GZ6G Technologies Corp S-1, filed May 17, 2021
GZ6G Technologies Corp. (GZIC)
S-1
2021-05-17
View Original
Added on
October 26, 2026
As filed with the Securities and Exchange Commission on May 17, 2021
Registration No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GZ6G TECHNOLOGIES CORP
(Exact name of registrant as specified in its charter)
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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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GZ6G Technologies Corp.
Suite #105-275, 25422 Trabuco Rd.
Lake Forest, CA 92630
(949) 872-1965
(Name, Address, including zip code, and telephone and facsimile number,
including area code, of registrants’ principal executive offices)
Copy to:
Sharon Mitchell
SD Mitchell & Associates, PLC
829 Harcourt Rd.
Grosse Pointe Park, MI 48230
(248) 515-6035
(Name, Address, including zip code, and telephone number,
including area code, of agent of service)
Approximate date of commencement sales to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the
earlier effective Registration Statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
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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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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class
of Securities 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
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16,666,667
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$0.30
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$5,000,000
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$545.50
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Common Stock, $0.001 par value per share, selling stockholders (3)
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3,589,744
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$0.195
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$700,000
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$76.37
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Total
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20,256,411
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$5,700,000
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$621.87
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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 $0.0001091
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(3)
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The Company has already received the proceeds from the selling stockholders in full as at the date of this Offering.
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The Registrant hereby amends this Registration Statement (the “Registration Statement”) on such date or dates as may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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The information in this
prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any jurisdiction where an offer or sale is not permitted
Subject to Completion, Dated May 14, 2021
PROSPECTUS
GZ6G Technologies Corp.
16,666,667 Shares of Common Stock
3,589,744 Shares by Selling Shareholder
This is the initial offering of Common Stock of GZ6G Technologies Corp. We are offering for sale a total of 16,666,667 shares of Common Stock at a fixed price of $0.30 per share for the duration of the Offering (the
“Offering”) and we are registering a total of 3,589,744 shares of Common Stock for certain Selling Shareholders with respect to proceeds of $700,000 received in full under the terms of a Loan Treaty Agreement prior to this Offering. There is no
minimum number of shares that must be sold by us for the Offering to be completed, and we will retain the proceeds from the sale of any of the offered shares, which are sold. The Offering is being conducted on a self-underwritten, best efforts
basis. Our Officers and Directors will attempt to sell the shares directly to friends, family members and business acquaintances. None of our Officers and Directors will receive commission or any other remuneration for such sales. In offering the
securities on our behalf, our Officers and Directors will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934.
We are offering a total of 16,666,667 Common Shares for sale at a fixed price of $0.30 per share for a period of three hundred and sixty-five (365) days from the effective date of this prospectus, unless extended by
our Board of Directors for up to an additional ninety (90) days. If all of the shares offered by us are purchased, the gross proceeds to us will be $5,000,000. All funds raised hereunder will become immediately available to us and will be used in
accordance with our intended “Use of Proceeds” as set forth herein. Because the offering has no set minimum, we may fail to raise enough capital to fund our intended operations. Investors are advised that they will not be entitled to a refund and
could lose their entire investment.
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Offering Price
to the Public
Per Share
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Commissions
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Net Proceeds
to Company
After Offering
Expenses
(100% of Shares Sold)(1)
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Net Proceeds
to Company
After Offering
Expenses
(75% of Shares Sold)(1)
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Net Proceeds
to Company
After Offering
Expenses
(50% of Shares Sold)(1)
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Common Stock
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$0.30
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Not Applicable
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$5,000,000.00
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$3,750,000.00
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$2,500,000.00
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Total
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$0.30
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Not Applicable
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$5,000,000.00
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$3,750,000.00
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$2,500,000.00
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(1)
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Offering expenses expected to be $80,000 will be borne by the Company and not deducted from Gross proceeds.
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Our independent registered public accountant has issued an audit opinion for the period ended December 31, 2020, which includes a statement expressing substantial doubt as to our ability to continue as a going
concern. Accordingly, any investment in the shares offered hereby involves a high degree of risk and you should only purchase shares if you can afford a loss of your entire investment.
Our shares are currently trading on the OTC Pink Market.
You should rely only on the information contained in this prospectus. We have not authorized any persons to provide you with information different from that contained in this prospectus. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. We are a smaller reporting company, as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and as such we may take advantage of reduced reporting burdens. Investing in our common stock involves risk. Please see “Risk Factors” beginning on page 8.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS, INCLUDING THE SECTION ENTITLED “RISK FACTORS” BEGINNING ON PAGE 10
BEFORE BUYING ANY SHARES OF OUR COMMON STOCK.
NEITHEIR THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until April 30, 2022, all dealers that effect transactions in these securities, whether or not participating in this Offering, may be required to deliver a prospectus. This is in
addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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You should rely only on the information contained or incorporated by reference to this prospectus in deciding whether to purchase our Common Stock. We have not authorized anyone to provide you
with information different from that contained in this prospectus. Under no circumstances should the delivery to you of this prospectus or any sale made pursuant to this prospectus create any implication that the information contained in this
prospectus is correct as of any time after the date of this prospectus. To the extent that any facts or events arising after the date of this prospectus, individually or in the aggregate, represent a fundamental change in the information presented
in this prospectus, the prospectus will be updated to the extent required by law.
TABLE OF CONTENTS
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The following summary highlights material information contained in this prospectus. The summary does not contain all of the information you should consider before investing in the securities.
Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements.
GZ6G Technologies Corp Mission
Our mission is to be one of the industry’s most innovative and trusted 5G & Wi-Fi 6 and beyond enterprise smart technology solutions providers globally. Enabling enterprise technology and expertise consulting
together to build smarter cities and venues of the future. Staff enterprise smart solutions consultants to provide a comprehensive and consolidated group of technology services to expedite enterprise client decisions, billing and support under one
company and its divisions. Acquire industry supporting core business models that supports growth and scalability, while providing exceptional customer support for all stakeholders at the enterprise level.
GZ6G expects to be the operating parent company to
all its divisions and subsidiaries leveraging the purchasing power to reduce operational expenses while improving overall benefits throughout the organization.
Expanding GZ6G Subsidiaries and Divisions to focus
on 4 core areas of expertise to support Enterprise smart solutions: 1. Wireless networking, security managed services; 2. Data Center Services; 3. IOT software development; 4. Marketing, advertising, sponsorship services. We expect each
subsidiary or division to operate on its own until GZ6G requires the expertise to fulfill all or part of GZ6G technologies enterprise smart solutions products and services as required by contracts.
As a smart technology
solutions provider our overall mission is to enhance wireless network capabilities for high-density locations, incorporating next generation wireless networks to meet future wireless speeds such as WiFi 6 and 5G, improve in venue monetization
solutions to help venue owners expedite infrastructure technologies, innovate reliable in venue mobile application, integrated Internet of Things (IoT) as the industry evolves that provides venue specific artificial intelligence data insights to
enhance user engagement and experience.
GZ6G will provide infrastructure, data management,
software development, and cyber security to its clients (hereinafter, also referred to as “Venues”).
GZ6G has future plans to roll up several complementary companies in the wireless, Wi-Fi security IoT and digital marketing sectors. GZ6G is able to 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 and cities in the United States
and International markets.
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We believe that this Offering will provide us with added flexibility to raise capital in today's financial climate. We believe that investors in today's markets demand more transparency. By our registering this
Offering and becoming a reporting company, we will provide that transparency to our investors. While we believe that our limited reporting requirements will satisfy most investors seeking transparency in any potential investment, we still caution
that simply because we have a registration statement declared effective (when in fact, it does become effective) we will not become a “fully reporting” company, but rather, we will be only subject to the reporting requirements of Section 15(d) of
the Securities Exchange Act of 1934. Accordingly, unless we subsequently register our shares of Common Stock pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1943, except during the year that our registration statement becomes
effective, these reporting obligations may be automatically suspended under Section 15(d) if we have less than 300 shareholders at the beginning of our fiscal year. Further, our required disclosure is less extensive than the disclosures required
of “fully reporting” companies. For example, we are not subject to disclose, in our Form 10K, risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively.
We currently have limited revenues. Accordingly, our independent registered public accountants have issued an opinion expressing substantial doubt regarding our ability to continue as a going concern (please refer to
the audit report to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, management intends to rely primarily upon debt and
equity financings to supplement cash flows, if any, generated by our services. We will seek out such financing as necessary to allow us to continue to grow our business operations, and to cover such costs, including professional fees, associated
with being a reporting company with the Securities and Exchange Commission ("SEC"). We estimate such costs to be approximately $80,000 for the 12 months following this Offering. We have included such costs to become a publicly reporting company in
our targeted expenses for working capital expenses and intend to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have received funding from eSilkroad Networks Limited (“eSilkroad”)
in the form of a Loan Treaty Agreement in the amount of Four Hundred Fifty Thousand Dollars ($450,000) and a further commitment to fund another one million dollars over a period of ninety (90) business days in tranches of $250,000, the first of
which was received on April 29, 2021. The Loan Treaty Agreement provides that funding received is convertible into shares of the Common Stock of the Company at $0.195 per share and we are registering a total of 3,589,744 shares for total proceeds
of $700,000 received from eSilkroad as part of this Registration Statement. We have not received any further firm commitments or indications from any family, friends or business acquaintances regarding any potential investments in us.
Our current cash and working capital is not sufficient to cover our current estimated expenses for our planned growth over the next 12 months, including; growing our engineering and marketing team, as well as our
sales team; adding key technical software developers, and launching meaningful marketing awareness. Our estimated expenses also include those fees associated with obtaining a Notice of Effectiveness from the SEC for this Registration Statement. We
hope that we will be able to secure additional financing, and complete this Offering within the coming months, in order to initiate our marketing and anticipated growth. Upon obtaining effectiveness, we will conduct the Offering contemplated
hereby, and anticipate raising sufficient capital from the offering to market and grow our Company. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan for marketing and
operations for up to twelve months after the completion of the Offering. Assuming we generate only nominal revenues, we will require additional financing to fund our operations during the twelve-month period following the completion of the Offering
if all or substantially all of the shares offered hereby are not sold. While our ability to generate revenue is not correlated directly to the amount of shares sold by us under the Offering, our potential to generate revenue can be affected by our
marketing and advertising strategies and the amount of personnel we employ. These factors are directly related to the amount of proceeds we receive from the Offering, which corresponds to the number of shares we are successful in selling under the
Offering (see “Use of Proceeds”). We believe we can begin generating accelerating revenues within the first three months following the successful completion of the Offering. It is unclear how much revenue our operations will generate; however, it
is our hope that our revenues will exceed our costs. Our revenues will be impacted by how successful and well-targeted execution of our marketing campaign, the general condition of the economy, and the number of clients we will attract. For a
further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled “Description of Business”.
We are neither a “Shell Company” as defined in Rule 405 under the Securities Act of 1933 as amended, or a “Blank Check Company” as defined in Rule 419 (a2) under the Securities Act of 1933, as amended. We have a
detailed business plan and business related assets and have no present plans or intentions to engage in a merger or acquisition with an identified company or companies, or other entity or person.
Corporate Information
Our principal executive offices are located at Suite #105-275, 25422 Trabuco Rd. Lake Forest, CA 92630. Our telephone number is (949) 872-1965. Our website address is http://www.GZ6G.com. The information on, or
that can be accessed through, our website is not part of this prospectus.
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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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22,793,357 Common Shares
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Securities being offered
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The selling stockholders identified in this prospectus may offer and sell up to 16,666,667 shares of our common stock to be sold by World Amber Corp (WAC), a Nevada corporation, pursuant
to the Equity Purchase Agreement. The 16,666,667 shares of common stock registered for resale by WAC represent approximately 73% of our current issued and outstanding shares of common stock, which totals 22,793,357, as of May 14, 2021, and
will represent 39% of the fully diluted outstanding common stock assuming all 16,666,667 shares are issued under this Offering, and including 3,589,744 shares being registered for resale by selling stockholder, eSilkroad, for which the
Company has received $700,000 pursuant to a Loan Treaty Agreement.. Neither Mr. Yohanan Aharon, the controlling shareholder of World Amber Corp., nor eSilkroad will hold more than 9.99% of the issued and outstanding shares of our Common
Stock at any one time.
The Company has already received proceeds of $700,000 under the terms of a Loan Treaty Agreement whereunder the holders may convert such proceeds into shares of Common Stock at $0.195 per
share for a total of 3,589,744 shares of common stock, which shares are being registered herein on behalf of selling stockholder eSilkroad Network Limited (“eSilkroad”), a Wyoming corporation controlled by Mr. Ruben Yakubov. The 3,589,744
shares of common stock registered for resale by eSilkroad represent approximately 16% of our current issued and outstanding shares of common stock, which totals 22,793,357, as of May 14, 2021, and will represent approximately 8% of the
fully diluted outstanding common stock assuming all 16,666,667 shares are issued under this Offering and including 3,589,744 shares being registered for resale by selling stockholder, eSilkroad.
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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 at fixed prices, at prevailing market prices at the time of sale, at varying
prices or at negotiated prices
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Public Market
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We are currently traded on the OTC Pink 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 are offered for a period of twelve 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 22,793,357 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 0 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 $80,000.
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Net Proceeds to the Company
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We are offering 16,666,667 shares of Common Stock, $0.001 par value at an offering price of $0.30 per Share for maximum net proceeds to the Company of $5,000,000 if all the shares are sold. Offering costs
expected to be $80,000 will be borne by the Company and not deducted from Gross proceeds. The full subscription price on sale of each share of Common Stock will be payable at the time of subscription and any such funds received from
investors in this Offering will be released to the Company when subscriptions are received and accepted. We are also registering a total of 3,589,744 shares of Common Stock issuable in connection with proceeds received by the Company prior
to the date of the Offering under the terms of a Loan Treaty Agreement totaling $700,000 which are convertible into shares of Common Stock at $0.195 per share.
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Use of Proceeds
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We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders, WAC and eSilkroad. However, we will receive proceeds from our initial sale of
shares to WAC pursuant to the Equity Purchase Agreement. Proceeds of $700,000 have been received prior to the date of this Offering from eSilkroad. We will pay for expenses of this offering, except that the selling stockholders will pay any
broker discounts or commissions or equivalent expenses applicable to the sale of their shares.
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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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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including, without limitation, in the sections captioned “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial
Condition and Plan of Operations,” and elsewhere. Any and all statements contained in this prospectus that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,”
“project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the
foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this prospectus may include, without limitation,
statements regarding (i) the plans and objectives of management for future operations, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other
financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the
SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.
The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans,
objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may
differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ
materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, related insufficient cash flows and resulting illiquidity, our inability to expand our business, existing or increased
competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. A description of some of the risks and uncertainties that could cause our actual results to differ
materially from those described by the forward-looking statements in this prospectus appears in the section captioned “Risk Factors” and elsewhere in this prospectus.
Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors.
An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our
Common Stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Currently, shares of our Common Stock are not publicly traded. In the event that shares of our Common Stock become
publicly traded, the trading price of our Common Stock could decline due to any of these risks, and you may lose all or part of your investment. In the event our Common Stock fails to become publicly traded you may lose all or part of your
investment.
RISKS RELATED TO THE OFFERING
Our existing stockholders may experience significant dilution from the sale of our common stock pursuant to the World Amber Corp (WAC)
Equity Purchase Agreement as well as from the issuance of shares under a Convertible Note agreement with eSilkroad.
The sale of our common stock to WAC in accordance with the Equity Purchase Agreement may have a dilutive impact on our shareholders. As a result, the market price of our
common stock could decline. Additionally, the issuance of common stock pursuant to the Loan Treaty and subsequent convertible note(s) will have a dilutive impact on our shareholders.
The perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock. Moreover, the perceived risk of
dilution and the resulting downward pressure on our stock price could encourage investors to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further
contribute to progressive price declines in our common stock.
WAC may not have sufficient capital to meet our Put notices.
WAC may not have sufficient capital to meet our requests. Additionally, WAC may enter into similar arrangements with different companies and if so, the amount of available
funds may be significantly less than we anticipate.
We are registering an aggregate of 16,666,667 shares of common stock to be issued under the WAC Equity Purchase Agreement. The sale of
such shares could depress the market price of our common stock.
We are registering an aggregate of 16,666,667 shares of common stock under the registration statement of which this prospectus forms pursuant to the WAC Equity Purchase
Agreement. The sale of these shares into the public market by WAC could depress the market price of our common stock. As of May 14, 2021, there were 22,793,357 shares of our common stock issued and outstanding.
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We are registering an aggregate of 3,589,744 shares of common stock pursuant to a Loan Treaty entered into with eSilkroad Networks
Limited.
We are registering an aggregate of 3,589,744 shares of common stock pursuant to the terms of a Loan Treaty entered into with eSilkroad, for which they have provided $700,000
of funds to the Company. The sale of these shares into the public market by eSilkroad could depress the market price of our common stock.
Unless we maintain an active trading market for our securities, investors may not be able to sell their shares.
We are a reporting company and our common shares are quoted on the OTC Pink (OTC.Pink) under the symbol “GZIC”. However, our trading market may not be maintained. Failure to maintain an active
trading market will have a generally negative effect on the price of our common stock, and you may be unable to sell your common stock or any attempted sale of such common stock may have the effect of lowering the market price and therefore your
investment could be a partial or complete loss.
Since our common stock is thinly traded it is more susceptible to extreme rises or declines in price, and you may not be able to sell your shares at or above
the price paid.
Since our common stock is thinly traded its trading price is likely to be highly volatile and could be subject to extreme fluctuations in response to
various factors, many of which are beyond our control, including (but not necessarily limited to):
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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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We are a start-up company with a limited operating history and may never be able to carry out our intended operations or achieve any significant revenues or profitability. We
are subject to the risks encountered by early stage companies.
Because we have a limited operating history, you should consider and evaluate our operating prospectus in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving
markets. For us, these risks include:
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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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These risks are described in more detail below. Our future growth will depend substantially on our ability to address these and the other risks described in this prospectus. If we do not successfully address these
risks, our business would be significantly harmed, and investors may lose their entire investment.
9
We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “smaller
reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing
only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the prior
December 31, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior December 31. To the extent we take advantage of
such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We may not be able to further implement our business strategy unless sufficient funds are raised in this Offering. Our inability to raise additional funds could cause investors
to lose their investment. Additionally, we may have to seek additional capital through the sale of additional shares or equity securities, which would result in additional dilution to our stockholders.
We may not realize sufficient proceeds from this Offering to further business development, or to provide adequate cash flow for planned business activities. As at March 31, 2021, we had $414,225 cash on hand. We have
generated limited revenue from our operations to date. At this rate, we expect that we will not be able to continue operations without obtaining additional funding or beginning to generate significant revenue. Accordingly, we anticipate that
additional funding will be needed for general administrative expenses, business development, marketing costs and support materials.
We do not currently have any arrangements for financing, and our obtaining additional financing will be subject to a number of factors, including general market conditions, investor acceptance of our plan of
operations and initial results from our business operations. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing may cause us to go out
of business. If this happens, investors would lose all or part of their investment.
If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in
additional dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing
will be available in amounts or on terms acceptable to us, if at all.
Because William Coleman Smith, our sole officer and director currently owns 100% of our outstanding Preferred Stock and approximately 55% of our Common Stock, investors may find
that corporate decisions influenced by William Smith are inconsistent with the best interests of other stockholders.
William Coleman Smith, our Founder, Chief Executive Officer and Chairman, currently owns 100% of the outstanding shares of our Special 2018 Series A Preferred Stock, 100% of the issued and outstanding Special 2018
Series B Preferred Stock which authorizes 51% of all voting rights of all classes of shares, and 54.8% of the outstanding shares of our Common Stock, and, upon completion of this Offering, will own 31.7% of our outstanding Common Stock if the
maximum number of shares are sold. Accordingly, William Coleman Smith will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all, or
substantially all, of our assets, and also the power to prevent or cause a change in control. While we have no current plans with regard to any merger, consolidation or sale of substantially all of our assets, the interests of Mr. Smith may still
differ from the interests of the other stockholders.
10
Because the Special 2018 Series A Preferred Stock issued to William Coleman Smith, provides for certain rights, preferences, powers, privileges, restrictions, qualifications and
limitations, investors may find that corporate decisions influenced by William Coleman Smith are inconsistent with the best interests of other stockholders.
The Special 2018 Series A Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Special 2018 Series A Convertible Preferred
Stock filed by us with the Nevada Secretary of State, including the following:
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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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These rights, preferences, powers, privileges, restrictions, qualifications and limitations, investors may find that corporate decisions influenced by William Coleman Smith are inconsistent with the best interests of
other stockholders.
Because the Special 2018 Series B Preferred Stock issued to William Coleman Smith, provides for certain rights, preferences, powers, privileges, restrictions, qualifications and
limitations, investors may find that corporate decisions influenced by William Coleman Smith are inconsistent with the best interests of other stockholders.
The Special 2018 Series B Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Special 2018 Series B Convertible Preferred
Stock filed by us with the Nevada Secretary of State, including the following:
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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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These rights, preferences, powers, privileges, restrictions, qualifications and limitations, investors may find that corporate decisions influenced by William Coleman Smith are inconsistent with the best interests of
other stockholders.
We have the ability to issue additional shares of our common stock and shares of preferred stock without asking for stockholder approval, which could cause your investment to be
diluted.
Our Articles of Incorporation authorizes the Board of Directors to issue up to 500,000,000 shares of common stock and up to 10,000,001 shares of preferred stock. The power of the Board of Directors to issue shares of
common stock, preferred stock or warrants or options to purchase shares of common stock is generally not subject to stockholder approval. Accordingly, any additional issuance of our common stock or preferred stock that may be convertible into
common stock, may have the effect of diluting your investment. Further, any issuance of preferred stock with voting rights, including weighted voting rights, may have the effect of limiting the voting power of holders of our common stock.
We have filed an application with the OTC to be uplisted to QB; in the event our application is denied, our business will suffer.
We have filed an application with the OTC Market to be uplisted from the Pink to the QB; in the event our application is denied, we will be unable to get bonded and we will lose potential opportunities with venues
that require bonding; our business will suffer and you could lose all or your entire investment.
11
There is substantial doubt about our ability to continue as a going concern.
We have no certainty of achieving or growing revenues in the future, and have a working capital deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our
ability to generate future revenues will depend on a number of factors, many of which are beyond our control. These factors include general economic conditions, market acceptance of our marketing platform, proposed products and competitive efforts.
Due to these factors, we cannot anticipate with any degree of certainty what the revenues will be in future periods. As such, our independent registered public accounting firm have expressed substantial doubt about our ability to continue as a
going concern. Their opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. You should consider our independent registered public accountant’s comments when determining if an
investment in us is suitable.
You may have limited access to information regarding our business.
As of effectiveness of our registration statement of which this prospectus is a part, we will be required to file periodic reports with the SEC, which will be immediately available to the public
for inspection and copying (see “Where You Can Find More Information” elsewhere in their prospectus). Except during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended under Section
15(d) if we have less than 300 shareholders at the beginning of our fiscal year. We currently have fewer than 300 shareholders and if we continue to have fewer than 300 shareholders, we will be exempt from the filing requirements as required
pursuant to Section 13 of the Securities Exchange Act and will not be required to file any periodic reports, including Form 10Q and 10K filings, with the SEC subsequent to the Form 10K required for the fiscal year in which our registration
statement is effective. Further, disclosures in our Form 10K that we will be required to file for the fiscal year in which our registration statement is effective, is less extensive than the disclosures required of fully reporting companies.
Specifically, we are not subject to disclose in our Form 10K risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively. If the reports are not filed or are less extensive than those required of
fully reporting companies, the investors will have reduced visibility as to the Company and its financial condition.
RISKS RELATED TO OUR BUSINESS
The COVID-19 pandemic and the efforts to mitigate its impact may have an adverse effect on our business, liquidity, results of operations, financial condition and price of our
securities.
The pandemic involving the novel strain of coronavirus, or COVID-19, and the measures taken to combat it, may have certain and adverse effects on our business. Public health authorities and governments at local,
national and international levels have announced various measures to respond to this pandemic. Some measures that directly or indirectly impact our business include:
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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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We have encouraged our contractors and consultants to work remotely when possible and we also have enacted our business continuity plans, including implementing procedures requiring employees to work remotely where
possible which may make maintaining our normal level of corporate operations, quality controls and internal controls difficult. Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in the
delivery of our inventory. Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’ financial condition, resulting in delayed spending in the venues we serve.
Because of the pandemic, large gatherings, such as in sports venues, concert halls, and at university campuses, have been prohibited, and the need for our Company’s services have been delayed.
12
As events are rapidly changing, we do not know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations or the full extent of that disruption. Further,
once we are able to restart normal business hours and operations doing so may take time and will involve costs and uncertainty. We also cannot predict how long the effects of COVID-19 and the efforts to contain it will continue to impact our
business after the pandemic is under control. Governments could take additional restrictive measures to combat the pandemic that could further impact our business or the economy in the geographies in which we operate. It is also possible that the
impact of the pandemic and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions. These measures have negatively impacted, and may continue to impact, our business and financial
condition as the responses to control COVID-19 continue.
We currently have no independent directors, which pose a significant risk for us from a corporate governance perspective.
Our sole officer and director, namely William Coleman Smith, our chief executive officer, president, treasurer and secretary, also serves as our sole director. As such, he is required to make interested party
decisions, such as the approval of related party transactions, their level of compensation, and oversight of our accounting function. Additionally, he exercises control over all matters requiring stockholder approval, including the nomination of
directors and the approval of significant corporate transactions.
Our Officers and Directors have limited experience running public companies past the start-up phase.
Although Mr. Smith has over 25 years of experience in running businesses, he lacks experience in running a public company; if you invest in our Company, we may not be able to stay compliant under the rules and
regulations of the Securities and Exchange Commission, and you could lose your entire investment.
Key management personnel may leave us, which could adversely affect the ability of us to continue operations.
We are entirely dependent on the efforts of our sole officer and director William Coleman Smith, because of the time and effort that he devotes to our Company. We risk the loss of Mr. Smith, who provides day-to-day
operational leadership as well as visionary leadership. He is in charge of overseeing all development strategies, supervising any/all future personnel, including the sales team, and any consultants or contractors that the Company engages to assist
in developing its marketing plan. The loss of him, or other key personnel in the future, could have a material adverse effect on our business, financial condition and results of operations. We will seek “key person” life insurance on its key
executives; however, we cannot be sure we will be able to obtain such insurance or that we will be able to afford the insurance. Even if we can obtain key person life insurance on acceptable terms, the proceeds of the insurance may not be
sufficient to truly replace the loss of the “key person”. Our success will depend on the performance of Mr. Smith, and the ability to retain, as well as attract and motivate other personnel to drive growth.
Our Directors and Executive Officers are Directors and Executive Officers of our subsidiary.
Our Directors and Executive Officers are Directors and Executive Officers of Green Zebra Media, our subsidiary. The interests of Green Zebra Media may require substantial dedication at times and may be detrimental to
the business of the Company.
Our Executive Officers and Directors have additional business activities and as such are not devoting all of their time to us, which may result in periodic interruptions, or
business failure.
Although we do not feel there is a conflict of interest, our Founder, William Coleman Smith, is the President of our subsidiary Green Zebra Media and must balance his time between running the public company, GZ6G
Technologies Corp, and the subsidiary, Green Zebra Media. While there are no set minimum hours that he is obligated to work on each of the businesses mentioned above, he spends at least 25 hours on GZ6G Technologies Corp. a week, and at least 25
hours a week on Green Zebra Media. Our operations may be such that decisions need to occur at times when Mr. Smith is unavailable, which may lead to the periodic interruption in the implementation of our business plan. Such delays could have a
significant negative effect on the success of the business.
13
About GZ6G Technologies Corp.
GZ6G Technologies Corp. (OTC: GZIC), a wireless Internet of Things (IoT) technology holdings company, is focused on acquiring, developing and overseeing innovative wireless IoT technology companies for the
emerging 5G and Wi-Fi 6 marketplaces, including target markets such as stadiums, airports, universities, and smart city projects.
The Company’s focus is on three streams of revenue: selling and installing the equipment needed for venues to provide high-speed Wi-Fi connections; maintaining the hardware needed to provide these connections; and
selling ad services to monetize the traffic that goes through these venues.
One of the revenue streams GZ6G has on its agenda is monetizing the user traffic on their Wi-Fi networks by delivering hyper-targeted information, ads and offers to captive audiences in stadiums, airports, and other
large venues.
Our current cash flow and access to capital compared to the fees being earned by our CEO and CFO may adversely affect our future performance and operations.
Mr. Smith’s employment agreement provides for payments of $10,000 per month. A company controlled by Mr. Smith, ELOC Holdings Corp. also has a contract with the Company for management fees of $10,000 per month.
Currently, said salaries are being accrued and deferred until such time that we are in a position, as determined in the sole discretion of the Company’s Board of Directors, to begin making any such payments. However, should we begin generating
meaningful revenue or raising funds hereunder, our Board of Directors may determine that such payments should be used to pay accrued and deferred salary. Any such decision would negatively affect our cash flows and would adversely affect us.
We plan on establishing a global command center to be staffed by wireless and IT engineers and support technicians managing physical hardware and software in the cloud in order
to support client needs.
The command center will offer digital leaders scale and agility, speed the launch of wireless, digital services and data analytics services, and seamlessly connect customers to world class experiences. Our wireless
IT network managed services and data center initiative for clients and partners will monitor Wireless IT networks and dispatch technicians as necessary to ensure continuous functionality of our Wi-Fi networks. If we are unable to establish a global
command center, we will be unable to provide the full-service support to our client base and our business could fail.
We have a short operating history in Digital Media and we may not be able to attract and keep sponsors as quickly as larger digital media companies can.
The Company has a short operating history in the Digital Media space of working with national and regional sponsors for Wi-Fi networks. Although we have relationships with Fortune 500 entities that have expressed
desire to sponsor our Wi-Fi networks, there can be no assurances that that these will translate into GZ6G Technologies receiving funds from the sponsor.
We are partly dependent on its partner network company, CenturyLink, and its infrastructure.
We are partly dependent on CenturyLink for exposure into the Stadium and Smart City target markets. If CenturyLink decides it wants to sever its relationship with us, it could damage our business, and be detrimental
to revenue growth.
We may not be able to hire sufficient support personnel.
We will need to hire personnel for IT support, installation and network management for the Wi-Fi networks. If it is difficult to hire enough appropriate personnel, the Company may need to hire contract workers or
acquire an IT staff to install and manage Wi-Fi networks. The Company will also need to hire sales personnel to address sponsors. If we are unable to hire the appropriate support personnel, our business plan will be damaged, and our business could
fail.
14
GZ6G Technologies will need to raise capital for product development.
We will need future funding to implement our product development plan to design, engineer, and implement a communications chip that can improve Wi-Fi network performance. If the Company is unsuccessful in raising
sufficient funding, the development plan may not progress as planned, and our business could fail.
If we are unable to engage the number of experienced staff to run our global command center, our business may fail.
If we cannot engage the experienced staff to run our global command center and service our clients, our business may fail, and you could lose all of your investment.
We have a rapidly evolving business model and our proposed product and services could fail to attract or retain clients or generate revenue.
We have a rapidly evolving business model and are regularly exploring the development of our offerings to our proposed target venue. This is due to the increasing speeds of internet channels and broadbands that
frequently update their product information requirements, policies, merchandising strategies and integration specifications causing retailers and manufacturers to have to stay constantly up to speed and revise their online
business strategies, product listings and attributes, and business rules, which can be resource-intensive and time-consuming. GZ6G will need to maintain its position in keeping up, and surpassing, other Internet companies with regard to speed and
technology. If the product and services we introduce fail to engage venues, we may fail to acquire or retain enough business or generate sufficient revenue or other value to justify our investment, and our business may be materially and adversely
affected. Our ability to retain or increase our client base and revenue will depend heavily on our ability to innovate and to create successful technology and marketing tools so that the client is convinced of our necessity.
If we are unable to maintain favorable terms with our venues, our expected gross profit may be adversely affected.
The success of our business depends in part on our ability to retain and increase the number of venues who contract us to serve multiple facets of their wireless internet, digital marketing and IoT. This includes
developing a custom digital marketing platform for their company, managing and optimizing their wireless networks. Digital marketing support includes banner and social media advertisements and advertorials, website and shopping portal purchase
engagements. The success of our business model is based on the premise that a venue will find our product services so comprehensive, they will contract us to do all of these services with us, instead of finding separate service providers for each
facet of their wireless and marketing plan.
