What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-13 · 233 added, 386 removed, 270 unchanged (70% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

September 30,

Current Assets

7 unchanged sentences

Deferred tax assets

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities

5 unchanged sentences

Other current liabilities

Stock payable

Derivative liabilities

4 unchanged sentences

TOTAL LIABILITIES

Stockholders' Deficit

Stockholders' Equity (Deficit)

Preferred stock:

1,200,000 authorized;

$0.001 par value - no shares issued and outstanding

$0.001 par value

Series A Preferred stock:

10,000 designated;

$0.001 par value,

10,000 shares issued and outstanding, respectively

Series B Preferred stock:

200,000 designated;

$0.001 par value,

21,000 and 0 shares issued and outstanding

Series C Preferred stock:

200,000 designated;

$0.001 par value,

No shares issued and outstanding

Common stock:

5 unchanged sentences

Accumulated other comprehensive loss

Deficit attributed to stockholders of iQSTEL Inc.

Equity (Deficit) attributed to stockholders of iQSTEL Inc.

Deficit attributable to noncontrolling interests

Total stockholders' Deficit

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

Total stockholders' Equity (Deficit)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

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

Consolidated Statements of Comprehensive Loss

( Unaudited )

Consolidated Statements of Operations

Three Months Ended

Nine Months Ended

September 30,

Cost of revenue

8 unchanged sentences

Loss on settlement of debt

Total other income (expense)

Total other expense

Net loss before provision for income taxes

Net income attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests

Net loss attributed to stockholders of iQSTEL Inc.

8 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the Three and Nine Months Ended September 30, 2020 and 2019

( Unaudited )

For the years ended March 31, 2021 and December 31, 2020

Preferred Stock

Comprehensive

Shareholders’

Balance - December 31, 2019

Common stock issued for settlement of debt

Common stock issued for services

Common stock issued for forbearance of debt

Common stock issued for conversion of debt

Common stock issued for exercised cashless warrant

Common stock to be issued for acquisition of Itsbchain LLC

Resolution of derivative liabilities

Foreign currency translation adjustments

Balance - March 31, 2020

Common stock issued for cash

Common stock issued for conversion of debt

Common stock issued for exercised cashless warrant

Common stock issued for settlement of debt

Resolution of derivative liabilities

Acquisition of IOT Lab

Foreign currency translation adjustments

Balance - June 30, 2020

Common stock issued for cash

Common stock issued for conversion of debt

Common stock issued for settlement of debt

Common stock issued for service

Resolution of derivative liabilities

Foreign currency translation adjustments

Balance - September 30, 2020

(Equity) Deficit

December 31, 2020

$ (14,699,148)

$ (1,388,575)

$ (1,006,461)

$ (2,395,036)

Preferred stock

conversion of

Common stock issued

issued for service

Common stock issued

for compensation

Common stock issued

for forbearance of

Common stock issued

for conversion of

Cancellation of

Resolution of

derivative liabilities

Foreign currency

March 31, 2021

$ (16,641,539)

Comprehensive

Shareholders’

Balance - December 31, 2018

Common stock issued in conjunction with convertible notes

Capital contribution

Balance - March 31, 2019

Common stock issued for conversion of debt

Resolution of derivative liabilities

Common stock issued in conjunction with convertible notes

Balance - June 30, 2019

Common stock issued for acquisition

Common stock issued in conjunction with convertible notes

Debt forgiveness

Foreign currency translation adjustments

Balance - September 30, 2019

(Equity) Deficit

December 31, 2019

$ (8,125,257)

$ (4,866,902)

$ (5,770,415)

Common stock issued

for settlement of debt

Common stock issued

for forbearance of debt

Common stock issued

for conversion of debt

Common stock issued

for exercised cashless warrant

Common stock issued

for acquisition of Itsbchain LLC

Resolution of

derivative liabilities

Foreign currency

translation adjustments

March 31, 2020

$ (12,015,747)

$ (5,212,314)

$ (6,136,146)

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

Consolidated Statements of Cash Flows

( Unaudited )

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Change in fair value of derivative liabilities

Gain on settlement of debt

Loss on settlement of debt

Prepayment and Default penalty

1 unchanged sentence

Accounts receivable

Accounts receivable - related party

Other current assets

Prepaid and other current assets

Accounts payable

Other current liabilities

Deferred tax asset

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of subsidiary, net of cash acquired

