F-12

Global Boatworks Holdings, Inc.

Notes to Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(4) PROPERTY AND EQUIPMENT, continued

The Company capitalized the costs of developing the architectural plans for the Luxuria model floating vessel and is amortizing the costs over their estimated useful life of seven years, beginning April 1, 2016. Amortization expense for the nine months ended September 30, 2019 and 2018, was $1,368 and $1,368, respectively. For property and equipment- other, depreciation expense for the nine months ended September 30, 2019 and 2018 was $665 and $4,928, respectively.

In April 2019, when the sale of the Luxuria I closed, the Company wrote off the undepreciated balance of $2,571 of furniture and equipment that was directly related to the Luxuria I.

(5) RENTAL PROPERTY AND RELATED NOTE PAYABLEBUSINESS COMBINATION

On September 25, 2014,4, 2020, R3Score entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Boatworks Holdings, Inc., a Florida corporation. Upon completion of the merger, R3Score’s shareholders collectively own, as a group, on a fully diluted basis approximately 81% of the combined company. The Merger Agreement was consummated on September 23, 2020, with a July 1, 2020 date for accounting purposes.

Stockholders’ Equity: Under ASC 80-5, Business Combinations, R3Score was deemed the accounting acquirer based on the following predominate factors: its former owners have the largest portion of voting rights in the Company, acquired the Miss Leah, a two story luxury floating vessel inboard and Management has more individuals coming from R3Score and the Cape Cod architectural style built on a barge platform. The Miss Leahheadquarters was based at a marina in Boston harbor. It was rented out primarily through a third party rental management company on a short term vacation type basis. The Miss Leah was built in 2004 by the founder of the Company and subsequently sold in 2006 to his brother who established the Predecessor’s rental business.

The terms of this acquisition were for a payablemoved to the related party Predecessor in the amount of $100,000, carrying interest at 2% per annum from the effective date of the transfer date of September 25, 2014 with all principal and interest due on the maturity date of June 20, 2022, which was memorialized in the form of a promissory note in June 2015, effective September 25, 2014. Due to the related party relationship between the Company and the Predecessor the luxury floating vessel was recorded on the Company’s books at its original cost basis of $0 based on its fully depreciated value at the transfer date. Accordingly, the Company charged additional paid-in capital as a distribution for $100,000 in 2014. Outstanding principal and interest totaled $109,907 at September 30, 2019.

(6) ACCRUED LIABILITIES

The major components of accrued liabilities are:

R3Score headquarters.

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(7) SHORT TERM LOANS AND SHORT-TERM CONVERTIBLE NOTES

a) Short term notes

Short term debt including accrued interest was, as follows:

NOTE 1: On July 9, 2015, the company entered into a loan agreement in the amount of $151,700 with a shareholder. The company issued 250 common shares to the shareholder as consideration for providing us the loan. The shares were valued at $25,000, or $100 per share (based on the recent private placement sales) was recorded as a discount and is being amortized at a rate of $2,083 per month over the life of the loan. The note bears interest at the rate of 10%. Prepaid interest in the amount of $15,000 and a loan fee of $1,700 were deducted from the proceeds of the loan. These were amortized each month at the rate of $1,250 and $142 over the life of the loan, respectively. We were obligated to pay the principal and interest due on July 9, 2016. The loan was secured by the Miss Leah, our company owned vessel. The Company paid $6,000 in interest to the holder during the third quarter 2016.(4) BUSINESS COMBINATION, continued

The note holder sold $51,700Company acquired approximately 81% of the equity of Global pursuant to the Merger Agreement by issuing 2,901,291 shares of Common Stock of Global. Total value of equity for the transaction was $2.3 million.. In addition, the Company issued 2,310,000 shares of common stock to settle $115,500 of debt, 1,988,709 shares of common stock to settle $926,035 of accrued liabilities and 3,800,000 shares of common stock for services valued at $3,040,000 rendered in relation to this note to a third party in August 2016,agreement.

The acquired assets and assumed liabilities of Global were recorded at their estimated fair values.  The following table summarizes the consideration paid for Global and the Company modified the new $51,700 note to add a conversion feature at a conversion rate of 60%fair value of the trading priceassets acquired and liabilities assumed at the acquisition date on July 1, 2020.

As of the Company’s common stock. This notedate of the Business Combination, the weighted-average useful life of total identifiable intangible assets acquired in the Business Combination, excluding goodwill, is considered stock settled debt and accordingly2.75 years.

Approximately $2.3 million of the goodwill recorded is tax deductible. The Company recorded a premium on100% impairment of the debtgoodwill into Net assets of $34,467 as a charge to interest expense on the modification date. This third party converted $51,700 of this in exchange for 1,575 shares in fiscal 2016, and the premium was reclassified to additional paid in capital.discontinued operations.

