received during the period			120,000
Cash deferred revenue recognized as revenue during the period			(482,500	)
Securities deferred revenue recognized as revenue during the period			(276,630	)
Balance, December 31, 2016		$	200,000

 

Share-based payments

 

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

 

Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable as of the measurement date. Amounts received prior to the measurement date are adjusted to fair value at each reporting period until a measurement date is achieved. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.

 

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

 

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

 

	●	The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the share based payment in effect at the time of the grant.
	●	The expected term is developed by management estimate.
	●	The Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common stock in the near future.
	●	The expected volatility is based on management estimates which are based upon our historical volatility.
	●	The forfeiture rate is based on historical experience.

 

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.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

On November 15, 2010, the date of the reverse recapitalization, the Company became subject to U.S. federal and the state of Nevada income taxes. The Company files an unconsolidated income tax return to the tax authorities in U.S.

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company will record interest and penalties related to unrecognized tax benefits in income tax expense. There were no penalties or interest related to income tax positions for the years ended December 31, 2016 and 2015.

 

At December 31, 2016, we accrued an IRS fine of $10,000 plus $492 of interest on account of a late filing of our 2013 Form 5472 Tax Return. The Company is currently appealing this fine.

 

The Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for the 2014, 2015 and 2016 tax years.

 

The Company’s two subsidiaries, Global Equity Partners Plc. and GEP Equity Holdings Limited, are incorporated under the laws of the Republic of Seychelles (“Seychelles”). A company is subject to Seychelles income tax if it does business in Seychelles. A company that is incorporated in Seychelles, but that does not do business in Seychelles, is not subject to income tax there. None of these two subsidiaries did business in Seychelles for the years ended December 31, 2016 and 2015, and do not intend to do business in Seychelles in the future. Accordingly, the Company is not subject to income tax in Seychelles for the years ended December 31, 2016 and 2015. All business activities were performed by Global Equity Partners Plc. and GEP Equity Holdings Limited in Dubai for the years ended December 31, 2016 and December 31, 2015. Dubai does not have an income tax.

 

Earnings per Share

 

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

 

As at December 31, 2016, the Company had common stock equivalents of 2,941,176 common shares in the form of a fixed price convertible note, which, if converted, would be dilutive. See Note 7(E). These common stock equivalents were not included in the computation of diluted net loss per share because the effects would have been anti-dilutive due to the net losses.

 

Fair Value of Financial Assets and Liabilities

 

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

 

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

 

●

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

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

 

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

 

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

 

The following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2016 and December 31, 2015, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

 

		December 31, 2016				December 31, 2015
Level 3 – Non-Marketable Securities – Non-recurring		$	3,085,322			$	2,650,471

 

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

 

Marketable Securities — The Level 2 position consists of the Company’s investment in equity securities of stock held in publicly traded companies. The valuation of these securities is based on significant inputs that are observable or can be derived from or corroborated by observable market data. These valuations are typically based on quoted prices in active markets. The Company´s investments in equity securities are in relatively inactive markets.

 

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

 

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

 

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

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

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

 

Changes in Level 3 assets measured at fair value for the years ended December 31, 2016 and 2015 were as follows:

 

Balance, December 31, 2014		$	3,000
Realized and unrealized gains (losses)			-
Purchases, sales and settlements			2,647,471
Impairment loss			-
Balance, December 31, 2015			2,650,471
Realized and unrealized gains (losses)			-
Securities received for services during the period			453,965
Sales and settlements during the period			(19,114	)
Impairment loss			-
Balance, December 31, 2016		$	3,085,322

 

Reclassification

 

Certain amounts in the December 31, 2015 balance sheet have been reclassified to conform to the current period´s presentation. Accrued liabilities amounting to $184,656 were included in the accounts payable at December 31, 2015.

 

Recent Accounting Pronouncements

 

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

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle-based approach. The core principle of the standard is that revenue should be recognized when the transfer of promised goods or services is made in an amount that the entity expects to be entitled to in exchange for the transfer of goods and services. The update also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB voted to defer the effective date of this guidance by one year. On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations, which clarifies how an entity determines if it is a principal or an agent for each specified good or service promised to the customer, the nature of each specified good or service, and how an entity that is principal obtains control of a good and service provided by another party involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing, which clarifies the guidance related to whether goods or services are distinct within the context of contract and therefore a performance obligation and the timing and pattern of revenue recognition for IP licenses. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and added some practical expedients. In December 2016, the FASB issued ASU 2016-20, Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements, which provides clarifying guidance in certain technical areas. The standard and related amendments will be effective for financial statements issued by public companies for interim and annual reporting periods beginning after December 16, 2018. Early adoption of the standard is permitted, but not before the original date of financial statements issued by public companies for interim and annual reporting periods beginning after December 16, 2017. We currently do not plan to early adopt this guidance and are evaluating the potential impact of this guidance on our consolidated financial statements as well as transition methods.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow (Topic 230). This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update provides new guidance regarding the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitized transactions, and separately identifiable cash flows and application of the predominance principle. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2017. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. We have completed an initial evaluation of this standard, which requires cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities. We have determined that there were no cash payments involved in debt extinguishment during the year ended December 31, 2016, hence there will be no potential impact on our financial statements due to this update. We will continue to evaluate the potential impact of this guidance on our consolidated financial statements.

