Statements in this Management's Discussion and Analysis of Financial Condition
and Results of Operation, as well as in certain other parts of this Quarterly
Report on Form 10-Q (as well as information included in oral statements or other
written statements made or to be made by the Company) that look forward in time,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Litigation Reform Act of 1995. Forward-looking statements include
statements concerning plans, objectives, goals, strategies, future events or
performance, expectations, predictions, and assumptions and other statements
that are other than statements of historical facts. Although the Company
believes such forward-looking statements are reasonable, it can give no
assurance that any forward-looking statements will prove to be correct. Such
forward-looking statements are subject to, and are qualified by, known and
unknown risks, uncertainties and other factors that could cause actual results,
performance or achievements to differ materially from those expressed or implied
by those statements. These risks, uncertainties and other factors include, but
are not limited to the Company's ability to estimate the impact of competition
and of industry consolidation and risks, uncertainties and other factors set
forth in the Company's filings with the Securities and Exchange Commission,
including without limitation to our Annual Report on Form 10-K.
The Company undertakes no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this Form 10-Q.
Current GES Corporate Operations
GES has developed and deployed proprietary Registration software, which was
designed specifically to authenticate and register voters. This proprietary
software functions as a data storage and retrieval registration system by
cross-referencing eligibility status within a control voter database. In a mail
ballot election, the voter's ID barcode, QR code, or signature on the Business
Reply Envelope, can be scanned and the status of that voter is identified. If
the voter is not eligible to vote or another ballot for that individual has
already been registered in the system, that ballot is marked VOID and removed
from the count. In an in-person election, the voter provides their name for
look-up in the system. If they have not voted, a signature box pops up on the
screen, the voter signs an electronic signature pad and the digital signature is
captured next to their name. If a voter tries to vote more than once, an alert
will pop up indicating that the voter has already registered, and the voter will
not receive an additional ballot. Because we account for every single ballot,
the system has multiple reporting options, which include the list of valid
envelopes and list of voters whose ballot was void, detailing the reason. Once
the voter is authenticated, the identifiers are removed to ensure a secret vote
and the ballot is scanned for tabulation.
GES developed proprietary Scanning and Tabulation election software. This
software features advanced OMR/OCR/Barcode scanning and tabulation system
featuring de-skewing, de-speckling and image correction. The computer hardware
was designed to run without Internet or Wi-Fi access and is hard wired, ensuring
complete security. The system allows for triple-auditing capabilities, which
are; electronically generated tabulation results, .jpeg imaging and storage, and
the original physical ballot. This advancement gives GES the ability to tabulate
elections faster and more efficiently. As experts in paper/mail ballot
elections, GES began deploying this system in our elections in the third quarter
of 2017 and it has been operating flawlessly.
In 2020 GES developed, built and implemented a propriety online election voting
solution that is compliant with Title IV of the United States Department of
Labor Office of Labor-Management Standards.
GES built the platform on one of the most secure global infrastructures Amazon
Web Services (AWS) which is a comprehensive, evolving platform provided by
Amazon that includes a mixture of infrastructure as a service (IaaS) platform as
a service and packaged software (PaaS), and software as a service offerings
The platform enables GES to protect individual client data, including the
ability to encrypt it, move it, and manage retention (if required). All data
flowing across the global network interconnects with the GES secured data center
and is automatically encrypted at the physical layer before it leaves our
secured facilities. Additional encryption layers exist as well.
GES controls where our client data is stored, who can access it, and what
resources your organization is utilizing at any given moment. Fine-grain
identity and access controls combined with continuous monitoring for near
real-time security information ensures that the right resources have the right
access at all times, wherever your information is stored.
GES encryption software uses AES 256 with a cryptographic key using a RSA
elliptic curve of 4096, which is used to encrypt the communication of the client
and the GES server, as well all client data hosted in the server. A six-digit
security code, delivered to the voter's email address provided by the client,
must be validated by the prospective voter in order to authenticate the identity
of the voter before the voter may access the ballot. After validating the voter,
the voter then votes anonymously, so that the identity of the voter and the
ballot cast can never be matched.
