Exhibit 99.1
AMENDEDNOTICE OF DEFAULTAND
NOTICEOFSALEOFCOLLATERAL
Reference is madetothe Senior Secured Redeemable Convertible Debenture (the “Debenture”) issued by Gopher Protocol Inc., aNevada corporation, now known as GBT Technologies, Inc., aNevada corporation (the“Company” or“Corporation”)to DiscoverGrowth Fund, LLC, aU.S. Virgin Islands limited liability company (the “Investor”or “Holder”) on December 3, 2018, pursuant to the Securities PurchaseAgreement of even datetherewith (the “Agreement”).
PursuanttoSectionV.G of theAgreement, “G. Events of Default. Company shall, at Investor’s option, be in default under this Agreement upon the happening of any of the followingeventsorconditions (each, an “Event ofDefault”):(a) a failure to pay any amount due underthe Debenture, thisAgreement or any Transaction Document within 5business days of the datethesame is due; (b) thefailure by Company to performanyof itsother obligations under the Debenture,this Agreement or any Transaction Document within 10 businessdays of noticefrom Investor of thesame; (c)falsity, inaccuracyormaterial breach by Company of any written warranty,representationorstatement made orfurnished toInvestor by or onbehalf of Company; (d) anuninsured material loss,theft, damage, or destruction to any of the Collateral, or theentry of anyjudgmentagainst Company or any lien against or the makingof any levy, seizure orattachment of or on theCollateral; (e) the failure of Investor to have a perfected firstpriority security interest in theCollateral; (f) any indicationor evidence received byInvestor thatCompanymay havedirectly or indirectly been engaged in anytypeofactivity thatmight reasonably be expected to result in theforfeiture of any property ofCompany to any governmental entity,federal, state orlocal; or (g) theoccurrence of any 3 or more Trigger Events under the Debenture.”
Pursuant to Section V.G(a)-(g) of the Agreement, Investor herebydeclares Company in defaultunder the Agreementduetoeach ofthe following:
(a) Company’s failure to pay all,or any portion,ofthe outstanding principaland interestdueunderthe Debenturefollowing Investor declaring all Obligations secured by theAgreement immediately due and payablepursuant to Investor’s May 28, 2019 Notice ofDefault.
(b) The failure by Company toperform each of the following obligations under theDebenture, the Agreement and other Transaction Documentswithin 10business days ofnotice from Investor of thesame:
(1) Each of the items set forth in Investor’s May28,2019 Notice of Default, whichstated, “Inaddition, Pursuant to Section V.G(b) of theAgreement, Investor herebygives noticeof the failure by Company to perform itsobligations under theDebentureand theAgreement by reason ofeachof theforegoing.”
(2) Company’s failure tocomply with itsobligationunder Section IV.H of theAgreement to “atall times maintainareserve equal to 5times thenumber of sharessufficient toimmediately issue all Conversion Shares potentially issuable at such time,”following repeated noticesby Investor.
(3) Company’s failure toengageasuitable replacement reputable registered transfer agent that willagreeto serve astransfer agent forCompanyand be bound by the terms and conditions of theirrevocable transfer agentinstructions.
(c) The falsity, inaccuracy and material breach byCompanyofeach ofthe following written warranties, representations and statement made or furnished toInvestor by or on behalf ofCompany:
(1) In SectionIII.12.aofthe Agreement that:“Investoris not, has never been, and as a result of thetransactions contemplated by theTransaction Documents will notbecome anofficer, director, insider orcontrol personofCompany, or toCompany’s knowledge 10% orgreater shareholder orotherwiseanaffiliate of Company as defined under Rule 12b-2 of theExchangeAct.”
(2) In SectionIII.A.7of theAgreement that, “All information that Company has provided toInvestor that constitutes ormight constitute material, non-public information will beincluded in theCurrent Report. Notwithstanding any otherprovision, except with respect to information that will be, and only to the extent that itactually is, timely publicly disclosed by Company pursuant to the foregoingsentence, neither Company nor any other Person acting onits behalfhas providedInvestor or its representatives, agents orattorneys with anyinformation that constitutes or might constitute material,non-public information. … Company understands and confirmsthat Investor will rely on the foregoingrepresentationsandcovenants in effectingtransactions in securities of Company.”
