What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2020-11-12 compared with 2020-08-12 · 674 added, 595 removed, 1385 unchanged (48% of the section changed)

Controls and Procedures

Other Information

and Procedures

FINANCIAL INFORMATION

Condensed consolidated financial statements

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets:

Accounts receivable

Other receivable

Marketable equity security

Assets of discontinued operations

Total current assets

Property and equipment, net

Note receivable

Convertible note receivable

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

AND STOCKHOLDERS’

Current Liabilities:

Accounts payable and accrued expenses (including related parties of $919,573 and $845,513)

Accounts payable and accrued expenses (including

related parties of $251,833 and $334,000)

Accrued settlement

Convertible notes payable, net of discount of $1,494,636 and $0

Convertible notes payable, net of discount of $577,931

Note payable, net of discount of $0 and $47,671

Derivative liability

Liabilities of discontinued

Total current liabilities

3 unchanged sentences

Stockholders’

Equity (Deficit):

Series B Preferred stock, $0.00001 par value;

shares authorized;

45,000 and 45,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

45,000 and 45,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

Series C Preferred stock, $0.00001 par value;

shares authorized;

700 and 700 shares issued and outstanding at June 30, 2020 and December 31, 2019

700 and 700 shares issued and outstanding at September 30, 2020 and December 31, 2019

Series D Preferred stock, $0.00001 par value;

shares authorized;

0 and 0 shares issued and outstanding at June 30, 2020 and December 31, 2019

0 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019

Series G Preferred stock, $0.00001 par value;

shares authorized;

0 and 0 shares issued and outstanding at June 30, 2020 and December 31, 2019

Series H Preferred stock, $0.00001 par value ($500.00 stated value);

0 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019

Series H Preferred stock, $0.00001 par value ($500.00

stated value);

40,000 shares authorized;

20,000 and 20,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

20,000 and 20,000 shares issued and outstanding at September 30, 2020 and December

Common stock, $0.00001 par value;

100,000,000,000 shares authorized;

162,117,340 and 16,536,351 shares issued and outstanding at June 30, 2020 and December 31, 2019

212,329,826 and 16,536,351 shares issued and outstanding at September 30, 2020 and December 31, 2019

Treasury stock, at cost;

1,040 shares at December 31, 2019 and 2018

1,040 shares at December

31, 2019 and 2018

Stock loan receivable

4 unchanged sentences

Total stockholders’

equity (deficit)

(24,703,706 )

(18,712,886 )

Total liabilities and stockholders’

equity (deficit)

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

liabilities and stockholders’

The accompanying footnotes

are an integral part of these unaudited condensed consolidated financial statements.

TECHNOLOGIES INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Related party sales

Cost of goods sold

Three Months Ended September

Nine Months Ended September

- related party

Operating expenses:

3 unchanged sentences

Impairment of assets

Total operating expenses

Total operating

Loss from operations

(122,274,768 )

(127,102,375 )

Other income (expense):

2 unchanged sentences

(13,614,981 )

(101,890,733 )

Interest expense and financing costs

Unrealized gain (loss) on marketable equity security

(10,882,912 )

Realized gain (loss) on disposal of marketable equity security

Realized gain (loss) on disposal of marketable equity

Loss on exchange of assets

1 unchanged sentence

Interest income

Total other income (expense)

(108,129,834 )

income (expense)

(32,476,500 )

3 unchanged sentences

(159,578,875 )

Income tax expense

Loss from continuing operations

4 unchanged sentences

Loss from operations of discontinued operations

$ (3,596,363 )

Gain on disposition of discontinued

$ (41,403,048 )

3 unchanged sentences

Basic and diluted

Net loss per share (basic and diluted):

Net loss per share (basic and

Continuing operations

3 unchanged sentences

(FORMERLY GOPHER PROTOCOL, INC.)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

EQUITY (DEFICIT)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’

B Convertible Preferred Stock

9 unchanged sentences

$ (18,712,886 )

Common stock issued for conversion of convertible debt

Common stock issued for joint venture

Fair value of beneficial conversion feature of converted

Common stock issued for conversion

of convertible debt

Common stock issued for joint

Fair value of beneficial conversion

feature of converted

(10,007,840 )

3 unchanged sentences

(21,689,836 )

Common stock issued for conversion of convertible debt

Fair value of beneficial conversion feature of converted

Common stock issued for conversion

of convertible debt

Fair value of beneficial conversion

feature of converted

Balance, June 30, 2020

1 unchanged sentence

(25,025,048 )

Common stock issued for conversion

of convertible debt

Fair value of beneficial conversion

feature of converted

September 30, 2020

$ (7,610,147 )

$ 250,129,185

$ (266,585,953 )

$ (24,703,706 )

Balance, December 31, 2018

1 unchanged sentence

Common stock issued for services

Common stock issued for conversion of convertible debt and accrued

Common stock issued for stock loan

Common stock issued for conversion

of convertible debt and accrued interest

Common stock issued for stock

Stock options issued for services

Fair value of beneficial conversion feature of converted/debt repaid

Relative fair value of warrants issued with convertible debt

Fair value of beneficial conversion

feature of converted/debt repaid

Relative fair value of warrants

issued with convertible debt

Balance, March 31, 2019

2 unchanged sentences

Common stock issued for penalty

Common stock issued for conversion of convertible debt and accrued

Series H preferred stock issued for acquisition

Common stock issued for conversion

of convertible debt and accrued interest

Series H preferred stock issued

for acquisition

Stock options issued for services

Fair value of beneficial conversion feature of converted/debt repaid

Fair value of beneficial conversion

feature of converted/debt repaid

(109,645,375 )

3 unchanged sentences

(85,937,605 )

Rounding of shares due to stock

Cancellation of shares for exchange of Mobiquity

Fair value of warrants issued

(41,403,048 )

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

September 30, 2019

$ (7,610,147 )

$ 225,892,607

$ (225,305,615 )

$ (7,662,050 )

The accompanying footnotes

are an integral part of these unaudited condensed consolidated financial statements.

TECHNOLOGIES INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities:

11 unchanged sentences

Warrants issued for services

Fair value of warrants issued in accordance with anit-dilution

Impairment of assets

Unrealized (gain) loss on market equity security

Realized gain on disposal ofmarket equity security

Realized gain on disposal of market equity security

Loss on exchange of assets

Equity loss in investment

Equity income in investment

Gain on disposition of discontinued operations

Convertible note receivable exchanged for services

1 unchanged sentence

Accounts receivable

Other receivable

Prepaid expenses

6 unchanged sentences

Cash paid for investment

Cash of discontinued operations

Cash from the sale of marketable equity security

Net cash used in investing activities

1 unchanged sentence

Issuance of convertible notes

Issuance of note payable

Payment on note payable

Issuance of notes payable

Payments on notes payable

Net cash provided by financing activities

Net decrease in cash

Net increase (decrease) in cash

Cash, beginning of period

5 unchanged sentences

Convertible notes issued for notes payable and accrued interest

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Common stock issued for convertible notes and accrued interest

The accompanying footnotes

are an integral part of these unaudited condensed consolidated financial statements.

TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC)

TO CONSOLIDATED FINANCIAL STATEMENTS

the Nine Months Ended September 30, 2020 and 2019 (unaudited)

1 - Organization and Basis of Presentation

5 unchanged sentences

of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network

technology platform and fixed solutions, development of an intelligent human body vitals device, prepaid services, asset-tracking

IoT, and wireless mesh networks.

technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless

mesh networks.

Effective August 5, 2019, the Company changed its name from Gopher Protocol Inc.

to GBT Technologies

The Company also offers prepaid cellular phone minutes for both domestic and international carriers.

In addition, the Company

offers cellular activation (activating SIM cards with wireless carriers) to create additional users (consumers) on those networks

and provides check processing, verification and recovery solutions for small to medium sized businesses.

The Company derived revenues

from (i) the provision of IT services;

(ii) from the operations of the assets that include the sale of phones, phone card products,

prepaid cellular phone minutes and cellular activation and (iii) from the licensing of its technology.

Company is targeting additional growing markets:

development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled

networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of

an intelligent human body vitals device, prepaid services, asset-tracking IoT and wireless mesh networks.

to GBT Technologies Inc.

derived revenues from (i) the provision of IT services;

and (ii) from the licensing of its technology.

unaudited condensed consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the

6 unchanged sentences

States of America were omitted pursuant to such rules and regulations.

The results of operations for the six months ended June

The results of operations for the nine months ended September

30, 2020 are not necessarily indicative of the results expected for the year ending December 31, 2020.

9 unchanged sentences

The Company has an accumulated deficit of $266,585,953 and has a working capital deficit of $14,501,308

as of June 30, 2020, and is in default on a note payable and other obligations, which raises substantial doubt about its ability

to continue as a going concern.

as of September 30, 2020, and is in default on a note payable and other obligations, which raises substantial doubt about its

ability to continue as a going concern.

Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the

7 unchanged sentences

from this uncertainty.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Summary of Significant Accounting Policies

14 unchanged sentences

of Consolidation

accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries,

UGopherServices Corp;

the Company’s 50% owned subsidiaries GBT BitSpeed Corp.

accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries;

the Company’s

50% owned subsidiaries GBT BitSpeed Corp.

and GBT Tokenize Corp;

Gopher Protocol UK

Limited (currently inactive);

the Company’s 50% owned subsidiary, Gopher Protocol Costa Rica Sociedad De Responabilidad

Limitada (currently inactive), and Altcorp Trading LLC, a Costa Rica company.

All significant intercompany transactions and balances

have been eliminated.

Gopher Protocol UK Limited (currently inactive);

the Company’s

50% owned subsidiary, Gopher Protocol Costa Rica Sociedad De Responabilidad Limitada (currently inactive), a wholly owned Altcorp

Trading LLC, a Costa Rica company (“AltCorp”) and Greenwich International Holdings, a Costa Rica corporation (“Greenwich”).

All significant intercompany transactions and balances have been eliminated.

the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly-liquid

debt instruments with original maturities of three months or less.

Company grants credit to establishments (such as convenience stores) that sell the Company’s products under credit terms

that it believes are customary in the industry and do not require collateral to support customer receivables.