If our technical and support teams do not meet the needs and expectations of our venues, our business could suffer.
Our business will depend on the effectiveness of our personnel to carry out efficiently and accurately all aspects of a venue’s wireless network platform and marketing plan. Our success depends on our teams to
possess the core capabilities and skill sets that help our venues execute on targeted audiences.
Our business is competitive. Competition presents an ongoing threat to the success of our business.
Our success depends on successfully servicing our venues; we will compete with companies who have access to greater amounts of capital, and who have established relationships with a larger base of venues. Because of
their size and bargaining power, our competitors may be able to offer their services at lower prices than us in the initial stages of our development. As a result, our operations may be significantly and negatively impacted by our larger, more
established competitors.
We cannot assure you that we will be able to manage the growth of our Company effectively.
We plan to experience average growth in demand for our product and services once we are able to launch our proposed platform. We expect our number of venues to increase once we launch our marketing plan, and we
expect our growth to continue for the foreseeable future. The growth and expansion of our product offerings could place significant demands on our management and our operational and financial resources. We will need to manage multiple relations
with our marketing team, technical support team, and our design engineers. To effectively manage our growth, we will need to continually implement operational plans and strategies, improve and expand our infrastructure of people and information
systems, and train and manage our team.
15
Our business will depend on our ability to maintain and scale the network infrastructure necessary to operate our network application; and any significant disruption in service
of our information data center or applications could result in a loss of venues.
Venues will access the platform we have created for them through our servers to manage their wireless networks within the venue. Our reputation and ability to acquire, retain and serve our venues will be dependent
upon the reliable performance of our proprietary network IoT platform and our servers. Issues within our internal servers, or IoT platform, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the
security or availability of our IoT platform, and prevent our venues from accessing their product management.
We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.
We will regard our client lists and any intellectual property we may acquire, i.e., patents, trademarks, service marks, copyrights, and similar intellectual property that would be critical to our success, and we will
rely on trademark, copyright and confidentiality and/or license agreements to protect our proprietary rights. Effective intellectual property protection may not be available in every area in which our products are made available. Furthermore,
regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring and using domain names that are similar to, infringe upon or diminish the value of our
patents and other proprietary rights. We may be unable to prevent third parties from using and registering our trademarks, or trademarks that are similar to, or diminish the value of our trademark.
We will be subject to payments-related risks.
We plan to accept payments using wire transfer, checks, PayPal, credit card and debit card. As we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements and
fraud. For certain payment methods, including credit and debit cards, we will pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We will rely on third parties to provide
payment-processing services, including the processing of credit cards and debit cards and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We will also be subject to payment card
association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or
requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from consumers or facilitate other types of online payments, and our business and operating results could be
adversely affected.
RISKS RELATING TO OUR COMMON STOCK
Our stock price may be volatile.
The market price of our Common Stock is likely to be highly volatile and could fluctuate widely in price in response to various potential factors, many of which will be beyond our control, including the following:
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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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In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may
also materially and adversely affect the market price of our Common Stock.
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As a public company, we will incur substantial expenses.
Upon declared effectiveness of this Registration Statement by the SEC, we will become subject to the information and reporting requirements of the U.S. securities laws. The U.S. securities laws require, among other
things, review, audit, and public reporting of our financial results, business activities, and other matters. Recent SEC regulation, including regulation enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially increased the
accounting, legal, and other costs related to becoming and remaining an SEC reporting company. If we do not have current information about our Company available to market makers, they will not be able to trade our stock. The public company costs of
preparing and filing annual and quarterly reports, and other information with the SEC and furnishing audited reports to stockholders, will cause our expenses to be higher than they would be if we were privately-held. In addition, we are incurring
substantial expenses in connection with the preparation of this Registration Statement. These increased costs may be material and may include the hiring of additional employees and/or the retention of additional advisors and professionals. Our
failure to comply with the federal securities laws could result in private or governmental legal action against us and/or our Officers and Director, which could have a detrimental effect on our business and finances, the value of our stock, and the
ability of stockholders to resell their stock.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the SEC’s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds
for believing that the investment is suitable for that investor prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional investors, broker/dealers must make reasonable efforts to
obtain information about the investor’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low priced securities will
not be suitable for at least some investors. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity and liquidity
of our Common Stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our Common Stock, reducing a shareholder’s ability to resell shares of
our Common Stock.
We may be exposed to potential risks resulting from new requirements under section 404 of the Sarbanes-Oxley Act of 2002.
In addition to the costs of compliance with having our shares listed on the OTCBB and/or OTC Markets, there are substantial penalties that could be imposed upon us if we fail to comply with all regulatory
requirements. In particular, under Section 404 of the Sarbanes-Oxley Act of 2002, as a smaller reporting company, our management will be required to provide a report on the effectiveness of our internal controls over financial reporting, beginning
with our second annual report, and we will not be required to provide an auditor’s attestation regarding such report. We have not assessed the effectiveness of our disclosure controls and procedures or our internal controls over financial
reporting, and we expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification
requirements. Additionally, investors should be aware of the risk that management may assess and render the Company’s internal controls ineffective, which could have a material adverse effect on the Company’s financial condition or result of
operations.
Our Common Stock is currently deemed to be “penny stock”, which makes it more difficult for investors to sell their shares.
Our Common Stock is currently subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market
or other national securities exchange and trades at less than $5.00 per share. These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make
suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade
penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any
significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
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The elimination of monetary liability against our existing and future directors, officers and employees under Nevada law and the existence of indemnification
rights our existing and future directors, officers and employees may result in substantial expenditures us and may discourage lawsuits against our directors, officers and employees.
Our Certificate of Incorporation contains specific provisions that eliminate the liability of directors for monetary damages to us and our stockholders. Further, we are prepared to give such indemnification to our
existing and future directors and officers to the extent provided by Nevada law. We may also have contractual indemnification obligations under any employment agreements we may have with our officers and directors. The foregoing indemnification
obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage us from
bringing a lawsuit against existing and future directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our
stockholders against us existing and future directors and officers even though such actions, if successful, might otherwise benefit us and our stockholders.
We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. All proceeds from the sale of such shares will be for the account
of the selling stockholders. We will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions or equivalent expenses applicable to the sale of their shares. We will receive proceeds from
the purchase of Shares by MAC and pursuant to the Equity Purchase Agreement.
There can be no assurance that we will raise any funds through this Offering and if a limited amount of funds are raised, we will use such funds according to its best judgment in accordance with the “Use of Proceeds”
chart. Discretion is not unlimited and any such change in the use of proceeds as discussed above would be restricted to a proportionate reduction in funds allocated to each specific item listed, and would not differ materially from the “Use of
Proceeds” chart above. To the extent our offering proceeds do not cover any professional fees incurred by us, we anticipate paying for any such expenses out of any additional funding or revenues we receive.
GZ6G TECHNOLOGIES CORP USE OF PROCEEDS (1)
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100%
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75%
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$
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50%
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25%
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10%
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Analytic Software Development
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$
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600,000
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$
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450,000
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$
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300,000
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$
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150,000
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$
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60,000
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Data Center Facilities Construction & Set-Up
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$
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1,300,000
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$
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975,000
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$
|
650,000
|
$
|
300,000
|
$
|
130,000
|
||||||||||
|
Managed Services NOC Center Construction Set-Up
|
$
|
700,000
|
$
|
525,000
|
$
|
350,000
|
$
|
150,000
|
$
|
70,000
|
||||||||||
|
Operational Capital (Inventory, Equipment, etc.)
|
$
|
350,000
|
$
|
265,000
|
$
|
175,000
|
$
|
87,500
|
$
|
35,000
|
||||||||||
|
Office Lease(s)
|
$
|
250,000
|
$
|
187,500
|
$
|
125,000
|
$
|
62,500
|
$
|
25,000
|
||||||||||
|
Office Furniture, Fixtures, Computers
|
$
|
350,000
|
$
|
265,000
|
$
|
175,000
|
$
|
150,000
|
$
|
35,000
|
||||||||||
|
Hiring Management, Administrative, Engineering, Sales, and Marketing Staff
|
$
|
1,100,000
|
$
|
820,000
|
$
|
550,000
|
$
|
250,000
|
$
|
110,000
|
||||||||||
|
Legal – Patents & Trademarks
|
$
|
100,000
|
$
|
75,000
|
$
|
50,000
|
$
|
37,500
|
$
|
10,000
|
||||||||||
|
Accounting, Filings, Insurance, Compliance
|
$
|
150,000
|
$
|
112,500
|
$
|
75,000
|
$
|
37,500
|
$
|
15,000
|
||||||||||
|
Miscellaneous
|
$
|
100,000
|
$
|
75,000
|
$
|
50,000
|
$
|
25,000
|
$
|
10,000
|
||||||||||
|
TOTAL
|
$
|
5,000,000
|
$
|
3,750,000
|
$
|
2,500,000
|
$
|
1,250,000
|
$
|
500,000
|
|
(1)
|
Offering expenses expected to be $80,000 will be borne by the Company and not deducted from Gross proceeds.
|
If we require additional funding, we will seek such funds from friends, family, and business acquaintances in order to continue our operations. As with any form of financing, there are uncertainties concerning the
availability of such funds on terms acceptable to us, as we have not received any firm commitments or indications of interest from our friends, family members, or business acquaintances regarding potential investments in our Company.
18
SELLING STOCKHOLDERS
The selling stockholders identified in this prospectus may offer and sell up to 16,666,667 shares of our common stock to be sold by WAC pursuant to the Equity Purchase
Agreement and 3,589,744 shares issuable under a Loan Treaty Agreement with eSilkroad. The 16,666,667 shares of common stock registered for resale by WAC represent approximately 73% of our current issued and outstanding shares of common stock,
which totals 22,793,357, as of May 14, 2021, and will represent 39% of the fully diluted outstanding common stock assuming all 16,666,667 shares are issued under this Offering and including 3,589,744 shares being registered for resale by selling
stockholder, eSilkroad. The 3,589,744 shares of common stock registered for resale by eSilkroad represent approximately 16% of our current issued and outstanding shares of common stock, which totals 22,793,357, as of May 14, 2021, and will
represent approximately 8% of the fully diluted outstanding common stock assuming all 16,666,667 shares are issued under this Offering and including 3,589,744 shares being registered for resale by selling stockholder, eSilkroad.
The selling stockholders identified in the table below may from time to time offer and sell under this prospectus any or all of the shares of common stock described under the
column “Shares of Common Stock Being Offered” in the table below.
None of the selling stockholders are broker-dealers or affiliates of broker-dealers. WAC will be deemed to be an underwriter within the meaning of the Securities Act. Certain
other selling stockholders may also be deemed to be underwriters. Any profits realized by such selling stockholders may be deemed to be underwriting commissions.
Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly. We cannot give an
estimate as to the number of shares of common stock that will actually be held by the selling stockholders upon termination of this offering because the selling stockholders may offer some or all of the common stock under the offering
contemplated by this prospectus or acquire additional shares of common stock. The total number of shares that may be sold hereunder will not exceed the number of shares offered hereby. Please read the section entitled “Plan of Distribution” in
this prospectus.
The manner in which the selling stockholders acquired or will acquire shares of our common stock is discussed below under “The Offering.”
The following table sets forth the name of each selling stockholder, the number of shares of our common stock beneficially owned by such stockholder before this offering, the
number of shares to be offered for such stockholder’s account and the number and (if one percent or more) the percentage of the class to be beneficially owned by such stockholder after completion of the offering. The number of shares owned are
those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares of our common stock
as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days of May 14, 2021, through the exercise of any option, warrant or right, through
conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement, and such shares are deemed to be beneficially owned and outstanding for computing
the share ownership and percentage of the person holding such options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other person. Beneficial ownership percentages are calculated based on 22,793,357
shares of our common stock outstanding as of May 14, 2021.
Unless otherwise set forth below, (a) the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the
selling stockholder’s name, subject to community property laws, where applicable, and (b) no selling stockholder had any position, office or other material relationship within the past three years, with us or with any of our predecessors or
affiliates. The number of shares of common stock shown as beneficially owned before the offering is based on information furnished to us or otherwise based on information available to us at the timing of the filing of the registration statement
of which this prospectus forms a part.
19
|
Number of Shares to be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares
|
||||
|
Name of Selling Stockholder
|
Shares Owned by the Selling Stockholders before the Offering (1)
|
Shares of Common Stock Being Offered or Sold
|
# of Shares (2)
|
% of Class (2)
|
|
World Amber Corporation (3)
|
0
|
16,666,667
|
0
|
N/A
|
|
Esilkroad Network Ltd. (3)
|
0
|
3,589,744
|
3,589,744
|
N/A
|
(1) Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment power with respect to shares of
common stock. Shares of common stock subject to options, warrants and convertible debentures currently exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares of common
stock issuable upon the conversion of the convertible debentures is subject to adjustment depending on, among other factors, the future market price of our common stock, and could be materially less or more than the number estimated in the table.
(2) Because the selling stockholders may offer and sell all or only some portion of the 16,666,667 shares of our common stock being offered pursuant to this prospectus and
may acquire additional shares of our common stock in the future, we can only estimate the number and percentage of shares of our common stock that any of the selling stockholders will hold upon termination of the offering. For purposes of this
table we have assumed Selling Stockholder eSilkroad will be issued a total of 3,589,744 shares in full satisfaction of $700,000 in proceeds provided under the Loan Treaty, however at no time will eSilkroad hold more than 9.99% of our total issued
and outstanding shares of common stock.
(3) Once issued, Yohanan Aharon, controlling shareholder of World Amber Corp. and Ruben Yakubov, controlling shareholder of eSilkroad Network Ltd., will have the same voting
and dispositive powers as other Common Stockholders have, with respect to the shares of the Common Stock issued.
THE OFFERING
On March 30, 2021, we entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with World Amber Corp. (“WAC”) Although we are not mandated to sell shares
under the Equity Purchase Agreement, the Equity Purchase Agreement gives us the option to sell to WAC, up to $5,000,000 worth of our common stock over the period ending twelve months following the Effect of this Registration Statement. The
$5,000,000 was stated as the total amount of available funding in the Equity Purchase Agreement because this was the maximum amount that WAC agreed to offer us in funding. There is no assurance that the market price of our common stock will
increase in the future.
The purchase price of the common stock will be set at a rate of $0.30 per share; there is an ownership limit for WAC of 9.99%.
On the Put Notice date, we are required to deliver Put shares to WAC in an amount (the “Estimated Put Shares”) determined by the amount of funds we request from WAC, and WAC
is required to simultaneously deliver to us, the investment amount indicated on the Put Notice.
WAC is not permitted to engage in short sales involving our common stock during the commitment period ending twelve months following the Effect of this Registration
Statement. In accordance with Regulation SHO however, sales of our common stock by WAC after delivery of a Put Notice of such number of shares reasonably expected to be purchased by WAC under a Put will not be deemed a short sale.
20
In addition, we must deliver the other required documents, instruments and writings required. WAC is not required to purchase the Put Shares unless:
|
•
|
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.
|
|
•
|
We shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable securities.
|
|
•
|
We shall have filed with the SEC in a timely manner all reports, notices and other documents required.
|
As we draw down on the equity line of credit, shares of our common stock will be sold into the market by WAC. The sale of these shares could cause our stock price to decline. In turn, if our stock price declines and we issue more puts, more shares
will come into the market, which could cause a further drop in our stock price. You should be aware that there is an inverse relationship between the market price of our common stock and the number of shares to be issued under the equity line of
credit. We have no obligation to utilize the full amount available under the equity line of credit.
Reliable IT – “At Reliable Technology Services our primary goal is to keep our clients’ IT equipment and services highly available and their staff highly effective. We accomplish this by providing our clients with all the benefits of an in-house IT department without the associated overhead. Clear, unbiased CIO level advice on their technology needs. This includes 24 hour monitoring and reporting of your computers, servers and network infrastructure. The management of Security Services monitored by trained and certified technicians. Remote cloud and local backups monitored and tested by trained and certified technicians. Security patch management monitored and implemented outside of business hours to minimize disruption during working hours”. 2
Cisco – “Is an American Multinational technology conglomerate. Cisco develops, manufactures and sells networking hardware, software, telecommunications equipment and other high – technology services and products. Through its numerous acquired subsidiaries, such as OpenDns, Webex, Jabber and Jasper, Cisco specializes in specific tech markets, such as the internet of things (IoT), domain security and energy management”.3
CradlePoint
AT&T – “We’re creating new and exciting customer experiences that connect people with who and what they love. There 5G network is live for consumers and businesses across the country, built on the nation’s best and also fastest wireless network. AT&T is also building FristNet, the nationwide network that enables first responders and public safety officials to stay connected in times of crisis. The robust and growing fiber footprint provides gigabit speeds to nearly two million customers”. 5
Before GZ6G, Ms. Ramirez led DSD Companies, a leading worldwide freight and transportation company, as Executive Vice President from 2017 – 2018 and as the Director of Human Resources and Compliance from 2007 - 2015. She left DSD Companies for a year to become the Director of Human Resources and Compliance for the cosmetics brand, Morphe from 2016 - 2017.
Fiscal Year ended December 31, 2020 and 2019:
Cash Used in Operating Activities
Cash Used in Operating Activities
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.
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.
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.
Performance Obligations
Neither the Equity Purchase Agreement nor any rights of ours, or WAC’s, thereunder may be assigned to any other person.
The offering price and other terms and conditions relative to our shares have been arbitrarily determined by us and do not bear any relationship to assets, earnings, book value, or any other objective criteria of
value. In addition, no investment banker, appraiser, or other independent third party has been consulted concerning the offering price for the shares, or the fairness of the offering price used for the shares.
We intend to sell 16,666,667 shares of our Common Stock at a price of $0.30 per share and register a total of 3,589,744 shares for resale in respect to proceeds totaling $700,000 received under a Loan Treaty
Agreement, which permits the holder to convert proceeds received, into shares of common stock at $0.195 per share. The following table sets forth the number of shares of Common Stock being registered for sale, the total consideration paid and the
price per share. The table assumes all 16,666,667 shares of Common Stock will be sold and the issuance of 3,589,744 shares in respect to the Loan Treaty Agreement.
|
Shares Issued
|
Total Consideration
|
Price Per Share
|
|||
|
Number of Shares
|
Percent
|
Amount
|
Percent
|
||
|
Purchasers of Shares
|
16,666,667
|
100%
|
$5,000,000
|
100%
|
$0.30
|
|
Purchase of Shares (1)
|
3,589,744
|
100%
|
$700,000
|
100%
|
$0.195
|
|
Total
|
20,256,411
|
100%
|
$5,700,000
|
100%
|
|
|
(1)
|
As of the date of this Offering proceeds totaling $700,000 have been received under the terms of the Loan Treaty Agreement
|
The following table sets forth the difference between the offering price of the shares of our Common Stock being offered by us, the net tangible book value per share, and the net tangible book value per share after
giving effect to the Offering by us, assuming that 100%, 75%, 50%, 25% and 10% of the offered shares are sold. Net tangible book value per share represents the amount of total tangible assets less total liabilities divided by the number of shares
outstanding as of December 31, 2020 Totals may vary due to rounding. Note - the table below does not reflect offering costs estimated to be $80,000 which will be borne by the Company and not deducted from gross proceeds.
|
100% of offered
shares are sold
|
75% of offered
shares are sold
|
50% of offered
shares are sold
|
25% of offered
shares are sold
|
10% of offered shares are sold
|
|
|
Offering Price
|
$0.30
per share
|
$0.30
per share
|
$0.30
per share
|
$0.30
per share
|
$0.30
per share
|
|
Selling stockholders
|
$0.195
|
$0.195
|
$0.195
|
$0.195
|
$0.195
|
|
Net tangible book value at December 31, 2020 (1)(2)
|
($0.035)
per share
|
($0.035)
per share
|
($0.035)
per share
|
($0.035)
per share
|
($0.035)
per share
|
|
Net tangible book value after giving effect to the Offering and proceeds from Selling Stockholders (3)
|
$0.12
per share
|
$0.092
per share
|
$0.067
per share
|
$0.035
per share
|
$0.011
per share
|
|
Increase in net tangible book value per share attributable to cash payments made by new investors and selling stockholders
|
$0.147
per share
|
$0.127
per share
|
$0.102
per share
|
$0.070
per share
|
$0.046
per share
|
|
Per Share Dilution to New Investors
|
$0.188
per share
|
$0.208
per share
|
$0.233
per share
|
$0.265
per share
|
$0.289
per share
|
|
Percent Dilution to New Investors
|
63%
|
69%
|
78%
|
88%
|
96%
|
|
Per Share Dilution to Selling Stockholders
|
$0.083
per share
|
$0.103
per share
|
$0.128
per share
|
$0.160
per share
|
$0.184
per share
|
|
Percent Dilution to Selling Stockholders
|
43%
|
53%
|
66%
|
82%
|
94%
|
|
(1)
|
Net tangible book value excludes non-controlling interest;
|
|
(2)
|
Includes the proforma impact of 10,000,000 shares issued to our CEO and President, William Coleman Smith subsequent to December 31, 2020 for total issued and outstanding shares of 22,793,357 as of the date of the Offering
|
|
(3)
|
Net tangible book value after giving effect to Offering and proceeds from Selling Stockholders includes $5,000,000 from the Offering and $700,000 from the Selling Stockholders which proceeds were received as follows: $50,000 prior to
December 31, 2020 and the balance of $650,000 subsequent to December 31, 2020.
|
21
As of the date of this prospectus, we have 22,793,357 shares of Common Stock issued and outstanding and 5,000,001 shares of Preferred Stock issued and outstanding. We are registering an additional 16,666,667 shares
of its Common Stock for sale at the price of $0.30 per share and a total of 3,589,744 shares of Common Stock for a Selling Stockholder in respect to proceeds provided prior to this Offering of $700,000 which are convertible into shares of Common
Stock at 0.195 per share. There is no arrangement to address the possible effect of the Offering on the price of the stock.
In connection with our selling efforts in the Offering, none of our officers and directors will register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor”
provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for
persons associated with an issuer that participate in an Offering of the issuer’s securities. None of our officers and directors are subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. None of
our officers and directors will be compensated in connection with his participation in the Offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. None of our officers and
directors has been within the past 12 months, a broker or dealer, and each of them is not, nor has been within the past 12 months, an associated person of a broker or dealer. At the end of the Offering, our officers and directors each will continue
to primarily perform substantial duties for us, or on our behalf, other than in connection with transactions in securities.
In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those states only if they have been registered or qualified for sale; an exemption from such
registration, or if qualification requirement is available and with which we have complied. In addition, and without limiting the foregoing, we will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to
security transactions during the period of time when their Registration Statement is effective.
We are subject to Regulation M of the Securities Exchange Act of 1934. Regulation M governs activities of underwriters, issuers, selling security holders and others in connection with offerings of securities.
Regulation M prohibits distribution participants and their affiliated purchasers from bidding for, purchasing or attempting to induce any person to bid for or purchase the securities being distributed. In connection with the offer and sale of the
shares being offered, our officers and directors will comply with Regulation M.
Penny Stock Regulation
Our Common Shares are considered Penny Stocks. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a
price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by
the exchange system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, that:
|
•
|
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
|
|
•
|
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;
|
|
•
|
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;
|
|
•
|
contains a toll-free telephone number for inquiries on disciplinary actions;
|
|
•
|
defines significant terms in the disclosure document or in the conduct of trading penny stocks; and,
|
|
•
|
contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation.
|
22
The broker-dealer also must provide the customer with the following, prior to proceeding with any transaction in a penny stock:
|
•
|
bid and offer quotations for the penny stock;
|
|
•
|
details of the compensation of the broker-dealer and its salesperson in the transaction;
|
|
•
|
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,
|
|
•
|
monthly account statements showing the market value of each penny stock held in the customer’s account.
|
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement and a signed and dated copy of a written suitability statement. These disclosure requirements will have the
effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.
Offering Period and Expiration Date
This Offering will start on the date this Registration Statement is declared effective by the SEC and continue for a period of twelve months. We may extend the offering period for an additional 90 days, unless the
Offering is completed or otherwise terminated by us.
Common Stock
Our authorized capital stock includes 500,000,000 shares of Common Stock, $0.001 par value per Share. Immediately prior to this offering there are 22,793,357 shares of our Common Stock outstanding,
There are no provisions in our charter or Bylaws that would delay, defer or prevent a change in our control. However, there exists such provision in our charter that may make changes of control more difficult. Such
provisions include the ability of our Board of Directors to issue a series of preferred stock and the limited ability of stockholders to call a special meeting. Special meetings of the shareholders may be called at any time by the President or by
resolution of the Board of Directors, or by the President upon the request in writing of one or more stockholders owning shares in the aggregate entitled to cast at least a majority of the votes at the meeting. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
The holders of our Common Stock have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors and are entitled to share ratably in all of our assets available for
distribution to holders of Common Stock upon liquidation, dissolution or winding up of our affairs. Our Common Stock does not provide the right to preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions
or rights. Our Common Stockholders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. Holders of shares of our Common Stock do not have cumulative voting rights, which means that the holders voting for
the election of directors, may cast such votes equal to the total number of shares owned by each shareholder for each of the duly nominated directors, if they so choose.
23
Preferred Stock
Our Certificate of Incorporation authorizes the issuance of 10,000,000 shares of Special Series A Preferred Stock, par value $0.004 per share, of which 5,000,000 shares are issued and outstanding. The Board of
Directors is further authorized to issue 1 share of Special 2018 Series B Preferred Stock, par value $0.001, of which 1 share is issued and outstanding. Our Board of Directors is authorized to determine or alter any or all of the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series, to set the
designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation preferences of the shares of any such series.
The Series A Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed by us with the
Nevada Secretary of State, including the following:
|
•
|
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 Special 2018 Series A Preferred Stock without the written consent of the holder(s) of the
Series A Preferred Stock.
|
|
•
|
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.
|
|
•
|
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 Series A Preferred Stock.
|
The Special 2018 Series B Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock filed by
us with the Nevada Secretary of State, including the following:
|
•
|
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.
|
|
•
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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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Dividends
At this time, we do not intend to pay out any cash dividends, now, or in the foreseeable future.
Warrants
There are no outstanding warrants to purchase our securities.
Options
There are no outstanding options to purchase our securities.
Transfer Agent and Registrar
Our transfer agent is Continental Stock Transfer & Trust Company, is located at 1 State Street, 30th Floor, New York, New York 1004, and its phone number is (212) 509-4000. The transfer agent is
responsible for all record-keeping and administrative functions in connection with the common shares.
Company Overview
GZ6G Technologies Corp. (“GZ6G”, “we” or the “Company”) is an emerging smart city technology growth company that provides wireless and monetization enterprise level smart solutions to cities and large venues that
require multiple types of products, services and third-party solutions to fulfill client needs. We were incorporated in Nevada on December 23, 2003, and are headquartered 8935 West Post Road, suite 102, Las Vegas NV. 98148.
GZ6G Technology & Expertise Is Helping Build Smarter Businesses. Wireless, Managed Services, Artificial Intelligence, data
analytics. Smarter Business. Developer Tools. Enterprise Technology for the federal government, stadiums, airports, universities, and the entertainment industry.
GZ6G’s Subsidiaries and Divisions will focus on 4 core areas of expertise to support the GZ6G Enterprise smart solutions: 1. Wireless networking, security managed Services; 2. Data Center Services; 3. IOT software
development; 4. Marketing, advertising, sponsorship services. We expect each subsidiary or division to operate on its on until GZ6G requires the expertise to fulfill all or part of GZ6G technologies enterprise smart solutions products and services
as required by contracts.
GZ6G Technologies Corp. (“Green Tech”) and its operating subsidiary, Green Zebra Media Corp work together to offer a fullly integrated wireless infrastructure solution for enterprise opportunities, while Green Zebra
Media focuses on innovative digital marketing, advertising sponsorship and monetization services for their clients. Green Zebra Media will provide digital marketing, monetization and marketing support services that are missing Wireless
communications Networks, IoT applications, and location-based engagement types of technology.
While there are many competitors that offer Wireless Networking technology platforms, there are few that provide a on premise wireless gateway communication ad servers and digital marketing monetization support
solutions together. The emerging industry requires assistant to maximize the client’s return on investment.
Green Zebra Networks (GZN) division will provide both managed services support for wireless networks hardware, software for enterprise level clients. In addition, GZN wireless technology will provide proprietary and
licensed technology solutions.
Green Zebra Labs (GZSL) a new division being created to support GZ6G’s Enterprise smart solutions software integration services for Smart City Venues, in addition to creating new IoT software venue applications that
support the smart city initiatives and venue specific data analytics and artificial intelligence applications. The Green Zebra Smart Labs Software team provides the client with a trusted external IoT software development team to assist with future
smart city solution integration opportunities.
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The mission of GZ6G’s management team is to build a family of smart solutions service companies that work together to minimizes the competition while lowering the risk to enter the 5G & Wi-Fi 6 marketplace.
Venue owners need additional help using integrated technical support service, however, offering a digital marketing and monetization solution has created a competitive advantage that connects and engage communities with relevant information,
offering and managing monetizing solutions will subsidize the expensive wireless technology infrastructure costs.
Offering an integrated approach digital marketing solution, sponsorship revenue, IT wireless networking and Software expertise together expedite the decision process for all stakeholders, our telecommunication,
wireless and agency partners allow us to expand our reach, capabilities and resources.
GZ6G provides an enterprise state-of-the art Wi-Fi Media and communication Platform (hardware and software) to monetize and scale to any size venue and/or audience. Our Green
Zebra Networks engineering team works with the Venue’s IT engineering team to install Wireless communications platforms. Green Zebra Networks will provide an engineering team to install the Wi-Fi platform into the venue Wi-Fi network, providing
WiFi monetization hardware (Green Zebra Media hub) that connects to the customer’s Wi-Fi network system. Every Wi-Fi Media server is embedded with Communication and data analytics software to create monetization and communication. This capability
transforms a single location into a powerful, media-rich communications network throughout the venue location.
This WIFI Media Server platform creates user engagement when users access Wi-Fi, enabling digital marketing teams to empower businesses, engage communities and enable mobile
users with relevant local information, accessed as a cloud or on-premises solution.
In addition, Green Zebra Media teams signs long term contracts to secure digital marketing and sponsorship assets monetize venue opportunities, supporting the venue team with
marketing strategies, planning, and implementation services, brand & user engagement services, digital marketing and design services, communication software and Wi-Fi ad servers.
Currently, GZ6G technologies is working on a number of enterprise projects that have been delayed in 2020 and pushed to Fall 2021 and throughout 2022, projects include several
NCAA universities, National Football League, and a cities located in the United States. It cannot be known at this time whether the current situation related to COVID-19 will push these projects further forward.
Further, the Company has entered into a contract with US Federal Contractor Registration (USFCR), whereby the Company will be provided with assistance to qualify and help with
federal contract procurement services and writing contracts for System for Award Management (SAM) projects.
GZ6G has future plans to roll up several complementary companies in the wireless, Wi-Fi security IoT and digital marketing sectors. GZ6G is able to 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 and cities in the United States
and International markets.
We were incorporated in Nevada and our headquarters are located at 8925 West Post Road, Suite 102, Las Vegas NV, 89148. We are a smart solutions technology provider focused on providing smart solutions advisory
services, developing and acquiring early stage wireless 5G/6G and beyond technologies that meet certain core application requirements that deliver potential enterprise smart city solutions. Types of Products include IPTV technologies, digital
displays technologies, VR, AI, data analytics software and wireless security tools for Stadiums, Airports, Universities and Smart City Projects. Our Mission: create shareholder value by creating a family of wireless technology companies
specializing in vertical markets that support subsidiary business units with necessary skill sets to deliver value added smart Solutions to partners and customers.
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A wireless Internet of Things (IoT) technology company and its subsidiaries and divisions, GZ6G Technologies Corp (GZ6G) is focused on acquiring, developing and overseeing innovative wireless IoT technology
companies for the emerging 5G and Wi-Fi6 marketplaces, including target markets such as stadiums, airports, universities, racetracks, casinos, and smart city projects.
Our controlled subsidiary, Green Zebra Media Corp (GZMC) is one such innovative provider of wireless hardware gateways, communications, marketing and sponsorship, data analytics platforms and CRM technology. Our
products are used for stadiums, cities, airports, universities and hospitality markets.
