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Item 9A. Controls and Procedures

2021-04-15 compared with 2020-04-15 · 73 added, 44 removed, 221 unchanged (35% of the section changed)

21 unchanged sentences

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank

Wall Street Reform and Consumer Protection Act.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Inherent Limitations

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake.

In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the three month period ended December 31, 2020, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

15 unchanged sentences

Iglesias was Executive Vice President and responsible of the Latin America marketing division of American Internet Communications (August 1998 – December 2002).

Leandro Iglesias has developed a carrier for more than 20 years in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables, satellite communications and international roaming services.

Leandro Iglesias has developed a career for more than 20 years in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables, satellite communications and international roaming services.

He is Electronic Engineer graduate from Universidad Simon Bolivar and graduated from the Management Program at IESA Business School.

5 unchanged sentences

Alvaro Quintana Cardona

Alvaro Quintana has developed a carrier of more than twenty years of experience in the telecommunication industry with particular focus on regulatory affairs, strategic planning, value added services and international interconnection agreements.

Before joying Etelix in year 2013 as Chief Operation Officer and Chief Financial Officer, Mr.

Alvaro Quintana has developed a career of more than twenty years of experience in the telecommunication industry with particular focus on regulatory affairs, strategic planning, value added services and international interconnection agreements.

Before joining Etelix in year 2013 as Chief Operation Officer and Chief Financial Officer, Mr.

Quintana acted between June 2004 and May 2013 as Interconnection and Value-Added Services Manager at Digitel (a mobile service provider in Venezuela, formerly a Telecom Italia Mobile subsidiary).

55 unchanged sentences

The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2020 and 2019.

Name and principal Position

Name and principal

Leandro Iglesias

4 unchanged sentences

Chief Commercial Officer

Employment Agreements for New Management

The Company entered into Employment Agreements with the following persons:

(i) Leandro Iglesias as President, CEO and Chairperson of the Company’s Board of Directors with an annual salary of $168,000 plus the “additional compensation”;

(ii) Juan Carlos Lopez Silva as Chief Commercial Officer with an annual salary of $120,000 plus the “additional compensation”;

and Alvaro Quintana Cardona as Chief Operating Officer and Chief Financial Officer with an annual salary of $144,000 plus the “additional compensation”.

Employees shall receive a bonus of 3% of the Company´s Net Income for services rendered under these employment agreements, and shall be paid under the 15 days after the 10-k file is completed.

The Employment Agreements have a term of 36 months, are renewable automatically for 24 month periods, unless the Company gives written notice at least 90 days prior to termination of the initial 36 month term or any of the subsequent 24 months term renewals.

The Company shall have the right to terminate any of the employment agreements at any time without prior notice, but in that event, the Company shall pay these persons salaries and other benefits they are entitled to receive under their respective agreements for three years or two years in the case of renewals.

On May 2, 2019, the Company entered into Employment Agreements with the following persons:

(i) Leandro Iglesias as President, CEO and Chairperson of the Company’s Board of Directors with an annual salary of $168,000 with an annual bonus of 3% of our net income;

(ii) Juan Carlos Lopez Silva as Chief Commercial Officer with an annual salary of $120,000 with an annual bonus of 3% of our net income;

and Alvaro Quintana Cardona as Chief Operating Officer and Chief Financial Officer with an annual salary of $144,000 with an annual bonus of 3% of our net income.

The Employment Agreements have a term of 36 months, are renewable automatically for 24-month periods, unless the Company gives written notice at least 90 days prior to termination of the initial 36-month term.

The above executive officers agreed to two year non-compete and non-solicit restrictive covenants with the Company.

If any of the executive officers are terminated for cause they shall forfeit any rights to severance.

On November 1, 2020, our board of directors approved amended employments in favor of our Chief Executive Officer, Leandro Iglesias, our Chief Financial Officer, Alvaro Quintana, and our Chief Commercial Officer, Juan Carlos Lopez Silva.

The amended employment agreement in favor of Mr.

Iglesias extended the term of employment from 36 months to 60 months.

The now five year employment agreement with Mr.

Iglesias provides that we will compensate him with a salary of $17,000 monthly and he is eligible for quarterly bonus of 250,000 shares of our common stock.

If we do not have the cash available, the agreement provides that Mr.

Iglesias may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock.

For common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share of the Company’s common stock on the OTC Markets during the last 10 days and applying a discount of 25%.” For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten US Dollars ($10).

Iglesias has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share.

The amended employment agreement in favor of Mr.

Quintana extended the term of employment from 36 months to 60 months.

The now five year employment agreement with Mr.

Quintana provides that he is eligible for quarterly bonus of 200,000 shares of our common stock.