Acquisition of subsidiary

Purchase of property and equipment

Payment of loan receivable - related party

Collection from due from related parties - related party

Net cash provided by (used in) investing activities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Bank overdraft

Proceeds from loans payable

2 unchanged sentences

Repayment of loans payable - related parties

Common stock issued

Proceeds from common stock issued

Proceeds from convertible notes

9 unchanged sentences

Non-cash transactions:

Derivative liabilities recognized as debt discount

Common stock issued in conjunction with convertible notes

Common stock issued for conversion of debt

1 unchanged sentence

Resolution of derivative liabilities

Debt forgiveness

Common stock issued for settlement of debt

Amount owing for acquisition of IOT

Common stock issued for forbearance of debt

Replacement of convertible notes to note payable

Common stock issued for acquisition of ItsBchain LLC

Preferred stock issued for conversion of common stock

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

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

March 31, 2021

NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization and Operations

(“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011 under the name of PureSnax International, Inc.

and changed its name to iQSTEL Inc.

(“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011 under the name of B-Maven Inc.

The Company changed its name to PureSnax International, Inc.

on September 18, 2015;

and more recently it changed its name to iQSTEL Inc.

on August 7, 2018.

The Company has been engaged in the business of telecommunication services as a wholesale carrier of voice, SMS and data for other telecom companies around the World with more than 150 active interconnection agreements with mobile companies, fix line companies and other wholesale carriers.

On April 15, 2020, we entered into a Company Acquisition Agreement (the “Agreement”) with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (“loT Labs”).

The loT Labs’ principal business activity is the sale of Short Messages (SMS) between USA and Mexico.

A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020.

1 unchanged sentence

The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees and minimize business disruption.

The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at September 30, 2020.

The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain.

A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of November 13 2020, the date of issuance of this Quarterly Report on Form 10-Q.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of May 14, 2021, the date of issuance of this Quarterly Report on Form 10-Q.

These estimates may change, as new events occur and additional information is obtained.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”).

Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2020 and the results of operations and cash flows for the periods presented.

The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period.

In the opinion of the Company’s management, the accompanying unaudited interim financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2021 and the results of operations and cash flows for the periods presented.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period.

These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 15, 2021.

Consolidation Policy

The consolidated financial statements of the Company include the accounts of the Company and its owned subsidiaries, Etelix.com USA, LLC, SwissLink Carrier AG, ITSBCHAIN, LLC, QGLOBAL SMS, LLC and loT Labs, LLC.

All significant intercompany balances and transactions have been eliminated in consolidation.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America 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.

The preparation of the consolidated financial statements in conformity with GAAP in the United States of America 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.

The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period.

Actual results could differ from these good faith estimates and judgments.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation and Re-measurement

The Company translates its foreign operations to U.S.

dollars in accordance with ASC 830, “ Foreign Currency Matters ”.

The Company’s, Etelix’s, ITSBCHAIN, LLC’s, QGLOBAL SMS, LLC’s and loT Labs LLC’s functional currency and reporting currency is the U.S.

dollar in accordance with ASC 830, “ Foreign Currency Matters ”.

The Company’s, Etelix’s, QGlobal’s and IoT Labs’ functional currency and reporting currency is the U.S.

dollar, SwissLink’s functional currency is the Swiss Franc (“CHF”).

SwissLink translates their records into U.S.

dollars as follows:

The Company’s subsidiaries, whose functional currency is not the U.S.

dollar, translate their records into U.S.

dollar as follows:

· Assets and liabilities at the rate of exchange in effect at the balance sheet date

1 unchanged sentence

· Revenue and expense items at the average rate of exchange prevailing during the period

Adjustments arising from such translations are included in accumulated other comprehensive income in stockholders’ equity.

September 30,

USD exchange rate

Adjustments arising from such translations are included in accumulated other comprehensive income in shareholders’ equity.

Accounts Receivable and Allowance for Uncollectible Accounts

4 unchanged sentences

Account balances are charged off after all means of collection have been exhausted and the potential for recovery is considered remote.

As of September 30, 2020 and December 31, 2019, the Company had no valuation allowance for doubtful accounts for the Company’s accounts receivable and recorded no bad debt expense for the nine months ended September 30, 2020 and 2019.

During the three months ended March 31, 2021 and 2020, the Company did not record bad debt expense.

