GlobalTech (GLTK) 10-Q/A 2023 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2 TO

FORM  10-Q/A

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-1938338

GLOBALTECH CORPORATION

 (Exact Name of registrant as specified in its charter)

Nevada	82-3926338
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Securities registered under Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered.
Common	N/A

3550 Barron Way Suite 13a, Reno, NV 89511

(Address of principal executive offices, including zip code.)

775 624 4817

(Telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered under Section 12(g) of the Act:

Common Stock, $0.0001 par value

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging grown company,” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging Growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of Common Stock held by non-affiliates of the Registrant was approximately N/A.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: 139,763,391 of Common Stock as of June 30, 2023

Document Incorporated by Reference: None

We are a controlled company as 63.30% of our issued and outstanding shares are held by Babar Ali Syed.

Index
		Page
Forward-Looking Statements		3
PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	4
	Consolidated Balance Sheets as on June 30, 2023 and December 31, 2022	4
	Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	5
	Consolidated Statements of Cash flows for the six months ended June 30, 2023 and 2022	6
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	7
	Consolidated Statements of Shareholders' Equity for the three and six months ended June 30, 2023 and 2022	8
	Notes to the Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

2

Forward-Looking Statements

Certain statements that we make from time to time, including statements contained in this Quarterly Report on Form 10-Q, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “shall,” “should,” “could,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “seeks,” “estimates,” “forecasts,” “predicts,” “possible,” “potential,” “target,” or “continue” or the negative of these terms or other comparable terminology. Our operations involve risks and uncertainties, many of which are outside of our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements reflecting management’s expectations for future financial performance and operating expenditures (including our ability to continue as a going concern, to raise additional capital and to succeed in our future operations), expected growth, profitability and business outlook, increased sales and marketing expenses, and the expected results from the integration of our acquisitions.

Forward-looking statements are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties, and other factors which may cause our (or our industry’s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These factors include, among other things, the unknown risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements as set forth under the heading “Risk Factors” in our Annual Report on Form 10-K/A filed with the SEC on September 20, 2023. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations, beliefs and views as of the date of this Quarterly Report on Form 10-Q concerning future developments and their potential effects on our business. Although we believe that the expectations reflected in the forward-looking statements contained in this Quarterly Report on Form 10-Q are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We anticipate that subsequent events and developments may cause our assessments to change. Except as required by law, we are under no duty to update or revise any of such forward- looking statements, whether as a result of new information, future events, or otherwise, after the date of this Quarterly Report on Form 10-Q.

You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we currently expect. The forward-looking statements contained herein should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

3

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

GLOBALTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2023 and DECEMBER 31, 2022
	June 30,			December 31,
	2023			2022
	(Restated)			(Restated)
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	750,478		$	756,231
Restricted cash		2,112,494			2,364,341
Accounts receivable – net		4,649,036			3,302,580
Short term investments		116,918			171,529
Prepayments		13,546			14,839
Stores and spares		830,954			1,066,725
Loans and advances		3,582,727			3,668,905
Other receivables		1,343,933			1,178,698
Total current assets		13,400,087			12,523,848
Property, plant and equipment		17,912,852			23,715,533
Operating lease right-of-use assets		488,101			707,991
Intangible assets - net		12,247,765			15,486,688
Long term loans and other assets		5,185,355			3,637,739
Deferred tax asset		8,257,196			11,065,173
TOTAL ASSETS	$	57,491,354		$	67,136,972
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade and other payables	$	24,916,288		$	28,027,230
Current portion of non-current liabilities		4,222,013			5,267,245
Accrued interest		2,000,387			2,041,753
Short term borrowings		1,216,113			1,531,718
Provision for taxation - net		1,341,848			1,678,731
Total current liabilities		33,696,649			38,546,677
Term finance certificates		2,640,916			4,042,807
Long term financing - secured		1,529,655			1,376,205
Long term deposits and payable		1,190,271			1,807,353
License fee payable		158,527			200,586
Operating lease liability		675,646			955,681
Other payables		589,379			1,866,732
Total non-current liabilities		6,784,393			10,249,365
TOTAL LIABILITIES	$	40,481,042		$	48,796,041
CONTINGENCIES AND COMMITMENTS
SHARE CAPITAL AND RESERVES
SHAREHOLDERS' EQUITY:
Preferred shares		-			2,978,090
Dividend on preferred shares		-			1,085,625
Common stock, $0.0001 par value - authorized 500,000,000 shares at June 30, 2023 and December 31, 2022 and issued 139,763,391 and 139,763,391 shares at June 30, 2023 and December 31, 2022.		13,976			13,976
Accumulated other comprehensive loss		(1,703,488	)		(769,359	)
Accumulated deficit		(34,254,138	)		(35,079,562	)
Shareholders’ Equity Attributable to the Parent Company		(35,943,650	)		(31,771,230	)
Non - controlling interest		52,953,962			50,112,161
TOTAL SHAREHOLDERS’ EQUITY		17,010,312			18,340,931
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	57,491,354		$	67,136,972
The accompanying consolidated notes are an integral part of these unaudited consolidated financial statements.

4

GLOBALTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
	FOR THE THREE MONTHS ENDED						FOR THE SIX MONTHS ENDED
	2023			2022			2023			2022
NET REVENUE	$	2,817,665		$	2,690,757		$	5,286,038		$	5,644,880
Direct operating costs		(2,642,855	)		(1,597,735	)		(4,781,677	)		(3,410,953	)
Other operating costs		(591,510	)		(593,986	)		(1,072,650	)		(1,145,877	)
Depreciation and amortization		(696,730	)		(1,216,795	)		(1,403,906	)		(2,342,381	)
Other expenses		(948,190	)		386,475			(4,023,009	)		(537,408	)
OPERATING LOSS		(2,061,620	)		(1,104,235	)		(5,995,204	)		(1,791,739	)
OTHER:
Other income - net		3,066,730			510,371			3,082,282			785,095
Finance cost		(484,379	)		(828,380	)		(909,474	)		(1,574,609	)
INCOME/(LOSS) BEFORE TAXATION		520,731			(1,422,244	)		(3,822,396	)		(2,581,253	)
Taxation		(41,624	)		(32,767	)		(80,732	)		(68,873	)
NET LOSS	$	479,107		$	(1,455,011	)	$	(3,903,128	)	$	(2,650,127	)
NET INCOME/(LOSS) ATTRIBUTABLE TO:
Common shareholders of GlobalTech Corporation		264,467			(851,181	)		(2,154,526	)		(1,550,324	)
Non - controlling interest (NCI)		214,640			(603,829	)		(1,748,601	)		(1,099,803	)
		479,107			(1,455,011	)		(3,903,128	)		(2,650,127	)
Net loss per common share: basic and diluted	$	0.00		$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted-average common shares used to compute basic and diluted loss per share		139,763,391			139,763,391			139,763,391			139,763,391
The accompanying consolidated notes are an integral part of these unaudited consolidated financial statements.

5

GLOBALTECH CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,903,128	)	$	(2,650,127	)
Adjustment for non-cash charges and other items:
Depreciation and amortization		1,403,906			2,342,381
Interest accretion on liabilities		800,140			1,674,721
Revenue from Indefeasible Right of Use ("IRU") agreement		-			(1,965,154	)
Liabilities written back		-			(81,890	)
Post employment benefits		11,576			105,519
Income on deposits, advances and savings accounts		(313,290	)		(154,906	)
Changes in operating assets and liabilities:
Stores and spares		235,771			171,349
Trade debts		(1,346,456	)		(4,158,340	)
Loans and advances		86,178			28,679
Short term investment		54,611			(757,909	)
Prepayments		1,293			403,170
Other receivables		(165,234	)		18,414
Trade and other payables		(3,110,942	)		(3,515,639	)
Increase / (Decrease) in non-current liabilities and assets:
Long term deposits and payables		(617,082	)		725,895
Other payables		(1,277,353	)		(840,893	)
Long term loans and other assets		(1,547,615	)		2,088,946
Post employment benefits paid		(10,891	)		(830	)
Income on deposit and savings accounts		313,290			154,906
Lease rental payments		(62,337	)		(64,204	)
Finance cost paid		(281,941	)		(1,018,655	)
Income tax paid		(56,983	)		(99,347	)
Net cash used in operating activities		(5,770,872	)		(7,593,912	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment on purchase of property and equipment - net		(17,074	)		(53,257	)
Proceeds from the encashment of short term investments		-			39,775
Net cash used in investing activities		(17,074	)		(13,482	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of term finance certificates		-			(353,322	)
Repayment of long term financing		(67,237	)		(121,974	)
Short term borrowings - net		-			(133,482	)
Net cash used in from financing activities		(67,237	)		(608,778	)
Net Decrease in Cash and Cash Equivalents		(5,855,183	)		(8,216,172	)
Cash and Cash Equivalents at the beginning of the Period		3,120,573			2,679,401
Exchange effect		5,597,584	)		9,239,560
Cash and Cash Equivalents at the End of the Period	$	2,862,973		$	3,702,790
SUPPLEMENTAL INFORMATION - Cash paid during the period for:
Income taxes	$	(56,983	)	$	(99,347	)
Interest	$	(281,941	)	$	(1,018,655	)
The accompanying consolidated notes are an integral part of these unaudited consolidated financial statements.

6

GLOBALTECH CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
	FOR THE THREE MONTHS ENDED						FOR THE SIX MONTHS ENDED
	2023			2022			2023			2022
NET INCOME/(LOSS)	$	479,107		$	(1,455,011	)	$	(3,903,128	)	$	(2,650,127	)
Items that will not be reclassified to profit or loss:
Remeasurement of post employment benefit obligations - net of tax		-			-			-			-
Changes in fair value of financial assets through other comprehensive income		(27,062	)		5,697,867			(526,495	)		3,717,549
Foreign currency translation adjustment		(237,892	)		4,486,985			2,675,703			5,405,728
Other Comprehensive income (loss) - net of tax		(264,954	)		10,184,852			2,149,208			9,123,277
COMPREHENSIVE INCOME/( LOSS)		214,153			8,729,842			(1,753,920	)		6,743,150
COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO:
Common shareholders of GlobalTech Corporation	$	118,213		$	5,106,957		$	(968,164	)	$	(3,786,793	)
Non - controlling interest (NCI)		95,941			3,622,884			(785,756	)		(2,686,357	)
Comprehensive (Loss) income attributable to GLOBALTCH		214,153			8,729,842			(1,753,920	)		(6,437,150	)
The accompanying consolidated notes are an integral part of these unaudited consolidated financial statements.