Transaction Costs

The $100,000 remaining balanceCompany incurred approximately $3.0 million in advisory, legal, accounting and management fees in conjunction with the Business Combination as of the original note was renegotiated into a new note on December 5, 2016 which matured on July 15, 2017. This new note carries interest at a rate of 16.8% which was payable in cash monthly. The Company paid $14,443 in interest during the year ended December 31, 2017. This new note required the Company to issue 100 shares which were valued at $6,000 which was recorded as a discount to be amortized over the remaining life of the note. The remaining note balance and unamortized discount balance at December 31, 2017, is $40,000 (see following assignments) and $0. The $40,000 balance of Note 1 matured on July 15, 2017. In an amendment dated December 7, 2018, as stated below this note balance was combined with Note 3.

September 30, 2020.

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Information as to

(5) PROPERTY AND EQUIPMENT

Property and Equipment consists of the ninefollowing:

The Company capitalized the cost of equipment purchased and is amortizing the cost over their estimated useful life of three years, beginning September 2019.

(6) INTANGIBLE ASSETS AND GOODWILL

Intangible assets consists of the following:

Amortization expense was $23,229 and $5,645 for the six months ended September 30, 2020 and  the year ended December 31, 2019, is unaudited)respectively. Amortization expense will be $13,304 for the fourth quarter 2020; $53,264; $31,993; $0; $0 and $0 for the years ended December 31, 2021; 2022, 2023, 2024 and 2025, respectively.

Pursuant to the merger agreement, R3Score recorded $4,367,459 in Goodwill. When management determined to divest the luxury floating living vessel business 100% impairment of the goodwill was recorded in assets of discontinued operations.

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)ACCRUED EXPENSES

a) Short term notes, (continued)

NOTE 2: On January 5, 2017, pursuant to a securities purchase agreement and a secured promissory note for $830,000 available in five tranches, the Company drew $170,000 and received $150,000 in cash netThe major components of $15,000 OID and $5,000 legal fees under this nine month secured promissory note. This note is secured by all the assets of the Company, inclusive of the Luxuria I and the Luxuria II, the member interests of its wholly owned LLC and personally guaranteed by Robert Rowe, CEO of the Company. The lender’s security interests are subordinate by law to the security interests of the August 11, 2016 lender.  This note is structured in multiple parts, first the initial $170,000 as drawn and a subsequent $660,000 which can be drawn at the Company’s option. This note does not carry a stated interest rate, (except it is 22% in event of default as defined in the promissory note), but carries an Original Issue Discount (OID) that totals $75,000 and is pro-rata on each tranche drawn. The OID will be amortized over the remaining life of the note from the date drawn. In addition, the Company is required to pay $5,000 of the lender’s legal fees which was applied to the first tranche drawn. which will also be recorded as debt discount and will be amortized over the nine month life of the note. The Company received the second tranche of $110,000 and received $100,000 in cash net of $10,000 OID under this note in March 2017.  The Company received the third tranche of $55,000 and received $50,000 in cash net of $5,000 OID under this note in November 2017. On November 16, 2017, the lender agreed to extend the note for a three month period and an extension fee of $10,050 was added to the principal balance of note. The note in the remaining balance of $345,050 matured on January 11, 2018. On January 17, 2018, the lender agreed to extend this note for an additional three month period for an extension fee of $10,351. On April 4, 2018, the lender agreed to extend this note for an additional three month period for an extension fee of $11,712.accrued expenses are:

On February 9, 2018, $35,000 was extended to the Company as a draw on this note. On April 6, 2018, $33,000 was extended to the Company as a draw on this note, including $3,000 OID. The note in the remaining balance of $416,550 matured on April 6, 2018. On April 6, 2018, the lender agreed to extend this note for an additional three month period for an extension fee of $11,712. On May 18, 2018, $33,000 was extended to the Company as a draw on this note, including $3,000 OID. At June 30, 2018, the balance of this note and the unamortized discount was $474,723 and $1,337, respectively. On July 6, 2018, the lender agreed to extend this note for an additional three month period for an extension fee of $14,613.

On July 3, 2018, August 2, 2018 and September 14, 2018 $27,500, $27,500 and $27,500 was extended to the Company as a draw on this note, including $2,500, $2,500 and $2,500 OID. On July 6, 2018, the lender agreed to extend this note for an additional three month period for an extension fee of $14,613. On October 19, 2018,  and November 21, 2018 $27,500 and $27,500 was extended to the Company as a draw on this note, including $2,500 and $2,500 OID. On October 6, 2018, the lender agreed to extend this note for an additional one month period for an extension fee of $5,667. At March 31, 2019, the balance of this note and the unamortized discount is $629,394 and $0, respectively.