The focus of our current operations in fiscal 2021 will be contracts which can most efficiently, and cost effectively, bring revenue generating operations through partnerships with venues and industries that must
adapt to the new 5G and WiFi6 environment. Beyond that, GZ6G and controlled entities are establishing a global command center to offer our customer base scale and agility, speed the launch of wireless, digital services and data analytics
services, and seamlessly connect customers to world class experiences. It is our intent that wireless IT network managed services and data center initiative for clients and partners will monitor cutting edge Wireless IT networks with the
ability to dispatch technicians as necessary to ensure continuous functionality of our Wi-Fi networks.
The use of Wi-Fi networks in high-density areas is the most efficient manner to ensure consistent wireless connectivity. Two trends are converging today to propel upgrades and new deployments of Wi-Fi networks,
including 5G and WiFi6. First, consumer demand for wireless connectivity continues to grow, overwhelming many wireless and Wi-Fi networks. Secondly, many large entities are seeking new digital media avenues to obtain exposure to target markets
through online ‘impressions’, particularly when they have access to a captive audience. GZ6G is uniquely positioned to facilitate the convergence of these two trends. Additionally, GZ6G is developing future Wi-Fi networks that can integrate the
Internet of Things (IoT) and significantly enhance network utility and user experiences.
The greater use of wireless devices (smartphones, tablets) and the emergence of IoT places has increased demand even further on wireless networks. Large network companies promote the 5G network deployment, but there
are limitations to its effectiveness, particularly in high-density areas. Wi-Fi networks remain the best network deployment plan for airports, businesses, universities, transport hubs and city locations where there are high-density network demands.
Existing Wi-Fi technology can significantly improve wireless performance at airports, transport hubs, convention centers, resorts, and stadiums. The future of Wi-Fi is even more exciting. New developments by GZ6G
will significantly enhance network throughput and allow for apps to reside on a venue’s network rather than the cloud. The result is much faster response and the ability to customize apps to serve local businesses, communities and users of the
network.
The GZ6G total solution turns the Wi-Fi cost center into a revenue center by (a) deploying a state-of-the-art Wi-Fi broadcast network with customized software for enhanced user experience and (b) obtaining sponsors
who desire exposure to consumers and businesses in high-density areas. This combination can easily justify Wi-Fi network deployment today.
Additionally, GZ6G plans to vertically integrate its operational model, providing both software and hardware as well as full support services to its customer base.
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GZ6G is installing Wi-Fi networks in high-density use areas and is partnering with other technology companies and host entities (stadiums, universities, airports, resorts) for the GZ6G total solution. GZ6G has
established strategic relationships with (a) network companies that are pitching the GZ6G solution; (b) established Wi-Fi networks that need upgrading; and (c) a range of potential sponsors in a variety of industries.
The Company currently has four divisions that will implement actions to correspond with the above services:
Market Opportunity
GZ6G Technologies is in a unique position to grow rapidly as a smart solution provider for strategic partners in the 5G & Wi-Fi 6 industry with our strategic public
partners. We have established relationships with large public company smart solutions teams selling our products and services. For the last couple of years, we have been training their sales teams and presenting to smart solutions enterprise
customers.
We have been preparing, developing and building relationships to scale 5G & Wi-Fi 6 emerging markets since winning the New York City connectivity challenge at Governors
Island in the Spring of 2018. We established a s relationship with Lumen’s smart solutions consulting team (formerly CenturyLink) and few other trusted strategic partnership opportunities. GZ6G is in a unique position to grow rapidly as a smart
solution provider in the 5G & Wi-Fi 6 industry.
In addition, GZ6G is seeking strategic acquisition opportunities to scale revenue, leadership and customer base by expanding the customer base and product lines in four core
business areas: wireless networking and managed services locations, Smart IoT Software Applications, Data Center facilities, Digital marketing Agencies opportunities. We expect to continue creating strategic partnerships that can help scalable a
diverse sales force and product offering target markets local to global.
5G & Wi-Fi 6 plus is creating what’s called the (4th) next generation industrial revolution that is going to create faster and faster high-speed internet that will create
more innovations opportunities that are directed at auto, delivery, entertainment, medical industry, sensors technologies just to name a few
The smart solutions industry is considered is considered the 4th industrial GZ6G Technologies is in a unique position to grow rapidly as a smart solution provider with our
established global strategic partners that currently provide reach 5G & Wi-Fi 6 target markets customers much quicker.
We have established relationships with large public smart solutions teams selling our products and services. For the last few years, we have been training sales teams and
presenting together throughout the united states smart solutions to enterprise customers.
GZ6G has been preparing, developing and building relationships to scale 5G & Wi-Fi 6 emerging markets since winning the New York City connectivity challenge at Governors
Island in the Spring of 2018. We established a s relationship with Lumen’s smart solutions consulting team (formerly CenturyLink) and few other trusted strategic partnership opportunities. GZ6G is in a unique position to grow rapidly as a smart
solution provider in the 5G & Wi-Fi 6 industry.
GZ6G plans to take advantage of early acquisition opportunities to scale the Gz6G business model. It is our belief that most of the existing industry is not preparing for the
future change that’s being created by the new high-speed capabilities coming to market.
We will continue to focus on wireless infrastructure, IoT software and marketing to scale revenue opportunities, leadership and
customer base by expanding the customer base and product lines in four core business areas: wireless networking and managed services locations, Smart IoT Software Applications, Data Center facilities, Digital marketing Agencies opportunities. We
expect to continue creating strategic partnerships that can help scalable a diverse sales force and product offering target markets local to global.
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Target Markets:
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Cities, Airports, Stadiums, Universities, and Hospitality Markets Globally
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Target Acquisitions:
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Advertising agencies, IT Network Related Companies, IoT software applications.
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Barriers to Market
With any emerging market there are any number of challenges that exist, as the market matures and flattens out. We don’t see this happening any time soon, quite the opposite over the last few years we have had a
chance to figure out a few things during the development and testing periods.
Emerging Smart solutions technology Expertise –
Lack of qualified and experiences staff will number one challenge to bringing smart solutions to market.
Competitive Landscape -Telecommunication companies are talking about the 5G and Wi-Fi 6 connective speeds and required infrastructure requirements with various other technologies. Connectivity is a
commodity between all of them, they are and will be looking for alternative product and service providers to differentiate themselves.
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Overall Smart Solutions product offering
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Diverse teams are required
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Go-To-Market Strategies
Smart Solutions Technology
GZ6G technologies going forward marketing strategy for 2021 and 2022 will primarily focused on global strategic partners relationships where our products and services complement each other’s’ product, services and
support offerings to enterprise clients.
This partnership approach reduces barriers to market lowers the risk while establishing brand value and trust with clients and customers. Access to our target markets are more receptive when working with their
trusted partners at this stage of our growth.
This partnership approach reduces barriers to market lowers the risk while establishing brand value and trust with clients and customers.
Scaling up our company divisions offices in local markets is very much part of our go to market strategy going forward. Local and regional support center in the near future will be potentially requirement for city,
stadium, airports, universities accounts.
Technology Monetization Marketing Strategy
The Green Zebra Media sponsor advertising division primarily focuses on various types of brand advertisers and agencies that represent brand advertisers that are interested in reaching targeted venue or multiple
venue customers.
GZ6G Technologies has relationships with Fortune 500 companies that seek to enhance consumer engagement while attending college sporting events, speedway events, conventions, and while traveling in the United States.
Many of these companies have annual budgets of $20 million to $100 million plus for sponsor opportunities to consumers through GZ6G Technologies on premise digital technology networks like IPTV and WIFI.
Certain sponsors are willing to contribute more per venue to be the exclusive sponsor for particular events or for several events, or for a period of time at one venue. Sponsorship companies are in the following
industries:
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Types of Venue Sponsor Industry
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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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Sponsorship Commitments & Current Contracts
GZ6G Technologies has relationships with Fortune 500 companies that seek to enhance consumer engagement while attending college sporting events, speedway events, conventions, and while traveling in the United States.
Many of these companies have annual budgets of $20 million to $50 million for marketing opportunities to consumers through GZ6G Technologies Wi-Fi networks. Certain sponsors are willing to contribute more per venue to be the exclusive sponsor for
particular events or for several events, or for a period of time at one venue. Sponsorship companies are in the following industries:
Potential Sponsorship from These Industries
Airlines
Beverages
Casinos
Hotels
Restaurants
Consumer Retail
Go-To-Market Strategies for Target Markets
GZ6G Technologies is looking at strategic acquisition opportunities that would allow for infrastructure, development and consumer target market opportunities; as well
as teaming up with partnerships that can help create a diverse sales force that focuses on target markets.
University and Stadium Market
The university and stadium market is best addressed through existing commitments and partnerships; for instance, with our partner, Lumen (f/k/a CenturyLink). GZ6G Technologies total solution to Wi-Fi installations is
very attractive to strategic partners. As a result, some of the strategic partners have integrated the GZ6G Technologies solutions into their product/service offerings.
Airport Market
The airport market is addressed with the direct sales force and ongoing relationships. GZ6G Technologies will leverage the relationships that key partners have with airports. The GZ6G Technologies total solution for
installing, managing and monetizing Wi-Fi installations in airports is attractive to partners managing existing Wi-Fi networks.
City Market
GZ6G Technologies will address the city market with a direct sales force. GZ6G Technologies has installed a Wi-Fi network on Governors Island New York during the connectivity challenge (2018 with Fibreless). Moving
forward GZ6G will continue to work alongside their partners to leverage the success of that installation to attract additional city Wi-Fi installations.
Industry Overview
Wi-Fi technology enables wireless users to use internet and telecom services in a high-density environment. Without Wi-Fi in areas where there is a high concentration of wireless users, response time degrades, phone
calls get ‘dropped,’ internet connectivity may be intermittent and user experience suffers. For this reason, Wi-Fi deployment is critical for internet and telecom networks in many geographical footprints.
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The market for Wi-Fi equipment worldwide is expected to grow to $15.6 billion by 2022, according to industry research by MarketsandMarkets, Inc. This describes a compound annual growth of 21.2% through 2022. Such
growth is driven by the use of wireless devices including smart phones, tablets and development of the IoT market. Approximately 67% of the worldwide wireless equipment market is in the US. MarketWatch reports the Global Wireless Connectivity
market, including chips and devices will reach $31.8 billion by 2022.
The primary drivers for the deployment of Wi-Fi networks are increasing bandwidth demand from businesses, universities, smart city projects, and consumers. With the integration of more images and videos for internet
users, demand for greater network bandwidth increases. The weakest link in broadband networks is the wireless connection to the end user. The latest Wi-Fi network technologies address this weak link in a cost-effective manner.
The primary constraints to deploying Wi-Fi networks has been poor-user experiences in high-density areas, security and privacy concerns. Users with multiple applications on smart phones, or with multiple devices
(smart phone and tablet or laptop) place high demands on wireless networks. Bandwidth intensive applications that include video and GPS create greater demands on wireless networks.
How does the host/network manager (airport, smart city, business, university) of Wi-Fi decide to improve network capabilities? Wi-Fi networks provide critical connectivity services to users, and bandwidth demand from
users creates the need to upgrade the networks. Security on Wi-Fi networks is improving, but bandwidth is lacking. Wi-Fi network users are demanding more bandwidth while travelling, when at sporting events, when spending time ‘downtown’ or in
commercial districts, and when at resorts, or on university campuses.
Current Operations
GZ6G provides a total solution for high-density use areas with:
(1) state of the art Wi-Fi hardware deployment to address the requirements of all wireless users, in a specific venue
(2) custom software that enables an enhanced user experience and secure, easy network access
(3) ability to integrate security system or expand Wi-Fi footprint
(4) automatic portals for any device in the area
(5) the ability to monetize the Wi-Fi network deployment for the host entity.
GZ6G Technologies Target Markets
GZ6G is focusing on high-density use venues where (1) internet connectivity demand is high and likely to grow, (2) the host venue recognizes the benefit of providing Wi-Fi broadcasting service, and (3) venues where
sponsors are interested in consumer exposure. The target venues include universities, professional sports stadiums and racetracks, airports, resorts and smart-city projects.
Hardware and Software Solutions Today
GZ6G Technologies installs state-of-the-art Wi-Fi equipment designed to meet the projected high-density use demands for the location. Equipment manufacturers may include Cisco, Cradle Point, D-Link, Juniper, Linksys.
Software may include products that are customizable from Brick & Mobile, Cloud4Wi, Purple Wifi, Panasonic, Socifi, Tanaza.
Wi-Fi network installation is customized to ensure the correct internet connectivity and speed is available throughout the venue. GZ6G has developed the software tools that are customized for the host/network manager
to easily manage the network through the use of dashboards, which may include integrating additional components such as a security system. The software tools (broadcasting system) allow for the host to create pop up notices to remind users of
important items regarding safety, first aid, ancillary services and special offers. The network manager gathers data to understand characteristics of user demands on the network. The host/network venue manager may also design features which provide
information to users to enhance their time while in the area, such as discounts to affiliated stores or restaurants, notices of services at the facility such as food outlets, retail items, special benefits to repeat customers, or notice of where
emergency healthcare is available. The host venue can customize the user interface on the network and as new supplementary services become available, such as a new food venue or new emergency management procedures, the customer interface can be
changed.
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GZ6G is moving Wi-Fi network utility to the next level with chip development that will enable greater speeds and greater security, while significantly enhancing the user experience. With the new GZ6G chip, custom
apps can reside on the Wi-Fi broadcast network, which makes it much quicker for users to gain information and guidance from a specific venues network. Instead of information sourced from websites through the cloud, integration of the new chip
enables customization of apps on the Wi-Fi network for that particular network footprint. All internet users within the venues network can have access to these apps. The result is much faster response times which creates greater user experience.
Customized Wi-Fi apps that may include 3-D maps include stores, restaurants, museums, healthcare facilities and any number of ancillary or affiliated services. GZ6G development of the next Wi-Fi broadcast network includes making it an open
architecture such that independent app developers can create new Wi-Fi apps with customization capabilities to the specific venue footprint.
Company Offerings
GZ6G Technologies focus on leading wireless marketing & CRM technology smart solutions provider, offering closed loop security gateways, wireless marketing and sponsorship CRM platform solutions, and deep data
analytic solutions for the hospitality, stadiums, airports, universities, and cities. This customized approach to marketing will allow clients to elevate the interaction between the venue and the consumers on their platform. The second division
will work with sponsors for unique marketing opportunities within the venue and for the venue.
The future vision for the Company is the inclusion of four main divisions.
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The parent company, GZ6G Technologies, provides enterprise technology and expertise consulting together to build smarter cities and venues of the future which would oversee the operational excellence of its four
existing and planned complimentary subsidiaries under the publicly listed entity.
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GZ6G’s Subsidiaries and Divisions will diversify its business model by establishing 4 core areas of business expertise to support the overall GZ6G Enterprise customer smart solutions:
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Green Zebra Network: Wireless networking, security managed Services;
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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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Green Zebra Smart Labs: Smart IOT software development services and applications
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Green Zebra Media: Marketing, advertising, sponsorship services.
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Green Zebra Networks (GZN) operates as a stand-alone division that offers IT Wireless networking, hardware, implementation and managing services support and solutions in local to national business. GZ6G would
subcontract the GZN division when Networking and managed services related products and services are required.
FiBox Pro Appliance Gateway Solution:
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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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Green Zebra Data Center (GZDC): offering Tier 3 Enterprise data center solutions to optimize end users, managed services, cloud data.
Green Zebra Media, Corp (GZMC) operates as an independent advertising company that offers traditional advertising, digital marketing, digital advertising and sponsorship GZ6G subcontracts GZMC services when
advertising and sponsorship services are required to help monetize venues and the FiBox Pro Product.
Green Zebra Smart Labs (GZSL) Division
This division will offer software development services for various types of Smart Solution cloud products and services. GZSL will integration services for third party technologies. This division will be responsible
for being the leading provider for in-venue wireless venue and user engagement, marketing, advertising platforms and data analytics.
The software division develops and support various API application support services for Smart solution broadcasting systems, data analytics and artificial intelligent application needs.
Data Analytics Software development and R& D support.
CRM, API software development, artificial intelligence (AI), research and development (R&D) platform integration solutions and more.
Current GZ6G development projects:
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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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Green Zebra Media, Corp (GZMC) operates as an independent advertising company that offers traditional advertising, digital marketing, digital advertising and sponsorship
services in addition to supporting GZ6G smart solutions customers and partners with agency services that include advertising, marketing, sponsorship sales agency, and platform support team; this division will be broken into two main operations.
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GZ6G Technologies envisions the creation of wireless ‘fiber-speed’ networks to meet the demands of wireless consumers and businesses. High-speed wireless networks enable the establishment of Wi-Fi networks in any
location to meet demands of wireless users, and expand the content capabilities of hosts and sponsors, regardless of the distance to fiber rings.
GZ6G is an IoT company made up of four different supportive channels:
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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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We are in the process of developing a global command center that will allow us to monitor all of our venues in one central place. We will have technical engineers available in case any of the networks go down in any
of the venues at any time. We will be able to remotely navigate any issues arising at the venues so that service will be virtually uninterrupted.
Practice areas can either function independently to address a client’s specific functional IoT needs, or be combined to provide brands with a holistic service offering that will handle all of their needs.
From banner and social media advertisements and advertorials, to website and shopping portal purchase engagements, and product procurement, we will support venues in all of their touch points and engagement
opportunities with their end audience.
We will offer the following core services:
We define venue as our target client, it can be a point of interest within a city or it could be the city itself. Venues are a specific geographical location, such as a city, airport, university, stadium, racetrack,
casino, or hospitality location (trade center, hotel etc.). When a venue connects to the network it is called a closed loop communication solution.
Qualify – Our infrastructure team goes into a new venue to ensure that they have the right infrastructure or bandwidth in place. This also means the team will be looking at whether the venue has the appropriate Wi-Fi
capabilities in place, so the equipment will sync. Qualify also means that an evaluation has been completed to ensure that the venue has the correct Wi-Fi speed so marketing materials such as videos, graphics and content will present itself
correctly.
The new GZ6G Wi-Fi broadcast network facilitates the Internet of Things to function in a way that it was projected to do years ago. Several possibilities with Wi-Fi apps are as follows:
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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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All of this and more is possible with apps that do not require downloads from the cloud. It’s all available instantly because it is on the venue network. Each venue network can control which apps are available to
which group of users, such that security cameras can be available to a select group. The possible apps are endless, and each venue network can customize its network page as it sees fit.
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Our team will possess core capabilities and skill sets that help our clients execute on targeted growth plans that tap into the trillion-dollar tech market. We will serve clients across a wide range of industries and
geographies.
Our growth will be through a multi-prong plan: (1) growing an in-house sales team; (2) leveraging strategic partners who are advisors to decision makers and owners of companies and will be conduits for introductions;
and (3) client referrals.
We will build a core team of product developers, creative designers, sales professionals and account managers under each practice area to service existing and new clients. Our philosophy is to develop “repeatable”
software platforms around common business needs that can be productized to allow for us to scale development of new projects and grow revenues without relying on building large development teams.
Our expertise is IoT; we will help companies become relevant, agile and competitive in a global consumer commerce environment. We will offer the ability for worldwide marketing and advertising through our developed
software and available wifi at our venues. Consumers want to be able to shop, among other things, anytime and anywhere, and on any device; our expertise allows for us to put our brands right in front of this consumer activity.
The global information technology industry is experiencing global growth and US companies have to be prepared to be competitive on a global marketplace.
The next generation Wi-Fi broadcast networks will bring fiber-like bandwidth capabilities to a wireless network. Additional benefits of the GZ6G Wi-Fi broadcast network development is the ability to (a) wirelessly
connect to fiber that may be at a distance from the facility, and (b) install high-speed bandwidth wireless to serve a community at a lower cost and much shorter deployment timeframe compared to fiber installations.
Employees and Consultants
In addition to our sole officer and director, we have just brought Wendy Ramirez into the Company as Vice President of Human
Resources, Rohan Potange as Interim Chief Technology Officer, Arlene Bordinhão as Director of Communications, and Eloisa Tobias, Director of Smart Solutions. Presently we have a total of 5 employees including our CEO and President, William
Coleman Smith.
Key Relationships
GZ6G has several strong relationships that are mutually beneficial to both partners; partners that will leverage the GZ6G capabilities to maintain and/or grow revenue streams for both entities.
Current Partnerships
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Lumen Technologies/CenturyLink
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Lumen Technologies: Lumen Technologies, previously CenturyLink, is one of the largest telecommunications organizations in the country focused on using their networks at cities,
stadiums and universities. As a trusted third-party solutions partner, GZ6G Technologies offers the smart solution tools and expertise required for Lumen Technology to develop long term user engagement solutions.
Brand LTD – Brand LTD is our advertising and marketing partner/creative agency.
ViTech – ViTech is one of our IPTV Solutions providers for large venues and smart cities.
Aruba Wireless – Aruba is one of the partners for which we utilize their hardware for smart venues and smart cities.
Internetsoft – Internetsoft is our software development strategic partner that works with our internal development team to scale our software development projects for smart venues and smart cities.
36
Marketing Strategy
We plan to market directly to sports arenas, concert venues, universities, racetracks, casinos, and to smart cities using our existing relationships as well as deploying a number of popular online marketing tactics.
Additionally, we will be leveraging strategic partners who are advisors to decision makers, and owners of companies, and who will be conduits for introductions and client referrals.
GZ6G has relationships with national and regional Fortune 500 entities that are seeking targeted methods to reach existing and potential customers. These sponsors include commercial enterprises that desire to
advertise or collect analytic data on users in high-density locations. National sponsors include the major network carriers, auto manufacturers, airlines, casinos, grocery stores, online retail, consumer discretionary goods and restaurant chains.
Many of these seek exposure to consumers in specific areas.
With selective Wi-Fi markets, a sponsor can more effectively deploy advertising budgets. Local restaurants can advertise specials at football games. Casinos or restaurants can advertise to airport customers or
smart-city users. Host entities can identify food specials at certain times when lines are low. Airports could provide flight updates in real time with notices to fliers that log in on their flight.
As the GZ6G network installation base grows, the Company will have the ability to offer sponsors a variety of venues for exposure.
Growth Strategy
IT Installation
Robert Half – “Provides not only desktop support and help desk analysts, applications architects, network administrators; but they also have
Robert Half Technology. Through Robert Half Technology, Managed Solutions, you have access to deep expertise and a tailored approach to consulting and managed services to assist you with major initiatives such as improving underperforming
functions, post-merger integration and the introduction of new technology. They can handle your entire project, from discovery and planning through post-delivery support and reporting”. 1
Reliable IT – “At Reliable Technology Services our primary goal is to keep our clients’ IT equipment and services highly available and their staff highly effective. We accomplish this by providing our clients with all the benefits of an in-house IT department without the associated overhead. Clear, unbiased CIO level advice on their technology needs. This includes 24 hour monitoring and reporting of your computers, servers and network infrastructure. The management of Security Services monitored by trained and certified technicians. Remote cloud and local backups monitored and tested by trained and certified technicians. Security patch management monitored and implemented outside of business hours to minimize disruption during working hours”. 2
1 https://www.roberthalf.ca/en/employers/managed-solutions
2 https://reliabletech.ca/about-us/
37
WIFI Hardware
Cisco – “Is an American Multinational technology conglomerate. Cisco develops, manufactures and sells networking hardware, software, telecommunications equipment and other high – technology services and products. Through its numerous acquired subsidiaries, such as OpenDns, Webex, Jabber and Jasper, Cisco specializes in specific tech markets, such as the internet of things (IoT), domain security and energy management”.3
CradlePoint
“Cradlepoint NetCloud is at the heart of everything we do — a cloud-based subscription service that combines cloud management, software-defined networking, and unified edge security
with industry-leading LTE and 5G cellular networking technology to power a portfolio of purpose-built wireless edge routers and adapters”. 4
Voice and Data
AT&T – “We’re creating new and exciting customer experiences that connect people with who and what they love. There 5G network is live for consumers and businesses across the country, built on the nation’s best and also fastest wireless network. AT&T is also building FristNet, the nationwide network that enables first responders and public safety officials to stay connected in times of crisis. The robust and growing fiber footprint provides gigabit speeds to nearly two million customers”. 5
Verizon Wireless – “The company offers voice, data and video services and solutions on its award-winning networks and platforms, delivering on customers’ demand for mobility,
reliable network connectivity, security, and control. Verizon was the first company in the world to launch a commercial 5G mobile network with a commercially available 5G-enabled smartphone. The company's operating structure focuses on three
customer-facing areas: Consumer, Business and Media”.6
Government Contracting Opportunities/Regulation
We have registered through US Federal Contractor Registration (USFCR) which will allow us to be included in the System for Award Management (SAM) which will allow us to be included in writing government contracts.
In the event we are awarded jobs through SAM, we will have to adhere to any requirements set forth by the United States Federal government.
Employees and Consultants
In addition to our sole officer and director, we have just brought Wendy Ramirez into the Company as Vice President of Human Resources, Rohan Potange as Interim Chief Technology Officer, Arlene Bordinhão as Director
of Communications, and Eloisa Tobias, Director of Smart Solutions. Presently we have a total of 5 employees including our CEO and President, William Coleman Smith.
Wendy Ramirez, Vice President of Human Resources
Ms. Ramirez joins GZ6G Technologies with more than 20 years of Human Resources experience and will help manage all recruitment, sourcing, training and organizational development as well be a sponsor and advocate for
all GZ6G Technologies’ employees.
Before GZ6G, Ms. Ramirez led DSD Companies, a leading worldwide freight and transportation company, as Executive Vice President from 2017 – 2018 and as the Director of Human Resources and Compliance from 2007 - 2015. She left DSD Companies for a year to become the Director of Human Resources and Compliance for the cosmetics brand, Morphe from 2016 - 2017.
3 https://en.wikipedia.org/wiki/Cisco_Systems
4 https://www.google.com/search?q=cradle+point&rlz=1C1CAFC_enCA916CA916&oq=cradle+point&aqs=chrome..69i57j0i10l7.2279j0j4&sourceid=chrome&ie=UTF-8
5 https://about.att.com/pages/connect
6 https://www.verizon.com/about/our-company/verizon-fact-sheet
38
Rohan Potange, Interim Chief Technology Officer
Rohan Patange has more than 13 years of experience in technology consulting, project management, operations, finance, strategic marketing, business expansion, and innovative product development. As a software
industry expert, his responsibilities at GZ6G Technologies Corp. encompass expanding and managing the teams responsible for the development of VenuTrax for GZ6G Technologies’ Green Zebra Smart Labs division. VenuTrax will be a state-of-the-art
logic management solution cloud (SaaS) platform intended to provide venues the ability to directly communicate with customers using 5G & Wi-Fi 6, as well as offer business intelligence such as data analytics and artificial intelligence for
monetization purposes.
Mr. Patange is also the Chief Executive Officer for GZ6G Technologies partner, Internet Soft, a digital transformation consultancy, and software development company that provides cutting-edge engineering solutions.
Internet Soft assists Fortune 500 companies and enterprise clients solve complex issues that always emerge during their digital evolution journey. Internet Soft helps Green Zebra Smart Labs scale up workforce and technologies to meet the demand for
the emerging 5G & Wi-Fi 6 industry.
Mr. Patange’s strong communication and mentoring skills allows him to lead teams in a way that promotes internal and external business relationships and strengthens customer confidence.
Mr. Patange received his Master’s in Computer Science from Savitribai Phule Pune University located in Pune, India.
Arlene Bordinhão, Director of Communications
Ms. Bordinhão joins GZ6G Technologies with more than 15 years of public relations, media relations social media, and communications experience in various industries such as hospitality, tourism, and
tech. In her role as communications director, Bordinhão will execute strategic PR and marketing plans, coordinate special events, create all press materials and presentations as well assists with marketing Green Zebra Media, a division of GZ6G
Technologies.
Before GZ6G Technologies, Bordinhão was Public Relations Manager for MGM Resorts international from 2018 – 2019, providing PR support for 13 award-winning resort properties such as Bellagio, ARIA, Park MGM, MGM
Grand, Mandalay Bay, to name a few. She’s garnered millions of impressions for MGM Resorts’ extensive portfolio in major national and international outlets including PEOPLE, EXTRA, HOLA!, Travel & Leisure, Daily Mail (UK), and Discovery Channel
(China).
Prior to MGM Resorts International, Bordinhão was the Public Relations Manager for Sundance Helicopters from 2014 - 2018, the longest-running helicopter tour company in Las Vegas. In this role, she would bring
positive media attention to the company by cultivating national and international relationships with the media. She also created all press materials, coordinated media events, and partnered with the Las Vegas Convention and Visitor’s Authority to
successfully execute familiarization trips for national and international media. Sundance Helicopters was the recipient of Las Vegas Review Journals’ Best of Las Vegas award for Best Helicopter Tour in 2017 and 2018, due in part to her efforts.
Bordinhão has a Bachelor of Arts degree in Communications, with an emphasis in Broadcasting from the University of Nevada Las Vegas where she graduated with honors.
Eloisa Tobias, Director of Smart Solutions
Ms. Tobias has more than a decade of experience in B2B sales and management which she’ll utilize at GZ6G Technologies’ Green Zebra Networks division. In this role, she’ll be responsible for leading the development,
improvement, and management of all activities related to smart solutions within the GZ6G Technologies’ Green Zebra Networks division. The Green Zebra Networks division continuously works with clients to offer a fully integrated wireless
infrastructure solution for enterprise opportunities. Green Zebra Networks division will provide both wireless IT hardware and software managed services support for the Orange County, CA market while serving enterprise-level clients. In addition,
Green Zebra Networks’ wireless technology will provide proprietary and licensed technology solutions.
39
Prior to joining Green Zebra Networks, Tobias was the Sales Development Representative for The Wiser Agency, a digital marketing firm, where she managed and developed B2B connection strategies to build relationships
with business owners and key stakeholders generating more than $18,000 per week in sales.
Before The Wiser Agency, Tobias was the Account Manager for RX Technology, a managed IT services provider. There she increased monthly recurring revenue by over 200% within six months and provided training for the
sales team.
Tobias graduated Cum Laude with an International Business Major from the University of Incarnate Word in San Antonio, Texas.
The Company works with legal counsel, an accounting firm and an auditing firm on an as needed basis. The Company is looking to hire technical, marketing and software development engineers/staff as soon as finances
allow. We intend to add additional staff as we grow. Any such additions will be made at the discretion of management and to meet the Company's then current needs, all subject to having available resources to attract and retain such staff.
The Company’s mailing address at 25422 Trabucco Road, Suite 105-275, Lake Forest, CA 92630 is a shared office complex with mail and other services available on a month-to-month basis at minimal cost.
On August 10, 2019, we entered into a lease agreement with IAC Apartment Development JV LLC to lease approximately 1,500 square feet of 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 uses 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 $1,727.50 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 $3,250 per month.
During fiscal 2020 the Company formed a partnership with one of its branding partners for shared office space in a 5,000 square foot office complex located at 8925 West Post Road, Suite 102, Las Vegas, NV 89148. The
shared use of the space by Green Zebra staff is currently provided free of charge as part of the shared contract work between Green Zebra, the Company and the branding partner.
Additional space is expected to be required as we expand our operations. We do not foresee any significant difficulties in obtaining any required additional space. We currently do not own any real property.
40
We currently trade on the OTC Pink under the symbol GZIC. We have recently submitted an application to move our Company up to the OTCQB.
We currently have 22,793,357 shares of common stock issued and outstanding, 5,000,000 shares of Series A Preferred Stock issued and outstanding, and 1 share of Special Series B Preferred Stock issued and
outstanding. We have issued 10,000,000 shares to our CEO and founder, William Coleman Smith during April 2021 in consideration for an additional 9% of controlled subsidiary, Green Zebra. No other shares have been issued between January 1, 2021 and
May 14, 2021.
Our founder, sole officer and director, continues to run our Company. Legal, accounting, and auditing professionals have been paid through funding received from third parties.
We currently have one outstanding Loan Treaty in the amount of $1,450,000 that is convertible into common shares at the rate of $0.195 per share, for a total conversion into 7,435,897 common shares. A total of
3,589,744 shares of Common Stock underlying $700,000 in proceeds received to date under this Loan Treaty are being registered in this Offering for the selling stockholder, eSilkroad Network Limited.
We have never paid out cash dividends related to its common stock and do not believe that we will pay dividends in the foreseeable future.
We have not issued any warrants, or options.
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019, AND THE NOTES TO THOSE AUDITED FINANCIAL STATEMENTS AS
WELL AS THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020, AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT ON FORM S-1.
