GZ6G Technologies Corp S-1/A, filed Apr 28, 2022
GZ6G Technologies Corp. (GZIC)
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Nevada
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7375
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20-0452700
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer Identification
Number)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☐
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Title of Class of Shares to be Registered
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Amount to be Registered
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Maximum
Offering Price Per Share
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Maximum Aggregate
Offering Price (1)
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Amount of Registration
Fee (1)(2)
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Common Stock, $0.001 par value per share issuable pursuant to MHFLP (3)
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5,000,000
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$2.00
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$10,000,000
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$927.00
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Shares of Common stock, $0.001 par value per share issuable upon exercise of Common Stock Purchase Warrant (4)(8)
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570,487
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$1.00
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$ 570,487
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$52.88
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Shares of Common Stock pursuant to conversion of a Promissory Note, $0.001 par value per share (5)
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560,000
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$1.00
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$ 560,000
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$51.91
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Shares of Common Stock, $0.001 par value per share issuable upon exercise of Common Stock Purchase Warrant (6)(8)
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560,000
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$1.00
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$ 560,000
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$51.91
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Shares of Common Stock, $0.001 par value per share, relative to an Engagement Agreement (7)
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10,769
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$2.08
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$22,399.52
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$2.08
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6,701,256
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$11,712,886.52
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$1,085.78
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(1)
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Estimated solely for the purpose of calculating the registration fee under Rule 457(a) and (o) of the Securities Act of 1933.
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(2)
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Based on the calculation of multiplying the aggregate offering amount by $0.0000927
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(3)
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Represents common shares for resale by Mast Hill Fund L.P. (MHFLP), a Delaware limited partnership (the Selling Stockholder”), which shares are issuable by GZ6G Technologies Corp. (the “Company”)
pursuant to the Equity Purchase Agreement (the “EPA”) entered into with Mast Hill Fund L.P. (MHFLP) on 11/10/2021. Although we are not mandated to sell shares under the Equity Purchase Agreement, the Equity Purchase Agreement gives
us the option to sell to MHFLP, up to $10,000,000 worth of our common stock over the period ending twenty-four months following the Effect of this Registration Statement, and MHFLP is obligated to purchase the shares upon a Put notice
from the Company. The $10,000,000 was stated as the total amount of available funding in the Equity Purchase Agreement because this was the maximum amount that MHFLP agreed to offer us in funding. Additionally, MHFLP will purchase the
shares at a price equal to 90% of the volume weighted average price of the Company’s Common Stock on the Principal Market on the Trading Day immediately preceding the respective Put Date for the duration of the Offering (the
“Offering”).
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(4)
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Represents common shares issuable upon exercise of a common stock purchase warrant included in the Equity Purchase Agreement (described above in note #3) for the purchase of 560,000 shares of our
common stock (MHFLP Warrant) issued to MHFLP as a commitment fee to the ELOC, and common shares issuable upon exercise of a common stock purchase warrant or the purchase of 10,487 shares of our common stock (Darbie Warrant)
issued to J.H. Darbie and Company as an incentive fee. J.H. Darbie and Company is an authorized, registered broker dealer.
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(5)
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Represents common shares issuable upon conversion of a convertible promissory note previously issued to Talos Victory Fund, LLC (Talos Note) in the amount of $560,000. We have
received funds from this Note in the amount of $463,680.00, following payment of a finder’s fee in the amount of $33,320.00 and the investor’s legal fees of $7,000.00.
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(6)
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Represents common shares issuable upon exercise pursuant to the common stock purchase warrant for the purchase of 560,000 shares of our common stock (TVFLLC Warrant) issued to TVFLLC as a
commitment fee.
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(7)
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The Company will not receive any proceeds from the sale of these shares; we are registering these shares on behalf of the selling shareholder, Carter Terry & Company, and pursuant to a Engagement Agreement entered
into with Carter Terry & Company, wherein they received, in addition to 8% of cash raised for the Company, 4% of the cash raised in restricted shares of common stock divided by the market price at the close of the engagement
agreement with Carter Terry & Company. Carter Terry & Company is an authorized, registered broker dealer.
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(8)
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A total of 1,130,487 shares of common stock are being registered pursuant to common stock purchase warrants issuable upon exercise of the warrants , on
behalf of the selling shareholders: (1) Mast Hill Fund LP (560,000); (2) Talos Victory Fund, LLC (560,000); and (3) J.H. Darbie and Company (10,487), and as described above. The warrants are
exercisable immediately and the Company is obligated to issue the corresponding number of shares pursuant to the exercise notice.
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In connection with the execution of the Equity Purchase Agreement, we issued a common stock purchase warrant (the “MHFLP Warrant”) for the purchase of 560,000 shares of our Common Stock (the “MHFLP Warrant Shares”) to the Selling Stockholder as a commitment fee. The MHFLP Warrant has a term of three years from the date of issuance and has an initial exercise price of $1.00 per share. The exercise of the MHFLP Warrant is subject to the Beneficial Ownership Limitation and is exercisable immediately; upon presentation of an exercise notice, the Company is obligated to issue the corresponding number of shares.
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The Issuer
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GZ6G Technologies Corp.
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Number of Shares
Currently Outstanding
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25,188,742 Common Shares
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Securities being offered by selling stockholders
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The selling stockholders identified in this prospectus may offer and sell up to 5,000,000 shares of our common stock to be sold by Mast Hill Fund L.P. (MHFLP), a Delaware corporation, pursuant to the Equity
Purchase Agreement. The 5,000,000 shares of common stock registered for resale by MHFLP represent approximately 20% of our current issued and outstanding shares of common stock, which totals 25,188,742 as of April 1, 2022, and will
represent 17% of the fully diluted outstanding common stock assuming all 5,000,000 shares are issued under this Offering. Mast Hill Fund, L.P., will not hold more than 9.99% of the issued and outstanding shares of our Common Stock at any
one time.
Further, the Company is registering 560,000 shares of common stock, on behalf of the selling shareholder, pursuant to a Promissory Note entered into with Talos Victory Fund, LLC, for which the Company has received the proceeds, and
which Talos Victory Fund, LLC may sell.
Finally, the Company is registering 10,769 shares of common stock, on behalf of the selling shareholder, issuable to Carter Terry & Company, an authorized and registered broker dealer, pursuant to an
Engagement Agreement the Company entered into.
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Description of Common Stock issuable upon the exercise of Common Stock Purchase Warrants
Included in the registration statement
by selling stockholders
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The Company is registering 560,000 shares of common stock on behalf of the selling shareholder, pursuant to a Common Stock Purchase Warrant , which allows for the purchase of common stock upon exercise of the
warrant, entered into with MHFLP, in conjunction with the Equity Purchase Agreement, wherein MHFLP may purchase common stock at $1.00 per share.
The Company is registering 10,487 shares of common stock, on behalf of the selling shareholder, pursuant to a Finder’s Fee Agreement entered into with JH Darbie and Company, wherein JH Darbie may purchase common
stock at $1.00 per share upon exercise of a Common Stock Purchase Warrant. J.H. Darbie and Company is an authorized, registered broker dealer.
The Company is registering 560,000 shares of common stock, on behalf of the selling shareholder, pursuant to a Common Stock Purchase Warrant, which allows for the purchase of common stock upon exercise of the
warrant, entered into with Talos Victory Fund. LLC (Talos) wherein , Talos may purchase common stock at $1.00 per share.
All common stock purchase warrants are exercisable immediately; upon presentation of an exercise notice, the Company is obligated to issue the corresponding number of shares.
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Offering Price
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The selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus following the effectiveness of this Form S-1 Registration Statement, or not at all.
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Public Market
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We are currently traded on the OTCQB market under the symbol GZIC. We cannot give any assurance that the shares being offered will have a market value, or that they can be resold at the offered price if
and when an active secondary market might develop.
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Duration of Offering
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The shares offered pursuant to “Put Notices” are offered for a period of twenty-four months following effectiveness of this Registration Statement, unless extended by our Board of Directors for an
additional 90 days.
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Number of Shares Outstanding Before the Offering
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There are 5,000,001 shares of Preferred Stock issued and outstanding as of the date of this prospectus, and 25,188,742 shares of Common Stock issued and outstanding as of the date of this prospectus, 0
Stock Options granted as of the date of this prospectus, and 1,130,487 Warrants issued as of the date of this prospectus.
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Registration Costs
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We estimate our total costs relating to the registration herein to be approximately $50,000.
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Net Proceeds to the Company
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If the Company is successful in issuing all available “Put Notices” to Mast Hill Fund, LP, we will issue 5,000,000 shares of Common Stock, $0.001 par value at an offering price equal to 90% of the volume
weighted average price of the Company’s Common Stock on the Principal Market on the Trading Day immediately preceding the respective Put Date for the duration of the Offering (the “Offering”) for maximum net proceeds to the Company of
$10,000,000 if all the shares are sold.
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Use of Proceeds
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We will not receive any of the proceeds from the sale of the Common Stock registered hereunder.
We will receive proceeds from MHFLP upon “Put Notices” presented to MHFLP by the Company, and pursuant to the Equity Purchase Agreement. We will also receive proceeds upon
the exercise of the MHFLP Warrants, the Darbie Warrants, and the Talos Warrants, assuming they are not exercised on a “cashless” basis. We intend to use such proceeds, if any, for general corporate purposes and working capital
requirements.
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Risk Factors
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An investment in our Common Stock involves a high degree of risk. You should carefully consider the risk factors set forth under the “Risk Factors” section herein and the other information contained in this
prospectus before making an investment decision regarding our Common Stock.
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the trading volume of our shares;
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the number of securities analysts, market-makers and brokers following our common stock;
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new products or services introduced or announced by us or our competitors;
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actual or anticipated variations in quarterly operating results;
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conditions or trends in our business industries;
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announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
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additions or departures of key personnel;
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sales of our common stock and
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general stock market price and volume fluctuations of publicly-traded, and particularly microcap, companies.
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risks that we may not have sufficient capital to achieve our growth strategy;
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risks that we may not develop and market our proposed products in a manner that enables us to be profitable and meet our customers’ requirements;
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risks that our growth strategy may not be successful; and
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risks that fluctuations in our operating results will be significant relative to our revenues.
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Voting Rights: The Special 2018 Series A Preferred Stock have one vote for each share owned.
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Adverse Effects: The Corporation shall not amend, alter or repeal the preferences, rights, powers or other terms of Special 2018 Series A Preferred Stock without the written consent of the holder(s) of the
Special 2018 Series A Preferred Stock.
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Conversion: The shares of Special 2018 Series A Preferred Stock shall convert into common shares at the rate of 10 new shares for every one share of Special 2018 Series A Preferred Stock owned. The holder
of the Special 2018 Series A Preferred Stock can convert the shares into common shares at any time.
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Dividends: The Special 2018 Series A Preferred Stock are not entitled to any dividends.
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No Impairment. The Corporation shall not intentionally take any action which would impair the rights and privileges of the Special 2018 Series A Preferred Stock.
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Voting Rights: The Special 2018 Series B Preferred Stock stockholder is entitled to 51% of all votes (including, but not limited to, common stock, and preferred stock (including on an as converted basis)
entitled to vote at each meeting of the stockholders of the Corporation (and written actions of the stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or
consideration.
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Adverse Effects: The Corporation cannot amend, alter, or repeal the preferences, rights, powers or other terms of the Special 2018 Series B Preferred Stock without the written consent or affirmative vote of
the holder of the Special 2018 Series B Preferred Stock.
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Dividends: The Special 2018 Series B Preferred Stock shall not be entitled to any dividends.
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No Impairment: The Corporation shall not intentionally take any action which would impair the rights and privileges of the Special 2018 Series B Preferred Stock.
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IP and Technology Risks
The extensive IP and technology risks, which affect companies globally, pose a risk to the security of our technology. We have conducted informational presentations with our employees regarding these risks and have security measures in place to detect unauthorized intrusion into our networks and technology.
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voluntary or mandatory quarantines;
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restrictions on travel; and
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limiting gatherings of people in public places.
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Our competitors;
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Additions or departures of key personnel;
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Our ability to execute our business plan:
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Operating results that fall below expectations; and
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Period-to-period fluctuations in our financial results.