This note requires a partial prepayment if and when the Company sells the Luxuria I and Luxuria II if applicable, upon the receipt of which the lender has agreed to release the security interest in the vessels. This prepayment is 10% of the profits on the Luxuria I and 33% of the profits on the Luxuria II.  If the Company rents/leases either the Luxuria I or II, then the prepayment is 20% of the gross rental revenue. The Company repaid $600,000 of this note at the closing of the sale of the Luxuria I in April 2019 in accordance with the March 2019, settlement agreement. The lender of Note 2 each in Notes 7a and b (with a combined total due of $947,840) agreed to a global settlement of $600,000 upon the closing of the sale of the Luxuria I and $70,000 due six months thereafter. The lender extended the date of the second tranche to November 30, 2019 and increased the payment to $72,500. The lender agreed to forgive the $276,175 balance. Upon the payment of the second tranche the Company will record a gain on debt settlement of $276,175 plus a gain on the embedded derivative value of approximately $208,000. The balance owed for rental revenue at September 30, 2019 is $3,388 and is included in the note balance of $32,782 at September 30 2019.

Global Boatworks Holdings, Inc.

Notes to Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

a) Short term notes, (continued)

NOTE 3: On July 17, 2017, the company entered into a loan agreement in the amount of $50,000 with a shareholder. The company issued 1,000 common shares to the shareholder as consideration for providing us the loan. The shares were valued at $15,000, or $15 per share based on the quoted market price which was recorded as a debt discount and was amortized at a rate of $1,250 per month over the life of the loan. The note bears interest at the rate of 12%, payable at maturity of July 17, 2018. The $40,000 balance of Note 1 matured on July 15, 2017. On December 7, 2018, notes 1 and 3 were combined into Note 3.Total unpaid principal and interest is $102,000 at September 30, 2019, which includes $12,000 in accrued interest.

NOTE 4: On April 18, 2018, the Company entered into an eight month financing of the $14,450 Luxuria I annual insurance premium. The balance at September 30, 2019 was $0.

NOTE 5: On March 4, 2019, a third party individual loaned the Company $10,000 on an undocumented basis with no stated interest or maturity Terms. The balance at September 30, 2019 was $10,000.

NOTE 6: On March 25, 2019, a third party stockholder loaned the Company $105,000. This note is collateralized with the 1,000,000 shares of super voting preferred stock held by the Company’s CEO. $50,000 of this note is payable on or before May 20, 2019 with the balance of $55,000 plus $10,000 in interest due on or before October 25, 2019. 500 shares of the super voting preferred stock will be released as collateral at each payment. The Company paid $25,000 of this note at the closing of the sale of the Luxuria I. The lender has agreed that the second $25,000 of the initial $50,000 repayment shall be paid upon the release of the $50,000 hold-back in escrow, which is subject to certain repairs being completed. The holdback was paid to obtain a release of the lien on the barge bottom, as agreed to by the lender. The note is now in default. The balance at September 30, 2019 was $80,000.

b) Short term convertible notes

Short term convertible debt including accrued interest was, as follows:

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(8) CONVERTIBLE NOTES

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

NOTES 1 AND 2: On August 11, 2016, pursuant to a securities purchase agreement and a secured convertible promissory note for $610,000, the Company drew $305,000 and received $227,500 in cash under this six month secured convertible promissory note. This note is secured by all the assets of the Company, inclusive of the Miss Leah and the Luxuria 1, and the member interests of its wholly owned LLC. This note is structured in two parts, first the initial $305,000 as drawn and a subsequent $305,000 which can be drawn at the Company’s option in amount/s determined by the Company. This note does not carry a stated interest rate, but carries an Original Issue Discount (OID) that totals $100,000 and is proportional to the total amount borrowed. An OID of $50,000 was recorded as a discount to the note for the initial draw andConvertible notes were, amortized over the six month life of the note. In addition, the Company is required to pay $10,000 of the lender’s legal fees (pro rata to the draws) and $22,500 of brokerage commission which was withheld from the initial $305,000 draw, both of which were also recorded as debt discounts and were amortized over the six month life of the note.

Also, the Company was required to issue 100 shares of restricted common stock which was valued at $100 per share based on recent stock sales and recorded as a discount to the note and is being amortized over the six month life of the note. This note required a $200,000 partial prepayment if and when the Company sells the Miss Leah. The note is personally guaranteed by the Company’s CEO, Robert Rowe. In event of default the note carries an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law.

On October 5, 2016, the Company drew an additional $122,000 and received $92,000 in cash under this six month secured convertible promissory note. An OID of $20,000 was recorded as a discount to the note for the second draw and was amortized over the remaining life of the note. On November 3, 2016, the Company drew an additional $183,000 and received $150,000 in cash under this six month secured convertible promissory note. An OID of $30,000 and legal costs of $3,000 were recorded as discounts to the note for the third draw and was amortized over the remaining life of the note.

