What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-03-31 compared with 2020-05-27 · 1715 added, 2193 removed, 788 unchanged (83% of the section changed)

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The Company will also

increase management’s review of key financial documents and records.

increase managements review of key financial documents and records.

a smaller reporting company, the Company does not have the resources to fund sufficient staff to ensure a complete segregation

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However, Company management does review, and will increase the review of,

financial statements on a monthly basis, and the Company’s external auditor conducts reviews on a quarterly basis.

financial statements on a monthly basis, and the Companys external auditor conducts reviews on a quarterly basis.

actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.

in Internal Control over Financial Reporting

were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2019,

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

were no changes in the Companys internal controls over financial reporting during the quarter ended December 31, 2020,

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

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Officers and Directors

are the names and certain information regarding the company’s executive officers and directors.

are the names and certain information regarding the companys executive officers and directors.

Directors/Officers:

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Executive Officer, Chief Financial Officer and Director

Directors/Officers (resigned during the year ended December 31, 2019)

Executive Officer

Financial Officer

of the Board of Directors

Murray is a licensed and UST Certified NMLS Originator, a licensed mortgage banker, a real estate broker and a licensed general

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University in May 2013.

Murray is an officer and shareholder of Hermes Roll LLC (“Hermes”), a Nevada limited liability company to be formed.

On March 4, 2015, the Company entered into a Territorial License Agreement with Hermes, which is the basis for the Company’s

Murray is an officer and shareholder of Hermes Roll LLC (Hermes), a Nevada limited liability company to be formed.

On March 4, 2015, the Company entered into a Territorial License Agreement with Hermes, which is the basis for the Companys

current operations.

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of the Company, and a Director.

Khatib was appointed as the Company Chief Excusive and Financial Officer on April 13, 2020, the Company’s Board of Directors

appointed Mansour Khatib, who has served as the Chief Marketing Officer and a director of the Company as Chief Executive Officer.

Khatib has also previously served as Interim Chief Executive Officer from May 2018 to July 2018.

From 2009 through 2012, Mansour

Khatib served as the CEO and CFO of The Merchandise Company, located in Long Beach, California.

From 2012 through the present,

Khatib has served as a U.S.

Business and Marketing Sales Representative for KB Racking, located in Toronto, Canada.

2013 through July 2014, Mr.

Khatib served as VP of Marketing for Sun Energy Partners, LLC, developing solar rooftop projects.

From July 2014 through the present, Mr.

Khatib has served as the CTO for New Energy Ventures, LLC, a company that is developing

utility scale projects in New Jersey, California, and smaller projects in Mexico, the Caribbean and Peru.

Khatib received

in Economics from Fachhochschule Wuppertal in Wuppertal, Germany in 1988 and a Bachelors in Electro Engineering & Computer

Technology from University Aachen in Aachen, Germany in 1985.

Danny Rittman is a veteran software architect and integrated circuit technology expert with over 20 years of experience in

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Rittman has served as the CTO and as a director of the Company, leading

the Company’s technological direction and managing teams of mobile software developers.

the Companys technological direction and managing teams of mobile software developers.

From 2012, through 2014, Dr.

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Rittman served as the Founder and CTO of Micrologic Design Automation,

leading the company’s technological direction, including architecture, design and development of EDA software tools.

leading the companys technological direction, including architecture, design and development of EDA software tools.

2002 through 2007, Dr.

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Rittman served

as the Founder and VP of R&D for Bindkey Technologies, leading the company’s technological direction, research and development

as the Founder and VP of R&D for Bindkey Technologies, leading the companys technological direction, research and development

of EDA software tools for integrated circuits and back-end design.

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specializing in EDA Concepts and Algorithms, from La Salle University, graduating Summa Cum Laude in 1998.

Davis is a seasoned executive with management experience across many areas including M&A, capital raising, sales and business

Since 2010, Mr.

Davis has served as the CEO of Bitspeed LLC, an extreme file transfer software and appliance solution.

In addition, since 2001, Mr.

Davis has served as the Managing Partner of CoBuilder, Inc., a consulting organization providing

services associated with increasing efficiencies, including market penetration and revenues, for large and small corporate entities.

Davis received an AB Political Science from Stanford University and an MBA (Concentration in Finance and Strategic Management)

from UCLA Anderson Graduate School of Management.

Davis resigned as the Company Chief Financial Officer on April 11, 2020.

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

Pickard is a certified public accountant with experience providing management consulting services for small to medium sized

companies, including review and preparation of filings with the Securities and Exchange Commission.

Pickard is the owner of

Pickard, CPA, PC which he founded in 1998.

Prior to that, from August 1996 to July 1998, Mr.

Pickard was a partner of

Singer Lewak Greenbaum & Goldstein, LLP, where he co-managed the accounting its securities industry practice group.

employed as a Business Assurance Manager of PricewaterhouseCoopers, LLP (formerly, Coopers & Lybrand, LLP) in various offices

from September 1987 to July 1993 and from April 1994 to August 1996, where he focused on auditing companies in insurance, high-tech

and industries.

Pickard holds a Bachelor of Science in Accounting and a Master of Accountancy from Brigham Young University.

Pickard is currently a licensed Certified Public Accountant in North Carolina and California.

Pickard resigned as the

Company Financial Officer on October 3, 2019.

Pickard resignation was not the result of any disagreements with management

or board of directors of the Company.

Khilji, 54, has owned and operated Muhammad Khilji, CPA, a business accounting and tax advisory service.

Khilji is engaged

in providing advisory services to small business clients.

He has been serving numerous high net worth individuals, professionals,

as well as entrepreneurs.

He is involved in consulting clients in the areas of strategic business management, sales and marketing

, retirement planning, asset protection , financial restructuring and bankruptc y.

Khilji tax compliance experience spans

over large corporations to multi-state partnerships.

Khilji has also served as contract CFO for a number of companies.

2004 to 2005, Mr.

Khilji served as a Senior Manager in the Financial Services Group of KPMG and from 2002 to 2004 as a Senior

Manager with the Corporate Tax Group at Waterhouse Cooper.

Prior to 2002, Mr.

Khilji was a Senior Manager with the Corporate Tax

Advisory Group at Arthur Anderson.

Khilji has been licensed as a Certified Public Accountant in California since 2002 and

graduated from Southern Illinois University in 1993 with a Master of Business Administration Finance and Marketing and in 1991

with a Bachelor of Science Finance.

Khilji resigned as Director of the Company on October 25, 2019.

His resignation was not

the result of any disagreements with management or board of directors of the Company

Yaspan , age 73, has owned and operated Law Offices of Robert M.

Yaspan since 1997 where has focused his practice on business

reorganizations and real property law.

Yaspan received a Bachelor of Arts degree in History from the University of Chicago

in 1968 and a Juris Doctorate from University of Southern California in 1971.

Yaspan is the manager of REKO Holdings LLC,

a significant shareholder of the Company.

Yaspan resigned as Director of the Company on June 5, 2019.

Yaspan resignation

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

Nagypal , age 48, has extensive experience in human resources and business, with multicultural understanding coming from diverse

international positions with over 18 years of successful track record in field and headquarters positions, both in specialist

and generalist roles.

Since 2013, Ms.

Nagypal has held various positions in Microsoft including HRD Leadership Development and

Talent Management from 2013 to 2015, Independent Software Vendor Acquisition Lead from 2015 to 2016 and Independent Software Vendor

Go-To-Market Lead from 2016 to present.

Prior to Microsoft, Ms.

Nagypal held positions with AXA Group, Kraft Biscuits and Danone

Nagypal received a Postgraduate Diploma in Human Resources Management from Middlesex University in 2002, a Law Degree

from Eotvos Lorand University in 1998 and a Masters in Economic Sciences from Budapest University of Economics in 1994.

resigned as Director of the Company on January 29, 2020.

Nagypal resignation was not the result of any disagreements with

management or board of directors of the Company

Siegel , 67, has had a long and distinguished career as a senior U.S.

government official and businessman.

He was appointed

by then President George W.

Bush as the U.S.

Ambassador to the Commonwealth of the Bahamas from October 2007 to January 2009.

He was also appointed by President Bush to serve under Ambassador John R.

Bolton at the United Nations in New York, serving as

the Senior Advisor to the U.S.

Mission and as the U.S.

representative to the 61st Session of the United Nations General Assembly.

Prior to his ambassadorship, he was appointed to the Board of Directors of the Overseas Private Investment Corporation (OPIC).

In addition to his public service, Ambassador Siegel has over 30 years of entrepreneurial successes.

Presently, he serves as President

of The Siegel Group, a multi-disciplined international business management advisory firm specializing in real estate, energy,

utilities, infrastructure, financial services, oil and gas and cyber and secure technology.

Ambassador Siegel also serves on the

Board of Directors and Advisory Boards of other numerous public and private companies, and private equity groups.

Phi Beta Kappa from the University of Connecticut in 1973 and received a juris doctorate from the Dickinson School of Law in 1976.

In December 2014, he received an honorary degree of Doctor of Business Administration from the University of South Carolina.

Siegel has previously served as a member of the Board of Directors of Healthwarehouse.com, Inc.

from June 2013 to September 2016,

PositiveID Corporation from February 2011 to the present, Notis Global, Inc.

from April 2014 to the present, Viscount Systems

from April 2013 to the present and Baltia Air Lines, Inc.

(dba USGlobal Airways) from June 2017 to present.

Siegel resigned

as Director of the Company on April 13, 2020.

Siegel resignation was not the result of any disagreements with management or

board of directors of the Company.

2012 to the present, Eva Bitter has served as Business Unit Leader for Rehab zRt.

Prior to 2012, Ms.

Bitter served in various

sales and marketing roles with Reckitt Benckiser, Colgate Palmolive Hungary and Kraft Foods Hungary.

Bitter received a degree

in International Relations from the College for Foreign Trade, Budapest in 1993 and a degree in External Economies from the University

of Economic Sciences, Budapest in 1996.

Bitter resigned as Director of the Company on January 17, 2020.

Bitter resignation

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

1978 through June 2017, Mitchell Tavera has served as a member of the El Segundo Police Department in various capacities

from Patrol Cadet, Detective, Sergeant, Lieutenant, Captain and culminating in his appointment as Chief of Police which role he

held from April 2010 through June 2017.

Following Mr.

Tavera’s retirement from the El Segundo Police Department, in November

2018, he joined Elite Interactive Solutions as Law Enforcement Liaison.

Tavera resigned as Director of the Company on October

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

Khatib was appointed as the Company Chief Excusive and Financial Officer on April 13, 2020, the Companys Board of Directors

appointed Mansour Khatib, who has served as the Chief Marketing Officer and a director of the Company as Chief Executive Officer.

Khatib has also previously served as Interim Chief Executive Officer from May 2018 to July 2018.

From 2009 through 2012, Mansour

Khatib served as the CEO and CFO of The Merchandise Company, located in Long Beach, California.

From 2012 through the present,

Khatib has served as a U.S.

Business and Marketing Sales Representative for KB Racking, located in Toronto, Canada.

2013 through July 2014, Mr.

Khatib served as VP of Marketing for Sun Energy Partners, LLC, developing solar rooftop projects.

From July 2014 through the present, Mr.

Khatib has served as the CTO for New Energy Ventures, LLC, a company that is developing

utility scale projects in New Jersey, California, and smaller projects in Mexico, the Caribbean and Peru.

Khatib received

in Economics from Fachhochschule Wuppertal in Wuppertal, Germany in 1988 and a Bachelors in Electro Engineering & Computer

Technology from University Aachen in Aachen, Germany in 1985.

Relationships

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at the time of the bankruptcy or within two years prior to that time.

convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other

minor offenses.

convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor

subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

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or banking activities.

found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to

have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have

violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization,

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December 17, 2015, the Company established a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit

Committee (collectively, the “Committees”) and approved and adopted charters to govern each of the Committees.

Committee (collectively, the Committees) and approved and adopted charters to govern each of the Committees.

there are no members on each of the committees and the board of directors has assumed the roles of each of the committees.

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April 22, 2015, Michael Murray was appointed by the Company as the Chairman of the Board of Directors, CEO, and President of the

On March 4, 2015, the Company entered into a Territorial License Agreement with Hermes, which is the basis for the Company’s

On March 4, 2015, the Company entered into a Territorial License Agreement with Hermes, which is the basis for the Companys

current operations.

Murray is the owner of 9,900 shares of Series D Preferred Stock of the Company that is convertible at

Murray’s election into 9,900,000 shares of common stock at a fixed price of $0.50 per share.

Murrays election into 9,900,000 shares of common stock at a fixed price of $0.50 per share.

During 2016 Mr.

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with both mobile and fixed solutions, commencing June 16, 2015 and continuing until Dr.

Rittman’s employment agreement is

April 16, 2016 (the “Effective Date”), Mansour Khatib and the Company entered into an Employment Agreement (the “Agreement”)

Rittmans employment agreement is

April 16, 2016 (the Effective Date), Mansour Khatib and the Company entered into an Employment Agreement (the Agreement)

pursuant to which Mr.

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August 15, 2016, the Employment Agreement of Mansour Khatib, our CMO, was amended and restated as follows:

the Company generating $1,000,000 in revenue during any three (3) month period (the “Threshold Requirement”), the

Executive will receive salary at the rate of $100,000 annually (the “Base Salary”);

the Company generating $1,000,000 in revenue during any three (3) month period (the Threshold Requirement), the

Executive will receive salary at the rate of $100,000 annually (the Base Salary);

provided, however, that that Company

shall pay to Executive $5,000 per month (the “Monthly Salary Advance”) commencing on August 15, 2016, which such Monthly

shall pay to Executive $5,000 per month (the Monthly Salary Advance) commencing on August 15, 2016, which such Monthly

Salary Advance shall be an advance on the Base Salary and shall continue to be paid to Executive until such time that the Company

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Once the Threshold Requirement is met, the Base Salary

will be payable in equal increments not less often than monthly in arrears and in any event consistent with the Company’s

will be payable in equal increments not less often than monthly in arrears and in any event consistent with the Companys

payroll policy and practices.

The Base Salary of the Executive may from time to time be increased, but not decreased, by

the Board, in its absolute discretion, including potential bonuses.”

the Board, in its absolute discretion, including potential bonuses.

January 1, 2020 Mansour Khatib salary was increased to $15,000 a month by Michel Murray our President.

with Section 16(a) of the Securities Exchange Act of 1934

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Mansour Khatib

Chief Executive Officer,

Chief Financial Officer, and director

Chief Executive Officer and director

Douglas Davis (1)

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other than as described herein.

as the Chief Executive Officer in May 2018, but remained as a consultant to the Company through the end of the year at a cost

of $15,000 per month.

as the Chief Executive Officer in April 2020.

as the Chief Financial Officer in September 2019.

following table sets forth all compensation awarded to, earned by or paid to the non-employee directors in 2020 and 2019 for their

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Equity Awards at Fiscal Year-End

are no outstanding equity awards outstanding at December 31, 2019 other than those disclosed above.

following table sets forth information with respect to the beneficial ownership of the Common Stock as of _______, 2020 by (i)

following table sets forth all unexercised warrants and unvested restricted stock that have been awarded to our named executives

by the Company and were outstanding as of December 31, 2020.

incentive plan

shares, units

Name and principal

exercisable (#)

unexercisable (#)

Michael Murray

President and director

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth information with respect to the beneficial ownership of the Common Stock as of March 24, 2021 by (i)

each person known by the Company to own beneficially more than 5% of the outstanding Common Stock;

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Stock beneficially owned by it or him as set forth opposite its or his name.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table

sets forth information with respect to the beneficial ownership of the Common Stock as of May 27_, 2020 by (i) each person known

by the Company to own beneficially more than 5% of the outstanding Common Stock;

(ii) each director of the Company;

officer of the Company and (iv) all executive officers and directors as a group.

Except as otherwise indicated below, each of the

entities or persons named in the table has sole voting and investment powers with respect to all shares of Common Stock beneficially

owned by it or him as set forth opposite its or his name.

Name of Beneficial Owner

Murray (2, 4)

Danny Rittman (3)

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GBT Tokenize Corp (4)

The Gonzalez Trust CR –

Pablo Gonzalez (7)

GBT BitSpeed Corp (5)

The Gonzalez Trust CR - Pablo Gonzalez (4)

All Officers and Directors as a Group

(1) Beneficial

ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting

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Pursuant to the rules and regulations of the Securities and Exchange Commission,

shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options

or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group,

but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the

The above is based on 171,496,091 shares of common stock outstanding as of May 27, 2020

shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or

warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but

are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.

The above is based on 493,110,305 shares of common stock outstanding as of March 24, 2021

Murray is President of the company, and a Director.

He holds a warrant for 4,000,000 shares of the Company’s common

He holds a warrant for 4,000,000 shares of the Company’s common stock.

Officer and Director of the Company.

Tokenize Corp is a 50/50 Joint venture between the Company and Tokenize-It S.A.

Controlled by the Gonzalez Trust from Costa

Controlled by the Gonzalez Trust from Costa Rica.

GBT Tokenize Corp hold 100,000,000 shares of the Company’s common stock.

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agreement pursuant to which he will receive salary at the rate of $250,000 annually payable in equal increments of $15,000 per

An additional $70,000 shall be payable within 15 days of the end of the calendar year.

On September 14, 2018,

the Company and Dr.

Rittman entered into a letter agreement confirming that the Company is the owner of all intellectual property

developed by Dr.

Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies, including

a global platform with both mobile and fixed solutions, commencing June 16, 2015 and continuing until Dr.

Rittman’s employment

agreement is terminated.

March 29, 2016, the Company contributed all of its rights relating to its proprietary microchip that is within a sticky patch

package (the “Patch”) to Guardian LLC in consideration of 50% of the profit generated by Guardian LLC (the “Joint

Venture”).

Guardian LLC was responsible for investing all needed funds for the purpose of developing the Patch and related

products to the Patch.

In addition, Guardian LLC was required to provide short term loans to Gopher on an as needed basis secured

by Gopher’s economic interest in the Joint Venture.

The Company provided IT services to Guardian LLC for a monthly fee.

On August 30, 2018, Guardian Patch converted the 2,000,000 shares of Series G Preferred Stock into 2,000,000 shares of common

On September 25, 2018, the Company entered into a Joint Venture Interest Purchase Agreement with Guardian, LLC pursuant

to which the Company purchased Guardian LLC’s 50% interest in a joint venture (the “JV Interest”) previously

entered between the parties in March 2016 covering the Guardian Patch, Puzpix and Epsilon.

In consideration for the JV Interest,

the Company issued Guardian 12,500,000 shares of common stock.

During the nine months ended September 30, 2018, the Company took

a charge to earnings of $11,750,000 related to the purchase of Guardian LLC’s 50% JV Interest.

April 16, 2016 (the “Effective Date”), Mansour Khatib and the Company entered into an Employment Agreement (the “Agreement”)

month with an additional $70,000 to be paid within 15 days of the end of the calendar year.

September 14, 2018, the Company and Dr.

Rittman entered into a letter agreement confirming that the Company is the owner of all

intellectual property developed by Dr.

Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile

technologies, including a global platform with both mobile and fixed solutions, commencing June 16, 2015 and continuing until

Rittman’s employment agreement is terminated.

September 1, 2017, the Company entered into and closed an Asset Purchase Agreement with a third party, RWJ Advanced Marketing,

LLC (“RWJ”), a Georgia corporation, pursuant to which the Company purchased certain assets from RWJ, including inventory,

terminals, licenses and permits and intangible assets.

At closing, the Company and Mr.

Greg Bauer entered into an Employment Agreement

pursuant to which Mr.

Mansour Khatib agreed to serve as the Chief Marketing Officer of the Company.

Mansour Khatib was also

appointed as a director of the Company on the Effective Date.

Pursuant to the terms of the Employment Agreement, Mr.

receive an annual salary of $100,000 upon the Company generating $1,000,000 in revenue during any three (3) month period.

