GZ6G Technologies Corporation

08/15/2022 | Press release | Distributed by Public on 08/15/2022 12:50

Quarterly Report for Quarter Ending June 30, 2022 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2022TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

333-256224

(Commission File Number)

GZ6G Technologies Corp.

(Exact name of registrant as specified in its charter)

Nevada 20-0452700
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

8925 West Post Road, Suite 102

Las Vegas, NV

89148

(Address of principal executive offices) (Zip Code)

(949)872-1965

(Registrant's telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None N/A N/A

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, smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth 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 7(a)(2)(B) of the Securities Act. ☐

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

As of August 15, 2022, there were 31,179,133shares of the registrant's common stock outstanding.

GZ6G Technologies Corp.

TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 32
Item 4. Controls and Procedures 32
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 33
Item 1A. Risk Factors 33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33
Item 3. Defaults Upon Senior Securities 33
Item 4. Mine Safety Disclosures 33
Item 5. Other Information 33
Item 6. Exhibits 34
SIGNATURES 35

i

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GZ6G TECHNOLOGIES CORP.

TABLE OF CONTENTS FOR UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

June 30, 2022, and 2021

Page
Condensed Consolidated Balance Sheets (Unaudited) 2
Condensed Consolidated Statements of Operations (Unaudited) 3
Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) 4
Condensed Consolidated Statements of Cash Flows (Unaudited) 5
Notes to the Unaudited Condensed Consolidated Financial Statements 6

1

GZ6G TECHNOLOGIES CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,
2022
December 31,
2021
ASSETS
Current assets
Cash $ 215,910 $ 759,791
Accounts receivable, net 2,500 2,000
Prepaid expenses 30,804 18,586
Other current assets 15,949 15,949
Total current assets 265,163 796,326
Property and equipment, net 211,859 235,176
Right of use assets 599,788 98,093
TOTAL ASSETS $ 1,076,810 $ 1,129,595
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $ 535,286 $ 335,037
Related party payables 264,180 179,769
Deferred revenue 178,000 209,000
Debt, current portion 3,767 44,156
Debt, related parties 1,315,725 1,065,725
Convertible notes, net of debt discount 9,035,638 5,075,840
Lease liability, current portion 82,701 99,003
Total current liabilities 11,415,297 7,008,530
Debt, net of current portion 44,000 44,000
Lease liability, net of current portion 529,086 -
Total liabilities 11,988,383 7,052,530
Stockholders' deficit
Series A Preferred stock, $0.004par, 10,000,000shares authorized, 5,000,000shares issued and outstanding at June 30, 2022 and December 31, 2021 20,000 20,000
Series B Preferred stock, $0.001par, 1share authorized, 1share issued and outstanding at June 30, 2022 and December 31, 2021 - -
Common stock, $0.001par, 500,000,000shares authorized, 27,802,050and 25,177,973shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 27,802 25,178
Additional paid in capital 12,233,626 10,784,308
Accumulated deficit (22,516,357 ) (16,092,531 )
Total GZ6G Technologies Corp stockholders' deficit (10,234,929 ) (5,263,045 )
Non-controlling interest (676,644 ) (659,890 )
Total stockholders' deficit (10,911,573 ) (5,922,935 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,076,810 $ 1,129,595

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

2

GZ6G TECHNOLOGIES CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
NET REVENUES $ 4,000 $ - $ 7,000 $ -
OPERATING EXPENSES
Cost of revenue 393 - 1,481 -
Research and development expenses - 2,600 - 5,200
Depreciation 24,973 1,603 71,451 2,189
General and administrative 1,343,924 183,388 1,876,111 252,012
General and administrative, related parties 120,000 90,000 240,000 150,000
Professional fees 27,400 13,100 50,200 55,256
Total operating expenses 1,516,690 290,691 2,239,243 464,657
(Loss) from operations (1,512,690 ) (290,691 ) (2,232,243 ) (464,657 )
Other income (expense)
Interest expenses (1,989,658 ) (1,626,026 ) (4,254,428 ) (1,930,105 )
PPP loan forgiveness - - 46,091 -
Total other income (expense) (1,989,658 ) (1,626,026 ) (4,208,337 ) (1,930,105 )
Net income (loss) $ (3,502,348 ) $ (1,916,717 ) $ (6,440,580 ) $ (2,394,762 )
Less: net income (loss) attributable to Non-controlling interest (16,155 ) (38,055 ) (16,754 ) (80,074 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (3,486,193 ) $ (1,878,662 ) $ (6,423,826 ) $ (2,314,688 )
Basic and diluted net loss per common share $ (0.13 ) $ (0.09 ) $ (0.25 ) $ (0.13 )
Weighted average shares, basic and diluted 26,153,918 21,914,237 25,672,152 17,278,993

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

3

GZ6G TECHNOLOGIES CORP.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Series A

Preferred Stock

Series B

Preferred Stock

Common Stock

Additional

Paid-in

Accumulated Non-
controlling

Total

Stockholders'

Shares Amount Shares Amount Shares Amount Capital Deficit Interest Deficit
Balance, December 31, 2021 5,000,000 $ 20,000 1 $ - 25,177,973 $ 25,178 $ 10,784,308 $ (16,092,531 ) $ (659,890 ) $ (5,922,935 )
Shares issued as financing costs - - - - 10,769 11 22,389 - - 22,400
Net income (loss) - - - - - - - (2,937,633 ) (599 ) (2,938,232 )
Balance, March 31, 2022 5,000,000 $ 20,000 1 $ - 25,188,742 $ 25,189 $ 10,806,697 $ (19,030,164 ) $ (660,489 ) $ (8,838,767 )
Cashless warrants exercise 356,364 356 (356 ) -
Shares issued under consulting agreement 1,869,463 1,869 658,131 660,000
Shares issued under Equity Purchase Agreement 387,481 388 35,641 36,029
Beneficial conversion feature under convertible notes with warrants 724,500 724,500
Repricing of warrants 9,013

9,013

Net income (loss) - - - - - - - (3,486,193 ) (16,155 ) (3,502,348 )
Balance, June 30, 2022 5,000,000 $ 20,000 1 $ - 27,802,050 $ 27,802 $ 12,233,626 $ (22,516,357 ) $ (676,644 ) $ (10,911,573 )

Series A

Preferred Stock

Series B

Preferred Stock

Common Stock

Additional

Paid-in

Accumulated Non-
controlling

Total

Stockholders'

Shares Amount Shares Amount Shares Amount Capital Deficit Interest Deficit
Balance December 31, 2020 5,000,000 20,000 1 - 12,793,357 12,793 5,180,816 (6,060,923 ) (680,180 ) (1,527,494 )
Net income (loss) - - - - - - - (436,026 ) (42,019 ) (478,045 )
Balance, March 31, 2021 5,000,000 20,000 1 - 12,793,357 12,793 5,180,816 (6,496,949 ) (722,199 ) (2,005,539 )
Shares issued to acquire additional interest in subsidiary 10,000,000 10,000 (142,649 ) 132,649 -
Net income (loss) - - - - - - - (1,878,662 ) (38,055 ) (1,916,717 )
Balance, June 30, 2021 5,000,000 $ 20,000 1 $ - 22,793,357 $ 22,793 $ 5,038,167 $ (8,375,611 ) $ (627,605 ) $ (3,922,256 )

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

4

GZ6G TECHNOLOGIES CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months
Ended June 30,
2022 2021
Cash flows from operating activities:
Net Loss $ (6,440,580 ) $ (2,394,762 )
Adjustments to reconcile net loss to net cash used in operating activities:
PPP loan forgiveness (46,091 ) -
Amortization of debt discount and issuance costs 4,034,548 1,884,293
Common stock issued as financing costs 22,400 -
Common stock issued under consulting agreement 660,000 -
Depreciation 71,451 2,189
Amortization of right of use assets 11,089 130
Repricing of warrant exercise price 9,013 -
Fixed assets reclassified to advertising expenses - 4,990
Changes in operating assets and liabilities:
Increase in accounts receivable (500 ) -
Increase in prepaid expenses (12,218 ) (2,278 )
(Increase) in other current assets - (10,436 )
Increase in accounts payable and accrued expenses 200,249 9,627
Increase in related party payables 84,411 85,758
Decrease in customer deposits (31,000 ) -
Net cash used in operating activities (1,437,228 ) (420,489 )
Cash Flows from Investing Activities:
Proceeds from credit for leasehold improvements 30,000 -
Purchase of equipment (78,134 ) (98,335 )
Net cash used in investing activities (48,134 ) (98,335 )
Cash flows from financing activities:
Proceeds from sale of common stock, net 36,029 -
Proceeds from subscription receivable - 150,000
Repayment of debt, related parties - (123,480 )
Refund of repayment to PPP loan 5,702
Proceeds from related parties 250,000
Repayment to convertible notes (281,000 )
Proceeds from convertible notes, net 930,750 900,000
Net cash provided by financing activities 941,481 926,520
Net increase (decrease) in cash (543,881 ) 407,696
Cash-beginning of period 759,791 180,544
Cash-end of period $ 215,910 $ 588,240
SUPPLEMENTAL DISCLOSURES
Interest paid $ - $ -
Income taxes paid $ - $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock-settled debt liability $ 446,412 $ 9,710,674
Cashless warrant

356

-

Beneficial conversion feature

724,500

-

Shares issued to acquire interest in subsidiary

-

132,649

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

5

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

(Unaudited)

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

GZ6G Technologies Corp. (formerly Green Zebra International Corp.) (the "Company" or "GZ6G") is a complete enterprise smart solutions provider for large venues and cities. Focused on acquiring smart city solutions, developing innovative products, and overseeing smart cities and smart venues, GZ6G also assists in modernizing clients with innovative wireless IoT technology for the emerging 5G and Wi-Fi 6 marketplaces. Target markets include stadiums, airports, universities, and smart city projects. The Company is organized under the laws of the State of Nevada and has offices in California and Nevada.