Net Income (Loss) Per Share of Common Stock

The Company has adopted ASC 260, ”Earnings per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation.

In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive.

There were no potentially dilutive shares of common stock outstanding for the years ended March 31, 2021 and 2020.

Concentrations of Credit Risk

2 unchanged sentences

At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

however, management believes that there is no unusual risk present, as the Company places its cash with financial institutions which management considers being of high quality.

During the nine months ended September 30, 2020, fourteen customers represented 80% of our consolidated revenues.

During the nine months ended September 30, 2019, six customers represented 79% of our consolidated revenues.

39% of the revenue comes from customers under prepayment conditions which means there is no credit or bad debt risk on that portion of the customers portfolio.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

During the three months ended March 31, 2021 and 2020, 4 customers represented 86% of our revenues and 12 customers represented 83% of our revenues, respectively.

Revenue Recognition

3 unchanged sentences

The Company’s payment terms vary by clients.

The Company leases office space for corporate and network monitoring activities and to house telecommunications equipment.

In accordance with ASC 842, “ Leases ”, we determine if an arrangement is a lease at inception.

The office lease meets the definition of a short-term lease because the lease term is 12 months or less.

Consequently, consistent with Company’s accounting policy election, the Company does not recognize the right-of-use asset and the lease liability arising from this lease.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Retirement Benefit Costs

7 unchanged sentences

Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Recent Accounting Pronouncements

2 unchanged sentences

NOTE 3 - GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company does not have significant cash, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.

In addition, the Company incurred a net loss of $3,501,963 for the nine months ended September 30, 2020 and has negative working capital as of September 30, 2020.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 3 - GOING CONCERN (Continued)

The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has suffered recurring losses from operations, has a working capital deficiency and does not have an established source of revenues sufficient to cover its operating costs.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its business plan and eventually attain profitable operations.

During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and marketing expenses.

During the next year, the Company's foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing in the industry and continuing its marketing efforts.

The Company may experience a cash shortfall and be required to raise additional capital.

2 unchanged sentences

The Company's failure to do so could have a material and adverse effect upon its operations and its stockholders.

NOTE 4 - ACQUISITION

On April 15, 2020, we entered into a Company Acquisition Agreement (the “Agreement”) with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs.

The Company’s principal business activity is the sale of Short Messages (SMS) between USA and Mexico.

We have agreed to pay a total of $180,000 for the 51% interest in the Company.

The consideration shall occur with an installment of $60,000 on the date of the execution of the Agreement, followed by a second payment of $60,000 at closing and a final payment of $60,000 that is set to occur 60 days following the closing date.

Under the Agreement, Mr.

Bunt has the right to request that any of the aforementioned payments be made in shares of our common stock, which the parties have agreed to value at $2.00 per share.

The shares are subject to adjustment after 180 days and up to 360 days after issuance if our stock trades at less than $2.00 per share.

The Agreement provides for a right of return to Mr.

Bunt of the shares in the Company if we fail to make timely payments.

The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:

Fair Value of Consideration:

Total Purchase Price

loT Labs has been included in our consolidated results of operations since the acquisition date.

The following table summarizes the identifiable assets acquired and liabilities assumed upon acquisition of IoT Labs and the calculation of goodwill:

Total purchase price

Other current assets

Property and equipment

Intangible asset

Total identifiable assets

Accounts payable

Total liabilities assumed

Non-controlling interest

Total net assets

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 4 – ACQUISITION (Continued)

Unaudited combined proforma results of operations for the nine months ended September 30, 2020 and 2019 as though the Company acquired loT Labs on January 1, 2019, are set forth below:

Nine Months Ended

September 30,

Cost of revenues

Operating expenses

Operating loss

Other expense

NOTE 5 – PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Advance payment to suppliers

Other receivable

Prepaid expenses

Tax receivable

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Property and equipment at March 31, 2021 and December 31, 2020 consisted of the following:

Telecommunication equipment

4 unchanged sentences

Total property and equipment

Depreciation expense for the nine months ended September 30, 2020 and 2019 amounted to $49,318 and $26,473, respectively.