7

GLOBALTECH CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY  (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

	Preferred Shares									Common Shares						Accumulated Other Comprehensive Income
Description	Shares			Amount			Dividend on Preferred Shares			Shares		Amount		Additional Paid in Capital		Other Comprehensive Loss			Translation Reserve			Total			Accumulated Deficit			Non-Controlling Interest			Total
Balance as at January 01, 2022 (Restated)		52,500		$	2,978,090		$	1,085,625			139,763,391	$	13,976	$	-	$	(124,914	)	$	1,335,465		$	1,210,551		$	(28,222,172	)	$	48,670,360		$	25,736,430
Net loss attributable for the six months ended June 30, 2022		-			-			-			-		-		-		-			-			-			(1,302,972	)		(1,347,154	)		(2,650,127	)
Other comprehensive loss for the six months ended June 30, 2022		-			-			-			-		-		-		5,508,019			3,162,350			8,670,369			-			452,907			9,123,277
Total comprehensive income for the six months ended June 30, 2022		-			-			-			-		-		-		5,508,019			3,162,350			8,670,369			(1,302,972	)		(894,247	)		6,473,151
Translation and other adjustments  for the six months ended June 30, 2022		-			-			-			-		-		-		-			-			-			-			2,153,526			2,153,526
Balance as of June 30, 2022	$	52,500		$	2,978,090		$	1,085,625			139,763,391	$	13,976	$	-	$	5,383,105		$	4,497,815		$	9,880,920		$	(29,525,144	)	$	49,929,638		$	34,363,105
Balance as of January 01, 2023 (Restated)		52,500		$	2,978,090			1,085,625			139,763,391	$	13,976	$	-	$	(1,873,824	)	$	1,104,465		$	(769,359	)	$	(35,079,562	)	$	50,112,161		$	18,340,931
Net loss attributable for the six months ended June 30, 2023		-			-			-			-		-		-		-			-			-			(2,334,198	)		(1,568,929	)		(3,903,128	)
Other comprehensive loss for the six months ended June 30, 2023		-			-			-			-		-		-		(326,040	)		1,569,446			1,270,405			-			878,803			2,149,208
Total comprehensive income for the six months ended June 30, 2023		-			-			-			-		-		-		(326,040	)		1,596,446			1,270,405			(2,334,198	)		(690,126	)		(1,753,920	)
Elimination of preferred stock due to acquisition of CPS		(52,500	)		(2,978,090	)		(1,085,625	)		-		-		-		-			(2,204,534	)		(2,204,534	)		3,159,623			3,108,627			-
Translation and other adjustments for the six months ended June 30, 2023		-			-			-			-		-		-		-						-			-			423,300			423,300
Balance as at June 30, 2023		-			-			-			139,763,391		13,976		-		(2,199,864	)		496,377			(1,703,488	)		(34,254,138	)	$	52,953,962		$	17,010,312

The accompanying consolidated notes are an integral part of these consolidated financial statements.

8

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022

	Preferred Shares									Common Shares						Accumulated Other Comprehensive Income
Description	Shares			Amount			Dividend on Preferred Shares			Shares		Amount		Additional Paid in Capital		Other Comprehensive Loss			Translation Reserve			Total			Accumulated Deficit			Non-Controlling Interest			Total
Balance as at April 01, 2022		52,500		$	2,978,090		$	1,085,625			139,763,391	$	13,976	$	-	$	(1,283,400	)	$	1,872,929		$	589,529		$	(28,921,315	)	$	49,887,358		$	25,633,262
Net loss attributable for the three months ended June 30, 2022		-			-			-			-		-		-		-			-			-			(603,829	)		(851,181	)		(1,455,011	)
Other comprehensive loss for the three months ended June 30, 2022		-			-			-			-		-		-		6,666,505			2,624,886			9,291,391			-			893,461			10,184,852
Total comprehensive income for the three months ended June 30, 2022		-			-			-			-		-		-		6,666,505			2,624,886			9,291,391			(603,829	)		42,280			8,729,842
Translation and other adjustments  for the three months ended June 30, 2022		-			-			-			-		-		-		-			-			-			-			2,153,526			2,153,526
Balance as of June 30, 2022	$	52,500		$	2,978,090		$	1,085,625			139,763,391	$	13,976	$	-	$	5,383,105		$	4,497,815		$	9,880,920		$	(29,525,144	)	$	49,929,638		$	34,363,105
Balance as of April 01, 2023		52,500		$	2,978,090			1,085,625			139,763,391	$	13,976	$	-	$	(2,169,988	)	$	2,832,227		$	662,238		$	(37,678,228	)	$	49,734,456		$	16,796,159
Net loss attributable for the three months ended June 30, 2023		-			-			-			-		-		-		-			-			-			264,467			214,640			479,107
Other comprehensive loss for the three months ended June 30, 2023		-			-			-			-		-		-		(29,876	)		(131,316	)		(161,193	)		-			(103,761	)		(264,954	)
Total comprehensive income for the three months ended June 30, 2023		-			-			-			-		-		-		(29,876	)		(131,316	)		(161,193	)		264,467			110,879			214,154
Elimination of preferred stock due to acquisition of CPS		(52,500	)		(2,978,090	)		(1,085,625	)		-		-		-		-			(2,204,534	)		(2,204,534	)		3,159,623			3,108,627			-
Translation and other adjustments for the three months ended June 30, 2023		-			-			-			-		-		-		-						-			-			-			-
Balance as at June 30, 2023		-			-			-			139,763,391		13,976		-		(2,199,864	)		496,377			(1,703,488	)		(34,254,138	)	$	52,953,962		$	17,010,312

The accompanying consolidated notes are an integral part of these consolidated financial statements.

9

GLOBALTECH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)

1. ORGANIZATION AND BUSINESS

GlobalTech Corporation (“The Company”) is a Nevada Corporation, incorporated with name of Elko Broadband Inc (“EBI”) on December 12, 2017. The Company changed its name on March 23, 2022, to GlobalTech Corporation following a plan of reorganization as disclosed in a following paragraph, GlobalTech Corporation is a broadband company and provides broadband services.

A Plan and Agreement of Reorganization dated December 31, 2021, has been entered into by and between Elko Broadband Inc., (now as GlobalTech Corporation) and Worldcall Holding Inc.(“WHI”), wherein transfer of all assets, properties and business of WHI, in exchange of 117,299,473 common stocks of GlobalTech Corporation the then Elko Broadband Inc.(“EBI”) par value $0.0001 per share. Plan of reorganization required name change to WorldCall Broadband Inc (“WBI”).  This requirement was subsequently amended to change name to GlobalTech Corporation.

However, if trading of shares of the common stock of the Company on OTC Markets is not commenced by December 31, 2022, or such later date as is agreed by WHI stockholders and EBI in writing, then such non-commencement of trading shall forthwith entitle the WHI stockholders to cancel, reverse and unwind the Overall Transaction, in consequence, whereof the 117,299,473 shares of the Company, representing eighty-five percent (85%) of the voting power in the Company, that are held by the WHI Stockholders shall be returned to the EBI Shareholders, and all of the WorldCall Services Limited shares and the Ferret Consulting shares that are then held by the Company shall be returned to the WHI Stockholders, at no further cost to either side involved.  On December 16, 2023, Merger and Reorganization Agreement was amended and latest amendment is done on September 20, 2023 in which December 31, 2023 is set for trading to commence.  As of the filing of this amendment trading of shares has not commenced.  The Company has applied for and received a Cusip number and has also applied for a symbol.

1.1. Legal Subsidiaries

1.1.1. WorldCall Telecom Limited

The Company - owned, directly and indirectly through shareholders in aggregate 55.2% of shares and control in WorldCall Telecom Limited (“WTL”).

WTL is a public limited Company, incorporated in Pakistan on March 15, 2001, under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017). Its shares are quoted on Pakistan Stock Exchange. WTL commenced its operations on December 01, 2004, and is engaged in providing Wireless Local Loop (“WLL”) and Long Distance & International (“LDI”) services in Pakistan; re-broadcasting international/national satellite/terrestrial wireless and cable television and radio signals; interactive communication and to establish, maintain and operate the licensed telephony services. The Group has been licensed by Pakistan Telecommunication Authority (“PTA”) and Pakistan Electronic Media Regulatory Authority (“PEMRA”) for these purposes. WTL is domiciled in Pakistan and its registered office cum principal place of business is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore.

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1.1.2. WorldCall Services (Pvt) Limited

WorldCall Services (Private) Limited (“WSL”), a wholly owned subsidiary of the Company, was incorporated on October 05, 2009, as a private limited Company in Pakistan, under the Companies Ordinance 1984 (Repealed) now Companies Act 2017. The objects of WSL include, but not limited to carrying on and undertaking the business of providing channel placement services, payphone services and generating revenue from communication services. The registered office of WSL is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore, Pakistan.

1.1.3. Ferret Consulting - (FZC)

Ferret Consulting (FZC), a wholly owned subsidiary of the Company, is a limited liability company registered in Emirates of Ajman, UAE as a Free Zone Company, in accordance with the Free Zone laws and regulations enforced in the Emirates of Ajman, U.A.E. It was registered on 24 Aug 2016 and commenced operations thereon.

1.1.4. Rout 1 Digital (Pvt) Limited

Route 1 Digital is a private limited company, a wholly owned subsidiary of Worldcall Telecom Limited, incorporated under the Companies Ordinance 1984 (now Companies Act 2017) on December 21, 2016. The primary business is to carry out the business of all transport services, sharing motor vehicle transportation with another or others, and consultancy in the field of information technology, software development and all activities ancillary thereto. The registered office of the Company is situated at Plot # 112-113, Block S, Quaid -e Azam Industrial Estate, Kot Lakhpat, Lahore, Pakistan.

2. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

Basis of Consolidation — We have prepared consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These financial statements include the operating results and financial condition of GlobalTech Corporation, its wholly-owned subsidiaries; WSL (acquired on November 2021), Ferret Consulting FZC (acquired on November 2021), its majority-owned subsidiary WTL and Rout 1 Digital (Pvt) Limited. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q.  They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the consolidated financial statements for the fiscal year ended December 31, 2022, included in the Company’s year-end financial statements on Form 10-K/A filed with the Securities and Exchange Commission on September 20, 2023.  Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on net earnings, financial position, or cash flows.  The unaudited consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K/A. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six-months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Going Concern – The Company incurred a loss of $3.90 million during the six months ended June 30, 2023. As of June 30, 2023, the Company’s accumulated loss stands at $33.92 million and its current liabilities exceed its current assets by $20.30 million. These conditions, along with other factors like declining revenue indicate the existence of material uncertainties that cast significant doubt about the Company’s ability to continue as a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. 

Significant Accounting Policies:

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Revenue Recognition — We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized upon transfer of control of promised goods and services to customers in an amount that reflects the consideration we expect to receive in exchange for those services. We enter contracts that can include various combinations of services, which are generally capable of being distinct and accounted for as separate performance obligations.

We derive revenue from six primary sources: (1) International Termination Services, (2) Indefeasible Right of Use (IRU) Services, (3) Cable TV and Internet Services, (4) Metro Fiber Solutions, (5) Capacity Sale Services, and (6) Advertisement Services. All our revenue arrangements are based on contracts with customers. Most of our contracts with customers contain single performance obligations, although certain contracts do contain multiple performance obligations where we perform more than one service for the same customer. We account for individual performance obligations separately if they are distinct within the context of the contract. For contracts where we provide multiple services such as where we perform multiple ancillary services, each service represents its own performance obligation. Selling or transaction prices are based on the contractual prices for each service at its stand-alone selling price.  We act as the principal in all revenue transactions. 

A five-step approach is applied in the recognition of revenue under ASC 606: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when we satisfy a performance obligation.

Payment of invoices is due as specified in the underlying customer agreement, typically advance payments to 30 days from the invoice date, which occurs on the date of transfer of control of the services to the customer. Since payment terms are less than a year, we have elected the practical expedient and do not assess whether a customer contract has a significant financing component. The Company’s revenue arrangements generally do not include a general right of refund for services provide.

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Direct Operating Costs — Direct operating costs consist primarily of salaries and benefits related to personnel who provide services to client, annual PTA fees and other direct costs related to the Company’s services. Costs associated with the implementation of new clients are expensed as incurred.

Other Operating Costs —Other operating costs consist primarily of compensation and benefits, travel and advertising expenses and are expensed as incurred.

Business Combinations – Third Party— The Company accounts for third party business combinations under the provisions of ASC 805, Business Combinations, which requires that the acquisition method of accounting be used for all business combinations. Assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. The fair value amount assigned to intangible assets is based on an exit price from a market participant’s viewpoint and utilizes data such as discounted cash flow analysis and replacement cost models. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected client retention rates, expected future cash inflows and outflows, discount rates, and estimated useful lives of those intangible assets. ASC 805 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.

