GBT Technologies Inc. 10-K/A

ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain a system of disclosure controls and procedures (as defined in Securities Exchange Act Rule 15d-15I) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive and Financial Officer) to allow for timely decisions regarding required disclosure. As required by SEC Rule 15d-15(b), our Chief Executive Officer (Principal Executive and Financial Officer), carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our management concluded that our disclosure controls and procedures are not effective in timely alerting management to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive and Financial Officer) to allow timely decisions regarding required disclosure. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management, consisting of our Chief Executive Officer (Principal Executive and Financial Officer), is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f), is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of our assets that could have a material effect on the financial statements. 59 Because of its inherent limitations, ICFR reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management assessed the effectiveness of our ICFR reporting as of December 31, 2022. Based on this assessment, management believes that as of December 31, 2022, our ICFR reporting is not effective based on those criteria. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC to provide only management’s report in this annual report. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes during our last fiscal year that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Not applicable Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Executive Officers and Directors Below are the names and certain information regarding the company’s executive officers and directors. Current Directors/Officers: Name Age Title Dr. Danny Rittman 60 Chief Technology Officer and Director Mansour Khatib 60 Chief Executive Officer, Chief Financial Officer and Director 60 Dr. Danny Rittman is a veteran software architect and integrated circuit technology expert with over 20 years of experience in the technology sector. From 2014 through the present, Dr. Rittman served as the CTO and as a director of the Company, leading the Company’s technological direction and managing teams of mobile software developers. From 2012, through 2014, Dr. Rittman served as a Senior Integrated Circuit Consultant for Qualcomm / Max Linear, managing teams of integrated circuit designers within the mobile technology arena. From 2007 through 2012, Dr. 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. From 2002 through 2007, Dr. Rittman served as an Integrated Circuit CAD / Software Senior Consultant for IBM, managing IC back-end projects and leading back-end CAD and QA software tool development and implementation. From 1995 through 2002, Dr. Rittman served as the Founder and VP of R&D for Bind-key Technologies, leading the company’s technological direction, research and development of EDA software tools for integrated circuits and back-end design. Dr. Rittman received a BS in Electrical Engineeri–g - VLSI Design from the University of Bridgeport, graduating Magna Cum Laude in 1992; a MS in Computer Scien–e - VLSI Design, specializing in Automation Algorithms, from La Salle University, graduating Magna Cum Laude in 1996; and a PhD in Computer Scien–e - VLSI Design, specializing in EDA Concepts and Algorithms, from La Salle University, graduating Summa Cum Laude in 1998. Mr. Rittman is the Company’s CTO and director. Mansour Khatib was appointed as the Company Chief Executive and Financial Officer on April 13, 2020, the Company’s Board of Directors appointed Mansour Khatib, who served as the Chief Marketing Officer and a director of the Company as Chief Executive Officer. Mr. 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, Mr. Khatib has served as a U.S. Business and Marketing Sales Representative for KB Racking, located in Toronto, Canada. From May 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. Mr. Khatib received B.A. 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. Mr. Khatib is the Company’s CEO and director. Family Relationships There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer. None of our directors or executive officers have had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000. 61 Involvement in Certain Legal Proceedings To our knowledge, during the last ten years, none of our directors and executive officers has: ● Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. ● Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. ● Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. ● Been 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. ● Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Corporate governance On 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. Currently, there are no members on each of the committees and the board of directors has assumed the roles of each of the committees. Agreements with Officers and Directors On June 30, 2015, the Company appointed Dr. Danny Rittman as Chief Technical Officer and a board member. 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. 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. On August 1, 2021, 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 $5,000 per month. On April 16, 2016 (the “Effective Date”), Mansour Khatib and the Company entered into an Employment Agreement (the “Agreement”) pursuant to which Mr. Mansour Khatib agreed to serve as the Chief Marketing Officer of the Company. Mr. Mansour Khatib was also appointed as a director of the Company on the Effective Date. Pursuant to the terms of the Employment Agreement, Mr. Khatib will receive an annual salary of $100,000 upon the Company generating $1,000,000 in revenue during any three (3) month period. There is no understanding or arrangement between Mr. Khatib and any other person pursuant to which he was appointed as an executive officer and director. Mr. Khatib does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Khatib has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant, exceeding $120,000. 62 Effective August 15, 2016, the Employment Agreement of Mansour Khatib, our CMO, was amended and restated as follows: Upon 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. On August 1, 2021, the Company amend his employment agreement pursuant to which he will receive salary at the rate of $5,000 per month. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s executive officers, directors, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such officers, directors, and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC. To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2022 filed with the SEC, all required Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2022. Code of Ethics We have adopted a Code of Ethics that applies to all officers, directors and employees. The Company will provide to any person without charge a copy of such code of ethics upon written request to the Company at its registered offices. 63 ITEM 11. EXECUTIVE COMPENSATION The following tables set forth all compensation paid to our officers for the years ended December 31, 2022 and 2021. Summary Compensation Table Non-Equity Non-Qualified Incentive Deferred Name and principal Stock Option Plan Compensation All Other Position Year Salary Bonus Awards Awards Compensation Earnings Compensation Total Michael Murray 2021 $ — $ — $ — $ — $ — $ — $ 5,000 $ 5,000 Former President and director(1) 2022 $ — $ — $ — $ — $ — $ — $ — $ — Danny Rittman 2021 $ 25,000 $ — $ — $ — $ — $ — $ 149,000 $ 174,000 Chief Technology Officer and director 2022 $ 60,000 $ — $ — $ — $ — $ — $ 3,671 $ 63,671 Mansour Khatib 2021 $ 25,000 $ — $ — $ — $ — $ — $ 140,000 $ 165,000 Chief Executive Officer and director 2022 $ 60,000 $ — $ — $ — $ — $ — $ 140,000 $ 200,000 (1) On June 17, 2022 Michael Murry Michael Murray resigned as the President and Director of the Company so that he may fully devote all of his efforts to GBT Tokenize Corp. and Metaverse Kit Corp. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer. There are no other stock option plans, retirement, pension, or profit-sharing plans for the benefit of our sole officer and director other than as described herein. Director Compensation During the years ended December 31, 2022 and 2021, there were 2 non-employee directors. Outstanding Equity Awards at Fiscal Year-End As of December 31, 2022, no new warrants was awarded to the executives. 64 ITEM 12. 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 March 31, 2023 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; (iii) each 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. Common Percentage Stock of Beneficially Common Name of Beneficial Owner Owned (1) Stock (1) Dr. Danny Rittman (2) 1,980 0.00 % Mansour Khatib (2) — 0.00 % Metaverse Kit Corp (3) 500,000,000 17.06 % GBT Tokenize Corp (4) 166,000,000 5.67 % All Officers and Directors as a Group 83,360 0.0 % (1) Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. 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 table. The above is based on 2,930,101,819 shares of common stock outstanding as of March 31, 2023 (2) Current Officer and Director of the Company. (3) Metaverse Kit Corp is a 50/50 Joint venture between the Company and ldar Gainulin and Maria Belova. which was assigned on June 10, 2022 to ldar Gainulin and Maria Belova. The company contributed 500,000,000 share of the common stock to Metaverse Kit. (4) GBT Tokenize Corp is a 50/50 Joint venture between the Company and Tokenize-It S.A. which was assigned on June 30, 2021 to Magic International Argentina F.C, S.L. Controlled by Sergio Fridman, a third party GBT Tokenize Corp hold 16,000,000 shares of the Company’s common stock. On April 11, 2022 the company, through its own subsidiary, Greenwich International Holdings, entered into a Master Joint Venture and Territorial License Agreement (the “Tokenize Agreement”) with Magic Internacional Argentina FC, S.L. (“Magic”) and Tokenize which replaced a prior joint venture entered between the parties , Controlled by Sergio Fridman, a third party GBT Tokenize Corp to hold an additional 150,000,000 shares of the Company’s common stock No Director, executive officer, affiliate or any owner of record or beneficial owner of more than 5% of any class of voting securities of the Company is a party adversary to the Company or has a material interest adverse to the Company. On June 10, 2022, (the Company, entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming, communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell, market and distribute the Meta Portfolio throughout the world. The Company was required to contribute 500,000,000 shares of common stock of the Company (“GBT Shares”) to Metaverse Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company issued 500,000,000 shares to Metaverse for certain equity method investment. The value of the shares of $5,000 was determined based on the FV of the Company’s common stock. The Company pledged its 50% ownership in Metaverse Kit to Igor 1 Corp. to secure a convertible note held by Igor 1 Corp. The Company was to appoint two directors and Licensor was allowed to appoint one director of Metaverse Kit. In addition, Metaverse Kit, Licensor and Elentina Group, LLC (“Elentina”) entered into a Consulting Agreements in which IGBM and Elentina, each were engaged to provide services for $25,000 per month payable quarterly which Metaverse Kit has the option to pay in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP. Licensor and Elentina were to provide services in connection with the development of the business as well as Metaverse Kit’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the Metaverse Agreement occurred on June 13, 2022. On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. Licensor agreed to pay $5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit. 65 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 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. 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 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, for a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired. Mr. 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. Mr. 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. On 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. Mr. Davis served as Interim Chief Executive Officer since July 2018 until his resignation on April 11, 2020. The term of Mr. Davis’ employment was for two years through January 1, 2021. Mr. 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. Mr. Davis was also entitled to the issuance of Stock Options to acquire 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 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. 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. 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 in which Mr. Davis is engaged to provide services for $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. Mr. 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. Mr. Davis’ resignation was not the result of any disagreements with management or board of directors of the Company. 66 On 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 of $10,000,000 and is also a shareholder of the Company. Under the Tokenize Agreement, the parties formed GBT Tokenize. The purpose 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 for $33,333 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. There is no guarantee that the Company will be successful in any or all of these critical steps. As explained above, on April 11, 2022 the Company, through its wholly owned subsidiary, Greenwich International Holdings, a Costa Rica corporation (“Greenwich”), entered into a Master Joint Venture and Territorial License Agreement (the “Tokenize Agreement”) with Magic International Argentina FC, S.L. (“Magic”) and Tokenize which replaced a prior joint venture entered between the parties. The purpose of 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 world, which Technology Portfolio was previously licensed to the Company for the State of California. The Tokenize Agreement provides that the Company shall contribute 150,000,000 shares of common stock of the Company (“GBT Shares”) to Tokenize. Sergio Fridman is the manager of Magic and the beneficial owner of all outstanding securities of Magic. Magic will contribute cash of $250,000 into Tokenize for promissory note and agreed to further fund Tokenize with all funds reasonably needed for implementation of the business purposes as described in the Tokenize Agreement. The GBT Shares will not be transferable for five years. As of June 30, 2022, the Company received the $250,000 fund from Magic but the promissory note agreement has not been finalized yet. Therefore, the Company recorded the $250,000 funds as an account payable. Magic and the Company each own 50% of the outstanding shares of common stock of Tokenize. The Company pledged its 50% ownership in Tokenize and its 100% ownership of Greenwich (the “Pledged Securities”) to Magic for providing that Magic may take possession of such Pledged Securities in the event the Company executes, delivers and performs any future agreement or document or judgement resulting in the creation of any lien, pledge, mortgage, claim, charge or encumbrance upon any assets of the Company. The Company shall appoint two directors and Magic shall appoint one director of Tokenize. On June 16, 2022 the parties amended the Tokenize Agreement to further define the constitution of the Board of Directors. As such, Section 4.2 of the Tokenize Agreement was amended and restated to provide that the Board of GBT Tokenize Corp. shall consist of two Directors, one of whom shall be appointed by GBT Tokenize Corp. and the other shall be appointed by the Company. 