SUMMARY FINANCIAL DATA
The following summary financial data should be read in conjunction with the financial statements and the notes thereto included elsewhere in this prospectus.
| | | | |
Balance Sheet Data: | | | | |
| | As of March 31, 2012 | | As of June 30, 2011 |
| | (unaudited) | | |
| | | | |
Current assets | $ | 2,605 | $ | - |
| | | | |
Other Assets | $ | 28,286 | $ | 2,500 |
| | | | |
Current liabilities | $ | 44,784 | $ | 665 |
| | | | |
Stockholders’ equity (deficit) | $ | (13,893) | $ | 1,835 |
| | | | |
Operating: | | For the Nine Month Period Ended March 31, 2012 | | For the Period June 24, 2011 (inception) to June 30, 2011 |
| | (unaudited) | | |
Net revenues | $ | - | $ | - |
Operating expenses | $ | 15,728 | $ | 5,665 |
Net (loss) | $ | (15,728) | $ | (5,665) |
Net (loss) per common share basic and diluted | $ | (0.00) | $ | (0.00) |
Weighted average number of shares outstanding – basic and diluted | | 7,500,000 | | 4,285,714 |
RISK FACTORS
You should be aware that there are various risks to an investmentneeds could result in our common stock. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide to invest in shares of our common stock.
If any of the following risks develop into actual events, then our business, financial condition, results of operations and/or prospects could be materially adversely affected. If that happens, the market price of our common stock, if any, could decline, and investors may lose all or part of their investment.
Risks Related to the Business
1.
BMI has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our abilityinability to continue as a going concern,.
BMI is an early stage company and, has virtually no financial resources. We have negative working capital of $42,179 and stockholders’ deficit of $13,893 at March 31, 2012. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the period ended June 30, 2011 that Company losses from operations raise substantial doubt about its ability to continue as a going concern. No assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern.
2.
BMI is and will continue to be completely dependent on the services ofresult, our founder and president, Anna C. Jones, the loss of whose services may cause our business operations to cease.
BMI’s operations and business strategy are completely dependent upon the knowledge and business connections of Ms. Jones. She is under no contractual obligation to remain employed by us. If she should choose to leave us for any reason or if she becomes ill and is unable to work for an extended period of time before we have hired additional personnel, our operations will likely fail. Even if we are able to find additional personnel, it is uncertain whether weinvestors could find someone who could develop our business along the lines described in this prospectus. We will most likely fail without the services of Ms. Jones or an appropriate replacement(s).
We intend to acquire key-man life insurance on the life of Ms. Jones naming us as the beneficiary when and if we obtain the resources to do so and if she is insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future.
3.
BMI will need to engage and retain qualified employees and consultants. No assurance can be given that we will be able to attract these employees or consultants when needed.
The interruption of services of Anna C. Jones will have a material adverse effect on the Company's future operations, potential profits and development, if suitable replacements are not promptly obtained, and there can be no assurance that such key personnel would accept compensation other than cash forlose their services in the future. In addition, the Company's success depends, in part, upon its ability to attract and retain other talented personnel. There can be no assurance that the Company will be able to attract and retain such personnel necessary for the development of the Company’s business.
4.
Because we have only recently commenced business operations, we face a high risk of business failure.
We were formed in June 2011. All of our efforts to date have been related to developing our business plan, creating and modifying formulas which will make up our E-Scentual product line, beginning our business activities and the pursuit of this public offering. Through March 31, 2012, we had no operating revenues and have distributed only samples of our planned products to potential customers or end-users. We face a high risk of business failure.
5.
Because we will operate in a highly competitive direct response market and retail environment, we face a high risk of business failure or at the very least a competitive disadvantage.
We are aware of many competitors to our skin care collection, many of which are more established and have significantly more financial resources than we do. Our success in this industry will be largely dependent on our ability to educate the consumer as to why our product will be better than our competition’s and establish the consumer’s need for our intended products. Our ability to compete effectively in this industry also depends on our ability to be competitive in pricing, servicing and performance.
6.
Because we will be dependent on advertising and marketing firms, we will be at a competitive disadvantage to companies having greater resources to pay larger fees.
We will require aggressive efforts in placing quality advertisements for our budgeted price that will reach the expected number of consumers. We do not know if we will be able to obtain optimal advertising placement within our projected budget or will even find advertising placement.
7.
We have had no product sales to date, and we can give no assurance that there will ever be any sales in the future.
All of our skincare products are still being developed and tested, and we have not generated any revenues from product sales. There is no guarantee that we will ever develop commercially viable products. To become profitable, we will have to successfully develop, manufacture, market and sell a number of skincare products. There can be no assurance that our product development efforts will be successfully completed, that we will be able to manufacture our products at an acceptable cost and with acceptable quality, or that our products can be successfully marketed in the future. We currently do not expect to receive revenues from the sale of any products until sometime late in 2012, if ever.
8.
There is no guarantee that our products will be accepted by consumers.
We have not yet commercially released any of our proposed products. The market acceptance of skincare and cosmetic products varies significantly and cannot be predicted. Factors that may cause a skincare and cosmetic product to be accepted or rejected by consumers include price, quality of ingredients, effectiveness, packaging, availability, advertising, and numerous other intangible factors. Consumer demand for our proposed products also may be affected by word of mouth testimonials, fads, and general consumer trends. Since we have not consumer test marketed our products, we are not certain if any of our products will appeal to our target consumer market. While we have distributed samples of our products the targeted consumer market could be quite different from the end-users that have used our samples to date. There can be no assurance that any of our products will gain broad acceptance among consumers. Unless we can achieve a sufficient following of consumers who purchase our products, we will not operate profitably and may have to cease our operations. No assurance can be given that any of our products will achieve sufficient consumer acceptance.
9.
Fluctuations in our financial results make quarterly comparisons and financial forecasting difficult.
Any revenues and operating results are likely to vary significantly from quarter to quarter because our industry experiences seasonal fluctuations, which reflect seasonal trends for health and beauty products.
We expect that our results will vary significantly in the future because of a number of reasons, including:
·
Our ability to establish acceptance and usage of our products,
·
Our ability to contract with competent manufactures and appropriate wholesalers and retailers,
·
Costs related to future growth and capital investment,
·
Results of strategic agreements with companies that may supply and produce our products,
·
Our ability to attract, retain and motivate qualified personnel.
We have not started revenue producing activities so we have no direct experience with seasonality. However, we understand that other entities in our industry have experienced seasonal impacts. Many skin products sell better during the summer months because of the impact on skin from the exposure to sun and others during the winter months because of the dryness associated with winter weather.
Because of these fluctuations and uncertainties, our operating results may fail to meet the expectations of investors. If this happens, any trading price of our common stock would almost certainly be materially adversely affected.
10.
We will be dependent on independent operators and other operators of retail outlets for the ultimate sale of our products.
The success of our planned marketing and distribution program is totally dependent on signing license agreements with owner/operators or distribution agreements with other operators, including those who operate carts in malls. We do not know the likelihood of entering into agreements with retailers or the timing that it will take to do so. There will also be uncertainty about the sales success of retailers, if any, that do agree to sell our products.
11.
Regulatory and legal uncertainties could harm our business.
We believe that our business is not subject to material regulation under the laws of the United States or any of the states in which we plan to sell our products. Laws and regulations often differ materially between states and within individual states such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement. If we become subject to any licensing or regulatory requirements, the failure to comply with any such requirements could lead to a revocation, suspension or loss of licensing status, termination of contracts and legal and administrative enforcement actions. We cannot be sure that a review of our current and proposed operations will not result in a determination that could materially and adversely affect our business, results of operations and financial condition. Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting our ability to conduct our business as now conducted or proposed to be conducted.
12.
We will be dependent on programs designed by independent advertising and marketing firms.
BMI will require aggressive efforts in placing quality advertisements that will reach our target audience of potential consumers. We do not know if we will be able to obtain optimal advertising placement given the likelihood of an extremely limited budget.
The ability to obtain prime advertising slots in various forms of media (online, print, radio, television, etc.) will be reliant upon the expertise and capabilities of the advertising and marketing firms that we may work with, as well as what the available budget is to initiate a marketing campaign.
There are also no assurances that we will obtain sufficient financing or resources to enter into agreements with advertising or marketing firms.
13.
We will be subject to competition from numerous companies, including a number of multi-national companies that have significantly greater financial and other resources.
The skincare and cosmetic products business is highly competitive. We will be competing with hundreds of large and small cosmetics companies, including such companies as L’Oreal S.A., The Procter & Gamble Company, The Estée Lauder Companies Inc. and numerous other multi-national manufacturers. Most of our competitors market products that are well known and trusted by the consumer marketplace. Since virtually all of our competitors have significantly greater financial and other resources than we do, our competitors have the ability to spend more aggressively on advertising and marketing, spend more on product development and testing, and have more flexibility than we do to respond to changing business and economic conditions. Competition in the skincare business is based on pricing of products, the quality of the products, innovation, perceived value, promotional activities, advertising, new product introductions, name recognition, and other factors. It is difficult for us to predict how we will be able to effectively compete with our competitors’ actions in these areas.
14.
We will have to rely on third parties to manufacture our products who may not perform to our standards or timeline.
Our business plan assumes that we will have our products manufactured by one or more third-party manufacturing companies on a contract basis. No contractual arrangement is currently in place. We will seek to enter into agreements with third-party manufacturers to manufacture both the ingredients and the containers for our products. We will be dependent on the timeliness and effectiveness of their efforts.
Failure or lack of reliability in the manufacture of our products is likely to result in loss of business. Among other risks:entire investment.
·
Our products may fail to provide the expected results,
·
We may experience limited availability of quality ingredients for manufacturing,
·
We may experience poor quality manufacturing,
·
Our products may have new competition from other companies attempting to duplicate our formulas, and
·
Our customers could experience results different from our test results.
There are also no assurances that we will obtain sufficient financing or resources to enter into agreements with manufacturers.
15.
We have no patent protection and may not be able to protect our proprietary rights.
Our ability to compete successfully will depend, in part, on the quality and uniqueness of our products. Although we intend to have trademark protection for our “E-Scentual” brand, we have no product patent protection for any of our proposed products or any of the ingredients or compounds used in our products. We may claim proprietary rights in various unpatented technologies, know-how and trade secrets relating to our products and manufacturing processes, and we intend to protect our proprietary rights in our product formulas and operations through contractual obligations with consultants and vendors. However, because we do not currently have patent protection on any of our products or compounds, other companies can attempt to compete with us by imitating our products. We cannot guarantee the adequacy of the protections we intend to take to protect our proprietary rights, or that our competitors will not independently develop or produce products or processes that are substantially equivalent or superior to our products or processes.
While we will attempt to protect our proprietary information as trade secrets through agreements with each of our employees, licensing partners, consultants, agents and other organizations to which we disclose our proprietary information, we cannot give any assurance that these agreements will provide effective protection for our proprietary information in the event of unauthorized use or disclosure of such information.
16.
We may be subjectunable to product liability claims.achieve some, all or any of the benefits that we expect to achieve from our plan to expand our operations.
The development, manufactureIn the future we may require additional financing for capital requirements and sale of skincare and cosmetic products expose us to the risk of damages from product liability or other consumer claims. Although each of our proposed products will be subject to industry accepted product tests to reduce the likelihood of any successful product liability claim against us, no assurance is given thatgrowth initiatives. Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital markets to maintain and expand our business. We may need to incur debt on terms and at interest rates that may not be subject to product liability claims in the future. We intend to obtain and maintain product liability insurance for liabilities arising from the use of our productsas favorable. If additional financing is not available when they enter the marketplace assuming that we have sufficient funds therefore. Additionally, we intend to use manufacturers of our products that maintain appropriate levels of liability insurance. If we are unable to locaterequired or engage manufacturers of our products that maintain or will agree to maintain appropriate levels of liability insurance,is not available on acceptable terms, we may be unable to operate our business as planned or at risk for product liability claims. A successful claim in excess ofall, fund our expansion, successfully promote our business, develop or enhance our products liability coverage, ifand services, take advantage of business opportunities or respond to competitive pressures, any of which could have a materiallymaterial adverse effect on our business, financial condition and results of operations.
17.As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have revenues but we are not profitable and may not be in the near future, if at all. Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
Risk Factors Related to the Business of the Company
There are significant potential conflictsOur telecommunications line of interestbusiness is highly sensitive to declining prices, which may adversely affect our revenues and margins.
The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs.
A reduction of our prices to compete with any other offers in the market will not always guarantee and increase in the traffic, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins.
The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber has adversely affected the use of traditional phone communications. We expect this IP-based services which offer voice communications for free to continue to increase, which may result in increased substitution on our service offerings.
Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.
Our key personnelresults of operations may fluctuate as a result of a number of factors, some of which are requiredbeyond our control including but not limited to:
| § | general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; |
| § | the budgetary constraints of our customers; seasonality; |
| § | the success of our strategic growth initiatives; |
| § | costs associated with the launching or integration of new or acquired businesses; |
| § | timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; |
| § | the mix, by state and country, of our revenues, personnel and assets; |
| § | movements in interest rates or tax rates; |
| § | changes in, and application of, accounting rules; |
| § | changes in the regulations applicable to us; |
As a result of these factors, we may not succeed in our business, and we could go out of business.
The termination of our carrier agreements or our inability to commit timeenter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits.
We rely upon our carrier agreements in order to provide our telecommunications services to our affairscustomers. These carrier agreements are in most cases for finite terms and, accordingly,therefore, there can be no guarantee that these individual(s) (particularlyagreements will be renewed at all or on favorable terms to us. Our ability to compete would be adversely affected if our president) may have conflictscarrier agreements were terminated or we were unable to enter into carrier agreements in the future to provide our telecommunications services to our customers, which could result in a reduction of interestour revenues and profits.
Our customers, could experience financial difficulties, which could adversely affect our revenues and profitability if we experience difficulties in allocating management time among various business activities. Incollecting our receivables.
As a provider of international long-distance services, we depend upon sales of transmission and termination of traffic to other long distance providers and the coursecollection of other business activities, certain key personnel (particularlyreceivables from these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our president) may become aware of business opportunities whichability to collect our accounts receivable from our major customers our profitability may be appropriatesubstantially reduced. While our most significant customers, from a revenue perspective, vary from quarter to quarter, our eight largest customers (2.48% of our total customer base) collectively accounted for presentation87% of total consolidated revenues by the six months ended June 30, 2022. This concentration of revenues increases our exposure to us, as well as the other entities withnon-payment by our larger customers, and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which they are affiliated. As such, there may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
In an effort to resolve such potential conflicts of interest, we have entered into a written agreement with Ms. Jones specifying that any business opportunities that she may become aware of independently or directly through her association with us (as opposed to disclosure to her of such business opportunities by management or consultants associated with other entities) would be presented by her solely to us. A copy of this agreement is filed as Exhibit 10.2 tocould adversely affect our Registration Statement, of which this prospectus is a part of.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
18.revenues and profitability.
Because we have nominal assets and no revenue, we are considered a "shellcompany" and will be subject to more stringent reporting requirements.
The Securities and Exchange Commission ("SEC") adopted Rule 405 of the Securities Act and Exchange Act Rule 12b-2 which defines ashellcompany as a registrant that has no or nominal operations, and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. Our balance sheet reflects that we have no cash or any other tangible asset and, therefore, we are defined as ashellcompany. The new rules prohibit shell companies from using a Form S-8 to register securities pursuant to employee compensation plans. However, the new rules do not prevent us from registering securities pursuant to S-1 registration statements. Additionally, the new rule regarding Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being ashellcompany. If an acquisition is undertaken (of which we have no current intention of doing), we must file a current report on Form 8-K containing the information required pursuant to Regulation S-K within four business days following completion of the transaction together with financial information of the acquired entity. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are ashellcompany. To the extent that we are required to comply with additional disclosure because we are ashellcompany, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being ashellcompany. The SEC adopted a new Rule 144 effective February 15, 2008, which makes resales of restricted securities by shareholders of ashellcompany more difficult.
19.
We intendmay fail to becomesuccessfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions.
We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary products and services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:
| § | difficulties integrating personnel from acquired entities and other corporate cultures into our business; |
| § | difficulties integrating information systems; |
| § | the potential loss of key employees of acquired companies; |
| § | the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or |
| § | the diversion of management attention from existing operations. |
Natural disasters, terrorist acts, acts of war, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations.
Our inability to operate our telecommunications networks because of such events, even for a limited period of time, may result in loss of revenue, significant expenses, which could have a material adverse effect on our results of operations and financial condition.
We could be harmed by network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems. To be successful, we need to continue to have available a high capacity, reliable and secure network for our and our customers’ use. As any other company, we face the risk of a security breach, whether through cyber-attacks, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure and related systems. There is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our proprietary or classified information. We are also subject to breaches of our network resulting in unauthorized utilization of our services, which subject us to the periodic reporting requirementscosts of providing those services, which are likely not recoverable. The secure maintenance and transmission of our information is a critical element of our operations. Our information technology and other systems that maintain and transmit customer information may be compromised by a malicious third-party penetration of our network security, or impacted by advertent or inadvertent actions or inactions by our employees, or those of a third party service provider or business partner. As a result, our or our customers’ information may be lost, disclosed, accessed or taken without the customers’ consent, or our services may be used without payment.
Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the Exchange Actgrowing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched the situations and do not believe any material internal or customer information has been compromised.
We operate a global business that will requireexposes us to incur audit feescurrency, economic and legal feesregulatory.
Our revenue comes primarily from sales outside the U.S. and our growth strategy is largely focused on emerging markets. Our success delivering solutions and competing in connection with the preparation of such reports. These additional costs could reduce or eliminateinternational markets is subject to our ability to earn a profit.manage various risks and difficulties, including, but not limited to:
| § | our ability to effectively staff, provide technical support and manage operations in multiple countries; |
| § | fluctuations in currency exchange rates; |
| § | timely collecting of accounts receivable from customers located outside of the U.S; |
| § | trade restrictions, political instability, disruptions in financial markets, and deterioration of economic conditions; |
| § | compliance with the U.S. Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; |
| § | variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights; and |
| § | compliance with export regulations, tariffs and other regulatory barriers. |
If we are unable to successfully manage growth, our operations could be adversely affected.
FollowingOur progress is expected to require the effective datefull utilization of our registration statement ofmanagement, financial and other resources, which this prospectus is a part, weto date has occurred with limited working capital. Our ability to manage growth effectively will be required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major affect on the amount of time to be spent by our auditors and attorneys. We currently estimate the annual maintenance and compliance costs of the periodic reporting requirements to be in the range of up to $50,000 per annum. The incurrence of such costs will obviously be an expense to our operations and thus will have a negative effectdepend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our overhead requirementsproducts. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, earn a profit. accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.
Risks Related to Legal Uncertainty
We may be exposedsubject to potentialtax and regulatory audits which could subject us to liabilities.
We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.
Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks resultingin international markets where our products and services are offered. Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business.
In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance.
The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally. These laws may be interpreted and applied inconsistently from any newcountry to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements under Section 404. If we cannot provide reliable financial reportscould cause us to incur substantial costs or prevent the occurrence of fraud,require us to change our business practices in a manner adverse to our business and operating resultsresults.
We may be subject to legal liability associated with providing online services or content.
We host and provide a wide variety of services and technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos, videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically and internationally. The law relating to the liability of providers of online services and products for activities of their users is currently unsettled both within the United States and internationally. We may be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions.
It is also possible that if any information provided directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For example, we offer web-based e-mail services, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, or privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services or technologies are used to spread or facilitate malicious or harmful code or applications.
Investigating and defending these types of claims are expensive, even if the claims are without merit or do not ultimately result in liability, and could subject us to significant monetary liability or cause a change in business practices that could negatively impact our ability to compete.
Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party fromacquiring us or a change in control even if it would benefit our shareholders.
Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety by reference to Nevada law.
The issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be harmed, investorsused to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could lose confidence in our reported financial information, andadversely affect the trading pricevoting power of holders of our common stock.
Under Nevada law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his discretion, may consider any of the following:
| (i) | The interests of the corporation’s employees, suppliers, creditors and customers; |
| |
| (ii) | The economy of the state and nation; |
| |
| (iii) | The impact of any action upon the communities in or near which the corporation’s facilities or operations are located; |
| |
| (iv) | The long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and |
| |
| (v) | Any other factors relevant to promoting or preserving public or community interests. |
Because our board of directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders might receive a premium for their stock if aover the then market ever develops, could drop significantly. However, for as long as we remainprice of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules.
We are no longer an “emerging growth company” as definedand therefore no longer eligible for reduced reporting requirements applicable to emerging growth companies.
It has been five years since our first registered sale of common stock in 2012, so we are no longer eligible for the Jumpstart Our Business Startups Act of 2012, or JOBS Act, wereduced disclosure requirements applicable to “emerging growth companies.”
Emerging growth companies may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emergingemerging growth companies”companies, including but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding an annuala nonbinding advisory vote on executive compensation and seeking nonbinding stockholdershareholder approval of any golden parachute payments not previously approved.
We may take advantageare also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of theseour second fiscal quarter, or our annual revenues are more than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth companies, smaller reporting exemptions untilcompanies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of audited financial statements and not being required to provide selected financial data, supplemental financial information or risk factors.
Since we are no longer an “emergingeligible for emerging growth company.”
Wecompany status, we will remain an “emerging growth company” for upbe subject to five years, although we would cease to be an “emerging growth company” prior to such timethe reporting obligations of a smaller reporting company and, if we havecontinue grow, we may be subject to increased reporting requirements applicable to accelerated filers, which are more onerous than $1.0 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates or we issue more than $1.0 billion of non-convertible debt over a three-year period.those applicable to smaller reporting companies.
20.As a smaller reporting company and will be exempt from certain disclosure requirements, which could make our Common Stock less attractive to potential investors.
Our internal controls
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
| ● | had a public float of less than $250 million as of the last business day of our most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of our voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or |
| | |
| ● | in the case of an initial registration statement under the Securities Act, or the Exchange Act, for shares of our common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or |
| | |
| ● | in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. |
As a smaller reporting company, we will not be required and may become inadequate asnot include a Compensation Discussion and Analysis section in our proxy statements; we grow,will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could causemake our financial reportingCommon Stock less attractive to be unreliable and leadpotential investors, which could make it more difficult for our stockholders to misinformation being disseminatedsell their shares.
If we fail to the public.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f),maintain an effective system of internal control over financial reporting is a process designed by, or underin the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel,future, we may not be able 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 and includes those policies and procedures that:
·
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
We will rely on the use of outside professionals to assist us in maintainingreport our internal controls. With growth or unmanageable increases in our business plan objectives, our internal controls may become inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision with regards to an investment in our common stock.
In order to mitigate the risks associated with maintaining internal controls if and when the Company grows, we will engage qualified professionals on an independent contractor basis to assist in reviewing and recording transactions. When and if finances permit, we will hire an experienced financial professional to oversee our reporting and control functions.
Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, future prospects.as a result, the value of our common shares.
However, our auditors will not beWe are required, under Section 404 of the Sarbanes-Oxley Act, to formally attest tofurnish a report by management on, among other things, the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as definedreporting. This assessment includes disclosure of any material weaknesses identified by our management in the JOBS Act if we take advantageour internal control over financial reporting. A material weakness is a deficiency, or combination of the exemptions available to us through the JOBS Act.
21.
The costs of being a public company could resultdeficiencies, in us being unable to continue as a going concern.
As a public company, we will have to comply with numerousinternal control over financial reporting and legal requirements, including those pertaining to audits and internal control. The coststhat results in more than a reasonable possibility that a material misstatement of maintaining the public company requirements could be significant and may preclude us from seeking financingannual or equity investment on acceptable terms. We estimate these costs will range up to $50,000 per year and may be higher if our business volume and activity ever increases. Our estimate of costs do not include the necessary compliance, documentation and reporting requirements for Section 404 as weinterim financial statements will not be subject to the full reporting requirements of Section 404 until we exceed $75 million in market capitalization if we decide to opt-out of the “emerging growth company” as defined in the JOBS Act to take advantage of the exemptions available to us through the JOBS Actprevented or we have been public for more than five years. If our revenues are insufficient or non-existent, and/or we cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs in the normal course of business which would result in our being unable to continue asdetected on a going concern.
22.
Having only one director limits our ability to establish effective independent corporate governance procedures and increases the control of our president.
We have only one director who also serves as the Company’s President. Accordingly, we cannot establish board committees comprised of independent members to oversee functions like compensation or audit issues. In addition, a vote of the board members is decided in favor of our chairman, which gives her significant control over all corporate issues.
Until we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our president’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.
Risks Related to Our Common Stock
23.
We are an “emerging growth company” and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements oftimely basis. Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation inalso generally requires an attestation from our periodic reports and proxy statements, and exemptions fromindependent registered public accounting firm on the requirementseffectiveness of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive becauseinternal control over financial reporting. However, for as long as we will rely on these exemptions. If some investors find our common stock less attractive asremain a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act provides that an “emerging growth company” cansmaller reporting company, we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise applyexemption permitting us not to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revisedthe independent registered public accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.firm attestation requirement.
Our compliance with Section 107 of the JOBS Act provides404 will require that our decision to opt out of the extended transition period for complying with new or revisedwe incur substantial accounting standards is irrevocable.
24.
expense and expend significant management efforts. We may not be able to raise sufficient financingcomplete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or resourcesmore material weaknesses in our internal control over financial reporting, we will be unable to develop, manufactureassert that our internal control over financial reporting is effective.
As of the date of our last Quarterly Report on Form 10-Q for the quarter ended June 30, 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 market our products.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 maycannot assure you that there will not be ablematerial weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to raise sufficient financingmaintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or resourcescash flows. This may expose us, including individual executives, to develop, manufacture and marketpotential liability which could significantly affect our products. We currently have no commitments for any funds.business. If we are unable to raise sufficient financingconclude that our internal control over financial reporting is effective, or resourcesif our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its audits of internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common shares could decline, and we could be subject to develop, manufacture and marketsanctions or investigations by FINRA, the SEC, or other regulatory authorities. Failure to remedy any material weakness in our products,internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our business will fail and investors will lose their entire investment.
future access to the capital markets.