The total note is convertible into common stock upon an event of default as follows:

Lender has the right at any time following an Event of Default, at its election, to convert (each instance of conversion is referred to herein as a “Conversion”) all or any part of the Conversion Eligible Outstanding Balance into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.0001 par value per share (“Common Stock”), of Company as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the “Conversion Amount”) divided by the Conversion Price (as defined below).

Subject to the adjustments set forth herein, the conversion price (the “Conversion Price”) for each Conversion shall be equal to 60% (the “Conversion Factor”) multiplied by the lowest Closing Bid Price in the twenty (20) Trading Days immediately preceding the applicable Conversion. Additionally, if at any time after the Effective Date, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future Conversions. Finally, in addition to the Default Effect, if any Major Default occurs after the Effective Date (other than an Event of Default for failure to pay the Conversion Eligible Outstanding Balance on the Maturity Date), the Conversion Factor shall automatically be reduced for all future Conversions by an additional 5% for each of the first three (3) Major Defaults that occur after the Effective Date (for the avoidance of doubt, each occurrence of any Major Default shall be deemed to be a separate

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(8)  CONVERTIBLE NOTES, continued

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

occurrence for purposes of the foregoing reductions in Conversion Factor, even if the same Major Default occurs three (3) separate times). For example, the first time the Conversion Shares are not DTC Eligible, the Conversion Factor for future Conversions thereafter will be reduced from 60% to 55% for purposes of this example. If, thereafter, there are three (3) separate occurrences of a Major Default pursuant to Section 4.1(a), then for purposes of this example the Conversion Factor would be reduced by 5% for the first such occurrence, and so on for each of the second and third occurrences of such Major Default.

Due to the variable conversion terms and certain default provisions, the embedded conversion option has been bifurcated and recorded as a derivative liability at an initial fair value of $378,624 with $217,500 recorded as a debt discount and $161,124 as a derivative expense. The October 5, 2016 draw resulted in an initial fair value of $113,616 with $92,000 recorded as a debt discount and $21,616 as a derivative expense.  The November 3, 2016 draw resulted in an initial fair value of $190,356 with $150,000 recorded as a debt discount and $40,356 as a derivative expense. The valuation method utilized during 2017 was the Black-Scholes model with the following range of assumptions: Expected life in years 0.10; the conversion price of $0.54; Bond equivalent yield rate 1.28%.

NOTE 1: On February 4, 2017, the maturity date was extended to May 11, 2017. Under the terms of this extension, the Company agreed to pay an additional $18,300 in interest at maturity. The Company recorded this interest as a debt discount and amortized it to maturity. On November 16, 2017, the lender agreed to extend the note for a three month period and an extension fee of $10,050 was added to the principal balance of note. On February 14,September 18, 2018, the lender agreed to extend the maturity of the August 4, 2016 Note from February 11, 2018 to May 11, 2018, in exchange for additional interest of $11,076 due at maturity.

On March 22, 2017, the Company issued 1,000 shares of common stock to settle $30,000 of this note. These shares were valued at $73 per share, or $73,000, based on the quoted trading price, and after relieving the related derivative valuecompany entered into a gain of $3,463 was recorded.

In May 2017, the lender bifurcated the original note, which had a then remaining balance of $598,300, into two new notes, Note 1 with a principal balance of $200,000 and Note 2 with a principal balance of $416,249, which included a maturity extension fee of $17,949. Note 1 is collateralized with the Miss Leah and Note 2 with all Company’s assets including the Luxuria I. At September 30, 2019, the unamortized balance of the extension fee is $0.

Note 1 required a mandatory partial prepayment of up to $200,000 if and when the Company sells the Miss Leah, upon the receipt of which the lender has agreed to release the security interest in the vessel. Note 2 contains no such provision.  All other provisions of the original note are carried over to these two new notes. The maturity date of these two notes was August 11, 2017. On August 11, 2017, the lender agreed to negotiate threeeighteen month extensions for both notes which was completed August 14, 2017, and combined extension fee of $17,619 was added to the principal balance of the notes.

F-18

Global Boatworks Holdings, Inc.

Notes to Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

On July 18, 2017, the Company issued 2,308 shares of common stock upon conversion $18,000 of Note 1. On August 10, 2017, the Company issued 3,800 shares of common stock upon conversion $10,944 of Note 1. The bifurcated convertible Notes 1 and 2 in the remaining balances of $182,000 and $416,249 matured on August 11, 2017. On November 11, 2017, the lender agreed to extend Note 2 for an additional three month period and an extension fee of $12,595 was added to the principal balance of note 2.

On September 14, 2017 the Company paid off the balance of Note 1loan agreement in the amount of $176,986 from$100,000 with a third party. The note bears interest at the proceedsrate of 8%. At maturity, March 17, 2020 the Company recorded the note plus accrued interest of $11,989 as a liability to issue 6,195,192 shares of the sale of the Miss Leah.Company’s common stock.

