Global Technologies Ltd 10-K for FY2023
Global Technologies Ltd (GTLL)
About this 10-K
Global Technologies Ltd filed this 10-K on December 29, 2023, covering the fiscal year ended June 30, 2023 (FY2023).
Headline figures
Fiscal year ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $17K
- down 86.3% from $124.51K a year earlier
- Net loss
- $1.03M
- compared with a net loss of $1.28M a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
A Registered Agent, Inc.
8 The Green, Suite A
Dover, DE 19901
(302) 288-0670
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTC Markets “PINK” |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐
Yes ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
☐
Yes ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
Reporting Company | ||
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If securities
are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes ☒
The
aggregate market value on December 31, 2022 (the last business day of the Company’s most recently completed second quarter) of
the voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the stock on that date,
was approximately $
As of December 27, 2023, there were shares of the registrant’s Class A common stock outstanding.
Cautionary Note Regarding Forward Looking Statements
This annual report contains 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. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue, “and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements.
Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:
| ● | risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures; | |
| ● | risk that we fail to meet the requirements of the agreements under which we acquired our business interests, including any cash payments to the business operations, which could result in the loss of our right to continue to operate or develop the specific businesses described in the agreements; | |
| ● | risk that we will be unable to secure additional financing in the near future in order to commence and sustain our planned development and growth plans; | |
| ● | risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations; | |
| ● | risks and uncertainties relating to the various industries and operations we are currently engaged in; | |
| ● | results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future growth, development or expansion will not be consistent with our expectations; | |
| ● | risks related to the inherent uncertainty of business operations including profit, cost of goods, production costs and cost estimates and the potential for unexpected costs and expenses; | |
| ● | risks related to commodity price fluctuations; | |
| ● | the uncertainty of profitability based upon our history of losses; | |
| ● | risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned development projects; | |
| ● | risks related to environmental regulation and liability; | |
| ● | risks related to tax assessments; or | |
| ● | other risks and uncertainties related to our prospects, properties and business strategy. |
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events or otherwise.
OTHER PERTINENT INFORMATION
As used in this annual report, “Global Technologies,” the “Company,” “we,” “us,” or “our” refer to Global Technologies, Ltd, a Delaware corporation, and all of its subsidiaries, unless otherwise indicated.
USE OF MARKET AND INDUSTRY DATA
This Annual Report on Form 10-K includes market and industry data that we have obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third-party sources referred to in this Annual Report on Form 10-K are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Annual Report on Form 10-K or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, internally prepared and third-party market prospective information, in particular, are estimates only and there will usually be differences between the prospective and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Also, references in this Annual Report on Form 10-K to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this Annual Report on Form 10-K.
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TABLE OF CONTENTS
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PART I
Item 1. Business.
Overview
Global Technologies, Ltd was incorporated under the laws of the State of Delaware on January 20, 1999 under the name of NEW IFT Corporation. On August 13, 1999, the Company filed an Amended and Restated Certificate of Incorporation with the State of Delaware to change the name of the corporation to Global Technologies, Ltd.
Our principal executive office is located at 8 Campus Drive, Suite 105 Parsippany, New Jersey 07054 and our telephone number is (973) 233-5151. Our website address is www.globaltechnologiesltd.info. The information provided on our website is not part of this Annual Report and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this Annual Report.
Current Operations
Global Technologies, Ltd (“Global”) is a company with a strong focus on entering new markets including the acquisition and redevelopment of distressed properties. The company seeks to capitalize on underutilized or undervalued assets, creating opportunities for growth, and delivering exceptional value to shareholders.
Our wholly owned subsidiaries:
Fox Trott Tango, LLC Acquisition
On June 20, 2023, the Company (the “Buyer”) and TXC Services, LLC (“Seller”) (together, the “Parties”) entered into a Membership Interest Purchase Agreement (“MIPA”) for the purchase of all 2,500,000 issued and outstanding Membership Units (“Membership Units”) of Fox Trot Tango, LLC (“FTT”), a Delaware limited liability company.
Subsequent to year end (July 25, 2023), the Parties entered into an Amended and Restated Membership Interest Purchase Agreement, Assignment, Secured Convertible Note, Securities Purchase Agreement and a Security Agreement and Pledge of Membership Units. In addition, the Company executed a Guaranty Agreement for the benefit of TK Management Services, LLC.
On this same date, the Company’s new wholly owned subsidiary, FTT, executed a Deed to Secure Debt in favor of the Seller.
Amended and Restated Membership Interest Purchase Agreement (“Amended MIPA”)
The purchase price for the purchase of all Membership Units was $6,500,000 payable from the Buyer to the Seller as follows:
(a) Buyer’s assumption of a certain promissory note in favor of TK Management Services, Inc. (“TK”), in the principal amount of $1,500,000 dated January 6, 2022 (“TK Secured Note”) secured by the Property as collateral, pursuant to a certain Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing (“TK Security Deed”) and other liabilities; and
(b) The issuance of a Secured Convertible Note, in the principal amount of $1,600,000, in favor of Seller (“Seller Secured Note”) and Securities Purchase Agreement (“Seller SPA”), secured by the Property as collateral, pursuant to a certain Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing (“Seller Security Deed”), subordinate to the TK Security Deed and by the Purchased Interest; and
(c) Earn-Out Lease Milestones. Seller shall receive up to Six Hundred and Eighty (680) shares of Series L Preferred Stock (“Series L Preferred”) valued at up to $3,400,000, based on the following earn-out lease milestones:
| (i) | Lease of 25% of the square footage of the Property, Seller shall receive 25% of the Series L Preferred; | |
| (ii) | Lease of 50% of the square footage of the Property, Seller shall receive 50% of the Series L Preferred; | |
| (iii) | Lease of 75% of the square footage of the Property, Seller shall receive 75% of the Series L Preferred; and | |
| (iv) | Lease of 100% of the Property, Seller shall receive 100% of the Series L Preferred. |
In the event that the Buyer is in default under this Agreement, or any of the Transaction Documents including, but not limited to, the assumption and guaranty of the TK Secured Note, the TK Security Deed, the Seller Secured Note, Seller SPA, the Seller Security Deed or if Buyer fails to issue to Seller duly authorized the Series L Preferred, the Seller shall have the right to exercise any and all remedies under the this Agreement and the other Transaction Documents, including, but not limited to, exercising its right to receive a return of the Purchased Interest pursuant to an assignment from Buyer, without recourse by the Buyer, in accordance with the Collateral Assignment.
Securities Purchase Agreement (“Seller SPA”)
On July 25, 2023, the Company and TXC Services, LLC entered into the Seller SPA for the issuance and sale of a Secured Convertible Note with an initial principal amount of $1,600,000 (the “Seller Secured Note”).
The Securities Purchase Agreement provides for the purchase by the Investor and the sale by the Company of the Seller Secured Note. The Securities Purchase Agreement contains representations and warranties of the Company and the Investor that are typical for transactions of this type. The representations and warranties made by the Company in the Securities Purchase Agreement are qualified by reference to certain exceptions contained in disclosure schedules delivered to the Investor. Accordingly, the representations and warranties contained in the Securities Purchase Agreement should not be relied upon by third parties who have not reviewed those disclosure schedules and the documentation surrounding the transaction as a whole.
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The Securities Purchase Agreement also obligates the Company to indemnify the Investor for certain losses resulting from (1) any misrepresentation or breach of any representation or warranty made by the Company or any subsidiary of the Company, (2) any breach of any obligation of the Company or, any subsidiary of the Company, of the Securities Purchase Agreement or any agreements and instruments entered into or connection with the Securities Purchase Agreement and (3) certain third party claims.
Secured Convertible Note (“Seller Secured Note”)
On July 25, 2023, the Company and FTT (collectively, the “Borrower”) executed the Seller Secured Note payable to TXC Services, LLC (“Holder”) in the principal amount of $1,600,000. The Seller Secured Note has a term of one (1) year, Maturity Date of July 25, 2024, and bears interest at 6% per annum. Any Principal Amount or interest on this Seller Secured Note which is not paid when due shall bear interest at the rate of eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”).
The Seller Secured Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder. The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Seller Secured Note shall be convertible into shares of Common Stock hereunder shall be 100% multiplied by the Market Price (as defined herein) subject to adjustment as described herein (“Conversion Price”). “Market Price” means the lowest one (1) Trading Price (as defined below) for the Common Stock during the three (3) Trading Day period ending on the last complete Trading Day prior to the Conversion Date subject to adjustment as provided in this Seller Secured Note. The Seller Secured Note will contain certain limitations on conversion. It provides that no conversion may be made if, after giving effect to the conversion, the Investor would own in excess of 9.99% of the Company’s outstanding shares of Common Stock. This percentage may be increased or decreased to a percentage not to exceed 9.99%, at the option of the Investor, except any increase will not be effective until 61 days prior notice to the Company.
The Seller Secured Note will impose penalties on the Company for any failure to timely deliver any shares of its Common Stock issuable upon conversion.
The Seller Secured Note will contain events of default that are typical for transactions of this type, as well as the following events:
| ● | the failure to issue Conversion Shares registered with the SEC or pursuant an exemption of the applicable Registration Statement in accordance with Regulation A. from and after the Public Company Date, the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of five (5) consecutive Trading Days; | |
| ● | except to the extent the Company is in compliance with Section 9(b), at any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation (as defined in Section 9(a)) is less than 200% of the sum of (A) the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise; | |
| ● | the Company’s (A) failure to cure a Conversion Failure or a Delivery Failure by delivery of the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or Exercise Date) (as the case may be) or (B) written notice to any holder of the Notes, including, without limitation, by way of public announcement or through any of its agents and such notice of such Company’s agent is not withdrawn by the Company within one (1) Trading Day, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to Section 3(d); | |
| ● | the Company’s, any Guarantor or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s, any Guarantor’s or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, and such failure remains uncured for a period of at least five (5) Trading Days; | |
| ● | the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading Days; | |
| ● | the occurrence of any default under, redemption of or acceleration prior to maturity of any indebtedness of the Company or a subsidiary; | |
| ● | the invalidity of any material provision of the Security Documents or if the enforceability of validity of any material provision of the Security Documents is contested by the Company; | |
| ● | the failure of the Security Documents to perfect or maintain the Investor’s first priority security interest; and | |
| ● | the failure to comply with certain covenants of the Seller Secured Note. |
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The Seller Secured Note will contain a variety of covenants on the part of Company that are typical for transactions of this type, as well as the following covenants:
| ● | the Company will not incur other indebtedness, except for certain permitted indebtedness; | |
| ● | the Company will not incur any liens, except for certain permitted liens; | |
| ● | the Company will not, directly or indirectly, redeem or repay all or any portion of any permitted indebtedness if at the time such payment is due or is made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an event of default has occurred and is continuing; and | |
| ● | the Company will not redeem, repurchase or pay any dividend or distribution on its Common Stock or any other capital stock in accordance with section 13.e. of the Secured Convertible Note Agreement: “, except that any such cash dividend or capital may be paid to the Company or a Guarantor.” |
Secured Promissory Note between Fox Trot Tango, LLC and TK Management Services, LLC (“TK Secured Note”)
On January 6, 2023, Fox Trot Tango, LLC (the “Borrower”) issued the TK Secured Note to TK Management Services, LLC (the “Lender”) in the principal amount of 1,500,000. The TK Secured Note accrues interest at 12% per annum and matures in one year, January 6, 2024 (the “Maturity Date”). In the event of default, the TK Secured Note shall accrue interest at 12% per annum. At Closing, the Borrower prepaid six months of interest and a $15,000 origination fee. Monthly payments of $15,000 begin on August 6, 2023, with a balloon payment due at the Maturity Date.
The TK Secured Note and the Secured Indebtedness are secured by the TK Security Deed. In the event of default, the Lender shall have all of the rights and remedies reserved in the TK Security Deed and other loan documents and shall have full recourse to the Real Property and other collateral.
Guaranty Agreement between the Company and TK Management Services, LLC
Global Technologies, Ltd (“Guarantor”) agreed to assume and guaranty all liabilities and obligations under the TK Secured Note and TK Security Deed previously executed by its new wholly owned subsidiary, Fox Trot Tango, LLC (“Borrower”).
Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all presently existing and future Guaranteed Obligations.
Security Agreement and Pledge of Membership interest between the Company and TXC Services, LLC
Global Technologies, Ltd (“Pledgor”) has agreed to grant to TXC Services, LLC (“Pledgee”) a security interest (the “Security Interest”) in and to all of its right, title and ownership interest in and to the Interests whether derived under the Certificate of Formation, the Operating Agreement, or otherwise, including, the Pledgor’s status as a Member of Fox Trot Tango, LLC (“FTT”), and the Pledgor’s right to participate in the management of the business and affairs of FTT (“Collateral”) to secure all liabilities and obligations of Pledgor to Pledgee.
To secure the complete and timely satisfaction of all liabilities, indebtedness and obligations of Pledgor to Pledgee under the Transaction Documents (collectively, the “Obligations”) pertaining to the Amended MIPA, the Pledgor herewith pledges, delivers, and assigns to the Pledgee and grants a first lien and security interest in favor of the Pledgee in and to the Interest (including Pledgor Total Rights in the Company). Provided there is not an Event of Default (as defined below), the aforesaid pledge shall be released within five (5) days after the date when the Pledgor and Company) have performed all Obligations under the Transaction Documents.
The Pledgor does hereby appoint Pledgee or its assignee, as Pledgor’s true and lawful attorney and in its name, place and stead, upon the occurrence of an Event of Default to cause the Interests to be transferred on the books of FTT to the name of Pledgee or to such other party as is designated by Pledgee. In furtherance of the preceding, Pledgor has delivered to Pledgee the Assignment of Member’s Interests, which instrument Pledgee shall hold in escrow and shall be entitled to (but not obligated to) release from escrow upon the occurrence of an Event of Default under any of the Transaction Documents.
An Event of Default under this Pledge shall include:
(a) The non-compliance or non-performance of the Company or Pledgor, under or of any term or condition when compliance or performance would otherwise be due under any Transaction Document.
(b) The adjudication of Pledgor or the Company as bankrupt or insolvent, or entry of any order, remaining unstayed by appeal or otherwise for ten (10) days, appointing a receiver or trustee for the Pledgor or the Company or for all or any of Pledgor’s or the Company’s assets, or the filing by or against the Pledgor or the Company of a petition seeking any of the foregoing or consenting thereto, or the filing of a petition to take advantage of any debtors’ act, or making a general assignment for the benefit of creditors or admitting in writing inability to pay debts as they mature.
(c) The dissolution of the Pledgor and the failure of the successor owner of such Pledgor’s Interests to execute a joinder to this Pledge with five (5) business days after transfer of such Interests to such successor.
About TCBM Holdings, LLC
TCBM Holdings, LLC (“TCBM”) was formed as a Delaware limited liability company on August 10, 2017. TCBM is a holding corporation, which operated through its two wholly owned subsidiaries, HMNRTH, LLC and 911 Help Now, LLC.
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About HMNRTH, LLC
HMNRTH, LLC (“HMN”) was formed as a Delaware limited liability company on July 30, 2019. HMNRTH operates as an online store selling a variety of hemp and CBD related products. The Company’s business model is to bridge the gap between the lifestyle and knowledge components within the cannabis industry. The Company’s goal is to educate every consumer while cultivating an experience by providing quality products, branded cutting-edge content, and diversified product lines for any purpose. Most importantly, we want our clients to discover their inner HMN, redefine their inner HMN and Empower their inner HMN.
In September 2019, the Company entered into a Quality Agreement with Nutralife Biosciences for the development and production of its CBD line of products. The Company’s product line includes hemp derived, full spectrum cannabidiol tinctures and creams in varying sizes.
In order for the Company to generate revenue through HMNRTH, we will need to: (i) produce additional inventory for retail sales through the Company’s ecommerce site or sales, or (ii) sales to third party distributors, or (iii) direct sales to brick and mortar CBD retail outlets, or (iv) generate additional CBD formulas to be utilized in new products At present, the Company does not have the required capital to move forward with any of the options and there is no guarantee that we will be able to raise the required funds.
Regulation of HMNRTH products:
The manufacture, labelling and distribution of our products is regulated by various federal, state and local agencies. These governmental authorities may commence regulatory or legal proceedings, which could restrict the permissible scope of our product claims or the ability to sell our products in the future. The FDA regulates our nutraceutical and wellness products to ensure that the products are not adulterated or misbranded.
We are subject to additional regulation as a result of our CBD products. The shifting compliance environment and the need to build and maintain robust systems to comply with different compliance in multiple jurisdictions increase the possibility that we may violate one or more of the requirements. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.
Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. Our advertising is subject to regulation by the FTC under the FTCA. Additionally, some states also permit advertising and labelling laws to be enforced by private attorney generals, who may seek relief for consumers, seek class action certifications, seek class wide damages and product recalls of products sold by us. Any actions against us by governmental authorities or private litigants could have a material adverse effect on our business, financial condition and results of operations.
About 911 Help Now, LLC
911 Help Now, LLC (“911”) was formed as a Delaware limited liability company on February 2, 2018. 911 was a holding company of intellectual property in the safety and security space. At present, we own no intellectual property within our 911 subsidiary. In order to generate future revenue within 911, we will need to identify and either acquire or license intellectual property. In the event of an acquisition, we will then need to either develop products utilizing our intellectual property or license out our intellectual property to a third party. There is no guarantee that we will be successful with an acquisition or licensing of any intellectual property.
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About Markets on Main, LLC
Markets on Main, LLC (“MOM”) was formed as a Florida limited liability company on April 2, 2020. MOM is A full service, sales and distribution, third-party logistics provider and portal to multi-channel sales opportunities. MOM’s focus is on bringing small businesses and entrepreneurs to large opportunities and distribution. MOM will provide the following services to its clients: inventory management, brand management, fulfilment and drop-ship capabilities, retail distribution and customer service. MOM’s website can be found at www.marketsonmain.com.
On January 3, 2022, the Company filed Articles of Conversion with the State of Florida to convert MOM from a limited liability company to a Florida profit corporation. Simultaneous with the filing of the Articles of Conversion, the Company filed Articles of Incorporation for MOM.
On January 19, 2022, MOM entered into an Exclusive Distribution Agreement (the “Distribution Agreement”) with Amfluent, LLC (“Amfluent”). Under the terms of the Distribution Agreement, MOM will become an exclusive distributor for the promotion and sale of products carried by Amfluent. As the exclusive distributor, MOM shall be awarded the exclusive territory of e-commerce, live shopping and digital sales. The Distribution Agreement has a term of one year from the Effective Date unless both parties agree to renew the Distribution Agreement for an additional term.
On January 30, 2022, MOM entered into a Marketing Management Agreement (the “Agreement”) with Chin Industries, LLC (“Chin”). Under the terms of the Agreement, Chin shall provide day to day management of websites where MOM’s products may be sold. The Agreement has a term of one year. As compensation, Chin shall receive a 50/50 split of net profits.
During the third quarter of fiscal 2022, MOM launched its first website, www.sculptbaby.com, under the Agreement with Chin. Product sales initiated in March 2022. During the fourth quarter of fiscal 2022, all Sculpt Baby inventory was sold. The Company has not identified its next product to launch.
On May 4, 2020, MOM entered into a Drop Ship Agreement (the “Agreement”) with QVC, Inc. Under the terms of the Agreement, MOM shall provide products for marketing, promotion, sale and distribution by QVC through certain televised and/or other electronic shopping services developed or to be developed by QVC and through other means and media.
About Tersus Power, Inc. (Delaware)
Tersus Power, Inc. (“Tersus”) (Delaware) was formed as a wholly owned subsidiary as per the terms of the Share Exchange Agreement entered into with Tersus Power, Inc., a Nevada corporation, and the Tersus Shareholders with the sole purpose of entering into an Agreement and Plan of Merger to effect a name change. The Articles of Incorporation were filed with the Secretary of State of the State of Delaware on March 15, 2022. As the Company elected to terminate the Share Exchange Agreement with Tersus Power, Inc. (Nevada), it does not anticipate any operations under its wholly owned subsidiary.
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Share Exchange Agreement with Tersus Power, Inc. (Nevada)
During the three months ended March 31, 2023, the Company received notification from FINRA that the proposed corporate action submission, as noted within the Tersus Power Share Exchange Agreement, had passed the allotted time for the corporate action to become effective. The Company is in the process of refiling the same corporate action. The delay on the corporate action becoming effective has required Tersus Power to seek alternate financing and to reevaluate its business plan. On May 24, 2023, the Company notified Tersus Power that it has elected to terminate the Exchange Agreement as per section 5.1(a)(iv). Please see NOTE F – NOTE RECEIVABLE for further information.
Consulting Services
On January 12, 2022, the Company entered into a Fee Agreement (the “Agreement”) for the preparation of a registration statement on Form 1-A and all follow up correspondence with the appropriate regulatory agencies. The Company was fully compensated for its services during the period ended March 31, 2022 and has fulfilled its obligations under the Agreement.
On February 1, 2022, the Company entered into a Letter Agreement (the “Agreement”) with Donohoe Advisory Services, Inc. (“Donohoe”) to provide assistance to the Company in support of the Company’s efforts to obtain a listing on a national securities exchange. Under the terms of the Agreement, the Company shall pay Donohoe an initial retainer in the amount of $17,500 and if successful a “success fee” in the amount of $10,000 in cash or registered shares of common stock. During the three months ended September 30, 2022, the Company requested and received the balance of the retainer as it does not anticipate requiring any additional assistance from Donohoe.
On February 5, 2022, the Company entered into a Fee Agreement (the “Agreement”) for the preparation of a registration statement on Form 1-A and all follow up correspondence with the appropriate regulatory agencies. As of June 30, 2023, the Company has initiated the work to be completed under the Agreement but is awaiting additional information from its client.
Research and development
For the years ended June 30, 2023 and 2022, we had $0 and $0 research and development costs, respectively.
Employees
Currently, Global Technologies has one full-time employee. We intend on retaining additional officers, ancillary staff and consultants during the fiscal year ended June 30, 2024.
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Potential Future Acquisitions
In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another company or entity. We may also acquire stock or assets of an existing business. Upon consummation of a transaction, it is probable that our present management and stockholders will no longer be in control of us. In addition, our sole director may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our stockholders, or sell his stock in us. Any such sale will only be made in compliance with the securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such acquisition would be issued in reliance upon exemption from registration under application federal and state securities laws. In some circumstances, as a negotiated element of the transaction, we may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after it has successfully consummated a merger or acquisition and is no longer considered an inactive company.
The issuance of substantial additional securities and their potential sale into any trading market which may develop in our securities may have a depressive effect on the value of our securities in the future. There is no assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected that the parties to any business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the business transaction in a so-called “tax-free” reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code (the “Code”). In order to obtain tax-free treatment under the Code, it may be necessary for the owner of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, our stockholders would retain less than 20% of the issued and outstanding shares of the surviving entity. This would result in significant dilution in the equity of our stockholders.