The GES voting platform verifies that the users does not use the back and
forward browser button, a safe mechanism against tampering. Distributed denial
of service DDoS protection tools help secure websites and applications and
prevent DDoS attacks, which bombard websites with traffic traditionally
delivered via "botnets" that are created by networked endpoints connected via
malware. The DDoS software protection provides always-on detection and automatic
inline mitigations that minimize application downtime and latency.
Management believes there is an opportunity in conducting United States and
Foreign Government Elections. GES' senior Management teams' primary business for
40 years has been mail/absentee ballot elections. The market for GES conducting
paper/mail ballot elections grew exponentially in January of 2017, when first
President Barack Obama, and then President Donald Trump designated U.S.
Elections "Critical Infrastructure". The effect of these Executive Orders was to
refocus the Department of Homeland Security, and the Elections Assistance
Commission to reenergize compliance on U.S. Government elections, and assist by
making available resources such as intelligence, funding, training and best
practices in election software and hardware, for all 50 States.
On March 23, 2018, President Trump signed the Consolidated Appropriations Act of
2018 into law, which included $380 million in Help America Vote Act (HAVA)
grants for states to make election security improvements. Among the authorized
uses of the grant funds is the replacement of voting equipment, specifically
equipment that does not produce a paper record or that is determined to be at
the end of its useful life. Recent published examples are:
• On December 20, 2019, President Trump signed the Consolidated Appropriations
Act of 2020 into law. The Act includes $425 million in new HAVA funds made
• In 2019, Hawaii (SB 166) allocated $789,598 for the purpose of a vote counting
• In 2019, Georgia issued a $150 million bond package for the replacement of
voting equipment statewide. The state also appropriated $12,840,000 from the
General Fund for the purpose of financing projects and facilities for the
Office of Secretary of State.
• In 2019, Wyoming appropriated $7.5 million into an election readiness account
(HB 21). The state's $3 million HAVA allocation will also be placed in this
account, the majority of which will go toward replacing outdated voting
• In 2019, North Dakota enacted SB 2002, which included a one-time appropriation
for voting equipment and electronic poll books statewide. The total amount of
$11.2 million included $8.2 million in state funds and $3 million in HAVA
The opportunity for mail/absentee ballots became a page one story in 2020 due to
the Coronavirus Pandemic. Subsequent accusations of voter fraud, compounded by
President Trump declaring the 2020 U.S. election voting as rigged and
fraudulent, has led to almost 40% of the U.S. Electorate believing the 2020
election was fraudulent.
On October 23, 2019, the Brennan Center has estimated that the national cost for
some of the most critical election security measures to be approximately $ 2.2
Billion dollars over the next five years.
Every state has a vote by mail process right now. Voters may request an Absentee
Mail Ballot from their County Board of Elections or a Vote by Mail ballot is
sent. In either case, our proprietary registration and tabulation software has
an immediate need. In the 2016 U.S. Presidential election, approximately 33
Million ballots were cast by mail making up about 25% of the votes. Most
individuals think only of the Presidential election every four years as the
Election. In reality, municipal Board of Elections throughout the U.S. are
conducting elections annually for such elected positions as; Governor, Mayor,
City Council, State Assembly, State Senate, Members of U.S. Congress (House
every 2 years, Senate every 6) Civil and Criminal Justices, Sheriffs, School
Boards, Village Trustees, etc. In short, most State and local municipal Board of
Elections are in the market purchasing software and hardware every year.
In the U.S. there are 3,007 counties, 64 parishes, 19 organized boroughs, 11
census areas, 41 independent cities, and the District of Columbia, all of whom
must buy updated Election Machines and Software. Each municipal county
individually purchases election voting machines under the guidance of their own
State's Secretary of State.
The United States Government, through the Elections Assistance Commission,
certifies election software and hardware for use in U.S. Government Elections.
On February 10, 2021 the U.S. Election Assistance Commission (EAC) announced the
adoption of the Voluntary Voting System Guidelines (VVSG) 2.0. These guidelines
have been formulated to improve cyber security, accessibility and usability
requirements in the U.S. voting process.
Election Software Developers and Manufactures may also qualify by meeting
individual requirements for individual States in the United States.
GES has begun undertaking the following six step benchmarks to qualify for the
updated U.S. certification and is also considering individual State
Step 1 - Voting System Testing, Testing current developed systems to U.S.
Federal 2.0 Standards
Step 2 - Technical Data Package Review; Reviews submitted documents against
documentation requirements of outside agencies, published standards, or U.S.