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 REGISTRATION STATEMENT ON FORM S-1.
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").
Results of Operations
Revenue
Fiscal Year ended December 31, 2020 and 2019:
We reported revenues of $8,887 and $11,204 in the fiscal years ended December 31, 2020 and 2019, respectively.
Three months ended March 31, 2021 and 2020:
We reported revenues of $Nil and $8,746 in the three months ended March 31, 2021 and 2020, respectively.
41
Operating Expenses
Years ended December 31, 2020 and 2019
For the years ended December 31, 2020 and 2019 we had the following operating expenses:
|
Year Ended
December 31,
|
||||||||
|
|
2020
|
2019
|
||||||
|
|
||||||||
|
OPERATING EXPENSES
|
||||||||
|
Cost of revenue
|
$
|
10,400
|
$
|
10,400
|
||||
|
Depreciation
|
1,948
|
3,269
|
||||||
|
General and administrative
|
232,052
|
351,170
|
||||||
|
General and administrative, related parties
|
240,000
|
240,000
|
||||||
|
Professional fees
|
59,108
|
53,490
|
||||||
|
Total operating expenses
|
543,508
|
658,329
|
||||||
|
|
||||||||
|
(Loss) from operations
|
(534,621
|
)
|
(647,125
|
)
|
||||
|
|
||||||||
|
Other income (expense)
|
||||||||
|
Interest expense
|
(3,996,466
|
)
|
(140,657
|
)
|
||||
|
Loss upon notes conversion
|
(364,909
|
)
|
-
|
|||||
|
Change in fair value of derivative liability
|
(28,844
|
)
|
12,204
|
|||||
|
Total other income (expense)
|
(4,390,219
|
)
|
(128,453
|
)
|
||||
|
Net income (loss)
|
$
|
(4,924,840
|
)
|
$
|
(775,578
|
)
|
||
|
Less: net income (loss) attributable to Non-controlling interest
|
$ |
(174,896
|
)
|
$ |
(161,672
|
)
|
||
|
Net income (loss) attributable to GZ6G Technologies Corp.
|
$
|
(4,749,944
|
)
|
$
|
(613,906
|
)
|
||
Total operating expenses for the year ended December 31, 2020 were $543,508 as compared to $658,329 for the year ended December 31, 2019. During the years ended December 31,
2020 and 2019 we reported costs of revenue of $10,400 and $10,400 respectively. The Company incurred $232,052 and $351,170 in general and administrative expenses in the fiscal years ended December 31, 2020 and 2019, respectively and general and
administrative costs from related parties of $240,000 and $240,000, respectively. 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, 2020 totaled
$59,108 as compared to $53,490 in the fiscal year ended December 31, 2019.
Other expense
Other expense reported for the fiscal years ended December 31, 2020 and 2019 totaled $4,390,219 and $128,453, respectively. 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. During the year ended December 31, 2019 the Company reported interest expenses of $140,657 including amortization of debt discount and issuance costs of $113,638, noncash interest of $23,580 and interest
expenses of $3,439 and a gain on the change in fair value of derivative liabilities of $12,204.
We had a net loss of $4,924,840 in the year ended December 31, 2020 compared to a net loss of $775,578 in the year ended December 31,
2019.
42
Three months ended March 31, 2021 and 2020
|
Three Months Ended
March 31,
|
||||||||
|
|
2021
|
2020
|
||||||
|
|
||||||||
|
OPERATING EXPENSES
|
||||||||
|
Cost of revenue
|
-
|
64,994
|
||||||
|
Research and development expenses
|
2,600
|
2,600
|
||||||
|
Depreciation
|
586
|
487
|
||||||
|
General and administrative
|
68,624
|
68,607
|
||||||
|
General and administrative, related parties
|
60,000
|
60,000
|
||||||
|
Professional fees
|
42,156
|
5,389
|
||||||
|
Total operating expenses
|
173,966
|
202,077
|
||||||
|
|
||||||||
|
(Loss) from operations
|
(173,966
|
)
|
(193,331
|
)
|
||||
|
|
||||||||
|
Other income (expense)
|
||||||||
|
Interest expense
|
(304,079
|
)
|
(55,134
|
)
|
||||
|
Change in fair value of derivative liability
|
-
|
(49,311
|
)
|
|||||
|
Total other income (expense)
|
(304,079
|
)
|
(104,445
|
)
|
||||
|
Net income (loss)
|
$
|
(478,045
|
)
|
$
|
(297,776
|
)
|
||
|
Less: net income (loss) attributable to Non-controlling interest
|
(42,019
|
)
|
(67,146
|
)
|
||||
|
Net income (loss) attributable to GZ6G Technologies Corp.
|
$
|
(436,026
|
)
|
$
|
(230,630
|
)
|
||
Total operating expenses for the three months ended March 31, 2021 were $173,966 as compared to $202,077 for the three months ended March 31, 2020. During the three months ended March 31, 2021 we reported costs
of revenue of $Nil and $64,994 respectively. Costs of revenue primarily include the consulting fees and associated expenses related to certain service contracts with specific performance. As a result of the impact of COVID 19, certain
activities which had commenced in the first quater of fiscal 2020 were suspended and re-engaged in the second quarter of fiscal 2021, resulting in a decline in associated expenses during the comparative three month periods. The Company
incurred $68,624 and $68,607 in general and administrative expenses in the three months ended March 31, 2021 and 2020, respectively and general and administrative costs from related parties of $60,000 and $60,000, respectively. 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 three months ended March 31, 2021 totaled $42,156 as compared to $5,389 in the three months ended March 31, 2020. The substantial increase
to professional fees is directly related to completion of an audit of our fiscal years ended december 31, 2020 and 2019, and the engagement of legal counsel and consultants to prepare an offering statment on Form S-1.
Other expense
Other expense reported for three months ended March 31, 2021 and 2020 totaled $304,079 and $104,445, respectively. During the three months ended March 31, 2021 the Company reported interest expenses of $304,079
including amortization of debt discount and issuance costs of $284,817 and interest expenses of $19,262. During the three months ended March 31, 2020 the Company reported interest expenses of $55,134 including amortization of debt discount and
issuance costs of $53,151 and interest expenses of $1,983 and a loss on the change in fair value of derivative liabilities of $49,311.
We had a net loss of $478,045 in the three months ended March 31, 2021 compared to a net loss of $297,776 in the three months ended March 31, 2020.
43
Statement of Cash Flows
December 31, 2020 and 2019
The following table summarizes our cash flows for the period presented:
|
December 31, 2020
|
December 31, 2019
|
|||||||
|
Net cash provided by (used in) operating activities
|
24,332
|
(256,010
|
)
|
|||||
|
Net cash used in investing activities
|
(4,990
|
)
|
(5,842
|
)
|
||||
|
Net cash provided by financing activities
|
130,843
|
292,184
|
||||||
|
Increase in cash
|
150,185
|
30,332
|
||||||
|
Cash end of year
|
180,544
|
30,359
|
||||||
Cash provided by operating activities for the year ended December 31, 2020 was $24,332 as compared to $256,010 of cash used by operating activities in the year ended December 31, 2019.
Cash provided by operating activities for the year ended December 31, 2020 was primarily the result of our net loss of $4,749,944 and the loss attributed to the non-controlling interest of $174,896 offset by non-cash
items including amortization of debt discount and offering costs of $3,953,295, a fair value adjustment to certain derivative liabilities of $28,844, a loss on conversion of certain notes of $364,909 and depreciation of $1,948. Changes in
operating activities in the year ended December 31, 2020 included a decrease in prepaid expenses of $10,400, a decrease in other current assets of $7,398, an increase to accounts payable of $84,663, and increase in related party payables of
$300,715 and an increase in customer deposits of $197,000 for total cash provided by operating activities of $24,332. Cash used in operating activities for the year ended December 31, 2019 was primarily the result of our net loss of $613,906 and
the loss attributed to the non-controlling interest of $161,672, offset by non-cash items including amortization of debt discount and offering costs of $113,638, a gain as a result of a fair value adjustment to certain derivative liabilities of
$12,204, non-cash interest of $23,580, stock-based compensation of $110,000 and depreciation of $3,269. Changes in operating activities in the year ended December 31, 2019 included a decrease in prepaid expenses of $10,400, an increase in other
current assets of $12,911, an increase in accounts receivable of $3, a decrease to accounts payable of $566, an increase in related party payables of $219,365 and an increase in customer deposits of $65,000 for total cash used in operating
activities of $256,010.
Cash Used In Investing Activities
Cash used by investing activities for the years ended December 31, 2020 and 2019 related to equipment purchases and totaled $4,990 and $5,842 respectively.
Cash Provided by Financing Activities
During the year ended December 31, 2020, financing activities provided cash of $130,843, which was comprised of proceeds from loans payable of $89,450, proceeds from advances from third parties of $50,000 and
repayments of convertible notes of $8,607.
During the year ended December 31, 2019, financing activities provided cash of $292,184, including proceeds from convertible notes of $150,005, advances from third parties of $150,000, repayment of a bank overdraft
of $961, and repayments to convertible notes of $6,860.
44
March 31, 2021 and 2020
The following table summarizes our cash flows for the period presented:
|
March 31, 2021
|
March 31, 2020
|
|||||||
|
Net cash (used in) operating activities
|
(176,175
|
) |
(24,231
|
)
|
||||
|
Net cash used in investing activities
|
(3,600
|
)
|
-
|
|
||||
|
Net cash provided by (used in) financing activities
|
413,146
|
(4,607
|
) |
|||||
|
Increase (decrease) in cash
|
233,371
|
(28,838
|
) |
|||||
|
Cash end of period
|
413,915
|
1,521
|
||||||
Cash used in operating activities for three months ended March 31, 2021 was $176,175 as compared to $24,231 of cash used by operating activities in the three months
ended March 31, 2020.
Cash used in operating activities for the three months ended March 31, 2021 was primarily the result of our net loss of $436,026 and the loss attributed to the
non-controlling interest of $42,019 offset by non-cash items including amortization of debt discount and offering costs of $284,817, fixed assets reclassified to advertising expenses of $4,990 and depreciation of $586. Changes in operating
activities in the three months ended March 31, 2021 included a decrease in prepaid expenses of $2,600, a decrease to accounts payable of $38,252, and an increase in related party payables of $47,129 for total cash used in operating activities
of $176,175. Cash used in operating activities for the three months ended March 31, 2020 was primarily the result of our net loss of $230,630 and the loss attributed to the non-controlling interest of $67,146, offset by non-cash items
including amortization of debt discount and issuance costs of $51,151, a gain as a result of a fair value adjustment to certain derivative liabilities of $12,204, non-cash interest of $23,580, a loss from the fair value adjustments to
derivative liabilities of $49,311 and depreciation of $487. Changes in operating activities in the three months ended March 31, 2020 included an increase in prepaid expenses of $1,150, an increase in customer deposits of $65,000, an increase
in accounts payable of $44,387, and an increase in related party payables of $62,359 for total cash used in operating activities of $24,231.
Cash Used In Investing Activities
Cash used by investing activities for three months ended March 31, 2021 and 2020 related to equipment purchases of $3,600 and $Nil respectively.
Cash Provided by Financing Activities
During the three months ended March 31, 2021, financing activities provided cash of $413,146, which was comprised of proceeds from convertible notes $275,000 and
proceeds from share subscriptons receivable of $150,000, offset by repayments of related party debt of $11,854.
During the three months ended March 31, 2020, financing activities used cash of $4,607, including proceeds from related party debt of $4,000 and repayments to
convertible notes of $8,607.
45
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
at March 31, 2021 the Company had cash on hand of $413,195 (December 31, 2020 - $180,544) and an accumulated deficit of $6,459,494 (December 31, 2020 - $6,023,468). 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 has been sufficient to meet our current operational needs to date, however, we do not have on hand sufficient funds to fully implement our planned business
operations. During the three months ended March 31, 2021 this note was amended to include an additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021. We have not been able to generate sufficient cash from
operating activities to fund our ongoing operations. Since our change in control in fiscal 2018, we have raised capital through equity sales, loans and advances and support from our sole officer and director, William Coleman Smith. We plan to
raise the additional proceeds required of $5,000,000 through sales of equity under this Offering. 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 recent COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. To date, the
implementation of services under certain of these agreements have experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also 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. With the recently negotiated financing the Company is currently reopening offices and has commenced the hiring of
additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements. 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.To mitigate impact the Company is currently focusing its efforts on contracts in the wireless and cellular telecommunications segment, as well as the infrastructure components of its existing
contracts to allow for continuity and forward momentum.
Going Concern
The audited consolidated financial statements and interim unaudited condensed consolidated financial statements herein 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 March 31, 2021, the Company had a working capital deficit of $1,849,275 with approximately $413,915 of cash on hand and an accumulated deficit of $6,459,494.
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 has been sufficient to meet our current operational needs to date. During the three
months ended March 31, 2021, this note was amended to include an additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2021 to meet its upgraded
infrastructure requirements. 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.
46
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
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 March 31, 2021 and December 31, 2020, the Company had recorded within Convertible Notes, net of discount, the amount of $2,552,327 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.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
Since inception, we have had no changes in or disagreements with our accountants. Our audited financial statements have been included in this prospectus in reliance upon Pinnacle Accountancy Group of Utah (a dba
of Heaton & Company, PLLC) , as experts in accounting and auditing.
47
We are dependent on the efforts and abilities of senior management. The interruption of services of senior management could have a material adverse effect on our operations, profits and future development if suitable
replacements are not promptly obtained. No assurance can be given that each executive will remain with us. All of our officers and directors will hold office until their resignation or removal.
The following table sets forth the names and ages of our current directors and executive officers as well as the principal offices and positions held by each person. Our Board
of Directors appoints our executive officers. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of shareholders, death, resignation or removal by the Board of Directors. Other than Mr.
Smith, we have no promoters as Rule 405 of Regulation S-K defines that term.
|
NAME
|
AGE
|
POSITION
|
|
William Coleman Smith
|
59
|
Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
|
EXECUTIVE SUMMARIES
William Coleman Smith, Founder, Sole Officer and Director
Coleman Smith has more than 25 years in the telecommunication industry and as a tech entrepreneur. He established two of the largest global cloud based application networks for
the media and education industry, and developed sales channel partnerships to launch a global e-learning network that sold software (SaaS) products through partner resellers worldwide, which he eventually sold in 2005. Because of his global
network, in 2006 he started a digital marketing agency which was the first web-based cloud, ad network that grew to over 6,500 publishing partners, which transformed online display advertising before selling in 2010.
Smith also serves as Chairman of the Board, CEO, and President of ELOC Holdings Corporation since its inception in 2001. ELOC Holdings Corporation is a digital media technology holdings company. Subsidiaries own and
operate proprietary Web TV channels, social media network channels, 100's of hours of documentaries, training and education programs, e-learning technology, digital content distribution technology, file sharing & collaboration technology,
digital video production, and software development.
An experienced industry executive, Mr. Smith held numerous roles in Fortune 500 companies, including Major and National Account Representative for MCI Communications, Senior Clinical Representative
for General Electric, and Senior Business Analyst for Dun and Bradstreet.
A recipient of numerous business awards such as the Ernst & Young Executive of the Year in 1999 and the Ernst & Young Entrepreneur of the Year in 1996, Smith also holds several ExecRank Certifications from
“Understanding SEC Compliance” to “Translating Cybersecurity.” He’s also authored 13 Keep It Simple series books for Entrepreneurs.
In addition to his storied business career, Smith served as a military medic in the United States Navy from 1985 to 1990 and was honorably discharged.
Smith is a graduate of East Tennessee State University with a Bachelor of Science degree in Finance and also has his Master’s Degree in Business Administration from the University of Southern California.
48
During the past ten years, except as noted above, the officers and directors of the Company have not been the subject of the following events:
|
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:
|
49
|
|
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.
|
|
Summary Compensation Table.
The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our CEO (William Coleman Smith) December 31, 2019 to December 31, 2020. Neither Mr. Smith,
nor any other person received compensation from us for the fiscal period year-end December 31, 2019 and the fiscal period year-end December 31, 2020, in excess of $100,000. William Smith’s employment agreement provides for salary payments of
$10,000.00 per month. However, said salaries are currently being accrued and deferred until such time that the Company is in a position, as determined in Mr. Smith’s sole discretion, to begin making any such payments. Our Board of Directors may
adopt an Equity Incentive Plan for us that may result in the granting stock based compensation for our CEO. a
|
Name
and Title |
Year
|
Salary
($) |
Bonus
($) |
Stock
Awards ($) |
Option
Awards ($) |
Non-Equity
Incentive Plan ($) |
Non-qualified
Deferred ($) |
All other
Compensation ($) |
Total
($) |
|
William C. Smith
CEO, CFO, Treasurer,
Secretary
|
2019
|
$240,000
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
$240,000
|
|
William C. Smith
CEO, CFO, Treasurer,
Secretary
|
2020
|
$240,000
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
$240,000
|
Notes to Summary Compensation Table:
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
$120,000 to Mr. Smith.
Director Compensation
Currently, there is no compensation in any form including payments of cash or in equity paid for services rendered as Directors. Additionally, no award of salary or equity has been accrued as payable for any
director for any current or prior service. At this time no other plan for compensation has been developed for either salary or equity compensation. It is contemplated that the registrant would develop and approve a plan as soon as it has
adequate resources to do so. Any future plans would be commensurate with the service provided and not exceed any industry standard for the size and performance of comparable companies in the same industry.
Directors may be compensated for out-of-pocket expenses associated with attending Board of Directors’ meetings.
There is no compensation disclosed on the Director Compensation Table below as the Directors of the Company received no compensation as Directors; instead, any compensation received is shown in the Executive
Compensation Summary Table above for those Officers who happen also to be Directors of ours.
50
Director Compensation Table
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
Fees
|
|
|
|
Value and
|
|
|
|
|
Earned
|
|
|
Non-Equity
|
Nonqualified
|
|
|
|
|
or
|
|
|
Incentive
|
Deferred
|
All
|
|
|
|
Paid in
|
Stock
|
Option
|
Plan
|
Compensation
|
Other
|
|
|
|
Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
William C. Smith
Director
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Code of Ethics
We have not adopted a Code of Ethics and plan to do so in the future.
Conflicts of Interest
The only conflicts that we foresee are that our officers and directors will devote time to projects that do not involve us.
Family Relationships
There are no family relationships between any director or executive officer.
Director Independence
Our board of directors is currently composed of one member, none of whom qualify as independent directors in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence
definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of her family members has engaged in various types of business
dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information
provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to our management and us.
Security Holders Recommendations to Board of Directors
We welcome comments and questions from our shareholders. Shareholders can direct communications to our Investor Relations team. However, while we appreciate all comments from shareholders, we may not be able to
individually respond to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with the SEC so that all shareholders have access to information about us at the same time. All
communications addressed to our Director and Executive Officers will be reviewed by the appropriate Officer unless the communication is clearly frivolous.
Board Committees
We do not have a standing audit committee, an audit committee financial expert, or any committee or person performing a similar function. We do not have any board committees including a nominating, compensation, or
executive committee. We currently have limited operating revenues. Presently, we have no independent directors. Management does not believe that it would be in our best interests at this time to retain independent directors to sit on an audit
committee or any other committee. If we are able to grow our business and increase our operations in the future, then we will likely seek out and retain independent directors and form audit, compensation, and other applicable committees. Further,
we do not have a policy with regard to the consideration of any director candidates recommended by security holders. Our directors perform all functions that would otherwise be performed by committees.
51
Our board is actively involved in our risk oversight function and collectively undertakes risk oversight as part of our monthly management meetings. This review of our risk tolerances includes, but is not limited to, financial, legal and
operational risks and other risks concerning our reputation and ethical standards.
Given our size, we do not have a nominating committee or a diversity policy. Our entire board monitors and assesses the need for and qualifications of additional directors. We may adopt a diversity policy in the
future in connection with our anticipated growth.
Long-Term Incentive Plans
We do not have a Long-Term Incentive Plan that involves ongoing Restricted Stock and Stock Option grants of which are performance based. We have not issued any Stock Option grants.
The following table sets forth certain information at May 14, 2021, with respect to the beneficial ownership of shares of Common Stock and Series A Preferred Stock by (i) each person known to us who owns beneficially
more than 5% of the outstanding shares of Common Stock (based upon reports which have been filed and other information known to us), (ii) each of our Directors, (iii) each of our Executive Officers and (iv) all of our Executive Officers and
Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown. As of May 14, 2021, we had 22,793,357 shares of Common Stock; 5,000,000 shares of Series A Preferred Stock
issued and outstanding; and 1 share of Special 2018 Series B Preferred Stock issued and outstanding to our Directors and Executive Officers as a group.
|
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
|
12,500,000
|
5,000,000
|
1
|
50,000,000 shares of common stock as to Series A
Series B - No Rights of Conversion
|
|
54.8% Common
100% Series Preferred A
100% Series B Preferred
|
||||
|
Total
|
12,500,000
|
5,000,000
|
1
|
|
|
(1) Based on 22,793,357 shares currently issued and outstaning
(2) Each shares of Series A Preferred Stock is convertible into 10 shares of Comon Stock
Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has
or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially
owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for
example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights.
In a private transaction, Mr. William Coleman Smith acquired 2,500,000 shares of the Company’s common stock from the former controlling shareholder, Mr. Terrence Flowers, for total consideration of $15,000 and became
the Company’s controlling shareholder.
On November 19, 2018, the Company issued a total of 5,000,000 shares of Series A Preferred Stock and 1 share of Series B Preferred Stock to William Coleman Smith, our sole director and officer, as partial
consideration in exchange for 51% of the outstanding shares of GZMC.
On April 29, 2021, Mr. Smith was issued 10,000,000 shares of common stock in exchange for an additional 9% ownership of Green Zebra Media Corp.
52
The Series A Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed by us with the
Nevada Secretary of State, including the following:
|
•
|
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.
|
The Special Series B Preferred Stock has a number of rights, privileges and preferences in accordance with the Certificate of Designations, Preferences and Rights of Special Series B Preferred Stock filed by us with
the Nevada Secretary of State, including the following:
|
•
|
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.
|
We are not aware of any arrangements that could result in a change of control. Mr. WIlliam Coleman Smith is currently the controlling shareholder of the Company and upon conversion of his Series A Preferred Shares
would remain the controlling shareholder of the Company.
Coleman Smith and ELOC Holdings Corp.
On July 9, 2018, Mr. Coleman Smith was appointed to the Board of Directors of the Company and as President, Secretary and Treasurer of the Company. Concurrently, in a private transaction, Mr. Smith acquired 2,500,000
shares of the Company’s common stock from Mr. Flowers for total consideration of $15,000 and became the Company’s controlling shareholder. 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 November 19, 2018, the Company issued a total of 5,000,000 shares of Series A Preferred Stock and 1 share of Series B Preferred Stock to William Coleman Smith, our sole director and officer, as partial
consideration in exchange for 51% of the outstanding shares of Green Zebra Media Corp (GZMC).
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 to the Company with interest at 1.5% per month to pay various expenses.
53
During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp also advanced funds 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 and the Company recorded
associated interest expenses of $22,629 for the fiscal year ended December 31, 2020.
The following amounts were included in related party payables on our Balance Sheets:
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
||
|
Coleman Smith, President
|
|
$
|
-
|
|
|
$
|
675,180
|
|
|
ELOC Holdings Corp.
|
|
|
-
|
|
|
|
230,232
|
|
|
Terrence Flowers
|
110
|
11,110
|
||||||
|
|
|
$
|
110
|
|
|
$
|
916,522
|
|
The following amounts were included in debt to related party on our Balance Sheets:
|
Balance at December 31, 2019
|
|
$
|
-
|
|
|
Payable to related parties – Smith prior to consolidated promissory note
|
|
|
796,987
|
|
|
Payable to related parties –ELOC prior to consolidated promissory note
|
397,963
|
|||
|
|
1,194,950
|
|||
|
Interest expenses during the period ended December 31, 2020
|
22,629
|
|||
|
Balance at December 31, 2020, consolidated promissory note reflected as Debt, related party.
|
$
|
1,217,579
|
Other than the foregoing, none of the following persons has any direct or indirect material interest in any transaction to which we were or are a party since the beginning of our last fiscal year, or in any proposed
transaction to which we propose to be a party:
(A) any of our director(s) or executive officer(s);
(B) any nominee for election as one of our directors;
(C) any person who is known by us to beneficially own, directly or indirectly, shares carrying more than 5% of the voting rights attached to our Common Stock; or
(D) any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons named in paragraph (A), (B) or (C) above.
54
RECENT SALES/ISSUANCE OF UNREGISTERED SECURITIES.
Between January 1, 2019 and December 31, 2020, and through May 14, 2021, we have issued the following securities.
|
(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.
|
All of the shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended, as it was a transaction by an issuer not involving a public offering; all of the shares contain a
restrictive legend on the share certificate stating that the securities have not been registered under the Act and setting forth, or referring to the restrictions on transferability and sale of the securities.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
55
GZ6G TECHNOLOGIES CORP.
TABLE OF CONTENTS FOR AUDITED FINANCIAL STATEMENTS
December 31, 2020 and 2019
|
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
|
|
|
|
Consolidated Balance Sheets
|
F-2
|
|
|
|
|
Consolidated Statements of Operations
|
F-3
|
|
|
|
|
Consolidated Statement of Changes in Stockholders' Deficit
|
F-4
|
|
|
|
|
Consolidated Statements of Cash Flows
|
F-5
|
|
|
|
|
Notes to Consolidated Financial Statements
|
F-6 to F-22
|
56
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, 2020 and 2019, 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, 2020 and 2019, 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 minimal operations which raise
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 consolidated 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 consolidated 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 consolidated 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 consolidated 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 a 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.
/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
May 14, 2021
F-1
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED BALANCE SHEETS
|
|
December 31,
2020
|
December 31, 2019
|
||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash
|
$
|
180,544
|
$
|
30,359
|
||||
|
Accounts receivable, net
|
2,000
|
2,000
|
||||||
|
Prepaid expenses
|
11,267
|
21,667
|
||||||
|
Subscription receivable
|
150,000
|
-
|
||||||
|
Other current assets
|
5,513
|
12,911
|
||||||
|
Total current assets
|
349,324
|
66,937
|
||||||
|
|
||||||||
|
Property and equipment, net
|
8,602
|
5,560
|
||||||
|
TOTAL ASSETS
|
$
|
357,926
|
$
|
72,497
|
||||
|
|
||||||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$
|
161,333
|
$
|
94,951
|
||||
|
Related party payables
|
110
|
916,522
|
||||||
|
Advances payable
|
-
|
150,000
|
||||||
|
Deferred revenue
|
287,000
|
90,000
|
||||||
|
Debt, current portion
|
3,768
|
3,768
|
||||||
|
Debt, related party
|
1,217,579
|
-
|
||||||
|
Convertible notes, net of debt discount
|
52,740
|
106,777
|
||||||
|
Derivative liability
|
-
|
154,847
|
||||||
|
Total current liabilities
|
1,722,530
|
1,516,865
|
||||||
|
|
||||||||
|
Debt, net of current portion
|
89,450
|
-
|
||||||
|
Total liabilities
|
1,811,980
|
1,516,865
|
||||||
|
|
||||||||
|
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, 12,793,357 and 4,799,112 shares issued and outstanding as at December 31, 2020 and December 31, 2019, respectively
|
12,793
|
4,799
|
||||||
|
Additional paid in capital
|
5,180,816
|
273,656
|
||||||
|
Accumulated deficit
|
(6,023,468
|
)
|
(1,273,524
|
)
|
||||
|
Total GZ6G Technologies Corp shareholders’ deficit
|
(809,859
|
)
|
(975,069
|
)
|
||||
|
Non-controlling interest
|
(644,195
|
)
|
(469,299
|
)
|
||||
|
Total stockholders’ deficit
|
(1,454,054
|
)
|
(1,444,368
|
)
|
||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
357,926
|
$
|
72,497
|
||||
The accompanying notes are an integral part of these audited consolidated financial statements
F-2
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Year Ended
December 31,
|
||||||||
|
|
2020
|
2019
|
||||||
|
NET REVENUES
|
$
|
8,887
|
$
|
11,204
|
||||
|
|
||||||||
|
OPERATING EXPENSES
|
||||||||
|
Cost of revenue
|
10,400
|
10,400
|
||||||
|
Depreciation
|
1,948
|
3,269
|
||||||
|
General and administrative
|
232,052
|
351,170
|
||||||
|
General and administrative, related parties
|
240,000
|
240,000
|
||||||
|
Professional fees
|
59,108
|
53,490
|
||||||
|
Total operating expenses
|
543,508
|
658,329
|
||||||
|
|
||||||||
|
(Loss) from operations
|
(534,621
|
)
|
(647,125
|
)
|
||||
|
|
||||||||
|
Other income (expense)
|
||||||||
|
Interest expense
|
(3,996,466
|
)
|
(140,657
|
)
|
||||
|
Loss on note conversion
|
(364,909
|
)
|
-
|
|||||
|
Change in fair value of derivative liability
|
(28,844
|
)
|
12,204
|
|||||
|
Total other income (expense)
|
(4,390,219
|
)
|
(128,453
|
)
|
||||
|
Net income (loss)
|
$
|
(4,924,840
|
)
|
$
|
(775,578
|
)
|
||
|
Less: net income (loss) attributable to Non-controlling interest
|
(174,896
|
)
|
(161,672
|
)
|
||||
|
Net income (loss) attributable to GZ6G Technologies Corp.
|
$
|
(4,749,944
|
)
|
$
|
(613,906
|
)
|
||
|
|
||||||||
|
Basic and diluted net loss per common share
|
$
|
(0.84
|
)
|
$
|
(0.13
|
)
|
||
|
|
||||||||
|
Weighted average shares, basic and diluted
|
5,670,970
|
4,734,003
|
||||||
The accompanying notes are an integral part of these audited consolidated financial statements
F-3
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, 2018
|
5,000,000
|
$
|
20,000
|
1
|
$
|
-
|
4,699,111
|
$
|
4,699
|
$
|
157,222
|
$
|
(659,618
|
)
|
$
|
(307,627
|
)
|
$
|
(785,324
|
)
|
||||||||||||||||||
|
Derivative liability reclassed upon debt paid
|
-
|
-
|
-
|
-
|
-
|
-
|
6,534
|
-
|
-
|
6,534
|
||||||||||||||||||||||||||||
|
Stock based Compensation
|
-
|
-
|
-
|
-
|
100,000
|
100
|
109,900
|
-
|
-
|
110,000
|
||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(613,906
|
)
|
(161,672
|
)
|
(775,578
|
)
|
|||||||||||||||||||||||||
|
Balance, December 31, 2019
|
5,000,000
|
$
|
20,000
|
1
|
$
|
-
|
4,799,111
|
$
|
4,799
|
$
|
273,656
|
$
|
(1,273,524
|
)
|
$
|
(469,299
|
)
|
$
|
(1,444,368
|
)
|
||||||||||||||||||
|
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
|
$
|
(6,023,468
|
)
|
$
|
(644,195
|
)
|
$
|
(1,454,054
|
)
|
||||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements
F-4
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year Ended
December 31,
|
|||||||
|
|
2020
|
2019
|
||||||
|
Cash flows from operating activities:
|
||||||||
|
Loss attributable to GZ6G Technologies Corp
|
$
|
(4,749,944
|
)
|
$
|
(613,906
|
)
|
||
|
Non-controlling interest
|
(174,896
|
)
|
(161,672
|
)
|
||||
|
Loss
|
(4,924,840
|
)
|
(775,578
|
)
|
||||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Amortization of debt discount and issuance cost
|
3,953,295
|
113,638
|
||||||
|
Non-cash interest
|
-
|
23,580
|
||||||
|
Fair value adjustments to derivative liability
|
28,844
|
(12,204
|
)
|
|||||
|
Loss upon notes conversion
|
364,909
|
-
|
||||||
|
Depreciation
|
1,948
|
3,269
|
||||||
|
Stock based compensation
|
-
|
110,000
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
(Increase) accounts receivable
|
-
|
(3
|
)
|
|||||
|
Decrease prepaid expenses
|
10,400
|
10,400
|
||||||
|
(Increase) decrease in other current assets
|
7,398
|
(12,911
|
)
|
|||||
|
Increase (decrease) in accounts payable and accrued expenses
|
84,663
|
(566
|
)
|
|||||
|
Increase in related party payables
|
300,715
|
219,365
|
||||||
|
Increase in customer deposits
|
197,000
|
65,000
|
||||||
|
Net cash provided by (used in) operating activities
|
24,332
|
(256,010
|
)
|
|||||
|
|
||||||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Purchase equipment
|
(4,990
|
)
|
(5,842
|
)
|
||||
|
Net cash used in investing activities
|
(4,990
|
)
|
(5,842
|
)
|
||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Bank overdraft
|
-
|
(961
|
)
|
|||||
|
Advances
|
50,000
|
150,000
|
||||||
|
Proceeds from loan payable
|
89,450
|
-
|
||||||
|
Proceeds from convertible notes
|
150,005
|
|||||||
|
Repayments to convertible notes
|
(8,607
|
)
|
(6,860
|
)
|
||||
|
Net cash provided by financing activities
|
130,843
|
292,184
|
||||||
|
Net increase in cash
|
150,185
|
30,332
|
||||||
|
Cash-beginning of period
|
30,359
|
27
|
||||||
|
Cash-end of period
|
$
|
180,544
|
$
|
30,359
|
||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES
|
||||||||
|
Interest paid
|
$
|
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
|
$
|
1,204,000
|
$
|
-
|
||||
|
Conversion of debt into common stock
|
$
|
310,558
|
$
|
-
|
||||
|
Stock issued under subscription receivable
|
$
|
150,000
|
$
|
-
|
||||
The accompanying notes are an integral part of these audited consolidated financial statements
F-5
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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.