The accounts receivable

balances are generally collected within 10 days of the product sale and the Company has minimal bad debts.

The Company currently

does not provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection

information, and existing economic conditions.

Normal receivable terms vary from 7-30 days after the issuance of the invoice and

typically would be considered past due when the term expires.

Delinquent receivables are written off based on individual credit

evaluation and specific circumstances of the customer.

The Company’s allowance for doubtful accounts was $0 and $0 at June

30, 2020 and December 31, 2019, respectively.

As of September 30, 2020 and December 31, 2019, the Company

did not have any cash equivalents.

and Equipment

7 unchanged sentences

and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

Computers and equipment

POSA machines

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

and equipment

Company applies the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

9 unchanged sentences

that fair values are reduced for the cost of disposal.

Based on its review at June 30, 2020 and December 31, 2019, the Company

Based on its review at September 30, 2020 and December 31, 2019, the Company

believes there was no impairment of its long-lived assets.

8 unchanged sentences

equity securities have been pledged to a third party which vested it under its name (See Note 8).

receivable consists of a promissory note received in connection with the sale of Ugopherservices (see Note 3).

The note is due

on December 31, 2021 and accrues interest at 6% per annum.

Financial Instruments

11 unchanged sentences

based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet

As of June 30, 2020, the Company’s only derivative financial instrument was an embedded conversion feature associated

As of September 30, 2020, the Company’s only derivative financial instrument was an embedded conversion feature associated

with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage

1 unchanged sentence

Value of Financial Instruments

certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances

to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due

to their short maturities.

certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt,

the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, Fair Value Measurements and Disclosures , requires disclosure of the fair value of financial instruments

13 unchanged sentences

Liabilities from Equity , and FASB ASC Topic 815, Derivatives and Hedging .

GBT TECHNOLOGIES INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019

certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including

7 unchanged sentences

as adjustments to fair value of derivatives.

June 30, 2020 and December 31, 2019, the Company identified the following liabilities that are required to be presented on the

balance sheet at fair value:

Fair Value As of

September 30, 2020 and December 31, 2019, the Company identified the following liabilities that are required to be presented on

the balance sheet at fair value:

Fair Value Measurements at

June 30, 2020

September 30, 2020

September 30,

Using Fair Value Hierarchy

Marketable equity security

Marketable equity security - Surge Holdings, Inc.

Conversion feature on convertible notes

Fair Value As of

Fair Value Measurements at

December 31, 2019

Using Fair Value Hierarchy

Marketable equity security

Fair Value Hierarchy

Marketable equity security - Surge Holdings, Inc.

stock is recorded at cost.

23 unchanged sentences

The 200,267 restricted shares have

not yet been returned to the Company as of June 30, 2020.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

not yet been returned to the Company as of September 30, 2020.

Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers (“

Topic 606 ”),

2014-09, Revenue from Contracts with Customers ("

Topic 606 "),

became effective for the Company on January 1, 2018.

1 unchanged sentence

policies that are affected by this new standard.

The Company applied the “modified retrospective”

The Company applied the "modified retrospective"

transition method

for open contracts for the implementation of Topic 606.

As sales are and have been primarily from IT services,

sale of phones, phone card products, prepaid cellular phone minutes and cellular activation, and the Company has no significant

post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s

accompanying consolidated financial statements for the cumulative impact of applying this new standard.

The Company made no adjustments

to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting

practices under Topic 605, Revenue Recognition .

from providing IT services, sale of phones, phone card products, prepaid cellular phone minutes and cellular activation services

are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products

to customers in return for expected consideration and includes the following elements:

The Company had no significant post-delivery obligations,

this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated

financial statements for the cumulative impact of applying this new standard.

The Company made no adjustments to its previously-reported

total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic

605, Revenue Recognition .

from providing IT services are recognized under Topic 606 in a manner that reasonably reflects the delivery of

its services to customers in return for expected consideration and includes the following elements:

contracts with the Company’s customers that it believes are legally enforceable;

7 unchanged sentences

services - revenue is recorded on a monthly basis as services are provided;

of phones, phone card products, prepaid cellular phone minutes and cellular activation –

revenue is recognized at the

time of sale to the customer;

fees and Royalties –

revenue is recognized based on the terms of the agreement with its customer.

of Goods Sold

of goods sold represents the cost of the phone, phone card products and prepaid cellular phone minutes sold by the Company.

revenue represents the net amount received for the purchase of products that have not seen shipped to the Company’s customers.

2 unchanged sentences

At December 31, 2019, the Company determined that the unearned revenue would not likely result in the recognition of revenue;

therefore, $249,094 of unearned revenue was reclassified to accrued expenses at June 30, 2020 and December 31, 2019.

therefore, $249,094 of unearned revenue was reclassified to accrued expenses at September 30, 2020 and December 31, 2019.

Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes .

17 unchanged sentences

periods presented.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

and Diluted Earnings Per Share

12 unchanged sentences

shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.

September 30,

Series B preferred stock

4 unchanged sentences

Evaluation of Subsequent Events

Company evaluates events that have occurred after the balance sheet date of June 30, 2020, through the date which the condensed

Company evaluates events that have occurred after the balance sheet date of September 30, 2020, through the date which the condensed

consolidated financial statements are issued.

11 unchanged sentences

The adoption of this

ASU did not have a material impact on the Company’s consolidated financial statements.

ASU did not have a material impact on the Company’s financial statements.

May 2014, the FASB issued ASU No.

25 unchanged sentences

evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying

2 unchanged sentences

Discontinued Operations

September 18, 2020, the Company entered into a Purchase and Sale Agreement with Mr.

LightHouse LTD .

, an Israeli corporation

(“MLH”) pursuant to which the Company agreed to sell and assign to MLH, effective July 1, 2020 all the shares, and

certain specified liabilities, of Ugopherservices Corp.

(“UGO”), a wholly owned subsidiary of the Company, in consideration

of $100,000 to be paid through the delivery of a promissory note payable to the Company (the “Note”), upon the terms

and subject to the limitations and conditions set forth in the Note.

There is no material relationship between the Company, on

one hand, and MLH, on the other hand.

September 30, 2019, the Company entered into an Asset Purchase Agreement with Surge Holdings, Inc., a Nevada corporation (“SURG”)

7 unchanged sentences

on the accompanying financial statements.

operating results for ECS Prepaid, Electronic Check Services and the Central State Legal Services have been presented in the accompanying

consolidated statement of operations for the three and six months ended June 30, 2020 and 2019 as discontinued operations and

are summarized below:

operating results for UGO, ECS Prepaid, Electronic Check Services and the Central State Legal Services have been presented in

the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019

as discontinued operations and are summarized below:

Three Months Ended

September 30,

Cost of revenue

2 unchanged sentences

Other income (expenses)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cost of revenue

2 unchanged sentences

Other income (expenses)

a result of this transaction, the Company recognized a gain on the disposition of discontinued operations of $1,381,803 in 2019.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

assets and liabilities of the discontinued operations at September 30, 2020 and December 31, 2019 are summarized below:

September 30,

Current assets

Property and equipment

Current liabilities

Total liabilities

a result of these transaction, the Company recognized a gain on the disposition of discontinued operations of $1,001,711 and $1,381,803

for the nine months ended September 30, 2020 and 2019, respectively.

4 - Property and Equipment, Net

and equipment consisted of the following as of June 30, 2020 and December 31, 2019:

and equipment consisted of the following as of September 30, 2020 and December 31, 2019:

September 30,

Computers and equipment

POSA machines

Less accumulated depreciation

Property and equipment, net

expense for the six months ended June 30, 2020 and 2019 was $46,363 and $55,357, respectively.

Investment in.

17 unchanged sentences

Note is payable by SURG to the Company on the 18-month anniversary of the issuance date and does not bear interest.

or about June 23, 2020, the Company entered into agreements with SURG and Glen Eagles Acquisition LP (“Glen”) into

series of agreements regarding the $4,000,000 SURG Note for which the SURG Note has been converted in full into 5,500,000 restricted

stock of SURG (“Issued Shares”) along with an additional 22,000,000 SURG shares reserved for the benefit of the Company

as a true up of shares to secure the value of the Issued Shares as $2,750,000.

The Company agreed that the Issued Shares will

be restricted for a year.

As a result of the exchange of $2,750,000 of the SURG Note for 5,500,000 shares of SURG common stock,

the Company recognized a loss of $1,430,000.

or about June 23, 2020, the Company and AltCorp entered into agreements with SURG and Glen Eagles Acquisition LP (“Glen”)

into series of agreements regarding the $4,000,000 SURG Note for which the SURG Note has been converted in full into 5,500,000

restricted stock of SURG (“Issued Shares”) along with an additional 22,000,000 SURG shares reserved for the benefit

of the Company’s subsidiary as a true up of shares to secure the value of the Issued Shares as $2,750,000.

The Company agreed

that the Issued Shares will be restricted for a year.

As a result of the exchange of $2,750,000 of the SURG Note for 5,500,000

shares of SURG common stock, the Company recognized a loss of $1,430,000.

converted in full its $1,000,000 convertible note that was issued by the Company on July 8, 2019, plus $50,000 of accrued interest

8 unchanged sentences

for consideration of up to $700,000.

The amount of $500,000 was paid on June 23, 2020 into a lawyer’s trust account, and

2,380,952 of SURG shares have been sent for cancelation.

Regarding the remaining 952,381 shares, see Note 16.

of June 30, 2020, the Company’s investment in SURG consisted of 6,452,381 shares of SURG common stock which was valued at

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Between sales to SURG and to a third party, the amount of $575,170 was received into a lawyer’s

trust account for the benefit of AltCorp, and 3,333,333 of SURG shares have been sent for cancelation.

During the nine months

ended September 30, 2020, $100,000 was paid for legal fees from the lawyer’s trust account leaving a balance of $475,170

at September 30, 2020.

August 12, 2020, the Company and its subsidiary, AltCorp, entered into a new pledge agreement with Stanley, where 5,500,000 SURG

shares been pledged to Stanley to secure the debt payable by the Company to Stanley as well as mitigate the damages allegedly

created by SURG.

of September 30, 2020, the Company’s investment in SURG consisted of 5,500,000 shares of SURG common stock which was valued

(See Note 16 for Subsequent Events)

Technologies, Inc (Divested in 2019).

