iQSTEL Inc 10-Q for FY2022 Q1
iQSTEL Inc (IQST)
About this 10-Q
iQSTEL Inc filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $19.42M
- up 36.8% from $14.2M a year earlier
- Net loss
- $554.97K
- compared with a net loss of $1.94M a year earlier
- Diluted EPS
- $0.00
- compared with -$0.02 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the quarterly period ended | |
| Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the transition period from __________ to__________ | |
| Commission File Number: |
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
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| (Address of principal executive offices) | |
| (Registrant’s telephone number) | |
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_______________________________________________________ | |
| (Former name, former address and former fiscal year, if changed since last report) | |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X]
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒
|
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X]
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common shares as of May 16, 2022
| 1 |
| TABLE OF CONTENTS | ||
| Page | ||
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PART I – FINANCIAL INFORMATION
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| Item 1: | Financial Statements | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 8 |
| Item 4: | Controls and Procedures | 8 |
|
PART II – OTHER INFORMATION
| ||
| Item 1: | Legal Proceedings | 9 |
| Item 1A: | Risk Factors | 9 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 9 |
| Item 3: | Defaults Upon Senior Securities | 9 |
| Item 4: | Mine Safety Disclosures | 9 |
| Item 5: | Other Information | 9 |
| Item 6: | Exhibits | 10 |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited consolidated financial statements included in this Form 10-Q are as follows:
| F-1 | Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021; |
| F-2 | Consolidated Statements of Operations for the three and nine months ended March 31, 2022 and 2021 (unaudited); |
| F-3 | Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited); and |
| F-4 | Consolidated Statements of Stockholder’s Equity as of March 31, 2022 and 2021. |
| F-5 | Notes to Consolidated Financial Statements (unaudited). |
These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2022 are not necessarily indicative of the results that can be expected for the full year.
| 3 |
iQSTEL INC
Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Due from related parties | ||||||||
| Prepaid and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset | ||||||||
| Goodwill | ||||||||
| Deferred tax assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Due to related parties | ||||||||
| Loans payable - net of discount of $ | ||||||||
| Loans payable - related parties | ||||||||
| Other current liabilities | ||||||||
| Deposit for option | ||||||||
| Total Current Liabilities | ||||||||
| Loans payable, non-current | ||||||||
| Employee benefits, non-current | ||||||||
| TOTAL LIABILITIES | ||||||||
| Stockholders' Equity (Deficit) | ||||||||
| Preferred stock: authorized; par value | ||||||||
| Series A Preferred stock: designated; par value, shares issued and outstanding, respectively | ||||||||
| Series B Preferred stock: designated; par value, and shares issued and outstanding | ||||||||
| Series C Preferred stock: designated; par value, shares issued and outstanding | ||||||||
| Common stock: authorized; par value and shares issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Equity (Deficit) attributed to stockholders of iQSTEL Inc. | ||||||||
| Deficit attributable to noncontrolling interests | ( | ) | ( | ) | ||||
| Total stockholders' Equity (Deficit) | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
iQSTEL INC
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administration | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income | ||||||||
| Other expenses | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Change in fair value of derivative liabilities | ||||||||
| Loss on settlement of debt | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss before provision for income taxes | ( | ) | ( | ) | ||||
| Income taxes | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: Net income attributable to noncontrolling interests | ||||||||
| Net loss attributed to stockholders of iQSTEL Inc. | $ | ( | ) | $ | ( | ) | ||
| Comprehensive income (loss) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency adjustment | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Less: Comprehensive income attributable to noncontrolling interests | ||||||||
| Net comprehensive loss attributed to stockholders of iQSTEL Inc. | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
iQSTEL INC
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the three ended March 31, 2022 and 2021
(Unaudited)
| Series A Preferred Stock | Series B Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid in Capital | Accumulated Deficit | Accumulated Comprehensive Loss | Total | Non Controlling Interest | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
Series A Preferred Stock | Series B Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid in Capital | Accumulated Deficit | Accumulated Comprehensive Loss | Total | Non Controlling Interest | Total Stockholders’ (Equity) Deficit | |||||||||||||||||||||||||||||||||||||
