This Quarterly Report on Form 10-Q contains predictions, estimates and other
forward-looking statements relating to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may", "should", "intends", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential", or "continue"
or the negative of these terms or other comparable terminology. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
including the risks set forth in the section entitled "Risk Factors" in our
Post-Effective Amendment to our Registration Statement on Form S-1/A Amendment
No. 4, as filed with the Securities and Exchange Commission (the "SEC") on April
28, 2022, and the following 424B filings made by the Company on June 9, 2022,
that may cause our actual results, performance or achievements to be materially
different from any future results, performances or achievements expressed or
implied by the forward-looking statements
Forward-looking statements represent our management's beliefs and assumptions
only as of the date of this Report. You should read this Report with the
understanding that our actual future results may be materially different from
what we expect.
All forward-looking statements speak only as of the date on which they are made.
We undertake no obligation to update such statements to reflect events that
occur or circumstances that exist after the date on which they are made, except
as required by federal securities and any other applicable law.
The management's discussion and analysis of our financial condition and results
of operations are based upon our condensed financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP").
The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited condensed financial statements
for the six months ended June 30, 2022, and the notes thereto appearing
elsewhere in this Report and the Company's audited financial statements for the
fiscal year ended December 31, 2021, as filed with the SEC on Form 10-K on March
11, 2022.
William Coleman Smith as the holder of the Company's issued and outstanding
shares of the Company's Special 2018 Series B Preferred Stock, controls 51% of
the voting rights of the Company and is able to influence the outcome of all
corporate actions requiring approval of our stockholders. Mr. Smith also holds a
total of 12,500,000 shares of common stock and 5,000,000 shares of Series A
Preferred Stock convertible into 50,000,000 shares of common stock (which is
100% of the Series A stock issued and outstanding) giving Mr. Smith voting
control over the Company.
Plan of Operations
We are an emerging smart city technology growth company that provides wireless
and monetization enterprise level smart solutions to cities and large venues
that require multiple types of products, services and third-party solutions to
fulfil client needs. To date we have generated modest revenues from operations,
and while we have various contracts in place for future development, there is no
assurance of future revenues.
Results of Operations
Three Months Ended June 30, 2022, and June 30, 2021
Revenue
We generated a total of $4,000 in gross revenue for the three months ended June
30, 2022, with no revenue in the comparable period ended June 30, 2021.
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Net Income (Loss)
Three Months ended June 30, 2022, and 2021
Three Months Ended
June 30
2022 2021
NET REVENUES $ 4,000 $ -
OPERATING EXPENSES
Cost of revenue 393 -
Research and development expenses - 2,600
Depreciation 24,973 1,603
General and administrative 1,343,924 183,388
General and administrative, related parties 120,000 90,000
Professional fees 27,400 13,100
Total operating expenses 1,516,690 290,691
(Loss) from operations (1,512,690 ) (290,691 )
Other income (expense)
Interest expense (1,989,658 ) (1,626,026 )
Total other income (expense) (1.989,658 ) (1,626,026 )
Net income (loss) $ (3,502,348 ) $ (1,916,717 )Less: net income (loss) attributable to Non-controlling interest (16,155 ) (38,055 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (3,486,193 ) $ (1,878,662 )
Total operating expenses for the three months ended June 30, 2022, were
$1,516,690 as compared to $290,691 for the three months ended June 30, 2021.
During the three months ended June 30, 2022 and 2021, we reported costs of
revenue of $393 and $Nil respectively. As a result of the impact of COVID 19,
certain activities which had commenced in the first quarter of fiscal 2020 were
suspended and re-engaged in the second quarter of fiscal 2021, resulting in a
increase in associated expenses during the comparative three month periods. The
Company incurred $1,343,924 and $183,388 in general and administrative expenses
in the three months ended June 30, 2022 and 2021, respectively and general and
administrative costs from related parties of $120,000 and $90,000, respectively.
General and administrative expenses include staff payroll, rent, travel, office
and sundry expense, transfer agent costs, consulting, marketing, advertising and
promotional expenses. The substantial increase primarily relates to new
employees hired in 2022 with a total of $459,083 in payroll expenses for the
three months ended June 30, 2022 as compared to $80,246 for the period ended
June 30, 2021, investor relations expenditures of $744,060 as compared to $2,268
in June 30, 2021, offset by transfer agent and filing fees which decreased from
$12,586 for the three months ended June 30, 2021 to $6,173 for the three months
ended June 30, 2022 as the Company issued more securities for financing
activities in the three months ended June 30, 2021, software expenses were
$16,738 for the three months ended June 30, 2022 with as compared to $847 for
the three month ended June 30, 2021, insurance expenses were $10,202 as compared
to $3,347 in June 30, 2021, rent expense increased from $22,625 for the period
ended June 30, 2021 to $53,377 for the three months ended June 30, 2022 and
utility expenses increased from $177 in the period ended June 30, 2021 to $4,732
for the three months ended June 30, 2022. General and administrative expenses
incurred from related parties include management fees charged by our CEO,
William Coleman Smith, and a company controlled by him. The increase in related
party administrative costs is due to an increase in management fees to Mr. Smith
of $10,000 per month in the period ended June 30, 2022. Professional fees in the
three months ended June 30, 2022, totaled $27,400 as compared to $13,100 in the
three months ended June 30, 2021, mainly due to an increase in audit fees from
$2,500 for the three months ended June 30, 2021 to $16,000 for the three months
ended June 30, 2022 as the Company incurred additional fees in June 2022 due to
expenses associated with the filing of certain registration statements and
increased financings. Depreciation increased from $1,603 during the three months
ended June 30, 2021, to $71,451 during the three months ended June 30, 2022, as
a result of the acquisition of a new office space and associated furnishings and
equipment.