 

Note 5 – Investments

 

Global Equity Partners Plc. and GEP Equity Holdings Limited hold following common equity securities in private and reporting companies as at December 31, 2016 and December 31, 2015:

 

		12/31/2016								12/31/2015
Company		No. of Shares				Book value				No. of Shares				Book value				Status
M1 Lux AG			2,000,000			$	-				2,000,000			$	-			Private Company
Monkey Rock Group Inc.			1,500,000			$	-				1,500,000			$	-			Reporting Company – OTC
Voz Mobile Cloud Limited			3,200,000			$	-				3,200,000			$	-			Private Company
Arrow Cars International Inc.			3,000,000			$	3,000				3,000,000			$	3,000			Private Company
Direct Security Integration Inc.			400,000			$	-				400,000			$	-			Private Company
Duo World Inc.			3,481,133			$	880,850				3,460,000			$	865,000			Reporting Company – OTC
Primesite Developments Inc.			5,606,521			$	1,781,521				5,606,521			$	1,781,521			Private Company
Quartal Financial Solutions AG			2,271			$	419,365				-				-			Private Company
			19,189,925			$	3,084,736				19,166,521			$	2,649,521

 

Global Equity Partners Plc. and GEP Equity Holdings Limited hold following preferred equity securities in private companies as at December 31, 2016 and December 31, 2015:

 

		12/31/2016								12/31/2015
Company		No. of Shares				Book value				No. of Shares				Book value				Status
Duo World Inc.			136,600			$	136				500,000			$	500			Reporting Company – OTC
Primesite Developments Inc.			450,000			$	450				450,000			$	450			Private Company
			586,600			$	586				950,000			$	950

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

On April 28, 2015, the Company received 3,460,000 common shares from a private company and client having a fair market value of $865,000 that has been treated as a cost method investment. The value of the cost method investment pertains to the receipt of 9.09% of the common stock in a private company in which the best evidence of value was the last available price at which shares were sold in a private placement. On April 28, 2015, the Company received 500,000 preferred shares from the same private company and client having a fair market value of $500 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of 10% of the preferred stock in this private company in which the best evidence of value was the services rendered.

 

On September 24, 2015, the Company received 4,500,000 common shares from a private company and client having a fair market value of $675,000 that is treated as a cost method investment. The value of the cost method investment pertains to partial receipt of 5% of the common stock in a private company in which the best evidence of value was based on the net asset value of the private company. On September 24, 2015, the Company also received 450,000 preferred shares from the same private company and client having a fair market value of $450 that is treated as a cost method investment. The value of the cost method investment pertains to the receipt of the preferred stock (10% of 4,500,000 common shares received) in the aforementioned private company in which the best evidence of value was the services rendered. On December 14, 2015, the Company further received 1,106,521 common shares from the same private company and client having a fair market value of $1,106,521 that is treated as a cost method investment. The value of the cost method investment pertains to partial receipt of 5% of the common stock in a private company in which the best evidence of value was based on the debt conversion price of the private company.

 

On February 8, 2016, the Company entered into an agreement with Yenom (Pvt.) Limited where the Company agreed to pay an equity commission, for the introduction of a client to the Company, in the form of transfer of 363,400 preferred shares (valued at $0.005 per share) of Duo World Inc. out of the 500,000 preferred shares which were owned by the Company at the year ended December 31, 2015. As a result of this transfer, the Company’s investment in preferred shares of Duo World Inc. was reduced to 136,600 preferred shares as on March 31, 2016 and a gain of $1,454 was recorded on transfer of this preferred stock.

 

On March 29, 2016, the Company received 1,815 common shares valued at CHF 160 or $163.89 and 456 common shares valued at CHF 261 or $267.34 from a private company and client having a fair market value of $419,365 that is treated as a cost method investment. The value of the cost method investment pertains to receipt of agreed common stock in a private company in which the best evidence of value was based on the Company´s prior equity sales.

 

On April 27, 2016, the Company received 46,133 common shares valued at $0.75 per share from a private company and client having a fair market value of $34,600 that is treated as a cost method investment. The value of the cost method investment pertains to receipt of agreed common stock in a private company in which the best evidence of value was the last available price at which shares were sold in a private placement.

 

On June 1, 2016, the Company paid an equity commission to a consultant, for the introduction of a client to the Company, in the form of transfer of 25,000 common shares (valued at $0.75 per share or $18,750 based on the Company´s prior equity sales) of Duo World Inc. out of the 46,133 common shares which were received and owned by the Company on April 27, 2016. As a result of this transfer, the Company’s overall investment in common shares of Duo World Inc. was reduced to 3,481,133 common shares as of December 31, 2016 and there was no gain / loss recorded on transfer of this common stock.

 

At December 31, 2016, there were no identifiable events or changes in circumstances that had a significant adverse effect on the value of the investments; hence, no impairment is required as of December 31, 2016.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Note 6 – Fixed Assets

 

Following table reflects net book value of fixed assets as of December 31, 2016 and 2015:

 

		12/31/2016				12/31/2015				Useful Life
Furniture and Equipment		$	38,815			$	37,204			3 to 5 years
Accumulated depreciation		$	(28,600	)		$	(17,123	)
Net fixed assets		$	10,215			$	20,081

 

Depreciation expense for the years ended December 31, 2016 and 2015 was $11,478 and $11,251, respectively.