Balance – December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Preferred stock issued for conversion of common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for service | — | — | 195 | 284,505 | — | — | 284,700 | — | 284,700 | |||||||||||||||||||||||||||||||||||||||
| Common stock issued for compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for forbearance of debt | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of debt | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Resolution of derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Balance – March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ |
| ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
iQSTEL INC
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Loss on settlement of debt | ||||||||
| Prepayment and default penalty | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid and other current assets | ( | ) | ||||||
| Due from related parties | ||||||||
| Accounts payable | ( | ) | ||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of subsidiary, net of cash acquired | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from loans payable | ||||||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Repayment of loans payable - related parties | ( | ) | ||||||
| Proceeds from common stock issued | ||||||||
| Deposit for option | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Net change in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash transactions: | ||||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
| Resolution of derivative liabilities | $ | $ | ||||||
| Preferred stock issued for conversion of common stock | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
iQSTEL INC
Notes to the Unaudited Consolidated Financial Statements
March 31, 2022
NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization and Operations
iQSTEL Inc.
(“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State
of
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, fixed line companies and other wholesale carriers.
The Company incorporated a 75% owned subsidiary, Global Money One Inc. under the laws of the state of Delaware, on November 16, 2020.
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 (“GAAP”) 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 March 31, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2022 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, 2021 filed with the SEC on April 15, 2022.
Consolidation Policy
The consolidated financial statements of the Company include the accounts of the Company and its owned subsidiaries, Etelix.com USA, LLC (“Etelix”), SwissLink Carrier AG (“Swisslink”), ITSBCHAIN, LLC (“ItsBchain”), QGLOBAL SMS, LLC (“QGlobal”), IoT Labs, LLC (“IoT Labs”) and Global Money One Inc (“Global Money One”). All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP 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.
| F-5 |
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”.
The functional currency and reporting currency of the Company, Etelix, QGlobal, Itsbchain, IoT Labs and Global Money One is the U.S. dollar, while the functional currency of SwissLink is the Swiss Franc (“CHF”).
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 |
| • | Equities at historical rate |
| • | 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 (loss) in stockholders’ equity.
Accounts Receivable and Allowance for Uncollectible Accounts
Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company reviews its allowance for doubtful accounts daily and past due balances over 60 days and a specified amount are reviewed individually for collectability. Account balances are charged off after all means of collection have been exhausted and the potential for recovery is considered remote. During the three months ended March 31, 2022 and 2021, the Company did not record bad debt expense.
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 period. 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 three months ended March 31, 2022 and 2021.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables. The Company places its cash and cash equivalents with financial institutions of high creditworthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.
During the three
months ended March 31, 2022, 4 customers represented
| F-6 |
Revenue Recognition
The Company recognizes revenue from telecommunication services in accordance with ASC 606, “Revenue from Contracts with Customers.”
The Company recognizes revenue related to monthly usage charges and other recurring charges during the period in which the telecommunication services are rendered, provided that persuasive evidence of a sales arrangement existed, and collection is reasonably assured. Management considers persuasive evidence of a sales arrangement to be a written interconnection agreement. The Company’s payment terms vary by clients.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 3 - GOING CONCERN
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 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 in the industry and continuing its marketing efforts. The Company may experience a cash shortfall and be required to raise additional capital.