August 15, 2016, the Employment Agreement of Mansour Khatib, our CMO, was amended and restated as follows:

the Company generating $1,000,000 in revenue during any three (3) month period (the “Threshold Requirement”), the

Executive will receive salary at the rate of $100,000 annually (the “Base Salary”);

provided, however, that that Company

shall pay to Executive $5,000 per month (the “Monthly Salary Advance”) commencing on August 15, 2016, which such Monthly

Salary Advance shall be an advance on the Base Salary and shall continue to be paid to Executive until such time that the Company

launches its Guardian Patch technology into the consumer markets.

Once the Threshold Requirement is met, the Base Salary

will be payable in equal increments not less often than monthly in arrears and in any event consistent with the Company’s

payroll policy and practices.

The Base Salary of the Executive may from time to time be increased, but not decreased, by

the Board, in its absolute discretion, including potential bonuses.

Khatib was appointed as the Company Chief Excusive and Financial Officer on April 13, 2020, the Company’s Board of Directors

appointed Mansour Khatib, who has served as the Chief Marketing Officer and a director of the Company as Chief Executive Officer.

Khatib has also previously served as Interim Chief Executive Officer from May 2018 to July 2018.

Bauer was retained as Chief Executive Officer for a term of one year, subject to an automatic extension,

unless terminated, in consideration of a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired.

Bauer was also appointed to the Board of Directors of the Company.

As of the closing date, Mr.

Murray resigned as Chief Executive

Officer of the Company but will remain as a director of the Company.

Bauer, since 2004 through present, has served as executive

director with W.L.

Petrey Wholesale, Inc.

where he was in charge of the UGO/Preway operations.

The Company is in litigations in

connection with RWJ transaction.

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

Davis was retained as Chief Executive Officer.

Davis served as Interim Chief Executive Officer since July 2018 until his resignation

on April 11, 2020.

The term of Mr.

employment was for two years through January 1, 2021.

Davis was entitled to

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,

exercisable for five years, subject to vesting.

The options were to be earned and vested (i) with respect to 20,000 shares of

common stock on the date hereof, (ii) 5,000 shares of common stock upon the successful dual list of the Company on an international

exchange such as SIX Zurich Stock Exchange or Euronext, (iii) 15,000 shares of common stock upon the successful up listing to

a national exchange such as the Nasdaq, NYSE Euronext, TSX, AMEX or other, and (iv) with respect to 5,000 shares of common stock

at each of the six (6) month anniversaries (July 1, 2019 and January 1, 2020).

The exercise price of such options shall be the

closing price of the Company on the date prior to such event.

October 10, 2019, the Company entered into a Joint Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC,

which is owned by Douglas Davis, the Company’s Chief Executive Officer, to form GBT BitSpeed Corp., a Nevada company (“GBT

BitSpeed”).

The purpose of GBT BitSpeed is to develop, maintain and support its proprietary Extreme Transfer Software Application

Concurrency, a software application to transfer secure, accelerated transmission of large file data over networks, and connection

to cloud storage, Network-Attached Storage (NAS) and Storage Area Networks (SANs) (“Concurrency”).

BitSpeed shall

contribute the services and resources for the development of Concurrency to GBT BitSpeed.

The Company shall contribute 10 million

shares of common stock (valued at $17,900,000) of the Company to GBT BitSpeed.

BitSpeed and the Company will each own 50% of GBT

The Company shall appoint two directors and BitSpeed shall appoint one director of GBT BitSpeed.

In addition, GBT BitSpeed

Davis entered into a Consulting Agreement in which Mr.

Davis is engaged to provide services in consideration of $10,000

per month payable quarterly which may be paid in shares of common stock calculated by the amount owed divided by the Company’s

Davis will provide services in connection with the development of the business as well as GBT BitSpeed’s

capital raising efforts.

The term of the Consulting Agreement is two years.

The closing of the BitSpeed Agreement occurred on

October 14, 2019.

On April 11, 2020, Douglas Davis resigned as Chief Executive Officer of the Company so that he may fully devote

all of his efforts to GBT Tokenize Corp., the Company’s joint venture, which intends to develop a new product.

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.

Via this Joint Venture the parties commenced

development of a development of an intelligent human vital signs’

device, suggested named qTerm.

The platform is an expansion

of the existing license agreement with GBT Tokenize Corp., which provided GBT Tokenize Corp.

with an exclusive territory of California

to develop certain of the Company’s technology.

As the nature of the platform cannot be restricted only to California, the

Company’s joint venture GBT Tokenize Corp.

will be compensated with additional two hundred million shares of the Company

to strengthen its funding, subject to board approval.

A provisional patent application for the qTerm Medical Device was filed

on March 30, 2020 with the USPTO.

The application has been assigned serial number 63001564.

The Joint Venture completed successfully

the first prototype.

There is no guarantee that the Company will be successful in researching, developing or implementing this

product into the market.

In order to successfully implement this concept, the Company will need to raise adequate capital to support

its research and, if successfully researched, developed and granted regulatory approval, the Company would need to enter into

a strategic relationship with a third party that has experience in manufacturing, selling and distributing this product.

is no guarantee that the Company will be successful in any or all of these critical steps.

for Approval of Related Party Transactions

Board of Directors is charged with reviewing and approving all potential related party transactions.

All such related

party transactions must then be reported under applicable SEC rules.

We have not adopted other procedures for review, or standards

for approval, of such transactions, but instead review them on a case-by-case basis.

or around August 10, 2018, the Board of Directors established committees for governance, compensation and audit.

The Audit Committee

is being led by Muhammed Khalji, a CPA.

The Compensation Committee is being led by Judit Nagypal.

The Governance Committee is

being led by Ambassador Ned L.

All three leaders of the committees are independent directors.

In addition, each committee

has two additional members, all of whom are also independent directors.

On or around May 2019 the Company commenced massive litigation

with a secured investor (see Legal Proceedings), which led the Company board to table its effort to potentially up-listing the

Company to a major exchange.

As such there was no need for said committees which create un-needed burden on the Company.

the period of said report, all independent Directors been resigned to pursue other opportunities, as disclosed in this report.

Board of Directors is in charged with reviewing and approving all potential related party transactions.

All such related party

transactions must then be reported under applicable SEC rules.

We have not adopted other procedures for review, or standards for

approval, of such transactions, but instead review them on a case-by-case basis.

Company has no outside directors as of December 31, 2020.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

42 unchanged sentences

of Amendment to the Articles of Incorporation of Gopher Protocol Inc.

Certificate of Change dated July 10, 2019 (67)

Articles of Merger by and between Gopher Protocol Inc.

of Change dated July 10, 2019 (67)

of Merger by and between Gopher Protocol Inc.

and GBT Technologies Inc.

dated July 10,

Certificate of Correction to the Certificate of Change (68)

Certificate of Correction to the Articles of Merger by and between Gopher Protocol Inc.

and GBT Technologies Inc.

of Correction to the Certificate of Change (68)

of Correction to the Articles of Merger by and between Gopher Protocol Inc.

and GBT Technologies

dated July 10, 2019 (68)

Certificate of Amendment to the Articles of Incorporation of GBT Technologies Inc.

of Amendment to the Articles of Incorporation of GBT Technologies Inc.

dated September

23, 2019 (72)

Promissory Note issued by the Company to ATL dated July 8, 2010 (3)

63 unchanged sentences

and Eagle Equities, LLC dated May 4, 2018 (57)

Series H Convertible Preferred Stock Certificate of Designation (65)

H Convertible Preferred Stock Certificate of Designation (65)

Convertible Note payable to Pablo Gonzalez dated June 17, 2019 (65)

Convertible Note payable to Glen Eagles Acquisition LP (66)

Amendment to Common Stock Purchase Warrant between Gopher Protocol Inc.

Note payable to Glen Eagles Acquisition LP (66)

to Common Stock Purchase Warrant between Gopher Protocol Inc.

and Glen Eagles Acquisition LP (66)

Amendment to Promissory Note between GBT Technologies Inc.

and Ilaid Research and Trading LP dated July 20, 2020 (76)

Promissory Note August 4, 2020 issued to Redstart Holdings Corp.

Licensing Agreement dated April 12, 2010, by and between Forex International Trading Corp and Triple (1)

128 unchanged sentences

Danny Rittman dated September 14, 2018 (63)

Exchange Agreement entered into between Gopher Protocol Inc., Altcorp Trading LLC, GBT Technologies, S.A., a Costa Rica company and Pablo Gonzalez dated June 17, 2019 (65)

Consulting Agreement entered into between Gopher Protocol Inc.

Agreement entered into between Gopher Protocol Inc., Altcorp Trading LLC, GBT Technologies,

S.A., a Costa Rica company and Pablo Gonzalez dated June 17, 2019 (65)

Agreement entered into between Gopher Protocol Inc.

and Glen Eagles Acquisition LP (66)

Letter Agreement between Mobiquity Technologies, Inc.

Agreement between Mobiquity Technologies, Inc.

and GBT Technologies Inc.

executed August 2, 2019 Delivered August 6, 2019 (69)

Stock Purchase Agreement between Mobiquity Technologies, Inc.

executed August

2, 2019 Delivered August 6, 2019 (69)

Purchase Agreement between Mobiquity Technologies, Inc.

and GBT Technologies Inc.

Dated September 10, 2019 (71)

Stock Purchase Agreement between Marital Trust GST Subject U/W/O Leopold Salkind and GBT Technologies Inc.

September 10, 2019 (71)

Purchase Agreement between Marital Trust GST Subject U/W/O Leopold Salkind and GBT Technologies

dated September 10, 2019 (71)

Stock Purchase Agreement between Dr.

Purchase Agreement between Dr.

Gene Salkind and GBT Technologies Inc.

dated September

Stock Purchase Agreement between Deepanker Katyal and GBT Technologies Inc.

10, 2019 (71)

Purchase Agreement between Deepanker Katyal and GBT Technologies Inc.

dated September

Joint Venture Agreement by and between GBT Technologies Inc.

10, 2019 (71)

Venture Agreement by and between GBT Technologies Inc.

and BitSpeed LLC dated October 10, 2019 (73)

Consulting Agreement by and between Douglas L.

Agreement by and between Douglas L.

Davis and GBT BitSpeed Corp.

dated October 10, 2019 (73)

Letter Agreement between GBT Technologies Inc.

Agreement between GBT Technologies Inc.

and Stanley Hills LLC dated February 26, 2020

Amendment to Promissory Note between GBT Technologies Inc.

to Promissory Note between GBT Technologies Inc.

and Iliad Research and Trading, L.P.

dated February 27, 2020 (74)

Order dated February 27, 2020 issued by the United States District Court District of Nevada (74)

Joint Venture and Territorial License Agreement by and between GBT Technologies Inc.

dated February 27, 2020 issued by the United States District Court District of Nevada (74)

Venture and Territorial License Agreement by and between GBT Technologies Inc.

and Tokenize-It S.A.

dated March 6, 2020 (75)

Consulting Agreement by and between Pablo Gonzalez and GBT Tokenize Corp.

Agreement by and between Pablo Gonzalez and GBT Tokenize Corp.

dated March 6, 2020 (75)

Pledge Agreement by and between GBT Tokenize Corp.

Agreement by and between GBT Tokenize Corp.

and Tokenize-It S.A., dated March 6, 2020 (75)

Letter from Alan R.

Purchase Agreement dated August 4, 2020 between GBT Technologies Inc.

and Redstart Holdings Corp.

Swift, CPA, P.A.

Letter from Anton & Chia, LLP (48)

List of Subsidiaries (70)

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant

to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

CCertification of Chief Executive Officer pursuant to 18 U.S.C.

from Anton & Chia, LLP (48)

of Subsidiaries (70)

Certification

of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section

906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2010

73 unchanged sentences

by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 11, 2020.

by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 24, 2020.

by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 10, 2020.

Form 10-K Summary.

2 unchanged sentences

TECHNOLOGIES INC.

March 31, 2021

Mansour Khatib

10 unchanged sentences

Michael Murray

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL,

TECHNOLOGIES INC.

Consolidated Financial Statements

3 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019

Consolidated Statement of Stockholders' Equity (Deficit) for the Years Ended December 31, 2019 and 2018

Consolidated Statement of Stockholders Deficit for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the shareholders and the board of directors of GBT Technologies, Inc.

on the Financial Statements

have audited the accompanying balance sheet of GBT Technologies, Inc.

(the "Company") as of December 31, 2019, the related

statement of operations, stockholders’

equity (deficit), and cash flows for the year then ended, and the related notes (collectively

Report of Independent

Registered Public Accounting Firm

To the shareholders

and the board of directors of GBT Technologies, Inc.

Opinion on the Financial

We have audited the

accompanying consolidated balance sheets of GBT Technologies, Inc.

the "Company") as of December 31, 2020 and 2019, the related

statement of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively

referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows

for the year then ended, in conformity with accounting principles generally accepted in the United States.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Doubt about the Company’s Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability

to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of

this uncertainty.

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the

years then ended, in conformity with accounting principles generally accepted in the United States.

Basis for Opinion

These financial statements

are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements

based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit

in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included

performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for

Substantial Doubt

about the Company’s Ability to Continue as a Going Concern

The accompanying financial

statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements,

the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BF Borgers CPA

BF Borgers CPA PC

Borgers CPA PC

as Auditor since 2017

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL,

Balance Sheet

Served as Auditor since

March 31, 2021

TECHNOLOGIES INC.

BALANCE SHEETS

Current Assets:

Accounts receivable

Prepaid expenses and other current assets

Cash held in trust

Marketable equity security

1 unchanged sentence

Total current assets

Property and equipment, net

Convertible note receivable

Marketable equity security

Equity investment

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’

Current Liabilities:

Accounts payable and accrued expenses (including related parties of $410,833 and $334,000)

Unearned revenue

Accrued settlement

Due to Guardian LLC (related party)

Convertible notes payable, net of discount of $362,004 and $0

6 unchanged sentences

Contingencies

Stockholders' Equity (Deficit):

Stockholders’

Series B Preferred stock, $0.00001 par value;

12 unchanged sentences

40,000 shares authorized;

20,000 shares issued and outstanding at December 31, 2019

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

Common stock, $0.00001 par value;

6 unchanged sentences

Accumulated deficit

Total stockholders' equity (deficit)

Total liabilities and stockholders' equity (deficit)

The accompanying footnotes

are an integral part of these consolidated financial statements

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL,

Statement of Operations

Total stockholders’

Total liabilities and stockholders’

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

TECHNOLOGIES INC.

STATEMENTS OF OPERATIONS

Years Ended December 31,

Related party sales

Cost of goods sold

Sales - related party

Operating expenses:

2 unchanged sentences

Acquisition costs

Buyout of joint venture agreement (related party)

Impairment of assets

6 unchanged sentences

Unrealized loss on marketable equity security

Realized gain (loss) on disposal of marketable equity security

Equity income (loss) in investment

Realized loss on disposal of marketable equity security

Loss on exchange of assets

Equity income in investment

Gain on settlement of debt

11 unchanged sentences

Discontinued operations

The accompanying footnotes are an integral part

of these consolidated financial statements

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL,

Statement of Stockholders’

Series B Convertible Preferred Stock

Series C Convertible Preferred Stock

Series D Convertible Preferred Stock

Series G Convertible Preferred Stock

Series H Convertible Preferred Stock

Treasury Stock

Balance, December 31, 2017

Conversion of Series D to common stock

Conversion of Series G to common stock

Common stock issued for services

Common stock issued for acquisition

Common stock issued for acquisition services

Common stock issued for equity interest in Mobiquity Technologies, Inc.

Common stock issued to Guardian LLC for termination of agreement

Common stock issued for price protection

Common stock issued for conversion of convertible debt and accrued interest

Cancellation of common stock for settlement agreement

Common stock issued for cash

Warrants issued for acquisition

Warrants issued for services

Warrants issued for acqusition 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 associated with convertible debt

Balance, December 31, 2018

Common stock issued for services

Common stock issued for conversion of convertible debt and accrued interest

Common stock issued for stock loan

Common stock issued for penalty

Common stock issued for joint venture

Common stock issued for cashless exercise of warrants

Cancellation of shares for exchange of Mobiquity shares

Series H preferred stock issued for acquisition

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 warrants issued

Rounding of shares due to stock split

Balance, December 31, 2019

The accompanying footnotes are an integral part

of these consolidated financial statements

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL,

Statement of Cash Flows

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

TECHNOLOGIES INC.

STATEMENT OF STOCKHOLDERS DEFICIT

B Convertible

C Convertible

D Convertible

G Convertible

H Convertible

Stockholders

December 31, 2018

$ (66,151,332 )

stock issued for services

stock issued for conversion of convertible debt and accrued interest

stock issued for stock loan

stock issued for penalty

stock issued for joint venture

stock issued for cashless exercise of warrants

of shares for exchange of Mobiquity shares

H preferred stock issued for acquisition

options issued for services

value of beneficial conversion feature of converted/debt repaid

fair value of warrants issued with convertible debt

value of warrants issued

of shares due to stock split

(186,505,119 )

December 31, 2019

(252,656,451 )

(18,712,886 )

stock issued for conversion of convertible debt

stock issued for joint venture

value of beneficial conversion feature of converted

(17,994,888 )

December 31, 2020

$ (7,610,147 )

$ 251,039,531

$ (270,651,339 )

$ (27,858,303 )

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

TECHNOLOGIES INC.

STATEMENTS OF CASH FLOWS

Years Ended December 31,

Cash Flows From Operating Activities:

Adjustments to reconcile net loss to

net cash used in operating activities:

$ (17,994,888 )

$ (186,505,119 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Depreciation of property and equipment

4 unchanged sentences

Shares issued for services

Shares issued for buyout of joint venture agreement

Shares issued for penalty

Convertible note issued for penalty

Warrants issued for services

Fair value of warrants issued in accordance with anit-dilution

Fair value of warrants issued in accordance with anti-dilution

Impairment of assets

Unrealized loss on market equity security

Realized loss on disposal of market equity security

Equity (income) loss in investment

Unrealized (gain) loss on market equity security

Realized gain on disposal of market equity

Loss on exchange of assets

Equity income in investment

Gain on disposition of discontinued operations

Convertible note issued for services

Convertible note receivable exchanged for services

Gain on settlement of debt

Cancellation of common stock per settlement agreement

Common stock issued for price protection

Changes in operating assets and liabilities:

Accounts receivable

Cash held in trust

Prepaid expenses

6 unchanged sentences

Purchase of property and equipment

Cash paid for acquisitions

Cash paid for investment in Spare

Cash paid for investment

4 unchanged sentences

Issuance of convertible notes

Issuance of note payable

Repayment of convertible notes

Payment on note payable

Issuance of common stock

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

4 unchanged sentences

Transfer of derivative liability to equity

Shares issued for equity interest in Mobiquity Technologies, Inc.

The accompanying footnotes are an integral part

of these consolidated financial statements

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Note 1 - Organization and Basis of Presentation

Organization and Line of Business

GBT Technologies Inc.

(formerly Gopher Protocol

Inc.) (the “Company”, “GBT”, “GTCH”) was incorporated on July 22, 2009 under the laws of the

State of Nevada.

The Company is targeting growing markets such as 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.

Effective August

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

Convertible notes issued for notes payable and accrued interest

Common stock issued for convertible notes and accrued interest

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

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Organization and Basis of Presentation

and Line of Business

Technologies Inc.

(formerly Gopher Protocol Inc.) (the Company, GBT, or GTCH) was incorporated

on July 22, 2009 under the laws of the State of Nevada.

The Company is targeting growing markets such as 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, asset-tracking IoT, and wireless

mesh networks.

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

to GBT Technologies Inc.

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.

Basis of Presentation

The accompanying consolidated financial statements

were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”).

On August 5, 2019, the Company effectuated

a 1 for 100 reverse stock split.

The share and per share information has been retroactively restated to reflect this reverse stock

(Also see Note 17 for a 1 for 50 stock split awaiting approval)

Going Concern

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

and (ii) from the licensing of its technology.

of Presentation

accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the

United States of America (U.S.

August 5, 2019, the Company effectuated a 1 for 100 reverse stock split.

The share and per share information has been retroactively

restated to reflect this reverse stock split.