Step 3 - Physical Configuration Audit; Examines the documentation of the system
against the actual submitted system
Step 4 - System Integration Testing; Executes tests on all components of a
system configured as if the system was deployed
Step 5 - Functional Configuration Audit; Examines submitted test data and
conducts additional testing to verify submitted system hardware and software
described in the documents submitted to the Elections Assistance Commission and
the Department of Homeland Security
Step 6 - Security Testing; Performs vulnerability assessments and penetration
analysis to assess system vulnerabilities
Trends and Uncertainties
The Company currently has minimal revenues and operations and is investigating
potential businesses and companies for acquisition to create and/or acquire a
sustainable business. Our ability to acquire or create a sustainable business
may be adversely affected by our current financial conditions, availability of
capital and/ or loans, general economic conditions which can be cyclical in
nature along with prolonged recessionary periods, and other economic and
The Company has generated recurring losses and cash flow deficits from its
operations since inception and has had to continually borrow to continue
operations. These matters raise substantial doubt about the Company's ability to
continue as a going concern. The continued operations of the Company are
dependent upon its ability to raise additional capital, obtain additional
financing and/or generate positive cash flows from operations. As further
described in "Liquidity and Capital Resources", management believes that it will
be successful in obtaining additional financing, from which the proceeds will be
primarily used to execute its new operating plans. The Company plans to use its
available cash and new financing to develop and execute its new business plan
and hopefully create and maintain a self-sustaining business. However, the
Company can give no assurances that it will be successful in achieving its plans
or if financing will be available or, if available, on terms acceptable to the
Company, or at all. Should the Company not be successful in obtaining the
necessary financing to fund its operations, and ultimately achieve adequate
profitability and cash flows from operations, the Company would need to curtail
certain or all of its operating activities.
There are no trends, events or uncertainties that have had or are reasonably
expected to have a material impact on the net sales or revenues or income from
continuing operations. There are no significant elements of income or loss that
do not arise from our continuing operations except for the fair value change on
derivative financial instruments and settlement on arbitration.
The rapid advances in computing and telecommunications technology over the past
several decades have brought with them increasingly sophisticated methods of
delivering administrating elections. Along with these advances, though, have
come risks regarding the integrity and privacy of data, and these risks apply to
election companies, falling into the general classification of cybersecurity.
While it is not possible for anyone to give an absolute guarantee that data will
not be compromised, when applicable, the Company shall utilize third-party
service providers to secure the Company's financial and personal data; the
Company believes that third-party service providers provide reasonable assurance
that the financial and personal data that they hold are secure.
Liquidity and Capital Resources
As of June 30, 2022, the Company has an accumulated deficit of $30,465,093 and a
working capital deficit of $8,607,077. Our ability to continue as a going
concern depends upon whether we can ultimately attain profitable operations,
generate sufficient cash flow to meet our obligations, and obtain additional
financing as needed.
For the six months ended June 30, 2022, the Company recorded net loss of
$870,242. We recorded an amortization of debt discount of $157,805, and a change
in fair value of derivative liability of $46, we had a decrease in accounts
payable and accrued expenses of $16,434 and a decrease in deferred revenue of
$21,500. We also had an increase in accrued expenses of 432,560. As a result,
we had net cash used in operating activities of $317,857 for the six months
ended June 30, 2022.
For the six months ended June 30, 2022, we received $376,250 as proceeds from
the issuance of convertible promissory notes payable and repaid $43,000 of
outstanding convertible note and repaid $16,744 of outstanding note payable
resulting in net cash provided by financing activities of $346,506.
As of June 30, 2021, the Company has an accumulated deficit of $29,003,016 and a
working capital deficit of $7,946,573. Our ability to continue as a going
concern depends upon whether we can ultimately attain profitable operations,
generate sufficient cash flow to meet our obligations, and obtain additional
financing as needed.
For the six months ended June 30, 2021, the Company recorded net loss of
$318,327. We recorded an amortization of debt discount of $150,455, a change in
fair value of derivative liability of $202,274 and a gain on settlement of debt
of $509,080. We had a decrease in accounts payable and accrued expenses of
$28,694 and a decrease in deferred revenue of $173,223. We also had an increase
in accrued expenses of 378,031. As a result, we had net cash used in operating
activities of $(298,564) for the six months ended June 30, 2021.