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, 2020, the Company had a working capital deficit of $1,373,206 with approximately $180,000 of cash on hand and an accumulated deficit of $6,023,468. 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 has been sufficient to meet our current operational needs to date. Subsequent to the fiscal year end, this note was amended to include an additional
$1,000,000 in funding, payable over 90 business days commencing April 16, 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2021 to meet its upgraded infrastructure requirements. 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.
Covid-19 Pandemic: The recent COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. To date, the
implementation of services under certain of these agreements have experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also 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. With the recently negotiated financing the Company is currently reopening offices and has commenced the hiring of
additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements. 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.To mitigate impact the Company is currently focusing its efforts on contracts in the wireless and cellular telecommunications segment, as well as the infrastructure components of its existing
contracts to allow for continuity and forward momentum.
F-6
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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 51% controlled subsidiary, Green Zebra Media Corp. (“GZMC’). as of December 31, 2020. 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.
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.
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.
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.
F-7
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition (continued)
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.
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.
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.
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.
F-8
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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, 2020, and 2019, the Company had recorded within Convertible Notes, net of discount, the amount of $164,104 and $nil for the value of the stock settled debt for certain convertible notes
(see Note 6).
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.
The following table provides a summary of the fair value of the Company’s derivative liabilities as of December 31, 2020 and December 31, 2019:
|
|
Fair value measurements on a recurring basis
|
|||||||||||
|
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
|
As of December 31, 2020:
|
||||||||||||
|
Liabilities
|
||||||||||||
|
Derivative liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
|
|
||||||||||||
|
As of December 31, 2019:
|
||||||||||||
|
Liabilities
|
||||||||||||
|
Derivative liabilities
|
$
|
-
|
$
|
-
|
$
|
154,847
|
||||||
F-9
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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,
2020 and December 31, 2019 excludes potentially dilutive securities of underlying share purchase warrants, convertible notes, stock options 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, 2020
|
December 31, 2019
|
||||||
|
Convertible Notes
|
256,410
|
403,450
|
||||||
|
Series A Preferred shares (convertible to common at a ratio of 10 common for each 1 preferred)
|
50,000,000
|
50,000,000
|
||||||
|
Total
|
50,256,410
|
50,403,450
|
||||||
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.
F-10
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 3: PROPERTY AND EQUIPMENT
Property and equipment, net consists of the following:
|
December 31, 2020
|
December 31, 2019
|
|||||||
|
Office equipment
|
$
|
23,618
|
$
|
18,628
|
||||
|
Less: accumulated depreciation and amortization
|
(15,016
|
)
|
(13,068
|
)
|
||||
|
Total property and equipment, net
|
$
|
8,602
|
$
|
5,560
|
||||
Depreciation expense amounted to $1,948 and $3,269 for the years ended December 31, 2020 and 2019, respectively.
NOTE 4: PREPAID EXPENSES
Prepaid expenses at December 31, 2020 and December 31, 2019 consist of the following:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
Reseller agreement
|
$
|
11,267
|
$
|
21,667
|
||||
|
|
$
|
11,267
|
$
|
21,667
|
||||
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 has a term of three years. 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 included in accounts payable as of December 31, 2020 and December 31,
2019. 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, 2020 and December 31, 2019:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
Security deposits
|
$
|
4,255
|
$
|
11,653
|
||||
|
Other deposits and receivables
|
1,258
|
1,258
|
||||||
|
$
|
5,513
|
$
|
12,911
|
|||||
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.
F-11
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 6: DEBT (continued)
Secured Revolving Convertible Promissory Note and Securities Purchase Agreement (continued)
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.
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 period 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).
F-12
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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, 2020
|
December 31, 2019
|
|||||||
|
Principal issued
|
$
|
162,589
|
$
|
169,450
|
||||
|
Repayment
|
(8,607
|
)
|
(6,861
|
)
|
||||
|
Accrued interest payable
|
4,270
|
-
|
||||||
|
Gain on extinguishment of note
|
(11,252
|
)
|
-
|
|||||
|
Settled with shares
|
(147,000
|
)
|
-
|
|||||
|
Amortization of debt discount
|
-
|
(55,812
|
)
|
|||||
|
Total:
|
$
|
-
|
$
|
106,777
|
||||
The interest expenses of these convertible notes are as follows:
|
Year ended December 31,
|
||||||||
|
|
2020
|
2019
|
||||||
|
Interest expense on the convertible notes
|
$
|
5,462
|
$
|
3,341
|
||||
|
Financing cost
|
-
|
23,580
|
||||||
|
Amortization of debt discount
|
804,005
|
113,637
|
||||||
|
Total:
|
$
|
809,467
|
$
|
140,558
|
||||
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, December 31, 2019 and at the commitment date, the fair value of the debt discount associated with the convertible notes s is
summarized as follows:
|
Balance at December 31, 2018
|
|
$
|
-
|
|
|
Derivative associated with convertible notes
|
|
|
173,585
|
|
|
Derivative liability reclassified to additional paid in capital upon debt paid
|
(6,534)
|
|||
|
(Gain) on change in fair value during the period
|
(12,204)
|
|||
|
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
|
$
|
-
|
||
F-13
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 6: DEBT (continued)
Secured Revolving Convertible Promissory Note and Securities Purchase Agreement (continued)
The loss on conversion as follow:
|
Principal
|
|
$
|
147,000
|
|
|
Stock-settled liability
|
|
|
748,192
|
|
|
895,192
|
||||
|
3,500,001 shares issued per notice of conversion
|
1,351,000
|
|||
|
Loss on conversion
|
$
|
455,808
|
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 Twelve (12) 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 will accrue 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.
During the period ended December 31, 2020, the Company accrued interest expenses of $1,022 in respect of this loan.
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.
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.
During the period ended December 31, 2020, the Company accrued interest expenses of $288 in respect of this loan.
F-14
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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, 2018
|
$
|
-
|
$
|
-
|
||||
|
Proceeds received
|
-
|
150,000
|
||||||
|
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,
|
||||||||
|
|
2020
|
2019
|
||||||
|
Interest expense on the convertible notes
|
$
|
13,558
|
$
|
-
|
||||
|
Amortization of debt discount
|
3,146,551
|
-
|
||||||
|
Total:
|
$
|
3,160,609
|
$
|
-
|
||||
F-15
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 6: DEBT (continued)
Advances Payable allocated to Convertible Note (continued)
The loss on conversion as follow:
|
Principal
|
|
$
|
163,558
|
|
|
Stock-settled liability
|
|
|
3,146,551
|
|
|
3,310,109
|
||||
|
3,894,245 shares issued per notice of conversion
|
3,403,570
|
|||
|
Loss on conversion
|
$
|
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 has agreed to provide a loan in the amount of up to $450,000 to the Company in $25,000
tranches, deposited weekly, which shall be memorialized by promissory notes in increments of $100,000. Each amount deposited shall have 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.
During the fiscal year ended December 31, 2020, the Company received two weekly tranche deposits for an aggregate of $50,000. The Company recorded $164,104 as the liability on stock settled debt associated with the
tranches which amount is amortized over the terms of the notes.
The carrying value of tranches is as follows:
|
December 31, 2020
|
December 31, 2019
|
|||||||
|
Principal issued
|
$
|
50,000
|
$
|
-
|
||||
|
Stock-settled liability
|
164,104
|
-
|
||||||
|
214,104
|
-
|
|||||||
|
Amortization of debt discount
|
(161,364
|
)
|
-
|
|||||
|
$
|
52,740
|
$
|
-
|
|||||
The interest expenses of traches are as follows:
|
Year ended December 31,
|
||||||||
|
|
2020
|
2019
|
||||||
|
Interest expense on notes
|
$
|
66
|
$
|
-
|
||||
|
Amortization of debt discount
|
2,740
|
-
|
||||||
|
Total:
|
$
|
2,806
|
$
|
-
|
||||
The accrued interest payable is as follows:
|
Balance, December 31, 2019
|
|
$
|
-
|
|
|
Interest expense on the convertible notes
|
|
|
66
|
|
|
Balance, December 31, 2020
|
|
$
|
66
|
|
F-16
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 6: DEBT (continued)
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, 2020 and 2019, 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.
This amount was retired in full subsequent to year end.
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. The following table provides balances of customer receivables and contract liabilities as of December 31, 2020 and December 31, 2019:
|
December 31, 2020
|
December 31,
2019
|
|||||||
|
Customer receivables (1)
|
$
|
-
|
$
|
-
|
||||
|
Contract liabilities (Customer deposits) (2), (a), (b), (c)
|
$
|
287,000
|
$
|
90,000
|
||||
|
(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 $155,000 and $90,000, respectively as at December 31,
2020 and December 31, 2019), 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, 2020 and December 31, 2019 we have not yet recognized any revenue from customer deposits on hand. The Company and customer
are currently in negotiations to determine the best way to proceed with the delayed implementation of these contracts.
|
Performance Obligations
As of December 31, 2020, 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.
F-17
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES (continued)
(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, 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 repaid.
(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 10 – Other Events. 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. The Company is currently completing the terms of the
purchase order and expects to reflect this amount as revenue in fiscal 2021.
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, 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 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.
During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp also advanced funds 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 and the Company recorded
associated interest expenses of $22,629 for the fiscal year ended December 31, 2020.
F-18
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 8: RELATED PARTY TRANSACTIONS (continued)
The following amounts were included in related party payables on our Balance Sheets:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
Coleman Smith, President
|
$
|
-
|
$
|
675,180
|
||||
|
ELOC Holdings Corp.
|
-
|
230,232
|
||||||
|
Terrence Flowers
|
110
|
11,110
|
||||||
|
|
$
|
110
|
$
|
916,522
|
||||
The following amounts were included in debt to related party on our Balance Sheets:
|
Balance at December 31, 2019
|
|
$
|
-
|
|
|
Payable to related parties – Smith prior to consolidated promissory note
|
|
|
796,987
|
|
|
Payable to related parties –ELOC prior to consolidated promissory note
|
397,963
|
|||
|
|
1,194,950
|
|||
|
Interest expenses during the period ended December 31, 2020
|
22,629
|
|||
|
Balance at December 31, 2020, consolidated promissory note reflected as Debt, related party.
|
$
|
1,217,579
|
NOTE 9: OTHER EVENTS
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 commencing in 2021 at an annual rate of $94,000 per annum for a period of 5 years. The parties will
review the initial payment due in 2021 based on the utilization of the venue location due to COVID-19 restrictions. GZMC is anticipating the start date for this project to be Summer 2021 based on acquiring the various bonds and licenses as may
be required and completion of the required services and equipment under the terms of the agreement.
NOTE 10: COMMITMENTS
(1) The Company entered into an agreement with Industrious IRV (“Industrious”), 333 Michelson Drive, Suite 300, Irvine CA 92612 to
license an office for operations of the Company commencing August 1, 2019 and terminating on July 31, 2020 at a monthly rental rate of $1,337 per month. Industrious provides rental offices to various clients at the location. The Company, under
the terms of the lease agreement, agreed to pay for any office services offered by Industrious and used by the Company. Due to the COVID-19 epidemic, the Company was unable to utilize the office space, and on June 2, 2020, Industrious credited
certain rental obligations, applied the security deposit against past due rent and wrote off the remaining balance.
(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.
F-19
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 10: COMMITMENTS (continued)
(3) On September 16, 2019, the Company’s subsidiary, Green Zebra Media Corp. licensed a further office from Industrious for its
operations at the monthly rate of $3,785 per month. The license is cancellable at any time after November 30, 2019 on 60 days’ notice. Due to the COVID-19 epidemic, the Company was unable to utilize the office space provided by Industrious, and
on June 2, 2020, Industrious credited certain rental obligations, applied the security deposit against past due rent and wrote off the balance owing.
NOTE 11: CAPITAL STOCK
On October 4, 2018, the Company filed amended and restated articles of incorporation to increase the number of shares of Common Stock to 1,100,000,000 with a par value of $0.001 and to designate 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.
The Board of Directors approved 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 par value of GZ6G common shares remained unchanged at
$0.001 per share following the reverse share split. Concurrent with the reverse share split the Company determined to decrease the authorized number of shares of common stock from 1,100,000,000 to 500,000,000.
The number of authorized, issued and outstanding preferred stock was not affected by the reverse split.
During the year ended December 31, 2019, the Company issued 100,000 shares as a commitment fee totaling $110,000 pursuant to a Securities Purchase Agreement with Diamondrock LLC. The Company valued the issuance at
the closing price of the Company’s stock of $1.10 per share as reported on OTCmarkets on date of grant.
As described more fully above in Note 6, during the year ended December 31, 2020, the Company issued 7,394,246 shares of common stock in full satisfaction of certain convertible notes issued.
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, 2020, and December 31, 2019, there were 12,793,357, and 4,799,111 shares of common stock issued and outstanding.
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 November 19, 2018, the Company issued a total of 5,000,000 shares of Series A Preferred Stock to Coleman Smith, our sole director and officer, as partial consideration in exchange for 51% of the outstanding
shares of GZMC.
On December 31, 2020 and December 31, 2019, there are a total of 5,000,000 shares of Series A Preferred Stock issued and outstanding.
F-20
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 11: CAPITAL STOCK (continued)
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, 2020 and December 31, 2019, there is 1 share of Series B Preferred stock issued and outstanding.
NOTE 12: 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, 2020 and December 31, 2019:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
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, 2020 and 2019:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
Expected benefit at federal statutory rate
|
$
|
997,500
|
34,000
|
|||||
|
Change in valuation allowance
|
(997,500
|
)
|
(34,000
|
)
|
||||
|
|
$
|
-
|
$
|
-
|
||||
The Company had deferred income tax assets as of December 31, 2020 and 2019 as follows:
|
|
December 31, 2020
|
December 31, 2019
|
||||||
|
Loss carryforwards
|
$
|
1,265,000
|
$
|
267,500
|
||||
|
Less - valuation allowance
|
(1,265,000
|
)
|
(267,500
|
)
|
||||
|
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.
F-21
GZ6G TECHNOLOGIES CORP.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 13: SUBSEQUENT EVENTS
Subsequent to December 31, 2020 the Company entered into an amendment to a Loan Treaty Agreement originally executed on December 21, 2020 (ref: Note 6). 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.
Subsequent to December 31, 2020 the Company and its sole officer and director, William Coleman Smith, 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 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.
F-22
GZ6G TECHNOLOGIES CORP.
TABLE OF CONTENTS FOR UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2021 and 2020
|
|
Page
|
|
Condensed Consolidated Balance Sheets
|
F-24
|
|
|
|
|
Condensed Consolidated Statements of Operations
|
F-25
|
|
|
|
|
Condensed Consolidated Statement of Changes in Stockholders' Deficit
|
F-26
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows
|
F-27
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements
|
F-28 to F-39
|
F-23
GZ6G TECHNOLOGIES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
March 31,
2021
|
December 31, 2020
|
||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash
|
$
|
413,915
|
$
|
180,544
|
||||
|
Accounts receivable, net
|
2,000
|
2,000
|
||||||
|
Prepaid expenses
|
8,667
|
11,267
|
||||||
|
Subscription receivable
|
-
|
150,000
|
||||||
|
Other current assets
|
5,513
|
5,513
|
||||||
|
Total current assets
|
430,095
|
349,324
|
||||||
|
|
||||||||
|
Property and equipment, net
|
6,626
|
8,602
|
||||||
|
TOTAL ASSETS
|
$
|
436,721
|
$
|
357,926
|
||||
|
|
||||||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$
|
123,081
|
$
|
161,333
|
||||
|
Related party payables
|
47,239
|
110
|
||||||
|
Deferred revenue
|
287,000
|
287,000
|
||||||
|
Short term loan
|
3,768
|
3,768
|
||||||
|
Current portion of long term debt
|
28,077
|
-
|
||||||
|
Debt, related party
|
1,205,725
|
1,217,579
|
||||||
|
Convertible notes, net of debt discount
|
612,557
|
52,740
|
||||||
|
Total current liabilities
|
2,307,447
|
1,722,530
|
||||||
|
|
||||||||
|
Long term debt, net of current portion
|
61,373
|
89,450
|
||||||
|
Total liabilities
|
2,368,820
|
1,811,980
|
||||||
|
|
||||||||
|
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, 12,793,357 shares issued and outstanding
|
12,793
|
12,793
|
||||||
|
Additional paid-in capital
|
5,180,816
|
5,180,816
|
||||||
|
Accumulated deficit
|
(6,459,494
|
)
|
(6,023,468
|
)
|
||||
|
Total GZ6G Technologies Corp stockholders’ deficit
|
(1,245,885
|
)
|
(809,859
|
)
|
||||
|
Non-controlling interest
|
(686,214
|
)
|
(644,195
|
)
|
||||
|
Total stockholders’ deficit
|
(1,932,099
|
)
|
(1,454,054
|
)
|
||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
436,721
|
$
|
357,926
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-24
GZ6G TECHNOLOGIES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Months Ended
March 31,
|
||||||||
|
|
2021
|
2020
|
||||||
|
NET REVENUES
|
$
|
-
|
$
|
8,746
|
||||
|
|
||||||||
|
OPERATING EXPENSES
|
||||||||
|
Cost of revenue
|
-
|
64,994
|
||||||
|
Research and development expenses
|
2,600
|
2,600
|
||||||
|
Depreciation
|
586
|
487
|
||||||
|
General and administrative
|
68,624
|
68,607
|
||||||
|
General and administrative, related parties
|
60,000
|
60,000
|
||||||
|
Professional fees
|
42,156
|
5,389
|
||||||
|
Total operating expenses
|
173,966
|
202,077
|
||||||
|
|
||||||||
|
(Loss) from operations
|
(173,966
|
)
|
(193,331
|
)
|
||||
|
|
||||||||
|
Other income (expense)
|
||||||||
|
Interest expense
|
(304,079
|
)
|
(55,134
|
)
|
||||
|
Change in fair value of derivative liability
|
-
|
(49,311
|
)
|
|||||
|
Total other income (expense)
|
(304,079
|
)
|
(104,445
|
)
|
||||
|
Net income (loss)
|
$
|
(478,045
|
)
|
$
|
(297,776
|
)
|
||
|
Less: net income (loss) attributable to Non-controlling interest
|
(42,019
|
)
|
(67,146
|
)
|
||||
|
Net income (loss) attributable to GZ6G Technologies Corp.
|
$
|
(436,026
|
)
|
$
|
(230,630
|
)
|
||
|
|
||||||||
|
Basic and diluted net loss per common share
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
||
|
|
||||||||
|
Weighted average shares, basic and diluted
|
12,793,357
|
4,799,111
|
||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-25
GZ6G TECHNOLOGIES CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
(Unaudited)
|
|
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
|
$
|
(1,273,524
|
)
|
$
|
(469,299
|
)
|
$
|
(1,444,368)
|
||||||||||||||||||||||||||||||
|
Derivative liability reclassified upon debt paid
|
-
|
-
|
-
|
-
|
-
|
-
|
10,584
|
-
|
-
|
10,584
|
|||||||||||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(230,630
|
)
|
(67,146
|
)
|
(297,776)
|
|||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2020
|
5,000,000
|
$
|
20,000
|
1
|
$
|
-
|
4,799,111
|
$
|
4,799
|
$
|
284,240
|
$
|
(1,504,154
|
)
|
$
|
(536,445
|
)
|
$
|
(1,731,560)
|
||||||||||||||||||||||||||||||
|
Balance December 31, 2020
|
5,000,000
|
20,000
|
1
|
-
|
12,793,357
|
12,793
|
5,180,816
|
(6,023,468)
|
(644,195)
|
(1,454,054)
|
|||||||||||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(436,026
|
)
|
(42,019
|
)
|
(478,045)
|
|||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2021
|
5,000,000
|
$
|
20,000
|
1
|
$
|
-
|
12,793,357
|
$
|
12,793
|
$
|
5,180,816
|
$
|
(6,459,494
|
)
|
$
|
(686,214
|
)
|
$
|
(1,932,099)
|
||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-26
GZ6G TECHNOLOGIES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
March 31,
|
|||||||
|
|
2021
|
2020
|
||||||
|
Cash flows from operating activities:
|
||||||||
|
Loss attributable to GZ6G Technologies Corp
|
$
|
(436,026
|
)
|
$
|
(230,630
|
)
|
||
|
Non-controlling interest
|
(42,019
|
)
|
(67,146
|
)
|
||||
|
Net loss
|
(478,045
|
)
|
(297,776
|
)
|
||||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Amortization of debt discount and issuance cost
|
284,817
|
53,151
|
||||||
|
Fair value adjustments to derivative liability
|
-
|
49,311
|
||||||
|
Fixed assets reclassify to advertising expense
|
4,990
|
-
|
||||||
|
Depreciation and impairment
|
586
|
487
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
(Increase) decrease in prepaid expenses
|
2,600
|
(1,150
|
)
|
|||||
|
Increase (decrease) in accounts payable and accrued expenses
|
(38,252
|
)
|
44,387
|
|||||
|
Increase in related party payables
|
47,129
|
62,359
|
||||||
|
Increase in customer deposits
|
-
|
65,000
|
||||||
|
Net cash provided by (used in) operating activities
|
(176,175
|
)
|
(24,231
|
)
|
||||
|
|
||||||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Purchase of equipment
|
(3,600
|
)
|
-
|
|||||
|
Net cash used in investing activities
|
(3,600
|
)
|
-
|
|||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds from debt, related party
|
-
|
4,000
|
||||||
|
Repayment of debt, related party
|
(11,854
|
)
|
||||||
|
Proceeds from convertible notes
|
275,000
|
-
|
||||||
|
Proceeds from subscription receivable
|
150,000
|
-
|
||||||
|
Repayment of convertible notes
|
-
|
(8,607
|
)
|
|||||
|
Net cash provided by financing activities
|
413,146
|
(4,607
|
)
|
|||||
|
Net increase (decrease) in cash
|
233,371
|
(28,838
|
)
|
|||||
|
Cash-beginning of period
|
180,544
|
30,359
|
||||||
|
Cash-end of period
|
$
|
413,915
|
$
|
1,521
|
||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES
|
||||||||
|
Interest paid
|
$
|
-
|
$
|
1,393
|
||||
|
Income taxes paid
|
$
|
-
|
$
|
-
|
||||
|
|
||||||||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
|
Stock-settled debt liability
|
$
|
2,552,327
|
$
|
-
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-27
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 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.
Going Concern
These unaudited 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 March 31, 2021, the Company had a working capital deficit of $1,849,275 with approximately $413,915 of cash on hand and an accumulated deficit of $6,459,494. 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 has been sufficient to meet our current operational needs to date. During the three months ended March 31, 2021, this note was amended to include an
additional $1,000,000 in funding, payable over 90 business days commencing April 16, 2021. The Company anticipates a need for a further $5,000,000 in fiscal 2021 to meet its upgraded infrastructure requirements. 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.
Covid-19 Pandemic: The recent COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. To date, the
implementation of services under certain of these agreements have experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also 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. With the recently negotiated financing the Company is currently reopening offices and has commenced the hiring of
additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements. 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.To mitigate impact the Company is currently focusing its efforts on contracts in the wireless and cellular telecommunications segment, as well as the infrastructure components of its existing
contracts to allow for continuity and forward momentum.
F-28
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed 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 condensed consolidated financial statements include the accounts of GZ6G Technology Corp. and its 51% controlled subsidiary, Green Zebra Media Corp. (“GZMC’). as of March 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.
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.
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.
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.
Reclassifications
Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.
F-29
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition (continued)
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.
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.
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.
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.
F-30
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 March 31, 2021 and December 31, 2020, the Company had recorded within Convertible Notes, net of discount, the amount of $2,552,327 and $164,104 for the value of the stock settled debt for
certain convertible notes (see Note 6).
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.
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.
F-31
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Net Income (Loss) Per Share (cont’d)
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 three months ended
March 31, 2021 and 2020 excludes potentially dilutive securities of underlying share purchase warrants, convertible notes, stock options 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:
|
|
March 31, 2021
|
March 31, 2020
|
||||||
|
Convertible Notes
|
1,666,667
|
927,600
|
||||||
|
Series A Preferred shares (convertible to common at a ratio of 10 common for each 1 preferred)
|
50,000,000
|
50,000,000
|
||||||
|
Total
|
51,666,667
|
50,927,600
|
||||||
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:
|
March 31, 2021
|
December 31,2020
|
|||||||
|
Office equipment
|
$
|
22,228
|
$
|
23,618
|
||||
|
Less: accumulated depreciation and amortization
|
(15,602
|
)
|
(15,016
|
)
|
||||
|
Total property and equipment, net
|
$
|
6,626
|
$
|
8,602
|
||||
Depreciation expense amounted to $586 and $1,948 for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively. During the three months ended March 31, 2021, the Company
reclassified certain assets in the amount of $4,990 into advertising expense.
NOTE 4: PREPAID EXPENSES
Prepaid expenses at March 31, 2021 and December 31, 2020 consist of the following:
|
|
March 31, 2021
|
December 31, 2020
|
||||||
|
Reseller agreement
|
$
|
8,667
|
$
|
11,267
|
||||
|
|
$
|
8,667
|
$
|
11,267
|
||||
F-32
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 4: PREPAID EXPENSES (Continued)
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 has a term of three years. 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 included in accounts payable as of March 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 March 31, 2021 and December 31, 2020:
|
|
March 31, 2021
|
December 31, 2020
|
||||||
|
Security deposits
|
$
|
4,255
|
$
|
4,255
|
||||
|
Other deposits and receivables
|
1,258
|
1,258
|
||||||
|
$
|
5,513
|
$
|
5,513
|
|||||
NOTE 6: DEBT
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 Twelve (12) 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. The Company has reclassified anticipated principal repayments for the twelve months starting May 19, 2021 from long term debt to current liabilities in
the current period.
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 March 31, 2021, the Company had accrued interest expenses of $1,428 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.
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,
|
F-33
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 6: DEBT (Continued)
PPP funds (continued)
|
•
|
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 March 31, 2021, the Company had accrued total interest expenses of $400 in respect of this loan ($288 – December 31, 2020). The Company has not commenced repayments under this PPP loan and is currently in
the process of applying for forgiveness of the loan in full. While the Company is applying for forgiveness of the loan in full the Company has estimated minimum forgiveness of 60% of the gross PPP proceeds and has included the remaining
portion as “Current portion of long-term debt” in the current period.
A schedule of the total long-term debt is below:
|
March 31,
2021
|
December 31, 2020
|
|||||||
|
SBA Loan
|
$
|
44,000
|
$
|
44,000
|
||||
|
PPP Loan
|
45,450
|
45,450
|
||||||
|
Total
|
89,450
|
89,450
|
||||||
|
Current portion
|
(28,077
|
)
|
-
|
|||||
|
Debt, long term
|
$
|
61,373
|
$
|
89,450
|
||||
|
Interest accrued, reflected as accounts payable
|
$
|
3,138
|
$
|
1,310
|
||||
Loan Treaty Agreement
On December 21, 2020, the Company entered into a Loan Treaty Agreement with a third party (“Treaty Agreement”) whereby the lender has agreed to provide a loan in the amount of up to $450,000 to the Company in
$25,000 tranches, deposited weekly, which shall be memorialized by promissory notes in increments of $100,000. Each amount deposited shall have 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.
During the fiscal year ended December 31, 2020, the Company received two weekly tranche deposits for an aggregate of $50,000. The Company recorded $164,104 as the liability on stock settled debt associated with the
tranches which amount is amortized over the terms of the notes.
During the three months ended March 31, 2021, the Company received eleven weekly tranche deposits for an aggregate of $275,000.
F-34
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 6: DEBT (Continued)
Loan Treaty Agreement (continued)
The carrying value of tranches is as follows:
|
March 31, 2021
|
December 31, 2020
|
|||||||
|
Principal issued
|
$
|
325,000
|
$
|
50,000
|
||||
|
Stock-settled liability
|
2,716,431
|
164,104
|
||||||
|
3,041,431
|
214,104
|
|||||||
|
Unamortized debt discount
|
(2,428,874
|
)
|
(161,364
|
)
|
||||
|
$
|
612,557
|
$
|
52,740
|
|||||
The interest expenses of traches are as follows:
|
For the Three ended March 31,
|
||||||||
|
|
2021
|
2020
|
||||||
|
Interest expense on notes
|
$
|
3,435
|
$
|
-
|
||||
|
Amortization of debt discount
|
284,817
|
-
|
||||||
|
Total:
|
$
|
288,252
|
$
|
-
|
||||
The accrued interest payable is as follows:
|
Balance, December 31, 2020
|
|
$
|
66
|
|
|
Interest expense on the convertible notes
|
|
|
3,435
|
|
|
Balance, March 31, 2021
|
|
$
|
3,501
|
|
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 March 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. This amount was retired in full subsequent to April 15, 2021.
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.
F-35
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES
The following table provides balances of customer receivables and contract liabilities as of March 31, 2021 and December 31, 2020:
|
March 31, 2021
|
December 31, 2020
|
|||||||
|
Customer receivables (1)
|
$
|
-
|
$
|
-
|
||||
|
Contract liabilities (Customer deposits) (2), (a), (b), (c)
|
$
|
287,000
|
$
|
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 $155,000 and $90,000, respectively as at March 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 March 31, 2021 and December 31, 2020, we have not yet recognized any revenue from customer deposits on hand. The Company and
customer are currently in negotiations to determine the best way to proceed with the delayed implementation of these contracts.
|
Performance Obligations
As of March 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.
(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, 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 repaid.
(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 10 – Other Events. As the installation had not yet been fully performed under the purchase order as of March 31, 2021, $132,000 is reflected as Deferred Revenue on the balance sheet. The
Company is currently completing the terms of the purchase order and expects to reflect this amount as revenue in fiscal 2021.
F-36
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 8: RELATED PARTY TRANSACTIONS
Terrence Flowers
On 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, 2020. The Company did not make any further payments and the amount due to Mr. Flowers as at March 31, 2021 is $110. 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 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.
During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp also advanced funds 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.
The Company recorded associated interest expenses of $15,308 and $51 for the three months ended March 31, 2021 and 2020, respectively.
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
|
(11,854)
|
|||
|
Balance at March 31, 2021, Debt, related party.
|
$
|
1,205,725
|
During the three months ended March 31, 2021, the Company accrued $30,000 in management fees due to ELOC and paid management fees to Coleman Smith of $30,000. 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 $1,831. The $30,000 due to ELOC and the $1,831 due to Coleman Smith are included as Accounts Payable related party on the balance sheet.
The following amounts were included in related party payables on our Balance Sheets:
|
|
March 31,
2021
|
December 31, 2020
|
||||||
|
Coleman Smith, President
|
$
|
1,821
|
$
|
-
|
||||
|
ELOC Holdings Corp.
|
45,308
|
-
|
||||||
|
Terrence Flowers
|
110
|
110
|
||||||
|
|
$
|
47,239
|
$
|
110
|
||||
F-37
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 9: COMMITMENTS
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 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 commencing in 2021 at an annual rate of $94,000 per annum for a period of 5 years. The
parties will review the initial payment due in 2021 based on the utilization of the venue location due to COVID-19 restrictions. GZMC is anticipating the start date for this project to be Summer 2021 based on acquiring the various bonds and
licenses as may be required and completion of the required services and equipment under the terms of the agreement.