Business Combinations – Common Control — The Company accounts for common control business combinations under the provisions of ASC 805, Business Combinations, which requires business combinations under the common control method. Under the common control method, we recognize the business combination by combining the historical carrying amounts of the assets, liabilities, and equity of the combining entities as of the date of combination. The financial statements reflect the assumption that the combining entities have been operating as a single economic entity throughout the period of common control. No fair value adjustments are made to the carrying amounts of the combining entities' assets, liabilities, and equity, as the transaction is considered a transfer of ownership interests between entities under common control. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.

The Plan and Agreement of Reorganization (as disclosed in note 1) has been accounted for as a reverse acquisition where EBI is a legal acquirer (the accounting acquiree) and WHI; is a legal acquiree (the accounting acquirer). The fair value of WHI’s net assets was reliably measured using trading price of WTL Stock, which was $0.012 as on the date of reorganization i.e., December 31, 2021.

In accordance with ASC 805-40, the fair value of the consideration effectively transferred has been calculated using the number of WHI’s shares that would have been issued to the shareholders of EBI on the acquisition date to give EBI’s shareholders an equivalent ownership interest in WHI as it has in the Company (WHI would had to issue 35,294 shares to EBI’s shareholders). Consideration effectively transferred has been computed to be approximately $423.53 (35,294 shares multiplied by the fair value of WHI’s shares of $0.012) against the assumed fair value of EBI’s net assets amounting to $419,181.

Cash	$	1,193
Non-current assets (incl. tangible and intangible assets)		458,287
Current liabilities (incl. trade and other payables)		(40,299	)
	$	419,181

The Company determined the fair value of the EBI’s assets acquired and liabilities assumed, as well as the valuation of the WHI’s shares to be issued to compute effective consideration. The Company used generally accepted valuation techniques and methodologies to arrive at the fair values disclosed above i.e., discounted cash flow and replacement cost method.

As per Guidance ASC 805-40-45-1, ASC 805-40-30-2, ASC 805-40-55-8 through ASC 805-40-55-10: As on December 31, 2021, following accounting treatment has been applied to reflect this reverse acquisition and also separately disclosed as Adjustments under business reorganization arrangement (note 1) in the consolidated statement of changes in equity on page F-7 of our annual report 10-K/A for the year ended December 31, 2022.

CR. Common stock			$	11,730
CR. Bargain Purchase Gain			$	407,451
DR. Net Assets of EBI	$	419,181
	$	419,181	$	419,181

This transaction resulted in a bargain purchase gain due to several factors including eventual listing of shares of common stock of the Company on NASDAQ in accordance with the applicable laws and regulations.

Income Taxes — Income tax expense includes U.S., Pakistan and other international income taxes, and interest and penalties on uncertain tax positions. Certain income and expenses are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized. All deferred income taxes are classified as long-term.

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Fair Value Measurements — ASC 820, Fair Value Measurement, requires the disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The Company follows a fair value measurement hierarchy to measure financial instruments. The fair value of the Company’s financial instruments is measured using inputs from the three levels of the fair value hierarchy as follows:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

These financial instruments are subject to fair value adjustments only in certain circumstances and include cash, restricted cash, accounts receivable, accounts payable and accrued expenses, borrowings under term loans and line of credit, and other payables. Due to the short-term nature of these financial instruments and that the borrowings bear interest at prevailing market rates, the carrying value approximates the fair value.

Accounts Receivable - net — Accounts receivable are presented on the consolidated balance sheet net of an allowance for credit losses, which is established based on reviews of the accounts receivable aging, an assessment of the customer’s history and current creditworthiness, and the probability of collection.  The Company routinely reviews its receivables and makes provisions for the credit losses utilizing the Current Expected Credit Losses model (“CECL”). The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. However, those provisions are estimates and actual results may materially differ from those estimates. Trade receivables are deemed uncollectible and are removed from accounts receivable and the allowance for credit losses when collection efforts have been exhausted.

Property, Plant, and Equipment — Tangible assets classified as property, plant, and equipment are stated at cost less accumulated depreciation and any identified impairment loss.  Additions are stated at cost less accumulated depreciation and any identified impairment loss. Cost in relation to self-constructed assets includes the direct cost of material, labor, and other allocable expenses.

Depreciation on owned assets is charged to the statement of profit or loss account on the straight-line method to write off the cost or revalued amount of an asset over its estimated useful life.

Depreciation on additions is charged from the month in which the assets are available for use while no depreciation is charged in the month in which the assets are disposed of.

The depreciation method, residual value, and useful lives of assets are reviewed at least at each financial year end and adjusted if the impact on depreciation is significant.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

The gain or loss on disposal of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense.

Loans and advances — Loans to employees are provided as per the Company’s policies and are secured against their gratuity and are adjusted against the provision of adjustments.

Advances to vendors are provided for provision of goods and services and they are secured either by a security deposit or a legally enforceable right to recover.

Loans and advances are carried at fair value through profit or loss and are initially recognized at fair value and transaction costs are expensed in the statement of profit or loss account. The fair value is determined using inputs observable in the market, which are classified as level 2 in the fair value hierarchy. They are considered a non-recurring fair value measurement and are measured at fair value. The fair value measurement considers market interest rates and the creditworthiness of the borrowers or other parties.

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Long term loans and other assets — Loans and other assets including deposits are provided to different parties and vendors which are recoverable either through a security deposit or a legally enforceable right.

These assets are carried at fair value through profit or loss and are initially recognized at fair value and transaction costs are expensed in the statement of profit or loss account. The fair value is determined using inputs observable in the market, which are classified as level 2 in the fair value hierarchy. They are considered a non-recurring fair value measurement and are measured at fair value on a recurring basis. The fair value measurement considers market interest rates and the creditworthiness of the borrowers or other parties.

Intangible Assets — Intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit. The recoverability of intangible assets is evaluated periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

Evaluation of Long-Lived Assets — The Company reviews its long-lived assets for impairment whenever changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset group, the Company will recognize an impairment loss based on the fair value of the asset.

There was no impairment of internal-use software costs, intangible assets or property and equipment during the six months ended June 30, 2023 and 2022. 

Leases — We account for lease arrangements in accordance with ASC 842, Leases.  An arrangement is determined as a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Earnings Per Share — The company calculates earnings per share in accordance with Accounting Standards Codification (ASC) Topic 260, "Earnings Per Share." Basic EPS is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts that are potentially dilutive were exercised or converted into common stock.

The company presents both basic and diluted EPS on the face of the income statement. The company also provides a reconciliation of the numerator and denominator used in the EPS calculations in the footnotes to the financial statements, in case of any change occurred during the year.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.

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Foreign Currency Translation — The financial statements of the Company’s foreign subsidiaries are translated from their functional currency into U.S. dollars, the Company’s functional currency. All foreign currency assets and liabilities are translated at the period-end exchange rate, and all revenue and expenses are translated at average exchange rates. The effects of translating the financial statements of the foreign subsidiaries into U.S. dollars are reported as a cumulative translation adjustment, a separate component of accumulated other comprehensive income/(loss) in the consolidated statements of shareholders’ equity. Foreign currency transaction gains/losses are reported as a component of other income–net in the consolidated statements of operations. The US$/PKR exchange rates used for the translation of PKR-denominated assets and liabilities are Rs. 287.10 and Rs.226.90 as on June 30, 2023 and December 31, 2022, respectively.

Restatement of Prior Balances— The consolidated financial statements of the Company for the prior period i.e., December 31, 2021 and 2022 have been restated in compliance with the Financial Accounting Standards Board (FASB) guidelines and in response to the comments received from the SEC Staff Letter dated September 14, 2023 as stated in the amended 10-K/A filed on September 20, 2023. The restatement of Form 10-K/A resulted in the restatement of consolidated financial statements (unaudited) as previously reported on Form 10-Q for the three and six months ended June 30, 2023 filed on August 18, 2023.    

The below adjustments resulted in the restatement of the consolidated financial statements as of June 30, 2023.  There were no restatements to the consolidated statement of operations, cash flows, or comprehensive income for the three and six months ended June 30, 2023 and 2022. 

	As Presented			Adjustment/			As Restated
	June 30, 2023			Reclassification			June 30, 2023
Balance Sheet
Common stock (a)	$	13,983		$	(7	)	$	13,976
Accumulated deficit (b)	$	(33,915,953	)	$	(338,185	)	$	(34,254,138	)
Shareholders’ Equity Attributable to the Parent Company (a) (b)	$	(35,605,458	)	$	(338,192	)	$	(35,943,650	)
Non-controlling interest (a) (b)	$	52,615,771		$	338,192		$	52,953,962

The restatements/reclassifications relating to the financial statements as of December 31, 2022 are as follows:

	As Presented December 31, 2022			Adjustment/ Reclassification			As Restated December 31, 2022
Balance Sheet
Common stock (a)	$	13,983		$	(7	)	$	13,976
Accumulated deficit (b)	$	(34,741,377	)	$	(338,185	)	$	(35,079,562	)
Shareholders’ Equity Attributable to the Parent Company (a) (b)	$	(31,433,038	)	$	(338,192	)	$	(31,771,230	)
Non-controlling interest (a) (b)	$	49,773,970		$	338,192		$	50,112,161

a)	As a result of the restatement the value of common stock issued and outstanding as of January 1, 2021 was decreased by $7 due to a transposition error.
b)	As a result of the restatement as of December 31, 2021 and 2022 in the amended 10-K/A filed on September 20, 2023, accumulated deficit of $338,185 and non-controlling interest of $338,185 as of June 30, 2023 and December 31, 2022 have been restated accordingly as compared to the previous filed report on Form 10-Q for the three and six months ended June 30, 2023 filed on August 18, 2023.

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All these restatements are material to the Company’s consolidated financial statements. We have evaluated the materiality of the restatement in accordance with FASB guidance and SEC Staff Comments and determined that it requires appropriate disclosure and revision of these consolidated financial statements.

Use of Estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include but are not limited to: (1) impairment of long-lived assets, (2) depreciable lives of assets, (3) allowance for doubtful accounts, (4) fair value of identifiable tangible and intangible assets, including determination of expected useful life, (5) estimating lease terms and incremental borrowing rates. Actual results could significantly differ from those estimates.

Recent Accounting Pronouncements — From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) and are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently adopted and recently issued accounting pronouncements will not have a material impact on our consolidated financial position, results of operations and cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The guidance in Accounting Standards Update (“ASU”) 2016-13 replaces the incurred loss impairment methodology under current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It will apply to all entities. For trade receivables, loans, and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. This may result in the earlier recognition of credit losses. In November, the FASB issued ASU No. 2019-10, which delays this standard’s effective date for SEC smaller reporting companies to the fiscal years interim periods beginning on or after December 15, 2022. The Company adopted the new guidance January 1, 2023 and the adoption of this new guidance had no material impact of the consolidated financial statements. As per the new guidance accounts receivable are presented on the consolidated balance sheet net of an allowance for credit losses, which is established based on reviews of the accounts receivable aging, an assessment of the customer’s history and current creditworthiness, and the probability of collection.  The Company routinely reviews its receivables and makes provisions for the credit losses utilizing the Current Expected Credit Losses model (“CECL”). The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. However, those provisions are estimates and actual results may materially differ from those estimates. Trade receivables are deemed uncollectible and are removed from accounts receivable and the allowance for credit losses when collection efforts have been exhausted.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments are not required to be implemented until after 2022 for public entities. The Company adopted this standard on January 1, 2023 and there was no impact on the consolidated financial statements as a result of the adoption of this standard.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments are effective for public business entities for fiscal years beginning after December 15, 2022. The Company adopted this update on January 1, 2023.  The Company determined that this update did not have a significant impact on the consolidated financial statements.