Other expense
Other expense reported for three months ended June 30, 2022, and 2021 totaled
$1,989,658 and $1,626,026, respectively. During the three months ended June 30,
2022, the Company reported other expenses of $1,989,658 attributable to interest
expenses as a result of the debt discount applied to certain convertible
promissory notes. During the three months ended June 30, 2021, the Company
reported other income expenses of $1,626,026 all of which related to interest
expense.
We had a net loss of $3,502,348 offset by a loss attributable to the
non-controlling interest of $16,158 bringing our total Net Loss attributable to
the Company to $3,486,193 in the three months ended June 30, 2022, compared to a
net loss of $1,916,717 less a loss of $38,055 attributable to the
non-controlling interest bringing our total Net Loss attributable to the Company
to $1,878,662 in the three months ended June 30, 2021.
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Six Months Ended June 30, 2022 and June 30, 2021
Revenue
We generated a total of $7,000 in gross revenue for the six months ended June
30, 2022, with no revenue in the comparable period ended June 30, 2021.
Net Income (Loss)
Six Months ended June 30, 2022 and 2021
Six Months Ended
June 30
2022 2021
NET REVENUES $ 7,000 $ -
OPERATING EXPENSES
Cost of revenue 1,481 -
Research and development expenses - 5,200
Depreciation 71,451 2,189
General and administrative 1,876,111 252,012
General and administrative, related parties 240,000 150,000
Professional fees 50,200 55,256
Total operating expenses 2,239,243 464,657
(Loss) from operations (2,232,243 ) (464,657 )
Other income (expense)
Interest expense (4,254,428 ) (1,930,105 )
PPP Loan Forgiveness 46,091 -
Total other income (expense) (4,208,337 ) (1,930,105 )
Net income (loss) $ (6,440,580 ) $ (2,394,762 )Less: net income (loss) attributable to Non-controlling interest (16,754 ) (80,074 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (6,423,826 ) $ (2,314,688 )
Total operating expenses for the six months ended June 30, 2022, were $2,239,243
as compared to $464,657 for the six months ended June 30, 2021. During the six
months ended June 30, 2022, and 2021, we reported costs of revenue of $1,481 and
$Nil respectively. As a result of the impact of COVID 19, certain activities
which had commenced in the first quarter of fiscal 2020 were suspended and
re-engaged in the second quarter of fiscal 2021, resulting in a increase in
associated expenses during the comparative six month periods. The Company
incurred $1,876,111and $252,012 in general and administrative expenses in the
six months ended June 30, 2022, and 2021, respectively and general and
administrative costs from related parties of $240,000 and $150,000,
respectively. General and administrative expenses include staff payroll, rent,
travel, office and sundry expense, transfer agent costs, consulting, marketing,
advertising and promotional expenses. The substantial increase primarily relates
to new employees hired in 2022 with a total of $850,795 in payroll expenses for
the six months ended June 30, 2022 as compared to $96,470 for the period ended
June 30, 2021, investor relations expenses were $754,060 for the six months
ended June 30, 2022 as compared to $2,258 for the period ended June 30, 2021,
advertising and promotion expenses decreased slightly from $40,795 for June 30,
2021 to $34,783 for the six months ended June 30, 2022, recruiting expenses were
$6,550 for the six months ended June 30, 2022 as compared to $1,784 for June 30,
2021, transfer agent and filing fees remained fairly constant increasing from
$15,328 for the six months ended June 30, 2021 to $16,585 for the six months
ended June 30, 2022, software expenses were $28,584 for the six months ended
June 30, 2022 as compared to $847 for the six month ended June 30, 2021,
insurance expenses were $18,410 as compared to $3,532 in June 30, 2021, rent
expense increased from $34,035 for the period ended June 30, 2021 to $106,344
for the six months ended June 30, 2022 and utility expenses increased from
$1,184 in the period ended June 30, 2021 to $8,977 for the six months ended June
30, 2022. General and administrative expenses incurred from related parties
include management fees charged by our CEO, William Coleman Smith, and a company
controlled by him. The increase in related party administrative costs is due to
an increase in management fees to Mr. Smith of $10,000 per month in the period
ended June 30, 2022. Professional fees in the six months ended June 30, 2022,
remained fairly constant totaling $50,200 as compared to $55,256 in the six
months ended June 30, 2021. Depreciation increased from $2,189 during the six
months ended June 30, 2021, to $71,451 during the six months ended June 30, 2022
as a result of the acquisition of a new office space and associated furnishings
and equipment.
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Other expense
Other expense reported for six months ended June 30, 2022, and 2021 totaled
$4,208,337 and $1,930,105, respectively. During the six months ended June 30,
2022, the Company reported other expenses of $4,254,428 attributable to interest
expenses as a result of the debt discount applied to certain convertible
promissory notes offset by the amount of $46,091 related to the forgiveness of a
PPP loan. During the six months ended June 30, 2021, the Company reported other
expense of $1,930,105 all of which related to interest expense.
We had a net loss of $6,440,580 offset by a loss attributable to the
non-controlling interest of $16,754 bringing our total Net Loss attributable to
the Company to $6,423,826 in the six months ended June 30, 2022, compared to a
net loss of $2,394,762 less a loss of $80,074 attributable to the
non-controlling interest bringing our total Net Loss attributable to the Company
to $2,314,688 in the six months ended June 30, 2021.
Statement of Cash Flows
June 30, 2022 and 2021
The following table summarizes our cash flows for the period presented:
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GZ6G TECHNOLOGIES CORP. 
