Global Technologies Ltd 10-Q for FY2023 Q3
Global Technologies Ltd (GTLL)
About this 10-Q
Global Technologies Ltd filed this 10-Q on May 23, 2023, covering the quarter ended March 31, 2023 (FY2023 Q3).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $668.38K
- compared with a net loss of $383.29K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR
THE QUARTERLY PERIOD ENDED
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
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” |
As of May 22, 2023, there were shares of registrant’s Class A common stock outstanding.
GLOBAL TECHNOLOGIES, LTD
FORM 10-Q
FOR THE NINE MONTHS ENDED MARCH 31, 2023
INDEX
| i |
USE OF MARKET AND INDUSTRY DATA
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q.
Solely for convenience, we refer to trademarks in this Quarterly Report on Form 10-Q without the ® or the ™ or symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our own trademarks. Other service marks, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, if any, are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.
OTHER PERTINENT INFORMATION
Unless the context otherwise indicates, when used in this Quarterly Report on Form 10-Q, the terms “Global Technologies” “we,” “us,” “our,” the “Company” and similar terms refer to Global Technologies, Ltd, a Delaware corporation, and all of our subsidiaries and affiliates.
| ii |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the period ended March 31, 2023 contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, the terms, timing and closing of our proposed acquisitions or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. 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. Our expectations are as of the date this Quarterly Report on Form 10-Q is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to confirm these statements to actual results, unless required by law.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
| ● | Our ability to effectively execute our business plan; | |
| ● | Our ability to manage our expansion, growth and operating expenses; | |
| ● | Our ability to protect our brands and reputation; | |
| ● | Our ability to repay our debts; | |
| ● | Our ability to rely on third-party suppliers outside of the United States; | |
| ● | Our ability to evaluate and measure our business, prospects and performance metrics; | |
| ● | Our ability to compete and succeed in a highly competitive and evolving industry; | |
| ● | Our ability to respond and adapt to changes in technology and customer behavior; | |
| ● | Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives; | |
| ● | Risks related to the anticipated timing of the closing of any potential acquisitions; and | |
| ● | Risks related to the integration with regards to potential or completed acquisitions. | |
| ● | Various risks related to health epidemics, pandemics and similar outbreaks, such as the coronavirus disease 2019 (“COVID-19”) pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows. |
This Quarterly Report on Form 10-Q also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties and contained in this Quarterly Report on Form 10-Q and, accordingly, we cannot guarantee their accuracy or completeness, though we do generally believe the data to be reliable. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, the possibility that we may fail to preserve our expertise in consumer product development; that existing and potential distribution partners may opt to work with, or favor the products of, competitors if our competitors offer more favorable products or pricing terms; that we may be unable to maintain or grow sources of revenue; that we may be unable maintain profitability; that we may be unable to attract and retain key personnel; or that we may not be able to effectively manage, or to increase, our relationships with customers; that we may have unexpected increases in costs and expenses. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
| iii |
PART I
INDEX TO FINANCIAL STATEMENTS
| 1 |
GLOBAL TECHNOLOGIES, LTD
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2023 | June 30, 2022 | |||||||
| (Unaudited) | ||||||||
| 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 | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Accrued director’s compensation | ||||||||
| Notes payable-third parties | ||||||||
| Loan payable, related party | ||||||||
| Loan payable-officer | ||||||||
| Loan payable | ||||||||
| Debt discounts | ( | ) | ||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock; shares authorized, $ par value: | ||||||||
| Series K; shares authorized, par value $, as of March 31, 2023 and June 30, 2022, there are and shares outstanding, respectively | ||||||||
| Series L; shares authorized, par value $, as of March 31, 2023 and June 30, 2022, there are and shares outstanding, respectively | ||||||||
| Preferred Stock value | ||||||||
| Class A Common stock; shares authorized, $ par value, as of March 31, 2023 and June 30, 2022, there are and shares outstanding, respectively | ||||||||
| Common Stock value | ||||||||
| Additional paid- in capital Class A common stock | ||||||||
| Additional paid- in capital preferred stock | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficiency | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
GLOBAL TECHNOLOGIES, LTD
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three and nine months ended March 31, 2023 and 2022
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2023 | 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 | ||||||||||||||||
| Depreciation expense | ||||||||||||||||
| Consulting Services | ||||||||||||||||
| Professional services | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Forgiveness of debt and interest | ||||||||||||||||
| Gain (loss) on derivative liability | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain (loss) on issuance on notes payable | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discounts | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expenses) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain (Loss) before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Basic and diluted income per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
GLOBAL TECHNOLOGIES, LTD
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS (DEFICIENCY)
(UNAUDITED)
For the three and nine months ended March 31, 2023 and 2022
For the three months ended March 31, 2023 and 2022:
| Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Series K | Series L | Common Stock | Additional | |||||||||||||||||||||||||||||||||||||
| Preferred stock | Preferred stock | Common Stock | to be | Paid in | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balances at December 31, 2021 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock for shares purchased through regulation A offering | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of replacement common shares | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock to noteholders in satisfaction of principal and interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of Series L preferred shares | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2022 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances March 31, 2022 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| Balances at December 31, 2022 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances at March 31, 2023 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
For the nine months ended March 31, 2023 and 2022:
| Series K | Series L | Common Stock | Additional | |||||||||||||||||||||||||||||||||||||
| Preferred stock | Preferred stock | Common Stock | to be | Paid in | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balances at 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 | - | - | ||||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrant | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of Series L Preferred shares | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income for the nine months ended March 31, 2022 | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2022 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Balances at June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock to a noteholder in satisfaction of principal and interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss for the nine months ended March 31, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances at March 31, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
GLOBAL TECHNOLOGIES, LTD
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months ended March 31, 2023 and 2022
| March 31, 2023 | March 31, 2022 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustment to reconcile net loss to net cash provided by operating activities: | ||||||||
| Gain from forgiveness of debt and interest | ( | ) | ||||||
| Derivative liability loss (gain) | ( | ) | ||||||
| Loss on issuance of notes payable | ||||||||
| Depreciation | ||||||||
| Amortization of debt discounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ||||||
| Accounts receivable | ( | ) | ||||||
| Accrued Interest receivable | ( | ) | ( | ) | ||||
| Prepaid director’s compensation | ||||||||
| Prepaid management services | ( | ) | ||||||
| Loans receivable | ||||||||
| Receivable, other | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued interest | ||||||||
| Accrued director’s compensation | ||||||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Notes receivable-long-term | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Issuance of stock for Regulation A financing | ||||||||
| Repayments under loans payable-related parties | ( | ) | ||||||
| Repayments under notes payable | ( | ) | ||||||
| Borrowings from loans payable-officer | ||||||||
| Borrowings from notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE (DECREASE) 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 and stock to be issued | $ | $ | ||||||
| Cancellation of common stock as per court order | $ | $ | ||||||
| Issuance of common stock for debt and accrued interest | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION
Overview
Global Technologies, Ltd. (hereinafter “Global Technologies”, the “Company”, “Our”, “We”, or “Us”) is a publicly quoted operating company that 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 offices are located at 501 1st Ave N., Suite 901, St. Petersburg, FL 33701 and our telephone number is (727) 482-1505. Our website address is www.globaltechnologiesltd.info. The information contained on, or that can be accessed through, our website is not a part of this Quarterly Report. We have included our website address in this Quarterly Report solely as an inactive textual reference.
Current Operations
Global Technologies, which through its subsidiaries, has operations engaged in the online sales of CBD and hemp related products, the acquisition of intellectual property in the safety and security space and as a portal for entrepreneurs to provide immediate access to live shopping, e-commerce, product placement in brick and mortar retail outlets and logistics.
As of March 31, 2023, Global Technologies had five wholly-owned subsidiaries: TCBM Holdings, LLC (“TCBM”), HMNRTH, LLC (“HMNRTH”), 911 Help Now, LLC (“911”), Markets on Main, Inc. (“MOM”) and Tersus Power, Inc. (“Tersus”). As of March 31, 2023, the Company had a minority investment in one entity, Global Clean Solutions, LLC.
| 6 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (cont’d)
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.
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.
| 7 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (cont’d)
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.
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. As of the date of this filing, it is highly unlikely the Agreement will close due to the delays.
| 8 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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.
| 9 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE B – BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q 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 condensed 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 unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2023 and the results of operations, changes in stockholders’ equity, and cash flows for the periods presented. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 as filed with the Securities and Exchange Commission on October 13, 2022. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended June 30, 2022, and updated, as necessary, in this Quarterly Report on Form 10-Q.
| 10 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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. The condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended June 30, 2022 filed with the Securities and Exchange Commission on October 13, 2022.
Principles of Consolidation
The condensed 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
| 11 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Accounts Receivable and Allowance for Doubtful Accounts:
Accounts receivable are recorded at invoiced amounts 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. At March 31, 2023 and June 30, 2022, an allowance for doubtful accounts was not considered necessary as all accounts receivable were deemed collectible.
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 credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection.
Concentrations of Risks
Concentration
of Accounts Receivable –At March 31, 2023 and June 30, 2022, the Company had
$
Concentration
of Revenues – For the nine months ended March 31, 2023, the Company generated
$
Concentration of Suppliers – The Company relies on a limited number of suppliers and contract manufacturers.
Concentration
of Loans Receivable, Other –At March 31, 2023 and June 30, 2022, the Company
had $
Concentration
of Notes Receivable – The Company had notes receivable of $
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 March 31, 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.
| 12 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
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.
| 13 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
| 14 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
| 15 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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 ASC 718 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 nine months ended March 31, 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.
| 16 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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, 2022, 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.
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.
| 17 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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 at least quarterly.
Intangible Assets
Intangible assets are stated at the lesser of cost or fair value less accumulated amortization. Please see NOTE D – ACQUISITION OF TCBM HOLDINGS, LLC for further information.