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3. ACQUISITIONS

	Ferret			WSL
Date of acquisition(s)	30-Nov-2021			30-Nov-2021
Property and equipment		-			30,983
Long term loans		16,576,630			2,987,911
Long term investments		5,849,298			5,197,957
Receivable from associates		-			7,216,311
Trade and other receivables		59,581			411,002
Short term investment		4,875,764			10,679
Cash and bank balances		375,600			20,753
Total assets		27,736,873			15,875,596
Long term loans		-			(6,163,627	)
Loan from directors		-			(1,873,446	)
long term payables		(1,613,556	)		(4,814,974	)
Short term borrowings		(47,993	)		(2,113,637	)
Accrued interest		(84,972	)		(1,897,713	)
Trade and other payables		(1,348	)		(15,787	)
Provision for taxation		-			(9,645	)
Total liabilities		(1,747,869	)		(16,888,829	)
Net assets	$	25,989,004		$	(1,013,233	)

As on November 30, 2021, WHI entered into its 100,000 shares swap agreement with the shareholders of Ferret Consulting (FZC), a UAE-based corporation, to acquire i) all of the issued and outstanding capital stock of Ferret, and (ii) all of the Ferret assets and liabilities that were used in business.

As on November 30, 2021, WHI entered into its 100,000 shares swap agreement with the shareholders of WSL, a Pakistan based corporation, to acquire i) all of the issued and outstanding capital stock of WSL, and (ii) all of the WSL assets and liabilities that were used in business.

Under the common control method, we recognize the business combination by combining the historical carrying amounts of the assets, liabilities, and equity of the combining entities as of the date of combination.  No fair value adjustments are made to the carrying amounts of the combining entities' assets, liabilities, and equity, as the transaction is considered a transfer of ownership interests between entities under common control.

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4. CASH AND BANK

	June 30, 2023		December 31,  2022
	(Unaudited)
Cash at bank
Current accounts	$	603,714	$	182,270
Savings accounts		16,438		112,438
		620,152		294,708
Cash in hand		130,325		461,323
Pay orders in hand		-		200
	$	750,478	$	756,231

5. RESTRICTED CASH

	June 30, 2023		December 31, 2022
	(Unaudited)
Deposit in escrow account	$	1,867,962	$	2,061,124
Margin and other deposits		244,532		303,217
	$	2,112,494	$	2,364,341

Deposits in escrow account:  It represents balance in savings accounts accumulated in Escrow Account. The telecom operators challenged the legality of Access Promotion Contribution (APC) for Universal Service Fund (USF), as levied by Pakistan Telecommunication Authority ("PTA") in 2009, and the dispute was finally decided by the honorable Supreme Court in December 2015. During pendency of the court proceedings, International Clearing House (ICH) agreement was signed in 2012, whereby it was decided that regular contributions for APC, based on each operator’s share under the ICH agreement, shall be made by LDI operators in an Escrow Account.

The formation of ICH was declared anti-competitive by the Competition Commission of Pakistan, and resultantly PTA issued a policy directive in June 2014 terminating ICH arrangement. Some operators challenged this termination and obtained interim relief from Sindh High Court and Lahore High Court. However, Supreme Court adjudicated the matter in February 2015 in favor of termination of ICH, and pursuant upon this, PTA issued its notification of termination of ICH arrangement. As of now, the mechanism of the adjustment of the amount available in Escrow Account remains to be finalized.

Margin and other deposits include deposits placed with banks against various guarantees. This amount also includes approximately $69,662 deposited in a Court of Law as disclosed in a relevant note of contingencies and commitments.

6. ACCOUNTS RECEIVABLE – NET

	June 30, 2023			December 31,  2022
	(Unaudited)
Considered good - unsecured	$	4,649,036		$	3,302,580
Considered doubtful - unsecured		2,174,759			2,174,759
		6,823,795			5,477,339
Less: Provision for expected credit loss		(2,174,759	)		(2,174,759	)
	$	4,649,036		$	3,302,580

Provision for expected credit losses has been approximately $0 and $741,603 for the six months ended June 30, 2023 and year ended December 31, 2022, respectively.

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7. PROPERTY, PLANT AND EQUIPMENT

	June 30, 2023			December 31,  2022
	(Unaudited)
Operating fixed assets	$	17,856,026		$	23,658,654
Capital work-in-progress		56,827			56,879
	$	17,912,852		$	23,715,533
Operating fixed assets
Building on freehold land	$	435,829		$	429,705
Freehold land		181,169			225,729
Leasehold improvements		850,104			806,713
Plant and equipment		36,152,665			36,335,401
Office equipment		470,521			458,815
Vehicles		137,127			135,200
Computers		803,834			785,610
Furniture and fixtures		155,620			149,969
Laboratory and other equipment		96,037			94,687
		39,282,906			39,421,829
Less: Accumulated depreciation		(21,426,880	)		(15,763,175	)
	$	17,856,026		$	23,658,654

Useful life of operating fixed assets is ranging between 5 years to over 20 years. There has not been significant additions and disposals have been made during the six months ended June 30, 2023 and 2022. Moreover, depreciation on operating assets has been allocated to depreciation and amortization on face of the statement of profit or loss.

Detail of additions	June 30, 2023
Leasehold improvements	$	7,011
Plant and equipment		7,844
Office equipment		878
Furniture and fixtures		954
Computers		387
	$	17,074

19

8. LEASES

We determine if an arrangement is a lease at inception. We have operating leases for office and temporary living space. Operating leases are included in operating lease ROU assets, current operating lease liability and non-current operating lease liability in our consolidated balance sheets as of June 30, 2023 and December 31, 2022. The Company does not have any finance leases.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rates, which are derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our bank financing arrangements, geographical location and collateralization of assets when calculating our incremental borrowing rates. Our lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of less than 12 months are not recorded in the consolidated balance sheets. Our lease agreements do not contain any residual value guarantees. For real estate leases, we account for the lease and non-lease components as a single lease component. Some leases include escalation clauses and termination options that are factored in the determination of the lease payments when appropriate.

If a lease is modified after the effective date, the operating lease ROU asset and liability is re-measured using the current incremental borrowing rate. We review our incremental borrowing rate for our portfolio of leases on a quarterly basis. Lease expense is included in direct operating costs and general and administrative expenses in the consolidated statements of operations based on the nature of the expense.

Break down of operating lease expense:

	Six Months Ended
	June 30,
	2023		2022
Operating lease cost	$	158,802	$	224,662
Short term lease cost		10,136		14,340
	$	168,938	$	239,003

Supplemental balance sheet information related to leases was as follows:

	June 30, 2023			December 31,  2022
	(Unaudited)
Operating leases
Operating lease ROU assets, net	$	488,101		$	707,991
Current operating lease liabilities		195,695			418,607
Non-Current operating lease liabilities		675,646			955,681
	$	871,341		$	1,374,288
Operating leases
ROU Assets		707,991			1,346,359
Asset lease expense		(99,151	)		(318,297	)
Foreign exchange loss		(120,740	)		(320,071	)
ROU Assets - net	$	488,101		$	707,991
Weighted average remaining lease term (in years):
Operating leases		7.68			6.34
Weighted average discount rate:
Operating leases		13.35	%		13.35	%

20

Supplemental cash flow and other information related to leases was as follows:

	Six Months Ended
	June, 30
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	62,337	$	146,668
ROU assets obtained in exchange for lease liabilities:
Operating leases, net of impairment and terminations	$	-	$	-

Maturities of lease liabilities are as follows:

Operating leases - Years Ending December 31,
2023 (six months)	$	69,295
2024		144,223
2025		156,727
2026		169,661
2027		174,244
Thereafter		620,521
Total lease payments	$	1,334,671
Less: imputed interest	$	(463,330	)
Total lease obligations	$	871,341
Less: current obligations	$	195,695
Long-term lease obligations	$	675,646

21

9. INTANGIBLE ASSETS – NET

	June 30, 2023			December 31,  2022
	(Unaudited)
Licenses	$	4,636,199		$	4,636,199
Patents and copyrights		23,839			23,504
IRU - media cost		19,478,961			23,689,827
Software		50,422			49,714
		24,189,421			28,399,244
Less: Accumulated amortization - net		(11,941,656	)		(12,912,555	)
	$	12,247,765		$	15,486,688

Useful life of intangible assets is ranging between 5 years to 20 years. Moreover amortization on intangible assets has been allocated to depreciation and amortization on face of the statement of profit or loss.

As of June 30, 2023, future amortization expense scheduled to be expensed is as follows:

Year ending December 31,
2023 (six months)	$	395,591
2024		791,182
2025		791,182
2026		791,182
2026		791,182
Thereafter		8,687,445
	$	12,247,765

22

10. TRADE AND OTHER PAYABLES

	June 30, 2023		December 31,  2022
	(Unaudited)
Trade creditors	$	10,499,392	$	11,634,923
Accrued and other liabilities		4,558,347		4,961,552
Payable to PTA against APC charges		6,151,829		7,784,002
Payable against long term investment		153,257		193,918
Contract liabilities		2,862,341		2,541,600
Withholding taxes payable		258,944		297,868
Sales tax payable		309,794		458,515
Security deposits		122,382		154,852
	$	24,916,288	$	28,027,230

Trade creditors: This includes payable to PTA amounting to $2.02 million and $2.54 million as on June 30, 2023 and December 31, 2022, respectively. Out of this $1.82 million (December 31, 2022: $2.26 million) represents payable regarding Annual Radio Spectrum Fee in respect of WLL licenses. PTA has issued multiple determinations that have been challenged and contested by the Company on legal grounds as well as on account of preoccupation of frequency / spectrums and losses suffered by the Company due to such preoccupancy for which the Company has demanded due compensation from PTA. In all these matters, the Company has filed appeals against PTA's determinations before the honorable Lahore High Court and the honorable Islamabad High Court and stay orders were obtained against the recovery. This matter has been decided in favor of the Company; however, PTA has gone into appeal before the Honorable Supreme Court of Pakistan.

Accrued and other liabilities: This includes payable to key management personnel amounting to $0.08 million and $0.10 million as on June 30, 2023 and December 31, 2022, respectively.

Security Deposits: These represent security deposits received from customers. These are interest-free and refundable on termination of the relationship with the Company. The relationship of these customers with the Company has ended and these deposits are now payable on demand. These have been utilized by the Company before the promulgation of the Companies Act, 2017.

11. CURRENT PORTION OF NON-CURRENT LIABILITIES

	June 30, 2023		December 31,  2022
	(Unaudited)
Term finance certificates	$	2,336,071	$	2,463,732
Mark-up payable on TFCs		1,349,990		1,422,080
Long term financing		340,257		962,825
Lease liabilities		195,695		418,608
	$	4,222,013	$	5,267,245

Details of the current portion of non -current liabilities are provided in their respective notes.

12. ACCRUED INTEREST

	June 30, 2023		December 31,  2022
	(Unaudited)
Short term borrowings	$	199,512	$	219,329
Term finance certificates		1,800,875		1,760,140
Long term financing		-		62,284
	$	2,000,387	$	2,041,753

23

13. SHORT TERM BORROWINGS

	June 30, 2023		December 31,  2022
	(Unaudited)
Line of credit facility -commercial banks	$	159,611	$	202,541
Line of credit facility - others		1,056,502		1,329,177
	$	1,216,113	$	1,531,718

Line of credit facility – commercial banks:

During the year ended 31 December 2022, Company restructured one of its line of credit facility with Askari Bank Limited amounting $1.27 million which is transferred to long term financing due to restructuring for detail refer Note 15.