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

The Company has an accumulated

deficit of $252,656,451 and has a working capital deficit of $11,830,572 as of December 31, 2019, and is in default on a note payable

and other obligations, which raises substantial doubt about its ability to continue as a going concern.

The Company's ability to continue as a going

concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to

meet its obligations and repay its liabilities arising from normal business operations when they come due.

Management has plans

to seek additional capital through some private placement offerings of debt and equity securities.

These plans, if successful,

will mitigate the factors which raise substantial doubt about the Company's ability to continue as a going concern.

consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded

asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Note 2 –

The Company has an accumulated deficit

of $270,651,339 and has a working capital deficit of $27,710,040 as of December 31, 2020, which raises substantial doubt about its ability

to continue as a going concern.

Companys ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future

and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations

when they come due.

Management has plans to seek additional capital through some private placement offerings of debt and equity

These plans, if successful, will mitigate the factors which raise substantial doubt about the Companys ability

to continue as a going concern.

These consolidated financial statements do not include any adjustments relating to the recoverability

and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements

in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported

amounts of revenues and expenses during the reporting period.

The Company regularly evaluates estimates and assumptions.

bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company

may differ materially and adversely from the Company’s estimates.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

To the extent there are material differences

between the estimates and the actual results, future results of operations will be affected.

Significant estimates in the accompanying

financial statements include useful lives of property and equipment, valuation of beneficial conversion feature, debt discounts,

valuation of derivatives, and the valuation allowance on deferred tax assets.

Principles of Consolidation

The accompanying consolidated financial statements

include the accounts of the Company and its wholly-owned subsidiaries, UGopherServices Corp.

GBT BitSpeed Corp.

and 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.

Cash Equivalents

For 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.

Accounts Receivable

The 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

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 December 31, 2019 and 2018, respectively.

Property and Equipment

Property and equipment are stated at

Expenditures for maintenance and repairs are charged to earnings as incurred;

additions, renewals and betterments are capitalized.

When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from

the respective accounts, and any gain or loss is included in operations.

Depreciation of property and equipment is provided using

the straight-line method for substantially all assets with estimated lives as follows:

Computers and equipment

POSA machines

Long-Lived Assets

The Company applies the provisions of Financial

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant,

and Equipment , which addresses financial accounting and reporting for the impairment or disposal of long-lived assets.

360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present

and the undiscounted cash flows estimated to be generated by those assets are less than the assets’

carrying amounts.

that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets.

Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost

Based on its review at December 31, 2019 and 2018, the Company believes there was no impairment of its long-lived

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Intangible Assets

The Company’s intangible assets were

acquired with the acquisition of certain RWJ assets in 2017, and the acquisition of certain ECS, Electronic Check and CSLS assets

in 2018 are being amortized over 60-120 months.

The Company performs a test for impairment annually.

As of December 31, 2018, the

Company performed the required impairment analysis.

During the year ended December 31, 2018, the Company determined that the intangible

assets associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $5,916,667.

intangible assets are being presented as assets of discontinued operations in the accompanying consolidated financial statements.

The intangibles assets of ECS, Electronic Check and CSLS are being presented as part of discontinued operations.

Marketable Equity Securities

The Company accounts for marketable equity

securities in accordance with ASC Topic 321, Investments –

preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

regularly evaluates estimates and assumptions.

The Company bases its estimates and assumptions on current facts, historical experience

and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making

judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent

from other sources.

The actual results experienced by the Company may differ materially and adversely from the Companys

To the extent there are material differences between the estimates and the actual results, future results of operations

will be affected.

Significant estimates in the accompanying financial statements include valuation of derivatives and valuation

allowance on deferred tax assets.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

of Consolidation

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

the Companys 50%

owned subsidiaries GBT BitSpeed Corp.

and GBT Tokenize Corp;

the Companys 50% owned subsidiary, Gopher Protocol Costa Rica

Sociedad De Responsabilidad 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.

As of December 31, 2020, and 2019, the Company did not have

any cash equivalents.

Held in Trust

held in trust consists of proceeds from the sale of investments.

The proceeds less the payment of certain expenses are being held

in AltCorps (the Companys wholly owned subsidiary) attorney trust account.

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

(ASC) Topic 360, Property, Plant, and Equipment , which addresses financial accounting and reporting for the

impairment or disposal of long-lived assets.

ASC 360 requires impairment losses to be recorded on long-lived assets used in operations

when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than

the assets carrying amounts.

In that event, a loss is recognized based on the amount by which the carrying amount exceeds

the fair value of the long-lived assets.

Loss on long-lived assets to be disposed of is determined in a similar manner, except

that fair values are reduced for the cost of disposal.

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

there was no impairment of its long-lived assets.

Equity Securities

Marketable equity securities are reported

at fair value based on quotations available on securities exchanges with any unrealized gain or loss being reported as a component

of other income (expense) on the statement of operations.

The portion of marketable equity security expected to be sold within

twelve months of the balance sheet date is reported as a current asset.

Goodwill represents the excess of purchase

price over the underlying book value of the net assets of the businesses that were acquired.

Under accounting requirements, goodwill

is not amortized, but is subject to annual impairment tests.

The Company recorded goodwill of $950,619 related to its acquisition

of certain RWJ assets in 2017, and $646,291, $254,586 and $25,000, respectively, related to its acquisition of certain ECS, Electronic

Check and CSLS assets in 2018.

During the year ended December 31, 2018, the Company determined that the goodwill associated with

the acquisition of certain RWJ assets was impaired and took a charge to earnings of $950,619.

The goodwill of ECS, Electronic

Check and CSLS are being presented as part of discontinued operations.

Derivative Financial Instruments

The Company evaluates all of its agreements

to determine if such instruments have derivatives or contain features that qualify as embedded derivatives.

For derivative financial

instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then

re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

For stock-based derivative

financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments

at inception and on subsequent valuation dates.

The classification of derivative instruments, including whether such instruments

should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

Derivative instrument liabilities

are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument

could be required within 12 months of the balance sheet date.

As of December 31, 2018, 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 of the Company’s stock price at the date of conversion.

year ended December 31, 2019, the convertible notes with embedded conversion features were settled.

Fair Value of Financial Instruments

For 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.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

FASB ASC Topic 820, Fair Value Measurements

and Disclosures , requires disclosure of the fair value of financial instruments held by the Company.

FASB ASC Topic 825, Financial

Instruments , defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement

that enhances disclosure requirements for fair value measures.

The carrying amounts reported in the consolidated balance sheets

for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values

because of the short period of time between the origination of such instruments and their expected realization and their current

market rate of interest.

The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.

The Company analyzes all financial instruments

with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity , and FASB

ASC Topic 815, Derivatives and Hedging .

For certain financial instruments, the carrying

amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a

financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination

of such instruments and their expected realization and their current market rate of interest.

The Company uses Level 2 inputs for its valuation

methodology for derivative liabilities as their fair values were determined by using the Black-Scholes-Merton pricing model based

on various assumptions.

The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with

any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.

At December 31, 2019 and 2018, the Company

identified the following liabilities that are required to be presented on the balance sheet at fair value:

Company accounts for marketable equity securities in accordance with ASC Topic 321, Investments –

equity securities.

Marketable equity securities are reported at fair value based on quotations available on securities exchanges with any unrealized

gain or loss being reported as a component of other income (expense) on the statement of operations.

The portion of marketable

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

Note receivable consists of a promissory note received

in connection with the sale of Ugopherservices (see Notes 3, 4 and 17).

The note is due on December 31, 2021 and accrues interest at 6%

At December 31, 2020, the Company determined that this note receivable was not collectible and took an impairment charge of

Financial Instruments

Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as

embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is

initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in

the statements of operations.

For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton

option pricing model to value the derivative instruments at inception and on subsequent valuation dates.

The classification of

derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the

end of each reporting period.

Derivative instrument liabilities are classified in the balance sheet as current or non-current

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, 2020, the Companys 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

of the Companys stock price at the date of conversion.

During the year ended December 31, 2019, the convertible notes with

embedded conversion features were settled;

therefore, there was no derivative liability at December 31, 2019.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Value of Financial Instruments

certain of the Companys 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

held by the Company.

FASB ASC Topic 825, Financial Instruments , defines fair value, and establishes a three-level valuation

hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.

amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments

and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments

and their expected realization and their current market rate of interest.

The three levels of valuation hierarchy are defined

1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices

for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly

or indirectly, for substantially the full term of the financial instrument.

3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.

Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing

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

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

convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their fair values because

of the short period of time between the origination of such instruments and their expected realization and their current market

rate of interest.

Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their fair values were determined by using

the Black-Scholes-Merton pricing model based on various assumptions.

The Companys derivative liabilities are adjusted to

reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations

as adjustments to fair value of derivatives.

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

sheet at fair value:

Fair Value Measurements at

8 unchanged sentences

Using Fair Value Hierarchy

Marketable equity security - Mobiquity Technologies, Inc.

Conversion feature on convertible notes

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Treasury Stock

Treasury stock is recorded at cost.

The re-issuance

of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the

re-issuance proceeds are charged or credited to additional paid-in capital.

Stock Loan Receivable

On January 8, 2019, the Company entered into

a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A., a Costa Rica corporation (“Latinex”),

to provide that Latinex may maintain its required regulatory capital as required by various regulators.

The Company has pledged

200,267 restricted shares of its common stock valued at $7,610,147 (based on the closing price on the grant date) for a term of

three years in consideration of an annual payment of $375,000 paid in quarterly installments of $93,750.

In lieu of cash payment,

Latinex may pay the Company in virtual currency of WISE Network S.A.

valued at a 50% discount of its offering price of $10 per

In the event that Latinex’s required capital has decreased below $5,000,000, Latinex is permitted to sell the pledged

shares of common stock only in an amount to ensure that Latinex can satisfy the required capital levels.

The Company must consent

to such sale of the shares of common stock, which may not be unreasonably withheld.

Upon expiration of the agreement, the remaining

shares of common stock shall be returned to the Company free and clear of all liens.

The Company has recorded the value of these

shares of common stock as a stock loan receivable which is presented as a contra-equity account in the accompanying consolidated

balance sheets.

At December 31, 2019, the Company wrote off the accrued interest income as Latinex did not perform any payment

and the Company has no mean to enforce this payment.

Latinex agreed in principal to return the pledged 200,267 restricted shares

to the Company for cancellation.

The 200,267 restricted shares has not yet been returned to the Company.

Revenue Recognition

Accounting Standards Update (“ASU”)

2014-09, Revenue from Contracts with Customers ("

Topic 606 "), became effective for the Company

on January 1, 2018.

The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected

by this new standard.

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.

Marketable equity security - Surge Holdings, Inc.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

stock is recorded at cost.

The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference

between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital.

Loan Receivable

January 8, 2019, the Company entered into a Stock Pledge Agreement with Latin American Exchange Latinex Casa de Cambio, S.A.,

a Costa Rica corporation (Latinex), to provide that Latinex may maintain its required regulatory capital as required

by various regulators.

The Company has pledged 200,267 restricted shares of its common stock valued at $7,610,147 (based on the

closing price on the grant date) for a term of three years in consideration of an annual payment of $375,000 paid in quarterly

installments of $93,750.

In lieu of cash payment, Latinex may pay the Company in virtual currency of WISE Network S.A.

at a 50% discount of its offering price of $10 per token.

In the event that Latinexs required capital has decreased below

$5,000,000, Latinex is permitted to sell the pledged shares of common stock only in an amount to ensure that Latinex can satisfy

the required capital levels.

The Company must consent to such sale of the shares of common stock, which may not be unreasonably

Upon expiration of the agreement, the remaining shares of common stock shall be returned to the Company free and clear

of all liens.

The Company has recorded the value of these shares of common stock as a stock loan receivable which is presented

as a contra-equity account in the accompanying consolidated balance sheets.

At December 31, 2019, the Company wrote off the accrued

interest income as Latinex did not perform any payment and the Company has no mean to enforce this payment.

Latinex agreed in

principal to return the pledged 200,267 restricted shares to the Company for cancellation.

The 200,267 restricted shares have

not yet been returned to the Company as of December 31, 2020.

Standards Update (ASU) No.

2014-09, Revenue from Contracts with Customers ( Topic 606 ),

became effective for the Company on January 1, 2018.

The Companys revenue recognition disclosure reflects its updated accounting

policies that are affected by this new standard.

The Company applied the modified retrospective transition method

for open contracts for the implementation of Topic 606.

The Company had no significant post-delivery obligations,

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

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

The Company made no adjustments to its previously-reported

1 unchanged sentence

605, Revenue Recognition .

Revenue 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:

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

identification of performance obligations in the respective contract;

determination of the transaction price for each performance obligation in the respective contract;

allocation the transaction price to each performance obligation;

recognition of revenue only when the Company satisfies each performance obligation.

These five elements, as applied to each of the Company’s revenue

category, is summarized below:

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

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

revenue is recognized at the time of sale to the customer;

License fees and Royalties –

Revenue is recognized under Topic 606 as

contracts with the Companys customers that it believes are legally enforceable;

● identification

of performance obligations in the respective contract;

● determination

of the transaction price for each performance obligation in the respective contract;

the transaction price to each performance obligation;

● recognition

of revenue only when the Company satisfies each performance obligation.

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

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

fees and Royalties –

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

Cost of Goods Sold

Cost of goods sold represents the cost of the

phone, phone card products and prepaid cellular phone minutes sold by the Company.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Unearned revenue

Unearned revenue represents the net amount

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

In 2018, the Company ran pre-sales

efforts for its pet tracker product and received prepayments for its product.

As of December 31, 2018, unearned revenue related

to this pre-sales campaign was $57,848.

In addition, during 2018, the Company received $200,000 in connection with an intellectual

property license and royalty agreement (see Note 15).

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.

The Company accounts for income taxes in accordance

with ASC Topic 740, Income Taxes .

ASC 740 requires a company to use the asset and liability method of accounting for income

taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized

for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities

and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely

than not that some portion, or all of, the deferred tax assets will not be realized.

Deferred tax assets and liabilities are

adjusted for the effects of changes in tax laws and rates on the date of enactment.

Under ASC 740, a tax position is recognized

as a benefit only if it is “more likely than not”

that the tax position would be sustained in a tax examination, with

a tax examination being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50%

likely of being realized on examination.

For tax positions not meeting the “more likely than not”

test, no tax benefit

The Company has no material uncertain tax positions for any of the reporting periods presented.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance

with ASC Topic 260, Earnings Per Share .

Basic earnings per share (“EPS”) is based on the weighted average number

of common shares outstanding.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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

In 2018, the Company ran pre-sales efforts for its pet tracker product and received prepayments for its product.

during 2018, the Company received $200,000 in connection with an intellectual property license and royalty agreement.

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 December 31, 2020 and 2019.

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

ASC 740 requires a company to use the

asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary

differences, and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences

between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance

when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of

ASC 740, a tax position is recognized as a benefit only if it is more likely than not that the tax position would

be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is the largest amount

of tax benefit that is greater than 50% likely of being realized on examination.

For tax positions not meeting the more

likely than not test, no tax benefit is recorded.

The Company has no material uncertain tax positions for any of the reporting

periods presented.

and Diluted Earnings Per Share

per share is calculated in accordance with ASC Topic 260, Earnings Per Share .

Basic earnings per share (EPS)

is based on the weighted average number of common shares outstanding.

Diluted EPS assumes that all dilutive securities are converted.

Dilution is computed by applying

the treasury stock method.

Under this method, options and warrants are assumed to be exercised at the beginning of the period (or

at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price

during the period.

Due to the net loss incurred potentially dilutive instruments would be anti-dilutive.

Accordingly, diluted loss

per share is the same as basic loss for all periods presented.

The following potentially-dilutive shares were excluded from the

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

Dilution is computed by applying the treasury stock method.

Under this method, options and warrants are assumed to be exercised

at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase

common stock at the average market price during the period.

Due to the net loss incurred potentially dilutive instruments would

be anti-dilutive.

Accordingly, diluted loss per share is the same as basic loss for all periods presented.

The following potentially-dilutive

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

Series B preferred stock

Series C preferred stock

Series G preferred stock

Series H preferred stock

Convertible notes

Management’s Evaluation of Subsequent

The Company evaluates

events that have occurred after the balance sheet date of December 31, 2019, through the date which the consolidated financial

statements are issued.

Evaluation of Subsequent Events

Company evaluates events that have occurred after the balance sheet date of December 31, 2020, through the date which the consolidated

financial statements are issued.

Based upon the review, other than described in Note 17 –

Subsequent Events, the Company did not identify

any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Recent Accounting Pronouncements

In June 2018, the FASB issued Accounting Standards

Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting ,

which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the

guidance on such payments to nonemployees with the requirements for share-based payments granted to employees.

ASU 2018-07 is effective

on January 1, 2019.

Early adoption is permitted.

The adoption of this ASU did not have a material impact on the Company’s

Subsequent Events, the Company

did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated

financial statements.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Accounting Pronouncements

December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income

Taxes (ASC 740).

This update is intended to simplify accounting for income taxes by removing certain exceptions to the general

principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740.

This update is effective for

fiscal years beginning after December 15, 2021.

The guidance in this update has various elements, some of which are

applied on a prospective basis and others on a retrospective basis with earlier application permitted.

The Company is currently

evaluating the effect of this ASU on the Companys consolidated financial statements and related disclosures.

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

consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16,

Income Taxes (Topic 740):

Intra-Entity Transfer of Assets Other than Inventory , which requires the recognition of the

income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs.

ASU 2016-16 is

effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted.

The adoption of

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

In February 2016, the FASB issued ASU 2016-02,

Leases (Topic 842) .

ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet

and requires expanded disclosures about leasing arrangements.

ASU 2016-02 is effective for fiscal years beginning after December

15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted.

of this ASU did not have a material impact on the Company’s consolidated financial statements as the Company did not have

any leases covered by this new ASU.

In May 2014, the FASB issued ASU No.

Revenue from Contracts with Customers .

ASU 2014-09 is a comprehensive revenue recognition standard that will supersede

nearly all existing revenue recognition guidance under current U.S.

GAAP and replace it with a principle-based approach for determining

revenue recognition.

ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or

services as they occur in the contract.

The ASU also will require additional disclosure about the nature, amount, timing

and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments

and assets recognized from costs incurred to obtain or fulfill a contract.

ASU 2014-09 is effective for interim and annual

periods beginning after December 15, 2017.

Early adoption is permitted only in annual reporting periods beginning after

December 15, 2016, including interim periods therein.

Entities will be able to transition to the standard either retrospectively

or as a cumulative-effect adjustment as of the date of adoption.

The Company adopted this ASU beginning on January 1, 2018

and used the modified retrospective method of adoption.

The adoption of this ASU did not have a material impact on the Company’s

financial statements and disclosures.

In December 2019, the FASB issued ASU

2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740).

is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending

existing guidance to improve consistent application of ASC 740.

This update is effective for fiscal years beginning after December

The guidance in this update has various elements, some of which are applied on a prospective basis and others

on a retrospective basis with earlier application permitted.

The Company is currently evaluating the effect of this ASU on

the Company’s consolidated financial statements and related disclosures.

Management does not believe that any recently

issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements.

accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 3 - Acquisitions

On March 16, 2018, the Company entered into

and closed an asset purchase agreement dated March 1, 2018 with ECS, a Missouri limited liability company, pursuant to which the

Company purchased certain assets from ECS, including, but not limited to, the processing prepaid platform, servers, POS terminals,

customer list, a processing software program and goodwill, in consideration of $1,100,000 of which $100,000 was paid on the Closing

Date and the balance is to be paid pursuant to a secured promissory note in the amount of $1,000,000.

In addition, the Company

issued 500,000 shares of common stock of the Company and warrants to purchase 500,000 shares of common stock that are exercisable

for a period of five years at a fixed exercise price of $1.85 per share.

The note is secured by the assets acquired by the Company

from ECS and the Company is required to make ten equal principal payments of $100,000 commencing on April 15, 2018.

may prepay the note at any time without penalty.