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 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| 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.
| 18 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE D – ACQUISITION OF TCBM HOLDINGS, LLC (cont’d)
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 its 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 its 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) | ||||
| Property, plant and equipment (ii) | ||||
| Goodwill (iii) | ||||
| Total purchase price | $ | |||
| (i) | |
| (ii) | |
| (iii) |
The changes in the carrying amount of goodwill for the period from November 30, 2019 through March 31, 2023 were as follows:
SCHEDULE OF GOODWILL
| Balance as of November 30, 2019 | $ | |||
| Additions and adjustments | ( | ) | ||
| Balance as of March 31, 2023 | $ |
| 19 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE D – ACQUISITION OF TCBM HOLDINGS, LLC (cont’d)
For
the nine months ended March 31, 2023 and year ended June 30, 2022, the Company recorded an impairment of goodwill in the amount of
$
NOTE E - PROPERTY AND EQUIPMENT
SCHEDULE OF PROPERTY AND EQUIPMENT
| March 31, 2023 | June 30, 2022 | |||||||
| Property and Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| (i) | ||
| (ii) |
NOTE F – NOTE RECEIVABLE
SCHEDULE OF NOTE RECEIVABLE
| March 31, 2023 | June 30, 2022 | |||||||
| Note receivable- Tersus Power, Inc. | $ | $ | ||||||
| Total | $ | $ | ||||||
| (i) | ||
| (ii) |
| 20 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE G – ACCRUED OFFICER AND DIRECTOR COMPENSATION
Accrued officer and director compensation is due to Wayne Anderson, the sole officer and director of the Company, and consists of:
SCHEDULE OF ACCRUED OFFICER AND DIRECTOR COMPENSATION
| March 31, 2023 | June 30, 2022 | |||||||
| Pursuant to January 26, 2018 Board of Directors Service Agreement | $ | $ | ||||||
| Total | $ | $ | ||||||
For the nine months ended March 31, 2023 and year ended June 30, 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 | Pursuant to Board of Directors Services Agreements | Total | ||||||||||
| Balances at June 30, 2022 | ||||||||||||
| Officer’s/director’s compensation for the nine months ended March 31, 2023 (i) | ||||||||||||
| Cash compensation | ( | ) | ( | ) | ||||||||
| Balances at March 31, 2023 | $ | $ | $ | |||||||||
| (i) |
| 21 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE H – NOTES PAYABLE, THIRD PARTIES
Notes payable to third parties consist of:
SCHEDULE OF NOTES PAYABLE TO THIRD PARTIES
March 31, 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 | ||||||||
| Totals | $ | $ | ||||||
| (i) |
| (ii) |
| 22 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE H – NOTES PAYABLE, THIRD PARTIES (cont’d)
| (iii) | |
| (iv) |
Income from forgiveness of principal and interest on convertible notes payable consists of:
SCHEDULE OF INTEREST FROM FORGIVENESS OF NOTES
| March
31, 2023 |
June
30, 2022 |
|||||||
| Forgiveness of Graphene Holdings, LLC principal and interest | ||||||||
| Total | $ | $ | ||||||
| 23 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE I - DERIVATIVE LIABILITY
The derivative liability at March 31, 2023 and June 30, 2022 consisted of:
SCHEDULE OF DERIVATIVE LIABILITY
March 31, 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 at March
31, 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 March 31, 2023 were (1) stock price of $ per share, (2)
conversion price of $ per share, (3) term of 6 months, (4) expected volatility 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 at June 30, 2022 | $ | |||
| Additions | ||||
| (Gain)Loss | ||||
| Change resulting from conversions and payoffs | ( | ) | ||
| Balance at March 31, 2023 | $ | |||
| 24 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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. At March 31, 2023 and June 30, 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. At March 31, 2023 and June 30, 2022, the Company had and shares issued and outstanding, respectively.
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. At March 31, 2023 and June 30, 2022, the Company had and shares issued and outstanding, respectively.
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
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. At March 31, 2023 and June 30, 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. At March 31, 2023 and June 30, 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. At March 31, 2023 and June 30, 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. All shares of the Series K Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $ per share (“Common Stock”), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series K Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series K Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
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.
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. At March 31, 2023 and June 30, 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.
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
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 is 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.”
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]
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
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.
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.
Preemptive or Subscription Rights. No holder of Common Shares shall be entitled to preemptive or subscription rights.
| 29 |
GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
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.
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
(e) Reissue of Shares. Class B Shares that are converted into Class A Shares as provided herein shall be retired and canceled 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.
At March 31, 2023 and June 30, 2022, the Company is authorized to issue and shares of Class A Common Stock, respectively. At March 31, 2023 and June 30, 2022, the Company has and shares issued and outstanding, respectively. At March 31, 2023 and June 30, 2022, the Company is authorized to issue and shares of Class B Common Stock, respectively. At March 31, 2023 and June 30, 2022, the Company has and shares issued and outstanding, respectively.
Common Stock, Preferred Stock and Warrant Issuances
For the nine months ended March 31, 2023 and year ended June 30, 2022, the Company issued and/or sold the following unregistered securities:
Common Stock:
Common stock issued during the nine months ended March 31, 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 $
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
Common stock issued during the 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 $
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE J - CAPITAL STOCK (cont’d)
Preferred Stock:
Preferred stock issued during the nine months ended March 31, 2023
None
Preferred stock issued during the 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 as reimbursement for returning shares of common stock to the Company.
Warrants and Options:
None.
As of March 31, 2023, the Company had no outstanding warrants or options.
NOTE K - COMMITMENTS AND CONTINGENCIES
Occupancy
As of March 31, 2023, the Company maintains office space at 501 1st Ave N., Suite 901, St. Petersburg, FL 33701 and is not required to reimburse Sylios Corp for monthly rent. The Company anticipates that this relationship will change with the hiring of additional employees, and it will be required to enter into a lease for a separate office space.
Director Agreements
NOTE L - 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 March 31, 2023, 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).
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GLOBAL TECHNOLOGIES, LTD
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended March 31, 2023 and 2022
(Unaudited)
NOTE L - GOING CONCERN UNCERTAINTY (cont’d)
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.
NOTE M - SUBSEQUENT EVENTS
On May 17, 2023, the Company appointed Frederick Kalei Cutcher to its Board of Directors.
On May 17, 2023, the Company’s Board of Directors elected to increase the Company’s number of authorized shares of its Class A Common Stock from to . The Company will file an Amendment to its Articles of Incorporation during the quarter ended June 30, 2023.
On May 17, 2023, Jimmy Wayne Anderson resigned in his role as an officer and director of the Company. Mr. Cutcher was retained as the Company’s new Chief Executive Officer and Principal Financial Officer.
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 $
On
May 17, 2023, the Company executed a Convertible Note (the “Convertible Note”) payable to Hillcrest Ridgewood Partners, LLC
in the principal amount of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,” “will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, and in our subsequent filings with the SEC, and include, among others, the following: marijuana is illegal under federal law, the marijuana industry is subject to strong competition, our business is dependent on laws pertaining to the marijuana industry, the marijuana industry is subject to government regulation, our business model depends on the availability of private funding, we will be subject to general real estate risks, if debt payments to note holder are not made we could lose our investment in our real estate properties, terms and deployment of capital. The terms “Global Technologies, Ltd “Global Technologies,” “Global,” “we,” “us,” “our,” and the “Company” refer to Global Technologies, Ltd., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.
Company Overview
Global Technologies, Ltd. (hereinafter the “Company”, “Our”, “We”, or “Us”) is a publicly quoted company that 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 offices are located at 501 1st Ave N., Suite 901, St. Petersburg, FL 33701 and our telephone number is (727) 482-1505. Our website address is www.globaltechnologiesltd.info. The information contained on, or that can be accessed through, our website is not a part of this Quarterly Report. We have included our website address in this Quarterly Report solely as an inactive textual reference.
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Current Operations
Global Technologies, Ltd (“Global Technologies”) is a publicly traded operating corporation, which through its subsidiaries, has operations engaged in the online sales of CBD and hemp related products, the acquisition of intellectual property in the safety and security space and as a portal for entrepreneurs to provide immediate access to live shopping, e-commerce, product placement in brick and mortar retail outlets and logistics.
As of March 31, 2023, Global Technologies had five wholly-owned subsidiaries: TCBM Holdings, LLC (“TCBM”), HMNRTH, LLC (“HMNRTH”), 911 Help Now, LLC (“911”), Markets on Main, Inc. (“MOM”) and Tersus Power, Inc. (“Tersus”). As of March 31, 2023, the Company had a minority investment in one entity, Global Clean Solutions, LLC.
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.
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.
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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.
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. As of the date of this filing, it is highly unlikely the Agreement will close due to the delays.
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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 March 31, 2023, the Company has initiated the work to be completed under the Agreement but is awaiting additional information from its client.
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Critical Accounting Policies, Judgments and Estimates
There were no material changes to our critical accounting policies and estimates during the interim period ended March 31, 2023.
Please see our Annual Report on Form 10-K for the year ended June 30, 2022 filed on October 13, 2022, for a discussion of our critical accounting policies and estimates and their effect, if any, on the Company’s financial results.
Components of our Results of Operations
Revenues
We generate revenue by selling consumer products either wholesale or direct to consumers, providing logistics services through our wholly owned subsidiary, Market on Main, and through our consulting services we offer to other publicly traded companies.
Cost of Revenues
Our cost of revenues includes inventory costs, materials and supplies costs, internal labor costs and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of selling, marketing, advertising, payroll, administrative, finance and professional expenses.
Interest Expense, Net
Interest expense includes the cost of our borrowings under our debt arrangements.
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Results of Operations
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
The following table sets forth information comparing the components of net (loss) income for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, | Period over Period Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Revenues, net | $ | - | $ | 11,927 | $ | (11,927 | ) | -100.00 | % | |||||||
| Cost of revenues | - | 598 | (598 | ) | -100.00 | % | ||||||||||
| Gross profit | - | 11,329 | (11,329 | ) | -100.00 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 4,497 | 36,584 | (32,087 | ) | -87.71 | % | ||||||||||
| Stock-based compensation | 20,000 | 20,000 | - | 0.00 | % | |||||||||||
| Other operating expenses | 21,798 | 67,286 | (45,488 | ) | -67.61 | % | ||||||||||
| Total operating expenses | 46,295 | 123,870 | (77,575 | ) | -62.63 | % | ||||||||||
| Operating loss | (46,295 | ) | (112,541 | ) | 66,246 | -58.86 | % | |||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | 4,315 | 6,000 | (1,685 | ) | -28.08 | % | ||||||||||
| Gain (loss) on derivative liability | (619,005 | ) | (84,948 | ) | (534,057 | ) | 628.67 | % | ||||||||
| Gain (loss) on issuance of notes payable | - | (63,038 | ) | 63,038 | -100.00 | % | ||||||||||
| Amortization of debt discounts | - | (119,331 | ) | 119,331 | -100.00 | % | ||||||||||
| Interest expense | (7,397 | ) | (9,428 | ) | 2,031 | -21.54 | % | |||||||||
| Total other income(expenses) | (622,087 | ) | (270,745 | ) | (351,342 | ) | 129.77 | % | ||||||||
| Gain(loss) before income taxes | (668,382 | ) | (383,286 | ) | (285,096 | ) | 74.38 | % | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net (loss) | $ | (668,382 | ) | $ | (383,286 | ) | $ | (285,096 | ) | 74.38 | % | |||||
Revenue
For the three months ended March 31, 2023 and 2022, we generated revenue of $- and $11,927, respectively. The decrease in revenue for the three months ended March 31, 2023 is largely attributable to the Company’s decrease in consulting revenue.
Cost of Revenues
For the three months ended March 31, 2023 and 2022, cost of revenues was $- and $598, respectively.
Gross Profit
For the three months ended March 31, 2023 and 2022, gross profit was $- and $11,329, respectively.
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Operating Expenses
Operating expenses were $46,295 and $123,870 for the three months ended March 31, 2023 and 2022, respectively, representing a decrease of $77,575, or 62.63%. The Company’s decrease in selling, general and administrative expenses, as well as fees for consulting services, were largely attributable to a reduction in corporate operating expenses.