 

Note 7 – Debt & Accounts Payables

 

(A) Accounts Payables and other accrued liabilities

 

The following table represents breakdown of accounts payable as of December 31, 2016 and December 31, 2015, respectively:

 

		12/31/2016				12/31/2015
Accrued salaries and benefits		$	89,184			$	79,386
Accounts payables			83,354				108,951
		$	172,538			$	188,337

 

On September 9, 2015, one of the employees of the Company decided to convert his accrued salary and commission balance to the common shares of the Company at $0.01 per share. As a result of this conversion, the Company issued 5,500,000 common shares having a fair value of $0.014 per share or $77,000 to the employee for his accrued salary and bonus of $55,000. As a result, $22,000 was recognized as net loss on conversion into stock.

 

On September 10, 2015, another employee of the Company decided to convert his accrued salary and commission balance to the common shares of the Company at $0.00735 per share. As a result of this conversion, the Company issued 10,749,000 common shares having a fair value of $0.0127 per share or $136,512 to the employee for his accrued salary and bonus of $79,000. As a result, $57,512 was recognized as net loss on conversion into stock.

 

On December 4, 2015, one of the employees of the Company decided to convert his accrued salary and bonus balance to the common shares of the Company at $0.0233 per share. Because of this conversion, the Company issued 892,790 common shares having a fair value of $0.0233 per share or $20,802, based on the quoted trading price, to the employee for his accrued salary and bonus of $20,000 and expenses payable of $802. As a result, no gain/loss was recognized on conversion into stock.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

On April 25, 2016, two of the Company’s consultants decided to convert their accrued fee balance amounting to $5,250 to the common shares of the Company at $0.015 per share. As a result of this conversion, the Company issued following common stock to its consultants:

 

	●	100,000 common shares to a consultant, having a fair value of $0.0143 per share or $1,430 based on closing quoted price on the date of conversion for his accrued fee balance of $1,500, thereby recognizing a gain on conversion of $70.
	●	250,000 common shares to a consultant, having a fair value of $0.0143 per share or $3,575 based on closing quoted price on the date of conversion for his accrued fee balance of $3,750, thereby recognizing a gain on conversion of $175.

 

On September 30, 2016, three of the Company’s employees decided to convert their partial accrued salaries and expenses payable balance amounting to $65,652 to the common shares of the Company at $0.02 per share. As a result of this conversion, the Company issued following common stock to its employees:

 

	●	900,000 common shares to Mr. Colin Copeland, having a fair value of $0.0205 per share or $18,450 based on closing quoted price on the date of conversion for his accrued salary balance of $18,000, thereby recognizing a loss on conversion of $450.
	●	1,599,240 common shares to Mr. James Robert Payne, having a fair value of $0.0205 per share or $32,784 based on closing quoted price on the date of conversion for his accrued salary balance of $31,985, thereby recognizing a loss on conversion of $799.
	●	783,335 common shares to Ms. Zara Victoria Clark, having a fair value of $0.0205 per share or $16,058 based on closing quoted price on the date of conversion for his accrued salary balance of $15,667, thereby recognizing a loss on conversion of $391.

 

(B) Accrued Contingencies and Penalties

 

Following is a breakdown of accrued liabilities as at December 31, 2016 and 2015, respectively:

 

		12/31/2016				12/31/2015
Provision for potential damages - See Note 7(D)		$	184,656			$	184,656
Provision for late filing fee of 2013 Tax return (See below)			10,492				-
Other			1,361				-
		$	196,509			$	184,656

 

At December 31, 2016, we accrued an IRS fine of $10,000 plus $492 of interest on account of a late filing of our 2013 IRS Form 5472 Tax Return. The Company is currently appealing this fine.

 

 (C) Accounts Payable and Accrued Liabilities – Related Parties

 

The following table represents the accounts payable and accrued expenses to related parties as of December 31, 2016 and December 31, 2015, respectively:

 

		12/31/2016				12/31/2015
Accrued salaries and benefits		$	52,587			$	152,875
Expenses payable			1,161				50,734
		$	53,748			$	203,609

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

On August 27, 2015, all of the officers and directors of the Company decided to convert their accrued salaries balance amounting to $398,156 to the common shares of the Company at $0.0025 per share, which is 50% of the average 20 days closing price prior to the conversion. Following is the breakdown of this conversion:

 

	●	The Company issued 69,076,922 common shares at $0.0025 per share having a fair value of $0.0064 per share or $442,092 based on closing quoted price on the date of conversion to Mr. Enzo Taddei for his accrued salary balance of $173,901. As a result, $268,191 was recognized as net loss on conversion into stock.
	●	The Company issued 42,127,492 common shares at $0.0025 per share having a fair value of $0.0064 per share or $269,616 based on closing quoted price on the date of conversion to Mr. Peter Smith for his accrued salary balance of $106,056. As a result, $163,560 was recognized as net loss on conversion into stock.
	●	The Company issued 46,951,071 common shares at $0.0025 per share having a fair value of $0.0064 per share or $300,487 based on closing quoted price on the date of conversion to Mr. Patrick Dolan for his accrued salary balance of $118,199. As a result, $182,288 was recognized as net loss on conversion into stock.