Line of credit facilities available from commercial banks under interest arrangements amounting to $0.11 million and $0.14 million, as on June 30, 2023 and December 31, 2022, respectively. These facilities are available at interest rate from 1 month to 3 months KIBOR (Karachi Interbank Offered Rate) plus 1.5% per annum (31 December 2022: 1 month to 3 months KIBOR plus 1.5% to 2.5% per annum), payable quarterly, on the balance outstanding. The mark up charged during the six months ended June 30, 2023 on outstanding balances at 18.52% to 22.44% (December 31, 2022: 11.19% to 17.60%) per annum, effectively. The Company is in negotiation with Banks for roll over of these facilities.

As on June 30, 2023 and December 31, 2022, the Company had no available yet-to-be-drawn available / committed borrowing facilities.

This credit facility with commercial banks are secured against first pair passu hypothecation charge on all present and future current and fixed assets excluding building, Wireless Local Loop ("WLL")/Long Distance and International ("LDI") receivables, first joint pari passu hypothecation charge over all present and future current and fixed assets of the Company with security margin over the facility amount, pledge of shares of listed companies in Central Depository Company ("CDC") account of the Company, lien over cash deposit of $0.152 million first exclusive assignment of all present and future receivables of LDI business arm of the Company, collection accounts with Bank for routing of LDI receivables, counter guarantee of the Company, equitable mortgage over the property  of office # 302, 303, 304, 3rd Floor,  the Plaza on  Plot #  G-7, Block-9,  KDA Scheme # 5, Kehkashan Clifton, Karachi and equitable mortgage over the property of office # 07, 08, 09 situated on 1st Floor, Ali Tower, MM Alam Road, Gulberg III.

Line of credit facility – others:

This represents various interest bearing and interest free loans from different parties.

	June 30, 2023		December 31,  2022
	(Unaudited)
Loan from other parties	$	89,502	$	96,108
Loan from related party		208,200		263,479
Loan from Elahi Group of Companies		758,801		969,590
	$	1,056,502	$	1,329,177

Loan from related party:

This represents payable to AMB Management Consultants (Pvt.) Ltd (AMB) (related party) against short term borrowings, which is due to payments made by AMB on behalf of the Company.

24

Loan from third parties: This represents various interest bearing and interest free loans denominated in US$ from different companies, as detailed below.

	June 30, 2023		December 31,  2022
	(Unaudited)
HTS Tel Communication	$	68,747	$	68,747
TLT Communication		20,755		3,973
Wisdom Information Technology Solution		-		23,388
	$	89,502	$	96,108

14. TERM FINANCE CERTIFICATES (TFCs)

	June 30, 2023			December 31,  2022
	(Unaudited)
Opening balance	$	7,458,750		$	7,847,937
Repayments		-			(389,187	)
		7,458,750			7,458,750
Current portion		(2,144,511	)		(2,463,737	)
		5,314,240			4,995,013
Add: Deferred markup		952,619			1,421,704
Exchange adjustment		(3,625,943	)		(2,373,910	)
Closing balance	$	2,640,916		$	4,042,807

Term finance certificates (TFCs) have a face value of $17.42 per certificate. These TFCs carry mark up at the rate of six months average KIBOR plus 1.0% per annum (2022: six-month average KIBOR plus 1.0% per annum), payable quarterly. The mark up rate charged during the six months ended June 30, 2023, on the outstanding balance ranged from 17.10% to 22.15% (December 31, 2022:  8.76% to 17.10%) per annum.

IGI Holding Limited (previously IGI Investment Bank Limited) is the Trustee (herein referred to as the Trustee) under the Trust Deed.

The liability of these TFCs has been rescheduled in December 2012 and then on April 03, 2015. During the year ended 31 December 2018, third rescheduling of these TFCs was successfully executed through signing of the Third Supplemental Trust Deed between the Trustees and the Company.

In accordance with the 3rd Supplemental Trust Deed executed during the year ended 31 December 2018, the outstanding principal is repayable by way of quarterly staggered instalments with downward revision in interest of 0.60% i.e. revised interest rate of six months average KIBOR + 1%. The outstanding interest payable as at the date of restructuring and up to December 20, 2018 is agreed to be deferred and shall be paid from March 20, 2021 in quarterly instalments. 50% of the interest accrued for the period between December 20, 2018, to December 20, 2020, shall be paid on regular quarterly basis commencing from March 20, 2019, and the remaining 50% shall be deferred and paid from March 20, 2021. Interest deferred has been measured at present value. Under the revised term sheet, these TFCs are due to mature on September 20, 2026.

25

The other main terms included appointment of one representative as a nominee director nominated by the Trustee which has been complied with. Further, 175 million sponsor's shares were pledged for investors which was to be released with quarterly scheduled principal repayments proportionately starting from June 2019. The pledged shares have not been released in proportion to the payments made during the year.

The Company has not paid due quarterly installments of June 2019 to June 2023 amounting USD 1.95 million. In case of failure to make due payments by the Company, Trustee can instruct the security agent to enforce the letter of pledge and sell the quantum of the pledged shares to generate the amount required for the settlement of the outstanding redemption amount.

Last year in January 2022 Trustee has sold 24.63 million shares for the amount of $0.198 million ($0.128 million settled against principal and $0.069 million against accrued mark-up) and in February 2022 Trustee has sold further 25.75 million shares for the amount of $ 0.20 million ($0.12 million settled against principal and $0.08 million against accrued mark-up) to recover o/s installments of June 2019, September 2019 and Dec 2019.

These TFCs are secured against first pair passu charge over the Company's present and future fixed assets including equipment, plant and machinery, fixtures excluding land and building with 25% margin in addition to all rights, benefits, claims and interests procured by the Company under:

A.	Long Distance and International ("LDI") and Wireless Local Loop ("WLL") license issued by PTA to the Company; and
B.	Assigned frequency spectrum as per deed of assignment.

26

15. LONG TERM FINANCING – SECURED

	June 30, 2023		December 31, 2022
	(Unaudited)
Bank Islami Limited		302,292	$	400,847
Allied Bank Limited		182,456		288,073
Askari Bank Limited		1,044,908		687,285
	$	1,529,656	$	1,376,205

Allied Bank Limited: This represents balance transferred as a result of restructuring of short-term running finance (RF) facility to Term Loan Facility and subsequently amended on 8^th October 2020 and 30^th September 2021. Principal will be repaid in 37 stepped up monthly instalments starting from August 2021 till August 2024. Interest will be accrued and will be serviced in 12 equal monthly instalments, starting from September 20, 2024. Effective interest rate applicable will be 3 Month KIBOR + 85 bps. The interest charged during the year on the outstanding balance ranged from 17.5% to 22.83% (2022: 11.39% to 16.62%) per annum. The facility is secured against 1st joint pari passu charge on present and future current and fixed assets excluding building of the Company for $1.86 million and right to set off on collection account.

Bank Islami Limited: This represents balance transferred as a result of restructuring of short-term running finance (RF) facility to Term Loan Facility on 12th January 2021. Principal will be repaid in 29 installments starting from Feb 2022 till May 2026. Interest will be accrued and will be serviced in 24 equal monthly instalments, starting from July 01, 2024. Effective interest rate applicable will be 6 Month KIBOR (Floor 7.5% & Capping 17%). The interest charged during the year on the outstanding balance ranged from 15.87% to 17% (2022: 7.65% to 15.87%) per annum. The facility is secured against 1st joint pair passu charge on present and future current and fixed assets excluding land & the building & licenses/receivable of LDI & WLL) of the Company for $3.07 million with 25% margin, pledge of various listed securities of the Company having carrying value $0.011 million and various personal properties of Directors.

Askari Bank Limited: This represents balance transferred as a result of settlement agreement from short term running finance (RF) facility to Term Loan Facility as on November 02, 2022. Principal will be repaid in 48 installments starting from Nov 2022 till Oct 2026. Markup outstanding after effective discounts / waivers as per settlement agreement and markup to be accrued will be serviced in 36 monthly installments, starting from Nov 2024. Effective markup rate applicable will be 1MK - 2% (Floor 10%). The mark up charged during the period on the outstanding balance ranged from 14.4% to 19.70% (2022: 13.46% to 14.61%). The facility is secured against 1st joint pair passu charge on present and future current and fixed assets (excluding land & building & licenses) of the Company with Margin 25%, collection account with AKBL for routing of LDI receivables along with additional mortgage on Properties situated in Sindh., Pakistan.

27

16. LICENSE FEE PAYABLE

	June 30, 2023		December 31,  2022
	(Unaudited)
License fee payable	$	158,527	$	200,586
	$	158,527	$	200,586

This represents the balance amount of the license fee payable to the Pakistan Telecommunication Authority (PTA) for WLL licenses. The Company had filed an application with PTA for a grant of moratorium overpayment of balance amount of WLL license. However, PTA rejected the Company's application and demanded its payment. Being aggrieved by this, the Company filed an appeal before Islamabad High Court ("IHC") against PTA's order. Meanwhile, the Ministry of Information Technology ("Ministry") through its letter dated August 30, 2011, allowed the operators, the staggering for settlement of Access Promotion Contribution ("APC") and Initial Spectrum Fee ("ISF") dues and required PTA to submit an installment plan for this purpose after consultations with the operators. In respect of an appeal filed by the Company, IHC took notice of the Ministry's letter and directed PTA through its order dated January 20, 2015, to expeditiously proceed with the preparation and submission of the said installment plan. As of this date, no such installment plan has been submitted by PTA.

PTA has withdrawn the frequencies 3.5 GHz, 479 MHz, 450 MHz, and 1900 MHz. PTA in haste and unilaterally has withdrawn 3.5 GHz and 479 MHz frequencies which have already been paid in full till 2024.  Through said decision PTA has also withdrawn 1900 MHz frequency spectrum which was already withdrawn by PTA/FAB in 2015 (11th year) until which the spectrum is fully paid on the basis of actual period of usage by the Company, The WLL License provides for such eventuality that when frequency spectrum is withdrawn, the licensee is to be compensated for the balance life of the frequency spectrum, therefore, after withdrawal of spectrum, there is no outstanding amount to be paid related to 1900 MHz frequency spectrum.

As a consequence of above, during last year the outstanding liability for 1900 MHz was reduced to zero on the basis that 1900 MHz frequency had been fully paid for until 2015 (11th year). Similarly, liability for 450MHz frequency spectrum was reduced on pro-rata after withdrawal. Owing to these circumstances, the management does not expect the liability to materialize fully in the near future.

17. CONTINGENCIES AND COMMITMENTS

There is no significant change in the status of contingencies and commitments from our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on September 20, 2023.

28

18. NET REVENUE

	Six Months Ended June 30,
	2023			2022
Telecom services	$	4,470,428		$	2,835,748
Broadband services		558,844			2,804,457
Other services		22,040			80,185
Gross Revenue		5,321,311			5,720,389
Less: Discounts		(1,027	)		(2,819	)
Less: Sales tax		(34,247	)		(72,690	)
Total Revenue	$	5,286,038		$	5,644,880

Introduction

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. All revenue is recognized as our performance obligations are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under ASC 606.

Most of our current contracts with customers contain a single performance obligation. For contracts where we provide multiple services, such as where we perform multiple ancillary services, each service represents its own performance obligation. The standalone selling prices are based on the contractual price for the service. Our contracts generally include standard commercial payment terms. We have no significant obligations for refunds, warranties or similar obligations and our revenue includes sales taxes collected from our customers.