In November 2018, the Company changed its name from NanoSensors, Inc. to Green Zebra International Corp. following a merger with Green Zebra Media Corp., a Delaware corporation, under common control.

The Board of Directors approved a name change and a reverse stock split of the Company's issued and outstanding common shares at a ratio of 200 to 1 on December 18, 2019. The accompanying financial statements, and all share and per share information contained herein has been retroactively restated to reflect the reverse stock split. On December 20, 2019, the Company changed its name from Green Zebra International Corp. to GZ6G Technologies Corp.

On August 6, 2021, Mr. William Ray Procanik and Mr. Brian Scott Hale were appointed to the Company's board of directors and concurrently the Company formed an audit committee, which each of Mr. Hale and Mr. Procanik joined, serving as independent board members. Concurrently the Company completed an application for an uplist to the OTCQB and submitted the required disclosure through OTCMarkets. The Company was approved for trading on the OTCQB Venture Market on October 25, 2021.

Going Concern

These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2021, the Company entered into various loan treaties, convertible notes and other financing arrangements through which we received net cash proceeds of $2,108,000. During the six-month period ended June 30, 2022, the Company received net cash proceeds of $885,250by way of a series of convertible promissory notes and $250,000in the form of related party loans. As of June 30, 2022, the Company had a working capital deficit of $11,150,135with approximately $215,910of cash on hand and an accumulated deficit of $22,516,357. The Company anticipates a need for a further $5,000,000in fiscal 2022 to meet its upgraded infrastructure requirements. In addition to the remaining funding which may be provided to the Company under various loan treaty agreements, the Company filed two registration statements on Form S-1 to facilitate this requirement which allow for total funding of up to $15,000,000, both of which have been deemed effective. Up to June 30, 2022 the Company has received funding under these equity lines of $136,029. There is no guarantee the Company will continue to receive financing as required. The continuation of the Company as a going concern is dependent upon the ability to raise additional equity and/or debt financing and the attainment of profitable operations from the Company's future business. If the Company is unable to obtain adequate capital as needed, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

6

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)

Covid-19 Pandemic: The COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. During 2021 the implementation of services under certain of our installation agreements experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also continue to impact our ability to raise additional capital. During March 2020, we gave notice of furlough to our administrative support employees in an effort to conserve resources as we evaluate our business development efforts in the coming months. In April 2020, the Company received a grant of $6,000and in May 2020 we received a PPP loan and an SBA loan in the approximate cumulative amount of $90,000for operations. During early 2022 the Company reopened its offices and continued with the hiring of additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer requirements for 2022. While recent progress in the battle against COVID leads us to believe that the worst of the effects of the pandemic are past, we cannot say with certainty that the situation will not change. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and still subject to change. While significant uncertainty remains, despite the fact that the Company has been able to source financing, it remains that the COVID-19 outbreak may have a negative impact on its ability to work through its collaborative development efforts with industry partners, and in acquiring venues due to the continuing impact of COVID 19, in particular as a result of the impact to the global supply chain.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States ("GAAP"), and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). The information furnished in the consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted pursuant to the SEC's rules and regulations. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's 2021 Form 10-K as filed with the Securities and Exchange Commission on March 28, 2022.

Consolidation

These consolidated financial statements include the accounts of GZ6G Technology Corp. and its 60% controlled subsidiary, Green Zebra Media Corp. ("GZMC'), as of June 30, 2022. All significant intercompany accounting transactions have been eliminated as a result of consolidation.

Use of Estimates

The preparation of these consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

7

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. At June 30, 2022, the Company had $0in excess of the FDIC insured limit.

Property and Equipment

Property and equipment are recorded at cost. Depreciation on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.

Research and Development Costs

We charge research and development costs to operations as incurred in accordance with ASC 730-Research and Development, except in those cases in which such costs are reimbursable under customer funded contracts. These amounts are not reflected in the reported research and development expenses in each of the respective periods but are included in net sales with the related costs included in cost of sales in each of the respective periods.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 - Revenue from Contracts with Customers. The core principle of this standard is that a company should record revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Further under ASC 606, the Company recognizes revenue from licensing agreements and service-based contracts by applying the following steps: (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 each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

We earn revenue from both digital marketing and the sale of WiFi and communication solutions to customers around the world. Revenue is earned from sales of our WiFi media platform and our WiFi monetization hardware (GZ Media hub) embedded with GZ software to create monetization and communication solutions for our customers. Our sales can consist of any one or a combination of items required by our customer including hardware, technology platforms and related support. We also enter into licensing contracts which provide for revenue based on licensing fees and revenue sharing with our licensees.

As we expand, we expect a large portion of our revenue from our digital communication solutions to be derived from service-based contracts where we expect to recognize a significant portion of our contracts over time, as there is a continuous delivery of services to the customer over the contractual period of performance. These contracts may or may not include fixed payments for services over time and/or commission-based fees.

8

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

Direct costs are expected to include materials, labor and overhead to be charged to work-in-progress (including our contracts-in-progress) inventory or cost of sales. Indirect costs relating to long-term contracts, are expected to include expenses such as general and administrative charges, and other costs will be charged to expense as incurred and will not be included in our work-in-process (including our contracts-in-progress) inventory or cost of sales. Total estimates are expected to be reviewed and revised periodically throughout the lives of the contracts, and adjustments to profits resulting from such revisions are made cumulative to the date of the change. Estimated losses on long-term contracts are recorded in the period in which the losses become evident. If we do not accurately estimate the total sales, related costs and progress towards completion on our long-term contracts, the estimated gross margins may be significantly impacted, or losses may need to be recognized in future periods. Any such resulting changes in margins or contract losses could be material to our results of operations and financial condition.

In addition, certain of our contracts will include termination for convenience or non-performance clauses that provide the customer with the right to terminate the contract. Such terminations could impact the assumptions regarding total contract revenues and expenses utilized in recognizing profit under those contracts where we apply the percentage-of-completion method of accounting. Changes to these assumptions could materially impact our results of operations and financial condition. As we fully implement our business model, our inability to perform on our long-term contracts could materially impact our results of operations and financial condition.

Stock-Based Compensation

We account for stock-based transactions in which the Company receives services from employees, non-employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date in accordance with ASC 718 - Compensation-Stock Compensation. Stock-based compensation cost for stock options or warrants is estimated at the grant date based on each instrument's fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.

Debt Issue Costs

The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as interest expense.

Original Issue Discount

If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized over the life of the debt to the statement of operations as interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Stock Settled Debt

In certain instances, the Company will issue convertible notes which contain a provision in which the price of the conversion feature is priced at a fixed discount to the trading price of the Company's common shares as traded in the over-the-counter market. In these instances, the Company records a liability, in addition to the principal amount of the convertible note, as stock-settled debt for the fixed value transferred to the convertible note holder from the fixed discount conversion feature. As of June 30, 2022 and December 31, 2021, the Company had recorded within Convertible Notes, net of discount, the amount of $8,680,783and $8,320,525for the value of the stock settled debt with respect to certain convertible notes (see Note 6).

9

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02 - Topic 842 Leases. ASU 2016-02 requires that most leases be recognized on the financial statements, specifically the recognition of right-to-use assets and related lease liabilities, and enhanced disclosures about leasing arrangements. The Company elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

Income Taxes

The Company follows ASC 740 - Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Basic and Diluted Net Income (Loss) Per Share

In accordance with ASC 260 - Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive. Potential common stock consists of the incremental common stock issuable upon convertible notes, classes of shares with conversion features.

10

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic and Diluted Net Income (Loss) Per Share

The computation of basic loss per share for the periods ended June 30, 2022, and 2021 excludes potentially dilutive securities of underlying share purchase warrants, convertible notes, and preferred shares, because their inclusion would be antidilutive. As a result, the computations of net loss per share for each period presented is the same for both basic and fully diluted.