Other Income (Expenses)
Other income (expense) was ($622,087) and ($270,745) for the three months ended March 31, 2023 and 2022, respectively, representing an increase of ($351,342), or 129.77%. The other income (expense) for the three months ended March 31, 2023 included interest expense of ($7,397), loss on derivative liability of ($619,005) offset by interest income in the amount of $4,315. The increase in other income (expense) for the three months ended March 31, 2023 was largely attributable to an increased loss on derivative liability as compared to the three months ended March 31, 2022.
Income Tax Expense
There was no income tax expense for the three months ended March 31, 2023 or for the three months ended March 31, 2022.
Net (Loss)
For the three months ended March 31, 2023, our net loss increased to ($668,382), as compared to ($383,286) for three months ended March 31, 2022, an increase of ($285,096). The increase in net loss for the three months ended March 31, 2023 was largely attributable to a loss on derivative liability as compared to the three months ended March 31, 2022.
Nine Months Ended March 31, 2023 Compared to Nine Months Ended March 31, 2022
The following table sets forth information comparing the components of net (loss) income for the nine months ended March 31, 2023 and 2022:
Nine Months Ended March 31, | Period
over Period Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Revenues, net | $ | 14,000 | $ | 106,927 | $ | (92,927 | ) | -86.91 | % | |||||||
| Cost of revenues | - | 598 | (598 | ) | -100.00 | % | ||||||||||
| Gross profit | 14,000 | 106,329 | (92,329 | ) | -86.83 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 17,166 | 95,836 | (78,670 | ) | -82.09 | % | ||||||||||
| Stock-based compensation | 354,467 | 110,087 | 244,380 | 221.99 | % | |||||||||||
| Other operating expenses | 52,194 | 115,864 | (63,670 | ) | -54.95 | % | ||||||||||
| Total operating expenses | 423,827 | 321,787 | 102,040 | 31.71 | % | |||||||||||
| Operating loss | (409,827 | ) | (215,458 | ) | (194,369 | ) | 90.21 | % | ||||||||
| Other (expense) income: | ||||||||||||||||
| Interest income | 13,137 | 6,277 | 6,860 | 109.29 | % | |||||||||||
| Forgiveness of debt and accrued interest | - | 449,294 | (449,244 | ) | -100.00 | % | ||||||||||
| Gain (Loss) on derivative liability | (74,988 | ) | 478,047 | (553,035 | ) | -115.69 | % | |||||||||
| Gain (Loss) on issuance of notes payable | - | (217,393 | ) | 217,393 | -100.00 | % | ||||||||||
| Amortization of debt discounts | (49,863 | ) | (381,013 | ) | 331,150 | -86.91 | % | |||||||||
| Interest expense | (22,573 | ) | (51,084 | ) | 28,511 | -55.81 | % | |||||||||
| Total other income (expenses) | (134,287 | ) | 284,128 | (418,415 | ) | -147.26 | % | |||||||||
| Income (loss) before income taxes | (544,114 | ) | 68,670 | (612,784 | ) | -892.36 | % | |||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net income (loss) | $ | (544,114 | ) | $ | 68,670 | $ | (612,784 | ) | -892.36 | % | ||||||
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Revenue
For the nine months ended March 31, 2023 and 2022, the Company generated $14,000 and $106,927 revenue, respectively. Revenue for the nine months ended March 31, 2023 was entirely comprised of revenue generated from consulting services. The decrease in revenue for the nine months ended March 31, 2023 is largely attributable to the Company’s decrease in consulting revenue.
Cost of Revenues
For the nine months ended March 31, 2023 and 2022, cost of revenues was $- and $598, respectively.
Gross Profit
For the nine months ended March 31, 2023 and 2022, gross profit was $14,000 and $106,329, respectively.
Operating Expenses
Operating expenses were $423,827 and $321,787 for the nine months ended March 31, 2023 and 2022, respectively, representing an increase of $102,040, or 31.71%. The increase in operating expenses is largely attributable to the increase in stock-based compensation for the nine months ended March 31, 2023.
Other Income (Expenses)
Other income (expense) was ($134,287) and $284,128 for the nine months ended March 31, 2023 and 2022, respectively, representing a decrease of ($418,415), or 147.26%. The other income (expenses) for the nine months ended March 31, 2023 included amortization of debt discounts of ($49,863), interest expense of ($22,573), loss on derivative liability of ($74,988) offset by interest income of $13,137. The decrease in other income for the nine months ended March 31, 2023 was largely attributable to forgiveness of debt and interest in the amount of $449,294 and gain on derivative liability of $478,047 for the nine months ended March 31, 2022 as compared to the nine months ended March 31, 2023.
Income tax expense
There was no income tax expense for the nine months ended March 31, 2023 and 2022.
Net Income (Loss)
For the nine months ended March 31, 2023, our net loss increased to ($544,114), as compared to net income of $68,670 for nine months ended March 31, 2022, a decrease of ($612,784). The increase in net loss for the nine months ended March 31, 2023 was largely attributable to forgiveness of debt and interest in the amount of $449,294 for the nine months ended March 31, 2022 versus $0 for the nine months ended March 31, 2023.
Liquidity and Capital Resources
The following table summarizes the cash flows for the nine months ended March 31, 2023 and 2022:
| March 31, 2023 | March 31, 2022 | |||||||
| Cash Flows: | ||||||||
| Net cash (used in) operating activities | (329,881 | ) | (280,876 | ) | ||||
| Net cash (used in) investing activities | - | (250,000 | ) | |||||
| Net cash provided by financing activities | 5,387 | 1,103,426 | ||||||
| Net (decrease) increase in cash | (324,494 | ) | 572,500 | |||||
| Cash at beginning of period | 324,494 | 56,300 | ||||||
| Cash at end of period | $ | - | $ | 628,850 | ||||
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As of March 31, 2023 and 2022, the Company had cash of $- and $628,850, respectively.
We had cash used in operating activities of $329,881 for the nine months ended March 31, 2023, compared to $280,876 for the nine months ended March 31, 2022.
We had cash used in investing activities of $- and $250,000 for the nine months ended March 31, 2023 and 2022, respectively.
We had cash provided by financing activities of $5,387 and $1,103,426 for the nine months ended March 31, 2023 and 2022, respectively.
Off-Balance Sheet Arrangements
We currently have no 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.
Seasonality
We do not consider our business to be seasonal.
Commitments and Contingencies
We are subject to the legal proceedings described in “Part II, Item 1. Legal Proceedings” of this report. There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.
Inflation and Changing Prices
Neither inflation nor changing prices for the nine months ended March 31, 2023 had a material impact on our operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2023, our disclosure controls and procedures were not effective.
Due to resource constraints, material weaknesses are evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchanges Commission, which is due to the lack of resources and segregation of duties. We lack sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and lacks documentation of its internal control processes.
Changes in Internal Control over Financial Reporting
There was no change to our internal controls or in other factors that could affect these controls during the period ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, our Board is currently seeking to improve our controls and procedures to remediate the deficiency described above.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. I addition to the estimated loss, the liability includes probable and estimable legal cost associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company business. There is no pending litigation involving the Company at this time.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In connection with the foregoing, the Company relied upon the exemptions from registration provided by Rule 701 and Section 4(a)(2) under the Securities Exchange Act of 1933, as amended:
Issuance of common stock – Nine months ended March 31, 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.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None
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Item 6. Exhibits
The documents set forth below are filed, incorporated by reference or furnished herewith as indicated.
Index to Exhibits
| + | Management contract or compensatory plan or arrangement. |
| * | Filed herewith |
| ** | Furnished herewith (not filed). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GLOBAL TECHNOLOGIES, LTD | ||
| By: | /s/ Frederick Kalei Cutcher | |
| Frederick Kalei Cutcher | ||
| President | ||
| Date: | May 23, 2023 | |
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Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of May 17, 2023 (the “Effective Date”) by and between Global Technologies, Ltd. (the “Company”) and Frederick Kalei Cutcher (the “Employee”) and. The Company and the Employee shall be referred to herein as the “Parties.”
RECITALS
Whereas, the Company desires to employ the Employee as its Chief Executive Officer (“CEO”); and
Whereas, the Company hereby employs the Employee as its CEO, and the Employee hereby accepts employment with the Company for the period and upon the terms and conditions contained in this Agreement.
Now, Therefore, in consideration of the mutual promises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
ARTICLE I.
Services to be Provided by Employee
A. Position and Responsibilities. The Employee shall be employed and serve as the CEO, subject to the direction of the Employee’s designated representative of the Company as may appointed by the Board of Directors of the Company (the “Board”). The Employee shall have such duties and responsibilities commensurate with the Employee’s title and function of such office and as the Board may require of the Employee from time to time. The Company may change the Employee’s title, and/or reporting line, from time to time, in its sole discretion. The Employee acknowledges and agrees that the Employee shall observe and comply with all of the Company’s Policies and Procedures, which may change from time to time, including, but limited to, the Employee Handbook and other onboarding documents.
B. Performance. During the Employee’s employment with the Company, the Employee shall devote on a full-time basis all of the Employee’s time, energy, skill and reasonable best efforts to the performance of the Employee’s duties hereunder in a manner that will faithfully and diligently further the business and interests of the Company, and shall exercise reasonable best efforts to perform the Employee’s duties in a diligent, trustworthy, good faith and business-like manner, all for the purpose of advancing the business of the Company. The Employee shall at all times act in a manner consistent with the Employee’s position. During the Employee’s employment, the Employee shall not engage in any other non-Company related business activities of any nature whatsoever, whether or not competitive.
C. Restrictive Covenants. The Employee’s employment is conditioned on the execution of and compliance with the Employee Confidential Disclosure, Invention Assignment, Non-Competition, Non-Solicitation and Non-Interference Agreement attached hereto as Attachment A, which the Employee must sign on or before the Employee’s first day of employment.
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ARTICLE II.
Compensation for SErvices
As compensation for all services the Employee will perform under this Agreement, the Company will pay the Employee, and the Employee shall accept as full compensation, the following:
A. Base Salary. The Company shall pay the Employee an annual salary of $100,000, less applicable payroll deductions and tax withholdings (the “Base Salary”) for all services rendered by the Employee under this Agreement. The Company shall pay the Base Salary in accordance with the normal payroll policies of the Company.
B. Equity Awards. In consideration of the Employee entering into this Agreement and as an inducement to join the Company, Company, subject to approval by the Board, will grant the Employee restricted stock units valued at $100,000 (“RSUs”), vesting and calculated at the end of the Initial Employment Term (“GTLL Shares”).
C. Bonuses. The Employee shall be eligible to receive a cash or equity bonus (the “Bonus”) payable in such form as determined by the Company in its sole discretion and subject to the approval by the Board.