Disaggregation of Revenue from Contracts with Customers

We derive revenue from six primary sources: (1) International Termination Services, (2) Indefeasible Right of Use (IRU), (3) Cable TV and Internet Services, (4) Metro Fiber Solutions, (5) Capacity Sale Services and (6) Advertisement Services.

The following table represents a disaggregation of revenue for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023		2022
Telecom Services:
International termination services		4,740,428		2,835,748
	$	4,740,428	$	2,835,748
Broadband Services:
IRU services		-		2,076,465
Cable TV and internet services		269,010		385,511
Metro fibre solutions		198,218		228,970
Capacity sale services		91,416		108,422
Advertisement services		-		5,088
	$	558,644	$	2,804,456

International termination services:

This service represents the international inbound traffic terminated in Pakistan via Company’s network to the local mobile network operators such as Mobilink, Zong, Telenor and Ufone etc. Revenue from terminating minutes is recognized at the time the call is made over the network of the Company. Revenue from terminating minutes is recognized at the time the call is made over the network of the Company. There is a postpaid billing invoicing cycle for such services.

29

Indefeasible Right of Use (IRU) services:

It is a distinct performance obligation whereby the Company enters into a contractual agreement to grant Indefeasible Right of Use (IRU) of dark fiber up to 20 years or more. Revenue from IRU services is recognized at point in time, when the asset is transferred, and a customer obtains control over it.

Cable TV and internet services:

Cable television is a video delivery service provided by the Company to retail and commercial subscribers via a coaxial cable and fiber optics, whereas Internet service is the delivery of data service provided by the Company to the subscribers via a coaxial cable and fiber optics. The Company is providing Fiber to the Home (“FTTH”) services which is not a distinct performance obligation, but rather a component of a connectivity services. The Company charges connection and membership fee at the time of setting up of connection. Subscription revenue from Cable TV, internet over cable, cable connectivity and channels subscription fee is recognized on provision of services.  Connection and membership fee is recognized as revenue when future services are provided. Such fee is paid by the customer at the time of the sale of the connection, and it entitles the customer to access the cable TV and internet services provided by the company. The Company follows an advance billing invoicing cycle for such services.

Metro fiber solutions:

This revenue stream represents point to point (P2P) connectivity, the latest Dark Fiber internet technology to its high-end large scale multinational companies, IT companies and leading educational institutions in major cities of Pakistan. Dark Fiber refers to fiber optic networks with no service or traffic running on the fiber strands. Unlike managed fiber services, Dark Fiber gives the maximum level of control to businesses, allowing them to use their preferred protocol and manage and maintain their own equipment. Dark Fiber has the capability to offer near limitless capacity, as well as providing the assurance of dedicated connectivity. It can be termed as a fiber corridor offering Committed information rate (CIR), fiber and data services, making it an excellent choice for organizations who require a dedicated, high capacity, secure service. Revenue from metro fiber solutions is recognized at point in time, when the asset is transferred, and a customer obtains control over it.

Capacity sale services:

These are the services arrangements whereby the Company enters into a contractual agreement to provide a portion of the capacity of fiber, wherein the rights are given to the customers for a longer period i.e., 20 years or more. Revenue from capacity sale services is recognized at point in time, when the asset is transferred, and a customer obtains control over it.

Advertisement services:

This revenue relates to the commercials of the different businesses, which are aired on the Company’s cable TV network. The Company offers advertisement to corporate, SME and retail customers on its in-house entertainment channels. There is vast range of advertising packages tailor-made and customized according to specific client requirements at high economical rates. Clients can opt for multiple modes of advertising like: Multiple Scroll, Multiple Logo, L-Shape, Time-checks, TVC, Documentary and Channel Branding. Advertisement income is recognized based on spots run when commercials are aired on the network. The Company follows a postpaid billing invoicing cycle for such services.

30

Deferred revenue was $9,351 as on June 30, 2023, and $34,442 as on December 31, 2022.

19. DIRECT OPERATING COSTS

	Six Months Ended June 30,				Three Months Ended June 30,
	2023		2022		2023			2022
Interconnect, settlement and other charges	$	4,023,136	$	1,962,965	$	2,286,965		$	957,679
Salaries, wages and benefits		244,591		346,937		117,895			162,939
Bandwidth and other PTCL charges		123,677		85,597		62,644			31,960
Power consumption and rent		105,798		194,787		55,892			52,985
Network maintenance and insurance		45,767		6,314		36,604			(32,931	)
PTA fees		23,556		30,810		9,232			12,881
Cable license fee		26,054		69,164		16,195			40,154
Annual spectrum fee		32,440		47,932		16,123			107
Stores and spares consumed		-		59,117		-			59,117
Metro fiber cost		-		103,611		-			48,381
Fees and subscriptions		-		110,386		(29,370	)		75,625
Content cost		2,911		89,714		1,815			84,129
Security services		3,214		3,801		1,598			2,140
Others		150,533		299,818		67,876			102,569
	$	4,781,677	$	3,410,953	$	2,642,855		$	1,597,735

20. FINANCE COST

	Six Months Ended June 30,
	2023		2022
Unwinding of discount on liabilities	$	109,335	$	472,477
Interest on term finance certificates		457,798		344,616
Interest on long term loan		257,877		45,392
Interest on short term borrowings		12,988		607,975
Finance charges on lease liabilities		59,650		86,428
Bank charges and commission		11,826		17,721
	$	909,474	$	1,574,609

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21. TAXATION

The provision (benefit) for income taxes for the six months ended June 30, 2023 and 2022 consisted of the following:

	Six Months Ended June 30,
	2023		2022
Current provision
For the period	$	80,732	$	68,873
Prior periods		-		-
Total current provision		80,732		68,873
Deferred provision		-		-
Total provision	$	80,732	$	68,873

The provision for current taxation represents minimum / final tax under the provisions of the Income Tax Ordinance, 2001 (ITO), as applicable in Pakistan.

	Six Months Ended June 30,
	2023		2022
Current provision
Federal	$	-	$	-
State		-		-
Foreign		80,732		68,873
Total current provision		80,732		68,873
Deferred
Federal		-		-
State		-		-
Foreign		-		-
Total provision	$	80,732	$	68,873

The components of the Company’s deferred income taxes as of June 30, 2023 and December 31, 2022 are as follows:

	June 30, 2023			December 31,  2022
	(Unaudited)
Asset for deferred taxation comprising temporary differences related to:
Unused tax losses	$	9,051,445		$	19,169,614
Provision for doubtful debts		3,135,472			4,878,530
Post employment benefits		222,605			314,490
Provision for stores and spares & stock-in-trade		4,086			6,565
Provision for doubtful advances and other receivables		289,161			464,426
		12,702,769			24,833,625
Liability for deferred taxation comprising temporary differences on other liabilities		(4,445,572	)		(10,380,642	)
Exchange translation adjustment		-			(3,387,811	)
Deferred tax asset	$	8,257,196		$	11,065,173

Deferred tax asset on tax losses available for carry forward has been recognized to the extent that the realization of related tax benefit is probable from reversal of existing taxable temporary differences and future taxable profit. These unused tax losses mainly represent allowable depreciation expenses for indefinite period. However, there are no such tax benefits which remain unrecognized into the financial statements and tax related contingencies have been adequately disclosed in note 17 of these financial statements. Management's assertion of future taxable profit is mainly based on income due to write back of liabilities and business plan to initiate fiber to home services with monetary support from the majority shareholder.

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22. RELATED PARTIES

Related parties comprise the parent Company, associated companies / undertakings, directors of the Company and their close relatives and key management personnel of the Company. The Company in the normal course of business carries out transactions with various related parties. Credit terms with related parties are more than normal business arrangements. Amounts due from and due to related parties are shown under respective notes to these financial statements.

	Six Months Ended June 30,					Three Months Ended June 30,
	2023		2022			2023			2022
Worldcall Business Solutions (Private) Limited Expenses borne on behalf of associate	$	24,605	$	30,597		$	14,411		$	15,956
Worldcall Business Solutions (Private) Limited Interest charges	$	54,313	$	26,011		$	42,557		$	12,634
Worldcall Cable (Private) Limited Interest charges	$	1,278	$	683		$	507		$	358
ACME Telecom (Private) Limited Interest charges	$	18	$	10		$	18		$	4
Worldcall Ride Hail (Private) Limited Interest charges	$	10	$	5		$	2		$	-
Key management personnel Advances against expenses disbursed (adjusted) - net	$	11,109	$	(5,774	)	$	(38,558	)	$	(68,351	)

	June 30, 2023			December 31, 2022
	(Unaudited)
Worldcall Business Solutions (Private) Limited Other receivable	$	445,866		$	474,774
Worldcall Cable (Private) Limited Other receivable	$	10,246		$	11,516
AMB Management Consultants (Pvt.) Ltd  Short term loan	$	(208,200	)	$	(263,479	)
ACME Telecom (Private) Limited Other receivable	$	145		$	163
Worldcall Ride Hail (Private) Limited Other receivable	$	79		$	95

As on June 30, 2023 and December 31, 2022, outstanding balance from key management personnel was approximately $582,968 and $759,017, respectively against miscellaneous expenses including salaries and other employee benefits etc.

The Company owes approximately $0.55 million and $0.94 million interest free loan to its director as on June 30, 2023 and December 31, 2022, respectively, which is repayable at discretion of the Company.

23. PREFERRED SHARES

During the six months ended June 30, 2023, the Company acquired the remaining convertible preference shares (“CPS”) of WorldCall Telecom Limited of 52,500 from Oman Telecommunication Company, previously held under a lockup agreement, and then sold CPS of WorldCall Telecom Limited of 22,500 to a third party.  The CPS shares owned by the Company have been eliminated in consolidation and the transaction resulting from the sale of 22,500 CPS to a third party has been recorded as non-controlling interest in the consolidated statement of shareholders’ equity. 

24. SUBSEQUENT EVENTS

On August 09, 2023, 13,000 of Worldcall Telecom Limited’s CPS owned by a third party were converted into 679,126,319 common shares and 3,000 of Worldcall Telecom Limited’s CPS owned by the Group were converted into 156,721,458 common shares. 

The Group evaluated subsequent events and transactions that occurred after the balance sheet date up to September 18, 2023, the date that the consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events other than the above that would have required adjustment or disclosure in the consolidated financial statements. 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our consolidated financial condition and results of operations for the three and six months ended June 30, 2023 and 2022, and other factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read together with our Consolidated Financial Statements and related notes beginning on page 4 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on September 20, 2023.

Some of the statements set forth in this section are forward-looking statements relating to our future results of operations. Our actual results may vary from the results anticipated by these statements. Please see “Forward-Looking Statements” on page 2 of this Quarterly Report on Form 10-Q.

Quarter Period Highlights

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Reference is made to Item 1A. Risk Factors depict important factors that could cause actual results to differ from expectations. In addition, the following discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto of GlobalTech Corporation included in “Item 18. Financial Statements and Supplementary Data.”

Overview

We are a leading cable and broadband operator in Pakistan and a prominent broadband communication services company providing video and broadband internet services in major cities of Pakistan through Hybrid Fiber Coaxial and state-of-the-art fiber optic networks. We also offer international voice/data interconnect services with a principal focus on the termination of international voice traffic into Pakistan. We were presented with the Best Media Company award and recognized as the largest cable operator in Pakistan by the Consumer’s Choice awards in Pakistan. https://cca.com.pk/company-award/

Video revenue decreased in their months ended June 30, 2023, primarily due to a decline in the number of residential video customers. We expect that the number of residential video customers will continue to decline, negatively impacting video revenue as a result of the competitive environment and shifting video consumption patterns.