As part of our investigation, we expect to meet personally with management and key personnel, visit and inspect material facilities, obtain independent analysis of verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of our limited financial resources and management expertise. The manner in which we participate in an opportunity will depend on the nature of the opportunity, the respective needs and desires of both parties, and the management of the opportunity.
With respect to any merger or acquisition, and depending upon, among other things, the target company’s assets and liabilities, our stockholders will in all likelihood hold a substantially lesser percentage ownership interest in us following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with assets and expectations of growth. Any merger or acquisition can be expected to have a significant dilutive effect on the percentage of shares held by our stockholders.
We will participate in a business opportunity only after the negotiation and execution of appropriate written business agreements. Although the terms of such agreements cannot be predicted, generally we anticipate that such agreements will (i) require specific representations and warranties by all of the parties; (ii) specify certain events of default; (iii) detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing; (iv) outline the manner of bearing costs, including costs associated with the Company’s attorneys and accountants; (v) set forth remedies on defaults; and (vi) include miscellaneous other terms.
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As stated above, we will not acquire or merge with any entity which cannot provide independent audited financial statements within a reasonable period of time after closing of the proposed transaction. If such audited financial statements are not available at closing, or within time parameters necessary to ensure our compliance within the requirements of the 1934 Act, or if the audited financial statements provided do not conform to the representations made by that business to be acquired, the definitive closing documents will provide that the proposed transaction will be voidable, at the discretion of our present management. If such transaction is voided, the definitive closing documents will also contain a provision providing for reimbursement for our costs associated with the proposed transaction.
There are no guarantees that we will be successful in Closing any additional acquisitions or mergers.
Competition
We believe we are an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. In view of our limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
In reference to our subsidiary 911 Help Now (“911”), the Personal Emergency Response marketplace is a large and fragmented market, which has many competitors with larger financial resources than us. Our differentiating factor in this space is our no monthly fee sales model. At present, we own no intellectual property within our 911 subsidiary. In order to generate future revenue within 911, we will need to identify and either acquire or license intellectual property. In the event of an acquisition, we will then need to either develop products utilizing our intellectual property or license out our intellectual property to a third party. There is no guarantee that we will be successful with an acquisition or licensing of any intellectual property.
In reference to our subsidiary HMNRTH (“HMNRTH”), the market for the sale of CBD-based products is fragmented and intensely competitive. Currently, in the United States, we do not believe that there are any businesses that can demonstrate or claim a dominant market share of the growing CBD products market. Our competitors in the retail location sales of CBD-based products include Green Roads, PlusCBD, and Select CBD, and in the digital space include Diamond CBD, CBDistillery, and Lazarus Natural. We expect that the quantity and composition of the competitive environment will continue to evolve as the industry matures and new customers enter the marketplace. In order for the Company to generate revenue through HMNRTH, we will need to: (i) produce additional inventory for retail sales through the Company’s ecommerce site or sales, or (ii) sales to third party distributors, or (iii) direct sales to brick and mortar CBD retail outlets, or (iv) generate additional CBD formulas to be utilized in new products At present, the Company does not have the required capital to move forward with any of the options and there is no guarantee that we will be able to raise the required funds.
In reference to our newly formed business operation through our subsidiary Markets on Main (“MOM”), the Company’s goal is to become a leader in sales and distribution of entrepreneur driven products, in a highly competitive industry. We compete with companies from all industries, some of which have substantially more resources, stronger name recognition, and longer operating histories than us, and which benefit from greater economies of scale.
We target products that leverage some sort of intellectual property that we may own or license from the entrepreneurs. Under the Company’s business plan, we anticipate that certain of our licensors will have reserved the right to manufacture, distribute and sell similar or identical products. Some of these products could directly compete with our products and could be sold to our customers or directly to consumers at lower prices than those at which our products are sold. Our competitors for MOM include Funko, Inc. and other dropship entities.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, we believe we will not be subject to regulation under the Investment Company Act of 1940 (the “1940 Act”) insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage in business combinations that result in us holding passive investment interests in a number of entities, we could be subject to regulation under the 1940 Act. In such event, we would be required to register as an investment company and incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status under the 1940 Act and, consequently, any violation of the 1940 Act would subject us to material adverse consequences. We believe that, currently, we are exempt under Regulation 3a-2 of the 1940 Act.
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Intellectual Property
We own no intellectual property.
Corporate Information
Our principal executive office is located at 8 Campus Drive, Suite 105 Parsippany, New Jersey 07054 and our telephone number is (973) 233-5151. Our website address is www.globaltechnologiesltd.info.
Available Information
Our website, www.globaltechnologiesltd.info, provides access, without charge, to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (“SEC”). The information provided on our website is not part of this Annual Report and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this Annual Report. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC.
Item 1A. Risk Factors.
You should carefully consider the risks described below and other information in this prospectus, including the financial statements and related notes that appear at the end of this prospectus, before deciding to invest in our securities. These risks should be considered in conjunction with any other information included herein, including in conjunction with forward-looking statements made herein. If any of the following risks actually occur, they could materially adversely affect our business, financial condition, operating results or prospects. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial may also impair our business, financial condition, operating results and prospects.
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Risks Relating to Our Company
We have incurred significant losses and anticipate future losses.
As of June 30, 2023, we had an accumulated deficit of $167,478,377 and a stockholders’ deficit of approximately $4,528,007.
Future losses are likely to occur as, until we are able to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders as we have no sources of income to meet our operating expenses. As a result of these, among other factors, we received from our registered independent public accountants in their report for the financial statements for the years ended June 30, 2023 and 2022, an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
Our existing financial resources are insufficient to meet our ongoing operating expenses.
We have no sources of income at this time and no existing cash balances to meet our ongoing operating expenses. In the short term, unless we are able to raise additional debt and/or equity we shall be unable to meet our ongoing operating expenses. On a longer-term basis, we intend to raise the debt and/or equity to meet our ongoing operating expenses and merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders. There can be no assurance that this series of events will be successfully completed.
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Scarcity of, and competition for, business opportunities and combinations.
We believe we are an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than us and, consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, we will also compete in seeking merger or acquisition candidates with numerous other small public companies. In view of our limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
We may be negatively affected by adverse general economic conditions.
Current conditions in domestic and global economies are extremely uncertain. Adverse changes may occur as a result of softening global economies, wavering consumer confidence caused by the threat of terrorism and war, and other factors capable of affecting economic conditions. Such changes could have a material adverse effect on our business, financial condition, and results of operations.
Because our former sole officer and director controls our voting activities, he may cause us to act in a manner that is most beneficial to himself and not to other shareholders which could cause us not to take actions that outside investors might view favorably.
Our former sole officer and director, has voting authority for approximately ninety percent (90%) of our outstanding voting stock. As a result, he effectively controls all matters requiring stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transactions. These insiders also have the ability to delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably.
Our sole officer and director may have conflicts of interest which may not be resolved favorably to us.
Certain conflicts of interest may exist between our sole director and us. Our sole officer and director has other business interests to which he devotes his attention and may be expected to continue to do so although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to us. See “Directors and Executive Officers” (page 42 below).
We may depend upon outside consultants/advisors; who may not be available on reasonable terms and as needed.
To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Board, without any input from stockholders, will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to us. In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.
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We may not be able to meet the filing and internal control reporting requirements imposed by the Securities and Exchange Commission, which may result in a decline in the price of our common shares and an inability to obtain future financing.
As directed by Section 404 of the Sarbanes-Oxley Act, as amended by SEC Release No. 33-8934 on June 26, 2008, the SEC adopted rules requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual reports. In addition, the independent registered public accounting firm auditing a company’s financial statements may have to also attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting. We may be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement:
| ● | Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting; |
| ● | Of management’s assessment of the effectiveness of its internal control over financial reporting as of year-end; and |
| ● | Of the framework used by management to evaluate the effectiveness of our internal control over financial reporting. |
Furthermore, our independent registered public accounting firm may be required to file its attestation on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting.
While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. In the event that we are unable to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.
In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the SEC, which could also adversely affect the market price of our common stock and our ability to secure additional financing as needed.
Reporting requirements under the Exchange Act and compliance with the Sarbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are costly and may increase substantially.
The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price.
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As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
We are working with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; personnel, such as a chief financial officer familiar with the obligations of public company reporting; consultants to design and implement internal controls; and financial printing alone will be a few hundred thousand dollars per year and could be several hundred thousand dollars per year. In addition, if and when we retain independent directors and/or additional members of senior management, we may incur additional expenses related to director compensation and/or premiums for directors’ and officers’ liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these additional expenses individually, or in the aggregate, may also be material.
In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
The increased costs associated with operating as a public company may decrease our net income or increase our net loss and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management’s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.
We have material weakness in our controls and procedures.
We have conducted an evaluation of our internal control over financial reporting based on the framework in “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations for the Treadway Commission (“COSO”) and published in 2013, and subsequent guidance prepared by COSO specifically for smaller public companies. Based on that evaluation, management concluded that our internal control over financial reporting was not effective as of June 30, 2023 and 2022 for the reasons discussed below:
Management identified the following material weakness and significant deficiencies in its assessment of the effectiveness of internal control over financial reporting as of June 30, 2023:
| ● | The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked personnel with accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements. |
| ● | Material Weakness – Inadequate segregation of duties. |
The management of the Company believes that these material weaknesses will remain until such time that the Company has the resources to increase the number of personnel committed to the performance of its financial duties that such weaknesses can be specifically addressed. This will include, but not limited to, the following:
| ● | Hiring of additional personnel to adequately segregate financial reporting duties. |
| ● | The retention of outside consultants to review our controls and procedures |
A significant deficiency is a deficiency, or combination of deficiencies in internal control over financial reporting, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control.
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
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General Business Risks
We are highly dependent on the services of key executives, the loss of whom could materially harm our business and our strategic direction. If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.
We are highly dependent on our management team, specifically Fredrick Cutcher, who we currently anticipate will be able to devote 25-30 hours per week to the Company’s operations. If we lose key employees, our business may suffer. Furthermore, our future success will also depend in part on the continued service of our management personnel and our ability to identify, hire, and retain additional key personnel. We do not carry “key-man” life insurance on the lives of any of our executives, employees or advisors. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition, our compensation costs may increase significantly.
We will need to raise additional capital to continue operations over the coming year.
We anticipate the need to raise approximately $1,000,000 in capital to fund our operations through June 30, 2024. We expect to use these cash proceeds, primarily to identify new business opportunities and possible acquisitions. We cannot guarantee that we will be able to raise these required funds or generate sufficient revenue to remain operational.
We may be unable to manage growth, which may impact our potential profitability.
Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:
| ● | Establish definitive business strategies, goals and objectives; | |
| ● | Maintain a system of management controls; and | |
| ● | Attract and retain qualified personnel, as well as, develop, train and manage management-level and other employees. |
If we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock price may decline.
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Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
We may in the future be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. While neither Delaware law nor our Articles of Incorporation or bylaws require us to indemnify or advance expenses to our officers and directors involved in such a legal action, we have entered into an indemnification agreement with our President and intend to enter into similar agreements with other officers and directors in the future. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
If we are unable to maintain effective internal control over our financial reporting, the reputational effects could materially adversely affect our business.
Under the provisions of Section 404(a) of the Sarbanes-Oxley Act of 2002, as amended by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted rules requiring public companies to perform an evaluation of Internal Control over Financial Reporting (Internal Controls) and to report on our evaluation in our Annual Report on Form 10-K. Our Internal Controls constitute a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. In the event we discover material weakness in our internal controls and our remediation of such reported material weakness is ineffective, or if in the future we are unable to maintain effective Internal Controls, additional resulting material restatements could occur, regulatory actions could be taken, and a resulting loss of investor confidence in the reliability of our financial statements could occur.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We estimate that it will cost approximately $75,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
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If the registration of our common stock is revoked in the future, our business opportunities will cease to exist.
In the event our securities registration was to be revoked, we would not have the ability to raise money through the issuance of shares and would lose the ability to continue the business plan set out in this filing. Common stock issued and outstanding at that time would no longer be tradable.
Our ability to use our net operating loss carry-forwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carry-forwards, or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
We may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any ability to do so may disrupt our business and hinder our ability to grow, divert the attention of key personnel, disrupt our business and impair our financial results.
As part of our business strategy, we intend to consider acquisitions of companies, technologies and products. We may not be able to identify such attractive acquisition opportunities. Acquisitions, involve numerous risks, any of which could harm our business, including, among other things:
| ● | difficulty in integrating the technologies, products, operations and existing contracts of a target company and realizing the anticipated benefits of the combined businesses; | |
| ● | mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies; | |
| ● | negative perception of the acquisition by customers, financial markets or investors; | |
| ● | difficulty in supporting and transitioning customers, if any, of the target company; | |
| ● | inability to achieve anticipated synergies or increase the revenue and profit of the acquired business; | |
| ● | the assumption of unknown liabilities; | |
| ● | exposure to potential lawsuits; | |
| ● | limitations on rights to indemnity from the seller; | |
| ● | the diversion of management’s and employees’ attention from other business concerns; | |
| ● | unforeseen difficulties operating in new geographic areas; | |
| ● | customer or key employee losses at the acquired businesses; | |
| ● | the price we pay or other resources that we devote may exceed the value we realize; or | |
| ● | the value we could have realized if we had allocated the purchase price or other resources to another opportunity and inability to generate sufficient revenue to offset acquisition costs. |
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Risks Associated with the Acquisition of Fox Trott Tango, LLC
Revenue from our properties, through the subsequent Fox Trott Tango acquisition, may be reduced or limited if the operations of our tenants are not successful.
Revenue from our properties, through the subsequent Fox Trott Tango acquisition, depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants and generally provide for reimbursement of real estate taxes and expenses of operating the property. Economic, legal, and/or competitive conditions, as well as COVID-19, may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants. Any reduction in our tenants’ abilities to pay base rent, percentage rent, or other charges on a timely basis, including the closing of stores prior to the end of the lease term or the filing by any of our tenants for bankruptcy protection, will adversely affect our financial condition and results of operations. In the event of default by a tenant, we may experience delays and unexpected costs in enforcing our rights as landlord under lease terms, which may also adversely affect our financial condition and results of operations.
Our net income depends on the success and continued presence of our “anchor” tenants.
Our net income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency, of any anchor tenant. Anchor tenants generally occupy large amounts of square footage, pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing significant numbers of customers to a property. The closing of one or more anchor stores at a property could adversely affect that property and result in lease terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result. Over the past several years, we have seen higher levels of anchor turnover and closings in some markets, which has caused an oversupply of larger retail spaces. Therefore, tenant demand for certain of our anchor spaces may decrease and as a result, we may see an increase in vacancy and/or a decrease in rents for those spaces that could have a negative impact to our net income.
We have properties that are geographically concentrated, and adverse economic or real estate market declines in these areas could have a material adverse effect on us.
Any adverse situation that disproportionately affects the markets where our properties are concentrated may have a magnified adverse effect on our portfolio. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how economic conditions will impact this market in both the short and long term.
Declines in the economy or a decline in the real estate market in these states could hurt our financial performance and the value of our properties. Factors that may negatively affect economic conditions in these states include:
| ● | business layoffs or downsizing; | |
| ● | industry slowdowns; | |
| ● | elevated levels of inflation over an extended period of time; | |
| ● | increasing interest rates; | |
| ● | increased business restrictions due to health crises; | |
| ● | relocations of businesses; | |
| ● | changing demographics; | |
| ● | increased telecommuting and use of alternative work places; | |
| ● | infrastructure quality; | |
| ● | any oversupply of, or reduced demand for, real estate; | |
| ● | concessions or reduced rental rates under new leases for properties where tenants defaulted; and | |
| ● | increased operating costs including insurance premiums and real estate taxes. |
We may be unable to collect balances due from tenants that file for bankruptcy protection.
If a tenant or lease guarantor files for bankruptcy, we may not be able to collect all pre-petition amounts owed by that party. In addition, a tenant that files for bankruptcy protection may terminate our lease in which event we would have a general unsecured claim that would likely be for less than the full amount owed to us for the remainder of the lease term, which could adversely affect our financial condition and results of operations.
We may experience difficulty or delay in renewing leases or re-leasing space.
We derive most of our revenue directly or indirectly from rent received from our tenants. We are subject to the risks that, upon expiration or termination of leases, whether by their terms, as a result of a tenant bankruptcy, general economic conditions or otherwise, leases for space in our properties may not be renewed, space may not be re-leased, or the terms of renewal or re-lease, including the cost of required renovations or concessions to tenants, may be less favorable than current lease terms and may include decreases in rental rates. As a result, our net income could be reduced.
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Our performance and value are subject to general risks associated with the real estate industry.
Our economic performance and the value of our real estate assets, and consequently, the value of our investments, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. As a company that invests in real estate, we are susceptible to the following real estate industry risks:
| ● | economic downturns in general, or in the areas where our properties are located; | |
| ● | adverse changes in local real estate market conditions, such as an oversupply or reduction in demand; | |
| ● | changes in tenant preferences that reduce the attractiveness of our properties to tenants; | |
| ● | zoning or regulatory restrictions; | |
| ● | decreases in market rental rates; | |
| ● | weather conditions that may increase or decrease energy costs and other weather-related expenses; | |
| ● | costs associated with the need to periodically repair, renovate and re-lease space; and | |
| ● | increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenues from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenues. |
Each of these risks could result in decreases in market rental rates and increases in vacancy rates, which could adversely affect our financial condition and results of operation.
Many real estate costs are fixed, even if income from our properties decreases.
Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to rent our properties on favorable terms. Under those circumstances, we might not be able to enforce our rights as landlord without delays and may incur substantial legal costs. Additionally, new properties that we may acquire or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such new properties until they are fully occupied.
Competition may limit our ability to purchase new properties and generate sufficient income from tenants.
Numerous commercial developers and real estate companies compete with us in seeking tenants for our existing properties and properties for acquisition. This competition may:
| ● | reduce properties available for acquisition; | |
| ● | increase the cost of properties available for acquisition; | |
| ● | reduce rents payable to us; | |
| ● | interfere with our ability to attract and retain tenants; | |
| ● | lead to increased vacancy rates at our properties; and | |
| ● | adversely affect our ability to minimize expenses of operation. |
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Risks Associated with Our Subsidiary, HMNRTH, LLC
All strains of cannabis other than hemp remain illegal under Federal law.
Despite the development of a legal cannabis industry under the laws of certain states and the legalization of hemp under the Agriculture Improvement Act of 2018, the state laws legalizing medical and adult cannabis use are in conflict with the Federal Controlled Substances Act, which classifies cannabis as a “Schedule-I” controlled substance and makes cannabis use and possession illegal on a national level. The United States Supreme Court has ruled that the Federal government has the right to regulate and criminalize cannabis, even for medical purposes, and thus Federal law criminalizing the use of cannabis pre-empts state laws that legalize its use. However, the Obama Administration determined that it is not an efficient use of resources to direct Federal law enforcement agencies to prosecute those lawfully abiding by state laws allowing the use and distribution of medical and recreational cannabis. There is no guarantee that the current or any future Administration will not change the Federal government’s stated policy regarding the low-priority enforcement of Federal laws in states where cannabis has been legalized. Any such change in the Federal government’s enforcement of Federal laws could cause significant financial damage to us and our shareholders.
We recently entered the CBD Market and as a result, we are subject to numerous potential regulatory matters, which could negatively impact our operations.
The Drug Enforcement Administration (“DEA”) which enforces the controlled substances laws of the United States has issued various rules and announcements concerning various items considered to be marijuana extracts which may encompass Cannabinoids. The uncertainty involves the extent to which the DEA will try to restrict the marketing or distribution of hemp finished/CBD products which we manufacture and distribute. If the DEA or other government agency were to take any action concerning our CBD products, it would have a negative impact on our revenues and financial condition.
Because we are subject to numerous laws and regulations, we could incur substantial costs.
The manufacture, labeling and distribution of our products is regulated by various federal, state and local agencies. These governmental authorities may commence regulatory or legal proceedings, which could restrict the permissible scope of our product claims or the ability to sell our products in the future. The FDA regulates our nutraceutical and wellness products to ensure that the products are not adulterated or misbranded.
We are subject to additional regulation as a result of our CBD products. The shifting compliance environment and the need to build and maintain robust systems to comply with different compliance in multiple jurisdictions increase the possibility that we may violate one or more of the requirements. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.
Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. Our advertising is subject to regulation by the FTC under the FTCA. Additionally, some states also permit advertising and labeling laws to be enforced by private attorney generals, who may seek relief for consumers, seek class action certifications, seek class wide damages and product recalls of products sold by us. Any actions against us by governmental authorities or private litigants could have a material adverse effect on our business, financial condition and results of operations.
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Laws and regulations affecting the medical marijuana industry are constantly changing, which could detrimentally affect our proposed operations.
Local, state and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to our proposed business. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.
Until we have developed and launched our products at commercial levels, there is uncertainty of market acceptance and the efficacy of the commercialization strategy.
While we have launched the sale of our CBD products on our ecommerce website, natural, hemp-based consumer products are new to the marketplace and it is not yet determined whether such products will gain consumer acceptance. Until we have consistent, proven sales, there is uncertainty of product acceptance in the intended markets and our ability to commercialize our products. As with any transformational product, there will be a time before customers embrace the product and recognize its full value. If there are no, or only low levels of, product acceptance and sales, we may have to alter our business plan. As is typical of any new business concept, demand and market acceptance for newly introduced products and services is subject to great uncertainty. Achieving market acceptance will require us to undertake substantial marketing efforts and to make significant expenditures to create awareness of and demand for our products. We have limited marketing experience and limited financial, personnel and other resources to undertake extensive marketing activities. Our efforts will be subject to all of the risks associated with the commercialization of new products, including unanticipated delays, expenses and the evolution of industry standards. There can be no assurance that markets for our products will not be limited, or that our strategies will result in successful product commercialization or in initial or continued market acceptance for our products.
Due to controversy over the cannabis plant within the United States, we face challenges getting our products into stores.
Some of our products are intended for ingestion purposes. There are potential significant health benefits to consuming hemp-based products, however, all products derived from the cannabis plant are controversial. Our products contain only trace amounts of THC and are below the legal limit for ingestion within the U.S. However, we anticipate that we may face scrutiny and experience resistance in getting our products into stores due to hesitation by food chains to carry any product even affiliated with the cannabis plant.
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We face substantial risk of product liability claims and potential adverse product publicity.