D. Expenses. The Employee is authorized to incur ordinary, necessary, and reasonable expenses in the course of Company’s business. The Company shall reimburse the Employee for such expenses pursuant to the Company’s expense reimbursement policy, upon presentation by the Employee of an itemized account of such expenditures in a manner prescribed by the Company, unless such expenses have been paid directly by the Company.
E. Paid Time Off. The Employee shall be eligible for paid time off in accordance with the Company’s policy, as in effect from time to time. The Employee shall also be entitled to any paid holidays as designated by the Company.
F. Health and Other Medical. The Employee shall be eligible to participate in all health, medical, dental, and life insurance employee benefits as are available from time to time to other employees (and their families) of the Company (to the extent the Employee is eligible under the general provisions thereof), including a Life Insurance Plan, Medical and Dental Insurance Plan, and a Long Term Disability Plan (the “Plans”), as such Plans may be modified, amended, terminated, or adopted from time to time by the Company in its sole discretion.
G. Savings Plan. The Employee will be eligible to enroll and participate, and be immediately vested in (to the extent legally possible and in accordance with existing Company benefit plans), all Company savings and retirement plans, including any 401(k) plans.
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ARTICLE III.
Term; Termination
A. Term of Employment. The Agreement’s stated term and employment relationship created hereunder will begin on the Effective Date and will remain in effect for one (1) year, unless earlier terminated in accordance with this Article III (the “Initial Employment Term”). This Agreement shall be automatically renewed for successive one (1) year terms after the Initial Employment Term (each one-year period, a “Renewal Term” and the Initial Employment Term and Renewal Term are collectively referred to as the “Term of Employment”), unless either party sends written notice to the other party at least thirty (30) days before the end of the then-existing Term of Employment, of such party’s desire to terminate this Agreement at the end of the then-existing Term of Employment, in which case this Agreement will terminate at the end of the then-existing Term of Employment, or unless earlier terminated in accordance with this Article III. The Employee will serve the Company during the Term of Employment.
B. Termination. Upon termination of the Employee’s employment, the Company shall pay the Employee (i) any unpaid Base Salary accrued through the date of termination, (ii) any accrued and unpaid vacation, paid time off or similar pay to which the Employee is entitled as a matter of law or Company policy, and (iii) any unreimbursed expenses properly incurred prior to the date of termination (the “Accrued Obligations”). Any outstanding stock option or other stock awards held by the Employee as of the date of termination shall be subject to the terms of the applicable award agreements.
(i) Expiration of the Agreement, Termination for Cause, or Voluntary Resignation. In the event the Employee voluntarily resigns without Good Reason (defined below), the Company may, in its sole discretion, shorten the notice period and determine the date of termination without any obligation to pay the Employee any additional compensation other than the Accrued Obligations and without triggering a termination of the Employee’s employment without Cause (as defined below). In the event the Agreement expires, the Company terminates the Employee’s employment for Cause or the Employee voluntarily resigns without Good Reason, the Company shall have no further liability or obligation to the Employee under this Agreement. The Accrued Obligations shall be payable in a lump sum within the time period required by applicable law, and in no event later than thirty (30) days following termination of employment. For purposes of this Agreement, “Cause” means termination because of: (a) an act or acts of gross negligence, dishonesty, misrepresentation, fraud, bad faith, moral turpitude, violation of the Company’s (and/or any affiliate’s) policies, or willful malfeasance by the Employee; (b) the Employee’s indictment or conviction of, or pleading nolo contendere or guilty to, a felony, or any crime involving moral turpitude; (c) a material breach by the Employee of this Agreement or any other agreement to which the Employee and the Company (and/or any affiliate) are parties; (d) conduct which would likely have a materially adverse effect on the Employee’s or the Company’s (and/or any affiliate’s) reputation and/or bring the Employee and/or the Company (and/or any affiliate) into public contempt and/or ridicule; and (e) the Employee’s failure or refusal to perform or intentional disregard of, the Employee’s duties and responsibilities hereunder, following, if curable, written notice by the Company to the Employee which shall specify in reasonable detail the circumstances, and there shall be no Cause with respect to any such circumstances if cured by the Employee within thirty (30) days after such notice.
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(ii) Termination Without Cause or for a Resignation for Good Reason. In the event the Employee’s employment is terminated by the Company without Cause or by the Employee for Good Reason, the Employee shall receive the following, subject to the execution and timely return by the Employee of a release of claims in the form to be delivered by the Company, which release shall, by its terms, be irrevocable no later than the sixtieth (60th) day following the termination of employment: (a) the Accrued Obligations, payable in a lump sum within the time period required by applicable law, and in no event later than thirty (30) days following termination of employment; (b) vesting of the RSUs and (c) reimbursement of the Employee for zero (0) months of the premiums associated with Employee’s continuation of health insurance for the Employee and the Employee’s family pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), provided the Employee timely elects and is eligible to continue to receive COBRA benefits (less all applicable tax withholdings), payable in accordance with the Company’s normal expense reimbursement policy.
For purposes of this Agreement, “Good Reason” means termination because of a (x) material breach by the Company of this Agreement; or (y) material diminution in the Employee’s authority, duties, or responsibilities. In such event, the Employee shall give the Company written notice thereof which shall specify in reasonable detail the circumstances constituting Good Reason, and there shall be no Good Reason with respect to any such circumstances if cured by the Company within sixty (60) days after such notice.
(iii) Termination as a Result of Death or Disability. In the event the Employee voluntarily resigns as a result of the Employee’s Disability (defined below) or death, the Employee shall receive the following, subject to the execution and timely return by the Employee (or in the case of death, the estate) of a release of claims in the form to be delivered by the Company, which release shall, by its terms, be irrevocable no later than the sixtieth (60th) day following the termination of employment: (a) the Accrued Obligations, payable in a lump sum within the time period required by applicable law, and in no event later than thirty (30) days following termination of employment; and (b) severance pay in an amount equal to the Employee’s Base Salary as of the date of termination for one (1) month, payable in a lump sum immediately following the effective date of the release of claims (further, provided that if the time period for execution and revocation of the release of claims begins in one taxable year and ends in a second year, no payment shall be made until the second taxable year).
For purposes of this Agreement, “Disability” means termination as a result of the Employee’s incapacity or inability, the Employee’s failure to have performed the Employee’s duties and responsibilities as contemplated herein for sixty (60) business days or more within any one (1) year period (cumulative or consecutive), because the Employee’s physical or mental health has become so impaired as to make it impossible or impractical for the Employee to perform the duties and responsibilities contemplated hereunder, with or without reasonable accommodation.
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ARTICLE IV.
Miscellaneous Provisions
A. Governing Law. The Parties agree that the Agreement shall be governed by and construed under the internal laws of the State of New Jersey. In the event of any dispute regarding this Agreement, the Parties hereby irrevocably agree to submit to the exclusive jurisdiction of the federal and state courts situated in New Jersey and the Employee agrees that the Employee shall not challenge personal or subject matter jurisdiction in such courts. The Parties also hereby waive any right to trial by jury in connection with any litigation or disputes under or in connection with this Agreement.
B. Headings. The paragraph headings contained in this Agreement are for convenience only and shall in no way or manner be construed as a part of this Agreement.
C. Severability. In the event that any court of competent jurisdiction holds any provision in this Agreement to be invalid, illegal or unenforceable in any respect, the remaining provisions shall not be affected or invalidated and shall remain in full force and effect.
D. Reformation. In the event any court of competent jurisdiction holds any restriction in this Agreement to be unreasonable and/or unenforceable as written, the court may reform this Agreement to make it enforceable, and this Agreement shall remain in full force and effect as reformed by the court.
E. Entire Agreement. This Agreement constitutes the entire agreement between the Parties, and fully supersedes any and all prior agreements, understanding or representations between the Parties pertaining to or concerning the subject matter of this Agreement, including, without limitation, the Employee’s employment with the Company. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Any amendment to this Agreement must be signed by all parties to this Agreement. The Employee acknowledges and represents that in executing this Agreement, the Employee did not rely, and has not relied, on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. The Parties represent that they relied on their own judgment in entering into this Agreement.
F. Waiver. No waiver of any breach of this Agreement shall be construed to be a waiver as to succeeding breaches. The failure of either party to insist in any one or more instances upon performance of any terms or conditions of this Agreement shall not be construed as a waiver of future performance of any such term, covenant or condition but the obligations of either party with respect thereto shall continue in full force and effect. The breach by one party to this Agreement shall not preclude equitable relief or the obligations hereunder.
G. Modification. The provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and the Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.
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H. Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and permitted assigns. The Employee may not assign this Agreement to a third party. The Company may assign its rights, together with its obligations hereunder, to any affiliate and/or subsidiary of the Company or any successor thereto or any purchaser of substantially all of the assets of the Company.
I. Code Section 409A.
(i) To the extent (A) any payments to which the Employee becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with the Employee’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code; (B) the Employee is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (C) at the time of the Employee’s separation from service the Company is publicly traded (as defined in Section 409A of Code), then such payments (other than any payments permitted by Section 409A of the Code to be paid within six (6) months of the Employee’s separation from service) shall not be made until the earlier of (1) the first day of the seventh month following the Employee’s separation from service or (2) the date of the Employee’s death following such separation from service. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Article IV, Section I shall be paid to the Employee or the Employee’s beneficiary in one lump sum, plus interest thereon at the Delayed Payment Interest Rate (as defined below) computed from the date on which each such delayed payment otherwise would have been made to the Employee until the date of payment. For purposes of the foregoing, the “Delayed Payment Interest Rate” shall mean the national average annual rate of interest payable on jumbo six-month bank certificates of deposit, as quoted in the business section of the most recently published Sunday edition of The New York Times preceding the Employee’s separation from service.
(ii) To the extent any benefits provided under Article III, Section B(ii)-(iii) above are otherwise taxable to the Employee, such benefits shall, for purposes of Section 409A of the Code, be provided as separate in-kind payments of those benefits, and the provision of in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.
(iii) In the case of any amounts payable to the Employee under this Agreement, or under any plan of the Company, that may be treated as payable in the form of “a series of installment payments,” as defined in Treas. Reg. §1.409A-2(b)(2)(iii), the Employee’s right to receive such payments shall be treated as a right to receive a series of separate payments for purposes of Treas. Reg. §1.409A-2(b)(2)(iii).
(iv) It is intended that this Agreement comply with or be exempt from the provisions of Section 409A of the Code and the Treasury Regulations and guidance of general applicability issued thereunder, and in furtherance of this intent, this Agreement shall be interpreted, operated, and administered in a manner consistent with such intent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement to be executed on the date first set forth above, to be effective as of that date.