We offer a full range of residential and business solutions including fiber optic-delivered communications and managed IT solutions to large enterprise customers. For Corporate Clients, we focus on high-quality service in the provision of dedicated lines having Committed Information Rates (CIR) features to enhance productivity. They are also provided fiber optic network solutions including dark fiber optic connectivity on an IRU (Indefeasible / irrefutable Right of Usage) basis, managed circuits, and Point to Point (P2P) and Point to Multipoint (PTMP) connectivity. On our Cable TV Infrastructure, we distribute satellite TV content to our customers on Hybrid Fiber Coaxial (HFC) and Fiber to the Home (FTTH) networks. We carry both analog and digital TV channels to our customers over our cable network. We have gathered a number of awards over the years for our services from the Consumer Association of Pakistan for the quality and affordability of our services. Our subsidiary WorldCall Public is one of the oldest operators in Pakistan and has good brand recognition for its current portfolio of services. With over two decades of service under our brand, we believe the value generated by our brand gives us a competitive edge over our competition.

Based on management assessment there is no material financial impact of COVID-19 in these financial statements. Furthermore, the Company assesses that its current operations are being performed at pre-Covid-19 levels as operational plans have been adjusted to accommodate for continuance observance of protocols without any disruptions.

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Broadband and Cable TV Operations

The Company has been investing in its ambition of providing affordable broadband connectivity across Pakistan besides making a concerted effort to improve its services to existing customers The company has already initiated a comprehensive deployment of consumer Fiber to the Home (FTTH) connectivity clusters converting and migrating its existing customers to a higher average revenue per user (ARPU) platform. The cluster delivered high-speed internet capped at 100 Mbps, a blend of HD resolution 200 + (Digital/ Analogue) channels in addition to user familiar Customer Relationship Module which gives ultimate freedom to the subscriber for a customized service management experience. As the metro fiber optic plant already traverses across our service areas, the conversion cost for migrating an existing HFC customer to FTTH service remains low. Set-top boxes deployed for Digital Cable TV service are fully compatible with RF Overlay FTTH deployment and need not be changed as part of this migration.

The company has nearly 1,900 kilometers (1,180 miles) of fiber optic infrastructure deployed across 20 major cities of Pakistan with a potential ability to access a market of almost 3 million households for subscriber acquisition. It is a major asset moving forward as access to subscriber concentration points is essential for GlobalTech future strategy.

For our FTTH network deployment, Company has achieved a good response to subscriber conversion and has already deployed phase 1 of the project successfully in populous areas of Lahore, a city in Pakistan. For optimum utilization of this infrastructure and synergizing of resources, we have made business collaborations to aggressively pursue Fiber to the Home (FTTH) service rollout across Pakistan. The FTTH initiative is not only limited to the aforementioned areas, but a comprehensive plan is also in place to convert all existing HFC connections in the various other areas of Lahore and other major cities of Pakistan in a phased manner. This activity will require minimal cost but improve the margin of the business to a large extent and resultantly augment its profitability. FTTH service is charged at a higher level as it delivers much higher bandwidth on fiber optic networks. Additionally, operational resource intensity is substantially lower in FTTH as compared to HFC networks. Higher ARPU with lower servicing costs would result in better performance moving forward.

Our financial numbers, the Revenue of broadband decreased by $2.24 million. The decrease in revenue is mainly due to revenue of duct sales recognized in the corresponding period of last year. Nonetheless, customer requirements are migrating towards a higher grade of service for data both in terms of availability and throughput and the Company has decided to make a shift towards the latest technology options in order to provide desired services to customers in a more secure manner. Company HFC deployments could have been upgraded to service the requirements, but FTTH offers a more cost-effective platform with a much higher capability set moving forward. Management has achieved the rollout of 15,000 subscribers on FTTH in the existing service areas. The management is emphasizing converting all coaxial cable connections with FTTH and in time it would contribute to a major positive shift in the revenue from the consumer segment of operations and the same is substantiated by the marginal increase recorded this year.

For consumer operations, FTTH continues to and will be a major revenue contributor for the Company in the future as well. Subject to the availability of funds Company plans to extend its service to all of the 20 cities covered by its fiber optic network. The management believes that since its inception WorldCall Public has had a large database of loyal customers that have been subscribing to its multiple services for more than fifteen years. To further supplement this effort the management is working on the customers’ loyalty program. Aggressive marketing strategy and on-field marketing activity have also been planned in achieving the desired objectives of new and initial subscribers. This activity is being strongly supported through corporate marketing initiatives and exploiting the digital social media platform fully as LinkedIn, Facebook, Instagram, and Twitter. The marketing campaign of FTTH are also being launched on our in-house cable network. The management is more or less certain that the revenue trend can only go up moving forward. The management also intends to facilitate its’ customers for easy payments after evaluating different payment platforms.

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Summary Table for Services offered

S.No.	Service	Service Area	End-Consumer
1	Long Distance and International (LDI)	National
1a	Bulk Sales		Telecom Operators
1b	Call termination charged per minute		Telecom Operators
2	Broadband
2a	Fiber to the Home (FTTH)	Lahore	Corporate/Residential
2b	Hybrid Fiber Coaxial (HFC)	Lahore / Karachi / Islamabad	Residential
2c	Affordable Broadband	Lahore / Karachi / Islamabad	Resellers/Residential
2d	Fiber Optic connectivity		Telecom Operators/ Corporate
3	Cable TV
3a	Analog and Digital Service (FTTH)	Lahore	Corporate/Residential
3b	Analog and Digital Service (HFC)	Lahore / Karachi / Islamabad	Residential
3c	Analog and Digital Service (Fiber Optic)	Lahore / Karachi / Islamabad / Multan / Faisalabad	*Local Cable Operator/ Local Loop Operator

*We provide Analog and Digital services via our Fiber Optic network to local cable operators, wherein each of the local operators reduces capital costs by receiving our service rather than installing equipment for receiving programming directly from Networks.

Pricing information for the listed services is as follows.

Service 1a is charged at bulk monthly rates with unlimited volumes of traffic. The origination operator is able to generate additional volumes by offering discounted calling rates for Pakistan and local Pakistani operator connected to Company LDI network benefits from additional income by utilization of vacant capacity on the interconnect. Company margin is fixed irrespective of the volume of traffic.

Service 1b is charged on per minute of traffic (on per second incremental basis) to the originating party along with a corresponding termination rate charged by the terminating party connected to Company LDI network.

Service 2a and 3a is direct fiber connectivity to the end user through Fiber to the Home (FTTH) architecture. Service is charged as per subscription opted by the end user and include cable TV and broadband data. Cable TV offering further includes options to have analogue, digital or both services.

Service 2b and 3b is direct hybrid fiber coaxial (HFC) connectivity to the end user. Service is charged as per subscription opted by the end user and include cable TV and broadband data. Cable TV offering further includes options to have analogue, digital or both the services. Compared to FTTH, HFC offers a lower capacity broadband connectivity for the end-user.

Service 2c is connecting local resellers to Company backbone where service offering and packaging is done by the Company and local loop operator only manages subscriber services for connectivity and network maintenance. Company charges on individual packages on pre-paid top-up basis.

Service 2d provides backhaul and core network connectivity fort telecom operators along with P2P links for corporate data connectivity. For telecom operator’s charges are on long term lease basis with O&M charged on annual basis for a specific length of fiber optic network deployment. For corporate in includes one-time charges for network deployment with monthly O&M.

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Service 3c connects and provides local cable operators and local loop operators with Company Cable TV services (Analogue and Digital). The connection is made on fiber optic cable to end-user premises and further distribution is handled by local loop operator through its own resources.

Service 1 is monitored for volume of traffic and applicable rates. Service 2a, 2b, 2c, 3a and 3b are monitored on subscriber connected. Service 2d and 3c are monitored for new sales and Service Level Agreement (SLA) delivery for existing customers.

Subscriber conversion rate from HFC to FTTH:

We were able to covert 100% of our HFC customers located in Lahore City (Wapda Town), however, we do not expect 100% conversion of all of our HFC customers. Our experience in Wapda Town is an indication of the level of acceptance by our customers to convert from HFC to FTTH.

Our conversion rates are high because we provide equipment and installation free of charge to our existing HFC customers. FTTH service is reliable as it does not depend upon power, as compared to an HFC plant. HFC plants require electrical power to operate the network, due to regular power failures in Pakistan HFC networks are frequently affected whereby having service interruption our customers.

FTTH is not dependent upon Network electrical power, rather it requires power at our central switch and customer premises. The continuous availability of service to our end users is of extreme importance.

We expect our customers to thus convert, however we are expecting a conversion rate of at least 50% of our customers. We expect 100% of our customers to convert as we will over the next 36 months stop analog service and have complete FTTH service. We will continue using our HFC plant as a backup to our Fiber plant to continue support our customers.

The table below gives an example of conversion in one of our areas.

Subscriber conversion from HFC to FTTH:

Company deployed FTTH network in one target area of Lahore City (Wapda Town) and achieved the following results:

Total subscribers HFC	=	1,890
Converted to FTTH	=	1,890
ARPU on HFC	=	USD 2
ARPU on FTTH	=	USD 6
Conversion ratio	=	100%
Incremental revenue	=	110%

As per the national broadband policy 2021 of Pakistan, Pakistan’s market has huge potential for broadband/data and therefore has set the following targets keeping in view the market potential, the following table sets forth Government of Pakistan’s targets for broadband deployment.

Targets under National Broadband Policy

Description	Current			Before 2025			By 2030
Fixed Broadband Penetration		1.13	%	>	15	%	>	35	%
Average Internet Usage/ Subscriber/Month (in GBs)		1.91	%	>	20	%	>	50	%

Based upon the above targets as set forth by the Government of Pakistan, we are able to leverage our existing fiber network thus allowing us to deploy in high-density areas with minimal capital expenditures using existing inventory of network equipment. However, the need for capital will increase over the years as fiber network is extended to areas that are currently not served by our existing Fiber Network. These capital needs will be substantial and may require us to raise capital by debt or equity raises. If we are to raise capital by issuing shares, your shareholding will be diluted.

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We believe that setting these targets can only be achieved with Government of Pakistan’s regulatory support such as clear guidance as to permitting and licensing.

The management is also planning to sign up large public and private sector organizations for a complete package of cable TV and internet services. While at the same time we are also planning to sign up with the large housing projects launched by Real Estate companies in different cities for the provision of CATV and broadband internet through our distribution channels with exclusivity right from the project launch. This would further improve and enhance the corporate outlook and revenue of the business.

Long Distance and International traffic operations

The company maintains a robust infrastructure and international interconnect portfolio for its international traffic operations. The operations target voice traffic coming to Pakistan principally originating from overseas Pakistani population calling home and not any significant business / corporate originations. Traditional traffic origination points are Middle Eastern countries, the United Kingdom, and North America. Termination of voice traffic is highly regulated in Pakistan and Company has been in operation since 2004 in this segment of operations.

International termination revenue is one of the major revenue streams, which increased by $1.90Million due to a increase in volume of international termination and increase in exchange rate. Volume increase was on account of bulk traffic arrangements and exchange rate increase is on account of USD value appreciation against Pakistani Rupee.

The company escalated its engagement with its interconnect partners in Pakistan and abroad to address the migration of voice business toward alternate platforms. The operating regime applicable to the business operations whereby charging on per minute basis of voice communications is shifting toward a bulk billing strategy which would address the recent decline in business by a significant increase in business volume at a lower margin.