The note has been repaid in full.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On April 2, 2018, the Company entered into

and closed an asset purchase agreement with Electronic Check, a Missouri corporation, pursuant to which the Company purchased certain

assets from Electronic Check, including, but not limited to, assets associated with software that validates written check authenticity.

The purchase price was $75,000 in cash, and the Company issued 250,000 shares of common stock of the Company and warrants to purchase

250,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $2.70 per share.

On April 2, 2018, the Company entered into

and closed an asset purchase agreement with CSLS, a Missouri corporation, pursuant to which the Company purchased certain assets

from CSLS, including, but not limited to, assets associated with a system to recover funds from returned checks, for $25,000 in

The Company entered into these asset purchase

agreements to acquire the software needed to process transactions for its prepaid business, and to acquire additional terminal

locations by which the Company will deploy its technology.

A summary of the purchase price and the purchase

price allocations at fair value is shown below.

Purchase price

Shares of common stock

Secured promissory note

Allocation of purchase price

Property and equipment

Customer relationships

Purchase price

at the date of acquisition.

the fair value of the 500,000 shares of

common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.

the fair value of the 500,000 warrants was

determined using the Black-Scholes option pricing model with the following assumptions:

Expected life of 5.0 years

Volatility of 210%;

Dividend yield of 0%;

Risk free interest rate of 2.65%

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

the fair value of the 250,000 shares of

common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.

the fair value of the 250,000 warrants was

determined using the Black-Scholes option pricing model with the following assumptions:

Expected life of 5.0 years

Volatility of 210%;

Dividend yield of 0%;

Risk free interest rate of 2.65%

Note 4 –

As new accounting pronouncements are issued, we will adopt those that are applicable under

the circumstances.

Discontinued Operations;

On September 30, 2019, the Company entered

into an Asset Purchase Agreement with Surge Holdings, Inc., a Nevada corporation (“SURG”) pursuant to which the Company

agreed to sell and assign to SURG all the assets and certain specified liabilities of its ECS Prepaid, Electronic Check Services

and the Central State Legal Services businesses in consideration of $5,000,000 to be paid through the issuance of 3,333,333 shares

of SURG’s common stock and a convertible promissory note in favor of the Company in the principal amount of $4,000,000.

3,333,333 shares of SURG’s common stock have been pledged to a third party for providing working capital needs of the Company.

The ECS Prepaid, Electronic Check Services

and the Central State Legal Services businesses have been presented as discontinued operations on the accompanying financial statements.

The 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 years ended December 31, 2019 and 2018 as discontinued operations and are summarized below:

Year Ended December 31,

Note Receivable

On 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.

material relationship between the Company, on one hand, and MLH, on the other hand.

At December 31, 2020, the Company determined that

this note receivable was not collectible and took an impairment charge of $100,000.

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

pursuant to which the Company agreed to sell and assign to SURG all the assets and certain specified liabilities of its ECS Prepaid,

Electronic Check Services and the Central State Legal Services businesses in consideration of $5,000,000 to be paid through the

issuance of 3,333,333 shares of SURGs common stock and a convertible promissory note in favor of the Company in the principal

amount of $4,000,000.

The 3,333,333 shares of SURGs common stock have been pledged to a third party for providing working

capital needs of the Company (See Note 8).

ECS Prepaid, Electronic Check Services and the Central State Legal Services businesses have been presented as discontinued operations

on the accompanying financial statements.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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

the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019 as discontinued operations

and are summarized below:

Years Ended December 31,

Cost of revenue

2 unchanged sentences

Other income (expenses)

The assets and liabilities of the discontinued

operations at September 30, 2019 and December 31, 2018 are summarized below:

$ (1,074,869 )

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

Current assets

Property and equipment

Intangible assets

Current liabilities

Total liabilities

As a result of this transaction, the Company

recognized a gain on the disposition of discontinued operations of $1,381,803.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Note 5 - Property and Equipment, Net

Property and equipment consisted of the following as of December

31, 2019 and 2018:

Computers and equipment

POSA machines

Less accumulated depreciation

Property and equipment, net

Depreciation expense for the years ended December 31, 2019 and 2018

was $107,095 and $106,602, respectively.

Note 5 –

Investment in Mobiquity Technologies,

and Surge Holdings, Inc.;

Investment in Surge Holdings, Inc.

and Mobiquity Technologies, Inc.;

Convertible Note Receivable

Mobiquity Technologies, Inc.

On September 4, 2018, the Company and Mobiquity

Technologies, Inc., a New York corporation (“Mobiquity”) entered an agreement pursuant to which the parties exchanged

equity interest in each of the companies.

In accordance with the agreement, the Company received 1,000 shares of Mobiquity’s

restricted Series AAAA Preferred Stock (the “Mobiquity Preferred Stock”) in consideration of Company’s concurrent

sale and issuance to Mobiquity of 10,000,000 shares of Company’s common stock.

The shares of Mobiquity Preferred Stock are

convertible into an aggregate of up to 100,000,000 shares of Mobiquity common stock (the “Mobiquity Common Stock”)

and 150,000,000 common stock purchase warrants (the “Mobiquity Warrants”).

The Mobiquity Warrants shall have a term

of 5 years from the date of grant and shall be exercisable at a price of $0.12 per share and the shares of Mobiquity Preferred

Stock shall not be convertible into shares of Mobiquity Common Stock and the Mobiquity Warrants shall not be contemporaneously

granted until after Mobiquity’s Board of Directors and stockholders shall have increased the authorized number of shares

of Mobiquity’s common stock to a number sufficient to accommodate a reserve in the Company’s favor of 250,000,000 shares

of Mobiquity’s common stock.

The Mobiquity Preferred Stock shall have immediate voting rights equal to the number of shares

of Mobiquity Common Stock into which they may be converted, not including the shares of Mobiquity’s common stock underlying

the Mobiquity Warrants.

On November 19, 2018, the Company and Mobiquity

entered into an Amendment and Exercise Letter waiving the requirement that Mobiquity’s Board of Directors and stockholders

increase the authorized number of shares of Mobiquity’s common stock to a number sufficient to accommodate a reserve in the

Company’s favor of 250,000,000 shares of Mobiquity’s common stock prior to the conversion of the Mobiquity Preferred

Stock or exercise of the Mobiquity Warrants.

In addition, the Company converted 200 shares of Mobiquity Preferred Stock resulting

in the issuance to the Company by Mobiquity of 20,000,000 shares of Mobiquity Common Stock and 30,000,000 Mobiquity Warrants.

Company exercised the 30,000,000 Mobiquity Warrants at an exercise price of $0.12 per share of common stock, payable through of

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

In addition, the Company issued 20,000 shares

of common stock to Glen Eagles Acquisition LP (“GEAL”) in consideration of its consulting services associated with

the negotiation of the number of shares of common stock to be delivered to Mobiquity upon exercise of the Mobiquity Warrants.

As a result of the transaction on September

4, 2018, the Company had an approximate 21% interest in Mobiquity and began to account for its investment in Mobiquity using the

equity method of accounting.

During the fourth quarter of 2018, Mobiquity issued additional shares of common stock resulting in

the Company’s ownership in Mobiquity dropping to approximately 18% at December 31, 2018.

The Company determined that during

the fourth quarter of 2018 that it did not exercise significant influence over Mobiquity due to its decreased ownership percentage

and the Company’s intent to begin selling shares of Mobiquity common stock that will further decrease its ownership percentage.

As a result, during the fourth quarter of 2018 the Company began accounting for its investment in Mobiquity as a marketable equity

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On May 10, 2019, the Company entered into a

Membership Interest Purchase Agreement with GEAL 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 issued on March 1, 2019.

Concurrently, the

Company entered into a Membership Interest Purchase Agreement with Mobiquity pursuant to which the Company sold the AVNG Interest

to Mobiquity in consideration of Mobiquity assuming the AVNG Note and Mobiquity amending the terms of the Remaining Mobiquity Warrant

providing for cashless exercise.

The Company paid 60,000,000 of its Mobiquity

shares as partial consideration for the purchase of GBT Technologies, S.

Holdings, Inc.

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

pursuant to which the Company agreed to sell and assign to SURG, all the assets and certain specified liabilities, of its ECS

Prepaid, Electronic Check Services and the Central State Legal Services businesses in consideration of $5,000,000 to be paid through

the issuance of 3,333,333 shares of SURGs common stock (See Note 8 for pledge to third party) and a convertible promissory

note in favor of the Company in the principal amount of $4,000,000 (the SURG Note), convertible into SURGs

shares of common stock following the six-month anniversary of the issuance date.

The conversion price of the SURG Note is the

volume weighted-average price of SURGs common stock over the 20 trading days prior to the conversion;

provided, however,

the conversion price shall never be lower than $0.10 or higher than $0.70.

The Company has agreed to restrict its ability to convert

the SURG Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and

its affiliates after such conversion does not exceed 4.99% of the then issued and outstanding shares of common stock.

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

On or about June 23, 2020, the Company and AltCorp

entered into agreements with SURG and Glen Eagles Acquisition LP (“Glen”) 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.

Additional shares will be issued if the original 5,500,000 are worth less than $2,750,000 on June 23, 2021.

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.

See additional settlement entered into with SURG on January

1, 2021 in Note 17.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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 agreement

with Glen for which the Company shall pay to Glen $200,000 via an assignment of a portion ($200,000 of a $4,000,000 face value) of the

$4,000,000 SURG Note.

(See Note 8).

On August 6, 2019,

Mobiquity delivered a counter signed letter agreement dated August 2, 2019 pursuant to which the Company exchanged 120,000,000

Mobiquity Warrants into 20,000,000 shares of Mobiquity common stock, which resulted in the Company holding 60,000,000 shares of

Mobiquity common stock.

On September 10, 2019,

the Company entered into (i) a Stock Purchase Agreement with Mobiquity pursuant to which the Company agreed to return 15,000,000

shares of Mobiquity common stock to Mobiquity in exchange for 110,000 shares of common stock of the Company, (ii) a Stock Purchase

Agreement with Marital Trust GST Subject U/W/O Leopold Salkind (“Salkind Trust”) pursuant to which the Company agreed

to sell 7,000,000 shares of Mobiquity common stock to Salkind Trust in consideration of $67,200, (iii) Stock Purchase Agreement

Gene Salkind (“Salkind”) pursuant to which the Company agreed to sell 28,000,000 shares of Mobiquity common

stock to Salkind in consideration of $268,000 and (iv) a Stock Purchase Agreement with Deepanker Katyal (“Katyal”)

pursuant to which the Company agreed to sell 10,000,000 shares of Mobiquity common stock to Katyal in consideration of 90,000 shares

of common stock of the Company.

or about June 23, 2020, Stanley Hills LLC (Stanley) which holds a pledge of 3,333,333 shares of SURG common stock

(See Note 8) via its manager/member (Stanleys 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.

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

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

The lawyers trust

account balance is $402,532 as of December 31, 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.

November 4, 2020, Altcorp and Stanley filed an Ex Parte Motion In the District Court, Clark County, Nevada (Case No:

A-20-823039-B,

43) to appoint receiver and issue a temporary restraining Order against Surge and its transfer agent for alleged defaults

on prior exchange agreement.

As court entered an order minute granting in part AltCorp motion, the parties entered on December

4, 2020 an interim agreement which set the material terms of the settlement.

A final settlement was achieved per the interim agreement

terms on January 1, 2021.

of December 31, 2020, the Companys investment in SURG consisted of 5,500,000 shares of SURG common stock which was valued

(See Note 17 for Subsequent Events)

Technologies, Inc (Divested in 2019).

September 4, 2018, the Company and Mobiquity Technologies, Inc., a New York corporation (Mobiquity) entered an agreement

pursuant to which the parties exchanged equity interest in each of the companies.

In accordance with the agreement, the Company

received 1,000 shares of Mobiquitys restricted Series AAAA Preferred Stock (the Mobiquity Preferred Stock)

in consideration of Companys concurrent sale and issuance to Mobiquity of 10,000,000 shares of Companys common stock.

The shares of Mobiquity Preferred Stock are convertible into an aggregate of up to 100,000,000 shares of Mobiquity common stock

(the Mobiquity Common Stock) and 150,000,000 common stock purchase warrants (the Mobiquity Warrants).

The Mobiquity Warrants shall have a term of 5 years from the date of grant and shall be exercisable at a price of $0.12 per share

and the shares of Mobiquity Preferred Stock shall not be convertible into shares of Mobiquity Common Stock and the Mobiquity Warrants

shall not be contemporaneously granted until after Mobiquitys Board of Directors and stockholders shall have increased

the authorized number of shares of Mobiquitys common stock to a number sufficient to accommodate a reserve in the Companys

favor of 250,000,000 shares of Mobiquitys common stock.

The Mobiquity Preferred Stock shall have immediate voting rights

equal to the number of shares of Mobiquity Common Stock into which they may be converted, not including the shares of Mobiquitys

common stock underlying the Mobiquity Warrants.

November 19, 2018, the Company and Mobiquity entered into an Amendment and Exercise Letter waiving the requirement that Mobiquitys

Board of Directors and stockholders increase the authorized number of shares of Mobiquitys common stock to a number sufficient

to accommodate a reserve in the Companys favor of 250,000,000 shares of Mobiquitys common stock prior to the conversion

of the Mobiquity Preferred Stock or exercise of the Mobiquity Warrants.

In addition, the Company converted 200 shares of Mobiquity

Preferred Stock resulting in the issuance to the Company by Mobiquity of 20,000,000 shares of Mobiquity Common Stock and 30,000,000

Mobiquity Warrants.

The Company exercised the 30,000,000 Mobiquity Warrants at an exercise price of $0.12 per share of common

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

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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

upon exercise of the Mobiquity Warrants.

a result of the transaction on September 4, 2018, the Company had an approximate 21% interest in Mobiquity and began to account

for its investment in Mobiquity using the equity method of accounting.

During the fourth quarter of 2018, Mobiquity issued additional

shares of common stock resulting in the Companys ownership in Mobiquity dropping to approximately 18% at December 31, 2018.

The Company determined that during the fourth quarter of 2018 that it did not exercise significant influence over Mobiquity due

to its decreased ownership percentage and the Companys intent to begin selling shares of Mobiquity common stock that will

further decrease its ownership percentage.

As a result, during the fourth quarter of 2018 the Company began accounting for its

investment in Mobiquity as a marketable equity security.

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 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.

Concurrently, the Company entered into a Membership Interest Purchase Agreement with Mobiquity pursuant

to which the Company sold the AVNG Interest to Mobiquity in consideration of Mobiquity assuming the AVNG Note and Mobiquity amending

the terms of the Remaining Mobiquity Warrant providing for cashless exercise.

Company paid 60,000,000 of its Mobiquity shares as partial consideration for the purchase of GBT Technologies, S.

August 6, 2019, Mobiquity delivered a counter signed letter agreement dated August 2, 2019 pursuant to which the Company exchanged

120,000,000 Mobiquity Warrants into 20,000,000 shares of Mobiquity common stock, which resulted in the Company holding 60,000,000

shares of Mobiquity common stock.

September 10, 2019, the Company entered into (i) a Stock Purchase Agreement with Mobiquity pursuant to which the Company agreed

to return 15,000,000 shares of Mobiquity common stock to Mobiquity in exchange for 110,000 shares of common stock of the Company,

(ii) a Stock Purchase Agreement with Marital Trust GST Subject U/W/O Leopold Salkind (Salkind Trust) pursuant to

which the Company agreed to sell 7,000,000 shares of Mobiquity common stock to Salkind Trust in consideration of $67,200, (iii)

Stock Purchase Agreement with Dr.

Gene Salkind (Salkind) pursuant to which the Company agreed to sell 28,000,000

shares of Mobiquity common stock to Salkind in consideration of $268,000 and (iv) a Stock Purchase Agreement with Deepanker Katyal

(Katyal) pursuant to which the Company agreed to sell 10,000,000 shares of Mobiquity common stock to Katyal in consideration

of 90,000 shares of common stock of the Company.

The closing of the agreements occurred on September 13, 2019.

As a result of these transactions,

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

At December 31, 2019, the Company owned no shares

of Mobiquity common stock.

Surge Holdings, Inc.

On September 30, 2019, the Company entered

into an Asset Purchase Agreement with Surge Holdings, Inc., a Nevada corporation (“SURG”) pursuant to which the Company

agreed to sell and assign to SURG, all the assets and certain specified liabilities, of its ECS Prepaid, Electronic Check Services

and the Central State Legal Services businesses in consideration of $5,000,000 to be paid through the issuance of 3,333,333 shares

of SURG’s common stock (See Note 17 for pledge to third party) and a convertible promissory note in favor of the Company

in the principal amount of $4,000,000 (the “SURG Note”), convertible into SURG’s shares of common stock

following the six-month anniversary of the issuance date.

The conversion price of the SURG Note is the volume weighted-average

price of SURG’s common stock over the 20 trading days prior to the conversion;

provided, however, the conversion price shall

never be lower than $0.10 or higher than $0.70.

The Company has agreed to restrict its ability to convert the SURG Note and receive

shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such

conversion does not exceed 4.99% of the then issued and outstanding shares of common stock.

The SURG Note is payable by SURG to

the Company on the 18-month anniversary of the issuance date and does not bear interest.

Note 6 –

Equity Investment in GBT

Technologies, S.A.

On June 17, 2019, the Company, Altcorp Trading

LLC, a Costa Rica company and a wholly-owned subsidiary of the Company (“Altcorp”), GBT Technologies, S.A., a Costa

Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”),

entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged

certain securities.

In accordance with the Exchange Agreement, Altcorp acquired 625,000 shares of GBT-CR representing 25% of its

issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of 20,000 shares of Series H Convertible

Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued by the Company (the “Gopher

Convertible Note”) as well as the transfer and assignment of a Promissory Note payable by Gopher Protocol Costa Rica Sociedad

De Responsabilidad Limitada to the Company in the principal amount of $5,000,000 dated February 6, 2019 (of which the underlying

security for this Promissory Note is 30,000,000 restricted shares of common stock of Mobiquity) and 60,000,000 restricted shares

of common stock of Mobiquity.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

The Gopher Convertible Note bears interest

of 6% per annum and is payable at maturity on December 31, 2021.

At the election of Gonzalez, the Gopher Convertible Note can be

converted into a maximum of 20,000 shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible, at

the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares

of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per

The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series

H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible

Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred Stock, Gonzalez would be

entitled to less than 50% of the resulting outstanding shares of common stock of the Company following conversion in full and,

as a result, such transaction is not considered a change of control.

GBT-CR is in the business of the strategic

management of BPO (Business Process Outsourcing) digital communications processing for enterprises and startups, distributed ledger

technology development, AI development and fintech software development and applications.

The Company accounts for its investment in

GBT-CR using the equity method of accounting.

At December 31, 2019, the Company evaluated

the carrying amount of this equity investment and determined that this investment was full impaired and as a result an impairment

charge of $30,731,534 was taken.

Information regarding GBT-CR as of and for

the year ended December 31, 2019 is below:

Current assets

Current liabilities

Total liabilities

Total stockholders' equity

Operating expenses

Other expenses

Note 7 –

As a result of

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

At December 31, 2020 and

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

Equity Investment in GBT Technologies, S.A.

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

GBT Technologies, S.A., a Costa Rica company (GBT-CR) and Pablo Gonzalez, a shareholders representative of

GBT-CR (Gonzalez), entered into and closed an Exchange Agreement (the GBT Exchange Agreement) pursuant

to which the parties exchanged certain securities.

In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares

of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of

20,000 shares of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000

issued by the Company (the Gopher Convertible Note) as well as the transfer and assignment of a Promissory Note

payable by Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada to the Company in the principal amount of $5,000,000

dated February 6, 2019 (of which the underlying security for this Promissory Note is 30,000,000 restricted shares of common stock

of Mobiquity) and 60,000,000 restricted shares of common stock of Mobiquity.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Gopher Convertible Note bears interest of 6% per annum and is payable at maturity on December 31, 2021.