67 As of December, 31, 2022 and December 31, 2021, the Company owed $505,000 and $475,000 to Yello Partners, Inc., a Company owned by the Mansour Khatib, the Company’s CEO. Stanley Hills LLC Accounts Payable – Related Party On March 8, 2020, SURG filed a lawsuit against its transfer agent, Vstock from transferring millions of SURG stock is currently in possession by the Company and assigned to Stanley Hills, LLC. On January 1, 2021, SURG, AltCorp and Stanley Hills, LLC (“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 in 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 Surg’s common stock during the ten trading days immediately preceding the issuance. SURG paid $400,000 in cash and $800,000 by shares. The SURG common stock issued to Altcorp have been pledged since August 12, 2020 for the benefit of Stanley to secure Stanley’s note payable by the Company. Accordingly, the SURG Common Stock issued to AltCorp as a result of the Settlement Agreement were pledged to Stanley. As of December 31, 2021 there were no surge shares pledges after the final settlement signed on December 22, 2021 and that replaced all prior settlement agreement. The final settlement SURG agreed to make total payments of $4,200,000 to the Company on or prior to January 7, 2022. This $4.2 million amount consists of $450,000 paid by SURG in November and December 2021, $100,000 to be paid on or about January 4, 2022, and $3,650,000 to be paid on or prior to January 7, 2022 of which $375,000 will be held in escrow as described before. The $3,750,000 was recorded as other receivable as of December 31, 2021. As of December, 31, 2022 and December 31, 2021, the Company recorded an outstanding payable to Stanley of $927,136 and $660,735, respectively, recorded under accrued expenses. Sales to related party for the year ended December 31, 2022 and 2021 were $45,000 and $180,000. Sales are derived from providing IT consulting services to Stanley Hills, a related party. The Company did not provide IT services to Stanley after the quarter ended June 30, 2022. Advanced from Related Party During the year ended December 31, 2022, Mansour Khatib, the Company’s CEO advanced $22,658 cash to the Company for business purposes to fund the e-commerce operations. During the year ended December 31, 2022, the Company repaid $18,384 cash to Mansour Khatib. As of December, 31, 2022 and December 31, 2021, the Company has recorded a due from related party of $0 and $30,049, respectively. As of December, 31, 2022 and December 31, 2021, the Company has recorded a due to related party of $62,003 and $0, respectively. Metaverse Agreement On June 10, 2022, the Company, entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming, communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell, market and distribute the Meta Portfolio throughout the world. The Company was required to contribute 500,000,000 shares of common stock of the Company (“GBT Shares”) to Metaverse Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company pledged its 50% ownership in Metaverse Kit to Igor 1 Corp. to secure a convertible note held by Igor 1 Corp. The Company was to appoint two directors and Licensor was allowed to appoint one director of Metaverse Kit. In addition, Metaverse Kit, Licensor and Elentina Group, LLC (“Elentina”) entered into a Consulting Agreements in which IGBM and Elentina, each were engaged to provide services for $25,000 per month payable quarterly which Metaverse Kit has the option to pay in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP. Licensor and Elentina were to provide services in connection with the development of the business as well as Metaverse Kit’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the Metaverse Agreement occurred on June 13, 2022. 68 On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. Licensor agreed to pay $5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit. On May 19, 2021, the Company entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT convertible note maturity date to December 31, 2022, (ii) amend the GBT convertible note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT convertible note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT convertible note by Gonzalez to a third party. As a result of the change in terms of this convertible note, the Company took a charge related to the modification of debt of $13,777,480 during the year ended December 31, 2021. During the year ended December 31, 2021, IGOR 1 converted $1,284,600 of the convertible note into 4,185,650 shares of the Company’s common stock. On June 24, 2021, the Company transferred 5,500,000 SURG shares received as repayment of $660,000 of this convertible note (See Note 10). During the year ended December 31, 2022, IGOR 1 converted $1,659,869 of the convertible note into 590,117,647 shares of the Company’s common stock. On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party, for $140,000. The note accrues interest at 10%, is unsecured and was due on September 30, 2021. On June 20, 2021 Alpha and the Company extended the note maturity to December 31, 2021. On March 30, 2022 Alpha and the Company extended the note maturity to December 31, 2022. The balance of the note at December 31, 2022 and 2021 was $140,000 and $140,000 plus accrued interest of $32,633 and $16,633, respectively. On February 9, 2022 the Board approved the employment of Ms. Rittman the spouse of Mr. Rittman, as an assistant to be paid $1,500 per month. Mr. Rittman recuse himself from voting on the matter due to a conflict. Procedures for Approval of Related Party Transactions Our 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. Director Independence The Company has no outside directors as of December 31, 2022. 69 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table shows the fees that were billed for the audit and other services provided by Madhava Rao and BF Borgers CPA PC for the years ended December 31, 2022 and 2021. Years Ended December 31, 2022 2021 Audit Fees $ 84,161 $ 94,636 Audit-Related Fees — — Tax Fees — — All Other Fees — — Total $ 84,161 $ 94,636 Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements. Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC, other accounting consulting and other audit services. Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. All Other Fees - This category consists of fees for other miscellaneous items. Board of Directors Pre-Approval Process, Policies and Procedures All audit and permissible non-audit services provided by our independent registered public accounting firm must be pre-approved. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of service. The independent registered public accounting firm and management periodically report to the board of directors regarding the extent of services provided by the independent registered public accounting firm. Consistent with the board of directors’ policy, all audit and permissible non-audit services provided by our independent registered public accounting firm were pre-approved by our board of directors. 70 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES No. Description 3.1 Certificate of Incorporation of Forex International Trading Corp. (1) 3.2 Bylaws of Forex International Trading Corp. (1) 3.3 Certificate of Designation for Series A Preferred Stock (2) 3.4 Certificate of Designation for Series B Preferred Stock (3) 3.5 Certificate of Designation – Series C Preferred Stock (4) 3.6 Amendment to the Certificate of Designation for the Series B Preferred Stock (5) 3.7 Amendment to the Certificate of Designation for the Series C Preferred Stock(5) 3.8 Certificate of Change filed pursuant to NRS 78.209 (6) 3.9 Articles of Merger filed pursuant to NRS 92.A.200 (6) 3.10 Certificate of Amendment to the Articles of Incorporation of Gopher Protocol Inc. (8) 3.11 Certificate of Change dated July 10, 2019 (23) 3.12 Articles of Merger by and between Gopher Protocol Inc. and GBT Technologies Inc. dated July 10, 2019(23) 3.13 Certificate of Correction to the Certificate of Change (24) 3.14 Certificate of Correction to the Articles of Merger by and between Gopher Protocol Inc. and GBT Technologies Inc. dated July 10, 2019 (24) 3.15 Certificate of Amendment to the Articles of Incorporation of GBT Technologies Inc. dated September 23, 2019(26) 3.16 Certificate of Designation for Series B Preferred Stock (7) 3.17 Certificate of Designation of the Preferences, Rights and Limitations of the Series G Convertible Preferred Stock (15) 3.18 Series H Convertible Preferred Stock Certificate of Designation (21) 4.1 Form of Warrant issued to Robert Warren Jackson, Gregory Bauer, Michael Murray and Guardian Patch, LLC dated September 1, 2017 (14) 4.2 Balloon Note payable by Gopher Protocol Inc. to RWJ Advanced Marketing, LLC dated September 1, 2017 (14) 4.3 Form of Warrant issued to Derron Winfrey, Dennis Winfrey, Mark Garner and JIL Venture dated March 1, 2018 (16) 4.4 Note payable by Gopher Protocol Inc. to ECS, LLC dated March 1, 2018 (16) 4.5 Stock Option issued to Kevin Pickard dated April 16, 2018 (17) 4.6 Stock Option issued to Muhammad Khilji dated April 25, 2018 (18) 4.7 6% Convertible Note payable to Pablo Gonzalez dated June 17, 2019 (21) 4.8 Convertible Note payable to Glen Eagles Acquisition LP (22) 4.9 Amendment to Common Stock Purchase Warrant between Gopher Protocol Inc. and Glen Eagles Acquisition LP (22) 4.10 Second Amendment to Promissory Note between GBT Technologies Inc. and Ilaid Research and Trading LP dated July 20, 2020 (29) 4.11 Convertible Promissory Note August 4, 2020 issued to Redstart Holdings Corp. (30) 4.12 Fourth Amendment to Promissory Note between GBT Technologies Inc. and Iliad Research and Trading, L.P. dated May 14, 2020 – Executed May 19, 2021(31) 4.13 Convertible Promissory Note May 26, 2021 issued to Redstart Holdings Corp. – Executed on May 27, 2021 (32) 4.14 Fifth Amendment to Promissory Note between GBT Technologies Inc. and Iliad Research and Trading LP dated August 19, 2021 executed August 20, 2021 (33) 4.15 Convertible Promissory Note September 21, 2021 issued to Redstart Holdings Corp. – Executed on September 24, 2021, and Funded on September 28, 2021 (34) 4.16 Amended Loan Authorization and Agreement between GBT Technologies Inc. and U.S. Small Business Administration dated October 1, 2021 (35) 4.17 Convertible Promissory Note dated November 8, 2021 issued to Sixth Street Lending LLC (36) 4.18 Description of Securities 71 10.1 Territorial License Agreement dated March 4, 2015, by and between Gopher Protocol Inc. and Hermes Roll LLC (7) 10.2 Amended and Restated Territorial License Agreement dated June 16, 2015 by and between Gopher Protocol Inc. and Hermes Roll LLC (9) 10.3 Letter Agreement dated August 20, 2015 by and between Gopher Protocol Inc. and Dr. Danny Rittman (10) 10.4 Letter Agreement dated March 14, 2016 by and between Gopher Protocol Inc. and Dr. Danny Rittman. (11) 10.5 Amended and Restated Employment Agreement by and between Gopher Protocol Inc. and Dr. Danny Rittman dated April 19, 2016 (12) 10.6 Letter Agreement between the Company and Danny Rittman dated June 29, 2017 (13) 10.7 Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 (14) 10.8 Addendum to Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 (14) 10.9 Employment Agreement between Gopher Protocol Inc. and Gregory Bauer dated September 1, 2017 (14) 10.10 Asset Purchase Agreement between Gopher Protocol Inc. and ECS Prepaid LLC dated March 1, 2018 (16) 10.11 Employment Agreement between Gopher Protocol Inc. and Derron Winfrey dated March 1, 2018(16) 10.12 Employment Agreement between Gopher Protocol Inc. and Mark Garner dated March 1, 2018(16) 10.13 Agreement between Gopher Protocol Inc. and Mobiquity Technologies, Inc. dated September 4, 2018 (19) 10.14 Exclusive Intellectual Property License and Royalty Agreement between Gopher Protocol Inc. and GBT Technologies, S.A. dated September 14, 2018 (20) 10.15 Letter Agreement between Gopher Protocol Inc. and Dr. Danny Rittman dated September 14, 2018 (20) 10.16 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 (21) 10.17 Consulting Agreement entered into between Gopher Protocol Inc. and Glen Eagles Acquisition LP (22) 10.18 Letter Agreement between Mobiquity Technologies, Inc. and GBT Technologies Inc. executed August 2, 2019 Delivered August 6, 2019 (39) 10.19 Stock Purchase Agreement between Mobiquity Technologies, Inc. and GBT Technologies Inc. Dated September 10, 2019 (25) 10.20 Stock Purchase Agreement between Marital Trust GST Subject U/W/O Leopold Salkind and GBT Technologies Inc. dated September 10, 2019 (25) 10.21 Letter Agreement between GBT Technologies Inc. and Stanley Hills LLC dated February 26, 2020 (27) 10.22 Amendment to Promissory Note between GBT Technologies Inc. and Iliad Research and Trading, L.P. dated February 27, 2020 (27) 10.23 Order dated February 27, 2020 issued by the United States District Court District of Nevada (27) 10.24 Joint Venture and Territorial License Agreement by and between GBT Technologies Inc. and Tokenize-It S.A. dated March 6, 2020 (28) 10.25 Consulting Agreement by and between Pablo Gonzalez and GBT Tokenize Corp. dated March 6, 2020 (28) 10.26 Pledge Agreement by and between GBT Tokenize Corp. and Tokenize-It S.A., dated March 6, 2020 (28) 10.27 Securities Purchase Agreement dated August 4, 2020 between GBT Technologies Inc. and Redstart Holdings Corp. (30) 10.28 Securities Purchase Agreement dated November 8, 2021 between GBT Technologies Inc. and Sixth Street Lending LLC (36) 10.29 Equity Financing Agreement between GBT Technologies Inc. and GHS Investments LLC dated December 17, 2021 (37) 10.30 Registration Rights Agreement between GBT Technologies Inc. and GHS Investments LLC dated December 17, 2021 (37) 10.31 Resolution of Purchase, Mutual Release and Settlement Agreement by and among GBT Technologies Inc. and Parties Listed Therein December 22, 2021(38) 10.33 Finders Fee Agreement between JH Darbie & Co. and GBT Technologies Inc. dated October 14, 2021 (39) 31.1 Certification of Chief Executive Officer (Principal Executive and 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. 32.1 Certification of Chief Executive Officer (Principal Executive and Financial Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 72 (1) Incorporated by reference to the Form S-1 Registration Statement filed with the SEC on September 9, 2009. (2) Incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 6, 2011 (3) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on May 14, 2012 (4) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 27, 2012. (5) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 20, 2012. (6) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on February 18, 2015 (7) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 12, 2015 (8) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 1, 2015 (9) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on June 16, 2015 (10) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 21, 2015 (11) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2016 (12) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2016 (13) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 30, 2017 (14) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 7, 2017 (15) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 3, 2018 (16) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 21, 2018 (17) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 18, 2018 (18) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 26, 2018. (19) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 9, 2018. (20) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 18, 2018. (21) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on June 19, 2019. (22) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on July 12, 2019. (23) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on July 15, 2019. (24) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 5, 2019. (39) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 7, 2019. (25) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 16, 2019. (26) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 25, 2019. (27) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 2, 2020. (28) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 11, 2020. (29) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 24, 2020. (30) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 10, 2020. (31) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 21, 2021. (32) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on June 1, 2021. (33) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 23, 2021. (34) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 29, 2021. (35) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 6, 2021. (36) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on November 11, 2021 (37) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 20, 2021 (38) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 28, 2021 (39) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities and Exchange Commission on January 12, 2022 Item 16. Form 10-K Summary. None 73 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GBT TECHNOLOGIES INC. Dated: April 14, 2023 By: /s/ Mansour Khatib Name: Mansour Khatib Title: Chief Executive and Financial Officer (Principal Executive, Financial and Accounting Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated. Signature Title Date /s/ Mansour Khatib Chief Executive & financial Officer & Director April 14, 2023 Mansour Khatib (Principal Executive, Financial and Accounting Officer) /s/ Dr. Danny Rittman Chief Technology Officer and Director April 14, 2023 Dr. Danny Rittman 74 GBT TECHNOLOGIES INC. Consolidated Financial Statements Contents Page Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID: 6662 ) F-2 Report of Independent Registered Public Accounting Firm for Prior Year Ended December 31, 2021(PCAOB ID: 5041 ) F-3 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-5 Consolidated Statement of Stockholders’ Deficit for the Years Ended December 31, 2022 and 2021 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-7 Notes to Consolidated Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of GBT Technologies, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of GBT Technologies, Inc. the "Company") as of December 31, 2022, the related statement of operations, stockholders' equity (deficit), and cash flows for the year 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, 2022, 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. 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 has accumulated deficit of $ 299,257,917 as of December 31, 2022 and has incurred recurring operating losses. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Completeness of litigation and claims accruals As disclosed in Note 17 to the consolidated financial statements, the Company is involved in various legal proceedings. The Company assesses the need to make a provision or to disclose a contingent liability on a case-by-case basis considering the underlying facts of each litigation. The eventual outcome of the litigations is uncertain and estimation at the balance sheet date involves extensive judgement of management including input from legal counsel due to the complexity of each litigation. Adverse outcomes could significantly impact the Company’s reported operations and balance sheet position. Considering the judgement involved in determining the need to make a provision or disclose litigation, the matter is considered a Critical Audit Matter. Our audit procedures included, among others, obtaining a list of litigation Company’s management and legal counsel, identifying material litigations from the aforementioned list and performing inquiries with the said counsel, obtaining and reading the underlying documents to assess the assumptions used by management in arriving at the conclusions; circulating, obtaining, and reading legal confirmations from the Company’s external legal counsels in respect of material litigations and considered that in our assessment; and verifying the disclosures related to provisions and contingent liabilities in the financial statements to assess consistency with underlying documents. Revenue recognition As described in Note 3 to the consolidated financial statements, management applies FASB Topic 606, Revenue from Contacts with Customers (“ASC 606”) to recognize revenue. Management recognizes revenue in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration. The Company’s revenue includes resale of purchased products through Amazon and also through IT services. The principal considerations for our determination that performing procedures over the full completion of revenue contracts and subsequent payment collections is a critical audit matter. This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the contractual terms, the timing of revenue recognition and the subsequent collections were appropriately identified and accounted for by management under ASC 606. Our audit procedures included, among others, understanding of controls relating to management’s revenue recognition process, examining transaction related documents, confirming revenues and outstanding receivables at the balance sheet date with a sample of the customers. M.S. Madhava Rao April 14, 2023 India Served as Auditor since 2022 F- 2 Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of GBT Technologies, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of GBT Technologies, Inc. the "Company") as of December 31, 2021 and 2020, 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, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States. 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. 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 our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Completeness of litigation and claims accruals As disclosed in Note 16 to the consolidated financial statements, the Company is involved in various legal proceedings. The Company assesses the need to make a provision or to disclose a contingent liability on a case-by-case basis considering the underlying facts of each litigation. The eventual outcome of the litigations is uncertain and estimation at the balance sheet date involves extensive judgement of management including input from legal counsel due to the complexity of each litigation. Adverse outcomes could significantly impact the Company’s reported operations and balance sheet position. Considering the judgement involved in determining the need to make a provision or disclose litigation, the matter is considered a Critical Audit Matter. Our audit procedures included, among others, obtaining a list of litigation Company’s management and legal counsel, identifying material litigations from the aforementioned list and performing inquiries with the said counsel, obtaining and reading the underlying documents to assess the assumptions used by management in arriving at the conclusions; circulating, obtaining, and reading legal confirmations from the Company’s external legal counsels in respect of material litigations and considered that in our assessment; and verifying the disclosures related to provisions and contingent liabilities in the financial statements to assess consistency with underlying documents. Revenue recognition in relation to fraud As described in Note 2 to the consolidated financial statements, management applies FASB Topic 606, Revenue from Contacts with Customers (“ASC 606”) to recognize revenue. Management recognizes revenue in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration. The Company’s revenue, inclusive of related party revenue, is IT services revenue recorded on a monthly basis as services are provided. The principal considerations for our determination that performing procedures over the full completion of revenue contracts and subsequent payment collections is a critical audit matter. This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the contractual terms, the timing of revenue recognition and the subsequent collections were appropriately identified and accounted for by management under ASC 606. Our audit procedures included, among others, understanding of controls relating to management’s revenue recognition process, examining transaction related documents, confirming revenues and outstanding receivables at the balance sheet date with a sample of the customers, and testing collections subsequent to the balance sheet date. /s/ BF Borgers CPA PC BF Borgers CPA PC Served as Auditor since 2017 Lakewood, CO March 25, 2022 F- 3 GBT TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31, December 31, 2022 2021 Current Assets: Cash $ 106,639 $ 155,106 Cash held in trust — 112,942 Marketable equity security — — Accounts Receivable 25,244 — Inventory 11,569 — Prepaid 12,500 — Note Receivable 198,475 — Inventory in Transit — — Investment 16,198 — Other receivable — 3,750,000 Total current assets 370,625 4,018,048 Total assets $ 370,625 $ 4,018,048 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities: Accounts payable and accrued expenses (including related parties of $ 1,539,802 and $ 2,302,928 ) $ 6,240,634 $ 6,896,263 Accrued settlement 4,090,057 4,090,057 Unearned revenue 48,921 249,384 Contract liabilities 41,444 — Convertible notes payable, current, net of discount of $ 190,464 and $ 362,004 6,397,727 8,109,436 Convertible notes payable, related party, net of discount of $ 0 and $ 0 116,605 116,605 Notes payable, current, net of discount of $ 0 and $ 47,671 41,137 2,612,397 Notes payable, current, related party 140,000 140,000 Due to related party 62,003 - Derivative liability 1,714,143 10,192,485 Total current liabilities 18,892,671 32,406,629 Convertible note payable, noncurrent, net of discount of $ 88,403 and $ 0 — 35,797 Note payable, noncurrent 308,863 337,603 Total liabilities 19,201,534 32,780,029 Contingencies (Note 18) — — Stockholders’ Deficit: Series B Preferred stock, $ 0.00001 par value; 20,000,000 shares authorized; 45,000 and 45,000 shares issued respectively — — Series C Preferred stock, $ 0.00001 par value; 10,000 shares authorized; 700 and 700 shares issued and outstanding respectively — — Series D Preferred stock, $ 0.00001 par value; 100,000 shares authorized; 0 and 0 shares issued and outstanding respectively — — Series G Preferred stock, $ 0.00001 par value; 2,000,000 shares authorized; 0 and 0 shares issued and outstanding respectively — — Series H Preferred stock, $ 0.00001 par value ($500 stated value); 40,000 shares authorized; 20,000 and 20,000 shares issued and outstanding respectively — — Common stock, $ 0.00001 par value; 10,000,000,000 shares authorized; 1,535,593,440 and 33,200,198 shares issued and outstanding respectively 15,356 332 Treasury stock, at cost; 21 shares respectively ( 643,059 ) ( 643,059 ) Stock loan receivable ( 7,610,147 ) ( 7,610,147 ) Additional paid in capital 288,664,858 284,072,666 Accumulated deficit ( 299,257,917 ) ( 304,581,773 ) Total stockholders’ deficit ( 18,830,909 ) ( 28,761,981 ) Total liabilities and stockholders’ deficit $ 370,625 $ 4,018,048 The accompanying footnotes are an integral part of these consolidated financial statements. F- 4 GBT TECHNOLOGIES INC. CONSOLIDATED STATEMENT OF OPERATIONS Years Ended December 31, 2022 2021 Sales $ 1,152,555 — Consulting Income – Related Party 45,000 180,000 Total sales 1,197,555 180,000 Cost of Goods Sold 817,754 — Gross Profit 379,801 180,000 Operating expenses: General and administrative 1,053,282 293,628 Marketing 360,335 837,614 Professional 1,814,543 2,124,272 Impairment of assets — 15,400,000 Gain on Bad Debt ( 50,000 ) — Total operating expenses 3,178,160 18,655,514 Loss from operations ( 2,798,359 ) ( 18,475,514 ) Other income (expense): Amortization of debt discount ( 442,247 ) ( 824,238 ) Change in fair value of derivative liability 6,594,370 ( 1,339,117 ) Interest expense and financing costs ( 969,629 ) ( 2,022,584 ) Realized gain (loss) on disposal of marketable equity security — 11,000 Gain on RJW settlement 3,012,355 — Loss on debt modification — ( 13,777,480 ) Change in fair value of marketable securities ( 310,462 ) — Other income 237,828 2,497,500 Total other income (expense) 8,122,215 ( 15,454,919 ) Profit (Loss) before income taxes 5,323,856 ( 33,930,433 ) Income tax expense — — Profit (Loss) from continuing operations 5,323,856 ( 33,930,433 ) Net Income (Loss) $ 5,323,856 $ ( 33,930,433 ) Weighted average common shares outstanding: Basic 696,686,911 19,991,381 Diluted 4,646,981,551 19,991,381 Net Income (Loss) per share (basic and diluted): Basic $ 0.01 $ ( 1.70 ) Diluted 0.00 ( 1.70 ) The accompanying footnotes are an integral part of the consolidated financial statements. F- 5 GBT TECHNOLOGIES INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT Total Stock Additional Stockholders’ Common Stock Treasury Stock Loan Paid-in Accumulated Equity/ Shares Amount Shares Amount Receivable Capital Deficit (Deficit) Balance December 31, 2020 5,133,489 51 1,040 ( 643,059 ) ( 7,610,147 ) 251,046,191 ( 270,651,339 ) ( 27,858,304 ) Common stock issued for conversion of convertible debt and accrued interest 13,821,709 139 — — — 5,677,867 — 5,678,006 Common stock issued for services 245,000 2 — — — 281,748 — 281,750 Common stock issued for joint venture 14,000,000 140 — — — 15,399,860 — 15,400,000 Fair value of beneficial conversion feature of converted — — — — — 11,666,999 — 11,666,999 Net income (loss) — — — — — — ( 33,930,433 ) ( 33,930,433 Balance, December 31, 2021 33,200,198 $ 332 $ 1,040 $ ( 643,059 ) $ ( 7,610,147 ) $ 284,072,666 $ ( 304,581,773 ) $ ( 28,761,981 ) Common stock issued amount for conversion of debt and accrue interest 847,133,242 8,471 — — — 2,156,990 — 2,165,461 Fair value of derivative liability due to conversions — — — 2,209,888 — 2,209,888 Common stock issued for cash 5,500,000 55 — — — 231,812 — 231,867 Common stock issued for- Tokenize 150,000,000 1,500 — — — ( 1,500 ) — — Equity Method Investment - Meta 500,000,000 5,000 — — — ( 5,000 ) — — Cancelation of shares ( 240,000 ) ( 2 ) — — — 2 — — Net income (loss) — — — — — — 5,323,856 5,323,856 Balance, December 31, 2022 1,535,593,440 $ 15,356 $ 1,040 $ ( 643,059 ) $ ( 7,610,147 ) $ 288,664,858 $ ( 299,257,917 ) $ ( 18,830,909 ) The accompanying footnotes are an integral part of these consolidated financial statements. F- 6 GBT TECHNOLOGIES INC. CONSOLIDATED STATEMENT OF CASH FLOWS Years Ended December 31, 2022 2021 Cash Flows From Operating Activities: Net income (loss) $ 5,323,856 $ ( 33,930,433 ) Adjustments to reconcile net income to net cash used in operating activities: Amortization of debt discount 442,247 824,238 Change in fair value of derivative liability ( 6,594,370 ) 1,339,117 Excess of debt discount and financing costs 34,175 136,785 Shares issued for services — 281,748 Loss on modification of debt — 13,777,480 Impairment of assets — 15,400,000 Realized gain on disposal of market equity security — ( 11,000 ) Loss on exchange of assets — — Change in fair value of market equity security 308,802 — Change on Settlement ( 3,012,633 ) — Payment of other income with marketable securities — ( 800,000 ) Changes in operating assets and liabilities: Accounts receivable ( 25,244 ) — Other receivable 3,741,525 ( 3,750,000 ) Cash held in trust — 289,590 Prepaid ( 12,500 ) — Inventory ( 11,569 ) — Contract liabilities ( 8,556 ) — Unearned revenue ( 200,463 ) ( 291 ) Accounts payable and accrued expenses ( 123,462 ) 5,073,651 Net cash used in operating activities ( 138,293 ) ( 1,369,114 ) Cash Flows From Investing Activities: Investment to GTX ( 150,000 ) — Investment to TGHI ( 125,000 ) — Net cash used in investing activities ( 275,000 ) — Cash Flows From Financing Activities: Issuance of convertible notes 300,000 1,317,386 Issuance of note receivable ( 190,000 ) — Proceeds from sales of common stock 231,864 ( 106,200 ) Repayment of related party ( 694,225 ) — Repayment of convertible note ( 39,042 ) — Proceeds from related party 756,227 — Issuance of notes payable — 200,000 Net cash provided by financing activities 364,826 1,411,186 Net increase in cash ( 48,467 ) 42,072 Cash, beginning of Year 155,106 113,034 Cash, end of Year $ 106,639 $ 155,106 Cash paid for: Interest $ — $ 2,898 Income taxes $ — $ 2,898 Supplemental non-cash investing and financing activities Debt discount related to convertible debt $ 325,916 $ 741,100 Reduction in derivative liability due to conversion $ 2,209,888 $ 11,666,999 Shares issued for conversion of convertible debt $ 2,165,464 $ 5,678,006 Transfer of marketable equity security to repay convertible note $ — $ 660,000 Share issuance for JV Metaverse $ 5,000 $ — Share issuance for JV Tokenize $ 1,500 $ — Transfer of accounts payable to convertible note $ — $ 424,731 Transfer of accrued interest to convertible note $ — $ 202,899 Cancellation of TTSG Shares $ ( 2 ) — The accompanying footnotes are an integral part of these consolidated financial statements. F- 7 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 1 - Organization and Basis of Presentation Organization and Line of Business GBT 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 derived revenues from (i) the provision of IT consulting services; and (ii) from the licensing of its technology. (ii) from selling electronic products through e-commerce platforms. On February 18, 2022 the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares revenues generated by Mahaser with respect to e-commerce sales through the online retail platform in the United States of America. The audited condensed CFS are prepared by the Company, pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Basis of Presentation The accompanying CFS were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Stock Split On October 26, 2021, the Company effectuated a 1 for 50 reverse stock split. The share and per share information has been retroactively restated to reflect this reverse stock split. In July 2, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022. F- 8 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 ● To amend the Company’s Articles of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $ 0.00001 per share (the “Common Stock”), of the Company from 2,000,000,000 shares to 10,000,000,000 shares. This action concluded on August 11, 2022: (i) authorize the Company’s Board of Directors to effect, in its sole discretion, a reverse stock split of the Common Stock in a ratio of up to 1-for-500 (the “Reverse Stock Split”), and (ii) authorize the filing of an amendment to the Company’s Articles of Incorporation to implement the Reverse Stock Split and any other action deemed necessary to effectuate the Reverse Stock Split, without further approval or authorization of stockholders, at any time prior to December 31, 2023. This action was not commenced by the Company’s board. Note 2 – Going Concern The accompanying CFS have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $ 299,257,917 and has a working capital deficit of $ 18,552,046 as of December 31, 2022, 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. These CFS 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 3 – Summary of Significant Accounting Policies Use of Estimates The preparation of CFS 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 CFS and the reported amounts of revenues and expenses during the reporting period. The Company 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 Company’s estimates. 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 CFS include valuation of derivatives and valuation allowance on deferred tax assets. F- 9 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Principles of Consolidation The accompanying CFS include the accounts of the Company and its subsidiaries; the Company’s 50% owned subsidiaries GBT BitSpeed Corp. (currently inactive) and GBT Tokenize Corp; the Company’s 50% owned subsidiary, Gopher Protocol Costa Rica Sociedad De Responsabilidad Limitada (currently inactive), a wholly owned subsidiary, AltCorp Trading LLC, a Costa Rica company (“AltCorp” currently inactive) and Greenwich International Holdings, a Costa Rica corporation (“Greenwich” currently inactive). All significant intercompany transactions and balances were eliminated. For entities determined to be VIEs, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. In addition, the Company’s variable interests in Mahaser obligate the Company to absorb deficits and provide it with the right to receive benefits that could potentially be significant to Mahaser. As a result of this analysis, the Company concluded it is the primary beneficiary of Mahaser and therefore consolidates the balance sheets, results of operations and cash flows of Mahaser. The Company performs a qualitative assessment of Mahaser on an ongoing basis to determine if it continues to be the primary beneficiary. 