The table below reflects the potentially dilutive securities at each reporting periodwhich have been excluded from the computation of diluted net loss per share:

June 30,
2022
June 30,
2021
Convertible Notes 23,691,779 4,871,812
Stock purchase warrants 2,402,154 -
Series A Preferred shares (convertible to common at a ratio of 10 common for each 1 preferred) 50,000,000 50,000,000
Total 76,093,933 54,871,812

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06 to simplify the current guidance for convertible instruments and the derivatives scope exception for contracts in an entity's own equity. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The update also provides for expanded disclosure requirements to increase transparency. For SEC filers, excluding smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein. The Company has not yet adopted this ASU and does not expect the adoption of ASU 2020-06 to have a material impact on the Company's financial statements or disclosures.

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

NOTE 3: PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following:

June 30,
2022
December 31,
2021
Office equipment $ 205,347 $ 166,372
Leasehold improvements 12,813 31,919
Software 100,595 72,330
Total 318,755 270,621
Less: accumulated depreciation and amortization (106,896 ) (35,445 )
Total property and equipment, net $ 211,859 $ 235,176

Depreciation expense amounted to $24,973and $1,603for the three months periods ended June 30, 2022, and 2021, respectively.

Depreciation expense amounted to $71,451and $2,189for the six months periods ended June 30, 2022, and 2021, respectively.

11

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 4: PREPAID EXPENSES

Prepaid expensesat June 30, 2022 and December 31, 2021 consist of the following:

June 30,
2022
December 31,
2021
Reseller agreement (1) $ - $ 3,467
Other expenses (2) 30,804 15,119
Total $ 30,804 $ 18,586
(1) On January 31, 2017, GZMC entered into a white label reseller agreement with Purple Wifi Limited, a company based in the UK that provides a hosted software solution as a Wifi hotspot platform for use on a company's Wifi hardware and also provides customer analytics services and marketing opportunities along with ancillary support services. The reseller agreement had an initial term of three years and was subsequently amended to reflect a five (5) year term. Under the terms of the agreement GZMC was required to pay a fee of $52,000of which a total of $6,450was unpaid and is included in accounts payable as of June 30, 2022 and December 31, 2021. The total amount expended under the reseller agreement was initially recorded as prepaid expenses on the Company's Balance Sheets and has been fully amortized over the term of the agreement on a five-year straight-line basis as part of general and administrative expense.
(2) Other prepaid expenses include annual subscription fees for software, insurance, prepaid term marketing expenses and office security services.

NOTE 5: OTHER CURRENT ASSETS

Other current assets consist of the followingat June 30, 2022 and December 31, 2021:

June 30,
2022
December 31,
2021
Security deposits $ 14,691 $ 14,691
Other deposits and receivables 1,258 1,258
Total $ 15,949 $ 15,949

NOTE 6: DEBT

Loan Treaty Agreement

On December 21, 2020, the Company entered into a Loan Treaty Agreement with a third party ("Treaty Agreement") whereby the lender agreed to provide a loan in the amount of up to $450,000to the Company in $25,000tranches, deposited weekly, memorialized by promissory notes in increments of $100,000. Each amount deposited has a term of 12 months for repayment and shall bear an interest rate of 8% per annum. In addition, at the option of the Lender, each $25,000loaned to the Company may be converted into common shares at a 25% discount to the market price at the close of business on November 23, 2020 ($0.26 x 75% = $0.195); or $0.195 per share. Each $25,000 may be converted at the one-year anniversary of the date of the weekly deposit, unless the Company becomes a fully reporting company, at which time the holder may convert such debt to common shares in six months, or if the underlying shares are registered, conversion may occur upon Notice of Effect from the Securities and Exchange Commission. On April 1, 2021, the Company entered into an amendment to the Loan Treaty Agreement originally executed on December 21, 2020. Under the terms of the amendment the lender agreed to fund an additional $1 million dollars over 90 business days in equal weekly tranches of $55,556. Each tranche may be converted under the same terms as the original loan treaty, or $0.195 per share, commencing the one-year anniversary of the date of the weekly deposit, unless the Company becomes a fully reporting company, at which time the holder may convert such debt to common shares in six months, or if the underlying shares are registered, conversion may occur upon Notice of Effect from the Securities and Exchange Commission.

12

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 6: DEBT (continued)

Loan Treaty Agreement (continued)

During the fiscal year ended December 31, 2021, the Company received weekly tranche deposits for an aggregate of $1,100,000. The Company recorded $11,656,833as the liability on stock settled debt associated with the tranches which amount is amortized over the terms of the notes.

During the six months ended June 30, 2022, the Company received a further $50,000under this loan treaty. The Company recorded $360,258, as the liability on stock settled debt associated with the tranche which amount is amortized over the terms of the notes.

On October 27, 2021, the Company issued 2,051,282shares of common stock to the lender in consideration for $400,000in loans provided under the terms of the Treaty Agreement at $0.195per share. A total of $250,000remains to be funded under the terms of this Treaty Agreement.

The carrying value of funding tranchesis as follows:

June 30,
2022
December 31,
2021
Principal $ 800,000 $ 750,000
Stock-settled liability 8,680,783 8,320,525
Total 9,480,783 9,070,525
Unamortized debt discount (891,941 ) (4,067,059 )
Debt carrying value $ 8,588,842 $ 5,003,466

The interest expenses for the funding tranchesare as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest expense on notes $ 15,956 $ 12,959 $ 31,507 $ 16,394
Amortization of debt discount 1,415,635 1,599,476 3,535,376 1,884,293
Total: $ 1,431,591 $ 1,612,435 $ 3,566,883 $ 1,900,687

The accrued interest payableis as follows:

Balance, December 31, 2021 $ 50,981
Interest expense on the convertible notes 31,507
Balance, June 30, 2022 $ 82,488

Convertible Debt with Warrant Agreement

On November 11, 2021, the Company entered into a Promissory Note with an investor in which the investor agreed to lend the Company the principal amount of $560,000for the purchase price of $504,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00per share. The Company concurrently entered into a Warrant Agreement for the purchase of an additional 560,000common shares at $1.00per share for a term of three (3) years.

13

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 6: DEBT (continued)

Convertible Debt with Warrant Agreement (continued)

On December 16, 2021, the Company entered into a Promissory Note with an investor in which the investor agreed to lend the Company the principal amount of $560,000for the purchase price of $504,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00per share. The Company concurrently entered into a Warrant Agreement for the purchase of an additional 560,000common shares at $1.00per share for a term of three (3) years.

In accordance with ASC 470 - Debt, the proceeds in fiscal year 2021 of $1,008,000was allocated based on the relative fair values of the convertible notes and the warrants of $504,027 and $503,973, respectively. The Warrant was valued at $503,973 and was recorded as a debt discount which is being amortized over the life of the Note. In addition, the Note had a beneficial conversion feature (BCF) in the amount of $616,027which was recorded as a debt discount which is being amortized over the life of the Note. The debt discount totaled $1,120,000.

On April 4, 2022, the Company entered into a Promissory Note with an investor in which the investor agreed to lend the Company the principal amount of $365,000for the purchase price of $328,500. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $1.00per share. The Company concurrently entered into a Warrant Agreement for the purchase of an additional 365,000common shares at $1.00per share for a term of three (3) years.

On May 23, 2022, the Company entered into a Promissory Note with an investor in which the investor agreed to lend the Company the principal amount of $440,000for the purchase price of $396,000. The Term of the Note is twelve months with an interest rate of 12%. The conversion rate of the Note is fixed at $0.30per share. The Company concurrently entered into a Warrant Agreement for the purchase of an additional 1,466,667common shares at $0.30per share for a term of three (3) years.

In accordance with ASC 470 - Debt, the proceeds in six months ended June 30, 2022, of $724,500was allocated based on the relative fair values of the convertible notes and the warrants of $364,497 and $360,003, respectively. The Warrant was valued at $360,003 and was recorded as a debt discount which is being amortized over the life of the Note. In addition, the Note had a beneficial conversion feature (BCF) in the amount of $444,007which was recorded as a debt discount which is being amortized over the life of the Note. The debt discount totaled $805,000.

During the six months ended June 30, 2022, the Company paid $281,000in cash to settle a portion of the outstanding principal and $19,711in cash to settle interest payable related to the December 16, 2021, convertible note.

The carrying value of the tranches is as follows:

June 30,
2022
December 31,
2021
Principal $ 1,925,000 $ 1,120,000
Repaid to principal (281,000 ) -
Unamortized debt discount (1,361,563 ) (1,047,626 )
Debt carrying value $ 282,437 $ 72,374

14

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 6: DEBT (continued)

Convertible Debt with Warrant Agreement (continued)

The interest expenses related to the tranches are as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest expense on notes $ 46,021 $ - $ 79,161 $ -
Amortization of debt discount 432,133 - 491,063 -
Total: $ 478,154 $ - $ 570,224 $ -

The accrued interest payable is as follows:

Balance, December 31, 2021 $ 13,440
Interest expense on the convertible notes 79,161
Repaid in cash (19,711 )
Balance, June 30, 2022 $ 72,890

During the six months ended June 30, 2022, the Company issued shares in respect to a Put notice (Note 10(5)) with a strike price of $0.095985 per share which triggered a dilutive issuance clause in the aforementioned Convertible Note agreements downward adjusting the conversion price per share to match the strike price.