Depreciation expense for the three months ended March 31, 2021 and 2020 amounted to $20,560 and $13,425, respectively.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

March 31, 2021

NOTE 5 –LOANS PAYABLE

Loans payable at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Loans payable at March 31, 2021 and December 31, 2020 consisted of the following:

Unique Funding Solutions_2

1 unchanged sentence

YES LENDER LLC 3

October 17, 2019 and due on March 31, 2020

Complete Business Solutions_8

December 24, 2010 and due on June 09, 2020

Nicolas Arvelo

Note was issued on November 20, 2019 and due on November 20, 2020

Martin Mendoza Diaz

Note was issued on November 20, 2019 and due on November 20, 2020

Note was issued on October 23, 2018 and due on January 3, 2022

Swisspeers AG

Note was issued on April 8, 2019 and due on October 4, 2022

Note was issued on August 3, 2020 and due on January 12, 2021

Apollo Management Group, Inc

13 unchanged sentences

Apollo Management Group, Inc 14

Note was issued on July 1, 2020 and due on December 15, 2020

Apollo Management Group, Inc 12

Note was issued on August 7, 2020 and due on December 15, 2020

Note was issued on December 4, 2020 and due on January 4, 2021

Note was issued on June 26, 2020 and due on April 1, 2021

1 unchanged sentence

Note was issued on September 1, 2020 and due on September 1, 2021

YES LENDER LLC 3

Note was issued on August 3, 2020 and due on January 12, 2021

M2B Funding Corp 1

Note was issued on December 10, 2020 and due on January 9, 2021

M2B Funding Corp 2

Note was issued on December 18, 2020 and due on January 17, 2021

M2B Funding Corp 3

Note was issued on December 24, 2020 and due on January 23, 2021

M2B Funding Corp 4

Note was issued on December 30, 2020 and due on January 29, 2021

Note was issued on October 23, 2018 and due on January 3, 2022

Swisspeers AG

Note was issued on April 8, 2019 and due on October 4, 2022

Darlene Covi19

Note was issued on April 1, 2020 and due on March 31, 2025

Note was issued on April 1, 2020 and due on September 30, 2027

Unamortized debt discount

3 unchanged sentences

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

March 31, 2021

NOTE 5 –LOANS PAYABLE (CONTINUED)

Loans payable to related parties at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Loans payable to related parties at March 31, 2021 and December 31, 2020 consisted of the following:

Alonso Van Der Biest

Note was issued on June 12, 2015 and originally due on June 11, 2019.

The note was extended to July 2021.

Alvaro Quintana

Note was issue on September 30, 2016 and due on September 29, 2019

49% of Shareholder of SwissLink

Note is due on demand

49% of Shareholder of SwissLink

Note is due on demand

Current portion of loans payable

Long-term loans payable

During the nine months ended September 30, 2020 and 2019, the Company borrowed amounts from third parties totaling $933,280 and $446,824, which includes original issue discount and financing costs of $34,316 and $17,953, respectively, and repaid the principal amount of $607,447 and $534,651, respectively.

During the nine months ended September 30, 2020 and 2019, the Company recorded interest expense of $180,843 and $154,507 and recognized amortization of discount, included in interest expense, of $33,842 and $17,953, respectively.

NOTE 8 – OTHER CURRENT LIABILITIES

Other current liabilities at September 30, 2020 and December 31, 2019 consist of the following:

September 30,

Accrued liabilities

Credit card liabilities

Accrued interest

Salary payable - management

Employee benefits

Other current liabilities

NOTE 9 - CONVERTIBLE NOTES

At September 30, 2020 and December 31, 2019, convertible notes consist of the following:

September 30,

During the three months ended March 31, 2021 and 2020, the Company borrowed from third parties totaling $444,444 and $210,000, which includes original issue discount and financing costs of $44,444 and $0 and repaid the principal amount of $309,082 and $98,646, respectively.

During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of $162,459 and $48,294 and recognized amortization of discount, included in interest expense, of $63,666 and $0, respectively.

During the three months ended March 31, 2021, the Company settled loans payable of $1,516,667 by 2,230,994 shares of common stock valued at $2,056,530.

As a result, the Company recorded loss on settlement of debt of $539,863.

As of March 31, 2021, the shares were not yet issued and recorded as stock payable.

NOTE 6 - CONVERTIBLE LOANS

At March 31, 2021 and December 31, 2020, convertible loans consisted of the following:

Promissory notes – Issued in fiscal year 2019, with variable conversion features

5 unchanged sentences

Long-term convertible notes

During the nine months ended September 30, 2020 and 2019, the Company recorded interest expense of $689,996 and $349,027 and recognized amortization of discount, included in interest expense, of $1,463,426 and $1,255,815, respectively.