NOTE 2: On October 13, 2017,April 18, 2019, the Company issued 6,190 shares of common stock upon conversion of Note 2 principalcompany entered into a eighteen month loan agreement in the amount of $8,914. On December 27, 2017,$10,000 with a third party. The note bears interest at the Company issued 25,000rate of 8%. At maturity, September 17, 2020 the lender converted the note plus accrued interest of $1,148 into 470,669 shares of the Company’s common stock upon conversion of Note 2 principal in the amount of $15,000.

On January 30, 2018, the Company issued 41,667 shares of common stock upon conversion of Note 2 principal in the amount of $15,000. On February 6, 2018, the Company issued 50,000 shares of common stock upon conversion of Note 2 principal in the amount of $18,000. On February 12, 2018, the Company issued 50,750 shares of common stock upon conversion of Note 2 principal in the amount of $15,225.  On February 19, 2018, the Company issued 95,000 shares of common stock upon conversion of Note 2 principal in the amount of $17,100. On February 23, 2018, the Company issued 93,750 shares of common stock upon conversion of Note 2 principal in the amount of $11,250. On March 2, 2018, the Company issued 95,000 shares of common stock upon conversion of Note 2 principal in the amount of $11,400. On March 12, 2018, the Company issued 94,500 shares of common stock upon conversion of Note 2 principal in the amount of $11,400. On March 20, 2018, the Company issued 95,000 shares of common stock upon conversion of Note 2 principal in the amount of $11,400. On March 28, 2018, the Company issued 94,000 shares of common stock upon conversion of Note 2 principal in the amount of $11,280. On April 16, 2018, the Company issued 158,000 shares of common stock upon conversion of Note 2 principal in the amount of $9,480. At December 31, 2018, the valuation method utilized to compute the embedded derivative liability was the Black-Scholes model with the following assumptions: Expected life in years 0.0; Stock price at December 31, 2018 $0.10; conversion price of $0.06; Bond equivalent yield rate 2.44%.

On January 15, 2019, the Company issued 238,000 shares of common stock upon conversion of Note 2 principal in the amount of $729. On March 1, 2019, the Company issued 260,000 shares of common stock upon conversion of Note 2 principal in the amount of $936. At September 30, 2019, the valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 0.0001; Stock price at September 30, 2019 $0.14 with the conversion price of $0.06; Bond equivalent yield rate 1.91%. At September 30, 2019 the balance was $313,393 and the unamortized discount was $0.

In March 2019, the lender of Note 2 each in Notes 7a and b (with a combined total due of $947,840) agreed to a global settlement of $600,000 upon the closing of the sale of the Luxuria I and $70,000 due six months thereafter. The lender agreed to forgive the $276,175 balance. Upon the payment of the second tranche the Company will record a gain on debt settlement of $276,175 plus a gain on the embedded derivative value of approximately $414,000. The lender agreed to extend the due date of the final payment to November 30, 2019, and increased the payment to $72,500.stock.

NOTE 3: On April 15, 2017,June 27, 2019, the Companycompany entered into a six month 10% convertible promissory notetwo year loan agreement in the amount of $15,000. In event of default$100,000 with a third party. The note bears interest at the note carries an interest rate of 18%5%.

The total At September 30, 2020, this note has accrued interest of $6,315. This note is convertible into 4,842,624 shares of the Company’s common stock as follows:stock.

NOTE 4: On July 1, 2019, the company entered into a two year loan agreement in the amount of $15,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $925 and is convertible into 726,021 shares of the Company’s common stock.

NOTE 5: On July 12, 2019, the company entered into a two year loan agreement in the amount of $42,500 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,597 and is convertible into 2,054,158 shares of the Company’s common stock.

NOTE 6: On July 12, 2019, the company entered into a two year loan agreement in the amount of $57,500 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,597 and  is convertible into 2,779,155 shares of the Company’s common stock.

NOTE 7: On August 27, 2019, the company entered into a two year loan agreement in the amount of $50,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,740 and is convertible into 2,467,967 shares of the Company’s common stock.

NOTE 8: On October 1, 2019, the company entered into a two year loan agreement in the amount of $25,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $1,216 and is convertible into 1,195,293 shares of the Company’s common stock.

NOTE 9: On March 25, 2020, the company entered into a two year loan agreement in the amount of $200,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $4,986 and is convertible into 5,607,539 shares of the Company’s common stock.

NOTE 10: On April 9, 2020, the company entered into a two year loan agreement in the amount of $10,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $229 and is convertible into 279,818 shares of the Company’s common stock.

NOTE 11: On July 3, 2020, the company entered into a two year loan agreement in the amount of $12,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has  accrued interest of $135 and is convertible into 331,984 shares of the Company’s common stock.

NOTE 12: On July 8, 2020, the company entered into a two year loan agreement in the amount of $25,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $264 and is convertible into 691,168 shares of the Company’s common stock.

