What changed in this filing

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Item 3. Legal Proceedings

2025-03-31 compared with 2024-04-19 · 102 added, 140 removed, 73 unchanged (77% of the section changed)

6 unchanged sentences

Relate to 2022:

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

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.

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

As such, all third parties other than prior transfer agent of the Company have been dismissed from this litigation.

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.

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

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.

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

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

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common stock immediately after exercise.

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

The outstanding principal amount may be

converted at any time into shares of the 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

2 unchanged sentences

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 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.

6 unchanged sentences

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:

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

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.

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.

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

The Company filed an answer on August 11, 2020.

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.

Based on Discover notice in writing of

selling all the Company’s assets, the Company intend to invoice Discover for that sale and offset the settlement amount at the

end of the year.

On January 25, 2024 Virgin Island Court ordered that

Final Award is confirmed.

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

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.

Based on Discover notice in writing of selling all the Company’s assets, the Company intend to invoice Discover

for that sale and offset the settlement amount at the end of the year.

On January 25, 2024 Virgin Island Court ordered that Final Award

is confirmed.

As part of its financial review for the fiscal year

ended December 31, 2024, the Board of Directors of the Company conducted an assessment of the Company’s Accrued Settlement Liability,

a balance originally recorded in 2020 in connection with the arbitration award issued in favor of Discover Growth Fund, LLC (“DGF”).

On February 28, 2020, DGF conducted a foreclosure sale of the Company’s assets.

However, the Company was not provided with an accounting

of the sale or details of the proceeds received by DGF.

The Company has maintained its position that the foreclosure sale satisfied the

arbitration award in full.

Additionally, DGF has not taken any action to enforce collection of the liability since the arbitration award

was confirmed by the U.S.

District Court for the Virgin Islands on January 25, 2024.

Accounting Treatment

In accordance with ASC 405-20-40-1 (Liabilities -

Extinguishment of Liabilities), a liability should be derecognized when it has been extinguished.

Extinguishment occurs when the debtor

is legally released from the obligation or when the obligation is otherwise settled.

• The Company’s assets were foreclosed

and sold by DGF in 2020;

• No further collection efforts have been initiated

• The Company maintains that the foreclosure

sale satisfied the judgment;

• The Company does not intend to make any payment

toward the liability;

• Carrying the liability indefinitely would misrepresent

the Company’s financial position, inflating its balance sheet without a true expectation of payment;

The Board of Directors approved the write-off of the

remaining Accrued Settlement Liability in the amount of $5,755,400, recognizing it as a gain in the Company’s financial statements

for the year ended December 31, 2024.

Financial Statement Impact

As a result of this decision, the Company recognized

a $5,755,400 gain on extinguishment of liability, which is included in other income in the consolidated statement of operations.

The corresponding

reduction in liabilities is reflected in the balance sheet under Accrued Settlement Liabilities, reducing the Company’s total liabilities.

Going Concern Consideration

The Company continues to operate under going concern

This write-off does not impact the Company’s assessment of its financial viability, as its ability to continue operations

depends on factors including access to financing and future business performance.

However, if any party disputes the Company’s position

in the future and initiates collection efforts, the Company will defend its position and disclose any developments accordingly.

Relate to 2023:

11 unchanged sentences

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”),

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.

4 unchanged sentences

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

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

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.

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.

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, 2024.

5 unchanged sentences

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

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”)

20 unchanged sentences

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

What changed 10-K

Item 3. Legal Proceedings