23 unchanged sentences

stock, payable through of the issuance to Mobiquity of 10,000,000 shares of common stock of the Company.

addition, the Company issued 20,000 shares of common stock to Glen Eagles Acquisition LP (“GEAL”) in consideration

addition, the Company issued 20,000 shares of common stock to Glen Eagles Acquisition LP (“Glen”) in consideration

of its consulting services associated with the negotiation of the number of shares of common stock to be delivered to Mobiquity

9 unchanged sentences

investment in Mobiquity as a marketable equity security.

May 10, 2019, the Company entered into a Membership Interest Purchase Agreement with GEAL pursuant to which the Company acquired

May 10, 2019, the Company entered into a Membership Interest Purchase Agreement with Glen pursuant to which the Company acquired

49% of the membership interest in Advangelists, LLC (the “AVNG Interest”) in consideration of the assumption of a

Promissory Note payable by GEAL to the former owners of the AVGN Interest with an outstanding balance of $7,475,000 (the “AVNG

Note”) and cancellation of an outstanding Promissory Note payable by GEAL to the Company in the amount of $1,200,000 originally

Promissory Note payable by Glen to the former owners of the AVGN Interest with an outstanding balance of $7,475,000 (the “AVNG

Note”) and cancellation of an outstanding Promissory Note payable by Glen to the Company in the amount of $1,200,000 originally

issued on March 1, 2019.

18 unchanged sentences

these transactions, the Company realized a loss on the sale of Mobiquity common stock of $3,673,595.

At June 30, 2020 and December

31, 2019, the Company owned no shares of Mobiquity common stock.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

At September 30, 2020 and

December 31, 2019, the Company owned no shares of Mobiquity common stock.

Equity Investment in GBT Technologies, S.A.

39 unchanged sentences

Investment in Joint Venture

March 6, 2020, the Company through its newly acquired wholly owned subsidiary, Greenwich International Holdings, a Costa Rica

corporation (“Greenwich”), entered into a Joint Venture and Territorial License Agreement (the “Tokenize Agreement”)

with Tokenize-It, S.A.

(“Tokenize”), which is owned by a Costa Rica Trust represented by Pablo Gonzalez (“Gonzalez”).

Gonzalez also represents Gonzalez Costa Rica Trust, which holds a note in the principal amount of $10,000,000 and is also a shareholder

of the Company.

Under the Tokenize Agreement, the parties formed GBT Tokenize Corp., a Nevada corporation (“GBT Tokenize”).

The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary technologies including advanced

mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation, mesh, games, data storage,

networking, IT services, business process outsourcing development services, customer service, technical support and quality assurance

for business, customizable and dedicated inbound and outbound calls solutions, as well as digital communications processing for

enterprises and startups (“Technology Portfolio”), throughout the State of California.

Upon generating any revenue

from the Technology Portfolio, the Joint Venture will earn the first right of refusal for other territories.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

March 6, 2020, the Company through Greenwich, entered into a Joint Venture and Territorial License Agreement (the “Tokenize

Agreement”) with Tokenize-It, S.A.

(“Tokenize”), which is owned by a Costa Rica Trust represented by Pablo Gonzalez

(“Gonzalez”).

Gonzalez also represents Gonzalez Costa Rica Trust, which holds a note in the principal amount of $10,000,000

and is also a shareholder of the Company.

Under the Tokenize Agreement, the parties formed GBT Tokenize Corp., a Nevada corporation

(“GBT Tokenize”).

The purpose of GBT Tokenize is to develop, maintain and support source codes for its proprietary

technologies including advanced mobile chip technologies, tracking, radio technologies, AI core engine, electronic design automation,

mesh, games, data storage, networking, IT services, business process outsourcing development services, customer service, technical

support and quality assurance for business, customizable and dedicated inbound and outbound calls solutions, as well as digital

communications processing for enterprises and startups (“Technology Portfolio”), throughout the State of California.

Upon generating any revenue from the Technology Portfolio, the Joint Venture will earn the first right of refusal for other territories.

shall contribute the services and resources for the development of the Technology Portfolio to GBT Tokenize.

17 unchanged sentences

was fully impaired and as a result an impairment charge of $5,500,000 was taken.

Although the investment was impaired, the product

development is still ongoing.

Convertible Notes Payable

notes payable at June 30, 2020 and December 31, 2019 consist of the following:

notes payable at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Convertible note payable to GBT Technologies

1 unchanged sentence

Convertible note payable to Power Up

Convertible notes payable to Redstart Holdings

Convertible note payable to Stanley Hills

37 unchanged sentences

Warrant may be exercised on a cashless basis and provided a beneficial ownership limitation of 4.99%.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

or about June 23, 2020, the Company entered into agreements with SURG and Glen Eagles Acquisition LP (“Glen”) into

series of agreements regarding the $4,000,000 SURG Note.

(See Note 5) Glen converted in full its $1,000,000 convertible note that

was issued by the Company on July 8, 2019 plus $50,000 of accrued interest, into $1,050,000 of a SURG Note via an assignment of

a portion ($1,050,000 of a $4,000,000 face value) of the $4,000,000 SURG Note.

or about June 23, 2020, the Company and AltCorp entered into agreements with SURG and Glen Eagles Acquisition LP (“Glen”)

into series of agreements regarding the $4,000,000 SURG Note.

(See Note 5) Glen converted in full its $1,000,000 convertible note

that was issued by the Company on July 8, 2019 plus $50,000 of accrued interest, into $1,050,000 of a SURG Note via an assignment

of a portion ($1,050,000 of a $4,000,000 face value) of the $4,000,000 SURG Note.

In addition, the Company entered into a consulting

22 unchanged sentences

Power Up, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Power Note.

As of September

30, 2020, the full amount of the Power Note was converted into shares of the Company’s common stock.

Holdings Corp.

August 4, 2020, the Company entered into a Securities Purchase Agreement with Redstart Holdings Corp., an accredited investor

(“Redstart”) pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note

1”) in the aggregate principal amount of $153,600 for a purchase price of $128,000.

The Redstart Note No.

1 has a maturity

date of November 3, 2021 and the Company has agreed to pay interest on the unpaid principal balance of the Redstart Note No.

at the rate of six percent (6%) per annum from the date on which the Redstart Note No.

1 is issued (the “Issue Date”)

until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise.

The Company shall

have the right to prepay the Redstart Note No.

1, provided it makes a payment including a prepayment to Redstart as set forth

in the Redstart Note No.

The transactions described above closed on August 5, 2020.

outstanding principal amount of the Redstart Note No.

1 may not be converted prior to the period beginning on the date that is

180 days following the Issue Date.

Following the 180 th day, Redstart may convert the Redstart Note No.

1 into shares

of the Company’s common stock at a conversion price equal to 85% of the lowest trading price with a 20-day

look back immediately preceding the date of conversion.

In addition, upon the occurrence and during the continuation of an Event

of Default (as defined in the Redstart Note No.

1), the Redstart Note No.

1 shall become immediately due and payable and the Company

shall pay to Redstart, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Redstart Note

September 15, 2020, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued

to Redstart a Convertible Promissory Note (the “Redstart Note No.

2”) in the aggregate principal amount of $93,600

for a purchase price of $78,000.

The Redstart Note No.

2 has a maturity date of September 15, 2021 and the Company has agreed

to pay interest on the unpaid principal balance of the Redstart Note No.

2 at the rate of six percent (6%) per annum from the

date on which the Redstart Note No.

2 is issued (the “Issue Date”) until the same becomes due and payable, whether

at maturity or upon acceleration or by prepayment or otherwise.

The Company shall have the right to prepay the Redstart Note No.

2, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No.

The transactions described

above closed on September 16, 2020.

The outstanding principal amount of the Redstart Note No.

2 may not be converted prior to

the period beginning on the date that is 180 days following the Issue Date.

Following the 180 th day, Redstart may convert

the Redstart Note No.

2 into shares of the Company’s common stock at a conversion price equal to 85% of the

lowest trading price with a 20-day look back immediately preceding the date of conversion.

In addition, upon the occurrence and

during the continuation of an Event of Default (as defined in the Redstart Note No.

2), the Redstart Note No.

2 shall become immediately

due and payable and the Company shall pay to Redstart, in full satisfaction of its obligations hereunder, additional amounts as

set forth in the Redstart Note No.

Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received

9 unchanged sentences

the first quarter of 2020, Stanley converted $345,889 of its convertible note into 36,756,267 shares of the Company’s common

stock, and during the second quarter of 2020, Stanley loaned the Company an additional $132,806.

The balance of the Stanley debt

at June 30, 2020 was $1,001,817.

The Stanley debt is secured via a pledge agreement on the SURG shares (See Note 16).

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

stock, and during the second and third quarters of 2020, Stanley loaned the Company an additional $289,460.

The balance of the

Stanley debt at September 30, 2020 was $1,158,471.

The Stanley debt is secured via a pledge agreement on the SURG shares (See

Research and Trading, L.P.

16 unchanged sentences

be increased by 5% in the event the Company enters into a Restricted Issuance Transaction that is approved by Iliad.

issue discount in being amortized to interest expense over the term of the promissory note.

February 27, 2020, the Company and Iliad entered to an Amendment to the Iliad Note (See Note 9) pursuant to which the maturity

issue discount is being amortized to interest expense over the term of the promissory note.

February 27, 2020, the Company and Iliad entered into an Amendment to the Iliad Note (See Note 9) pursuant to which the maturity

date of the Iliad Note was extended to August 27, 2020, provided that the Debt may be converted into shares of common stock of

7 unchanged sentences

such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.

the six months ended June 30, 2020, Iliad converted $279,000 of its convertible note to 23,697,978 shares of the Company’s

common stock.

The balance of the Iliad debt at June 30, 2020 was $2,486,983.

For additional extension of maturity date, see Note

20, 2020 the Company and Iliad entered into agreement to extend the maturity of the Iliad Note until February 27, 2021 in consideration

of an extension fee of $1,000.

During the nine months ended September 30, 2020, Iliad converted $429,000 of its convertible note

to 39,425,822 shares of the Company’s common stock.

The balance of the Iliad debt at September 30, 2020 was $2,336,983,

plus accrued interest of $156,621.

on convertible notes

Company recognized interest expense of $2,669,847 and $2,479,025 during the six months ended June 30, 2020 and 2019, respectively,

Company recognized interest expense of $3,833,752 and $6,569,124 during the nine months ended September 30, 2020 and 2019, respectively,

related to the amortization of the debt discount on convertible notes.

The unamortized debt discount at June 30, 2020 was $1,494,636.

roll-forward of the convertible notes payable from December 31, 2019 to June 30, 2020 is below:

The unamortized debt discount at September 30, 2020 was

roll-forward of the convertible notes payable from December 31, 2019 to September 30, 2020 is below:

Convertible notes payable, December 31, 2019

6 unchanged sentences

Amortization of debt discounts

Convertible notes payable, June 30, 2020

9 - Note Payable

payable at June 30, 2020 and December 31, 2019 consist of the following:

Convertible notes payable, September 30, 2020

9 - Notes Payable

payable at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

RWJ acquisition note

6 unchanged sentences

Notes payable, long-term portion

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Acquisition Note

3 unchanged sentences

This note has not been repaid

as of June 30, 2020.

(See Note 14).

as of September 30, 2020.

(See Notes 14, 16).

June 22, 2020, the Company received a loan from the Small Business Administration under the Economic Injury Disaster Loan program

related to the COVID-19 relief efforts.

The loan bears interest at 3.75% per annum, requires monthly payments of $731 after 12

months from funding and is due 30 years from the date of issuance.

The loan bears interest at 3.75% per annum, requires monthly principal and interest payments

of $731 after 12 months from funding and is due 30 years from the date of issuance.

February 27, 2019, the Company entered into a note purchase agreement with a third party investor, pursuant to which the Company

30 unchanged sentences

common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date.

Hills note was reclassified from notes payable to convertible notes payable (See Note 8).

on Promissory Note

Company recognized interest expense of $47,671 and $101,096 during the six months ended June 30, 2020 and 2019, respectively,

Company recognized interest expense of $47,671 and $176,712 during the nine months ended September 30, 2020 and 2019, respectively,

related to the amortization of the debt discount on promissory notes.

The unamortized debt discount at June 30, 2020 was $0.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

roll-forward of the promissory notes from December 31, 2019 to June 30, 2020 is below:

The unamortized debt discount at September 30, 2020 was

roll-forward of the promissory notes from December 31, 2019 to September 30, 2020 is below:

Notes payable, December 31, 2019

3 unchanged sentences

Amortization of debt discounts

Notes payable, June 30, 2020

Notes payable, September 30, 2020

Accrued Settlement

12 unchanged sentences

a gain on the settlement of debt of $1,375,556 in 2019 as the difference between the carrying amount of the debt and the amount

awarded by the arbitrator.

awarded by the arbitrator (See Note 14).

11 - Derivative Liability

5 unchanged sentences

Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the fair value of

derivative liability at June 30, 2020:

derivative liability at September 30, 2020:

Risk free rate

1 unchanged sentence

Dividend rate

following table represents the Company’s derivative liability activity for the six months ended June 30, 2020:

following table represents the Company’s derivative liability activity for the nine months ended September 30, 2020:

Derivative liability balance, December 31, 2019

2 unchanged sentences

Change in derivative liability during the period

Derivative liability balance, June 30, 2020

Derivative liability balance, September 30, 2020

12- Stockholders’

the six months ended June 30, 2020, the Company had the following transactions in its common stock:

an aggregate of 60,454,245 for the conversion of convertible notes of $624,889

Board of Directors of the Company approved, on April 13, 2020, a reverse stock split of all of the Company’s Common Stock,

pursuant to which every 50 shares of Common Stock of the Company shall be reverse split, reconstituted and converted into one

(1) share of Common Stock of the Company (the “Reverse Stock Split”).

The Company submitted an Issuer Company Related

Action Notification regarding the Reverse Stock Split to FINRA on April 14, 2020.

To effectuate the Reverse Stock Split,

the Company filed on April 21, 2020 a Certificate of Change Pursuant to Nevada Revised Statutes (“NRS”) Section 78.209

(the “Certificate of Change”) with the Secretary of State of the State of Nevada subject to FINRA approval.

this reverse stock split has not yet been approved by the State of Nevada, the financial statements have not been retroactively

restated to reflect this reverse stock split.

On June 8, 2020 FINRA advised the Company that such request is deficient due to

the fact that a holder of an outstanding convertible note of the Company had entered into two settlements with the Securities

and Exchange Commission that related to securities laws violations but were in no way related to the Company.

As a result, FINRA

advised that it is necessary for the protection of investors, the public interest, and to maintain fair and orderly markets that

documentation related to the Reverse Stock Split not be processed.

The Company appealed the decision made by FINRA on June 15,

On August 4, 2020, FINRA notified the Company that its appeal had been denied.

the nine months ended September 30, 2020, the Company had the following transactions in its common stock:

an aggregate of 95,793,475 for the conversion of convertible notes of $958,489 and accrued

interest of $4,590;

100,000,000 shares to GBT Tokenize for a joint venture agreement.

2 unchanged sentences

common stock on the grant date.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

the six months ended June 30, 2019, the Company had the following transactions in its common stock:

the nine months ended September 30, 2019, the Company had the following transactions in its common stock:

an aggregate of 9,500 shares to employees and board members as part of their compensation

15 unchanged sentences

the grant date;

200,000 shares that were returned in connection with the Company’s sale of its

investment with Mobiquity.

The shares were valued based on the Company’s stock

price on the date of the agreement.

B Preferred Shares

11 unchanged sentences

These rights were subsequently removed, except in cases of stock dividends

of June 30, 2020 and December 31, 2019, there were 45,000 Series B Preferred Shares outstanding.

of September 30, 2020 and December 31, 2019, there were 45,000 Series B Preferred Shares outstanding.

C Preferred Shares

22 unchanged sentences

amount that both they and the Company believed that they were owed.

At June 30, 2020 and December 31, 2019, GV owns 700 Series

At September 30, 2020 and December 31, 2019, GV owns 700 Series

C Preferred Shares.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(a)(2) under

2 unchanged sentences

defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

of June 30, 2020 and December 31, 2019, there were 700 Series C Preferred Shares outstanding.

of September 30, 2020 and December 31, 2019, there were 700 Series C Preferred Shares outstanding.

D Preferred Shares

of June 30, 2020 and December 31, 2019, there are 0 and 0 shares of Series D Preferred Shares outstanding, respectively.

of September 30, 2020 and December 31, 2019, there are 0 and 0 shares of Series D Preferred Shares outstanding, respectively.

G Preferred Shares

of June 30, 2020 and December 31, 2019, there are 0 and 0 shares of Series G Preferred Shares outstanding, respectively.

of September 30, 2020 and December 31, 2019, there are 0 and 0 shares of Series G Preferred Shares outstanding, respectively.

H Preferred Shares

22 unchanged sentences

(See Note 14 for further details.)

of June 30, 2020 and December 31, 2019, there are 20,000 shares of Series H Preferred Shares outstanding.

of September 30, 2020 and December 31, 2019, there are 20,000 shares of Series H Preferred Shares outstanding.

following is a summary of warrant activity.

Outstanding, December 31, 2019

Outstanding, June 30, 2020

Exercisable, June 30, 2020

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

exercise price for warrant outstanding and exercisable at June 30, 2020:

Outstanding, September 30, 2020

Exercisable, September 30, 2020

exercise price for warrant outstanding and exercisable at September 30, 2020:

13 - Related Parties

3 unchanged sentences

subject to common control or that are subject to common significant influences.

the six months ended June 30, 2020 and 2019, the Company paid a law firm owned by the Company’s chairman $0 and $90,000,

the nine months ended September 30, 2020 and 2019, the Company paid a law firm owned by the Company’s chairman $10,000 and

$90,000, respectively, for legal services.

On June 5, 2019, said chairman Mr.

Robert Yaspan resigned as Director of the Company to pursue

other interests.

Robert Yaspan resigned as Director of the Company

to pursue other interests.

April 6, 2018, the Company and Danny Rittman, Chief Technology Officer and a Director of the Company, agreed to amend his employment

26 unchanged sentences

See Note 14 - Contingencies.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

January 1, 2019, the Company and Douglas Davis entered into an Amended and Restated Employment Agreement pursuant to which Mr.

5 unchanged sentences

Davis was entitled to

an annual base salary of $250,000, which was to be increased to $400,000 upon the Company uplisting to a national exchange.

an annual base salary of $250,000, which was to be increased to $400,000 upon the Company up-listing to a national exchange.

Davis was also entitled to the issuance of Stock Options to acquire an aggregate of 50,000 shares of common stock of the Company,

31 unchanged sentences

resignation was not the result of any disagreements with management or board of directors of the Company.

March 6, 2020, the Company through Greenwich, entered into the Tokenize Agreement with Tokenize, which is owned by a Costa Rica

Trust represented by Gonzalez.

Gonzalez also represents Gonzalez Costa Rica Trust, which holds a note in the principal amount

of $10,000,000 and is also a shareholder of the Company.

Under the Tokenize Agreement, the parties formed GBT Tokenize.

of GBT Tokenize is to develop Technology Portfolio, throughout the State of California.

Upon generating any revenue from the Technology

Portfolio, the Joint Venture will earn the first right of refusal for other territories.

Tokenize shall contribute the services

and resources for the development of the Technology Portfolio to GBT Tokenize.

The Company contributed 100,000,000 GBT Shares

to GBT Tokenize.

Tokenize and the Company will each own 50% of GBT Tokenize.

The Company pledged its 50% ownership in GBT Tokenize

and its 100% ownership of Greenwich to Tokenize to secure its Technology Portfolio investment.

The Company shall appoint two directors

and Tokenize shall appoint one director of GBT Tokenize.

In addition, GBT Tokenize and Gonzalez entered into a Consulting Agreement

in which Gonzalez is engaged to provide services in consideration of $33,333.33 per month payable quarterly which may be paid

in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP.

Gonzalez will provide services

in connection with the development of the business as well as GBT Tokenize’s capital raising efforts.