The management is deliberating new products and services in different areas in emerging markets. The current business plan envisions an aggressive acquisition/collaboration roadmap for technology assets, focusing on both operators and technology platforms with the essential elements of robust operations and growth potential already in place. The same would be involved in getting better solutions in place for voice aggregation operations along with a better position in getting bulk deals in place for business growth.

The company plans to further transform its business strategy to a more globally integrated approach for its subsidiaries. Our future plans also include the mergers and acquisition of existing & new businesses having similar operations in different parts of the world, which include the Middle East, Europe, South Asia, and Africa. As part of our strategy, we intend to leverage our existing technical and managerial strengths in expanding our services to acquired or joint venture partners.

Results of Operations

Net Revenue: Revenue is derived from telecom services and broadband services. Telecom services-related revenue stood at US$ 4.74 million during the six months ended June 30, 2023 compared to US$ 2.83 million during six months ended June 30, 2022, this increase of approximately US$ 1.90 million was primarily due to the increase in volume of international termination business. Broadband services generated revenue of US$ 0.55 million during six months ended June 30, 2023 compared to US$ 2.80 million during six months ended June 30, 2022. This decrease of US$ 2.24 million is due to recognition of duct sale in corresponding period of last year.

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Adjusted EBITDA for the six months ended June 30, 2023 is US$ 2.51 million, whereas Adjusted EBITDA for the corresponding period June 30, 2022 is US$1.86 million. Net loss for the six months ended June 30, 2023 is US$3.90 million, and net loss for the six months ended June 30, 2022 was US$2.60 million. We realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (all percentages are calculated using whole numbers. Minor differences may exist due to rounding).

	Six Months Ended June 30,
	2023			2022
Net revenues	$	5,286,038		$	5,644,880
Adjusted EBITDA	$	2,506,600	)	$	1,862,143
Loss from Operations	$	(2,912,922	)	$	(1,006,644	)

Set forth below is a presentation and reconciliation of our adjusted EBITDA for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023			2022
Net revenue	$	5,286,038		$	5,644,880
GAAP net loss		(3,903,128	)		(2,650,127	)
Depreciation and amortization		1,403,906			2,342,381
Finance cost		909,474			1,574,609
Taxation		80,732			68,873
Exchange loss		4,015,616			526,406
Adjusted EBITDA	$	2,506,600	)	$	1,862,143

Adjusted EBITDA is defined as net income attributable to GlobalTech Corporation shareholders plus net income attributable to non-controlling interest, net interest expense, income taxes, depreciation and amortization, and other operating (income) expenses, net, such as exchange loss/(gain).

Adjusted EBITDA and loss from operations during the six months ended June 30, 2023 were impacted by the decline in revenue, mainly due to duct sale recognized in corresponding period of last year, whereas Adjusted EBITDA and income from operations during the six months ended June 30,2022 were impacted by the increase in revenue mainly by  rise in traffic (international minutes) originated/ terminated.

During this period, Company was also transforming its business operations and moving towards a service-centric operation that does not require heavy investments in infrastructure. Current business operations are being maintained at the optimal operating level and new investments were principally utilized for solutions development more suited for future needs. The company is focused on the development of products and services that would be better suited for its future roadmap as a technology-centric solutions Company.

Gross Margin: The Company recorded a gross margin of USD 0.50 million during the six months ended June 30, 2023 compared to USD 2.23 million during the six months ended June 30, 2022. The decrease was due to duct sale recognized in corresponding period of last year and currency devaluation resulting in a net decrease of USD 0.36 million in revenues thus resulting in a decrease in gross margins.

Direct operating costs: Direct operating costs stood at USD 4.78 million during the six months ended June 30, 2023 compared to USD 3.41 million during the six months ended June 30, 2022. The increase in direct cost is mainly due to interconnect cost, which is aligned with termination revenue and increase in exchange rate.  Operating costs remain practically the same in both periods and positive variance is on account of currency devaluation of nearly 25% over the period. We intend to maintain our operating expenses at current levels, leveraging our existing systems with the increased customer base. Our staff levels would be maintained; our existing networking equipment has additional capacity to handle increased customer loads. Based on our current levels, we can substantially increase customer levels without incurring additional costs.

Other operating costs: Other operating costs stood at USD 1.07 million during the six months ended June 30, 2023 compared to USD 1.15 million during the six months ended June 30, 2022. Operating costs remain practically the same during the periods.

Other income and expenses: The Company recorded other income of USD 3.08 million during the six months ended June 30, 2023 compared to USD 0.79 million during the six months ended June 30, 2022. Other expenses stood at USD 4.02 million during the six months ended June 30, 2023 against USD 0.54 million during the six months ended June 30, 2022.

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Updates on plans:

Long Distance and International traffic operations:

During the quarter our engagement with middle eastern operators has borne fruit. Our principal interconnect partner, ACMETEL has successfully enhanced traffic volumes in bulk arrangements and enhanced volume of traffic have started to flow. Correspondingly, business financial are reflected in this period quarter ending June 30, 2023.

LDI management team attended significant conference as planned namely Capacity Middle East (UAE) and GCCM Middle East (Oman). We plan to further enhance our participation in international forums for voice and data traffic.

Broadband and Cable TV Operations:

It is updated that arrangements with respective authorities have been finalized for the commencement of network roll-out to commence as early as June 2023. It is subject to the timely availability of both the equipment and the funds.

Blockchain: 

Management has made a strategic decision to discontinue development of blockchain based upon current market conditions in Pakistan and to focus the company on its broadband strategy.  Company has not incurred any costs to date which are directly attributable to development of Blockchain.

Additionally, the Company has started work on commercial monetization of its in-house Customer Relationship Management (CRM) system for third-party sales. The software has a good capability set for sales pipeline, call center integration, authority matrix, human resource, performance monitoring, and accounting integration. The first sector being targeted is commercial banking for loan and portfolio management. The Company is confident it can carry out commercial activation for external sales, but the market is still to be tested in this regard.

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Liquidity and Capital Resources

We have significant amounts of debt. The principal amount of our debt as of June 30, 2023, was $6.64 million, consisting of $4.44 million of Term Finance Certificates, a Term Loan of $ 1.28 million, and short-term borrowings including running finances of $ 1.22 million. These debt facilities are secured and require significant cash to fund principal and interest payments on our debt. We are required to make debt repayments of US$ 3.90 million in the coming twelve months and we believe that sufficient funds will be generated through the operations and also with the financial support of the parent company, however rising interest rates by the United States Federal Reserve and the ensuing threat of global recession may result in lower revenues. We are currently in discussions for a private placement of our common shares pursuant to Regulation S exclusion from the Section 5 registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for offers made outside the United States by both U.S. and foreign issuers to non-U.S Persons.

We expect to raise a minimum of $5 million to a maximum of $10 million by December 31, 2023. Most likely shares will be placed at a 50% discount to the trading value of the common shares of the Company over a 30-day period.

While there is no guarantee that any of these methods will result in raising sufficient funds to meet our capital needs or that even if available will be on terms acceptable to us, we will be very cautious and prudent about any new capital raise given the global market uncertainties. However, we are very conscious of the dilutive effect and price pressures in raising equity-based capital.

Despite the challenging environment, we are continually expanding our FTTH network using our existing equipment inventory consisting of Fiber Optic Cable, Customer Premises Equipment without having to deploy additional capital to purchase such equipment. The continual deployment will result in additional revenues for the company.

As possible acquisitions and mergers, we actively review them against our objectives including, among other considerations, improving the operational efficiency, achieving synergies, product development or technical capabilities of our business, and achieving appropriate return targets, and we may participate in the extent we believe these possibilities present attractive opportunities. Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures with the main focus on growth in international termination traffic, FTTH rollout, Data, and Fiber sales and thereby converting the same in escalation in the bottom line of cash flows.

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The Company believes its balances of cash, and cash equivalents which totaled $2,862,973 as of June 30, 2023, along with cash generated by ongoing operations and continued access to debt/capital markets, will be sufficient to satisfy its cash requirements over the next 12 months and beyond. However, this includes restricted cash oof $2,112,494 that is not available for immediate ordinary business use. We believe that our existing staffing levels are sufficient to service additional customers.

Cash flows from operating, investing, and financing Activities:

Cash and Cash Equivalents: We held $2,862,972 and $3,702,789 cash and cash equivalents as of June 30, 2023, and 2022, respectively. Which includes restricted cash of $2,112,494 and $2,679,402 that is not available for immediate ordinary business use.

Operating Activities: Net cash provided by operating activities increased during the ongoing period by $ 1.82 primarily due to a decrease in EBITDA mainly on account of a decline in broadband revenue and forex translational losses increasing operating expenses insurmountably. Net cash used in operating activities for the six months ended June 30, 2023, and 2022 was $ (5.77) million and $ (7.59) million respectively.

Investing Activities: Net cash generated in investing activities for the six months ended June 30, 2023, and 2022 was $ (0.02) million and $ (0.01) million, respectively. The increase in cash used was primarily due to the investment in available opportunities to augment the returns.

Financing Activities: Net cash used in financing activities show a decrease of $0.54 million during the period ended June 30, 2023, compared to the period ended June 30, 2022.

Critical Accounting Policies and Estimates

The critical accounting policies and estimates used in the preparation of our consolidated financial statements that we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements presented in this Report are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2022.

There have been no material changes in our critical accounting policies and estimates from those described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on September 20, 2023. 

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Contractual Obligations and Commitments

We have contractual obligations under our financing arrangements. We also maintain operating leases for office premises. We have been in compliance with all debt covenants as of June 30, 2023. For additional information, see Contractual Obligations and Commitments under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022.

Off-Balance Sheet Arrangements

As of June 30, 2023, and December 31, 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special-purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by 17 C.F.R. 229.10(f)(1) and are not required to provide information under this item, pursuant to Item 305(e) of Regulation S- K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our president (our principal executive officer and our principal accounting officer, and principal financial officer), an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2023, in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Tread Way Commission (“COSO”) in Internal Control—Integrated Framework. Based on this assessment, management concluded that as of June 30, 2023, our company’s internal control over financial reporting was ineffective based on present company activity. In the course of making our assessment, we identified a material weakness in our internal control over financial reporting. This material weakness consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of staff who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness that could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. Our company is in the process of adopting specific internal control mechanisms with our board and officers’ collaboration to ensure effectiveness as we grow. We are presently engaging an outside consultant to assist in adopting new measures to improve upon our internal controls. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over company activities as well as more stringent accounting policies to track and update our financial reporting.

Based on the evaluation of our disclosure controls and procedures, as of June 30, 2023, our president (our principal executive officer and our principal accounting officer, and principal financial officer) concluded that, as of such date, our disclosure controls and procedures were ineffective.

This quarterly report does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only the management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the six months ended June 30, 2023 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

See discussion of legal proceedings in “Note 17, Commitments And Contingencies” of the Notes to Consolidated Financial Statements in this Report, which is incorporated by reference herein.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I—Item 1A. “Risk Factors” in our Annual Report on Form 10-K/A, which could materially affect our business, financial condition and/or future results and may be further impacted by the coronavirus pandemic. The risks described in our Annual Report on Form 10-K/A are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows and/or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit Number	Exhibit Description
31.1	Certification of the Company’s Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Company’s Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.
32.1 *	Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 *	Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

*The certifications on Exhibit 32 hereto are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		GLOBALTECH CORPORATION
Dated: September 20, 2023	By:	/s/ Dana Green
		Dana Green
		Chief Executive Officer, President and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: September 20, 2023	By:	/s/ Dana Green
		Dana Green
		Chief Executive Officer, President and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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