Like any other retailer, distributor or manufacturer of products that are designed to be ingested, we face an inherent risk of exposure to product liability claims in the event that the use of our products results in injury. In the event we do not have adequate insurance or contractual indemnification, product liability claims could have a material adverse effect on the Company. The Company is not currently a named defendant in any product liability lawsuit; however, other manufacturers and distributors of nutritional supplements currently are or have been named as defendants in such lawsuits. The successful assertion or settlement of any uninsured claim, a significant number of insured claims, or a claim exceeding the Company’s insurance coverage could have a material adverse effect on the Company.
Government regulation of cannabis and hemp is constantly evolving, and unfavorable developments could have an adverse effect on our operating results.
Any changes in laws or regulations relating to cannabis and hemp could adversely affect our business, results of operations and our business prospects.
Risks Associated with Our Subsidiary, Markets on Main, LLC
An inability to develop and introduce products in a timely and cost-effective manner may damage our business.
Our sales and profitability depend on our ability to bring products to market to meet customer demands and before consumers begin to lose interest in a given property. There is no guarantee that we will be able to manufacture, source and ship new or continuing products in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ increasingly compressed shipping schedules and the seasonality of our business. Moreover, unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, manufacturing delays or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such products or, in some situations, may cause a product or new brand introduction to be discontinued.
Our success will depend on the reliability and performance of third-party distributors, manufacturers and suppliers.
We compete with other companies for the production capacity of third-party suppliers for components. Certain of these competing companies have substantially greater financial and other resources than we have, and we may be at a competitive disadvantage in seeking to procure production capacity. Our inability to contract with third-party manufacturers and suppliers to provide a sufficient supply of our products on acceptable terms and on a timely basis could negatively impact our relationships with existing customers and cause us to lose revenue-generating opportunities with potential customers. We also rely on operators and distributors to market and distribute our products. If our operators or distributors are unsuccessful, we may miss revenue-generating opportunities that might otherwise have been recognized.
We are increasingly dependent on information technology, and potential cyberattacks, security problems or other disruption and expanding social media vehicles present new risks.
We rely on information technology networks and systems, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, billing and operating data. We may purchase some of our information technology from vendors, on whom our systems will depend, and we rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information. We depend upon the secure transmission of this information over public networks. Our networks and storage applications could be subject to unauthorized access by hackers or others through cyberattacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached due to operator error, malfeasance or other system disruptions. In some cases, it will be difficult to anticipate or immediately detect such incidents and the damage they cause. Any significant breakdown, invasion, destruction, interruption or leakage of information from our systems could harm our reputation and business.
In addition, the use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our or our brands’ reputations. Employees or others might disclose non-public sensitive information relating to our business through external media channels, including through the use of social media. The continuing evolution of social media will present us with new challenges and risks.
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Defects in products we develop internally or for clients could reduce our revenue, increase our costs, burden our engineering and marketing resources, involve us in litigation and adversely affect us.
Our success will depend on our ability to avoid, detect and correct defects in our products. We may not be able to maintain products that are free from defects. Although we have taken steps to prevent defects, our products could suffer such defects. The occurrence of such defects or malfunctions could result in physical harm to the patrons of our customers and the subsequent termination of agreements, cancellation of orders, product returns and diversion of our resources. Even if our customers do not suffer financial losses, customers may replace our products if they do not perform according to expectations. Any of these occurrences could also result in the loss of or delay in market acceptance of our products and/or loss of sales. In addition, the occurrence of defects in our products may give rise to claims for lost revenues and related litigation by our customers and may subject us to investigation or other disciplinary action by regulatory authorities that could include suspension or revocation of our ability to do business in certain jurisdictions.
Our success depends, in part, on our ability to successfully manage our future inventories.
We must maintain sufficient inventory levels to operate our business successfully, but we must also avoid accumulating excess inventory, which increases working capital needs and lowers gross margin. We must typically order our CBD products well in advance of the time these products will be offered for sale to our customers. As a result, it may be difficult to respond to changes in consumer preferences and market conditions, which, for pop culture products, can change rapidly. If we do not accurately anticipate the popularity of certain products, then we may not have sufficient inventory to meet demand. Alternatively, if demand or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. If we are not successful in managing our inventory, our business, financial condition and results of operations could be adversely affected.
We may also be negatively affected by changes in retailers’ inventory policies and practices. As a result of the desire of retailers to more closely manage inventory levels, there is a growing trend to make purchases on a “just-in-time” basis. This requires us to more closely anticipate demand and could require us to carry additional inventory. Policies and practices of individual retailers may adversely affect us as well, including those relating to access to and time on shelf space, price demands, payment terms and favoring the products of our competitors. Our retail customers make no binding long-term commitments to us regarding purchase volumes and make all purchases by delivering purchase orders. Any retailer can therefore freely reduce its overall purchase of our products, including the number and variety of our products that it carries, and reduce the shelf space allotted for our products. If demand or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. If we are not successful in managing our inventory, our business, financial condition and results of operations could be adversely affected.
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An inability to develop and introduce products in a timely and cost-effective manner may damage our business.
Our sales and profitability for our CBD products depend on our ability to bring products to market to meet customer demands before consumers begin to lose interest in a given property. There is no guarantee that we will be able to source our manufacturing and ship new or continuing products in a timely manner or on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ increasingly compressed shipping schedules and the seasonality of our business. These time constraints may lead our customers to reduce their demand for these products in order to minimize their inventory risk. Moreover, unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, manufacturing or distribution delays or changes in anticipated consumer demand for our products and new brands, or the related third party content, may cause the introduction date for new CBD products to be later than anticipated, may reduce or eliminate the profitability of such products or, in some situations, may cause a product or new brand introduction to be discontinued.
Risk to Our Common Stock
If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities in the secondary market.
Companies trading on the Over-the-Counter Bulletin Board must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get relisted on the OTC Bulletin Board, which may have an adverse material effect on the Company.
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
| ● | the issuer of the securities that was formerly a shell company has ceased to be a shell company; | |
| ● | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; | |
| ● | the issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and | |
| ● | at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
At the present time, the Company is not classified as a “shell company” under Rule 405 of the Securities Act.
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We do not expect to pay dividends in the future; any return on investment may be limited to the value of our common stock.
We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.
Authorization of preferred stock.
Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 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. On July 16, 2019, the Company’s Board of Directors approved the designation of two new series of preferred stock, Series K Super Voting Preferred Stock (3 shares authorized) and Series L Preferred Stock (500,000 shares authorized).
We have authorized 5,000,000 shares of Preferred Stock with 294 and 276 shares outstanding at June 30, 2023 and 2022, respectively. In the event of issuance of additional shares, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Please see NOTE J - CAPITAL STOCK for further information.
The market price for our common stock may be particularly volatile given our status as a relatively unknown company, with a limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price, which may result in substantial losses to you.
Our stock price may be particularly volatile when compared to the shares of larger, more established companies that trade on a national securities exchange and have large public floats. The volatility in our share price will be attributable to a number of factors. First, our common stock will be compared to the shares of such larger, more established companies, sporadically and thinly traded. As a consequence of this limited liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could decline precipitously in the event that a large number of shares of our common stock are sold on the market without commensurate demand. Second, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time. Moreover, the OTC Bulletin Board is not a liquid market in contrast to the major stock exchanges. We cannot assure you as to the liquidity or the future market prices of our common stock if a market does develop. If an active market for our common stock does not develop, the fair market value of our common stock could be materially adversely affected.
Existing stockholders will experience significant dilution from our sale of shares under potential Securities Purchase Agreements.
The sale of shares pursuant to any Securities Purchase Agreements executed by the Company in the future will have a dilutive impact on our stockholders. As a result, the market price of our common stock could decline significantly, as we sell shares pursuant to the Securities Purchase Agreement. In addition, for any particular advance, we will need to issue a greater number of shares of common stock under the Securities Purchase Agreement as our stock price declines. If our stock price is lower, then our existing stockholders would experience greater dilution.
The Company May Issue Shares of Preferred Stock with Greater Rights than Common Stock.
The Company’s charter authorizes the Board of Directors to issue one or more series of preferred stock and set the terms of the preferred stock without seeking any further approval from holders of the Company’s common stock. Any preferred stock that is issued may rank ahead of the Company’s common stock in terms of dividends, priority and liquidation premiums and may have greater voting rights than the Company’s common stock.
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Being a Public Company Significantly Increases the Company’s Administrative Costs.
The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and listing requirements subsequently adopted by the NYSE Amex in response to Sarbanes-Oxley, have required changes in corporate governance practices, internal control policies and audit committee practices of public companies. Although the Company is a relatively small public company, these rules, regulations, and requirements for the most part apply to the same extent as they apply to all major publicly traded companies. As a result, they have significantly increased the Company’s legal, financial, compliance and administrative costs, and have made certain other activities more time consuming and costly, as well as requiring substantial time and attention of our senior management. The Company expects its continued compliance with these and future rules and regulations to continue to require significant resources. These rules and regulations also may make it more difficult and more expensive for the Company to obtain director and officer liability insurance in the future and could make it more difficult for it to attract and retain qualified members for the Company’s Board of Directors, particularly to serve on its audit committee.
Our shares are subject to the U.S. “Penny Stock” Rules and investors who purchase our shares may have difficulty re-selling their shares as the liquidity of the market for our shares may be adversely affected by the impact of the “Penny Stock” Rules.
Our stock is subject to U.S. “Penny Stock” rules, which may make the stock more difficult to trade on the open market. Our common shares are not currently traded on the OTC Bulletin Board, but it is the Company’s plan that the common shares be quoted on the OTC Bulletin Board. A “penny stock” is generally defined by regulations of the U.S. Securities and Exchange Commission (“SEC”) as an equity security with a market price of less than US$5.00 per share. However, an equity security with a market price under US $5.00 will not be considered a penny stock if it fits within any of the following exceptions:
| (i) | the equity security is listed on NASDAQ or a national securities exchange; | |
| (ii) | the issuer of the equity security has been in continuous operation for less than three years, and either has (a) net tangible assets of at least US $5,000,000, or (b) average annual revenue of at least US $6,000,000; or | |
| (iii) | the issuer of the equity security has been in continuous operation for more than three years and has net tangible assets of at least US $2,000,000. |
Our common stock does not currently fit into any of the above exceptions.
If an investor buys or sells a penny stock, SEC regulations require that the investor receive, prior to the transaction, a disclosure explaining the penny stock market and associated risks. Furthermore, trading in our common stock will be subject to Rule 15g-9 of the Exchange Act, which relates to non-NASDAQ and non-exchange listed securities. Under this rule, broker/dealers who recommend our securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Securities are exempt from this rule if their market price is at least $5.00 per share. Since our common stock is currently deemed penny stock regulations, it may tend to reduce market liquidity of our common stock, because they limit the broker/dealers’ ability to trade, and a purchaser’s ability to sell, the stock in the secondary market.
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The low price of our common stock has a negative effect on the amount and percentage of transaction costs paid by individual shareholders. The low price of our common stock also limits our ability to raise additional capital by issuing additional shares. There are several reasons for these effects. First, the internal policies of certain institutional investors prohibit the purchase of low-priced stocks. Second, many brokerage houses do not permit low-priced stocks to be used as collateral for margin accounts or to be purchased on margin. Third, some brokerage house policies and practices tend to discourage individual brokers from dealing in low-priced stocks. Finally, broker’s commissions on low-priced stocks usually represent a higher percentage of the stock price than commissions on higher priced stocks. As a result, the Company’s shareholders may pay transaction costs that are a higher percentage of their total share value than if our share price were substantially higher.
Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and experience further dilution.
We are authorized to issue up to 14,991,000,000 shares of common stock, of which 14,488,440,097 and 13,785,662,319 shares of common stock are issued and outstanding as of June 30, 2023 and June 30, 2022, respectively. Our Board of Directors has the authority to cause us to issue additional shares of common stock and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future. Please see NOTE - J CAPITAL STOCK for further information.
A reverse stock split may decrease the liquidity of the shares of our common stock.
The liquidity of the shares of our common stock may be affected adversely by a reverse stock split given the reduced number of shares that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split.
Following a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.
Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, we cannot assure you that a reverse stock split will result in a share price that will attract new investors.
You may be diluted by conversions of the Company’s convertible notes and future conversions of the Company’s Series L Preferred Stock.
As of June 30, 2023, we had (i) outstanding Convertible Promissory Notes in an aggregate principal amount of $390,000, which are convertible for up to 6,900,000,000 shares of our Class A Common Stock based on a closing stock price of $0.0002 at June 30, 2023 and inherent conversion features; and (ii) 294 shares of Series L Preferred Stock outstanding, which are convertible into 14,497,440,097 shares of our Class A Common Stock based on the inherent conversion feature.
The conversion of the Convertible Promissory Notes and Series L Preferred Stock will result in further dilution of your investment. In addition, you may experience additional dilution if we issue common stock in the future. As a result of this dilution, you may receive significantly less in net tangible book value than the full purchase price you paid for the shares in the event of liquidation. As of the date of this filing, the Company does not have a sufficient number of authorized but unissued shares to issue in the event our noteholders and the holder of our Series L Preferred stock were to elect to convert into shares of our Class A Common Stock. The Company may be required to file an Amendment to its Articles of Incorporation to increase the number of authorized shares of Class A Common Stock or to effect a reverse stock split to satisfy the requested conversions.
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Issuances of shares of common stock or securities convertible into or exercisable for shares of common stock following this offering, will dilute your ownership interests and may adversely affect the future market price of our common stock.
The issuance of additional shares of our common stock or securities convertible into or exchangeable for our common stock could be dilutive to stockholders if they do not invest in future offerings. We may seek additional capital through a combination of private and public offerings in the future.
The Company’s shares of common stock are quoted on the OTC Pink Sheet market, which limits the liquidity and price of the Company’s common stock.
The Company’s shares of Common Stock are traded on the OTC Pink Sheet market under the symbol “GTLL.” Quotation of the Company’s securities on the OTC Pink Sheet market limits the liquidity and price of the Company’s Common Stock more than if the Company’s shares of Common Stock were listed on The Nasdaq Stock Market or a national exchange. There is currently no active trading market in the Company’s Common Stock. There can be no assurance that there will be an active trading market for the Company’s Common Stock following a business combination. In the event that an active trading market commences, there can be no assurance as to the market price of the Company’s shares of Common Stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules requiring 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 or 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 has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
We are classified as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.
We are a “smaller reporting company.” Specifically, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings.
Cautionary Note
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
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Item 1B. Unresolved Staff Comments.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 2. Properties.
Our principal executive office is located at 8 Campus Drive, Suite 105 Parsippany, New Jersey 07054 and our telephone number is (973) 233-5151.
Item 3. Legal Proceedings.
From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, Management of the Company does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is quoted under the symbol “GTLL” on the OTC Markets “PINK.” The following information reflects the high and low closing prices of the Company’s common stock on the OTC Markets “PINK.”
| Quarterly period | Low | High | ||||||
| Fiscal year ended June 30, 2023: | ||||||||
| First Quarter | $ | 0.0002 | $ | 0.0005 | ||||
| Second Quarter | $ | 0.0001 | $ | 0.0003 | ||||
| Third Quarter | $ | 0.0001 | $ | 0.0002 | ||||
| Fourth Quarter | $ | 0.0001 | $ | 0.0004 | ||||
| Fiscal year ended June 30, 2022: | ||||||||
| First Quarter | $ | 0.0015 | $ | 0.0044 | ||||
| Second Quarter | $ | 0.0003 | $ | 0.0042 | ||||
| Third Quarter | $ | 0.0003 | $ | 0.0019 | ||||
| Fourth Quarter | $ | 0.0002 | $ | 0.0005 | ||||
Holders of Record
The Company had approximately 149 holders of record of our Class A Common Stock as of December 27, 2023.
Dividends
We have never paid cash dividends on any of our capital stock, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Plans
The Company does not currently maintain any Equity Compensation Plans.
Recent Sales of Unregistered Securities, Uses of Proceeds from Registered Securities and Issuer Purchases of Equity Securities
We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the following transactions under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, in that such sales and issuances did not involve a public offering, or under Rule 701 promulgated under the Securities Act, in that they were offered and sold either pursuant to written compensatory plans or pursuant to a written contract relating to compensation, as provided by Rule 701. All of the purchasers of unregistered securities for which we relied on Section 4(a)(2) and/or Regulation D represented that they were accredited investors as defined under the Securities Act. We claimed such exemption on the basis that (a) the purchasers in each case represented that they intended to acquire the securities for investment only and not with a view to the distribution thereof and that they either received adequate information about the registrant or had access, through employment or other relationships, to such information and (b) appropriate legends were affixed to the stock certificates issued in such transactions.
Class A Common Stock:
Year ended June 30, 2023
On July 14, 2022, the Company issued 111,111,111 shares of common stock with a fair market value of $33,333 to a noteholder in satisfaction of $20,000 principal against the note dated January 13, 2022.
On July 15, 2022, the Company issued 212,500,000 shares of common stock with a fair market value of $63,750 to a noteholder in satisfaction of $23,750 principal and $1,750 interest against the note dated January 13, 2022.
On August 8, 2022, the Company issued 379,166,667 shares of common stock with a fair market value of $113,750 to a noteholder in satisfaction of $43,750 principal and $1,750 interest against the note dated February 4, 2022.
| 32 |
Year ended June 30, 2022
On November 17, 2021, the Company issued 40,070,137 shares of common stock with a fair market value of $144,252 to a noteholder in satisfaction of $16,500 principal and $3,535 interest against the note dated December 17, 2019.
On November 17, 2021, the Company issued 126,674,824 shares of common stock with a fair market value of $456,029 for a cashless exercise of a warrant.
On December 22, 2021, the Company issued 55,000,000 shares of common stock with a fair market value of $110,000 to a noteholder in satisfaction of $68,750 principal and $2,750 interest against the note dated June 17, 2021.
On January 18, 2022, the Company issued 55,108,596 shares of common stock with a fair market value of $93,685 to a noteholder in satisfaction of $48,750 principal and $1,950 interest against the note dated July 12, 2021.
On March 3, 2022, the Company issued 500,000,000 shares of common stock with a fair market value of $650,000 to an Accredited Investor (the “Investor”) to replace shares of common stock the Investor had returned to the Company in prior periods.
On March 3, 2022, the Company issued 600,000,000 shares of common stock with a fair market value of $780,000 to an Accredited Investor (the “Investor”) to replace shares of common stock the Investor had returned to the Company in prior periods.
On March 15, 2022, the Company issued 163,548,387 shares of common stock with a fair market value of $81,774 to a noteholder in satisfaction of $48,750 principal and $1,950 interest against the note dated September 9, 2021.
On April 29, 2022, the Company issued 335,833,333 shares of common stock with a fair market value of $67,167 to a noteholder in satisfaction of $38,750 principal and $1,550 interest against the note dated October 27, 2021.
Common Stock cancelled during the year ended June 30, 2022
A total of 390,000,000 shares of common stock were returned to the Company by shareholders during the year ended June 30, 2022.
On October 18, 2021, a Default Final Judgment was entered in favor of the Company in the Complaint for Declaratory Judgment filed with the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida against Fortis Holdings, Ltd, Wayfarer Management, Ltd, Flash Funding, Inc. and OTC Capital Partners, LLC. A total of 2,991,000,000 shares of the Company’s issued and outstanding common stock were voided.
Warrants:
As of June 30, 2023, the Company had no outstanding warrants.
Penny Stock
Penny Stock Regulation Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00. Excluded from the penny stock designation are securities registered on certain national securities exchanges or quoted on NASDAQ, provided that current price and volume information with respect to transactions in such securities is provided by the exchange/system or sold to established customers or accredited investors.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in connection with the transaction, and the monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. As our securities have become subject to the penny stock rules, investors may find it more difficult to sell their securities.
| 33 |
Item 6. Selected Financial Data
Not required for smaller reporting company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report. This discussion and analysis contain forward-looking statements that are based upon current expectations and involve risks, assumptions and uncertainties.
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus.
Although the forward-looking statements in this annual report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Our financial statements are stated in United States Dollars (USD or US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.
| 34 |
Financing Needs
In order to fund our operations, we rely upon direct investments, partnerships and joint ventures with accredited investors. Once the Company becomes profitable, we intend to fund our operations from free cash flow.
At present, the Company only has sufficient funds to conduct its operations for two to three months. There can be no assurance that additional financing will be available in amounts or on terms acceptable to the Company, if at all.
If we are not successful in generating sufficient liquidity from Company operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on the Company’s business, results of operations liquidity and financial condition.
The Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history under its current business model and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.
The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. In the event there is a downturn in the U.S. stock and debt markets, this could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders.
Results from Operations
Our results of operations for the years ended June 30, 2023 and 2022 are summarized below:
| June 30, 2023 | June 30, 2022 | |||||||
| Gross revenues | $ | 17,000 | $ | 124,506 | ||||
| Cost of goods sold | - | 13,000 | ||||||
| Total Operating expenses | 540,212 | 610,794 | ||||||
| Loss from Operations | (523,212 | ) | (499,288 | ) | ||||
| Other income (expense) | (510,828 | ) | (779,027 | ) | ||||
| Net Loss | (1,034,040 | ) | (1,278,315 | ) | ||||
| Net loss per share- basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
Revenues
Since our inception on January 20, 1999, we have generated minimal revenue from our operations. We cannot guarantee we will be successful in our business operations. We have limited financial resources and limited operations until such time that we are able to begin to generate revenue from our own operations. Our business is subject to risks inherent in the establishment of a new business plan through the subsequent acquisition of Fox Trott Tango, LLC, including the financial risks associated with the limited capital resources currently available to us and risks associated with the implementation of our business strategies.
For the years ended June 30, 2023 and 2022, we generated $17,000 and $124,506 in revenue, respectively. Our revenue for the year ended June 30, 2023 was entirely comprised from consulting services. Our revenue for the year ended June 30, 2022 was comprised of consulting services and sales of Sculptbaby products. We do not anticipate generating any further revenue from the sale of Sculptbaby products.
For the years ended June 30, 2023 and 2022, our cost of goods sold was $0 and $13,000, respectively. The makeup of the cost of goods sold for the year ended June 30, 2022 was 100% comprised of costs for the sale of the Company’s Sculpt Baby product.
| 35 |
Operating Expenses
Our operating expenses were $540,212 and $610,794 for the years ended June 30, 2023 and 2022, respectively. The decrease in operating expenses for the year ended June 30, 2023 is largely attributable to a decrease in selling, general and administrative expenses and consulting services.
We incurred $0 and $0 in advertising expenses for the years ended June 30, 2023 and 2022, respectively.
We incurred $378,634 and $328,237 in officer and director related compensation for the years ended June 30, 2023 and 2022, respectively.
Loss from Operations
The Company’s loss from operations increased to ($523,212) for the year ended June 30, 2023 from ($499,288) for the year ended June 30, 2022, an increase of $23,924. The increase in loss from operations is largely attributable to an increase in officer and director compensation and professional services.