If we do not have the cash available, the agreement provides that Mr.

Quintana may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock.

Quintana has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share.

The amended employment agreement in favor of Mr.

Silva extended the term of employment from 36 months to 60 months.

Silva is eligible for quarterly bonuses of 150,000 shares of our common stock.

If we do not have the cash available, the agreement provides that Mr.

Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%.

Option Grants

14 unchanged sentences

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth, as of March 31, 2020, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.

The following table sets forth, as of April 12, 2021, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.

Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law.

5 unchanged sentences

Name and Address of Beneficial Owner

Shares Owned (1)

Leandro Iglesias

2 unchanged sentences

All Directors and Executive Officers as a Group (3 persons)

Oscar Brito (3)

1,932,100‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Series A Preferred Stock

Name and Address of Beneficial Owner

Leandro Iglesias

Alvaro Quintana Cardona

Juan Carlos Lopez Silva

All Directors and Executive Officers as a Group (3 persons)

10,000‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

(1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity.

(2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants.

The percent of class is based on 44,589,590 voting shares as of March 31, 2020.

Brito has beneficial ownership of 50% of Metrospaces Inc., which holds 1,050,725 shares of our common stock;

Brito owns 2,115,000 by himself.

The percent of class is based on 136,881,964 voting shares as of April 12, 2021.

(3) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants.

The percent of class is based on 10,000 voting shares as of April 12, 2021.

Certain Relationships and Related Transactions, and Director Independence

1 unchanged sentence

Due from related party

During the year ended December 31, 2019, the Company loaned $129,387 to a related party and collected $73,947.

As of December 31, 2019 and 2018, the Company had due from related parties of $316,860.

During the year ended December 31, 2020, the Company loaned $17,187 to related parties who are a shareholder and a former director, collected $388 and wrote off amounts totaling $43,375.

During the year ended December 31, 2020 and 2019, the Company loaned $18,888 and $129,387 to a related party and collected $2,088 and $73,947, respectively.

As of December 31, 2020 and 2019, the Company had due from related parties of $221,790 and $316,860, respectively.

The loans are unsecured, non-interest bearing and due on demand.

This correspond to:

(1) loan to employee of $106;

(2) loan to Metrospaces, Inc.

(3) loan to our Director Oscar Brito of $34,234;

and (4) loan to subsidiary Etelix.com USA LLC of $279,520.

Due to related parties

During the year ended December 31, 2019 and 2018, the Company borrowed $46,438 and $800 from CEO of the Company and repaid $38,400 and $850, respectively.

As of December 31, 2019 and 2018, the Company had due to related parties of $34,631 and $23,193, respectively.

The loans are unsecured, non-interest bearing and due on demand.

From the $34,631 the Company owns $8,038 to CEO and $26.593 to former Director Pat Gosselin.

During the year ended December 31, 2020 and 2019, the Company borrowed $20,182 and $46,438 from CEO and CFO of the Company, and repaid $20,197 and $38,400 to the CEO and CFO, respectively.

During the year ended December 31, 2020, the Company borrowed $20,000 from Francisco Bunt who owns 49% of loT Labs and repaid $20,000.

As of December 31, 2020 and 2019, the Company had amounts due to related parties of $94,616, which included $60,000 to Francisco Bunt (Note 4) and $34,631, respectively.

The amounts are unsecured, non-interest bearing and due on demand.

Debt forgiveness

During the year ended December 31, 2019 and 2018, the Company recorded debt forgiveness of $406,080 and $45,200 as additional paid in capital.

During the year ended December 31, 2020, the Company recorded debt forgiveness of $406,080 as additional paid in capital.

Principal Accounting Fees and Services

Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audit of the Below is the table of Audit Fees billed by our auditors in connection with the audits of the Company’s annual financial statements for the years ended:

Financial Statements

for the Year Ended

Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audits of the Company’s annual financial statements for the years ended:

Financial Statements for the

Year Ended December 31

Audit Services

Audit Related Fees

Exhibits, Financial Statements Schedules

62 unchanged sentences

Leandro Iglesias

Chief Executive Officer,

Principal Executive Officer

Chief Executive Officer, Principal Executive Officer

April 15, 2021

1 unchanged sentence

Alvaro Quintana Cardona

Chief Operating Officer, Chief Financial Officer,

Principal Financial Officer and Principal Accounting Officer

Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

April 15, 2021

2 unchanged sentences

Leandro Iglesias

Chief Executive Officer,

Principal Executive Officer

Chief Executive Officer, Principal Executive Officer

April 15, 2021

1 unchanged sentence

Alvaro Quintana Cardona

Chief Operating Officer, Chief Financial Officer,

Principal Financial Officer and Principal Accounting Officer

Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

April 15, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures