What changed in this filing

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Item 3. Legal Proceedings

2021-03-31 compared with 2020-05-27 · 111 added, 174 removed, 25 unchanged (92% of the section changed)

2 unchanged sentences

is currently no litigation that management believes will have a material impact on the financial position of the Company.

June 10, 2016, the Company entered into a consulting agreement with Waterford Group LLC (“Waterford”) pursuant to

which the Company engaged Waterford to provide sales and marketing consulting and advisory services to the Company in consideration

of 1,000 shares of restricted common stock of the Company (the “Shares”) and a common stock purchase warrant (the

“Warrant”) to acquire 7,500 shares of restricted common stock of the Company at an exercise price of $225.00 per share

for a period of five (5) years.

500 of the Shares were issued to Waterford upon the execution of the Agreement.

The Warrant vested

on a quarterly basis in eight (8) equal quarterly installments each in the amount of 938 shares each quarter during the term of

the Agreement.

The first quarterly installment vested upon the execution of the Agreement and each subsequent quarterly installment

was to vest each quarter thereafter.

The Company believes that Waterford is in default of its agreement, as it failed to perform

or provide any services under the agreement.

As such, the Company put Waterford on notice in writing that the Company did not

issue shares or warrants during the third or fourth fiscal quarters of 2016 due to the default.

or around January 23, 2017, the Company filed a complaint against Waterford and the Company’s Transfer Agent, in Superior

Court of the State of California, County of Riverside.

On February 1, 2017, the Company obtained a temporary restraining order

that prohibits Waterford from (x) lifting the restricted legend from the 500 shares that it received in connection with signing

the Agreement;

(y) selling the 500 shares to another party;

and, (z) from exercising the warrant on 938 shares that was issued

and vested upon the execution of the Agreement.

As ordered by the court, on February 9, 2017, the Company deposited a Corporate

Surety Bond in the amount of $42,875 to secure the temporary restraining order.

The Company agreed with Waterford to go to binding

arbitration, which is currently being scheduled.

or around February 27, 2017, the Company was issued a stay of the temporary restraining order barring its transfer agent from

providing shares in connection with the exercise of the first Waterford warrant on 938 shares that was provided to Waterford in

connection with the execution of the engagement letter that was executed by the parties on or around June 10, 2016.

12, 2018, the Waterford legal matter was settled in favor of the Company that resulted in the cancelation of Waterford’s

938 warrants and the cancelation of 500 shares of the Company’s common stock owned by Waterford.

or around January 30, 2019, RWJ Advanced Marketing, LLC, Greg Bauer, and Warren Jackson sued the Company in Superior Court of

the State of California - County of Los Angeles, General District in connection with the acquisition of UGopherServices in September

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.

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

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

or around January 30, 2019, RWJ Advanced Marketing, LLC, Greg Bauer, and Warren Jackson sued the Company and multiple third and

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

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 plaintiffs 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.

On October 13, 2020, the Second Lawsuit was removed by other defendants into Central District of California

2:20−cv−09399−RGK−AGR).

On February 2, 2021 The Central District of California dismissed the

entire Second Lawsuit based on demand futility.

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,

It was the Companys intention to dividend its holdings of its wholly owned subsidiary Ugopherservices Corp.

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.

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

confirmed in writing.

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

SURG never answered the notice.

The Company noticed certain third parties that it intends to take legal actions to resolve

On November 12, 2020 the Company filed a complaint in the United States District Court –

District of Nevada

- Case 2:20-cv-02078 against RWJ, Mr.

Jackson and against W.L.

Petrey Wholesale Company Inc for fraud, breach of contract,

Unjust Enrichment and other claims.

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

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

after exercise.

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

The outstanding principal amount may be converted at any time into shares of the Companys 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

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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”).

In the Notice, the Investor declared that the Company was in default of the terms of the SPA.

2019, in a letter to the Investor the Company disputed each of the purported “Trigger Events”

and demanded the Investor

retract the Notice.

It is the Company’s position that the Notice is a further attempt by the Investor to mask its issues

surrounding its recent conversion notice and resulting affiliate status and the investors ownership position in the Company as

set forth above.

The Investor responded that the Notice will not be withdrawn.

In the Notice, the Investor declared all obligations

under the SPA immediately due and payable.

In the Notice, the Investor purported to establish 10:00 a.m.

Eastern Time on Monday,

June 24, 2019, as the date on which it intended to sell and dispose of the collateral securing the Debentures and said the sale

would take place in St.

Thomas, The Virgin Islands.