Other Income (Expenses)
Other income (expenses) were ($510,828) for the year ended June 30, 2023 versus ($779,027) for the year ended June 30, 2022. The decrease in other expenses for the year ended June 30, 2023 is largely attributable to a decrease in amortization of debt discount expense and no impairment of goodwill or loss on issuance of convertible notes as compared to the year ended June 30, 2022.
Net (loss)
For the year ended June 30, 2023, our net loss decreased to ($1,034,040), as compared to a net loss of ($1,278,315) for the year ended June 30, 2022, a decrease of $244,275. The decrease in net loss is largely attributable to the Company’s decrease in other income (expenses).
Liquidity and Capital Resources
Cash on Hand
Our cash on hand as of June 30, 2023 and June 30, 2022, was $18,300 and $324,494, respectively.
We currently have no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
We are dependent on the sale of our securities or issuance of debt to fund our operations and will remain so until we generate sufficient revenues to pay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees.
| 36 |
If we are unable to raise the funds, we will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. Please see NOTE M- GOING CONCERN UNCERTAINTY for further information.
Notes payable, third parties
Our Notes payable third parties were $390,000 and $387,500 as of June 30, 2023, and June 30, 2022, respectively. Please see NOTE H – NOTES PAYABLE, THIRD PARTIES for a full schedule of all notes payable to third parties, including issue date, maturity date and interest rate.
Loans payable, related parties
Our loans payable, related party was $2,250 and $2,250 as of June 30, 2023 and June 30, 2022, respectively.
Our cash flows for the years ended June 30, 2023 and 2022 are summarized below:
Year Ended June 30, 2023 |
Year Ended June 30, 2022 |
|||||||
| Cash (used in) provided by: | ||||||||
| Operating activities | $ | (392,437 | ) | $ | (484,410 | ) | ||
| Investing activities | (15,000 | ) | (350,000 | ) | ||||
| Financing activities | 101,243 | 1,102,604 | ||||||
| Net increase (decrease) in Cash | $ | (306,194 | ) | $ | 268,194 | |||
Use of Cash
We had net cash (used in) operating activities for the years ended June 30, 2023 and June 30, 2022 of ($392,437) and ($484,410), respectively.
We had net cash (used in) investing activities for the years ended June 30, 2023 and June 30, 2022 of ($15,000) and ($350,000), respectively.
We had net cash provided by financing activities for the years ended June 30, 2023 and June 30, 2022 of $101,243 and $1,102,604, respectively.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| 37 |
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
| 38 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Global Technologies, Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Global Technologies, Ltd. and Subsidiaries (“the Company”) as of June 30, 2023 and 2022, and the related consolidated statements of operations, stockholders’ (deficiency), and cash flows for each of the years in the two-year period ended June 30, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note M to the financial statements, the Company has a history of net losses, an accumulated deficit, and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note M. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-1 |
Potential Discontinued Operations – Refer to Notes A and N to the Financial Statements
The Company has several subsidiaries with varied business operations and acquired additional companies subsequent to June 30, 2023. There is potential that one or more of the subsidiaries during the year under audit may have discontinued operations which would require additional disclosures and may materially impact the presentation on the financial statements. Determination of the status of the subsidiaries’ operations is potentially subject to judgment and estimation.
How the Critical Audit Matter Was Addressed in the Audit
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included:
| ● | Review of underlying agreements and documentation for evidence that deconsolidation, assets are held for sale, or abandonment has occurred. | |
| ● | Determination if it appears reasonable that the entities and related assets are available for future operations. | |
| ● | Assessment of any potential material impact to the financial statements and related disclosures in the qualitative or quantitative sense. |
We have served as the Company’s auditor since 2019.
December 28, 2023
| F-2 |
GLOBAL TECHNOLOGIES, LTD
CONSOLIDATED BALANCE SHEETS
| June 30, 2023 | June 30, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Accrued interest receivable | ||||||||
| Loan receivable, other | ||||||||
| Total current assets |
| |||||||
| Property and equipment, less accumulated depreciation
of $ | ||||||||
| Notes receivable | ||||||||
| Deposit on building | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Notes payable-third parties | ||||||||
| Loans payable, related party | ||||||||
| Debt discounts | ( | ) | ||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| Mezzanine Equity: | ||||||||
| Common stock to be issued upon conversion of Series L Preferred Stock | ||||||||
| Total mezzanine equity | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock; shares authorized, $ par value: | $ | $ | ||||||
| Series K; shares authorized, par value $, as of June 30, 2023 and 2022, there are and shares outstanding, respectively | ||||||||
| Series L; shares authorized, par value $, as of June 30, 2023 and 2022, there are and shares outstanding, respectively | ||||||||
| Preferred stock value | ||||||||
| Common stock; shares authorized, $ par value, as of June 30, 2023 and 2022, there are and shares outstanding, respectively | ||||||||
| Additional paid- in capital Class A common stock | ||||||||
| Additional paid- in capital preferred stock | ||||||||
| Common stock to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficiency | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
GLOBAL TECHNOLOGIES, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 30, 2023 and 2022
| 2023 | 2022 | |||||||
| Revenue earned: | ||||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating Expenses | ||||||||
| Officer and director compensation, including stock-based compensation of $ and $, respectively | ||||||||
| Consulting services | ||||||||
| Depreciation expense | ||||||||
| Professional services, including stock-based fees of $ and $, respectively | ||||||||
| Selling, general and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Gain (expense) on derivative liability | ( | ) | ( | ) | ||||
| Interest (expense) income | ( | ) | ||||||
| Forgiveness of debt and accrued interest | ||||||||
| Impairment of goodwill | ( | ) | ||||||
| Write-off of note receivable and accounts receivable | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Default principal and interest expense | ( | ) | ||||||
| Loss on issuance of convertible notes | ( | ) | ||||||
| Amortization of debt discounts | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per common share | $ | ) | $ | ) | ||||
| Weighted average common shares outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
GLOBAL TECHNOLOGIES, LTD
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY)
For the years ended June 30, 2023 and 2022
| Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Series K Preferred | Series L Preferred | Common Stock to | Additional | |||||||||||||||||||||||||||||||||||||
| stock | stock | Common Stock | be | Paid in | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balances on June 30, 2021 | $ | $ | | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Return of common shares as per court order | - | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Return of common shares | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of replacement common shares | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock for shares purchased through Regulation A offering | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock to noteholders in satisfaction of principal and interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of 3 Series L Preferred stock for 300,000,000 common stock | ||||||||||||||||||||||||||||||||||||||||
| Conversion of 3 Series L Preferred stock for 300,000,000 common stock,shares | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of professional fees | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of professional fees, shares | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of related party debt | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of related party debt, shares | ||||||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrant | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred shares | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss for the year ended June 30, 2022 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances on June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Balances on June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock to a noteholder in satisfaction of principal and interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of 3 Series L Preferred stock for common stock to be issued | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of professional fees | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred stock in satisfaction of related party debt | - | |||||||||||||||||||||||||||||||||||||||
| Common stock to be issued upon conversion of Series L Preferred Stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss for the year ended June 30, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances on June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
GLOBAL TECHNOLOGIES, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 2023 and 2022
June 30, 2023 | June 30, 2022 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash provided by operating activities: | ||||||||
| Issuance of common stock for stock-based professional fees | ||||||||
| Issuance of Series L preferred stock in settlement of related party accounts due | ||||||||
| Derivative liability (gain) loss | ||||||||
| Forgiveness of debt and accrued interest | ( | ) | ||||||
| Loss on issuance of note payable | ||||||||
| Write-off of note, accrued interest receivable and accounts receivable | ||||||||
| Impairment of goodwill | ||||||||
| Depreciation | ||||||||
| Amortization of debt discounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts and loans receivable | ( | ) | ||||||
| Prepaid director’s compensation | ||||||||
| Accounts payable | ||||||||
| Accrued interest | ||||||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Deposit on building | ( |
|||||||
| Note receivable | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Borrowings from loans payable officer | ||||||||
| Issuance of stock for Regulation A financing | ||||||||
| Proceeds from notes payable-third parties | ||||||||
| Payments under notes payable | ( | ) | ||||||
| Borrowings from notes payable | ||||||||
Payments on related party loans | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
Cancellation of common stock as per court order | $ | $ | ||||||
Cancellation of common stock to be issued | $ | $ | ||||||
| Issuance of common stock for debt | $ | $ | ||||||
| Issuance of Series L Preferred stock for payment of professional services | $ | $ | ||||||
| Issuance of common stock for return of Series L Preferred stock | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-6 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE A – ORGANIZATION
Overview
Global Technologies, Ltd. (hereinafter the “Company”, “Our”, “We”, or “Us”) was incorporated under the laws of the State of Delaware on January 20, 1999 under the name of NEW IFT Corporation. On August 13, 1999, the Company filed an Amended and Restated Certificate of Incorporation with the State of Delaware to change the name of the corporation to Global Technologies, Ltd.
Our principal executive office is located at 8 Campus Drive, Suite 105 Parsippany, New Jersey 07054 and our telephone number is (973) 233-5151. The information contained on, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K. We have included our website address in this Annual Report solely as an inactive textual reference.
Current Operations
Global Technologies, Ltd (“Global”) is a company with a strong focus on entering new markets including the acquisition and redevelopment of distressed properties. The company seeks to capitalize on underutilized or undervalued assets, creating opportunities for growth, and delivering exceptional value to shareholders.
Our wholly owned subsidiaries:
About TCBM Holdings, LLC
TCBM Holdings, LLC (“TCBM”) was formed as a Delaware limited liability company on August 10, 2017. TCBM is a holding corporation, which operated through its two wholly owned subsidiaries, HMNRTH, LLC and 911 Help Now, LLC.
About HMNRTH, LLC
HMNRTH, LLC (“HMN”) was formed as a Delaware limited liability company on July 30, 2019. HMNRTH operates as an online store selling a variety of hemp and CBD related products. The Company’s business model is to bridge the gap between the lifestyle and knowledge components within the cannabis industry. The Company’s goal is to educate every consumer while cultivating an experience by providing quality products, branded cutting-edge content, and diversified product lines for any purpose. Most importantly, we want our clients to discover their inner HMN, redefine their inner HMN and Empower their inner HMN.
| F-7 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE A – ORGANIZATION (cont’d)
In order for the Company to generate revenue through HMNRTH, we will need to: (i) produce additional inventory for retail sales through the Company’s ecommerce site or sales, or (ii) sales to third party distributors, or (iii) direct sales to brick and mortar CBD retail outlets, or (iv) generate additional CBD formulas to be utilized in new products At present, the Company does not have the required capital to initiate any of the options and there is no guarantee that we will be able to raise the required funds.
About 911 Help Now, LLC
911 Help Now, LLC (“911”) was formed as a Delaware limited liability company on February 2, 2018. 911 was a holding company of intellectual property in the safety and security space. At present, we own no intellectual property within our 911 subsidiary. In order to generate future revenue within 911, we will need to identify and either acquire or license intellectual property. In the event of an acquisition, we will then need to either develop products utilizing our intellectual property or license out our intellectual property to a third party. There is no guarantee that we will be successful with an acquisition or licensing of any intellectual property.
About Markets on Main, Inc.
Markets on Main, LLC (“MOM”) was formed as a Florida limited liability company on April 2, 2020. MOM is A full service, sales and distribution, third-party logistics provider and portal to multi-channel sales opportunities. MOM’s focus is on bringing small businesses and entrepreneurs to large opportunities and distribution. MOM will provide the following services to its clients: inventory management, brand management, fulfillment and drop-ship capabilities, retail distribution and customer service. MOM’s website can be found at www.marketsonmain.com.
On May 4, 2020, MOM entered into a Drop Ship Agreement (the “Agreement”) with QVC, Inc. Under the terms of the Agreement, MOM shall provide products for marketing, promotion, sale and distribution by QVC through certain televised and/or other electronic shopping services developed or to be developed by QVC and through other means and media.
On January 3, 2022, the Company filed Articles of Conversion with the State of Florida to convert MOM from a limited liability company to a Florida profit corporation. Simultaneous with the filing of the Articles of Conversion, the Company filed Articles of Incorporation for MOM.
On January 19, 2022, MOM entered into an Exclusive Distribution Agreement (the “Distribution Agreement”) with Amfluent, LLC (“Amfluent”). Under the terms of the Distribution Agreement, MOM will become an exclusive distributor for the promotion and sale of products carried by Amfluent. As the exclusive distributor, MOM shall be awarded the exclusive territory of e-commerce, live shopping and digital sales. The Distribution Agreement has a term of one year from the Effective Date unless both parties agree to renew the Distribution Agreement for an additional term.
On January 30, 2022, MOM entered into a Marketing Management Agreement (the “Agreement”) with Chin Industries, LLC (“Chin”). Under the terms of the Agreement, Chin shall provide day to day management of websites where MOM’s products may be sold. The Agreement has a term of one year. As compensation, Chin shall receive a 50/50 split of net profits.
During the third quarter of fiscal 2022, MOM launched its first website, www.sculptbaby.com, under the Agreement with Chin. Product sales initiated in March 2022. During the fourth quarter of fiscal 2022, all Sculpt Baby inventory was sold. The Company has not identified its next product to launch.
About Tersus Power, Inc. (Delaware)
Tersus Power, Inc. (“Tersus”) (Delaware) was formed as a wholly owned subsidiary as per the terms of the Share Exchange Agreement entered into with Tersus Power, Inc., a Nevada corporation, and the Tersus Shareholders with the sole purpose of entering into an Agreement and Plan of Merger to effect a name change. The Articles of Incorporation were filed with the Secretary of State of the State of Delaware on March 15, 2022. As the Company elected to terminate the Share Exchange Agreement with Tersus Power, Inc. (Nevada), it does not anticipate any operations under its wholly owned subsidiary.
| F-8 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE A – ORGANIZATION (cont’d)
Consulting Services
On January 12, 2022, the Company entered into a Fee Agreement (the “Agreement”) for the preparation of a registration statement on Form 1-A and all follow up correspondence with the appropriate regulatory agencies. The Company was fully compensated for its services during the period ended March 31, 2022 and has fulfilled its obligations under the Agreement.
On
February 1, 2022, the Company entered into a Letter Agreement (the “Agreement”) with Donohoe Advisory Services, Inc. (“Donohoe”)
to provide assistance to the Company in support of the Company’s efforts to obtain a listing on a national securities exchange.
Under the terms of the Agreement,
On February 5, 2022, the Company entered into a Fee Agreement (the “Agreement”) for the preparation of a registration statement on Form 1-A and all follow up correspondence with the appropriate regulatory agencies. As of March 31, 2023, the Company has initiated the work to be completed under the Agreement but is awaiting additional information from its client.
Share Exchange Agreement with Tersus Power, Inc. (Nevada)
During the three months ended March 31, 2023, the Company received notification from FINRA that the proposed corporate action submission, as noted within the Tersus Power Share Exchange Agreement, had passed the allotted time for the corporate action to become effective. The Company is in the process of refiling the same corporate action. The delay on the corporate action becoming effective has required Tersus Power to seek alternate financing and to reevaluate its business plan. On May 24, 2023, the Company notified Tersus Power that it has elected to terminate the Exchange Agreement as per section 5.1(a)(iv). Please see NOTE F – NOTE RECEIVABLE for further information.
| F-9 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE B – BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for financial statements and with Form 10-K and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2023 and the results of operations, changes in stockholders’ equity, and cash flows for the periods presented.
As of June 30, 2023, Global Technologies had five wholly owned subsidiaries: TCBM Holdings, LLC (“TCBM”), HMNRTH, LLC (“HMNRTH”), 911 Help Now, LLC (“911”), Markets on Main, LLC (“MOM”) and Tersus Power, Inc. (“Tersus”). As of June 30, 2023, the Company had a minority investment in one entity, Global Clean Solutions, LLC.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of Global Technologies and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.
Cash Equivalents
Investments
having an original maturity of 90 days or less that are readily convertible into cash are considered to be cash equivalents. For the
periods presented, the Company had
Accounts Receivable and Allowance for Doubtful Accounts:
Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of Global Technologies’ customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole.
Accounts receivable – related party and allowance for doubtful accounts
Accounts receivable – related party are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current creditworthiness and current economic trends. Accounts are written off after exhaustive efforts at collection.
Concentrations of Risks
Concentration
of Accounts Receivable – On June 30, 2023, the Company had $
in accounts receivable. At June 30, 2023, the Company elected to write-off $
Concentration
of Revenues – For the year ended June 30, 2023, one customer accounted for
| F-10 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Concentration of Suppliers – The Company relies on a limited number of suppliers and contract manufacturers. In particular, a single supplier is currently the sole manufacturer of the Company’s CBD products.
Concentration
of Loans Receivable, Other – On June 30, 2023 and 2022, the Company had $
and $
Concentration
of Notes Receivable – The Company had notes receivable of $
and $
Income Taxes
In accordance with Accounting Standards Codification (ASC) 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The asset and liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is not more likely than not that a deferred tax asset will be realized.
We expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of June 30, 2023, we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations since our inception. To date, we have not incurred any interest or tax penalties.
Financial Instruments and Fair Value of Financial Instruments
We adopted ASC Topic 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
| Level 1: | Observable inputs such as quoted market prices in active markets for identical assets or liabilities |
| Level 2: | Observable market-based inputs or unobservable inputs that are corroborated by market data |
| Level 3: | Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. |
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. Except for the derivative liability, we had no financial assets or liabilities carried and measured at fair value on a recurring or nonrecurring basis during the periods presented.
Derivative Liabilities
We evaluate convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.
The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. Please see NOTE I - DERIVATIVE LIABILITY for further information.
| F-11 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Long-lived Assets
Long-lived assets such as property and equipment and intangible assets are periodically reviewed for impairment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
Accounting for Investments - The Company accounts for investments based upon the type and nature of the investment and the availability of current information to determine its value. Investments in marketable securities in which there is a trading market will be valued at market value on the nearest trading date relative to the Company’s financial reporting requirements. Investments in which there is no trading market from which to obtain recent pricing and trading data for valuation purposes will be valued based upon management’s review of available financial information, disclosures related to the investment and recent valuations related to the investment’s fundraising efforts.
Marketable Equity Securities
Marketable equity securities are stated at lower of cost or market value with unrealized gains and losses included in operations. The Company has classified its marketable equity securities as trading securities.
Deferred Financing Costs
Deferred financing costs represent costs incurred in the connection with obtaining debt financing. These costs are amortized ratably and charged to financing expenses over the term of the related debt.
Revenue recognition
Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606:
Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.
Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.
Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.
Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or overtime.
Substantially all of the Company’s revenues continue to be recognized when control of the goods is transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards.
Service revenue is recognized when the professional consulting, maintenance or other ancillary services are provided to the customer.
| F-12 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Stock-Based Compensation
We account for share-based awards to employees in accordance with ASC 718 “Stock Compensation”. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. The Company accounts for non-employee stock-based awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Under the new standard, the Company will value all equity classified awards at their grant-date under ASC718 and no options were required to be revalued at adoption.
Related Parties
A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.
Advertising Costs
Advertising costs are expensed as incurred. For the periods presented, we had no advertising costs.
We compute net loss per share in accordance with FASB ASC 260. The ASC specifies the computation, presentation and disclosure requirements for loss per share for entities with publicly held common stock.
Basic loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net loss per share are excluded from the calculation. For the years ended June 30, 2023 and 2022, the Company excluded and , respectively, shares relating to convertible notes payable to third parties and shares issuable upon conversion of the Company’s Series L Preferred stock.
| F-13 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Recently Enacted Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our financial statements.
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on May 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently evaluating the impact of the adoption of ASU 2020-06 on our financial statements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. Financial instruments included in the Company’s financial statements include cash, accounts payable and accrued expenses, accrued interest payable, loans payable to related parties, notes payable to third parties, notes payable to related parties and derivative liability. Unless otherwise disclosed in the notes to the financial statements, the carrying value of financial instruments is considered to approximate fair value due to the short maturity and characteristics of those instruments. The carrying value of debt approximates fair value as terms approximate those currently available for similar debt instruments.
Goodwill
After completing the purchase price allocation, any residual of cost over fair value of the net identifiable assets and liabilities was assigned to the unidentifiable asset, goodwill. Formerly subject to mandatory amortization, this now is not permitted to be amortized at all, by any allocation scheme and over any useful life. Impairment testing, using a methodology at variance with that set forth in FAS 144 (which, however, continues in effect for all other types of long-lived assets and intangibles other than goodwill), must be applied periodically, and any computed impairment will be presented as a separate line item in that period’s income statement, as a component of income from continuing operations (unless associated with discontinued operations, in which case, the impairment would, net of income tax effects, be combined with the remaining effects of the discontinued operations. In accordance with Statement No. 142, “Goodwill and Other Intangible Assets,” the Company does not amortize goodwill, but performs impairment tests of the carrying value on a semi-annual and annual basis.
Intangible Assets
Intangible assets are stated at the lesser of cost or fair value. Please see NOTE D – ACQUISITION OF TCBM HOLDINGS, LLC for further information.
| F-14 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE D – ACQUISITION OF TCBM HOLDINGS, LLC
On
November 30, 2019, the Company acquired
Details regarding the book values and fair values of the net assets acquired are as follows:
SCHEDULE OF FAIR VALUE OF NET ASSETS ACQUIRED
| Book Value | Fair Value | Difference | ||||||||||
| Cash | $ | $ | $ | |||||||||
| Inventory | ||||||||||||
| Property and Equipment | ||||||||||||
| Total | $ | $ | $ | |||||||||
Goodwill and Intangibles
Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Intangible assets other than goodwill are recorded at fair value at the time acquired or at cost, if applicable. Intangible assets that do not have indefinite lives are amortized in line with the pattern in which the economic benefits of the intangible asset are consumed. If the pattern of economic benefit cannot be reliably determined, the intangible assets are amortized on a straight-line basis over the shorter of the legal or estimated life. Goodwill and indefinite-lived intangibles assets are not amortized but are tested for impairment in the fourth quarter using the same dates each year or more frequently if changes in circumstances or the occurrence of events indicate potential impairment.
In performing the annual impairment test, the fair value of each indefinite-lived intangible asset is compared to its carrying value and an impairment charge is recorded if the carrying value exceeds the fair value. For goodwill, the Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than it’s carrying amount, and whether it is necessary to perform the quantitative goodwill impairment test. The quantitative test is required only if the Company concludes that it is more-likely-than-not that a reporting unit’s fair value is less than it’s carrying amount. For quantitative testing, the Company compares the fair value of each reporting unit with its carrying amount. If the carrying amount exceeds the fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
Fair values are determined using established business valuation techniques and models developed by the Company, estimates of market participant assumptions of future cash flows, future growth rates and discount rates to value estimated cash flows. Changes in economic and operating conditions, actual growth below the assumed market participant assumptions or an increase in the discount rate could result in an impairment charge in a future period.
