10-Q: Global Arena Holding Reports Continued Losses in Q3 2023, Focus Remains on Financing and Acquisition Strategies

Global Arena Holding, Inc. reports ongoing losses in Q3 2023, with a continued focus on securing financing and pursuing strategic acquisitions to improve its financial position.

Summary

• Global Arena Holding, Inc. (GAHI) reported a net loss of $994,500 for the nine months ended September 30, 2023, compared to a net loss of $1,086,627 for the same period in 2022.
• Revenues increased slightly to $612,468 for the nine months ended September 30, 2023, from $559,911 in the prior year.
• The company's operating expenses decreased from $1,270,375 to $988,355 year over year.
• As of September 30, 2023, GAHI had an accumulated deficit of $32,300,548 and a working capital deficit of $9,541,888.
• The company's ability to continue as a going concern is dependent on raising additional capital, obtaining financing, and generating positive cash flows.
• GAHI is pursuing the acquisition of Election Services Solutions, LLC, with the closing anticipated in the first quarter of 2024.
• The company is also working to close Tidewater Energy Group Inc. in the first quarter of 2024.
• During the three months ended September 30, 2023, the Company issued 206,600,000 shares of common stock for convertible notes of $203,825 and accrued interest of $2,775.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's ongoing losses, accumulated deficit, and dependence on raising additional capital to continue as a going concern. While there was a slight increase in revenue and decrease in expenses, the overall financial situation remains precarious.

Positives

• Revenues increased to $612,468 for the nine months ended September 30, 2023, compared to $559,911 for the same period in 2022.
• Operating expenses decreased to $988,355 for the nine months ended September 30, 2023, compared to $1,270,375 for the same period in 2022.

Negatives

• The company reported a net loss of $994,500 for the nine months ended September 30, 2023.
• The company has an accumulated deficit of $32,300,548 as of September 30, 2023.
• The company's ability to continue as a going concern is dependent on raising additional capital.

Risks

• The company's ability to acquire or create a sustainable business may be adversely affected by its current financial conditions, availability of capital, general economic conditions, and other economic and political situations.
• The company has generated recurring losses and cash flow deficits from its operations since inception and has had to continually borrow to continue operations.
• There are risks regarding the integrity and privacy of data, and these risks apply to election companies, falling into the general classification of cybersecurity.

Future Outlook

The company's future operations are dependent on its ability to raise additional capital, obtain additional financing, and/or generate positive cash flows from operations.

Management Comments

• Management is hopeful that with their ability to raise additional funds that the Company should be able to continue as a going concern.

Industry Context

The company operates in the election services industry, which is subject to increasing cybersecurity risks and evolving regulatory guidelines. The market for mail/absentee ballot elections grew exponentially in January of 2017, when first President Barack Obama, and then President Donald Trump designated U.S. Elections Critical Infrastructure.

Comparison to Industry Standards

• It is difficult to compare Global Arena Holding's results directly to industry standards due to its small size and specific focus on election services.
• Larger companies in the election services industry, such as Dominion Voting Systems and Election Systems & Software (ES&S), have significantly higher revenues and resources.
• Global Arena Holding's reliance on convertible debt financing is a common strategy for small, developing companies but carries significant risks.

Legal Proceedings

• The Company may be involved in legal proceedings in the ordinary course of business.
• On May 1, 2023, Brett Pezzuto and Christian Pezzuto filed a complaint in the United States District Court for the Southern District of New York (Civil Action No. 1:23-cv-03591) against the Company and GES for breach of contract for failures to pay monies owned pursuant to promissory notes and for not providing plaintiffs an opportunity to convert their promissory notes to common stock.
• On May 22, 2023, Lim Chap Huat filed a Memorandum of Law in Support of Plaintiffs Motion for Summary Judgment in Lieu of Complaint Pursuant to CPLR 3213 in the Supreme Court of the State of New York (Index No. 652474/2023) against the Company.

Stakeholder Impact

• Shareholders: Continued losses and reliance on debt financing may negatively impact shareholder value.
• Employees: The company's financial instability could lead to uncertainty regarding job security.
• Customers: The company's ability to provide reliable election services may be affected by its financial condition.
• Creditors: The company's high debt levels and history of defaults pose a risk to creditors.

Next Steps

• The company plans to close Tidewater Energy Group Inc. in the first quarter of 2024.
• The company is pursuing the acquisition of Election Services Solutions, LLC, with the closing anticipated in the first quarter of 2024.
• GES has begun undertaking the following six step benchmarks to qualify for the updated U.S. certification and is also considering individual State certifications; Step 1 Voting System Testing, Testing current developed systems to U.S. Federal 2.0 Standards Step 2 Technical Data Package Review; Reviews submitted documents against documentation requirements of outside agencies, published standards, or U.S. specificationsStep 3 Physical Configuration Audit; Examines the documentation of the system against the actual submitted system Step 4 System Integration Testing; Executes tests on all components of a system configured as if the system was deployedStep 5 Functional Configuration Audit; Examines submitted test data and conducts additional testing to verify submitted system hardware and software described in the documents submitted to the Elections Assistance Commission and the Department of Homeland SecurityStep 6 Security Testing; Performs vulnerability assessments and penetration analysis to assess system vulnerabilities

Key Dates

Keywords

financial statements, election services, convertible notes, going concern, acquisition, revenues, net loss, expenses, financing, capital