iQSTEL Inc 10-Q for FY2021 Q2

iQSTEL Inc (IQST)

10-Q 2021-08-16 For: 2021-06-30

Added on April 07, 2026

About this 10-Q

iQSTEL Inc filed this 10-Q on August 16, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.13M; up 44.9% from $11.13M a year earlier
Net loss: $987.38K; compared with net income of $1.29M a year earlier
Diluted EPS: -$0.01; compared with -$0.01 a year earlier

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☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended June 30, 2021

☐	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from __________ to__________

	Commission File Number: 000-55984


Nevada	45-2808620
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

300 Aragon Avenue, Suite 375 Coral Gables, FL 33134
(Address of principal executive offices)

(954) 951-8191
(Registrant’s telephone number)
_______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

☐ Large accelerated filer	☐ Accelerated filer
☒ Non-accelerated Filer	☒ Smaller reporting company
	☐ Emerging growth company

TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
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	9
Item 4:	Controls and Procedures	9
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	10
Item 1A:	Risk Factors	10
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3:	Defaults Upon Senior Securities	10
Item 4:	Mine Safety Disclosures	10
Item 5:	Other Information	10
Item 6:	Exhibits	11

F-1	Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020;
F-2	Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited);
F-3	Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited); and
F-4	Consolidated Statements of Stockholder’s Equity as of June 30, 2021; and 2020.
F-5	Notes to Consolidated Financial Statements (unaudited).

	June 30, 2021			December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	1,849,470		$	753,316
Accounts receivable, net		3,262,974			2,528,321
Due from related parties		245,810			221,790
Prepaid and other current assets		205,195			78,157
Total Current Assets		5,563,449			3,581,584

Property and equipment, net		359,198			350,530
Intangible asset		35,070			21,875
Goodwill		1,537,742			1,537,742
Deferred tax assets		439,769			460,036
TOTAL ASSETS	$	7,935,228		$	5,951,767

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable		2,648,123			2,737,411
Due to related parties		34,616			94,616
Loans payable - net of discount of $0 and $19,221		103,824			1,332,612
Loans payable - related parties		1,129,188			2,054,379
Current portion of convertible notes - net of discount of $0 and $370,106		—			253,554
Other current liabilities		272,156			413,676
Derivative liabilities		—			1,025,691
Total Current Liabilities		4,187,907			7,911,939

Convertible notes - net of discount of $0 and $2,184		—			2,816
Loans payable, non-current		136,606			270,836
Employee benefits, non-current		154,110			161,212
TOTAL LIABILITIES		4,478,623			8,346,803

Stockholders' Equity (Deficit)
Preferred stock: 1,200,000 authorized; $0.001 par value
Series A Preferred stock: 10,000 designated; $0.001 par value, 10,000 shares issued and outstanding, respectively		10			10
Series B Preferred stock: 200,000 designated; $0.001 par value, 21,000 and 0 shares issued and outstanding		21			—
Series C Preferred stock: 200,000 designated; $0.001 par value, No shares issued and outstanding		—			—
Common stock: 300,000,000 authorized; $0.001 par value 141,657,358 and 118,133,432 shares issued and outstanding, respectively		141,657			118,133
Additional paid in capital		22,045,226			13,267,261
Accumulated deficit		(17,628,915	)		(14,699,148)
Accumulated other comprehensive loss		(48,825	)		(74,831)
Equity (Deficit) attributed to stockholders of iQSTEL Inc.		4,509,174			(1,388,575)
Deficit attributable to noncontrolling interests		(1,052,569	)		(1,006,461)
Total Stockholders' Equity (Deficit)		3,456,605			(2,395,036)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	7,935,228		$	5,951,767


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

Revenues	$	16,128,367		$	11,130,086		$	30,325,978		$	16,147,498
Cost of revenues		16,083,802			10,397,778			29,794,043			15,576,331
Gross profit		44,565			732,308			531,935			571,167

Operating expenses
General and administration		1,209,167			905,016			2,707,278			2,202,543
Total operating expenses		1,209,167			905,016			2,707,278			2,202,543

Loss from operations		(1,164,602	)		(172,708	)		(2,175,343	)		(1,631,376)

Other income (expense)
Other income		4,145			8,815			29,179			24,732
Other expenses		(427	)		(3,002	)		(896	)		(8,057)
Interest expense		(12,062	)		(653,141	)		(642,087	)		(1,454,515)
Change in fair value of derivative liabilities		39,505			1,914,271			317,080			254,248
Gain (loss) on settlement of debt		11,069			283,230			(528,794	)		283,230
Total other income (expense)		42,230			1,550,173			(825,518	)		(900,362)