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Number of Shares to be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares
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Name of Selling Stockholder
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Shares Owned by the Selling Stockholders before the Offering (1)
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Shares of Common Stock Being Offered or Sold
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# of Shares (2)
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% of Class (2)
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Mast Hill Fund L.P.(3)
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0
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5,000,000
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5,000,000
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N/A
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Mast Hill Fund L.P. (4)
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0
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560,000
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560,000
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JH Darbie and Company (5)
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0
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10,487
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10,487
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Talos Victory Fund LLC (6)
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0
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560,000
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560,000
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Talos Victory Fund LLC (7)
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0
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560,000 |
560,000
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Carter Terry & Company (8)
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0
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10,769 |
10,769
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Our registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable put shall have been declared effective.
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We shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable securities.
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We shall have filed with the SEC in a timely manner all reports, notices and other documents required.
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Shares Issued
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Total Consideration
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Price Per Share
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Number of Shares
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Percent
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Amount
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Percent
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Purchasers of Shares
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5,000,000
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100%
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$10,000,000
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100%
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$2.00
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Total
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5,000,000
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100%
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$10,000,000
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100%
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100% of offered
shares are sold
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75% of offered
shares are sold
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50% of offered
shares are sold
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25% of offered
shares are sold
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10% of offered shares are sold
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Offering Price
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$2.00
per share
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$2.00
per share
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$2.00
per share
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$2.00
per share
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$2.00
per share
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Net tangible book value at December 31, 2021 (1)(2)
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($0.205)
per share
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($0.205)
per share
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($0.205)
per share
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($0.205)
per share
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($0.205)
per share
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Net tangible book value after giving effect to the Offering proceeds
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$0.16
per share
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$0.081
per share
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$(0.006)
per share
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$(0.101)
per share
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$(0.162)
per share
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Increase in net tangible book value per share attributable to cash payments made by new investors
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$0.365
per share
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$0.286
per share
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$0.199
per share
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$0.104
per share
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$0.043
per share
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Per Share Dilution to New Investors
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$1.840
per share
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$1.919
per share
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$2.006
per share
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$2.101
per share
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$2.162
per share
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Percent Dilution to New Investors
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92%
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96%
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100%
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105%
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108%
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(1)
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Net tangible book value excludes non-controlling interest;
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(2)
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Based on 25,188,742 shares issued and outstanding as of April 1, 2022.
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contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
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contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties;
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contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask price;
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contains a toll-free telephone number for inquiries on disciplinary actions;
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defines significant terms in the disclosure document or in the conduct of trading penny stocks; and,
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contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation.
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bid and offer quotations for the penny stock;
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details of the compensation of the broker-dealer and its salesperson in the transaction;
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the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and,
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monthly account statements showing the market value of each penny stock held in the customer’s account.
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Voting Rights: The Series A Preferred Stock have one vote for each share owned.
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Adverse Effects: The Corporation shall not amend, alter or repeal the preferences, rights, powers or other terms of Special 2018 Series A Preferred Stock without the written consent of the holder(s) of the
Series A Preferred Stock.
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Conversion: The shares of Special 2018 Series A Preferred Stock shall convert into common shares at the rate of 10 new shares for every one share of Special 2018 Series A Preferred Stock owned. The holder
of the Series A Preferred Stock can convert the shares into common shares at any time.
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Dividends: The Series A Preferred Stock are not entitled to any dividends.
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No Impairment. The Corporation shall not intentionally take any action which would impair the rights and privileges of the Series A Preferred Stock.
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Voting Rights: The Special 2018 Series B Preferred Stock stockholder is entitled to 51% of all votes (including, but not limited to, common stock, and preferred stock (including on an as converted basis)
entitled to vote at each meeting of the stockholders of the Corporation (and written actions of the stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or
consideration.
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Adverse Effects: The Corporation cannot amend, alter, or repeal the preferences, rights, powers or other terms of the Special 2018 Series B Preferred Stock without the written consent or affirmative vote of
the holder of the Special 2018 Series B Preferred Stock.
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Dividends: The Special 2018 Series B Preferred Stock shall not be entitled to any dividends.
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No Impairment: The Corporation shall not intentionally take any action which would impair the rights and privileges of the Special 2018 Series B Preferred Stock.
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Cities, Airports, Stadiums, Universities, and Hospitality Markets Globally
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Advertising agencies, IT Network Related Companies, IoT software applications.
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Overall Smart Solutions product offering
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Diverse teams are required
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Airline industry
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Technology Industry
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Healthcare Industry
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Sports Industry
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Entertainment Industry
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Hospitality industry
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Beverages
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1.
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Green Zebra Network: Wireless networking, security managed Services;
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2.
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Green Zebra Data Center Services: Tier 3 Enterprise center optimize for end users, managed services, cloud data
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3.
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Green Zebra Smart Labs: Smart IOT software development services and applications
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4.
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Green Zebra Media: Marketing, advertising, sponsorship services.
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GZN provides a smart appliance Network gateway device called FiBoxPro gateway that creates a closed loop local communication and monetization service. GZN will provide the configuration and managed
services. These IT technical teams will also provide technical support and communication with internal and external teams.
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VenuTrax – an in-venue and Saas platform cloud data analytics and artificial intelligent engine used to help venue owners communicate and monetization relevant information regarding user insights.
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CastWifi – An in Venue or cloud WIFI interactive broadcasting technology that allows public venue wireless networks to broadcast live content to their user audience in a closed loop setting like a similar
to IPTV technology but over Wi-Fi.
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Infrastructure
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Software Development
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Cyber Security
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Data Management
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Instantly receive best location for emergency first aid with a selected route, walking or driving. Information on where closest drinking fountain, first aid station, among other things, is located.
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Police can receive optimal path to particular location and control any security cameras in different locations.
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Consumers receive information on where street parking is available in real time and which parking structures have spaces available.
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Travelers can be notified of flight changes, allowing more restaurant time.
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Real time information on shortest food lines at a stadium.
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3-D images of museum, real-time information on lines at any venue.
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Cameras showing crowd at outdoor restaurant or parks. Control of access can change.
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Security system cameras only available to certain parties such as police or other security personnel.
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Short term restaurant or store specials when customer traffic is low.
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Lumen Technologies/CenturyLink
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THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020, AND THE NOTES TO THOSE AUDITED FINANCIAL STATEMENTS.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOVLE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING THOSE DISCUSSED IN “RISK FACTORS” AND ELSWHERE IN THIS FORM 10K AND IN OUR REGISTRATION STATEMENT ON FORM S-1/A FILED ON APRIL , 2022 .
THE MANAGEMENT’S DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS ARE BASED UPON OUR AUDITED FINANCIAL STATEMENTS, WHICH HAVE BEEN PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA (“GAAP”).
Revenue
Fiscal Year ended December 31, 2021 and 2020:
We reported revenues of $78,000 and $8,887 in the fiscal years ended December 31, 2021 and 2020, respectively.
Operating Expenses
Years ended December 31, 2021 and 2020
For the years ended December 31, 2021 and 2020 we had the following operating expenses:
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Year Ended December 31, |
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| 2021 | 2020 | |||||||
| OPERATING EXPENSES | ||||||||
| Cost of revenue | $ | 43,121 | $ | 10,400 | ||||
| Depreciation | 20,429 | 1,948 | ||||||
| General and administrative | 963,068 | 232,052 | ||||||
| General and administrative, related parties | 330,000 | 240,000 | ||||||
| Professional fees | 99,099 | 59,108 | ||||||
| Total operating expenses | 1,455,717 | 543,508 | ||||||
| (Loss) from operations | (1,377,717 | ) | (534,621 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (8,051,277 | ) | (3,996,466 | ) | ||||
| Loss upon notes conversion | (714,973 | ) | (364,909 | ) | ||||
| Change in fair value of derivative liability | - | (28,844 | ) | |||||
| Total other income (expense) | (8,766,250 | ) | (4,390,219 | ) | ||||
| Net income (loss) | $ | (10,143,967 | ) | $ | (4,924,840 | ) | ||
| Less: net income (loss) attributable to Non-controlling interest | $ | (112,359 | ) | $ | (174,896 | ) | ||
| Net income (loss) attributable to GZ6G Technologies Corp. | $ | (10,031,608 | ) | $ | (4,749,944 | ) | ||
Total operating expenses for the year ended December 31, 2021 were $1,455,717 as compared to $543,508 for the year ended December 31, 2020. During the years ended December 31, 2021 and 2020 we reported costs of revenue of $43,121 and $10,400, respectively. The Company incurred $963,068 and $232,052 in general and administrative expenses in the fiscal years ended December 31, 2021 and 2020, respectively, and general and administrative costs from related parties of $330,000 and $240,000, respectively. Year over year increases to general and administrative costs were directly related to an increase in operations and increased staffing and associated costs as we relocated to a larger facility and continued to expand our staff and operation in 2021 in order to position ourselves for the reopening of venues and services with the decline of the impact of COVID 19 towards the end of fiscal 2021. General and administrative expenses include rent, travel, office and sundry expense, transfer agent costs, consulting, marketing, advertising and promotional expenses. General and administrative expenses incurred from related parties include management fees charged by our CEO William Coleman Smith, and a company controlled by him. Professional fees in the fiscal year ended December 31, 2021 totaled $99,099 as compared to $59,108 in the fiscal year ended December 31, 2020.
Other expense
Other expense reported for the fiscal years ended December 31, 2021, and 2020 totaled $8,766,250 and $4,390,219, respectively. During the year ended December 31, 2021 the Company reported interest expenses of $8,051,277 (December 31, 2020 -$3,996,466) including amortization of debt discount and issuance costs of $7,823,512 (December 31, 2020 -$3,953,295) and interest expenses of $227,765 (December 31, 2020 - $43,171), a loss on conversion of certain notes of $714,973 (December 31, 2020 - $364,909) and a loss on the change in fair value of derivative liabilities of $28,844 for December 31, 2020 with no comparable loss as at December 31, 2021.
During the year ended December 31, 2020 the Company reported interest expenses of $3,996,466 including amortization of debt discount and issuance costs of $3,953,295 and interest expenses of $43,171, a loss on conversion of certain notes of $364,909 and a loss on the change in fair value of derivative liabilities of $28,844.
We had a net loss of $10,143,967 in the year ended December 31, 2021 compared to a net loss of $4,924,840 in the year ended December 31, 2020.
Statement of Cash Flows
Years Ended December 31, 2021 and 2020
The following table summarizes our cash flows for the years presented:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Net cash provided by (used in) operating activities | $ | (1,369,844 | ) | $ | 24,332 | |||
| Net cash used in investing activities | (251,993 | ) | (4,990 | ) | ||||
| Net cash provided by financing activities | 2,201,084 | 130,843 | ||||||
| Increase in cash | 579,247 | 150,185 | ||||||
| Cash end of year | $ | 759,791 | $ | 180,544 | ||||
Cash Used in Operating Activities
Cash used in operating activities for the year ended December 31, 2021 was $1,369,844 as compared to $24,332 of cash provided by operating activities in the year ended December 31, 2020.
Cash used in operating activities for the year ended December 31, 2021 was primarily the result of our net loss of $10,143,967 (December 31, 2020 – $4,924,840) offset by non-cash items including amortization of debt discount and offering costs of $7,823,512 (December 31, 2020- $3,953,295), a loss on conversion of certain notes of $714,973 (December 31, 2020-$364,909) and depreciation of $20,429 (December 31, 2020- $1,948). In the fiscal year ended December 31, 2021 we also had the amount of $910 for Amortization of right of use assets and $4,990 due to a reclassification of fixed assets to advertising expense with no comparable amounts for these items in the fiscal year ended December 31, 2020. In the fiscal year ended December 31, 2020 we had a fair value adjustment of $28,844 to derivative liabilities with no comparable adjust at December 31, 2021.
Changes in operating activities in the year ended December 31, 2021 included an increase in prepaid expenses of $7,319 comparted to a decrease in prepaid expenses of $10,400 during the year ended December 31, 2020, an increase in other current assets in fiscal 2021 of $10,436 compared to a decrease in other current assets of $7,398 in fiscal 2020, an increase to accounts payable of $100,264 at December 31, 2021 (December 31, 2020- $84,663), and increase in related party payables of $179,659 at December 31, 2021 (December 31, 2020 -$300,715) and an decrease in customer deposits of $78,000 for December 31, 2021 compared to an increase in customer deposits of $197,000 for the fiscal year ended December 31, 2020. Fiscal year December 31, 2021 had total cash used in operating activities of $1,369,844 as compared total cash provided by operating activities of $24,332 for the fiscal year ended December 31, 2020.