Convertible Promissory Note

On June 3, 2022, the Company entered into a Convertible Promissory Note with an investor in which the investor agreed to lend the Company the principal amount of $160,000for the purchase price of $156,250. The Term of the Note is twelve months with an interest rate of 10%. The conversion rate of the Note is as follows: 35% discount to the lowest bid price during the ten-day trading period prior to a notice of conversion.The carrying value of this convertible promissory noteis as follows:

June 30,
2022
December 31,
2021
Principal $ 160,000 $ -
Stock-settled liability 86,154 -
Total 246,154 -
Unamortized debt discount (81,795 ) -
Debt carrying value $ 164,359 $ -

The interest expenses for the convertible promissory noteare as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest expense on note $ 1,797 $ - $ 1,797 $ -
Amortization of debt discount 8,109 - 8,109 -
Total: $ 9,906 $ - $ 9,906 $ -

The accrued interest payable is as follows:

Balance, December 31, 2021 $ -
Interest expense on the convertible note 1,797
Balance, June 30, 2022 $ 1,797

15

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 6: DEBT (continued)

SBA

On May 19, 2020, the Company received a long-term loan from U.S. Small Business Administration (SBA) in the amount of $44,000, upon the following conditions:

Payment: Installment payments, including principal and interest, of $215monthly, will begin twenty-four (24) months from the date of the promissory note, or May 19, 2022. The balance of principal and interest will be payable Thirty (30) years from the date of the promissory note.

Interest: Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date(s) of each advance.

Payment terms: Each payment will be applied first to interest accrued to the date of receipt of each payment, and the balance, if any, will be applied to principal; each payment will be made when due even if at that time the full amount of the loan has not yet been advanced or the authorized amount of the Loan has been reduced.

The interest expenses related to the SBA loanare as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest expense on notes $ 412 $ 402 $ 818 $ 818

The accrued interest payable is as follows:

Balance, December 31, 2021 $ 2,672
Addition: Interest expense 818
Balance, June 30, 2022 $ 3,490

PPP funds

The Paycheck Protection Program ("PPP") is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. The loan may be forgiven in full if the funds are used for payroll costs, interest on mortgages, rent, and utilities (with at least 60% of the forgiven amount having been required to be used for payroll). Additional terms include:

An interest rate of 1% per annum;
Loans issued prior to June 5, 2020, have a maturity of 2 years, with loans issued thereafter having a maturity of 5 years;
Loan payments are deferred for six months;
No collateral or personal guarantees are required; and
Neither the government nor lenders will charge small businesses any fees.

On May 14, 2020, the Company received PPP proceeds of $45,450. As of December 31, 2021, the Company paid $5,702including $5,061in principal and $641in interest payable in respect of this loan. The Company requested full loan forgiveness by submitting a request to the lender. The total loan principal amount of $45,450with the interest amount of $641was forgiven in full in the three months ended March 31, 2022. As a result, the Company recorded the full amount of $46,091that had been received as other income.

16

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 6: DEBT (continued)

Other Short-term loans

On January 5, 2018, GZMC entered into a loan agreement with National Funding Inc. whereby the Company acquired funding in the amount of $20,625. The terms of the loan called for the Company to pay an origination fee of $412and to repay $26,400by way of 176 daily payments of $150. As of June 30, 2022, and December 31, 2021, there was an outstanding amount of $3,768due and payable on the loan, and the loan was in default.

NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES

The Company generates revenue from contracts which, among other services, provide wireless and digital promotion rights for certain events including WiFi media network advertising rights, and the development of smart venue wireless networks and software engagement technology products for airports, stadiums, campuses, cities and other venues in the United States and International markets. In general, our contracts require several months of implementation which is charged at a fixed rate, followed by monthly maintenance and management services, ad hoc fixed rate services, and a share in advertising revenue, when applicable. As a result, the Company will accept deposits from customers, which deposits are applied as each stage of our implementation is complete or under the terms of the service contract. Invoices issued to customers for the implementation phase of our contracts are due and payable when issued, however, as the associated scope of services have not yet been concluded, these invoices do not yet meet the revenue recognition criteria required to report these amounts as earned revenue (ref: Note 2 - Revenue Recognition). As a result, deposits when received from customers are included as liabilities on our balance sheets.

The following table provides balances of customer receivables and contract liabilitiesas of June 30, 2022, and December 31, 2021:

June 30, 2022 December 31,
2021
Customer receivables (1) $ - $ -
Contract liabilities (Customer deposits) (1), (2) (a), (b), (c) $ 178,000 $ 209,000
(1) The Company has deposits of $178,000and $209,000, respectively as at June 30, 2022 and December 31, 2021, with respect to certain future services to be provided, which amounts are not yet earned under revenue recognition criteria provided by ASC 606 and therefore, they are not reflected as accounts receivable on the Company's balance sheets. During the three months and six months ended June 30, 2022, the Company recorded $3,000and $6,000, respectively as income relative to the above contracts and returned $25,000in previously paid deposits to one of its customers.
(2) Contract liabilities are consideration we have received from our customers billed in advance of providing goods or services promised in the future or for work in progress. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include installation and maintenance charges that are deferred and recognized when the installation is complete or with respect to deposits for maintenance, over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities may be included as customer deposits or deferred revenue in our consolidated balance sheets, based on the specifics of the contract. During the three and six months ended June 30, 2022, we have recognized $3,000and $6,000in revenue from customer deposits on hand (June 30, 2021 - Nil). The Company and certain customers are currently in negotiations to determine the best way to proceed with the delayed implementation of certain prior period contracts for which we have received deposits but have not completed the scope of work.

17

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 7: CUSTOMER DEPOSITS, CONTRACT RECEIVABLES AND CONTRACT LIABILITIES

Performance Obligations

While we had originally expected to recognize revenue during fiscal 2020 with respect to contracts for which we have received customer deposits, the impact of COVID-19 had a significant impact on implementation. The Company is currently in negotiations to determine the best way to proceed with the delayed implementation of these contracts, or their termination.

(a) We executed a license agreement for the country of Spain in fiscal 2016 and the Company received an initial deposit of $25,000 against the total licensing fee payable. This amount has been recorded on the Company's balance sheets as deferred income. While the Company and the customer attempted to negotiate an amendment to the terms of the agreement in late fiscal 2019, the onset of COVID-19 resulted in further delays which are ongoing. As a result, the Company is currently in negotiation for a formal termination of the agreement with this customer.

(b) On July 11, 2019, GZMC entered into an Airport WiFi Sponsorship Marketing Agreement with a third party whereunder GZMC will secure long-term, exclusive and non-exclusive smart venues for WiFi marketing, digital marketing and data analytics for various brand sponsors at various airports across the United States. There were several venues anticipated under the terms of the agreement with installations commencing on various schedules. GZMC generated invoices for $100,000for each of 13 venues, whereby $65,000per venue is due on receipt of the invoice and the remaining $35,000is due sixty days thereafter. As at June 30, 2022 and December 31, 2021, the Company has received partial payments of $130,000against the initial deposit required, of which a total of $25,000 was returned during the period leaving $105,000 on deposit. Previously the Company expected revenue recognition under these contracts to commence in fiscal 2020, however, as a result of the impact of the COVID-19 pandemic, the project has been delayed indefinitely. Funds originally provided for the implementation of this project are anticipated to be applied as a deposit on a project yet to be identified or otherwise, fully repaid.

(c) On October 6, 2020, the Company received a purchase order in the amount of $132,000in regard to a Media Agreement described in Note 9(3) below. During the year ended December 31, 2021, the Company completed the installation terms included in the purchase order and as a result $78,000has been reflected as revenue as at December 31, 2021. A further $6,000 was recorded as income during the six months ended June 30, 2022, with the remaining $48,000included in deferred income in relation to future service obligations under the contract which will be earned over the term of the service contract.

NOTE 8: RELATED PARTY TRANSACTIONS

Terrence Flowers

As at December 31, 2019, a total of $11,110was payable to Mr. Terrence Flowers, who ceased to be a shareholder, officer and director on July 9, 2018. During the year ended December 31, 2020, the Company repaid $11,000to Mr. Flowers, leaving a balance due of $110at June 30, 2022 and December 31, 2021. The amount is reflected on the balance sheet in related party payables.

18

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 8: RELATED PARTY TRANSACTIONS (continued)

Coleman Smith and ELOC Holdings Corp.

On July 9, 2018, Mr. William Coleman Smith was appointed to the Board of Directors of the Company and as President, Secretary and Treasurer of the Company. Subsequently, on July 10, 2018, the Company executed a consulting agreement with ELOC Holdings Corp., a company controlled by Mr. Smith, whereby ELOC will provide the services of Mr. Smith for a fee of $10,000 per month. On April 1, 2021, the Company revised Mr. Smith's compensation so that he also receives $10,000 per month directly as an employee in addition to accrued monthly fees for management services provided through controlled entity ELOC. On February 7, 2022, the board of directors of the Company approved and authorized a further increase of $10,000 per month in salary for Mr. Smith directly, effective January 1, 2022.

