ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statements
This Form 10-K may contain “forward-looking statements,” as that term is used in federal securities laws, about Global Tech’s consolidated financial condition, results of operations and business. These statements include, among others:
statements concerning the potential benefits that may be experienced from business activities and certain transactions contemplated or completed; and
statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Form 10-K. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Form 10-K. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. The most important facts that could prevent us from achieving our stated goals include, but are not limited to, the following:
volatility or decline of Global Tech’s stock price;
potential fluctuation of quarterly results;
failure to earn revenues or profits;
inadequate capital to continue or expand our business, and inability to raise additional capital or financing to implement our business plans;
failure to commercialize our technology or to make sales;
decline in demand for our products and services;
rapid adverse changes in markets;
litigation with or legal claims and allegations by outside parties against GTII, including but not limited to challenges to intellectual property rights;
insufficient revenues to cover operating costs; and
inability to make a business acquisition that is profitable for the Company and its shareholders.
There is no assurance that we will be profitable, we may not be able to successfully develop, manage or market our products and services, we may not be able to attract and retain qualified executives and technology personnel, we may not be able to obtain customers for our products or services, our products and services may become obsolete, government regulation may hinder our business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of outstanding warrants and stock options, and other risks inherent in our businesses.
Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Form 10-K. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10K, or to reflect the occurrence of unanticipated events.
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RESULTS OF OPERATIONS
Results of Operations for the Year Ended December 31, 2023, compared to the Year Ended December 31, 2022:
During the 2023 and 2022 fiscal years, we generated $0 in revenues. Our total operating expenses increased from $13,117,530 in 2022 to $83,094,531 in 2023. The increase was primarily the result of the increase in stock-based compensation to our professionals. General and administrative expenses increased from $434,547 in 2022 to $436,499 in 2023, a slight increase of $1,952, mostly due to the due to inflation. Compensation to officers, medical contributions, and service fees to professionals increased by $14,7800,872 in 2023. Additionaly there were directors fees paid for multiple years of $55,195,071 in 2023 Expenses were $12,681,286 in 2022 and $82,657,229 in 2023 and the increase was due mostly to increases in share-based compensation. Depreciation expense decreased by $894, to $803 from $1,697 from the prior year. Other onetime items impacting our 2023 financial results include an impairment expense of $14,990,277 of our Gold License owned by our subsidiary. Our subsidiary also wrote off a receivable from its joint venture of $1,631,768. During 2023 the company wrote off old notes payable and associated interest to entities that no longer were in existence creating a debt foregiveness income of $2,092,272.
Our net loss increased by $84,311,579 to $97,882,781 in 2023 from $13,571,202 in 2022, due to the increased stock-based compensation in 2023.
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 2023, we had cash on hand of $1,238,564 compared to $3,320,164 on December 31, 2022. We used cash in our operations of $4,367,601 in 2023 compared to $488,276 in 2022, a $3,879,325 increase. We (paid) raised net $1,881,000 and $151,821 from related party loans in 2023 and 2022, respectively. We anticipate that we will have an increase in our cash flow from continuing operations with the acquisition made during the year. We have sufficient cash on hand on December 31, 2023, to cover our negative cash flow. We will attempt to increase our operating activities with our acquisition operations in 2024, and possibly raise capital through the sale of our common stock or through debt financing.
CONTRACTUAL OBLIGATIONS
The Company has contractional obligations with numerous independent service providers.
Going Concern Qualification
The Company has incurred significant losses from operations, and such losses are expected to continue. The Company’s has included a “Going Concern Qualification” in their report for the year ended December 31, 2023. In addition, the Company has net losses and negative working capital. The foregoing raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include seeking additional capital and/or debt financing. There is no guarantee that additional capital and/or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to the Company. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The “Going Concern Qualification” may make it substantially more difficult to raise capital.
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Potential Impact of COVID-19
The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have had and continue to have an impact on the way people live, work, interact and shop. While the impact of COVID-19 on our business has largely abated at this time, uncertainties continue. We may experience certain disruptions to our supply chain due to COVID-19, which have impacted and may continue to impact sales of and consumer access to our products. In addition, we have experienced changes in the purchasing patterns of our customers, including a shift in many markets to purchasing our products online. COVID-19 may continue to impact consumers’ behavior, shopping patterns and consumption preferences.
While we currently expect to be able to continue operating our business as described above, uncertainty resulting from COVID-19 could result in unforeseen additional disruptions to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. These principles require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flow and related disclosure of contingent assets and liabilities. Our estimates include those related to revenue recognition, accounts receivable reserves, income and other taxes, stock-based compensation and equipment and contingent obligations. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
We define our “critical accounting policies” as those U.S. generally accepted accounting principles that require us to make subjective estimates about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific way, we apply those principles. Our estimates are based upon assumptions and judgments about matters that are highly uncertain at the time the accounting estimate is made and applied and require us to continually assess a range of potential outcomes. A detailed discussion of the critical accounting policies that most affect our Company is in Footnote 2 of the notes to our financial statements.
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