COMPANY:
| By: | Jimmy Wayne Anderson, CEO |
Address
501 1st Ave North
Suite 901
St. Petersburg, FL 33701
Email:
EMPLOYEE:
| Fredrick Kalei Cutcher |
94 New York Avenue
Lake Hopatcong, NJ 07849
Email: cutcher33@gmail.com
| Signature Page to Employment Agreement |
ATTACHMENT A
Employee Confidential Disclosure, Invention Assignment,
Non-Competition, Non-Solicitation and Non-Interference Agreement
This Employee Confidential Disclosure, Invention Assignment, Non-Competition, Non-Solicitation and Non-Interference Agreement (“Agreement”) is entered into by and between Ferguson Containers, Inc. (the “Company”) and the employee executing this Agreement below (“Employee”). The Effective Date of this Agreement is the Effective Date of the Employment Agreement. The Company and Employee shall be referred to herein individually as a “Party” and collectively as the “Parties.”
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
1. Confidential Information, Employee’s Non-Disclosure Agreement and Inventions Ownership.
(a) Confidential Information. During Employee’s employment with the Company, the Company shall provide Employee otherwise prohibited access to certain Confidential Information (defined below), which is not known to the Company’s competitors or within the Company’s industry generally, which was developed by the Company over a long period of time and/or at its substantial expense, and which is of great competitive value to the Company. For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, all Company Inventions (defined below) and all documents or information, in whatever form or medium, concerning or relating to any of the Company’s designs; drawings; photographs; illustrations; sketches; models; prototypes; samples; specimens; discoveries; ideas; improvements; know-how; processes; techniques; technical improvements; development tools or techniques; modifications; technical data; patterns; formulas; plans; strategies; devices; data; product information; manufacturing, engineering and testing processes, data and strategies; product specifications; products; projects; research; developmental or experimental work; plans for research; clinical studies or trials; information concerning past, current, future and/or proposed products, projects or studies; interpretations and analyses; database schemas or tables; infrastructure; testing protocols; laboratory notebooks; developments; development projects; equipment; software; software source documents; computer programs and codes; source code, object code and other documentation regarding software products; programming standards; user manuals; technical manuals; training manuals; users’ names or passwords; business practices; operations; policies; finances and financial information and data; business plans; marketing and sales plans, strategies and methods; merchandising and product plans, strategies and methods; budgets; forecasts; pricing and pricing strategies; costs; contracts and contract terms (actual and proposed); contractual relationships; procurement requirements; partners and investors (actual and prospective); partner and investor lists, profiles, preferences and nonpublic personal information; customers and suppliers (actual and prospective); customer and supplier lists, profiles and preferences, including, without limitation, buying and selling habits and special needs; customer and supplier nonpublic personal information; business records; audits; management methods and information; reports, recommendations and conclusions; and other business information disclosed or made available to Employee by the Company, either directly or indirectly, in writing, orally, or by drawings or observation. “Confidential Information” does not include any information which is generally available to and known by the public as of the Effective Date of this Agreement or becomes generally available to and known by the public (other than as a result of Employee’s breach of this Agreement or any other agreement or obligation to keep such information confidential). Confidential Information, whether prepared or compiled by Employee or the Company or furnished to Employee during Employee’s employment with the Company, shall be the sole and exclusive property of the Company, and none of such Confidential Information or copies thereof, shall be retained by Employee. Employee agrees not to dispute, contest, or deny any such ownership rights either during or after Employee’s employment with the Company. Employee acknowledges that the Company does not voluntarily disclose Confidential Information, but rather takes precautions to prevent dissemination of Confidential Information beyond those employees, such as Employee, entrusted with such information. Employee further acknowledges that the Confidential Information: (i) is entrusted to Employee because of Employee’s position with the Company; and (ii) is of such value and nature as to make it reasonable and necessary for Employee to protect and preserve the confidentiality and secrecy of the Confidential Information. Employee acknowledges and agrees that the Confidential Information is proprietary to and a trade secret of the Company and, as such, is a valuable, special and unique asset of the Company, the unauthorized use or disclosure of which will cause irreparable harm, substantial injury and loss of profits and goodwill to the Company.
(b) Non-Disclosure.
(i) Employee agrees to preserve and protect the confidentiality of all Confidential Information. Employee agrees that during the period of Employee’s employment with the Company and at any time thereafter (regardless of the reason for Employee’s separation or termination of employment): (A) Employee shall hold all Confidential Information in the strictest confidence, take all reasonable precautions and steps to safeguard all Confidential Information and prevent its wrongful use by or wrongful or inadvertent disclosure or dissemination to any unauthorized person or entity, and follow all policies and procedures of the Company protecting or regarding the Confidential Information; and (B) Employee shall not, directly or indirectly, use for Employee’s own account, use for any other purpose, disclose to anyone, publish, exploit, destroy, copy or remove from the offices of the Company, nor solicit, allow or assist another person or entity to use, disclose, publish, exploit, destroy, copy or remove from the offices of the Company, any Confidential Information or part thereof, except: (1) as permitted in the proper performance of Employee’s duties for the Company; (2) as permitted in the ordinary course of the Company’s business for the benefit of the Company; or (3) as otherwise permitted or required by law. Employee shall immediately notify the Board and the Chief Financial Officer (collectively referred to as “Management”) if Employee learns of or suspects any actual or potential unauthorized use or disclosure of Confidential Information concerning the Company. In the event Employee is subpoenaed, served with any legal process or notice, or otherwise requested to produce or divulge, directly or indirectly, any Confidential Information by any entity, agency or person in any formal or informal proceeding including, but not limited to, any interview, deposition, administrative or judicial hearing and/or trial, except where prohibited by law, Employee should immediately notify Management and deliver a copy of the subpoena, process, notice or other request to Management as promptly as possible, but under no circumstances more than ten (10) days following Employee’s receipt of same; provided, however, Employee is not required to notify Management or provide a copy of the subpoena, process, notice or other request where Employee is permitted to make such disclosure of Confidential Information pursuant to this Agreement or applicable law or regulation, as set forth in Section 1(c) and Section 1(d).
(ii) Subject to Section 1(b)(iii), Employee agrees that Employee will not use or disclose any confidential, proprietary or trade secret information belonging to any former employer or third party, and Employee will not bring onto the premises of the Company or onto any Company property, any confidential, proprietary or trade secret information belonging to any former employer or third party without such third party’s written consent. Employee acknowledges that that the Company has specifically instructed Employee not to disclose to the Company, use, or induce the Company to use, any confidential, proprietary or trade secret information belonging to any previous employer or others.
(iii) During Employee’s employment, the Company will receive from third parties their confidential and/or proprietary information, subject to a duty on the Company’s part to maintain the confidentiality of and to use such information only for certain limited purposes. Employee agrees to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or organization or to use it except as necessary in the course of Employee’s employment with the Company and in accordance with the Company’s agreement with such third party.
(iv) Except in the proper performance of Employee’s duties and responsibilities, Employee agrees that Employee shall not remove, destroy, deface, damage or delete any Property of the Company. For purposes of this Agreement, the term “Property” means all property or information, in whatever form or media, and all copies thereof whether or not the original was deleted or destroyed, of the Company, including, without limitation, any Confidential Information, software, hardware, including any and all Company-issued equipment, devices, cellular telephones, PDAs, computers, laptops, hard drives, keys, access cards, access codes or passwords belonging to the Company, databases, files, records, reports, memoranda, research, plans, proposals, lists, forms, drawings, specifications, notebooks, manuals, correspondence, materials, e-mail, electronic or magnetic recordings or data, and any other physical or electronic documents that Employee receives from or sends to any employee of the Company, that Employee copies from the files or records of the Company, or that Employee otherwise has access to during Employee’s employment.
(c) No Interference. Notwithstanding any other provision of this Agreement, (i) Employee may disclose Confidential Information when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Employee to divulge, disclose or make accessible such information; and (ii) nothing in this Agreement is intended to interfere with Employee’s right to (1) report possible violations of state or federal law or regulation to any governmental or law enforcement agency or entity; (2) make other disclosures that are protected under the whistleblower provisions of state or federal law or regulation; (3) file a claim or charge with the Equal Employment Opportunity Commission (“EEOC”), any state human rights commission, or any other governmental agency or entity; or (4) testify, assist, or participate in an investigation, hearing, or proceeding conducted by the EEOC, any state human rights commission, any other governmental or law enforcement agency or entity, or any court. For purposes of clarity, in making or initiating any such reports or disclosures or engaging in any of the conduct outlined in subsection (ii) above, Employee may disclose Confidential Information to the extent necessary to such governmental or law enforcement agency or entity or such court, need not seek prior authorization from the Company, and is not required to notify the Company of any such reports, disclosures or conduct.
(d) Defend Trade Secrets Act. Employee is hereby notified in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(e) Inventions.
(i) Prior Inventions Retained and Licensed. Employee has provided a list describing all Inventions (defined below) that Employee: (i) conceived, created, developed, made, reduced to practice or completed, either alone or with others, prior to Employee’s employment with the Company; (ii) claims a proprietary right or interest in; and (iii) does not assign to the Company hereunder (collectively referred to as the “Prior Inventions”). If no such list is attached, Employee represents that there are no such Prior Inventions. Employee understands and agrees that the Company makes no attempt to verify Employee’s claim of ownership to any of the Prior Inventions. Employee agrees that Employee shall not incorporate in any work that Employee performs for the Company any Prior Inventions or any of the technology described in any Prior Inventions. Nonetheless, if in the course of Employee’s employment with the Company, Employee incorporates Prior Inventions into a product, service, process or machine of the Company, Employee hereby grants and shall be deemed to have granted the Company a nonexclusive, royalty-free, irrevocable, sublicensable, transferable, perpetual, and worldwide license to make, have made, modify, use, import, reproduce, distribute, prepare and have prepared derivative works of, offer to sell, sell and otherwise exploit such Prior Inventions. For purposes of this Agreement, the term “Inventions” means all tangible and intangible materials, work product, information, methods, designs, computer programs, software, databases, formulas, models, prototypes, reports, discoveries, ideas, improvements, know-how, compositions of matter, processes, photographs, drawings, illustrations, sketches, developments, and all related intellectual property, including inventions, original works of authorship, moral rights, mask works, trade secrets and trademarks.
(ii) Assignment of Inventions. During Employee’s employment with the Company and following the termination of Employee’s employment for any reason, Employee agrees that Employee shall promptly make full written disclosure to the Company, shall hold in trust for the sole right and benefit of the Company, and hereby assigns and shall be deemed to have assigned to the Company or its designee, all of Employee’s right, title, and interest in and to any and all Inventions that have been or may be conceived, created, developed, completed, reduced to practice or otherwise made by Employee, solely or jointly with others, during the period of Employee’s employment with the Company which (a) relate in any manner to the Company’s business or actual or demonstrably anticipated research or development of the Company; (b) are suggested by, result from, or arise out of any work that Employee may do for or on behalf of the Company; (c) result from or arise out of any Confidential Information that may have been disclosed or otherwise made available to Employee as a result of duties assigned to Employee by the Company; or (d) are otherwise made through the use of the time, information, equipment, facilities, supplies or materials of the Company, even if developed, conceived, reduced to practice or otherwise made during other than working hours (collectively referred to as “Company Inventions”). Employee further acknowledges that all original works of authorship that are made by Employee (solely or jointly with others) within the scope of Employee’s employment with the Company and that are protectable by copyright are “Works Made for Hire,” as that term is defined in the United States Copyright Act. Employee understands and agrees that the decision whether or not to commercialize or market any Company Inventions is within the Company’s sole discretion and for the Company’s sole benefit, and that no royalty will be due to Employee as a result of the Company’s efforts to commercialize or market any such Company Innovation.