On April 29, 2014, our 60% controlled subsidiary, GZMC, entered into a management and consulting agreement with Mr. Smith, the sole officer and director of GZMC whereunder GZMC is required to pay an annual salary of $120,000to Mr. Smith.

During the year ended December 31, 2020, Mr. Smith and ELOC Holdings Corp made short term loans with interest at 1.5% per month to the Company to pay various expenses. As of December 31, 2020, Mr. Smith, ELOC Holdings Corp. and the Company agreed to retroactively allocate interest in the amount of 5% per annum to loans, advances, wages and management fees payable by each of GZMC and the Company from January 1, 2020 forward. The parties entered into a single consolidated promissory note for all amounts payable to each of ELOC and Smith, with a principal amount of $1,217,579payable to ELOC.

During the fiscal year ended December 31, 2021, the Company paid a total of $151,854, of which $11,854was repaid during the six months ended June 30, 2021, to ELOC to reduce the principal balance on the loan.

During the six months ended June 30, 2022, the Company's CEO, William Coleman Smith entered into Promissory Notes with the Company for a total of $250,000due and payable within 5 (days) of the Company receiving proceeds and bearing interest at 1%.

No repayments were made pursuant to above loans during the six months ended June 30, 2022.

The following amounts are included in debt to related partyon our Balance Sheets:

Balance at December 31, 2020, Debt, related party $ 1,217,579
Payments on loan (151,854 )
Balance at December 31, 2021, Debt, related party. 1,065,725
Convertible Promissory Notes for funding provided 250,000
Balance at June 30, 2022, Debt, related party. $ 1,315,725
The interest expenses related to above loansare as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest expense on notes $ 13,562 $ 13,066 $ 26,700 $ 28,374

19

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 8: RELATED PARTY TRANSACTIONS (continued)

Coleman Smith and ELOC Holdings Corp.

During the three and six month periods ended June 30, 2022, the Company accrued $30,000and $60,000in management fees to ELOC, respectively and paid management fees to Coleman Smith of $90,000and $180,000, respectively. During the three and six months periods ended June 30, 2021, the Company accrued $30,000and $60,000in management fees to ELOC respectively, and paid management fees to Coleman Smith of $60,000and $90,000, respectively.

The following amounts are included in related party payableson our Balance Sheets:

June 30,
2022
December 31,
2021
Coleman Smith, President $ 1,657 $ 3,946
Interest payable 82,413 55,713
ELOC Holdings Corp. 180,000 120,000
Terrence Flowers 110 110
$ 264,180 $ 179,769

On April 8, 2021, the Company and William Coleman Smith, officer and director entered into a securities purchase agreement whereunder Mr. Smith sold an additional 9% interest in GZMC to the Company for consideration of 10 million unregistered, restricted shares of common stock. On the conclusion of the transaction, the Company controlled 60% of GZMC.

NOTE 9: OPERATING LEASE

On May 19, 2021, the Company signed an 18-month lease for office premises in California located at 1 Technology Drive, Bldg. B, Irvine, CA 92618, Suite no. B123 occupying approximately 6,498 square feet of usable space. The terms of the lease provide for basic monthly rent in the first year of approximately $9,097per month, and $9,487for each of the remaining six months. In addition, the tenant is responsible for their share of operating expenses, utilities and services. On February 4, 2022, the Company signed a first amendment to the lease agreement to extend the lease term to November 30, 2027. The terms of the lease provide for basic monthly rent starting in December 2022 of approximately $10,592, with annually increasing around 4%. In addition, the tenant is responsible for their share of operating expenses, utilities and services. As a result of the adoption ASU No. 2016-02 - Topic 842 Leases, the Company recognized a lease liability and right-to-use asset of approximately $645,440, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 6.75% on January 1, 2022.

Future minimum lease payments in respect of the above leasesas of June 30, 2022, as presented in accordance with ASC 842 were as follows:

2022 58,027
2023 127,556
2024 133,014
2025 138,472
2026 143,931
Remaining periods 136,527
Total future minimum lease payments 737,527
Less: imputed interest (125,740 )
Total 611,787
Current portion of operating lease 82,701
Long term portion of operating lease $ 529,086

20

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 10: COMMITMENTS

(1) On April 2, 2019, a vendor of the Company, the "Plaintiff" filed a complaint against the Company's 60% controlled subsidiary, Green Zebra, in the Superior Court of California, Orange County for unpaid invoices related to services and products sold in fiscal 2017, including reasonable value in the amount of $61,899.62. The Court approved a default judgement on January 23, 2020, with respect to the aforementioned claim, including the following:
Damages $ 61,890
Prejudgment interest at the annual rate of 10% 9,835
Attorney fees 1,200
Other costs 505
Total judgement value $ 73,430

In April 2021, the Plaintiff perfected the judgement and obtained a hold against a bank account controlled by Green Zebra in the approximate amount of $16,282, which amount was subsequently released to the Plaintiff and has been recorded as a reduction to the balance owing to the Plaintiff. The Company has remitted a further $2,420towards the outstanding balance. At June 30, 2022 and December 31, 2021, a total of $54,738remained outstanding. The Company and the Plaintiff are currently in discussions regarding the claimed amount.

(2) On August 10, 2019, the Company's CEO, Mr. William Coleman Smith, entered into a lease agreement with IAC Apartment Development JV LLC to lease space at 861 Tularosa, Irvine, California for a one-year term at a rental rate of $3,455 per month, plus utilities, for the Company's subsidiary, Green Zebra Media Corp. Green Zebra will use the space for its operations. On April 1, 2020, the landlord and the Company agreed to a rental deferment agreement to defer the rental costs by 50% as a result of COVID-19. The monthly rent commencing April 1, 2020 was $1,727 plus utilities. The rental deferment ended on June 1, 2020. The original lease expired on August 9, 2020, and was renewed on expiry for another one-year term at a reduced rate of $3,350 per month. On August 16, 2021, the Company renewed a lease for a further one-year term at a rental rate of $3,620 per month, plus utilities, for the Company's subsidiary, Green Zebra Media Corp. The Company has elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis
(3) On September 14, 2020, GZMC entered into a WiFi Media Solution Agreement (the "Media Agreement") with a city in Iowa in regard to a city owned location ("venue location") whereby GZMC was granted rights to provide sponsorship advertising, performance marketing and professional services. Under the terms of the Media Agreement, GZMC must pay fees to the city at an annual rate of $94,000per annum for a period of 5 years following the initial operation of the venue location, the opening of which was delayed past December 31, 2021, as a result of COVID-19 restrictions. GZMC is anticipating the start date for this project to occur during fiscal 2022 based on acquiring the various bonds and licenses as may be required and the official commencement of venue services.
(4)

On April 25, 2021, the Company entered into an Equity Purchase Agreement with World Amber Corp., whereby the Company agreed to sell to World Amber Corp up to 16,666,667shares of the Company's common stock for a maximum commitment amount of $5,000,000at $0.30per share. The Company has submitted a registration statement on Form S-1 to the Securities and Exchange Commission in order facilitate this funding agreement which was deemed effective on September 24, 2021.

On each of November 2, 2021, and November 3, 2021, the Company presented a Put to World Amber Corp., pursuant to the Effective S-1 Registration Statement for $50,000 each Put, as a result the cumulative $100,000in funds resulted in the issuance of 333,334shares of registered common stock at $0.30per share.

21

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 10: COMMITMENTS (continued)

(5) On November 10, 2021, the Company entered into a Registration Right Agreement with Mast Hill Fund, L.P. (the "Investor"), whereby the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor up to Ten Million Dollars ($10,000,000.00) of Put Shares at an originally estimated put price of $2.00 per share, subject to adjustment in accordance with the terms of the agreement which calls for valuation of the Put price equal to 90% of the volume weighted average price of the Company's Common Stock on the Principal Market on the Trading Day immediately preceding the respective Put Date, and subject to a valuation period of seven (7) Trading Days immediately following the Clearing Date associated with the applicable Put Notice during which the Purchase Price of the Common Stock is valued in order to establish the applicable Purchase Price.To induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws. The Registration was deemed effective on May 11, 2022.
(6) On April 7, 2022, the Company entered into Professional Relations and Consulting Agreement (Agreement) with Acorn Management Partners, LLC (Acorn), a Georgia Limited Liability Company, wherein the Company will pay Acorn $11,500 per month, and issue, or cause to be issued, $120,000worth of the Company's restricted common stock in three tranches, total shares equivalent to $60,000for the first six month period and total shares equivalent to $30,000 for each of the remaining two three-month periods. The term of the Agreement is for one year, broken down into three periods; the first began on April 8, 2022, and is for six months. The next two periods are for three months each. The Agreement may be terminated at any time, in writing, by either party. If the Agreement is terminated by the Company before the end of any period, Acorn will be entitled for full payment of the period, and the full issuance of the shares for that period. The Company issued a total of 51,282 unregistered restricted shares on April 15, 2022, in respect of the first installment of $60,000 worth of common stock under the terms of the Agreement which shares are valued at fair market value on the date of issue.