The term of the Consulting

Agreement is two years.

The closing of the Tokenize Agreement occurred on March 9, 2020.

14 - Contingencies

3 unchanged sentences

related parties in Superior Court of the State of California - County of Los Angeles, General District in connection with the

acquisition of UGopherServices in September 2017.

The case number is 19STCV03320.

The lawsuit alleges breach of contract, among

other causes of action.

The Company answered the complaint and filed a cross-complaint against the plaintiffs in the case and

third parties on or around February 15, 2019.

acquisition of UGO in September 2017.

The case number is 19STCV03320 (the “Original Lawsuit”).

The complaint in the

Original Lawsuit alleges breach of contract, among other causes of action.

The Company answered the complaint and filed a cross-complaint

against the plaintiffs in the case and third parties on or around February 15, 2019.

On or about September 10, 2020, the Company

through its agent of service was “served”

with a complaint (the Company contested service) that was recently filed

against the Company and third parties by Robert Warren Jackson and Gregory Bauer in Los Angeles Superior Court Case No.:

(“Second Lawsuit”).

In the Original Lawsuit filed, the court rejected the plaintiff’s claims that they were

filing a purported quasi-derivative lawsuit.

As such, in this current litigation, the plaintiff is now again claiming the action

is a derivative lawsuit.

In the Original lawsuit, the Company filed a cross complaint against the plaintiff and other third parties.

Recently, the court has scheduled various hearings and a trial date set for December 27, 2021.

It was the Company’s intention

to dividend its holdings of its wholly owned subsidiary Ugopherservices Corp.

(“UGO”).

As UGO is the main dispute

in the litigations described above, the Company has elected to sell UGO to a third party effective July 1, 2020 (See Note 3).

On September 17, 2020, the Company terminated Greg Bauer as consultant (resulting from the sale of UGO), which he confirmed in

On or about October 13, 2020, one of the defendants filed a motion to remove the Second Lawsuit from the Los Angeles

Superior Court to Federal court.

The Company was not served per federal rule as required per the removal.

the sale of UGO (See Note 3), the Company noticed third parties (including SURG, via its asset manager) to wire the UGO funds

to its new bank account.

SURG never answered the notice.

The Company intends to take legal actions to resolve this issue.

December 3, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with Discover Growth Fund,

LLC pursuant to which the Company issued a Senior Secured Redeemable Convertible Debenture (the “Debenture”) in the

aggregate face value of $8,340,000.

In connection with the issuance of the Debenture and pursuant to the terms of the SPA, the

Company issued a Common Stock Purchase Warrant to acquire up to 225,000 shares of common stock for a term of three years (the

LLC (the “Investor”) pursuant to which the Company issued a Senior Secured Redeemable Convertible Debenture (the “Debenture”)

in the aggregate face value of $8,340,000.

In connection with the issuance of the Debenture and pursuant to the terms of the SPA,

the Company issued a Common Stock Purchase Warrant to acquire up to 225,000 shares of common stock for a term of three years (the

“Warrant”) on a cash-only basis at an exercise price of $100.00 per share with respect to 50,000 Warrant Shares, $75.00

11 unchanged sentences

“Notice”).

On December 23, 2019, in the pending arbitration between the Company and the Investor, an Interim Award

was entered in favor of the Investor.

On January 31, 2020, the Company was informed that a final award was entered (the “Final

Award”).

The Final Award affirms that certain sections of the Senior Secured Redeemable Convertible Debenture (the “Debenture”) constitute

unenforceable liquidated damages penalties and were stricken.

Further, it was determined that the Investor was entitled to recovery

of their attorney’s fees.

Consequently, the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued

from May 15, 2019 and costs in the amount of $55,613.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

February 18, 2020, the Company filed a motion with the United States District Court District of Nevada (the “Nevada Court”)

to confirm the Final Award and a motion to consolidate Discover’s application to confirm the Final Award filed in the U.S.

On December 23, 2019, in arbitration between the Company and the Investor, an Interim Award was entered

in favor of the Investor.

On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”).

The Final Award affirms that certain sections of the Debenture constitute unenforceable liquidated damages penalties and

were stricken.

Further, it was determined that the Investor was entitled to recovery of their attorney’s fees.

Consequently,

the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued from May 15, 2019 and costs in the amount

On February 18, 2020, the Company filed a motion with the United States District Court District of Nevada (the “Nevada

Court”) to confirm the Final Award and a motion to consolidate Investor’s application to confirm the Final Award filed

District Court of the Virgin Islands (Case No:

3 :20-cv-00012-CVG-RM) (the “Virgin Island Court”).

On February 27,

2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion to consolidate and further decided

that the confirmation of the Final Award should be litigated in the Virgin Island Court.

As such, on February 27, 2020, the Company

filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award;

Address the Outstanding issue regarding

whether Discover’s rights are subordinated to other creditors and, thereafter, oversee a commercially reasonable foreclosure

sale (Case No:

February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion to consolidate and

further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court.

As such, on February

27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award, address the outstanding

issues regarding whether Investor’s rights are subordinated to other creditors and, thereafter, oversee a commercially reasonable

foreclosure sale (Case No:

3 :20-cv-00012-CVG-RM).

It is the Company’s position that the Final Award must first be confirmed and all

questions regarding the rights of Discover relative to those of other creditors must be determined before any foreclosure sale

It is further the position of the Company that the previously disclosed foreclosure sale scheduled by Discover is

being conducted in a commercially unreasonable manner and that if Discover proceeded forward with the foreclosure sale it did

It was the Company’s position that the Final Award must first be confirmed

and all questions regarding the rights of Investor relative to those of other creditors must be determined before any foreclosure

sale can proceed.

It is further the position of the Company that the previously disclosed foreclosure sale scheduled by Investor

is being conducted in a commercially unreasonable manner and that if Discover proceeded forward with the foreclosure sale it did

so at its own risk.

Nevertheless, on February 28, 2020, Discover advised that it conducted a sale of the Company’s assets.

As the date of this report Discover failed to present a deed of sale for the alleged sale that allegedly took place as noticed.

The Company filed with Virgin Island Court the motions disputing the validity of said alleged sale.

Nevertheless, on February 28, 2020, Investor advised that it conducted a sale of the Company’s assets.

As the date of this report Investor failed to present a deed of sale for the alleged sale that allegedly took place as noticed.

The Company filed with Virgin Island Court the motions disputing the validity of the alleged sale.

On July 28, 2020, Investor

filed in the State of Nevada a motion for attorneys $48,844 and costs $716.

The Company filed an answer on August 11, 2020.

October 16, 2020, Investor motion for attorneys $48,844 and costs $716 was denied.

Technologies, S.A.

September 14, 2018, the Company entered into an Exclusive Intellectual Property License and Royalty Agreement (the “GBT

License Agreement”) with GBT-CR, a fully compliant and regulated cryptocurrency exchange platform that currently operates

in Costa Rica as a decentralized cryptocurrency platform, pursuant to which, among other things, the Company granted to GBT-CR

License Agreement”) with GBT-CR, a fully compliant and regulated crypto currency exchange platform that currently operates

in Costa Rica as a decentralized crypto currency platform, pursuant to which, among other things, the Company granted to GBT-CR

an exclusive, royalty-bearing right and license relating intellectual property relating to systems and methods of converting electronic

8 unchanged sentences

and dispose of products and devices utilizing the Digital Currently Technology.

the terms of the GBT License Agreement, the Company is entitled to receive a royalty payment of 2% of gross revenue of each licensed

product sold by GBT-CR during the period starting in which revenue is first generated using the licensed products and continuing

for five years thereafter.

Upon signing the GBT-CR License Agreement, GBT-CR paid the Company $300,000 which is nonrefundable.

The Company has recognized the $300,000 as revenue during the years ended December 31, 2018.

Upon GBT-CR making available for

sale (the “Commercial Event”) an ICO (Initial Coin Offering) (the “Coin”), GBT-CR will make a payment

to the Company in the amount of $5,000,000.

Further, upon the Commercial Event, GBT-CR will grant the Company the ability to acquire

30% of the Coin at a 30% discount of such offering price of the Coin.

The GBT License Agreement commenced as of the signing date

and, unless terminated in accordance with the termination provisions of the GBT License Agreement, shall remain in force until

the expiration of the patent pertaining to the Digital Currency Technology;

provided that the right to use trade secrets shall

survive the expiration of the GBT License Agreement provided the Company has not terminated.

Prior to the signing of the GBT License

Agreement, GBT-CR advanced $200,000 to the Company, which the parties have agreed will be applied toward the $5,000,000 fee when

it becomes due.

The $200,000 is recorded as unearned revenue at December 31, 2018 and reclassified to accrued expense at December

February 27, 2020 GBT Technologies, S.A., as successor in interest to Hermes Roll, LLC had notified the Company that it was in

default on its Amended and Restated Territorial License Agreement (“ARTLA”) dated June 15, 2015 and that the ARTLA

had been cancelled and rescinded.

Under the terms of the GBT License Agreement,

the Company is entitled to receive a royalty payment of 2% of gross revenue of each licensed product sold by GBT-CR during the

period starting in which revenue is first generated using the licensed products and continuing for five years thereafter.

signing the GBT-CR License Agreement, GBT-CR paid the Company $300,000 which is nonrefundable.

The Company has recognized the

$300,000 as revenue during the years ended December 31, 2018.

Upon GBT-CR making available for sale (the “Commercial Event”)

an ICO (Initial Coin Offering) (the “Coin”), GBT-CR will make a payment to the Company in the amount of $5,000,000.

Further, upon the Commercial Event, GBT-CR will grant the Company the ability to acquire 30% of the Coin at a 30% discount of

such offering price of the Coin.

The GBT License Agreement commenced as of the signing date and, unless terminated in accordance

with the termination provisions of the GBT License Agreement, shall remain in force until the expiration of the patent pertaining

to the Digital Currency Technology;

provided that the right to use trade secrets shall survive the expiration of the GBT License

Agreement provided the Company has not terminated.

Prior to the signing of the GBT License Agreement, GBT-CR advanced $200,000

to the Company, which the parties have agreed will be applied toward the $5,000,000 fee when it becomes due.