At the election of Gonzalez,

the Gopher Convertible Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock.

Each share of Series

H Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common

stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by

the conversion price ($10.00 per share).

The Series H Preferred Stock has no liquidation preference, does not pay dividends

and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred

Stock may be convertible into.

Upon conversion of the Gopher Convertible Note and the 20,000 shares of Series H Preferred

Stock, Gonzalez would be entitled to less than 50% of the resulting outstanding shares of common stock of the Company following

conversion in full and, as a result, such transaction is not considered a change of control.

is in the business of the strategic management of BPO (Business Process Outsourcing) digital communications processing for enterprises

and startups, distributed ledger technology development, AI development and fintech software development and applications.

Company accounted for its investment in GBT-CR using the equity method of accounting;

however, in 2020, the Company owned less

than 20% of and exercised no control over GBT-CR;

therefore, this investment is currently accounted for under the cost method.

Moreover, on March 19, 2020, California Governor Gavin Newsom issued a stay at home order to protect the health and well-being

of all Californians and to establish consistency across the state in order to slow the spread of COVID-19.

California was therefore

under strict quarantine control and travel has been severely restricted, resulting in disruptions to work, communications, and

access to files (due to limited access to facilities).

The stay at home order was lifted in California only on January 25, 2021.

As such, the Company was unable to access or to contact GBT-CR on an on-going basis, and cannot get information about GBT-CR.

December 31, 2019, the Company evaluated the carrying amount of this equity investment and determined that this investment was

fully impaired and as a result an impairment charge of $30,731,534 was taken.

Investment in Joint Venture

On October 10, 2019, the Company entered into

a Joint Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC, which is owned by Douglas Davis, the Company’s

former Chief Executive Officer, to form GBT BitSpeed Corp., a Nevada company (“GBT BitSpeed”).

The purpose of GBT BitSpeed

is to develop, maintain and support its proprietary Extreme Transfer Software Application Concurrency, a software application to

transfer secure, accelerated transmission of large file data over networks, and connection to cloud storage, Network-Attached Storage

(NAS) and Storage Area Networks (SANs) (“Concurrency”).

BitSpeed shall contribute the services and resources for the

development of Concurrency to GBT BitSpeed.

The Company shall contribute 10 million shares of common stock (valued at $17,900,000)

of the Company to GBT BitSpeed.

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

The Company shall appoint two directors

and BitSpeed shall appoint one director of GBT BitSpeed.

In addition, GBT BitSpeed and Mr.

Davis entered into a Consulting Agreement

Davis is engaged to provide services in consideration of $10,000 per month payable quarterly which may be paid in

shares of common stock calculated by the amount owed divided by the Company’s 20-day VWAP.

Davis will provide services

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

The term of the Consulting

Agreement is two years.

The closing of the BitSpeed Agreement occurred on October 14, 2019.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

At December 31, 2019, the Company evaluated

the carrying amount of this joint venture investment and determined that an impairment charge of $17,900,000 was necessary.

Note 8 –

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.

The Company shall

contribute 100,000,000 shares of common stock of the Company (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.

addition, GBT Tokenize and Gonzalez entered into a Consulting Agreement in which Gonzalez is engaged to provide services in consideration

of $33,333 per month payable quarterly which may be paid in shares of common stock calculated by the amount owed divided by the

Companys 10-day VWAP.

Gonzalez will provide services in connection with the development of the business as well as GBT

Tokenizes capital raising efforts.

The term of the Consulting Agreement is two years.

The closing of the Tokenize Agreement

occurred on March 9, 2020.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

this Joint Venture the parties commenced development of a development of an intelligent human vital signs device, suggested

The platform is an expansion of the existing license agreement with GBT Tokenize Corp., which provided GBT Tokenize

with an exclusive territory of California to develop certain of the Companys technology.

As the nature of the platform

cannot be restricted only to California, the Companys joint venture GBT Tokenize Corp.

will be compensated with additional

two hundred million shares of the Company to strengthen its funding, subject to board approval.

A provisional patent application

for the qTerm Medical Device was filed on March 30, 2020 with the USPTO.

The application has been assigned serial number

The Joint Venture completed successfully the first prototype.

There is no guarantee that the Company will be successful

in researching, developing or implementing this product into the market.

In order to successfully implement this concept, the

Company will need to raise adequate capital to support its research and, if successfully researched, developed and granted regulatory

approval, the Company would need to enter into a strategic relationship with a third party that has experience in manufacturing,

selling and distributing this product.

There is no guarantee that the Company will be successful in any or all of these critical

March 31, 2020, the Company evaluated the carrying amount of this joint venture investment and determined that this investment

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.

Accounts Payable and Accrued Expenses

payable and accrued expenses at December 31, 2020 and 2019 consist of the following:

Accounts payable

Accrued interest

Convertible Notes Payable

Convertible notes payable at December 31, 2019 and 2018 consist

of the following:

Convertible notes payable to Power Up

Convertible notes payable to Investor

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

Convertible note payable to GBT Technologies

Convertible note payable to Glen Eagle

Convertible note payable to Power Up

Convertible notes payable to Redstart Holdings

Convertible note payable to Stanley Hills

Convertible note payable to Iliad

Total convertible notes payable

2 unchanged sentences

Less current portion

Convertible notes, long-term portion

Power Up Lending Group Ltd.

On October 2, 2017, the Company entered into

a Securities Purchase Agreement with Power Up Lending Group Ltd., an accredited investor (“Power Up”) pursuant to which

the Company issued to Power Up a Convertible Promissory Note (the “Power Note No.

1”) in the aggregate principal amount

The Power Note No.

1 has a maturity date of July 10, 2018 and the Company has agreed to pay interest on the unpaid

principal balance of the Power Note No.

1 at the rate of ten percent (10%) per annum from the date on which the Power Note No.

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

Company shall have the right to prepay the Power Note, provided that it makes a payment to Power Up as set forth in the Power Note

The outstanding principal amount of the Power

1 is convertible at any time and from time to time at the election of Power Up during

the period beginning on the date that is 180 days following the issue date into shares of the Company’s

common stock at a conversion price equal to 61% of the lowest trading price with a 15-day

Convertible notes payable, long-term portion

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

for GBT Technologies S.

accordance with the acquisition of GBT-CR the Company issued a convertible note in the principal amount of $10,000,000.

The convertible

note bears interest of 6% per annum and is payable at maturity on December 31, 2021.

At the election of the holder, the convertible

note can be converted into a maximum of 20,000 shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible,

at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares

of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per

The convertible note is convertible into common stock at a fixed price that was higher than the Companys

common stock on the date of grant, therefore, this convertible note does not contain a beneficial conversion feature.

split (See Note 1) the conversion feature is substantially not in the money.

The parties are in negotiations to address the issue

per the Note holder demands to mitigate its damages.

There is no guarantee that the Company will be successful in resolving this

Eagles Acquisition LP

July 8, 2019, the Company entered a Consulting Agreement with Glen Eagles Acquisition LP (Glen) as consultant to

provide services in connection with the Companys acquisition of 25% of GBT Technologies, S.A., a Costa Rican corporation

Consultant will provide analysis, interaction with related professional and other services as requested

by the Company to integrate and expand capabilities between GBT-CR and the Company.

The Company shall pay Glen $1,000,000 through

the issuance of a 6% Convertible Note.

At the election of Glen, the Convertible Note can be converted into a maximum of 2,000

shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible, at the option of the holder but subject

to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the Company as

determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per share).

The Series H Preferred

Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall be entitled to one

vote for each share of common stock that the Series H Preferred Stock may be convertible into.

In addition, the Company entered

into an Amendment of a Common Stock Purchase Warrant held by Glen to acquire nine million shares of common stock that had been

assigned to Glen by Guardian Patch LLC.

Pursuant to the amendment, the Company agreed to provide that the Common Stock Purchase

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

On 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 4) 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 agreement with Glen

for which the Company shall pay to Glen $200,000 via an assignment of a portion ($200,000 of a $4,000,000 face value) of the $4,000,000

Glen in turn will convert all its $1,250,000 considerations received into 2,500,000 SURG shares (See Note 17).

Up Lending Group Ltd.

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

(Power Up) pursuant to which the Company issued to Power Up a Convertible Promissory Note (the Power Note)

in the aggregate principal amount of $183,600 for a purchase price of $153,000.

The Power Note has a maturity date of May 15,

2021 and the Company has agreed to pay interest on the unpaid principal balance of the Power Note at the rate of six percent (6%)

per annum from the date on which the Power 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 Power Note,

provided it makes a payment including a prepayment to Power Up as set forth in the Power Note.

The transactions described above

closed on February 19, 2020.

The outstanding principal amount of the Power Note may not be converted prior to the period beginning

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

Following the 180th day, Power Up may convert the Power Note into shares

of the Companys common stock at a conversion price equal to 85% of the lowest trading price with a 15-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 Power Note), the Power Note No.

1 shall become immediately due and payable and the Company shall

pay to Power Up, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Power Note No.

Due to the variable conversion price associated

with the Power Note No.

1, the Company has determined that the conversion feature is considered a derivative liability.

conversion feature was initially calculated to be $172,282, which is recorded as a derivative liability as of the date of issuance.

The derivative liability was first recorded as a debt discount up to the face amount of the Power Note No.

1, with the remainder

being charged to financing cost during the period.

The debt discount is being amortized over the terms of the Power Note No.

As of March 6, 2018, the Company had paid off

in full all principal, interest and penalties with respect to the Power Note No.

1, and there are no further obligations owed with

respect to such note.

On September 28, 2018, the Company entered

into a Securities Purchase Agreement with Power Up pursuant to which the Company issued to Power Up a Convertible Promissory Note

(the “Power Note No.

2”) in the aggregate principal amount of $243,600 for a purchase price of $203,000.

2 has a maturity date of December 24, 2019 and the Company has agreed to pay interest on the unpaid principal balance

of the Power Note No.

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

2 is issued 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 Power Note No.

2, provided it makes a payment to Power Up as set forth in the Power Note No.

The outstanding principal amount of the Power

of Default (as defined in the Power Note), the Power Note shall become immediately due and payable and the Company shall pay to

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

During 2020, the

full amount of the Power Note ($183,600) plus $4,590 of accrued interest was converted into shares of the Companys common

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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.

The outstanding principal amount of the Redstart Note

1 may not be converted prior to the period beginning on the date that is 180 days following the Issue Date.

the 180 th day, Power Up may convert the Power 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 15 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 Power Note No.

2), the Power Note No.

2 shall become immediately due and payable and the

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

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Due to the variable conversion price associated

with the Power Note No.

2, the Company has determined that the conversion feature is considered a derivative liability.

conversion feature was initially calculated to be $337,669, which is recorded as a derivative liability as of the date of issuance.

The derivative liability was first recorded as a debt discount up to the face amount of the Power Note No.

2, with the remainder

being charged to financing cost during the period.

The debt discount is being amortized over the terms of the Power Note No.

At December 31, 2019 and 2018, the principal

amount outstanding under the Power Note No.

2 was $0 and $243,600.

During the year ended December 31, 2019, the entire principal

balance of $243,600 and accrued interest of $6,090 was converted into 7,491 shares of common stock.

On November 6, 2018, the Company entered into

a Securities Purchase Agreement with Power Up pursuant to which the Company issued to Power Up a Convertible Promissory Note (the

“Power Note No.

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.

Since the conversion price

will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted for as a

derivative liability.

In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the Redstart

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 No.

1 (In February 2021 Note No.

1 was converted into

shares in full –

See Note 17).

On 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

2”) in the aggregate principal amount of $93,600 for a purchase price of $78,000.

The Power Note

3 has a maturity date of February 6, 2020 and the Company has agreed to pay interest on the unpaid principal balance of the

Power Note No.

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

3 is issued until the same

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.

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 Power Note No.

3, provided it makes a payment to Power Up as set forth in the Power Note No.

The outstanding principal amount of the Power

3 may not be converted prior to the period beginning on the date that is 180 days following the issue date.

the 180 th day, Power Up may convert the Power Note No.

3 into shares of the Company’s common

stock at a conversion price equal to 85% of the lowest trading price with a 15 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 Power Note No.

3), the Power Note No.

3 shall become immediately due and payable and the Company shall

pay to Power Up, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Power Note No.3.

Due to the variable conversion price associated

with the Power Note No.

3, the Company has determined that the conversion feature is considered a derivative liability.

conversion feature was initially calculated to be $171,942, which is recorded as a derivative liability as of the date of issuance.

The derivative liability was first recorded as a debt discount up to the face amount of the Power Note No.

3, with the remainder

being charged to financing cost during the period.

The debt discount is being amortized over the terms of the Power Note No.

At December 31, 2019 and 2018, the principal

amount outstanding under the Power Note No.

3 was $0 and $183,600.

During the year ended December 31, 2019, the entire principal

balance of $183,600 and accrued interest of $4,590 was converted into 15,685 shares of common stock.

Bellridge Capital LLC

On March 2, 2018, the Company entered into

and closed a Securities Purchase Agreement with Bellridge Capital, LLC (“Bellridge”) pursuant to which Bellridge invested

$750,000 into the Company in consideration of a 10% Convertible Debenture (the “Bellridge Debenture”) and common stock

purchase warrants to acquire an aggregate of 500,000 shares of common stock exercisable for a period of five years at an exercise

price of $2.35 per share.

The Bellridge Debenture bears interest of 10% and is payable March 1, 2019.

The Bellridge Debenture is

convertible into shares of common stock at $0.90 per share subject to antidilution protection.

During an event of default, the

conversion price in effect on any conversion date means, as of any conversion date or other date of determination, shall be 35%

of the lowest trading price for the Company’s common stock during the 20 trading Days immediately preceding the delivery

of a notice of conversion.

Bellridge has agreed to restrict its ability to convert the Bellridge Debenture or exercise its

Common Stock Purchase Warrants and receive shares of common stock such that the number of shares of common stock held by it and

its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares

of common stock.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On March 2, 2018, the Company delivered 1,000,000

shares of Common Stock to an escrow agent.

The 1,000,000 escrow shares are to be utilized for the purpose of limited price protection.

If, beginning on the 7 th monthly anniversary of the issuance of the 1,000,000 escrow shares, Bellridge has sold shares

issuable upon conversion of the Bellridge Debenture at a sales price of less than $1.10 per share, then that number of shares shall

be released from escrow to Bellridge as a limited make whole using the following formula:

(($1.00 –

closing price

on 1 st day of each monthly anniversary beginning on the 1 st day of the 7 th month (and continuing

monthly until all shares are sold) / closing price of the 1 st monthly day in question) * number of shares sold

at a price less than $1.10.

As long as the Company is not in default of

the Bellridge Debenture or in breach of the Securities Purchase Agreement, at any time during which Bellridge owns the Bellridge

Debenture, Bellridge commits to limit in the aggregate all sales of the shares of common stock issued upon conversion of the Bellridge

Debenture and the related Common Stock Purchase Warrant to the greater of not more than (i) 10.00% of the daily trading volume

for the Company’s common stock as reported for that day or (ii) $35,000.

Breach of this leak-out provision will be considered

a material breach by Bellridge.

In connection with the Bellridge Debenture,

the Company issued 500,000 warrants to purchase shares of the Company’s common stock with an exercise price of $2.35.

Company first determined the value of the convertible note and the fair value of the detachable warrants issued in connection with

this transaction.

The estimated value of the warrants of $827,428 and was determined using the Black-Scholes option pricing model

with the following assumptions:

Expected life of 5.0 years

Volatility of 210%;

Dividend yield of 0%;

Risk free interest rate of 2.65%

The face amount of the convertible note of

$750,000 was proportionately allocated to the convertible note and the warrant in the amount of $356,593 and $393,407, respectively.

The amount allocated to the warrants of $393,407 was recorded as a discount to the convertible note and as additional paid in capital.

The value of the convertible note was then allocated between the convertible note and the beneficial conversion feature, which

amounted to $0 and $356,593, respectively.

The combined total discount is $750,000 and will be amortized over the year life of

the convertible note.

On April 9, 2018, Bellridge elected to exercise

the Bellridge Option, and as such the Company and Bellridge closed the second financing as contemplated by the Securities Purchase

Agreement entered with Bellridge pursuant to which Bellridge invested an additional $750,000 into the Company in consideration

of a 10% Convertible Debenture (the “Second Bellridge Debenture”

and together with the First Bellridge Debenture, the

“Bellridge Debenture”) and common stock purchase warrants to acquire an aggregate of 500,000 shares of common stock

exercisable for a period of five years at an exercise price of $2.35 per share (the “Second Bellridge Warrant”

together with the First Bellridge Warrant, the “Bellridge Warrant”) The Bellridge Debenture bears interest of 10% and

is payable one year from issuance.

The First Bellridge Debenture and the Second Bellridge Debenture are convertible into shares

of common stock at $0.90 per share and $1.00 per share, respectively, subject to limited antidilution protection.

During an event of default, the conversion

price for the Bellridge Debenture in effect on any conversion date means, as of any conversion date or other date of determination,

shall be 35% of the lowest trading price for the Company’s common stock during the 20 trading Days immediately preceding

the delivery of a notice of conversion.

Bellridge has agreed to restrict its ability to convert the Bellridge Debenture or exercise

the Bellridge Warrant and receive shares of common stock such that the number of shares of common stock held by it and

its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares

of common stock.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

In connection with both closings, the Company

delivered 1,000,000 shares of common stock to an escrow agent.

The escrow shares are to be utilized for the purpose of limited

price protection.

If, beginning on the 7 th monthly anniversary of the issuance of the escrow shares, Bellridge has sold

shares issuable upon conversion of the Bellridge Debenture at a sales price of less than $1.10 per share, then that number of shares

shall be released from escrow to Bellridge as a limited make whole using the following formula:

(($1.00 –

closing price

on 1 st day of each monthly anniversary beginning on the 1 st day of the 7 th month (and continuing

monthly until all shares are sold) / closing price of the 1 st monthly day in question) * number of shares sold at a

price less than $1.10.

As long as the Company is not in default of

the Bellridge Debenture or in breach of the Securities Purchase Agreement, at any time during which Bellridge owns the Bellridge

Debenture, Bellridge commits to limit in the aggregate all sales of the shares of common stock issued upon conversion of the Bellridge

Debenture and the related Common Stock Purchase Warrant to the greater of not more than (i) 10.00% of the daily trading volume

for the Company’s common stock as reported for that day or (ii) $35,000.

Breach of this leak-out provision will be considered

a material breach by Bellridge.

In connection with the Second Bellridge Debenture,

the Company issued 500,000 warrants to purchase shares of the Company’s common stock with an exercise price of $2.35.

Company first determined the value of the convertible note and the fair value of the detachable warrants issued in connection with

this transaction.

The estimated value of the warrants of $2,037,713 and was determined using the Black-Scholes option pricing model

with the following assumptions:

Expected life of 5.0 years

Volatility of 210%;

Dividend yield of 0%;

Risk free interest rate of 2.60%

The face amount of the convertible note of

$750,000 was proportionately allocated to the convertible note and the warrant in the amount of $201,778 and $548,222, respectively.

The amount allocated to the warrants of $548,222 was recorded as a discount to the convertible note and as additional paid in capital.

The value of the convertible note was then allocated between the convertible note and the beneficial conversion feature, which

amounted to $0 and $201,778, respectively.

The combined total discount is $750,000 and will be amortized over the year life of

the convertible note.

In October 2018, Bellridge converted $275,000

in principal and $17,075 in accrued interest into 324,528 shares of common stock.

In addition, in November 2018, Bellridge was

issued an additional 318,583 shares of common stock pursuant to the limited price protection described above.

On November 28, 2018, the Company entered into

a letter agreement with Bellridge acknowledging that no event of default exists under the Bellridge Debentures as a result of the

issuance of certain convertible securities, that the Company may prepay the Bellridge Debentures in the full amount by making a

payment in the amount of $2,450,000 by December 17, 2018 (the “Repayment Date”) and Bellridge will not submit further

conversion notices until after the Repayment Date.