 

On May 31, 2016, Mr. Peter Smith, officer and director of the Company, decided to convert his partial accrued salary balance of $27,500 to the common shares of the Company at $0.0275 per share. As a result of this conversion, the Company issued 1,000,000 common shares to Mr. Peter having a fair value of $0.0248 per share or $24,800 based on closing quoted price on the date of conversion, thereby recognizing a gain on conversion of $2,700. On the same day, Mr. Enzo Taddei, officer and director of the Company, decided to convert his partial accrued salary balance of $27,500 to the common shares of the Company at $0.0275 per share. As a result of this conversion, the Company issued 1,000,000 common shares to Mr. Enzo having a fair value of $0.0248 per share or $24,800, thereby recognizing a gain on conversion of $2,700.

 

On June 15, 2016, all of the officers and directors of the Company decided to convert their partial accrued salaries balance amounting to $250,000 to the common shares of the Company at $0.02 per share. As a result of this conversion, the Company issued 4,500,000 common shares each to Mr. Peter Smith and Mr. Enzo Taddei, having a fair value of $0.0201 per share or $180,900 based on closing quoted price on the date of conversion for their accrued salary balance of $180,000, thereby recognizing a loss on conversion of $900, and issued 3,500,000 common shares to Mr. Patrick Dolan, having a fair value of $0.0201 per share or $70,350 based on closing quoted price on the date of conversion for his accrued salary balance of $70,000, thereby recognizing a loss on conversion of $350.

 

On September 30, 2016, all of the officers and directors of the Company decided to convert their partial accrued salaries balance amounting to $154,014 to the common shares of the Company at $0.02 per share. As a result of this conversion, the Company issued following common stock to its officers and directors:

 

	●	2,720,120 common shares to Mr. Peter Smith, having a fair value of $0.0205 per share or $55,762 for his accrued salary balance of $54,402, thereby recognizing a loss on conversion of $1,360
	●	3,656,697 common shares to Mr. Enzo Taddei, having a fair value of $0.0205 per share or $74,962 for his accrued salary balance of $73,134, thereby recognizing a loss on conversion of $1,828, and
	●	1,323,863 common shares to Mr. Patrick Dolan, having a fair value of $0.0205 per share or $27,139 for his accrued salary balance of $26,477, thereby recognizing a loss on conversion of $662.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

(D) Notes Payable

 

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at December 31, 2015:

 

Date of Note		Principal (net of debt discount)				Accrued Interest				Accrued Liabilities				Total Payable
October 9, 2013		$	120,420			$	106,196			$	184,656			$	411,272
October 17, 2013			319,598				160,402				-				480,000
November 26, 2013			-				37,971				-				37,971
August 27, 2015			123,333				-				-				123,333
Balance, December 31, 2015		$	563,351			$	304,569			$	184,656			$	1,052,576

 

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest and accrued liabilities as at December 31, 2016:

 

Date of Note		Principal (net of debt discount)				Accrued Interest				Accrued Liabilities				Total Payable
October 9, 2013		$	120,420			$	106,196			$	184,656			$	411,272
October 17, 2013			319,598				160,402				-				480,000
November 26, 2013			-				37,971				-				37,971
August 25, 2016			153,333				-				-				153,333
October 13, 2016			114,584				-				-				114,584
December 06, 2016			132,083				-				-				132,083
Balance, December 31, 2016		$	840,018			$	304,569			$	184,656			$	1,329,243

 

●

On October 9, 2013, the Company secured a two-month loan for GBP 75,000 (equivalent to $120,420) with the understanding that the Company will issue 10,000 common restricted shares, issued to the lender on December 7, 2013, and also repay 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 common restricted shares and for this the lender agreed to a five-month extension. This stock compensation was issued to the lender also on December 12, 2013. This loan is currently in default. Total accrued interest as at December 31, 2016 is $106,196. The Company also accrued $184,656 provision for potential damages due to the ongoing litigation in the Dubai Courts as of December 31, 2016 and 2015, which is included in accrued liabilities in the accompanying consolidated balance sheet. (See Note 7(B) and 11).

 

		Principal				Accrued Interest				Accrued Liabilities
Balance, December 31, 2014		$	120,420				106,196				-
Repayments			-				-				-
Interest accrued in 2015			-				-				-
Potential damages accrued in 2015			-				-				184,656
Balance, December 31, 2015		$	120,420				106,196				184,656
Repayments			-				-				-
Interest accrued in 2016			-				-				-
Balance, December 31, 2016		$	120,420				106,196				184,656

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

●

On October 17, 2013, the Company secured a three-month bridge loan for 200,000 GBP (equivalent to $319,598) with the agreement to repay the principal plus 5% per month interest on or before January 18, 2014. The note holder received, as a form of guarantee, 1,600,000 shares of Direct Security Integration Inc. and the note holder is currently trying to sell these shares. The shares used as a form of guarantee formed part of the assets of our Company.   On September 18, 2015, the Company and the note holder agreed to amend the previous terms of the agreement and both parties agreed on the new terms whereby the company is now liable to pay $500,000 as full and final payment of the October 17, 2013 loan principal, accrued interest, and all other related penalties. This repayment will not accrue any further interest or penalties. As a result, the Company has reversed the excess accrued interest and monitoring fee payable amounting to $660,578 recognized as a gain on settlement; leaving the principal loan balance of $319,598 and accrued interest balance $180,402 of as on September 30, 2015.   On December 21, 2015, the company repaid first installment of the accrued interest amounting to $20,000; leaving the accrued interest balance of $160,402 and principal loan balance $319,598 of as on December 31, 2015. The remaining installments totaling to $480,000, as per the amended agreement, have not been paid as of December 31, 2016.