(3) In Section IV.F of theAgreement that, “Company covenants andagrees that neither it nor anyotherPerson acting on itsbehalf will, provide Investor or its agents orcounselwith anyinformation that Company believes orreasonablyshouldbelieve willconstitute materialnon-public information after Closing. … Company understands and confirms that Investor will berelying on theforegoingin effectingtransactions in securities ofCompany, including withoutlimitation sales of the Shares.”
(4) In SectionIII.B.11of theAgreement that,“Company and each Subsidiary have, or have rights to use, all patents, patent applications,trademarks, trademark applications, service marks, tradenames, copyrights, licenses and other similarrights that are necessary or materialforuse inconnection withtheir respective businesses as described in the Public Reports andwhich the failure to so have wouldhave aMaterial AdverseEffect (collectively, ‘Intellectual PropertyRights’). Neither Company nor any Subsidiaryhas received awrittennotice that theIntellectual Property Rights used by Company oranySubsidiary violates or infringes upon the rightsof any Person. To the knowledge ofCompany, all such Intellectual Property Rights are enforceable and thereisno existinginfringement by another Person of any of the IntellectualPropertyRights of Company oreach Subsidiary.”
(5) InSection V.C of theAgreement that the IPSecurity Agreement “contains atrue, complete, andcurrent listing of allpatents, trademarks, tradestyles,copyrights,and other intellectualproperty rights (including allregistrationsandapplications therefor) owned by Company as ofthe date hereof that are registered with any governmental authority.”
(d) Anuninsured material loss,theft, damage, or destruction to any of the Collateralby reason of the claimsreferencedinthe June 17, 2019letter from Uleses Henderson to Bryan Hardy re Demand to StopForeclosure Sale Trademark Search.
(e) The failure of Investorto have aperfected first priority security interest in theCollateral byreasonof theclaims referenced in theJune17, 2019letter from Uleses Henderson to Bryan Hardy re Demand to StopForeclosure Sale Trademark Search.
(f) Any indication or evidence received byInvestor that Company may have directly orindirectly been engaged in anytypeof activity thatmight reasonably be expected to result in the forfeiture of any property of Company to anygovernmental entity, federal, state or local, by reason of Company’sdisclosure of materialnon-publicinformation toInvestor.
(g) The occurrence of any 3 ormore Trigger Events under theDebenture.At least the following TriggerEvents are known to have occurred to date:
1. On December 6, 2018, Companyissued apressrelease relating to and referencingInvestor, the Debenture andthe transactions contemplated thereby, without providing it to Investor forreview and approvalprior toissuing. Debenture § I.H.d,Agreement §IV.D.
2. Company replacedEmpireStock Transfer Inc. as Company’stransfer agent before areputable registered transfer agent agreed inwriting to serve as Company’s transfer agent and to be bound by all terms and conditions of the Transfer AgentInstructions. Debenture § I.H.1.c, TransferAgent Instructions, p. 2.
3. Company failed to engagea suitablereplacement reputable registered transfer agent thatagreed to serve as transfer agent forCompany and be bound by the termsand conditions of theTransfer AgentInstructionsas soon as practicable and in any eventwithin 2 Trading Days. Debenture §I.H.1.c, Transfer AgentInstructions, p. 2.
4. On May 20, 2019, Company made an objection andinstructiontoits transfer agent, West Coast Stock Transfer Inc., not tocomplywith theDeliveryNotice from Investor datedMay17, 2019. Debenture § I.H.1.i.
5. Effective May22, 2019, Company’s CommonStockis not designated fortrading on the OTCQB or ahigherstockmarket. Debenture§ I.H.1.p, §I.G.6.c(ii).
6. On May 24, 2019, Company issued a pressrelease relating to and referencingInvestor, theDebentureandthe transactions contemplated thereby, without providing it to Investor forreview and approvalprior toissuing.Debenture § I.H.d,Agreement §IV.D.
7. On May 24, 2019, Companyfileda currentreport on Form 8-K relating to andreferencing Investor, theDebenture and the transactions contemplated thereby, withoutproviding it to Investor for review andapproval prior to filing. Debenture §I.H.d, Agreement §IV.D.
8. On May 27, 2019, Company advisedInvestor’s brokers that aregistration statement is noteffective and available forthe resale of allConversion Shares. Debenture § I.H.1.g.
9. On May 27, 2019, Company advisedInvestor’s brokers that aregistration statement isnot effective and available forthe resale of allConversionShares, and anexemption isnot available for theresale of all theConversion Shares without restriction. Debenture § I.H.1.p, § I.G.6.c(iv).