Acquisitions
Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for the valuation as appropriate. The valuation inputs in these models and analyses are based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability.
Fair value estimates are based on a series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. Management values property, plant and equipment using the cost approach supported where available by observable market data, which includes consideration of obsolescence. Management values acquired intangible assets using the relief from royalty method or excess earnings method, forms of the income approach supported by observable market data for peer companies. The significant assumptions used to estimate the value of the acquired intangible assets include discount rates and certain assumptions that form the basis of future cash flows (such as revenue growth rates, customer attrition rates, and royalty rates). Acquired inventories are marked to fair value for valuation of the total purchase price. For certain items, the carrying value is determined to be a reasonable approximation of fair value based on information available to the Company.
SCHEDULE OF ASSETS ACQUIRED
| Assets acquired | As of November 30, 2019 | |||
| Cash | $ | |||
| Inventory (i) | (i) | |||
| Property, plant and equipment (ii) | (ii) | |||
| Assets acquired excluding goodwill | ||||
| Goodwill (iii) | (iii) | |||
| Total purchase price | $ | |||
| (i) | |
| (ii) | |
| (iii) |
The changes in the carrying amount of goodwill for the period from November 30, 2019 through June 30, 2023 were as follows:
SCHEDULE OF GOODWILL
| Balance as of November 30, 2019 | $ | |||
| Additions and adjustments | ( | ) | ||
| Balance as of June 30, 2023 | $ |
For
the years ended June 30, 2023 and 2022, the Company recorded an impairment of goodwill in the amount of $
| F-15 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE E - PROPERTY AND EQUIPMENT
June 30, 2023 | June 30, 2022 | |||||||
| Property and Equipment (i) | $ | $ | ||||||
| Less: accumulated depreciation (ii) | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| (i) | |
| (ii) |
NOTE F – NOTE RECEIVABLE
SCHEDULE OF NOTE RECEIVABLE
| June 30, 2023 | June 30, 2022 | |||||||
| Note receivable- Tersus Power, Inc. | $ | $ | ||||||
| Total | $ | $ | ||||||
| (i) | On December 14, 2021, the
Company, was issued a Senior Secured Promissory Note (the “Note”) in the principal amount of $ | |
| (ii) | The convertible note receivable is considered available for sale debt securities with a private company that is not traded in active markets. Since observable price quotations were not available at acquisition, fair value was estimated based on cost less an appropriate discount upon acquisition. The discount of each instrument is accreted into interest income over the respective term as shown within the Company’s Condensed Consolidated Statements of Operations. | |
| (iii) | At June 30, 2023, the Company elected to write-off the note receivable and all accrued interest as the Company elected to terminate the Exchange Agreement between the parties on May 24, 2023. |
NOTE G – ACCRUED OFFICER AND DIRECTOR COMPENSATION
Accrued officer and director compensation due to Jimmy Wayne Anderson, the Company’s former sole officer and director, and consists of:
SCHEDULE OF ACCRUED OFFICER AND DIRECTOR COMPENSATION
| June 30, 2023 | June 30, 2022 | |||||||
| Pursuant to the July 1, 2021 Board of Directors Service Agreement | $ | $ | ||||||
| Total | $ | $ | ||||||
For the years ended June 30, 2023 and 2022, the balance of accrued officer and director compensation changed as follows:
SCHEDULE OF CHANGES IN ACCRUED OFFICER AND DIRECTOR COMPENSATION
Pursuant to Employment Agreements (ii)(iii) | Pursuant to Board of Directors Services Agreements (i)(iv) | Total | ||||||||||
| Balances on June 30, 2021 | $ | $ | $ | |||||||||
| Officer’s/director’s compensation for the year ended June 30, 2021 (including stock-based compensation of $ accrued as Stock to be Issued) | ||||||||||||
| Cash compensation | ( | ) | ( | ) | ||||||||
| Balances on June 30, 2022 | ||||||||||||
| Officer’s/director’s compensation for the year ended June 30, 2023 | ||||||||||||
| Cash compensation | ( | ) | ( | ) | ( | ) | ||||||
| Balances on June 30, 2023 | $ | $ | $ | |||||||||
| (i) | ||
| (ii) | ||
| (iii) | ||
| (iv) |
| F-16 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE H - NOTES PAYABLE, THIRD PARTIES
Notes payable to third parties consist of:
SCHEDULE OF NOTES PAYABLE TO THIRD PARTIES
| June 30, 2023 | June 30, 2022 | |||||||
| Convertible
Promissory Note dated January 20, 2021 payable to Tri-Bridge Ventures, LLC (“Tri-Bridge”), interest at | ||||||||
| Convertible
Promissory Note dated February 22, 2021 payable to Tri-Bridge Ventures, LLC (“Tri-Bridge”), interest at | ||||||||
| Convertible
Promissory Note dated January 13, 2022 payable to Sixth Street Lending, LLC (“Sixth Street”), interest at | ||||||||
| Convertible
Promissory Note dated February 4, 2022 payable to Sixth Street Lending, LLC (“Sixth Street”), interest at | ||||||||
| Convertible
Promissory Note dated May 31, 2023 payable to Hillcrest Ridgewood Partners, LLC (“Hillcrest”), interest at | ||||||||
| Totals | $ | $ | ||||||
| F-17 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE H - NOTES PAYABLE, THIRD PARTIES (cont’d)
| (i) | |
| (ii) | |
(iii) |
| F-18 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE H - NOTES PAYABLE, THIRD PARTIES (cont’d)
| (iv) | |
| (v) | |
| Upon
the occurrence of any Event of Default, this New Convertible Note shall become immediately due and payable, and the Company shall
pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Amount then outstanding plus
accrued interest (including any Default Interest) through the date of full repayment multiplied by 150% (collectively the “Default
Amount”), as well as all costs, including, without limitation, legal fees and expenses, of collection, all without demand,
presentment or notice, all of which hereby are expressly waived by the Holder. The Holder shall be entitled to exercise all other
rights and remedies available at law or in equity. The transaction closed on May 31, 2023.
As of June 30, 2023, $ |
Income from forgiveness of principal and interest on convertible notes payable consists of:
SCHEDULE OF INTEREST FROM FORGIVENESS OF NOTES PAYABLE
June 30, 2023 | June 30, 2022 | |||||||
| Forgiveness of Graphene Holdings, LLC principal and interest | $ | $ | ||||||
| Total | $ | $ | ||||||
| F-19 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE I - DERIVATIVE LIABILITY
The derivative liability on June 30, 2023 and June 30, 2022 consisted of:
SCHEDULE OF DERIVATIVE LIABILITY
June 30, 2023 | June 30, 2022 | |||||||
| Convertible Promissory Notes payable to Tri-Bridge Ventures, LLC. Please see NOTE H – NOTES PAYABLE, THIRD PARTIES for further information | $ | $ | ||||||
| Convertible Promissory Note payable to Sixth Street Lending, LLC. Please see NOTE H – NOTES PAYABLE, RELATED PARTIES for further information | ||||||||
Total derivative liability | $ | $ | ||||||
The Convertible Promissory Notes (the “Notes”) contain a variable conversion feature based on the future trading price of the Company’s common stock. Therefore, the number of shares of common stock issuable upon conversion of the Notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates of the notes and charged the applicable amounts to debt discounts (limited to the face value of the respective notes) and the remainder to other expenses. The increase (decrease) in the fair value of the derivative liability from the respective issue dates of the notes to the measurement dates is charged (credited) to other expense (income).
The
fair value of the derivative liability was measured at the respective issuance dates and on June 30, 2023, and June 30, 2022 using the
Black Scholes option pricing model. Assumptions used for the calculation of the derivative liability of the Notes at June 30, 2023 were
(1) stock price of $per share, (2) conversion price of $per share, (3) term of
The following table provides a reconciliation of the beginning and ending balances for the convertible note embedded derivative liability measured at fair value using significant unobservable inputs (Level 3):
SCHEDULE OF EMBEDDED DERIVATIVE LIABILITY MEASURED AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS
| Level 3 | ||||
| Balance on June 30, 2021 | $ | |||
| Additions | ||||
| (Gain) Loss | ||||
| Change resulting from conversions and payoffs | ||||
| Balance on June 30, 2022 | ||||
(Gain) Loss | ( | ) | ||
Change resulting from conversions and payoffs | ( | ) | ||
| Balance on June 30, 2023 | $ | |||
NOTE J - CAPITAL STOCK
Preferred Stock
Filed with the State of Delaware:
On September 30, 1999, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series A 8% Convertible Preferred Stock, par value $. The designation of the new Series A 8% Convertible Preferred Stock was approved by the Board of Directors on August 16, 1999. The Company is authorized to issue shares of the Series A 8% Convertible Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
On September 30, 1999, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series B 8% Convertible Preferred Stock, par value $. The designation of the new Series B 8% Convertible Preferred Stock was approved by the Board of Directors on August 16, 1999. The Company is authorized to issue shares of the Series B 8% Convertible Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
| F-20 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
On February 15, 2000, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series C 5% Convertible Preferred Stock, par value $. The designation of the new Series C 5% Convertible Preferred Stock was approved by the Board of Directors on February 14, 2000. The Company is authorized to issue shares of the Series C 5% Convertible Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
On April 26, 2001, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series D Convertible Preferred Stock, par value $. The designation of the new Series D Convertible Preferred Stock was approved by the Board of Directors on April 26, 2001. The Company is authorized to issue shares of the Series D Convertible Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
On June 28, 2001, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series E 8% Convertible Preferred Stock, par value $. The designation of the new Series E 8% Convertible Preferred Stock was approved by the Board of Directors on March 30, 2001. The Company is authorized to issue shares of the Series E Convertible Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
Series K Super Voting Preferred Stock
On July 31, 2019, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series K Super Voting Preferred Stock, par value $. The designation of the new Series K Super Voting Preferred Stock was approved by the Board of Directors on July 16, 2019. The Company is authorized to issue three () shares of the Series K Super Voting Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
Dividends. Initially, there will be no dividends due or payable on the Series K Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed.
Liquidation and Redemption Rights. Upon the occurrence of a Liquidation Event (as defined below), the holders of Series K Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series K Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the holders of the Series K Super Voting Preferred Stock receive securities of the surviving Corporation having substantially similar rights as the Series K Super Voting Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least a majority of the voting securities of the successor Corporation immediately thereafter (the “Permitted Merger”), unless the holders of the shares of Series K Super Voting Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially all, or any material part of, the Corporation’s assets, unless the holders of Series K Super Voting Preferred Stock elect otherwise.
Conversion. No conversion of the Series K Super Voting Preferred Stock is permitted.
Rank.
Voting Rights.
A. If at least one share of Series K Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series K Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of any and all Preferred stocks which are issued and outstanding at the time of voting.
| F-21 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
B. Each individual share of Series K Super Voting Preferred Stock shall have the voting rights equal to:
[twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of any other Preferred stocks issued and outstanding at the time of voting}]
Divided by:
[the number of shares of Series K Super Voting Preferred Stock issued and outstanding at the time of voting]
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series K Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or By-laws.
Series L Preferred Stock
On July 31, 2019, the Company filed a Certificate of Designations, Rights, Preferences and Limitations for a newly designated Series L Preferred Stock, par value $. The designation of the new Series L Preferred Stock was approved by the Board of Directors on July 16, 2019. The Company is authorized to issue five hundred thousand () shares of the Series L Preferred Stock. On June 30, 2023 and 2022, the Company had and shares issued and outstanding, respectively.
Dividends. The holders of Series L Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion.
Voting.
a. If at least one share of Series L Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series L Preferred Stock at any given time, regardless of their number, shall have voting rights equal to four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all series of Preferred Stock which are issued and outstanding at the time of voting.
b. Each individual share of Series L Preferred Stock shall have the voting rights equal to:
[four times the sum of: {all shares of Common Stock issued and outstanding at time of voting + the total number of shares of all series of Preferred Stock issued and outstanding at time of voting}]
divided by:
[the number of shares of Series L Preferred Stock issued and outstanding at the time of voting]
Conversion Rights.
a) Outstanding. If at least one share of Series L Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series L Preferred Stock at any given time, regardless of their number, shall be convertible into the number of shares of Common Stock defined by the formula set forth in section 4.b.
b) Method of Conversion.
i. Procedure- Before any holder of Series L Preferred Stock shall be entitled to convert the same into shares of common stock, such holder shall surrender the certificate or certificates therefore, duly endorsed, at the office of the Company or of any transfer agent for the Series L Preferred Stock, and shall give written notice 5 business days prior to date of conversion to the Company at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of common stock are to be issued. The Company shall, within five business days, issue and deliver at such office to such holder of Series L Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of common stock to which such holder shall be entitled as aforesaid. Conversion shall be deemed to have been effected on the date when delivery of notice of an election to convert and certificates for shares is made, and such date is referred to herein as the “Conversion Date.”
| F-22 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
ii. Issuance- Shares of Series L Preferred Stock may only be issued in exchange for the partial or full retirement of debt held by Management, Employees, Consultants or as directed by a majority vote of the Board of Directors. The number of Shares of Series L Preferred Stock to be issued to each qualified person (member of Management, Employee or Consultant) holding a Note shall be determined by the following formula:
For
retirement of debt:
iii. Calculation for conversion into Common Stock- Each individual share of Series L Preferred Stock shall be convertible into the number of shares of Common Stock equal to:
[5000]
divided by:
[.50 times the lowest closing price of the Company’s common stock for the immediate five-day period prior to the receipt of the Notice of Conversion remitted to the Company by the Series L Preferred stockholder]
Common Stock
Class A and Class B:
Identical Rights. Except as otherwise expressly provided in ARTICLE FIVE of the Company’s Amended and Restated Certificate of Incorporation dated August 13, 1999, all Common Shares shall be identical and shall entitle the holders thereof to the same rights and privileges.
| F-23 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
Stock Splits. The Corporation shall not in any manner subdivide (by any stock split, reclassification, stock dividend, recapitalization, or otherwise) or combine the outstanding shares of one class of Common Shares unless the outstanding shares of all classes of Common Shares shall be proportionately subdivided or combined.
Liquidation Rights. Upon any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation, after payment shall have been made to holders of outstanding Preferred Shares, if any, of the full amount to which they are entitled pursuant to the Certificate of Incorporation, the holders of Common Shares shall be entitled, to the exclusion of the holders of the Preferred Shares, if any, to share ratably, in accordance with the number of Common Shares held by each such holder, in all remaining assets of the Corporation available for distribution among the holders of Common Shares, whether such assets are capital, surplus, or earnings. For the purposes of this paragraph, neither the consolidation or merger of the Corporation with or into any other corporation or corporations in which the stockholders of the Corporation receive capital stock and/or securities (including debt securities) of the acquiring corporation (or of the direct or indirect parent corporation of the acquiring corporation) nor the sale, lease or transfer of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution, or winding up of the Corporation as those terms are used in this paragraph.
Voting Rights.
(a)
(b) The holders of Class A Shares and Class B Shares are not entitled to cumulative votes in the election of any directors.
Pre-emptive or Subscription Rights. No holder of Common Shares shall be entitled to pre-emptive or subscription rights.
| F-24 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
Conversion Rights.
(a) Automatic Conversion. Each Class B Share shall (subject to receipt of any and all necessary approvals) convert automatically into one fully paid and non-assessable Class A Share (i) upon its sale, gift, or other transfer to a party other than a Principal Stockholder (as defined below) or an Affiliate of a Principal Stockholder (as defined below), (ii) upon the death of the Class B Stockholder holding such Class B Share, unless the Class B Shares are transferred by operation of law to a Principal Stockholder or an Affiliate of a Principal Stockholder, or (iii) in the event of a sale, gift, or other transfer of a Class B Share to an Affiliate of a Principal Stockholder, upon the death of the transferor. Each of the foregoing automatic conversion events shall be referred to hereinafter as an “Event of Automatic Conversion.” For purposes of this ARTICLE FIVE, “Principal Stockholder” includes any of Donald H. Goldman, Steven M. Fieldman, Lance Fieldman, Yuri Itkis, Michall Itkis and Boris Itkis and an “Affiliate of a Principal Stockholder” is a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. For purposes of this definition, “control,” when used with respect to any specified person, means the power to direct or cause the direction of the management, and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Without limitation, an Affiliate also includes the estate of such individual.
(b) Voluntary Conversion. Each Class B Share shall be convertible at the option of the holder, for no additional consideration, into one fully paid and non-assessable Class A Share at any time.
(c) Conversion Procedure. Promptly upon the occurrence of an Event of Automatic Conversion such that Class B shares are converted automatically into Class A Shares, or upon the voluntary conversion by the holder, the holder of such shares shall surrender the certificate or certificates therefor, duly endorsed in blank or accompanied by proper instruments of transfer, at the office of the Corporation or of any transfer agent for the Class A Shares, and shall give written notice to the Corporation at such office (i) stating that the shares are being converted pursuant to an Event of Automatic Conversion into Class A Shares as provided in subparagraph 5.6(a) hereof or a voluntary conversion as provided in subparagraph 5.6(b) hereof, (ii) specifying the Event of Automatic Conversion (and, if the occurrence of such event is within the control of the transferor, stating the transferor’s intent to effect an Event of Automatic Conversion) or whether such conversion is voluntary, (iii) identifying the number of Class B Shares being converted, and (iv) setting out the name or names (with addresses) and denominations in which the certificate or certificates for Class A Shares shall be issued and including instructions for delivery thereof. Delivery of such notice together with the certificates representing the Class B Shares shall obligate the Corporation to issue such Class A Shares and the Corporation shall be justified in relying upon the information and the certification contained in such notice and shall not be liable for the result of any inaccuracy with respect thereto. Thereupon, the Corporation or its transfer agent shall promptly issue and deliver at such stated address to such holder or to the transferee of Class B Shares a certificate or certificates for the number of Class A Shares to which such holder or transferee is entitled, registered in the name of such holder, the designee of such holder or transferee, as specified in such notice. To the extent permitted by law, conversion pursuant to (i) an Event of Automatic Conversion shall be deemed to have been effected as of the date on which the Event of Automatic Conversion occurred or (ii) a voluntary conversion shall be deemed to have been effected as of the date the Corporation receives the written notice pursuant to this subparagraph (c) (each date being the “Conversion Date”). The person entitled to receive the Class A Shares issuable upon such conversion shall be treated for all purposes as the record holder of such Class A Shares at and as of the Conversion Date, and the right of such person as the holder of Class B Shares shall cease and terminate at and as of the Conversion Date, in each case without regard to any failure by the holder to deliver the certificates or the notice by this subparagraph (c).
(d) Unconverted Shares. In the event of the conversion of fewer than all of the Class B Shares evidenced by a certificate surrendered to the Corporation in accordance with the procedures of this Paragraph 5.6, the Corporation shall execute and deliver to or upon the written order of the holder of such certificate, without charge to such holder, a new certificate evidencing the number of Class B Shares not converted.
(e) Reissue of Shares. Class B Shares that are converted into Class A Shares as provided herein shall be retired and cancelled and shall not be reissued.
(f) Reservation. The Corporation hereby reserves and shall at all times reserve and keep available, out of its authorized and unissued Class A Shares, for the purpose of effecting conversions, such number of duly authorized Class A Shares as shall from time to time be sufficient to effect the conversion of all outstanding Class B Shares. The Corporation covenants that all the Class A Shares so issuable shall, when so issued, be duly and validly issued, fully paid and non-assessable, and free from liens and charges with respect to the issue. The Corporation will take all such action as may be necessary to assure that all such Class A Shares may be so issued without violation of any applicable law or regulation, or any of the requirements of any national securities exchange upon which the Class A Shares may be listed. The Corporation will not take any action that results in any adjustment of the conversion ratio if the total number of Class A Shares issued and issuable after such action upon conversion of the Class B Shares would exceed the total number of Class A Shares then authorized by the Amended and Restated Certificate of Incorporation, as amended.
| F-25 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
On June 30, 2023 and 2022, the Company is authorized to issue and shares of Class A Common Stock, respectively. On June 30, 2023 and 2022, the Company has and shares issued and outstanding, respectively. On June 30, 2023, and 2022, the Company is authorized to issue and shares of Class B Common Stock, respectively. On June 30, 2023 and 2022, the Company has and shares issued and outstanding, respectively.
Common Stock, Preferred Stock and Warrant Issuances
For the twelve months ended June 30, 2023 and June 30, 2022, the Company issued and/or sold the following securities:
Common Stock:
Year ended June 30, 2023
On
July 14, 2022, the Company issued shares
of common stock with a fair market value of $
On
July 15, 2022, the Company issued shares
of common stock with a fair market value of $
On
August 8, 2022, the Company issued shares
of common stock with a fair market value of $
Year ended June 30, 2022
On
November 17, 2021, the Company issued shares
of common stock with a fair market value of $
On
November 17, 2021, the Company issued shares
of common stock with a fair market value of $
On
December 13, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 14, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 15, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 16, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 17, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 21, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 22, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 22, 2021, the Company issued shares
of common stock with a fair market value of $
On
December 28, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
December 29, 2021, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
January 3, 2022, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
January 3, 2022, the Company issued shares
of common stock to an accredited investor with a fair market value of $
On
January 18, 2022, the Company issued shares
of common stock with a fair market value of $
On
March 3, 2022, the Company issued shares
of common stock with a fair market value of $
On
March 3, 2022, the Company issued shares
of common stock with a fair market value of $
On
March 15, 2022, the Company issued shares
of common stock with a fair market value of $
On
April 29, 2022, the Company issued shares
of common stock with a fair market value of $
| F-26 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE J - CAPITAL STOCK (cont’d)
Common Stock to be issued at June 30, 2023
On May 19, 2023, Jetco Holdings, LLC submitted a Notice of Conversion for three shares of Series L Preferred Stock in exchange for shares of common stock. As of June 30, 2023, the shares of common stock had not been issued.
Mezzanine Equity
As of June 30, 2023, the Company has common stock
to be issued upon conversion of the Company’s Series L Preferred Stock (“Series L Preferred”) in the amount of $.
As of June 30, 2023, the Series L Preferred can be converted at $
Common Stock cancelled during the year ended June 30, 2022
A
total of
On October 18, 2021, a Default Final Judgment was entered in favor of the Company in the Complaint for Declaratory Judgment filed with the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida against Fortis Holdings, Ltd, Wayfarer Management, Ltd, Flash Funding, Inc. and OTC Capital Partners, LLC. A total of shares of the Company’s issued and outstanding common stock were voided.
Preferred Stock:
Year ended June 30, 2023
On June 30, 2023, the Company issued shares of its Series L Preferred Stock in satisfaction of professional fees due to a consultant.
On June 30, 2023, the Company issued shares of its Series L Preferred Stock to its former sole officer and director, Jimmy Wayne Anderson, in satisfaction of related party debt.