Cash Used In Investing Activities
Cash used by investing activities for the years ended December 31, 2021 and 2020 related to equipment purchases and totaled $251,993 and $4,990 respectively.
Cash Provided by Financing Activities
During the year ended December 31, 2021, financing activities provided cash of $2,201,084 (December 31, 2020- $130,843), which was comprised of proceeds from private placements of $100,000 (December 31, 2020), subscriptions receivable of $150,000 (December 31, 2020 – nil), proceeds from convertible notes of $2,108,000 (December 31, 2020 – nil) offset by repayment of debt of $151,854 (December 31, 2020 – nil) and repayments of loans payable of $5,062 (December 31, 2020 – nil). During December 31, 2020 there were advances of $50,000 loans payable proceeds of $89,450, and repayments of convertible debts of $8,607 with no comparable amounts during the fiscal year ended December 31, 2021.
Liquidity and Capital Resources
The Company has been in the start-up phase and has generated modest revenues from its operations, and while we have various contracts in place for future development, there is no assurance of future revenues. As of December 31, 2021, the Company had a working capital deficit of $6,212,204 with approximately $760,000 of cash on hand and an accumulated deficit of $16,092,531. In December 2020, the Company signed a convertible promissory note with a third party to provide an aggregate amount of $450,000 in $25,000 increments weekly, which was sufficient to meet operational needs and has been funded in full. During the year ended December 31, 2021, this note was amended to include an additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021, of which an amount of $600,000 has been received against the $1,000,000 funding as of December 31, 2021. Further prior to December 31, 2021, the Company has received an additional $1,108,000 in funding with respect to net proceeds of $1,008,000 from certain convertible notes and $100,000 in proceeds with respect to the sale of certain registered shares issued in consideration for put notices under an equity line entered into in fiscal 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2022 to meet its upgraded infrastructure requirements and has filed two registration statements on Form S-1 to facilitate this requirement, one of which was deemed effective on September 24, 2021, and the other still pending notice of effect. The issuance of additional securities may result in significant dilution in the equity interests of our current stockholders. Obtaining loans, assuming these loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available for use when needed or, if available, that it can be obtained on commercially reasonable terms.
Covid-19 Pandemic
The COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. During 2021 the implementation of services under certain of our installation agreements experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also continue to impact our ability to raise additional capital. During March 2020, we gave notice of furlough to our administrative support employees in an effort to conserve resources as we evaluate our business development efforts in the coming months. In April 2020, the Company received a grant of $6,000 and in May 2020 we received a PPP loan and an SBA loan in the approximate cumulative amount of $90,000 for operations. During early 2022 the Company reopened its offices and continued with the hiring of additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements for 2022. While recent progress in the battle against COVID leads us to believe that the worst of the effects of the pandemic are past, we cannot say with certainty that the situation will not change. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and still subject to change. While significant uncertainty remains, despite the fact that the Company has been able to source financing, it remains that the COVID-19 outbreak may have a negative impact on its ability to work through its collaborative development efforts with industry partners, and in acquiring venues due to the continuing impact of COVID 19, in particular as a result of the impact to the global supply chain.
Going Concern
These audited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2021, the Company had a working capital deficit of $6,212,204 with approximately $760,000 of cash on hand and an accumulated deficit of $16,092,531. In December 2020, the Company signed a convertible promissory note with a third party to provide an aggregate amount of $450,000 in $25,000 increments weekly, which was sufficient to meet operational needs and has been funded in full. During the year ended December 31, 2021, this note was amended to include an additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021, of which an amount of $600,000 has been received against the $1,000,000 funding as of December 31, 2021. Further prior to December 31, 2021, the Company has received an additional $1,108,000 in funding with respect to net proceeds of $1,008,000 from certain convertible notes and $100,000 in proceeds with respect to the sale of certain registered shares issued in consideration for put notices under an equity line entered into in fiscal 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2022 to meet its upgraded infrastructure requirements and has filed two registration statements on Form S-1 to facilitate this requirement, one of which was deemed effective on September 24, 2021, and the other still pending notice of effect. The continuation of the Company as a going concern is dependent upon the ability to raise additional equity and/or debt financing and the attainment of profitable operations from the Company’s future business. If the Company is unable to obtain adequate capital as needed, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Critical Accounting Policies
The preparation of our financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their
evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more
fully discussed in the Notes to our Financial Statements.
Research and Development Costs
We charge research and development costs to operations as incurred in accordance with ASC 730-Research and Development, except in those cases in which such costs are reimbursable under customer funded contracts. These amounts are not reflected in the reported research and development expenses in each of the respective periods but are included in net sales with the related costs included in cost of sales in each of the respective periods.
Stock-Based Compensation
We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date in accordance with ASC 718 – Compensation-Stock Compensation. Stock-based compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.
Stock Settled Debt
In certain instances, the Company will issue convertible notes which contain a provision in which the price of the conversion feature is priced at a fixed discount to the trading price of the Company’s common shares as traded in the over-the-counter market. In these instances, the Company records a liability, in addition to the principal amount of the convertible note, as stock-settled debt for the fixed value transferred to the convertible note holder from the fixed discount conversion feature. As of December 31, 2021, and December 31, 2020, the Company had recorded within Convertible Notes, net of discount, the amount of $8,320,525 and $164,104 for the value of the stock settled debt for certain convertible notes.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06 to simplify the current guidance for convertible instruments and the derivatives scope exception for contracts in an entity’s own equity. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The update also provides for expanded disclosure requirements to increase transparency. For SEC filers, excluding smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein.
|
NAME
|
AGE
|
POSITION
|
|
William Coleman Smith
|
60
|
Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
|
| Brian Scott Hale |
55 |
Director |
| William Ray Procanik |
50 |
Director |
|
1.
|
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such
person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of
such filing;
|
|
2.
|
Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
3.
|
The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting,
the following activities;
|
|
|
i)
|
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
|
||
|
|
ii)
iii)
|
Engaging in any type of business practice; or
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
|
||
|
4.
|
The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of
such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
|
|||
|
5.
|
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission
has not been subsequently reversed, suspended, or vacated;
|
|||
|
6.
|
Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding
by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
|
|
7.
|
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
|
i)
|
Any Federal or State securities or commodities law or regulation; or
|
|
|
ii)
|
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or
temporary or permanent cease-and-desist order, or removal or prohibition order, or
|
|
|
iii)
|
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
8.
|
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.
78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or
persons associated with a member.
|
|
|
Name
and Title |
Year
|
Salary
($) |
Bonus
($) |
Stock
Awards ($) |
Option
Awards ($) |
Non-Equity
Incentive Plan ($) |
Non-qualified
Deferred ($) |
All other
Compensation ($) |
Total
($) |
|
William C. Smith
CEO, CFO, Treasurer,
Secretary
|
2021
|
$330,000(1) |
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
$330,000(1)
|
|
William C. Smith
CEO, CFO, Treasurer,
Secretary
|
2020
|
$240,000
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
$240,000(1)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
Pension Value and |
|
|
|
|
Fees Earned or
|
Stock
|
Option
|
Non-Equity Incentive |
Nonqualified Deferred
|
All Other
|
|
|
|
Paid in Cash
|
Awards | Awards | Plan Compensation |
Compensation Earnings
|
Compensation |
Total
|
|
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
William C. Smith
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
| William Ray Procanik | 0 |
0 | 0 |
0 |
0 |
0 |
0 |
| Brian Scott Hale |
0 |
0 | 0 | 0 | 0 | 0 |
0 |
|
Name and address of
beneficial owner
|
Common
Stock
|
Series A
Preferred
Stock (2)
|
Series B Preferred Stock
|
Beneficial Ownership as Converted
|
|
Percentage
of Class of Stock (1)
|
||||
|
William Coleman Smith
3333 Michelson Dr., 3rd Floor
Irvine, California 92612
|
62,500,000(2)
|
5,000,000
|
1
|
50,000,000 shares of common stock as to Series A(2)
Series B - No Rights of Conversion
|
|
83.1% Common
100% Series Preferred A
100% Series B Preferred
|
||||
|
William Ray Procniak
58 Woodley Court, Unit 16, Meriden CT, 06450
|
540 | - | - | - | <0% Common |
|||||
|
Brian Scott Hale
3035 Rhea Hwy,
Suite 150
Dayton TN 37321
|
600,000 | - | - | - | 0.008% Common |
|||||
|
Total
|
63,100,540
|
5,000,000
|
1
|
|
|
83.93% Common
100% Series Preferred A
100% Series B Preferred
|
|
•
|
Voting Rights: The Series A Preferred Stock have one vote for each share owned.
|
|
•
|
Adverse Effects: The Corporation shall not amend, alter or repeal the preferences, rights, powers or other terms of A Preferred Stock without the written consent of the holder(s) of the Series A Preferred
Stock.
|
|
•
|
Conversion: The shares of Series A Preferred Stock shall convert into common shares at the rate of 10 new shares for every one share of Special 2018 Series A Preferred Stock owned. The holder of the
Special 2018 Series A Preferred Stock can convert the shares into common shares at any time.
|
|
•
|
Dividends: The Series A Preferred Stock are not entitled to any dividends.
|
|
•
|
No Impairment. The Corporation shall not intentionally take any action which would impair the rights and privileges of the Special 2018 Series A Preferred Stock.
|
|
•
|
Voting Rights: The Special 2018 Series B Preferred Stock stockholder is entitled to 51% of all votes (including, but not limited to, common stock, and preferred stock (including on an as converted basis)
entitled to vote at each meeting of the stockholders of the Corporation (and written actions of the stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or
consideration.
|
|
•
|
Adverse Effects: The Corporation cannot amend, alter, or repeal the preferences, rights, powers or other terms of the Special 2018 Series B Preferred Stock without the written consent or affirmative vote of
the holder of the Special 2018 Series B Preferred Stock.
|
|
•
|
Dividends: The Special 2018 Series B Preferred Stock shall not be entitled to any dividends.
|
|
•
|
No Impairment: The Corporation shall not intentionally take any action which would impair the rights and privileges of the Special 2018 Series B Preferred Stock.
|
On July 9, 2018, Mr. William Coleman Smith was appointed to the Board of Directors of the Company and as President, Secretary and Treasurer of the Company. Subsequently, on July 10, 2018, the Company executed a consulting agreement with ELOC Holdings Corp. whereby ELOC will provide the services of Mr. Smith for a fee of $10,000 per month. ELOC Holdings, Corp is a company controlled by Mr. Smith.
On April 29, 2014, our 51% controlled subsidiary, GZMC, entered into a management and consulting agreement with Mr. Smith, the sole officer and director of GZMC whereunder GZMC was required to pay an annual salary of $120,000 to Mr. Smith.
During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp made short term loans with interest at 1.5% per month to the Company to pay various expenses.
As of December 31, 2020, Mr. Smith, ELOC Holdings Corp. and the Company agreed to retroactively allocate interest in the amount of 5% per annum to loans, advances, wages and management fees payable by each of GZMC and the Company from January 1, 2020 forward. The parties entered into a single consolidated promissory note for all amounts payable to each of ELOC and Smith, with a principal amount of $1,217,579 payable to ELOC.
During the fiscal year ended December 31, 2021, the Company paid a total of $151,854 to ELOC to pay down the principal balance on the loan.
The following amounts were included in debt to related party on our Balance Sheets:
| Balance at December 31, 2020, Debt, related party | $ | 1,217,579 | ||
| Payments on loan | (151,854 | ) | ||
| Balance at December 31, 2021, Debt, related party. | $ | 1,065,725 |
The Company recorded associated interest expenses of $55,713 and $22,629 for the fiscal years ended December 31, 2021 and 2020, respectively.
During the fiscal year ended December 31, 2021, the Company accrued $120,000 in management fees to ELOC and paid management fees to Coleman Smith of $210,000. Further, Mr. Smith received payments for expenses and invoiced the Company for expenses paid on behalf of the Company leaving a net amount due for expenses of $17,085.