(iii) Maintenance of Records. Employee agrees to keep and maintain adequate and current hard-copy and electronic records of all Company Inventions. The records will be available to and remain the sole property of the Company during Employee’s employment with the Company and at all times thereafter.
(iv) Patent and Copyright Registrations. Employee agrees to assist the Company or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in Company Inventions in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, affidavits, and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company and/or its successors, assigns and nominees, the sole and exclusive rights, title and interest in and to such Company Inventions. Employee further agrees that Employee’s obligation to execute or cause to be executed, when it is in Employee’s power to do so, any such instrument or papers shall continue after the termination of this Agreement. Employee hereby appoints Management as Employee’s attorney-in-fact to execute documents on Employee’s behalf for this purpose. Employee agrees that this appointment is coupled with an interest and will not be revocable.
(f) Return of Company Property. Upon request by the Company or upon the termination of Employee’s employment for any reason, Employee shall immediately return and deliver to the Company any and all Property, including, without limitation, Confidential Information, software, hardware, including any and all Company-issued equipment, devices, cellular telephones, PDAs, computers, laptops, hard drives, keys, access cards, access codes or passwords, databases, files, documents, records, reports, memoranda, research, plans, proposals, lists, papers, books, forms, drawings, specifications, notebooks, manuals, correspondence, materials, e-mail, electronic or magnetic recordings or data, including all copies thereof (in electronic or hard copy format), which belong to the Company or which relate to the Company’s business and which are in Employee’s possession, custody or control, whether prepared by Employee or others. Employee further agrees that after Employee provides such Property to the Company, Employee will immediately destroy any information or documents, including, without limitation, any analyses, compilations, studies or other documents, whether prepared by Employee or others, containing or reflecting any Confidential Information or relating to the business of the Company from any computer, cellular phone or other digital or electronic device in Employee’s possession, custody or control, and Employee shall certify such destruction in writing to the Company. Upon request by the Company, Employee shall provide such computer, cellular phone or other digital or electronic device to the Company or the Company’s designee for inspection to confirm that such information and documents have been destroyed. If at any time after the termination of Employee’s employment for any reason, Employee or the Company determines that Employee has any Property in Employee’s possession or control, Employee shall immediately return all such Property in Employee’s possession or control, including all copies and portions thereof, to the Company.
2. Restrictive Covenants. In consideration for (i) the Company’s promise to provide Confidential Information to Employee; (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to Employee; (iii) access to the customers and suppliers of the Company; and (iv) the Company’s employment of Employee and the compensation and other benefits provided by the Company to Employee, to protect the Confidential Information and goodwill of the Company, Employee agrees to the following restrictive covenants.
(a) Non-Competition. During Employee’s employment with the Company and for a period of six (6) months after Employee’s employment terminates for any reason (the “Restricted Period”), other than in connection with Employee’s duties for the Company, Employee shall not, directly or indirectly, either individually or as a principal, partner, stockholder, Board, agent, consultant, contractor, distributor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, (i) control, manage, operate, establish, take steps to establish, lend money to, invest in, solicit investors for, or otherwise provide capital to, or (ii) become employed by, join, perform services for, consult for, do business with or otherwise engage in any Competing Business (defined below) within the Restricted Area (defined below). For purposes of this Agreement, the term “Competing Business” means any business, individual, partnership, firm, corporation or other entity that is competing or that is preparing to compete with any aspect of the Company’s business. For purposes of this Agreement, based on Employee’s position and access to the Company’s Confidential Information, the term “Restricted Area” means (i) the United States; (ii) any geographical area or territory outside the United States where the Company sells or markets its products; (iii) any geographical area or territory in the United States or internationally where the Company operates and for or within which Employee performed any services for the Company; (iv) any geographical area or territory in the United States or internationally where the Company sells or markets its products and for which Employee had any responsibility; and (v) any other geographical area or territory about which Employee received Confidential Information during the last twenty-four (24) months of Employee’s employment with the Company.
(b) Non-Solicitation of Customers. Employee agrees that during the Restricted Period, other than in connection with Employee’s duties for the Company, Employee shall not use, directly or indirectly, either as a principal, manager, agent, employee, consultant, officer, director, stockholder, partner, investor or lender or in any other capacity, and whether personally or through other persons, solicit business from, interfere with, or induce to curtail or cancel any business or contracts with the Company, or attempt to solicit business with, interfere with, or induce to curtail or cancel any business or contracts with the Company, or do business with any actual or prospective customer or supplier of the Company with whom the Company did business or who the Company solicited within the preceding twenty-four (24) months, and who or which: (1) Employee contacted, called on, serviced or did business with during Employee’s employment with the Company; (2) Employee learned of as a result of Employee’s employment with the Company; or (3) about whom Employee received Confidential Information. This restriction applies only to business which is in the scope of services or products provided by the Company.
(c) Non-Recruitment. To the extent permitted by law, Employee agrees that during the Restricted Period, other than in connection with Employee’s duties for the Company, Employee shall not, on behalf of Employee or on behalf of any other person or entity, directly or indirectly, hire, solicit or recruit, or attempt to hire, solicit or recruit, or encourage to leave or otherwise cease his/her employment or engagement with the Company, any individual who is an employee or independent contractor of the Company or who was an employee or independent contractor of the Company within the twelve (12) month period prior to Employee’s separation from employment with the Company.
(d) Non-Disparagement. Employee agrees that the Company’s goodwill and reputation are assets of great value to the Company, which have been obtained and maintained through great costs, time and effort. Therefore, Employee agrees that during Employee’s employment and after the termination of Employee’s employment, Employee shall not make, publish or otherwise transmit any false statements, whether written or oral, regarding the Company and its officers, directors, executives, employees, contractors, consultants, products, programs, studies, business or business practices. A violation or threatened violation of this Section 2(d) may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law. Nothing in this Section 2(d) restricts or prevents Employee from providing truthful testimony as required by court order or other legal process or is intended to interfere with Employee’s right to engage in the conduct outlined in Section 1(c).
(e) Tolling. If Employee violates any of the covenants contained in this Section 2, the Restricted Period applicable to such covenant(s) shall be suspended and shall not run in favor of Employee from the time of the commencement of such violation until the time that Employee cures the violation to the satisfaction of the Company; the period of time in which Employee is in breach shall be added to the Restricted Period applicable to such covenant(s).
(f) Reasonableness. Employee hereby represents to the Company that Employee has read and understands, and agrees to be bound by, the terms of Section 1 and Section 2. Employee understands that the covenants in Section 2 may limit Employee’s ability to engage in certain businesses anywhere in or involving the Restricted Area during the Restricted Period, but Employee acknowledges that Employee shall receive Confidential Information, as well as sufficiently high remuneration and other benefits as an employee of the Company to justify such restrictions. Employee acknowledges that the geographic scope and duration of the restrictions and covenants contained in Section 1 and Section 2 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) Employee’s level of control over and contact with the business in the Restricted Area; and (iii) the amount of compensation and Confidential Information (including, without limitation, trade secrets) that Employee is receiving in connection with Employee’s employment with the Company. It is the desire and intent of the Parties that the provisions of Section 1 and Section 2 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, Employee and the Company hereby waive any provision of applicable law that would render any provision of Section 1 and/or Section 2 invalid or unenforceable.
3. Remedies. Employee acknowledges that the restrictions and covenants contained in Section 1 and Section 2, in view of the nature of the Company’s business and Employee’s position with the Company, are reasonable and necessary to protect the Company’s legitimate business interests, goodwill and reputation, and that any violation of Section 1 or Section 2 would result in irreparable injury and continuing damage to the Company, and that money damages would not be a sufficient remedy to the Company for any such breach or threatened breach. Therefore, Employee agrees that the Company shall be entitled to a temporary restraining order and injunctive relief restraining Employee from the commission of any breach or threatened breach of Section 1 and/or Section 2, without the necessity of establishing irreparable harm or the posting of a bond, and to recover from Employee damages incurred by the Company as a result of the breach, as well as the Company’s attorneys’ fees, costs and expenses related to any breach or threatened breach of this Agreement and enforcement of this Agreement. Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees, and costs. The existence of any claim or cause of action by Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the restrictions or covenants contained in Section 1 or Section 2, or preclude injunctive relief.
4. No Previous Restrictive Agreements. Employee represents that, except as disclosed to the Company in writing, Employee is not bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any confidential, proprietary or trade secret information in the course of Employee’s employment with the Company or that contains any non-competition, non-solicitation and/or non-recruitment obligations. Employee further represents that the performance of Employee’s job duties for the Company does not and will not violate or breach any agreement with any previous employer or other party, or any legal obligation that Employee may owe to any previous employer or other party, including, without limitation, any non-disclosure, non-competition, non-solicitation and/or non-recruitment obligations. Employee shall not disclose to the Company or induce the Company to use any confidential, proprietary or trade secret information belonging to any previous employer or others.
5. Business Opportunities. Employee, without further compensation, assigns and agrees to assign to the Company and its successors, assigns or designees, all of Employee’s right, title and interest in and to all Business Opportunities (defined below), and further acknowledges and agrees that all Business Opportunities constitute the exclusive property of the Company. Employee shall present all Business Opportunities to a Director of the Company, and shall not exploit a Business Opportunity. For purposes of this Agreement, “Business Opportunities” means all business ideas, prospects, or proposals pertaining to any aspect of the Company’s business and any business the Company prepared to conduct or contemplated conducting during Employee’s employment with the Company, which are developed by Employee or originated by any third party and brought to the attention of Employee, together with information relating thereto. For the avoidance of doubt, this Section 5 is not intended to limit or narrow Employee’s duties or obligations under federal or state law with respect to corporate opportunities.
6. Conflicting Activities. Employee agrees that, during Employee’s employment with the Company, Employee shall not engage in any employment, consulting relationship, business or other activity that: (i) is in any way competitive with the business or proposed business of the Company; (ii) conflicts with Employee’s duty of loyalty, responsibilities or obligations to the Company; or (iii) adversely affects the performance of Employee’s job duties and responsibilities with the Company. Employee agrees to not assist any other person or organization in competing with the Company or in preparing to engage in competition with the business or proposed business of the Company.
7. Breach. Employee acknowledges that Employee is subject to immediate dismissal by the Company for any breach of this Agreement and that such a dismissal will not relieve Employee from any continuing obligations under this Agreement or from the imposition by a court of any judicial remedies, including, without limitation, money damages and/or injunctive relief for such breach.