In the event the Bellridge Debentures are not paid off as of the Repayment Date

(i) the outstanding principal amount (principal balance) of the First Bellridge Debenture shall be increased to $1,022,510 and

the outstanding principal amount (principal balance) of the Second Bellridge Debenture shall be increased to $1,427,490 and (ii)

the Conversion Price of the Bellridge Debentures shall be adjusted to equal 35% of the lowest trading price for the Company’s

common stock during the twenty trading days immediately preceding the delivery by Bellridge of a Notice of Conversion.

17, 2018, the Bellridge Debentures were repaid in full, and there are no further obligations owed with respect to the Bellridge

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

$8,340,000 Senior Secured Redeemable Convertible

On 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.

The Debenture has a maturity date two years from the issuance date and the Company has

agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal to the Wall Street Journal

Prime Rate plus 2% per annum (Wall Street Journal Prime Rate plus 12% per annum upon the occurrence of a Triggering Event).

is payable on the date the applicable principal is converted or on maturity.

The interest must be paid in cash and, in certain

circumstances, may be paid in shares of common stock.

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.

Pursuant to the terms of

the SPA, the investor agreed to tender to the Company the sum of $7,500,000, of which the Company received the sum of $4,500,000

as of the closing, $1,000,000 on January 4, 2019, $1,000,000 on February 5, 2019 and $1,000,000 on March 5, 2019.

As of the closing,

the face value of the Debenture was $5,004,000.00;

as of the first month’s anniversary of the closing, the face value of

the Debenture increased to $6,116,000;

as of the second month’s anniversary of the closing, the face value of the Debenture

increased to $7,228,000;

and as of the third month’s anniversary of the closing, the face value of the Debenture increased

to $8,340,000.

As of the closing, the number of Warrant Shares was 135,000;

as of the first month’s anniversary of the closing,

the number of Warrant Shares increased to 165,000;

as of the second month’s anniversary of the closing, the number of Warrant

Shares increased to 195,000;

as of the third month’s anniversary of the closing, the number of Warrant Shares increased to

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 $0.05 (The conversion price is lowered by 10% upon the occurrence of each Triggering Event).

The Market Price is the average

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

In connection with the Debenture, the Company

issued 225,000 warrants to purchase shares of the Company’s common stock with an exercise prices ranging from $50.00 to $100.00.

The Company first determined the value of the convertible note and the fair value of the detachable warrants issued in connection

with this transaction.

The estimated value of the warrants of $7,832,697 and was determined using the Black-Scholes option pricing

model with the following assumptions:

Expected life of 3.0 years

Volatility of 190%;

Dividend yield of 0%;

Risk free interest rate of 2.84%

The face amount of the convertible note of

$8,340,000 was proportionately allocated to the convertible note and the warrant in the amount of $4,310,085 and $4,029,915, respectively.

The amount allocated to the warrants of $4,029,915 was recorded as a discount to the convertible note and as additional paid in

The value of the convertible note was then allocated between the convertible note and the beneficial conversion feature.

Due to the variable conversion price associated with the Debenture, the Company has determined that the conversion feature is considered

derivative liabilities.

The embedded conversion feature was initially calculated to be $11,212,573, which is recorded as a derivative

liability as of the dates of issuance.

The derivative liability was first recorded as a debt discount up to value allocated to

the convertible note, with the remainder being charged to financing cost during the period.

The combined total discount is $8,340,000

and will be amortized over the year life of the convertible note.

In December 2018, the investor converted $2,000,000

in principal and $6,616 in accrued interest into 94,993 shares of common stock.

In January 2019, the investor converted $350,000

in principal and $1,158 in accrued interest into 16,624 shares of common stock.

In March 2019, the investor converted $580,000

in principal and $51,096 in accrued interest into 34,963 shares of common stock.

At December 31, 2019 and 2018, the principal

amount outstanding under the Debenture was $0 and $3,004,000, respectively.

On May 28, 2019, the Investor delivered to

the Company a “Notice of Default and Notice of Sale of Collateral”

(the “Notice”).

In the Notice, the Investor

declared that the Company was in default of the terms of the SPA.

Specifically, the Investor claimed multiple “Trigger Events”

had occurred under the Debenture which constituted an Event of Default.

On May 30, 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 as previously reported by the Company.

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.

(See Note 9 and 15 for further discussions of

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

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

(See Note 9 and 15)

$10,000,000 for GBT Technologies S.

In accordance with the acquisition of GBT-CR

the Company issued a convertible note in the principal amount of $10,000,000.

The convertible note bears interest of 6% per annum

and is payable at maturity on December 31, 2021.

At the election of the holder, the convertible note can be converted into a maximum

of 20,000 shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible, at the option of the holder

but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the

Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per share).

The convertible

note is convertible into common stock at a fixed price that was higher than the Company’s common stock on the date of grant,

therefore, this convertible note does not contain a beneficial conversion feature.

Glen Eagles Glen Eagles Acquisition LP

On July 8, 2019, the Company entered a Consulting

Agreement with Glen Eagles Acquisition LP (“Glen”) as consultant to provide services in connection with the Company’s

acquisition of 25% of GBT Technologies, S.A., a Costa Rican corporation (“GBT-CR”).

Consultant will provide analysis,

interaction with related professional and other services as requested by the Company to integrate and expand capabilities between

GBT-CR and the Company.

The Company shall pay Glen $1,000,000 through the issuance of a 6% Convertible Note.

At the election of

Glen, the Convertible Note can be converted into a maximum of 2,000 shares of Series H Preferred Stock.

Each share of Series H

Preferred Stock is convertible, at the option of the holder but subject to the Company increasing its authorized shares of common

stock, into such number of shares of common stock of the Company as determined by dividing the Stated Value ($500 per share) by

the conversion price ($10.00 per share).

The Series H Preferred Stock has no liquidation preference, does not pay dividends

and the holder of Series H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred

Stock may be convertible into.

In addition, the Company enter into an Amendment of a Common Stock Purchase Warrant held by Glen

to acquire nine million shares of common stock that had been assigned to Glen by Guardian Patch LLC.

Pursuant to the amendment,

the Company agreed to provide that the Common Stock Purchase Warrant may be exercised on a cashless basis and provided a beneficial

ownership limitation of 4.99%.

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.

Since the conversion price will vary based on the Company’s

stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability.

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.

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.

(In March 2021 Note No.

2 was converted into shares in full –

See Note 17).

On December 9, 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

3”) in the aggregate principal amount of $100,200 for a purchase price of $83,500.

The Redstart Note No.

3 has a maturity date

of December 9, 2021 and the Company has agreed to pay interest on the unpaid principal balance of the Redstart Note No.

3 at the rate

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

3 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.

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

The transactions

described above closed on December 11, 2020.

The outstanding principal amount of the Redstart Note No.

3 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.

3 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.

Since the conversion price will vary based on the Company’s

stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability.

In addition, upon

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

3), the Redstart Note No.

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.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

The Company entered into a series of loan agreements

with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $1,000,000 in loans (the “Debt”) since

May 2019 up to December 2019.

On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company and Stanley

entered into a letter agreement providing that the current note payable balance due to Stanley (See Note 9) in the amount of $1,214,900

may be converted into shares of common stock of the Company at a conversion price equal to 85% multiplied by the lowest one trading price

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

conversion price will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted

for as a derivative liability.

Stanley has agreed to restrict its ability to convert the Debt and receive shares of common stock

such that the number of shares of common stock held by it and its affiliates after such conversion or exercise

does not exceed 4.99% of the then issued and outstanding shares of common stock.

During 2020, Stanley converted $583,889 of its convertible

note into 67,282,583 shares of the Company’s common stock, and during 2020, Stanley loaned the Company an additional $547,097.

balance of the Stanley debt at December 31, 2020 was $1,009,469.

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

(See Note 4).

Research and Trading, L.P.

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

L.P.(Iliad), pursuant to which the Company issued a promissory note for the original principal amount of $2,325,000.

The promissory note had an original issue discount of $300,000 and the inventor paid consideration of $2,025,000 to the Company,

of which $25,000 was paid for legal expenses.

The outstanding balance of the promissory note is to be paid on the one-year anniversary

of the issuance of the note.

Interest on the note accrues at the rate of 10% per annum compounding daily.

Subject to the terms

and conditions set forth in the note, the Company may prepay all or any portion of the outstanding balance of the note at any

time in an amount in cash equal to 120% of the amount repaid.

In connection with transactions that generate less than $1,000,000

in proceeds, the Company has agreed to not issue any debt instrument or incurrence of any debt other than trade payables in the

ordinary course of business, any securities or agreements to sell common stock with anti-dilution or price reset/reduction features

or any securities that are or may be become convertible or exercisable into common stock with a price that varies with the market

price of the common stock (collectively, Restricted Issuance Transaction).

The outstanding balance of the Note will

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

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

On 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 the Company at a conversion price equal to 80% multiplied by the

lowest trading daily VWAP for the common stock during the 20 trading day period ending on the latest complete trading day prior to the

conversion date, provided for the payment by the Company to Iliad of an extension fee equal to 7.5% of the outstanding balance of the

Iliad Note resulting in a new balance of the Iliad Note of $2,765,983 and provided that the Company’s failure to deliver shares

of common stock within three trading days of a conversion would result in an event of default.

Since the conversion price will vary based

on the Company’s stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability.

Iliad has agreed to restrict its ability to convert the Iliad Note and receive shares of common stock such that the number of shares

of common stock held by it and its affiliates after such conversion or exercise does not exceed 9.99% of the

then issued and outstanding shares of common stock.

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 2020, Iliad converted $539,000 of its

convertible note to 53,175,795 shares of the Company’s common stock.

The balance of the Iliad debt at December 31, 2020 was $2,446,746,

including accrued interest of $14,905.

(See Note 17 for additional extension of this note)

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Discounts on convertible notes

The Company recognized interest expense of $4,149,879

$6,569,124 and $3,740,794 during the year ended December 31, 2019 and 2018, respectively, related to the amortization of the debt

discount on convertible notes.

and $6,569,124 during the years ended December 31, 2020 and 2019, respectively, related to the amortization of the debt discount on convertible

The unamortized debt discount at December 31, 2020 was $362,004.

A roll-forward of the convertible note from December 31, 2017 to

December 31, 2019 is below:

Convertible notes, December 31, 2017

A roll-forward of the convertible notes payable

and debt discount from December 31, 2018 to December 31, 2020 is below:

Convertible notes payable, December 31, 2018

$ (3,233,124 )

Issued for cash

Issued for acquisition

Issued for services

Original issue discount

Repayment in cash

Conversion to common stock

Debt discount related to new convertible notes

Reduction in convertible note due to legal settlement

Amortization of debt discounts

Convertible notes, December 31, 2018

Convertible notes payable, December 31, 2019

Issued for cash

Issued for acquisition

Issued for services

Accrued interest added to convertible note

Exchange of convertible note for other company assets

Notes payable converted to convertible notes

Original issue discount

1 unchanged sentence

Debt discount related to new convertible notes

Reduction in convertible note due to legal settlement

Amortization of debt discounts

Convertible notes, December 31, 2019

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Convertible notes payable, December 31, 2020

Note 9 –

Accrued Settlement

In connection with a legal matter filed by

the Investor of the $8,340,000 Senior Secured Redeemable Convertible Debenture, 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

(See Note 8 and 15).

In connection with this settlement, the Company recognized a gain on the settlement of debt of

$1,375,556 as the difference between the carrying amount of the debt and the amount awarded by the arbitrator.

Note 10 - Derivative Liability

Certain of the convertible notes payable discussed

in Note 8 have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion

feature being recorded as a derivative liability.

The fair value of the derivative liability

is recorded and shown separately under current liabilities.

Changes in the fair value of the derivative liability is recorded in

the statement of operations under other income (expense).

The Company uses a weighted average Black-Scholes

option pricing model with the following assumptions to measure the fair value of derivative liability at December 31, 2019 and

Risk free rate

Conversion/ Exercise price

Dividend rate

The following table represents the Company’s

derivative liability activity for the years ended December 31, 2018 and 2019:

Derivative liability balance, December 31, 2017

Issuance of derivative liability during the period

Fair value of beneficial conversion feature of debt repaid

Change in derivative liability during the period

Derivative liability balance, December 31, 2018

Issuance of derivative liability during the period

Fair value of beneficial conversion feature of debt converted

Change in derivative liability during the period

Derivative liability balance, December 31, 2019

Note 11- Note Payable

Notes payable at December 31, 2019 and 2018 consist of the following:

Notes Payable

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

RWJ acquisition note

ECS acquisition note

Promissory note to investor

Promissory note to Iliad

Promissory note to Stanley Hills

Promissory note to Alpha Eda

Total notes payable

1 unchanged sentence

Notes payable

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

RWJ Acquisition Note

In connection with the acquisition of RWJ in

September 2017, the Company issued a note payable.

The note accrues interest at 3.5% per annum, is due on December 31, 2019 and

is secured by the assets purchased in the acquisition.

This note has not been repaid (See Note 15).

ECS Acquisition Note

In connection with the acquisition of ECS,

the Company issued a note payable.

The note is to be repaid in monthly installment payments of $100,000 with the final payment

due on January 15, 2019.

The Company imputed interest of 9% on this note payable.

The balance of this note payable was paid in

full in January 2019.

Promissory Notes

On February 27, 2019, the Company entered into

a note purchase agreement with a third party investor, pursuant to which the Company issued a promissory note for the original

principal amount of $2,325,000.

The promissory note had an original issue discount of $300,000 and the inventor paid consideration

of $2,025,000 to the Company, of which $25,000 was paid for legal expenses.

The outstanding balance of the promissory note is to

be paid on the one-year anniversary of the issuance of the note.

Interest on the note accrues at the rate of 10% per annum compounding

Subject to the terms and conditions set forth in the note, the Company may prepay all or any portion of the outstanding

balance of the note at any time in an amount in cash equal to 120% of the amount repaid.

In connection with transactions that generate

less than $1,000,000 in proceeds, the Company has agreed to not issue any debt instrument or incurrence of any debt other than

trade payables in the ordinary course of business, any securities or agreements to sell common stock with anti-dilution or price

reset/reduction features or any securities that are or may be become convertible or exercisable into common stock with a price

that varies with the market price of the common stock (collectively, “Restricted Issuance Transaction”).

Less current portion

Notes payable, long-term portion

Acquisition Note

connection with the acquisition of RWJ in September 2017, the Company issued a note payable.

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.

The Company contests the validity

of the note, as such the note has not been repaid as of December 31, 2020.

(See Note 15).

The balance of the note at December

31, 2020 is $2,600,000 plus accrued interest of $307,631.

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 principal and interest payments

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

The balance of the note at December 31, 2020

is $150,000 plus accrued interest of $3,067.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC for $140,000.

The note accrues interest at 10% per annum,

is unsecured and is due on June 30, 2021.

The balance of the note at December 31, 2020 is $140,000 plus accrued interest of $1,803.

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

issued a promissory note for the original principal amount of $2,325,000.

The promissory note had an original issue discount of

$300,000 and the inventor paid consideration of $2,025,000 to the Company, of which $25,000 was paid for legal expenses.

The outstanding

balance of the Note will be increased by 5% in the event the Company enters into a Restricted Issuance Transaction that is approved

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

The Company issued promissory notes for $1,046,261

to a third party for funds received as working capital during the year ended December 31, 2019.

The notes accrue interest at 10%

per annum, are due on February 9, 2020 and are secured by a pledge agreement lien on the SURG shares.

For extending maturities and adding conversion

feature to these notes, see Note 17.

Discounts on Promissory Note

The Company recognized interest expense of

$252,329 and $0 during the years ended December 31, 2019 and 2018, respectively, related to the amortization of the debt discount

on promissory notes.

balance of the promissory note is to be paid on the one-year anniversary of the issuance of the note.

Interest on the note accrues

at the rate of 10% per annum compounding daily.

Subject to the terms and conditions set forth in the note, the Company may prepay

all or any portion of the outstanding balance of the note at any time in an amount in cash equal to 120% of the amount repaid.

In connection with transactions that generate less than $1,000,000 in proceeds, the Company has agreed to not issue any debt instrument

or incurrence of any debt other than trade payables in the ordinary course of business, any securities or agreements to sell common

stock with anti-dilution or price reset/reduction features or any securities that are or may be become convertible or exercisable

into common stock with a price that varies with the market price of the common stock (collectively, Restricted Issuance

Transaction).

For every Restricted Issuance Transaction that the Company was funded during 2020, Iliad consent and approval

was obtained.

The outstanding balance of the Note will be increased by 5% in the event the Company enters into a Restricted Issuance

Transaction that is approved by Iliad.

The original 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 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 the Company

at a conversion price equal to 80% multiplied by the lowest trading daily VWAP for the common stock during the 20 trading day

period ending on the latest complete trading day prior to the conversion date, provided for the payment by the Company to Iliad

of an extension fee equal to 7.5% of the outstanding balance of the Iliad Note resulting in a new balance of the Iliad Note of

$2,765,983 which has been reclassified to convertible notes payable.

(See Note 8).

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 2020, Iliad converted $539,000 of its convertible note to 53,175,795 shares of the Companys common stock.

of the Iliad debt at December 31, 2020 was $$2,446,746, including accrued interest of $14,905.

(See Note 17 for additional extension

of this note)

Company issued promissory notes with Stanley Hills for funds received as working capital.

The notes accrue interest at 10% per

annum and were due on February 9, 2020.

On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company

and Stanley entered into a letter agreement (See Note 8) providing that the debt in the amount of $1,214,900 may be converted

into shares of common stock of the Company at a conversion price equal to 85% multiplied by the lowest one trading price for the

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).

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

on Promissory Note

Company recognized interest expense of $47,671 and $252,329 during the years ended December 31, 2020 and 2019, respectively, related

to the amortization of the debt discount on promissory notes.

The unamortized debt discount at December 31, 2020 was $0.

A roll-forward of the promissory notes from December 31, 2017 to

December 31, 2019:

Notes payable, December 31, 2017

Issued for acquisition

Repayment of note payable

A roll-forward of the promissory notes and debt discount

from December 31, 2018 to December 31, 2020 is below:

Notes payable, December 31, 2018

5 unchanged sentences

Notes payable, December 31, 2019

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Note 12- Stockholders’

During the year ended December 31, 2019, the

Company had the following transactions in its common stock:

issued an aggregate of 9,500 shares to employees and board members as part of their compensation agreements with the Company.

The value of the common stock of $235,900 was determined based on the closing stock price of the Company’s common stock on the grant date;

issued 74,762 shares to an investor for the conversion of $1,357,200 in convertible notes and $62,934 in accrued interest;

issued 59,820 shares to an investor for disputed penalties on a convertible debenture.

The value of the common stock of $975,065 was determined based on the closing stock price of the Company’s common stock on the grant date;

issued 200,267 shares to Latinex in order to provide that Latinex may maintain its required regulatory capital as required by various regulators.

The Company has recorded the value of these shares of common stock as a stock loan receivable which is presented as a contra-equity account in the accompanying consolidated balance sheets.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the grant date;

issued 10,000,000 shares in connection with a joint venture with BitSpeed.

The value of the common stock of $17,900,000 was based on the closing price of the Company’s common stock on the closing date;

issued 4,566,214 shares in connection with the cashless exercise of 6,120,000 warrants;

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

(See Note 5).

The shares were valued based on the Company’s stock price on the date of the agreement.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

During the year ended December 31, 2018, the

Company had the following transactions in its common stock:

issued 660,000 shares in connection with the conversion of 66,000 shares of Series D Preferred Stock;

issued 20,000 shares in connection with the conversion of 2,000,000 shares of Series G Preferred Stock;

issued 2,500 shares to a consultant for professional services rendered valued at $123,725.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the dates that the shares earned based on the agreement;

issued 18,000 shares to employees and board members as part of their agreements with the Company.

The value of the common stock of $4,404,500 was determined based on the closing stock price of the Company’s common stock on the date of the respective agreements;

issued 30,000 to a consultant for services related to assisting the Company with the acquisition of the RWJ assets.

The 30,000 shares were earned when the operations of the RWJ assets produced revenue in excess of $10,000,000.