The following amounts were included in related party payables on our Balance Sheets:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Coleman Smith, President | $ | 3,946 | $ | - | ||||
| Interest payable | 55,713 | - | ||||||
| ELOC Holdings Corp. | 120,000 | - | ||||||
| $ | 179,769 | $ | - | |||||
|
(1)
|
On August 26, 2019, Diamondrock, Ltd. was issued 100,000 shares of common stock pursuant to a commitment Fee on Financing Agreement.
|
|
(2)
|
Subsequent to a partial assignment of a Convertible Note, to various purchasers on September 28, 2020, the Company received notices of election to convert the entire principal balance of $147,000 on October
1, 2020. The Company issued a total of 3,500,001 shares of common stock to six individuals in full and final settlement of the New Note on October 26, 2020.
|
|
(3)
|
Subsequent to a partial assignment of Convertible Note, to various purchasers on December 30, 2020, the Company received notices of election to convert the entire principal balance of $150,000, plus accrued
interest of $13,558.31, on December 31, 2020. The Company issued a total of 3,894,245 shares of common stock to six individuals in full and final settlement of the New Note on December 31, 2020.
|
|
(4)
|
On December 30, 2020, 600,000 common shares were purchased by a third party for the total amount of $150,000.00; at $0.25 per share. These shares were issued on January 26, 2021, and are restricted.
|
|
(5)
|
On April 29, 2021, 10,000,000 common shares were issued to William Coleman Smith in exchange for an additional 9% ownership of Green Zebra Media Corp.
|
|
(6)
|
On November 11, 2021, the Company entered into a Promissory Note with Mast Hill Fund, L.P. ("MHFLP"), a Delaware limited partnership in which MHFLP has agreed to lend the Company the principal amount of
$560,000 for the purchase price of $504,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00 per share. The Company concurrently issued a Common Stock Purchase
Warrant , as amended, to MHFLP for the purchase of an additional 560,000 common shares at $1.00 per share for a term of three (3) years.
|
|
(7)
|
On November 11, 2021, the Company issued a Common Stock Purchase Warrant to J.H. Darbie and Company, an authorized, registered broker dealer, wherein J.H. Darbie and Company may purchase 10,487
shares of common stock for $1.00 per share, as a Finder’s Fee for introducing the Company to MHFLP.
|
|
(8)
|
On December 8, 2021, the Company entered into an Engagement Agreement with Carter, Terry & Company, an authorized, registered broker dealer, wherein, in addition to 8% of the gross cash proceeds
raised from introduced parties they are to be issued 4% of the cash they raise in restricted stock divided by the market close on the date of the Agreement. A total of 10,769
shares have been issued under this engagement.
|
|
(9)
|
On December 16, 2021, the Company entered into a Promissory Note with Talos Victory Fund, LLC in the amount of $560,000, and issued a Common Stock Purchase Warrant for the purchase of an
additional 560,000 shares of common stock at $1.00 per share for a term of three (3) years. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00 per share.
|
FINANCIAL STATEMENTS TABLE OF CONTENTS
GZ6G TECHNOLOGIES CORP.
TABLE OF CONTENTS FOR AUDITED FINANCIAL STATEMENTS
December 31, 2021 and 2020
| Page | |
| Report of Independent Registered Public Accounting Firm | F-2 |
| Consolidated Balance Sheets | F-4 |
| Consolidated Statements of Operations | F-5 |
| Consolidated Statement of Changes in Stockholders’ Deficit | F-6 |
| Consolidated Statements of Cash Flows | F-7 |
| Notes to Consolidated Financial Statements | F-8 to F-27 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
GZ6G Technologies Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of GZ6G Technologies Corp. (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses and has a working capital deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern – Disclosure
The financial statements of the Company are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. As noted in “Consideration of the Company’s Ability to Continue as a Going Concern” above, the Company has a history of recurring net losses, a significant accumulated deficit and currently has net working capital deficit. The Company has contractual obligations such as commitments for repayments of accounts and notes payable and accrued interest (collectively “obligations”). Currently management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures, obtaining additional financing through loans from related and unrelated parties, and private placements of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to access financing through stock issuances, the Company will continue to manage cash outflows and meet the obligations through related and unrelated party loans.
We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is probable that the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable that the Company’s plans will be effectively implemented include its ability to manage expenditures, its access funding from the capital market, and obtain loans from related and unrelated parties. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the following, among others: (i) evaluating the probability that the Company will be able to access funding from the capital market; (ii) evaluating the probability that the Company will be able to manage expenditures, and (iii) evaluating the probability that the Company will be able to obtain loans from related and unrelated parties.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2019.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, Utah
March 25, 2022
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED BALANCE SHEETS
| December 31, 2021 |
December 31, 2020 |
|||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 759,791 | $ | 180,544 | ||||
| Accounts receivable, net | 2,000 | 2,000 | ||||||
| Prepaid expenses | 18,586 | 11,267 | ||||||
| Subscription receivable | - | 150,000 | ||||||
| Other current assets | 15,949 | 5,513 | ||||||
| Total current assets | 796,326 | 349,324 | ||||||
| Property and equipment, net | 235,176 | 8,602 | ||||||
| Right to use assets | 98,093 | - | ||||||
| TOTAL ASSETS | $ | 1,129,595 | $ | 357,926 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 335,037 | $ | 234,773 | ||||
| Related party payables | 179,769 | 110 | ||||||
| Deferred revenue | 209,000 | 287,000 | ||||||
| Debt, current portion | 44,156 | 3,768 | ||||||
| Debt, related party | 1,065,725 | 1,217,579 | ||||||
| Convertible notes, net of debt discount | 5,075,840 | 52,740 | ||||||
| Lease liability | 99,003 | - | ||||||
| Total current liabilities | 7,008,530 | 1,795,970 | ||||||
| Debt, net of current portion | 44,000 | 89,450 | ||||||
| Total liabilities | 7,052,530 | 1,885,420 | ||||||
| Stockholders’ deficit | ||||||||
| Series A Preferred stock, $0.004 par, 10,000,000 shares authorized, 5,000,000 shares issued and outstanding | 20,000 | 20,000 | ||||||
| Series B Preferred stock, $0.001 par, 1 share authorized, 1 issued and outstanding | - | - | ||||||
| Common stock, $0.001 par, 500,000,000 shares authorized, 25,177,973 and 12,793,357 shares issued and outstanding as at December 31, 2021 and December 31, 2020, respectively | 25,178 | 12,793 | ||||||
| Additional paid in capital | 10,784,308 | 5,180,816 | ||||||
| Accumulated deficit | (16,092,531 | ) | (6,060,923 | ) | ||||
| Total GZ6G Technologies Corp stockholders’ deficit | (5,263,045 | ) | (847,314 | ) | ||||
| Non-controlling interest | (659,890 | ) | (680,180 | ) | ||||
| Total stockholders’ deficit | (5,922,935 | ) | (1,527,494 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 1,129,595 | $ | 357,926 | ||||
The accompanying notes are an integral part of these audited consolidated financial statements
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Year Ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| NET REVENUES | $ | 78,000 | $ | 8,887 | ||||
| OPERATING EXPENSES | ||||||||
| Cost of revenue | 43,121 | 10,400 | ||||||
| Depreciation | 20,429 | 1,948 | ||||||
| General and administrative | 963,068 | 232,052 | ||||||
| General and administrative, related parties | 330,000 | 240,000 | ||||||
| Professional fees | 99,099 | 59,108 | ||||||
| Total operating expenses | 1,455,717 | 543,508 | ||||||
| (Loss) from operations | (1,377,717 | ) | (534,621 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (8,051,277 | ) | (3,996,466 | ) | ||||
| Loss on note conversion | (714,973 | ) | (364,909 | ) | ||||
| Change in fair value of derivative liability | - | (28,844 | ) | |||||
| Total other income (expense) | (8,766,250 | ) | (4,390,219 | ) | ||||
| Net income (loss) | $ | (10,143,967 | ) | $ | (4,924,840 | ) | ||
| Less: net income (loss) attributable to Non-controlling interest | (112,359 | ) | (174,896 | ) | ||||
| Net income (loss) attributable to GZ6G Technologies Corp. | $ | (10,031,608 | ) | $ | (4,749,944 | ) | ||
| Basic and diluted net loss per common share | $ | (0.49 | ) | $ | (0.84 | ) | ||
| Weighted average shares, basic and diluted | 20,473,723 | 5,670,970 | ||||||
The accompanying notes are an integral part of these audited consolidated financial statements
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
|
Series A Preferred Stock |
Series B Preferred Stock |
Common Stock |
Additional Paid-in |
Accumulated | Non- controlling |
Total Stockholders’ |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | |||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | 5,000,000 | $ | 20,000 | 1 | $ | - | 4,799,111 | $ | 4,799 | $ | 273,656 | $ | (1,310,979 | ) | $ | (505,284 | ) | $ | (1,517,808 | ) | ||||||||||||||||||||
| Derivative liability reclassed upon debt paid | - | - | - | - | - | - | 10,584 | - | - | 10,584 | ||||||||||||||||||||||||||||||
| Issuance of common stock for debt conversion | - | - | - | - | 7,394,246 | 7,394 | 4,747,176 | - | - | 4,754,570 | ||||||||||||||||||||||||||||||
| Issuance of common stock for private placement | - | - | - | - | 600,000 | 600 | 149,400 | - | - | 150,000 | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | - | (4,749,944 | ) | (174,896 | ) | (4,924,840 | ) | |||||||||||||||||||||||||||
| Balance, December 31, 2020 | 5,000,000 | $ | 20,000 | 1 | $ | - | 12,793,357 | $ | 12,793 | $ | 5,180,816 | $ | (6,060,923 | ) | $ | (680,180 | ) | $ | (1,527,494 | ) | ||||||||||||||||||||
| Shares issued to acquire additional interest in subsidiary | - | - | - | 10,000,000 | 10,000 | (142,649 | ) | - | 132,649 | - | ||||||||||||||||||||||||||||||
| Fair value of beneficial conversion feature of convertible notes issued | - | - | - | - | - | - | 504,027 | - | - | 504,027 | ||||||||||||||||||||||||||||||
| Fair value of convertible debt warrants issued | - | - | - | - | - | - | 503,973 | - | - | 503,973 | ||||||||||||||||||||||||||||||
| Warrants issued as financing cost | - | - | - | - | - | - | 25,141 | - | - | 25,141 | ||||||||||||||||||||||||||||||
| Issuance of common stock for debt conversion | - | - | - | - | 2,051,282 | 2,052 | 4,613,333 | - | - | 4,615,385 | ||||||||||||||||||||||||||||||
| Issuance of common stock for private placement | - | - | - | - | 333,334 | 333 | 99,667 | - | - | 100,000 | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | - | (10,031,608 | ) | (112,359 | ) | (10,143,967 | ) | |||||||||||||||||||||||||||
| Balance, December 31, 2021 | 5,000,000 | $ | 20,000 | 1 | $ | - | 25,177,973 | $ | 25,178 | $ | 10,784,308 | $ | (16,092,531 | ) | $ | (659,890 | ) | $ | (5,922,935 | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year Ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | (10,143,967 | ) | (4,924,840 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of debt discount and issuance cost | 7,823,512 | 3,953,295 | ||||||
| Financing cost | 25,141 | - | ||||||
| Fair value adjustments to derivative liability | - | 28,844 | ||||||
| Loss upon notes conversion | 714,973 | 364,909 | ||||||
| Depreciation | 20,429 | 1,948 | ||||||
| Amortization of right of use assets | 910 | - | ||||||
| Fixed assets reclassify to advertising expense | 4,990 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease prepaid expenses | (7,319 | ) | 10,400 | |||||
| (Increase) decrease in other current assets | (10,436 | ) | 7,398 | |||||
| Increase (decrease) in accounts payable and accrued expenses | 100,264 | 84,663 | ||||||
| Increase in related party payables | 179,659 | 300,715 | ||||||
| Increase (decrease) in customer deposits | (78,000 | ) | 197,000 | |||||
| Net cash provided by (used in) operating activities | (1,369,844 | ) | 24,332 | |||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of equipment | (251,993 | ) | (4,990 | ) | ||||
| Net cash used in investing activities | (251,993 | ) | (4,990 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances | - | 50,000 | ||||||
| Proceeds from private placement | 100,000 | - | ||||||
| Proceeds from subscription receivable | 150,000 | - | ||||||
| (Repayment) of debt, related party | (151,854 | ) | - | |||||
| Proceeds from loan payable | - | 89,450 | ||||||
| (Repayment) of loan payable | (5,062 | ) | - | |||||
| Proceeds from convertible notes | 2,108,000 | - | ||||||
| Repayments to convertible notes | - | (8,607 | ) | |||||
| Net cash provided by financing activities | 2,201,084 | 130,843 | ||||||
| Net increase in cash | 579,247 | 150,185 | ||||||
| Cash-beginning of period | 180,544 | 30,359 | ||||||
| Cash-end of period | $ | 759,791 | $ | 180,544 | ||||
| SUPPLEMENTAL DISCLOSURES | ||||||||
| Interest paid | $ | 1,393 | $ | 1,393 | ||||
| Income taxes paid | $ | - | $ | - | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Balance of payable to related parties converted to debt, related parties | $ | - | $ | 1,217,579 | ||||
| Stock-settled debt liability | $ | 11,129,908 | $ | 1,204,000 | ||||
| Conversion of debt into common stock | $ | 400,000 | $ | 310,558 | ||||
| Stock issued under subscription receivable | $ | - | $ | 150,000 | ||||
| Initial measurement of right to use assets and lease liability | $ | 157,462 | $ | - | ||||
| Beneficial conversion feature discount recorded | $ | 1,008,000 | $ | - | ||||
The accompanying notes are an integral part of these audited consolidated financial statements
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS
GZ6G Technologies Corp. (formerly Green Zebra International Corp.) (the “Company” or “GZ6G”) is a complete enterprise smart solutions provider for large venues and cities. Focused on acquiring smart city solutions, developing innovative products, and overseeing smart cities and smart venues, GZ6G also assists in modernizing clients with innovative wireless IoT technology for the emerging 5G and Wi-Fi 6 marketplaces. Target markets include stadiums, airports, universities, and smart city projects. The Company is organized under the laws of the State of Nevada and has offices in California and Nevada.