Net income (loss) before provision for income taxes		(1,122,372	)		1,377,465			(3,000,861	)		(2,531,738)
Income taxes		—			—			—			—
Net income (loss)		(1,122,372	)		1,377,465			(3,000,861	)		(2,531,738)
Less: Net income (loss) attributable to noncontrolling interests		(134,996	)		91,446			(71,094	)		72,733
Net income (loss) attributed to stockholders of iQSTEL Inc.	$	(987,376	)	$	1,286,019		$	(2,929,767	)	$	(2,604,471)

Comprehensive income (loss)
Net income (loss)	$	(1,122,372	)	$	1,377,465		$	(3,000,861	)	$	(2,531,738)
Foreign currency adjustment		(56,664	)		(30,310	)		50,992			(33,588)
Total comprehensive income (loss)		(1,179,036	)	$	1,347,155		$	(2,949,869	)	$	(2,565,326)
Less: Comprehensive income (loss) attributable to noncontrolling interests		(162,761	)		76,594			(46,108	)		56,275
Net comprehensive income (loss) attributed to stockholders of iQSTEL Inc.	$	(1,016,275	)	$	1,270,561		$	(2,903,761	)	$	(2,621,601)

Basic earnings (loss) per common share	$	(0.01	)	$	0.02		$	(0.02	)	$	(0.06)
Diluted loss per common share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.06)

Weighted average number of common shares outstanding - Basic		139,078,656			57,019,993			128,840,922			43,928,994
Weighted average number of common shares outstanding - Diluted		139,078,656			68,551,209			128,840,922			43,928,994


	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 Shareholders’ Deficit
Balance - December 31, 2020	10,000	$	10	—	$	—	118,133,432		$	118,133		$	13,267,261		$	(14,699,148	)	$	(74,831	)	$	(1,388,575	)	$	(1,006,461	)	$	(2,395,036)

Preferred stock issued for conversion of common stock	—		—	21,000		21	(21,000,000	)		(21,000	)		20,979			—			—			—			—			—
Common stock issued for cash	—		—	—		—	35,862,500			35,863			3,550,387			—			—			3,586,250			—			3,586,250
Common stock issued for service	—		—	—		—	195,000			195			284,505			—			—			284,700			—			284,700
Common stock issued for compensation	—		—	—		—	600,000			600			563,400			—			—			564,000			—			564,000
Common stock issued for forbearance of debt	—		—	—		—	250,000			250			49,675			—			—			49,925			—			49,925
Common stock issued for conversion of debt	—		—	—		—	6,080,632			6,081			416,214			—			—			422,295			—			422,295
Cancellation of common stock	—		—	—		—	(1,294,600	)		(1,295	)		(88,809	)		—			—			(90,104	)		—			(90,104)
Resolution of derivative liabilities	—		—	—		—	—			—			708,611			—			—			708,611			—			708,611
Foreign currency translation adjustments	—		—	—		—	—			—			—			—			54,905			54,905			52,751			107,656
Net loss	—		—	—		—	—			—			—			(1,942,391	)		—			(1,942,391	)		63,902			(1,878,489)
Balance - March 31, 2021	10,000	$	10	21,000	$	21	138,826,964		$	138,827		$	18,772,223		$	(16,641,539	)	$	(19,926	)	$	2,249,616		$	(889,808	)	$	1,359,808

Common stock issued for compensation	—		—	—		—	600,000			600			411,600			—			—			412,200			—			412,200
Common stock issued for settlement of debt	—		—	—		—	2,230,394			2,230			2,054,300			—			—			2,056,530			—			2,056,530
Debt forgiveness	—		—	—		—	—			—			807,103			—			—			807,103			—			807,103
Foreign currency translation adjustments	—		—	—		—	—			—			—			—			(28,899	)		(28,899	)		(27,765	)		(56,664)
Net loss	—		—	—		—	—			—			—			(987,376	)		—			(987,376	)		(134,996	)		(1,122,372)
Balance - June 30, 2021	10,000	$	10	21,000	$	21	141,657,358		$	141,657		$	22,045,226		$	(17,628,915	)	$	(48,825	)	$	4,509,174		$	(1,052,569	)	$	3,456,605


			Common Stock
	Preferred Class A	Preferred Class B	Shares		Amount		Additional Paid in Capital			Accumulated Deficit			Accumulated Comprehensive Loss			Total			Non Controlling Interest			Total Shareholders' Deficit
Balance - December 31, 2019	-	-	18,008,591	$	18,008	$	3,240,528		$	(8,125,257	)	$	(181	)	$	(4,866,902	)	$	(903,513	)	$	(5,770,415)