Year ended June 30, 2022
On February 15, 2022, the Company issued shares of the Company’s Series L Preferred Stock to the Company’s sole officer and director, Jimmy Wayne Anderson, as reimbursement for returning shares of common stock to the Company.
Warrants:
None
| F-27 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE K - INCOME TAXES
The Company accounts for income taxes using the asset and liability method described in SFAS No. 109, “Accounting For Income Taxes”, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax basis of the Company’s assets and liabilities at the enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In recognition of the uncertainty regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance on June 30, 2023 and 2022.
The provision (benefit) for income taxes includes income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities.
Significant
components of the Company’s deferred tax assets and liabilities are calculated at an estimated effective tax rate of
The
provision for (benefit from) income taxes differ from the amount computed by applying the statutory United States federal income tax
rate for the periods presented to income (loss) before income taxes. The income tax rate was
SCHEDULE OF PROVISION (BENEFIT) FOR INCOME TAXES
| June 30, 2023 | June 30, 2022 | |||||||
| Year Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Expected
tax at | $ | ( | ) | $ | ( | ) | ||
| Non-deductible stock-based compensation | ||||||||
| Non-deductible loss (non-taxable income) from derivative liability | ||||||||
| Non-deductible default principle | ||||||||
| Non-deductible loss on issuance of convertible nots | ||||||||
| Non-deductible amortization of debt discounts | ||||||||
| Impairment of goodwill | ||||||||
| Forgiveness of debt and accrued interest | ( | ) | ||||||
| Increase (decrease) in Valuation allowance | ||||||||
| Provision for (benefit from) income taxes | $ | $ | ||||||
All tax years remain subject to examination by the Internal Revenue Service.
Significant components of the Company’s deferred income tax are as follows:
SCHEDULE OF COMPONENTS OF DEFERRED INCOME TAX
| June 30, 2023 | June 30, 2022 | |||||||
| Unpaid accrued officer and director compensation | $ | $ | ||||||
| Net operating loss carry-forwards | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net non-current deferred tax asset | $ | $ | ||||||
Based
on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset
of $
Current
tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs.
Therefore, the amount available to offset future taxable income may be limited to
| F-28 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE L - COMMITMENTS AND CONTINGENCIES
Occupancy
Our principal executive office is located at 8 Campus Drive, Suite 105 Parsippany, New Jersey 07054 and our telephone number is (973) 233-5151.
Employment and Director Agreements
NOTE M - GOING CONCERN UNCERTAINTY
Under ASC 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, our evaluation shall initially not take into consideration the potential mitigating effects of our plans that have not been fully implemented as of the date the financial statements are issued.
In
performing the first step of this assessment, we concluded that the following conditions raise substantial doubt about our ability to
meet our financial obligations as they become due. We have a history of net losses: As of June 30, 2023 and June 30, 2022, we had an
accumulated deficit of $
In performing the second step of this assessment, we are required to evaluate whether our plans to mitigate the conditions above alleviate the substantial doubt about our ability to meet our obligations as they become due within one year after the date that the financial statements are issued. Our future plans include securing additional funding sources that may include establishing corporate partnerships, establishing licensing revenue agreements, issuing additional convertible debentures and issuing public or private equity securities, including selling common stock through an at-the-market facility (ATM).
There is no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available through external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material effect on the business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or they will not have a significant dilutive effect on the Company’s existing shareholders. We have therefore concluded there is substantial doubt about our ability to continue as a going concern.
The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our failure to continue as a going concern.
| F-29 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE N - SUBSEQUENT EVENTS
On
November 17, 2023, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Jetco Holdings, LLC (the
“Purchaser”). Under the terms of the Agreement, the Purchaser acquired shares of the Company’s Series L Preferred
Stock for the purchase price of $
On August 23, 2023, the Company entered into a Consulting Agreement (the “Agreement”) with Brain Bridge Advisors, LLC (the “Consultant”). Under the terms of the Agreement, the Consultant is to provide compliance related services and preparation of the Company’s filings with the Securities and Exchange Commission. The Agreement has a term of one year. The Consultant shall receive shares of the Company’s Series L Preferred Stock as compensation.
On
June 20, 2023, the Company (the “Buyer”) and TXC Services, LLC (“Seller”)
(together, the “Parties”) entered into a Membership Interest Purchase Agreement (“MIPA”) for the purchase of
all
Subsequent to year end (July 25, 2023), the Parties entered into an Amended and Restated Membership Interest Purchase Agreement, Assignment, Secured Convertible Note, Securities Purchase Agreement and a Security Agreement and Pledge of Membership Units. In addition, the Company executed a Guaranty Agreement for the benefit of TK Management Services, LLC.
On this same date, the Company’s new wholly owned subsidiary, FTT, executed a Deed to Secure Debt in favor of the Seller.
Amended and Restated Membership Interest Purchase Agreement (“Amended MIPA”)
The
purchase price for the purchase of all Membership Units was $
(a)
Buyer’s assumption of a certain promissory note in favor of TK Management Services, Inc. (“TK”), in the principal amount
of $
(b)
The issuance of a Secured Convertible Note, in the principal amount of $
(c)
Earn-Out Lease Milestones. Seller shall receive up to Six Hundred and Eighty () shares of Series L Preferred Stock (“Series
L Preferred”) valued at up to $
| (i) | Lease of 25% of the square footage of the Property, Seller shall receive 25% of the Series L Preferred; | |
| (ii) | Lease of 50% of the square footage of the Property, Seller shall receive 50% of the Series L Preferred; | |
| (iii) | Lease of 75% of the square footage of the Property, Seller shall receive 75% of the Series L Preferred; and | |
| (iv) | Lease of 100% of the Property, Seller shall receive 100% of the Series L Preferred. |
In the event that the Buyer is in default under this Agreement, or any of the Transaction Documents including, but not limited to, the assumption and guaranty of the TK Secured Note, the TK Security Deed, the Seller Secured Note, Seller SPA, the Seller Security Deed or if Buyer fails to issue to Seller duly authorized the Series L Preferred, the Seller shall have the right to exercise any and all remedies under the this Agreement and the other Transaction Documents, including, but not limited to, exercising its right to receive a return of the Purchased Interest pursuant to an assignment from Buyer, without recourse by the Buyer, in accordance with the Collateral Assignment.
Securities Purchase Agreement (“Seller SPA”)
On
July 25, 2023, the Company and TXC Services, LLC entered into the Seller SPA for the issuance and
sale of a Secured Convertible Note with an initial principal amount of $
The Securities Purchase Agreement provides for the purchase by the Investor and the sale by the Company of the Seller Secured Note. The Securities Purchase Agreement contains representations and warranties of the Company and the Investor that are typical for transactions of this type. The representations and warranties made by the Company in the Securities Purchase Agreement are qualified by reference to certain exceptions contained in disclosure schedules delivered to the Investor. Accordingly, the representations and warranties contained in the Securities Purchase Agreement should not be relied upon by third parties who have not reviewed those disclosure schedules and the documentation surrounding the transaction as a whole.
| F-30 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE N - SUBSEQUENT EVENTS (cont’d)
The Securities Purchase Agreement also obligates the Company to indemnify the Investor for certain losses resulting from (1) any misrepresentation or breach of any representation or warranty made by the Company or any subsidiary of the Company, (2) any breach of any obligation of the Company or, any subsidiary of the Company, of the Securities Purchase Agreement or any agreements and instruments entered into or connection with the Securities Purchase Agreement and (3) certain third party claims.
Secured Convertible Note (“Seller Secured Note”)
On
July 25, 2023, the Company and FTT (collectively, the “Borrower”) executed the Seller Secured Note payable to TXC Services,
LLC (“Holder”) in the principal amount of $
The
Seller Secured Note is convertible, in whole or in part,
at any time and from time to time before maturity at the option of the Holder.
The Seller Secured Note will impose penalties on the Company for any failure to timely deliver any shares of its Common Stock issuable upon conversion.
The Seller Secured Note will contain events of default that are typical for transactions of this type, as well as the following events:
| ● | the failure to issue Conversion Shares registered with the SEC or pursuant an exemption of the applicable Registration Statement in accordance with Regulation A. from and after the Public Company Date, the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of five (5) consecutive Trading Days; | |
| ● | except to the extent the Company is in compliance with Section 9(b), at any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation (as defined in Section 9(a)) is less than 200% of the sum of (A) the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise; | |
| ● | the Company’s (A) failure to cure a Conversion Failure or a Delivery Failure by delivery of the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or Exercise Date) (as the case may be) or (B) written notice to any holder of the Notes, including, without limitation, by way of public announcement or through any of its agents and such notice of such Company’s agent is not withdrawn by the Company within one (1) Trading Day, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to Section 3(d); | |
| ● | the Company’s, any Guarantor or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s, any Guarantor’s or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, and such failure remains uncured for a period of at least five (5) Trading Days; |
| F-31 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE N - SUBSEQUENT EVENTS (cont’d)
| ● | the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading Days; | |
| ● | the occurrence of any default under, redemption of or acceleration prior to maturity of any indebtedness of the Company or a subsidiary; | |
| ● | the invalidity of any material provision of the Security Documents or if the enforceability of validity of any material provision of the Security Documents is contested by the Company; | |
| ● | the failure of the Security Documents to perfect or maintain the Investor’s first priority security interest; and | |
| ● | the failure to comply with certain covenants of the Seller Secured Note. |
The Seller Secured Note will contain a variety of covenants on the part of Company that are typical for transactions of this type, as well as the following covenants:
| ● | the Company will not incur other indebtedness, except for certain permitted indebtedness; | |
| ● | the Company will not incur any liens, except for certain permitted liens; | |
| ● | the Company will not, directly or indirectly, redeem or repay all or any portion of any permitted indebtedness if at the time such payment is due or is made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an event of default has occurred and is continuing; and | |
| ● | the Company will not redeem, repurchase or pay any dividend or distribution on its Common Stock or any other capital stock in accordance with section 13.e. of the Secured Convertible Note Agreement: “, except that any such cash dividend or capital may be paid to the Company or a Guarantor.” |
Secured Promissory Note between Fox Trot Tango, LLC and TK Management Services, LLC (“TK Secured Note”)
On
January 6, 2023, Fox Trot Tango, LLC (the “Borrower”) issued the TK Secured Note to TK Management Services, LLC (the “Lender”)
in the principal amount of
The TK Secured Note and the Secured Indebtedness are secured by the TK Security Deed. In the event of default, the Lender shall have all of the rights and remedies reserved in the TK Security Deed and other loan documents and shall have full recourse to the Real Property and other collateral.
Guaranty Agreement between the Company and TK Management Services, LLC
Global Technologies, Ltd (“Guarantor”) agreed to assume and guaranty all liabilities and obligations under the TK Secured Note and TK Security Deed previously executed by its new wholly owned subsidiary, Fox Trot Tango, LLC (“Borrower”).
Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all presently existing and future Guaranteed Obligations.
Security Agreement and Pledge of Membership interest between the Company and TXC Services, LLC
Global Technologies, Ltd (“Pledgor”) has agreed to grant to TXC Services, LLC (“Pledgee”) a security interest (the “Security Interest”) in and to all of its right, title and ownership interest in and to the Interests whether derived under the Certificate of Formation, the Operating Agreement, or otherwise, including, the Pledgor’s status as a Member of Fox Trot Tango, LLC (“FTT”), and the Pledgor’s right to participate in the management of the business and affairs of FTT (“Collateral”) to secure all liabilities and obligations of Pledgor to Pledgee.
To secure the complete and timely satisfaction of all liabilities, indebtedness and obligations of Pledgor to Pledgee under the Transaction Documents (collectively, the “Obligations”) pertaining to the Amended MIPA, the Pledgor herewith pledges, delivers, and assigns to the Pledgee and grants a first lien and security interest in favor of the Pledgee in and to the Interest (including Pledgor Total Rights in the Company). Provided there is not an Event of Default (as defined below), the aforesaid pledge shall be released within five (5) days after the date when the Pledgor and Company) have performed all Obligations under the Transaction Documents.
| F-32 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2023 and 2022
NOTE N - SUBSEQUENT EVENTS (cont’d)
The Pledgor does hereby appoint Pledgee or its assignee, as Pledgor’s true and lawful attorney and in its name, place and stead, upon the occurrence of an Event of Default to cause the Interests to be transferred on the books of FTT to the name of Pledgee or to such other party as is designated by Pledgee. In furtherance of the preceding, Pledgor has delivered to Pledgee the Assignment of Member’s Interests, which instrument Pledgee shall hold in escrow and shall be entitled to (but not obligated to) release from escrow upon the occurrence of an Event of Default under any of the Transaction Documents.
An Event of Default under this Pledge shall include:
(a) The non-compliance or non-performance of the Company or Pledgor, under or of any term or condition when compliance or performance would otherwise be due under any Transaction Document.
(b) The adjudication of Pledgor or the Company as bankrupt or insolvent, or entry of any order, remaining unstayed by appeal or otherwise for ten (10) days, appointing a receiver or trustee for the Pledgor or the Company or for all or any of Pledgor’s or the Company’s assets, or the filing by or against the Pledgor or the Company of a petition seeking any of the foregoing or consenting thereto, or the filing of a petition to take advantage of any debtors’ act, or making a general assignment for the benefit of creditors or admitting in writing inability to pay debts as they mature.
(c) The dissolution of the Pledgor and the failure of the successor owner of such Pledgor’s Interests to execute a joinder to this Pledge with five (5) business days after transfer of such Interests to such successor.
On July 18, 2023, the Company issued shares of its common stock to its former President, Jimmy Wayne Anderson, for the conversion of four () shares of Series L Preferred Stock.
| F-33 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management conducted an evaluation, with the participation of our Chief Executive Officer, who is our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, we concluded that because of the material weakness and significant deficiencies in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of June 30, 2023 or 2022.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for the preparation of our financial statements and related information. Management uses its best judgment to ensure that the financial statements present accurately, in material respects, our financial position and results of operations in fairness and conformity with generally accepted accounting principles.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate, and that the assumptions and opinions in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management’s and directors’ authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on our financial statements.
We conducted an evaluation of the effectiveness of our internal control over financial reporting, based on the framework in “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and published in 2013, and subsequent guidance prepared by COSO specifically for smaller public companies. Based on that evaluation, management concluded that our internal control over financial reporting was not effective as of June 30, 2023 and June 30, 2022 for the reasons discussed below.
A significant deficiency is a deficiency, or combination of deficiencies in internal control over financial reporting, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Management identified the following material weakness and significant deficiencies in its assessment of the effectiveness of internal control over financial reporting as of June 30, 2023 and June 30, 2022:
| ● | The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked personnel with accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements. |
| ● | Material Weakness – Inadequate segregation of duties. |
We expect to be materially dependent on a third party that can provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements, which could lead to a restatement of those financial statements. Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and maintained, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must account for resource constraints. In addition, the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, can and will be detected.
| 39 |
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting during the year ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Notes to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements.
Loss Contingencies
The Company is subject to various loss contingencies arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as its ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. The Company regularly evaluates current information available to us to determine whether such accruals should be adjusted.
Accounting for Acquisitions
In accordance with the guidance for business combinations, we determine whether a transaction or other event is a business combination, which requires that the assets acquired and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, we account for the transaction or other event as an asset acquisition. Under both methods, we recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, we evaluate the existence of goodwill or a gain from a bargain purchase. We capitalize acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations.
Income Taxes
The Company recognizes deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.
| 40 |
Recent Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our financial statements.
In July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2017-11. Among other things, ASU 2017-11 provides guidance that eliminates the requirement to consider “down round” features when determining whether certain financial instruments or embedded features are indexed to an entity’s stock and need to be classified as liabilities. ASU 2017-11 provides for entities to recognize the effect of a down round feature only when it is triggered and then as a dividend and a reduction to income available to common stockholders in basic earnings per share. The guidance is effective for annual periods beginning after December 15, 2018; early adoption is permitted. The Company has adopted ASU 2017-11. As a result, we have not recognized the fair value of the warrants containing down round features as liabilities.
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on May 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently evaluating the impact of the adoption of ASU 2020-06 on our financial statements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
Off-Balance Sheet Arrangements
We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Share-based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”), which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values.
| 41 |
PART III
Item 10. Directors and Executive Officers.
Directors and Executive Officers
The names and ages of our Directors and Executive Officers are set forth below. Our By-Laws provide for not less than one Director. All Directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified. The officers are elected by our Board.
| Name | Age | Position and Term | ||||
| Fredrick Cutcher | 38 | President, Principal Financial Officer and Chairman of the Board (May 2023 to present) | ||||
Fredrick Cutcher President, Principal Financial Officer, Director and Chairman of the Board –
Family Relationships
There are no family relationships among the directors and executive officers.
Conflicts of Interest- General
Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. Thus, there exist potential conflicts of interest including, among other things, time, efforts and corporation opportunity, involved in participation with such other business entities. While our sole officer and director of our business is engaged in business activities outside of our business, he devotes to our business such time as he believes to be necessary.
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Conflicts of Interest- Corporate Opportunities
Presently no requirement is contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention. Our officers and directors do, however, have a fiduciary duty of loyalty to us to disclose to us any business opportunities which come to their attention, in their capacity as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another company. We have no intention of merging with or acquiring an affiliate, associate person or business opportunity from any affiliate or any client of any such person.
Committees to the Board of Directors
In the ordinary course of business, the board of directors maintains a compensation committee and an audit committee.
The primary function of the compensation committee is to review and make recommendations to the board of directors with respect to the compensation, including bonuses, of our officers and to administer the grants under our stock option plan.
The functions of the audit committee are to review the scope of the audit procedures employed by our independent auditors, to review with the independent auditors our accounting practices and policies and recommend to whom reports should be submitted, to review with the independent auditors their final audit reports, to review with our internal and independent auditors our overall accounting and financial controls, to be available to the independent auditors during the year for consultation, to approve the audit fee charged by the independent auditors, to report to the board of directors with respect to such matters and to recommend the selection of the independent auditors.
In the absence of a separate audit committee our board of directors’ functions as audit committee and performs some of the same functions of an audit committee, such as recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditor’s independence, the financial statements and their audit report; and reviewing management’s administration of the system of internal accounting controls.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
(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 was 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) has been convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) has been the subject of 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, 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;
(4) has been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any 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 (3)(i) above, or to be associated with persons engaged in any such activity;
(5) has been found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) has been 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;
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(7) has been 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 an 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) has been 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))), any 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.
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth with respect to the named executive officer, compensation made for the twelve months ended June 30, 2023 and 2022:
Name and Principal Position | Year | Salary- Paid or accrued ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value & Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c)(3) | (d) | (e) | ||||||||||||||||||||||||||||||||
| Fredirick Cutcher, President, Treasurer, Secretary, Chairman (1)(2) | 2023 | 4,167 | 0 | 0 | 0 | 0 | 0 | 0 | 4,167 | |||||||||||||||||||||||||||
| Jimmy Wayne Anderson, former President (3)(4) | 2023 | 294,467 | 0 | 0 | 0 | 0 | 0 | 0 | 294,467 | |||||||||||||||||||||||||||
| 2022 | 0 | 198,150 | 0 | 0 | 0 | 0 | 0 | 198,150 | ||||||||||||||||||||||||||||
| (1) | On May 17, 2023, the Company retained Fredrick Cutcher as the Company’s Chief Executive Officer. | |
| (2) | On May 17, 2023, the Company entered into an Employment Agreement (the “Agreement”) with Mr. Cutcher for his role as the Company’s Chief Executive Officer. Under the terms of the Agreement, Mr. Cutcher is to receive a base salary of $100,000 and $100,000 in Restricted Stock Units that vest at the end of the initial term of the Agreement. The Agreement has a term of one year and shall renew for successive one-year terms unless either party terminates the Agreement. The Agreement was effective as of May 17, 2023. | |
| (3) | On July 28, 2022, the Company’s Board of Directors elected to compensate Mr. Anderson as Mr. Anderson has served as the Company’s sole officer and director since December 2018 and has not been under an employment agreement. As such, the Company compensated Mr. Anderson a total of $294,467 during the first quarter of fiscal 2023. | |
| (4) | Mr. Anderson resigned as an officer and director of the Company on May 17, 2023. |
| (a) | Accrued salary and salary paid. Please see NOTE G - ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information. | |
| (b) | Paid bonus. | |
| (c) | Delivery of common stock to officer for services rendered. | |
| (d) | Options issued to employee for execution of employment agreement. |
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Directors’ Compensation
On July 1, 2021, the Company executed a new Board of Directors Service Agreement with Jimmy Wayne Anderson. Under the terms of the Agreement, Mr. Anderson shall receive a one-time bonus payment of Fifty Thousand and no/100 dollars ($50,000.00) upon execution of the Agreement, and Twenty Thousand and no/100 dollars ($20,000.00) paid to Mr. Anderson on the last calendar day of each quarter as long as Mr. Anderson continues to fulfill his duties and provide the services set forth above. The compensation of $20,000 per quarter commenced with the third calendar quarter of 2021 (first fiscal quarter of 2022).
The following table sets forth with respect to the named director, compensation information inclusive of equity awards and payments made for the twelve months ended June 30, 2023 and 2022:
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||
| Fredrick Cutcher (2023)(1) | $ | - | - | - | - | - | - | $ | - | |||||||||||||||||||
| Jimmy Wayne Anderson (2023)(2)(3) | $ | 80,000 | $ | - | - | - | - | - | $ | 80,000 | ||||||||||||||||||
| Jimmy Wayne Anderson (2022)(2)(3) | $ | 80,000 | $ | - | - | - | - | - | $ | 80,000 | ||||||||||||||||||
| (1) | Mr. Cutcher was appointed to the Company’s Board of Directors on May 17, 2023. For the periods presented, Mr. Cutcher had not entered into a Board of Directors Service Agreement. |
| (2) | On July 1, 2021, the Company executed a new Board of Directors Service Agreement with Mr. Anderson. Under the terms of the Agreement, Mr. Anderson received a one-time bonus payment of Fifty Thousand and no/100 dollars ($50,000.00) upon execution of the Agreement, and Twenty Thousand and no/100 dollars ($20,000.00) paid to Mr. Anderson on the last calendar day of each quarter as long as Mr. Anderson continues to fulfill his duties and provide the services set forth above. The compensation of $20,000 per quarter commenced with the third calendar quarter of 2021 (first fiscal quarter of 2022). |
| (3) | Mr. Anderson resigned as an officer and director of the Company on May 17, 2023. Please see NOTE G - ACCRUED OFFICER AND DIRECTOR COMPENSATION. |
Director Independence
The Company has one director, Fredrick Cutcher, who also serves as the Company’s sole officer. All current directors are shareholders of the Company.