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. As of December 31, 2022 and 2021, the Company did no t have any cash equivalents. Funds in Escrow Restricted cash is $ 375,000 as part of the SURG settlements proceeds that needs to stay in escrow and $ 19,694 restricted cash that the court on January 28, 2022 awarded the Company with injunction against RWJ defendants, where all funds generating from resale should be deposited into GBT blocked account, and therefore RWJ defendants cannot use these funds without court order, neither the Company. According to settlement agreement made on September 26, 2022, these funds held in escrow and no longer restricted. The Company entered into the Confidential Settlement Agreement and Mutual Release (“RJW Agreement”) by and between RWJ Advanced Marketing, LLC, Robert Warren Jackson, Gregory Bauer (collectively the “RJW Parties”) and W.L. Petrey Wholesale Company, Inc., (“Petrey”) on one hand; and GBT Technologies Inc., on behalf of itself and its agents (collectively the GBT Parties”), on the other hand. The Company the RJW Agreement effective September 26, 2022 with final signatures delivered to the Company on or about October 5, 2022. Among other agreements the parties agreed and stipulated to release all funds currently being held in a blocked account of $ 19,694 with 50% distributed to the RWJ Parties and 50% to the Company or its assignee. Marketable Securities The Company accounts for investment securities in accordance with ASC Topic 321, Investments – equity securities. Marketable equity securities are reported at FV 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 12 months of the balance sheet date is reported as a current asset. These publicly traded equity securities are valued using quoted prices and are included in Level 1. F- 10 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Inventory Inventory consists of electronic product ready for sale on Amazon.com. It is stated at the lower of cost or net realizable value and all inventories were returned product from online customers. We value our inventory using the weighted average costing method. Our Company’s policy is to include as a part of inventory any freight incurred to ship the product from our contract vendors to our warehouses. Outbound freight costs to our customers are considered period costs and reflected in selling, general and administrative expenses. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence. Note Receivable Paid-Off 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 for $ 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. At December 31, 2020, the Company determined this note was not collectible and took an impairment charge of $ 100,000 . During July 2021, MLH effected a $ 50,000 payment on the Note. During April 2022, MLH effected a second payment for additional $ 50,000 on the Note exhausting the Note balance. 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 FV and is then re-valued at each reporting date, with changes in the FV 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, 2022 and 2021, 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. Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FV due to their short maturities. FASB ASC Topic 820, Fair Value Measurements and Disclosures , requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments , defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV 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 FV 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: F- 11 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 ● 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 use one or more unobservable inputs which are significant to the FV 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 FV 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 FV were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations as adjustments to FV of derivatives. At December 31, 2022 and 2021, the Company identified the following liabilities that are required to be presented on the balance sheet at FV: Schedule of fair value, assets and liabilities measured on recurring basis Fair Value Fair Value Measurements at As of December 31, 2022 Description December 31, 2021 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 1,714,143 $ — $ 1,714,143 $ — Fair Value Fair Value Measurements at As of December 31, 2021 Description December 31, 2022 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 10,192,485 $ — $ 10,192,485 $ — 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. F- 12 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Revenue Recognition Accounting Standards Update (“ASU”) No. 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. The Company had no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying CFS for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition . Revenue from providing IT consulting services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements: ● executed contracts with the Company’s customers that it believes are legally enforceable; ● identification 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; and ● recognition of revenue only when the Company satisfies each performance obligation. These five elements, as applied to each of the Company’s IT revenue category, is summarized below: ● IT consulting services - revenue is recorded on a monthly basis as services are provided. These five elements, as applied to each of the Company’s license revenue category, is summarize below: ● License services – the one-time related party licensing income recorded as other income upon agreement is executed and services are provided and recognized over the term of five years. E-Commerce sales – ● Identify the contract(s) with a customer. ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations”. Since this is an e-commerce sale on the Amazon of eBay websites, the Company just followed the general terms on Amazon or eBay websites and the customer entered into a contract with the Company based on the product listed on the Amazon or eBay websites; Identify the performance obligations in the contract. According to the contract, the Company is responsible for operation exclusively. The Company is entitled to all revenue which is being paid by Amazon or eBay into a designated bank account and the Company is responsible fo r all product acquisitions as well as shipments. The only performance obligations were the electronic products that were listed on Amazon or eBay websites and the Company determined each order is one single obligation; F- 13 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Determine the transaction price. The transaction price set to be the listed price on the Amazon or eBay websites.; Allocation the transaction price to the performance obligations in the contract.; and Recognize revenue when the Company satisfies a performance obligation. Sales are being recognized upon shipment. Unearned revenue Unearned revenue represents the net amount received for the purchase of products that have not seen shipped to the Company’s customers. The Company has $ 48,921 and $ 249,384 of unearned revenue at December 31, 2022 and 2021, respectively. Contract liabilities On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with Touchpoint Group Holdings, Inc. (“Touchpoint” or “TGHI”) pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $ 50,000 as a onetime fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the 5 five-year term. The Company has yet to earn any royalty income in relation to this agreement as of December 31, 2022. The contract liabilities as of December 31, 2022 and December 31, 2021 was $ 41,444 and $ 0 , respectively. Variable Interest Entity On February 18, 2022, the Company, effective March 1, 2022 entered into a Revenue Sharing Agreement (“RSA”) with Mahaser LTD. (“Mahaser”) pursuant to which the Company shares in revenues generated by Mahaser e-commerce sales through the online retail platform in the United States of America. Mahaser owns an e-commerce platform as a store which is the legal, exclusive owner of Ravenholm Electronics. The Company will operate the e-commerce platform and entitled to 95% for all revenue generated by and received by Mahaser from March 1, 2022 through December 31, 2022. The RSA provides that the Company will be entitled to appoint a manager to Mahaser. As consideration, the Company will pay Mahaser $ 100,000 no later than March 1, 2022 and issue Mahaser 1,000,000 shares of the Company’s restricted common stock. The Company shall have no obligations to make any further payments to Mahaser. For any further extensions, the Company will have the option to extend the RSA for annual payment of $ 200,000 , which can be payable with the Company’s shares of common stock payable based on 20 days VWAP prior to issuance. On March 16, 2022 the parties entered into Amendment No. 1 to the to the RSA, where all consideration to be paid or issued to Mahaser will be deferred until such time where the e-commerce platform generated in cumulative revenue of $1,000,000. On March 31, 2022, the parties entered into Amendment No. 2 to the RSA, where Mahaser agreed to pay the Company 100% per year for all revenue generated by and received by seller from the sales by Amazon within the United States of America as follows from March 1, 2022 through December 31, 2022. The Company will be responsible for 100% of the cost of goods sold as well. In addition, the Company is entitled to earn 100% revenues and cost of goods sold of the period from February 1, 2022 to February 28, 2022. The Company evaluated whether it has a variable interest in Mahaser, whether Mahaser is a VIE and whether the Company has a controlling financial interest in Mahaser. The Company concluded that it has variable interests in Mahaser on the basis of GBT has 100% control over the JV/revenue sharing, and as such should consolidate the JV into its books and records as it assigned 100% financial responsibility. Mahaser’s equity at risk, as defined by GAAP, is considered to be insufficient to finance its activities without additional support, and, therefore, Mahaser is considered a VIE. F- 14 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 The following table summarizes the carrying amount of the assets and liabilities of Mahaser included in the Company’s consolidated balance sheets at December 31, 2022 (after elimination of intercompany transactions and balances): Condensed financial statements Assets of consolidated variable interest entity (“VIE”) included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of: Current assets: Cash and equivalents $ 93,581 Inventory 11,569 Due From related party 20,270 Total current assets $ 125,420 Liabilities of consolidated VIE included in the consolidated balance sheets above (after elimination of intercompany transactions and balances) consist of: Current liabilities Total current liabilities $ 94,496 Statements of operations of consolidated VIE included in the consolidated statements of operations above (after elimination of intercompany transactions and balances) consist of: Statements of operations Sales $ 1,107,555 Cost of goods sold 817,754 Gross profit 289,801 General and administrative expenses 330,647 Net Loss $ 40,846 Income Taxes 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 is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented and its current on all its tax filings federal and state until 2021 inclusive. F- 15 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 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. 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 income 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. Schedule of anti dilutive securities excluded from computation of earnings per share December 31, December 31, 2022 2021 Series B preferred stock 45,000 45,000 Series C preferred stock 700 700 Series H preferred stock 20,000 20,000 Warrants 70,770 392,870 Convertible notes 3,949,223,831 83,722,340 Total 3,949,360,301 84,180,910 Management’s Evaluation of Subsequent Events The Company evaluates events that have occurred after the balance sheet date of December 31, 2022, through the date which the CFS are issued. Based upon the review, other than described in Note 20 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the CFS. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06 , Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging , or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity , and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the year ended December 31, 2022. On April 2021, the FASB issued ASU 2021-04, “ Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ ASU 2021-04 ”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants. The new ASU is available here and effective for all entities in fiscal years starting after December 15, 2021. Early adoption is permitted. The Company adopted this ASU on the CFS in the year ended December 31, 2021. The adoption had no material impact on the CFS for the year ended December 31, 2022. Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying CFS. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. F- 16 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 4 – Marketable Securities TGHI Agreement On January 28, 2022, the Company entered into a Stock Purchase Agreement with Marko Radisic (the “Seller”) and Touchpoint Group Holdings, Inc. (“TGHI”) pursuant to which the Company acquired 10,000 shares of Series A Convertible Preferred Stock (the “Touchpoint Preferred”) from the Seller for $ 125,000 . The Touchpoint Preferred is convertible into 10,000,000 shares of common stock of Touchpoint. On February 22, 2022, the Company entered into an Intellectual Property License and Royalty Agreement with TGHI pursuant to which the Company granted TGHI a worldwide license for its technologies for five years in the domains of Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies pertaining to the Company’s digital currency technology (the “Technology”). GBT will charge TGHI earned royalties based on actual uses by TGHI of the Technology resulting from revenue attributable to the use, performance or other exploitation of the Technology, to the extent applicable, after deducting any taxes that the Company may be required to collect, and deducting any international sales, goods and services, value added taxes or similar taxes which the Company is required to pay, if any, excluding deductions for taxes on the Company net income. TGHI agreed to issue the Company 10,000,000 shares of common stock of TGHI in the FV of $ 50,000 as a one-time fee for the Company entering this Intellectual Property License and Royalty Agreement, which was booked contract liabilities and amortized over the five-year term. The Company has yet to earn any royalty income order to this agreement as of December 31, 2022. TGHI converted the Touchpoint Preferred into 10,000,000 shares of common stock of Touchpoint on February 23, 2022 resulting in the Company owning 20,000,000 shares of common stock of Touchpoint in total FV of $ 6,000 as of December 31, 2022 based on level 1 stock price in OTC markets. MetAlert -prior name GTX Corp On April 12, 2022, GBT Tokenize Corp (“GBT Tokenize”), a Nevada corporation which the Company owns 50% of the outstanding shares of common stock, entered into a series of agreements with GTX Corp (“GTX”) and various note holders of GTX pursuant to which Tokenize acquired a convertible promissory note of GTX of $ 100,000 (the “GTX Notes”). In addition, GBT Tokenize acquired 76,923 (GBT acquired 5,000,000 in the original deal, where GTX to perform a corporate action of 1:65 reverse split on September 20, 2022) shares of common stock of GTX for $ 150 ,0–0 - in total FV of $ 12,538 as of December 31, 2022 based on level 1 stock price in OTC markets. F- 17 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 The GTX Notes bear 10% interest and 50% of the principal may be converted into shares of common stock on a one-time basis at a conversion price of $ 0.01 per share. The remaining 50% of the principal must be paid in cash. The closing occurred on April 12, 2022. GTX changed its name into Metalert Inc. on or about September 20, 2022. On September 30, 2022, GBT Tokenize, loaned MetAlert Inc., a Nevada corporation (f/k/a GTX Corp.) (“MetAlert”) $ 90,000 . For such loan, MetAlert provided Tokenize a promissory note of $ 90,000 which is due and payable together with interest of 5 % upon the earlier of September 19, 2023 or when declared by Tokenize. MetAlert designs, manufactures and sells various interrelated and complementary products and services in the wearable technology and IoMT (Internet of Medical Things) marketplace. As of December 31, 2022, the notes had an outstanding balance of $ 190,000 and accrued interest of $ 8,475 . As