Historically, the Company has relied upon funds from its stockholders. Management may raise additional capital through future public or private offerings of the Company's stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company's failure to do so could have a material and adverse effect upon its operations and its stockholders.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2022 and December 31, 2021 consisted of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Telecommunication equipment | $ | $ | ||||||
| Telecommunication software | ||||||||
| Other equipment | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment | $ | $ | ||||||
Depreciation
and amortization expense for the three months ended March 31, 2022 and 2021 amounted to $
| F-7 |
NOTE 5 –LOANS PAYABLE
Loans payable at March 31, 2022 and December 31, 2021 consisted of the following:
| March 31, | December 31, | Interest | |||||||||||
| 2022 | 2021 | Term | rate | ||||||||||
| Bridge Loan | $ | $ | |||||||||||
| Martus | |||||||||||||
| Swisspeers AG | |||||||||||||
| Darlene Covid19 | |||||||||||||
| Total | |||||||||||||
| Less: Unamortized debt discount | ( | ) | |||||||||||
| Total loans payable | |||||||||||||
| Less: Current portion of loans payable | ( | ) | ( | ) | |||||||||
| Long-term loans payable | $ | $ | |||||||||||
During the three
months ended March 31, 2022 and 2021, the Company borrowed from third parties totaling $
During the three months ended March 31, 2022 and 2021,
the Company recorded interest expense of $
Loans payable to related parties at March 31, 2022 and December 31, 2021 consisted of the following:
| March 31, | December 31, | Interest | |||||||||||
| 2022 | 2021 | Term | rate | ||||||||||
| 49% of Shareholder of SwissLink | $ | $ | Note is due on demand | ||||||||||
| 49% of Shareholder of SwissLink | Note is due on demand | ||||||||||||
| Total | |||||||||||||
| Less: Current portion of loans payable | |||||||||||||
| Long-term loans payable | $ | $ | |||||||||||
| F-8 |
NOTE 6 – OTHER CURRENT LIABILITIES
Other current liabilities at March 31, 2022 and December 31, 2021 consisted of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accrued liabilities | $ | $ | ||||||
| Accrued interest | ||||||||
| Salary payable - management | ||||||||
| Employee benefits | ||||||||
| Other current liabilities | ||||||||
| $ | $ | |||||||
NOTE 7 – STOCKHOLDERS’ EQUITY
The Company’s authorized capital consists of shares of common stock with a par value of per share.
Series A Preferred Stock
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, 2022 and December 31, 2021, shares of Series A Preferred Stock were issued and outstanding.
Series B Preferred Stock
As of March 31, 2022 and December 31, 2021, shares of Series B Preferred Stock were issued and outstanding.
| F-9 |
Series C Preferred Stock
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.
As of March 31, 2022 and December 31, 2021, Series C Preferred Stock was issued or outstanding.
Common Stock
During the three months ended March 31, 2022, the Company issued shares of common stock, valued at fair market value on issuance as follows;
| · | shares issued for
cash of $ |
| · | shares for compensation valued at |
As of March 31, 2022 and December 31, 2021, and shares of common stock were issued and outstanding, respectively.
Deposit for stock subscription
During the three
months ended March 31, 2022, the Company received $
NOTE 8 - RELATED PARTY TRANSACTIONS
Due from related parties
As of March
31, 2022 and December 31, 2021, the Company had due from related parties of $
Due to related parties
During the three months ended March 31, 2022 and
2021, the Company repaid $
As of March
31, 2022 and December 31, 2021, the Company had amounts due to related parties of $
Employment agreements
During
the three months ended March 31, 2022 and 2021, the Company recorded management fees of $
| F-10 |
NOTE 9 – 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
NOTE 10 - SEGMENTS
At March 31, 2022, 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 months ended March 31, 2022 and 2021:
Three months ended March 31, 2022
NOTE 11 - SEGMENT - Schedule of Operating Activities by Geographic Segment
| USA | Switzerland | Elimination | Total | |||||||||||||
| Revenues | $ | $ | ( | ) | $ | |||||||||||