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(8) CONVERTIBLE NOTES, continued

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

Lender hasNOTE 13: On July 16, 2020, the right at any time, at its election, to convert (each instance of conversion is referred to herein ascompany entered into a “Conversion”) all or any part of the Conversion Eligible Outstanding Balance into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.0001 par value per share (“Common Stock”), of Company as per the following conversion formula: the number of Conversion Shares equalstwo year loan agreement in the amount being converted (the “Conversion Amount”) divided byof $60,000 with a third party. The note bears interest at the Conversion Price (as defined below). Subject to the adjustments set forth herein, the conversion price (the “Conversion Price”) for each Conversion shall be equal to 60% (the “Conversion Factor”) multiplied by the lowest Closing Bid Price in the fifteen (15) Trading Days immediately preceding the applicable Conversion.

Due to the variable conversion terms and certain default provisions, the embedded conversion option has been recorded as a derivative liability at an initial fair valuerate of $13,472 recorded as a debt discount. The valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 0.10; Stock price at April 15, 2017, $25 with the conversion price of $15; Bond equivalent yield rate 0.92%5%. At September 30, 2019,2020, this note has accrued interest of $567 and is convertible into 1,657,016 shares of the valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 0.0001; Stock price at September 30, 2019 $0.14 with the conversion price of $0.06; Bond equivalent yield rate 1.91%. The principal and interest balance was $18,715 and the unamortized discount balance was $0 at September 30, 2019.The note is currently in default.Company’s common stock.

NOTES 4, 5 AND 6:NOTE 14: On May 17, 2017, as discussedJuly 16, 2020, the company entered into a two year loan agreement in section a) above, the $100,000amount of $50,000 with a third party. The note holder sold $60,000 of this note to three third parties, one of whom subsequently became a related party, andbears interest at the Company modified the new $20,000 notes to add a conversion feature at a conversion rate of $2 per share,5%. On September 23, 2020 the lender converted the note plus accrued interest of $473 into 1,380,847 shares of the Company’s common stock.

NOTE 15: On August 14, 2020, the company entered into a two year loan agreement in the amount of $25,000 with a maturity date of May 16, 2018. This was treated as a debt extinguishment and a beneficial conversion feature was recordedthird party. The note bears interest at issuance of $20,000 per note and will be amortized over the life of the notes. These third parties converted an aggregate of $13,500 of these notes in exchange for 6,750 shares in June 2017. On July 26, 2017, two of these third parties converted an aggregate of $11,000 of these notes in exchange for 5,500 shares. In September 2017, the Company modified the conversion rate of these notes to $0.50 per share, which was treated as debt extinguishment whereby the then remaining balance of the discount was amortized as interest expense and new discounts totaling $35,500 were recorded which are being amortized over the remaining life of the notes. On June 30, 2019, the holder of one of these notes agreed to offset a portion of the $30,000 note they owed the Company, (which the Company had previously established a $30,000 allowance for), with the balance of this note payable to them. The Company offset $18,823 of the note receivable with this note.5%. At September 30, 2019,2020, this note has accrued interest of $161and is convertible into 687,724 shares of the total principal and interest under these notes was $25,022 and the unamortized discounts were $0. The two remaining notes are in default.Company’s common stock.

NOTE 7:16: On August 31, 2017,September 15, 2020, the company entered into a two year loan agreement in the amount of $10,000 with a third party. The note bears interest at the rate of 5%.At September 30, 2020, this note has  accrued interest of $11and is convertible into 226,551 shares of the Company’s common stock.

NOTE 17: On September 15, 2020, the company entered into a two year loan agreement in the amount of $20,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $22 and is convertible into 453,103 shares of the Company’s common stock.

NOTE 18: On September 22, 2020, the company entered into a two year loan agreement in the amount of $5,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $0 and is convertible into 54,113 shares of the Company’s common stock.

NOTE 19: On September 23, 2020 the Company entered into a six month 10% convertible promissory note45 day loan agreement in the amount of $30,000. In event of default$77,500 with a third party, replacing a previously undocumented loan. The note bears interest at the note carries an interest rate of 18%.

The total note is convertible into common stock as follows:

Lender has the right at any time, at its election, to convert (each instance of conversion is referred to herein as a “Conversion”) all or any part of the Conversion Eligible Outstanding Balance into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.0001 par value per share (“Common Stock”), of Company as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the “Conversion Amount”) divided by the Conversion Price (as defined below). Subject to the adjustments set forth herein, the conversion price (the “Conversion Price”) for each Conversion shall be equal to 80% (the “Conversion Factor”) multiplied by the lowest Closing Bid Price in the fifteen (15) Trading Days immediately preceding the applicable Conversion.

Global Boatworks Holdings, Inc.