NOTE 11: CAPITAL STOCK

The Company has authorized 500,000,000common shares with a par value of $0.001, 10,000,000shares of Series A Preferred Stock, par value $0.004and 1share of Series B Preferred Stock, par value $0.001. The shares of Series A Preferred Stock are convertible into shares of Common Stock on the basis of 10 shares of Common Stock for every 1 share of Series A Preferred Stock and have voting rights of one vote for each share of Series A Preferred Stock held. The Series B Preferred Stock is not convertible but has voting rights granting the holder 51% of all votes (including common and preferred stock) entitled to vote at any meeting of the stockholders of the Company. Neither the Series A nor Series B Preferred Stockholders have any rights to dividends or proceeds of the assets of the Company upon any liquidation or winding up of the Company.

Common Stock

On February 8, 2022, pursuant to an Engagement Agreement with Carter, Terry & Company, an authorized, registered broker dealer, the Company issued a total of 10,769shares of common stock as compensation. The Company recorded $22,400as financing cost.

On April 7, 2022, pursuant to an Engagement Agreement with Acorn Management Partners, LLC, the Company issued a total of 51,282shares of common stock as compensation. The Company recorded $60,000as investor relations services.

On May 23, 2022 pursuant to an Engagement Agreement with Beyond Media SEZC, the Company issued a total of 1,818,181shares of common stock as compensation. The Company recorded $600,000as investor relationship expenses.

On May 27, 2022 the Company issued 356,364shares of common stock as a result of the exercise of a cashless warrants.

The Company issued an accumulated 387,481shares of common stock under an Equity Purchase Agreement with Mast Hill Fund, L.P. with net proceeds of $36,029(Note 10(5)).

As of June 30, 2022, and December 31, 2021, there were 27,802,050and 25,177,973shares of common stock issued and outstanding, respectively.

22

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 11: CAPITAL STOCK (continued)

Series A Preferred Stock

The total number of Series A Preferred stock that may be issued by the Company is 10,000,000shares with a par value of $0.004.

As of June 30, 2022 and December 31, 2021, there are a total of 5,000,000shares of Series A Preferred Stock issued and outstanding.

Series B Preferred Stock

The total number of Series B Preferred Stock that may be issued by the Company is 1share with a par value of $0.001.

As of June 30, 2022 and December 31, 2021, there is 1share of Series B Preferred stock issued and outstanding.

Share Purchase Warrants

On November 11, 2021, the Company entered into a Warrant Agreement with J.H. Darbie and Company, an authorized, registered broker dealer, wherein J.H. Darbie and Company may purchase 10,487shares of common stock for $1.00 per share, as a Finder's Fee for introducing the Company to MHFLP. The fair value of the warrants granted was estimated at $25,141using the Black-Scholes pricing model

In November and December 2021, the Company issued cumulative 1,120,000warrants to convertible note holders and subscribers for common shares, in accordance with the terms of subscription unit agreements into with the convertible note holder and subscribers. The fair value of the warrants granted was estimated at $503,973using the Black-Scholes pricing model.

In April and May 2022, the Company issued a total of 1,831,667warrants to convertible note holders and subscribers for common shares, in accordance with the terms of subscription unit agreements entered into with the convertible note holders and subscribers. The fair value of the warrants granted was estimated at $360,003using the Black-Scholes pricing model.

During the six months ended June 30, 2022, 356,364shares of common stock were issued from the exercise of 560,000cashless warrants.

Certain warrants above include dilution protection for the warrant holders, which could cause the exercise price to be reduced as a result of a financing event at a valuation below the exercise price in effect at the time. During the six months ended June 30, 2022, as a result of additional share issuances below the original exercise price of certain warrants, the warrant exercise price was downward adjusted to $0.095985 per share. The downward adjustment on each of the modification dates was treated as additional paid in capital and fully expensed as financing costs on the modification date, and the Company recorded a cumulative $9,013 to additional paid in capital and interest expenses.

In accordance with authoritative accounting guidance, the fair value of the outstanding common stock purchase warrants was calculated using the Black-Scholes option-pricing model with the following assumptions at the measurement date(s):

23

GZ6G TECHNOLOGIES CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022, and 2021
(Unaudited)

NOTE 11: CAPITAL STOCK (continued)

Share Purchase Warrants (continued)

Measurement date
Dividend yield 0 %
Expected volatility 279~297%
The following table summarizes information with respect to outstanding warrants to purchase common stock
Risk-free interest rate 0.83~1.22%
Expected life (years) 3.00~5.00
Stock Price $0.55~$2.80
Exercise Price 0.3~1.00
of the Company at June 30, 2022 and December 31, 2021:

Exercise Price

December 31,

2021

Issued Repricing Exercised June 30,
2022

Expiration

Date

$ 1.00 560,000 (560,000 ) -
$ 1.00 560,000 0.095985 560,000 December 2024
$ 1.00 10,487 0.095985 10,487 November 2026
$ 1.00 365,000 0.095985 365,000 April 2025
$ 0.30 1,466,667 0.095985 1,466,667 May 2025
1,130,487 1,831,667 (560,000 ) 2,402,154

A summary of the warrant activityfor the period ended June 30, 2022, and December 31, 2021 is as follows:

Weighted-
Average Exercise

Weighted-
Average Remaining

Contractual

Aggregate

Intrinsic

Shares Price Term Value
Outstanding at December 31, 2021 1,130,487 $ 1.00 2.93 $ -
Grants 1,831,667 0.44 - -
Exercised (560,000 ) - - -
Expired - - - -
Outstanding at June 30, 2022 2,402,154 $ 0.09585 2.32 $ -
Exercisable at June 30, 2022 2,402,154 $ 0.09585 2.32 $ -

NOTE 12: SUBSEQUENT EVENTS

On July 5, 2022 the Company issued 260,000shares of common stock valued at $0.095985per share pursuant to a Notice of Conversion from Mast Hill in respect to accrued and unpaid interest on the November 3, 2021 Convertible Note.

On July 7, 2022 the Company issued 560,000shares of common stock to Talos at $0.095985per share pursuant to the exercise of a share purchase warrant.

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On July 7, 2022, effective June 14, 2022, the Company entered into a Sponsorship & Services Agreement (Agreement) with the Texas Rangers MLB Stadium called Globe Life Field (Rangers) wherein the Rangers granted sponsorship benefits to the Company. The Agreement calls for advanced sponsorship revenue share payments of $375,000 by the Company to the Rangers during the fiscal years 2023 and 2024, pursuant to a split fee arrangement for WiFi managed services and Sponsorship opportunity. The Agreement offers the rights of the Company to place stadium ads in a shared revenue model. The Company will also manage the WiFi Network captive portal remotely, as an exclusive arrangement.

On July 11, 2022, the Company entered into a further Convertible Promissory Note with 1800 Diagonal Lending, LLC, a Virginia limited liability company, in which 1800 Diagonal agreed to lend the Company $63,750, with gross proceeds of $60,000after deducting fees. The Term of the Note is twelve months with an interest rate of 10%. The conversion rate of the Note is as follows: 35% discount to the lowest bid price during the ten-day trading period prior to a notice of conversion. Funds were deposited on July 25, 2022 and will be used for operating costs and further execution of GZ6G's business plan.

On July 19, 2022, 383,000unregistered shares of the Company's common stock were issued to Acorn Management Partners, LLC in lieu of cash payments owed to Acorn pursuant to a Professional Relations and Consulting Agreement (Consulting Agreement) entered into on April 7, 2022, and an Addendum to that Consulting Agreement entered into on July 6, 2022.

On August 3, 2022 the Company received a conversion notice from eSilkroad for the issuance of 1,538,462shares to settle $300,000in note proceeds at $0.195per share, which remain unissued at the date of this report.

Subsequent to June 30, 2022 the Company issued 642,983shares of common stock in respect to Put Notices issued to Mast Hill for total net proceeds of $46,420.

The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there are no additional subsequent events requiring disclosure.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains predictions, estimates and other forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors including the risks set forth in the section entitled "Risk Factors" in our Post-Effective Amendment to our Registration Statement on Form S-1/A Amendment No. 4, as filed with the Securities and Exchange Commission (the "SEC") on April 28, 2022, and the following 424B filings made by the Company on June 9, 2022, that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements

Forward-looking statements represent our management's beliefs and assumptions only as of the date of this Report. You should read this Report with the understanding that our actual future results may be materially different from what we expect.

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.

The management's discussion and analysis of our financial condition and results of operations are based upon our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements for the six months ended June 30, 2022, and the notes thereto appearing elsewhere in this Report and the Company's audited financial statements for the fiscal year ended December 31, 2021, as filed with the SEC on Form 10-K on March 11, 2022.

William Coleman Smith as the holder of the Company's issued and outstanding shares of the Company's Special 2018 Series B Preferred Stock, controls 51% of the voting rights of the Company and is able to influence the outcome of all corporate actions requiring approval of our stockholders. Mr. Smith also holds a total of 12,500,000 shares of common stock and 5,000,000 shares of Series A Preferred Stock convertible into 50,000,000 shares of common stock (which is 100% of the Series A stock issued and outstanding) giving Mr. Smith voting control over the Company.