On June 20, 2019, the United States District Court District of Nevada (the

“Court”) granted an Order Granting Ex Parte Application for Temporary Restraining Order (Case Number:

2:19-cv-01039)

in favor of the Company temporarily restraining the Investor from selling, foreclosing upon, encumbering, dissipating, or

otherwise transferring any of the collateral referenced in the Notice and from conducting the sale currently referenced in the

Company obtained injunction restraining the Investor from proceeding with the Sale of Collateral, (District Court District of

Nevada - Case Number:

2:19-cv-01039) and filed its arbitration demand on Friday, June 7, 2019.

On July 2, 2019, Honorable Philip

Pro (Ret.) was appointed as Arbitrator in Gopher Protocol, I nc.

Discover Growth Fund, LLC (JAMS Ref# 1260005395).

United States District Court for the District of Nevada ( Gopher Protocol, Inc, a Nevada corporation, Plaintiff, vs.

Growth Fund, LLC, a US Virgin Islands limited liability company, Defendant ;

2:19-cv-01039) granted the motion

of GBT Technologies Inc.

(the “Company”) for a Preliminary Injunction against Discover Growth Fund, LLC (“DGF”),

continuing in effect the Court’s previously granted Temporary Restraining Order that enjoined DGF from selling, foreclosing

upon, encumbering, dissipating, or otherwise transferring any of the Company’s assets (the “Preliminary Injunction”).

the issuance of the Preliminary Injunction, the Company believes that DGF (in a series of its own actions that included Notices

to increase reserves and a Notice of Conversion) has again violated the Preliminary Injunction.

The most recent example is DGF’s

October 24, 2019 delivery to the Company of a purported “Notice of Default and Notice of Sale of Collateral”

“Most Recent Notice”).

In the Most Recent Notice, DGF again declared that the Company was in default of the terms

of the December 3, 2018 Securities Purchase Agreement (“SPA”) between the Company and DGF.

In the Most Recent Notice,

DGF purported to declare all of the Company’s obligations under the SPA immediately due and payable.

In the Most Recent

Notice, DGF purported to establish 10:00 a.m.

Eastern Time on Monday, December 2, 2019, as the date on which DGF intended to sell

and dispose of the collateral securing the Senior Secured Redeemable Convertible Debenture that were the subject of the SPA and

that the sale would take place in St.

Thomas, The Virgin Islands.

Company disputes the fundamental basis for any such sale as set forth in the Most Recent Notice, including the purported basis

for DGF’s claims that the Company is in default under the SPA.

Among other issues, the Company continues to maintain

that the SPA is void and that DGF’s actions thereunder are legally unsupportable.

The Company will seek to have the purported

sale terminated and to have DGF held in contempt by the United States District Court for the District of Nevada.

will also seek to recover all of its associated fees and costs relative to its pursuit of this matter.

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

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

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.

January 31, 2020, in the arbitration, GBT Technologies Inc.

(k/n/a Gopher Protocol, Inc.

Discover Growth Fund, LLC (“Discover”)

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

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 attorneys 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.

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

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 attorneys 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 Investors 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 Companys 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 Investors 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 Companys 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.

January 14, 2018, the Company entered into an Initial Term Agreement (the “ITA”) with Spare CS Inc.

(“Spare”),

a Delaware corporation, pursuant to which the Company agreed to acquire 50% of the equity of Spare.

Spare is a mobile banking

app that allows customers to access cash with no ATM, no debit or credit card, and no purchase required from participating merchants.

During the years ended December 31, 2018, the Company terminated the ITA with Spare and wrote off the $265,000 that has been advanced

The $265,000 is included as part of the impairment of assets in the accompanying consolidated statement of operations

for the year ended December 31, 2018.

Nevertheless, on February 28, 2020, Investor advised that it conducted a sale of the Companys 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 and costs 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

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 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

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Confirmation Number:

6787)(collectively, the “Digital Currently Technology”).

6787)(collectively, the Digital Currently Technology).

Pursuant to the GBT License Agreement, the Company granted

1 unchanged sentence

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, 2019 and 2018 in the accompanying consolidated balance

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 was

recorded as unearned revenue at December 31, 2018 and reclassified to accrued expense at December 31, 2020 and 2019.

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.

connection with SURG Exchange Agreement - On November 4, 2020, Altcorp and Stanley filed an Ex Parte Motion in the District Court,

Clark County, Nevada (Case No:

A-20-823039-B, in Dep No:

43) to appoint receiver and issue a temporary restraining Order against

SURG and its transfer agent for alleged defaults on prior exchange agreement.

On December 4, 2020, the parties entered an interim

agreement which set the material terms of the settlement.

A final settlement was achieved per the interim agreement terms on January

On March 4, 2021 the Company filed a motion to enforce settlement agreements, as the Company alleged that SURG owes an

additional $240,000 which is due and owing under the settlement agreements.

MINE SAFERY DISCLOSURES

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-K

Item 3. Legal Proceedings