of December 31, 2022 and December 31, 2021, the marketable security had a FV of $ 12,538 and $ 0 , respectively. Note 5 – Investment in Surge Holdings, Inc. Surge Holdings, Inc. On September 30, 2019, GBT Technologies Inc. (the “Company”) entered into an Asset Purchase Agreement (“APA”) 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 for $ 5,000,000 to be paid through the issuance of 3,333,333 shares of SURG’s common stock (the “SURG Common Stock”) and a convertible promissory note in favor of the Company in the principmountount of $ 4,000,000 (the “SURG Note”), convertible into SURG’s shares of common stock. On January 7, 2022, the Company received payments from Surgepays Inc. (formerly known as Surge Holdings, Inc.) in total of $ 3,750,000 pursuant to the terms of the Settlement Agreement dated December 22, 2021. On June 23, 2020, SURG entered into an Exchange Agreement (the “AltCorp Exchange Agreement”) with AltCorp Trading LLC (“AltCorp”) with such AltCorp Exchange Agreement being consented and agreed to by the Company, the parent of AltCorp. At the expiration of the lock-up period, in the event the VWAP for the SURG Common Stock was, during the preceding twenty-day trading period, less than $ 0.50 per share, AltCorp retained the right to reserve additional shares of SURG Common Stock equal to the True-Up Value as defined in the AltCorp Exchange Agreement. F- 18 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On March 8, 2020, SURG filed a lawsuit against its transfer agent from transferring millions of SURG stock that is currently in possession by the Company and assigned to Stanley Hills, LLC. On January 1, 2021, SURG, AltCorp and Stanley Hills, LLC (“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 in 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 Surg’s common stock during the 10 trading days immediately preceding the issuance. SURG paid $ 400,000 in cash and $ 800,000 by shares. The SURG common stock issued to Altcorp have been pledged since August 12, 2020 for the benefit of Stanley to secure Stanley’s note payable by the Company. Accordingly, the SURG Common Stock issued to AltCorp as a result of the Settlement Agreement were pledged to Stanley. As of December 31, 2021 there were no surge shares pledges after the final settlement signed on December 22, 2021 and that replaced all prior settlement agreement. The final settlement SURG agreed to make total payments of $ 4,200,000 to the Company’s trust account on or prior to January 7, 2022. This $4.2 million amount consists of $450,000 paid by SURG in November and December 2021, $100,000 to be paid on or about January 4, 2022, and $3,650,000 to be paid on or prior to January 7, 2022 of which $375,000 will be held in escrow as described before. The $3,750,000 was recorded as other receivable as of December 31, 2021. As of December 31, 2021, the Company has recorded an outstanding payable balance to Stanley amounted $1,862,928 recorded under accrued expenses. Subsequently, SURG was a party to two lawsuits in state District Court, the Eighth Judicial District Court for Clark County, Nevada involving AltCorp, Stanley and Glen Eagles Acquisition LP (the “AltCorp Parties.”). Each of these lawsuits were ultimately disputes relating to the total consideration SURG was to pay the Company under the APA. On October 18, 2021, the AltCorp Parties, the Company, and SURG entered into a Memorandum of Understanding (the “MOU”) to set up a framework for an attempt to settle the two lawsuits. On December 22, 2021 (the “Effective Date”), pursuant to the framework in the MOU, the AltCorp Parties (and an additional third party), the Company, ECS, and SURG, Kevin Brian Cox (SURG’s Chief Executive Office–) - in his individual capacity, entered into a Resolution of Purchase, Mutual Release, and Settlement Agreement (the “Final Settlement Agreement”) to settle the two lawsuits and resolve all disputes related to the consideration paid by SURG to the Company in connection with the APA. (F) The Final Settlement Agreement, among other resolutions, essentially provides the following: i) From the total consideration of the Final Settlement Agreement, the amount of $ 375,000 (“Escrow Amount”) will be deposited by SURG in escrow. SURG has acquired the Company’s rights to a certain Master Distribution and Service Agreement (“MDA”). Under certain circumstances, if the result of the Company’s lawsuit against a third party (the “GBT Lawsuit”) is a monetary judgment without the assignment or legal decree of ownership of the MDA, the Company shall be entitled to receive the Escrow Amount and shall assign to SURG the first $ 1,000,000 the Company recovers from the defendants in the GBT Lawsuit. In the event that the Company does not prevail in the GBT Lawsuit then it shall be entitled to release of the Escrow Amount but shall be responsible for any fees and costs obligation sought by the defendants in the GBT Lawsuit. (ii) SURG agreed to make total payments of $4,200,000 to the Company’s trust account on or prior to January 7, 2022. This $4.2 million amount consists of $450,000 paid to the Company in November and December 2021, $100,000 to be paid on or about January 4, 2022, and $3,650,000 to be paid on or prior to January 7, 2022 of which $375,000 will be held in escrow as described before. The final settlement SURG agreed to make total payments of $4,200,000 to the Company’s trust account on or prior to January 7, 2022. The $3,750,000 was recorded as other receivable as of December 31, 2021. The entire balance of $3,750,000 was paid in January 2022. (iii) Potential payments to third parties. The Final Settlement Agreement replaces all prior agreements between the parties. In addition, within three (3) trading days of the last payment related to the $ 4.2 million payment to Stanley being made, the parties shall make filings with the state District Court in Clark County, Nevada to dismiss both lawsuits, including, regarding the lawsuit filed by AltCorp Trading, LLC, the dismissal of the lawsuit as to VStock Transfer, LLC. The parties agreed to a full mutual release of any disputes or claims between the parties. The final settlement of $ 3,750,000 was received by the Company in January 2022 and paid out $ 3,750,000 to the third parties before December 31, 2022. As the Company committed to assign certain revenue share agreement to SURG as part of the Company’s settlement with RWJ Agreement, on October 5, 2022 and as cumulation of all settlement agreements the Company issued a request to the SURG regarding release of certain escrow funds and the execution of an assignment of rights as contemplated in the aforereferenced agreement. F- 19 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 6 - 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 4,006 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 for 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 token. 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 principle to return the pledged 4,006 restricted shares to the Company for cancellation. The 4,006 restricted shares have not yet been returned to the Company as of December 31, 2022. Note 7 – Impaired Investment 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 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 Technologies, Inc. (“Mobiquity”) and 60,000,000 restricted shares of common stock of Mobiquity. The Gopher Convertible Note bears interest of 6% 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 ($500 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. F- 20 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On May 19, 2021, the Company, entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of Note Balance Principal and Accrued Interest (the “Gonzalez Agreement”) with third party, GBT-CR, IGOR 1 Corp and Gonzalez. Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT Convertible Note maturity date to December 31,2022, (ii) amend the GBT Convertible Note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT Convertible Note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT Convertible Note by Gonzalez to a third party. 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 accounted for its investment in GBT-CR using the equity method of accounting; however, in 2020, the Company owned less than 20% after GBT-CR issued additional shares to other investors therefore 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. Investment in Joint Venture On 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. 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. Tokenize shall contribute the services and resources for the development of the Technology Portfolio to GBT Tokenize. The Company shall contribute 2,000,000 shares of common stock of the Company (“GBT Shares”) to GBT Tokenize. Tokenize and the Company will each own 50% of GBT Tokenize. The shares were valued at $ 5,500,000 . In addition, GBT Tokenize and Gonzalez entered into a Consulting Agreement in which Gonzalez is engaged to provide services for $ 33,333 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. During year ended December 31, 2021, Gonzalez assigned all his accrued balances of $ 424,731 to Stanley Hills in a private transaction that the Company is not part to. The closing of the Tokenize Agreement occurred on March 9, 2020. F- 21 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Through this Joint Venture the parties commenced development of an intelligent human vital signs’ device, which we currently refer to as the 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. There is no guarantee that the Company will be successful in any or all of these critical steps. On May 28, 2021, the parties agreed to amend the Tokenize Agreement to expand territory granted for the Technology Portfolio under the license to GBT Tokenize to include the entire continental United States. The Company has further agreed to issue GBT Tokenize an additional 14,000,000 shares of common stock of the Company. The shares were valued at $ 15,400,000 . At 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. At December 31, 2021, 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 $ 15,400,000 was taken. Although the investment was impaired, the product development is still ongoing. The carrying amount of this investment at December 31, 2022 and December 2021, was $ 0 and $ 0 , respectively. Note 8 – Accounts Payable and Accrued Expenses Accounts payable and accrued expenses at December 31, 2022 and 2021 consist of the following: Schedule of accounts payable and accrued expenses 2022 2021 Accounts payable $ 1,530,762 $ 1,110,127 Accrued liabilities 1,513,261 3,033,016 Accrued interest 3,196,611 2,753,120 Other — — Total $ 6,240,634 $ 6,896,263 Note 9 – 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. In addition, during 2018, the Company received $ 200,000 in connection with an intellectual property license and royalty agreement. The Company has $ 48,921 and $ 249,384 of unearned revenue at December 31, 2022 and 2021, respectively. F- 22 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 10 – Convertible Notes Payable, Non-related Partied and Related Party Convertible notes payable – non related parties at December 31, 2022 and 2021 consist of the following: Schedule of rollfoward of convertible note December 31, December 31, 2022 2021 Convertible note payable to GBT Technologies S.A $ 6,395,531 $ 8,055,400 Convertible notes payable to 1800 191,257 124,200 Convertible notes payable to Redstart Holdings — 244,500 Total convertible notes payable, non related parties 6,586,788 8,424,100 Unamortized debt discount ( 189,060 ) ( 278,867 ) Convertible notes payable – non related parties 6,397,727 8,145,233 Less current portion 6,397,727 ( 8,109,436 ) Convertible notes payable – non related parties, long-term portion $ — $ 35,797 $10,000,000 for GBT Technologies S. A. acquisition 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% 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 ($500 per share) by the conversion price ($ 500 per share). This convertible note may convert 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 and therefore recorded as derivative liability (see note 12). On May 19, 2021, the Company, Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties had agreed to (i) extend the GBT convertible note maturity date to December 31, 2022, (ii) amend the GBT convertible note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT convertible note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT convertible note by Gonzalez to a third party. As a result of the change in terms of this convertible note, the Company took a charge related to the modification of debt of $ 13,777,480 during the year ended December 31, 2021. This convertible note is recorded as derivative liability because of the discounted price on conversion (see note 13). During the year ended December 31, 2021, IGOR 1 converted $1,284,600 of the convertible note into 4,185,650 shares of the Company’s common stock. On June 24, 2021, the Company transferred 5,500,000 SURG shares received as repayment of $660,000 of this convertible note (See Note7). During the year ended December 31, 2022, IGOR 1 converted $1,659,869 of the convertible note into 590,117,647 shares of the Company’s common stock. As of December 31, 2022, the note had an outstanding balance of $ 6,395,531 and accrued interest of $ 2,027,148 . Redstart Holdings Corp. F- 23 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Paid Off Notes/Converted Notes On 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 No. 1”) of $ 153,600 for $ 128,000 . The Redstart Note No. 1 had a maturity date of November 3, 2021 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 1 at the rate of 6 % 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. 1. The transactions described above closed on August 5, 2020. The outstanding principal amount of the Redstart Note No. 1 may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180 th day, Redstart may convert the Redstart Note No. 1 into shares of the Company’s common stock 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. 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. During the year ended December 31, 2021, the entire amount of Note No. 1 of $ 153,600 plus accrued interest was converted into 226,532 shares of common stock. 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 Note No. 2”) of $ 93,600 for $ 78,000 . The Redstart Note No. 2 had a maturity date of September 15, 2021 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 2 at the rate of 6 % from the date on which the Redstart Note No. 2 is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Redstart Note No. 2, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No. 2. 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. 2 shall become immediately due and payable and the Company shall pay to Redstart, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Redstart Note No. 2. During the year ended December 31, 2021, the entire amount of Note No. 2 of $ 93,600 plus accrued interest was converted into 89,169 shares of common stock. F- 24 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 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 No. 3”) of $100,200 for $83,500. The Redstart Note No. 3 had a maturity date of December 9, 2021 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 3 at the rate of 6% 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. 3. 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. 3 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. 3. During the year ended December 31, 2021, the entire amount of Note No. 3 of $100,200 plus accrued interest was converted into 135,582 shares of common stock. On 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) of $ 184,200 for a purchase price of $ 153,500 . The Redstart Note No. 4 had a maturity date of February 5, 2022 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 4 at the rate of 6 % 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. 4, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No. 4. 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 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. 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. 4. During the year ended December 31, 2021, the entire amount of Redstart Note No. 4 of $ 184,200 plus accrued interest was converted into 386,146 shares of common stock. F- 25 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On 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”) of $ 106,200 for $ 88,500 . The Redstart Note No. 5 had a maturity date of June 15, 2022 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 5 at the rate of 6 % 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. 5. 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 No. 5 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. 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. 5. During the year ended December 31, 2021, the entire amount of Redstart Note No. 5 of $ 106,200 plus accrued interest was converted into 317,837 shares of common stock. On May 26, 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. 6”) of $106,200 for $88,500. The Redstart Note No. 6 had a maturity date of August 26, 2022 and the Company had agreed to pay interest on the unpaid principal balance of the Redstart Note No. 6 at the rate of 6 % from the date on which the Redstart Note No. 6 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. 6, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No. 6. The transactions described above closed on May 28, 2021. The outstanding principal amount of the Redstart Note No. 6 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. 6 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. 6), the Redstart Note No. 6 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. 6. During the year ended December 31, 2021, the entire amount of Redstart Note No. 5 of $106,200 plus accrued interest was fully repaid in total cash of $ 141,782 . On September 21, 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. 7”) of $ 244,500 for $203,750. The Redstart Note No. 7 had a maturity date of December 22, 2022 and the Company agreed to pay interest on the unpaid principal balance of the Redstart Note No. 7 at 2.5% from the date on which the Redstart Note No. 7 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. 7, provided it makes a payment including a prepayment to Redstart as set forth in the Redstart Note No. 7. The transactions described above closed on September 28, 2021. The outstanding principal amount of the Redstart Note No. 7 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. 7 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. 7), the Redstart Note No. 7 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. 7. During the year ended December 31, 2022, Redstart converted the entire note into 7,656,951 shares of the Company’s common stock. F- 26 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Iliad Research and Trading, L.P. On February 27, 2019, the Company entered into a note purchase agreement with a third-party invest–r - 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 $ 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% 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 had 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. The original 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 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 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 for an extension fee of $ 1,000 . On February 28, 2021 the Company and Iliad entered into agreement to further extend the maturity of the Iliad Note until May 31, 2021 for an extension fee of $1,000 representing the third extension of the original note. On May 19, 2021, the Company and Iliad entered into agreement to further extend the maturity of the Iliad Note until August 31, 2021 for an extension fee of $1,000 representing the fourth extension of the original note. On August 20, 2021, the Company and Iliad entered into agreement to further extend the maturity of the Iliad Note until December 31, 2021 for an extension fee of $ 1,000 . During the year ended December 31, 2021, Iliad converted $2,508,737 of its convertible note into 4,053,069 shares of the Company’s common stock. The balance of the Iliad debt at December 31, 2022 and December 31, 2021 was $ 0 and $ 0 , respectively. Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC - First Note On November 8, 2021, the Company entered into a Securities Purchase Agreement with Sixth Street Lending LLC (“Sixth Street”) pursuant to which the Company issued to Sixth Street a Convertible Promissory Note (the “Sixth Street Note”) of $ 124,200 for $ 103,500 . The Sixth Street Note had a maturity date of February 8, 2023 and the Company agreed to pay interest on the unpaid principal balance of the note at 6 % from the date on which the 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 note, provided it makes a payment including a prepayment to Sixth Street as set forth in the Sixth Street Note. The outstanding principal amount of the note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180 th day, Sixth Street may convert the note into shares of the Company’s common stock at a conversion price equal to 85% of the average of the two lowest trading prices 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 Sixth Street Note), the note shall become immediately due and payable and the Company shall pay to Sixth Street, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Sixth Street Note. During the year ended December 31, 2022, Sixth Street converted the entire note into 26,343,190 shares of the Company’s common stock. Outstanding Notes F- 27 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC - Second Note On May 5, 2022, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“DL”), pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) of $ 244,500 for $ 203,500 . The DL Note had a maturity date of August 4, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at 6.0 % from the date on which the DL 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 DL Note at any time from the Issue Date and continuing through 180 days following the Issue Date, provided it makes a payment including a prepayment premium to DL as set forth in the DL Note. The transactions described above funded on May 9, 2022. The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180 th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20-day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. Unless the Company shall have first delivered to DL, at least 48 hours prior to the closing of any equity (or debt with an equity component) financing in an amount less than $150,000 (“Future Offering”), written notice describing the proposed Future Offering and providing the Buyer an option during the 48 hour period following delivery of such notice to DL the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering then the Company is restricted from conducting the Future Offering during the period beginning on the Issue Date and ending nine months following the Issue Date. During the year ended December 31, 2022, 1800 Diagonal lending converted $130,400 of the convertible note into 222,091,971 shares of the Company’s common stock. As of December 31, 2022, the note had an outstanding balance of $ 114,100 and accrued interest of $ 7,674 . Sixth Street Lending LLC – named changed - 1800 Diagonal Lending LLC - Third Note On September 13, 2022, the Company entered into a Securities Purchase Agreement (dated September 9, 2022) with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $ 116,200 with an original issue discount of $12,450 resulting in net proceeds of the Company of $ 103,750 . The DL Note had a maturity date of September 9, 2023 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued (the “Issue Date”). A one-time interest charge of 12 % or $ 13,944 was applied on the Issue Date to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $13,014.40 resulting in a total payback to DL of $130,144. The first payment is due October 30, 2022 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company. The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75 % of the lowest trading price with a 10-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 DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99 % of the outstanding shares of the common stock of the Company. F- 28 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 During the year ended December 31, 2022, the company paid back $ 39,043 to 1800 Diagonal lending. As of December 31, 2022, the note had an outstanding balance of $ 77,157 and an interest of $ 13,944 . As of December 31, 2022 and December 31, 2021, the nonrelated party convertible notes had total outstanding balance of $ 6,393,497 and 8,145,233 , net of debt discount, and accrued interest of $ 2,068,799 and $ 1,547,924 , respectively. Convertible notes payable – related parties at December 31, 2022 and 2021 consist of the following: Summary of convertible notes payable December 31, December 31, 2022 2021 Convertible note payable to Stanley Hills 116,605 116,605 Unamortized debt discount — — Convertible notes payable, net, related party 116,605 116,605 Less current portion ( 116,605 ) ( 116,605 ) Convertible notes payable, net, related party, long-term portion $ — $ — Stanley Hills LLC 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”) from 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 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. 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. Stanley had 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 the year ended December 31, 2021, Stanley converted $ 1,231,466 of its convertible note plus interest into 4,420,758 shares of the Company’s common stock, and during the year ended December 31, 2021, Stanley loaned the Company an additional $ 325,000 . Also, during the year ended December 31, 2021, the Company transferred the SURG shares received as repayment of $ 800,000 of this convertible note (See Note 10) and also converted $ 126,003 of accrued interest into the principal balance. During the year ended December 31, 2021, Gonzalez assigned all his accrued balances of $ 424,731 to Stanley in a private transaction that the Company is not part to (See Note 10). As of December 31, 2022 and 2021 the principal balance of Stanley debt is $ 116,605 and 116,605 respectively. The unpaid interest of the Stanley debt at December 31, 2022 and 2021 was $ 20,033 and $ 8,372 , respectively. The Stanley debt is secured via a pledge agreement on the SURG shares. Discounts on convertible notes The Company recognized interest expense of $ 438,015 and $ 824,238 during the years ended December 31, 2022 and 2021, respectively, related to the amortization of the debt discount on convertible notes. The unamortized debt discount at December 31, 2022 and 2021 was $ 189,060 and $ 278,867 , respectively. F- 29 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 A roll-forward of the convertible notes payable from December 31, 2020 to December 31, 2022 is below: Schedule of roll forward convertible notes payable Convertible notes payable, December 31, 2020 13,426,706 Issued for cash 983,450 Convertible note issued for accounts payable 625,429 Accrued interest added to convertible note 234,521 Payment with marketable securities ( 1,460,000 ) Payment with cash ( 106,200 ) Original issue discount 127,550 Conversion to common stock ( 5,649,000 ) Debt discount related to new convertible notes ( 741,100 ) Amortization of debt discounts 819,423 Convertible notes payable, December 31, 2021 $ 8,261,839 Issued for cash 300,000 Payment with cash ( 39,042 ) Original issue discount 60,700 Conversion to common stock ( 2,158,971 ) Debt discount related to new convertible notes ( 352,441 ) Amortization of debt discounts 442,247 Convertible notes payable, December 31, 2022 $ 6,514,332 Note –11 - Notes Payable, Non-related Parties and Related Party Notes payable, non-related parties at December 31, 2022 and December 31, 2021 consist of the following: Schedule of notes payable December 31, December 31, 2022 2021 RWJ acquisition note $ — $ 2,600,000 SBA loan 350,000 350,000 Total notes payable 350,000 2,950,000 Unamortized debt discount — — Notes payable 350,000 2,950,000 Less current portion ( 41,137 ) ( 2,612,397 ) Notes payable, long-term portion $ 308,863 $ 337,603 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 %, 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, 2021. The balance of the note at December 31, 2022 and 2021 was $ 0 and $ 2,600,000 plus accrued interest of $ 0 and $ 394,666 , respectively. F- 30 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 SBA Loan On 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 %, requires monthly principal and interest payments of $ 731 after 12 months from funding and is due 30 years from the date of issuance. The monthly payments have been extended by the SBA to all EIDL borrowers with additional 12 months. Monthly payments will be commenced on or around June 16, 2022. On October 1, 2021, the Company entered an Amended Loan Authorization and Agreement with the SBA providing for the modification of the Original Note providing for monthly principal and interest payments of $ 1,771 after 24 months from the Original Note commencing on or around June 22, 2022. On March 17, 2022 the SBA notified it deferred the payments to all COVID-19 EIDL loans will have the first payment due extended from 24-months to 30-months from the date of the note. The Modified Note will continue to bear interest at 3.75 % and is due 30 years from the date of issuance of the Original Note. The Modified Note is guaranteed by Douglas Davis, the former CEO of the Company and current consultant, as well as by GBT Tokenize Corp. The additional funding of $ 200,000 was received by the Company on October 5, 2021. The balance of the note at December 31, 2022 and 2021 was $ 350,000 and $ 350,000 plus accrued interest of $ 23,707 and $ 10,582 , respectively. Notes payable, related party at December 31, 2022 and December 31, 2021 consist of the following: Schedule of notes payable related parties December 31, December 31, 2022 2021 Alpha Eda note payable $ 140,000 $ 140,000 Total notes payable, related party 140,000 140,000 Unamortized debt discount — — Notes payable, net, related party 140,000 140,000 Less current portion ( 140,000 ) ( 140,000 ) Notes payable, net, related party, long-term portion $ — $ — Alpha Eda On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party for $140,000. The note accrues interest at 10%, is unsecured and was due on September 30, 2021. On June 20, 2021 Alpha and the Company extended the note maturity to December 31, 2021. The balance of the note at December 31, 2022 and 2021 was $ 140,000 and $ 140,000 plus accrued interest of $ 32,633 and $ 16,633 , respectively. Discounts on Promissory Note The Company recognized interest expense of $ 0 and $ 47,671 during the years ended December 31, 2021 and 2020, respectively, related to the amortization of the debt discount on promissory notes. The unamortized debt discount at December 31, 2021 and 2020 was $ 0 . Note 12 – 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 (presented separately in accounts payable and accrued expenses) and costs of $ 55,613 . (See Note 17). 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 17). The Company recorded accrued settlement of $ 4,090,057 and $ 4,090,057 at December 31, 2022 and 2021, respectively. F- 31 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 13 - Derivative Liability Certain of the convertible notes payable discussed in Note 10 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 FV of the derivative liability is recorded and shown separately under current liabilities. Changes in the FV 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 FV of derivative liability at December 31, 2022 and 2021: Schedule of assumptions to measure fair value December 31, December 31, 2022 2021 Stock price $ 0.001 $ 0.17 4.42 - Risk free rate 4.76 % 0.19 - 0.39 % Volatility 213 - 277 % 167 - 217 % 0.0015 - 0.102 - Conversion/ Exercise price $ 0.0017 $ 0.103 Dividend rate 0 % 0 % The following table represents the Company’s derivative liability activity for the years ended December 31, 2022 and 2021: Derivative instruments and hedging activities Derivative liability balance, December 31, 2019 $ — Issuance of derivative liability during the period 5,767,230 Fair value of beneficial conversion feature of debt converted ( 2,038,392 ) Change in derivative liability during the period 1,533,610 Derivative liability balance, December 31, 2020 5,262,448 Debt modification 13,777,480 Issuance of derivative liability during the period 1,480,439 Fair value of beneficial conversion feature of debt converted ( 116,669 ) Change in derivative liability during the period 1,339,117 Derivative liability balance, December 31, 2021 $ 10,192,485 Issuance of derivative liability during the period 325,915 Fair value of beneficial conversion feature of debt converted ( 2,209,887 ) Change in derivative liability during the period ( 6,594,370 ) Derivative liability balance, December 31, 2022 $ 1,714,143 F- 32 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 14 - Stockholders’ Equity Common Stock 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. 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. 