The $200,000 is recorded

as unearned revenue at December 31, 2018 and reclassified to accrued expense at December 31, 2019.

On February 27, 2020 GBT Technologies,

S.A., as successor in interest to Hermes Roll, LLC had notified the Company that it was in default on its Amended and Restated

Territorial License Agreement (“ARTLA”) dated June 15, 2015 and that the ARTLA had been cancelled and rescinded.

Concentrations

2 unchanged sentences

instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.

There have been no losses in these accounts through June 30, 2020.

GBT TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2020

There have been no losses in these accounts through September 30, 2020.

16 - Subsequent Events

has evaluated events that occurred subsequent to the end of the reporting period shown herein:

July 20, 2020 the Company and Iliad entered into agreement to extend the maturity of the Iliad Note until February 27, 2021 in

consideration of an extension fee of $1,000.

to June 30, 2020, the Company issued 3,834,356 shares of common stock to Iliad for the conversion of $50,000 of convertible notes

or about June 23, 2020 Stanley which held a pledge of 3,333,333 shares of SURG common stock (See Note 8) via Stanley’s Member,

acting as an agent for the Company, entered into an agreement with SURG, its transfer agent and an escrow officer for which it

was agreed that 3,333,333 SURG shares will be cancelled for consideration of up to $700,000.

The amount of $500,000 was paid on

June 23, 2020 into a lawyer’s trust account, and 2,380,952 of SURG shares have been sent for cancelation.

Surge elected

not to acquire the remaining 952,381 for $200,000, and as such the remaining shares should be released to Stanley’s member

as free trading.

The Company and Stanley’s member mitigate the damages created via legal consultant.

July 28, 2020 Discover Growth Fund, LLC filed in the State of Nevada a motion for attorneys $48,844 and costs $716.

filed an answer on August 11, 2020.

August 12, 2020, the Company and its subsidiary, AltCorp Trading LLC, entered into a new pledge agreement with Stanley, where

5,500,000 SURG shares been pledged to Stanley to secure the debt payable by the Company to Stanley as well as mitigate the damages

allegedly created by SURG.

Board of Directors of the Company approved, on April 13, 2020, a reverse stock split of all of the Company’s Common Stock,

pursuant to which every 50 shares of Common Stock of the Company shall be reverse split, reconstituted and converted into one

(1) share of Common Stock of the Company (the “Reverse Stock Split”).

The Company submitted an Issuer Company Related

Action Notification regarding the Reverse Stock Split to FINRA on April 14, 2020.

To effectuate the Reverse Stock Split,

the Company filed on April 21, 2020 a Certificate of Change Pursuant to Nevada Revised Statutes (“NRS”) Section 78.209

(the “Certificate of Change”) with the Secretary of State of the State of Nevada subject to FINRA approval.

this reverse stock split has not yet been approved by the State of Nevada, the financial statements have not been retroactively

restated to reflect this reverse stock split.

On June 8, 2020 FINRA advised the Company that such request is deficient due to

the fact that a holder of an outstanding convertible note of the Company had entered into two settlements with the Securities

and Exchange Commission that related to securities laws violations but were in no way related to the Company.

As a result, FINRA

advised that it is necessary for the protection of investors, the public interest, and to maintain fair and orderly markets that

documentation related to the Reverse Stock Split not be processed.

The Company appealed the decision made by FINRA on June 15,

On August 4, 2020, FINRA notified the Company that its appeal had been denied.

August 4, 2020, the Company entered into a Securities Purchase Agreement with Redstart Holdings Corp., an accredited investor

(“Redstart”) pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note”)

in the aggregate principal amount of $153,600 for a purchase price of $128,000.

The Redstart Note has a maturity date of November

3, 2021 and the Company has agreed to pay interest on the unpaid principal balance of the Redstart Note at the rate of six percent

(6%) per annum from the date on which the Redstart Note is issued (the “Issue Date”) until the same becomes due and

payable, whether at maturity or upon acceleration or by prepayment or otherwise.

The Company shall have the right to prepay the

Redstart Note, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note.

The transactions

described above closed on August 5, 2020.

The outstanding principal amount of the Redstart Note may not be converted prior

to the period beginning on the date that is 180 days following the Issue Date.

Following the 180 th day, Redstart

may convert the Redstart Note into shares of the Company’s common stock at a conversion price equal to 85%

of the lowest trading price with a 20 day look back immediately preceding the date of conversion.

In addition, upon the

occurrence and during the continuation of an Event of Default (as defined in the Redstart Note), the Redstart Note shall become

immediately due and payable and the Company shall pay to Redstart, in full satisfaction of its obligations hereunder, additional

amounts as set forth in the Redstart Note.

The issuances of the Redstart Note was made in reliance upon the exemption from

the registration requirements of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(a)(2) of

In no event shall Redstart be allowed to effect a conversion if such conversion, along with all other shares of

Company common stock beneficially owned by Redstart and its affiliates would exceed 4.99% of the outstanding shares of the common

stock of the Company.

or about October 14, 2020, AltCorp., together with Stanley, filed a complaint against SURG and its transfer agent in District

Court, Clark county, Nevada.

The case number is A-20-823039-B.

The complaint is seeking default cure, damages and appointment

of a receiver to SURG for default on SURG liabilities per contract (See Note 5).

SURG and their transfer agent been served with

the complaint.

On October 8, 2020, Stanley assigned $75,600

of its convertible promissory note to Rasel Ltd, a related party.

On or about October 10, 2020 Stanley converted

$76,500 of its Note (See Note 8) into 10,000,000 shares of the Company’s common stock.

On or about October 10, 2020, Rasel Ltd,

a related party, converted $76,500 of its convertible promissory note into 10,000,000 shares of the Company’s common stock.

October 16, 2020, Discover motion for attorneys $48,844 and costs $716 was denied.

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

15 unchanged sentences

with the Securities and Exchange Commission.

some cases, you can identify forward-looking statements by terminology such as “may,”

“will,”

“should,”

“could,”

“expects,”

“plans,”

“intends,”

“anticipates,”

“believes,”

“estimates,”

“predicts,”

“potential,”

or “continue”

some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’

‘‘will,’’

‘‘should,’’

‘‘could,’’

‘‘expects,’’

‘‘plans,’’

‘‘intends,’’

‘‘anticipates,’’

‘‘believes,’’

‘‘estimates,’’

‘‘predicts,’’

‘‘potential,’’

or ‘‘continue’’

or the negative

9 unchanged sentences

section of the report should be read together with Footnotes of the Company audited financials for the year ended December 31,

2019, the unaudited statements of operations for the three and six months ended June 30, 2020 and 2019 are compared in the sections

Technologies Inc (f/k/a Gopher Protocol Inc., the “Company”, “we”, “us”, “our”,

“Gopher”, “Gopher Protocol”

, “GOPH”, “GTCH”, or “GBT”) was incorporated

2019, the unaudited statements of operations for the three and nine months ended September 30, 2020 and 2019 are compared in the

sections below.

Technologies Inc.

(f/k/a Gopher Protocol Inc., the “Company”, “we”, “us”, “our”,

“Gopher”, “Gopher Protocol”, “GOPH”, “GTCH”, or “GBT”) was incorporated

on July 22, 2009 under the laws of the State of Nevada and is headquartered in Santa Monica, California.

3 unchanged sentences

to GBT Technologies Inc.

also offers prepaid cellular phone minutes for both domestic and international carriers.

In addition, the Company offers cellular

activation (activating SIM cards with wireless carriers) to create additional users (consumers) on those networks and provides

check processing, verification and recovery solutions for small to medium sized businesses.

The Company has historically derived

revenues from (i) the provision of IT services;

(ii) from the operations of the assets that include the sale of phones, phone

card products, prepaid cellular phone minutes and cellular activation and (iii) from the licensing of its technology.

has historically derived revenues from (i) the provision of IT services;

and (ii) from the licensing of its technology.

Company is targeting additional growing markets:

1 unchanged sentence

networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of

an intelligent human body vitals device, prepaid services, asset-tracking IoT and wireless mesh networks.

an intelligent human body vitals device, asset-tracking IoT and wireless mesh networks.

Tokenize Joint Venture

30 unchanged sentences

occurred on March 9, 2020.

This investment was fully impaired as of March 31, 2020.

Company operates in a high-tech marketplace and relies on professionals and partnerships all over the world, which is impacted

26 unchanged sentences

of Operations:

months ended June 30, 2020 and June 30, 2019

comparison of the statements of operations for the three months ended June 30, 2020 and 2019 is as follows:

Three Months Ended

$ (1,181,854 )

Cost of goods sold

months ended September 30, 2020 and September 30, 2019

comparison of the statements of operations for the three months ended September 30, 2020 and 2019 is as follows:

Three Months Ended September

Sales –

related party

Operating expenses

(121,866,978 )

Loss from operations

Other expense

(122,274,768 )

Other income (expense)

(80,786,868 )

Loss before provision for income taxes

5 unchanged sentences

$ (41,403,048 )

$ (109,645,375 )

$ 106,049,012

for the three months ended June 30, 2020 were $4,074,102, compared to $5,255,956 for the same period in 2019.

The decrease of

$1,181,854 or 22.5% was a result of a decreased sales due to the economic shutdown due to COVID-19.

gross margins for the three months ended June 30, 2020 were 5.4%, compared to 4.5% for the same period in 2019.

The small increase

in the gross margin was due to selling products with higher margins.

expenses for the three months ended June 30, 2020 were $711,085, compared to $1,657,211 for the same period in 2019.

of $946,126 or 57.1% was principally due to lower compensation costs due to the decrease in personnel and lower professional and

consulting fees.

expense for the three months ended June 30, 2020 was $3,104,071, a decrease of $105,025,763 or 97.1% from $108,129,834 for the

same period in 2019.

The decrease was principally due to a reduction of the change in fair value of derivative liability.

loss for the three months ended June 30, 2020 was $3,596,363 compared to $109,645,375 for the same period in 2019 due to the factors

described above.

months ended June 30, 2020 and June 30, 2019

comparison of the statements of operations for the six months ended June 30, 2020 and 2019 is as follows:

Six Months Ended June 30,

$ (1,466,119 )

Cost of goods sold

for both the three months ended September 30, 2020 and 2019 were $45,000.

