GTII Global Tech Industries Group Inc (PK)

Notes to the Unaudited Condensed Consolidated Financial Statements

September 30, 2022

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

A) CONSOLIDATION

The accompanying consolidated financial statements have been prepared by GLOBAL TECH INDUSTRIES GROUP, INC. (“the Company”) without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2022, and the results of operations and cash flows for the three and six months then ended, have been made.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period ended March 31, 2023, are not necessarily indicative of the operating results for what will be the full year ended December 31, 2022.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as disclosed in Note 2 below. All significant inter-company balances and transactions have been eliminated.

B) GOING CONCERN

The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. As a result, economic uncertainties have arisen which have the potential to negatively impact the Company’s ability to raise funding from the markets. Other financial impacts could occur though such potential impacts are unknown at this time.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

A) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Ludicrous, Inc., TTI Strategic Acquisitions and Equity Group, Inc, Classroom Salon Holdings, LLC, TTII Oil & Gas, Inc., and GT International, Inc. All subsidiaries of the Company, other than TTI Strategic Acquisitions and Equity Group, Inc., currently have no financial activity. All significant inter-company balances and transactions have been eliminated.

B) USE OF MANAGEMENT’S ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

C) CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained with major financial institutions in the U S. Deposits held with these banks at times exceed $250,000 of insurance provided on such deposits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash and cash equivalents. On March 31, 2023, and December 31, 2022, $4,266,931 and $3,320,164 excess cash balances existed, respectively.

D) INCOME TAXES

The Company applies ASC 740 which requires the asset and liability method of accounting for income taxes. The asset and liability method require that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.

ASC 740 requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards 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 the deferred tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

E) REVENUE RECOGNITION

The Company had no revenues during the three and six months ended September 30, 2022 and 2021, however when revenues commence, the Company will recognize revenues in accordance with ASC 606, “Revenue from Contracts with Customers.” Revenue is recognized per our contract with our customers at a point of time when control of our products or services are transferred to our customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products, and after all our performance obligations have been met. The Company currently has no consulting revenues with performance obligations of hours expended on various projects with our customers pursuant to underlying contracts. If we subsequently determine that collection from any customer is not reasonably assured, we record an allowance for doubtful accounts and bad debt expense for all that customer’s unpaid invoices and cease recognizing revenue for continued services provided until cash is received.

F) STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with the provisions of ASC 718. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the reward- known as the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments are estimated using the Black Scholes option-pricing model adjusted for the unique characteristics of those instruments.

Equity instruments issued to non-employees are recorded at their fair values as determined in accordance with ASC 718 as amended by ASU 2018-07. As such, the grant date is the measurement date of an award’s fair value., which is expensed over the requisite service period.

G) FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows ASC 820, “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

The carrying amounts reported in the balance sheets for cash and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value 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 carrying value of notes payable approximates fair value because negotiated terms and conditions are consistent with current market rates as of March 31, 2023, and December 31, 2022.

Marketable securities are reported at the quoted and listed market rates of the securities held at the period end.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

The following table presents the Company’s marketable securities within the fair value hierarchy utilized to measure fair value on a recurring basis as of March 31, 2023, and December 31, 2022:

H) BASIC AND DILUTED LOSS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, “Earnings Per Share.” Basic loss per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share gives effect to dilutive convertible securities, options, warrants and other potential common stock outstanding during the period; only in periods in which such effect is dilutive. For the three ended March 31, 2023, and 2022, there were 23,358,496 warrants outstanding, however their effects were anti-dilutive. and there were no potentially dilutive securities to consider in the fully diluted earnings per share calculation.

I) RECENT ACCOUNTING PRONOUNCEMENTS

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

J) MARKTABLE SECURITIES

The Company purchases marketable securities and engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net Interest Income.

K) LONG LIVED ASSETS

The Company evaluates its long-lived assets in accordance with FASB ASC 350, “Intangibles-Goodwill and Other,” and FASB ASC 360, “Property, Plant, and Equipment.” Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets and is recorded in the period in which the determination was made.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 3 - MARKETABLE SECURITIES

The Company has acquired various shares of Marketable Securities. During the nine months ended March 31, 2023, the Company recorded a gain of $4,000 which consisted of unrealized gains (losses) by marking to market, the value of the shares held. For the three months ended March 31, 2022, the Company recorded unrealized loss of $(27,000). The Company does not hold any equity securities that do not have readily available fair values, therefore no impairment analysis or other methods to determine value are used.

