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 nine months ended September 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 September 30, 2022 and September 30, 2021
Revenue
We generated a total of $74,890 in revenue for the three months ended September
30, 2022, and $132,000 in revenue in the comparable period ended September 30,
2021.
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Net Income (Loss)
Three Months ended September 30, 2022, and 2021
Three Months Ended
September 30
2022 2021
NET REVENUES $ 74,890 $ 132,000
OPERATING EXPENSES
Cost of revenue 3,770 32,722
Research and development expenses - 2,600
Depreciation 26,403 17,752
General and administrative 554,248 293,318
General and administrative, related parties 120,000 90,000
Professional fees 30,000 18,759
Total operating expenses 734,421 455,151
(Loss) from operations (659,531 ) (323,151 )
Other income (expense)
Gain on extinguishment of debt 3,568,359 -
Interest expense (1,189,022 ) (2,522,952 )
Total other income (expense) 2,379,337 (2,522,952 )
Net income (loss) $ 1,719,806 $ (2,846,103 )Less: net income (loss) attributable to Non-controlling interest (20,757 ) 13,841
Net income (loss) attributable to GZ6G Technologies Corp. $ 1,740,563 $ (2,859,944 )
Total operating expenses for the three months ended September 30, 2022, were
$734,421 as compared to $455,151 for the three months ended September 30, 2021.
During the three months ended September 30, 2022 and 2021, we reported costs of
revenue of $3,770 and $32,722 respectively. The Company incurred $554,248 and
$293,318 in general and administrative expenses in the three months ended
September 30, 2022, and 2021, respectively and general and administrative costs
from fees charged by 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 period over period primarily
relates to new employees hired in 2022 with $322,573 in payroll expenses for the
three months ended September 30, 2022 as compared to $163,971 for the period
ended September 30, 2021, share based compensation to officers and directors in
the current period of $65,070 as compared to $0 in the prior comparative three
months, transfer agent fees of $22,392 compared to $6,708 in fiscal 2021 due to
the costs associated with shares issuances under our equity offerings, software
expenses of $14,417 for the three months ended September 30, 2022 with as
compared to $3,528 for the three month ended September 30, 2021, insurance
expenses of $10,651 as compared to $2,766 in September 30, 2021, and increases
to rent expenses to $59,186 for the three months ended September 30, 2022 from
$48,404 for the three months ended September 30, 2021.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
payable to Mr. Smith of $10,000 per month in the period ended September 30,
2022. Professional fees in the three months ended September 30, 2022, totaled
$30,000 as compared to $18,759 in the three months ended September 30, 2021,
mainly due to an increase in accounting and audit fees from $8,875 for the three
months ended September 30, 2021 to $22,500 for the three months ended September
30, 2022 as the Company incurred additional fees in September 2022 due to
expenses associated with the filing of certain registration statements and
increased financings. Depreciation increased from $17,752 during the three
months ended September 30, 2021, to $26,403 during the three months ended
September 30, 2022, as a result of the acquisition of a new office space and
associated furnishings and equipment.
Other income (expense)
Other income and expense reported for three months ended September 30, 2022,
reflected a gain of $2,379,332 for 2022 as including interest expenses and
amortization of debt discounts of $1,189,022, offset by a gain on extinguishment
of debt of $3,568,359. During the three months ended September 30, 2021, the
Company reported other income expenses of $2,522,952 all of which related to
interest expense and amortization of debt discounts.
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We had a net income of $1,719,806 offset by a loss attributable to the
non-controlling interest of $20,757 bringing our total net income attributable
to the Company to $1,740,563 in the three months ended September 30, 2022,
compared to a net loss of $2,846,103 plus a gain of $13,841 attributable to the
non-controlling interest bringing our total Net Loss attributable to the Company
to $2,859,944 in the three months ended September 30, 2021.
Nine Months Ended September 30, 2022 and September 30, 2021
Revenue
We generated a total of $81,890 in gross revenue for the nine months ended
September 30, 2022, with $132,000 revenue in the comparable period ended
September 30, 2021.