 

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

 

●

On April 29, 2016, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs. The interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the year ended December 31, 2016, $5,000 of the debt issuance costs and $30,000 of the debt discount balance was amortized to income statement, making the aggregate note payable balance amounting to $135,000. On October 12, 2016, the Company repaid the full amount of this loan note in cash to the lender.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Principal loan amount		$	135,000
Original issue discount			(30,000	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs during the year			35,000
Cash repayment			(135,000	)
Balance at December 31, 2016		$	-

 

●

On August 25, 2016, the Company secured a six-month non-convertible loan for $167,500 carrying an original issue discount of $37,500. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the year ended December 31, 2016, $3,333 of the debt issuance costs and $25,000 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $14,167.

 

Principal loan amount		$	167,500
Original issue discount			(37,500	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs during the year			28,333
Balance at December 31, 2016		$	153,333
(Net of unamortized discount and issue costs of $14,167)

 

Subsequent to the year ended December 31, 2016, after receipt of $167,500 from Mammoth Corporation (New Lender) on February 23, 2017, St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by GEQU to St. George Investments LLC in the amount of $167,500 dated August 25, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $184,250 dated February 23, 2017. The terms of this exchanged note were a one-off 10% increase in the principal loan of $16,750, increasing the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date of revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.017. Fair value of GEQU stock as on the date of exchange was $0.0179. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of GEQU stock as on February 23, 2017. The Company accounted for the difference arising due to BCF amounting to $9,754 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated August 25, 2016 and $16,750 was recognized as loss on debt extinguishment. (See Note 12)

 

●

On October 13, 2016, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the year ended December 31, 2016, $2,084 of the debt issuance costs and $12,500 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $20,416.

 

Principal loan amount		$	135,000
Original issue discount			(30,000	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs during the year			14,584
Balance at December 31, 2016		$	114,584
(Net of unamortized discount and issue costs of $20,416)

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

●

On December 06, 2016, the Company secured a six-month non-convertible loan for $167,500 carrying an original issue discount of $37,500. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs. During the year ended December 31, 2016, $833 of the debt issuance costs and $6,250 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $35,417.

 

Principal loan amount		$	167,500
Original issue discount			(37,500	)
Issuance costs			(5,000	)
Amortization of OID and issuance costs during the year			7,083
Balance at December 31, 2016		$	132,083
(Net of unamortized discount and issue costs of $35,417)

 

(E) Fixed Price Convertible Note Payable

 

	●	On August 27, 2015, the Company secured a six-month non-convertible loan for $135,000 carrying an original issue discount of $30,000. In addition, the company agreed to pay $5,000 to the note holder to cover their legal costs and the interest will not be accrued on the outstanding principal balance unless an event of default occurs.
		During the three months ended March 31, 2016, $1,667 of the debt issuance costs and $10,000 of the debt discount balance was amortized to income statement, leaving an unamortized issue cost and discount balance of $0.
		On March 18, 2016, the Company entered into an exchange agreement with the same lender whereby original purchase agreement dated August 27, 2015 was exchanged with the new agreement to extend the loan repayment term until April 17, 2016. The total exchange price for $135,000 of principal of the Old Note was as follows:

 

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

 

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

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

		On April 28, 2016, St. George decided not to opt for converting the principal loan to common shares. Instead, on April 28, 2016, the Company renegotiated the loan terms, further extending the repayment to July 1, 2016. The terms of this further extension were a one-off 10% interest payment of $13,500 to be added to the principal of $135,000 and the issuance of 3,000,000 common shares. The Company accounted for this further extension as a debt extinguishment of previous extension dated March 18, 2016 and $58,200 was recognized as loss on debt extinguishment comprising of $13,500 of interest payment and $44,700 for issuance of 3,000,000 common shares of the Company valued at a fair value of $0.0149 on the date of new exchange. (See Note 9 (B))
		On July 1, 2016, after receipt of $148,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by GEQU to St. George Investments LLC in the amount of $148,500 dated April 28, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9-month convertible promissory note amounting to $163,350 dated July 01, 2016. The terms of this exchanged note were a one-off 10% increase in the principal loan of $14,850, making the principal sum from $148,500 to $163,350. The new lender also has a right, at any time after the issue date of revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.017. Fair value of GEQU stock as on the date of exchange was $0.0197. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of GEQU stock as on July 01, 2016. The Company accounted for the difference arising due to BCF amounting to $25,944 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated April 28, 2016 and $14,850 was further recognized as loss on debt extinguishment.
		On September 16, 2016, the note holder partially converted $59,500 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,500,000 common shares to Mammoth Corporation.
		On December 1, 2016, the note holder partially converted $53,850 of the note to the common shares of the Company at an agreed fixed price of $0.017 per share. As a result of this conversion, the Company issued 3,167,647 common shares to Mammoth Corporation.
		During the year ended December 31, 2016, the company amortized $23,297 of debt discount balance arising due to BCF, leaving un-amortized debt discount balance of $2,647 as of December 31, 2016. The outstanding convertible note balance amounted to $50,000 as of December 31, 2016, and $47,353 net of the discount.
		Subsequent to the year ended December 31, 2016, the Company issued 5,000,000 common shares to Mammoth Corporation in order to settle remaining payable balance in full amounting to $50,000. The Company verbally agreed to a conversion price of $0.01 per share other than the contractual fixed price of $0.017 per share, in order to fully settle this obligation, thereby $39,324 was recognized as a loss on conversion of this note. (See Note 12)