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.
There were no shares issued during the three months ended March 31, 2021 or 2020.
As of March 31, 2021 and December 31, 2020, there were 12,793,357 shares of common stock issued and outstanding.
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 March 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 March 31, 2021 and December 31, 2020, there is 1 share of Series B Preferred stock issued and outstanding.
F-38
GZ6G TECHNOLOGIES CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND 2020
NOTE 11: SUBSEQUENT EVENTS
On April 1, 2021, the Company entered into an amendment to a Loan Treaty Agreement originally executed on December 21, 2020 (ref: Note 6). 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. On April 21, 2021, the Company entered to an amendment agreement whereby the payment schedule as amended as follows: April 23, 2021 - $250,000; June 4, 2021 - $250,000; July 16, 2021 - $250,000; and August
27, 2021 - $250,000.
On April 8, 2021, the Company and its sole officer and director, William Coleman Smith, 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.
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.
An outstanding short-term loan of $3,768 (Note 6 above) was retired subsequent to April 15, 2021.
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.
F-39
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.
Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC) located at 1438 N Highway 89, Suite 120, Farmington, Utah 84025, phone (801) 447-9572, our independent registered public
accountant, has audited our financial statements included in this prospectus and Registration Statement to the extent and for the periods set forth in their audit report and has presented its report with respect to our audited financial statements.
Sharon D. Mitchell of the law offices of SD Mitchell & Associates, PLC located at 829 Harcourt Rd., Grosse Pointe Park, Michigan 48230; telephone (248) 515-6035 passed on the legality of the
shares being offered in this prospectus.
Our Certificate of Incorporation provides that we shall indemnify our directors and officers to the fullest extent permitted by Nevada law and that none of our directors will be personally liable
to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:
|
•
|
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.
|
These provisions require us to indemnify our directors and officers unless restricted by Nevada law and eliminate our rights and those of our stockholders to recover monetary damages from a
director for breach of her fiduciary duty of care as a director except in the situations described above. The limitations summarized above, however, do not affect our ability or that of our stockholders to seek non-monetary remedies, such as an
injunction or rescission, against a director for breach of her or her fiduciary duty.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, we have been
advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act, and the rules and regulations promulgated hereunder, with respect to the Common Stock offered hereby. Their
prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits thereto. While we have summarized the material terms of all agreements and exhibits
included in the scope of their Registration Statement, for further information regarding the terms and conditions of any exhibit, reference is made to such exhibits. Upon effectiveness of their prospectus, we will be subject to the reporting and
other requirements of Section 15(d) of the Securities Exchange Act of 1934 and will file periodic reports with the Securities and Exchange Commission. We will make available to our shareholders annual reports containing financial statements
audited by our independent auditors and our quarterly reports containing unaudited financial statements for each of the first three quarters of each year; however, we will not send the annual report to our shareholders unless requested by an
individual shareholder.
57
For further information with respect to us and the Common Stock, reference is hereby made to the Registration Statement and the exhibits thereto, which may be inspected and copied at the principal
office of the SEC, 100 F Street NE, Washington, D.C. 20549, and copies of all or any part thereof may be obtained at prescribed rates from the Commission’s Public Reference Section at such addresses. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC.
The following table sets forth the forecasted expenses in connection with this registration statement. All of such expenses are estimates, other than the filing fees payable to the Securities and
Exchange Commission*.
|
Securities and Exchange Commission Registration Fee
|
$622
|
|
Audit Fees and Expenses
|
$25,000
|
|
Legal Fees and Expenses
|
$25,000
|
|
Transfer Agent and Registrar Fees and Expenses
|
$5,000
|
|
Edgar Filing Fees
|
$7,500
|
|
Miscellaneous Expenses
|
$16,878
|
|
Total
|
$80,000
|
*Estimates only
The officers and directors of the Company are indemnified as provided by the Nevada Revised Statutes and the Bylaws of the Company. Unless specifically limited by a corporation’s Certificate of
Incorporation, Nevada law automatically provides directors with immunity from monetary liabilities. The Company’s Certificate of Incorporation does not contain any such limiting language. Excepted from that immunity are:
|
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.
|
The Certificate of Incorporation provide that the Company will indemnify its officer, director, legal representative, and persons serving at the request of the Company as a director or officer of
another corporation, or as its representative in a partnership, joint venture, trust or other enterprise to the fullest extent legally permissible under the laws of the State of Nevada against all expenses, liability and loss (including attorney’s
fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by that person as a result of that connection to the Company. Their right of indemnification under the Certificate is a contract right, which may
be enforced in any manner by such person and extends for such persons benefit to all actions undertaken on behalf of the Company.
The Bylaws of the Company provide that the Company will indemnify its director and officer to the fullest extent not prohibited by Nevada law; provided, however, that the Company may modify the
extent of such indemnification by individual contracts with its directors and officers; and, provided, further, that the Company shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof)
initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the Company, (iii) such indemnification is provided by the Company, in its sole
discretion, pursuant to the powers vested in the Company under Nevada law or (iv) such indemnification is required to be made pursuant to the Bylaws.
58
The Certificate of Incorporation of the Company provide that the Company will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or he is or was a director or officer, of the Company, or is or was serving at the request of the Company as a director or executive
officer of another Company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under the Bylaws of the Company or otherwise.
The Certificate of Incorporation of the Company provides that no advance shall be made by the Company to an officer of the Company (except by reason of the fact that such officer is or was a
director of the Company in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to
the best interests of the Company.
The following is a list of exhibits filed as part of their Registration Statement. Where so indicated by footnote, exhibits that were previously filed are incorporated herein by reference. Any
statement contained in an Incorporated Document shall be deemed to be modified or superseded for purposes of their Registration Statement to the extent that a statement contained herein or in any other subsequently filed Incorporated Document
modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of their Registration Statement.
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
Certificate of Amendment to
Articles of Incorporation, amended and restated articles |
| 3.5 |
Certificate of Amendment to Articles of Incorporation |
| 3.6 |
Certificate of Amendment to Articles of Incorporation |
| 3.7 |
Certificate of Amendment to Articles of Incorporation |
| 3.8 |
Certificate of Amendment to Articles of Incorporation |
|
4.1*
|
Specimen Stock Certificate
|
|
4.2*
|
Form of Subscription Agreement
|
|
4.3
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4.4
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5.1
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10.1
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10.2
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| 10.3 |
Stock Purchase
Agreement between the Company, Green Zebra Media Corp. and William Coleman Smith dated April 8, 2021 |
| 10.4 |
Loan Treaty Agreement between the Company and eSilkroad Network Limited |
| 10.5 |
Amendment to Loan Treaty Agreement between Esilkroad Network Limited and the Company dated April 6, 2021 |
| 10.6 |
Form of Convertible Promissory Note, Loan Treaty |
| 10.7 |
Equity Purchase
Agreement between the Company and World Amber Corp. dated April 25, 2021 |
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23.1
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23.2
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Consent of SD Mitchell & Associates, PLC (included in Exhibit 5)
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* To be filed by amendment
59
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to their Registration Statement to:
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Include any prospectus required by Section 10(a)(3) of the Securities Act;
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| (b) |
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities 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
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| (c) |
Include any additional or changed material information on the plan of distribution.
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2. To, for the purpose of determining any liability under the Securities Act, treat
each post-effective amendment as a new Registration Statement relating to the securities offered herein, and to treat the offering of such securities at that time to be the initial bona fide offering thereof.
3. To remove from registration, by means of a post-effective amendment, any of the
securities being registered hereby that remain unsold at the termination of the offering.
4. For determining liability of the undersigned Registrant under the Securities Act
to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned Registrant pursuant to their Registration Statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(a) Any preliminary prospectus or prospectus of the undersigned
Registrant relating to the offering required to be filed pursuant to Rule 424;
(b) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(c) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and,
(d) Any other communication that is an offer in the offering made
by the undersigned Registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our director, officers and controlling persons pursuant to the provisions above,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our director, officers, or controlling persons in the
successful defense of any action, suit or proceeding, is asserted by one of our director, officers, or controlling person sin connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
60
For the purposes of determining liability under the Securities Act for any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a Registration Statement relating to an offering,
other than Registration Statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the Registration Statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a Registration Statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that
is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration
Statement or made in any such document immediately prior to such date of first use.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused their Registration Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Irvine, California on this 17th day of May, 2021
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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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In accordance with the requirements of the Securities Act of 1933, the following persons in the capacities and on the dates stated signed their Registration Statement.
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GZ6G Technologies Corp.
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By: /s/ William Coleman Smith
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William Coleman Smith, CEO
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Date: May 17, 2021
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| By: /s/ William Coleman Smith | ||
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William Coleman Smith, CFO
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Date: May 17, 2021
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62
EXHIBIT A
NANOSENSORS, INC. CERTIFICATE OF
DESIGNATION
of the
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to
Section 78.1955
of the General Corporation Law of the State of Nevada
Pursuant to the authority conferred upon the Board of Directors by the Corporation's Articles of Incorporation (Article THIRD, Paragraph (a)) and pursuant to the provisions of Section 78.1955 of the General Corporation
Law of the State of Nevada (the ''NGCL"), the following resolution was adopted by the Board of Directors:
RESOLVED, that in compliance with the terms and conditions of the Agreement and Plan
of Merger, dated as of November 27, 2007 (the "Merger Agreement"), by and among the Corporation, Cuchulainn Acquisition Inc., a Panamanian corporation ("Acquisition''), and Cuchulainn Holdings, Inc. ("Cuchulainn''), a Panamanian corporation, as amended on January 16, 2008, pursuant to which, upon the effective time of the merger of Cuchulainn with and into Acquisition (the "Merger''),
with Acquisition being the surviving corporation in the Merger, each issued and outstanding share of common stock of Cuchulainn will be converted into the right to receive .000565 share of a newly issued series of preferred stock of the
Corporation, the Board of Directors hereby creates, authorizes and provides for the issuance of a series of the Corporation's
Preferred Stock, par value $.001 per share (the "Preferred Stock''), and hereby states the designation and number of shares, and fixes the relative rights, preferences, privileges and restrictions thereof as follows:
|
1.
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DESIGNATION AND NUMBER.
|
This series shall consist of ten thousand (10,000) shares of Preferred Stock and shall
be designated the "Series A Convertible Preferred Stock." The stated value of each share of Series A Preferred Stock shall be Sixty-Two and 00/100 Dollars
($62.00) (the"Stated Value").
1
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2.
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CERTAIN DEFINITIONS.
|
"Bankruptcy Law" means Title 11, United States Code, and the Federal Rules of Bankruptcy
Procedure, and anysimilar Federal orstate law, rule or regulation providing for the relief of debtors.
"Board of Directors" or ''Board"
means the Corporation's Board of Directors, as constituted
from time to time.
''Business Day'' means any day other than a Saturday, a Sunday or a day on which the New York Stock Exchange or commercial banks located in New York City are
authorized or permitted by law to close.
"Certificate" means this Certificate of Designation.
"Common Stock'' means the Corporation's common stock, par value $.001per share.
"Conversion" means the
conversion of shares of Series A Preferred Stock into Conversion Shares in accordance with the procedures specified herein.
"ConversionFactor'' means the199,604.068 shares of Common Stock into which one Series A Preferred Share is initially convertible, as adjusted from time to time as provided herein. "Conversion Shares" means the shares of the Corporation's Common Stock that are issuableto the Holders upon the
conversion of the shares of Series A Preferred Stock.
"Debt'' means, as to any Person at any time: (a) all indebtedness, liabilities and obligations of such Person for borrowed money; (b) all indebtedness, liabilities and obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable of such Person
arising in the ordinary course of business that are not
past due by more than 60 days; (c) all capital lease obligations of such Person; (d) all indebtedness, liabilities and obligations of others guaranteed bysuch Person; (e) all indebtedness, liabilities and
obligations secured bya lien existing on property owned by such Person, whether or not the indebtedness, liabilities or obligations secured thereby have been assumed by such Person or are nonrecourse to such Person; (f) all reimbursement obligations of such Person (whether contingent or otherwise) inrepsect of letters of credit, bankers' acceptances, surety or
other bonds and sirilar instruments; and (g) all indebtednes.s liabilities and obligations of such Person to redeem or retire shares
of capital stock of such Person.
2
"Holder'' means any holder of Series A Preferred Shares, all of such holders being the "Holders."
"Issue Date" shall mean the date upon which the shares of Series A Preferred Stock shall be issued by the Corporation.
"Junior Securities" means the Common Stock and all other capital stock or other securities of the Corporation that do not constitute Pari Passu Securities or Senior Securities.
"Liquidation Event" means any of the following events:
(a) the Corporation or any Subsidiary (other than a Subsidiary (x) that is not a
"significant subsidiary'' (as such term is defined in Rule l.02{w) of Regulation S-X promulgated by the Securities and Exchange Commission) and is not otherwise material to the Corporation, and (y) with respect to which neither the Corporation nor any other Subsidiary has any recourse
liability, as general partner or otherwise), pursuant to or
under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding; (ii) consents to the entry of any
order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (iii) consents to the appointment of a custodian of it or for any substantial part of its property;(iv) makes a general assignment for the benefit of its creditors; (v) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (vi) consents to the filing of such petition or the appointment ofor taking possession bya custodian; or
(b) a court of competent jurisdiction bas entered an order or decree under
any Bankruptcy Law that: (i) is for relief against the Corporation or any Subsidiary, or adjudicates the
Corporation or any Subsidiary to be insolvent or bankrupt; (ii) appoints a custodian or receiver for the Corporation or any Subsidiary, or for any substantial part of its property; or (iii) orders the winding up or
liquidation of the Corporation or any Subsidiary, and such order or decree remains unstayed and in effect for at least thirty (30) days.
3
"Liquidation Preference.. means, with respect t a Series A Preferred Share, an amount equal to
the Stated Value of such Preferred Share plus all unpaid dividends thereon accruing, if any, through the dateon which such Preferred Share is converted or redeemed.
"Major Transaction" means, with respect to the Corporation, (x) a merger, consolidation, business combination, tender offer, exchange of shares, recapitalization, reorganization, redemption or other similar event, as a result of which shares of Common Stock shall be changed into the same
or a different number of shares of the same or another class or classes of stock or securities or other assets of the Corporation or another entity, (y) the sale by the Corporation of all or substantially all of its assets, or (z) the issuance
by the Coi:poration of warrants or securities directly or indirectly exchangeable for, convertible into or otherwise granting the right to acquire equity securities of the Corporation.
''Pari Passu Securities"
means any securities ranking by their terms pari passu with the
Series A Preferred Stock in respect of redemption or distribution upon liquidation.
''Person", means any individual, corporation, trust, association, corporation,
partnership, joint venture, limited liability corporation, joint stock corporation, Governmental Authority or other person or entity.
"Senior Securities" means (i) any Debt issued or assumed by the Corporation and (ii) any securities of the Corporation
which by their terms have a preference over the Series A
Preferred Stock in respect of redemption or distribution upon liquidation.
"Series A Preferred Stock'' means the Corporation's Series A Preferred Stock.
"Series A
Preferred Shares" means the shares of Series A Preferred Stock issued pursuant to these resolutions.
"Stated Value" has the meaning ascribed to it in Section 1.
"Subsidiary" means, with respect to the Coq,oration, any corporation or other entity of which at least a majority of the outstanding shares of stock or other ownership
interests having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or Persons performing similar functions) of such corporation or entity (irrespective of whether or not at the
4
. .
time, in the case of a corporation, stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the
Corporation or one or more of its Subsidiaries or by the Corporation and oneor more of its Subsidiaries.
Except as explicitly stated, all definitions contained in this Certificate are equally applicable to the singular and plural forms of the terms defined. The words ''hereof', ''herein" and ''hereunder" and words of similar import referring to this Certificate refer to this Certificate as a whole and not to any particular provision of this Certificate.
|
3.
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DIVIDENDS.
|
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(a)
|
No Dividends. The Series A Preferred Stock shall not be entitled to dividends unless the Corporation declares dividends in cash or other property to holders of outstanding Junior Securities or Pari Passu Securities, in which event, each outstanding share of the Series A Preferred Stock shall be entitled, prior to the payment of any dividend on Junior Securities or Pari Passu
Securities, to receive dividends of cash or property equivalent in value to the dividend payable in respect of one share of Common Stock multiplied by the
number of Conversion Shares into which each Series A Preferred Share is convertible based on the Conversion Factor in effect on the payment date for such
dividend. Any dividend payable to the Series A Preferred Stock shall have the same record and payment date and terms as the dividend is payable on the Junior Securities or Pari Passu Securities.
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(b)
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Redenmtion of or
Payment on Certain Securities. As long as any Series A Preferred Shares are outstanding, the Corporation shall not (i) purchase, redeem or otherwise acquire for . value any shares of Junior Securities or Pari Passu Securities, directly or indirectly, other than as a result of reclassification of Junior Securities or Pari Passu Securities or the exchange or conversion of one type of Junior Securities or Pari Passu
Securities for or into another type of Junior Securities or Pari Passu Securities, or (ii) make any payment on account of, or set aside money for, a sinking or other like fund for the purchase, redemption or other acquisition for value of any share of Junior Securities or Pari Passu Securities.
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5
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4.
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PRIORITY
LIQUIDATION
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Upon the occurrence ofa Liquidation Event. nodistribution shallbe made to the holders of any shares of Junior Securities unless each Holder shall have received the Liquidation Preference with respect to each Series A Preferred Share then held by
such Holder. In the event that, upon the occurrence of a Liquidation Event, the assets available fordistnoution to the Holders and the holdersof Pari
Passu Securities are insufficient to pay the Liquidation Preference with respect to all of the outstanding Series A Preferred Shares and the preferential ammmts payable to such holders, the entire assets of
the Corporation shall be distributed ratably among the
Series A Preferred Shares and the shares of such Pari
Passu Securities in proportion to the ratio that the
preferential amount payable on each such share (which shall be the Liquidation Preference in the case of a Series A Preferred Share) bears totheaggregate preferential amount payableon all such shares.
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5.
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REDEMPTION
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(a)
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The shares of Series A Preferred Stock shall not be redeemable at any time at the option of the Corporation.
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(b)
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The Series A Preferred
Stock shall be redeemed by the Corporation as a whole, upon the written demand of the holders of a majority of the outstanding shares of Series A Preferred Stock, at any time commencing one year after the Issue Date, on not less than
30 days' written notice to the Corporation at the Redemption Price (defined below), within 30 days after such notice. The ''Redemption Price" shall be equal to the
sum of (x)the Stated Value of the Preferred Shares being redeemed plus (y) the unpaid Dividends, if any, with respect to the Series A Preferred Shares being redeemed plus (z) a redemption premium $6.20 for each full year that the Series A Preferred Stock was outstanding, using the Issue Date as the first dayof each such year, prorated for each fraction ofa year, whether or not theSeries A Preferred Stock was outstanding for a fullyear.
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6
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(c)
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Notwithstanding anything contained herein to the
contrary, the Corporation may not purchase, redeem or acquire any Pari Passu Securities or Junior Securities unless all accrued and unpaid Dividends, if any, on the shares of Series A Preferred Stock have been paid or declared and set apart for payment.
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(d)
|
Upon receipt of the demand described in Section (b),
above, the Corporation shall deliver to the Holders a notice setting forth the date set for redemption (the "Redemption Date''), which date shall be a
Business Day: Notice of redemption shallbe mailed to the Holders (by United States first class mail) at least 10 days before the Redemption Date at the address
shown on the stock books of the Corporation. Immediately following 5:00 p.m. (Eastern Standard Time) on the Redemption Date, all rights of the Holders of the shares of Series A Preferred Stock will terminate except the right to receive the Redemption Price without interest (unless the Corporation defaults in the payment of the redemption price).
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(e)
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Following the Redemption Date, the Corporation shall deliver the Redemption Price within 10 days after receipt by the Corporation of the original shares of Series A Preferred Stock returned by the Holder (or the Holder's agent) to the Corporation. If Corporation fails to pay the Redemption Price to a Holder within the time period specified above, such Holder shall be entitled to interest thereon, from and after the date of
which payment of the redemption payment was due until such amount has been paid in full, at an annual rate equal to 10 percent {10%) per annum and shall continue
to have the voting rights set forth herein.
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6.
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CONVERSION.
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(a)
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Optional Conversion. Commencing on the date when there shall be sufficient shares of
Common Stock available to permit the conversion of all issued shares of Series A Preferred Stock, the Holders, by majority vote of the outstanding shares of Series A, shall have the right to convert all of the Series A Preferred Shares then outstanding into such number of fully paid and non-assessable shares ("Conversion Shares") ofthe Common Stock as is determined in accordance with the terms of this Section 5 (an "Optional
Conversion'). The Optional Conversion shall occur upon presentation of consents to such Conversion signed by the holders of the requisite
number of Series A Preferred Shares and the holders of Series A Preferred Shares and theCorporation shall thereafter have the same rights and obligations as they would respectively have in the event of a Mandatory
Conversion.
|
.
7
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(b)
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Mandatory Conversion. Upon the
effective dateof the acceptance by the Secretary of State of the State of Nevada of an amendment to the Corporation's Articles of Incorporation (the "Amendment'') to effect a reverse split of its common stock at the rate of one new share for at least each currently outstanding one hundred shares of Common Stock (the ''Reverse Stock
Split'') and to create a number of shares of additional Common Stock sufficient, together with the previously authorized and unreserved shares of Common Stock, to permit the conversion of all of the outstanding shares
of Series A Preferred Stock into Common Stock, then all of the outstanding shares of Series A Preferred Stock shall, immediately upon the occurrence of the
aforesaid effective date, automatically be converted into shares of the Corporation's Common Stock with.out any notice required on the part of the Corporation or the Holder (the "Mandatory Conversion''), such that each Holder shall receive the number of shares of Common Stock determined by
multiplying (i) the number of shares of Series A Preferred Stock then owned by such Holder 2Y (ii) the Conversion Factor in effect, giving effect to the change therein resulting from the Reverse Stock Split The
Corporation agrees that it shall, upon the effectiveness of the Mandatory
Conversion, expeditiously effect the issuance of the shares of Common Stock resulting from the Mandatory Conversion. If the Amendment shall not have been filed by April 30, 2008, the Holders of at least 1,000
shares of Series A Preferred Stock, may request that the Board of Directors may request that the Board of Directors, two directors or the President of the
Corporation, in accordance with the Bylaws of the Corporation, call a special meeting of shareholders to occur not later th.an July 31, 2009, to consider and act upon the Amendment and shall take all requisite corporate action for the approval and filing of the Amendment. The presently authorized but unissued and unreserved shares of Common Stock are
hereby reserved for issuance upon conversion of the Series A Preferred Stock.
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(c)
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Conversion Procedure. The Corporation shall cause its transfer agent to issue the Common Stock issuable upon the Optional Conversion or the Mandatory Conversion as quickly as practicable following the date on
which the Mandatory Conversion occurred. The Corporation shall bear the cost associated with the issuance of the Common Stock so issuable. The Common Stock and other securities issuable shall be issued with the same restrictive legend, if any, borne by the certificate for Series A Preferred Stock tendered to said
transfer agent. The Common Stock issuable upon the Optional Conversion or the Mandatory Conversion shall be issued in the same name as the person who is the then-current Holder of the Series A Preferred Stock unless, in the opinion of counsel to the Corporation, a change of name
and such transfer can be made in compliance with
applicable securities laws. The Holders shall be treated as holders of Common Stock of the Corporation at the close of business on the date of the Optional Conversion or the Mandatory Conversion. Each certificate representing the Series A Preferred Stock shall be cancelled, upon issuance of the receipt of the certificates representing the Common Stock into which the Series A Preferred Stock was converted. If any Holder is entitled to receive a fractional Conversion Share, such fractional Conversion
Share shall be disregarded and the number of Conversion Shares issuable upon such Conversion, in the aggregate, shall be the next lower whole number of
Conversion Shares. No cash or property shall be issued in lieu of fractional Conversion Shares upon the the Optional Conversion or Mandatory Conversion.
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7.
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ADJUSTMENTS TO CONVERSION
FACTOR. The Conversion Factor shall be subject to adjustment from time to time as provided in this Section 7.
The Board' s calculation of the Conversion Factor from time to time shall bedeemed conclusive absent manifest error.
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(a)
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Subdivision or Combination
of Common Stock.If the Corporation at anytime hereafter subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise), the outstanding
shares of Common Stock into a greater nwnber of shares, then, after the record
date for such subdivision, the Conversion Factor in effect immediately prior to such subdivision shall be
proportionately reduced. Except as may otherwise be provided with respect to the Reverse Stock Split in Section 6(b), if the Corporation, at any time hereafter O, combines
(by reverse stock split, recapitalization, reorganization, reclassification or othenvise) the outstanding shares of Common Stock into a smaller nmnber of shares, then, after the of record date for such combination, the
Conversion Factor in effect immediately prior to suchcombination will be proportionally increased.
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8
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(b)
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Distributions. If the Corporation shall declare or make any distribution of cash or any other assets (or rights to acquire such assets) to holders of Common Stock in respect of such Common Stock, except as
contemplated by Section 7(a) of this Certificate, as a partial liquidating dividend or otherwise, including without limitation, any dividend or distribution to the Corporation's shareholders in shares (or rights to acquire shares) of capital stock of a subsidiary (a ''Distribution''), the Corporation shall deliver written notice of such Distribution (a ''Distribution Notice'') to each Holder at least twenty (20} days prior to the earlier to occur (the "Determination Date'') of (i) the record date for determining shareholders entitled to such Distribution (the ''Record Date'') and (ii) the date on which such Distributionis made (the ''Distribution Date"), and shall, on the Determination Date, deliver to each such Holder, at the same time that it makes such Distribution to its
shareholders, the same amount and type of assets being distributed in such Distribution, as though the Holder were a holder on the Determination Date therefor of a nwnber of shares of Common Stock into which the Series A Preferred
Shares held by such Holder are convertible as of such Determination Date (such number of shares to be
determined at the Conversion Factor then in effect.)
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(c)
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Major Transactions. In the event of a Major Transaction, the Corporation will give each Holder at least twenty (20) days' written notice prior to the earlier of (i) the closing or effectiveness of such Major
Transaction and (ii) the record date for the receipt of such shares of stock or securities or other assets, and the Corporation will cause the surviving or, in the event of a sale of assets, purchasing entity to assume the
obligations of the Corporation with respect to the Series A Preferred Stock. Furthermore, in case of any Major Transaction, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or
other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of the Series A
Preferred Stock would have been entitled upon the consummation of such Major Transaction as if such Series A Preferred Shares had been converted to Common Stock immediately prior to the aforesaid record date. In any such case, appropriate adjustment (as determined by the Board of Directors in good faith) shall be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holders, to the end
that these provisions (including provisions with respect to changes in and other
adjustments of the Conversion Factor) shall thereafter be applicable, as nearly
as reasonably may be practicable, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series A Preferred Stock.
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9
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(d)
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Adjustments; Additional Shares, Securities or
Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 7, the Holders shall, upon the the Optional
Conversion or Mandatory Conversion, as the case may be, become entitled to receive securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall bedeemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 7.
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8.
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V0TING RIGHTS
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The Holders of shares of Series A
Preferred Stock shall be entitled to the following voting rights:
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(a)
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In addition to the rights provided by law or in the Corporation's Bylaws, each
share of Series A Preferred Stock shall entitle the Holder thereof to such number of votes as shall equal the number of shares of Common Stock into which one share of Series A Preferred Stock is then convertible pursuant to
this Certificate multiplied by the number of shares of Series A Preferred Stock held by such Holder, rounded to the nearest whole number. Except as otherwise provided by law, the Holders of Series A Preferred Stock shall be entitled
to vote together with the holders of Common Stock on all matters as to which holders of Common Stock shall be entitled to vote, as a single class.
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(b)
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As long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the written approval of the Holders of at
least a majority of the then outstanding shares of Series A Preferred Stock given in writing by consent or by vote at a meeting, consenting or voting (as the case may be) separately as a single class:
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(i)
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alter, change, modify or
amend (x) the provisions relating to the Series A Preferred Stock set forth herein in any way or (y) the terms of any other capital stock of the Corporation so as to affect adversely any of the rights of the Holders;
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(ii)
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create or provide for
the creation of any new class or series of capital stock (i) having a
preference over or ranking pari passu with the Series A
Preferred Stock as to payment of dividends, redemption or distribution of assets upon a Liquidation Event or any other liquidation, dissolution or winding up of theCorporation;
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(iii)
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issue voting securities of the Corporation such th.at after such issuance, the voting power of the Holders would be reduced to less than 67% of the aggregate voting power of the issued securities of
theCorporation;
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(iv)
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increase theauthorired number ofshares of Series A Preferred Stock;
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(v)
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re-issue any shares of Series A Preferred Stock which have been converted in accordance with theterms hereof;
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10
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(vi)
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issue any Pari Passu Securities or Senior Securities; provided,
that the Corporation may issue non-convertibledebt securities or Junior Securities without the approval of the Holders, subject totheother provisions of this Certificate; or
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.
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(vii)
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purchase, redeem or otherwise acquire for value, or declare, pay or make any
provision for any dividend or distribution with respect to Junior Securities, other
than the payment of cash in lieu of fractional shares in the event of a stock split, stock dividend, the exercise of warrants or conversion rights or similar transaction; or
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(viii)
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authorize or approve any Major Transaction.
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9.
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MISCELLANEOUS
|
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(a)
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Transfer of Preferred Shares. Upon notice to the Corporation (except
that no such notice shallbe required in the case of a pledge), a Holder may sell, transfer, assign, pledge orotherwise dispose of all or any portion of the Preferred Shares to any person or entity
as long as such transaction is the subject of an effective registration statement under the Securities Act or is exempt from registration. From and after thedate of any such saleor transfer, the transferee thereof shallbe deemed tobe a
Holder. Upon any such sale or transfer, the Coiporation shall, promptly following the return of the certificate or certificates representing the Preferred
Shares that are the subject of such sale or transfer, issue and deliver to such transferee a new certificate in the nameof such transferee.
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(b)
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Notices. Any notice, demand or request required or permitted to be given by the Coiporation or an Investor pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission (immediately followed by written confirmation delivered according to another mechanism provided by this section), unless such delivery is made on a day that is not a Business Day, in which case
such delivery will be deemed to be made on the
next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed, if to the Corporation:
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11
NanoSensors, Inc.
1475 Veterans Blvd.
Redwood City, California 94063 Attn: Treasurer
and if to any Holder, at the address indicated in the stock register of the
Corporation.
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(c)
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Lost or Stolen Certificate. Upon receipt by the Corporation of evidence of the loss, theft, destruction or mutilation ofa certificate representing a Holder's Preferred Shares,
and (in thecase of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Corporation, and upon surrender and cancellation of such certificate if mutilated, the Corporation shall execute and deliver tosuch Holder a newcertificate
identical inall respects to the original certificate.
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(d)
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Remedies. The remedies provided to a Holder in this Certificate shall be cumulative and in addition to all other remedies available to such Holder under this Certificate, at law or inequity
(including without limitation a decree of specific perfonnance and/or other injunctive reliet). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing contained
herein shall limit such Holder's right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate. Amounts set
forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Corporation (or the performance
thereof). The Corporation acknowledges that a material breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the
remedy at law for any such breach may be inadequate. The Corporation agrees, in the event of any such breach or threatened breach, each Holder shall be entitled,
in addition to all other available remedies, to seek an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security or indemnity being required.
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(e)
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Failure or Delay not Waiver. No failure or delayon the partofa Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof: nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise
thereof orof any other right, power or privilege.
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12
(f) Return to Status as Authorized Shares. Upon any conversion or any other redemption or extinguishment of the Series A
Preferred Stock, the shares converted, redeemed or extinguished will be automatically returned to the status of authorized and unissued shares of preferred stock, available for
future designation and issuance pursuant to the terms of the Certificate of Incorporation, but shall not be reissued as shares of Series A Preferred Stock.
(g) Inclusion in Articles of Incorporation. The statements contained herein creating and designating the Series A Preferred Stock and fixing the number, powers, preferences and relative, optional,
participating, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics thereof shall, upon the effective date of said series, be deemed to be included in and be a part of the Articles
of Incorporation of the Corporation pursuant to the applicable provisions of the NGCL.
13
CERTIFICATE OF DESIGNATION
of
SPECIAL 2018 SERIES B PREFERRED STOCK
of
NANOSENSORS, INC.