| Cost of revenue | ( | ) | ||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administration | ||||||||||||||||
| Operating (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other (expense) income | ( | ) | ( | ) | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
Three months Ended March 31, 2021
| USA | Switzerland | Elimination | Total | |||||||||||||
| Revenues | $ | $ | $ | ( | ) | $ | ||||||||||
| Cost of revenue | ( | ) | ||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administration | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| F-11 |
Asset Information
The following table shows asset information by geographic segment as of March 31, 2022 and December 31, 2021:
| March 31, 2022 | USA | Switzerland | Elimination | Total | ||||||||||||
| Assets | ||||||||||||||||
| Current assets | $ | $ | $ | ( | ) | $ | ||||||||||
| Non-current assets | $ | $ | $ | ( | ) | $ | ||||||||||
| Liabilities | ||||||||||||||||
| Current liabilities | $ | $ | $ | ( | ) | $ | ||||||||||
| Non-current liabilities | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | USA | Switzerland | Elimination | Total | ||||||||||||
| Assets | ||||||||||||||||
| Current assets | $ | $ | $ | ( | ) | $ | ||||||||||
| Non-current assets | $ | $ | $ | ( | ) | $ | ||||||||||
| Liabilities | ||||||||||||||||
| Current liabilities | $ | $ | $ | ( | ) | $ | ||||||||||
| Non-current liabilities | $ | $ | $ | $ | ||||||||||||
NOTE 11 – SUBSEQUENT EVENTS
Subsequent to March 31, 2022 and through the date that these financials were made available, the Company had the following subsequent events:
On April 21, 2022, we entered
into a Purchase Agreement for the purchase of
On April 25, 2022 we entered into a Common Stock Purchase
Option Agreement with Apollo Management Group, Inc. to subscribe for and purchase from iQSTEL Inc., four million eight hundred thousand
() shares of Common Stock with an exercise price per share of two dollars (); and an initial exercise date September 30,
2022. The purchase price of this option is five hundred thousand dollars ($
On May 6, 2022, we entered into a Purchase Company
Agreement (Purchase Agreement) with US Acquisitions, LLC, a California limited liability company (Seller) concerning the contemplated
sale by Seller and the purchase by us of
| F-12 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
iQSTEL Inc. (the “Company”) (OTC Pink: IQST) (www.iqstel.com) is a technology company offering a wide array of services to global telecommunications and technology industries with presence in 13 countries.
The Company has an extensive portfolio of products and services for its clients such as: SMS, VoIP, 4G & 5G international infrastructure connectivity, Cloud-PBX, OmniChannel Marketing, IoT services, blockchain and payment solutions. These services are grouped within three business divisions: Telecom, Technology and Fintech.
The company operates its business through its wholly-owned subsidiary Etelix.com USA, LLC (“Etelix”) (www.etelix.com); and its majority-owned subsidiaries SwissLink Carrier AG (www.swisslink-carrier.com), QGlobal SMA (https://www.qglobalsms.com/), Smart Gas (http://iotsmartgas.com/) and ItsBChain (http://itsbchain.com/). The information contained on our websites is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered part of this or any other report filed with the SEC.
Results of Operations
Revenues
Our total revenue reported for the three months ended March 31, 2022 was $19,419,311, compared with $14,197,611 for the three months ended March 31, 2021. These numbers reflect an increase of 36.78% quarter over quarter on our consolidated revenues.
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
| 4 |
| Subsidiary | Revenue Three Months Ended March 31, 2022 | Revenue Three Months Ended March 31, 2021 | ||||||
| Etelix.com USA, LLC | $ | 5,914,300 | $ | 3,560,386 | ||||
| SwissLink Carrier AG | 1,026,080 | 1,135,802 | ||||||
| QGlobal LLC | 109,196 | 250,014 | ||||||
| IoT Labs LLC | 12,369,735 | 9,251,409 | ||||||
| $ | 19,419,311 | $ | 14,197,611 | |||||
The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and new acquisitions.
Cost of Revenues
Our total cost of revenues for the three months ended March 31, 2022 increased to $18,935,251, compared with $13,710,241 for the three months ended March 31, 2021.