Employment Agreements
On May 17, 2023, the Company entered into an Employment Agreement (the “Agreement”) with Mr. Cutcher for his role as the Company’s Chief Executive Officer. Under the terms of the Agreement, Mr. Cutcher is to receive a base salary of $100,000 and $100,000 in Restricted Stock Units that vest at the end of the initial term of the Agreement. The Agreement has a term of one year and shall renew for successive one-year terms unless either party terminates the Agreement. The Agreement was effective as of May 17, 2023.
Stock Option Plan and other Employee Benefits Plans
The Company does not maintain a Stock Option Plan or other Employee Benefit Plans.
Overview of Compensation Program
We currently do not maintain a Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable, and competitive.
Role of Executive Officers in Compensation Decisions
The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and directors of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of December 27, 2023, the Company had authorized 14,991,000,000 shares of Class A Common Stock, 4,000,000 Class B Common Stock and 5,000,000 shares of Preferred Stock. There were 14,688,440,097 shares of Class A Common Stock, 0 shares of Class B Common Stock and 346 shares of Preferred Stock issued and outstanding as of December 27, 2023.
The following table sets forth certain information, as of December 27, 2023, with respect to any person (including any “group”, as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known to us to be the beneficial owner of more than five percent (5%) of any class of our voting securities, and as to those shares of our equity securities beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group.
The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within sixty (60) days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.
The table below shows the number of shares beneficially owned as of December 27, 2023 by each of our individual directors and executive officers, by other holders of 5% or more of the outstanding Class A common stock and by all our current directors and executive officers as a group.
Class A Common Stock | ||||||||
| Name of Beneficial Owner | Beneficially Owned (1)(2) | Percentage of Common Stock (2) | ||||||
| 5% Stockholders | ||||||||
| Jetco Holdings, LLC(3) | 10,300,000,000 | 20.90 | % | |||||
| MainSpring, LLC (4) | 5,000,000,000 | 10.14 | % | |||||
| Brain Bridge Advisors, LLC (5) | 5,000,000,000 | 10.14 | % | |||||
| Current Executive Officers and Directors | ||||||||
| Fredrick Cutcher (6) | - | 0.00 | % | |||||
| Total Executive Officers and Directors | - | 0.00 | % | |||||
| (1) | Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants, or convertible debt currently exercisable or convertible, or exercisable or convertible within 60 days of December 27, 2023 are deemed outstanding for computing percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any person. Percentages are based on a total of shares of Class A common stock outstanding on December 27, 2023 and the shares issuable upon exercise of options, warrants exercisable, and debt convertible on or within 60 days of December 27, 2023. | |
| (2) | The number of common shares outstanding used in computing the percentages is 49,288,440,097 that includes 14,688,440,097 Class A common shares outstanding and 34,600,000,000 shares of common stock issuable upon conversion of all 346 shares of Series L Preferred Stock outstanding at December 27, 2023, but excludes an indeterminate number of shares of common stock to be issued upon conversion of the Company’s outstanding convertible notes. |
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| (3) | Included within Jetco Holdings, LLC’s ownership is 103 shares of Series L Preferred Stock. Jetco Holdings, LLC is a Wyoming limited liability company. The address for Jetco Holdings, LLC is 11718 SE Federal Highway, Suite 372, Hobe Sound, FL 33455. Timothy Cabrera is the control person for Jetco Holdings, LLC. | |
| (4) | Included within MainSpring, LLC’s ownership is 50 shares of Series L Preferred Stock. MainSpring, LLC is a Wyoming limited liability company. The address for MainSpring, LLC is 611 Fort Harrison Ave S, Suite 363, Clearwater, FL 33756. Brian McFadden is the control person for MainSpring, LLC. | |
| (5) | Included within Brain Bridge Advisors, LLC’s ownership is 50 shares of Series L Preferred Stock. The address for Brain Bridge Advisors, LLC is 18245 Paulson Dr., Suite 39, Port Charlotte, FL 33954. Tim Cabrera is the control person for Brain Bridge Advisors, LLC. | |
| (6) | The address for Mr. Cutcher is 8 Campus Dr., Suite 105, Parsippany, NJ 07054. |
Series K | ||||||||
| Preferred Stock | Percentage of Series K | |||||||
| Name of Beneficial Owner | Beneficially Owned (1)(2) | Preferred Stock | ||||||
| Jimmy Wayne Anderson (3) | 3 | 100.00 | % | |||||
Total | 3 | 100.00 | % | |||||
| (1) | The Company’s Series K Super Voting Preferred Stock has no conversion feature. | |
| (2) | The number of Series K Preferred shares outstanding used in computing the percentages is 3 as of December 27, 2023. | |
| (3) | The address for Mr. Anderson is 501 1st Ave N., Suite 901, St. Petersburg, FL 33701. |
| Series L | Percentage of | |||||||
| Preferred Stock | Series L | |||||||
| Name of Beneficial Owner | Beneficially Owned (1)(2) | Preferred Stock | ||||||
| Sylios Corp (3) | 10 | 2.89 | % | |||||
| Jimmy Wayne Anderson (4) | 41 | 11.85 | % | |||||
| Around the Clock Partners, LP (5) | 40 | 11.56 | % | |||||
| Jetco Holdings, LLC (6) | 103 | 29.77 | % | |||||
| MainSpring, LLC (7) | 50 | 14.45 | % | |||||
| Valvasone Trust (8) | 44 | 12.72 | % | |||||
| Jody A. DellaDonna (9) | 8 | 2.31 | % | |||||
| Brain Bridge Advisors, LLC (10) | 50 | 14.45 | % | |||||
| Total | 346 | 100.00 | % | |||||
| (1) | Each share of the Company’s Series L Preferred Stock can be converted into shares of the Company’s Class A Common stock based on the following formula: $5,000 divided by .50 times the lowest closing price of the Company’s Class A Common Stock for the immediate five-day period prior to the receipt of the Notice of Conversion. | |
| (2) | The number of shares Series L Preferred Stock outstanding used in computing the percentages is 346 as of December 27, 2023. | |
| (3) | Sylios Corp is a Florida corporation. The address for Sylios Corp is 501 1st Ave N., Suite 901, St. Petersburg, FL 33701. Mr. Anderson is the control person for Sylios Corp. | |
| (4) | The address for Mr. Anderson is 501 1st Ave N., Suite 901, St. Petersburg, FL 33701. | |
| (5) | Around the Clock Partners, LP is a Delaware limited partnership. The address for Around the Clock Partners, LP is 501 1st Ave N., Suite 901, St. Petersburg, FL 33701. Mr. Anderson is the control person for Around the Clock Partners, LP. | |
| (6) | Jetco Holdings, LLC is a Wyoming limited liability company. The address for Jetco Holdings, LLC is 11718 SE Federal Highway, Suite 372, Hobe Sound, FL 33455. Timothy Cabrera is the control person for Jetco Holdings, LLC. | |
| (7) | MainSpring, LLC is a Wyoming limited liability company. The address for MainSpring, LLC is 611 Fort Harrison Ave S, Suite 363, Clearwater, FL 33756. Brian McFadden is the control person for MainSpring, LLC. | |
| (8) | The address for Valvasone Trust 5114 Stoneywood Circle, Mableton, GA 30126. The trustee for Valvasone Trust is John DellaDonna. | |
| (9) | The address for Jody A. DellaDonna is 109 Carrick Way, Macon, GA 31210. | |
| (10) | The address for Brain Bridge Advisors, LLC is 18245 Paulson Dr., Suite 39, Port Charlotte, FL 33954. Tim Cabrera is the control person for Brain Bridge Advisors, LLC. |
Please see NOTE J – CAPITAL STOCK for further information.
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
Policies and Procedures for Related Person Transactions
The Company’s board of directors has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.
A “Related Party Transaction” is a transaction, arrangement, or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related party had, has or will have a direct or indirect material interest. A “Related Party” means:
| ● | any person who is, or at any time during the applicable period was, one of the Company’s executive officers or a member of or nominee for the board of directors; | |
| ● | any person (including any entity or group) who is known by the Company to be the beneficial owner of more than five percent (5%) of our voting stock; | |
| ● | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer, or a beneficial owner of more than five percent (5%) of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer, or beneficial owner of more than five percent (5%) of our voting stock; | |
| ● | any of the foregoing persons that qualify as such at any time during the fiscal year in which a transaction that would otherwise be subject to this the policy occurs, even if such person has ceased to have such status during such fiscal year; and | |
| ● | any firm, corporation, or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a ten percent (10%) or greater beneficial ownership interest. |
In addition, we will have in place policies and procedures designed to minimize potential conflicts of interest arising from any dealings the Company may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time.
Other Related Party Transactions
We have entered into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnify and advance litigation expenses incurred by such individuals by reason of (i) their status as directors and/or officers of the Company, (ii) acts or omissions made in good faith, (iii) their service in any capacity with respect to an employee benefit plan of our company or one or more of our majority owned subsidiaries, or (iv) their service as directors, officers, managers, general partners, trustees, employees, or agents of another entity (including a majority owned subsidiary of our company) at our request while directors and/or officers of our company to the fullest extent permitted by applicable law. See “Limitations on Personal Liability of Directors, Indemnification and Advancement Rights of Directors and Officers, and Director and Officer Insurance” for more detail on the extent to which Delaware law permits the indemnification of Directors and Officers under the indemnification agreement.
Pursuant to the indemnification agreements, the Company will advance all reasonable expenses to be incurred by the indemnitee related to a proceeding for which the indemnitee is entitled to indemnification. The indemnitee shall repay, to the Company, any expenses advance to the indemnitee if it is ultimately be determined that indemnitee is not entitled to be indemnified against such expenses.
Transactions with Related Parties
On June 30, 2023, the Company issued six (6) shares of its Series L Preferred Stock to its former sole officer and director, Jimmy Wayne Anderson, in satisfaction of related party debt.
On July 18, 2023, the Company issued 200,000,000 shares of its common stock to its former President, Jimmy Wayne Anderson, for the conversion of four (4) shares of Series L Preferred Stock.
During the year ended June 30, 2023, the Company reimbursed Jimmy Wayne Anderson $28,056 for expenses paid on behalf of the Company.
Promoters and Certain Control Persons
None.
List of Parents
None.
Item 14. Principal Accounting Fees and Services
The following is a summary of the fees billed to the Company by Fruci & Associates II, PLLC for professional accounting services rendered for the fiscal years ended June 30, 2023 and 2022.
Fiscal Year 2023 | Fiscal Year 2022 | |||||||
| Audit Fees (1) | $ | 37,405 | $ | 20,500 | ||||
| Audit-Related Fees | - | - | ||||||
| Tax Fees (2) | - | - | ||||||
| Other Fees (3) | - | - | ||||||
| Total | $ | 37,405 | $ | 20,500 | ||||
(1) Audit fees consist of fees billed for services rendered for the audit of our financial statements and review of our financial statements included in our quarterly reports on Form 10–Q.
(2) Tax fees consist of fees billed for professional services related to the preparation of our U.S. federal and state income tax returns.
(3) Other fees consist of fees billed for professional services related to non-recurring fees for the initial public offering and the acquisitions completed during the year.
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Item 15. Financial Statements and Exhibits.
EXHIBIT INDEX
| + | Management contract or compensatory plan or arrangement. |
| * | Filed herewith |
| ** | Furnished herewith (not filed). |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 28, 2023
| GLOBAL TECHNOLOGIES, LTD. | ||
| By: | /s/ Fredrick Cutcher | |
| Fredrick Cutcher | ||
| Chairman and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Fredrick Cutcher | ||||
| Fredrick Cutcher | President, Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) | December 28, 2023 |
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Exhibit 10.24
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is made and entered into as of this 23rd day of August 2023, by and between Global Technologies, Ltd a Delaware corporation whose address is 8 Campus Drive, Suite 105, Parsippany, NJ 07054 (the “Company”) and Brain Bridge Advisors LLC (the “Consultant”), a Wyoming limited liability company, whose address is 18245 Paulson Drive, Suite 39, Port Charlotte, FL 33954, (individually, a “Party”; collectively, the “Parties”). This Agreement is non-exclusive.
RECITALS
WHEREAS, Consultant has significant experience in the preparation of reports to be filed with the Securities and Exchange Commission (“SEC”); including, but not limited to Registration Statements, Quarterly Reports, Annual Reports, Current Reports, Information statements, preparation of consolidated foot notes to the Company’s financial statements, and filings of other accounting and financial reporting forms for regulatory agencies.
NOW, THEREFORE, in consideration of the mutual promises herein contained, the Parties hereto hereby agree as follows:
1. CONDITIONS. This Agreement will not take effect, and Consultant will have no obligation to provide any service whatsoever, unless and until the Company sends a signed copy of this Agreement to Consultant (either by mail, email or facsimile copy). The Company shall be truthful with Consultant in regard to any relevant material regarding the Company, verbally or otherwise, or this entire Agreement will terminate and all consideration paid shall be forfeited without further notice.
Upon execution of this Agreement, the Company agrees to cooperate with Consultant in carrying out the purposes of this Agreement, keep Consultant informed of any developments of importance pertaining to the Company’s business and abide by this Agreement in its entirety.
2. TERM OF AGREEMENT. This Agreement shall be in full force and effect commencing on August 23, 2023 and shall remain in effect for one (1) year. Either Party shall have the right to terminate this Agreement without notice in the event of the bankruptcy, insolvency, or assignment for the benefit of creditors of the other Party. Either Party shall have the right to terminate this Agreement with notice, and the effective date of termination shall be the date such notice is received (by mail, overnight delivery, or fax) by the terminated Party.
3. CONSULTING SERVICES. During the term of this Agreement, Consultant will perform the services described below (the “Consulting Services”) for the Company.
(a) Transactional Business
(i) Preparation of the Company’s Registration Statements of Forms S-1 and S-8;
(ii) Preparation of the Company’s Quarterly Reports on Form 10-Q for the periods ended September 30, 2023, December 31, 2023 and March 31, 2024;
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(iii) Preparation of the Company’s Annual Report on Form 10-K for the period ended June 30, 2023;
(iv) Preparation of the Company’s Current Reports on Form 8-K; and
(v) Preparation of the Company’s PRE14A and DEF14A.
4. STANDARD OF PERFORMANCE. Consultant shall devote such time and efforts to the affairs of the Company as is reasonably necessary to render the services contemplated by this Agreement. Consultant is not responsible for the performance of any services that may be rendered hereunder if the Company fails to provide the requested information in writing prior thereto. The services of Consultant shall not include the rendering of any legal opinions or the performance of any work that is in the ordinary purview of a certified public accountant. Consultant cannot guarantee results on behalf of the Company but shall use commercially reasonable efforts in providing the services listed above. Consultant’s duty is to identify prospective acquisition/joint venture companies for the Company. Consultant will in no way act as a “broker-dealer” under state securities laws. Because all final decisions pertaining to any particular investment are to be made by the Company, the Company may be required to communicate directly with potential acquisition/joint venture prospective companies.
5. COMPENSATION TO CONSULTANT. As Consultant’s entire compensation for its performance under this Agreement, and upon the execution of this Agreement, the Company shall issue Consultant a total of 50 shares of the Company’s Series L Preferred Stock. Within six months of the date of this Agreement, the Company shall file a Registration Statement to register shares of the Company’s Class A Common Stock to be issued upon conversion of the Series L Preferred Stock. The Consultant will be solely responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to the Consultant’s performance of services and receipt of fees under this Agreement. The Company will regularly report amounts paid, if any, to the Consultant by filing Form 1099-MISC and/or other appropriate form with the Internal Revenue Service as required by law. Because the Consultant is an independent contractor, the Company will not withhold or make payments for social security; make consulting contract insurance or disability insurance contributions; or obtain worker’s compensation insurance on the Consultant’s behalf. The Consultant agrees to accept exclusive liability for complying with all applicable state and federal laws governing self-employed individuals, including obligations such as payment of taxes, social security, disability and other contributions based on fees paid to the Consultant under this Agreement. The Consultant hereby agrees to indemnify and defend the Company against any and all such taxes or contributions, including penalties and interest.
6. CONFIDENTIAL INFORMATION. The Consultant and the Company acknowledge that each will have access to proprietary information regarding the business operations of the other and agree to keep all such information secret and confidential and not to use or disclose any such information to any individual or organization without the non-disclosing Parties prior written consent. It is hereby agreed that from time-to-time Consultant and the Company may designate certain disclosed information as confidential for purposes of this Agreement.
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7. INDEMNIFICATION. Each Party (the “Indemnifying Party”) agrees to indemnify, defend, and hold harmless the other Party (the “Indemnified Party”) from and against any and all claims, damages, and liabilities, including any and all expense and costs, legal or otherwise, caused by the negligent act or omission of the Indemnifying Party, its subcontractors, agents, or employees, incurred by the Indemnified Party in the investigation and defense of any claim, demand, or action arising out of the work performed under this Agreement; including breach of the Indemnifying Party of this Agreement. The Indemnifying Party shall not be liable for any claims, damages, or liabilities caused by the sole negligence of the Indemnified Party, its subcontractors, agents, or employees.
The Indemnified Party shall notify promptly the Indemnifying Party of the existence of any claim, demand, or other matter to which the Indemnifying Party’s indemnification obligations would apply and shall give them a reasonable opportunity to settle or defend the same at their own expense and with counsel of their own selection, provided that the Indemnified Party shall at all times also have the right to fully participate in the defense. If the Indemnifying Party, within a reasonable time after this notice, fails to take appropriate steps to settle or defend the claim, demand, or the matter, the Indemnified Party shall, upon written notice, have the right, but not the obligation, to undertake such settlement or defense and to compromise or settle the claim, demand, or other matter on behalf, for the account, and at the risk, of the Indemnifying Party.
The rights and obligations of the Parties under this Article shall be binding upon and inure to the benefit of any successors, assigns, and heirs of the Parties.
8. COVENANTS OF CONSULTANT. Consultant covenants and agrees with the Company that, in performing Consulting Services under this Agreement, Consultant will:
(a) Comply with all federal and state laws;
(b) Not make any representations other than those authorized by the Company; and
(c) Not publish, circulate or otherwise use any materials or documents other than materials provided by or otherwise approved by the Company.
9. COVENANTS OF THE COMPANY. The Company covenants, represents and warrants to Consultant as follows:
(a) Authorization. The Company and its signatories herein have full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby.
(b) No Violation. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate any provision of the charter or by-laws of the Company or violate any terms of provision of any other material agreement to which the Company is a party or any applicable statute or law.
(c) Contracts in Full Force and Effect. All contracts, agreements, plans, policies and licenses to which the Company is a party are valid and in full force and effect.
(d) Consents. No consent of any person, other than the signatories hereto, is necessary to the consummation of the transactions contemplated hereby, including, without limitation, consents from parties to loans, contracts, lease or other agreements and consents from governmental agencies, whether federal, state, or local.
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(e) Consultant Reliance. Consultant has and will rely upon the documents, instruments and written information furnished to Consultant by the Company’s officers or designated employees.
(f) Company’s Material. All representations and statements provided herein about the Company are true and complete and accurate. The Company agrees to indemnify, hold harmless, and defend Consultant, its officers, directors, agents and employees, at the Company’s expense for any proceeding or suit which may rise out of any inaccuracy or incompleteness of any such material or written information supplied to Consultant.
10. MISCELLANEOUS PROVISIONS
(a) Amendment and Modification. This Agreement may be amended, modified and supplemented only by written agreement of the Company and Consultant.
(b) Waiver of Compliance. Any failure of Consultant, on the one hand, or the Company, on the other, to comply with any obligation, agreement, or condition herein may be expressly waived in writing, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
(c) Expenses, Transfer Taxes, Etc. Other than as expressly set forth in this Agreement, the Parties shall bear their own costs and expenses in carrying out the provisions of this Agreement.
(d) Compliance with Regulatory Agencies. Each Party agrees that all actions, direct or indirect, taken by it and its respective agents, employees and affiliates in connection with this Agreement and any financing or underwriting hereunder shall conform to all applicable Federal and State securities laws.
(e) Notices. Any notices to be given hereunder by any Party to the other may be effected either by personal delivery in writing, by a reputable, national overnight delivery service, by facsimile transmission or by mail, registered or certified, postage prepaid with return receipt requested. Notices shall be addressed to the “Contact Person” at the addresses appearing on the signature page of this Agreement, but any Party may change his address or “Contact Person” by written notice in accordance with this subsection. Notices delivered personally shall be deemed delivered as of actual receipt, notices sent by facsimile shall be deemed delivered one (1) day after electronic confirmation of receipt, notices sent by overnight delivery service shall be deemed delivered one (1) day after delivery to the service, mailed notices shall be deemed delivered as of five (5) days after mailing.
(f) Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
(g) Delegation. Neither Party shall delegate the performance of its duties under this Agreement without the prior written consent of the other Party.
(h) Publicity. Neither Consultant nor the Company shall make or issue or cause to be made or issued, any announcement or written statement concerning this Agreement or the transactions contemplated hereby for dissemination to the general public without the prior consent of the other Party. This provision shall not apply, however, to any announcement or written statement required to be made by law or the regulations of any Federal or State governmental agency, except that the Party required to disclose shall consult with and make reasonable efforts to accommodate changes to the required disclosure and the timing of such announcement suggested by the other Party.
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(i) Arbitration and Governing Law. If a dispute arises out of or relates to this contract, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure. If they do not reach such solution within a period of 60 days, then, upon notice by either party to the other, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association in accordance with the provisions of its Commercial Arbitration Rules. This Agreement and the legal relations among the Parties hereto shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflict of law doctrine. The Parties agree that the venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein will be the County of Pinellas, State of Florida.
(j) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(k) Headings. The heading of the sections of this Agreement are inserted for convenience only and shall not constitute a part hereto or affect in any way the meaning or interpretation of this Agreement.
(l) Entire Agreement. This Agreement including any Exhibits hereto, and the other documents and certificates delivered pursuant to the terms hereto, set forth the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promise, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officers employee or representative of any Party hereto.
(m) Third Parties. Except as specifically set forth or referred to herein, nothing herein express or implied is intended or shall be construed to confer upon or give to any person or entity other than the Parties hereto and their successors or assigns, any rights or remedies under or by reason of this Agreement.
(n) Attorneys’ Fees and Costs. If any action is necessary to enforce and collect upon the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees and costs, in addition to any other relief to which that Party may be entitled. This provision shall be construed as applicable to the entire Agreement.
(o) Survivability. If any part of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, that part shall be severable from the remainder of the Agreement.
(p) Further Assurances. Each of the Parties agrees that it shall from time-to-time take such actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purposes of this Agreement.