(Pursuant to NRS 78.1955)
of
SPECIAL 2018 SERIES B PREFERRED STOCK
of
NANOSENSORS, INC.
(Pursuant to NRS 78.1955)
NANOSENSORS, INC., a Nevada corporation (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors / Majority Shareholders. The Board of Directors / Majority Shareholders hereby fixes the
relative rights, preferences, and limitations of the Corporation’s Special 2018 Series B Preferred Stock as follows:
Special 2018 Series B Preferred Stock
Section 1. Designation and Amount. The designation of this class of capital stock shall be “Special 2018 Series B Preferred”, par value $0.001 per share (the “2018 Series B Preferred Stock”). The number of authorized shares of 2018 Series B Preferred Stock
is one (1) share.
Section 2. Voting Rights. Except as otherwise required by law, the holder of the share of 2018 Series B Preferred Stock shall have the following rights:
(a) Number of Votes; Voting with Common Stock. Except as provided by Nevada statutes
or Section 2(b) below), the holder of the 2018 Series B Preferred Stock shall vote together with the holders of preferred stock (including on an as converted basis), par value $0.001, and common stock, par value $0.001 per share, of the
Corporation (the “Common Stock”) as a single class. The 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 stockholders of the Corporation (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration. The
2018 Series B Preferred Stock shall not be divided into fractional shares.
(b) Adverse Effects. The Corporation shall not amend, alter or repeal the preferences,
rights, powers or other terms of the 2018 Series B Preferred Stock so as to affect adversely the 2018 Series B Preferred Stock or the holder thereof without the written consent or affirmative vote of the holder of the 2018 Series B Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
Section 3. Dividends, Liquidation. The share of 2018 Series B Preferred Stock shall not be entitled to any dividends in respect thereof, and shall not participate in any proceeds available to the Corporation’s
shareholders upon the liquidation, dissolution or winding up of the Corporation.
Section 4. No Impairment. The Corporation shall not intentionally take any action which would impair the rights and privileges of the 2018 Series B Preferred Stock set forth herein or the rights of the holder thereof. The
Corporation will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the provisions herein
and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of the 2018 Series B Preferred Stock against impairment.
Section 5. Replacement Certificate. In the event that the holder of the 2018 Series B Preferred Stock notifies the Corporation that the stock certificate evidencing the share of 2018 Series B Preferred
Stock has been lost, stolen, destroyed or mutilated, the Corporation shall issue a replacement stock certificate evidencing the 2018 Series B Preferred Stock identical in tenor and date to the original stock certificate evidencing the 2018 Series
B Preferred Stock, provided that the holder executes and delivers to the Corporation an affidavit of lost stock certificate and an agreement reasonably
satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such 2018 Series B Preferred Stock certificate.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly
executed by an officer thereunto duly authorized this 29th day of June, 2018.
NANOSENSORS, INC.
By: /s/Coleman Smith
Name: Coleman Smith
Title: CEO
Sharon D. Mitchell, Attorney at Law
SD Mitchell & Associates, PLC
57492 Onaga Trail ∙ Yucca Valley, California 92284
829 Harcourt Rd. ∙ Grosse Pointe Park, Michigan 48230
(248) 515-6035 (Phone) (248) 751-6030 (Facsimile) sharondmac2013@gmail.com
*Admitted in Michigan
14 May 2021
Mr. William Coleman Smith
President/Chief Executive Officer
GZ6G Technologies Corp.
Suite #105-275, 25422 Trabuco Rd.
Lake Forest, CA 92630
Re: Form S-1 Registration Statement
Dear Mr. Smith:
You have requested that I furnish you my legal opinion with respect to the legality of the following described securities of GZ6G Technologies
Corp. (the “Company”) covered by a Form S-1 Registration Statement (“Registration Statement”), filed with the Securities and Exchange Commission for the purpose of registering such securities under the Securities Act of 1933:
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1.
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16,666,667 shares of GZ6G Technologies Corp. Common Stock, $0.001 par value (“Shares”) offered for sale to World Amber Corp., by the Company; and
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2.
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3,589,744 shares of GZ6G Technologies Corp. Common Stock, $0.001 par value (“Shares”) offered for sale by a Shareholder
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In connection with this opinion, I have examined the corporate records of the Company, including the Company’s Certificate of Incorporation,
Bylaws, and the Registration Statement and Prospectus, as well as such other documents and records as I deemed relevant in order to render this opinion. In my examination, I have assumed the genuineness of all signatures, the legal capacity of all
natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified, conformed, photostatic or facsimile copies and the authenticity of the originals of
such copies.
Based on the forgoing, and in reliance thereon, and subject to the qualification and limitations set forth below, I am of the opinion that the
Company is duly organized in the State of Nevada, validly existing and in good standing as a corporation under the laws of the State of Nevada.
It is my opinion that all of the 16,666,667 shares of the Common Stock offered for sale by the Company, and described in the S-1 Registration
Statement, will be, when sold, duly authorized, validly issued, fully paid and non-assessable under the laws of the State of Nevada. It is my further opinion that all of the 3,589,744 shares of the Common Stock offered for sale by the selling
Shareholder, and described in the S-1 Registration Statement, have been duly authorized, validly issued, fully paid and non-assessable under the laws of the State of Nevada.
Mr. William Coleman Smith
President/Chief Executive Officer
GZ6G Technologies Corp.
14 May 2021
Page 2 of 2
Nothing herein shall be deemed to relate to or to constitute an opinion concerning any matters not specifically set forth above. The foregoing
opinions relate only to the matters of the internal law of the State of Nevada without reference to conflict of laws and to matters of federal law, and I do not purport to express any opinion on the laws of any other jurisdiction.
I do hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and
further consent to statements made therein regarding the use of my name under the heading “Interests of Named Experts and Counsel” in the Prospectus constituting a part of the Registration Statement.
With best regards,
/s/Sharon D. Mitchell
Sharon D. Mitchell
EMPLOYMENT CONTRACT
This Employment Contract (this “Contract”) is made effective
as of April 29, 2014, by and between Green Zebra Media Corp. of 24522 Trubuco Rd., Lake Forest CA 92660, Lake Forest , California, 92630
and William Coleman Smith Jr. of 24842 Camino Villa, Lake Forest, California, 92630.
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A.
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Green Zebra Media Corp. is engaged in the business of Wireless Technology Company.
William Coleman Smith Jr. will primarily perform the job duties at the following location: 23293 South
Point, Laguna Hills, California.
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B.
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Green Zebra Media Corp. desires to have the services of William Coleman Smith Jr..
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C.
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William Coleman Smith Jr. is an at will employee of
Green Zebra Media Corp.. Either party is able to terminate the employment agreement at any
time.
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Therefore, the parties agree as follows:
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1.
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EMPLOYMENT. Green Zebra Media Corp. shall employ William Coleman Smith Jr. as a(n) CEO. William Coleman Smith Jr. shall provide to Green Zebra Media Corp. duties as needed. William Coleman Smith Jr. accepts and agrees to such employment, and agrees to be subject to the general supervision, advice
and direction of Green Zebra Media Corp. and Green Zebra Media Corp.'s supervisory personnel.
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2.
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BEST EFFORTS OF EMPLOYEE. William Coleman Smith Jr. agrees to perform faithfully, industriously, and to the best of
William Coleman Smith Jr.'s ability, experience, and talents, all of the duties that may be required by the express and implicit terms of this Contract,
to the reasonable satisfaction of Green Zebra Media Corp.. Such duties shall be provided at such place(s) as the needs, business, or opportunities of Green Zebra Media Corp. may require from
time to time.
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3.
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OWNERSHIP OF SOCIAL MEDIA
CONTACTS. Any social media contacts, including "followers" or "friends," that are acquired through accounts (including,
but not limited to email addresses, blogs,
Twitter, Facebook, YouTube, or other social media networks) used or created on behalf of Green Zebra Media Corp. are the property of Green Zebra Media Corp..
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1
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4.
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COMPENSATION
OF EMPLOYEE. As compensation for the services provided by William Coleman Smith Jr. under this Contract, Green Zebra Media Corp. wi1l pay William Coleman Smith Jr. an annual salary of $120,000.00 payable in
accordance with Green Zebra Media Corp.'s usual payroll procedures and subject to applicable federal, state, and local withholding. Upon termination of this Contract,
payments under this paragraph shall cease; provided, however, that William Coleman Smith Jr. shall be entitled to payments for periods or partial periods that occurred prior to the date of termination
and for which William Coleman Smith
Jr. has not yet been paid,and for any commission earned in accordance with Green Zebra Media Corp.'s customary procedures, if applicable. Accrued vacation will be paid in accordance with state law and Green Zebra Media Corp.'s customary procedures.This section of the Contract is included only for accounting and payroll purposes and shouldnot be construed as establishing a minimum or definite term of employment.
Death of the Employee. If William Coleman Smith Jr. dies dw-ing the term of this Contract, William ColemanSmith Jr. shall
be entitled to payments or prutial commission payments for the period ending with the date of William Coleman Smith Jr.'s death.
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5.
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EXPENSE REIMBURSEMENT. Green Zebra Media Corp. will reimburse William Coleman Smith Jr. for "out-of-pocket" expenses incurred by William Coleman Smith Jr. in accordance with Green Zebra Media Corp.'s policies in effect from time to time.
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6.
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RECOMMENDATIONS FOR IMPROVING OPERATIONS. William Coleman Smith Jr. shall provide Green Zebra
Media Corp. with all information, suggestions, and recommendations regarding GreenZebra Media Corp.'s business, of
which WilliamColeman Smith Jr. has knowledge, that will be of benefit to Green Zebra Media Corp..
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7.
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BENEFITS . William Coleman Smith Jr. shall be entitled to employment benefits, as
provided by Green Zebra Media Corp.'s policies in effect duringthe term of employment. These benefits include:
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-
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Vacation
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-
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Personal Leave
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2
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-
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Holidays
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-
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Health Insurance
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-
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Disability Insurance
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-
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Life Insurance
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-
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Auto allowance
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8.
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TERM and TERMINATION. William Coleman Smith Jr.'s employment under this Contract shall be for an unspecified term on an "at will" basis. This Contract may be terminated by Green Zebra Media Corp. upon 90 days written notice, and by William Coleman Smith Jr. upon 90 Days written notice. If Green Zebra Media Corp. shall so terminate this
Contract, William Coleman Smith Jr. shall be entitled to compensation for 3 years beyond the termination date of such termination, unless William Coleman Smith Jr. is in violation of
this Contract. If William Coleman Smith Jr. is in violation of this Contract, Green Zebra Media Corp. may terrnfoate employment without notice and with compensation to
William Coleman Smith Jr. only to the date of such te1mination.
The compensation paid under this Contract shall be William Coleman Smith Jr.'s exclusive remedy.
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9.
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COMPLIANCE
WITH EMPLOYER'S RULES. William Coleman Smith Jr. agrees to comply with all of the rules and regulations of Green Zebra Media Corp..
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10.
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RETURN OF PROPERTY. Upon termination of this Contract, William ColemanSmith Jr. shall deliver to Green Zebra Media Corp. all property which is Green Zebra Media Corp.'s property or related to Green Zebra Media Corp.'s business (including keys,
records, notes, data, memoranda, models, and equipment) that is in William Coleman Smith Jr.'s possession or under William Coleman Smith Jr.'s control. Such obligationshall be governed by any separate confidentiality or proprietary rights agreement signed by William Coleman Smith Jr..
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11.
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NOTICES. All notices required or permitted under this Contract shall be in writing and
shall bedeemed delivered when delivered in person or on the third day after being deposited in the United States mail, postage paid, addressed as follows:
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Employer:
Green Zebra Media Corp.
William Coleman Smith
Director
24522 Trubuco Rd. , Lake Forest CA 92660 Lake Forest Ca, California 92630
3
Employee:
William Coleman Smith Jr.
24842 Camino Villa
Lake ForestCa, California 92630
Such addresses may be changed from time to time by
either party by providing written notice in
the manner set forth above.
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12.
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ENTIRE AGREEMENT. This Contract contains the entire agreement of the partiesand there are no other promises or conditions in any other agreement whether oral or written. This Contractsupersedes any prior written or oral agreements between the
parties.
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13.
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AMENDMENT. This Contract may be modified or
amended, if the amendment is made in writing and is signed by both parties.
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14.
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SEVERABILITY.
If any provisions of this Contractshall be held to be invalid or unenforceable for any reason, the remaniing provisions shall continue to be valid and enforceable. If a court
finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become validor enforceable, then such provision shall bedeemed to be written, construed,andenforced as so limited.
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15.
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WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this
Contract shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strictcompliance with every provision of this Contract.
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16.
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APPLICABLE LAW. This Contract shall be governed by the laws of the State of California.
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17.
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SIGNATORIES. This Contract shall be signed by William ColemanSmith, Jr., CEO on behalf of Green Zebra Media Corp. and by
William Coleman Smith Jr. in an individual capactiy. This Contract is
effective as of the date first above written.
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| GREEN ZEBRA MEDIA CORP. |
WILLIAM COLEMAN SMITH JR. |
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/s/William Coleman Smith
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/s/William Coleman Smith Jr.
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William Coleman Smith
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William Coleman Smith | |||
| President/CEO |
4
CONSULTING AGREEMENT
This Agreement is made effective as of August 01, 2018, by and between Nanosensors, INC, of 25422 Trubuco Rd, Ste. 105 -275, Lake Forest, California
92630, and ELOC Holdings Corp, of 25422 Camino Villa, Lake Forest, California 92630.
In this Agreement, the party who is contracting to receive services shall be referred to as "Nano", and the party who will be providing the services shall
be referred to as "ELOC".
ELOC has a background in Business Management Technology Services and is willing to provide services to Nano based on this background.
Nano desires to have services provided by ELOC.
Therefore, the parties agree as follows:
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1.
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DESCRIPTION OF SERVICES. Beginning on August 01, 2018, ELOC will provide the following services (collectively, the "Services"):
Coleman Smith
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2.
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PERFORMANCE OF SERVICES. The manner in
which the Services are to be performed and the specific hours to be worked by ELOC shall be determined by ELOC. Nano will rely on ELOC to work as many hours as may be reasonably necessary to fulfill ELOC's obligations under this
Agreement.
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3.
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PAYMENT. Nano will pay a fee to ELOC for
the Services based on $10,000.00 per month. This fee shall be payable monthly, no later than the fifth day of the month following the period during which the Services were performed.
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4.
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EXPENSE REIMBURSEMENT. ELOC shall be
entitled to reimbursement from Nano for the following "out-of-pocket" expenses:
Travel
Meals, not including alcohol Postage
Copying
NANO Public Company related fees
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5.
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TERM/TERMINATION. This Agreement may be
terminated by either party upon 60 days' written notice to the other party.
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1
6. RELATIONSHIP OF PARTIES. It is understood by the
parties that ELOC is an independent contractor with respect to Nano, and not an employee of Nano. Nano will not provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefit, for the benefit of ELOC.
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7.
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EMPLOYEES. ELOC's employees, if any, who
perform services for Nano under this Agreement shall also be bound by the provisions of this Agreement.
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8.
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INJURIES AND INSURANCE. ELOC acknowledges
ELOC's obligation to obtain appropriate insurance coverage for the benefit ofELOC (and ELOC's employees, if any). ELOC waives any rights to recovery from Nano for any injuries that ELOC (and/or ELOC's employees) may sustain while
performing services under this Agreement and that are a result of the negligence of ELOC or ELOC's employees.
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9.
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INDEMNIFICATION. ELOC agrees to indemnify
and hold harmless Nano from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted against Nano that result from the acts or omissions of ELOC, ELOC's employees, if any, and ELOC's
agents.Nano agrees to indemnify and hold harmless ELOC from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted against ELOC that result from the acts or omissions of Nano, Nano's
employees, if any, and Nano's agents.
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10.
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OWNERSHIP OF SOCIAL MEDIA CONTACTS. Any
social media contacts, including "followers" or "friends," that are acquired through accounts (including, but not limited to email addresses, biogs, Twitter, Facebook, Youtube, or other social media networks) used or created on behalf of
Nano are the property of ELOC.
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11.
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CONFIDENTIALITY. Nano recognizes that ELOC
has and will have the following information:
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future plans business affairs process information trade secrets copyrights
and other proprietary information (collectively, "Information") which are valuable, special and
unique assets ofNanosensors, INC and need to be protected from improper disclosure. In consideration for the disclosure of the Information, ELOC agrees that ELOC will not at any time or in any manner, either directly or indirectly, use any
Information for ELOC's own benefit, or divulge, disclose, or communicate in any manner any Information to any third party without the prior written consent of Nano. ELOC will protect the Information and treat it as strictly confidential. A
violation of this paragraph shall be a material violation of this Agreement.
This Agreement is in compliance with the Defend Trade Secrets Act and provides civil or criminal immunity to any
individual for the disclosure of trade secrets: (i) made in confidence to a federal, state, or local government official, or to an attorney
when the disclosure is to report suspected violations of the law; or (ii) in a complaint or other document filed in a lawsuit if made under seal.
2
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12.
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CONFIDENTIALITY AFTER TERMINATION. The
confidentiality provisions of this Agreement shall remain in full force and effect after the termination of this Agreement.
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13.
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RETURN OF RECORDS. Upon termination of
this Agreement, ELOC shall deliver all records, notes, data, memoranda, models, and equipment of any nature that are in ELOC's possession or under ELOC's control and that are Nano's property or relate to Nano's business.
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14.
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NOTICES. All notices required or permitted
under this Agreement shall be in writing and shall be deemed delivered when delivered in person or deposited in the United States mail, postage prepaid, addressed as follows:
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IF for Nano:
Nanosensors, INC
William Coleman Smith CEO
25422 Trubuco Rd, Ste. 105 -275 Lake Forest, California 92630
IF for ELOC:
ELOC Holdings Corp William Coleman Smith CEO
25422 Camino Villa
Lake Forest, California 92630
Such address may be changed from time to time by either party by providing written notice to the other in the manner
set forth above.
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15.
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ENTIRE AGREEMENT. This Agreement contains
the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior written or oral agreements between the parties.
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16.
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AMENDMENT. This Agreement may be modified
or amended if the amendment is made in writing and is signed by both parties.
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17.
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SEVERABILITY. If any provision of this
Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by
limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
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3
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18.
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WAIVER OF CONTRACTUAL RIGHT. The failure
of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.
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19.
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APPLICABLE LAW. This Agreement shall be
governed by the laws of the State of California.
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20.
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INTERRUPTION OF SERVICE. Either party
shall be excused from any delay or failure in performance required hereunder if caused by reason of any occurrence or contingency beyond its reasonable control, including, but not limited to, acts of God, acts of war, fire, insurrection,
laws proclamations, edits, ordinances or regulations, strikes, lock-outs or other serious labor disputes, riots, earthquakes, floods, explosions or other acts of nature. The obligations and rights of the party so excused shall be extended
on a day-to-day basis for the time period equal to the period of such excusable interruption. When such events have abated, the parties' respective obligations hereunder shall resume. In the event the interruption of the excused party's
obligations continues for a period in excess of thirty (30) days, either party shall have the right to terminate this Agreement upon ten (10) days' prior written notice to the other party.
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21.
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ASSIGNMENT. ELOC agrees that it will not
assign, sell, transfer, delegate or otherwise dispose of any rights or obligations under this Agreement without the prior written consent of Nano. Any purported assignment , transfer, or delegation shall be null and void. Nothing in
this Agreement shall prevent the consolidation of Nano with, or its merger into, any other corporation, or the sale by Nano of all or substantially all of its properties or assets, or the assignment by Nano of this Agreement and the
performance of its obligations hereunder to any successor in interest or any Affiliated Company. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs,
legal representatives, successors , and permitted assigns, and shall not benefit any person or entity other than those enumerated above.
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22.
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SIGNATORIES. This Agreement shall be
signed on behalf of Nano by Coleman Smith, CEO and on behalf of ELOC by Coleman Smith, CEO and effective as of the date first above written.
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| Party Receiving Services: |
Party Providing Services |
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| NANOSENSORS INC. |
ELOC HOLDINGS CORP |
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/s/William Coleman Smith
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/s/William Coleman Smith
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William Coleman Smith
|
William Coleman Smith | |||
| President/CEO |
CEO |
4
STOCK PURCHASE AGREEMENT
THIS STOCK
PURCHASE AGREEMENT (“SPA” or “Agreement”) is made and entered into this 8th day of April 2021, by and between GZ6G
Technologies Corp (“GZ6G”, “Corporation”), a Nevada corporation and William Coleman Smith (“Smith”), an individual residing in the state of California, and Green Zebra Media Corporation (“GZMC”), a Delaware corporation.
WHEREAS, Smith is the Chief Executive Officer and Director of GZ6G, as well as the controlling member of GZMC.
WHEREAS, GZ6G currently holds 51% of the equity of GZMC and desires to increase its equity ownership;
WHEREAS, Smith does hereby desire to exchange 9% equity ownership of GZMC in exchange for 10,000,000 shares of GZ6G’s common stock;
WHEREAS, GZ6G does hereby desire to exchange 10,000,000 shares of the Corporation’s common stock in exchange for an additional 9% equity ownership of GZMC, and does so pursuant to the terms and conditions set forth below:
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in this SPA, and in order to consummate the exchange of the Corporation's stock aforementioned, it is hereby agreed as follows:
1. Exchange.
Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated hereby, the Corporation shall sell, convey, transfer, and deliver to Smith certificates representing such shares of common stock, and Smith
shall deliver 9% equity ownership in GZMC in consideration of the purchase price set forth in this Agreement. The certificate representing the Corporation's stock shall be duly endorsed for transfer or accompanied by appropriate stock transfer
powers duly executed in blank, in either case with signatures guaranteed in the customary fashion. The closing of the transaction contemplated by this Agreement ("Closing"), to be held at such date, time and place as shall be determined by the
Purchaser and Seller, but in no event later than April 10, 2021, except with the written consent of the Seller.
2. AMOUNT AND
PAYMENT OF PURCHASE PRICE. The total consideration and method of payment shall be 10,000,000 shares of GZ6G’s common stock in exchange for 9% ownership in GZMC, valued at par value: $0.001 per share.
3. REPRESENTATIONS
AND WARRANTIES OF CORPORATION. Corporation hereby warrants and represents:
(a) Organization and Standing. GZ6G is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the corporate power and authority to carry on its business as it is now being conducted.
(b) Restrictions on Stock.
i. The Corporation is not a party to any agreement, written or oral, creating rights in respect to the
Corporation's Stock in any third person or relating to the voting of the Corporation's Stock.
ii. The Corporation is the lawful owner of the shares of common stock, free and clear of all security
interests, liens, encumbrances, equities and other charges.
iii. There are no existing warrants, options, stock purchase agreements, redemption agreements,
restrictions of any nature, calls or rights to subscribe of any character relating to the stock, nor are there any securities convertible into such stock, other than those disclosed to GZMC.
1
4. REPRESENTATIONS
AND WARRANTIES OF CORPORATION AND SMITH. Corporation and Smith hereby represent and warrant that there has been no act or omission by the Corporation, or Smith which would give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee, or other like payment in connection with the transactions contemplated hereby.
5. GENERAL
PROVISIONS
(a) Entire Agreement. This Agreement (including the exhibits hereto and any written amendments hereof
executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.
(b) Sections and Other Headings. The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of this Agreement.
(c) Governing Law. This agreement and all transactions contemplated hereby, shall be governed by,
construed and enforced in accordance with the laws of the State of Nevada.
IN WITNESS
WHEREOF, this Agreement has been executed by each of the individual parties hereto on the date first above written.
| GZ6G TECHNOLOGIES CORP | WILLIAM COLEMAN SMITH | |||
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/s/William Coleman Smith
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/s/William Coleman Smith
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William Coleman Smith
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William Coleman Smith | |||
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CEO
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||||
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GREEN ZEBRA MEDIA CORPORATION
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||||
| /s/William Coleman Smith |
||||
| William Coleman Smith | ||||
| Director |
2
LOAN TREATY AGREEMENT
THIS LOAN TREATY AGREEMENT (“Treaty”) is entered
into by and between GZ6G Technologies Corp. (“GZIC”, “Company”, “Borrower”), a publicly traded Nevada corporation, and eSilkroad Network Limited (“eSilk”, “Lender”), a privately held Wyoming corporation, on this 21st day of December 2020, and
based on the terms and conditions set forth below:
1. Subject of the Treaty. Under this Treaty, the Lender shall
provide loans in the amount of up to Four Hundred Fifty Thousand US Dollars ($450,000), hereinafter referred to as the "loan amount", and the Borrower undertakes to return to the Lender the amount of the loan received on time and in accordance
with the procedure established by the Treaty.
2. Loan Granting Procedure. Lender shall provide up to $450,000 in
Twenty Five Thousand Dollars ($25,000) tranches, deposited weekly, which shall be memorialized by Promissory Notes, in increments of One Hundred Thousand Dollars ($100,000) executed by both GZIC and by eSilk (attached here as form).
2.1 Payments will begin on Friday, December 18, 2020, in the
amount of Twenty-Five Thousand Dollars ($25,000), and will continue each week, on Wednesday’s, until both parties agree to increase the weekly amounts and until the full amount of the loan (as necessary) is provided.
2.2 Each tranche shall be deposited in the Huntington Bank IOLTA
account of SD Mitchell & Associates (“IOLTA”), and shall be dispersed pursuant to the instructions of William Coleman Smith, president of GZIC.
2.3 Each amount deposited into the IOLTA account shall have a term
of 12 months for repayment; the day the 12 months commences shall be the day the deposit is available for disbursement in the IOLTA account.
2.4 Conversion. At the option of the Lender,
each $25,000 loaned to the Company may be converted into common shares of the Company at the rate of 25% discount to the close of business on November 23, 2020 ($0.26 x 25% = $0.195); $0.195 per share.
2.5 Date of Conversion. Each $25,000 may be
converted at the one year anniversary of the deposit of the $25,000 and subsequent disbursement to the Company of the $25,000, unless the Company becomes a fully reporting company, at which time the holding period would be six months, or if the
underlying shares are registered.
2.6 Reservation of Shares. A total of
2,307,692 shares of the Company’s common stock will be held on reserve for the conversion of the Loan Treaty into shares.
3. Interest rate under the Treaty. The interest rate on the loan
amount shall be 8% per annum. Interest shall begin accruing on the date the funds are deposited into the IOLTA account.
4. Final provisions. This Treaty and any relations in connection
with this Treaty are governed and interpreted in accordance with the laws of the State of Nevada. If any dispute, disagreement or claim arises from this Treaty or related to this Treaty, the Parties shall make every effort to resolve this
dispute in good faith in a timely manner.
4.1. If it is not possible to resolve the disagreements through
negotiations, all disputes, disagreements and demands arising from this Treaty or in connection with it, shall be resolved in accordance with the rules of jurisdiction of disputes established by the procedural law of the State of Nevada
4.2. Any changes, modifications, or amendments to this Treaty are
valid only upon mutual written agreement, executed by authorized representatives of both Parties. Under the written form, the Parties, for the purposes of this Treaty, understand and agree that both the drawing up of a single document, and/or the
exchange of letters, telegrams, messages using facsimile facilities which allows to identify the sender and the date of departure, are sufficient for written approval.
5. Party Information
Lender’s Details:
eSilkroad Network Limited
9110 63rd Drive, 2nd Floor
Rego Park
New York, New York 11374
Borrower’s Details:
GZ6G Technologies Corp.
3333 Michelson Dr., 3rd Floor
Irvine, CA 92612
Huntington Bank IOLTA Account:
The Huntington National Bank
19683 Mack Ave
MI4212
Grosse Pointe Woods, MI 48236
Account #: [redacted]
ABA Routing Number: 044000024
Swift Code (International): HUNTUS33
Beneficiary:
SD Mitchell & Associates, PLC, IOLTA
977 Hampton Road
Grosse Pointe Woods, MI 48236
The undersigned, by signing below, do hereby acknowledge that they have read, understand, and agree to
the terms and conditions of this Treaty.
| GZ6G TECHNOLOGIES CORP |
ESILKROAD NETWORK LIMITED | |||
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/s/William Coleman Smith
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/s/Ruben Yakubov
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|||
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William Coleman Smith
|
Ruben Yakubov |
|||
| President/CEO |
President |
AMENDMENT TO LOAN TREATY AGREEMENT
THIS AMENDMENT TO LOAN TREATY AGREEMENT (“Amendment”) is entered into on this 6th day of April 2021, by and between
GZ6G Technologies Corp (“GZIC”, “Company”, “Borrower”), a publicly traded Nevada corporation, and eSilkroad Network Limited (“eSilk”, “Lender”), a privately held Wyoming corporation, on this 6th day of April 2021, and pursuant to the terms
and conditions set forth below:
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1.
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Whereas, GZIC and eSilk entered into a Loan Treaty Agreement (“Treaty”) on December 21, 2020, wherein eSilk promised to lend Four
Hundred Fifty Thousand Dollars ($450,000) to GZIC in payments of Twenty Five Thousand Dollars ($25,000) every week.
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2.
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Whereas, eSilk has agreed to amend and extend the Loan Treaty to include an additional One Million Dollars ($1,000,000) to the Treaty
in payments of Fifty-Five Thousand Five Hundred Fifty-Five Dollars Fifty-Six Cents ($55,555.56), every Friday, over a period of ninety (90) business days beginning April 16, 2021.
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3.
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Whereas, payments from eSilk will be deposited into the Huntington Bank IOLTA account of SD Mitchell & Associates, PLC and
dispersed pursuant to instructions by William Coleman Smith, president of GZIC.
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4.
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Whereas, each payment of $55,555,56 shall be memorialized by Convertible Promissory Notes, in increments of Two Hundred Twenty Two
Thousand Two Hundred Twenty Two Dollars Twenty Four Cents ($222,222.24).
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5.
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Whereas, at the option of the Lender, each $55,555.56 loaned to the Company may be converted into common shares at the rate of $0.195
per share.
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All other terms of the original Loan Treaty Agreement entered into on December 21, 2020, remain the same and unchanged.
By signing below, the undersigned does hereby acknowledge that they have reviewed, understood and agree with the terms set forth above.
| GZ6G TECHNOLOGIES CORP |
ESILKROAD NETWORK LIMITED | |||
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/s/William Coleman Smith
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/s/Ruben Yakubov
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|||
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William Coleman Smith
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Ruben Yakubov |
|||
| President/CEO |
President |
CONVERTIBLE PROMISSORY NOTE
Dated: [*] Amount: $[*]
THIS CONVERTIBLE PROMISSORY NOTE
(“Note”) is entered into this [*] day of [*], 202[*], by and between GZ6G Technologies Corp. (“Company”, “GZIC”, “Borrower”), a publicly traded company incorporated in the State of Nevada, and eSilkroad Network Limited (“eSilk”, “Lender”), a
privately held Wyoming corporation, wherein eSilk has provided [*] ($[*]) in [*] Dollars ($[*]) increments to GZIC, pursuant to a Loan Treaty entered into on December 21, 2020, and an extension of the loan treaty (Loan Treaty Extension) on April 20,
2021, and on the terms and conditions set forth below.
The Loan Treaty Extension calls for the provision of One Million Dollars ($1,00,000) in $250,000 increments by eSilk to GZIC. The
Principal Amount of $250,000 shall carry an interest rate of 8% per annum (“Interest”); the Principal Amount and any accrued and unpaid Interest shall be repaid upon the one-year anniversary of the deposit of the funds into the Huntington Bank IOLTA
account of SD Mitchell & Associates, PLC (“Due Date”).
Funds deposited into the Huntington Bank IOLTA Account of SD Mitchell & Associates, shall be dispersed pursuant to instructions
dictated by GZIC.
The Borrower covenants, promises and
agrees as follows:
1. Interest and Payment. This
Note shall carry an interest rate of 8% per annum and shall be paid, along with the Principal Amount, on the Due Date. The payment of the Principal Amount and/or Interest shall be made at the Lender’s address as it appears underneath the signature
line of this Note, or at such other places as may be designated by Lender.
2. Term. The term of this Note
shall be for twelve months commencing on the date of each $250,000 deposit of the Loan Treaty into the Huntington Bank IOLTA account. This Note may be repaid without penalty, at any time during the twelve months, with Notice, by paying to the Lender
the entire outstanding Principal Amount and all accrued but unpaid Interest on this Note, or in amounts agreed upon by both the Lender and the Borrower.