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
| Subsidiary | Cost of Revenue Three Months Ended March 31, 2022 | Cost of Revenue Three Months Ended March 31, 2021 | ||||||
| Etelix.com USA, LLC | $ | 5,804,495 | $ | 3,435,200 | ||||
| SwissLink Carrier AG | 823,181 | 1,009,382 | ||||||
| QGlobal LLC | 89,998 | 203,194 | ||||||
| IoT Labs LLC | 12,217,577 | 9,062,465 | ||||||
| $ | 18,935,251 | $ | 13,710,241 | |||||
Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls and SMS terminated in vendor’s network.
The behavior in the costs shows a logical correlation with the behavior of the revenue commented above. We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost.
Gross Margin
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, was $484,060 for the three months ended March 31, 2022 compared to $487,370 for the three months ended March 31, 2021.
| 5 |
Operating Expenses
Operating expenses decreased to $989,498 for the three months ended March 31, 2022 from $1,498,111 for the three months ended March 31, 2021. The detail by major category is reflected in the table below.
| Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
| Salaries, Wages and Benefits | $ | 325,628 | $ | 284,530 | ||||
| Technology | 45,160 | 60,025 | ||||||
| Professional Fees | 323,315 | 92,495 | ||||||
| Legal & Regulatory | 10,699 | 24,359 | ||||||
| Travel & Events | 7,561 | 1,268 | ||||||
| Public Cost | 9,556 | 14,406 | ||||||
| Advertising | 76,878 | 151,000 | ||||||
| Bank Services and Fees | 29,457 | 26,657 | ||||||
| Depreciation and Amortization | 33,547 | 20,560 | ||||||
| Office, Facility and Other | 86,558 | 64,215 | ||||||
| Sub Total | 948,359 | 739,515 | ||||||
| Stock-based compensation | 41,139 | 758,596 | ||||||
| Total Operating Expense | $ | 989,498 | $ | 1,498,111 | ||||
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
| Three Months Ended March 31, | ||||||||||||
| 2022 | 2021 | Difference | ||||||||||
| iQSTEL | 537,032 | 1,173,777 | -636,745 | |||||||||
| Etelix | 103,292 | 91,031 | 12,261 | |||||||||
| SwissLink | 208,197 | 181,995 | 26,202 | |||||||||
| ItsBchain | 254 | 252 | 2 | |||||||||
| QGlobal | 28,137 | 27,976 | 161 | |||||||||
| IoT Labs | 59,158 | 23,080 | 36,078 | |||||||||
| Global Money One | 53,428 | — | 53,428 | |||||||||
| 989,498 | 1,498,111 | -508,613 | ||||||||||
The most significant differences are: (1) the decrease in the Stock-based compensation of $717,457; (2) the increases in Salaries of $41,098 due to sales commissions and new personnel; and (3) the increase in Professional Fees of $230,820 that includes the Audit and Accounting and other consulting fees.
Operating Income
The Company showed negative Operating Income for the three months ended March 31, 2022 of $505,438 compared with a negative result of $1,010,741 for the three months ended March 31, 2022.
Even though the Company showed a negative Operating Income, the number shows a trend of significant improvement year over year,
| 6 |
Other Expenses/Other Income
We had other expenses of $19,293 for the three months ended March 31, 2022, as compared with other expenses of $867,748 for the same period ended 2021. The decrease in other expenses is largely due to the absence of derivative liabilities in 2022 and the decrease of interest expenses of $615,137 for the three months ended March 31, 2022 compared to the same period ended 2021.
Net Loss
We finished the three months ended March 31, 2022 with a net loss attributed to shareholders of iQSTEL Inc. of $554,970, as compared to a loss of $1,942,391 during the three months ended March 31, 2021. When comparing the results year over year, these numbers show a significant improvement, as the fundamentals of the Company are getting stronger quarter after quarter leading to our goal of generating positive net income.