Net Income (Loss)
Nine Months ended September 30, 2022, and 2021
Nine Months Ended
September 30,
2022 2021
NET REVENUES $ 81,890 $ 132,000
OPERATING EXPENSES
Cost of revenue 5,251 32,722
Research and development expenses - 7,800
Depreciation 97,854 19,941
General and administrative 2,430,359 545,330
General and administrative, related parties 360,000 240,000
Professional fees 80,200 74,015
Total operating expenses 2,973,664 919,808
(Loss) from operations (2,891,774 ) (787,808 )
Other income (expense)
Gain on extinguishment of debt 3,568,359 -
Interest expenses (5,443,450 ) (4,453,057 )
PPP loan forgiveness 46,091 -
Total other income (expense) (1,829,000 ) (4,453,057 )
Net income (loss) $ (4,720,774 ) $ (5,240,865 )
Less: net income (loss) attributable to Non-controlling interest (37,511 ) (66,233 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (4,683,263 ) $ (5,174,632 )
Total operating expenses for the nine months ended September 30, 2022, were
$2,973,664 as compared to $919,808 for the nine months ended September 30, 2021.
During the nine months ended September 30, 2022 and 2021, we reported costs of
revenue of $5,251 and $32,722 respectively. The Company incurred $2,430,359 and
$545,330 in general and administrative expenses in the nine months ended
September 30, 2022 and 2021 respectively and general and administrative costs
from related parties of $360,000 and $240,000, 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 $1,173,368 in payroll expenses for the
nine months ended September 30, 2022 as compared to $260,441 for the period
ended September 30, 2021, share based compensation to officers and directors in
the current period of $65,070 as compared to $0 in the prior comparative three
months, investor relations expenses were $754,060 for the nine months ended
September 30, 2022 as compared to $4,225 for the period ended September 30,
2021, advertising and promotion expenses increased substantially from $44,754
for September 30, 2021 to $66,013 for the nine months ended September 30, 2022,
transfer agent and filing fees increased period over period as a result of
equity financings in the period and associated share issuance costs from $22,037
for the nine months ended September 30, 2021 to $38,977 for the nine months
ended September 30, 2022, software expenses were $43,001 for the nine months
ended September 30, 2022 as compared to only $4,375 for the nine month ended
September 30, 2021 as we worked to improve our product offerings, insurance
expenses, including general, health and auto insurance were $28,801 as compared
to $5,456 in September 30, 2021, and rent expense increased from $81,078 for the
period ended September 30, 2021 to $165,530 for the nine months ended September
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 September 30, 2022. Professional fees in the nine months ended September
30, 2022, remained fairly constant totaling $80,200 in the current nine months,
as compared to $74,015 in the nine months ended September 30, 2021. Depreciation
increased from $19,941 during the nine months ended September 30, 2021, to
$97,854 during the nine months ended September 30, 2022, as a result of the
acquisition of a new office space and associated furnishings and equipment.
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Other expense
During the nine months ended September 30, 2022, the Company reported other
expenses of $1,829,000 including interest expenses and amortization of debt
discounts of $5,443,450, offset by a gain on extinguishment of debt of
$3,568,359 and a gain of $46,091 related to the forgiveness of a PPP loan.
During the nine months ended September 30, 2021, the Company reported other
expenses of $4,453,057 all of which related to interest expense and amortization
of debt discounts
We had a net loss of $4,720,774 offset by a loss attributable to the
non-controlling interest of $37,511 bringing our total Net Loss attributable to
the Company to $4,683,263 in the nine months ended September 30, 2022, compared
to a net loss of $5,240,865 less a loss of $66,233 attributable to the
non-controlling interest bringing our total Net Loss attributable to the Company
to $5,174,632 in the nine months ended September 30, 2021.
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GZ6G TECHNOLOGIES CORP. 