Common stock issued for settlement of debt			4,308,510		4,309		198,191			—			—			202,500			—			202,500
Common stock issued for services			4,173,000		4,173		445,861			—			—			450,034			—			450,034
Common stock issued for forbearance of debt			50,000		50		2,850			—			—			2,900			—			2,900
Common stock issued for conversion of debt			17,208,350		17,208		256,760			—			—			273,968			—			273,968
Common stock issued for exercised cashless warrant			2,235,697		2,235		(2,235	)		—			—			—			—			—
Common stock to be issued for acquisition of Itsbchain LLC			—		—		50,000			—			—			50,000			—			50,000
Resolution of derivative liabilities			—		—		2,567,348			—			—			2,567,348			—			2,567,348
Foreign currency translation adjustments			—		—		—			—			(1,672	)		(1,672	)		(1,606	)		(3,278)
Net loss	-	-	—		—		—			(3,890,490	)		—			(3,890,490	)		(18,713	)		(3,909,203)
Balance - March 31, 2020	-	-	45,984,148	$	45,983	$	6,759,303		$	(12,015,747	)	$	(1,853	)	$	(5,212,314	)	$	(923,832	)	$	(6,136,146)

Common stock issued for cash			4,500,000		4,500		355,500			—			—			360,000			—			360,000
Common stock issued for conversion of debt			16,613,263		16,614		410,918			—			—			427,532			—			427,532
Common stock issued for exercised cashless warrant			997,889		998		(998	)		—			—			—			—			—
Common stock issued for settlement of debt			200,000		200		67,140			—			—			67,340			—			67,340
Resolution of derivative liabilities			—		—		1,094,240			—			—			1,094,240			—			1,094,240
Acquisition of loT Labs			—		—		—			—			—			—			94,366			94,366
Foreign currency translation adjustments			—		—		—			—			(15,458	)		(15,458	)		(14,852	)		(30,310)
Net income	-	-	—		—		—			1,286,019			—			1,286,019			91,446			1,377,465
Balance - June 30, 2020	-	-	68,295,300	$	68,295	$	8,686,103		$	(10,729,728	)	$	(17,311	)	$	(1,992,641	)	$	(752,872	)	$	(2,745,513)

	June 30,			December 31,
	2021			2020
Telecommunication equipment	$	258,809		$	259,000
Telecommunication software		547,446			530,514
Other equipment		79,350			47,206
Total property and equipment		885,605			836,720
Accumulated depreciation and amortization		(526,407	)		(486,190	)
Total property and equipment	$	359,198		$	350,530

	June 30, 2021			December 31, 2020			Term	Interest rate
Unique Funding Solutions_2	$	—		$	2,000		Note was issued on October 12, 2018 and due on January 17, 2019		28.6%
YES LENDER LLC 3		—			5,403		Note was issued on August 3, 2020 and due on January 12, 2021		26.0%
Advance Service Group LLC		—			12,143		Note was issued on October 20, 2020, 2020 and due on February 19, 2021		29.0%
Apollo Management Group, Inc		—			63,158		Note was issued on March 18, 2020 and due on December 15, 2020		12.0%
Apollo Management Group, Inc 2		—			68,421		Note was issued on March 25, 2020 and due on December 15, 2020		12.0%
Apollo Management Group, Inc 3		—			66,316		Note was issued on April 1, 2020 and due on October 1, 2021		12.0%
Apollo Management Group, Inc 4		—			73,684		Note was issued on April 2, 2020 and due on October 2, 2021		12.0%
Apollo Management Group, Inc 5		—			36,842		Note was issued on April 7, 2020 and due on October 7, 2021		12.0%
Apollo Management Group, Inc 6		—			84,211		Note was issued on April 15, 2020 and due on October 15, 2021		12.0%
Apollo Management Group, Inc 7		—			55,000		Note was issued on April 20, 2020 and due on December 15, 2020		12.0%
Apollo Management Group, Inc 14		—			32,432		Note was issued on December 4, 2020 and due on January 4, 2021		12.0%
Labrys Fund		—			280,000		Note was issued on June 26, 2020 and due on April 1, 2021		12.0%
M2B Funding Corp		—			300,000		Note was issued on September 1, 2020 and due on September 1, 2021		12.0%
M2B Funding Corp 1		—			77,778		Note was issued on December 10, 2020 and due on January 9, 2021		22.0%
M2B Funding Corp 2		—			27,778		Note was issued on December 18, 2020 and due on January 17, 2021		22.0%
M2B Funding Corp 3		—			55,556		Note was issued on December 24, 2020 and due on January 23, 2021		22.0%
M2B Funding Corp 4		—			111,111		Note was issued on December 30, 2020 and due on January 29, 2021		22.0%
Martus		103,824			108,609		Note was issued on October 23, 2018 and due on January 3, 2022		5.0%
Swisspeers AG		28,546			49,187		Note was issued on April 8, 2019 and due on October 4, 2022		7.0%
Darlene Covid19		108,060			113,040		Note was issued on April 1, 2020 and due on March 31, 2025		0.0%
Total		240,430			1,622,669
Less: Unamortized debt discount		—			(19,221	)
Total loans payable		240,430			1,603,448
Less: Current portion of loans payable		(103,824	)		(1,332,612	)
Long-term loans payable	$	136,606		$	270,836