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, 2020. On August 4, 2020, FINRA notified the Company that its appeal had been denied. On October 25, 2021 FINRA approved the Reverse Stock Split and on October 26, 2021, the Company effectuated a 1 for 50 reverse stock split. In July 7, 2022 the Company filed a preliminary information statement to the stockholders of record (the “Record Date”) in connection with certain actions to be taken by the written consent by stockholders holding a majority of the voting stock of the Company, dated as of June 28, 2022. ● To amend the Company’s Articles of Incorporation, (the “Articles of Incorporation”) to increase the number of authorized shares of common stock, par value $ 0.00001 per share (the “Common Stock”), of the Company from 2,000,000,000 shares to 10,000,000,000 shares. This action concluded on August 11, 2022. ● (i) authorize the Company’s Board of Directors to effect, in its sole discretion, a reverse stock split of the Common Stock in a ratio of up to 1-for-500 (the “Reverse Stock Split”), and (ii) authorize the filing of an amendment to the Company’s Articles of Incorporation to implement the Reverse Stock Split and any other action deemed necessary to effectuate the Reverse Stock Split, without further approval or authorization of stockholders, at any time prior to December 31, 2023. This action was not commenced yet by the Company’s board. F- 33 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 During the year ended December 31, 2022, the Company had the following transactions in its common stock: ● Of 5,500,000 Shares issued for cash of $ 231,866 ; and ● Of 847,133,242 Shares issued for the conversion of convertible notes of $ 2,158,969 and accrued interest of $ 6,491 ; and ● cancelled 240,000 for services rendered ● Of 150,000,000 Shares issued to GBT Tokenize for certain joint venture agreement between Magic International Argentina FC, S.L. and the Company. The value of the shares of $ 1,500 was determined based on the FV of the Company’s common stock; and ● Of 500,000,000 Shares issued to Metaverse for certain equity method investment. The value of the shares of $5,000 was determined based on the FV of the Company’s common stock; and Series B Preferred Shares 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 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 or splits. As of December 31, 2022 and 2021, there were 45,000 Series B Preferred Shares outstanding. Series C Preferred Shares 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 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. F- 34 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 At December 31, 2022 and 2021, 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, 2022 and 2021, there were 700 Series C Preferred Shares outstanding. Series D Preferred Shares As of December 31, 2022 and 2021, there are 0 and 0 shares of Series D Preferred Shares outstanding, respectively. Series G Preferred Shares As of December 31, 2022 and 2021, 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 for the issuance of 20,000 shares of Series H Convertible Preferred Stock of the Company and a Convertible Note 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% 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 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. 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 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 Company. (See Note 14 for further details.) As of December 31, 2022 and 2021, there are 20,000 shares of Series H Preferred Shares outstanding. F- 35 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Warrants The following is a summary of warrant activity. Summary of warrant activity Weighted Weighted Average Average Remaining Aggregate Warrants Exercise Contractual Intrinsic Outstanding Price Life Value Outstanding, December 31, 2021 392,870 $ 74.97 0.76 $ — Granted — Forfeited — Exercised — Outstanding, December 31, 2022 70,770 $ 205.07 0.30 $ — Exercisable, December 31, 2022 70,770 $ 205.07 0.30 $ — The exercise price for warrant outstanding and exercisable at December 31, 2022: Summary of exercise price for warrant outstanding Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price — $ 25.00 — $ 25.00 60,000 92.50 60,000 92.50 10,000 135.00 10,000 135.00 400 1,595.00 400 1,595.00 — 2,500.00 — 2,500.00 — 3,750.00 — 3,750.00 — 5,000.00 — 5,000.00 200 11,750.00 200 11,750.00 150 12,500.00 150 12,500.00 20 14,000.00 20 14,000.00 70,770 70,770 Equity Purchase Agreement and Registration Rights Agreement On December 17, 2021 (the “Effective Date”), GBT Technologies Inc. (the “Company”) entered into an equity financing agreement (the “Equity Financing Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with GHS Investments LLC (“GHS”), pursuant to which GHS shall purchase from the Company, up to that number of shares of common stock of the Company (the “Shares”) for $ 10,000,000 , subject to certain limitations and conditions set forth in the Equity Financing Agreement from time to time over the course of 24 months after an effective registration of the Shares with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement, is declared effective by the SEC (the “Contract Period”). The Equity Financing Agreement grants the Company the right, from time to time at its sole discretion (subject to certain conditions) during the Contract Period, to direct GHS to purchase shares of Common Stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The purchase price of the shares of Common Stock contained in a Put will be 90% of the lowest daily volume weighted average price (VWAP) of the Company’s Common Stock during the ten consecutive trading days preceding the receipt by GHS of the applicable Put notice. Such sales of Common Stock by the Company, if any, may occur from time to time, at the Company’s option, during the Contract Period. Subject to the satisfaction of certain conditions set forth in the Equity Financing Agreement, on each Put the Company will deliver an number of Shares equaling 110% of the dollar amount of each Put. The maximum dollar amount of each Put will not exceed 200% of the average daily trading dollar volume for the Company’s Common Stock during the ten trading days preceding the Trading Day that GHS receives a Put. No Put will be made in an amount equaling less than $10,000 or greater than $500,000. Puts are further limited to GHS owning no more than 4.99% of the outstanding stock of the Company at any given time. The Equity Financing Agreement and the Registration Rights Agreement contain customary representations, obligations, rights, warranties, agreements and conditions of the parties. The Equity Financing Agreement terminates upon any of the following events: when GHS has purchased $10,000,000 in the Common Stock of the Company pursuant to the Equity Financing Agreement; on the date that is 24 calendar months from the date the Equity Financing Agreement was executed. F- 36 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Actual sales of shares of Common Stock to GHS under the Equity Financing Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. For the year ended December 31, 2022, the Company did not receive any proceeds from the equity purchase agreement. Note 15 - Income Taxes At December 31, 2022 and 2021, the significant components of the deferred tax assets are summarized below: Schedule Of Components of deferred tax assets December 31, December 31, 2022 2021 Deferred income tax asset Net operating loss carryforwards $ 9,182,327 $ 8,945,238 Total deferred income tax asset 9,182,327 8,945,238 Less: valuation allowance ( 9,182,327 ) ( 8,945,238 ) Total deferred income tax asset $ — $ — The valuation allowance increased by $ 237,089 and $ 712,442 in 2022 and 2021, respectively, as a result of the Company generating additional net operating losses. The Company’s net operating loss carryforward of approximately $ 31,663,196 begin to expire in 2025. No income tax expense reflected in the consolidated statements of income for the years 2022 and 2021. The reconciliation of the effective income tax rate to the federal statutory rate for the years ended December 31, 2022 and 2021 is as follows: Schedule of Effective Income Tax Rate Reconciliation 2022 2021 Amount Percent Amount Percent Federal statutory rates $ 1,118,010 21.0 % $ ( 7,125,391 ) 21.0 % State income taxes 425,908 8.0 % ( 2,714,435 ) 8.0 % Permanent differences ( 1,784,116 ) - 33.5 % 9,127,383 - 26.9 % Valuation allowance against net deferred tax assets 237,089 4.5 % 712,442 - 2.1 % 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, 2022 and 2021. F- 37 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 16 - 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. On August 1, 2021, 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 of $5,000 per month. 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 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, for a base salary of $ 250,000 and a bonus of 10% of net profit generated by the assets acquired. Mr. 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. Mr. 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 – See Note 18– - Contingencies. On 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. Mr. Davis served as Interim Chief Executive Officer since July 2018 until his resignation on April 11, 2020. The term of Mr. Davis’ employment was for two years through January 1, 2021. Mr. 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. Mr. Davis was also entitled to the issuance of Stock Options to acquire 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. 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. 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 in which Mr. Davis is engaged to provide services for $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. Mr. 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. Mr. Davis’ resignation was not the result of any disagreements with management or board of directors of the Company. F- 38 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On 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 of $ 10,000,000 and is also a shareholder of the Company. Under the Tokenize Agreement, the parties formed GBT Tokenize. The purpose 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 for $ 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. There is no guarantee that the Company will be successful in any or all of these critical steps. F- 39 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Yello Partners Inc. As of December 31, 2022 and 2021, the Company has $ 505,000 and $ 385,000 owed to Yello Partners, Inc., a Company owned by the CEO. Alpha Eda Note Payable – Related Party On November 15, 2020, the Company issued a promissory note to Alpha Eda, LLC (“Alpha”), a related party, for $ 140,000 . The note accrues interest at 10 %, is unsecured and was due on September 30, 2021 . On June 20, 2021 Alpha and the Company extended the note maturity to December 31, 2021 . The balance of the note at December 31, 2022 and 2021 was $ 140,000 and $ 140,000 plus accrued interest of $ 32,633 and $ 16,333 , respectively. Stanley Hills LLC Convertible Note Payable – Related Party 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”) from 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 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. 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. Stanley had 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 the year ended December 31, 2021, Stanley converted $ 1,231,466 of its convertible note plus interest into 4,420,758 shares of the Company’s common stock, and during the year ended December 31, 2021, Stanley loaned the Company an additional $ 325,000 . Also, during the year ended December 31, 2021, the Company transferred the SURG shares received as repayment of $ 800,000 of this convertible note (See Note 10) and converted $ 126,003 of accrued interest into the principal balance. During the year ended December 31, 2021, Gonzalez assigned all his accrued balances of $ 424,731 to Stanley in a private transaction that the Company is not part to (See Note 10). The balance of the Stanley convertible note payable at December 31, 2022 and December 31, 2021 was $ 116,605 and $ 116,605 , respectively. The Stanley debt is secured via a pledge agreement on the SURG shares. F- 40 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Stanley Hills LLC Accounts Payable – Related Party On March 8, 2020, SURG filed a lawsuit against its transfer agent, Vstock from transferring millions of SURG stock that is currently in possession by the Company and assigned to Stanley Hills, LLC. On January 1, 2021, SURG, AltCorp and Stanley Hills, LLC (“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 in 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 Surg’s common stock during the 10 trading days immediately preceding the issuance. SURG paid $ 400,000 in cash and $ 800,000 by shares. The SURG common stock issued to Altcorp has been pledged since August 12, 2020 for the benefit of Stanley to secure Stanley’s note payable by the Company. Accordingly, the SURG Common Stock issued to AltCorp as a result of the Settlement Agreement were pledged to Stanley. As of December 31, 2021 there were no surge shares pledges after the final settlement signed on December 22, 2021 and that replaced all prior settlement agreement. The final settlement SURG agreed to make total payments of $ 4,200,000 to the Company on or prior to January 7, 2022. This $4.2 million amount consists of $450,000 paid by SURG in November and December 2021, $100,000 to be paid on or about January 4, 2022, and $3,650,000 to be paid on or prior to January 7, 2022 of which $375,000 will be held in escrow as described before. The $ 3,750,000 was recorded as other receivable as of December 31, 2021. As of December 31, 2022, the Company has recorded an outstanding payable balance to Stanley amounted $ 927,136 recorded under accrued expenses. Consulting income for both the years ended December 31, 2022 and 2021 were $ 45,000 and $ 180,000 . Consulting income are derived from providing IT consulting services to Stanley Hills, a related party. Note 17 - 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 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.: 20STCV32709 (“Second Lawsuit”). In the Original Lawsuit filed, the court rejected the plaintiff’s claims that they were filing a purported quasi-derivative lawsuit. As such, in this current litigation, the plaintiff is now again claiming the action is a derivative lawsuit. On October 13, 2020, the Second Lawsuit was removed by other defendants into Central District of California (CASE NO. 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, 2021 which was later continued by the Court to September 28, 2022. It was the Company’s intention to dividend its holdings of its wholly owned subsidiary Ugopher services Corp. (“UGO”). As UGO is the main dispute in the litigations described above, the Company has elected to sell UGO to a third-party effective July 1, 2020. On September 17, 2020, the Company terminated Greg Bauer as consultant (resulting from the sale of UGO), which he confirmed in writing. On or about June 14, 2021 the Company stipulated with plaintiff that all third parties will be released and plaintiff may file a new first amendment complaint that will name only the Company. As such, all third parties other than prior transfer agent of the Company have been dismissed from this litigation. F- 41 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Following the sale of UGO, 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. SURG is the clearing house for UGO.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. Bauer, Mr. Jackson and against W.L. Petrey Wholesale Company Inc for fraud, breach of contract, Unjust Enrichment and other claims. On January 28, 2022 the court awarded the Company with injunction against RWJ defendants, where all fee funds generating from resale should be deposited into GBT blocked account, and therefore RWJ defendants cannot use these funds without court order. The Company entered into the Confidential Settlement Agreement and Mutual Release (“RJW Agreement”) by and between RWJ Advanced Marketing, LLC, Robert Warren Jackson, Gregory Bauer (collectively the “RJW Parties”) and W.L. Petrey Wholesale Company, Inc., (“Petrey”) on one hand; and GBT Technologies Inc., on behalf of itself and its agents (collectively the GBT Parties”), on the other hand. The Company the RJW Agreement effective September 26, 2022 with final signatures delivered to the Company on or about October 5, 2022. Pursuant to the RJW Agreement, the parties have agreed to settle, release, and otherwise resolve all known or unknown claims between them and agreed to jointly stipulate, move, or otherwise dismiss the lawsuits filed in the United States District Court of Nevada (Case No. 2:20-cv- 02078), in the Superior Court of the State of California, County of Los Angeles, Central District (Case Nos. 19STCV03320 and 20STCV32709), and in the United States District Court of the Central District of California (Case No. 2:20-cv-09399-RGK-AGR) with prejudice. The parties agreed and stipulated to release all funds currently being held in a blocked account of $ 19,809 with 50% distributed to the RWJ Parties and 50% distributed the Company or its assignee. The Parties also entered into the InComm Assignment Agreement (“IAA”) which assigned, transferred and conveyed all proceeds derived from the RWJ Parties’ agreements with Interactive Communications International, Inc., and its affiliate Hi Technology Corp., including but not limited to that Master Distribution and Service Agreement between Interactive Communications International, Inc. and Petrey d/b/a UGO-HUB dated August 29, 2016, as amended (collectively referred to as the “InComm Proceeds”), and which shall divide the InComm Proceeds 90% to the Company or its assignee and 10% to the RWJ Parties or their assignee. Finally, the Company agreed to pay $ 40,000 to the RWJ Parties or their assignee. The Company accrued $ 49,847 expenses represent the final amounts due to the RJW Parties. The Company under a different settlement agreement with SURG, committed to assign the IAA. As such, on October 5, 2022 and as cumulation of all settlement agreements the Company issued a request to SURG regarding release of certain escrow funds and the execution of an assignment of rights as contemplated in the aforereferenced agreement. On 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”) 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 per share with respect to 50,000 Warrant Shares, $75 with respect to 75,000 Warrant Shares and $50 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 (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 “Notice”). On December 23, 2019, in arbitration between the Company and the Investor, an Interim Award was entered in favor of the Investor. On January 31, 2020, the Company was informed that a final award was entered (the “Final Award”). The Final Award affirms that certain sections of the Debenture constitute unenforceable liquidated damages penalties and were stricken. Further, it was determined that the Investor was entitled to recovery of their attorney’s fees. Consequently, the arbitrator awarded Investor an award of $ 4,034,444 plus interest of 7.25 % accrued from May 15, 2019 and costs of $ 55,613 . On February 18, 2020, the Company filed a motion with the United States District Court District of Nevada (the “Nevada Court”) to confirm the Final Award and a motion to consolidate Investor’s application to confirm the Final Award filed in the U.S. District Court of the Virgin Islands (Case No: 3 :20-cv-00012-CVG-RM) (the “Virgin Island Court”). On February 27, 2020, the Nevada Court denied the Company’s motion to confirm the Final Award and motion to consolidate and further decided that the confirmation of the Final Award should be litigated in the Virgin Island Court. As such, on February 27, 2020, the Company filed a Notice of Entry of Order as well as a Motion to Confirm the Arbitration Award, address the outstanding issues regarding whether Investor’s rights are subordinated to other creditors and, thereafter, oversee a commercially reasonable foreclosure sale (Case No: 3 :20-cv-00012-CVG-RM). It was the Company’s position that the Final Award must first be confirmed and all questions regarding the rights of Investor relative to those of other creditors must be determined before any foreclosure sale can proceed. It is further the position of the Company that the previously disclosed foreclosure sale scheduled by Investor is being conducted in a commercially unreasonable manner and that if Discover proceeded forward with the foreclosure sale it did so at its own risk. Nevertheless, on February 28, 2020, Investor advised that it conducted a sale of the Company’s assets. As the date of this report Investor failed to present a deed of sale for the alleged sale that allegedly took place as noticed. The Company filed with Virgin Island Court the motions disputing the validity of the alleged sale. On July 28, 2020, Investor filed in the State of Nevada a motion for attorneys $ 48,844 and costs $ 716 . The Company filed an answer on August 11, 2020. On October 16, 2020, Investor motion for attorneys $ 48,844 and costs $ 716 was denied. This case is still pending with the Federal court and the Court has not taken any substantive action in the matter as of the date of this report. F- 42 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 In connection with SURG Exchange Agreement (see Note 5) - 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. 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. On June 24, 2021 per the June 23, 2020 Agreement, the Company together with AltCorp sent SURG and its transfer agent via registered mail, a true-up shares demand for an additional 14,870,370 SURG shares as calculated per the Agreement. As of the filing date of this report, SURG’s transfer agent did not answer the Company’s request. Subsequently, SURG was a party to two lawsuits in state District Court, the Eighth Judicial District Court for Clark County, Nevada involving AltCorp, Stanley and Glen Eagles Acquisition LP (the “AltCorp Parties.”). Each of these lawsuits were ultimately disputes relating to the total consideration SURG was to pay the Company under the APA. On October 18, 2021, the AltCorp Parties, the Company, and SURG entered into a Memorandum of Understanding (the “MOU”) to set up a framework for an attempt to settle the two lawsuits. On December 22, 2021 (the “Effective Date”), pursuant to the framework in the MOU, the AltCorp Parties (and an additional third party), the Company, ECS, and SURG, Kevin Brian Cox (SURG’s Chief Executive Officer) - in his individual capacity, entered into a Resolution of Purchase, Mutual Release, and Settlement Agreement (the “Final Settlement Agreement”) to settle the two lawsuits and resolve all disputes related to the consideration paid by SURG to the Company in connection with the APA. On or about July 9, 2021 the Company filed a lawsuit in District Court in Clack County Nevada – Department 19 (Case number A-21-837631-C) against Terry Taylor and TTSG Holdings, Inc for breach of contract, breach of covenant of Good Faith and Fair Dealing, Unjust Enrichment and declaratory relief for failure of providing consulting services per contract they entered. The Company is demanding the return of 240,000 shares issued, return of the $5,000 payments, recission of the consulting agreement, and attorney’s fees and costs. As Terry Taylor and TTSG Holdings failed to appear to a notice of deposition, the Company filed for a summary judgment. On January 20, 2023 the court issued a $708,821 writ of execution against Terry Taylor and TTSG Gregory Mancuso and Rainer AG On or about February 2, 2022, GBT was served with a First Amended Complaint (the “Complaint”) initiated by Gregory Mancuso and Rainer AG, a Swiss corporation, Case No. 21SMCV01430, filed in the Superior Court of the State of California for the County of Los Angeles. The Complaint names a number of different parties, including GBT, and asserts, among other things, claims for conversion, unjust enrichment, breach of contract, and breach of implied covenant of fair dealing, which Plaintiffs allege arise out of a brokerage agreement entered into between Plaintiff Rainer AG and co-defendant Consul Group re Dos Mil Veintiuno S.R.L (“Consul”). GBT was sued under an alter ego theory of liability, and its only involvement in the above-referenced chain of events seems to be that its shares were deposited with Rainer by Consul upon the opening of the brokerage account. GBT will be filling a demurrer to the First Amended Complaint based on a variety of deficiencies with the First Amended Complaint, and will ask the Court to dismiss the claims against GBT. F- 43 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 18 - Contingencies GBT Technologies, S.A. On 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: 32893586; Application Number: 16008069; Type: Utility under 35 USC 111(a); 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. Under the terms of the GBT License Agreement, the Company is entitled to receive a royalty payment of 2% of gross revenue of each licensed product sold by GBT-CR during the period starting in which revenue is first generated using the licensed products and continuing for five years thereafter. Upon signing the GBT-CR License Agreement, GBT-CR paid the Company $ 300,000 which is nonrefundable. The Company recognized the $300,000 as revenue during the years ended December 31, 2018. Upon GBT-CR making available for sale (the “Commercial Event”) an ICO (Initial Coin Offering) (the “Coin”), GBT-CR will make a payment to the Company 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. 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. 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 pledged 4,006 restricted shares of its common stock valued at $7,610,147 (based on the closing price on the grant date) for three years for 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 token. 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 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 principle to return the pledged 4,006 restricted shares to the Company for cancellation. The 4,006 restricted shares have not yet been returned to the Company as of December 31, 2022. Assignment of lease agreement On May 17, 2022, Mahaser LLC (“Assignee”) entered into an assignment and assumption of lease agreement by and between 2819 Coldwater LLC (“Assignor”), Sunset Place Holdings LLC (“Lessor”) and Yossi Attia (“Guarantor”). Pursuant to the agreement, Lessor agreed to lease to Assignor certain Standard Industrial/Commercial Multi-Tenant Lease – Gross agreement dated February 7, 2022 (the “Lease”) and expiring on January 31, 2024, which premises commonly known as 8265 Sunset Boulevard, Suite #107, West Hollywood, CA 90046. The base rent payment shall equal $4,100 per month and share of common area operating expense shall equal $ 200 per month. Guarantor has guaranteed payment of Assignor’s obligations under the Lease and Assignor assigned all of its right, title and interest in the Lease to Assignee and Assignee assumed Assignor’s obligations under the Lease. F- 44 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 Note 19 – Concentrations Concentration of Credit Risk Financial instruments, which potentially subject the Company to a concentration of credit risk for the years, consist principally of temporary cash investments. There have been no losses in these accounts through December 31, 2022 and 2021. Liquidity risk The Company has an accumulated deficit of $ 299,257,917 and has a working capital deficit of $ 18,522,046 as of December 31, 2022, which raises substantial doubt about its ability to continue as a going concern as the Company does not have sufficient funds to discharge its current liabilities. Customers Sales for both the years ended December 31, 2022 and 2021 were $ 1,152,555 and $ 0 . The Consulting income from related party for both the years ended December 31, 2022 and 2021 was $ 45,000 and $ 180,000 . Sales are derived from providing IT consulting services to a related party and sales from amazon and Ebay. Note 20 - Subsequent Events On January 24, 2023, the Company issued a convertible promissory note to Glen Eagles Acquisition LP in the principal amount of $ 512,500 . The convertible promissory note bears interest of 10 % and is payable at maturity on December 31, 2023 . F- 45 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On March 1, 2023, the Company entered into a Securities Purchase Agreement, with 1800 Diagonal Lending LLC, an accredited investor (“DL”) pursuant to which the Company issued to DL a Promissory Note (the “DL Note”) of $ 59,408 with an original issue discount of $ 6,258 resulting in net proceeds of the Company of $ 53,150 . The DL Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 12.0% from the date on which the DL Note is issued. A one-time interest charge of 12 % or $ 7,128 was applied on the issuance date of the DL Note to the principal amount owed under the DL Note. Accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten payments of $ 6,653 .60 resulting in a total payback to DL of $ 66,536 . The first payment is due April 15, 2023 with nine subsequent payments each month thereafter. The Company shall have a five-day grace period with respect to each payment. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. This DL Note shall not be secured by any collateral or any assets of the Company. The outstanding principal amount of the DL Note may not be converted into the Company common shares except in the event of default. In the event of default on the DL Note, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price during the 10 day period immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Note), the DL Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. On March 1, 2023, the Company entered into a Securities Purchase Agreement with DL pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Convertible Note”) of $ 62,680 for a purchase price of $ 52,150 . The DL Convertible Note had a maturity date of June 1, 2024 and the Company had agreed to pay interest on the unpaid principal balance of the DL Convertible Note at the rate of 6.0 % from the date on which the DL Convertible Note 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 DL Convertible Note, provided it makes a payment including a prepayment to DL as set forth in the DL Convertible Note. The outstanding principal amount of the DL Convertible Note may not be converted prior to the period beginning on the date that is 180 days following the date the DL Convertible Note is issued . Following the 180th day, DL may convert the DL Convertible Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest trading price during the 20 day period preceding the date of conversion. In addition, upon the occurrence and during the continuation of an event of default (as defined in the DL Convertible Note), the DL Convertible Note shall become immediately due and payable and the Company shall pay to DL, in full satisfaction of its obligations hereunder, additional amounts as set forth in the DL Convertible Note. In no event shall DL be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by DL and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. F- 46 GBT TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 and 2021 On June 10, 2022, GBT Technologies, Inc. (the “Company”), entered into a Joint Venture and Territorial License Agreement (the “Metaverse Agreement”) with Ildar Gainulin and Maria Belova (collectively, the “Licensor”). Under the Metaverse Agreement, the parties formed Metaverse Kit Corp., a Nevada corporation (“Metaverse Kit”). The purpose of Metaverse Kit was to develop, maintain and support source codes for its proprietary technologies and comprehensive platform that combines a core virtual reality platform and an extended set of real-world functions to provide a metaverse experience initially within the area of sports and then expanding into virtual worlds of entertainment, live events, gaming, communications and other cross over product opportunities (the “Meta Portfolio”). Under the Metaverse Agreement, Licensor agreed to provide Metaverse Kit with the licensed technology and expertise. In connection therewith, the parties entered an Asset Purchase Agreement (the “Metaverse APA”) concurrently with the Metaverse Agreement whereby Licensor sold Metaverse Kit all source codes pertaining to the Meta Portfolio. Further, Licensor provided an exclusive license to Metaverse Kit throughout the world for the invented product/service and the related platforms relating to the Meta Portfolio and to use the know how to develop, manufacture, sell, market and distribute the Meta Portfolio throughout the world. The Company was required to contribute 500,000,000 shares of common stock of the Company (“GBT Shares”) to Metaverse Kit. Licensor and the Company were to each own 50% of Metaverse Kit. The Company pledged its 50% ownership in Metaverse Kit to Igor 1 Corp. to secure a convertible note held by Igor 1 Corp. The Company was to appoint two directors and Licensor was allowed to appoint one director of Metaverse Kit. In addition, Metaverse Kit, Licensor and Elentina Group, LLC (“Elentina”) entered into a Consulting Agreements in which IGBM and Elentina, each were engaged to provide services for $ 25,000 per month payable quarterly which Metaverse Kit has the option to pay in shares of common stock calculated by the amount owed divided by the Company’s 10-day VWAP. Licensor and Elentina were to provide services in connection with the development of the business as well as Metaverse Kit’s capital raising efforts. The term of the Consulting Agreement was two years. The closing of the Metaverse Agreement occurred on June 13, 2022. On March 14, 2023, the Company received a counter signed Settlement Agreement and Release by Licensor dated March 2, 2023 (“Settlement Agreement”). Pursuant to the Settlement Agreement, the parties agreed that Metaverse Agreement, the Metaverse APA and the Consulting Agreement are void and cancelled. Licensor agreed to pay $ 5,000 to the Company as settlement payment and surrender their shares in Metaverse Kit. On February 1, 2023, the Company engaged AlKhatib Consulting Group to provide exclusive representation services in connect with managing market partners, effective on February 1, 2012 for 24 consecutive months. On April 3, 2023, GBT Tokenize Corp. (“Seller”), a subsidiary that is owned 50 % by GBT Technologies, Inc (“GBT”) entered into an Asset Purchase Agreement (“APA”) with Trend Innovation Holdings, Inc. ( “TREN”), in which GBT consented, pursuant to which Seller sold certain assets relating to proprietary system and method named Avant-Ai, which is a text-generation, deep learning self-training model (the “System”). In consideration of acquiring the System, TREN is required to issue to the Seller 26,000,000 common shares of TREN (the “Shares”). The Shares will be restricted per Rule 144 as promulgated under the Securities Act of 1933, as amended (the “1933 Act”) and Seller agreed to a lock-up period of nine (9) months following closing (the “Lock Up Term”). In the event that TREN is unable to up-list to Nasdaq either through a business combination or otherwise prior to the expiration of the Lock Up Term, the Seller may request within three (3) business days of the expiration of the Lock-Up Term, that all transactions contemplated by the APA be unwound. In addition, TREN, Seller and GBT entered into a license agreement regarding the System, granting the Seller and/or GBT a perpetual, irrevocable, non-exclusive, non-transferable license for using the System to be used in its own development, as in-house tool, where Seller or GBT may not sublicense its rights hereunder to any customer or client. F-47