In November 2018, the Company changed its name from NanoSensors, Inc. to Green Zebra International Corp. following a merger with Green Zebra Media Corp., a Delaware corporation, under common control.
The Board of Directors approved a name change and a reverse stock split of the Company’s issued and outstanding common shares at a ratio of 200 to 1 on December 18, 2019. The accompanying financial statements, and all share and per share information contained herein has been retroactively restated to reflect the reverse stock split. On December 20, 2019, the Company changed its name from Green Zebra International Corp. to GZ6G Technologies Corp.
On August 6, 2021, Mr. William Ray Procniak and Mr. Brian Scott Hale were appointed to the Company’s board of directors and concurrently the Company formed an audit committee, which each of Mr. Hale and Mr. Procniak joined, serving as independent board members. Concurrently the Company completed an application for an uplist to the OTCQB and submitted the required disclosure through OTCMarkets. The Company was approved for trading on the OTCQB Venture Market on October 25, 2021.
Going Concern
These audited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2021, the Company had a working capital deficit of $6,212,204 with approximately $760,000 of cash on hand and an accumulated deficit of $16,092,531. In December 2020, the Company signed a convertible promissory note with a third party to provide an aggregate amount of $450,000 in $25,000 increments weekly, which was sufficient to meet operational needs and has been funded in full. During the year ended December 31, 2021, this note was amended to include an additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021, of which an amount of $600,000 has been received against the $1,000,000 funding as of December 31, 2021. Further prior to December 31, 2021, the Company has received an additional $1,108,000 in funding with respect to net proceeds of $1,008,000 from certain convertible notes and $100,000 in proceeds with respect to the sale of certain registered shares issued in consideration for put notices under an equity line entered into in fiscal 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2022 to meet its upgraded infrastructure requirements and has filed two registration statements on Form S-1 to facilitate this requirement, one of which was deemed effective on September 24, 2021, and the other still pending notice of effect. The continuation of the Company as a going concern is dependent upon the ability to raise additional equity and/or debt financing and the attainment of profitable operations from the Company’s future business. If the Company is unable to obtain adequate capital as needed, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)
Covid-19 Pandemic: The COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. During 2021 the implementation of services under certain of our installation agreements experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also continue to impact our ability to raise additional capital. During March 2020, we gave notice of furlough to our administrative support employees in an effort to conserve resources as we evaluate our business development efforts in the coming months. In April 2020, the Company received a grant of $6,000 and in May 2020 we received a PPP loan and an SBA loan in the approximate cumulative amount of $90,000 for operations. During early 2022 the Company reopened its offices and continued with the hiring of additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements for 2022. While recent progress in the battle against COVID leads us to believe that the worst of the effects of the pandemic are past, we cannot say with certainty that the situation will not change. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and still subject to change. While significant uncertainty remains, despite the fact that the Company has been able to source financing, it remains that the COVID-19 outbreak may have a negative impact on its ability to work through its collaborative development efforts with industry partners, and in acquiring venues due to the continuing impact of COVID 19, in particular as a result of the impact to the global supply chain.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Consolidation
These consolidated financial statements include the accounts of GZ6G Technology Corp. and its 60% controlled subsidiary, Green Zebra Media Corp. (“GZMC’). as of December 31, 2021. All significant intercompany accounting transactions have been eliminated as a result of consolidation.
Use of Estimates
The preparation of these consolidated financial statements in conformity with United States generally accepted accounting principles 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 the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2021, the Company had $509,791 in excess of the FDIC insured limit, respectively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.
Research and Development Costs
We charge research and development costs to operations as incurred in accordance with ASC 730-Research and Development, except in those cases in which such costs are reimbursable under customer funded contracts. These amounts are not reflected in the reported research and development expenses in each of the respective periods but are included in net sales with the related costs included in cost of sales in each of the respective periods.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. The core principle of this standard is that a company should record revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Further under ASC 606, the Company recognizes revenue from licensing agreements and service-based contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
We earn revenue from both digital marketing and the sale of WiFi and communication solutions to customers around the world. Revenue is earned from sales of our WiFi media platform and our WiFi monetization hardware (GZ Media hub) embedded with GZ software to create monetization and communication solutions for our customers. Our sales can consist of any one or a combination of items required by our customer including hardware, technology platforms and related support. We also enter into licensing contracts which provide for revenue based on licensing fees and revenue sharing with our licensees.
As we expand, we expect a large portion of our revenue from our digital communication solutions to be derived from service-based contracts where we expect to recognize a significant portion of our contracts over time, as there is a continuous delivery of services to the customer over the contractual period of performance. These contracts may or may not include fixed payments for services over time and/or commission-based fees.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition (continued)
Direct costs are expected to include materials, labor and overhead to be charged to work-in-progress (including our contracts-in-progress) inventory or cost of sales. Indirect costs relating to long-term contracts, are expected to include expenses such as general and administrative charges, and other costs will be charged to expense as incurred and will not be included in our work-in-process (including our contracts-in-progress) inventory or cost of sales. Total estimates are expected to be reviewed and revised periodically throughout the lives of the contracts, and adjustments to profits resulting from such revisions are made cumulative to the date of the change. Estimated losses on long-term contracts are recorded in the period in which the losses become evident. If we do not accurately estimate the total sales, related costs and progress towards completion on our long-term contracts, the estimated gross margins may be significantly impacted, or losses may need to be recognized in future periods. Any such resulting changes in margins or contract losses could be material to our results of operations and financial condition.
In addition, certain of our contracts will include termination for convenience or non-performance clauses that provide the customer with the right to terminate the contract. Such terminations could impact the assumptions regarding total contract revenues and expenses utilized in recognizing profit under those contracts where we apply the percentage-of-completion method of accounting. Changes to these assumptions could materially impact our results of operations and financial condition. As we fully implement our business model, our inability to perform on our long-term contracts could materially impact our results of operations and financial condition.
Stock-Based Compensation
We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date in accordance with ASC 718 – Compensation-Stock Compensation. Stock-based compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.
Debt Issue Costs
The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as interest expense.
Original Issue Discount
If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized over the life of the debt to the statement of operations as interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Stock Settled Debt
In certain instances, the Company will issue convertible notes which contain a provision in which the price of the conversion feature is priced at a fixed discount to the trading price of the Company’s common shares as traded in the over-the-counter market. In these instances, the Company records a liability, in addition to the principal amount of the convertible note, as stock-settled debt for the fixed value transferred to the convertible note holder from the fixed discount conversion feature. As of December 31, 2021, and 2020, the Company had recorded within Convertible Notes, net of discount, the amount of $8,320,525 and $164,104 for the value of the stock settled debt for certain convertible notes (see Note 6).
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 – Topic 842 Leases. ASU 2016-02 requires that most leases be recognized on the financial statements, specifically the recognition of right-to-use assets and related lease liabilities, and enhanced disclosures about leasing arrangements. The Company elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.
Income Taxes
The Company has adopted ASC Topic 740 – Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Net Income (Loss) Per Share
In accordance with ASC Topic 260 – Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive. Potential common stock consists of the incremental common stock issuable upon convertible notes, classes of shares with conversion features. The computation of basic loss per share for the years ended December 31, 2021 and December 31, 2020 excludes potentially dilutive securities of underlying share purchase warrants, convertible notes, and preferred shares, because their inclusion would be antidilutive. As a result, the computations of net loss per share for each period presented is the same for both basic and fully diluted.
The table below reflects the potentially dilutive securities at each reporting period which have been excluded from the computation of diluted net loss per share:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Convertible Notes | 4,966,154 | 256,410 | ||||||
| Stock purchase warrants | 1,130,487 | - | ||||||
| Series A Preferred shares (convertible to common at a ratio of 10 common for each 1 preferred) | 50,000,000 | 50,000,000 | ||||||
| Total | 56,096,641 | 50,256,410 | ||||||
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06 to simplify the current guidance for convertible instruments and the derivatives scope exception for contracts in an entity’s own equity. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The update also provides for expanded disclosure requirements to increase transparency. For SEC filers, excluding smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein.
NOTE 3: PROPERTY AND EQUIPMENT
Property and equipment, net consists of the following:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Office equipment | $ | 166,372 | $ | 23,618 | ||||
| Leasehold improvements | 31,919 | - | ||||||
| Software | 72,330 | - | ||||||
| Total | 270,621 | 23,618 | ||||||
| Less: accumulated depreciation and amortization | (35,445 | ) | (15,016 | ) | ||||
| Total property and equipment, net | $ | 235,176 | $ | 8,602 | ||||
Depreciation expense amounted to $20,429 and $1,948 for the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, the Company reclassified certain assets in the amount of $4,990 into advertising expense.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 4: PREPAID EXPENSES
Prepaid expenses at December 31, 2021 and December 31, 2020 consist of the following:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Reseller agreement | $ | 3,467 | $ | 11,267 | ||||
| Other expenses | 15,119 | - | ||||||
| Total | $ | 18,586 | $ | 11,267 | ||||
On January 31, 2017, GZMC entered into a white label reseller agreement with Purple Wifi Limited, a company based in the UK that provides a hosted software solution as a Wifi hotspot platform for use on a company’s Wifi hardware and also provides customer analytics services and marketing opportunities along with ancillary support services. The reseller agreement had an initial term of three years and was subsequently amended to reflect a five (5) year term. Under the terms of the agreement GZMC was required to pay a fee of $52,000 of which a total of $6,450 was unpaid and is included in accounts payable as of December 31, 2021 and December 31, 2020. The total amount expended under the reseller agreement has been recorded as prepaid expenses on the Company’s Balance Sheets and is amortized over the term of the agreement on a five-year straight-line basis as part of general and administrative expense.
NOTE 5: OTHER CURRENT ASSETS
Other current assets consist of the following at December 31, 2021 and December 31, 2020:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Security deposits | $ | 14,691 | $ | 4,255 | ||||
| Other deposits and receivables | 1,258 | 1,258 | ||||||
| Total | $ | 15,949 | $ | 5,513 | ||||
NOTE 6: DEBT
Secured Revolving Convertible Promissory Note and Securities Purchase Agreement
On July 19, 2019, the Company entered into a Securities Purchase Agreement with Diamondrock LLC (“Diamond”) whereby Diamond has agreed to advance up to $750,000 to the Company by way of a Secured Revolving Convertible Promissory Note with an initial cumulative funding of $169,450 (less an original issue discount (“OID”) of 10% totaling $16,945) to be drawn down in tranches at the election of the Company. As of December 31, 2019, the Company had drawn down a total of $169,450 of which $16,945 represents the OID and $2,500 represents agreed debt issue costs, for total net proceeds to the Company of $150,005. The Company is required under the terms of the agreement to repay the draw downs in four equal installments, plus accrued interest of 5% per annum, with the initial installment commencing 90 days after the first draw down under the agreement.