Plan of Operations

We are an emerging smart city technology growth company that provides wireless and monetization enterprise level smart solutions to cities and large venues that require multiple types of products, services and third-party solutions to fulfil client needs. To date we have generated modest revenues from operations, and while we have various contracts in place for future development, there is no assurance of future revenues.

Results of Operations

Three Months Ended June 30, 2022, and June 30, 2021

Revenue

We generated a total of $4,000 in gross revenue for the three months ended June 30, 2022, with no revenue in the comparable period ended June 30, 2021.

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Net Income (Loss)

Three Months ended June 30, 2022, and 2021

Three Months Ended
June 30
2022 2021
NET REVENUES $ 4,000 $ -
OPERATING EXPENSES
Cost of revenue 393 -
Research and development expenses - 2,600
Depreciation 24,973 1,603
General and administrative 1,343,924 183,388
General and administrative, related parties 120,000 90,000
Professional fees 27,400 13,100
Total operating expenses 1,516,690 290,691
(Loss) from operations (1,512,690 ) (290,691 )
Other income (expense)
Interest expense (1,989,658 ) (1,626,026 )
Total other income (expense) (1.989,658 ) (1,626,026 )
Net income (loss) $ (3,502,348 ) $ (1,916,717 )
Less: net income (loss) attributable to Non-controlling interest (16,155 ) (38,055 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (3,486,193 ) $ (1,878,662 )

Total operating expenses for the three months ended June 30, 2022, were $1,516,690 as compared to $290,691 for the three months ended June 30, 2021. During the three months ended June 30, 2022 and 2021, we reported costs of revenue of $393 and $Nil respectively. As a result of the impact of COVID 19, certain activities which had commenced in the first quarter of fiscal 2020 were suspended and re-engaged in the second quarter of fiscal 2021, resulting in a increase in associated expenses during the comparative three month periods. The Company incurred $1,343,924 and $183,388 in general and administrative expenses in the three months ended June 30, 2022 and 2021, respectively and general and administrative costs from related parties of $120,000 and $90,000, respectively. General and administrative expenses include staff payroll, rent, travel, office and sundry expense, transfer agent costs, consulting, marketing, advertising and promotional expenses. The substantial increase primarily relates to new employees hired in 2022 with a total of $459,083 in payroll expenses for the three months ended June 30, 2022 as compared to $80,246 for the period ended June 30, 2021, investor relations expenditures of $744,060 as compared to $2,268 in June 30, 2021, offset by transfer agent and filing fees which decreased from $12,586 for the three months ended June 30, 2021 to $6,173 for the three months ended June 30, 2022 as the Company issued more securities for financing activities in the three months ended June 30, 2021, software expenses were $16,738 for the three months ended June 30, 2022 with as compared to $847 for the three month ended June 30, 2021, insurance expenses were $10,202 as compared to $3,347 in June 30, 2021, rent expense increased from $22,625 for the period ended June 30, 2021 to $53,377 for the three months ended June 30, 2022 and utility expenses increased from $177 in the period ended June 30, 2021 to $4,732 for the three months ended June 30, 2022. General and administrative expenses incurred from related parties include management fees charged by our CEO, William Coleman Smith, and a company controlled by him. The increase in related party administrative costs is due to an increase in management fees to Mr. Smith of $10,000 per month in the period ended June 30, 2022. Professional fees in the three months ended June 30, 2022, totaled $27,400 as compared to $13,100 in the three months ended June 30, 2021, mainly due to an increase in audit fees from $2,500 for the three months ended June 30, 2021 to $16,000 for the three months ended June 30, 2022 as the Company incurred additional fees in June 2022 due to expenses associated with the filing of certain registration statements and increased financings. Depreciation increased from $1,603 during the three months ended June 30, 2021, to $71,451 during the three months ended June 30, 2022, as a result of the acquisition of a new office space and associated furnishings and equipment.

Other expense

Other expense reported for three months ended June 30, 2022, and 2021 totaled $1,989,658 and $1,626,026, respectively. During the three months ended June 30, 2022, the Company reported other expenses of $1,989,658 attributable to interest expenses as a result of the debt discount applied to certain convertible promissory notes. During the three months ended June 30, 2021, the Company reported other income expenses of $1,626,026 all of which related to interest expense.

We had a net loss of $3,502,348 offset by a loss attributable to the non-controlling interest of $16,158 bringing our total Net Loss attributable to the Company to $3,486,193 in the three months ended June 30, 2022, compared to a net loss of $1,916,717 less a loss of $38,055 attributable to the non-controlling interest bringing our total Net Loss attributable to the Company to $1,878,662 in the three months ended June 30, 2021.

27

Six Months Ended June 30, 2022 and June 30, 2021

Revenue

We generated a total of $7,000 in gross revenue for the six months ended June 30, 2022, with no revenue in the comparable period ended June 30, 2021.

Net Income (Loss)

Six Months ended June 30, 2022 and 2021

Six Months Ended
June 30
2022 2021
NET REVENUES $ 7,000 $ -
OPERATING EXPENSES
Cost of revenue 1,481 -
Research and development expenses - 5,200
Depreciation 71,451 2,189
General and administrative 1,876,111 252,012
General and administrative, related parties 240,000 150,000
Professional fees 50,200 55,256
Total operating expenses 2,239,243 464,657
(Loss) from operations (2,232,243 ) (464,657 )
Other income (expense)
Interest expense (4,254,428 ) (1,930,105 )
PPP Loan Forgiveness 46,091 -
Total other income (expense) (4,208,337 ) (1,930,105 )
Net income (loss) $ (6,440,580 ) $ (2,394,762 )
Less: net income (loss) attributable to Non-controlling interest (16,754 ) (80,074 )
Net income (loss) attributable to GZ6G Technologies Corp. $ (6,423,826 ) $ (2,314,688 )

Total operating expenses for the six months ended June 30, 2022, were $2,239,243 as compared to $464,657 for the six months ended June 30, 2021. During the six months ended June 30, 2022, and 2021, we reported costs of revenue of $1,481 and $Nil respectively. As a result of the impact of COVID 19, certain activities which had commenced in the first quarter of fiscal 2020 were suspended and re-engaged in the second quarter of fiscal 2021, resulting in a increase in associated expenses during the comparative six month periods. The Company incurred $1,876,111and $252,012 in general and administrative expenses in the six months ended June 30, 2022, and 2021, respectively and general and administrative costs from related parties of $240,000 and $150,000, respectively. General and administrative expenses include staff payroll, rent, travel, office and sundry expense, transfer agent costs, consulting, marketing, advertising and promotional expenses. The substantial increase primarily relates to new employees hired in 2022 with a total of $850,795 in payroll expenses for the six months ended June 30, 2022 as compared to $96,470 for the period ended June 30, 2021, investor relations expenses were $754,060 for the six months ended June 30, 2022 as compared to $2,258 for the period ended June 30, 2021, advertising and promotion expenses decreased slightly from $40,795 for June 30, 2021 to $34,783 for the six months ended June 30, 2022, recruiting expenses were $6,550 for the six months ended June 30, 2022 as compared to $1,784 for June 30, 2021, transfer agent and filing fees remained fairly constant increasing from $15,328 for the six months ended June 30, 2021 to $16,585 for the six months ended June 30, 2022, software expenses were $28,584 for the six months ended June 30, 2022 as compared to $847 for the six month ended June 30, 2021, insurance expenses were $18,410 as compared to $3,532 in June 30, 2021, rent expense increased from $34,035 for the period ended June 30, 2021 to $106,344 for the six months ended June 30, 2022 and utility expenses increased from $1,184 in the period ended June 30, 2021 to $8,977 for the six months ended June 30, 2022. General and administrative expenses incurred from related parties include management fees charged by our CEO, William Coleman Smith, and a company controlled by him. The increase in related party administrative costs is due to an increase in management fees to Mr. Smith of $10,000 per month in the period ended June 30, 2022. Professional fees in the six months ended June 30, 2022, remained fairly constant totaling $50,200 as compared to $55,256 in the six months ended June 30, 2021. Depreciation increased from $2,189 during the six months ended June 30, 2021, to $71,451 during the six months ended June 30, 2022 as a result of the acquisition of a new office space and associated furnishings and equipment.

28

Other expense

Other expense reported for six months ended June 30, 2022, and 2021 totaled $4,208,337 and $1,930,105, respectively. During the six months ended June 30, 2022, the Company reported other expenses of $4,254,428 attributable to interest expenses as a result of the debt discount applied to certain convertible promissory notes offset by the amount of $46,091 related to the forgiveness of a PPP loan. During the six months ended June 30, 2021, the Company reported other expense of $1,930,105 all of which related to interest expense.

We had a net loss of $6,440,580 offset by a loss attributable to the non-controlling interest of $16,754 bringing our total Net Loss attributable to the Company to $6,423,826 in the six months ended June 30, 2022, compared to a net loss of $2,394,762 less a loss of $80,074 attributable to the non-controlling interest bringing our total Net Loss attributable to the Company to $2,314,688 in the six months ended June 30, 2021.