Liquidity and Capital Resources
As of March 31, 2022, we had total current assets of $7,372,071 and current liabilities of $2,649,615, resulting in a positive working capital of $4,722,456 and a current ratio of approximately 2.78 to 1. This compares with the working capital of $4,203,509 at December 31, 2021.
Our operating activities used $447,652 in the three months ended March 31, 2022 as compared with $1,042,192 used in operating activities in the three months ended March 31, 2021. Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Our negative operating cash flows in 2022 and 2021 is largely the result of our net loss for the periods.
Investing activities used $24,918 for the three months ended March 31, 2022 compared with $78,346 for the three months ended March 31, 2021. Uses of funds on investing activities in 2022 were the acquisition of property and equipment.
Financing activities provided $1,367,982 in the three months ended March 31, 2022 compared with $3,416,581 provided in the three months ended March 31, 2021. Our positive financing cash flow in 2022 was largely the result of the net proceeds from the subscription of new common stocks under our Regulation A offering $1,100,000.
Our current financial condition has improved significantly since 2018. However, we intend to fund operations through increased sales and debt and/or equity financing arrangements, to strengthen our liquidity and capital resources. The Company has received the qualification of an Offering Statement under Regulation A for the sale of up to 80,000,000 common stocks. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. We also plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Inflation
Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three month period ended March 31, 2022.
Critical Accounting Polices
A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2022; however, we consider our critical accounting policies to be those related to allowance for doubtful accounts, valuation of long-lived assets, and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See the Consolidated Financial Statements in this Quarterly Report for a complete discussion of our significant accounting policies.
| 7 |
Off Balance Sheet Arrangements
As of March 31, 2022, there were no off-balance sheet arrangements.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position, or cash flow.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
Item 4. Controls and Procedures
Disclosure Controls and Procedures - Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report.
These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were ineffective as of March 31, 2022. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.
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 Control over Financial Reporting - There were no changes in our internal control over financial reporting during the three month period ended March 31, 2022, 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.
| 8 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Item 1A: Risk Factors
See Risk Factors contained in our Form 10-K filed with the SEC on April 15, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.
During the three months ended March 31, 2022, the Company issued 2,000,000 shares of common stock, valued at fair market value on issuance as follows;
| · | 2,000,000 shares issued for cash of $1,000,000 |
| · | 60,000 shares for compensation valued at $41,139 |
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
None
| 9 |
Item 6. Exhibits
| Exhibit Number |
Description of Exhibit
|
| 31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 formatted in Extensible Business Reporting Language (XBRL). |
|
**Provided herewith |
| 10 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on May 16, 2022 on its behalf by the undersigned thereunto duly authorized.
| IQSTEL INC. | |
| /s/Leandro Iglesias | |
|
Leandro Iglesias Principal Executive Officer |
|
| /s/ Alvaro Quintana Cardona | |
|
Alvaro Quintana Cardona Principal Financial and Accounting Officer |
|
| 11 |
| CERTIFICATIONS |
I, Leandro Iglesias, certify that;
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2022 of iQSTEL Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 16, 2022
/s/ Leandro Iglesias
By: Leandro Iglesias
Title: Chief Executive Officer
| CERTIFICATIONS |
I, Alvaro Quintana Cardona, certify that;
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2022 of iQSTEL Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 16, 2022
/s/ Alvaro Quintana Cardona
By: Alvaro Quintana Cardona
Title: Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly Report of iQSTEL, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 filed with the Securities and Exchange Commission (the “Report”), I, Leandro Iglesias, Chief Executive Office, and I, Alvaro Quintana Cardona, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented. |
| By: | /s/ Leandro Iglesias |
| Name: | Leandro Iglesias |
| Title: | Principal Executive Officer |
| Date: | May 16, 2022 |
| By: | /s/ Alvaro Quintana Cardona |
| Name: | Alvaro Quintana Cardona |
| Title: | Principal Financial Officer |
| Date: | May 16, 2022 |
This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.