NOTE 4 - FIXED ASSETS

Depreciation expense for the three months ended March 31, 2023, and 2022 was $269 and $893, respectively. March 31, 2023, assets of $3,214.

Fixed assets consist of the following:

NOTE 5 - LICENSES

GOLD TRANSACTIONS NETWORK LICENSE

On February 28, 2021, pursuant to a Stock Purchase Agreement (the “SPA”) between the Company and Gold Transactions International, Inc. (GTI), the Company purchased 100% of the stock of GoldTI and assumed its sole asset a License Agreement held by GoldTI. The license provides access to a joint venture of companies (the “Network”), that buys gold from artisan miners internationally, and provides transportation, assaying, refining and storage facilities in the DMCC1, a free trade zone for commodities trading in Dubai, and then sells the refined gold to its customers. The License Agreement grants the Company the following:

Pursuant to the SPA, 100% of the GTI shares were exchanged for 6,000,000 shares of the Company’s common stock (acquisition date fair value was $10,018,085). GTI has met its performance obligations and this transaction closed in the second quarter of 2022. As per the table below the License asset was valued at $14,990,277 net of additional liabilities recorded on the closing date of the transaction May 25, 2022.

The acquisition of GTI is being treated as an asset purchase and not business combination per ASC 805 as substantially all of the assets acquired are concentrated in a single identifiable asset. The following table summarizes the consideration transferred to acquire GTI and the amount of identified assets, and liabilities assumed at the acquisition date.

Recognized amounts of identifiable assets acquired and liabilities assumed:

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 7 - RELATED PARTY TRANSACTIONS

Accrued Payables and Accrued Expenses – Related Parties

Related party payables and accrued expenses totaled $1,718,905 and $1,551,208 on March 31, 2023, and December 31, 2022. These totals are detailed as follows:

Due to related parties advances consists of cash advances and expenses paid by Mr. Reichman to satisfy the expense needs of the Company. The payables and cash advances are unsecured, due on demand and do not bear interest. As of March 31, 2023, and December 31, 2022, these amounts totaled $212,958 and $270,649.

The Company does not have sufficient operations and funds to pay its officers their wages in cash, therefore all wages have been accrued for the three months ended March 31, 2023, and 2022. The accrued officer wages for the three months ended March 31, 2023, and 2022 are $162,000 and $137,000, respectively. The balance of accrued wages due to the officers on March 31, 2023, and December 31, 2022, are $1,432,500 and $1,232,500, respectively. Additionally, there is an expense account due Mr. Reichman in total of $60,059 and $48,059 on March 31, 2023, and December 31, 2022.

Due to Related Parties

Due to related parties consists of a short-term cash advance by Mr. Reichman to satisfy the expense needs of the Company. The balance is unsecured, due on demand and do not bear interest. As of March 31, 2023, and December 31, 2022, these amounts totaled $1,075,000 and $0.

NOTE 8 - NOTES PAYABLE

(a) NOTES PAYABLE IN DEFAULT:

Notes payable in default consist of various notes bearing interest at rates from 5% to 9%, which are unsecured with original due dates between August 2000 and December 2016. All the notes are unpaid to date and are in default and are thus classified as current liabilities. At March 31, 2023 and December 31, 2022, notes payable in default amounted to $871,082 and $871,082, respectively. Below is a discussion of the details to the notes payable in default and a table summarizing the notes in default with additional information.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

None of the above notes are convertible or have any covenants.

(b) Additional detail to all Notes Payable in Default is as follows:

On March 31, 2023, and December 31, 2022, accrued interest on the outstanding notes payable (default and current) were $426,813 and $416,774, respectively and related party notes was $1,899 and $399, respectively. Interest expense on the outstanding notes amounted to $12,199 and $12,199 for the three months ended March 31, 2023, and 2022 including the imputed interest discussed below.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

(c) NOTES PAYABLE

On November 29, 2022, the Company received cash from an individual in the amount of $50,000 as a loan bearing interest at 5%, with a term of 12 months of the date received. On March 31, 2023, accrued interest on this note totaled $1,021 respectively.