Statement of Cash Flows

June 30, 2022 and 2021

The following table summarizes our cash flows for the period presented:

June 30, 2022 June 30, 2021
Net cash used in operating activities $ (1,437,228 ) $ (420,489 )
Net cash used in investing activities (48,134 ) (98,335 )
Net cash provided by financing activities 941,481 926,520
Increase (decrease) in cash (543,881 ) 407,696
Cash end of period $ 215,910 $ 588,240

Cash Used in Operating Activities

Net Cash used in operating activities for the six months ended June 30, 2022, was $1,437,228 as compared to $420,489 of cash used by operating activities for the six months ended June 30, 2021.

Cash used in operating activities for the six months ended June 30, 2022, was primarily the result of our net loss of $6,440,580 offset by non-cash items including amortization of debt discount and issuance costs of $4,034,548, financing costs of $22,400, PPP loan forgiveness of $46,091, depreciation of $71,451, amortization of right of use assets of $11,089, common stock issued for investor relations of $660,000 and repricing of warrant exercise pricing of $9,013. Changes in operating activities for the period ended June 30, 2022, included an increase in prepaid expenses of $12,218, an increase in accounts payable and accrued expenses of $200,249, an increase in related party payables of $84,411, a decrease in customer deposits of $31,000 and an increase in accounts receivable of $500. Cash used in operating activities for the period ended June 30, 2021, relates to a net loss of $2,394,762, offset by amortization of debt discount of $1,884,293, depreciation of $2,189, fixed assets reclassified to advertising expenses of $4,990 and amortization of rights of use assets of $130. Changes in operating activities in the six months ended June 30, 2021, included a decrease in prepaid expenses of $2,278, an increase in other current assets of $10,436, an increase to accounts payable and accrued expenses of $9,627, and an increase in related party payables of $85,758.

Cash Used In Investing Activities

Cash used by investing activities for the six months ended June 30, 2022, was $48,134 and was related to equipment purchases of $78,134 offset by proceeds from a credit related to leasehold improvements of $30,000.

29

Cash used by investing activities for the six months ended June 30, 2021 was $98,335 and related to equipment purchases of $98,335.

Cash Provided by Financing Activities

During the six months ended June 30, 2022, financing activities provided net cash of $941,481, which was comprised of proceeds from convertible notes of $930,750, proceeds from related party of $250,000, proceeds from the sale of common stock of $36,029, a refund of related to a PPP loan which was forgiven during the period of $5,702 offset by a repayment of convertible notes of $281,000.

During the six months ended June 30, 2021, financing activities consisted of proceeds from a share subscriptions receivable of $150,000 and proceeds from convertible notes of $900,000, offset by repayments of related party debt of $123,480.

Liquidity and Capital Resources

The Company has been in the start-up phase and has generated modest revenues from its operations, and while we have various contracts in place for future development, there is no assurance of future revenues. As at June 30, 2022, the Company had cash on hand of $215,910 (December 31, 2021- $759,791) and an accumulated deficit of $22,516,357 (December 31, 2021 - $16,092,531).

During the year ended December 31, 2021, the Company entered into various loan treaties, convertible notes and other financing arrangements through which we received net cash proceeds of $2,108,000. During the six-month period ended June 30, 2022, the Company received net cash proceeds of $885,250 by way of a series of convertible promissory notes and $250,000 in the form of related party loans. The Company anticipates a need for a further $5,000,000 in fiscal 2022/23 to meet its upgraded infrastructure requirements. In addition to the remaining funding which may be provided to the Company under various loan treaty agreements, the Company filed two registration statements on Form S-1 to facilitate this requirement which allow for total funding of up to $15,000,000, both of which have been deemed effective. Up to June 30, 2022 the Company has received funding under these equity lines of $136,029. There is no guarantee the Company will continue to receive financing as required.

Covid-19 Pandemic

The recent COVID-19 pandemic could have a continuing adverse impact on our existing sponsorship and revenue agreements. To date, the implementation of services under certain of these agreements have experienced delays as a result of the pandemic. COVID-19 has caused significant disruptions to the global financial markets, which may also impact our ability to raise additional capital. During March 2020, we gave notice of furlough to our administrative support employees in an effort to conserve resources as we evaluated our business development efforts during that period. In April 2020, the Company received a grant of $6,000 and in May 2020 we received a PPP loan and an SBA loan in the approximate cumulative amount of $90,000 for operations. With the recently negotiated financing the Company is currently reopening offices and has commenced the hiring of additional staff as well as the upgrading of infrastructure requirements to meet anticipated customer needs. While recent progress in the battle against COVID leads us to believe that the worst of the effects of the pandemic are past, we cannot say with certainty that the situation will not change. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and still subject to change. While significant uncertainty remains, despite the fact that the Company has been able to source financing, it remains that the COVID-19 outbreak may have a negative impact on continuing funding and its ability to work through its collaborative development efforts with industry partners, and in acquiring venues due to the continuing impact of COVID 19. To mitigate impact the Company is currently focusing its efforts on contracts in the wireless and cellular telecommunications segment, as well as the infrastructure components of its existing contracts to allow for continuity and forward momentum.

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Going Concern

These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2021, the Company entered into various loan treaties, convertible notes and other financing arrangements through which we received net cash proceeds of $2,108,000. During the six month period ended June 30, 2022, the Company received net cash proceeds of $885,250 by way of a series of convertible promissory notes and $250,000 in the form of related party loans. As of June 30, 2022, the Company had a working capital deficit of $11,150,135 with approximately $215,910 of cash on hand and an accumulated deficit of $22,516,357. The Company anticipates a need for a further $5,000,000 in fiscal 2022 to meet its upgraded infrastructure requirements. In addition to the remaining funding which may be provided to the Company under various loan treaty agreements, the Company filed two registration statements on Form S-1 to facilitate this requirement which allow for total funding of up to $15,000,000, both of which have been deemed effective. Up to June 30, 2022, the Company has received funding under these equity lines of $136,029. There is no guarantee the Company will continue to receive financing as required. The continuation of the Company as a going concern is dependent upon the ability to raise additional equity and/or debt financing and the attainment of profitable operations from the Company's future business. If the Company is unable to obtain adequate capital as needed, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.

Research and Development Costs

We charge research and development costs to operations as incurred in accordance with ASC 730-Research and Development, except in those cases in which such costs are reimbursable under customer funded contracts. These amounts are not reflected in the reported research and development expenses in each of the respective periods but are included in net sales with the related costs included in cost of sales in each of the respective periods. During each of the six months ended June 30, 2022, and 2021 we expended $NIL and $5,200 on research and development costs, respectively.

Stock-Based Compensation

We account for stock-based transactions in which the Company receives services from employees, non-employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date in accordance with ASC 718 - Compensation-Stock Compensation. Stock-based compensation cost for stock options or warrants is estimated at the grant date based on each instrument's fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.

Stock Settled Debt

In certain instances, the Company will issue convertible notes which contain a provision in which the price of the conversion feature is priced at a fixed discount to the trading price of the Company's common shares as traded in the over-the-counter market. In these instances, the Company records a liability, in addition to the principal amount of the convertible note, as stock-settled debt for the fixed value transferred to the convertible note holder from the fixed discount conversion feature. As of June 30, 2022, and December 31, 2021, the Company had recorded within Convertible Notes, net of discount, the amount of $8,680,783 and $8,320,525 for the value of the stock settled debt for certain convertible notes.

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Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06 to simplify the current guidance for convertible instruments and the derivatives scope exception for contracts in an entity's own equity. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The update also provides for expanded disclosure requirements to increase transparency. For SEC filers, excluding smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of June 30, 2022, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission's rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our internal controls and procedures are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only one person, who is the Company's principal executive officer and principal financial officer and, (ii) while the Company has a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.

We would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need to expand our board to include independent members.

Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective controls over financial reporting.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 2, 2019, a vendor of the Company, the "Plaintiff" filed a complaint against the Company's 60% controlled subsidiary, Green Zebra, in the Superior Court of California, Orange County for unpaid invoices related to services and products sold in fiscal 2017, including reasonable value in the amount of $61,899.62. The Court approved a default judgement on January 23, 2020, with respect to the aforementioned claim, including the following:

Damages $ 61,890
Prejudgment interest at the annual rate of 10% 9,835
Attorney fees 1,200
Other costs 505
$ 73,430

During the year ended December 31, 2021, the Company became aware of the judgement and, the Plaintiff perfected the judgement and obtained a hold against a bank account controlled by Green Zebra in the approximate amount of $16,282, which funds were subsequently released to Plaintiff. A further $2,420 has been paid to the Plaintiff during the fiscal year ended December 31, 2021. The Company and the Plaintiff are currently in discussions regarding the balance of the claimed amount. At the date of this report there is a total of $54,728 due and payable.

Other than as set out above, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

The Company is a smaller reporting company and is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

Exhibit Number Exhibit
31 Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
101.INS XBRL INSTANCE DOCUMENT
101.SCH XBRL TAXONOMY EXTENSION SCHEMA
101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GZ6G Technologies Corp.
Date: August 15, 2022 By: /s/ William Coleman Smith
William Coleman Smith
Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

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