2.1 Receipt of Funds. In order
to acknowledge receipt of funds from Lender, SD Mitchell & Associates shall acknowledge, to Lender, and Borrower, verification of the date the funds were posted into its Huntington Bank IOLTA account.
2.1.1 Dates Funds Received. The following date is the date $250,000 was received into the IOLTA account:
(a) [*]
3. Use of Proceeds. GZIC shall
use the funds underlying this Note to pay overhead and operating costs of the Company, at its discretion, relative to the needs of the Company.
4. Conversion. At the option
of the Lender, each $250,000 loaned to the Company may be converted into common shares of the Company at the rate of 25% discount to the close of business on November 23, 2020 ($0.26 x 25% = $0.195); $0.195 per share.
4.1 Date of Conversion. Each
$250,000 may be converted at the one year anniversary of the deposit of the $250,000 and subsequent disbursement to the Company of the $250,000, unless the Company becomes a fully reporting company, at which time the holding period would be six
months, or if the underlying shares are registered.
5. Default.
5.1 Events of Default. The
entire unpaid and unredeemed balance of the Principal Amount and all Interest accrued and unpaid on this Note shall, at the election of Holder, be and become immediately due and payable upon the occurrence of any of the following events (a “Default
Event”):
(a) The non-payment by the Borrower when due of the Principal Amount and Interest as provided in this Note;
(b) If the Borrower (i) applies for or consents to the appointment of, or if there shall be a taking of possession by, a receiver,
custodian, trustee, or liquidator for the Borrower or any of its property; (ii) becomes generally unable to pay its debts as they become due; (iii) makes a general assignment for benefit of creditors or becomes insolvent; (iv) files or is served with
any petition for relief under the Bankruptcy Code or any similar federal or state statute; (v) has any judgment entered against it in excess of $1,000,000 in any one instance or in the aggregate during any consecutive twelve (12) month period, or has
any attachment or levy made to or against any of its property or assets; (vi) defaults with respect to any evidence of indebtedness or liability for borrowed money, or any such indebtedness shall not be paid as and when due and payable; or (vii) has
assessed or imposed against it, or if there shall exist, any general or specific lien for any federal, state or local taxes or charges against any of its property or assets; or
(c) If the Company (i) enters into any merger, sale, or acquisition agreement with any third party; (ii) where a change of control
occurs; (iii) where a sale of all, or substantially all, of its assets occur; or (iv) the Company fails to remain current in its public filings, or is deemed non-compliant by any regulatory agency monitoring its public filings.
5.2 Rights upon Default. The
sole right and remedy, upon default of this Note, is to place a lien on the Company’s assets under the UCC regulations, and to demand immediate payment of any outstanding balance of the principal, along with accrued, and unpaid, interest on the Note.
6. Failure to Act and Waiver. No
failure or delay by Lender to insist upon the strict performance of any term of this Note or to exercise any right, power or remedy consequent upon a default hereunder shall constitute a waiver of any such term or any such breach, or preclude the
Holder from exercising any such right, power, or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Note, Lender shall not be deemed to waive the right either to require payment when due of all
other amounts payable under this Note, or to declare a default for failure to effect such a payment of any such other amount.
The failure of Lender to give notice of any failure or breach of the Company under this Note shall not constitute a waiver of any
right or remedy in respect of such continuing failure or breach or any subsequent failure or breach.
7. Consent to Jurisdiction. The
Company hereby agrees and consents that any action, suit or proceeding arising out of this Note may be brought in any appropriate court in the State of Nevada, having jurisdiction over the subject matter, all at the sole election of Lender, and by
the issuance and execution of this Note the Borrower irrevocably consents to the jurisdiction of each such court.
8. Transfer/Assignment. This
Note shall not be transferred or assigned without the written consent of both parties.
9. Notices. All notices and
communications under this Note shall be in writing and shall be either emailed, with acknowledgement of receipt of such email, delivered in person or accompanied by a signed receipt thereof or mailed first-class, certified mail, return receipt
requested, postage prepaid, and addressed as follows:
If to the Lender:
eSilkroad Network Limited
9110 63rd Drive, 2nd Floor
Rego Park
New York, New York 11374
And if to the Borrower:
GZ6G Technologies Corp.
3333 Michelson Dr., 3rd Floor
Irvine, CA 92612
Any notice of communication shall be deemed given and received as of the date of such delivery or mailing.
10. Governing Law. This Note
shall be governed by and construed and enforced in accordance with the laws of the State of Nevada.
By signing below, the undersigned do hereby acknowledge receipt, review, and agreement with the terms and
conditions of this Note as stated above.
[Signature page follows]
IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed on this [*] day of [*], 202[*]:
| GZ6G TECHNOLOGIES CORP |
ESILKROAD NETWORK LIMITED | |||
|
/s/
|
/s/
|
|||
|
William Coleman Smith
|
Ruben Yakubov |
|||
| President/CEO |
President |
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (“Agreement”) dated April 25, 2021, is made by and between GZ6G TECHNOLOGIES CORP. a Nevada corporation
("Company"), and WORLD AMBER CORP, a Nevada corporation (the "Investor").
RECITALS
WHEREAS, the parties desire, that upon the terms and subject to the conditions contained herein, the Company shall issue and sell to
Investor, from time to time as provided herein, and Investor shall purchase up to sixteen million six hundred sixty-six thousand six hundred sixty-seven (16,666,667) shares of the Company’s Common Stock (as defined below); and
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 DEFINED TERMS as used in this Agreement, the following terms shall have the following meanings specified or indicated
(such meanings to be equally applicable to both the singular and plural forms of the terms defined).
“AFFILIATE” shall mean a party’s employees, representatives, agents, partners, consultants and advisors and all persons that directly
or indirectly, through one or more intermediaries, controls or are controlled by, or under common control with, such party.
“AGREEMENT” shall have the meaning specified in the preamble hereof.
“BY-LAWS” shall have the meaning specified in Section 4.7.
“CLAIM NOTICE” shall have the meaning specified in Section 9.3(a).
“CLOSING” shall mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.
“CLOSING CERTIFICATE” shall mean the closing certificate of the Company in the form of Exhibit B hereto.
“CLOSING DATE” shall have the meaning specified in Section 2.3.
“COMMITMENT PERIOD” shall mean the period commencing on the Execution Date, and ending on the earlier of (i) the date on which
Investor shall have purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, or (ii) July 30, 2022.
1
“CLOSING PRICE” shall mean the price of $0.30 per share.
“COMMON STOCK” shall mean the Company's common stock, $0.001 par value per share, and any shares of any other class of common stock
whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company).
“COMMON STOCK EQUIVALENTS” shall mean any securities that are convertible into or exchangeable for Common Stock or any options or
other rights to subscribe for or purchase Common Stock or any such convertible or exchangeable securities.
“COMPANY” shall have the meaning specified in the preamble to this Agreement.
“DAMAGES” shall mean any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of expert witnesses and investigation).
“DISPUTE PERIOD” shall have the meaning specified in Section 9.3(a).
“DTC” shall have the meaning specified in Section 2.3.
“DWAC” shall have the meaning specified in Section 2.3.
“EFFECTIVE DATE” shall mean the date that the Registration Statement is declared effective by the SEC.
“ESTIMATED PUT SHARES” shall have the meaning specified in Section 2.2(a).
“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.
“EXECUTION DATE” shall have the meaning specified in the preamble hereof.
“FAST” shall have the meaning specified in Section 2.3.
“FINRA” shall mean the Financial Industry Regulatory Authority, Inc.
“INDEMNIFIED PARTY” shall have the meaning specified in Section 9.3(a).
“INDEMNIFYING PARTY” shall have the meaning specified in Section 9.3(a).
“INDEMNITY NOTICE” shall have the meaning specified in Section 9.3(b).
“INVESTMENT AMOUNT” shall mean the dollar amount to be invested by Investor to purchase Put Shares with respect to any Put as notified
by the Company to Investor in accordance with Section 2.2.
“INVESTOR” shall have the meaning specified in the preamble to this Agreement.
“LEGEND” shall have the meaning specified in Section 8.1.
“MARKET PRICE” shall mean the average VWAP price on the Principal Market during the Valuation Period, as reported by Bloomberg Finance
L.P.
“MATERIAL ADVERSE EFFECT” shall mean any effect on the business, operations, properties, or financial condition of the Company that is
material and adverse to the Company and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform its obligations under any of this Agreement.
2
“MAXIMUM COMMITMENT AMOUNT” shall mean Five Million Dollars ($5,000,000).
“PERSON” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
“PRINCIPAL MARKET” shall mean the OTC Bulletin Board, OTCQB or such other principal exchange which is at the time the principal
trading exchange or market for the Common Stock.
“PURCHASE PRICE” shall mean $0.30 per share.
“PUT” shall mean the right of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and
conditions of this Agreement.
“PUT DATE” shall mean any Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).
“PUT NOTICE” shall mean a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Investment
Amount with respect to which the Company intends to require Investor to purchase shares of Common Stock pursuant to the terms of this Agreement.
“PUT SHARES” shall mean up to sixteen million six hundred sixty-six thousand six hundred sixty-seven (16,666,667)) shares of Common
Stock issued or issuable pursuant to a Put that has been exercised or may be exercised in accordance with the terms and conditions of this Agreement.
“REGISTERED SECURITIES” shall mean the (a) Put Shares, (b) outstanding Common Stock of the Company subject to piggyback registration
rights, and (c) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization
or otherwise. As to any particular Registered Securities, once issued such securities shall cease to be Registrable Securities when (i) a Registration Statement has been declared effective by the SEC and such Registrable Securities have been
disposed of pursuant to a Registration Statement, (ii) such Registrable Securities have been sold under circumstances under which all of the applicable conditions of Rule 144 are met, (iii) such time as such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction under the Securities Act or (iv) in the opinion of counsel to the Company, which counsel shall be reasonably acceptable to Investor, such Registrable Securities may be
sold without registration under the Securities Act or the need for an exemption from any such registration requirements and without any time, volume or manner limitations pursuant to Rule 144(b)(i) (or any similar provision then in effect) under
the Securities Act.
“REGISTRATION STATEMENT” shall mean the Company’s effective registration statement on file with the SEC, and any follow up
registration statement or amendment thereto.
3
“REGULATION D” shall mean Regulation D promulgated under the Securities Act.
“RULE 144” shall mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act.
“SEC” shall mean the Securities and Exchange Commission.
“SECURITIES ACT” shall have the meaning specified in the recitals of this Agreement.
“SEC DOCUMENTS” shall mean, as of a particular date, all reports and other documents filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the Company's then most recently completed and reported fiscal year as of the time in question (provided that if the date in question is within ninety days of the beginning of the Company's fiscal year,
the term shall include all documents filed since the beginning of the preceding fiscal year).
“SHORT SALES” shall mean all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.
“SUBSCRIPTION DATE” shall mean the date on which this Agreement is executed and delivered by the Company and Investor.
“THIRD PARTY CLAIM” shall have the meaning specified in Section 9.3(a).
“TRADING DAY” shall mean a day on which the Principal Market shall be open for business.
“TRANSACTION DOCUMENTS” shall mean this Agreement and the Registration Rights Agreement.
“TRANSFER AGENT” shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the
Common Stock upon the Company's appointment of any such substitute or replacement transfer agent).
“UNDERWRITER” shall mean any underwriter participating in any disposition of the Registered Securities on behalf of Investor pursuant
to the Registration Statement.
4
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1 INVESTMENTS.
(a) PUTS. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII), on
any Put Date the Company may exercise a Put by the delivery of a Put Notice. The number of Put Shares that Investor shall purchase pursuant to such Put shall be determined by dividing the Investment Amount specified in the Put Notice by the
Purchase Price with respect to such Put Notice.
Section 2.2 MECHANICS.
(a) PUT NOTICE. At any time during the Commitment Period, the Company may deliver a Put Notice to Investor, subject to the
conditions set forth in Section 7.2; provided, however, that the Investment Amount identified in the applicable Put Notice, when taken together with all prior Put Notices, shall not exceed the Maximum Commitment Amount. The maximum Put amount that
the Company may request from Investor at any one time shall be equal to twice the average of the daily trading volume of the of the Company’s common stock during the ten trading days immediately following the Put date, and so long as the amount
does not exceed 9.99% of the then issued and outstanding shares of the Company. The price of the shares, purchased pursuant to any Put shall be $0.30 per share. On the Put Date, the Company shall deliver to Investor’s brokerage account estimated
Put Shares equal to the Investment Amount indicated in the Put Notice divided by the number of shares equal to the Put Notice at $0.30 per share (the “Estimated Put Shares”). Simultaneously therewith, and in all events within one Trading Day
following the Put Date, Investor shall pay the Investment Amount to the Company by wire transfer. The Investment Amount shall be deemed delivered on the Trading Day it is received by the Company if such wire is received on or prior to 12:00 noon
Eastern time. Similarly, the Put Shares shall be deemed delivered on the Trading Day they are received electronically by Investor if such Put Shares are received on or prior to 12:00 Noon Eastern time. Any wire transfer or Put Shares received after
12:00 Noon Eastern time on a Trading Day shall be deemed to have been received on the next Trading Day.
(b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on (i) the Trading Day it is received by
electronic mail by Investor if such notice is received on or prior to 12:00 noon Nevada time, or (ii) the immediately succeeding Trading Day if it is received by electronic mail after 12:00 noon Nevada time on a Trading Day or at any time on a day
which is not a Trading Day.
Section 2.3 CLOSINGS. On the day WAC delivers a Put Notice to Investor, the Investor shall provide the amount of investment requested
and the Company shall deliver to Investor, the correlating number of common shares to Investor within three days of Investor’s deposit.
5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company that:
Section 3.1 INTENT. Investor is entering into this Agreement for its own account and Investor has no present arrangement (whether or
not legally binding) at any time to sell the Registered Securities to or through any person or entity; provided, however, that Investor reserves the right to dispose of the Registered Securities at any time in accordance with federal and state
securities laws applicable to such disposition.
Section 3.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges that it has had the opportunity to review this Agreement and
the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
Section 3.3 SOPHISTICATED INVESTOR. Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Registered Securities. Investor
acknowledges that an investment in the Registered Securities is speculative and involves a high degree of risk.
Section 3.4 AUTHORITY. (a) Investor has the requisite power and authority to enter into and perform its obligations under this
Agreement and the transactions contemplated hereby in accordance with its terms; (b) the execution and delivery of this Agreement and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary action and no further consent or authorization of Investor or its partners is required; and (c) this Agreement has been duly authorized and validly executed and delivered by Investor and constitutes a valid and binding obligation of
Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of
general application.
Section 3.5 NOT AN AFFILIATE. Investor is not an officer, director or “affiliate” (as that term is defined in Rule 405 of Securities
Act) of the Company.
6
Section 3.6 ORGANIZATION AND STANDING. Investor is a corporation duly organized, validly existing and in good standing under the laws
of the State of Wyoming and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified and in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a material adverse effect on Investor.
Section 3.7 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement and any other document or instrument contemplated
hereby, and the consummation of the transactions contemplated hereby and thereby, and compliance with the requirements hereof and thereof, will not (a) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on
Investor, (b) violate any provision of any indenture, instrument or agreement to which Investor is a party or is subject, or by which Investor or any of its assets is bound, or conflict with or constitute a material default thereunder, (c) result
in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by Investor to any third party, or (d) require the approval of any third-party (that
has not been obtained) pursuant to any material contract, instrument, agreement, relationship or legal obligation to which Investor is subject or to which any of its assets, operations or management may be subject.
Section 3.8 DISCLOSURE; ACCESS TO INFORMATION. Investor had an opportunity to review copies of the SEC Documents filed on behalf of
the Company and has had access to all publicly available information with respect to the Company.
Section 3.9 MANNER OF SALE. At no time was Investor presented with or solicited by or through any leaflet, public promotional
meeting, television advertisement or any other form of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor that, except as disclosed in the SEC Documents:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly organized and validly existing and in good standing under
the laws of the State of Nevada and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a Material Adverse Effect.
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Section 4.2 AUTHORITY. (a) The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement and to issue the Put Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate
action and no further consent or authorization of the Company or its Board of Directors or stockholders is required; and (c) each of this Agreement and has been duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general application.
Section 4.3 CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of five hundred million
(500,000,000) shares of Common Stock, $0.001 par value per share, of which twenty two million one hundred forty-six thousand six hundred twenty-three (22,146,623) were issued and outstanding as of April 12, 2021, ten million (10,000,000) shares of
Special Series A Preferred Stock, par value $0.004, of which 5,000,000 Special Series A Preferred shares are issued and outstanding, and one (1) share of Special Serie B Preferred Stock, par value $0.001, of which 1 share is issued and
outstanding.. Except as set forth in the Company’s SEC Documents, or as otherwise disclosed to Investor by the Company, as of April 12, 2021, there are no outstanding securities which are convertible into shares of Common Stock, whether such
conversion is currently exercisable or exercisable only upon some future date or the occurrence of some event in the future. All of the outstanding shares of Common Stock of the Company have been duly and validly authorized and issued and are fully
paid and non-assessable.
Section 4.4 COMMON STOCK. The Company is in full compliance with all reporting requirements of an alternative reporting company, and
the Company has maintained all requirements for the continued listing or quotation of the Common Stock, and such Common Stock is currently listed or quoted on its Principal Market.
Section 4.5 VALID ISSUANCES. When issued, and paid for as herein provided, the Put Shares shall be duly and validly issued, fully
paid, and non-assessable. The sales of the Put Shares pursuant to this Agreement, and the Company's performance of its obligations hereunder, shall not (a) result in the creation or imposition of any liens, charges, claims or other encumbrances
upon the Put Shares, or any of the assets of the Company, or (b) entitle the holders of outstanding shares of Common Stock to preemptive or other rights to subscribe to or acquire the Common Stock or other securities of the Company. The Put Shares
shall not subject Investor to personal liability, in excess of the subscription price by reason of the ownership thereof.
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Section 4.6 NO CONFLICTS. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, including without limitation the issuance of the Put Shares, do not and will not (a) result in a violation of the Company’s Articles of Incorporation or By-Laws or (b) conflict with, or constitute a material
default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture, instrument or any
“lock-up” or similar provision of any underwriting or similar agreement to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the
Common Stock in accordance with the terms hereof (other than any SEC, FINRA or state securities filings that may be required to be made by the Company subsequent to any Closing, any registration statement that may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of Investor herein.
Section 4.7 NO MATERIAL ADVERSE CHANGE. Since April 12, 2021, no event has occurred that would have a Material Adverse Effect on the
Company.
Section 4.8 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the Company’s SEC filings, there are no lawsuits or proceedings
pending or to the knowledge of the Company threatened, against the Company, nor has the Company received any written or oral notice of any such action, suit, proceeding or investigation, which would have a Material Adverse Effect. No judgment,
order, writ, injunction or decree or award has been issued by or, so far as is known by the Company, requested of any court, arbitrator or governmental agency which would have a Material Adverse Effect.
Section 4.9 DILUTION. The number of shares of Common Stock issuable as Put Shares may increase substantially in certain
circumstances, including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the end of the Commitment Period. The Company’s executive officers
and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect. The board of directors of the Company has concluded in its good faith business
judgment that such issuance is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Put Shares is binding upon the Company and enforceable regardless of the dilution such issuance may have on
the ownership interests of other shareholders of the Company.
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ARTICLE V
COVENANTS OF INVESTOR
Section 5.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. Investor's trading activities with respect to shares of the Common Stock will
be in compliance with all applicable state and federal securities laws, rules and regulations and the rules and regulations of FINRA and the Principal Market on which the Common Stock is listed or quoted.
Section 5.2 SHORT SALES AND CONFIDENTIALITY. Neither Investor nor any Affiliate of the Investor acting on its behalf or pursuant to
any understanding with it will execute any Short Sales during the period from the date hereof to the end of the Commitment Period. For the purposes hereof, and in accordance with Regulation SHO, the sale after delivery of a Put Notice of such
number of shares of Common Stock reasonably expected to be purchased under a Put Notice shall not be deemed a Short Sale. Notwithstanding the foregoing, Investor may not sell any shares of the Company’s Common Stock owned by Investor, other than
the Put Shares, during the period from the delivery of a Put Notice to the applicable Closing Date. Other than to other Persons party to this Agreement, Investor has maintained the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction).
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 RESERVATION OF COMMON STOCK. The Company will, from time to time as needed in advance of a Closing Date, reserve and keep
available until the consummation of such Closing, sufficient shares of Common Stock for the purpose of enabling the Company to satisfy its obligation to issue the Put Shares to be issued in connection therewith. The number of shares so reserved
from time to time, as theretofore increased or reduced as hereinafter provided, may be reduced by the number of shares actually delivered hereunder.
Section 6.2 LISTING OF COMMON STOCK. If the Company is required to apply to have the Common Stock traded on any other Principal
Market, it shall include in such application the Put Shares, and shall take such other action as is necessary or desirable in the reasonable opinion of Investor to cause the Common Stock to be listed on such other Principal Market as promptly as
possible. The Company shall use its commercially reasonable efforts to continue the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the bylaws or rules of the FINRA and the Principal Market.
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Section 6.3 CERTAIN AGREEMENTS. From the date of this Agreement to the earlier to occur of (a) the expiration of the Commitment
Period or (b) the date in which the Company has put to the Investor at least $5,000,000 worth of Put Shares, the Company covenants and agrees that it will not, without the prior written consent of the Investor, enter into any other agreement with a
third party during the Commitment Period having terms and conditions substantially comparable to this Agreement, except as may be necessary to satisfy outstanding pre-emptive rights. For the avoidance of doubt, nothing contained in the Transaction
Documents shall restrict, or require the Investor's consent for, any agreement providing for the sale, issuance or distribution of (or the sale, issuance or distribution of) any equity securities of the Company pursuant to any agreement or
arrangement that is not commonly understood to be a “registered offering”. Further, nothing contained in this Transaction Document shall restrict or require the Investor’s Consent for, any agreement providing for the sale, issuance or distribution
of (or the sale, issuance or distribution of) any debt securities of the Company.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE AND SELL COMMON STOCK. The obligation hereunder of the
Company to issue and sell the Put Shares to Investor is subject to the satisfaction of each of the conditions set forth below.
(a) ACCURACY OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Investor shall be true and
correct in all material respects as of the date of this Agreement and as of the date of each such Closing as though made at each such time.
(b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by Investor at or prior to such Closing.
(c) PRINCIPAL MARKET REGULATION. The Company shall not issue any Put Shares, and the Investor shall not have the right to
receive any Put Shares, if the issuance of such shares would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of the Principal Market (the
“EXCHANGE CAP”).
Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A PUT NOTICE AND THE OBLIGATION OF INVESTOR TO PURCHASE PUT
SHARES. The right of the Company to deliver a Put Notice and the obligation of Investor hereunder to acquire and pay for the Put Shares is subject to the satisfaction of each of the following conditions:
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(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement, and any amendment or supplement thereto, shall remain
effective for the sale by Investor of the Registered Securities subject to such Put Notice, and (i) neither the Company nor Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such
Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so and (ii) no other suspension of the use or
withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.
(b) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be
true and correct in all material respects (except for representations and warranties specifically made as of a particular date), except for any conditions which have temporarily caused any representations or warranties herein to be incorrect and
which have been corrected with no continuing impairment to the Company or Investor.
(c) PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company.
(d) NO INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been
commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by this Agreement.
(e) ADVERSE CHANGES. Since the date of filing of the Company's most recent SEC Document, no event that had or is reasonably
likely to have a Material Adverse Effect has occurred.
(f) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the Common Stock shall not have been suspended
by the SEC, the Principal Market or the FINRA and the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market.
(g) INTENTIONALLY OMITTED.
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(h) TEN PERCENT LIMITATION. On each Closing Date, the number of Put Shares then to be purchased by Investor shall not exceed
the number of such shares that, when aggregated with all other shares of Common Stock then owned by Investor beneficially or deemed beneficially owned by Investor, would result in Investor owning more than 9.99% of all of such Common Stock as would
be outstanding on such Closing Date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section, in the event that the amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder is greater on a Closing Date than on the date upon which the Put Notice associated with such Closing Date is given, the amount of Common Stock outstanding on
such Closing Date shall govern for purposes of determining whether Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement, would own more than 9.99% of the Common Stock following such Closing Date.
(i) PRINCIPAL MARKET REGULATION. The Company shall not issue any Put Shares, and the Investor shall not have the right to
receive any Put Shares, if the issuance of such shares would exceed the Exchange Cap.
(j) NO KNOWLEDGE. The Company shall have no knowledge of any event reasonably likely to have the effect of causing such
Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the sixty (60) Trading Days following the Trading Day on which such Put Notice is deemed delivered).
(k) NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder approval requirements of the Principal Market.
(l) OTHER. Within one (1) Trading Days of the date of delivery of each Put Notice, Investor shall have received a
certificate in substantially the form and substance of Exhibit B hereto, executed by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each such certificate.
ARTICLE VIII
LEGENDS
Section 8.1 NO STOCK LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend shall be placed on the shares representing the Put Shares.
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Section 8.2 INVESTOR'S COMPLIANCE. Nothing in this Article VIII shall affect in any way Investor's obligations under any agreement to
comply with all applicable securities laws upon the sale of the Common Stock.
ARTICLE IX
NOTICES; INDEMNIFICATION
Section 9.1 NOTICES. All notices, demands, consents, approvals, and other requests, communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or electronic mail as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice
or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by electronic mail as a PDF, at the address below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of
mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
If to the Company:
GZ6G Technologies Corp.
3333 Michelson Drive, 3rd Floor
Irvine, California 92612
If to the Investor:
World Amber Corp
81
Belvia Drive,
Concord,
Ontario, L4K 5K3, CAN
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Either party hereto may from time to time change its address or electronic mail for notices under this Section 9.1 by giving at least
ten (10) days' prior written notice of such changed address or electronic mail to the other party hereto.
Section 9.2 INDEMNIFICATION. Each party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other party along with
its officers, directors, employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against
any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment
thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, or (iv) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily from Indemnified
Party's failure to perform any covenant or agreement contained in this Agreement or Indemnified Party's negligence, recklessness or bad faith in performing its obligations under this Agreement; provided, however, that the foregoing indemnity
agreement shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying Party in
reliance upon and in conformity with written information furnished to the Indemnifying Party by the Indemnified Party expressly for use in the Registration Statement, any post-effective amendment thereof or supplement thereto, or any preliminary
prospectus or final prospectus (as amended or supplemented).
Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for indemnification by any Indemnified Party (as defined below)
under Section 9.2 shall be asserted and resolved as follows:
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(a) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 9.2 is
asserted against or sought to be collected from such Indemnified Party by a person other than a party hereto or an affiliate thereof (a “THIRD PARTY CLAIM”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification that is being asserted under any provision of Section 9.2 against an Indemnifying Party, together with the
amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a “CLAIM NOTICE”) with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim
Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following
receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the “DISPUTE PERIOD”) whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section
9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and
expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this clause (i), file any motion, answer or other pleadings or take any
other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of
any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may takeover the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim.
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(ii) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any
notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be
prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such
dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this clause (ii) or of
the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with
such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect
to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its
liability to the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount
of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.
(b) In the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such claim (an “INDEMNITY NOTICE”) with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent
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that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that
it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in
such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.
(c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.
(d) The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the
Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.
ARTICLE X
MISCELLANEOUS
Section 10.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and interpreted in accordance with the laws of the
State of Nevada without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in Nevada with respect to any dispute arising
under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby.
Section 10.2 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Company and Investor and their
respective successors. Neither this Agreement nor any rights of Investor or the Company hereunder may be assigned by either party to any other person.
Section 10.3 THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the Company and Investor and their respective
successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
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Section 10.4 TERMINATION. The Company may terminate this Agreement at any time by written notice to the Investor. Additionally, this
Agreement shall terminate at the end of Commitment Period or as otherwise provided herein; provided, however, that the provisions of Articles IX, and Sections 10.1 and 10.2 shall survive the termination of this Agreement for a period of twenty four
(24) months.
Section 10.5 ENTIRE AGREEMENT, AMENDMENT; NO WAIVER. This Agreement and the instruments referenced herein contain the entire
understanding of the Company and Investor with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Investor makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.
Section 10.6 FEES AND EXPENSES. The Company agrees to pay its own expenses in connection with the preparation of this Agreement and
performance of its obligations hereunder. The Company shall pay all stamp or other similar taxes and duties levied in connection with issuance of the Put Shares pursuant hereto.
Section 10.7 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of
the parties and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Agreement may be delivered
to the other parties hereto by electronic mail of a copy of this Agreement bearing the signature of the parties so delivering this Agreement.
Section 10.8 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement
to any party.
Section 10.9 FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
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Section 10.10 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
Section 10.11 EQUITABLE RELIEF. The Company recognizes that in the event that it fails to perform, observe, or discharge any or all
of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to Investor. The Company therefore agrees that Investor shall be entitled to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
Section 10.12 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for the convenience of reference and are
not to be considered in construing or interpreting this Agreement.
Section 10.13 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied upon for the determination of the Closing Price for
the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg Finance L.P. or any successor thereto. The written mutual consent of Investor and the Company shall be required to employ any other reporting entity.
Section 10.14 PUBLICITY. The Company and Investor shall consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement without the prior written consent of the other parties, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide the other parties with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name of Investor without the prior written consent of such Investor, except to the extent required by law. Investor acknowledges that this Agreement and all or part of the
Transaction Documents may be deemed to be “material contracts” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements
filed under the Securities Act or the Exchange Act. Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Equity Purchase Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
WORLD AMBER CORP
By: /s/Yohanan Aharon
Name: Yohanan Aharon
Title: Managing Member
GZ6G TECHNOLOGIES CORP.
By: /s/William Coleman Smith
Name: William Coleman Smith
Title: Chief Executive Officer
EXHIBITS:
EXHIBIT A - Put Notice
EXHIBIT B - Closing Certificate
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EXHIBIT A
FORM OF PUT NOTICE
TO: WORLD AMBER CORP
We refer to the Equity Purchase Agreement dated April 12, 2021 (the “Agreement”) entered into by GZ6G TECHNOLOGIES CORP. (the “Company”) and WORLD AMBER
CORP. Capitalized terms defined in the Agreement shall, unless otherwise defined, have the same meaning when used herein.
We hereby:
1 - Give you notice that we require you to purchase $__________ (the “Investment Amount”) in Put Shares; and
2 - Certify that, as of the date hereof, to the best of our knowledge, the conditions set forth in Section 7.2 of the Agreement are satisfied.
Date: _____________, 20__
GZ6G TECHNOLOGIES CORP.
By: _________________________
Name: William Coleman Smith
Title: Chief Executive Officer
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EXHIBIT B
FORM OF
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER
OF
GZ6G TECHNOLOGIES CORP.
Pursuant to Section 7.2(m) of that certain Equity Purchase Agreement dated April 25, 2021 (the “Agreement”), by and between the Company and WORLD AMBER
CORP (the “Investor”), the undersigned, in his capacity as the Chief Executive Officer of GZ6G TECHNOLOGIES CORP. (the “Company”), and not in his individual capacity, hereby certifies, as of the date hereof (such date, the “Condition Satisfaction
Date”), the following:
1. The representations and warranties of the Company are true and correct in all material respects as of the Condition
Satisfaction Date as though made on the Condition Satisfaction Date (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to
and including the Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties of the Company set forth in the Agreement to be incorrect and which have been corrected with no continuing
impairment to the Company or Investor; and
2. All of the Company’s conditions to Closing set forth in Section 7.2 of the Agreement have been satisfied as of the Condition
Satisfaction Date.
Capitalized terms used herein shall have the meanings set forth in the Agreement unless otherwise defined herein.
IN WITNESS WHEREOF, the undersigned has hereunto affixed his hand as of the 28th day of April 2021.
GZ6G TECHNOLOGIES CORP.
By: ___________________________
Name: William Coleman Smith
Title: Chief Executive Officer
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To Whom It May Concern:
We hereby consent to the use in the registration statement of GZ6G
Technologies Corp. on Form S-1, filed on May 17, 2021, of our Report of Independent Registered Public Accounting Firm, dated April 15, 2021, on the consolidated balance sheet of GZ6G Technologies Corp. as of December 31, 2020 and 2019, and
the related consolidated statements of operations and changes in consolidated stockholders equity and consolidated cash flows for the years then ended and the related notes,
which appear in the Form S-1.
/s/ Pinnacle Accountancy Group of Utah
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, UT
May 17, 2021