On December 5, 2022, the Company received cash from an individual in the amount of $30,000 as a loan bearing interest at 5%, with a term of 12 months of the date received. On March 31, 2023, accrued interest on this note totaled $578, respectively.

On January 1, 2023, the Company had legal fees paid directly from an individual in the amount of $20,000 as a loan bearing interest at 5%, with a term of 12 months of the date received. On March 31, 2023, accrued interest on this note totaled $300, respectively.

In connection with the acquisition of the License Agreement, the Company executed a Promissory Note in the amount of $5,044,610, bears interest at 2.168%, is payable quarterly in graduating amounts over a 5-year period and is unsecured. On December 31, 2020, the Note Holder agreed to delay the interest accrual until 2021 and delayed the quarterly installments. As of March 31, 2023, the balance on this loan was $4,968,177.

The Company has debt obligations on the note as follows:

(d) IMPUTED INTEREST

During the three months ended March 31, 2023, and 2022, the Company recorded imputed interest on a non-interest-bearing note in the amount of $3,360 and $3,360, respectively, as an increase in additional paid in capital.

NOTE 9 - STOCKHOLDERS’ EQUITY (DEFICIT)

ISSUANCES OF COMMON STOCK

During the three months ended March 31, 2023 the Company issued 48,018,648 shares of common stock with a fair market value of $72,253,223 respectively, for services rendered. Directors were issued 36,460,714 shares with a total value of $54,691,071 to related parties. A total of 557,934 shares issued for services performed during the period including legal, IR services, IT and consulting services valued at $702,152. Medical advisory and service related to a 501c charitable organization received 11,000,000 shares valued at $16,860,000. All non director services performed were from outside, unrelated third parties.

During the first three months of 2022, 533,399 shares of common stock were issued with a fair market value of $863,108. The services performed during the quarter were, legal, IR services, IT and consulting services for art procurement, medical advisory and service related to a 501c charitable organization. All services performed were from outside, unrelated third parties.

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2023

WARRANTS

On March 22, 2021, GTII entered into a warrant agreement with Liberty Stock Transfer Agent (“Liberty”), whereby Liberty agreed to act as GTII’s warrant agent in its offering of warrants to GTII’s shareholders (each, a “Warrant”). All shareholders of record on April 1, 2021, were issued 0.10 of a Warrant per share of Common Stock held of record by such holder. This agreement created 23,364,803 warrants to the shareholders of the Company as a dividend valued at $57,689,800, and recorded as a decrease in retained earnings with the offsetting entry to paid in capital. The Warrants were issued on April 8, 2021. Each full Warrant shall be exercisable into one share of GTII’s common stock at an exercise price of $2.75. The Warrants shall expire on April 8, 2023. Manhattan Transfer Registrar Co. shall act as co-agent with Liberty. On July 27, 2021, the Company filed an Amended Registration Statement to register the warrants to be free trading when exercised.

Warrant transactions are as follows:

GLOBAL TECH INDUSTRIES GROUP, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

September 30, 2022

NOTE 10 – LEGAL ACTIONS

On February 3, 2017, the Company filed suit in Eastern District Federal Court New York against American Resource Technologies, Inc., (ARUR) and several directors and officers relating to the Chautauqua County Court Kansas decision nullifying the acquisition Agreement of ARUR. The Company has made several attempts to recover the shares of GTII stock paid to ARUR for the asset acquisition and the various costs and expenses expended by GTII in fulfillment of its obligations under the contract with ARUR. The failure of non-litigation attempts to resolve the matter resulted in filing an action for declaratory judgment in the US District Court for the Eastern District of New York, Docket No. 17-CV-0698. The case was subsequently withdrawn due to the close of ARUR operations. During the 2^nd quarter 2020, the Company was successful in recalling the 4,668,530 shares and cancelling them from the shareholders list.