8. Notice. If Employee, in the future, seeks or is offered employment, or any other position or capacity with another company, entity or person, Employee agrees to inform each such company, entity or person of the existence of the restrictions in Section 1 and Section 2. The Company shall be entitled to advise such company, entity or person and third parties, including, without limitation, actual or potential customers, of the provisions of Section 1 and Section 2 and to otherwise deal with such company, entity, person or third party to ensure that the provisions of Section 1 and Section 2 are enforced and duly discharged.
9. Reformation. The Company and Employee agree that in the event any of the terms, provisions, covenants or restrictions contained in this Agreement, or any part thereof, shall be held by any court of competent jurisdiction to be effective in any particular area or jurisdiction only if said term, provision, covenant or restriction is modified to limit its duration or scope, then the court shall have such authority to so reform the term, provision, covenant or restriction and the Parties hereto shall consider such term, provision, covenant or restriction to be amended and modified with respect to that particular area or jurisdiction so as to comply with the order of any such court and, as to all other jurisdictions, the term, provision, covenant or restriction contained herein shall remain in full force and effect as originally written. By agreeing to this contractual modification prospectively at this time, the Company and Employee intend to make Section 1 and Section 2 enforceable under the law or laws of all applicable jurisdictions so that the restrictive covenants in their entirety and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.
10. Severability. In the event any court of competent jurisdiction or any foreign, federal, state, county or local government or any other governmental regulatory or administrative agency or authority holds any provision of this Agreement to be invalid, illegal or unenforceable, such invalid, illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required, and the remaining provisions shall not be affected or invalidated and shall remain in full force and effect.
11. Binding Effect of Agreement and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors, legal representatives and permitted assigns. Employee may not assign this Agreement to a third party. The Company may assign its rights, together with its obligations hereunder, to any affiliate and/or subsidiary of the Company or any successor thereto or any purchaser of substantially all of the assets of the Company, without Employee’s consent and without advance notice.
12. Survival. Employee agrees that Employee’s obligations under this Agreement shall continue in effect after the termination of Employee’s employment, regardless of the reason(s) for termination, and whether such termination is voluntary or involuntary.
13. Affiliates. For the purposes of this Agreement, any references to the Company shall be interpreted as broadly as possible and include, without limitation, any predecessors, successors, and parents, subsidiaries, and affiliates of the Company, and any other corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental body or other entity directly or indirectly through one or more intermediaries, is controlled by, or is under common control with, the Company. The Parties agree that such affiliates.
are intended third-party beneficiaries of this Agreement and may enforce the terms of this Agreement as if each were a party to this Agreement.
14. At-Will Employment. Employee’s employment with the Company is on an at-will basis. No provision of this Agreement constitutes an employment contract or guarantee of employment for any period of time, or confers any rights to Employee that are contrary to the employment-at-will doctrine. In addition, no policy, practice or statement of the Company will create an implied contract that contradicts the at-will nature of Employee’s employment relationship. Any change to the at-will employment relationship must be by a specific, written agreement signed by Employee and the Company. No other representative of the Company has the authority to alter this at-will employment relationship on behalf of the Company. This Agreement does not purport to set forth all of the terms and conditions of Employee’s employment. Employee acknowledges and agrees that Employee owes obligations to the Company that are not set forth in this Agreement.
15. Waiver. The failure of either Party to insist in any one or more instances upon performance of any terms or conditions of this Agreement shall not be construed as a waiver of future performance of any such term, covenant or condition, but the obligations of either Party with respect thereto shall continue in full force and effect. No waiver of any breach of this Agreement shall be construed to be a waiver as to succeeding breaches and no waiver of any provisions of this Agreement shall constitute a waiver of any other provision of this Agreement. The breach by one party to this Agreement shall not preclude equitable relief, injunctive relief or the obligations in Section 1 or Section 2.
16. Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, and fully supersedes any and all prior and contemporaneous agreements, understandings and/or representations between the Parties, whether oral or written, pertaining to the subject matter of this Agreement; provided, however, Employee’s obligations under this Agreement are in addition to Employee’s obligations under any applicable law or regulation, any offer letter or agreement, and the Company’s policies and procedures. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Any amendment to this Agreement must be signed by all parties to this Agreement.
17. Disclaimer of Reliance. Except for the specific representations expressly made by the Company in this Agreement, Employee specifically disclaims that Employee is relying upon or has relied upon any communications, promises, statements, inducements, or representation(s) that may have been made, oral or written, regarding the subject matter of this Agreement. Employee represents that Employee relied solely and only on Employee’s own judgment in making the decision to enter into this Agreement.
18. Controlling Law and Venue. This Agreement shall be governed by and construed under the laws of the State of Florida, without regard to any applicable conflict of law or choice of law rules. Venue of any litigation arising from this Agreement or Employee’s employment with the Company shall be in the federal and state courts of competent jurisdiction in the State of Florida for any dispute relating to or arising out of this Agreement or Employee’s employment, and agrees that Employee shall not challenge personal jurisdiction in such courts. Employee waives any objection that Employee may now or hereafter have to the venue or jurisdiction of any proceeding in such courts or that any such proceeding was brought in an inconvenient forum (and agrees not to plead or claim the same).
19. Voluntary Agreement. Employee acknowledges that Employee has read and understands this Agreement, and as signified by Employee’s signature hereto, Employee is voluntarily executing the same.
20. Execution in Multiple Counterparts. This Agreement may be executed in multiple counterparts, whether or not all signatories appear on these counterparts, and each counterpart shall be deemed an original for all purposes.
{Signature Page Follows}
The signatures below indicate that the Parties have read, understand and will comply with this Agreement.
COMPANY:
| By: | Jimmy Wayne Anderson, CEO |
Address
501 1st Ave North
Suite 901
St. Petersburg, FL 33701
EMPLOYEE:
| Fredrick Kalei Cutcher |
94 New York Avenue
Lake Hopatcong, NJ 07849
Email: cutcher33@gmail.com
Exhibit 10.8
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO BORROWER. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: May 17, 2023
Principal Amount: $40,000.00
CONVERTIBLE NOTE
DUE MAY 17, 2023
THIS CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Notes of Global Technologies, Ltd, a Delaware corporation, (the “Borrower”), due May 17, 2023 (this note, the “Note” and, collectively with the other notes of such series, the “Notes”).
FOR VALUE RECEIVED, Borrower promises to pay to Hillcrest Ridgewood Partners, LLC, or its registered assigns (the “Holder”), with an address at: 919 N. Market Street, Suite 950, Wilmington, DE 19081, or shall have paid pursuant to the terms hereunder, the principal sum of Forty Thousand Dollars ($40,000.00), plus accrued but unpaid interest thereon, on May 17, 2024 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid or such later date if extended by the Holder as provided hereunder, and to pay interest, if any, to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.
This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“Alternate Consideration” shall have the meaning set forth in Section 5(a).
“Bankruptcy Event” means any of the following events: (a) Borrower or any Subsidiary thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Borrower or any Subsidiary thereof, (b) there is commenced against Borrower or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) Borrower or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) Borrower or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) Borrower or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f) Borrower or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) Borrower or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
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“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d).
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of Florida are required by law or other governmental action to close.
“Buy-In” shall have the meaning set forth in Section 4(c)(v).
“Change of Control Transaction” means, other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes, the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of Borrower, by contract or otherwise) of in excess of 50% of the voting securities of Borrower, (b) Borrower merges into or consolidates with any other Person, or any Person merges into or consolidates with Borrower and, after giving effect to such transaction, the stockholders of Borrower immediately prior to such transaction own less than 50% of the aggregate voting power of Borrower or the successor entity of such transaction, (c) Borrower sells or transfers all or substantially all of its assets to another Person and the stockholders of Borrower immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by Borrower of an agreement to which Borrower is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
“Conversion” shall have the meaning ascribed to such term in Section 4.
“Conversion Date” shall have the meaning set forth in Section 4(a).
“Conversion Price” shall have the meaning set forth in Section 4(b).
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“Event of Default” shall have the meaning set forth in Section 7(a).
“Fundamental Transaction” shall have the meaning set forth in Section 5(a).
“Mandatory Default Amount” means 150% of the outstanding principal amount of this Note, plus, all other amounts, costs, expenses and liquidated damages due in respect of this Note.
“Florida Courts” shall have the meaning set forth in Section 9(c).
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“Note Register” shall have the meaning set forth in Section 3(c).
“Notice of Conversion” shall have the meaning set forth in Section 4(a).
“Original Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.
“Other Holder” means a holder, if any of one or more Other Notes (collectively, “Other Holders”).
“Other Notes” means Notes, if any, nearly identical to this Note issued to other Holders if any pursuant to the Purchase Agreement.
“Purchase Agreement” means the Securities Purchase Agreement, dated as of ______________ among Borrower and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Successor Entity” shall have the meaning set forth in Section 5(a).
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock Exchange, the OTC Bulletin Board, OTCQB, OTC Pink or the OTCQX (or any successors to any of the foregoing).
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if any of the NASDAQ markets or exchanges is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Stock on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to Borrower, the fees and expenses of which shall be paid by Borrower.
“Warrants” means the Warrants issued pursuant to the Purchase Agreement.
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Section 2. Interest and Repayment.
a) Interest and Principal Payments. Holders shall be entitled to receive, and Borrower shall pay, simple interest on the outstanding principal amount of this Note at the annual rate of eight percent (8%) (as subject to increase as set forth in this Note) from the Original Issue Date through the Maturity Date. Principal and interest shall be due and payable on the Maturity Date.
b) Payment Grace Period. Except as set forth herein, the Borrower shall not have any grace period to pay any monetary amounts due under this Note.
c) Conversion Privileges. The Conversion Rights set forth in Section 4 shall remain in full force and effect immediately from the date hereof and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Section 4 hereof.
d) Application of Payments. Interest on this Note shall be calculated on the basis of a 365 or 366-day year as the case may be and the actual number of days elapsed. Payments made in connection with this Note shall be applied first to amounts due hereunder other than principal and interest, thereafter to interest and finally to principal.
e) Pari Passu. All payments made on this Note and the Other Notes and all actions taken by the Borrower with respect to this Note and the Other Notes, including but not limited to Optional Redemption, shall be made and taken pari passu with respect to this Note and the Other Notes. Notwithstanding anything to the contrary contained herein or in the Transaction Documents, it shall not be considered non-pari passu for a Holder or Other Holder to elect to receive interest paid in shares of Common Stock or for the Borrower to actually pay interest in shares of Common Stock to such electing Holder or Other Holder, nor for a Holder of a Note or Other Note to accept a prepayment provided a prepayment offer was made to the Holder and holders of Other Notes on a pari passu basis.
f) Manner and Place of Payment. Principal and interest on this Note and other payments in connection with this Note shall be payable at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make its payment pursuant to the assignee’s instructions upon receipt of written notice thereof. Except as set forth herein, this Note may not be prepaid or mandatorily converted without the consent of the Holder.
Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.
c) Reliance on Note Register. Prior to due presentment for transfer to Borrower of this Note, Borrower and any agent of Borrower may treat the Person in whose name this Note is duly registered on the register maintained of Holders of the Notes and Other Notes (the “Note Register”) as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither Borrower nor any such agent shall be affected by notice to the contrary.