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

(F) Related Party – Short Term Loans Payable

 

The Company received loans from two of its officers and directors. The loans were non-interest bearing, unsecured and due on demand. The following table represents the loans payable activity as of December 31, 2016 and 2015:

 

Balance, December 31, 2014		$	58,595
Proceeds from loans			48,422
Repayments			(5,500	)
Converted to common stock			(101,517	)
Balance, December 31, 2015		$	-
Proceeds from loans			5,974
Repayments			(5,974	)
Balance, December 31, 2016		$	-

 

On August 27, 2015, both of the officers and directors of the Company decided to convert their short-term loans payable balance amounting to $101,517 to common shares of the Company at $0.0025 per share, which is 50% of the average 20 days closing price prior to the conversion. Following is the breakdown of this conversion:

 

	●	The Company issued 11,776,756 common shares at $0.0025 per share having a fair value of $0.0064 per share or $75,371 to Mr. Enzo Taddei for his loan payable balance of $29,648. As a result, $45,723 was recognized as net loss on conversion into stock.
	●	The Company issued 28,547,822 common shares at $0.0025 per share having a fair value of $0.0064 per share or $182,706 to Mr. Peter Smith for his loan payable balance of $71,869. As a result, $110,837 was recognized as net loss on conversion into stock.

 

Note 8 - Income Taxes

 

The income tax provision differs from the amount of tax determined by applying the US federal statutory rate of 35% as follows:

 

		2016				2015
Income Tax (benefit) provision at statutory rate:		$	(5,600	)		$	86,603
Increase (decrease) in income tax due to:
Non-Taxable foreign earnings / losses			(99,306	)			(402,915	)
Amortization of debt discount			41,987				30,473
Loss on derivative liabilities			-				88,315
Loss on conversion of notes			384				328,464
Stock based compensation			19,821				54,539
Change in valuation allowance			42,714				(185,478	)
Total		$	-			$	-

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income taxes.

 

Net deferred tax assets and liabilities are comprised of the following:

 

		2016				2015
Deferred tax assets (liabilities), current		$	-			$	-
Deferred tax assets (liabilities), non-current
Net operating loss carry-forward		$	108,904			$	66,190
Valuation allowance		$	(108,904	)		$	(66,190	)
		$	-			$	-
Net deferred tax assets (liabilities)		$	-			$	-
Non-current assets (liabilities)		$	-			$	-
		$	-			$	-

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

The US parent entity´s expenses are funded by the foreign subsidiaries through a management fee, which is, included in the US parent´s unconsolidated US annual income tax return as taxable revenues.

 

The Company has not recorded deferred income taxes applicable to undistributed earnings of the foreign subsidiaries because there are cumulative losses in those subsidiaries through December 31, 2016. In the future, the Company does not intend to record deferred income taxes applicable to undistributed future earnings of the foreign subsidiaries because it is the present intention of management to reinvest the undistributed earnings indefinitely in those foreign subsidiaries.

 

In assessing the realizability of deferred tax assets, management considers that whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2016 and 2015, based upon the levels of historical taxable income and the limited experience of the Company, the Company believes that it is more-likely-than-not that it will not be able to realize the benefits of some or all of these deductible differences. Accordingly, a valuation allowance of approximately $(108,904) and $(66,190) has been provided in the accompanying financial statements as of December 31, 2016 and 2015, respectively.

 

At December 31, 2016, the Company had approximately $311,000 of net operating loss carry-forwards that will expire through 2036.

 

The Company is not subject to any foreign income taxes for the years ended December 31, 2016 and 2015. The Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for the 2014, 2015 and 2016 tax years.

 

Note 9 - Stockholders’ Equity

 

(A) Preferred Stock

 

On November 30, 2011, the Company designated 5,000,000 of its authorized preferred stock as Series “A” convertible preferred shares. On November 13, 2012, the Company’s board of directors approved an amendment to the Certificate of Designation; to amend the voting rights and conversion rights of the Company’s Series “A” preferred shares as follows:

 

	●	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

 

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

 

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

	On July 15, 2015 the designation of the 5,000,000 Series “A” preferred shares was withdrawn.
	On November 10, 2016, the Company designated 45,000,000 of its authorized preferred stock as Series “B” convertible preferred shares. The Certificate of Designation stated the following:

 

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

 

On November 11, 2016, Enzo Taddei, Patrick V. Dolan and Peter J. Smith, all Directors of the Company, offered to retire and exchange an aggregate 450,000,000 shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock. The Company permitted Messrs. Taddei, Dolan and Smith to exchange 200,000,000, 50,000,000 and 200,000,000 shares of Common Stock, respectively, for 20,000,000, 5,000,000 and 20,000,000 shares of Series “B” Preferred Stock, respectively. There was no loss or gain related to this transaction as the value of the common shares exchanged equated to the value of the Series “B” Preferred shares received.

 

(B) Common Stock

 

During the year ended December 31, 2015, the Company issued 739,894,825 common shares valued at their fair value of $3,181,479 in exchange for conversion of promissory notes, accrued interest, accrued salaries, and commission of $1,344,629 and related derivative liabilities of $1,102,928, thereby recognizing a net loss on conversion of $733,922.

 

Effective February 16, 2015, the Company amended its Articles of Incorporation (Article 3) to increase the number of shares of common stock, which the Company has the authority to issue from 70,000,000 to 500,000,000.

 

Effective August 3, 2015, the Company again amended its Articles of Incorporation (Article 3) to increase the number of shares of common stock available to issue from 500,000,000 to 1,000,000,000.

 

During the year ended December 31, 2016, the Company issued 48,309,802 common shares and cancelled 450,000,000 common shares as follows:

 

	●	350,000 common shares were issued at a fair value of $5,005 in exchange for conversion of fee payable to the Company’s consultants amounting to $5,250, thereby recognizing a gain on conversion of $245. (See Note 7 (A)).
	●	25,483,255 common shares were issued at a fair value of $526,007 in exchange for conversion of accrued salaries of $524,665, thereby recognizing a net loss on conversion of $1,342. (See Note 7 (A&C)).
	●	4,000,000 common shares were issued to St. George Investments LLC at a fair value of $69,900 in lieu of exchange fee for a loan note. (See Note 7(E)).
	●	6,667,647 common shares were issued to Mammoth Corporation at a fixed conversion price of $0.017 per share as a result of a partial conversion of a loan note amounting to $113,350. (See Note 7(E)).
	●	10,000,000 restricted common shares under SEC Rule 144 to a non-affiliated investor at $0.0135 per share or $135,000.
	●	1,808,900 common shares were issued to a couple of vendors against services received by the Company as per the agreements signed with them.
	●	On November 11, 2016, certain Officers and Directors of the Company, offered to retire and exchange an aggregate 450,000,000 shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock. The Company permitted Officers and Directors of the Company to exchange 200,000,000, 50,000,000 and 200,000,000 shares of Common Stock, respectively, for 20,000,000, 5,000,000 and 20,000,000 shares of Series “B” Preferred Stock, respectively.

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

Note 10 – Related Party Transactions

 

On July 1, 2015, the Company entered into a consultancy agreement valued at $148,000 with a Nevada Corporation that is majority owned by the two officers of the Company. During the year ended December 31, 2015, the Company received $148,000 in cash as per the agreement and has provided the relevant consultancy services in due course of the business, thereby recognizing it as revenue from related party in the statement of operations.

 

On November 11, 2016, certain Officers and Directors of the Company exchange 450,000,000 shares of Common Shares held by them for 45,000,000 Series “B” Preferred Stock. (See Note 9(A)).

 

During 2016, the Company issued certain Officers and Directors 22,200,680 shares of Common Stock for $459,013 of accrued salaries. (See Note 9(B) and 7(C)).

 

At December 31, 2016 and 2015 there were accounts payable and accrued liabilities due to related parties. (See Note 7(C)).

 

Note 11 – Commitments and contingencies

 

Contingencies

 

●	On October 9, 2013, the Company secured a two-month loan for GBP 75,000 (equivalent to $120,420) and issued 10,000 restricted shares of common stock to the lender, The Able Foundation, on December 7, 2013, and also repaid 35,000 GBP (equivalent to $56,196) in lieu of interest. As the principal and interest was not paid back to the lender on time, the Company compensated the lender with an additional 20,000 restricted shares of common stock in consideration for a for a five-month extension on the loan. This stock compensation was issued to the lender also on December 12, 2013. The Company is currently in litigation, in the courts of Dubai, regarding the Able Foundation loan.
	The plaintiff, the Able Foundation, is requesting a settlement of $411,272, which is the $226,616 currently owed, and an additional $184,656 accrued in 2015 as a provision for potential damages (see Note 7(D)).
	On, June 1, 2015, the Company (the defendant) retained the legal services of a Dubai based law firm called Al Safar & Partners. Currently, there is a judgment against the Company (the defendant) for the recovery of $411,272.
	The Company’s Dubai lawyers, Al Safar & Partners, have subsequently appealed this judgment based on the fact that they believe from a legal stand point that:

 

	1)	the Company (the defendant) has not been heard, which is a violation of the fundamental principle of law “Audi Alteram Partem”.
	2)	there is no legal existence of Global Equity Partners Plc. in Dubai as it is a Republic of Seychelles corporation; hence the Courts of Dubai have no jurisdiction in the matter.   According to the Dubai lawyers, the judgment issued against the Company (the defendant) by the Dubai First Instance Court bears no legality and void therefore the Plaintiff´s claim should be rejected in its entirety.   These legal proceedings and appeal the judgment are currently ongoing. The Company intends to vigorously defend the litigation. At December 31, 2016, the Company cannot predict the outcome of the litigation

 

 

Global Equity International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

 

●

From time to time, we may be involved in litigation or disputes relating to claims arising out of our operations in the normal course of business. As of December 31, 2016, we are in dispute with a former client regarding certain payments that we made on behalf of this former client. We are maintaining an open dialogue with this former client in an effort to resolve the matter.