Notes to Consolidated Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(7) SHORT TERM LOANS AND SHORT TERM CONVERTIBLE NOTES, (continued)

Due to the variable conversion terms and certain default provisions, the embedded conversion option has been recorded as a derivative liability at an initial fair value of $24,210 recorded as a debt discount. The valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 0.10; Stock price at August 31, 2017, $2.80 with the conversion price of $1.80; Bond equivalent yield rate 1.08%0%. At September 30, 2019,2020, this note has accrued interest of $0 and is convertible into 500,000 shares of the valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 0.0001; Stock price at September 30, 2019 $0.14 with the conversion price of $0.06; Bond equivalent yield rate1.91%. The principal and interest balance was $36,185 at September 30, 2019. The note is currently in default.Company’s common stock.

NOTE 8:20: On March 19, 2018, pursuant to a securities purchase agreement and a nine month convertible promissory note for $16,500September 23, 2020 the Company received $16,000, netentered into a 45 day loan agreement in the amount of $500$7,067 with a third party, to settle accrued expenses. The note bears interest at the rate of the lender’s legal fees which was withheld from the funds provided. This0%. At September 30, 2020, this note carries a 14%has accrued interest rate, with all interest due at maturity.

The total noteof $0 and is convertible into 50,000 shares of the Company’s common stock as follows:stock.

LenderNOTE 21: On September 23, 2020, the company entered into a two year loan agreement in the amount of $75,000 with a third party. The note bears interest at the rate of 6%. At September 30, 2020, this note has the right at any time, at its election, to convert (each instanceaccrued interest of conversion$86 and is referred to herein as a “Conversion”) all or any partconvertible into 202,703 shares of the Conversion Eligible Outstanding BalanceCompany’s common stock.

NOTE 22: On September 23, 2020, the company entered into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.0001 par value per share (“Common Stock”), of Company as per the following conversion formula: the number of Conversion Shares equalsa two year loan agreement in the amount being converted (the “Conversion Amount”) divided byof $60,000 with a third party. The note bears interest at the Conversion Price (as defined below)rate of 6%. At September 30, 2020, this note has accrued interest of $69 and is convertible into 162,162 shares of the Company’s common stock.

Subject to the adjustments set forth herein, the conversion price (the “Conversion Price”) for each Conversion shall be equal to 61% (the “Conversion Factor”) multiplied by the lowest Closing Bid Price in the ten (10) Trading Days immediately preceding the applicable Conversion.

Due to the variable conversion terms and certain default provisions, the embedded conversion option has been recorded as a derivative liability at an initial fair value of $41,119 recorded as a debt discount. The valuation method utilized was the Black-Scholes model with the following assumptions: Expected life in years 1.00; Stock price at March 20, 2018, $0.40 with the conversion price of $0.122; Bond equivalent yield rate 1.76%.

This note was paid in cash on March 27, 2019, and the Company recorded a loss on repayment of the debt of $8,594.

(8)(9) SHORT TERM LOANS - RELATED PARTY

On May 4, 2017, the Company borrowed $20,000 from the Company’s CEO under an informal agreement. This loan carries an interest rate of 8.98% and has a 36 month term. $6,362 was repaid during the nine months ended September 30, 2019. At September 30, 2019, this loan balance is $0.

During the nine monthsperiod ended September 30, 2019,December 31, 2018, the CEO advanced $15,424$8,500 to the Company and was repaid $11,840, under an undocumented advance which carries no interest and has no stated maturity. At September 30,During the year ended December 31, 2019, the CEO advanced an additional $5,000 under this loan balance is $3,380.undocumented advance.

Global Boatworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements and Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(9) LONG TERM DEBT(10) LIABILITY TO ISSUE COMMON SHARES

In April 2017 the Company entered intoMarch 2020, a six year loanconvertible note matured in the amount of $35,000$100,000 plus accrued interest of $11,989. By contract this note is convertible into 6,195,192 shares of common stock. As the shares have not yet been issued, they are accounted for as a liability to purchase the Suzuki outboard engines for the Luxuria I. This loan carries an interest rate of 6.49% with monthly payments. Atissue shares. In September 30, 2019 the balance of this loan was $22,692, of which $5,755 is due within one year. The lender retains2020, a security interestconvertible note matured in the outboard motorsamount of $10,000 plus accrued interest of $1,164. By contract this note is convertible into 470,669 shares of common stock. As the shares have not yet been issued, they are accounted for the Luxuria I even though the vessel has been sold.as a liability to issue shares.

(10)During the third quarter the Company recorded a liability to issue 20,405,000 shares of common stock in exchange for services valued at $96,031, or $0.005 per share.

(11) COMMITMENTS AND CONTINGENCIES

a) Stockholders deficit

At September 30, 2019, the Company had the obligation to issue 1,000 shares of common stock on July 1, 2017 and 1,000 shares on January 1, 2018, under a three year consulting agreement entered into on December 9, 2016. These shares were valued at the market price for shares at the date they are earned.