For the six months ended June 30, 2021, we received $276,500 as proceeds from
the issuance of convertible promissory notes payable resulting in net cash
provided by financing activities of $276,500.
Management believes that it will be able to continue its operations and further
advance its acquisition plans. However, management cannot give assurances that
such plans will materialize and be successful in the near term or on terms
advantageous to the Company, or at all. Should the Company not be successful in
its new business plans or obtain additional financing, the Company would need to
curtail certain or all of its operating activities.
The Company's continuation as a going concern is dependent upon its ability to
ultimately attain profitable operations, generate sufficient cash flow to meet
its obligations, and obtain additional financing as may be required. Our
auditors for the years ended December 31, 2021 and 2020 have included a "going
concern" modification in their auditors' reports. A "going concern" modification
may make it more difficult for us to raise funds when needed. The outcome of
this uncertainty cannot presently be determined.
The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty. There can be no assurance that
management will be successful in implementing its business plan or that the
successful implementation of such business plan will actually improve our
Results of Operations for the Three Months Ended June 30, 2022 Compared to the
Three Months Ended June 30, 2021
Revenues for the three months ended June 30, 2022 were $199,513 compared to
$350,676 for the three months ended June 30, 2021, an decrease of $151,163. The
majority of our clients hold elections on a three year cycle. The majority of
our clients hold elections on a three year cycle. This decrease in revenues is
due primarily to less elections held during the three month period in 2022
Salaries and benefits totaled $167,552 for the three months ended June 30, 2022
compared to $117,713 for the three months ended June 30, 2021. Actual
compensation paid was approximately $72,723. This increase was due to the
employment compensation increase by 10% every year for John Matthews and Kathryn
Professional fees for the three months ended June 30, 2022 totaled $100,809
compared to $168,669 for the three months ended June 30, 2021, an decrease of
$67,860. This decrease is primarily due to lower professional services during
the three months ended June 30, 2022.
For the three months ended June 30, 2022, we incurred marketing and advertising
expenses of $24,096 compared to the $0 in the three months ended June 30, 2021.
We incurred software development expenses of $667 in 2022 compared to $17,877 in
2021, we incurred printing costs of $78,367 in 2022 compared to $84,455 in 2021,
and we incurred general and administrative expenses of $59,198 in 2022 compared
to $158,987 in 2021. The decrease in general and administrative expenses was
mainly due to a decrease in costs due to the decrease in revenue.
Total operating expenses for the three months ended June 30, 2022 were $430,689
compared to $543,692 for the three months ended June 30, 2021, a decrease of
$113,003 principally due to reasons discussed above.
Results of Operations for the Six Months Ended June 30, 2022 Compared to the Six
Months Ended June 30, 2021
Revenues for the six months ended June 30, 2022 were $397,844 compared to
$585,261 for the six months ended June 30, 2021, and decrease of $187,417. The
majority of our clients hold elections on a three year cycle. This decrease in
revenues is due primarily to less elections held during the six month period in
Salaries and benefits totaled $342,471 for the six months ended June 30, 2022
compared to $235,425 for the six months ended June 30, 2021. Actual compensation
paid was approximately $132,815. This increase was due to the employment
compensation increase by 10% every year for John Matthews and Kathryn Weisbeck.
Professional fees for the six months ended June 30, 2022 totaled $208,789
compared to $222,601 for the six months ended June 30, 2021, an decrease of
$13,812. This decrease is primarily due to lower professional services during
the six months ended June 30, 2022.
For the six months ended June 30, 2022, we incurred marketing and advertising
expenses of $65,289 compared to the $0 in the six months ended June 30, 2021. We
incurred software development expenses of $24,931 in 2022 compared to $21,729 in
2021, we incurred printing costs of $98,676 in 2022 compared to $142,089 in
2021, and we incurred general and administrative expenses of $131,823 in 2022
compared to $198,926 in 2021. The decrease in general and administrative
expenses was primarily due to a decrease in costs due to the decrease in
Total operating expenses for the six months ended June 30, 2022 were $854,878
compared to $820,770 for the six months ended June 30, 2021, an increase $34,108
principally due to reasons discussed above.