 

Commitments

 

●

On October 7, 2015, the Company renewed its rent agreement for its head office at Dubai for a further period of two years amounting to a rental of $31,850 per annum for the first year (from November 2015 until October 2016) and $35,035 for the second year (from November 2016 until October 2017). This agreement is further renewable for a period of one year at 5% higher than the current rent.

 

Note 12 – Subsequent events

 

●	On February 2, 2017, the Company issued 5,000,000 common shares to Mammoth Corporation in order to settle remaining payable balance in full amounting to $50,000. The Company verbally agreed to a conversion price of $0.01 per share other than the contractual fixed price of $0.017 per share, in order to fully settle this obligation, thereby $39,324 was recognized as a loss on conversion of this note. (See Note 7(E)).
●	On February 6, 2017, the Company secured from a private individual a nine-month fixed price convertible loan amounting to $60,000 having an interest at 10% per annum and an agreed fixed conversion price of $0.012 per share. Fair value of GEQU stock as on the date of exchange was $0.0198. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of GEQU stock as on February 6, 2017. The Company accounted for the difference arising due to BCF amounting to $39,000 as a debt discount with a corresponding effect to additional paid in capital.
●	On February 21, 2017, the Company was engaged by a natural resources client with upstream oil and gas, mining and commodities trading divisions in the Americas, Africa and Asia, called Blackstone Natural Resources BV, to assist with introducing them to capital in the Middle East and a possible listing of their stock on a stock exchange.
●	On February 23, 2017, after receipt of $167,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by GEQU to St. George Investments LLC in the amount of $167,500 dated August 25, 2016. The Company re-negotiated the loan terms with new lender (Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting to $184,250 dated February 23, 2017. The terms of this exchanged note were a one-off 10% increase in the principal loan of $16,750, making the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date of revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at a fixed conversion price of $0.017. Fair value of GEQU stock as on the date of exchange was $0.0179. This indicated a beneficial conversion feature (BCF) of the Note as the conversion price is lower than the fair value of GEQU stock as on February 23, 2017. The Company accounted for the difference arising due to BCF amounting to $9,754 as a debt discount with a corresponding effect to additional paid in capital. Interest on unpaid principal balance shall not accrue during the term of the note unless an event of default occurs. The Company accounted for this exchange as a debt extinguishment of previous note dated August 25, 2016 and $16,750 was recognized as loss on debt extinguishment. (See Note 7(D)).
●	On March 14, 2017, the Company, as part of a group restructuring exercise, transferred the ownership of GE Professional DMCC from its subsidiary Global Equity Partners Plc. to its other subsidiary GEP Equity Holdings Limited.

 

 

EXHIBIT INDEX

 

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

 

Exhibit No.		Document Description
2*		Plan and Agreement of Reorganization dated November 15, 2010, among Global Equity International, Inc., Global Equity Partners PLC and Stockholders of Global Equity Partners LLC
3.1*		Articles of Incorporation
3.(i).2**		Certificate of Amendment to Articles of Incorporation, effective February 16, 2015.
3.(i).3***		Certificate of Amendment to Articles of Incorporation, effective August 14, 2015.
3.2*		Bylaws
4.1****		Certificate of Designation of Series “B” Convertible Preferred Stock
10.1*****		Employment Agreement dated September 1, 2016 between GEP Equity Holdings Limited and Peter J. Smith.
10.2*****		Employment Agreement dated September 1, 2016 between GEP Equity Holdings Limited and Enzo Taddei.
10.3*****		Employment Agreement dated October 1, 2016, between GEP Equity Holdings Limited and Patrick V. Dolan.
14*		Code of Business Conduct and Ethics adopted on September 2, 2011
21*****		Subsidiaries
31.1*****		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350
31.2*****		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350
32.1*****		906 Certification of Principal Executive Officer
32.2*****		906 Certification of Principal Financial Officer
*		Incorporated by reference to the Company’s Form 10 Registration Statement filed with the Commission on December 1, 2011, and as subsequently amended.
**		Incorporated by reference to the Company’s Form 8-K filed with the Commission on February 17, 2015.
***		Incorporated by reference to the Company’s Form 8-K filed with the Commission on August 25, 2015.
****		Incorporated by reference to the Company’s Form 8-K filed with the Commission on November 14, 2016.
*****		Filed herewith.

 

 

SIGNATURES

 

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

 

	Global Equity International, Inc.
Dated: March 23, 2017	By:	/s/ Peter J. Smith
		Peter J. Smith
	Its:	President and Chief Executive Officer

  

In accordance with the Securities Exchange Act of 1934, this amended report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Dated: March 23, 2017	By:	/s/ Peter J. Smith
		Peter J. Smith
	Its:	President and Chief Executive Officer and Director
		(Principal Executive Officer)
Dated: March 23, 2017	By:	/s/ Enzo Taddei
		Enzo Taddei
	Its:	Chief Financial Officer, Secretary and Director
		(Principal Financial Officer and Principal Accounting Officer)

 

Dated: March 23, 2017	By:	/s/ Patrick V. Dolan
		Patrick V. Dolan
	Its:	Managing Director