At September 30, 2019, the Company had the obligation to issue 1,000 shares of common stock on May 22, 2018 under a three month consulting agreement entered into on that date. These shares were valued at the market price for shares at the date they were earned.

At September 30, 2019, the Company had the obligation to issue 6,000 shares of common stock on April 6, 2018 under a consulting agreement entered into in April 2017. These shares were valued at the market price for shares at the date they were earned.

The $5,050 value of these 8,000 shares has been recorded in accrued liabilities at September 30, 2019. (Note 6)

b) Leases

Leases:We occupy approximately four hundred (400) square feet of office space without charge at the residence of our Chief Executive Officer, President, Treasurer and Director, and our Secretary.

c) Material Contracts and Agreements

On November 1, 2016, the Company entered into a three year employment agreement with its CEO, Robert Rowe. This agreement calls for him to be paid $20,000 per month in cash and for the Company to issue him 10,000 shares of restricted common stock. These shares were issued and valued at the market price on the grant date, $57.70 per share, for a total of $577,700, which was recorded as prepaid officer compensation and was amortized over the one year vesting period. The agreement allows him to elect to convert any accrued compensation due him for common stock at a 40% discount market or at such lower price that may have been provided to other parties. The Company recognizes gains or losses on such conversions, on conversion date, as compensation expense. On September 5, 2017, upon conversion the Company recognized a $515,000 conversion loss as additional officer compensation. The Company is also obligated to pay Leah Rowe, spouse of Bob Rowe, $600 per week as Corporate Secretary. At September 30, 2019, $322,979 is accrued under these agreements as noted in Note 6.

On December 9, 2016, we entered into an agreement (the Agreement) with Oceanside Equities, Inc., (Oceanside), a Florida corporation that provides consulting services. Oceanside agreed to provide us with services from December 9, 2016 until December 8, 2019, in exchange for a one time fee of $20,000 in cash; $16,000 per month accrued and payable in either cash or shares of restricted common stock at the Company’s election and three thousand one hundred (3,100) shares of our restricted common stock, to be issued 1,100 on January 1, 2017, 1,000 issued on July 1, 2017 and 1,000 issued on January 1, 2018. These shares were valued at the market price on the date they are earned which were recognized over the term of the contract at the rate of $12,500 per month.

Global Boatworks Holdings, Inc.

Notes to Consolidated Financial Statements and Financial Statements

(Information as to the nine months ended September 30, 2019 is unaudited)

(10) COMMITMENTS AND CONTINGENCIES (continued)Officer.

c) Material Contracts and Agreements, continued

The agreement allows Oceanside to elect to convert any accrued compensation due him for common stock at a 50% discount market or at such lower price that may have been provided to other parties. The Company recognizes gains or losses on such conversions, on conversion date, as consulting fee expense. On September 5, 2017, upon conversion the Company recognized a $480,000 conversion loss as related party professional fees. At September 30, 2019, $352,000 is accrued under this agreement as noted in Note 6.

On May 19, 2017, as amended in September 2017, the Company entered into a two year consulting agreement with a related party, Ron Rowe II. This agreement calls for him to be paid $8,000 per month in cash and for the Company to issue him 5,000 shares of restricted common stock. These shares were issued and valued at the market price on the grant date, $29 per share, for a total of $145,000, which was recorded as an immediate consulting expense as it was for past services. The agreement allows the consultant to elect to convert any accrued compensation due him for common stock at a 40% discount market or at such lower price that may have been provided to other parties. The Company recognizes gains or losses on such conversions, on conversion date, as compensation expense. On September 5, 2017, upon conversion the Company recognized a $120,000 conversion loss as related party professional fees. At September 30, 2019, $128,405 is accrued under this agreement as noted in Note 6.

d) Common Stock Subscription Agreement

In the last quarter of 2014, as memorialized in May 2015, the Company received a stock subscription agreement from a now former officer and director of the Company for 1,500 shares of common stock in exchange for $250,000 in cash or cash equivalents, such as labor and materials for the construction of the barge bottom, or $167 per share. Through June 30, 2016 this former officer and director has paid $55,000 and received 330 shares, respectively. In August 2016, the Company issued 425 shares of our restricted common stock to this former officer and director in exchange for the construction of the barge bottom for Luxuria I, delivered in February 2017, valued at $70,000, based on a negotiated agreement.

This party, a former officer of the Company, discussed in d) above has not accepted the stock certificate and informed the Company that they want to renegotiate since the market price of the common stock has fallen below the negotiated signed contractual price per share. In the third quarter 2019, the Company discovered this party had placed a lien on the barge bottom. This party agreed to release this lien upon payment of $50,000 in cash, which was made in the third quarter 2019.

e) Legal Matters