Sales are derived from providing IT consulting services

to a related party.

expenses for the three months ended September 30, 2020 were $452,790, compared to $122,319,768 for the same period in 2019.

decrease of $121,866,978 or 99.6% was principally due to the fair value of warrants issued of $120,476,603 as a result of anti-dilution

provisions in certain warrants previously issued during the three months ended September 30, 2019.

expense for the three months ended September 30, 2020 was $919,220, a decrease of $80,786,868 or 101.2% from other income of $79,867,648

for the same period in 2019.

The decrease is principally due to a decrease in the change in the fair value of the derivative liability

during the three months ended September 30, 2019, offset by i) amortization of debt discounts, and ii) realized and unrealized

loss on a marketable equity security.

operating results of our discontinued operations for Ugopherservices, ECS Prepaid, Electronic Check Services and the Central State

Legal Services businesses for the three months ended September 30, 2020 and 2019 is summarized below:

Three Months Ended

September 30,

Cost of revenue

Operating expenses

Loss from operations

Other income (expenses)

a result of the disposition of Ugopherservices, ECS Prepaid, Electronic Check Services and the Central State Legal Services businesses,

the Company recognized a gain on the disposition of discontinued operations of $1,001,711 and $1,381,803 for the three months

ended September 30, 2020 and 2019, respectively.

loss for the three months ended September 30, 2020 was $325,299 compared to $41,403,048 for the same period in 2019 due to the

factors described above.

months ended September 30, 2020 and September 30, 2019

comparison of the statements of operations for the nine months ended September 30, 2020 and 2019 is as follows:

Nine Months Ended September

Sales - related party

Operating expenses

(120,332,711 )

Loss from operations

(127,102,375 )

Other expense

11 unchanged sentences

$ 145,224,781

for the six months ended June 30, 2020 were $8,381,842, compared to $9,847,961 for the same period in 2019.

The decrease of $1,466,119

or 14.9% was a result of a decreased sales due to the economic shutdown due to COVID-19.

gross margins for the six months ended June 30, 2020 were 5.7%, compared to 5.1% for the same period in 2019.

The small increase

in the gross margin was due to selling products with higher margins.

expenses for the six months ended June 30, 2020 were $6,860,518, compared to $5,626,020 for the same period in 2019.

of $1,234,498 or 21.9% was due to an impairment charge of $5,500,000 in 2020 offset by lower marketing expenses;

lower compensation

costs due to the decrease in personnel;

lower professional and consulting fees and lower stock compensation expense.

expense for the six months ended June 30, 2020 was $7,225,405, a decrease of $105,118,743 or 93.6% from $112,344,148 for the same

period in 2019.

The decrease was principally due to a reduction of the change in fair value of derivative liability.

loss for the six months ended June 30, 2020 was $13,604,203 compared to $117,751,235 for the same period in 2019 due to the factors

described above.

for both the nine months ended September 30, 2020 and 2019 were $135,000.

Sales are derived from providing IT consulting services

to a related party.

expenses for the nine months ended September 30, 2020 were $6,904,664, compared to $127,237,375 for the same period in 2019.

decrease of $120,332,711 or 94.6% was principally due to the fair value of warrants issued of $120,476,603 as a result of anti-dilution

provisions in certain warrants previously issued during the nine months ended September 30, 2019.

expense for the nine months ended September 30, 2020 was $8,144,625, a decrease of $24,331,875 or 74.9% from $32,476,500 for the

same period in 2019.

The decrease is principally due to i) a change in the fair value of the derivative liability, ii) a decrease

in amortization of discount and interest and financing costs;

and iii) a decrease in realized and unrealized loss on a marketable

equity security.

operating results of our discontinued operations for Ugopherservices, ECS Prepaid, Electronic Check Services and the Central State

Legal Services businesses for the nine months ended September 30, 2020 and 2019 is summarized below:

Nine Months Ended

September 30,

Cost of revenue

Operating expenses

Loss from operations

Other income (expenses)

a result of the disposition of Ugopherservices, ECS Prepaid, Electronic Check Services and the Central State Legal Services businesses,

the Company recognized a gain on the disposition of discontinued operations of $1,001,711 and $1,381,803 for the nine months ended

September 30, 2020 and 2019, respectively.

loss for the nine months ended September 30, 2020 was $325,299 compared to $41,403,048 for the same period in 2019 due to the

factors described above.

and Capital Resources

cash was $315,945 and $59,634 at June 30, 2020 and December 31, 2019, respectively.

Cash used in operating activities during the

six months ended June 30, 2020 was $343,934, compared to $5,265,601 during the same period in 2019.

Significant differences exist

between the periods, including warrants issued for services, change in fair value of derivative liability, financing costs, impairment

of assets and unrealized gain (loss) on marketable equity securities.

Our working capital position worsened going from a working

capital deficit of $11,830,572 at December 31, 2019 to a working capital deficit of $14,950,571 at June 30, 2020, principally

as a result of an increase in accounts payable and accrued expenses;

cash was $252,049 and $59,634 at September 30, 2020 and December 31, 2019, respectively.

Cash used in operating activities during

the nine months ended September 30, 2020 was $542,913, compared to $5,979,896 during the same period in 2019.

Significant differences

exist between the periods, including warrants issued for services, change in fair value of derivative liability, financing costs,

impairment of assets and unrealized gain (loss) on marketable equity securities.

Our working capital position worsened going from

a working capital deficit of $11,712,886 at December 31, 2019 to a working capital deficit of $14,501,308 at September 30, 2020,

principally as a result of an increase in accounts payable and accrued expenses;

an increase in derivative liability;

an increase in convertible

notes payable;

in convertible notes payable;

offset by a decrease in note payable.

Cash flows used in investing activities were $4,200 during the six months

ended June 30, 2020, compared to $1,209,246 for the same period in 2019.

The decrease is due to the amount paid for an investment

during the six months ended June 30, 2020.

Cash from financing activities for the six months ended June 30, 2020 was $604,445,

compared to $5,065,744 for the same period in 2019.

The decrease is due to the issuance of a convertible notes and notes payable

sustained net losses of $13,604,203 for the six months ended June 30, 2020.

In addition, we had a working capital deficit of $14,950,571

and accumulated deficit of $266,260,654 at June 30, 2020.

In September of 2017 we purchased the assets of RWJ Advanced Marketing,

LLC, and then after ECS Prepaid LLC, Electronic Check Services, Inc.

and Central States Legal Services, Inc.

ECS have historically generated significant revenues which we do not expect to continue in the future, as the Company divested

its investment in ECS Prepaid LLC, Electronic Check Services, Inc.

Cash flows used in investing activities were $231,771 during

the nine months ended September 30, 2020, compared to $1,148,268 for the same period in 2019.

The decrease is due to the amount

paid for an investment during the nine months ended September 30, 2020.

Cash from financing activities for the nine months ended

September 30, 2020 was $967,099, compared to $5,454,561 for the same period in 2019.

The decrease is due to the issuance of a

convertible notes and notes payable in 2019.

sustained net losses of $13,929,502 for the nine months ended September 30, 2020.

In addition, we had a working capital deficit

of $14,501,308 and accumulated deficit of $266,585,953 at September 30, 2020.

In September of 2017 we purchased the assets of

RWJ Advanced Marketing, LLC, and then after ECS Prepaid LLC, Electronic Check Services, Inc.

and Central States Legal Services,

RWJ and ECS have historically generated significant revenues which we do not expect to continue in the future, as

the Company divested its investment in ECS Prepaid LLC, Electronic Check Services, Inc.

and Central States Legal Services, Inc.

on or around September

2019, left only with the acquired assets from RWJ Advanced Marketing, LLC which in litigation, as disclosed in this report.

addition, during the last half of 2018 and the first few months of 2019, the Company has raised approximately $9,500,000 of net

proceeds through the issuance of convertible debt and notes payable (see discussion below).

We intend to continue to make investments

to support our business growth and we will require additional funds to respond to business challenges, including the need to develop

new features and products or enhance our existing products, improve our operating infrastructure or acquire complementary businesses

and technologies.

on or around September 2019, left only with the acquired assets from RWJ Advanced Marketing, LLC which in litigation, as disclosed

in this report.

In addition, during the last half of 2018 and the first few months of 2019, the Company has raised approximately

$9,500,000 of net proceeds through the issuance of convertible debt and notes payable (see discussion below).

We intend to continue

to make investments to support our business growth and we will require additional funds to respond to business challenges, including

the need to develop new features and products or enhance our existing products, improve our operating infrastructure or acquire

complementary businesses and technologies.

Further, we need additional capital to continue operations.

Accordingly, we need to engage in equity or debt

financings to secure additional funds.

We expect that we have sufficient capital to maintain operations through the third quarter

Accordingly, we need to

engage in equity or debt financings to secure additional funds.

We expect that we have sufficient capital to maintain operations

through the end of 2020.

In order to fully implement our business plan, we will need to raise $10,000,000.

The Company will need to raise additional

capital in the future of which there is no guarantee that the Company will be able to successfully raise such capital on acceptable

With the cash flow received from recent convertible debt and notes payable, the future sale of our marketable equity securities,

the conversion of the convertible notes receivable into marketable equity securities and ultimately into cash, and additional

cash anticipated to be raised in the near future, we believe we will have sufficient cash to meet our obligations for the next

The Company will need

to raise additional capital in the future of which there is no guarantee that the Company will be able to successfully raise such

capital on acceptable terms.

With the current cash on hand, cash in our attorney’s trust account and additional cash anticipated

to be raised in the future, we believe we will have sufficient cash to meet our obligations for the next 12 months.

for GBT Technologies S.

9 unchanged sentences

note does not contain a beneficial conversion feature.

The holders of the note notify the Company about legal procedure they commenced

against the company in Costa Rica with regard this note.

The holders of the note have notified the Company about legal procedure

they commenced against the company in Costa Rica with regard this note.

The company was not served with any lawsuit.

33 unchanged sentences

The note accrues interest at 3.5% per annum, was due on December 31, 2019 and is secured by the assets purchased in the acquisition.