Critical Accounting Policies
The Company's financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United States of
America. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses. These estimates and assumptions are affected by management's
applications of accounting policies. Critical accounting policies for the
Company include revenue recognition, valuation of convertible promissory notes
and related warrants, stock and stock option compensation, estimates, and
derivative financial instruments.
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and include the accounts of GAHI and its wholly-owned and majority owned
subsidiaries, GES, GAHI Acquisition Corp and Tidewater Energy Group, Inc. All
significant intercompany accounts and transactions have been eliminated in
The Company recognizes revenue in accordance with FASB ASC 606, Revenue From
Contracts with Customers. The Company earns revenues through various services it
provides to its clients. GES's income is recognized at the presentation date of
the certification of the election results. The payments received in advance are
recorded as deferred revenue on the balance sheet. Should an election not
proceed, all non-refundable deferred revenue will be recognized as revenue.
Convertible debt is accounted for under FASB ASC 470, Debt - Debt with
Conversion and Other Options. The Company records a beneficial conversion
feature ("BCF") related to the issuance of convertible debt that has conversion
features at fixed or adjustable rates that are in-the-money when issued and
records the relative fair value of any warrants issued with those instruments.
The BCF for the convertible instruments is recognized and measured by allocating
a portion of the proceeds to the warrants and as a reduction to the carrying
amount of the convertible instrument equal to the intrinsic value of the
conversion features, both of which are credited to additional paid-in capital.
The Company calculates the fair value of warrants issued with the convertible
instruments using the Black-Scholes valuation method, using the same assumptions
used for valuing stock options, except that the contractual life of the warrant
Under these guidelines, the Company allocates the value of the proceeds received
from a convertible debt transaction between the conversion feature and any other
detachable instruments (such as warrants) on a relative fair value basis. The
allocated fair value of the BCF and warrants are recorded as a debt discount and
is accreted over the expected term of the convertible debt as interest expense.
The Company accounts for modifications of its embedded conversion features in
accordance with the ASC which requires the modification of a convertible debt
instrument that changes the fair value of an embedded conversion feature and the
subsequent recognition of interest expense or the associated debt instrument
when the modification does not result in a debt extinguishment.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded derivatives. For
derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then
re-valued at each reporting date, with changes in the fair value reported in the
statements of operations. The Company uses the Black-Scholes-Merton model to
value the derivative instruments. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period.
The Company records stock-based compensation in accordance with FASB ASC Topic
718, Compensation - Stock Compensation. FASB ASC Topic 718 requires companies to
measure compensation cost for stock-based employee compensation at fair value at
the grant date and recognize the expense over the requisite service period. The
Company recognizes in the statement of operations the grant-date fair value of
stock options and other equity-based compensation issued to employees and
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in
an Entity's Own Equity. ASU 2020-06 reduces the number of accounting models for
convertible debt instruments and convertible preferred stock. For convertible
instruments with conversion features that are not required to be accounted for
as derivatives under Topic 815, Derivatives and Hedging, or that do not result
in substantial premiums accounted for as paid-in capital, the embedded
conversion features no longer are separated from the host contract. ASU 2020-06
also removes certain conditions that should be considered in the derivatives
scope exception evaluation under Subtopic 815-40, Derivatives and
Hedging-Contracts in Entity's Own Equity, and clarify the scope and certain
requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the
guidance related to the disclosures and earnings-per-share (EPS) for convertible
instruments and contract in entity's own equity. ASU 2020-06 is effective for
public business entities that meet the definition of a Securities and Exchange
Commission (SEC) filer, excluding entities eligible to be smaller reporting
companies as defined by the SEC, for fiscal years beginning after December 15,
2021, including interim periods within those fiscal years. For all other
entities, the amendments are effective for fiscal years beginning after December
15, 2023, including interim periods within those fiscal years. Early adoption is
permitted, but no earlier than fiscal years beginning after December 15, 2020,
including interim periods within those fiscal years. The Board specified that an
entity should adopt the guidance as of the beginning of its annual fiscal year.
The Company is currently evaluation the impact this ASU will have on its
consolidated financial statements.
Management does not believe that any recently issued, but not yet effective,
accounting standards could have a material effect on the accompanying financial
statements. As new accounting pronouncements are issued, we will adopt those
that are applicable under the circumstances.
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