During the nine months ended September 30, 2020 and 2019, the Company repaid notes of $492,190 and $660,401 and accrued interest including prepayment penalty of $552,631 and $295,000.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 9 - CONVERTIBLE NOTES (Continued)

During the nine months ended September 30, 2020, the Company converted notes with principal amounts of $681,118 and accrued interest of $86,313 into 35,813,477 shares of common stock.

During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of $33,430 and $295,903 and recognized amortization of discount, included in interest expense, of $370,470 and $457,177, respectively.

During the three months ended March 31, 2021 and 2020, the Company repaid notes of $250,000 and $334,500 and accrued interest including prepayment penalty of $6,027 and $151,542, respectively.

During the three months ended March 31, 2021, the Company converted notes with principal amounts and accrued interest of $422,295 into 6,080,632 shares of common stock.

The corresponding derivative liability at the date of conversion of $708,611 was settled through additional paid in capital.

On June 10, 2020, the Company settled a convertible note with accrued interest of $64,230 with a total of 650,000 share issuances.

The Company issued 200,000 shares in June, 225,000 shares in July and 503,571 shares in August, which included 278,571 true-up shares.

As a result, the Company recognized a loss on settlement of debt of $24,699.

On June 26, 2020, the Company issued a loan payable of $700,000 to Labrys Fund to settle the previously-outstanding convertible notes with accrued interest of $986,340.

As a result, the Company recognized a gain on settlement of debt of $286,340 (Note 7).

On July 22, 2020, the Company settled a convertible note with accrued interest of $ 64,363 and an original common stock purchase warrant to purchase 20,000 shares of common stock with a total of 650,000 share issuances.

During the period ended September 30, 2020, the Company issued 1,038,375 shares which included 388,375 true-up shares.

As a result, the Company recognized a loss on settlement of debt of $9,886.

On September 1, 2020, the Company entered into a Multipurpose agreement and issued a new note which a principal balance of $1,045,327 to replace the 15 notes issued from January 2020 to May 2020 which an aggregate principal amount was $985,556 and an aggregate accrued interest was $59,771.

The Company also issued another promissory note of $300,000 (Note 7).

As a result, the Company recognized a loss on settlement of debt of $300,000.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 6 - CONVERTIBLE LOANS (CONTINUED)

Promissory Notes - Issued in fiscal year 2019

7 unchanged sentences

Likewise, the notes include original issue discount and financing costs totaling $278,000 and the Company received cash of $2,266,250.

Promissory Notes - Issued in fiscal year 2020

During the nine months ended September 30, 2020, the Company issued a total of $2,708,771 in notes with the following terms:

· Terms 12 months.

· Annual interest rates 5% or 12%.

· Convertible at the option of the holders 90 or 180 days from issuance.

· Conversion prices are typically based on the discounted (25% or 60% discount) lowest trading prices of the Company’s shares during 30 trading day periods prior to conversion.

Certain note has a capped conversion price of $0.025.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 9 - CONVERTIBLE NOTES (Continued)

Notes allow the Company to redeem the notes at a range from 120% to 125% provided that no redemption is allowed after the 180 th or 185 th day.

Likewise, the notes include original issue discount and financing costs totaling $229,444 and the Company received cash of $1,420,000.

Certain convertible notes were also provided with a total of 6,500,000 warrants.

Derivative liabilities

The Company determined that the conversion option in the notes met the definition of liabilities in accordance with ASC Topic No.

815 - 40, “ Derivatives and Hedging - Contracts in Entity’s Own Stock .” The Company will bifurcate the embedded conversion options in the notes once the notes become convertible and account for them as derivative liabilities.

The Company valued the conversion features of convertible notes and warrants using the Black Scholes valuation model.

The fair value of the derivative liability for all the note and warrants that became convertible for the nine months ended September 30, 2020, amounted to $2,047,278.

$1,006,642 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $1,040,636 was recognized as a “day 1” derivative loss.

The fair value of the derivative liability for all the notes and warrants that became convertible for the year ended December 31, 2019 amounted to $4,916,471.

$1,313,350 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $3,603,121 was recognized as a “day 1” derivative loss.