10. Company states thatitpermitted its transfer agent toissue shares of Common Stock to Holderwhich,when aggregated with all other sharesof Common Stock thendeemed beneficially owned byHolder, would result in Holderowningmore than 4.99% of all Common Stockoutstanding immediately after giving effect to suchissuance. Debenture §I.H.1.c,§I.G.7.
11. Company did nottimelyfile a current reportunder Item 2.04 of Form 8-K within fourbusiness days of May 28, 2019, the date ofInvestor’s Notice ofDefault. Debenture §I.H.m.
12. On June 4, 2019, Company fileda currentreporton Form 8-K relating to andreferencing Investor, theDebenture and the transactions contemplated thereby, withoutproviding it to Investor for review andapproval prior to filing. Debenture §I.H.d, Agreement §IV.D.
13. Company has failedto atall times maintain areserve equal to 5timesthenumber ofshares sufficient toimmediately issue all potentiallyissuable Conversion Shares. Debenture §I.H.1.c, Agreement §IV.H.
14. On June 21, 2019, Companyfileda currentreport on Form 8-K relating to andreferencing Investor, theDebenture and the transactions contemplated thereby, withoutproviding it to Investor for review andapproval prior to filing. Debenture §I.H.d, Agreement §IV.D.
15. CompanyterminatedEmpire StockTransfer as transfer agent, without anewtransfer firstagreeing in writing to be bound by all terms and conditions of theirrevocable instructions.
StockTransfer.
16. Company terminated Investor’s share reserve with Empire.
17. Company engaged West Coast Stock Transfer as transfer agentwithout itagreeing in writingwithin 2Trading Days to bebound by all terms andconditionsof the irrevocableinstructions.
18. Company terminated West Coast Stock Transferastransferagent, without a new transfer firstagreeingin writing tobe bound by alltermsand conditions of the irrevocableinstructions.
StockTransfer.
19. Company terminated Investor’s share reserve with West Coast.
20. CompanyengagedNevada Agencyand Transfer Company astransferagent without it agreeing in writingwithin 2 Trading Days to be bound by all terms andconditions of the irrevocableinstructions.
21. Company failedtoinstruct Nevada Agency andTransfer Company to honor Investor’s share reserve request.
22. On or about July 29,2019,Company changed its name and failed tonotify Investor.
23. On August 12, 2019, Company filed apreliminaryproxystatement relating to and referencingInvestor,the Debenture and thetransactions contemplated thereby,without providing it toInvestor forreviewandapproval prior to filing. Debenture § I.H.d, Agreement § IV.D.
24. On August 14, 2019, Company didnot timely file itsquarterly report on Form 10-Q when first due.
25. On August19,2019, Company filed aquarterly report relating to and referencingInvestor,the Debenture andthe transactions contemplated thereby, without providing it to Investor forreview and approvalpriorto filing. Debenture § I.H.d,Agreement §IV.D.
26. On August 30, 2019, Company filed adefinitiveproxystatement relating to and referencingInvestor,the Debenture and thetransactions contemplated thereby,without providing it toInvestor forreviewandapproval prior to filing. Debenture § I.H.d, Agreement § IV.D.
Pursuant to Section V.Hofthe Agreement, “H. Remedies. Upon theoccurrence of any Event ofDefaultand atany time thereafter, Investor maydeclareall Obligations secured hereby immediately due and payable and shallhave, in addition to any remediesprovided herein or by anyapplicablelaw or in equity, allthe remediesofasecured party underthe UCC. …”
PursuanttoSectionV.H of theAgreement, Investor herebydeclares all Obligations secured by theAgreement immediately due and payable.
PursuanttoSectionV.H of theAgreement, Investor herebyprovides Companywith noticeof Investor’s public sale anddisposition of allof theCollateral at 10:00 amEastern time on Monday, December 2, 2019 at 5330 Yacht Haven Grande, Suite 206, St. Thomas VI 00802. Pursuant toSection V.H(d) of the Agreement,Companyishereby required toassemble the Collateral and make itavailable toInvestor at suchplace prior tosuch time.
Theforegoing is without waiverof any of Investor’s rightor remedies,including, but notlimited to, the rightto damages forCompany’s multiple unexcused materialbreachesof theAgreement, Debenture and Transaction Documents.
All ofthe foregoing are withoutwaiver of anyrights or remedies of Investor, all of which are expressly reserved.
| Dated: October 24,2019 | DISCOVER GROWTH FUND, LLC |
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| | By: | John Kirkland
By: President ofG.P. of Member |