On December 30, 2016, the Company executed a stock purchase agreement (the “Agreement”), which was signed and closed in Hong Kong, with GoFun Group, Ltd. through its wholly owned subsidiary Go F & B Holdings, Ltd. GoFun Group, Ltd. is a privately held company running a casual dining restaurant business, based in Hong Kong. Subsequent to the agreement being signed, GoFun Group failed to substantially perform under the agreement, including, but not limited to providing audited financials of its assets, making the ongoing payments called for in the agreement, along with other matters that led Global Tech to initiate litigation in the United States. Currently, Global Tech and GoFun are litigating the matter in the U.S District Court for the Southern District of New York, Docket No.17-CV-03727 . On October 2, 2019, the Company was able to secure, via preliminary settlement, the return of 43,649,491 shares of the Company’s stock out of the original 50,649,491 that were issued in good faith to GoFun in anticipation of a final stock exchange. That stock has been returned to the Company’s treasury and cancelled. On May 14, 2021, the Superior Court of New Jersey, Chancery Division: Monmouth County (docket no. PAS-MON-C-60-21) issued an order restraining the removal of restrictive legends on the remaining 7,000,000 shares of stock, pending further order of the New Jersey Court. The underlying matter currently in the U.S. district Court for the Southern District of New York, remains pending. The Company and GoFun have mutually agreed to resolve the matter and the respective counsels are currently working toward that goal.

On December 30, 2019, a dispute between the Company and its counsel regarding the GoFun matter, above, resulted in a filing, and subsequent settlement, of an action in the Supreme Court of the State of New York for the County of New York (Index No. 656396/2019). Pursuant to the settlement, counsel for the Company accepted previously-issued shares as full payment for all legal work, expenses, costs, and other fees.

On March 17, 2021, the Company filed an action against Pacific Technologies Group, Inc., Rollings Hills Oil and Gas Inc., Demand Brands, Inc., Innovativ Media Group, Inc., Tom Coleman, and Bruce Hannan, in the Supreme Court of the State of New York, County of New York (Index No. 651771/2021), alleging fraud, rescission and cancellation of a written instrument, unconscionability, breach of contract, breach of good faith and fair dealing, unjust enrichment, and civil conspiracy. The action stems from a stock purchase agreement entered into by the Company and Pacific Technologies Group, Inc. (then known as Demand Brands, Inc.) on October 16, 2018. On May 22, defendants filed a motion seeking additional time to answer. On November 23, 2021, the defendants filed a venue-related procedural motion to dismiss. On January 21, 2022, the Company submitted its opposition to said motion, and on February 11, 2022, defendants filed their affirmation in reply. To date, no decision on that motion has been entered by the Court.

On August 16, 2021, the Company filed an action against David Wells, in the United States District Court for the Southern District of New York (Case 1:21-cv-06891) seeking injunctive relief and relinquishment of 150,000 shares held in the name of David Wells. As of December 31, 2021, David Wells has not yet filed an answer to the Company’s complaint. On November 11, 2021, David Wells filed an action against GTII in the United States District Court for the District of Nevada,(Case 2:21-cv-02040) claiming a violation of the duty to register transfer of shares. As of December 31, 2021, the parties are engaged in briefing jurisdictional motions. Open Issue

On August 24, 2021, the Company filed an application for a temporary restraining (“TRO”) order in the Superior Court of New Jersey, Chancery Division: Monmouth County (Docket No.: Mon-C-132-21) seeking to restrain Liberty Stock Transfer, Inc. from removing restrictive legends from 6,000,000 shares of Company stock held in the name of International Monetary, as well as from transferring said shares. The Court granted the TRO effective until September 28, 2021. On September 28, 2021, the Court declined to issue any further restraints.

In the interim, on September 16, 2021, International Monetary filed an action against the Company in Clark County, Nevada (Case No: A-21-841175-B) alleging breach of contract and breach good faith and fair dealing, as well as a request for declaratory relief, and temporary restraining order and preliminary injunction. On September 30, 2021, the Company filed a notice of removal of the action to the United States District Court for the District of Nevada (Case 2:21-cv-01820), as well as a request for a temporary restraining order enjoining International Monetary from taking any action to remove the restrictive legend shares from Company shares held in its name. On October 14, 2021, International Monetary filed a motion to strike the petition for removal. As of December 31, 2021, no ruling on that motion had been entered. As of December10x, 2022 the parties entered in to a mutual resolution of the matter and on November 3, 2022, the Company entered into a settlement agreement with two separate private lenders, which provided for the settlement of all disputes and claims of the parties, including those arising in connection with the lenders’ loans to the Company (the “Settlement Agreement”). The transactions under the Settlement Agreement closed on November 8, 2022.

On January 28, 2023, the board authorized management to issue 227,284 shares of the Company’s common stock, restricted by Rule 144, to International Monetary in keeping with the previously signed settlement agreement.