A summary of activity during the nine months ended September 30, 2020 follows:

Warrants Outstanding

Weighted Average

Exercise Price

Outstanding, December 31, 2019

Cashless Exercised

Forfeited/canceled

Outstanding, September 30, 2020

The reset feature of warrants associated with the convertible notes was effective at the time that a separate convertible note with lower exercise price was issued.

As a result of the reset features for warrants, the warrants increased by 10,813,001 at $0.0012 per share.

We accounted for the issuance of the warrants as a liability and recognized the derivative liability.

The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2020:

Warrants Outstanding

Warrants Exercisable

Weighted Average Remaining

Weighted Average

Exercise Price

Weighted Average

Exercise Price

Contractual life

The intrinsic value of the warrants as of September 30, 2020 is $303,250.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 10 - DERIVATIVE LIABILITIES

The Company analyzed the conversion options for derivative accounting consideration under ASC 815, “ Derivatives and Hedging ,” and determined that the instrument should be classified as a liability since the conversion options become effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

The Company determined that the conversion option in the note met the definition of a liability in accordance with ASC Topic No.

815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock .

The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability.

The Company valued the conversion features of convertible notes and warrant using the Black Scholes valuation model.

During the three months ended March 31, 2021, the fair value of the derivative liability for new notes was $0, as there were no notes that became convertible.

NOTE 7 – DERIVATIVE LIABILITY

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging , and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in Accounting for Derivative Liabilities

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2020 and December 31, 2019.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2021.

The Black-Scholes model requires six basic data inputs:

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Changes to these inputs could produce a significantly higher or lower fair value measurement.

The fair value of each convertible note is estimated using the Black-Scholes valuation model.

The estimated fair values of the liabilities measured on a recurring basis are as follows:

Nine Months Ended

September 30,

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 7 – DERIVATIVE LIABILITY (CONTINUED)

For the three months ended March 31, 2021 and the year ended December 31, 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows:

Three months ended

Expected term

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0.05% - 2.56%

The following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2020:

The following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2021:

Fair Value Measurements Using Significant Observable Inputs (Level 3)

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Settled on issuance of common stock

Change in fair value of the derivative

Balance - September 30, 2020

The aggregate (gain) loss on derivatives during the nine months ended September 30, 2020 and 2019 was as follows:

Nine Months Ended

September 30,

Change in fair value of the derivative liabilities

Balance - March 31, 2021

The following table summarizes the change in fair value of derivative liability included in the income statement for the three months ended March 31, 2021 and 2020, respectively.

Three months Ended

Addition of new derivatives recognized as loss on derivatives

(Gain) loss on change in fair value of the derivative

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 11 – STOCKHOLDERS’ EQUITY

The Company’s authorized capital consists of 300,000,000 shares of common stock with a par value of $0.001 per share.

During the nine months ended September 30, 2020, the Company issued 60,177,619 shares of common stock, valued at fair market value on issuance as follows;

Revaluation of derivative liabilities

Change in fair value of the derivative liabilities

NOTE 8 – SHAREHOLDERS’ EQUITY

The Company’s authorized capital consists of 1,200,000 shares of preferred stock and 300,000,000 shares of common stock with a par value of $0.001 per share.

During the three months ended March 31, 2021, the Company issued 42,988,132 shares of common stock, valued at fair market value on issuance as follows;

· 35,862,500 shares issued for cash of $3,586,250

· 6,275,456 shares issued for settlement of debt of $365,678

· 5,867,600 shares issued for services valued at $567,978

· 50,000 shares issued for forbearance of debt of $2,900

· 600,000 shares issued to our management for compensation valued at $564,000

· 6,080,632 shares issued for conversion of debt of $422,295

· 3,233,586 shares issued for cashless exercised warrant

As of September 30, 2020 and December 31, 2019, 78,186,210 and 18,008,591 shares of common stock were issued and outstanding, respectively.

· 195,000 shares for services valued at $284,700

· 250,000 shares for forbearance of debt valued at $49,925

During the three months ended March 31, 2021, the Company cancelled 1,294,600 shares of common stock which was issued for service.

As of March 31, 2021 and December 31, 2020, 138,826,964 and 118,133,432 shares of common stock were issued and outstanding, respectively.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 8 – SHAREHOLDERS’ EQUITY (CONTINUED)

Series A Preferred Stock

On November 3, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock, consisting of up 10,000 shares, par value $0.001.