This note has not been repaid as of June 30, 2020 and is in litigation between the Company, RWJ and third parties (see Item 3

This note has not been repaid as of September 30, 2020 and is in litigation between the Company, RWJ and third parties (see Item

Legal Proceedings).

December 3, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated

third-party institutional investor (the “Investor”), pursuant to which the Company issued a Senior Secured Redeemable

Convertible Debenture (the “Debenture”) in the aggregate face value of $8,340,000.

On January 31, 2020, in the arbitration

titled GBT Technologies Inc.

(k/n/a Gopher Protocol, Inc.

Discover Growth Fund, LLC (“Discover”) (JAMS Ref.

1260005395), the Company was informed that a final award was entered (the “Final Award”).

The Final Award affirms

that certain sections of the Senior Secured Redeemable Convertible Debenture (the “Debenture”) constitute unenforceable

liquidated damages penalties and were stricken.

Further, it was determined that neither Discover nor John Kirkland, President

and General Partner of Discover, were entitled to recovery of their attorney fees.

Consequently, and consistent with the expectations

of the Company, the arbitrator awarded Discover an award of $4,034,444.46 plus interest of 7.25% accrued from May 15, 2019 and

costs in the amount of $55,613.00.

On February 18, 2020, the Company filed a motion with the United States District Court District

of Nevada (the “Nevada Court”) to confirm the Final Award and a motion to consolidate Discover’s application

to confirm the Final Award filed in the U.S.

December 3, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with Discover Growth Fund,

LLC (the “Investor”) pursuant to which the Company issued a Senior Secured Redeemable Convertible Debenture (the “Debenture”)

in the aggregate face value of $8,340,000.

In connection with the issuance of the Debenture and pursuant to the terms of the SPA,

the Company issued a Common Stock Purchase Warrant to acquire up to 225,000 shares of common stock for a term of three years (the

“Warrant”) on a cash-only basis at an exercise price of $100.00 per share with respect to 50,000 Warrant Shares, $75.00

with respect to 75,000 Warrant Shares and $50.00 with respect to 100,000 Warrant Shares.

The holder may not exercise any portion

of the Warrants to the extent that the holder would own more than 4.99% of the Company’s outstanding common stock immediately

after exercise.

The outstanding principal amount may be converted at any time into shares of the Company’s common

stock at a conversion price equal to 95% of the Market Price less $5.00 (the conversion price is lowered by 10% upon the

occurrence of each Triggering Event –

the current conversion price is 75% of the Market Price less $5.00).

The Market Price

is the average of the 5 lowest individual daily volume weighted average prices during the period the Debenture is outstanding.

On May 28, 2019, the Investor delivered to the Company a “Notice of Default and Notice of Sale of Collateral”

“Notice”).

On December 23, 2019, in arbitration between the Company and the Investor, an Interim Award was entered

in favor of the Investor.

On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”).

The Final Award affirms that certain sections of the Debenture constitute unenforceable liquidated damages penalties and

were stricken.

Further, it was determined that the Investor was entitled to recovery of their attorney’s fees.

Consequently,

the arbitrator awarded Investor an award of $4,034,444 plus interest of 7.25% accrued from May 15, 2019 and costs in the amount

On February 18, 2020, the Company filed a motion with the United States District Court District of Nevada (the “Nevada

Court”) to confirm the Final Award and a motion to consolidate Investor’s application to confirm the Final Award filed

District Court of the Virgin Islands (Case No:

3 :20-cv-00012-CVG-RM) (the “Virgin

Island Court”).

On February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and

motion to consolidate and further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court.

As such, on February 27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award;

Address the Outstanding issue regarding whether Discover’s rights are subordinated to other creditors and, thereafter, oversee

a commercially reasonable foreclosure sale (Case No:

3 :20-cv-00012-CVG-RM) (the “Virgin Island Court”).

February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion to consolidate and

further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court.

As such, on February

27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award, address the outstanding

issues regarding whether Investor’s rights are subordinated to other creditors and, thereafter, oversee a commercially reasonable

foreclosure sale (Case No:

3 :20-cv-00012-CVG-RM).

It was the Company’s position that the Final

Award must first be confirmed and all questions regarding the rights of Discover relative to those of other creditors must be

determined before any foreclosure sale can proceed.

It was further the position of the Company that the previously disclosed foreclosure

sale scheduled by Discover is being conducted in a commercially unreasonable manner and that if Discover proceeded forward with

the foreclosure sale it did so at its own risk.

Nevertheless, on February 28, 2020, Discover advised that it conducted a sale

of the Company’s assets.

On July 28, 2020 Discover Growth Fund, LLC filed in the State of Nevada a motion for attorneys

$48,844 and costs $716.

The Company has not yet filed an answer.

It was the Company’s position that the Final Award must first be confirmed

and all questions regarding the rights of Investor relative to those of other creditors must be determined before any foreclosure

sale can proceed.

It is further the position of the Company that the previously disclosed foreclosure sale scheduled by Investor

is being conducted in a commercially unreasonable manner and that if Discover proceeded forward with the foreclosure sale it did

so at its own risk.

Nevertheless, on February 28, 2020, Investor advised that it conducted a sale of the Company’s assets.

As the date of this report Investor failed to present a deed of sale for the alleged sale that allegedly took place as noticed.

The Company filed with Virgin Island Court the motions disputing the validity of the alleged sale.

On July 28, 2020, Investor

filed in the State of Nevada a motion for attorneys $48,844 and costs $716.

The Company filed an answer on August 11, 2020.

October 16, 2020, Investor motion for attorneys $48,844 and costs $716 was denied.

February 18, 2020, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd., an accredited investor

17 unchanged sentences

shall pay to Power Up, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Power Note.

of September 30, 2020, the full amount of the convertible note has been converted into shares of common stock

February 27, 2019, the Company entered into a note purchase agreement with a third party investor - Iliad Research and Trading,

26 unchanged sentences

outstanding shares of common stock.

During the six months ended June 30, 2020, Iliad converted $279,000 of its convertible note

to 23,697,978 shares of the Company’s common stock.

The balance of the Iliad debt at June 30, 2020 was $2,486,983.

20, 2020 the Company and Iliad entered into agreement to extend the maturity of the Iliad Note until February 27, 2021 in consideration

of an extension fee of $1,000.

On July 20, 2020 the Company and Iliad entered into agreement to extend the maturity of the

Iliad Note until February 27, 2021 in consideration of an extension fee of $1,000.

During the nine months ended September 30,

2020, Iliad converted $429,000 of its convertible note to 39,425,822 shares of the Company’s common stock.

The balance of

the Iliad debt at September 30, 2020 was $2,336,983, plus accrued interest of $156,621.

Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received

15 unchanged sentences

The amount of $575,170

was paid on June 23, 2020 into a lawyer’s trust account, and 2,380,952 of SURG shares have been sent for cancelation..

elected not to acquire the remaining 952,381 shares for $200,000, and as such the remaining shares should be released to Stanley’s

member as free trading.

The Company and Stanley’s member mitigate the damages created via legal consultant.

was received into a lawyer’s trust account, and 3,333,333 of SURG shares have been sent for cancelation.

On August 12, 2020,

2020, the Company and its subsidiary, AltCorp Trading LLC, entered into a new pledge agreement with Stanley, where 5,500,000 SURG

shares been pledged to Stanley to secure the debt payable by the Company to Stanley as well as mitigate the damages allegedly

created by SURG.

the Company and its subsidiary, AltCorp Trading LLC, entered into a new pledge agreement with Stanley, where 5,500,000 SURG shares

been pledged to Stanley to secure the debt payable by the Company to Stanley as well as mitigate the damages allegedly created

June 17, 2019, the Company, Altcorp Trading LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“Altcorp”),

52 unchanged sentences

of Financial Statements

accompanying financial statements include the accounts of the Company have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“U.S.

GAAP”).

15 unchanged sentences

equity security expected to be sold within twelve months of the balance sheet date is reported as a current asset.

2014-09 , Revenue from Contracts with Customers (“Topic 606”), became effective for the Company

2014-09, Revenue from Contracts with Customers ("

Topic 606 "), became effective for the Company

on January 1, 2018.

1 unchanged sentence

by this new standard.

The Company applied the “modified retrospective”

The Company applied the "modified retrospective"

transition method for open contracts for the

implementation of Topic 606.

As sales are and have been primarily from IT services, sale of phones,

phone card products, prepaid cellular phone minutes and cellular activation, and the Company has no significant post-delivery

obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying

consolidated financial statements for the cumulative impact of applying this new standard.

The Company made no adjustments to

its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting

practices under Topic 605, Revenue Recognition .

from providing IT services, sale of phones, phone card products, prepaid cellular phone minutes and cellular activation services

are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers

in return for expected consideration and includes the following elements:

contracts with the Company ’

s customers that it believes are legally enforceable;

The Company had no significant post-delivery obligations, this new standard did not result

in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative

impact of applying this new standard.

The Company made no adjustments to its previously-reported total revenues, as those periods

continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition .

from providing IT services are recognized under Topic 606 in a manner that reasonably reflects the delivery of

its services to customers in return for expected consideration and includes the following elements:

executed contracts with the Company’s customers that it believes are legally enforceable;

identification

4 unchanged sentences

of revenue only when the Company satisfies each performance obligation.

five elements, as applied to each of the revenue categories, is summarized below:

five elements, as applied to each of the Company’s revenue category, is summarized below:

services - revenue is recorded on a monthly basis as services are provided;

of phones, phone card products, prepaid cellular phone minutes and cellular activation –

revenue is recognized at the

time of sale to the customer;

fees and Royalties –

13 unchanged sentences

based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet

As of December 31, 2018, the Company’s only derivative financial instrument was an embedded conversion feature associated

As of September 30, 2020, the Company’s only derivative financial instrument was an embedded conversion feature associated

with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage

21 unchanged sentences

Date of Inception.

Our Board is considering in the near future the potential divesture of UGopherServices in form of a none-cash

dividend, subject of resolving the legal dispute as disclose in the report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

32 unchanged sentences

in Internal Control over Financial Reporting

were no changes in the Company’s internal controls over financial reporting during the quarter ended June 30, 2020, that

materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2020,

that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

II - OTHER INFORMATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 4. Controls and Procedures