Further, the Company was required to pay a commitment fee in the amount of $112,500 on signing of the agreement by way of the initial issuance of a total of 100,000 shares. Diamond may sell the commitment fee shares subject to applicable securities regulations and may request additional shares from the Company at a future date should the aggregate value of the shares when sold generate less than the agreed $112,500 commitment fee.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Secured Revolving Convertible Promissory Note and Securities Purchase Agreement (continued)
Under the terms of the convertible note, on or after maturity the note may converted to shares of common stock in whole or in part equal to 60% of the lowest of the Volume Weighted Average Price for each of the fifteen (15) days immediately preceding the date of the Notice of Conversion. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $150,005 Notes was calculated using the Black-Scholes pricing model at $173,585, with the following assumptions: risk-free interest rate of 1.53% ~ 1.60%, expected life of 0.6 year, volatility of 175% ~ 292%, and expected dividend yield of zero. Because the fair value of the note exceeded the net proceeds from the $150,005, a charge was recorded to “Financing cost” for the excess of the fair value of the note.
The Company issued 100,000 shares on August 26, 2019 to satisfy the commitment fee. The Company valued issuance at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of issuance, and consequently recorded stock-based compensation of $110,000.
On August 26, 2020, a Revolving Secured Convertible Promissory Note Assignment and Purchase Agreement (the “Purchase Agreement”) was entered into between Diamond and Ilya Aharon (the “Buyer”). Under this Agreement, the Buyer acquired the Secured Revolving Convertible Promissory Note (“Diamond Note”) from Diamond for cash consideration of $147,000. The Purchase Agreement assigned all obligations of the Company and the guarantor under the terms of the original Diamond Note to Buyer.
On September 5, 2020, the Board of Directors approved the issuance of a new Convertible Promissory Note (the “New Note”) to Buyer in the amount of $147,000 thereby terminating all obligations of the Company and guarantor under the Diamond Note. The note was unsecured and non-interest bearing.
Under the New Note the Company had the right to prepay all or any portion of the New Note at any time upon 30 days written notice to the debtholder, without penalty at the debtholder’s discretion. The debtholder has the right at any time with 3 days written notice to convert any part of the New Note into shares of the Company’s common stock at a conversion rate of a 40% discount to the lowest market price at the close of market during the 60 days immediately prior to the notice of conversion. The Company recorded $748,192 as liability on stock settled debt associated with this New Note and expensed $748,192 as amortization of debt discount in the year ended December 31, 2020.
On October 1, 2020, the Company received a Notice of Conversion in respect to the New Note and converted the full value of the debt ($147,000) into 3,500,001 shares.
Due to the variable conversion price associated with the Revolving Secured Convertible Promissory Note disclosed above, the Company has determined that the debt discount is a derivative liability for instruments which are convertible and have not yet been settled. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives on the date they are deemed to be derivative liabilities. The initial embedded derivative liability of $173,585 was recorded as a derivative liability on the consolidated balance sheet and is remeasured to fair value at each balance sheet date with a resulting non-cash gain or loss related to the change in the fair value being charged to earnings (loss).
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Secured Revolving Convertible Promissory Note and Securities Purchase Agreement (continued)
The carrying value of the Diamond Note and the New Note is as follows:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Principal issued | $ | - | $ | 162,589 | ||||
| Repayment | - | (8,607 | ) | |||||
| Accrued interest payable | - | 4,270 | ||||||
| Gain on extinguishment of note | - | (11,252 | ) | |||||
| Settled with shares | - | (147,000 | ) | |||||
| Amortization of debt discount | - | - | ||||||
| Total: | $ | - | $ | - | ||||
The interest expenses of these convertible notes are as follows:
| Year ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Interest expense on the convertible notes | $ | - | $ | 5,462 | ||||
| Financing cost | - | - | ||||||
| Amortization of debt discount | - | 804,005 | ||||||
| Total: | $ | - | $ | 809,467 | ||||
The accrued interest payable is as follows:
| Balance, December 31, 2019 | $ | 201 | ||
| Interest expense on the convertible notes | 5,462 | |||
| Payment to interest | (1,393 | ) | ||
| Debt Assignment and Purchase Agreement | (4,270 | ) | ||
| Balance, December 31, 2020 | $ | - |
As a result of the application of ASC No. 815 in period ended December 31, 2020 and at the commitment date, the fair value of the debt discount associated with the convertible notes is summarized as follows:
| Balance at December 31, 2019 | 154,847 | |||
| Derivative liability reclassified to additional paid in capital upon debt paid | (10,584 | ) | ||
| Loss on change in fair value during the period | 28,844 | |||
| Gain on extinguishment | (173,107 | ) | ||
| Balance at December 31, 2020 | $ | - |
The loss on conversion in the year ended December 31, 2020 as follow:
| Principal | $ | 147,000 | ||
| Stock-settled liability | 748,192 | |||
| Total | 895,192 | |||
| 3,50,001 shares issued per notice of conversion | 1,351,000 | |||
| Loss on conversion in December 31, 2020 | $ | 455,808 |
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Advances Payable allocated to Convertible Note
During the year ended December 31, 2019, the Company received $150,000 from an unrelated third party. Proceeds were for shortfalls in operational expenses. The advance was non-interest bearing, and there were no specific terms of repayment at that time. On December 21, 2020, the Lender and the Company agreed to allocate interest in the amount of 6% per annum and to accrue interest from the date the advance was first entered into. At this time the Company executed a convertible promissory note with principal amount of $150,000. The note was due and payable on the one-year anniversary of the date of each advance and was convertible at a price of 15% of the market closing price 5 days prior to presentation of a notice of conversion. The Company recorded $35,185 as liability on stock settled debt associated with this convertible note. The Company recorded interest expenses of $13,558 during the year ended December 31, 2020.
On December 30, 2020, a Convertible Promissory Note Assignment and Purchase Agreement (the “Purchase Agreement”) was entered into between the note holder and a buyer (the “Buyer”). Under this Agreement, the Buyer acquired the Convertible Promissory Note for cash consideration of $163,558 from the holder. The Purchase Agreement assigned all obligations of the Company and the guarantor under the terms of the original convertible note to the Buyer.
On December 20, 2020, the Board of Directors approved the issuance of a new Convertible Promissory Note to the Buyer in the amount of $163,558 thereby terminating all obligations of the Company and guarantor under the original convertible promissory note above. The note is unsecured and non-interest bearing.
Under the new Convertible Promissory Note the Company had the right to prepay all or any portion of the new convertible promissory note at any time upon 30 days written notice to the debtholder, without penalty at the debtholder’s discretion. The debtholder has the right at any time with 3 days written notice to convert any part of the New Note into shares of the Company’s common stock at a conversion rate of a 40% discount to the lowest market price at the close of market during the 120 days immediately prior to the notice of conversion. The Company recorded $3,111,366 as the liability on stock settled debt associated with this New Note.
On December 31, 2020, the Company received a Notice of Conversion in respect to the New Note and converted the full value of the debt $163,558 into 3,894,245 shares.
The carrying value of the Advance payable and the New Note is as follows:
| Convertible Note | Advances payable | |||||||
| Balance, December 31, 2019 | $ | - | $ | 150,000 | ||||
| Debt Assignment and Purchase Agreement | 150,000 | (150,000 | ) | |||||
| Accrued interest expenses | 13,558 | - | ||||||
| Settled with common shares | (163,558 | ) | - | |||||
| Balance, December 31, 2020 | $ | - | $ | - | ||||
The interest expenses of this convertible note above are as follows:
| Year ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Interest expense on the convertible notes | $ | - | $ | 13,558 | ||||
| Amortization of debt discount | - | 3,146,551 | ||||||
| Total | $ | - | $ | 3,160,609 | ||||
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Advances Payable allocated to Convertible Note
The loss on conversion during the year ended December 31, 2020 as follow:
| Principal | $ | 163,558 | ||
| Stock-settled liability | 3,146,551 | |||
| Total | 3,310,109 | |||
| 3,894,245 shares issued per notice of conversion | 3,403,570 | |||
| Loss on conversion in December 31, 2020 | $ | 93,461 |
Loan Treaty Agreement
On December 21, 2020, the Company entered into a Loan Treaty Agreement with a third party (“Treaty Agreement”) whereby the lender agreed to provide a loan in the amount of up to $450,000 to the Company in $25,000 tranches, deposited weekly, memorialized by promissory notes in increments of $100,000. Each amount deposited has a term of 12 months for repayment and shall bear an interest rate of 8% per annum. In addition, at the option of the Lender, each $25,000 loaned to the Company may be converted into common shares at a 25% discount to the market price at the close of business on November 23, 2020 ($0.26 x 75% = $0.195); or $0.195 per share. Each $25,000 may be converted at the one-year anniversary of the date of the weekly deposit, unless the Company becomes a fully reporting company, at which time the holder may convert such debt to common shares in six months, or if the underlying shares are registered, conversion may occur upon Notice of Effect from the Securities and Exchange Commission. On April 1, 2021, the Company entered into an amendment to a Loan Treaty Agreement originally executed on December 21, 2020. On April 1, 2021, the Company entered into an amendment to the Treaty Agreement. Under the terms of the amendment the lender has agreed to fund an additional $1 million dollars over 90 business days in equal weekly tranches of $55,556. Each tranche may be converted under the same terms as the original loan treaty, or $0.195 per share, commencing the one-year anniversary of the date of the weekly deposit, unless the Company becomes a fully reporting company, at which time the holder may convert such debt to common shares in six months, or if the underlying shares are registered, conversion may occur upon Notice of Effect from the Securities and Exchange Commission.
During the fiscal year ended December 31, 2021 and 2020, the Company received weekly tranche deposits for an aggregate of $1,100,000 and $50,000, respectively. The Company recorded $11,656,833 and $164,104, respectively, as the liability on stock settled debt associated with the tranches which amount is amortized over the terms of the notes.
On October 27, 2021, the Company issued 2,051,282 shares of common stock to lender eSilkroad Network Ltd. in consideration for $400,000 in loans previously provided under the terms of a convertible note agreement convertible at $0.195 per share.
The carrying value of tranches is as follows:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Principal | $ | 750,000 | $ | 50,000 | ||||
| Stock-settled liability | 8,320,525 | 164,104 | ||||||
| Total | 9,070,525 | 214,104 | ||||||
| Unamortized debt discount | (4,067,059 | ) | (161,364 | ) | ||||
| Debt carrying value | $ | 5,003,466 | $ | 52,740 | ||||
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Loan Treaty Agreement
The interest expenses of traches are as follows:
| Year ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Interest expense on notes | $ | 50,915 | $ | 66 | ||||
| Amortization of debt discount | 7,751,138 | 2,740 | ||||||
| Total: | $ | 7,802,052 | $ | 2,806 | ||||
The accrued interest payable is as follows:
| Balance, December 31, 2020 | $ | 66 | ||
| Interest expense on the convertible notes | 50,915 | |||
| Balance, December 31, 2021 | $ | 50,981 |
The loss on conversion during the year ended December 31, 2021 is as follows:
| Principal | $ | 400,000 | ||
| Stock-settled liability | 3,500,412 | |||
| Total | 3,900,412 | |||
| 2,051,282 shares issued per notice of conversion | 4,615,385 | |||
| Loss on conversion in December 31, 2021 | $ | 714,973 |
Convertible Debt
On November 11, 2021, the Company entered into a Promissory Note with an investor in which the investor has agreed to lend the Company the principal amount of $560,000 for the purchase price of $504,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00 per share. The Company concurrently issued a Common Stock Purchase Warrant for the purchase of an additional 560,000 common shares at $1.00 per share for a term of three (3) years.
On December 16, 2021, the Company entered into a Promissory Note with an investor in which the investor has agreed to lend the Company the principal amount of $560,000 for the purchase price of $504,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00 per share. The Company concurrently issued a Common Stock Purchase Warrant for the purchase of an additional 560,000 common shares at $1.00 per share for a term of three (3) years.
In accordance to ASC 470 – Debt, the proceeds of $1,008,000 was allocated based on the relative fair values of the convertible note and the warrant of $504,027 and $503,973, respectively. The Warrant was valued at $503,973 was recorded as a debt discount which is being amortized over the life of the Note. In addition, the Note had a BCF in the amount of $616,027 which was recorded as a debt discount which is being amortized over the life of the Note. The debt discount totaled $1,120,000.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
Convertible Debt (continued)
The carrying value of tranches is as follows:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Principal | $ | 1,120,000 | $ | - | ||||
| Unamortized debt discount | (1,047,626 | ) | - | |||||
| Debt carrying value | $ | 72,374 | $ | - | ||||
The interest expenses of traches are as follows:
| Year ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Interest expense on notes | $ | 13,440 | $ | - | ||||
| Amortization of debt discount | 72,374 | - | ||||||
| Total: | $ | 85,814 | $ | - | ||||
The accrued interest payable is as follows:
| Balance, December 31, 2020 | $ | - | ||
| Interest expense on the convertible notes | 13,440 | |||
| Balance, December 31, 2021 | $ | 13,440 |
SBA
On May 19, 2020, the Company received a long-term loan from U.S. Small Business Administration (SBA) in the amount of $44,000, upon the following conditions:
Payment: Installment payments, including principal and interest, of $215 monthly, will begin twenty-four (24) months from the date of the promissory note. The balance of principal and interest will be payable Thirty (30) years from the date of the promissory note.
Interest: Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date(s) of each advance.
Payment terms: Each payment will be applied first to interest accrued to the date of receipt of each payment, and the balance, if any, will be applied to principal; each payment will be made when due even if at that time the full amount of the loan has not yet been advanced or the authorized amount of the Loan has been reduced.
As at December 31, 2021, the Company had accrued interest payable of $2,672 in respect of this loan. (December 31, 2020 - $1,022).
PPP funds
The Paycheck Protection Program (“PPP”) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 6: DEBT (continued)
PPP funds (continued)
The loan may be forgiven in full if the funds are used for payroll costs, interest on mortgages, rent, and utilities (with at least 60% of the forgiven amount having been required to be used for payroll). Additional terms include:
| ● | An interest rate of 1% per annum; |
| ● | Loans issued prior to June 5, 2020 have a maturity of 2 years, with loans issued thereafter having a maturity of 5 years; |
| ● | Loan payments are deferred for six months; |
| ● | No collateral or personal guarantees are required; and, |
| ● | Neither the government nor lenders will charge small businesses any fees. |
On May 14, 2020, the Company received PPP proceeds of $45,450.
As of December 31, 2021, the Company paid $5,702 including $5,061 in principal and $641 in interest payable in respect of this loan. The Company is currently in the process of applying for forgiveness of the loan in full.
A schedule of the total long-term debt is below:
| December 31, 2021 |
December 31, 2020 |
|||||||
| SBA Loan | $ | 44,000 | $ | 44,000 | ||||
| PPP Loan | 40,389 | 45,450 | ||||||
| Total | 84,389 | 89,450 | ||||||
| Current portion | (40,389 | ) | - | |||||
| Debt, long term | $ | 44,000 | $ | 89,450 | ||||
| Interest accrued, reflected as accounts payable | $ | 2,672 | $ | 1,310 | ||||
Other Short-term loans
On January 5, 2018, GZMC entered into a loan agreement with National Funding Inc. whereby the Company acquired funding in the amount of $20,625. The terms of the loan called for the Company to pay an origination fee of $412 and to repay $26,400 by way of 176 daily payments of $150. As of December 31, 2021 and December 31, 2020, there was an outstanding amount of $3,768 due and payable on the loan, and the loan was in default at the year ended December 31, 2020 and remains in default.
NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES
The Company generates revenue from contracts which, among other services, provide wireless and digital promotion rights for certain events including WiFi media network advertising rights, and the development of smart venue wireless networks and software engagement technology products for airports, stadiums, campuses, cities and other venues in the United States and International markets. In general, our contracts require several months of implementation which is charged at a fixed rate, followed by monthly maintenance and management services, ad hoc fixed rate services, and a share in advertising revenue, when applicable. As a result, the Company will accept deposits from customers, which deposits are applied as each stage of our implementation is complete or under the terms of the service contract. Invoices issued to customers for the implementation phase of our contracts are due and payable when issued, however, as the associated scope of services have not yet been concluded, these invoices do not yet meet the revenue recognition criteria required to report these amounts as earned revenue (ref: Note 2 – Revenue Recognition). As a result, deposits when received from customers are included as liabilities on our balance sheets.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES (continued)
The following table provides balances of customer receivables and contract liabilities as of December 31, 2021 and December 31, 2020:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Customer receivables (1) | $ | - | $ | - | ||||
| Contract liabilities (Customer deposits) (2), (a), (b), (c) | $ | 209,000 | $ | 287,000 | ||||
| (1) | While the Company has outstanding customer invoices for a total of $1,395,000 and $1,460,000 (net of customer deposits received of $209,000 and $287,000, respectively as at December 31, 2021 and December 31, 2020), these amounts are not yet earned under revenue recognition criteria provided by ASC 606 and therefore, they are not reflected as accounts receivable on the Company’s balance sheets. |
| (2) | Contract liabilities are consideration we have received from our customers billed in advance of providing goods or services promised in the future or for work in progress. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include installation and maintenance charges that are deferred and recognized when the installation is complete or with respect to deposits for maintenance, over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities may be included as customer deposits or deferred revenue in our consolidated balance sheets, based on the specifics of the contract. As of December 31, 2021 and December 31, 2020, we have recognized $78,000 and $0, respectively, in revenue from customer deposits on hand. The Company and certain customers are currently in negotiations to determine the best way to proceed with the delayed implementation of certain prior period contracts for which we have received deposits but have not completed the scope of work. |
Performance Obligations
As of December 31, 2021, our estimated revenue expected to be recognized in the future related to performance obligations associated with certain customer contracts that have been invoiced but remain unsatisfied (or partially satisfied) is approximately $1,550,000. While we had originally expected to recognize approximately 30% of this revenue through 2020, with the balance recognized thereafter, the impact of COVID-19 has had a significant impact on these contracts. The Company is currently in negotiations to determine the best way to proceed with the delayed implementation of these contracts, or their termination.
(a) We executed a license agreement for the country of Spain in fiscal 2016 and the Company received an initial deposit of $25,000 against the total licensing fee payable. This amount has been recorded on the Company’s balance sheets as deferred income. While the Company and the customer attempted to negotiate an amendment to the terms of the agreement in late fiscal 2019, the onset of COVID-19 resulted in further delays which are ongoing. As a result, the Company is currently in negotiation for a formal termination of the agreement with this customer.
(b) On July 11, 2019, GZMC entered into an Airport WiFi Sponsorship Marketing Agreement with a third party whereunder GZMC will secure long-term, exclusive and non-exclusive smart venues for WiFi marketing, digital marketing and data analytics for various brand sponsors at various airports across the United States. There were several venues anticipated under the terms of the agreement with installations commencing on various schedules. GZMC generated invoices for $100,000 for each of 13 venues, whereby $65,000 per venue is due on receipt of the invoice and the remaining $35,000 is due sixty days thereafter. As at December 31, 2021 and December 31, 2020, the Company had received partial payments of $130,000 against the initial deposit required. Previously the Company expected revenue recognition under these contracts to commence in fiscal 2020, however, as a result of the impact of the COVID-19 pandemic, the project has been delayed indefinitely. Funds originally provided for the implementation of this project are anticipated to be applied as a deposit on a project yet to be identified or otherwise, repaid.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES (continued)
(c) On October 6, 2020, the Company received a purchase order in the amount of $132,000 in regard to a Media Agreement described in Note 9(3) below. As the installation had not yet been fully performed under the purchase order as of December 31, 2020, $132,000 is reflected as Deferred Revenue on the balance sheet. During the fiscal year ended December 31, 2021, the Company completed the installation terms included in the purchase order and as a result $78,000 has been reflected as revenue as at December 31, 2021. The remaining $64,000 included in deferred income relates to future service obligations under the contract which will be earned over the term of the service contract.
NOTE 8: RELATED PARTY TRANSACTIONS
Terrence Flowers
As at December 31, 2019, a total of $11,110 was payable to Mr. Terrence Flowers, who ceased to be a shareholder, officer and director on July 9, 2018. During the year ended December 31, 2020, the Company repaid $11,000 to Mr. Flowers, leaving a balance due of $110 at December 31, 2021 and 2020. The amount is reflected on the balance sheet in related party payables.
Coleman Smith and ELOC Holdings Corp.
On July 9, 2018, Mr. William Coleman Smith was appointed to the Board of Directors of the Company and as President, Secretary and Treasurer of the Company. Subsequently, on July 10, 2018, the Company executed a consulting agreement with ELOC Holdings Corp. whereby ELOC will provide the services of Mr. Smith for a fee of $10,000 per month. ELOC Holdings, Corp is a company controlled by Mr. Smith.
On April 29, 2014, our 60% controlled subsidiary, GZMC, entered into a management and consulting agreement with Mr. Smith, the sole officer and director of GZMC whereunder GZMC was required to pay an annual salary of $120,000 to Mr. Smith.
During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp made short term loans with interest at 1.5% per month to the Company to pay various expenses.
As of December 31, 2020, Mr. Smith, ELOC Holdings Corp. and the Company agreed to retroactively allocate interest in the amount of 5% per annum to loans, advances, wages and management fees payable by each of GZMC and the Company from January 1, 2020 forward. The parties entered into a single consolidated promissory note for all amounts payable to each of ELOC and Smith, with a principal amount of $1,217,579 payable to ELOC.
During the fiscal year ended December 31, 2021, the Company paid a total of $151,854 to ELOC to pay down the principal balance on the loan.
The following amounts were included in debt to related party on our Balance Sheets:
| Balance at December 31, 2020, Debt, related party | $ | 1,217,579 | ||
| Payments on loan | (151,854 | ) | ||
| Balance at December 31, 2021, Debt, related party. | $ | 1,065,725 |
The Company recorded associated interest expenses of $55,713 and $22,629 for the fiscal years ended December 31, 2021 and 2020, respectively.
During the fiscal year ended December 31, 2021, the Company accrued $120,000 in management fees to ELOC and paid management fees to Coleman Smith of $210,000. Further, Mr. Smith received payments for expenses and invoiced the Company for expenses paid on behalf of the Company leaving a net amount due for expenses of $17,085.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 8: RELATED PARTY TRANSACTIONS (continued)
Coleman Smith and ELOC Holdings Corp. (continued)
The following amounts were included in related party payables on our Balance Sheets:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Coleman Smith, President | $ | 3,946 | $ | - | ||||
| Interest payable | 55,713 | |||||||
| ELOC Holdings Corp. | 120,000 | - | ||||||
| Terrence Flowers | 110 | 110 | ||||||
| $ | 179,769 | $ | 110 | |||||
Securities Purchase Agreement – William Coleman Smith
On April 8, 2021, the Company and William Coleman Smith, officer and director entered into a securities purchase agreement whereunder Mr. Smith sold an additional 9% interest in GZMC to the Company for consideration of 10 million unregistered, restricted shares of common stock. On the conclusion of the transaction, the Company controlled 60% of GZMC.
NOTE 9: COMMITMENTS
| (1) | On April 2, 2019, a vendor of the Company, the “Plaintiff” filed a complaint against the Company’s 60% controlled subsidiary, Green Zebra, in the Superior Court of California, Orange County for unpaid invoices related to services and products sold in fiscal 2017, including reasonable value in the amount of $61,899.62. The Court approved a default judgement on January 23, 2020 with respect to the aforementioned claim, including the following: |
| Damages | $ | 61,890 | ||
| Prejudgment interest at the annual rate of 10% | 9,835 | |||
| Attorney fees | 1,200 | |||
| Other costs | 505 | |||
| Total judgement value | $ | 73,430 |
As of December 31, 2020 and March 31, 2021, the Company was unaware of the judgement. In April 2021, the Plaintiff perfected the judgement and obtained a hold against a bank account controlled by Green Zebra in the approximate amount of $16,282, which amount was subsequently released to the Plaintiff and has been recorded as a reduction to the balance owing to the Plaintiff. The Company remitted a further $2,420 towards the outstanding balance. At December 31, 2021 a total of $54,738 remained outstanding. The Company and the Plaintiff are currently in discussions regarding the claimed amount.