Under the Certificate of Designation, holders of Series A Preferred Stock will participate on an equal basis per-share with holders of our common stock in any distribution upon winding up, dissolution, or liquidation.

Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders.

The rights of the holders of Series A Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020

As of March 31, 2021 and December 31, 2020, 10,000 shares of Series A Preferred Stock were issued and outstanding, respectively.

Series B Preferred Stock

On November 11, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series B Preferred Stock, consisting of up 200,000 shares, par value $0.001.

Under the Certificate of Designation, holders of Series B Preferred Stock will receive a liquidation preference of $81 per share in any distribution upon winding up, dissolution, or liquidation of the Company before junior security holders, as provided in the designation.

Holders of Series B Preferred Stock are entitled to receive as, when, and if declared by the Board of Directors, dividends in kind at an annual rate equal to twenty four percent (24%) of $81 per share for each of the then outstanding shares of Series B Preferred Stock, calculated on the basis of a 360-day year consisting of twelve 30-day months.

Holders of Series B Preferred Stock do not have voting rights but may convert into common stock after twelve months from the issuance date, at a conversion rate of one thousand (1,000) shares of Common Stock for every one (1) share of Series B Preferred Stock.

Upon conversion, the shares are subject to a one-year leak-out restriction on sales into the market of no more than 5% previous month’s stock liquidity.

During the three months ended March 31, 2021, 21,000,000 shares of common stock were converted into 21,000 shares of Series B Preferred Stock by our management.

As of March 31, 2021 and December 31, 2020, 21,000 and 0 shares of Series B Preferred Stock were issued and outstanding, respectively.

Series C Preferred Stock

On January 7, 2021, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock, consisting of up 200,000 shares, par value $0.001.

Under the Certificate of Designation, holders of Series C Preferred Stock will rank junior to the Series B Preferred Stock, but on par with common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation of the company, as provided in the designation.

The holders of shares of Series C Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose.

Holders of Series B Preferred Stock do not have voting rights but may convert into common stock after twenty four months from the issuance date, at a conversion rate of one thousand (1,000) shares of Common Stock for every one (1) share of Series C Preferred Stock.

Upon conversion, the shares are subject to a one-year leak-out restriction on sales into the market of no more than 5% previous month’s stock liquidity.

The rights of the holders of Series C Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on January 7, 2021.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 9 - RELATED PARTY TRANSACTIONS

Due from related party

During the nine months ended September 30, 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.

As of September 30, 2020, and December 31, 2019, the Company had due from related parties of $290,284 and $316,860, respectively.

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

Due from related parties

During the three months ended March 31, 2021 and 2020, the Company loaned $0 and $13,399 to a related party, respectively.

As of March 31, 2021 and December 31, 2020, the Company had due from related parties of $221,790.

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

Due to related parties

During the nine months ended September 30, 2020, the Company borrowed $182 from the CFO of the Company and repaid $197 to the CEO and CFO.

During the nine months ended September 30, 2020, the Company borrowed $20,000 from Francisco Bunt who owns 49% of loT Labs and repaid $20,000.

As of September 30, 2020, and December 31, 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.

During the three months ended March 31, 2021 and 2020, the Company borrowed $0 and $182 from CEO and CFO of the Company, and repaid $10,587 and $162 to the CEO and CFO, respectively.

As of March 31, 2021 and December 31, 2020, the Company had amounts due to related parties of $34,616 and $94,616, respectively.

During the three months ended March 31, 2021, the Company paid $60,000 for the rest of consideration of acquisition of IoT Labs in 2020 The amounts are unsecured, non-interest bearing and due on demand.

Employment agreements

On June 25, 2018, 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 $54,000;

(ii) Juan Carlos Lopez Silva as Chief Commercial Officer with an annual salary of $54,000;

and Alvaro Quintana Cardona as Chief Operating Officer and Chief Financial Officer with an annual salary of $30,000.

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 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.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 12 - RELATED PARTY TRANSACTIONS (Continued)

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 March 3, 2020, Oscar Brito resigned as a member of our Board of Directors.

There was no known disagreement with Mr.

Brito on any matter relating to our operations, policies or practices.

The Company provided the severance package as follows;

· 2,000,000 shares of common stock valued at $300,000

· Additional 173,000 shares in order to apply the anti-dilution protection, valued at $10,034

· Forgiveness of amounts due to the Company totaling $43,375

· Cash payment of $15,000.