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Section 4. Conversion.
a) Voluntary Conversion. At any time after the Closing Date, until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to Borrower a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note and accrued interest, if any, to be converted at the election of the Holder and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to Borrower unless the entire principal amount of this Note has been so converted. Conversions of principal hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s). Borrower may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
b) Conversion Price. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), 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 twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. If the Trading Prices cannot be calculated for such security on such date in the manner provided above, the Trading Prices shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Prices are required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. Upon any Event of Default, including not having current financial information publicly disclosed, the Conversion Price will be reduced to 50% multiplied by the Market Price (as defined herein)(representing a discount rate of 50%).
c) Mechanics of Conversion.
i. Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted plus interest, if any, elected by the Holder to be converted by (y) the Conversion Price. Upon every Conversion, the Company shall deliver an additional $2,500 worth of shares (as calculated by the Conversion Price in effect on the Conversion Notice being honored) to cover the Holder’s expenses and deposit fees associated with each Notice of Conversion.
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ii. Delivery of Certificate Upon Conversion. Not later than five (5) Trading Days after each Conversion Date (the “Share Delivery Date”), Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. On or after the earlier of (i) the six-month anniversary of the Original Issue Date or (ii) the Effective Date, Borrower shall in lieu of delivering physical certificates representing the Conversion Shares, upon request of the Holder, so long as the certificates therefor do not bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Borrower shall cause its transfer agent to electronically transmit the Conversion Shares by crediting the account of Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Borrower’s Common Stock is DTC eligible and the Borrower’s transfer agent participates in the Deposit Withdrawal at Custodian system. Such delivery must be made on or before the Legend Removal Date.
iii. Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to Borrower at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event Borrower shall promptly return to the Holder any original Note delivered to Borrower and the Holder shall promptly return to Borrower the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation Absolute. Borrower’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to Borrower or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of Borrower to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by Borrower of any such action Borrower may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, Borrower may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and Borrower posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, Borrower shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If Borrower fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, Borrower shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages being to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for Borrower’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if Borrower fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder or Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then Borrower shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if Borrower had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, Borrower shall be required to pay the Holder $1,000. The Holder shall provide Borrower written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of Borrower, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi. Reservation of Shares Issuable Upon Conversion. Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than three times such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note and interest which has accrued and would accrue on such principal amount, assuming such principal amount was not converted through three years after the Original Issue Date. Borrower covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
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vii. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, Borrower shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
viii. Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and Borrower shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to Borrower the amount of such tax or shall have established to the satisfaction of Borrower that such tax has been paid. Borrower shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.
d) Holder’s Conversion Limitations. Borrower shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of Borrower subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to Borrower each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and Borrower shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) Borrower’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by Borrower, or (iii) a more recent written notice by Borrower or Borrower’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, Borrower shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of Borrower, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder may decrease the Beneficial Ownership Limitation at any time and the Holder, upon not less than 61 days’ prior notice to Borrower, may increase the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase will not be effective until the 61st day after such notice is delivered to Borrower. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.
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Section 5. Certain Adjustments.
a) Stock Dividends and Stock Splits. If Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by Borrower upon conversion of the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of Borrower, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of Borrower) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time Borrower grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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c) Pro Rata Distributions. During such time as this Note is outstanding, if Borrower shall declare or make any dividend whether or not permitted, or makes any other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Fundamental Transaction. If, at any time while this Note is outstanding, (i) Borrower, directly or indirectly, in one or more related transactions effects any merger or consolidation of Borrower with or into another Person, (ii) Borrower, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) Borrower, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) Borrower, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of Borrower, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and Borrower shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. Borrower shall cause any successor entity in a Fundamental Transaction in which Borrower is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Borrower under this Note and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of Borrower and shall assume all of the obligations of Borrower under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as Borrower herein.
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e) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of Borrower) issued and outstanding.
f) Notice to the Holder.
i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, Borrower shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Conversion by Holder. If (A) Borrower shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) Borrower shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of Borrower shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which Borrower is a party, any sale or transfer of all or substantially all of the assets of Borrower, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) Borrower shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of Borrower, then, in each case, Borrower shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding Borrower or any of the Subsidiaries, Borrower shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 6. Negative Covenants. As long as any principal amount of this Note remains outstanding, Borrower shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
a) enter into any transaction pursuant to Section 3(a)(10) of the Securities Act;
b) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder, provided, however, that Borrower may amend its articles of incorporation to increase the number of common shares authorized provided all such additional shares of common stock are reserved solely for issuance to the Holders, or to create a class or series of preferred stock so long as the class or series has no conversion or dividend rights, or any liquidation preference;
c) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to the Conversion Shares or Warrant Shares as permitted or required under the Transaction Documents;
d) declare or make any dividend or other distribution of its assets or rights to acquire its assets to holders of shares of Common Stock, preferred stock, or any other equity security by way of return of capital or otherwise including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction;
d) enter into any transaction with any Affiliate of Borrower which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of Borrower (even if less than a quorum otherwise required for board approval); or
e) enter into any agreement with respect to any of the foregoing.
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Section 7. Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of (A) the principal or interest amount of this Note or (B) liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of a default under clause (B) above, is not cured within 3 Trading Days after Borrower has become or should have become aware of such default;
ii. Borrower shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by Borrower of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after written notice of such failure sent by the Holder or by any Other Holder to Borrower and (B) ten (10) Trading Days after Borrower has become or should have become aware of such failure;
iii. a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents other than the Notes, including but not limited to failure to strictly comply with the provisions of the Transaction Documents, or (B) any other material agreement, lease, document or instrument to which Borrower or any Subsidiary is obligated (and not covered by clause (vi) below), which, in the case of subsection (B), would reasonably be expected to have a Material Adverse Effect;
iv. any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any Other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;
v. Borrower or any Subsidiary shall be subject to a Bankruptcy Event;
vi. Borrower or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. Borrower shall be a party to any Change of Control Transaction or Fundamental Transaction;
viii. Borrower shall fail for any reason to deliver certificates to a Holder prior to the fifth (5th) Trading Day after a Conversion Date pursuant to Section 4(c) or Borrower shall provide at any time notice to the Holder, including by way of public announcement, of Borrower’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
ix. any monetary judgment, writ or similar final process shall be entered or filed against Borrower, any subsidiary or any of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 90 calendar days;
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x. any dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business not assumed by the Borrower or another Subsidiary;
xi. cessation of material operations by Borrower or by a material Subsidiary if the operations are not assumed by the Borrower or another Subsidiary;
xii. an event resulting in the Common Stock no longer being listed or quoted on a Trading Market, or notification from a Trading Market that the Borrower is not in compliance with the conditions for such continued quotation on at least one Trading Market and such non-compliance continues for twenty (20) days following such notification;
xiii. a Commission or judicial stop trade order or suspension from the Borrower’s Principal Trading Market;
xiv. the Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder;
xv. a failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document;
xvi. a default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and Holder are parties, or the occurrence of an event of default under any such other agreement to which Borrower and Holder are parties which is not cured after any required notice and/or cure period or waived;
xvii. the occurrence of an Event of Default under any Other Note;
xviii. any material provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Borrower, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by Borrower or any governmental authority having jurisdiction over Borrower or Holder, seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document;
xix. Borrower does not meet the current public information requirements under Rule 144; or
xx. the Conversion Price falls below the par value of the common stock subject to cure as set forth above.
In the event more than one grace, cure or notice period is applicable to an Event of Default, then the shortest grace, cure or notice period shall be applicable thereto.
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b) Remedies Upon Event of Default, Fundamental Transaction and Change of Control Transaction. If any Event of Default or a Fundamental Transaction or a Change of Control Transaction occurs, the outstanding principal amount of this Note, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing on the Maturity Date and also five (5) days after the occurrence of any Event of Default interest on this Note shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by Borrower. In connection with such acceleration described herein, the Holder need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 8. Prepayment. The Borrower shall not have the option to prepay this Note after 180th day after the Issue Date (“Cutoff Date”). Prior to the Cutoff Date, the Borrower shall have the right, exercisable on not less five (5) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to 125%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. Prior to the Option Prepayment Date, the Holder may convert all or a portion of this Note in accordance with its terms.
Section 9. Miscellaneous.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to Borrower, to: Global Technologies, Ltd, 501 1st Ave N, Suite 901, St. Petersburg, FL 33701 Attn: Jimmy Wayne Anderson, email: info@globaltechnologiesltd.info , and (ii) if to the Holder, to: the address, email address and fax number indicated on the front page of this Note.
a) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Borrower, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Borrower. This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
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b) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to Borrower.
c) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of St. Petersburg, County of Pinellas (the “Florida Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Florida Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Florida Courts, or such Florida Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding. This Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to Florida Civil Procedure Law and Rules or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.
d) Waiver. Any waiver by Borrower or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of Borrower or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by Borrower or the Holder must be in writing.
e) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
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f) Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
i) Amendment. Unless otherwise provided for hereunder, this Note may not be modified or amended or the provisions hereof waived without the written consent of Borrower and the Holder.
j) Facsimile Signature. In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force and effect as if such signature page were an original thereof.
*********************
(Signature Pages Follow)
| 17 |
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the Date written above.
| GLOBAL TECHNOLOGIES, LTD | ||
| By: | ||
| Name: | Jimmy Wayne Anderson | |
| Title: | Chief Executive Officer | |
| 18 |
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Note due May 17, 2023 of Global Technologies, Ltd, a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”), of Borrower according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by Borrower in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to Borrower that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
| Date to Effect Conversion: ____________________________ | |
| Principal Amount of Note to be Converted: $__________________ | |
| Additional Interest to be Converted: $_______________ | |
| Number of shares of Common Stock to be issued: ______________ | |
| Signature: _________________________________________ | |
| Name: ____________________________________________ | |
| Address for Delivery of Common Stock Certificates: __________ | |
| _____________________________________________________ | |
| _____________________________________________________ | |
| Or | |
| DWAC Instructions: _________________________________ | |
| Broker No:_____________ | |
| Account No: _______________ |
| 19 |
Exhibit 31.1
CERTIFICATIONS
I, Frederick Kalei Cutcher, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the nine months ended March 31, 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. |
| 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: May 23, 2023 | |
| /s/ Frederick Kalei Cutcher | |
| Frederick Kalei Cutcher | |
| President |
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, Frederick Kalei Cutcher, Principal Financial Officer of Global Technologies, Ltd certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the nine months ended March 31, 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. |
| 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: May 23, 2023 | ||
| By: | /s/ Frederick Kalei Cutcher | |
| Frederick Kalei 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 quarterly report of Global Technologies, Ltd (the “Company”) on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, hereby certify, in their capacity as an executive officer of the Company, 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: May 23, 2023 | /s/ Frederick Kalei Cutcher |
| Frederick Kalei Cutcher | |
| President (Principal Executive Officer) |