| (2) | On August 10, 2019, the Company’s CEO, Mr. William Coleman Smith, entered into a lease agreement with IAC Apartment Development JV LLC to lease space at 861 Tularosa, Irvine, California for a one-year term at a rental rate of $3,455 per month, plus utilities, for the Company’s subsidiary, Green Zebra Media Corp. Green Zebra will use the space for its operations. On April 1, 2020, the landlord and the Company agreed to a rental deferment agreement to defer the rental costs by 50% as a result of COVID-19. The monthly rent commencing April 1, 2020 was $1,727 plus utilities. The rental deferment ended on June 1, 2020. The original lease expired on August 9, 2020 and was renewed on expiry for another one-year term at a reduced rate of $3,350 per month. On August 16, 2021 the Company renewed a lease for a further one-year term at a rental rate of $3,620 per month, plus utilities, for the Company’s subsidiary, Green Zebra Media Corp. The Company has elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis |
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 9: COMMITMENTS (continued)
| (3) | On September 14, 2020, GZMC entered into a WiFi Media Solution Agreement (the “Media Agreement”) with a city in Iowa in regard to a city owned location (“venue location”) whereby GZMC was granted rights to provide sponsorship advertising, performance marketing and professional services. Under the terms of the Media Agreement, GZMC must pay fees to the city at an annual rate of $94,000 per annum for a period of 5 years following the initial operation of the venue location, the opening of which was delayed past December 31, 2021 as a result of COVID-19 restrictions. GZMC is anticipating the start date for this project to occur during fiscal 2022 based on acquiring the various bonds and licenses as may be required and the official commencement of venue services. |
| (4) | On May 19, 2021, the Company signed an 18-month lease for office premises in California located at 1 Technology Drive, Bldg B, Irvine, CA 92618, Suite no. B123 occupying approximately 6,498 square feet of usable space. The terms of the lease provide for basic monthly rent in the first year of approximately $9,097 per month, and $9,487 for each of the remaining six months. In addition, the tenant is responsible for their share of operating expenses, utilities and services. As a result of the adoption ASU No. 2016-02 – Topic 842 Leases, the Company recognized a lease liability and right-to-use asset of approximately $157,462, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 6.75% on June 1, 2021. Total future payments are $102,408 and imputed interest is $3,405, leaving lease liabilities of $99,003 as at December 31, 2021. |
| (5) |
On April 25, 2021, the Company entered into an Equity Purchase Agreement with World Amber Corp., whereby the Company agreed to sell to World Amber Corp up to 16,666,667 shares of the Company’s common stock for a maximum commitment amount of $5,000,000 at $0.30 per share. The Company has submitted a registration statement on Form S-1 to the Securities and Exchange Commission in order facilitate this funding agreement which was deemed effective on September 24, 2021.
On each of November 2, 2021, and November 3, 2021, the Company presented a Put to World Amber Corporation, pursuant to the Effective S-1 Registration Statement for $50,000 each Put, the cumulative $100,000 in funds requiring the issuance of 333,334 shares of registered common stock at $0.30 per share. |
| (5) | On November 10, 2021, the Company entered into a Registration Right Agreement with Mast Hill Fund, L.P., whereby the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor up to Ten Million Dollars ($10,000,000.00) of Put Shares (as defined in the Purchase Agreement) and to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws. |
NOTE 10: CAPITAL STOCK
The Company has authorized 500,000,000 common shares with a par value of $0.001, 10,000,000 shares of Series A Preferred Stock, par value $0.004 and 1 share of Series B Preferred Stock, par value $0.001. The shares of Series A Preferred Stock are convertible into shares of Common Stock on the basis of 10 shares of Common Stock for every 1 share of Series A Preferred Stock and have voting rights of one vote for each share of Series A Preferred Stock held. The Series B Preferred Stock is not convertible but has voting rights granting the holder 51% of all votes (including common and preferred stock) entitled to vote at any meeting of the stockholders of the Company. Neither the Series A nor Series B Preferred Stockholders have any rights to dividends or proceeds of the assets of the Company upon any liquidation or winding up of the Company.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 10: CAPITAL STOCK (continued)
Common Stock
On April 8, 2021, the Company and William Coleman Smith, officer and director entered into a securities purchase agreement whereunder Mr. Smith sold an additional 9% interest in GZMC to the Company for consideration of 10 million unregistered, restricted shares of common stock. On the conclusion of the transaction, the Company controls 60% of GZMC. The transaction occurred between parties under common control and the value of the shares was recorded at par value or $0.001 per share, in addition as a result of the change in ownership percentage to account for the additional 9% interest the Company recorded a reduction to additional paid in capital of $142,649 as of the acquisition date.
On October 27, 2021, the Company issued 2,051,282 shares of common stock to lender eSilkroad Network Ltd. in consideration for $400,000 in loans previously provided under the terms of a convertible note agreement convertible at $0.195 per share.
On each of November 2, 2021, and November 3, 2021, the Company presented a Put to World Amber Corporation, pursuant to the Effective S-1 Registration Statement for $50,000 each Put, for a cumulative $100,000 in funds requiring the issuance of 333,334 shares of registered common stock at $0.30 per share.
During the year ended December 31, 2020, the Company issued a total of 600,000 shares in respect to a private placement at $0.25 per share for total proceeds of $150,000. The $150,000 is reflected on the balance sheets of the Company as a Subscription Receivable and was received in January 2021.
As of December 31, 2021 and December 31, 2020, there were 25,177,973 and 12,793,357 shares of common stock issued and outstanding, respectively.
Series A Preferred Stock
The total number of Series A Preferred stock that may be issued by the Company is 10,000,000 shares with a par value of $0.004.
On December 31, 2021 and December 31, 2020, there are a total of 5,000,000 shares of Series A Preferred Stock issued and outstanding.
Series B Preferred Stock
The total number of Series B Preferred Stock that may be issued by the Company is 1 share with a par value of $0.001.
On December 31, 2021 and December 31, 2020, there is 1 share of Series B Preferred stock issued and outstanding.
Share Purchase Warrants
On November 11, 2021, the Company entered into a Warrant Purchase Agreement with J.H. Darbie and Company, an authorized, registered broker dealer, wherein J.H. Darbie and Company may purchase 10,487 shares of common stock for $1.00 per share, as a Finder’s Fee for introducing the Company to MHFLP. The fair value of the warrants granted was estimated at $25,141 using the Black-Scholes pricing model
In November and December 2021, the Company issued accumulated 1,120,000 warrants to convertible note holders and subscribers for common shares, in accordance with the terms of subscription unit agreements into with the convertible note holder and subscribers. The fair value of the warrants granted was estimated at $503,973 using the Black-Scholes pricing model.
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 10: CAPITAL STOCK (continued)
Share Purchase Warrants (continued)
In accordance with authoritative accounting guidance, the fair value of the outstanding common stock purchase warrants was calculated using the Black-Scholes option-pricing model with the following assumptions at the measurement date(s):
| Measurement date | ||||
| Dividend yield | 0% | |||
| Expected volatility | 279~293% | |||
| Risk-free interest rate | 0.83~1.22% | |||
| Expected life (years) | 3.00~5.00 | |||
| Stock Price | $1.99~ $2.40 | |||
| Exercise Price | $1.00 | |||
The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at December 31, 2021:
| Exercise | Number | Expiration | ||
| Price | Outstanding | Date | ||
| $1.00 | 560,000 | November 2024 | ||
| $1.00 | 560,000 | December 2024 | ||
| $1.00 | 10,487 | November 2026 |
A summary of the warrant activity for the year ended December 31, 2021 is as follows:
| Weighted- Average Exercise |
Weighted- Contractual |
Aggregate Intrinsic |
||||||||||||||
| Shares | Price | Term | Value | |||||||||||||
| Outstanding at December 31, 2020 | - | $ | - | - | $ | - | ||||||||||
| Grants | 1,130,487 | 1.00 | 3.02 | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Expired | - | - | - | - | ||||||||||||
| Outstanding at December 31, 2021 | 1,130,487 | $ | 1.00 | 2.93 | $ | - | ||||||||||
| Exercisable at December 31, 2021 | 1,130,487 | $ | 1.00 | 2.93 | $ | - | ||||||||||
NOTE 11: INCOME TAX
The income tax expense (benefit) at a federal rate of 21% and a state tax rate of 0% consisted of the following for the years ended December 31, 2021 and December 31, 2020:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Total current | $ | - | $ | - | ||||
| Total deferred | - | - | ||||||
| $ | - | $ | - | |||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The following is a reconciliation of the expected statutory federal income tax and state income tax provisions to the actual income tax benefit for the years ended December 31, 2021 and 2020:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Expected benefit at federal statutory rate | $ | 2,106,600 | 997,500 | |||||
| Change in valuation allowance | (2,106,600 | ) | (997,500 | ) | ||||
| $ | - | $ | - | |||||
The Company had deferred income tax assets as of December 31, 2021 and 2020 as follows:
| December 31, 2021 |
December 31, 2020 |
|||||||
| Loss carryforwards | $ | 3,372,800 | $ | 1,266,200 | ||||
| Less - valuation allowance | (3,372,800 | ) | (1,266,200 | ) | ||||
| Total net deferred tax assets | $ | - | $ | - | ||||
The Company has several unfiled tax years since a change in control in fiscal 2018, and certain prior filed returns are also open for examination by the taxing authorities. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented above. The Company had no accruals for interest and penalties at either December 31, 2020 and 2019. The Company’s utilization of any net operating loss carry-forward may be unlikely as a result of the change in control which occurred in fiscal 2018 and its change in business activities.
NOTE 12: SUBSEQUENT EVENTS
On February 7, 2022, the board of directors of the Company approved and authorized an increase of $10,000 per month in salary for the sole officer of the Company, William Coleman Smith, effective January 1, 2022.
Subsequent to the year ended December 31, 2021, pursuant to an Engagement Agreement with Carter, Terry & Company, an authorized, registered broker dealer, the Company issued a total of 10,769 compensation shares.
The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there are no additional subsequent events requiring disclosure.
On April 2, 2019, a vendor of the Company, the “Plaintiff” filed a complaint against the Company’s 60% controlled subsidiary, Green Zebra, in the Superior Court of California, Orange County for unpaid invoices related to services and products sold in fiscal 2017, including reasonable value in the amount of $61,899.62. The Court approved a default judgement on January 23, 2020 with respect to the aforementioned claim, including the following:
| Damages | $ | 61,890 | ||
| Prejudgment interest at the annual rate of 10% | 9,835 | |||
| Attorney fees | 1,200 | |||
| Other costs | 505 | |||
| $ | 73,430 |
As of December 31, 2020 and March 31, 2021, the Company was unaware of the judgement. In April 2021, the Plaintiff perfected the judgement and obtained a hold against a bank account controlled by Green Zebra in the approximate amount of $16,282, which amount was subsequently released to the Plaintiff and has been recorded as a reduction to the balance owing to the Plaintiff. The Company remitted a further $2,420 towards the outstanding balance. At December 31, 2021 a total of $54,738 remained outstanding. The Company and the Plaintiff are currently in discussions regarding the claimed amount.
Other than as set out above, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
| • |
for any breach of the director’s duty of loyalty to the Company or its stockholders;
|
| • |
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;
|
| • |
under Nevada Revised Statutes for the unlawful payment of dividends; or
|
| • |
for any transaction from which the director derives an improper personal benefit.
|
|
Securities and Exchange Commission Registration Fee (fee rounded to next whole dollar)
|
$1,086
|
|
Audit Fees and Expenses
|
$1,000
|
|
Legal Fees and Expenses
|
$8,333
|
|
Transfer Agent and Registrar Fees and Expenses
|
$8,500
|
|
Edgar Filing Fees
|
$5,000
|
|
Miscellaneous Expenses
|
$26,081
|
|
Total
|
$50,000
|
| a. |
willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director has a material conflict of interest;
|
| b. |
a violation of criminal law unless the director had reasonable cause to believe that her or her conduct was lawful or no reasonable cause to believe that her or her conduct was unlawful;
|
| c. |
a transaction from which the director derived an improper personal profit; and
|
| d. |
willful misconduct.
|
| (a) |
Include any prospectus required by Section 10(a)(3) of the Securities Act;
|
| (b) |
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in thsecurities offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and
|
| (c) |
Include any additional or changed material information on the plan of distribution.
|
|
|
GZ6G Technologies Corp.
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By:
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/s/William Coleman Smith |
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Name:
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William Coleman Smith
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Title:
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Chief Executive Officer
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Name
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Position
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Date
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/s/William Coleman Smith
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Chief Executive Officer
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April 27 , 2022 |
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William Coleman Smith
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/s/William Coleman Smith
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Chief Financial Officer (Principal Financial and Accounting Officer
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April 27 , 2022
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William Coleman Smith
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/s/William Coleman Smith
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Director
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April 27 , 2022
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William Coleman Smith
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| /s/Brian Scott Hale |
Director |
April 27 , 2022 | ||
| Brian Scott Hale | ||||
| /s/William Ray Procniak |
Director |
April 27 , 2022 | ||
| William Ray Procniak |
Sharon D. Mitchell, Attorney at Law