We also appointed Mr.

Brito as an advisor to our Board of Directors and agreed to pay him $5,000 per month for such services.

On March 16, 2020, our Board of Directors adopted a Director Compensation Plan that applies to members of our Board of Directors.

Below are the features of the plan:

· All Directors shall receive reimbursement for reasonable travel expenses incurred to attend Board and committee meetings.

· All Directors shall be compensated $3,000 monthly for their service as Directors.

· In lieu of the cash compensation set forth above, each Director may elect to receive shares of the Corporation's Common Stock equal to the total cash compensation divided by the average market value of the Company's Common Stock during the last 10 trading days and applying a discount of 10%.

· Directors Alvaro Cardona and Leandro Iglesias shall each receive 1,000,000 shares of the Company’s Common Stock, valued at $70,000 each, for their service as members of the Board of Directors for the period from June 2018 to December 2019.

During the nine months ended September 30, 2020 and 2019, the Company recorded management fees of $378,000 and $226,000 and paid $91,600 and $116,200, respectively.

During the nine months ended September 30, 2020, the Company settled accrued salary – management of $202,500 and issued 4,308,510 shares.

As at September 30, 2020 and December 31, 2019, the Company accrued management salaries of $352,131 and $268,231, respectively.

NOTE 13 – COMMITMENTS AND CONTIGENCIES

During the three months ended March 31, 2021 and 2020, the Company recorded management fees of $135,000 and $126,000, bonus of $564,000 and $0 and paid $143,212 and $28,600, respectively.

NOTE 1 0 – COMMITMENTS AND CONTINGENCIES

Leases and Long-term Contracts

The Company has not entered into any long-term leases, contracts or commitments.

The Company leases facilities which the term is 12 months.

For the nine months ended September 30, 2020 and 2019, the Company incurred $16,100 and $17,600, respectively.

The Company leases facilities which the term is less than 12 months.

For the years ended March 31, 2021 and December 31, 2020, the Company incurred $6,900 and $9,200, respectively.

Advisory service

On March 3, 2020, we appointed Oscar Brito as an advisor to our Board of Directors and agreed to pay him $5,000 per month for such services.

Brito acted as an advisor to our Board of Directors until August 30, 2020.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

March 31, 2021

NOTE 1 1 - SEGMENT

At September 30, 2020, the Company operates in one industry segment, telecommunication services, and two geographic segments, USA and Switzerland, where current assets and equipment are located .

At March 31, 2021, the Company operates in one industry segment, telecommunication services, and two geographic segments, USA and Switzerland, where current assets and equipment are located .

Operating Activities

The following table shows operating activities information by geographic segment for the three and nine months ended September 30, 2020 and 2019:

Three months Ended September 30, 2020

Cost of revenue

Operating expenses

General and administration

Operating income (loss)

Other income (expense)

Three months Ended September 30, 2019

Cost of revenue

Operating expenses

General and administration

Operating income (loss)

Other income (expense)

Income credit

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 14 – SEGMENT (Continued)

Nine months Ended September 30, 2020

The following table shows operating activities information by geographic segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

Cost of revenue

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Other income (expense)

Nine months Ended September 30, 2019

Three Months Ended March 31, 2020

Cost of revenue

3 unchanged sentences

Other income (expense)

Income credit

As of August 7, 2019, having completed all conditions under the Purchase Agreement, the Company acquired SwissLink located in Switzerland.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

March 31, 2021

NOTE 11 – SEGMENT (CONTINUED)

Asset Information

The following table shows asset information by geographic segment at September 30, 2020 and December 31, 2019:

September 30, 2020

The following table shows asset information by geographic segment as of March 31, 2021 and December 31, 2020:

March 31, 2021

Current assets

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Non-current liabilities

NOTE 15 - SUBSEQUENT EVENTS

Subsequent to September 30, 2020 and through the date that these financials were made available, the Company had the following subsequent events:

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%.

Notes to the Unaudited Consolidated Financial Statements

September 30, 2020

NOTE 15 - SUBSEQUENT EVENTS (Continued)

Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders.

The rights of the holders of Series A Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020

NOTE 12 – SUBSEQUENT EVENT

Management has evaluated subsequent events through the date these consolidated financial statements were available to be issued.

Based on our evaluation no material events have occurred that require disclosure.

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-Q

Item 1. Financial Statements