	June 30,		December 31,			Interest
	2021		2020		Term	rate
Alonso Van Der Biest	$	30,000	$	80,200	Note was issued on June 12, 2015 and due on July 31, 2021		16.5%
Alvaro Quintana		—		10,587	Note was issue on September 30, 2016 and due on September 29, 2019		0%
49% of Shareholder of SwissLink		883,068		1,737,512	Note is due on demand		0%
49% of Shareholder of SwissLink		216,120		226,080	Note is due on demand		5%
Total		1,129,188		2,054,379
Less: Current portion of loans payable		1,129,188		2,054,379
Long-term loans payable	$	—	$	—

	Six months Ended	Year ended
	June 30,	December 31,
	2021	2020
Expected term	0.16 - 1.18 years	0.02 - 6.00 years
Expected average volatility	145% - 241%	74% - 550%
Expected dividend yield	—	—
Risk-free interest rate	0.07% - 0.09%	0.05% - 2.56%

Fair Value Measurements Using Significant Observable Inputs (Level 3)

Balance - December 31, 2020	$	1,025,691

Settled on issuance of common stock		(708,611)
Change in fair value of the derivative		(317,080)
Balance - June 30, 2021	$	—


	USA			Switzerland			Elimination			Total
Revenues	$	14,990,382			1,149,183		$	(11,198	)	$	16,128,367
Cost of revenue		15,074,899			1,020,101			(11,198	)		16,083,802
Gross profit		(84,517	)		129,082			—			44,565

Operating expenses
General and administration		1,022,625			186,542			—			1,209,167

Operating loss		(1,107,142	)		(57,460	)		—			(1,164,602	)

Other income (expense)		47,030			(4,800	)		—			42,230

Net loss	$	(1,060,112	)	$	(62,260	)	$	—		$	(1,122,372	)


	USA			Switzerland		Elimination			Total
Revenues	$	9,947,837		$	1,183,087	$	(838	)	$	11,130,086
Cost of revenue		9,387,289			1,011,327		(838	)		10,397,778
Gross profit		560,548			171,760		—			732,308

Operating expenses
General and administration		741,967			163,049		—			905,016

Operating income (loss)		(181,419	)		8,711		—			(172,708	)

Other income (expense)		1,547,495			2,678		—			1,550,173

Net income	$	1,366,076		$	11,389	$	—		$	1,377,465

Subsidiary	Revenue Six Months Ended June 30, 2021		Revenue Six Months Ended June 30, 2020
Etelix.com USA, LLC	$	7,481,915	$	7,221,345
SwissLink Carrier AG		2,284,985		2,381,204
QGlobal LLC		502,431		163,546
IoT Labs LLC		20,056,647		6,381,403
	$	30,325,978	$	16,147,498

Subsidiary	Cost of Revenue Six Months Ended June 30, 2021		Cost of Revenue Six Months Ended June 30, 2020
Etelix.com USA, LLC	$	7,338,609	$	7,217,330
SwissLink Carrier AG		2,029,483		2,069,935
QGlobal LLC		419,810		102,231
IoT Labs LLC		20,006,141		6,186,835
	$	29,794,043	$	15,576,331

	Six Months Ended June 30,
	2021		2020
Salaries, Wages and Benefits	$	560,618	$	562,427
Technology		216,428		28,100
Professional Fees		232,216		214,853
Legal & Regulatory		50,627		3,224
Bad debts		—		76,375
Travel & Events		5,430		1,341
Public Cost		24,331		49,732
Advertising		487,825		583,079
Bank Services and Fees		58,309		35,926
Depreciation and Amortization		42,421		31,140
Office, Facility and Other		142,977		116,312

Sub Total		1,821,182		1,702,509

Stock-based compensation		886,096		500,034
Total Operating Expense	$	2,707,278	$	2,202,543


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 June 30, 2021 formatted in Extensible Business Reporting Language (XBRL).
	**Provided herewith

IQSTEL INC.

/s/Leandro Iglesias
Leandro Iglesias Principal Executive Officer


/s/ Alvaro Quintana Cardona
Alvaro Quintana Cardona Principal Financial and Accounting Officer