The value of the common stock of $4,590,000 was determined based on the closing stock price of the Company’s common stock on the date of the shares were earned.

issued aggregate of 12,500 shares to a consultant for services rendered valued at $2,715,000.

The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the ECS and Electronic Check assets (see Note 3).

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of acquisition of ECS and Electronic Check;

issued 5,000 shares for the acquisition of the ECS assets valued at $1,010,000.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date;

issued 2,500 shares for the acquisition of the Electronic Check valued at $695,000.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date;

issued 100,000 shares in connection with its equity interest in Mobiquity valued at $9,980,000 (See Note 6).

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of the Mobiquity transaction;

issued an additional 100,000 shares to Mobiquity valued at $3,90,000 for payment of the exercise price for 20,000,000 warrants previously granted to the Company.

Issued for cash

Accrued interest and penalties added to notes payable

Notes payable converted to convertible notes

Amortization of debt discounts

Notes payable, December 31, 2020

Accrued Settlement

connection with a legal matter filed by the Investor of the $8,340,000 Senior Secured Redeemable Convertible Debenture, 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 attorneys fees.

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

from May 15, 2019 (presented separately in accounts payable and accrued expenses) and costs in the amount of $55,613.

In connection with this settlement, the Company recognized 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 (See Note 15).

Derivative Liability

of the convertible notes payable discussed in Note 8 have a conversion price that can be adjusted based on the Companys

stock price which results in the conversion feature being recorded as a derivative liability.

fair value of the derivative liability is recorded and shown separately under current liabilities.

Changes in the fair value of

the derivative liability is recorded in the statement of operations under other income (expense).

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

derivative liability at December 31, 2020 and 2019:

Risk free rate

Conversion/ Exercise price

Dividend rate

following table represents the Companys derivative liability activity for the years ended December 31, 2019 and 2020:

Derivative liability balance, December 31, 2018

Issuance of derivative liability during the period

Fair value of beneficial conversion feature of debt converted

Change in derivative liability during the period

Derivative liability balance, December 31, 2019

Issuance of derivative liability during the period

Fair value of beneficial conversion feature of debt converted

Change in derivative liability during the period

Derivative liability balance, December 31, 2020

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Stockholders Equity

Board of Directors of the Company approved, on April 13, 2020, a reverse stock split of all of the Companys 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 year ended December 31, 2020, the Company had the following transactions in its common stock:

an aggregate of 140,138,107 for the conversion of convertible notes of $1,306,489 and accrued interest of $4,590;

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

The value of the common stock of $5,500,000 was determined based

on the closing stock price of the Companys common stock on the grant date.

the year ended December 31, 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 agreements with the Company.

of the common stock of $235,900 was determined based on the closing stock price of the Companys common stock on the grant

74,762 shares to an investor for the conversion of $1,357,200 in convertible notes and $62,934 in accrued interest;

59,820 shares to an investor for disputed penalties on a convertible debenture.

The value of the common stock of $975,065 was

determined based on the closing stock price of the Companys common stock on the grant date;

200,267 shares to Latinex in order to provide that Latinex may maintain its required regulatory capital as required by various

The Company has recorded the value ($7,610,147) of these shares of common stock as a stock loan receivable which is

presented as a contra-equity account in the accompanying consolidated balance sheets.

The value of the common stock was determined

based on the closing stock price of the Companys common stock on the grant date;

10,000,000 shares in connection with a joint venture with BitSpeed.

The value of the common stock of $17,900,000 was based on

the closing price of the Companys common stock on the closing date;

4,566,214 shares in connection with the cashless exercise of 6,120,000 warrants;

200,000 shares that were returned in connection with the Companys sale of its investment with Mobiquity.

(See Note 4).

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;

issued 10,000 shares to a consultant for services rendered valued at $998,000.

The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of its equity interest in Mobiquity.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of Mobiquity transaction;

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

issued 125,000 shares to Guardian LLC in connection the termination of its 50% interest in the profits of certain of the Company’s products (See Note 11).

The shares were valued at $11,750,000 which was determined based on the closing stock price of the Company’s common stock at the date of the agreement;

issued 3,245 shares to Bellridge for the conversion of $275,000 in convertible notes and $17,075 in accrued interest;

issued 94,992 shares to an investor for the conversion of $2,000,000 in convertible notes and $6,521 in accrued interest;

issued 3,186 shares to Bellridge pursuant to the limited price protection.

The shares were valued at $213,451 which was charged to financing cost was determined based on the closing stock price of the Company’s common stock on the date of issuance;

issued 20,000 shares to a consultant for services rendered in connection with the issuance of the Company’s common stock as payment of the exercise price for the Mobiquity warrants valued at $780,000.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;

issued 20,000 shares to Eagle Equities LLC as a result of the Company issuing shares of common stock for less than $30.00 pursuant to an agreement with Eagle Equities.

The shares were valued at $670,000 which was charged to financing cost was determined based on the closing stock price of the Company’s common stock on the date the Company issued shares for less than $30.00;

issued 937 shares to a consultant for services rendered valued at $30,000.

The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;

issued 12,727 shares of common stock to an investor for cash proceeds of $1,500,000 (See discussion below);

canceled 500 shares pursuant to the settlement of a legal matter.

Eagle Equities, LLC

On December 29, 2017, the Company entered into

a Securities Purchase Agreement with Eagle Equities, LLC (“Eagle”) pursuant to which Eagle agreed to purchase up to

20,000 shares of the Company’s common stock for a purchase price of $1,500,000 or $75.00 per share.

The closing occurred

on December 29, 2017 with respect to the funding of $1,000,000 resulting in the issuance of 13,333 shares of common stock (the

“First Closing Shares”).

Eagle agreed to potentially purchase an additional 6,667 shares of common stock (the “Second

Closing Shares”) on or before March 31, 2018 for a purchase price of $500,000 subject to various closing conditions.

21, 2018, Eagle purchased an additional 6,667 shares of common stock for a purchase price of $500,000.

The Company placed an aggregate of 20,000

shares of common stock (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection.

If, beginning on the seventh month anniversary of the issuance of the First Closing Shares and Second Closing Shares, Eagle has

sold any of the First Closing Shares or the Second Closing Shares at a sales price of less than $72.00 per share, then that number

of Escrow Shares shall be released from escrow to Eagle as a limited make whole which shall be determined by using the following

($72.00 –

Closing Price) / Closing Price) * number

of shares sold at a price less than $72.00.

Closing Price is price on the first day of

each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of January 31, 2019

or until all shares are sold).

The Company shall deposit an additional 20,000

shares of common stock into escrow which shares shall only be released to Eagle, if, prior to January 31, 2019 (while Eagle continues

to hold shares), the Company issues shares at an issue price of less than $30.00 per share.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

The Company also issued Eagle a Common Stock

Purchase Warrant to acquire 6,667 shares of common stock exercisable for three years at an exercise price of $200.00 per share

(the “Eagle Warrant”).

Unless otherwise agreed in writing by both the Company and Eagle, at no time will Eagle exercise

any amount of the Eagle Warrant to purchase common stock that would result in Eagle owning more than 9.9% of the common stock outstanding

of the Company.

The Eagle Warrant contains standard anti-dilution protections.

On May 4, 2018, the Company entered into a

Securities Purchase Agreement with Eagle pursuant to which Eagle agreed to purchase up to 12,121 shares of the Company’s

common stock for an aggregate purchase price of $2,000,000 or $165.00 per share.

The closing occurred on May 4, 2018 with respect

to the funding of $500,000 resulting in the issuance of 3,030 shares of common stock and on May 25, 2018 with respect to the funding

of $500,000 resulting in the issuance of an additional 3,030 shares of common stock.

Additional closings of $500,000 for 303,030

shares are scheduled to close on June 15, 2018 and July 5, 2018 each.

The additional closings on June 15, 2018 and July 5, 2018

have not occurred.

The Company agreed to place 3,030 shares of

common stock each tranche (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection.

If, beginning on the seventh month anniversary of the closing of each tranche, Eagle has sold any of its shares of common stock

at a sales price of less than $165.00 per share, then that number of Escrow Shares shall be released from escrow to Eagle as a

limited make whole which shall be determined by using the following formula:

($165.00 –

Closing Price) /

Closing Price) * number of shares sold at a price less than $165.00.

Closing Price is price on the first day of

each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of June 4, 2019

or until all shares are sold.

Series B Preferred Shares

On November 1, 2011, the Company and certain

creditors entered into a Settlement Agreement (the “Settlement Agreement”) whereby without admitting any wrongdoing

on either part, the parties settled all previous agreements and resolved any existing disputes.

Under the terms of the Settlement

Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis.

Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered

shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties.

The Series B Preferred Stock has a stated value

of $100 per share and is convertible into the Company’s common stock at a conversion price of $30.00 per share representing

30 posts split common shares.

Furthermore, the Series B Preferred Stock votes on an as converted basis and carries standard anti-dilution

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

As of December 31, 2019 and 2018, there were

45,000 Series B Preferred Shares outstanding.

Series C Preferred Shares

On April 29, 2011, GV Global Communications,

(“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”).

September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the

Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors.

Each share of Series C Preferred Stock is convertible,

at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined

below) by the Conversion Price (as defined below).

The Conversion Price for each share is equal to a 50% discount to

the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10-day trading period

prior to the conversion with a minimum conversion price of $0.02.

The stated value is $11.00 per share (the “Stated

Value”).

The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of

Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be

convertible into.

GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive

shares of the Company’s common stock such that the number of shares of the Company’s common stock held by it and its

affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company’s common stock.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

During the year ended December 31, 2014, GV

Global Communications, Inc.

converted 7,770 of its Series C Preferred Stock into 120 post-split.

During the third quarter of 2014,

the Company received 42 post-split common shares to adjust the shares issued to reflect the amount that both they and the Company

believed that they were owed.

At December 31, 2019 and 2018, GV owns 700 Series C Preferred Shares.

The issuance of the Series C Preferred Stock

was made in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act of 1933 and Rule 506

promulgated under Regulation D thereunder.

GV is an accredited investor as defined in Rule 501 of Regulation D promulgated

under the Securities Act of 1933.

As of December 31, 2019 and 2018, there were

700 Series C Preferred Shares outstanding.

Series D Preferred Shares

Per the terms of the Exclusive License Agreement

and in consideration of the licensing agreement signed between the Company and Hermes Roll LLC, the Company issued 100,000 shares

of Series D Preferred Stock of the Company (the “Preferred Shares”).

The preferred stock has a value of $ 1,000 based

upon the cost of the license;

due to the holder of license is the related party of the Company.

The Preferred Shares have no liquidation

The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on

an as-converted basis.

The Preferred Shares have a conversion price of $0.01 (the “Conversion Price”) and a stated

value of $10.00 per share (the “Stated Value”).

Each Preferred Share is convertible, at the option of the Holder, into

such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price.

On January 23, 2018, Reko Holdings, LLC converted

66,000 shares of its Series D Preferred Stock into 660,000 restricted common shares.

As of December 31, 2019 and 2018, there are

0 and 0 shares of Series D Preferred Shares outstanding, respectively.

Series G Preferred Shares

On December 29, 2017, Guardian LLC converted

all of the principal and interest of the Note, into 2,000,000 shares of Series G Preferred Stock.

The Series G Preferred Stock

is entitled to vote on an as-converted basis, automatically converts to common stock upon any liquidation, dissolution or winding

up and the Company may not declare a dividend until the Series G Preferred Stock has received a dividend.

Each share of Series

G Preferred Stock is convertible into one shares of common stock of the Company and contain standard anti-dilution rights.

On August 30, 2018, Guardian LLC converted

the 2,000,000 shares of Series G Preferred Stock into 20,000 shares of common stock.

As of December 31, 2019 and 2018, there are

0 and 0 shares of Series G Preferred Shares outstanding, respectively.

Series H Preferred Shares

On June 17, 2019, the Company,

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

S.A., a Costa Rica company (“GBT-CR”) and Pablo Gonzalez, a shareholder’s representative of GBT-CR (“Gonzalez”),

entered into and closed an Exchange Agreement (the “GBT Exchange Agreement”) pursuant to which the parties exchanged

certain securities.

In accordance with the Exchange Agreement, Altcorp acquired 625,000 shares of GBT-CR representing 25% of its

issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of 20,000 shares of Series H Convertible

Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000 issued by the Company (the “Gopher

Convertible Note”) as well as additional consideration.

The Gopher Convertible Note bears interest of 6% per annum and is

payable at maturity on December 31, 2021.

At the election of Gonzalez, the Gopher Convertible Note can be converted into a maximum

of 20,000 shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible, at the option of the holder

but subject to the Company increasing its authorized shares of common stock, into such number of shares of common stock of the

Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per share).

Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series H Preferred Stock shall

be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible into.

8, 2019, the Company entered a Consulting Agreement with Glen Eagles Glen Eagles Acquisition LP (“Glen”) as consultant

to provide services in connection with the Company’s acquisition of 25% of GBT-CR.

Consultant will provide analysis, interaction

with related professional and other services as requested by the Company to integrate and expand capabilities between GBT-CR and

The shares were valued based on the Companys stock price on the date of the agreement.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

B Preferred Shares

November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the Settlement Agreement)

whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing

Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred

Stock of the Company on a pro-rata basis.

Following the issuance and delivery of the shares of Series B Preferred Stock to said

creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities

and obligations between the parties.

Series B Preferred Stock has a stated value of $100 per share and is convertible into the Companys common stock at a conversion

price of $30.00 per share representing 30 posts split common shares.

Furthermore, the Series B Preferred Stock votes on an as

converted basis and carries standard anti-dilution rights.

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

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

C Preferred Shares

April 29, 2011, GV Global Communications, Inc.

(GV) provided funding to the Company in the aggregate principal amount

of $111,000 (the Loan).

On September 25, 2012, the Company and GV entered into a Conversion Agreement

pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which

was approved by the Board of Directors.

share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company

as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).

The Conversion

Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Companys

common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.02.

stated value is $11.00 per share (the Stated Value).

The Series C Preferred Stock has no liquidation

preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of

common stock that the Series C Preferred Stock shall be convertible into.

GV has contractually agreed to restrict its ability

to convert the Series C Preferred Stock and receive shares of the Companys common stock such that the number of shares

of the Companys common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued

and outstanding shares of the Companys common stock.

the year ended December 31, 2014, GV Global Communications, Inc.

converted 7,770 of its Series C Preferred Stock into 120 post-splits.

During the third quarter of 2014, the Company received 42 post-split common shares to adjust the shares issued to reflect the

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

At December 31, 2020 and 2019, GV owns 700 Series C Preferred

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

the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.

GV is an accredited investor as

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

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

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

D Preferred Shares

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

G Preferred Shares

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

H Preferred Shares

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

GBT Technologies, S.A., a Costa Rica company (GBT-CR) and Pablo Gonzalez, a shareholders representative of

GBT-CR (Gonzalez), entered into and closed an Exchange Agreement (the GBT Exchange Agreement) pursuant

to which the parties exchanged certain securities.

In accordance with the Exchange Agreement, AltCorp acquired 625,000 shares

of GBT-CR representing 25% of its issued and outstanding shares of common stock from Gonzalez in exchange for the issuance of

20,000 shares of Series H Convertible Preferred Stock of the Company and a Convertible Note in the principal amount of $10,000,000

issued by the Company (the Gopher Convertible Note) as well as additional consideration.

The Gopher Convertible

Note bears interest of 6% per annum and is payable at maturity on December 31, 2021.

At the election of Gonzalez, the Gopher Convertible

Note can be converted into a maximum of 20,000 shares of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible,

at the option of the holder but subject to the Company increasing its authorized shares of common stock, into such number of shares

of common stock of the Company as determined by dividing the Stated Value ($500 per share) by the conversion price ($10.00 per

The Series H Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series

H Preferred Stock shall be entitled to one vote for each share of common stock that the Series H Preferred Stock may be convertible

On July 8, 2019, the Company entered a Consulting Agreement with Glen Eagles Glen Eagles Acquisition LP (Glen)

as consultant to provide services in connection with the Companys acquisition of 25% of GBT-CR.

Consultant will provide

analysis, interaction with related professional and other services as requested by the Company to integrate and expand capabilities

between GBT-CR and the Company.

(See Note 14 for further details.)

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

As of December 31, 2019, there are 20,000 shares

of Series H Preferred Shares outstanding.

The following is a summary of warrant

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

following is a summary of warrant activity.

Outstanding, December 31, 2018

2 unchanged sentences

Exercisable, December 31, 2020

The exercise price for warrant outstanding

and exercisable at December 31, 2019:

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

The fair value of the warrants listed above

was determined using the Black-Scholes option pricing model with the following assumptions:

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

exercise price for warrant outstanding and exercisable at December 31, 2020:

fair value of the warrants listed above was determined using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate

3 unchanged sentences

Expected dividend yield

As a result of the above mentioned reverse

stock split, the Company issued 25,245,000 warrants to purchase shares of the Company’s common stock with exercise prices

ranging from $0.50 to $2.70 per share as a result of an anti-dilutive clause in certain of the Company’s outstanding warrants.

The fair value of these warrants was $120,476,603 which is shown as a charge to earnings on the accompanying financial statements.

During the years ended December 31, 2018, the

Company issued:

10,000 warrants in connection with two convertible notes payable;

5,000 warrants as consideration for the acquisition of the ECS assets (see Note 3) valued at $992,958;

2,500 warrants as consideration for the acquisition of the Electronic Check assets (see Note 3) valued at $682,919;

22,500 warrants to shares to employees and board members as part of their agreements with the Company valued at $5,443,039;

17,500 warrants to a consultant for services rendered.

135,000 warrants in connection with a convertible note issued to investor;

canceled 938 warrants pursuant to the settlement of a legal matter.

Note 13 - Income Taxes

At December 31, 2019 and 2018, the significant components of

the deferred tax assets are summarized below:

a result of the above-mentioned reverse stock split, the Company issued 25,245,000 warrants to purchase shares of the Companys

common stock with exercise prices ranging from $0.50 to $2.70 per share as a result of an anti-dilutive clause in certain of the

Companys outstanding warrants.

The fair value of these warrants was $120,476,603 which is shown as a charge to earnings

on the accompanying financial statements for the year ended December 31, 2019.

December 31, 2020 and 2019, the significant components of the deferred tax assets are summarized below:

Deferred income tax asset

Net operation loss carryforwards

Book to tax differences in intangible assets

Total deferred income tax asset

1 unchanged sentence

Total deferred income tax asset

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

The valuation allowance increased by $1,606,154

in 2019 as a result of the Company generating additional net operating losses.

The valuation allowance increased by $3,414,266

in 2018 of which $4,030,588 was a result of the Company generating additional net operating losses offset by $616,322 as a result

of the change in the corporate tax rate from 34% to 21%.

The Company’s net operating loss carryforward of approximately $25,600,000

begin to expire in 2024.

Income tax expense reflected in the consolidated

statements of income consist of the following for 2019 and 2018:

Income tax expense

The reconciliation of the effective income tax rate to the federal

statutory rate for the years ended December 31, 2019 and 2018 is as follows:

valuation allowance increased by $808,722 and $1,606,154 in 2020 and 2019, respectively, as a result of the Company generating

additional net operating losses.

The Companys net operating loss carryforward of approximately $28,390,000 begin to expire

income tax expense reflected in the consolidated statements of income for the years 2020 and 2019.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

reconciliation of the effective income tax rate to the federal statutory rate for the years ended December 31, 2020 and 2019 is

Federal statutory rates

$ (3,757,564 )

$ (39,166,075 )

State income taxes

(14,920,410 )

Permanent differences

1 unchanged sentence

Effective rate

The Company periodically evaluates the likelihood

of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance

to the extent the future realization of the deferred tax assets is not judged to be more likely than not.

The Company considers

many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings

experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company

for tax reporting purposes, and other relevant factors.

Future changes in the unrecognized tax benefit

will have no impact on the effective tax rate due to the existence of the valuation allowance.

The Company estimates that the unrecognized

tax benefit will not change significantly within the next twelve months.