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(q) Relationship of the Parties. Nothing contained in this Agreement shall be deemed to constitute either Party becoming the partner of the other, the agent or legal representative of the other, nor create any fiduciary relationship between them, except as otherwise expressly provided herein. It is not the intention of the Parties to create nor shall this Agreement be construed to create any commercial relationship or other partnership. Neither Party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Party, except as otherwise expressly provided herein. The rights, duties, obligations and liabilities of the Parties shall be separate, not joint or collective. Each Party shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein.
(r) No Authority to Obligate the Company. Without the consent of the Board of Directors of the Company, Consultant shall have no authority to take, nor shall it take, any action committing or obligating the Company in any manner, and it shall not represent itself to others as having such authority.
11. Non-Circumvention. In and for valuable consideration, the Company hereby agrees that Consultant may introduce (whether by written, oral, data, or other form of communication) the Company to one or more opportunities, including, without limitation, existing or potential investors, lenders, borrowers, trusts, natural persons, corporations, limited liability companies, partnerships, unincorporated businesses, sole proprietorships and similar entities (an “Opportunity” or “Opportunities”). The Company further acknowledges and agrees that the identity of the subject Opportunities, and all other information concerning an Opportunity (including without limitation, all mailing information, phone and fax numbers, email addresses and other contact information) introduced hereunder are the property of Consultant, and shall be treated as confidential information by the Company, it affiliates, officers, directors, shareholders, employees, agents, representatives, successors and assigns. The Company shall not use such information, except in the context of any arrangement with Consultant in which Consultant is directly and actively involved, and never without Consultant’s prior written approval. The Company further agrees that neither it nor its employees, affiliates or assigns, shall enter into, or otherwise arrange (either for it/him/herself, or any other person or entity) any business relationship, contact any person regarding such Opportunity, either directly or indirectly, or any of its affiliates, or accept any compensation or advantage in relation to such Opportunity except as directly though Consultant, without the prior written approval of Consultant. Consultant is relying on the Company’s assent to these terms and their intent to be bound by the terms by evidence of their signature. Without the Company’s signed assent to these terms, Consultant would not introduce any Opportunity or disclose any confidential information to the Company as herein described.
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IN WITNESS, WHEREOF, the Parties hereto have caused this Agreement to be duly executed, all as of the day and year first above written.
| COMPANY: | CONSULTANT: | |||
| GLOBAL TECHNOLOGIES LTD | BRAIN BRIDGE ADVISORS LLC | |||
| 8 Campus Dr., Suite 105 | 18245 Paulson Dr., Suite 39 | |||
| Parsippany, NJ 07054 | Port Charlotte, FL 33954 | |||
| By: | By: | |||
| Fredrick Cutcher | Timothy Cabrera | |||
| Its: | Chief Executive Officer | Its: | Managing Member | |
| Date: | August 23, 2023 | Dated: | August 23, 2023 | |
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Exhibit 10.26
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into as of the __ day of ________, 2023 (“Agreement”), by and between Global Technologies, Ltd, a Delaware corporation (“Company”), and _______ (“Indemnitee”):
WHEREAS, highly competent persons may be reluctant to serve as directors, officers, employees, fiduciaries and other agents (“Representatives”) of corporations unless they are provided with adequate protection through insurance or adequate indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of such corporations; and
WHEREAS, the Board of Directors of the Company has determined that difficulties in attracting and retaining such persons are detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons as set forth herein so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Article I
DEFINITIONS
For purposes of this Agreement the following terms shall have the meaning given here:
| 1.01 | “Board” shall mean the Board of Directors of the Company. | |
| 1.02 | “Change of Control” shall mean the first of the following events to occur: |
| (a) | there is consummated a merger or consolidation to which the Company or any direct or indirect subsidiary of the Company is a party if the merger or consolidation would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) less than 51% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or |
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| (b) | the direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in the aggregate of securities of the Company representing fifty percent (50%) or more of the total combined voting power of the Company’s then issued and outstanding securities is acquired by any person or entity, or group of associated persons or entities acting in concert; provided, however, that for purposes hereof, the following acquisitions shall not constitute a Change of Control: (A) any acquisition by the Company or any of its subsidiaries, (B) any acquisition directly from the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust or fiduciary) sponsored or maintained by the Company or any corporation controlled by the Company, (D) any acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities, (E) any acquisition by a corporation owned, directly or indirectly, by the members of the Company in substantially the same proportions as their ownership of stock of the Company, (F) any acquisition in connection with which, pursuant to Rule 13d-1 promulgated pursuant to the Exchange Act, the individual, entity or group is permitted to, and actually does, report its beneficial ownership on Schedule 13G (or any successor Schedule); provided that, if any such individual, entity or group subsequently becomes required to or does report its beneficial ownership on Schedule 13D (or any successor Schedule), then, for purposes of this paragraph, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so report on Schedule 13D, beneficial ownership of all of the voting securities of the Company beneficially owned by it on such date, and (G) any acquisition in connection with a merger or consolidation which, pursuant to Section 1.02(a) above, does not constitute a Change of Control; or | |
| (c) | there is consummated a transaction contemplated by an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 51% of the combined voting power of the voting securities of which are owned by members of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; or | |
| (d) | the members of the Company approve any plan or proposal for the liquidation of the Company, or | |
| (e) | a change in the composition of the Board such that the “Continuity Directors” cease for any reason to constitute at least a majority of the Board. For purposes of this clause, “Continuity Directors” means (A) those members of the Board who were directors on the date hereof and (B) those members of the Board (other than a director whose initial assumption of office was in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) who were elected or appointed by, or on the nomination or recommendation of, at least a majority of the then-existing directors who either were directors on the date hereof or were previously so elected or appointed; | |
| (f) | such other event or transaction as the Board shall determine constitutes a Change of Control. |
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1.03 “Company” has the meaning set forth in the introductory paragraph above. For purposes of this Agreement, references to the “Company” shall include, in addition to the resulting Company, any constituent Company (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its Representatives, so that any person who is or was a Representative of such constituent Company, or is or was serving at the request of such constituent Company as a Representative of another Company, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Agreement with respect to the resulting or surviving Company as he or she would have with respect to such constituent Company if its separate existence had continued.
1.04 “Corporate Status” describes the status of a person who is or was a Representative of the Company or, while a Representative of the Company, is or was serving at the express written request of the Company as a Representative of another Enterprise, including service with respect to an employee benefit plan.
1.05 “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
1.06 “Effective Date” means the date set forth in the introductory paragraph above.
1.07 “Enterprise” shall mean the Company and any other corporation, company, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the express written request of the Company as a Representative.
1.08 “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements, costs, expenses and obligations paid or incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding (including attorneys’ fees and related disbursements, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”), and any other penalties and amounts paid or to be paid in settlement thereof). Expenses also shall include, without limitation, (i) expenses incurred in connection with any appeal resulting from, incurred by Indemnitee in connection with, arising out of, in respect of or relating to, any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedes bond, or other appeal bond or its equivalent, (ii) for purposes of Section 8.05 of this Agreement only, expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (iii) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement and (iv) any interest, assessments or other charges in respect of the foregoing.
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1.09 “Good Faith” shall mean Indemnitee having acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, in a manner in which Indemnitee would have had no reasonable cause to believe Indemnitee’s conduct was unlawful. Notwithstanding the foregoing definition, the Indemnitee shall not be deemed to have acted in “Good Faith” in instances where the Indemnitee has been finally adjudicated by a court of competent jurisdiction to have acted in a grossly negligent manner. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, have reasonable cause to believe that the person’s conduct was unlawful.
1.10 “Independent Counsel” means a law firm, or an attorney employed by or serving as a member of a law firm, that is experienced in matters of corporation law and/or limited liability company law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’ s rights under this Agreement.
1.11 “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other threatened, pending or completed proceeding whether civil, criminal, administrative or investigative, other than one initiated by Indemnitee. For purposes of the foregoing sentence, a “Proceeding” shall not be deemed to have been initiated by Indemnitee where Indemnitee seeks to enforce Indemnitee’s rights under this Agreement pursuant to Article VIII of this Agreement.
Article II
TERM OF AGREEMENT
This Agreement shall continue until and terminate upon the later of: (i) 10 years after the date that Indemnitee shall have ceased to serve as a Representative of the Company or of any other Enterprise which Indemnitee served at the express written request of the Company; or (ii) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of the indemnification or advancement of expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Article VIII of this Agreement relating thereto.
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Article III
SERVICES BY INDEMNITEE, NOTICE OF PROCEEDINGS
3.01 Services. Indemnitee agrees to serve as a Representative. The duties and obligations of a Representative may be set forth in the Company’s Bylaws, as may be amended from time to time (the “Bylaws”). Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). Indemnitee, by his current and continuing Corporate Status, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Agreement in entering into or continuing such service.
3.02 Notice of Proceeding. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.
3.03 Duty of Cooperation and Disclosure. In any Proceeding in which Company is advancing Expenses or providing an indemnification to the Indemnitee, the Indemnitee shall fully cooperate with the person, persons, insurers or entities acting on the Company’s or Indemnitee’s behalf, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and relates to the subject Proceeding, and the Company’s indemnification and advancement obligations hereunder shall at all times be subject to the Indemnitee’ s duty of cooperation. At the time of Indemnitee’s request for indemnification, Indemnitee shall disclose to the Company all relevant facts and circumstances within the Indemnitee’s personal knowledge that pertain to the request and underlying dispute.
Article IV
INDEMNIFICATION
4.01 In General. Notwithstanding any amendment, modification or repeal of the indemnification provisions of the Delaware General Corporation Law, as amended, or other applicable law or the Bylaws after the date of this Agreement, and subject to the exceptions set forth in Section 4.05 herein, if Indemnitee was or is, or is threatened to be made, a party to any Proceeding by reason of Indemnitee’s (a) acts or omissions made in Good Faith and (b) his Corporate Status, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights to indemnification and to the advancement of expenses conferred in this Agreement shall apply to claims made against an Indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof. The rights to indemnification and to the advancement of expenses hereunder shall only apply to a Proceeding initiated by Indemnitee if such Proceeding has been authorized by the Board.
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4.02 Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4.02 if, by reason of Indemnitee’s Corporate Status, Indemnitee was or is, or is threatened to be made, a party to or participant in any Proceeding, other than a Proceeding by or in the right of the Company. Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in Good Faith.
4.03 Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4.03 if, by reason of Indemnitee’s Corporate Status, Indemnitee was or is, or is threatened to be made, a party to or is otherwise involved in any Proceeding brought by or in the right of the Company to procure a judgment in its favor. Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in Good Faith. Notwithstanding the foregoing, no such indemnification shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State Delaware or such other court shall deem proper.
4.04 Indemnification of a Party Who is Wholly or Partly Successful. Subject to the exceptions set forth in Section 4.05 herein, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in defense of any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, against all Expenses, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein. Subject to the exceptions set forth in Section 4.05, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee to the maximum extent permitted by law, against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Subsection 4.04 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter, so long as there has been no finding (either adjudicated or pursuant to Article VI) that Indemnitee did not act in Good Faith.
4.05 Exceptions. Notwithstanding anything to the contrary herein, the Company shall not be obligated to advance Expenses or indemnify the Indemnitee pursuant to this Agreement with respect to:
| (a) | Expenses for which the Indemnitee is indemnified pursuant to any directors and officers insurance policy purchased and maintained by the Company (as provided in Article IX). It is specifically understood that the indemnity provided in this Agreement is in excess of any such directors and officers insurance policy and the Indemnitee will look first to the directors and officers insurance policy; or |
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| (b) | Remuneration paid to the Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law; or | |
| (c) | Indemnitee’s reimbursement to the Company of any bonus or other incentive-based or equity-based compensation previously received by Indemnitee or payment of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase or sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or | |
| (d) | Expenses incurred on account of any Proceeding in which judgment is rendered against the Indemnitee for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section l6(b) of the Securities Exchange Act of 1934 and amendments to it or similar provisions of any federal, state or local law; or | |
| (e) | Expenses incurred on account of the Indemnitee’s conduct which is finally adjudged by a court of competent jurisdiction to have been, or which Indemnitee has admitted facts sufficient for the Independent Counsel or court to reasonably conclude that the Indemnitee’s conduct was: (1) a breach of the duty of loyalty owed to the Company, (2) an act or omission which was not in Good Faith, (3) an act or omission which involved intentional misconduct or, with respect to any criminal Proceeding, a knowing violation of law, or (4) a transaction from which the Indemnitee derived an improper personal benefit; or | |
| (f) | If a final decision by a court of competent jurisdiction in the matter shall determine that such indemnification is not lawful as against public policy; or | |
| (g) | Any income taxes, or any interest or penalties related to them, in respect of compensation received for services as a director and/or officer. |
4.06 Indemnification for Expenses as a Witness. To the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
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Article V
ADVANCEMENT OF EXPENSES
5.01 Statement of Expenses. The Company shall advance all reasonable Expenses which, by reason of Indemnitee’s Corporate Status, were incurred by or on behalf of Indemnitee in connection with any Proceeding, within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.
5.02 Assumption of Defense. In the event the Company (i) shall be obligated to advance the Expenses for any Proceeding against Indemnitee by a third party and (ii) acknowledges in writing the Company’s obligation to indemnify the Indemnitee with respect to such Proceeding (subject to the terms of this Agreement), the Company shall be entitled to assume the defense of such Proceeding as provided herein. Such defense by the Company may include the representation of two or more parties by one attorney or law firm as permitted under the ethical rules and legal requirements related to joint representations, subject to exceptions set forth below in the event of a potential conflict of interest. Following delivery of written notice to Indemnitee of the Company’s election to assume the defense of such Proceeding and the Company’s acknowledgment of its indemnification obligation with respect to such Proceeding, the approval by Indemnitee (which approval shall not be unreasonably withheld) of counsel designated by the Company and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of separate counsel subsequently incurred by Indemnitee with respect to the same Proceeding so long as such Proceeding is diligently defended. For the avoidance of doubt, a potential conflict of interest shall be deemed a reasonable basis for the Indemnitee to withhold consent under this section. If (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have notified the Board in writing that Indemnitee has reasonably concluded that there is likely to be a conflict of interest between the Company (or any other co-clients as provided above) and Indemnitee in the conduct of any such defense, or (iii) the Company fails to employ counsel to assume the defense of such Proceeding, the fees and expenses of Indemnitee’s own counsel shall be subject to indemnification and/or advancement pursuant to the terms of this Agreement. Nothing herein shall prevent Indemnitee from employing counsel for any such Proceeding at Indemnitee’s own expense.
Article VI
PROCEDURES FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION
6.01 Initial Request. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The President or any other officer of the Company shall promptly advise the Board in writing that Indemnitee has requested indemnification.
6.02 Method of Determination. A determination (if required by applicable law) with respect to Indemnitee’s entitlement to indemnification shall be made, as follows:
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| (a) | if a Change in Control has occurred, unless Indemnitee shall request in writing that such determination be made in accordance with clause (b) of this Section 6.02, the determination shall be made by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee. | |
| (b) | If a Change in Control has not occurred, and subject to Section 6.03, the determination shall be made by (i) a majority vote of the Disinterested Directors, even though less than a quorum; (ii) by a committee of Disinterested Directors designated by majority vote of such Disinterested Directors, even though less than a quorum; (iii) if there are no such Disinterested Directors, by the Independent Counsel in a written opinion to the Board, or (iv) by the Company’s stockholders. |
6.03 Selection, Payment, Discharge, of Independent Counsel. In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6.02 of this Agreement, the Independent Counsel shall be selected, paid, and discharged in the following manner:
| (a) | If a Change of Control has not occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. | |
| (b) | If a Change of Control has occurred, the Independent Counsel shall be selected the by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event clause (a) of this section shall apply) and approved by the Board, which approval shall not be unreasonably withheld, conditioned or delayed. | |
| (c) | Following the initial selection described in clauses (a) and (b) of this Section 6.03, Indemnitee or the Company, as the case may be, may, within seven (7) days after such written notice of selection has been given, deliver to the other party a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirement of “Independent Counsel” as defined in Section 1.10 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. | |
| (d) | Either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction if the parties have been unable to agree on the selection of Independent Counsel within (30) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6.01 of this Agreement. Such petition may request a determination whether an objection to the party’s selection is without merit and/or seek the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate. A person so appointed shall act as Independent Counsel under Section 6.02 of this Agreement. |
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| (e) | The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6.03, regardless of the manner in which such Independent Counsel was selected or appointed. | |
| (f) | Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 8.01(c) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). |
6.04 Company Response. If a determination by the Company that Indemnitee is entitled to indemnification pursuant to this Agreement is required, and the Company fails to respond within sixty (60) days to a written request for indemnity, the Company shall be deemed to have approved the request.
6.05 Cooperation. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification under this Agreement, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any expenses, costs, disbursements and obligations (including attorneys’ fees) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
6.06 Payment. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.
6.07 Reservation of Rights. Notwithstanding anything to the contrary herein, if it is determined that Indemnitee is entitled to indemnification hereunder, the Company shall have the obligation to advance to the Indemnitee any Expenses incurred by Indemnitee in connection therewith; provided, however, that all amounts advanced in respect of such Expenses shall be repaid to the Company by Indemnitee to the extent it shall be determined in a final judgment of a court of competent jurisdiction that Indemnitee is not entitled to be indemnified for such Expenses.
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Article VII
PRESUMPTIONS
7.01 Effect of Other Proceedings. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) be conclusive as to the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in Good Faith.
7.02 Reliance as Safe Harbor. For purposes of any determination of Good Faith, Indemnitee shall be deemed to have acted in Good Faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or the expert selected with reasonable care by the Enterprise. The provisions of this Section 7.02 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
7.03 Service for Subsidiaries. If Indemnitee is serving as a director, officer, employee or agent of another Enterprise at least 50% of whose equity interests are owned by the Company shall, Indemnitee shall be conclusively presumed to be serving in such capacity at the request of the Company.
Article VIII
REMEDIES OF INDEMNITEE
8.01 Application. This Article VIII shall apply in the event of a Dispute. For purposes of this Article, “Dispute”, shall mean any of the following events:
| (a) | a determination is made pursuant to Article VI of this Agreement that Indemnitee is not entitled to indemnification under this Agreement; | |
| (b) | advancement of Expenses is not timely made pursuant to Article V of this Agreement; or | |
| (c) | the determination of entitlement to be made pursuant to Section 6.02 of this Agreement has not been made within sixty (60) days after receipt by the Company of the request for indemnification; | |
| (d) | payment of indemnification is not made pursuant to Section 4.06 of this Agreement within thirty (30) days after receipt by the Company of a written request therefor; or | |
| (e) | payment of indemnification is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification. |
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8.02 Adjudication. In the event of a Dispute, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’ s entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 8.02.
8.03 De Novo Review. In the event that a determination shall have been made pursuant to Article VI of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Article VIII shall be conducted in all respects as a de novo trial, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.
8.04 Company Bound. If a determination shall have been made or deemed to have been made pursuant to Article VI of the Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding absent (i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee’ s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
8.05 Expenses of Adjudication. In the event that Indemnitee, pursuant to this Article VIII, seeks a judicial adjudication to enforce Indemnitee’s rights under, or to recover damages for breach of this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by Indemnitee in such adjudication, but only if Indemnitee prevails therein. If it shall be determined in such adjudication that Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the Expenses incurred by Indemnitee in connection with such adjudication shall be appropriately prorated.
Article IX
NON-EXCLUSIVITY, INSURANCE, SUBROGATION
9.01 Non-Exclusivity. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under the Company’s Certificate of Incorporation, the Bylaws, or under any agreement, vote of stockholders or disinterested directors or otherwise. No amendment, alteration, rescission or replacement of this Agreement or any provision hereof shall be effective as to Indemnitee with respect to any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration, rescission or replacement.
9.02 Insurance. The Company shall maintain an insurance policy or policies against liability arising out of this Agreement or otherwise.
9.03 Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to any rights of recovery of Indemnitee who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
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9.04 No Duplicative Payment. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
Article X
GENERAL PROVISIONS
10.01 Binding Effect, Etc. This Agreement shall be binding upon and inure to the benefit of any be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, executors and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company’s request.
10.02 Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
| (a) | the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and | |
| (b) | to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, which is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. |
10.03 No Adequate Remedy. The parties declare that it is impossible to measure in money the damages which will accrue to either party by reason of a failure to perform any of the obligations under this Agreement. Therefore, if either party shall institute any action or proceeding to enforce the provisions hereof, such party against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law, and such party shall not urge in any such action or proceeding the claim or defense that the other party has an adequate remedy at law.
10.04 Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
10.05 Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
10.06 Modification and Waiver. No supplement modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions thereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
10.07 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
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| If to Indemnitee, to: | As shown with Indemnitee’s Signature below. | |
| If to the Company to: | Global Technologies, Ltd | |
| 8 Campus Drive, Suite 105 | ||
| Parsippany, NJ 07054 | ||
| Attn: Chief Executive Officer |
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
10.08 Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the state of Delaware without application of the conflict of laws principles thereof. No amendment, repeal, adoption or modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any Proceeding relating to such event, act or omission arises or is first threatened, commenced or completed).
10.09 Third-Party Beneficiaries. Nothing in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on any other person or persons other than the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is intended to relieve or discharge the obligations or liability of any third persons to the Company. Except as expressly set forth in this Agreement, no provision of this Agreement shall give any third parties any right of subrogation or action over or against the Company.
10.10 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon. This Agreement replaces in full all prior indemnification agreements or understandings between the Company, including any of its subsidiaries, and the Indemnitee, and any all such prior agreements or understandings are hereby rescinded by mutual agreement.
[Signature Page Follows]
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IN WI1NESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
| COMPANY | GLOBAL TECHNOLOGIES, LTD | |
| By: | ||
| Name: | Fredrick Kutcher | |
| Title: | Chief Executive Officer | |
| INDEMNITEE | ||
| Name: | ||
| Indemnitee’s Address for Notices: | ||
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Exhibit 21.1
Exhibit 31.1
CERTIFICATIONS
I, Fredrick Cutcher, certify that:
| 1. | I have reviewed this annual report on Form 10-K for the year ended June 30, 2023 of Global Technologies, Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: December 28, 2023 | |
| /s/ Fredrick Cutcher | |
| Fredrick Cutcher | |
| Principal Executive Officer and Principal Financial Officer |
Exhibit 31.2
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a)
under the Securities Exchange Act of 1934
I, Fredrick Cutcher, Principal Financial Officer of Global Technologies, Ltd., certify that:
| 1. | I have reviewed this annual report on Form 10-K for the year ended June 30, 2023 of Global Technologies, Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: December 28, 2023 | ||
| By: | /s/ Fredrick Cutcher | |
| Principal Financial Officer | ||
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Global Technologies, Ltd. (the “Company”) on Form 10-K for the year ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fredrick Cutcher, Chief Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: December 28, 2023 | /s/ Fredrick Cutcher |
| Fredrick Cutcher | |
| Chief Executive Officer and Principal Financial Officer |