The Company will continue to classify income tax penalties

and interest as part of general and administrative expense in its consolidated statements of operations.

There were no interest

or penalties accrued as of December 31, 2019 and 2018.

Note 14 - Related Parties

Related parties are natural persons or other

entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the party

in making financial and operating decisions.

Related parties include other parties that are subject to common control or that are

subject to common significant influences.

For the years ended December 31, 2019 and 2018, $180,000 and $180,000, respectively of

the Company’s revenue is from IT services delivered to Guardian Patch LLC (“Guardian LLC”), which was previously

a related party to the Company.

The revenue generated from Guardian LLC was paid to the Company via a reduction in the amount that

the Company owes Guardian LLC or its affiliates that is classified as Due to Guardian LLC in the accompanying consolidated balance

As of December 31, 2019 there are no balances between the Company and Guardian LLC.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

For the years ended December 31, 2019 and 2018,

the Company paid a law firm owned by the Company’s chairman $90,000 and $0, respectively, for legal services.

2019, said chairman Mr.

Robert Yaspan resigned as Director of the Company to pursue other interests.

On April 6, 2018, the Company and Danny Rittman,

Chief Technology Officer and a Director of the Company, agreed to amend his employment agreement pursuant to which he will receive

salary at the rate of $250,000 annually payable in equal increments of $15,000 per month with an additional $70,000 to be paid

within 15 days of the end of the calendar year.

On September 25, 2018, the Company entered

into a Joint Venture Interest Purchase Agreement with Guardian, LLC pursuant to which the Company purchased Guardian LLC’s

50% interest in a joint venture (the “JV Interest”) previously entered between the parties in March 2016 covering the

Guardian Patch, Puzpix and Epsilon.

In consideration for the JV Interest, the Company issued Guardian 125,000 shares of common

During the year ended December 31, 2018, the Company took a charge to earnings of $11,750,000 related to the purchase of

Guardian LLC’s 50% JV Interest.

On September 14, 2018, the Company and Dr.

Rittman entered into a letter agreement confirming that the Company is the owner of all intellectual property developed by Dr.

Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies, including a global platform

with both mobile and fixed solutions, commencing June 16, 2015 and continuing until Dr.

Rittman’s employment agreement is

On September 1, 2017, the Company entered into

and closed an Asset Purchase Agreement with a third party, RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation,

pursuant to which the Company purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible

Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the

deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to

be more likely than not.

The Company considers many factors when assessing the likelihood of future realization of its deferred

tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income

or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

changes in the unrecognized tax benefit will have no impact on the effective tax rate due to the existence of the valuation allowance.

The Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months.

will continue to classify income tax penalties and interest as part of general and administrative expense in its consolidated

statements of operations.

There were no interest or penalties accrued as of December 31, 2020 and 2019.

Related Parties

parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise

significant influence over the party in making financial and operating decisions.

Related parties include other parties that are

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

the year ended December 31, 2020 and 2019, the Company paid a law firm owned by the Companys 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.

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

agreement pursuant to which he will receive salary at the rate of $250,000 annually payable in equal increments of $15,000 per

month with an additional $70,000 to be paid within 15 days of the end of the calendar year.

September 14, 2018, the Company and Dr.

Rittman entered into a letter agreement confirming that the Company is the owner of all

intellectual property developed by Dr.

Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile

technologies, including a global platform with both mobile and fixed solutions, commencing June 16, 2015 and continuing until

Rittmans employment agreement is terminated.

September 1, 2017, the Company entered into and closed an Asset Purchase Agreement with a third party, RWJ Advanced Marketing,

LLC (RWJ), a Georgia corporation, pursuant to which the Company purchased certain assets from RWJ, including inventory,

terminals, licenses and permits and intangible assets.

At closing, the Company and Mr.

Greg Bauer entered into an Employment Agreement pursuant to which Mr.

Bauer was retained

as Chief Executive Officer for a term of one year, subject to an automatic extension, unless terminated, in consideration of a

base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired.

Bauer was also appointed to the

Board of Directors of the Company.

Greg Bauer entered into an Employment Agreement

pursuant to which Mr.

Bauer was retained as Chief Executive Officer for a term of one year, subject to an automatic extension,

unless terminated, in consideration of a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired.

Bauer was also appointed to the Board of Directors of the Company.

As of the closing date, Mr.

Murray resigned as Chief Executive Officer of the Company but will

remain as a director of the Company.

Bauer, since 2004 through present, has served as executive director with W.L.

Petrey Wholesale,

Murray resigned as Chief Executive

Officer of the Company but will remain as a director of the Company.

Bauer, since 2004 through present, has served as executive

director with W.L.

Petrey Wholesale, Inc.

where he was in charge of the UGO/Preway operations.

Bauer holds a Bachelor of Science degree from University of Maryland

College Park.

Bauer is veteran of the United States Navy and was honorably discharged in 1983.

He held the title of United

States Navy Surface Warfare Qualified.

In May 2018, Mr.

Bauer’s resigned as Chief Executive Officer and director of the Company

and entered into a consulting agreement with the Company.

The Company is in litigation in connection with RWJ transaction –

The Company is in litigations in

connection with RWJ transaction –

See Note 15 - Contingencies.

On January 1, 2019, the Company and Douglas

Davis entered into an Amended and Restated Employment Agreement pursuant to which Mr.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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

Davis was retained as Chief Executive Officer.

Davis has served as Interim Chief Executive Officer since July 2018.

Davis served as Interim Chief Executive Officer since July 2018 until his resignation

on April 11, 2020.

The term of Mr.

employment is for two years

through January 1, 2021.

Davis will be entitled to an annual base salary of $250,000, which shall be increased to $400,000

upon the Company uplisting to a national exchange.

Davis is also be entitled to the issuance of Stock Options to acquire an

aggregate of 50,000 shares of common stock of the Company, exercisable for five years, subject to vesting.

The options will be

earned and vested (i) with respect to 20,000 shares of common stock on the date hereof, (ii) 5,000 shares of common stock upon

the successful dual list of the Company on an international exchange such as SIX Zurich Stock Exchange or Euronext, (iii) 15,000

shares of common stock upon the successful up listing to a national exchange such as the Nasdaq, NYSE Euronext, TSX, AMEX or other,

and (iv) with respect to 5,000 shares of common stock at each of the six (6) month anniversaries (July 1, 2019 and January 1, 2020).

The exercise price of such options shall be the closing price of the Company on the date prior to such event.

(See Note 17)

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On October 10, 2019, the Company entered into

a Joint Venture Agreement (the “BitSpeed Agreement”) with BitSpeed LLC, which is owned by Douglas Davis, the Company’s

Chief Executive Officer, to form GBT BitSpeed Corp., a Nevada company (“GBT BitSpeed”).

The purpose of GBT BitSpeed

is to develop, maintain and support its proprietary Extreme Transfer Software Application Concurrency, a software application to

transfer secure, accelerated transmission of large file data over networks, and connection to cloud storage, Network-Attached Storage

(NAS) and Storage Area Networks (SANs) (“Concurrency”).

BitSpeed shall contribute the services and resources for the

development of Concurrency to GBT BitSpeed.

The Company shall contribute 10 million shares of common stock (valued at $17,900,000)

of the Company to GBT BitSpeed.

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

Davis employment was for two years through January 1, 2021.

Davis was entitled to

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,

exercisable for five years, subject to vesting.

The options were to be earned and vested (i) with respect to 20,000 shares of

common stock on the date hereof, (ii) 5,000 shares of common stock upon the successful dual list of the Company on an international

exchange such as SIX Zurich Stock Exchange or Euronext, (iii) 15,000 shares of common stock upon the successful up listing to

a national exchange such as the Nasdaq, NYSE Euronext, TSX, AMEX or other, and (iv) with respect to 5,000 shares of common stock

at each of the six (6) month anniversaries (July 1, 2019 and January 1, 2020).

The exercise price of such options shall be the

closing price of the Company on the date prior to such event.

October 10, 2019, the Company entered into a Joint Venture Agreement (the BitSpeed Agreement) with BitSpeed LLC,

which is owned by Douglas Davis, the Companys Chief Executive Officer, to form GBT BitSpeed Corp., a Nevada company (GBT

The purpose of GBT BitSpeed is to develop, maintain and support its proprietary Extreme Transfer Software Application

Concurrency, a software application to transfer secure, accelerated transmission of large file data over networks, and connection

to cloud storage, Network-Attached Storage (NAS) and Storage Area Networks (SANs) (Concurrency).

BitSpeed shall

contribute the services and resources for the development of Concurrency to GBT BitSpeed.

The Company shall contribute 10 million

shares of common stock (valued at $17,900,000) of the Company to GBT BitSpeed.

BitSpeed and the Company will each own 50% of GBT

The Company shall appoint two directors and BitSpeed shall appoint one director of GBT BitSpeed.

In addition, GBT BitSpeed

Davis entered into a Consulting Agreement in which Mr.

Davis is engaged to provide services in consideration of $10,000

per month payable quarterly which may be paid in shares of common stock calculated by the amount owed divided by the Companys

Davis will provide services in connection with the development of the business as well as GBT BitSpeeds

capital raising efforts.

The term of the Consulting Agreement is two years.

The closing of the BitSpeed Agreement occurred on

October 14, 2019.

On April 11, 2020, Douglas Davis resigned as Chief Executive Officer of the Company so that he may fully devote

all of his efforts to GBT Tokenize Corp., the Companys joint venture, which intends to develop a new product.

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 BitSpeed shall appoint one director of GBT BitSpeed.

In addition, GBT BitSpeed and Mr.

Davis entered into a Consulting Agreement

Davis is engaged to provide services in consideration of $10,000 per month payable quarterly which may be paid in

shares of common stock calculated by the amount owed divided by the Company’s 20-day VWAP.

Davis will provide services

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

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 Companys 10-day VWAP.

Gonzalez will provide services

in connection with the development of the business as well as GBT Tokenizes capital raising efforts.

The term of the Consulting

Agreement is two years.

The closing of the BitSpeed Agreement occurred on October 14, 2019.

Note 15 - Contingencies

Legal Proceedings

From time to time, the Company may be involved

in various litigation matters, which arise in the ordinary course of business.

There is currently no litigation that

management believes will have a material impact on the financial position of the Company.

On 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.

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.

believes that Waterford is in default of its agreement, as it failed to perform or provide any services under the agreement.

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.

On 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.

Company agreed with Waterford to go to binding arbitration, which is currently being scheduled.

On 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.

On October 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.

On 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 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.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On 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 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 –

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”

(the “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.

(See Notes 6, 9 and 17)

Spare CS, Inc.

On 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 to Spare.

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.

GBT Technologies, S.A.

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 an exclusive, royalty-bearing right

and license relating intellectual property relating to systems and methods of converting electronic transmissions into digital

currency as reflected in that certain patent filed with the United Stated Patent and Trademark Office on or about June 14, 2018

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

Via this Joint Venture the parties commenced

development of a development of an intelligent human vital signs device, suggested named qTerm.

The platform is an expansion

of the existing license agreement with GBT Tokenize Corp., which provided GBT Tokenize Corp.

with an exclusive territory of California

to develop certain of the Companys technology.

As the nature of the platform cannot be restricted only to California, the

Companys joint venture GBT Tokenize Corp.

will be compensated with additional two hundred million shares of the Company

to strengthen its funding, subject to board approval.

A provisional patent application for the qTerm Medical Device was filed

on March 30, 2020 with the USPTO.

The application has been assigned serial number 63001564.

The Joint Venture completed successfully

the first prototype.

There is no guarantee that the Company will be successful in researching, developing or implementing this

product into the market.

In order to successfully implement this concept, the Company will need to raise adequate capital to support

its research and, if successfully researched, developed and granted regulatory approval, the Company would need to enter into

a strategic relationship with a third party that has experience in manufacturing, selling and distributing this product.

is no guarantee that the Company will be successful in any or all of these critical steps.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

Contingencies

time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business.

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

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 (See Note 3).

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 (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 noticed certain third parties that it intends to take legal

actions to resolve this issue.

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.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

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 Companys outstanding common stock immediately

after exercise.

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

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 (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).

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 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, 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 $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 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

transmissions into digital currency as reflected in that certain patent filed with the United Stated Patent and Trademark Office

on or about June 14, 2018 (EFS ID:

Application Number:

1 unchanged sentence

Confirmation Number:

6787)(collectively, the

“Digital Currently Technology”).

Pursuant to the GBT License Agreement, the Company granted GBT-CR an exclusive worldwide

license to use the Digital Currency Technology to make, use, sell, lease or otherwise commercialize and dispose of products and

devices utilizing the Digital Currently Technology.

6787)(collectively, the Digital Currently Technology).

Pursuant to the GBT License Agreement, the Company granted

GBT-CR an exclusive worldwide license to use the Digital Currency Technology to make, use, sell, lease or otherwise commercialize

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

Under the terms of the GBT License Agreement,

4 unchanged sentences

$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.

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

Note 16 –

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.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

connection with SURG Exchange Agreement (see Note 4) - 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 1, 2021 (see Note 17).

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.

Concentrations

Concentration of Credit Risk

Financial 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 December 31, 2019.

Note 17 - Subsequent Events

Management has evaluated events that occurred

subsequent to the end of the reporting period shown herein:

On February 18, 2020, the Company entered into

a Securities Purchase Agreement with Power Up Lending Group Ltd., an accredited investor (“Power Up”) pursuant to which

the Company issued to Power Up a Convertible Promissory Note (the “Power Note”) in the aggregate principal amount of

Concentration

of Credit Risk

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 December 31, 2020.

Subsequent Events

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

January 1, 2021 SURG, AltCorp and Stanley entered into a Mutual Release and Settlement Agreement (Settlement Agreement).

Pursuant to the terms of the Settlement Agreement, SURG agreed to amend the AltCorp Exchange Agreement where SURG acknowledged

a debt of $3,300,000 (the Debt) to be paid via 33 monthly payments of $100,000 payable in shares of common stock

of SURG at a per share price equal the volume weighted average price of SURGs common stock during the ten (10) trading

days immediately preceding the issuance.

At the end of the 33rd month, if AltCorp has not realized gross, pre-tax proceeds at

least equal to the amount of the Debt, SURG shall transfer to AltCorp and/or its designee additional shares of SURGs common

stock necessary to satisfy the Debt.

To the date of this report, SURG has made three payments per the settlement agreements.

February 10, 2021, 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.

4) in the aggregate principal amount of $184,200

for a purchase price of $153,500.

The Power Note has a maturity date of May 15, 2021 and the Company has agreed to pay

interest on the unpaid principal balance of the Power Note at the rate of six percent (6%) per annum from the date on which the

Power 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 Power Note, provided it makes a payment including

a prepayment to Power Up as set forth in the Power Note.

The transactions described above closed on February 19, 2020.

The outstanding

principal amount of the Power Note may not be converted prior to the period beginning on the date that is 180 days following the

Following the 180th day, Power Up may convert the Power Note into shares of the Company’s common stock at

a conversion price equal to 85% of the lowest trading price with a 15-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 Power Note), the Power Note

shall become immediately due and payable and the Company shall pay to Power Up, in full satisfaction of its obligations hereunder,

additional amounts as set forth in the Power Note

On February 27, 2020, the Company and Iliad

entered to an Amendment to the Iliad Note 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 the Company at a conversion price equal to 80% multiplied

by the lowest trading daily VWAP for the common stock during the 20 trading day period ending on the latest complete trading day

prior to the conversion date, provided for the payment by the Company to Iliad of an extension fee equal to 7.5% of the outstanding

balance of the Iliad Note resulting in a new balance of the Iliad Note of $2,765,983 and provided that the Company’s failure

to deliver shares of common stock within three trading days of a conversion would result in an event of default.

agreed to restrict its ability to convert the Iliad Note and receive shares of common stock such that the number of shares of common stock

held by it and its affiliates after such conversion or exercise does not exceed 9.99% of the then issued and

outstanding shares of common stock.

The Company entered into a series of loan agreements

with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $1,000,000 in loans (the “Debt”)

since May 2019 up to December 2019.

On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company

and Stanley entered into a letter agreement providing that the Debt may be converted into shares of common stock of the Company

at a conversion price equal to 85% multiplied by the lowest one trading price for the common stock during the 20 trading day period

ending on the latest complete trading day prior to the conversion date.

Stanley has agreed to restrict its ability to convert

the Debt and receive shares of common stock such that the number of shares of common stock held by it and its affiliates

after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.

Stanley Debt is secured via a pledge agreement on the SURG shares.

The Company agreed that Stanley will hold title to the SURG

shares which was completed on or about April 16, 2020 where the 3,333,333 SURG shares been vested under Stanley name.

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

GBT TECHNOLOGIES INC.

(FORMERLY GOPHER PROTOCOL, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2019 and 2018

On 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.

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.

Tokenize shall contribute the services and

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

The Company shall contribute 100,000,000 shares of common

stock of the Company (“GBT Shares”) to GBT Tokenize.

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

Company pledged its 50% ownership in GBT Tokenize and its 100% ownership of Greenwich to Tokenize to secure its Technology Portfolio

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.

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.

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.

District Court of the Virgin Islands (Case

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 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 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 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.

On April 11, 2020, Douglas Davis resigned as

Chief Executive Officer of the Company so that he may fully devote all of his efforts to GBT Tokenize Corp., the Company’s

joint venture, which intends to develop a new product.

resignation was not the result of any disagreements with

management or board of directors of the Company.

The 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.

FINRA has not yet declared an effective date for the Reverse Stock Split.

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.

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

have not been be retroactively restated to reflect this reverse stock split.

On April 13, 2020, the Company’s Board

of Directors appointed Mansour Khatib, who has served as the Chief Marketing Officer and a director of the Company as Chief Executive

Khatib has also previously served as Interim Chief Executive Officer from May 2018 to July 2018.

The Redstart Note No.

4 has a maturity date of February 5, 2022 and the Company has agreed to

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

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

on which the Redstart Note No.

4 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.

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

The transactions described above

closed on February 10, 2021.

The outstanding principal amount of the Redstart Note No.

4 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.

4 into shares of the Companys 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.

4), the Redstart Note No.

4 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.

March 15, 2021, 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.

5) in the aggregate principal amount of $106,200 for

a purchase price of $88,500.

The Redstart Note No.

5 has a maturity date of June 15, 2022 and the Company has agreed to pay interest

on the unpaid principal balance of the Redstart Note No.

5 at the rate of six percent (6%) per annum from the date on which the

Redstart Note No.

5 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.

5, provided it makes

a payment including a prepayment to Redstart as set forth in the Redstart Note No.

The transactions described above closed

on March 17, 2021.

The outstanding principal amount of the Redstart Note No.

5 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

5 into shares of the Companys 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.

5), the Redstart Note No.

5 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.

GBT TECHNOLOGIES

TO CONSOLIDATED FINANCIAL STATEMENTS

the Years Ended December 31, 2020 and 2019

January 19, 2021 the Company entered into consulting agreements with two third-party consultants.

The executive officers of the

Company conducted an extensive search and has explored all possible avenues of financing and in order to fully-implement its business

plan it has determined that for its best interest to engage two outside consultants to identify investors as an accredited investor,

under Section 4(a)(2) of the Securities Act of 1933, as amended (the Private Offering) is in the best interest of

The terms of the agreements are for one consultant a 12,000,000 Company one-time new shares issuance and $1,000 cash

monthly payment, and to the second consultant 250,000 Company one-time new shares issuance, along with additional 30,000 new issuance

per quarter, and $500 cash monthly payment.

The company issued to the consultants the 12,250,000 restricted stock on February

February 28, 2021 the Company and Iliad entered into agreement to further extend the maturity of the Iliad Note until May 31,

2021 in consideration of an extension fee of $1,000 representing the third extension of the original note.

to December 31, 2020, the Company issued 224,185,847 shares of common stock in exchange for $3,116,668 of convertible notes payable

and $6,180 of accrued interest.

Included in these amounts are the conversions of the Redstart Note No.

1 and Redstart Note No.

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 9A. Controls and Procedures