25.
The Company is selling the shares offered in this prospectus without an underwriterOur disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be abledisclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to sell all or anymanagement, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the shares offered herein.
The common shares are being offered on our behalf by Ms. Jones, our president, on a direct primary basis. No broker-dealer has been retained as an underwriterSEC. We believe that any disclosure controls and procedures or internal controls and procedures, no broker-dealer is under any obligation to purchase any common shares. There are no firm commitments to purchase anymatter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the sharescontrol system are met.
These inherent limitations include the realities that judgments in this offering. Consequently, there is no guaranteedecision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the Company, through its president, is capableindividual acts of selling all,some persons, by collusion of two or any,more people or by an unauthorized override of the common shares offered hereby. The salecontrols. Accordingly, because of just a small number of shares increases the likelihood of no market ever developing forinherent limitations in our shares.
control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
26.
SinceDeficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements.
We could be adversely affected if there are deficiencies in our disclosure controls and procedures or in our internal controls over financial reporting. The design and effectiveness of our disclosure controls and procedures and our internal controls over financial reporting may not prevent all errors, misstatements or misrepresentations. Consistent with other entities in similar stages of development, we have a limited number of employees currently in the accounting group, limiting our ability to provide for segregation of duties and secondary review. A lack of resources in the accounting group could lead to material misstatements resulting from undetected errors occurring from an individual performing primarily all areas of accounting with limited secondary review. Deficiencies in internal controls over financial reporting which may occur could result in material misstatements of our results of operations, restatements of financial statements, other required remediations, a decline in the price of our common shares, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
Risks Related to Our Securities
We have the right to issue additional common stock and preferred stock without consent of stockholders. This would have the effect of diluting investors’ ownership and could decrease the value of their investment.
We have additional authorized, but unissued shares of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders’ percentage ownership of our company.
In addition, our certificate of incorporation authorizes the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights, preferences, designations and limitations of which may be set by the Board of Directors. Our certificate of incorporation has authorized issuance of up 300,000,000 shares of common stock and up to 1,200,000 shares of preferred stock in the discretion of our Board.
The shares of authorized but unissued preferred stock may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation.
We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
Risks Related to the Offering and the Market for our Stock
Because there is no minimum foroffering amount, funds raised may not be sufficient to complete the plans of the Company as set forth in “Use of Proceeds” in this Prospectus.
There is no minimum offering amount. If we do not raise the maximum proceeds, funds raised may not be sufficient to complete all our offering, if only a few persons purchase shares they will lose their money without us being even ableplans as set forth in “Use of Proceeds” in this Prospectus, which could inhibit our ability to developcommence to generate revenue.
If a market for our shares.
Since there is no minimum with respect to the number of shares to be sold directly by the Company in its offering, if only a few shares are sold, we willcommon stock does not develop, shareholders may be unable to even attempt to create a public market of any kind for oursell their shares. Without a public market for our shares, the limited number of shares that we may be able to sell will be highly illiquid or unable to be sold to any other potential investor(s). In such an event, it is highly likely that the entire investment by an investor in our
Our common stock would be lost.
27.
The offering price of our common stock has been determined arbitrarily.
The price of our common stock in this offering hasis quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities. We do not been determined by any independent financial evaluation, market mechanism or by our auditors, and is therefore, to a large extent, arbitrary. Our audit firm has not reviewed management's valuation and, therefore, expresses no opinion as to the fairness of the offering price as determined by management. As a result, the price of the common stock in this offering may not reflect the value perceived by thecurrently have an active trading market. There can be no assurance that the shares offered herebyan active and liquid trading market will develop or, if developed, that it will be sustained.
Our securities are worth the price for which they are offered and investors may, therefore, lose a portion or all of their investment.
28.
Shareholdersvery thinly traded. Accordingly, it may be diluted significantly through our effortsdifficult to obtain financing and satisfy obligations through issuance of additional shares of our common stock.
We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized (100,000,000) shares but unissued (90,000,000) shares assuming the sale of 2,500,000 shares in this offering. In addition, if a trading market develops for our common stock, we may attempt to raise capital by sellingsell shares of our common stock possibly at a discountwithout significantly depressing the value of the stock. Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to market. These actions will certainly result in dilutionmajor fluctuations in the price of the ownership interests of existing shareholders, further dilute common stock book value, and that this dilution may be material.stock.
29.
The proposed aggregate proceeds of the offering are less than the estimated cost of the offering, so the Company will receive no economic benefits from the completion of the offering.
The proposed maximum aggregate proceeds of the offering ($25,000) are substantially less than the proposed costs to complete the offering ($65,000). We will, therefore, receive no financial benefit from the completion of the offering and will have to pay for most of the costs of the offering from the proceeds of operations or from other sources such as loans from officer(s) or from related and unrelated parties.
30.
The interests of shareholders may be hurt because we can issue sharesmarket price of our common stock to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of our company.
Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our company.
31.
Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.
Our Articles of Incorporation at Article XI provide for indemnification as follows: "No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification."
We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costlyhighly volatile and may resultcould fluctuate widely in us receiving negative publicity, eitherofprice in response to various factors, many of which factors is likely to materially reduce the market and price forare beyond our shares, if such a market ever develops.
32.control.
Currently, there
Our stock price is no established public market for our securities, and there can be no assurances that any established public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to a number of factors, including:
| § | Technological innovations or new products and services by us or our competitors; |
| § | Government regulation of our products and services; |
| § | The establishment of partnerships with other telecom companies; |
| § | Intellectual property disputes; |
| § | Additions or departures of key personnel; |
| § | Sales of our common stock; |
| § | Our ability to integrate operations, technology, products and services; |
| § | Our ability to execute our business plan; |
| § | Operating results below or exceeding expectations; |
| § | Whether we achieve profits or not; |
| § | Loss or addition of any strategic relationship; |
| § | Economic and other external factors; and |
| § | Period-to-period fluctuations in our financial results. |
Our stock price may fluctuate widely as a result of any of the above. In addition, the securities markets have from time to time experienced significant price fluctuations.
Priorand volume fluctuations that are unrelated to the dateoperating performance of this prospectus, there has not been any established tradingparticular companies. These market for our common stock,fluctuations may also materially and there is currently no established public market whatsoever for our securities. A market maker has agreed to file an application with FINRA on our behalf so as to be able to quote the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectiveness of our registration statement of which this prospectus is a part and the subsequent closing of this offering. There can be no assurance that the market maker’s application will be accepted by FINRA nor can we estimate as to the time period that the application will require. We are not permitted to file such application on our own behalf. If the application is accepted, there can be no assurances as to whether
(i)
any market for our shares will develop;
(ii)
the prices at which our common stock will trade; or
(iii)
the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the Depository Trust Company ("DTC") to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all companies on the OTCBB. What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.
In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and tradingmarket price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever,
Because we are subject to the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in“Penny Stock” rules, the marketplace and may be influenced by many factors, including the depth and liquiditylevel of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of BMI and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.
Because of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that developstrading activity in our stock willmay be subject to the penny stock restrictions. See “Plan of Distribution” and Risk Factor #33 below.
33.reduced.
Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities, ifSecurities and Exchange Commission has adopted regulations which generally define “penny stock” to be any will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule 3a51-1 of the Exchange Act establishes the definition of a "penny stock," for purposes relevant to us, as anylisted, trading equity security that has a minimum bidmarket price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, thecertain exemptions. The penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver,broker-dealer, prior to anya transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure schedule prepared bydocument that provides information about penny stocks and the SEC relating torisks in the penny stock market, which, in highlight form, sets forth:
·
market. The broker-dealer must also provide the basis on whichcustomer with current bid and offer quotations for the broker or dealer made the suitability determination, and
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stock, in both public offerings and in secondary trading and commissions payable to boththe compensation of the broker-dealer and its salesperson in the registered representative, current quotations fortransaction, and monthly account statements showing the securities and the rights and remedies available to an investor in casesmarket value of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for theeach penny stock held in the accountcustomer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and information onreceive the limited market in penny stocks.
Because of these regulations, broker-dealerspurchaser’s written agreement to the transaction. These disclosure requirements may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
Investors in this offering will experience immediate and substantial dilution.
If all of the shares offered hereby are sold, investors in this offering will own 6.19% of the then outstanding shares of common stock, but will have paid approximately 52.54% of the total consideration for our outstanding shares, resulting in a dilution of $0.8822 per share. See “Dilution.”
If all the 4,800,000 shares related to the option would be issued in addition with the 10,000,000 shares of the offering the option new investors will own 2.89% of the then outstanding shares of common stock, but will have paid approximately 33.58% of the total consideration for our outstanding shares, resulting in a dilution of $1.8282 per share. See “Dilution.”
We have broad discretion in the use of a portion of the net proceeds from our initial public offering and may not use them effectively.
We currently intend to use the net proceeds from this offering for next 12 months $490,000 for our budget expenses, $1,000,000 for Capital Infusion for business growth, $8,500,000 for New Subsidiaries Acquisitions to fully implement our business plan to its fullest potential and achieve our growth plans. For more information, see “Use of Proceeds.” However, our management will have broad discretion in the application of the net proceeds. Our stockholders may not agree with the manner in which we choose to allocate the net proceeds from this offering. Our failure to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income.
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any secondary market.control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
We may be subject to securities litigation, which is expensive and could divert management attention.
In the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, timing and likelihood of success, plans and objectives of management for future operations, and future results of current and anticipated products are forward-looking statements. These additional sales practicestatements involve known and disclosure requirementsunknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described under the sections in this prospectus entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could impedediffer materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
This prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.
USE OF PROCEEDS
We are offering a total of 10,000,000 shares at a price of $1.00 per share under our Primary Offering. The shares being offered by us are being offered without the use of underwriters or broker-dealers and will be sold by our officers and directors. No commissions or discounts will be paid in connection with the sale of our securities, ifthe shares being offered by us.
The following table below sets forth the net proceeds assuming the sale of 25%, 50%, 75% and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.
34.
The market for penny stocks has experienced numerous frauds and abuses that could adversely impact investors in our stock.
Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
·
Control100% of the market forPrimary Offering.
| | | | 25% | | | | 50% | | | | 75% | | | | 100% | |
| Gross proceeds | | $ | 2,500,000 | | | $ | 5,000,000 | | | $ | 7,500,000 | | | $ | 10,000,000 | |
| Estimated offering expenses | | $ | 10,000 | | | $ | 10,000 | | | $ | 10,000 | | | $ | 10,000 | |
| Net Proceeds | | $ | 2,490,000 | | | $ | 4,990,000 | | | $ | 7,490,000 | | | $ | 9,990,000 | |
| Budget Expenses 2021 & 2022 | | $ | 490,000 | | | $ | 490,000 | | | $ | 490,000 | | | $ | 490,000 | |
| Capital Infusion for business growth 2022 & 2023 | | $ | 1,000,000 | | | $ | 1,000,000 | | | $ | 1,000,000 | | | $ | 1,000,000 | |
| Funds for New Subsidiaries Acquisition (s) 2022 & 2023 | | $ | 1,000,000 | | | $ | 3,500,000 | | | $ | 6,000,000 | | | $ | 8,500,000 | |
| Funds to Retire Debt | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Use of Net proceeds | | $ | 2,490,000 | | | $ | 4,990,000 | | | $ | 7,490,000 | | | $ | 9,990,000 | |
We plan to use the security by one or a few broker-dealers that are often related to the promoter or issuer;
·
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·
"Boiler room" practices involving high pressure sales tactics and unrealistic price projections by sales persons;
·
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
·
Wholesale dumpingnet proceeds of the same securities by promotersPrimary Offering as described above and broker-dealers after pricesfor working capital, general corporate purposes and acquisitions. We do not have been manipulatedany acquisitions currently pending.
The principal purposes of this offering are to raise sufficient capital for us to implement our business plan, become a desired level, along withreporting under the inevitable collapse of those prices with consequent investor losses.
35.
Any trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.
There is currently no establishedExchange Act and create a public market for our common stock,shares. If we are unable to sell any shares under the Primary Offering, we have sufficient funds to pay the costs of this offering.
Secondary Offering
The common shares offered by the selling security holder are being registered for the account of the selling security holder identified in this prospectus. All net proceeds from the sale of these common shares will go to the selling security holder who offers and there can be no assurance thatsells its common shares. We will not receive any established public market will develop inpart of the foreseeable future. Transferproceeds from such sales of common shares, other than the exercise price for the option, which we expect to use for working capital.
DIVIDEND POLICY
We have never paid dividends on our common stock, may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to andpay any cash dividends on our common stock in the foreseeable future. In addition, we may not be able to qualify securities for resaleincur debt financing in at least 17 statesthe future, the terms of which do not offer manual exemptions (or may offer manual exemptions but may not to offer one towill likely prohibit us from paying cash dividends or distributions on our common stock. Even if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one. See also “Plan of Distribution-State Securities-Blue Sky Laws.”
36.
Our board of directors (consisting of one person, our President) has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.
Our articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.
37.
The ability of our president to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.
Upon the completion of this offering, our president will beneficially own an aggregate of approximately 75% of our outstanding common stock assuming the sale of all shares being registered. Because of her beneficial stock ownership, our president will be in a position to continue to elect our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our president may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority shareholders would have no way of overriding decisions made by our president. This level of control may also have an adverse impact on the market value of our shares because our president may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
38.
All of our presently issued and outstanding common shares are restricted under rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected.
All of the presently outstanding shares of common stock (7,500,000 shares) are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months (as is the case herein) if purchased from a non-reporting company, may, under certain conditions, sell all or any of her shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock each three months. As a result of revisions to Rule 144 which became effective on February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.
All 7,500,000 issued and outstanding shares of our common stock are owned by our president which consists of 5,000,000 shares issued for organizational expenses and 2,500,000 shares issued for product formulas and may be sold commencing one year from the date the Company is no longer considered a “shell company.” See “Market for Securities.”
39.
We do not expectpermitted to pay cash dividends in the foreseeable future.future, we currently anticipate that we will retain all future earnings, if any, to fund the operation and expansion of our business and for general corporate purposes.
We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on
DILUTION
If you invest in our common stock, at any time inyour ownership interest will be diluted to the foreseeable future. The future paymentextent of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our boardthe difference between initial public offering price per share of directors will consider. Since we do not anticipate paying cash dividends on our common stock return on your investment, if any, will depend solely on an increase, if any, inand the marketpro forma as adjusted net tangible book value per share of our common stock.stock immediately after this offering.
40.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
Because none of our directors (currently one person) are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles. Some of these corporate governance measures have been metered by the JOBS Act of 2012. See Risk Factor #23 above.
41.
You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.
As of the effective dateJune 30, 2022 we had a historical net tangible book value of our registration statement$9,041,776 or $ 0.0597 per share of which this prospectus is a part, we will become subject to certain informational requirements of the Exchange Act, as amended and we will be required to file periodic reports (i.e., annual, quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. Except during the year that our registration statement becomes effective, these reporting obligations may (in our sole discretion) be automatically suspended under Section 15(d) of the Exchange Act if we have less than 500 shareholders and do not file a registration statement on Form 8A (of which we have no current plans to file). If this occurs after the year in which our registration statement becomes effective, we will no longer be obligated to file periodic reports with the SEC and your access to our business information would then be even more restricted. After this registration statement on Form S-1 becomes effective, we may be required to deliver periodic reports to security holders. However, we will not be required to furnish proxy statements to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act .. Previously, a company with more than 500 shareholders of record and $10 million in assets had to register under the Exchange Act. However, the JOBS Act raises the minimum shareholder threshold from 500 to either 2,000 persons or 500 persons who are not "accredited investors" (or 2,000 persons in the case of banks and bank holding companies). The JOBS Act excludes securities received by employees pursuant to employeecommon stock, incentive plans for purposes of calculating the shareholder threshold. This means that access to information regarding our business and operations will be limited.
USE OF PROCEEDS
BMI will apply the proceeds from the offering to pay for accounting fees, legal and professional fees associated with the offering. The total estimated costs of the offering ($65,000) exceed the maximum amount of offering proceeds ($25,000). The costs of the offering, which principally relate to professional costs, are estimated to consist of:
| | |
SEC Registration fee | $ | 2.91 |
NASD filing fee | | 100.00 |
Accounting fees and expenses | | 5,000.00 |
Transfer agent fees | | 2,500.00 |
Blue Sky fees and expenses | | 5,000.00 |
Miscellaneous expenses | | 2,397.09 |
Legal fees and expenses | | 50,000.00 |
| | |
Total | $ | 65,000.00 |
As funds are obtained from the sale of shares, offering costs will be paid in the sequence listed in the table regardless of the amount of dollars collected. If all of the registered shares are sold, all costs will be paid for in full other than our legal fees which currently amount to $50,000 (i.e. (only) $7,500 of the legal fees will be paid if the maximum offering proceeds are collected by the Company. From the maximum offering proceeds we will pay for the expenses associated with this offering which include SEC registration fee, NASD filing fees, accounting and auditing fee, transfer agent fees, blue sky fees, and miscellaneous expenses which amount to approximately $15,000, leaving $7,500 of the maximum offering proceeds to be used to pay our current legal counsel, and an estimated $2,500 cash on hand left for general operating expenses, materials and supplies for our products and sample inventory production. We would still have the obligation to pay the legal fees for our prior legal counsel as well as our current legal counsel from our business operations or from loans to the Company.
BMI will pay all costs related to this offering. This amount in excess of the offering proceeds ($40,000) will be paid as and when necessary and required or otherwise accrued on the books and records of BMI until we are able to pay the full amount due either from revenues or loans from related or unrelated parties. Absent sufficient revenues to pay these amounts within four months from the date of this prospectus, we will seek financial assistance either from our shareholders or a third party business associate of our president who may agree to loan us the funds to cover the balance of outstanding professional and related fees relating to our prospectus to the extent that such liabilities cannot be extended or satisfied in other ways and our professionals insist upon payment. If and when loaned, the loan will be evidenced by a noninterest-bearing unsecured corporate note to be treated as a loan until repaid, if and when BMI has the financial resources to do so. No formal written arrangement exists with respect anyone’s commitment to loan funds for this purpose and, accordingly, there existed only an agreement between BMI the corporate entity, our President and our former legal counsel (filed as Exhibit 10.1) which was binding upon all parties.
Our current and former legal counsel have both agreed to defer a substantial amount of their fees until after our offering becomes effective and is, in fact, through the deferral of their fees may be asserted as financing for our offering. Our plans will not change regardless of whether the maximum proceeds are raised, except to the extent indicated in MD&A “Liquidity” section, first paragraph.
THE OFFERING
BMI will spend substantially more in costs on this offering than it will receive in proceeds. The Company will incur ongoing continuous costs to meet the reporting requirements of a public company. These costs will exceed our current or anticipated revenues. However, BMI believes that the risks are worth taking because management believes, based on its own observations which are not based on any formal studies, that potential vendors, consultants and manufacturers will have a higher regard for a public company than a small, privately-held startup company. Management’s belief is based solely on advice and informal consultation with various professionals who are known to us and have public company experience. These discussions have led us to believe that being a public company may afford the business (management and its shareholders) with a higher degree of recognition than would be typically attained as a small private (or non-public) company and may increase its ability and/or options to obtain financing for growth. In addition, by being a public company we believe increases our future opportunities to raise funds or to pay vendors by issuing restricted common stock rather than cash. We cannot predict the likelihood that our observations and conclusions about the benefits of being a public company will prove accurate or beneficial to us.
BMI is offering for sale a maximum of 2,500,000151,559,011 shares of common stock outstanding at a fixed priceJune 30, 2022. Our historical net tangible book value per share is the amount of $0.01 per share. There is no minimum number of shares that must be sold by us for the offering to close, and we will retain and use the proceeds from the sale of any of the offered shares that are sold to pay a portion of the costs of the offering. There are no circumstances under which any offering proceeds will be released to parties other than BMI (except for proceeds refunded to investors whose subscriptions are rejected by us within 48 hours of receipt). All of the proceeds of this offering will be applied to the costs and fees associated with this offering. Moreover, in the event the Company is unable to raise the maximum proceeds under this offering, the implementation of the business plan will be extremely difficult, if not possible. The offering is being conducted on a self-underwritten, direct primary basis, which means our president and chief executive officer, Ms. Jones, will attempt to sell these shares. This prospectus permitstotal tangible assets less our president and chief executive officer to sell the shares directly to the public, with no commission or other remuneration payable to her for any shares that she may sell. Ms. Jones will sell the shares and intends to offer them to friends, family members and business acquaintances. In offering the securities on our behalf, she will rely on the safe harbor provision from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. The intended methods of communication include, without limitation, telephone and personal contact.
In connection with BMI’s selling efforts in the offering, Ms. Jones will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Exchange Act. Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. Ms. Jones is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Ms. Jones will not be compensated in connection with her participation in the offeringtotal liabilities at June 30, 2022, divided by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Ms. Jones is not, nor has she been within the past 12 months, a broker or dealer, and she is not, nor has she been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Ms. Jones will continue to primarily perform duties for the Company or on its behalf otherwise than in connection with transactions in securities. Ms. Jones will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).
The proceeds from the sale of the shares in this offering will be made payable to Quick Law Group, P.C. - COLTAF Account, BMI’s fund retention agent. Quick Law Group, P.C., acts as legal counsel for BMI and, therefore, may not be considered an independent third party. In this case, the fund retention agent holds the closing documents and funds in a transfer of money for shares of common stock of the Company, acting for both parties pursuant to their instructions. Therefore we have selected Quick Law Group, P.C. to act our funds retention agent for this offering to hold both documents and funds pursuant to the terms of the Fund Retention Agreement. All subscription agreements and checks are irrevocable and should be delivered to Quick Law Group, P.C. at the address provided on the Subscription Agreement. As the fund retention agent Quick Law Group, P.C. will hold all funds until the maximum proceeds are received or management determines that the offering is complete and accepts receipt of subscription agreements and monies for less than the maximum amount of the offering. The Company believes that this arrangement is beneficial and efficient for both management and investors in that the fund retention agent oversees the intake of offering proceeds, the approval of subscriptions by the Company, issuancenumber of shares of common stock and the distribution of proceedsoutstanding at June 30, 2022.
After giving further effect to the Company in an orderly manner. The fund retention agent holds all funds received in payment of the Subscription Price in a segregated account, and distributes the offering proceeds to the Company once the offering is completed, withdrawn or terminated.
We will receive all proceeds from the sale of up to 2,500,00010,000,000 shares being offered. No proceeds will be received by any other entity other than the Company. Theof common stock in this offering at an assumed initial public offering price of $1.00 per share is fixedand after deducting the estimated offering expenses payable by us, our as adjusted net tangible book value at $0.01 for the durationJune 30, 2022 would have been $ 19,031,776.00 , or $0.1178 per share of common stock. This represents an immediate increase in pro forma as adjusted net tangible book value of $0.0581 per share to existing stockholders and immediate dilution of $0.8822 per share to new investors purchasing shares of common stock in this offering.
The following table illustrates this dilution on a per share basis:
All subscription funds will be held in a noninterest-bearing account pending the completion of the offering.
| | | | | Maximum Offering |
| Offering | | | | |
| Initial price to public | | $ | 1.0000 | | | $ | 10,000,000.00 | |
| Net tangible book value as of June 30, 2022 | | $ | 0.0597 | | | $ | 9,041,776.00 | |
| Increase in net tangible book value per share attributable to new investors | | $ | 0.0581 | | | $ | 9,990,000.00 | |
| As adjusted net tangible book value per share after this offering | | $ | 0.1178 | | | $ | 19,031,776.00 | |
| Dilution in net tangible book value per share to new investors | | $ | 0.8822 | | | | | |
| | | | | | | | | |
| % Dilution | | | 88.22 | % | | | | |
The offering will be completed 180 days from the effective date of this prospectus (or such earlier date when all 2,500,000 shares are sold), unless extended by our board of directors for an additional 180 days. There is no minimum number of shares of common stock that mustwill be sold. All subscription agreements and checks for paymentoutstanding after this offering is based on 161,559,011 shares of shares are irrevocable (exceptcommon stock outstanding as to any states that require a statutory cooling-off period or provide for rescission rights).of June 30, 2022.
The Company will deliver stock certificates attributable tofollowing table summarizes, on the as adjusted basis described above, the total number of shares of common stock purchased byfrom us, the investors within 30 days of the close of the offeringtotal consideration paid or as soon thereafter as practicable.
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
The offering may terminate on the earlier of:
| |
i.
| the date when the sale of all 2,500,000 shares is completed, or
|
| |
ii.
| 180 days from the effective date of this document or any extension thereto.
|
The offering price of the common stock has been determined arbitrarily and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth.
The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only, and currently no market for our common stock exists. While a market maker has agreed to file a Rule 211 application with FINRA in order to apply for the inclusion of our common stock in the OTCBB, such efforts may not be successful, and our shares may never be quoted and owners of our common stock may not have a market in which to sell the shares. Also, no estimate may be given as to the time that this application process will require.
If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCBB). What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.
Please refer to the sections of this prospectus entitled "Risk Factors" and "Dilution" before making an investment in this stock.
DETERMINATION OF OFFERING PRICE
The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, any historical earnings or net worth. In determining the offering price, management considered such factors as the prospects, if any, for similar companies, anticipated results of operations, present financial resources and the likelihood of acceptance of this offering. No valuation or appraisal has been prepared for our business. We cannot assure you that a public market for our securities will develop or continue or that the securities will ever trade at a price higher than the offering price.
DILUTION
“Dilution” represents the difference between the offering price of the shares of common stock hereby being offered and the net book value per share of common stock immediately after completion of this offering. "Net book value" is the amount that results from subtracting total liabilities from total assets. In this offering, the level of dilution is increased as a result of the relatively low net book value of our issued and outstanding common stock and because the proceeds of the offering are substantially less than our estimated costs. Assuming all of the shares of common stock offered herein are sold, the purchasers in this offering will lose the entire value of their shares purchased in that each purchased share will have a negative net book value of ($0.0054). Net book value of existing shareholders’ shares will also decrease from $(0.0019) to ($0.0054) because estimated costs will exceed the proceeds received from this offering.
The following table illustrates the dilution to the purchasers of the common stock in this offering:
| | | | |
Assuming the sale of: |
| 625,000 shares (25% of the maximum offering) | 1,250,000 shares (50% of the maximum offering) | 1,875,000 shares (75% of the maximum offering) | 2,500,000 shares (maximum offering) |
| | | | |
Offering Price Per Share | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
| | | | |
Book Value Per Share Before the Offering | $(0.00185) | $(0.00185) | $(0.00185) | $(0.00185) |
| | | | |
Book Value Per Share After the Offering | $(0.00894) | $(0.00759) | $(0.00642) | $(0.00539) |
| | | | |
Net Decrease to Original Shareholders | $(0.00709) | $(0.00574) | $(0.00456) | $(0.00354) |
| | | | |
Decrease in Investment to New Shareholders | $(0.01894) | $(0.01759) | $(0.01642) | $(0.01539) |
| | | | |
Dilution to New Shareholders (%) | 100% | 100% | 100% | 100% |
The following table summarizes the number and percentage of shares purchased the amount and percentage of consideration paid, and the average price per Shareshare paid or to be paid by our existing stockholders and by new investors in this offering:offering at an assumed initial public offering price of $1.00 per share, before deducting estimated offering expenses payable by us:
| | | | |
| Price Per Share | Number of Shares Held | Percentage of Ownership | Consideration Paid |
2,500,000 shares sold | | | | |
Existing shareholders | $0.001 | 7,500,000 | 75% | $7,500 |
Investors in this offering | $0.01 | 2,500,000 | 25% | $25,000 |
| | | | |
1,875,000 shares sold | | | | |
Existing shareholders | $0.001 | 7,500,000 | 80% | $7,500 |
Investors in this offering | $0.01 | 1,875,000 | 20% | $18,750 |
| | | | |
1,250,000 shares sold | | | | |
Existing shareholders | $0.001 | 7,500,000 | 86% | $7,500 |
Investors in this offering | $0.01 | 1,250,000 | 14% | $12,500 |
| | | | |
625,000 shares sold | | | | |
Existing shareholders | $0.001 | 7,500,000 | 92% | $7,500 |
Investors in this offering | $0.01 | 625,000 | 8% | $6,250 |
| | | | | | | | |
| | | Shares Purchased | | Total Consideration | | |
| | | | | | | | | | | |
| | | | Number | | | | Percentage | | | | Amount | | | | Percentage | | | | Average Price Per Share | |
| Existing holders | | | 151,559,011 | | | | 93.81 | % | | $ | 151,559.01 | | | | 1.4930 | % | | $ | 0.0010 | |
| New investors | | | 10,000,000 | | | | 6.19 | % | | $ | 10,000,000.00 | | | | 98.5070 | % | | $ | 1.0000 | |
| Total | | | 161,559,011 | | | | 100.00 | % | | $ | 10,151,559.01 | | | | 100.0000 | % | | $ | 0.0628 | |
DIVIDEND POLICY
SELLING SHAREHOLDER
This prospectus relates to the offer and sale by the selling stockholders from time to time of up to an aggregate of 4,800,000 shares of common stock.
When we refer to the “selling stockholder” in this prospectus, we mean the entity listed in the table below, and each of its respective pledgees, donees, permitted transferees, assignees, successors and others who later come to hold any of such selling stockholder’s interests in shares of our Common Stock other than through a public sale.
Other than as described in this prospectus, the selling stockholders have not within the past three years had any position, office or other material relationship with us or any of our predecessors or affiliates other than as a holder of our securities. None of the selling stockholders is a broker-dealer or affiliate of a broker-dealer.
We have never paid cash or any other formissued a one year Common Stock Purchase Option with a grant date of dividend on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. Moreover, any future credit facilities might contain restrictions on our abilityApril 25, 2022 to declare and pay dividends on our common stock. We plan to retain all earnings, if any,Apollo Management Group, Inc. for the foreseeable futureright to acquire up to 4,800,000 at an exercise price of $2.00 per share. On the same date, we grated registration rights in favor of Apollo Management Group, Inc. for use in the operationresale of our business and to fundshares underlying the pursuit of future growth. Future dividends, if any, will depend on, among other things, our results of operations, capital requirements and on such other factors as our board of directors, in its discretion, may consider relevant.
option.
MARKET FOR SECURITIES
There is no established public market for our common stock, and a public market may never develop. A market maker has agreed to file an application with FINRA so as to be able to quoteThe table below presents information regarding the selling stockholder, the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectivenessCommon Stock that it may sell or otherwise dispose of our registration statement of whichfrom time to time under this prospectus is a part and the subsequent closingnumber of this offering. There can be no assurance as to whether such market maker’s application will be accepted by FINRA nor can we estimate the time period that will be required for the application process. Even if our common stock were quoted in a market, there may never be substantial activity in such market. If there is substantial activity, such activity may not be maintained,shares and no prediction can be made as to what prices may prevail in such market.
If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCBB). What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.
The Company does not havecommon stock or equity subject to outstanding options or warrants to purchase or securities convertible into our common stock or equity. Also, all current sharespercentage of our outstanding common stock are held by Ms. Jones, our president (7,500,000 shares). In general, under Rule 144, a holdershares of restricted common shares who is an affiliate at the timeCommon Stock each of the sale or any time during the three months preceding the sale can resell shares, subject to the restrictions described below.
If we become a public reporting company under the Exchange Act for at least 90 days immediately before the sale, then at least six months must have elapsed sinceselling stockholder will own assuming all of the shares were acquired from uscovered by this prospectus are sold by the selling stockholder.
We do not know when or an affiliate, and we must remain current in our filings for an additional periodwhat amounts the selling stockholder may sell or otherwise dispose of one year; in all other cases, at least one year must have elapsed since the shares were acquired from usof Common Stock offered hereby. The selling stockholder might not sell or an affiliate.
The numberdispose of shares sold by such person within any three-month period cannot exceed the greater of:
·
1%or all of the total numbershares covered by this prospectus or may sell or dispose of our commonsome or all of the shares then outstanding;other than pursuant to this prospectus. Because the selling stockholder may not sell or
·
The average weekly trading volume otherwise dispose of our commonsome or all of the shares during the four calendar weeks preceding the date on which notice on Form 144covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale is filed withor other disposition of any of the SEC (or, if Form 144 is not required toshares, we cannot estimate the number of shares that will be filed, the four calendar weeks preceding the dateheld by the selling broker receivesstockholder after completion of the sell order).(offering. However, for purposes of this table, we have assumed that all of the shares of Common Stock covered by this prospectus will be sold by the selling stockholders, and all the 10,000,000 offering sales will be sold too.
| Name of selling stockholder | | Shares of Common stock owned prior to offering | | Shares of Common stock to be sold | | Shares of Common stock owned after offering (if all shares are sold) | | Percent of common stock owned after offering (if all shares are sold) |
| Apollo Management Option | | | 0 | | | | 4,800,000 | | | | 4,800,000 | | | | 2.89 | % |
| Total | | | 0 | | | | 4,800,000 | | | | 4,800,000 | | | | 2.89 | % |
| (1) | | The information in the table is based on information supplied to us by the selling shareholders. The percentages of ownership are calculated based on 161,559,011 shares of common stock outstanding as of August 30, 2022, and taking in consideration all the 10,000,000 offering were sold. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act, and generally includes shares over which the selling stockholder has voting or dispositive power, including any shares that the selling stockholder has the right to acquire within 60 days of the date of this prospectus. |
| (2) | | Mr.Yohan Narainehas voting and dispositive control over the shares held by Apollo Management Group, Inc. |
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. This condition is notdiscussion contains forward-looking statements that are based on beliefs of our management, as well as assumptions made by, and information currently available to, the Company because its securities do not trade on a recognized exchange.)
Conditions relating to the manner of sale, notice requirements (filing of Form 144 with the SEC) and the availability of public information about us must also be satisfied.
All of the presently outstanding shares of our common stock are "restricted securities" as defined under Rule 144 promulgated under the Securities Act andmanagement. Actual results may only be sold pursuant to an effective registration statementdiffer materially from those discussed in or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which have become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shellcompany,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, ceases to be a “shellcompany” and files a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 Registration Statement with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. The Form 10 information or disclosure is equivalent to the information that a company would be required to file if it were registering a class of securities on Form 10 under the Exchange Act. Under amended Rule 144, restricted or unrestricted securities, initially issuedimplied by a reporting or non-reportingshellcompany or a company that was at anytime previously a reporting or non-reportingshellcompany, can only be resold in reliance on Rule 144 if the following conditions are met:
1.
the issuer of the securities that was formerly a reporting or non-reportingshellcompany has ceased to be ashellcompany;
2.
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
3.
the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and
4.
at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not ashellcompany.
At the present time, we are classifiedforward-looking statements as a “shellcompany” under Rule 405result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the Securities Act Rule 12b-2 of the Exchange Act. As such, all restricted securities presently held by our sole stockholder may not be resold in reliance on Rule 144 until: (1) we file a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 Registration Statement with the SEC when we cease to be a “shellcompany”; (2) we have filed all reports as required by Section 13 and 15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the time we file the Form 8-K with the SEC reflecting our status that we are no longer ashellcompany.
Current Public Informationsection entitled “Risk Factors.” See “Cautionary Note Regarding Forward-Looking Statements.”
In general, for sales by affiliatesThe discussion and non-affiliates, the satisfactionanalysis of the current public information requirement depends on whether we are a public reporting company under the Exchange Act:
·
If we have been a public reporting company for at least 90 days immediately prior to the sale, then the current public information requirement is satisfied if we have filed all our periodic reports (other than Form 8-K) required to be filed under the Exchange Act during the 12 months immediately prior to the sale (or such shorter period as we have been required to file).
·
If we have not been a public reporting company for at least 90 days immediately prior to the sale, then the requirement is satisfied if specific types of basic information about us (including our business, management and our financial condition and results of operations) is made publicly available.
However, no assurance can be given as to:
·
operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the likelihoodUnited States of a market for our common shares developing,
·
America. The preparation of these financial statements requires us to make estimates and assumptions that affect the liquidity of any such market,
·
the ability of the shareholders to sell the shares, or
·
the prices that shareholders may obtain for any of the shares.
No prediction can be made as to the effect, if any, that future sales of shares or the availability of shares for future sale will have on the market price prevailing from time to time. Sales of substantialreported amounts of our common shares, orassets and liabilities and the perception that such sales could occur, may adversely affect prevailing market pricesdisclosure of the common shares.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this prospectus which is a part of our registration statement involve riskscontingent assets and uncertainties, including statements as to:
·
our future operating results;
·
our business prospects;
·
any contractual arrangements and relationships with third parties;
·
the dependence of our future success on the general economy;
·
any possible financings; and
·
the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe," “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as ofliabilities at the date of this prospectus. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-lookingfinancial statements, and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this prospectus, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Operations
We were incorporated on June 24, 2011 and acquired our product formulas and sample products on June 27, 2011. All of the activity through March 31, 2012 involved incorporation efforts, planning and acquiring the formulas, developing our E-Scentual product line, as well as preparationthe reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As used in this offering.
We are a development stage company“Management’s Discussion and have extremely limited financial resources. We have not established a sourceAnalysis of equityFinancial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability“the Company,” refers to remain a going concern. At the time of this filing, we are a “shell company” as such term is defined by Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
BMI is in the business of developing, manufacturing, marketingIQSTEL Inc.
Results of Operations for the Three and sellingSix Months Ended June 30, 2021 and 2021
Revenues
Our total revenue reported for the E-Scentual Skin Care Collection, a skin care line combining sciencethree months ended June 30, 2022 was $23,699,716, compared with nature$16,128,367 for the three months ended June 30, 2021. These numbers reflect an increase of 46.94% quarter over quarter on our consolidated revenues. Our total revenue reported for the six months ended June 30, 2022 was $43,119,027, compared with $30,325,978 for the six months ended June 30, 2021; an increase of 42.19%.
When looking at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to form an effective beauty treatment. BMI owns the rightssix months ended June 30, 2021:
| Subsidiary | | Revenue Six Months Ended June 30, 2022 | | Revenue Six Months Ended June 30, 2021 |
| Etelix.com USA, LLC | | $ | 11,957,291 | | | $ | 7,481,915 | |
| SwissLink Carrier AG | | | 2,262,903 | | | | 2,284,985 | |
| QGlobal LLC | | | 155,635 | | | | 502,431 | |
| IoT Labs LLC | | | 26,763,540 | | | | 20,056,647 | |
| Smartbiz Telecom | | | 921,410 | | | | — | |
| Whisl Telecom | | | 1,058,248 | | | | — | |
| | | $ | 43,119,027 | | | $ | 30,325,978 | |
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 June 30, 2022 increased to $22,853,442, compared with $16,083,802 for the three months ended June 30, 2021. Our total cost of revenues for the six months ended June 30, 2022 increased to $41,788,693, compared with $29,794,043 for the six months ended June 30, 2021.
When looking at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:
| Subsidiary | | Cost of Revenue Six Months Ended June 30, 2022 | | Cost of Revenue Six Months Ended June 30, 2021 |
| Etelix.com USA, LLC | | $ | 11,626,271 | | | $ | 7,338,609 | |
| SwissLink Carrier AG | | | 1,855,331 | | | | 2,029,483 | |
| QGlobal LLC | | | 122,471 | | | | 419,810 | |
| IoT Labs LLC | | | 26,521,536 | | | | 20,006,141 | |
| Smartbiz Telecom | | | 831,419 | | | | — | |
| Whisl Telecom | | | 831,665 | | | | — | |
| | | $ | 41,788,693 | | | $ | 29,794,043 | |
Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its intellectual property, E-Scentual, what we believe to be an anti-aging formula that is the main ingredientcustomers. These costs primarily consist of usage charges for calls and SMS terminated in vendor’s network.
The behavior in the E-Scentual Skin Care Collection.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.
BMI intendsGross Margin
The Consolidated Gross Margin for the six months ended June 30, 2022 was 3.09%, which compared to develop1.75% for the six months ended June 30, 2021 represents an increase in our consolidated Gross Margin of 76.57%.
When looking at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:
| Subsidiary | | Gross Margin Six Months Ended June 30, 2022 | | Gross Margin Six Months Ended June 30, 2021 |
| Etelix.com USA, LLC | | % | 2.77 | | | % | 1.92 | |
| SwissLink Carrier AG | | | 18.01 | | | | 11.18 | |
| QGlobal LLC | | | 21.31 | | | | 16.44 | |
| IoT Labs LLC | | | 0.90 | | | | 0.25 | |
| Smartbiz Telecom | | | 9.77 | | | | — | |
| Whisl Telecom | | | 21.41 | | | | — | |
| | | % | 3.09 | | | % | 1.75 | |
Operating Expenses
Operating expenses decreased to $1,144,452 for the three months ended June 30, 2022 from $1,209,167 for the three months ended June 30, 2021. Operating expenses decreased to $2,133,950 for the six months ended June 30, 2022 from $2,707,278 for the six months ended June 30, 2021. The detail by major category for the six months ended June 30, 2022 and 2021 is reflected in the table below.
| | | Six Months Ended June 30, |
| | | 2022 | | 2021 |
| Salaries, Wages and Benefits | | $ | 828,764 | | | $ | 560,618 | |
| Technology | | | 101,036 | | | | 216,428 | |
| Professional Fees | | | 349,842 | | | | 232,216 | |
| Legal & Regulatory | | | 43,116 | | | | 50,627 | |
| Travel & Events | | | 29,831 | | | | 5,430 | |
| Public Cost | | | 16,832 | | | | 24,331 | |
| Advertising | | | 373,600 | | | | 487,825 | |
| Bank Services and Fees | | | 91,961 | | | | 58,309 | |
| Depreciation and Amortization | | | 62,371 | | | | 42,421 | |
| Office, Facility and Other | | | 164,967 | | | | 142,977 | |
| | | | | | | | | |
| Sub Total | | | 2,062,320 | | | | 1,821,182 | |
| | | | | | | | | |
| Stock-based compensation | | | 71,630 | | | | 886,096 | |
| Total Operating Expense | | $ | 2,133,950 | | | $ | 2,707,278 | |
The main reasons for the overall decrease in operating expenses for the six months ended June 30, 2022 compared to the same period of 2021 is due to the a full spectrumsignificant reduction in Stock-based compensation.
When looking at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:
| | | Six Months Ended June 30, |
| | | 2022 | | 2021 | | Difference |
| iQSTEL | | $ | 1,039,299 | | | $ | 1,993,964 | | | $ | (954,665 | ) |
| Etelix | | | 193,587 | | | | 162,674 | | | | 30,913 | |
| Swisslink | | | 430,856 | | | | 368,537 | | | | 62,319 | |
| ItsBchain | | | 453 | | | | 1,450 | | | | (997 | ) |
| QGlobal | | | 73,935 | | | | 56,138 | | | | 17,797 | |
| IoT Labs | | | 119,919 | | | | 70,142 | | | | 49,777 | |
| Global Money One | | | 84,777 | | | | 54,373 | | | | 30,404 | |
| Smartbiz Telecom | | | 55,873 | | | | — | | | | 55,873 | |
| Whisl Telecom | | | 135,251 | | | | — | | | | 135,251 | |
| | | $ | 2,133,950 | | | $ | 2,707,278 | | | $ | (573,328 | ) |
Operating Income
The Company showed negative Operating Income for the three months ended June 30, 2022 of skin care products designed$298,178 compared with a negative result of $1,164,602 for the three months ended June 30, 2021.
The Company showed negative Operating Income for the six months ended June 30, 2022 of $803,616 compared with a negative result of $2,175,343 for the six months ended June 30, 2021.
The decrease of the numbers for the six month period above is primarily due to naturally improve skin wellness and provide anti-aging properties through our E-Scentual Skin Care Collection. The E-Scentual product line will combine sciencea reduction in the costs associated with nature to form an advanced beauty treatment, using a varietythe operation of essential oils and other naturally produced ingredients. Utilizing aromatherapy, a variety of specific actives, and our botanically-based formulasthe public entity (iQSTEL, Inc.) that include our proprietary process, E-Scentual products are intended to deliver a dramatic improvement in general health, well-being and increased vitality for great looking skin. We believe that BMI’s products, when available, will stimulate cell renewal, prevent and reduce the appearance of wrinkle and fine lines, dark circles, spider veins, rosacea, varicose veins and reduce under eye puffiness.decreased by $954,665 year over year.
Other Expenses/Other Income
We had other income of $12,721 for the three months ended June 30, 2022, as compared with other income of $42,230 for the same period ended 2021. We had other expenses of $6,572 for the six months ended June 30, 2022, as compared with other expenses of $825,518 for the same period ended 2021. The decrease in other expenses is mainly due to the reduction in interest expense.
Net Loss
We finished the three months ended June 30, 2022 with a loss of $285,457, as compared to a loss of $1,122,372 during the three months ended June 30, 2021. We finished the six months ended June 30, 2022 with a loss of $810,188, as compared to a loss of $3,000,861 during the six months ended June 30, 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.
Results of Operations for the Years Ended December 31, 2021 and 2020
Net Revenue
Our net revenue for the year ended December 31, 2021 was $64,702,018 as compared with $44,910,006 for the year ended December 31, 2020. These numbers reflect an increase of 44% year over year on our consolidated Revenues.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2021 and 2020:
| Subsidiary | | Revenue Year Ended December 31, 2021 | | Revenue Year Ended December 31, 2020 |
| Etelix.com USA, LLC | | | 15,445,161 | | | | 14,033,528 | |
| SwissLink Carrier AG | | | 4,681,978 | | | | 5,432,022 | |
| QGlobal LLC | | | 666,887 | | | | 421,619 | |
| IoT Labs LLC | | | 43,907,992 | | | | 25,022,837 | |
| | | | 64,702,018 | | | | 44,910,006 | |
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.
If net revenues continue growing at a similar rate for the next twelve months, we believe that E-Scentual,the company will reach a total consolidated revenue of approximately $90 million by December 31, 2022.
Cost of Revenue
Our total cost of sales for the year ended December 31, 2021 was $63,168,303 as compared with $43,947,654 for the year ended December 31, 2020.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2021 and 2020:
| Subsidiary | | Cost of revenue Year Ended December 31, 2021 | | Cost of revenue Year Ended December 31, 2020 |
| Etelix.com USA, LLC | | | 15,080,687 | | | | 14,062,553 | |
| SwissLink Carrier AG | | | 3,986,334 | | | | 4,656,865 | |
| QGlobal LLC | | | 563,528 | | | | 311,409 | |
| IoT Labs LLC | | | 43,537,754 | | | | 24,916,827 | |
| | | | 63,168,303 | | | | 43,947,654 | |
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 intellectual property,revenues and our cost of sales, discussed above, increased from $962,352 in 2020 to $1,533,715 in 2021.
We expect an increase in the gross margin for the next twelve months as a result of having better termination costs.
Operating Expenses
Operating expenses for the year ended December 31, 2021 were $4,517,632, as compared with $4,174,367 for the year ended December 31, 2020. The detail by major category is a unique formula made of essential oilsreflected in the table below.
| | | Years Ended December 31 |
| | | 2021 | | 2020 |
| | | | | |
| Salaries, Wages and Benefits | | $ | 1,160,021 | | | $ | 1,208,709 | |
| Technology | | | 218,053 | | | | 133,400 | |
| Professional Fees | | | 441,490 | | | | 374,821 | |
| Legal and Regulatory | | | 106,001 | | | | 121,229 | |
| Travel & Events | | | 23,117 | | | | 8,596 | |
| Public Cost | | | 42,674 | | | | 87,234 | |
| Allowance for doubtful accounts | | | — | | | | 183,414 | |
| Depreciation and Amortization | | | 91,474 | | | | 68,602 | |
| Advertising | | | 977,334 | | | | 942,950 | |
| Bank Services and Fees | | | 117,886 | | | | 137,598 | |
| Office, Facility and Other | | | 392,117 | | | | 209,956 | |
| | | | | | | | | |
| Subtotal | | | 3,570,167 | | | | 3,476,509 | |
| | | | | | | | | |
| Stock-based compensation | | | 947,464 | | | | 697,858 | |
| | | | | | | | | |
| Total Operating Expenses | | $ | 4,517,631 | | | $ | 4,174,367 | |
Operating Expenses by subsidiary are as follow:
| | | Years Ended December 31, |
| | | 2021 | | 2020 | | Difference |
| iQSTEL | | $ | 2,906,114 | | | $ | 2,623,555 | | | $ | 282,560 | |
| Etelix | | | 339,354 | | | | 407,937 | | | | -68,583 | |
| SwissLink | | | 784,052 | | | | 815,130 | | | | -31,078 | |
| ItsBchain | | | 2,396 | | | | 52,684 | | | | -50,288 | |
| QGlobal | | | 106,803 | | | | 83,304 | | | | 23,499 | |
| Global Money One | | | 175,324 | | | | — | | | | 175,324 | |
| IoT Labs | | | 203,588 | | | | 191,757 | | | | 11,831 | |
| | | $ | 4,517,631 | | | $ | 4,174,367 | | | $ | 343,265 | |
The most significant difference is generated by iQSTEL which is basically due to the Stock-based compensation. This item includes compensation to Management, Directors and other all natural ingredients that provide nourishmentprofessional service providers.
No allowance for doubtful accounts were established due to additional controls already implemented within the commercial area and collection team.
Advertising corresponds to the skin. These product mixtures rapidly penetratethird-party consultancy for the skin delivering essential nutrients beneathdesign and implementation of a Social Media communication strategy oriented to build and enhance our companies and brand image and a marketing program for the top layer of skinRegulation A offering.
All other items were stable from one year to the other, which allows us to affirm that the body usescost structure of the company is under control.
Other Expenses
We had other expenses of $880,085 for the year ended December 31, 2021, as compared with other expenses of $3,487,315 for the year ended December 31, 2020. The reduction in Other Expenses in 2021 compared to 2020 is due to the significant reduction in the natural processinterest expense of collagen regeneration. Anecdotal stories$3,509,323 for the year ended December 31, 2020 to $675,481 for the year ended December 31, 2021.
Net Loss
We finished the year ended December 31, 2021 with a loss of $3,864,001 as compared to a loss of $6,699,482 during the year ended December 31, 2020. This represents an improvement in our financial results year over year, due to an increment in the Gross Revenue and feedback from over 75 end-users that are currently testing our products have described a dramaticsignificant reduction of the Interest Expenses.
Liquidity and Capital Resources
As of June 30, 2022, we had total current assets of $6,818,441 and current liabilities of $3,607,416, resulting in a positive working capital of $3,211,025. This compares with the working capital of $4,203,509 at December 31, 2021. This decrease in working capital, as discussed in more detail below, is primarily the appearanceresult of fine lines and wrinkles after regular use of essential oils and other all natural ingredients that arethe cash used in our formulas.the acquisition of subsidiaries.
Our plan to continueoperating activities used $1,435,292 in the six months ended June 30, 2022 as compared with $2,093,398 used in operating activities in the six months ended June 30, 2021.
Investing activities used $1,612,255 for the six months ended June 30, 2021. Uses of funds in investing activities consisted primarily of the acquisition of subsidiaries for $1,564,132 and purchases of property and equipment for $47,223.
Financing activities provided $1,367,982 in the six months ended June 30, 2022 compared with $3,353,854 provided in the six months ended June 30, 2021. Our positive financing cash flow in 2022 was largely the result of the proceeds from the subscription of new common stocks under our Regulation A offering of $1,100,000.
Our current financial condition has improved significantly with a going concern is to reachpositive working capital and a cash position as of June 30, 2022 that represents 4.69 times the point where we begin generating sufficient revenue from our skincare products to meet our obligations on a timely basis. Inloss recognized during the early stages of our operations, we will keep costs to a minimum, andthree-month period then ended. However, we intend to introduce products gradually, beginningfund 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 of which are available 12,500,000. This offering has been conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold from the available shares. We also plan to seek additional financing in fall of 2012; however therea private equity offering to secure funding for operations. There can be no assurance that we will be successful in achieving or adheringraising additional funding. If we are not able to this schedule. The cost to developsecure additional funding, the various products could be in excessimplementation of $100,000. We will need at least an additional $50,000 to $100,000 to purchase initial raw material inventory and introduce marketing and advertising programs that will educate as well as excite our customer demographics.
Our only source of capital at this time is investment by others in this offering. We must raise capital or debt financing in order to implement our business strategy. Upon becoming a public company, we will contact private equity funds, angel investors and others known to our president and the professionals with whom we deal in order to raise the necessary financing. As stated throughout this prospectus the Company, in order to fully develop its product line, will need to seek additional capital through debt or equity. The Company believes that if it can raise at least 50% or more of its financing requirements, itplan will be able to move forward with the first phase of its business plan.
Management believes that if it is successful in raising the necessary funds, of which thereimpaired. There can be no assurances, we may generate sales revenue within 12 months of receiving those funds. However, while we hopeassurance that wesuch additional financing will be successful in these efforts, additional equity financing may not be available to us on acceptable terms or at all, and thusall.
Inflation
Although our operations are influenced by general economic conditions, we could fail to satisfy our future cash requirements.
Despite the aforementioned in order to executedo not believe that inflation had a material effect on our plan, we must finalize our offeringresults of operations during the six-month period ended June 30, 2022.
Critical Accounting Polices
A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition andseek additional financing. Even if we receive 75%, 50%, 25% results, and requires management’s most difficult, subjective or 10%complex judgments, often as a result of the offering amount,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 plansfinancial statements included in this Prospectus for the six months ended June 30, 2022; however, we consider our critical accounting policies to execute our business planbe 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 limited until we seek additional financing. The maximum offering proceeds arebelieved 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 Prospectus for a necessary step in execution however critical to the following timeline is the seeking and securing of additional financing. If and when we obtain the required financing, we will be able to undertake our business plan through the following phases. We will seek to engage or hire employees or outside consultants to enhance the abilitiescomplete discussion of our founder in the development and executionsignificant accounting policies.
Off Balance Sheet Arrangements
As of her business plan. As mentioned above these costs could be in excess of $100,000 and will be needed as payment for certain services and costs projected over the next 12 months as we move forward with our business plan.June 30, 2022, there were no off-balance sheet arrangements.
Phase 1 (3-4 months in duration; $15,000 est. costs)Recent Accounting Pronouncements
·
initial product formula program combined with local (grass roots) promotional efforts, simple but effective method of getting product out there
·
Web site offering primarily static content and “brochure-ware” to support advertising, promotion and marketing communications efforts the E-Scentual products
·
simple feedback mechanisms, typically using email or product surveys from customers who participate in sampling and beta development
·
market prospecting and outside sales professional training
Phase 2 (3-4 months in duration; $15,000 est. costs)
·
interactive Web applications for real-time content capture and delivery
·
leverage progressive formula development from existing and potential:
·
sources – beta and sample users
·
manufacturing – building with world class efforts and quality control
·
clients, prospects, suppliers, partners, stakeholders
·
a framework for collaboration and community interest in our products – all natural
Phase 3 (3-4 months in duration; $30,000 est. costs)
·
develop transaction-based systems to enhance product sales and target marketing
·
customer profile building, using geographic, demographic, psychographic, and transaction behavior data to pinpoint ‘ideal customer’
·
targeted one to one delivery with retail operations using distributors
·
integrated information and communications environments, combining voice, image, and data to assist with product sales and target marketing
·
simple system-to-system exchanges for routine transactions
Phase 4 (3-4 months in duration; $40,000 est. costs)
·
real-time dynamic information exchange while building psychodynamic customer profiles and ‘world class’ product development
·
advanced system-to-system exchanges for all transactions
·
real-time performance support systems – sales, production, marketing
We believe that our products may begin to generate limited revenues by selective placement and grass roots marketing efforts within the Southern California market within 120 to 150 days after we have completed our offering andreceive additional financing. These product placement and marketing efforts are conditional upon us receiving additional financing as our current financial resources are not enough to pursue these actions.
The above time-line estimates (or stages of development) are predicated upon the Company obtaining the necessary financing either through equity or debt. If we are not able to obtain the necessary levels of financing as determined by the above stages, we will not be able to meet or achieve any of the time-line objectives. If we complete 75%, 50%, 25% or even 10% of our additional financing objectives, we will not be able to pursue any of our time-line goals or action steps due to the fact that we will not be able to hire or obtain the necessary resources to carry out each phase of development, and will have to defer pursing the next stage of business or consider an alternative means to accomplish each stage of development, which will take longer than initially planned .. In that case the Company will be forced to proceed on a piecemeal basis using primarily the services of our president, and chief executive officer and limited use of outside contractors when and if limited funds are obtained. Our president, and chief executive officer devotes in excess of twenty (20) hours a week to our continued business efforts. There is no realistic way to predict the timing or completion of our business plans based upon those scenarios.
Without additional financing to the offering proceeds, we will not be able to pursue our business plan or its time-line objectives, and the Company may fail entirely.
It is our plan to seek financing from either equity financing or through debt instruments. This effort will occur after our offering is complete and the proceeds have been received. Company’s management will, through relationships with professionals throughout the industry, continue to work on and refine the product formulas as well as other health and beauty products using the same basic products of essential oils. Completing these tasks will require the hiring of several employees and/or outside consultants. With the level of sophistication and expertise that our founder has, as well as other variouscosmeceutical (which represent a “marriage” between cosmetics and pharmaceuticals) professionals that she knows, the Company should make progress in its product development and eventually achieve sales of the these products, but currently no timeframe can be provided. Most if not all of these actions will be predicated on the Company obtaining the necessary financing to accomplish these steps. If financing is not available on terms reasonable to the Company and its shareholders, then the progression steps for this business plan will not occur as planned and may never occur.
We currently have no sources of financing and no commitments for financing. We will seek to obtain the necessary financing by contacting potential funding sources known to the professional and business contacts of our president. There are no assurances that we will obtain sufficient financing or resources to enter into agreements with product manufacturers, developers or sales/marketing firms. We do not have any cash or other resourcesexpect the adoption of recently issued accounting pronouncements to commence the use of outside consultants. If we do not receive funding or financing, including that from this offering, our business we believe could be maintained with extremely limited operations for at least 12 months because our president will continue providing her services without compensation (accrued or otherwise) and rely on short term loans from her friends and family members. However, failure to obtain financing under this offering or as from any other sources would severely impair our ability to implement our plans and likely result in our ceasing operations. We do not currently have a formal agreementsignificant impact on our results of operation, financial position, or cash flow.
BUSINESS
Company Description
iQSTEL Inc. (OTCQX: IQST, www.iQSTEL.com) is a US-based publicly-listed company holding an Independent Board of Directors and Audit Committee with a presence in place with our president covering this period; however, our president’s19 countries and 70 employees are offering leading-edge services through its four business lines.
The Telecom Division (www.iqstelecom.com), which represents the majority of current planoperations, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic connectivity through its subsidiaries: Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), and QGlobal SMS (www.qglobalsms.com).
The Fintech business line (www.globalmoneyone.com) (www.maxmo.vip) offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances, Mobile Top Up, Buy/Sell Crypto). Our Fintech subsidiary, Global Money One, is to provide substantially allimmigrants access to reliable financial services that make it easier to manage their money and stay connected with their families back home.
The BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, itsBchain.
The Electric Vehicle (EV) Business Line (www.evoss.net) offers electric motorcycles to work and have fun in the USA, Spain, Portugal, Panama, Colombia, and Venezuela. EVOSS is also working on the development of our administrative and planning work as well as basic product formulation/production and marketing work on her own without cash compensation while she seeks other sources of funding. We do not have any plansan EV Mid Speed Car to accrue any compensation for these services and our president, who is managementserve the niche of the Company, agrees with that action while we seek other sources of financing. We do not have any formal plans or agreements in place to continue receiving short term financing from our president, her friends or family members. To date this financing has been as needed for working capital purposes.
Other
As a corporate policy,we will not incur any cash obligations that we cannot satisfy with known resources, of which there are currently none except for our legal fees which will become due and payable upon completion of this offering which is further described in “Liquidity” below and/or elsewhere in this prospectus. We will not incur any significant obligations that need to be satisfied with cash payments2nd car in the short-term unless we have a secure funding source to pay the obligations when due. We believe that the perception that many people have of a public company may make it more likely that they will accept restricted securities from a public company as consideration for indebtedness owed to them than they would from a private company. We havefamily.
The information contained on our websites is not performed any studies ofincorporated by reference into this matter. Management’s belief is based solely on adviceProspectus and informal consultation with various professionals who are known to us and have public company experience. These discussions have led us to believe that being a public company may afford the business (management and its shareholders) with a higher degree of recognition than would be typically attained as a small private (or non-public) company and may increase its ability and/or options to obtain financing for growth. In addition, by being a public company we believe increases our future opportunities to raise funds or to pay vendors by issuing restricted common stock rather than cash.
However, there can be no assurances that we will be successful in any of those efforts even if we are a public entity. Additionally, issuance of restricted shares would necessarily dilute the percentage of ownership interest of our stockholders.
Liquidity
All amounts received from this offering will be used to pay expenses of the offering. BMI will pay all costs relating to this offering estimated at $65,000. These amounts will be paid when they become due and payable (upon submission to management) or otherwise accrued on the books and records of BMI until we are able to pay the amounts in full either from revenues or loans that may be obtained from related or unrelated parties. Our obligations for these expenses, when recorded as liabilities for lengthy periods of time, could preclude us from receiving financial assistance from other sources or, as a minimum, make getting other financing more difficult. Absent sufficient revenues to pay these amounts (primarily for estimated legal fees of $50,000) within four months from the date of our engagement with our legal counsel, we will be in technical default. With a technical default on the outstanding payments owed to our counsel there are no penalties and the debt willshould not be senior to any other debt we owe. There can be no assurance that we will be able to obtain a noninterest-bearing unsecured corporate noteconsidered part of this or any other type of financing to settle these obligations when they become due.
BMI entered into a financial agreement with our former legal counsel to prepare and assist the Company in order to seek assistance in lending funds to us if necessary (Exhibit 10.1) with all of the requisite documentation and filings to cover our legal expenses associated with this offering. Upon termination of our legal representation agreement with our former legal counsel we sought to determine the amount owed. The amount of $20,000 was agreed to in settlement owing under this agreement as of January 11, 2012. A summary of Exhibits 10.1 and 10.3 may be found in the “Management’s Discussion and Analysis or Plan of Operation” section of this prospectus. Both Exhibits 10.1 and 10.3 arereport filed as part of our registration statement of which this prospectus is a part. We terminated our agreement with Gary B. Wolff, P.C. as of January 23, 2012 as disclosed in Exhibit 10.3. As of March 7, 2012 we entered into a legal services agreement with new legal counsel, Quick Law Group, P.C. Our agreement with new legal counsel provides for a fee of $30,000, payable as $7,500 from the maximum offering proceeds, and the balance of $22,500 within four months from the date of our engagement with the Quick Law Group, P.C.SEC.
Since acquiring the product formulas and sample products, most of our resources and work have been devoted to planning our business, implementing systems and controls, and completing our registration statement. When those procedures are done, which we believe will occur over the next four months, we will continue to work on updating and improving our product formulas, and the development of packaging and labeling for our intended products. We will then need to commence inventory production and marketing efforts to provide for the initial sales of our products. We believe that the work needed to complete our product development, stock inventory, and initiate our marketing plans, including the development of a comprehensive ecommerce website, will range from $100,000 to $200,000 if outside contractors and experts are used. Based on conversations we have had to date with various distributors of natural beauty care products, we believe we can obtain funding to outsource these procedures. Although there can be no assurances whatsoever that we will obtain this funding, we believe that if we do we can commence the launch of our product line to the public beginning in late 2012, while there is no assurance that this time frame will be met, or that we will ever be able to commence the launch of our product line even if funding is obtained. If we have to use our internal resources only, the process will take much longer and our launch may be limited to a much smaller target market and produce less sales than anticipated. If we are unable to raise any funds, the cash costs may have to be provided by our president to the extent that she is capable and willing to provide such funds. We do not currently have any oral or written agreements to raise any funds in place with our president and founder or any third parties and cannot provide any assurances that we will obtain any funds. Our goal would be to have sufficient inventory and our distribution channels up and running within one year, but there is no way of estimating what the likelihood of achieving that goal would be.
On January 20, 2012, we entered into anHistory
iQSTEL, formerly known as PureSnax International, Distribution Agreement with ELVIE Corporation, an import and export company located in California. Pursuant to the terms of the agreement, ELVIE Corporation will have the right to exclusively distribute our product lines when available for sale in the Pacific Rim region. The agreement is for a period of one year expiring on the first anniversary with an option by both parties to extend for an additional period of two years. However, either we or ELVIE Corporation may terminate the agreement for any reason upon ninety days written notice.
Private capital, if sought, will most likely be sought from former business associates of our founder or private investors referred to us by those business associates. To date, we have not sought any funding source, other than the investors that have previously provided loans to the Company, and have not authorized any person or entity to seek out funding on our behalf. If a market for our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may be needed to complete our planned business operations from the product formulas that we have acquired.
We have embarked upon an effort to become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange Act of '34, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 until we exceed $75 million in market capitalization, if we decide to opt-out of the “emerging growth company” qualification as defined in the JOBS Act to take advantage of the exemptions available to us through the JOBS Act or five years has resulted from us being a public company. These obligations will reduce our ability and resources to expand our business. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of those efforts. We will reduce compensation levels paid to management (if and when we do compensate management which for the foreseeable future is limited) if there is insufficient cash generated from operations to satisfy these costs.
There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities except as set forth herein. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. We believe that the perception that many people have of a public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our own beliefs. Issuing shares of our common stock to such persons instead of paying cash to them may increase our chances to establish and expand our business. Having shares of our common stock may also give persons a greater feeling of identity with us which may result in referrals. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of BMI because the shares may be issued to parties or entities committed to supporting existing management. BMI may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.
As of March 31, 2012, we owed $44,434 in connection with organizational costs, product development costs and expenses associated with this offering, particularly our settlement with our former legal counsel. We have not entered into any formal agreements, written or oral, with any vendors or other providers for payment of services or expenses. There are no other significant liabilities as of March 31, 2012.
As of March 31, 2012, we owed $11,626 in connection with an interest-free demand loan from two unrelated parties and $908 from Ms. Jones a related party to the Company. The proceeds were used for basic working capital purposes. We owe our former legal counsel $20,000 as settlement for professional services which we agreed to pay when we have the available funds or working capital.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2to the financial statements, included elsewhere in this prospectus, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.
Seasonality
We have not started revenue producing activities so we have no direct experience with seasonality. However, we understand that other business entities in our industry have experienced seasonal impacts. Many skin products sell better during the summer months because of the impact on skin from the exposure to sun and others during the winter months because of the dryness associated with winter weather.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
BUSINESS
BMIInc., was incorporated under the laws of the State of Nevada on June 24, 2011,2011. PureSnax was previously a wellness brand focused on bringing healthy snacks and foods to consumers. On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor. From March of 2017 until its acquisition of Etelix.com USA, LLC, PureSnax was working to develop its own brand and its own products for manufacture, distribution, sales and marketing of various products within the health foods and snacks industry and to pursue related business opportunities. PureSnax acquired Etelix.com USA, LLC on June 25, 2018. The company left the healthy snacks and foods business to focus on the Telecommunications Business.
In August 30, 2018, PureSnax changed its name to “iQSTEL Inc.” and received a new CUSIP number: 46265G107, as well as a new trading symbol “IQST” in order to better resemble its new name. iQSTEL also changed the Standard Industrial Classification (SIC Code) to 4813, Telephone Communications, Except Radiotelephone.
The transformative process is an ongoing effort. However, in the last year the Company achieved the restructuring of its revenue from a 100% VoIP business to one where currently VoIP represents half of overall Company revenue, while SMS and value-added SMS services account for the other half. SMS and value-added SMS is a much higher gross profit business; thus the Company’s bottom line has increased in tandem.
Operating Subsidiaries
Based on our current business infrastructure, the Company has expanded from its original VoIP services into new business areas: Short Message Service (SMS) for Applications to Person (A2P) and Person to Person (P2P); Internet of Things (IoT) solutions and Blockchain-based platforms.
Etelix.com USA LLC, a wholly owned subsidiary of iQSTEL Inc., is a Miami, Florida-based international telecom carrier founded in 2008 that provides telecom and technology solutions worldwide, with commercial presence in North America, Latin America, and Europe. Etelix provides International Long-Distance voice services for Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G).
Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian markets, among which it is worth mentioning: China Telecom, PCCW, Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel.
An important milestone in the evolution of Etelix was in 2013, when the company become part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia. This consortium is led by Orange Telecom and Orbitel, where Etelix participates with 10 Gbps of capacity. The bulk of this contract was sold to Millicom (Tigo Costa Rica). This capacity considerably enhanced Tigo’s ability to deploy world-class 4G services to its customers in Costa Rica.
SwissLink Carrier AG is a 51% owned subsidiary of iQSTEL Inc. SwissLink Carrier AG is a Switzerland based international Telecommunications Carrier founded in 2015 providing international VoIP connectivity worldwide, with commercial presence in Europe, CIS and Latin America. SwissLink Carrier AG is a Swiss licensed Operator.
One of Company’s strategic line of actions is to expand the participation in Asian and African traffic. Africa is currently the market with the higher contribution to margin and Asia concentrate one third of the termination traffic in the industry. Estimations show that 56% (International Telecommunication Union) of the traffic terminating in Africa is originated from customers in Europe; while the corresponding percentage of traffic terminated in Asia is 37% (International Telecommunication Union). Based on these numbers the goal to expand the participation in the Asian and African traffic goes through establishing a strong presence in Europe.
The acquisition of Swisslink strengthened the Company’s presence in Europe putting us in a very competitive position to capture traffic to Asian and African countries; however, it will also give us the opportunity to compete in the European traffic, where we currently have a low participation.
QGlobal SMS LLC is a 100% owned subsidiary of iQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specialized in international and domestic SMS termination.
IoT Labs LLC is a 51% owned subsidiary of iQSTEL Inc. IoT Labs is a SMS service provider based in Austin, TX.
The Company has entered into the SMS business in 2020 through the acquisition of QGlobal and IoT Labs. Both companies specialize in international and domestic SMS termination, with emphasis on the Applications to Person (A2P), Person to Person (P2P) and OmniChannel Marketing Services for several markets: Wholesale Carrier, Government, Corporate, Enterprise, Small and Medium Companies.
QGlobal SMS has commercial presence in Europe, USA and Latin America, with robust international interconnection with Tier-1 SMS Aggregators, guarantying to its customers’ high quality and low termination rates, in over more than 100 countries, while IoT Labs is specialized in the SMS traffic exchange between US and Mexico.
With the acquisition of these two SMS providers, we quickly began to cross-sell services to our existing client base.
The Global A2P SMS Market is expected to grow at a CAGR of 4.1% during the forecast period 2018 – 2030, to account for US$ 101 billion in 2030, according to Transparency Market Research. This market has experienced significant growth and adoption rate in the past few years and is expected to experience notable growth and adoption in years to come
ItsBchain LLC is a 75% owned subsidiary of iQSTEL Inc. ItsBchain is a blockchain technology developer and solution provider, with a strong focus on the telecom sector. The company is in the final stage of development of a series of blockchain solutions aimed at using the blockchain ledger and smart contract solutions to enable more efficiency, quickness in execution and fraud-prevention in the telco industry. Specifically, the company is developing a solution that will enable users and carriers to transfer mobile phone numbers with just a few clicks, allowing users and carriers the ability to transfer retail users from one mobile carrier to another instantly.
Regulations
Telecommunications services are subject to extensive government regulation in the United States of America. Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The FCC has jurisdiction over all telecommunications common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services
Regulation of Telecom by the Federal Communications Commission
Telecommunication License
Anyone seeking to conduct telecommunications business where the telecommunication services will transpire between the United States of America and an international destination must obtain a license from the Federal Communications Commission (FCC). This particular license is named a Section 214 license, after the section in the Communications Act of 1934.
Etelix.com USA, LLC was authorized by the Federal Communications Commission to provide facility-based services in accordance with section 63.18(e)(1) of the Commission’s rules; and also to provide resale services in accordance with section 63.18(e)(2) under license number ITC-214-20090625-00303.
Since Etelix has no other network infrastructure outside the United States of America, no other licenses are required for us to operate as an international carrier service provider.
Universal Service and Other Regulatory Fees and Charges
In 1997, the FCC issued an order, referred to as the Universal Service Order, which time it acquiredrequires all telecommunications carriers providing interstate telecommunications services to contribute to universal service support programs administered by the product formulasFCC (known as the Universal Service Fund). These periodic contributions are currently assessed based on a percentage of each contributor’s interstate and sample productsinternational end user telecommunications revenues reported to the FCC. Etelix also contributed to several other regulatory funds and programs, most notably Telecommunications Relay Service and FCC Regulatory Fees (collectively, the Other Funds). Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our president. The Company at this time believes thatcustomers all of our contributions.
In addition, based on the nature of our current business, we receive certain exemptions from federal Universal Service Fund contributions. Changes in our business could eliminate our ability to qualify for some or all of these formulas can be used to develop at least eight distinct products. At May 31, 2012, we had one employee,exemptions. Changes in regulation may also have an impact on the availability of some or all of these exemptions. If even some of these exemptions become unavailable, they could materially increase our founderfederal Universal Service Fund or Other Funds’ contributions and president, Anna C. Jones. Duringhave a material adverse effect on the period June 24, 2011 (datecost of inception) through March 31, 2012, Ms. Jones has devoted a minimum of five (5) hours per week to in excess of thirty (30) hours per week as necessary for the businessour operations and, its development. For calendar year 2012, Ms. Jones will commit to providing at least fifteen (15) hours a week to us but may increase that number as necessarytherefore, on our ability to continue to operate profitably, and to develop theand grow our business. As of this date and through calendar year 2012, Ms. Jones will continue to provide her services at no cost to the Company. It is expected that Ms. Jones will devote as much time as necessary to us as we begin to near product launch.
At the time of this filing, BMI a “shell company” as such term is defined by Rule 405We cannot be certain of the Securities Act and Rule 12b-2stability of the Exchange Act.
The Company issued 5,000,000 shares of its common stock to Ms. Jones at inceptioncontribution factors for the Other Funds. Significant increases in exchangethe contribution factor for organizational expenses incurred upon incorporation. Followingthe Other Funds in general and the Telecommunications Relay Service Fund in particular can impact our formation, we issued an additional 2,500,000 shares of our common stock to Ms. Jones, in exchange for various product formulas and sample materials. (See “Certain Relationships and Related Transactions”, and Note 1 to the Company’s financial statements.) These product formulas contain specific quantity and mixture measurements, preparation and production instructions for a wide variety of ingredients thatprofitability. Whether these contribution factors will be used in our development of up to eight initial products. The formulas are specific to ‘butters’ (semi-solid), lotions, creams and toners which are the base for our intended products. The formulas provide for an exacting mix of ingredients, temperature, insertion or placement of ingredients with other ingredients to provide the necessary product results.
BMI is a development stage company and has no financial resources. We have not established or attempted to establish a source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain a going concern.
As of March 31, 2012, we had limited assets which consisted of; cash of $1,708, raw materials inventory of $547, prepaid expense of $350, deferred offering costs of $26,724 and intangible assets relating to product formulas valued at $1,562, net of accumulated amortization. In order to fund the development of our new skincare business and our working capital needs over the next 12 months, we intend to attempt to secure funding from the sale of common stock or debt financing either from third-party investors or distributors and manufactures involvedstable in the natural beauty product industry. We have begun such conversations with a number of distributors and manufacturers and, while the conversations have been fruitful to date, there can be no assurancefuture is unknown, but it is possible that we will be ablesubject to obtainsignificant increases.
Employees
iQSTEL, including all subsidiaries, has 49 employees as of December 31, 2021.
MANAGEMENT
The following information sets forth the names, ages, and positions of our current directors and executive officers.
| Name | | Age | | Positions and Offices Held |
| Leandro Iglesias | | | 56 | | | President, Chairman, Chief Executive Officer and Director |
| Alvaro Quintana Cardona | | | 51 | | | Chief Operating Officer, Chief Financial Officer and Director |
| Juan Carlos Lopez Silva | | | 53 | | | Chief Commercial Officer |
| Raul Perez | | | 69 | | | Director |
| Jose Antonio Barreto | | | 62 | | | Director |
| Italo Segnini | | | 55 | | | Director |
Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.
Leandro Iglesias
Before founding Etelix in year 2008, where he has acted as President and CEO, Mr. Iglesias was the International Business Manager at CANTV/Movilnet (the Venezuelan biggest telecommunications services provider). He held this position between January 2003 and July 2008, while the company was under the control of Verizon. Previous to his position in Cantv/Movilnet Mr. Iglesias was Executive Vice President and responsible of the Latin America marketing division of American Internet Communications (August 1998 – December 2002). Leandro Iglesias has developed a career for more than 20 years in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables, satellite communications and international roaming services. He is Electronic Engineer graduate from Universidad Simon Bolivar and graduated from the Management Program at IESA Business School. He also holds an MBA from Universidad Nororiental Gran Mariscal de Ayacucho.
Aside from that provided above, Mr. Iglesias does not hold and has not held over the past five years any fundsother directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or that such funds will be offered on terms acceptablesubject to us.the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
We are currently developing an initial linebelieve that Mr. Iglesias is qualified to serve on our Board of men’s and women’s skincare and cosmetic products. Our chief executive officer, Ms. Jones, has limited professional and industryDirectors because of his wealth of experience in developing skincare products, and it is our goal to re-formulate somethe telecom industry.
Alvaro Quintana Cardona
Alvaro Quintana has developed a career of these acquired formulas and to develop new products with the helpmore than twenty years of independent contractors. After our initial products have been fully developed and ready for market, we will arrange for these products to be manufactured for us by third-party commercial cosmetics manufacturers. We do not intend to establish our own manufacturing capabilities. We will identify, through our executive officer or other professionalsexperience in the skincare business, manufacturerstelecommunication industry with particular focus on regulatory affairs, strategic planning, value added services and international interconnection agreements. Before joining Etelix in year 2013 as Chief Operation Officer and Chief Financial Officer, Mr. Quintana acted between June 2004 and May 2013 as Interconnection and Value-Added Services Manager at Digitel (a mobile service provider in Venezuela, formerly a Telecom Italia Mobile subsidiary). He holds a Bachelor Degree in Business Administration and a Specialist Degree in Economics, both from the Universidad Catolica Andres Bello. He also holds a Master in Telecommunications from the EOI Business School in Spain.
Aside from that may be willingprovided above, Mr. Cardona does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to engageSection 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
We believe that Mr. Quintana is qualified to serve on our Board of Directors because of his wealth of experience in the manufacturetelecom industry.
Juan Carlos Lopez Silva
Juan Carlos Lopez Silva is an Engineer graduated from Universidad de Los Andes, with a Master degree in Project Management from the Pontificia Universidad Javeriana; and packagingMBA from EADA Business School; with more than 20 years of new skincare products throughexperience in project management, negotiation, business development and management on international companies. Previous to joining Etelix in August 2011 as Chief Commercial Officer, Juan Carlos was International Carrier Relations Manager at Colombia Telecomunicaciones S.A. Esp. a sole-source manufacturing agreementsubsidiary of Telefonica of Spain, between September 2003 and June 2011.
Aside from that provided above, Mr. Silva does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or on a contract manufacturing basis based on our limited quantities. We will seeksubject to the assistancerequirements of designersSection 15(d) of the Exchange Act or packaging consultantsany company registered as an investment company under the Investment Company Act of 1940.
Raul A Perez
From December 1, 2014 to develop the packagingpresent, Mr. Perez serves as CFO of Deerbrook Family Dentistry, PC, Dental Practice in Humble, Texas. From November 1, 2017 to January 31, 2019, he served as Senior Accountant to Principrin School, PC, Day Care in Houston, Texas.
Mr. Perez has been in finance for our initial products. We currently anticipate that our first line of skincare products, expected to consist ofmore than 40 years, starting in 1970 as analyst in treasury and finance departments and progressively assuming different positions up to eight separate products, will be availablecorporate treasurer for commercial sale during late 2012 although no assurances can be given that we will achieve or come close to achieving that goal.
Commercial salelarge corporations. He served for Sudamtex of our products will be dependent upon us achieving additional financingVenezuela, C.A for 5 years and Polar Brewery in Caracas, Venezuela for 10 year. Beginning in 2000, he accepted a position as well as completing the development, formulation and production of our various products. These products will consist initially of a men’s line and women’s line of facial ‘butter,’ facial cream, lotion, and toner specific to the gender, with a hint of scent and colors that are indicativeDirector of the intended line. WeSecurity and Exchange Commission of Venezuela to have initially identified several local skincare product distributors,the surveillance of Venezuelan stock market participants. Also, in 2004 he completed the requirements and one international skincare distributor, that may be willing to offer our skincare to their clientele when products are available, although no commitments have been made as of the date of this prospectus.
While we have just started our business operations, discussions have been limited to advice and direction from other industry veterans. Any discussions that we may have cannot be formulated into a firm or even an oral agreement for services until we have completed our offering and pursued other financing sources or alternatives. Our intent is to further our discussions with these independent contractors, manufacturers, and distributors or other professionals, beyond just the casual stage of information sharing.
In order to be able to implement the foregoing plan of operations, we anticipate that we will need to secure minimal financing of between $50,000 and $100,000 before the end of third quarter calendar year 2012. If we are not successful in raising this initial financing, we will not be able to proceed with our business plan. Our plan of operations requires us to complete our offering and establish sources of financing in order to be able to fulfill our capital needs to develop, produce and furnish products for the commercial markets and ultimately generate sales. Upon successful completion of our offering, we will pursue along with development of our product line, obtaining a source of financing as well as establishing a public market for our common stock, which may then allow us to seek access to financing from sources that would not be available to usreceived his certification as a private company. This may then allow usVenezuelan Investment Advisor. Later, as an independent contractor for three years, he was selected as the Corporate Compliance Officer for an especially important stock market broker dealer in Venezuela, Activalores Casa de Bolsa, in which he developed the Compliance Unit and manuals required by local and international anti money laundering laws. He also taught Advanced Institute of Finance (IAF) in Caracas being a professor of Corporate Finance and Managerial Accounting for 5 years.
Mr. Perez has a Bachelor’s degree in accounting (1976), and MBA Finance (1982), gave me the overall knowledge of finance and how to negotiate with strength in pursuing financing or strategic agreements with vendors, manufacturers,plan, start up, run, and financial institutions. We cannot predict the likelihood or timing of success in this area.control a business.
The Company has no current plans to be acquired or to merge with any other entity; nor does the Company or any of its shareholders have any plans to enter into a change of control or similar transaction.
Proposed Business
Our goal is to develop a skincare/cosmetics business based on a series of an all-natural essential oils-based branded skincare products marketed under the “E-Scentual” and “B-Maven” brand names. Our goal is to develop, manufacture and market a line of quality skincare products that are sold as prestige products principally through limited distribution channels to complement the images associated with the “E-Scentual” and “B-Maven” brands. Our business plan contemplates the sale of the E-Scentual products primarily through upscale department stores, specialty retailers, prestige hotels, salons and spas. In addition, our goal is to have our products available for sale through a website which we will create, in stores on cruise ships, high-end luxury hotels/resorts, in-flight and duty-free shops, as well as through established foreign branded retail operations.
We will use independent marketing professionals to gain introductions to our targeted markets. Our target market will consist of men and women who are seeking an all-natural product with soothing effects upon their complexion and age-related signs.
We have not yet entered into contracts with nor approached any industry or marketing consultants or independent contractors. We currently have no sources of financing and no commitments for financing. There are no assurances that we will obtain sufficient financing or resourcesselected Mr. Perez to enter into agreements with independent contractors, manufacturers, distributors or marketing firms.
Proposed Products
We are developing a new line of skin care products. Management has contactedserve as an independent cosmetics formulator fordirector because of his education, skills and experience in finance and his regulatory history.
Jose Antonio Barreto
From 2006 to the purposepresent, Mr. Barreto has been Chief Business Development Officer of assistingXpectra Remote Management / Mexico. There he was in charge of directing all aspects of account development and sales effort to close specific private and government opportunities and developing strategic accounts in Mexico and the LATAM region. From 2020 to present, he has been an advisor to our Board of Directors.
Mr. Barreto has more than 30 years of experience working in telecommunications and technology companies. He has been directly responsible of leading the business development and operational in several telecommunication and technology companies’ acquisition activity, with the responsibility of leading the technical, operation and financial analysis. Over the last 14 years, Jose Antonio has been the North and Central American leader, spanning from Mexico to Panama, in the development of these formulations with a proprietary bio complex blend of ten different raw materials, which we will be the foundation of all of the products that we develop. These materials contain anti-oxidant properties that are believed by many to help fight free radical damage caused by sunlight, stress and other environmental factors. Other ingredients that we will use in these formulas will be selected for their efficacy in helping to correct existing skin damage and age-related signs (such as wrinkles, reduced skin firmness and poor elasticity). Our goal is to develop a line of crèmes that use natural, renewable ingredients that are desired by consumers and incorporated into skin care products using the latest technology, to distinguish our products from those brands that rely on petrochemical and/or undesirable synthetic ingredients.
Our discussions with the independent cosmetics formulator have been limited, and we currently do not have a legally-binding or any other formal agreement with them. If an agreement is reachedcommercial processes in the future, we believe that it will provide for their services on a professional consulting basis which will be billed hourly. The independent formulator has been provided samplestechnology security field, artificial intelligence, Internet of our product formulas,Things (IoT) platforms, as well as has worked with our founder, chief executive officercutting edge technology solutions and presidentsoftware systems.
He studied Electronic Engineering at the Universidad Simón Bolivar followed by a Master of Science Degree in a limited workspace environmentElectrical and Computer Engineering at Rice University. He also completed the Master in developing product samples upon with which to work with and to distribute to our samples to potential end-users or customers. The independent formulator has to date provided its services and assistance on an ad-hoc basis and does not expect to receive compensation for its time to date. The product samples, formulas and any further product samples or derivations of such are the property of the Company and is considered proprietary intellectual property. Part of this intellectual property that is unique to the formulas is the exact ingredient amounts,Telecommunications Management offered by Universidad Simon Bolivar and the specific method of mixing or producing of the products. The consistency and quality control of the products is essential to a successful product for the skin care market. We cannot predict the likelihood of entering into an acceptable contractual arrangement with any independent formulator.Telecom SudParis Institute.
We have providedselected Mr. Barreto to serve as an independent formulator, with whom we have no formal, ongoing arrangement or commitment, with the product profile for eachdirector because of productshis education, skills and experience in development which involve a list of ingredients along with product features and benefits. This independent formulator, along with our founder, has developed numerous samples based on these product specifications, and we are always evaluating and making adjustments to these formulations. In addition to developing products that incorporate natural ingredients believed to contain anti-aging properties, our goal is for our products to provide consumers with a pleasurable sensory experience, most particularly smell, color and touch that they cannot get from other facial products.technology companies.
Based on information provided to us by the formulator, we hope to have completed the formulation and development process for our initial products by the end of our first quarter for fiscal year 2013 (i.e. August 2012), so that we can commence testing of the various products before manufacturing is set to begin. We believe that testing will be conducted by the business that we intend to engage to manufacture our products. We intend to test all of the products for stability and compliance with the Cosmetic Toiletry Fragrance Association ("CTFA") standards, a self-regulatory organization for the cosmetic industry. This will include various types of tests, including product safety, preservative efficacy, package stability, and assay testing for all products, including over the counter ingredients. Testing stability involves a three month period where analysts are looking for changes in viscosity (thickness), appearance and odor at various temperatures to help determine shelf life, expiry dates, and other things. Although it is our intent to engage a manufacturer to provide all of these services, we may not be able to contract or hire a manufacturer to provide these services, or at a cost that is available to us. If we are unable to hire or contract a manufacturer, then we will pursue the necessary testing on a per-piece basis with a specialist in the field, and produce products on a small scale that will not necessarily fulfill our needs for commercial sales, but will provide us with product that may be available for sale through alternative channels such as Internet commerce, direct sales, smaller retail events specific
Italo R. Segnini (age 55)
From March 2020 to the present, Mr. Segnini has been serving as Global Carrier Partnership Director of Sierra Wireless. From June 2019 to February 2020, he served as an Independent Telecom Consultant. From 2017 to 2019, he served as Director of International Carrier Business for Televisa Telecom. From 2012 to 2019, he served as Director International Carrier Business for Millicom.
Mr. Segnini is a long time Telecommunicaction industry and possibly retail placement of the products on a limited basis.
As the products are expected to be sold over the counter, we do not anticipate needing or obtaining any Federal Food and Drug Administration or other regulatory approvals, and we do not plan on doing any clinical testing of any kind. Any products containing sun protection factor (SPF) or any other non-over the counter ingredients, however, will need to meet FDA testing regulations and the global standards for sales in countries other than the United States. We do not anticipate having any products that contain SPF in our initial skincare line.
Our goal is to eventually offer a broad range of skin care products that address various skin care needs for women and men. Our planned products include moisturizers, creams, lotions, cleansers, and other cosmetic products, a number of which will be developed for use on particular areas of the body, such as the face or the hands or around the eyes. Initially, the products that our formulator is currently creating based on our criteria are, however, limited to the following series of skin crème products for women and men:
Women’s line:
·
E-Scentual – face cream
·
E-Scentual – antioxidant anti-aging
·
E-Scentual – purifying cleanser
·
E-Scentual – exfoliating cleanser
Men’s line:
·
E-Scentual – face cream
·
E-Scentual – exfoliating cleanser
·
E-Scentual – purifying cleanser
Proposed Manufacturing
We do not intend to manufacture our products in our own facilities. Rather, we intend to outsource the manufacture of our products to one or more independent cosmetics manufacturers that also manufacture cosmetics for a number of other cosmetics lines. The manufacturer will be expected to test our initial product formulations during a four to six week period. During this testing, we expect to be making further adjustments to our formulations, requiring that new batches of each product be produced following each change. While we believe that we may be able to contract or engage a manufacturer to perform these functions, we may not be able to do so. As discussed above (inProposed Products), we will modify our plan of operations in a manner consistent with our at-that-time financial situation.
Once the formula is fixed for each product, the manufacturer will create a commercial batch of each product, bottle and package the products for us. We are also in the process of choosing all the peripheral items involved in the manufacturing and marketing process, including the:
·
shape and size of the product containers;
·
types of caps;
·
packaging;
·
logo and label designs; and
·
unit cartons.
We currently have no arrangements with any manufacturer.
Marketing and Distribution
We intend to seek an exclusive arrangement,professional who has had high level positions at least initially, with high-end retailers in the U.S. for the initial sale of our products. We also intend to pursue exclusive relationships as a product amenity provider for luxury hotels, resorts and airlines, as well as international distribution. These efforts will be undertaken with the assistance of marketing professionals. We currently have no arrangements with any marketing professional; however, we have had numerous discussions with several international distributors of consumer goods and products directly into China and other Pacific Rim countries that wish to represent BMI’s products. Product samples were provided to these international distributors and the Company is still waiting feedback from one of these international distributors relative to their interest in carrying BMI’s products, placement terms and pricing, initial anticipated order quantities, and labeling requirements. The results from the feedback from one of the international distributor is listed below.
Effective January 20, 2012, we entered into an International Distribution Agreement with ELVIE Corporation, an established import/export business. Pursuant to the terms of the agreement, ELVIE Corporation will have the right to exclusively distribute our product lines when available for sale in the Pacific Rim region. The agreement is for a period of one year expiring on the first anniversary with an option by both parties to extend for an additional period of two years. However, either we or ELVIE Corporation may terminate the agreement for any reason upon ninety days written notice.
We anticipate that we will have completed our initial manufacturing of the products during our first half of fiscal year 2012 (i.e. November or December 2012), provided that we obtain the necessary financing. There are no assurances that we will be successful in obtaining financing or in completing the development of our products within this timeframe or otherwise.
Competition
The skincare and cosmetic products business is highly competitive. We will be competing with hundreds of large and small cosmetics companies, including such companies as L’Oreal S.A., The Procter & Gamble Company, The Estée Lauder Companies Inc. and numerous other multi-national manufacturers. Most of our competitors market products that are well known and trusted by the consumer marketplace. Since virtually all of our competitors have significantly greater financial and other resources than we do, our competitors have the ability to spend more aggressively on advertising and marketing, spend more on product development and testing, and have more flexibility than we do to respond to changing business and economic conditions. Competition in the skincare business is based on pricing of products, the quality of the products, innovation, perceived value, promotional activities, advertising, new product introductions, name recognition, and other factors. It is difficult for us to predict how we will be able to effectively compete with our competitors’ actions in these areas.
We believe that, through the efforts of independent marketing and advertising professionals, we will prepare marketing materials and other consumer-directed materials that will help inform the consumers as to the potential benefits of our products, when fully developed. We have produced samples of our various intended productsGlobal Tier Ones for more than 12 months, which includes time prior20 years, Telefonica, Millicon and Televisa, Sierra Wireless to our founding,mention a few. Mr. Segnini has extensive executive experience in the Telecom areas like Voice, A2P, SMS, Data, Roaming, Mobility Services, B2B, MNO, MVNO, IoT, Interconnection, etc., and have received positive resultsa solid business performance record spanning multiple functions including International commercial negotiations, management, sales, business development, sales, regulatory and operations. Italo R. Segnini holds a Juris Doctor degree from the Andres Bello Catholic University, a significant percentageTelecommunication Masters Degree from Madrid Pontificia Comillas University and an MBA from IESA Business School
Term of “potential” consumers or end-usersOffice
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our products. These resultsstockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and responses have been elicited from the sample users in a non-scientific manner and include before and after pictures of the users facial complexion which includes strong age-related signs from both age and sun damage due to the Southern California weather. These results although anecdotal have provided our founder with the incentive to improve upon the initial product formulas and to pursue the retail market of these products for the mass consumer. With the spread of the resultshold office until removed by the “potential” consumersboard, subject to their friends and family, the need for the product has begun to generate through what is considered anecdotal marketing. Even without a retail product available, our founder has received repeated requests to produce products for consumption.respective employment agreements.
We will compete using our contacts to develop opportunities to meet potential distributors that we will be able to take advantage of as quickly as our limited resources will permit. These opportunities will come from contacts and referrals that we make through our independent consultants and our president. The ability to take advantage of these opportunities will depend upon our ability to secure sufficient funding for our product development and manufacturing and marketing and advertising professionals. However, we cannot predict the likelihood or timing for our success.No assurances can be given that our competitive strategy will have any success.Significant Employees
Intellectual Property
We have no patentssignificant employees other than our officers and directors.
Family Relationships
There are no family relationships between or trademarksamong the directors, executive officers or applications pending.
Government Regulation and Industry Standards
We believe that our business is not subject to material regulation under the laws of the United Statespersons nominated or any of the states in which we plan to sell our products. Laws and regulations often differ materially between states and within individual states such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement. If we become subject to any licensing or regulatory requirements, the failure to comply with any such requirements could lead to a revocation, suspension or loss of licensing status, termination of contracts and legal and administrative enforcement actions. We cannot be sure that a review of our current and proposed operations will not result in a determination that could materially and adversely affect our business, results of operations and financial condition. Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting our ability to conduct our business as now conducted or proposed to be conducted.
Employees
As of May 31, 2012, we had one employee, our founder and president, Ms. Jones. During the period June 24, 2011 (date of inception) through March 31, 2012, Ms. Jones has devoted a minimum of five (5) hours per week to in excess of thirty (30) hours per week as necessary for the business and its development. For the remainder of calendar year 2012, Ms. Jones will commit to providing at least fifteen (15) hours a week to us but may increase that number as necessary to continue to develop the business. As of this date and throughout calendar year 2012, Ms. Jones will continue to provide these services at no cost to the Company. We have no plans to compensate Ms. Jones for her efforts. For the immediate future, we intend to use independent contractors and consultants to assist in many aspects of our business on an as needed basis pending financial resources being available. We may use independent contractors and consultants once we receive sufficient funding to hire additional employees. Even then, we will principally rely on independent contractors for substantially all of our technical and manufacturing needs.
There is no written employment contract or agreement. Currently, we are not actively seeking additional employees or engaging any consultants through a formal written agreement or contract. Services are provided on an as-needed basis to date. This may change in the event that we are able to secure financing through equity or loans to the Company.
Property
Our office and mailing address is 3272 Reynard Way, San Diego, CA 92103. The space is provided to us by Ms. Jones. Ms. Jones incurs no incremental costs as a result of our using the space. Therefore, she does not charge us for its use. There is no written lease agreement.
Litigation
We are not party to any pending, or to our knowledge, threatened litigation of any type.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our management consists of:
| | |
Name
| Age
| Title
|
Anna C. Jones
| 36
| President, CEO, principal executive officer, treasurer, chairman, principal financial officer and principal accounting officer
|
Anna Celeste Jones – founded the Company in June 2011. Ms. Jones through various family members over the past two decades has been exposed to the world of herbology; which began early in her upbringing as well as being taught about effective facial creams, sports balms and tinctures and their development. Ms. Jones has studied physiology, rehabilitation, nutrition and derma-care through a variety of programs available in Southern California. Ms. Jones currently works as a special cases manager with Work Comp Medical Services, Inc., a physicians scheduling and billing company based in San Diego. She has been with this organization for more than ten years. Ms. Jones is a self trained entrepreneur who has been involved with several projects and programs that have focused on internal as well as external processes that support healthy skin, which provides significant research for local universities. Ms. Jones has not held any executive positions in any public company nor does Ms. Jones have any accounting, financial reporting or legal education or experience that would be necessary as the business grows.
Possible Potential Conflicts
The OTCBB on which we plan to have our shares of common stock quoted does not currently have any director independence requirements.
No member of management will be requiredchosen by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.
Currently we have only one officer and one director (both of whom are the same person), and will seek to add additional officer(s) and/become directors or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.
In an effort to resolve potential conflicts of interest, we have entered into a written agreement with Ms. Jones specifying that any business opportunities that she may become aware of independently or directly through her association with us (as opposed to disclosure to her of such business opportunities by management or consultants associated with other entities) would be presented by her solely to us.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Code of Business Conduct and Ethics
In June 2011 we adopted a Code of Ethics and Business Conduct which is applicable to our future employees and which also includes a Code of Ethics for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:
·
honest and ethical conduct,
·
full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,
·
compliance with applicable laws, rules and regulations,
·
the prompt reporting violation of the code, and
·
accountability for adherence to the code.
A copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as Exhibit 14.1 to our Registration Statement of which this prospectus is a part.
Board of Directors
All directors will hold office until the completion of their term of office, which is not longer than one year, or until their successors have been elected. Our current directors’ term of office expires on June 30, 2012. All officers are appointed annually by the board of directors, subject to existing employment agreements (of which there are currently none) and serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.
As long as we have no additional directors besides our Chief Executive Officer and Chairman, all votes on issues are resolved in favor of the chairman’s vote.
Involvement in Certain Legal Proceedings
Except as described below, duringDuring the past ten10 years, no present director,none of our current directors, nominees for directors or current executive officer or person nominated to become a director or an executive officerofficers has been involved in any legal proceeding identified in Item 401(f) of BMI:
Regulation S-K, including:
1.
had a Any petition under the federalFederal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
2.
was convicted Any conviction in a criminal proceeding or being named a subject toof a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.
was Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, her involvement in any of the following activities:
i.
acting Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii.
engaging Engaging in any type of business practice; or
iii.
engaging Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federalFederal or stateState securities laws or federalFederal commodities laws; or
4.
was the Being subject ofto any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federalany Federal or stateState authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i), above,type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; or
5.
was Being found by a court of competent jurisdiction (inin a civil action),action or by the SecuritiesSEC to have violated any Federal or State securities law, and Exchangethe judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Being subject to, or a federalparty to, any Federal or stateState judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law and for which the judgment hasor regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not beenlimited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated.vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Director Independence
The Board of Directors reviews the independence of our directors on the basis of standards adopted by the NASDAQ Stock Market (“NASDAQ”). As a part of this review, the Board of Directors considers transactions and relationships between our company, on the one hand, and each director, members of the director’s immediate family, and other entities with which the director is affiliated, on the other hand. The purpose of such a review is to determine which, if any, of such transactions or relationships were inconsistent with a determination that the director is independent under NASDAQ rules. As a result of this review, the Board of Directors has determined that none of our directors is an “independent director” within the meaning of applicable NASDAQ listing standards.
Committees of the Board
Our full board serves the functions that would normally be served by a separately-designated Nominating Committee, and Compensation Committee.
Company has an Audit Committee with a financial expert on the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of Directorsthe Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2021. Following the year end, all of the Form 3s were filed late for incoming management of Etelix.com USA LLC.
ConcurrentCode of Ethics
We do not have a code of ethics but we plan to adopt one this fiscal year.
EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2021 and 2020.
Name and principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) (1)(2) | Total ($) |
Leandro Iglesias President, CEO and Director | 2020 2021 | 76,800 174,000 | - 419,024 | - - | - - | - - | 76,800 593,024 |
Alvaro Quintana Treasury, Secretary and Director | 2020 2021 | 25,100 159,088 | - 337,674 | - - | - - | - - | 25,100 496,762 |
Juan Carlos López Chief Commercial Officer | 2020 2021 | 28,500 80,000 | - 244,050 | - - | - - | - - | 28,500 324,050 |
On May 2, 2019, the Company entered into Employment Agreements with having sufficient membersthe following persons: (i) Leandro Iglesias as President, CEO and resources,Chairperson of the BMICompany’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 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. The above executive officers agreed to two year non-compete and non-solicit restrictive covenants with the Company. If any of the executive officers are terminated for cause they shall forfeit any rights to severance.
On November 1, 2020, our board of directors will establish an audit committee and a compensation committee. We believe that we will need a minimumapproved amended employments in favor of five directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. See “Executive Compensation” hereinafter.
All directors will be reimbursed by BMI for any expenses incurred in attending directors' meetings provided that BMI has the resources to pay these fees. BMI will consider applying for officers and directors liability insurance at such time when it has the resources to do so.
Summary Executive Compensation Table
The following table shows, for the period from June 24, 2011 (inception) to June 30, 2011, compensation awarded to or paid to, or earned by, our Chief Executive Officer, (the “Named Executive Officer”).Leandro Iglesias, our Chief Financial Officer, Alvaro Quintana, and our Chief Commercial Officer, Juan Carlos Lopez Silva.
| | | | | | | | | |
SUMMARY COMPENSATION TABLE |
Name
and
principal
position
(a) | Year
(b) | Salary
($)
(c) | Bonus
($)
(d) | Stock
Awards
($)
(e) | Option
Awards
($)
(f) | Non-Equity
Incentive
Plan
Compensation
($)
(g) | Nonqualified
Deferred
Compensation
Earnings
($)
(h) | All Other
Compensation
($)
(i) | Total ($)
(j) |
1 Anna C. Jones CEO, CFO and Director | 2011 | - | - | - | - | - | - | 5,000 | 5,000 |
ThereThe 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 no formal employment arrangement with Ms. Jones at this time. Ms. Jones’s compensation haseligible for quarterly bonus of 250,000 shares of our common stock. If we do not been fixedhave the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock or based on any percentage calculations. She makes all decisions determiningnewly 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 timingapplying a discount of her compensation25%.” 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). Mr. 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. 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). Mr. 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 immediate future, doesterm of employment from 36 months to 60 months. Mr. Silva is eligible for quarterly bonuses of 150,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%.
Option Grants
We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans.
Compensation of Directors
All Directors shall receive any compensationreimbursement for her services. Ms. Jones’s compensation amounts in the future mayreasonable travel expenses incurred to attend Board and committee meetings.
Effective on July 1, 2021 and thereafter, all Directors shall be formalized if and when her services are considered full-time in nature, i.e. in excess of 2080 hours per year and the Company has the necessary finances in ordercompensated monthly up to pay her.
1Ms. Jones received 5,000,0004,000 shares of common stock cash of $1,000 for their service as Directors. The Chairman and Secretary of the Company for organizational servicesBoard shall receive an additional $2,000 per month in addition to the Director compensation.
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 25%.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which was valuedwe provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at $5,000.the discretion of the board of directors or a committee thereof.
Compensation Committee
We do not currently have a compensation committee of the board of directors or a committee performing similar functions. The Company does not intend on issuing any additional shares to Ms. Jones for further organizational services or for her activitiesboard of directors as ana whole participates in the consideration of executive officer or director.and director compensation.
GrantsIndebtedness of Plan-Based Awards TableDirectors, Senior Officers, Executive Officers and Other Management
None of our nameddirectors or executive officers receivedor any grantsassociate or affiliate of stock, option awardsour company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other plan-based awards duringsimilar agreement or understanding currently outstanding.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than described below or the period ended June 30, 2011. The Company has no activitytransactions described under the heading “Executive Compensation” (or with respect to these awards.which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
Options Exercised and Stock Vested TableDue from related party
NoneDuring the year ended December 31, 2021, the Company loaned $220,674 to our CEO and applied to due to CEO of $8,004.
During the year ended December 31, 2021, the Company wrote off due from related party of $10,148.
During the year ended December 31, 2020, the Company loaned $20,182 to related parties who are a stockholder and a former director, collected $20,197 and wrote off amounts totaling $43,375.
During the years ended December 31, 2021 and 2020, the Company loaned $220,674 and $18,888 to a related party and collected $226 and $2,088, respectively.
As of December 31, 2021 and 2020, the Company had due from related parties of $424,086 and $221,790, respectively. The loans are unsecured, non-interest bearing and due on demand.
Due to related parties
During the years ended December 31, 2021 and 2020, the Company borrowed $0 and $20,182 from CEO and CFO of the Company, and repaid $90,787 and $20,197 to the CEO and CFO, respectively.
During the year ended December 31, 2020, the Company borrowed $20,000 from Francisco Bunt who owns 49% of loT Labs and repaid $20,000.
As of December 31, 2021 and 2020, the Company had amounts due to related parties of $26,613 and $94,616, respectively, which included $0 and $60,000 to Francisco Bunt (Note 4), respectively. The amounts are unsecured, non-interest bearing and due on demand.
Dept to Equity Swap
During the year ended December 31, 2021 the Company recorded a debt-to-equity swap to a related party of $1,647,150 as additional paid in capital.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of August 30, 2022, certain information as to shares of our namedvoting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers exercised any stock options, and no restricted stock units if any, held bydirectors as a group.
Unless otherwise indicated below, to our named executive officers vested during the period ended June 30, 2011. The Company has no activityknowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address of 300 Aragon Avenue, Suite 375, Coral Gables, FL 33134.
The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these awards.rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner.
| | | Common Stock |
| Name of Beneficial Owner | | Number of Shares Owned (1) | | Percent of Class (2) |
| Leandro Iglesias | | | 542,932 | | | | 0.358 | % |
| Alvaro Quintana Cardona | | | 1,121,842 | | | | 0.740 | % |
| Juan Carlos Lopez Silva | | | 925,497 | | | | 0.611 | % |
| Raul Perez | | | 8,000 | | | | 0.005 | % |
| Jose Antonio Barreto | | | 8,000 | | | | 0.005 | % |
| Italo Segnini | | | 8,000 | | | | 0.005 | % |
| All Directors and Executive Officers as a Group (6 persons) | | | 2,614,271 | | | | 1.724 | % |
Outstanding Equity Awards at Fiscal Year-End Table
| | | | Series A Preferred Stock | |
| Name of Beneficial Owner | | | Number of Shares Owned (1) | | | | Percent of Class (3) | |
| Leandro Iglesias | | | 7,000 | | | | 70.00 | % |
| Alvaro Quintana Cardona | | | 3,000 | | | | 30.00 | % |
| Juan Carlos Lopez Silva | | | — | | | | — | |
| Raul Perez | | | — | | | | — | |
| Jose Antonio Barreto | | | — | | | | — | |
| Italo Segnini | | | — | | | | — | |
| All Directors and Executive Officers as a Group (6 persons) | | | 10,000 | | | | 100.00 | % |
(1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity.
None(2) Pursuant to Rules 13d-3 and 13d-5 of our named executive officers hadthe Exchange Act, beneficial ownership includes any outstanding stockshares as to which a shareholder has sole or option awardsshared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 147,357,358 voting shares as of June 30, 2011 that would be compensatoryMarch 8, 2022.
(3) Pursuant to Rules 13d-3 and 13d-5 of the officer.Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The Company has not issued any awards to its named executive officers. The Company and its Boardpercent of Directors may grant awardsclass is based on 10,000 voting shares as it sees fit to its employees as well as key consultants.
of March 8, 2022.
PRINCIPAL SHAREHOLDERS
DESCRIPTION OF CAPITAL STOCK
As
Our authorized capital stock consists of May 31,2012 we had 7,500,000300,000,000 shares of common stock, outstanding which are held by one shareholder. The chart below sets forth the ownership, or claimed ownership,with a par value of certain individuals$0.001 per share, and entities. This chart discloses those persons known by the board1,200,000 shares of directors to have, or claim to have, beneficial ownershippreferred stock, with a par value of more than 5%$0.001 per share. As of the outstandingAugust 30, 2022, there were 151,559,011 shares of our common stock asissued and outstanding, 10,000 shares of May 31,2012;Series A Preferred Stock issued and outstanding, 21,000 shares of Series B Preferred Stock issued and outstanding and 0 shares of Series C Preferred stock issued and outstanding. Our shares of common stock are held by seventy (70) stockholders of record.
Common Stock
Our common stock is entitled to one vote per share on all directors and executive officersmatters submitted to a vote of BMI; andthe stockholders, including the election of directors. The holders of our common stock possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, and officers asby a group.
| | | | |
Title Of Class | Name, Title and Address of Beneficial Owner of Shares(a) | Amount of Beneficial Ownership(b) | Percent of Class |
| | | Before Offering | After Offering(d) |
Common | Anna C. Jones (c) | 7,500,000 | 100.00% | 75.00% |
| | | | |
| | | | |
| All Directors and Officers as a group (1 person) | 7,500,000 | 100.00% | 75.00% |
|
(a) The address for purposes of this table is the Company’s address which is 3272 Reynard Way, San Diego, California, 92103.
|
(b) Unless otherwise indicated, BMI believes that all persons named in the table have sole voting and investment power with respect to all shares of the common stock beneficially owned by them. A person is deemed to be the beneficial owner of securities which may be acquired by such person within 60 days from the date indicated above upon the exercise of options, warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants or convertible securities that are held by such person (but not those held by any other person) and which are exercisable within 60 days of the date indicated above, have been exercised.
|
(c) Ms. Jones received 2,500,000 shares for selling the product formulas and products samples to the Company on June 27, 2011. These product formulas are critical to our business.
|
(d) Assumes the sale of the maximum amount of this offering (2,500,000 shares of common stock). The aggregate amount of shares to be issued and outstanding after the offering will be 10,000,000 based upon such assumption.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The only promotersplurality) of the Company wouldvotes entitled to be Ms. Jones, founder, president, and chief executive officer, and principal financial officer, and up until January 23, 2012 whereby Gary B. Wolff, P.C., the Company’s former securities counselcast by virtue of the fact that Mr. Wolff’s firm was effectively financing this offering as a result of their agreement set forth in Exhibit 10.1 to the registration statement of which this prospectus is a part. The Company on January 23, 2012 terminated its legal representation agreement with Gary B. Wolff, P.C., a copy of which is attached as Exhibit 10.3 to the registration statement of which this prospectus is a part. The Company retained the services of Quick Law Group, P.C. as new legal counsel on March 7, 2012. Our agreement with new legal counsel provides for a fee of $30,000, $7,500 payable from the maximum offering proceeds, and the balance of $22,500 within four months of the date of our agreement entered into with the Quick Law Group.
While it may be asserted that the Quick Law Group, P.C. may be considered a “promoter” by virtue of the fact that Mr. Quick’s law firm may be effectively financing this offering through the deferral of legal fees, the Company and Mr. Quick believe these activities do not constitute the taking of an "initiative in founding and organizing the business or enterprise of an issuer," as set forth in the definition of "promoter" in Rule 405.
Our office and mailing address is 3272 Reynard Way, San Diego, CA 92103. The space is provided to us by Ms. Jones. Ms. Jones incurs no incremental costs as a result of our using the space. Therefore, she does not charge us for its use. There is no written lease agreement.
The Company issued 5,000,000 shares of its common stock to its President, Chief Executive Officer and Chief Financial Officer in exchange for organizational services incurred upon incorporation in June 2011. These services were valued at $5,000.
Ms. Jones developed our formulas. Ms. Jones received 2,500,000all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing a majority of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for sellingcumulative voting in the product formulas and product samples to us. The valueelection of the product formulas and product samples we purchased was $2,500 which approximates the cost incurred in developing the various formulas.directors.
As
Preferred Stock
Our board of March 31, 2012, we owed $11,626 in connection with an interest-free demand loan from two unrelated parties and $908 in connection with an interest-free demand loan from a related party. The proceeds were used for basic working capital purposes.
DESCRIPTION OF CAPITAL STOCK
Introduction
We were incorporated under the laws of the State of Nevada on June 24, 2011. BMI isdirectors may become authorized to issue 100,000,000authorize preferred shares of common stock and 1,000,000to divide the authorized shares of our preferred stock.
Preferred Stock
Our certificatestock into one or more series, each of incorporation authorizeswhich must be so designated as to distinguish the issuanceshares of 1,000,000 shareseach series of preferred stock with designations, rights and preferences determined from time to time by our board of directors. Nothe shares of preferred stock have been designated, issued or are outstanding. Accordingly, ourall other series and classes. Our board of directors is empowered, without stockholder approval,authorized, within any limitations prescribed by law and our articles of incorporation, to issue up to 1,000,000fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock with voting, liquidation, conversion, or other rights that could adversely affectincluding, but not limited to, the rights of the holders of the common stock. Although we have no present intention to issue any shares of preferred stock, there can be no assurance that we will not do so in the future.following:
Among other rights, our board of directors may determine, without further vote or action by our stockholders:
·
the1.The number of shares constituting that series and the distinctive designation of the series;that series, which may be by distinguishing number, letter or title;
·
whether to pay dividends2.The dividend rate on the shares of that series, and, if so, the dividend rate, whether dividends will be cumulative, and if so, from which date or dates,date(s), and the relative rights of priority, if any, of payment of dividends on shares of thethat series;
·
whether the3.Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of thesuch voting rights;
·
whether the4.Whether that series will be convertible into or exchangeable for shares of any other class or series of stockhave conversion privileges, and, if so, the terms and conditions of such conversion, or exchange;including provision for adjustment of the conversion rate in such events as the Board of Directors determines;
·
whether5.Whether or not the shares of thethat series will be redeemable, and, if so, the dates, terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and whether therethe amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;
6.Whether that series will behave a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of thesuch sinking fund; and
·
the7.The rights of the shares of thethat series in the event of our voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights orof priority, if any, of payment of shares of thethat series; and
8.Any other relative rights, preferences and limitations of that series.
We presently do not have plansSeries A Preferred Stock
On November 1, 2020, pursuant to issue any sharesArticle III of preferred stock. However, preferred stock could be usedour Articles of Incorporation, our Board of Directors voted to dilutedesignate a potential hostile acquirer. Accordingly, any future issuanceclass 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 any rightsliquidation. Holders of Series A Preferred Stock are entitled to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control in our Company or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to,vote together with the holders of our common stock and could adversely affect the rights and powers, including voting rights,on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders.
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 our common stock.
CommonSeries B Preferred Stock
Our certificate of incorporation authorizes the issuance of 100,000,000 shares of common stock. There are 7,500,000 shares of our common stock issued and outstanding at March 31, 2012 held by one shareholder, our President. will receive $81 per share in any distribution upon winding up, dissolution, or liquidation before junior security holders. Holders of our common stock:
·
have equal ratable rightsSeries B Preferred Stock are entitled to dividends from funds legally available for payment of dividendsreceive as, when, as and if declared by the boardBoard of directors;
·
are entitledDirectors, dividends in kind at an annual rate equal to twenty four percent (24%) of $81 per share ratably in allfor each of the assets available for distributionthen 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. Upon conversion, the shares are subject to holdersa one-year leak-out restriction on sales into the market of no more than 5% previous month’s stock liquidity.
On January 15, 2021, we entered into Conversion Agreements with Leandro Iglesias, our Chief Executive Officer and director, Alvaro Quintana, Chief Financial Officer and director, and Juan Carlos Lopez, our Chief Commercial Officer, pursuant to which we agreed to convert 21,000,000 shares of common stock from each officer into 21,000 shares of our Series B Preferred Stock, as follow:
| Shareholders | Number of Shares of Common Stock Converting Into Series B Preferred Stock | Number of shares of Series B Preferred Stock acquired in conversion |
| Leandro Iglesias | 12,200,000 | 12,200 |
| Alvaro Cardona | 5,300,000 | 5,300 |
| Juan Carlos Lopez | 3,500,000 | 3,500 |
| Total | 21,000,000 | 21,000 |
The parties entered into these Conversion Agreements to, among other things, allow more common stock to be available for future issuances in connection with note conversions and as a means to lock-up the shares of common stock underlying the Series B Preferred held by our officers from trading and to establish a leak-out agreement upon liquidation,any future conversions back to common stock.
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 winding upliquidation of our affairs;
·
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 preemptive, subscription or conversionvoting rights or redemption or access to any sinking fund; and
·
are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders
See also Plan of Distribution regarding negative implications of being classified as a “Penny Stock.”
Authorized but Un-issued Capital Stock
Nevada law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.
One of the effects of the existence of un-issued and unreservedconvert into common stock (and/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.
Dividend Policy
We have never declared or preferred stock) may bepaid any cash dividends on our common stock. We currently intend to enable our board of directorsretain future earnings, if any, to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain controlfinance the expansion of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of our common stock at prices higher than prevailing market prices.
Shareholder Matters
As an issuer of "penny stock" the protection provided by the federal securities laws relating to forward looking statements does not apply to us if our shares are considered to be penny stocks which they currently are and probably will be for the foreseeable future. Although the federal securities law provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks.business. As a result, we willdo not have the benefit of this safe harbor protectionanticipate paying any cash dividends in the event of any claim that the material provided by us, including this prospectus, contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.foreseeable future.
As a Nevada corporation, we are subject to theNevada Revised Statutes ("NRS" or "Nevada law"). Certain provisions ofNevada law described below create rights that might be deemed material to our shareholders. Other provisions might delay or make more difficult acquisitions of our stock or changes in our control or might also have the effect of preventing changes in our management or might make it more difficult to accomplish transactions that some of our shareholders may believe to be in their best interests.Anti-Takeover Laws
Directors' Duties. Section 78.138 of the Nevada law allows our directors and officers, in exercising their powers to further our interests, to consider the interests of our employees, suppliers, creditors and customers. They can also consider the economy of the state and the nation, the interests of the community and of society and our long-term and short-term interests and shareholders, including the possibility that these interests may be best served by our continued independence. Our directors may resist a change or potential change in control if they, by a majority vote of a quorum, determine that the change or potential change is opposed to or not in our best interest. Our board of directors may consider these interests or have reasonable grounds to believe that, within a reasonable time, any debt which might be created as a result of the change in control would cause our assets to be less than our liabilities, render us insolvent, or cause us to file for bankruptcy protection
Dissenters' Rights. Among the rights granted underNevada law which might be considered material is the right for shareholders to dissent from certain corporate actions and obtain payment for their shares (seeNevada Revised Statutes ("NRS") 92A.380-390). This right is subject to exceptions, summarized below, and arises in the event of mergers or plans of exchange. This right normally applies if shareholder approval of the corporate action is required either byNevada law or by the terms of the articles of incorporation.
A shareholder does not have the right to dissent with respect to any plan of merger or exchange, if the shares held by the shareholder are part of a class of shares which are:
·
listed on a national securities exchange,
·
included in the national market system by the Financial Industry Regulator Authority (FINRA), or
·
held of record by not less than 2,000 holders.
This exception notwithstanding, a shareholder will still have a right of dissent if it is provided for in the articles of incorporation or if the shareholders are required under the plan of merger or exchange to accept anything but cash or owner's interests, or a combination of the two, in the surviving or acquiring entity, or in any other entity falling in any of the three categories described above in this paragraph.
Inspection Rights.Nevada law also specifies that shareholders are to have the right to inspect company records (see NRS 78.105). This right extends to any person who has been a shareholder of record for at least six months immediately preceding his or her demand. It also extends to any person holding, or authorized in writing by the holders of, at least 5% of outstanding shares. Shareholders having this right are to be granted inspection rights upon five days' written notice. The records covered by this right include official copies of:
i.
the articles of incorporation, and all amendments thereto,
ii.
bylaws and all amendments thereto; and
iii.
a stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them, respectively.
In lieu of the stock ledger or duplicate stock ledger, Nevada law provides that the corporation may keep a statement setting out the name of the custodian of the stock ledger or duplicate stock ledger, and the present and complete post office address, including street and number, if any, where the stock ledger or duplicate stock ledger specified in this section is kept.
Control Share Acquisitions. Sectionssections 78.378 to 78.3793 of Nevada law contain provisions that may prevent any person acquiring a controlling interest in a Nevada-registered company from exercising voting rights. To the extent that these rights support the voting power of minority shareholders, these rights may also be deemed material. These provisions will be applicable to us as soon as we have 200 shareholders of record with at least 100 of these having addresses in Nevada as reflected on our stock ledger. While we do not yet have the required number of shareholders in Nevada or elsewhere, it is possible that at some future point we will reach these numbers and, accordingly, these provisions will become applicable. We do not intend to notify shareholders when we have reached the number of shareholders specified under these provisions of Nevada law. Shareholders can learn this information pursuant to the inspection rights described above and can see the approximate number of our shareholders by checking under Item 5 of our annual reports on Form 10-K. This form is filed with the Securities and Exchange Commission within 90 days after the close of each fiscal year hereafter. You can view these and our other filings at www.sec.gov in the "EDGAR" database.
Under NRS Sections 78.378 to 78.3793, an acquiring person who acquires a controlling interest in company shares may not exercise voting rights on any of these shares unless these voting rights are granted by a majority vote of our disinterested shareholders at a special shareholders' meeting held upon the request and at the expense of the acquiring person. If the acquiring person's shares are accorded full voting rights and the acquiring person acquires control shares with a majority or more of all the voting power, any shareholder, other than the acquiring person, who does not vote for authorizing voting rights for the control shares, is entitled to demand payment for the fair value of their shares, and we must comply with the demand. An "acquiring person" means any person who, individually or acting with others, acquires or offers to acquire, directly or indirectly, a controlling interest in our shares. "Controlling interest" means the ownership of our outstanding voting shares sufficient to enable the acquiring person, individually or acting with others, directly or indirectly, to exercise one-fifth or more but less than one-third, one-third or more but less than a majority, or a majority or more of the voting power of our shares in the election of our directors. Voting rights must be given by a majority of our disinterested shareholders as each threshold is reached or exceeded. "Control shares" means the company's outstanding voting shares that an acquiring person acquires or offers to acquire in an acquisition or within 90 days immediately preceding the date when the acquiring person becomes an acquiring person.
These Nevada statutes do not apply if a company's articles of incorporation or bylaws in effect on the tenth day following the acquisition of a controlling interest by an acquiring person78.379 provide that these provisions do not apply.
According to NRS 78.378, the provisions referred to above will not restrict our directors from taking action to protect the interests of our Company and its shareholders, including without limitation, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power. Likewise, these provisions do not prevent directors or shareholders from including stricter requirements in our articles of incorporation or bylaws relating tostate regulation over the acquisition of a controlling interest in certain Nevada corporations unless the Company.
articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not exclude us from the restrictions imposed by NRS 78.378 to 78.3793, nor do they impose any more stringent requirements.
Certain Business Combinations. Sections 78.411 to 78.444 of the Nevada law may restrict our ability to engage in a wide variety of transactions with an "interested shareholder." As was discussed above in connection with NRS 78.378 to 78.3793,state that these provisions could be considered materialdo not apply. The statute creates a number of restrictions on the ability of a person or entity to our shareholders, particularly to minority shareholders. They might also have the effectacquire control of delaying or making more difficult acquisitions of our stock or changes in our control. These sections of NRS are applicable to anya Nevada company withby setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and that has a class of securities registered under Section 12residents of the 1934 Securities Exchange Act, unlessState of Nevada; and does business in the company's articles of incorporation provide otherwise. By this registration statement, we are not registering our common stock under Section 12(g) of the Exchange Act. Accordingly, upon the effectiveness of this registration statement on Form S-1 we will not be subject to these statutes.
These provisionsState of Nevada law prohibit us from engaging in any "combination" with an interested stockholder for three years after the interested stockholder acquired the shares that cause him/her to become an interested shareholder, unless she had prior approval of our board of directors. The term "combination" is described in NRS 78.416 and includes, among other things, mergers, sales or purchases of assets, and issuances or reclassifications of securities. If the combination did not have prior approval, the interested shareholder may proceed after the three-year period only if the shareholder receives approval from a majority of our disinterested shares or the offer meets the requirements for fairness that are specified in NRS 78.441-42. For the above provisions, "resident domestic corporation" means a Nevada corporation that has 200 or more shareholders. An "interested stockholder" is defined in NSR 78.423 as someone who is either:
§
the beneficial owner, directly or indirectly,through an affiliated corporation. Because of 10% or morethese conditions, the statute currently does not apply to our company.
Listing of Common Stock
Our Common Stock is currently quoted on the voting power of our outstanding voting shares; orOTCQX under the trading symbol “IQST.”
§
our affiliate or associate and who within three years immediately before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding shares at that time.
Amendments to Bylaws -Our articles of incorporation provide that the power to adopt, alter, amend, or repeal our bylaws is vested exclusively with the board of directors. In exercising this discretion, our board of directors could conceivably alter our bylaws in ways that would affect the rights of our shareholders and the ability of any shareholder or group to effect a change in our control; however, the board would not have the right to do so in a way that would violate law or the applicable terms of our articles of incorporation.
Transfer Agent and Registrar
The transfer agent for our common stock is Action Stock Transfer Company, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, UT 84121. Its telephone number is 801-274-1088.
PLAN OF DISTRIBUTION
There is no public market for our common stock. Our common stock is currently held by one shareholder. Therefore, the current and potential market for our common stock is limited and the liquidityregistrar of our shares mayCommon Stock is VStock Transfer, LLC.
Penny Stock Regulation
The SEC has adopted regulations which generally define “penny stock” to be severely limited. Whileany equity security that has a market maker has agreed to fileprice (as defined) of less than $5.00 per share or an application on our behalf with FINRA so as to be able to quote the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectiveness of our registration statement of which this prospectus is a part and the subsequent closing of this offering, we do not have a formal or written agreement in place with them. There can be no assurance as to whether such market maker’s application will be accepted by FINRA nor can we estimate the time period that will be required for the application process. In the absence of quotation or listing, no market is available for investors in our common stock to sell their shares. We cannot provide any assurance that a meaningful trading market will ever develop or that our common stock will ever be quoted or listed for trading.
If the shares of our common stock ever become tradable, the tradingexercise price of our common stock could beless than $5.00 per share. Such securities are subject to wide fluctuations in response to various events or factors, many of which are beyond our control. As a result, investors may be unable to sell their shares at or greater than the price at which they are being offered.
This offering will be conducted on a direct primary basis utilizing the efforts of Ms. Jones, president of the Company. Potential investors include, but are not limited to, family, friends and acquaintances of Ms. Jones. The intended methods of communication include, without limitation, telephone calls and personal contact. In her endeavors to sell this offering, Ms. Jones will not use any mass advertising methods such as the internet or print media.
Funds received in connection with the sale of our securities will be transmitted immediately into a trust account. There can be no assurancerules that all, or any, of the shares will be sold.
Ms. Jones will not receive commissions for any sales originated on our behalf. We believe that Ms. Jones is exempt from registration as a broker-dealer under the provisions of Rule 3a4-1 promulgated under the Exchange Act. In particular, Ms. Jones:
1.
Is not subject to a statutory disqualification, as that term is defined in Section 3(a) 39 of the Act, at the time of her participation;
a.
Is not to be compensated in connection with her participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
b.
Is not an associated person of a broker or dealer; and
c.
Meets the conditions of the following:
i.
Primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities;
ii.
Was not a broker or dealer, or associated persons of a broker or dealer, within the preceding 12 months; and
iii.
Did not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs within this section, except that for securities issued pursuant to Rule 415 under the Securities Act of 1933, the 12 months shall begin with the last sale of any security included within a Rule 415 registration
No officers or directors of the Company may purchase any securities in this offering.
There can be no assurance that all, or any, of the shares will be sold. As of this date, we have not entered into any agreements or arrangements for the sale of the shares with any broker/dealer or sales agent. However, if we were to enter into such arrangements, we will file a post effective amendment to disclose those arrangements because any broker/dealer participating in the offering would be acting as an underwriter and would have to be so named herein. In order to comply with the applicable securities laws of certain states, the securities may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available and with which we have complied. The purchasers in this offering and in any subsequent trading market must be residents of such states where the shares have been registered or qualified for sale or an exemption from such registration or qualification requirement is available. As of this date, we have not identified the specific states where the offering will be sold.
The proceeds from the sale of the shares in this offering will be payable to Quick Law Group, P.C. – COLTAF ("Fund Retention Account") and will be deposited in a noninterest-bearing account until the subscription agreements are accepted by the Company. Failure to do so will result in checks being returned to the investor who submitted the check. No interest will be paid to any shareholder or the Company. All subscription agreements and checks are irrevocable (except as to any states that require a statutory cooling-off period or provide for rescission rights). All subscription funds will be held in the Fund Retention Account pending acceptance of the subscription by the Company, and funds shall be released to BMI as received and cleared from the Fund Retention Account, until the maximum offering is fully subscribed for, or the offering is closed, withdrawn or terminated. Thereafter, the fund retention agreement shall terminate.
Investors can purchase common stock in this offering by completing a Subscription Agreement, a copy of which is filed as Exhibit 99.1a to the registration statement of which this prospectus is a part, and sending it together with payment in full. All payments must be made in United States currency either by personal check, bank draft, or cashier check. There is no minimum subscription requirement. All subscription agreements and checks are irrevocable. The Company expressly reserves the right to either accept or reject any subscription. Any subscription rejected will be returned to the subscriber within five business days of the rejection date which is 48 hours from the date the subscription and funds are received in the Fund Retention Account. Furthermore, once a subscription agreement is accepted, it will be executed without reconfirmation to or from the subscriber. Once we accept a subscription, the subscriber cannot withdraw it.
Any purchasers of our securities should be aware that any market that develops in our common stock will be subject to “penny stock” restrictions.
We will pay all expenses incident to the registration, offering and sale of the shares other than commissions or discounts to underwriters, broker-dealers or agents.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Any purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.
The trading of our securities, if any, will be in the over-the-counter markets which are commonly referred to as the OTCBB as maintained by FINRA (once and if and when quoting thereon has occurred). As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.
OTCBB Considerations
OTCBB securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTCBB securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTCBB stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
To be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. We are not permitted to file such application on our own behalf. A market maker has agreed to file an application with FINRA on our behalf so as to be able to quote the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectiveness of our registration statement of which this prospectus is a part. There can be no assurance that the market maker’s application will be accepted by FINRA, nor can we estimate as to the time period that the application will require.
The OTCBB is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTCBB. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTCBB.
Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTCBB has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company assuming all FINRA questions relating to its Rule 211 process are answered accurately and satisfactorily. The only requirement for ongoing inclusion in the OTCBB is that the issuer be current in its reporting requirements with the SEC.
Although we anticipate that quotation on the OTCBB will increase liquidity for our stock, investors may have difficulty in getting orders filled because trading activity on the OTCBB in general is not conducted as efficiently and effectively as with NASDAQ-listed securities. As a result, investors’ orders may be filled at a price much different than expected when an order is placed.
Investors must contact a broker-dealer to trade OTCBB securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker.
OTCBB transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the OTCBB, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.
If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCBB). What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.
Because OTCBB stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.
Section 15(g) of the Exchange Act
Our shares will be covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder. They impose additional sales practice requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses).
Rule 15g-1 exempts a number of specificthem. For transactions from the scope of the penny stockcovered by these rules, (but is not applicable to us).
Rule 15g-2 declares unlawful broker-dealer transactions in penny stocks unless the broker-dealer has first providedmust make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker-dealers selling penny stocks to provide their customers with monthly account statements.
Rule 3a51-1 of the Exchange Act establishes the definition of a "penny stock,"purchase. Additionally, for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreementdelivery, prior to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
·
the basis on which the broker or dealer made the suitability determination, and
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction
Disclosuremarket. The broker-dealer also has to be made aboutmust disclose the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the rightsbroker-dealer is the sole market-maker, the broker-dealer must disclose this fact and remedies available to an investor in cases of fraud in penny stock transactions. Additionally,the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements have tomust be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Many brokers have decided not As the Shares immediately following this Offering will likely be subject to trade penny stocks because of the requirements of thesuch penny stock rules, and, as a result, the number of broker-dealers willing to act as market makerspurchasers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, which is likely, it could have an adverse effect on the market, if any, for the Company’s securities. If the Company’s securities are subject to the penny stock rules, investorsthis Offering will in all likelihood find it more difficult to disposesell their Shares in the secondary market.
PLAN OF DISTRIBUTION
Primary Offering
We are offering 10,000,000 shares at a fixed price of the Company’s securities.
State Securities – Blue Sky Laws
There is no established$0.35 per share even if a public trading market for our common stock,shares develops. The $0.35 fixed per share offering price for the duration of this offering was arbitrarily chosen by management. There is no relationship between this price and there canour assets, earnings, book value or any other objective criteria of value.
This offering is being made by us without the use of outside underwriters or broker-dealers. The shares to be no assurance thatsold by us will be sold on our behalf by our officers and directors. They will not receive commissions or proceeds or other compensation from the sale of any marketshares on our behalf.
Our officers and directors will developnot register as broker-dealers pursuant to Section 15 of the Exchange Act, in reliance upon Rule 3a4-1, which sets forth those conditions under which a person associated with an issuer may participate in the foreseeable future. Transferoffering of our common stock may also be restricted under the issuer's securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as "Blue Sky" laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.
We will consider applying for listing in Mergent, Inc., a leading provider of business and financial information on publicly listed companies, which, once published, will provide BMI with “manual” exemptions in approximately 33 states as indicated in CCH Blue Sky Law Desk Reference at Section 6301 entitled “Standard Manuals Exemptions.” However, we may not be accepted for listing in Mergent or similar services designed to obtain manual exemptions if we are considereddeemed to be a "shell company"broker-dealer.
1. Our officers and directors are not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of application.his participation;
Thirty-three states have what is commonly referred to as2. Our officers and directors will not be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
3. Our officers and directors are not, nor will they be at the time of participation in the offering, associated persons of a "manual exemption" for secondary tradingbroker-dealer; and
4. Our officers and directors meets the conditions of securities such as those to be resold by selling stockholders. In these states, so long as we obtain and maintain a listing in Mergent, Inc. or Standard and Poor's Corporate Manual, secondary tradingparagraph (a)(4)(ii) of our common stock can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia and Wyoming. We cannot secure this listing, and thus this qualification, until after our registration statement is declared effective. Once we secure this listing (assuming that being a development stage and shell company is not a bar to such listing), secondary trading can occur in these states without further action.
Upon effectiveness of this Prospectus, the Company intends to consider (but may not) becoming a “reporting issuer” under Section 12(g)Rule 3a4-1 of the Exchange Act, as amended, by way of filing a Form 8-A within that they: (A) primarily perform, or are intended primarily to perform at the SEC. A Form 8-A is a “short form” of registration whereby information about the Company will be incorporated by reference to the Registration Statement on Form S-1, of which this prospectus is a part. Upon filingend of the Form 8-A, if done,offering, substantial duties for or on behalf of our company, other than in connection with transactions in securities; and (B) are not broker or dealers, or been associated persons of a broker or dealer, within the Company’s shares of common stock will become “coveredpreceding twelve months; and (C) have not participated in selling and offering securities” for any issuer more than once every twelve months other than in reliance on paragraphs (a)(4)(i) or “federally covered securities” as described in some states’ laws, which means that unless you(a)(4)(iii).
Secondary Offering
We are an “underwriter” or “dealer,” you will have a “secondary trading” exemption under the laws of most states (and the District of Columbia, Guam, the Virgin Islands and Puerto Rico) to resellregistering the shares of common stock you purchase inCommon Stock to permit the resale of these shares of Common Stock by the Selling Stockholder and any of its transferees, pledgees, assignees, donees, and successors-in-interest from time to time after the date of this offering. However, four states do impose filing requirementsprospectus. We will not receive any of the proceeds from the sale by the Selling Stockholder of the shares of Common Stock other than the exercise price for the option, which we plan to use for working capital.
The Selling Stockholder and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered if hereby on the Company: Michigan, New Hampshire, TexasOTC Markets or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. The Selling Stockholders may use any one or more of the following methods when selling securities:
| § | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| § | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| § | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| § | an exchange distribution in accordance with the rules of the applicable exchange; |
| § | privately negotiated transactions; |
| § | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
| § | in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; |
| § | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| § | a combination of any such methods of sale; or |
| § | any other method permitted pursuant to applicable law. |
The Selling Stockholder may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and Vermont. in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Stockholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out its short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholder and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because Selling Stockholder may at its own cost, makebe deemed to be “underwriter” within the required notice filingsmeaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholder has advised us that there is no underwriter or coordinating broker acting in Michigan, New Hampshire, Texas and Vermont immediately after filing its Form 8-Aconnection with the SEC.proposed sale of the resale securities by the Selling Stockholder.
We currently do not intendagreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholder without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be able to qualify securitiessold unless they have been registered or qualified for resalesale in other states which require shares to be qualified before they can be resold by our shareholders.the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Limitations Imposed by Regulation M
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the sharesresale securities may not simultaneously engage in market making activities with respect to ourthe common stock for athe applicable restricted period, of two business daysas defined in Regulation M, prior to the commencement of suchthe distribution. In addition, the Selling Shareholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Shareholder or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
LEGAL MATTERS
INTERESTS OF NAMED EXPERTS AND COUNSEL
The
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the issuancesecurities being registered or upon other legal matters in connection with the registration or offering of the shares of common stock offered hereby will be passed upon for us by Quick Law Group, P.C., 1035 Pearl Street, Suite 403, Boulder, Colorado 80302.
was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
EXPERTS
The Doney Law Firm, our independent legal counsel, has provided an opinion on the validity of our common stock.
Urish Popeck & Co., LLC has audited our consolidated financial statements of BMI as of June 30, 2011 and for the period June 24, 2011 (inception) to June 30, 2011years ended December 31, 2021 and 2020 included in this prospectus have beenand registration statement. Urish Popeck & Co., LLC has presented their report with respect to our audited by independent registered public accountants and have been soconsolidated financial statements. The report of Urish Popeck & Co., LLC is included in reliance upon the report of PLS CPA, a Professional Corporation given on thetheir authority of such firm as experts in accounting and auditing.
auditing
UNAUDITED INTERIM STATEMENTS
The information for the interim period ended March 31, 2012 is unaudited; however, it includes all adjustments considered necessary by management for a fair presentation of our financial condition and results of operations.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration statement on Form S-1 including(including the exhibits, schedules and amendments thereto) under the Securities Act, with respect to the shares of our common stock to be sold in this offering.offered hereby. This prospectus does not contain all of the information includedset forth in the registration statement.statement and the exhibits and schedules thereto. For further information aboutwith respect to us and the sharescommon stock offered hereby, reference is made to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus as to the contents of any contract, agreement or other documents are summaries of the material terms of that contract, agreement or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description of the matter involved. Copies of the registration statement, and the exhibits and schedules thereto, may be accessed at the Securities and Exchange Commission’s website at www.sec.gov. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. The address of the Securities and Exchange Commission’s website is http://www.sec.gov.
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. We make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission available, free of charge, through our website at www.iQSTEL.com/investor-releations, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the Securities and Exchange Commission. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. You may read and copy any reports, statements or other information on file at the public reference rooms. You can also request copies of these documents, for a copying fee, by writing to the Securities and Exchange Commission, or you can review these documents on the Securities and Exchange Commission’s website, as described above. In addition, we will provide electronic or paper copies of our common stockfilings free of charge upon request.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to be sold in“incorporate by reference” certain information we have filed with the Securities and Exchange Commission into this offering, please referprospectus, which means we are disclosing important information to our registration statement.
Asyou by referring you to other information we have filed with the Securities and Exchange Commission. The information we incorporate by reference is considered part of this prospectus. All reports and definitive proxy or information statements subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the effectiveSecurities Exchange Act of 1934, as amended, on or after the date of ourthis prospectus and prior to the sale of all securities registered hereunder or termination of the registration statement of which this prospectus isforms a part we will become subject to certain informational requirements of the Exchange Act, as amended(excluding any disclosures that are furnished and we will be required to file periodic reports (i.e., annual, quarterly and material events)not filed with the SEC which willSecurities and Exchange Commission) shall be immediately availabledeemed to be incorporated by reference into this prospectus and to be part hereof from the date of filing of such reports and other documents.
Notwithstanding the foregoing, we are not incorporating by reference any documents, portions of documents, exhibits or other information that is deemed to have been furnished to, rather than filed with, the Securities and Exchange Commission.
Any statement contained in a document incorporated by reference into this prospectus shall be deemed to be modified or superseded for the purposes of this prospectus or any prospectus supplement to the public for inspection and copying. Except during the yearextent that our registrationa statement becomes effective, these reporting obligations may (in our sole discretion) be automatically suspended under Section 15(d) of the Exchange Act if we have less than 500contained herein or more security holders and $10 millionany prospectus supplement or in assets and do not file a registrationany subsequently filed document that is also incorporated by reference in this prospectus or any prospectus supplement modifies or supersedes such statement. Any statement on Form 8-A (of which we have no current plans to file). If this occurs after the year in which our registration statement becomes effective, we will no longer be obligated to file such periodic reports with the SEC and your access to our business information would then be even more restricted. After this registration statement on Form S-1 becomes effective, we may be required to deliver periodic reports to security holders as proscribed by the Exchange Act, as amended. However, we willso modified or superseded shall not be requireddeemed, except as so modified or superseded, to furnish proxy statements to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial ownershipconstitute a part of securities to the SEC pursuant to Section 16 of the Exchange Act. Previously, a company with more than 500 shareholders of record and $10 million in assets had to register under the Exchange Act. However, the JOBS Act raises the minimum shareholder threshold from 500 to either 2,000 personsthis prospectus or 500 persons who are not "accredited investors" (or 2,000 persons in the case of banks and bank holding companies). The Act excludes securities received by employees pursuant to employee stock incentive plans for purposes of calculating the shareholder threshold. This means that access to information regarding our business and operations will be limited.any prospectus supplement.
You may read and copy any document we file at the SEC's public reference room at 100 F Street, N. E., Washington, D.C. 20549. You should call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings will also be available to the public at the SEC's web site at "http:/www.sec.gov."
You may request and we will voluntarily provide, a copy of ourthe filings incorporated herein by reference, including our annual report which will contain audited financial statements,exhibits to such documents that are specifically incorporated by reference, at no cost, to you, by writing or telephoningcalling us at the following address:address or telephone number:
B-Maven,IQSTEL Inc. Inc.
3272 Reynard Way 300 Aragon Avenue, Suite 375
San Diego, CA 92103Coral Gables, FL 33134
619-846-4614Phone: (877) 786-8500
Statements contained in this prospectus as to the contents of any contract or other documents are not necessarily complete, and in each instance investors are referred to the copy of the contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference and the exhibits and schedules thereto.
B-MAVEN,IQSTEL INC.
(a Development Stage Company)
June 30, 2011
INDEX TO UNAUDITED FINANCIAL STATEMENTS
| | Page |
Contents
Balance Sheets | Page(s)
| F-1 |
| Statement of Operations | | F-2 |
| Statement of Changes in Stockholders’ Deficit | | F-3 |
| Statement of Cash Flows | | F-4 |
| Notes to Financial Statements | | F-5 |
IQSTEL INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
| | Page |
Report of Independent Registered Public Accounting FirmFirms | F-2
| F-15 |
| Balance Sheets | | F-18 |
Balance Sheet at June 30, 2011
| F-3
|
| |
Statement of Operations for the Period June 24, 2011 (inception) to June 30, 2011 | F-4
| F-19 |
| Statement of Changes in Stockholders’ Deficit | | F-20 |
Statement of Stockholders’ Equity for the Period June 24, 2011 (inception) to June 30, 2011
| F-5
|
| |
Statement of Cash Flows for the Period June 24, 2011 (inception) to June 30, 2011 | F-6
| F-21 |
| |
Notes to the Financial Statements | F-7
|
| |
Unaudited Interim Financial Statements for the Period Ended March, 31, 2012
| F-11
F-22 |
F-1
![[s1a6_s1z001.jpg]](https://files.docoh.com/S-1A/0001078782-12-001550/s1a6_s1z001.jpg)
iQSTEL INC
Consolidated Balance Sheets
(Unaudited)
| | | June 30, | | December 31, |
| | | 2022 | | 2021 |
| ASSETS | | | | |
| Current Assets | | | | | | | | |
| Cash | | $ | 1,645,937 | | | $ | 3,334,813 | |
| Accounts receivable, net | | | 4,303,010 | | | | 2,540,515 | |
| Due from related parties | | | 375,955 | | | | 424,086 | |
| Prepaid and other current assets | | | 493,539 | | | | 267,110 | |
| Total Current Assets | | | 6,818,441 | | | | 6,566,524 | |
| | | | | | | | | |
| Property and equipment, net | | | 386,707 | | | | 409,382 | |
| Intangible asset | | | 99,592 | | | | 99,592 | |
| Goodwill | | | 5,172,146 | | | | 1,537,742 | |
| Deferred tax assets | | | 426,664 | | | | 446,402 | |
| TOTAL ASSETS | | $ | 12,903,550 | | | $ | 9,059,642 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | | 2,517,086 | | | | 1,474,595 | |
| Due to related parties | | | 26,613 | | | | 26,613 | |
| Loans payable - net of discount of $0 and $7,406 | | | 96,185 | | | | 315,450 | |
| Loans payable - related parties | | | 228,727 | | | | 239,308 | |
| Other current liabilities | | | 658,131 | | | | 307,049 | |
| Stock payable | | | 80,674 | | | | — | |
| Total Current Liabilities | | | 3,607,416 | | | | 2,363,015 | |
| | | | | | | | | |
| Loans payable, non-current | | | 104,840 | | | | 119,295 | |
| Employee benefits, non-current | | | 149,518 | | | | 156,434 | |
| TOTAL LIABILITIES | | | 3,861,774 | | | | 2,638,744 | |
| | | | | | | | | |
| Stockholders' Equity | | | | | | | | |
| 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 shares issued and outstanding | | | 21 | | | | 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
151,559,011 and 147,477,358 shares issued and outstanding, respectively | | | 151,559 | | | | 147,477 | |
| Additional paid in capital | | | 29,304,429 | | | | 25,842,982 | |
| Accumulated deficit | | | (19,443,071 | ) | | | (18,536,921 | ) |
| Accumulated other comprehensive loss | | | (37,376 | ) | | | (36,658 | ) |
| Equity attributed to stockholders of iQSTEL Inc. | | | 9,975,572 | | | | 7,416,911 | |
| Deficit attributable to noncontrolling interests | | | (933,796 | ) | | | (996,013 | ) |
| Total Stockholders' Equity | | | 9,041,776 | | | | 6,420,898 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 12,903,550 | | | $ | 9,059,642 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
iQSTEL INC
Consolidated Statements of Operations
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | | |
| Revenues | | $ | 23,699,716 | | | $ | 16,128,367 | | | $ | 43,119,027 | | | $ | 30,325,978 | |
| Cost of revenue | | | 22,853,442 | | | | 16,083,802 | | | | 41,788,693 | | | | 29,794,043 | |
| Gross profit | | | 846,274 | | | | 44,565 | | | | 1,330,334 | | | | 531,935 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 1,144,452 | | | | 1,209,167 | | | | 2,133,950 | | | | 2,707,278 | |
| Total operating expenses | | | 1,144,452 | | | | 1,209,167 | | | | 2,133,950 | | | | 2,707,278 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (298,178 | ) | | | (1,164,602 | ) | | | (803,616 | ) | | | (2,175,343 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | | | | | | | |
| Other income | | | 6,432 | | | | 4,145 | | | | (4,628 | ) | | | 29,179 | |
| Other expenses | | | 10,125 | | | | (427 | ) | | | 16,780 | | | | (896 | ) |
| Interest expense | | | (3,836 | ) | | | (12,062 | ) | | | (18,724 | ) | | | (642,087 | ) |
| Change in fair value of derivative liabilities | | | — | | | | 39,505 | | | | — | | | | 317,080 | |
| Gain (loss) on settlement of debt | | | — | | | | 11,069 | | | | — | | | | (528,794 | ) |
| Total other income (expense) | | | 12,721 | | | | 42,230 | | | | (6,572 | ) | | | (825,518 | ) |
| | | | | | | | | | | | | | | | | |
| Income taxes | | | — | | | | — | | | | — | | | | — | |
| Net loss | | | (285,457 | ) | | | (1,122,372 | ) | | | (810,188 | ) | | | (3,000,861 | ) |
| Less: Net income (loss) attributable to noncontrolling interests | | | 65,723 | | | | (134,996 | ) | | | 95,962 | | | | (71,094 | ) |
| Net loss attributed to stockholders of iQSTEL Inc. | | $ | (351,180 | ) | | $ | (987,376 | ) | | $ | (906,150 | ) | | $ | (2,929,767 | ) |
| | | | | | | | | | | | | | | | | |
| Comprehensive income (loss) | | | | | | | | | | | | | | | | |
| Net loss | | $ | (285,457 | ) | | $ | (1,122,372 | ) | | $ | (810,188 | ) | | $ | (3,000,861 | ) |
| Foreign currency adjustment | | | (1,023 | ) | | | (56,664 | ) | | | (1,407 | ) | | | 50,992 | |
| Total comprehensive loss | | | (286,480 | ) | | $ | (1,179,036 | ) | | $ | (811,595 | ) | | $ | (2,949,869 | ) |
| Less: Comprehensive income (loss) attributable to noncontrolling interests | | | 65,222 | | | | (162,761 | ) | | | 95,273 | | | | (46,108 | ) |
| Net comprehensive loss attributed to stockholders of iQSTEL Inc. | | $ | (351,702 | ) | | $ | (1,016,275 | ) | | $ | (906,868 | ) | | $ | (2,903,761 | ) |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per common share | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.02 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average number of common shares outstanding - Basic and diluted | | | 150,835,665 | | | | 139,078,656 | | | | 149,196,728 | | | | 128,840,922 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
iQSTEL INC
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the three and six months ended June 30, 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 | | | 10,000 | | | $ | 10 | | | | 21,000 | | | $ | 21 | | | | 147,477,358 | | | $ | 147,477 | | | $ | 25,842,982 | | | $ | (18,536,921 | ) | | $ | (36,658 | ) | | $ | 7,416,911 | | | $ | (996,013 | ) | | $ | 6,420,898 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for cash | | | — | | | | — | | | | — | | | | — | | | | 2,000,000 | | | | 2,000 | | | | 998,000 | | | | — | | | | — | | | | 1,000,000 | | | | — | | | | 1,000,000 |
| Common stock issued for compensation | | | — | | | | — | | | | — | | | | — | | | | 60,000 | | | | 60 | | | | 41,079 | | | | — | | | | — | | | | 41,139 | | | | — | | | | 41,139 |
| Foreign currency translation adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (196 | ) | | | (196 | ) | | | (188 | ) | | | (3840 |
| Net income (loss) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (554,970 | ) | | | — | | | | (554,970 | ) | | | 30,239 | | | | (524,731) |
| Balance - March 31, 2022 | | | 10,000 | | | $ | 10 | | | | 21,000 | | | $ | 21 | | | | 149,537,358 | | | $ | 149,537 | | | $ | 26,882,061 | | | $ | (19,091,891 | ) | | $ | (36,854 | ) | | $ | 7,902,884 | | | $ | (965,962 | ) | | $ | 6,936,922 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for compensation | | | — | | | | — | | | | — | | | | — | | | | 60,000 | | | | 60 | | | | 30,430 | | | | — | | | | — | | | | 30,490 | | | | — | | | | 30,490 |
| Common stock issued and to be issued for acquisition of subsidiaries | | | — | | | | — | | | | — | | | | — | | | | 1,461,653 | | | | 1,462 | | | | 1,548,538 | | | | — | | | | — | | | | 1,550,000 | | | | (33,056 | ) | | | 1,516,944 |
| Common stock issued for asset acquisition | | | — | | | | — | | | | — | | | | — | | | | 500,000 | | | | 500 | | | | 324,500 | | | | — | | | | — | | | | 325,000 | | | | — | | | | 325,000 |
| Common stock payable | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,900 | | | | — | | | | — | | | | 18,900 | | | | — | | | | 18,900 |
| Issuance of common stock purchase option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 500,000 | | | | — | | | | — | | | | 500,000 | | | | — | | | | 500,000 |
| Foreign currency translation adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (522 | ) | | | (522 | ) | | | (501 | ) | | | (1,023) |
| Net income (loss) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (351,180 | ) | | | — | | | | (351,180 | ) | | | 65,723 | | | | (285,457) |
| Balance - June 30, 2022 | | | 10,000 | | | $ | 10 | | | | 21,000 | | | $ | 21 | | | | 151,559,011 | | | $ | 151,559 | | | $ | 29,304,429 | | | $ | (19,443,071 | ) | | $ | (37,376 | ) | | $ | 9,975,572 | | | $ | (933,796 | ) | | $ | 9,041,776 |
| | | | 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 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
iQSTEL INC
Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | |
| | | Six Months Ended |
| | | June 30, |
| | | 2022 | | 2021 |
| | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net loss | | $ | (810,188 | ) | | $ | (3,000,861 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Stock based compensation | | | 90,529 | | | | 1,170,796 | |
| Depreciation and amortization | | | 62,371 | | | | 42,421 | |
| Amortization of debt discount | | | 7,407 | | | | 435,956 | |
| Change in fair value of derivative liabilities | | | — | | | | (317,080 | ) |
| Loss on settlement of debt | | | — | | | | 528,794 | |
| Prepayment and Default penalty | | | — | | | | 122,020 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (910,284 | ) | | | (784,128 | ) |
| Prepaid and other current assets | | | (6,977 | ) | | | (130,278 | ) |
| Due from related party | | | 47,832 | | | | — | |
| Accounts payable | | | 49,794 | | | | (31,917 | ) |
| Other current liabilities | | | 34,224 | | | | (129,121 | ) |
| Net cash used in operating activities | | | (1,435,292 | ) | | | (2,093,398 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Acquisition of subsidiaries, net | | | (1,564,132 | ) | | | (60,000 | ) |
| Purchase of property and equipment | | | (47,223 | ) | | | (68,844 | ) |
| Payment of loan receivable - related party | | | (1,000 | ) | | | (24,220 | ) |
| Collection of amounts due from related parties | | | 100 | | | | 200 | |
| Net cash used in investing activities | | | (1,612,255 | ) | | | (152,864 | ) |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Proceeds from loans payable | | | — | | | | 400,000 | |
| Repayments of loans payable | | | (232,018 | ) | | | (321,609 | ) |
| Repayment of loans payable - related parties | | | — | | | | (60,787 | ) |
| Proceeds from common stock issued | | | 1,100,000 | | | | 3,586,250 | |
| Proceed from issuance of common stock purchase option | | | 500,000 | | | | — | |
| Repayment of convertible notes | | | — | | | | (250,000 | ) |
| Net cash provided by financing activities | | | 1,367,982 | | | | 3,353,854 | |
| | | | | | | | | |
| Effect of exchange rate changes on cash | | | (9,311 | ) | | | (11,438 | ) |
| | | | | | | | | |
| Net change in cash | | | (1,688,876 | ) | | | 1,096,154 | |
| Cash, beginning of period | | | 3,334,813 | | | | 753,316 | |
| Cash, end of period | | $ | 1,645,937 | | | $ | 1,849,470 | |
| | | | | | | | | |
| Supplemental cash flow information | | | | | | | | |
| Cash paid for interest | | $ | 3,333 | | | $ | 117,198 | |
| Cash paid for taxes | | $ | — | | | $ | — | |
| | | | | | | | | |
| Non-cash transactions: | | | | | | | | |
| Common stock issued for asset acquisition | | $ | 325,000 | | | $ | — | |
| Cmmon stock issued and to be issued for acquisition of suobsidiaries | | $ | 1,550,000 | | | $ | — | |
| Common stock issued for conversion of debt | | $ | — | | | $ | 422,295 | |
| Resolution of derivative liabilities | | $ | — | | | $ | 708,611 | |
| Related party debt forgiveness | | $ | — | | | $ | 807,103 | |
| Common stock issued for settlement of debt | | $ | — | | | $ | 2,056,530 | |
| Preferred stock issued for conversion of common stock | | $ | — | | | $ | 21 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
iQSTEL INC
Notes to the Unaudited Consolidated Financial Statements
June 30, 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 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, fixed line companies and other wholesale carriers.
Acquisitions
On May 13, 2022, we entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Whisl telecom LLC (“Whisl”).
On June 1, 2022, we entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Smartbiz Telecom LLC (“Smartbiz”).
Both acquisitions are detailed in Note 4.
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 June 30, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 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”), Global Money One Inc (“Global Money One”), Whisl telecom LLC and Smartbiz Telecom LLC. 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.
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
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, Global Money One, Whisl, and Smartbiz is the U.S. dollar, while the functional currency of SwissLink is the Swiss Franc (“CHF”).
SwissLink translates their records into the 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 six months ended June 30, 2022 and 2021, 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 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 six months ended June 30, 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 six months ended June 30, 2022, 8 customers represented 87% of our revenues. During the six months ended June 30, 2021, 5 customers represented 87% of our revenues.
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 – ACQUISITIONS
On May 13, 2022, we entered into a Company Acquisition 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 51% of the membership interests Seller holds in Whisl, a Texas limited liability company. Whisl provides local US termination for Voice through its FCC license of VoIP Service number 832742; and is in the process to obtain a C-Lec FCC License over next 12 months. The Company is one of the premier Intermediate Voice Providers in the USA. It has been a carrier since 2017 with billions of minutes traversing its network. The Company provides its customers with multiple levels of Redundancy, Diversity, and Disaster Recovery for their applications and ability to make changes to underlying carrier configuration in real time. The Company offers a single carrier solution for Voice Global services, and its customers benefit from hundreds of interconnection agreements that the Company has cultivated since its inception. Pursuant to the Purchase Agreement, the closing of the purchase of the 51% membership interests was $1,800,000, which consisted of $1,250,000 in cash and $550,000 in our restricted common stock to Seller, which amounts to 1,461,653 shares of common stock.
On June 1, 2022, we entered into a Purchase Agreement for the purchase of 51% of the membership interests in Smartbiz, a Florida Corporation which provides telecommunication services, dedicated to VoIP business for wholesale and retail markets. The purchase price for the acquisition was $1,800,000, which consisted of $800,000 in cash and $1,000,000 in our common stock to the seller, which amounts to 2,850,330 shares of common stock.
Smartbiz and Whisl have been included in our consolidated results of operations since the acquisition dates.
The following table summarizes the fair value of the consideration paid by the Company:
Whisl
| | | May 13, |
| Fair Value of Consideration: | | 2022 |
| Cash | | | $ | 1,000,000 | |
| Payable to seller | | | | 250,000 | |
| 1,461,653 shares of common stock | | | | 550,000 | |
| Total Purchase Price | | | $ | 1,800,000 | |
Smartbiz
| | | June 1, |
| Fair Value of Consideration: | | 2022 |
| Cash | | | $ | 725,000 | |
| Payable to seller | | | | 75,000 | |
| 2,850,330 shares of common stock | | | | 1,000,000 | |
| Total Purchase Price | | | $ | 1,800,000 | |
The following table summarizes the identifiable assets acquired and liabilities assumed upon acquisition of Smartbiz and Whisl and the calculation of goodwill:
Whisl
| | | | | |
| Total purchase price | | $ | 1,800,000 | |
| Cash | | | 141,113 | |
| Accounts receivable | | | 109,762 | |
| Total identifiable assets | | | 250,875 | |
| | | | | |
| Accounts payable | | | (241,426 | ) |
| Other current liabilities | | | (2,075 | ) |
| Total liabilities assumed | | | (243,501 | ) |
| Net assets | | | 7,374 | |
| | | | | |
| Non-controlling interest | | | 3,613 | |
| Total net assets | | | 3,761 | |
| Goodwill | | $ | 1,796,239 | |
Smartbiz
| | | | | |
| Total purchase price | | $ | 1,800,000 | |
| Cash | | | 19,755 | |
| Accounts receivable | | | 789,515 | |
| Total identifiable assets | | | 809,270 | |
| | | | | |
| Accounts payable | | | (807,265 | ) |
| Other current liabilities | | | (76,839 | ) |
| Total liabilities assumed | | | (884,104 | ) |
| Net assets | | | (74,834 | ) |
| | | | | |
| Non-controlling interest | | | (36,669 | ) |
| Total net assets | | | (38,165 | ) |
| Goodwill | | $ | 1,838,165 | |
Unaudited combined proforma results of operations for the six months ended June 30, 2022 and 2021 as though the Company acquired Smartbiz and Whisl on January 1, 2020, are set forth below:
| | | | | | | | | |
| | | Six Months Ended |
| | | June 30, |
| | | 2022 | | 2021 |
| Revenues | | $ | 47,228,496 | | | $ | 38,791,210 | |
| Cost of revenues | | | 46,061,883 | | | | 37,528,152 | |
| Gross profit | | | 1,166,613 | | | | 1,263,058 | |
| | | | | | | | | |
| Operating expenses | | | 3,066,379 | | | | 3,327,710 | |
| Operating loss | | | (1,899,766 | ) | | | (2,064,652 | ) |
| | | | | | | | | |
| Other expense | | | (6,572 | ) | | | (825,518 | ) |
| | | | | | | | | |
| Net Loss | | $ | (1,906,338 | ) | | $ | (2,890,170 | ) |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2022 and December 31, 2021 consisted of the following:
| | | June 30, | | December 31, |
| | | 2022 | | 2021 |
| Telecommunication equipment | | $ | 290,660 | | | $ | 258,871 | |
| Telecommunication software | | | 593,497 | | | | 618,125 | |
| Other equipment | | | 98,085 | | | | 108,805 | |
| Total property and equipment | | | 982,242 | | | | 985,801 | |
| Accumulated depreciation and amortization | | | (595,535 | ) | | | (576,419 | ) |
| Total property and equipment | | $ | 386,707 | | | $ | 409,382 | |
Depreciation and amortization expense for the six months ended June 30, 2022 and 2021 amounted to $62,371 and $42,421, respectively.
NOTE 6 –LOANS PAYABLE
Loans payable at June 30, 2022 and December 31, 2021 consisted of the following:
| | | June 30, | | December 31, | | | | |
| | | 2022 | | 2021 | | Term | | Interest rate |
| Bridge Loan | | $ | — | | | $ | 222,222 | | | Note was issued on November 1, 2020 and due on January 30, 2022 | | | 18.0% |
| Martus | | | 96,185 | | | | 100,634 | | | Note was issued on October 23, 2018 and due on January 3, 2023 | | | 5.0% |
| Swisspeers AG | | | — | | | | 9,605 | | | Note was issued on April 8, 2019 and due on October 4, 2022 | | | 7.0% |
| Darlene Covid19 | | | 104,840 | | | | 109,690 | | | Note was issued on April 1, 2020 and due on March 31, 2025 | | | 0.0% |
| Total | | | 201,025 | | | | 442,151 | | | | | | |
| Less: Unamortized debt discount | | | — | | | | (7,406 | ) | | | | | |
| Total loans payable | | | 201,025 | | | | 434,745 | | | | | | |
| Less: Current portion of loans payable | | | (96,185 | ) | | | (315,450 | ) | | | | | |
| Long-term loans payable | | $ | 104,840 | | | $ | 119,295 | | | | | | |
During the six months ended June 30, 2022 and 2021, the Company borrowed from third parties totaling $0 and $444,444, which includes original issue discount and financing costs of $0 and $44,444 and repaid the principal amount of $232,018 and $321,609, respectively.
During the six months ended June 30, 2022 and 2021, the Company recorded interest expense of $18,724 and $172,701 and recognized amortization of discount, included in interest expense, of $7,407 and $63,666, respectively. In 2021, the Company recorded interest expense from convertible notes of $33,430 and recognized amortization of discount, included in interest expense, of $372,290.
Loans payable to related parties at June 30, 2022 and December 31, 2021 consisted of the following:
| | | June 30, | | December 31, | | | | |
| | | 2022 | | 2021 | | Term | | Interest rate |
| 49% of Shareholder of SwissLink | | $ | 19,047 | | | $ | 19,929 | | | Note is due on demand | | | 0% |
| 49% of Shareholder of SwissLink | | | 209,680 | | | | 219,379 | | | Note is due on demand | | | 5% |
| Total | | | 228,727 | | | | 239,308 | | | | | | |
| Less: Current portion of loans payable | | | 228,727 | | | | 239,308 | | | | | | |
| Long-term loans payable | | $ | — | | | $ | — | | | | | | |
NOTE 7 – OTHER CURRENT LIABILITIES
Other current liabilities at June 30, 2022 and December 31, 2021 consisted of the following:
| | | June 30, | | December 31, |
| | | 2022 | | 2021 |
| Accrued liabilities | | $ | 40,929 | | | $ | 61,153 | |
| Payable for acquisition of subsidiaries | | | 325,000 | | | | — | |
| Accrued interest | | | — | | | | 8,173 | |
| Salary payable - management | | | 80,730 | | | | 92,229 | |
| Salary payable | | | 2,799 | | | | — | |
| Employee benefits | | | 106,516 | | | | 105,221 | |
| Other current liabilities | | | 102,157 | | | | 40,273 | |
| | | $ | 658,131 | | | $ | 307,049 | |
NOTE 8 – 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.
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 stockholders at a rate of 51% of the total vote of stockholders.
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 June 30, 2022 and December 31, 2021, 10,000 shares of Series A Preferred Stock were issued and outstanding.
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.
As of June 30, 2022 and December 31, 2021, 21,000 shares of Series B Preferred Stock were issued and outstanding.
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 C 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 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.
As of June 30, 2022 and December 31, 2021, no Series C Preferred Stock was issued or outstanding.
Common Stock
During the six months ended June 30, 2022, the Company issued 4,081,653 shares of common stock, valued at fair market value on issuance as follows;
| · | 2,000,000 shares issued for cash of $1,000,000 |
| · | 120,000 shares for compensation to our directors valued at $71,629 |
| · | 1,461,653 shares for acquisition of Whisl valued at $550,000 |
| · | 500,000 shares for asset acquisition valued at $325,000 |
As of June 30, 2022 and December 31, 2021, 151,559,011 and 147,477,358 shares of common stock were issued and outstanding, respectively.
Common Stock Purchase Option
On April 25, 2022, we entered into a Common Stock Purchase Option Agreement with Apollo Management Group, Inc. to subscribe for and purchase from the Company, 4,800,000 shares of Common Stock with an exercise price per share of $2.00; and an initial exercise date September 30, 2022. The purchase price of this option is $500,000.
NOTE 9 - RELATED PARTY TRANSACTIONS
Due from related parties
During the six months ended June 30, 2022 and 2021, the Company advanced $1,000 and $24,220 to related parties and collected $100 and $200, respectively.
As of June 30, 2022 and December 31, 2021, the Company had due from related parties of $375,955 and $424,086. The loans are unsecured, non-interest bearing and due on demand.
Due to related parties
During the six months ended June 30, 2022 and 2021, the Company repaid $0 and $60,787 to certain members of Company management.
As of June 30, 2022 and December 31, 2021, the Company had amounts due to related parties of $26,613.
Employment agreements
During the six months ended June 30, 2022 and 2021, the Company recorded management fees of and $270,000, bonus of $0 and $976,200 and paid $281,000 and $301,300, respectively.
NOTE 10 – 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 six months ended June 30, 2022 and 2021, the Company incurred $38,645 and $24,223, respectively.
NOTE 11 - SEGMENTS
At June 30, 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 and six months ended June 30, 2022 and 2021:
Three months ended June 30, 2022
NOTE 11 - SEGMENT - Schedule of Operating Activities by Geographic Segment
| | | | | | | | | | | | | | | | | |
| | | USA | | Switzerland | | Elimination | | Total |
| Revenues | | $ | 23,059,647 | | | | 1,236,823 | | | $ | (596,754 | ) | | $ | 23,699,716 | |
| Cost of revenue | | | 22,418,046 | | | | 1,032,150 | | | | (596,754 | ) | | | 22,853,442 | |
| Gross profit | | | 641,601 | | | | 204,673 | | | | — | | | | 846,274 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 921,793 | | | | 222,659 | | | | — | | | | 1,144,452 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (280,192 | ) | | | (17,986 | ) | | | — | | | | (298,178 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | 13,314 | | | | (593 | ) | | | — | | | | 12,721 | |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (266,878 | ) | | $ | (18,579 | ) | | $ | — | | | $ | (285,457 | ) |
Three months Ended 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 | ) |
Six months ended June 30, 2022
| | | | | | | | | | | | | | | | | |
| | | USA | | Switzerland | | Elimination | | Total |
| Revenues | | $ | 41,534,760 | | | | 2,262,903 | | | $ | (678,636 | ) | | $ | 43,119,027 | |
| Cost of revenue | | | 40,611,998 | | | | 1,855,331 | | | | (678,636 | ) | | | 41,788,693 | |
| Gross profit | | | 922,762 | | | | 407,572 | | | | — | | | | 1,330,334 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 1,703,093 | | | | 430,857 | | | | — | | | | 2,133,950 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (780,331 | ) | | | (23,285 | ) | | | — | | | | (803,616 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | (16,527 | ) | | | 9,955 | | | | — | | | | (6,572 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (796,858 | ) | | $ | (13,330 | ) | | $ | — | | | $ | (810,188 | ) |
Six months Ended June 30, 2021
| | | | | | | | | | | | | | | | | |
| | | USA | | Switzerland | | Elimination | | Total |
| Revenues | | $ | 28,057,392 | | | | 2,284,985 | | | $ | (16,399 | ) | | $ | 30,325,978 | |
| Cost of revenue | | | 27,780,959 | | | | 2,029,483 | | | | (16,399 | ) | | | 29,794,043 | |
| Gross profit | | | 276,433 | | | | 255,502 | | | | — | | | | 531,935 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 2,338,741 | | | | 368,537 | | | | — | | | | 2,707,278 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (2,062,308 | ) | | | (113,035 | ) | | | — | | | | (2,175,343 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | (840,841 | ) | | | 15,323 | | | | — | | | | (825,518 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (2,903,149 | ) | | $ | (97,712 | ) | | $ | — | | | $ | (3,000,861 | ) |
Asset Information
The following table shows asset information by geographic segment as of June 30, 2022 and December 31, 2021:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 | | USA | | Switzerland | | Elimination | | Total |
| Assets | | | | | | | | | | | | | | | | |
| Current assets | | $ | 6,117,363 | | | $ | 923,941 | | | $ | (222,863 | ) | | $ | 6,818,441 | |
| Non-current assets | | $ | 11,673,710 | | | $ | 595,961 | | | $ | (6,184,562 | ) | | $ | 6,085,109 | |
| Liabilities | | | | | | | | | | | | | | | | |
| Current liabilities | | $ | 2,384,494 | | | $ | 1,445,785 | | | $ | (222,863 | ) | | $ | 3,607,416 | |
| Non-current liabilities | | $ | — | | | $ | 254,358 | | | $ | — | | | $ | 254,358 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 | | USA | | Switzerland | | Elimination | | Total |
| Assets | | | | | | | | | | | | | | | | |
| Current assets | | $ | 5,783,859 | | | $ | 997,216 | | | $ | (214,551 | ) | | $ | 6,566,524 | |
| Non-current assets | | $ | 4,468,491 | | | $ | 609,189 | | | $ | (2,584,562 | ) | | $ | 2,493,118 | |
| Liabilities | | | | | | | | | | | | | | | | |
| Current liabilities | | $ | 1,070,972 | | | $ | 1,506,594 | | | $ | (214,551 | ) | | $ | 2,363,015 | |
| Non-current liabilities | | $ | — | | | $ | 275,729 | | | $ | — | | | $ | 275,729 | |
NOTE 12 – SUBSEQUENT EVENTS
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.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors and Stockholders
B-Maven,iQSTEL, Inc.
Coral Gables, FL
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheetsheets of B-Maven,iQSTEL, Inc. (A Development Stage(the “Company”) as of June 30, 2011December 31, 2021 and 2020, the related consolidated statements of operations, changes in shareholders’stockholders’ equity, and cash flows for the period from June 24, 2011 (inception)years then ended, and the related notes (collectively referred to June 30, 2011. Theseas the “consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States)statements”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of B-Maven, Inc. as of June 30, 2011,the Company at December 31, 2021 and 2020, and the resultresults of its operations and its cash flows for each of the period from June 24, 2011 (inception) to June 30, 2011 years then ended, in conformity with U.S.accounting principles generally accepted accounting principles.in the United States of America.
Going Concern Uncertainty – See Also Critical Audit Matters Section Below
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company’sCompany has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
/s/PLS CPA
PLS CPA, A Professional Corp.
August 17, 2011
San Diego, CA. 92111
RegisteredThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
B-MAVEN, INC.
(a Development Stage Company)
Balance Sheet
June 30, 2011
| | |
ASSETS | | |
| | |
CURRENT ASSETS: | | |
Cash | $ | - |
| | |
OTHER ASSETS: | | |
Intangible asset – Product formulas | | 2,500 |
TOTAL ASSETS | $ | 2,500 |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| | |
CURRENT LIABILITIES: | | |
Accrued expenses | $ | 665 |
TOTAL LIABILITIES | | 665 |
| | |
| | |
STOCKHOLDERS’ EQUITY: | | |
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding | | - |
Common stock, $0.001 par value; 100,000,000 shares authorized; 7,500,000 shares issued and outstanding | | 7,500 |
Deferred offering costs | | - |
Deficit accumulated during development stage | | (5,665) |
TOTAL STOCKHOLDERS’ EQUITY | | 1,835 |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,500 |
See notes (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
B-MAVEN, INC.
(Revenue Recognition
Critical Audit Matter Description
The Company recognizes revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services.
Significant judgment is exercised by the Company in determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation.
The related audit effort in evaluating management’s judgments in determining revenue recognition for customer agreements required a Development Stage Company)high degree of auditor judgment.
Statement of Operations
ForHow the Period June 24, 2011 (inception) through June 30, 2011Critical Audit Matter was Addressed in the Audit
Our principal audit procedures related to the Company’s revenue recognition for customer agreements included the following:
| · | We gained an understanding of internal controls related to revenue recognition. |
| · | We evaluated management’s significant accounting policies for reasonableness. |
Revenue
| $
· | -
We selected a sample of revenues recognized and performed the following procedures: |
| o | Obtained and read contract source documents for each selection and other documents that were part of the agreement, if applicable. |
Expenses:
| o | Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions. |
Organization expenses
| o | 5,665
|
| | |
Loss before provision for income taxes
| | 5,665
|
| | |
Provision for income tax
| | -
|
| | |
Net loss
| $
| (5,665)
|
| | |
BasicWe tested the mathematical accuracy of management’s calculations of revenue and diluted loss per share
| $
| (0.00)
|
| | |
Weighted average common shares outstanding - basic and diluted
| | 4,285,714
the associated timing of revenue recognized in the financial statements. |
Going Concern
See notesCritical Audit Matter Description
As described further in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs. The ability of the Company to continue as a going concern is dependent on executing its business plan and ultimately to attain profitable operations. Accordingly, the Company has determined that these factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. Management intends to continue to fund its business by way of public or private offerings of the Company’s stock or through loans from private investors, in order satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. However, the Company has not concluded that these plans alleviate the substantial doubt related to its ability to continue as a going concern.
How the Critical Audit Matter was Addressed in the Audit
We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination. Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others:
| · | We performed testing procedures such as analytical procedures to identify conditions and events that indicate that there could be substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
| · | We reviewed and evaluated management's plans for dealing with adverse effects of these conditions and events. |
| · | We inquired of Company management and reviewed company records to assess whether there are additional factors that contribute to the uncertainties disclosed. |
| · | We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed. |
/s/ Urish Popeck & Co., LLC
We have served as the Company's auditor since 2020.
Pittsburgh, PA
April 15, 2022
iQSTEL INC
Consolidated Balance Sheets
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| ASSETS | | | | |
| Current Assets | | | | | | | | |
| Cash | | $ | 3,334,813 | | | $ | 753,316 | |
| Accounts receivable, net | | | 2,540,515 | | | | 2,528,321 | |
| Due from related parties | | | 424,086 | | | | 221,790 | |
| Prepaid and other current assets | | | 267,110 | | | | 78,157 | |
| Total Current Assets | | | 6,566,524 | | | | 3,581,584 | |
| | | | | | | | | |
| Property and equipment, net | | | 409,382 | | | | 350,530 | |
| Intangible asset | | | 99,592 | | | | 21,875 | |
| Goodwill | | | 1,537,742 | | | | 1,537,742 | |
| Deferred tax assets | | | 446,402 | | | | 460,036 | |
| TOTAL ASSETS | | $ | 9,059,642 | | | $ | 5,951,767 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | | 1,474,595 | | | | 2,737,411 | |
| Due to related parties | | | 26,613 | | | | 94,616 | |
| Loans payable - net of discount of $7,406 and $19,221 | | | 315,450 | | | | 1,332,612 | |
| Loans payable - related parties | | | 239,308 | | | | 2,054,379 | |
| Current portion of convertible notes - net of discount of $0 and $370,106 | | | — | | | | 253,554 | |
| Other current liabilities | | | 307,049 | | | | 413,676 | |
| Derivative liabilities | | | — | | | | 1,025,691 | |
| Total Current Liabilities | | | 2,363,015 | | | | 7,911,939 | |
| | | | | | | | | |
| Convertible notes - net of discount of $0 and $2,184 | | | — | | | | 2,816 | |
| Loans payable, non-current | | | 119,295 | | | | 270,836 | |
| Employee benefits, non-current | | | 156,434 | | | | 161,212 | |
| TOTAL LIABILITIES | | | 2,638,744 | | | | 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 147,477,358 and 118,133,432 shares issued and outstanding, respectively | | | 147,477 | | | | 118,133 | |
| Additional paid in capital | | | 25,842,982 | | | | 13,267,261 | |
| Accumulated deficit | | | (18,536,921 | ) | | | (14,699,148 | ) |
| Accumulated other comprehensive loss | | | (36,658 | ) | | | (74,831 | ) |
| Equity (Deficit) attributed to stockholders of iQSTEL Inc. | | | 7,416,911 | | | | (1,388,575 | ) |
| Deficit attributable to noncontrolling interests | | | (996,013 | ) | | | (1,006,461 | ) |
| Total stockholders' Equity (Deficit) | | | 6,420,898 | | | | (2,395,036 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | $ | 9,059,642 | | | $ | 5,951,767 | |
The accompanying notes are an integral part of these consolidated financial statements.
iQSTEL INC
Consolidated Statements of Operations
| | | | | | | | | |
| | | Years Ended |
| | | December 31, |
| | | 2021 | | 2020 |
| | | | | |
| Revenues | | $ | 64,702,018 | | | $ | 44,910,006 | |
| Cost of revenue | | | 63,168,303 | | | | 43,947,654 | |
| Gross profit | | | 1,533,715 | | | | 962,352 | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| General and administration | | | 4,517,631 | | | | 4,174,367 | |
| Total operating expenses | | | 4,517,631 | | | | 4,174,367 | |
| | | | | | | | | |
| Operating loss | | | (2,983,916 | ) | | | (3,212,015 | ) |
| | | | | | | | | |
| Other income (expense) | | | | | | | | |
| Other income | | | 4,426 | | | | 38,585 | |
| Other expenses | | | 2,684 | | | | (117,562 | ) |
| Interest expense | | | (675,481 | ) | | | (3,509,323 | ) |
| Change in fair value of derivative liabilities | | | 317,080 | | | | 255,614 | |
| Gain (loss) on settlement of debt | | | (528,794 | ) | | | (154,629 | ) |
| Total other income (expense) | | | (880,085 | ) | | | (3,487,315 | ) |
| | | | | | | | | |
| Income taxes | | | — | | | | (152 | ) |
| Net income (loss) | | | (3,864,001 | ) | | | (6,699,482 | ) |
| Less: Net income (loss) attributable to noncontrolling interests | | | (26,228 | ) | | | (125,591 | ) |
| Net income (loss) attributed to stockholders of iQSTEL Inc. | | $ | (3,837,773 | ) | | $ | (6,573,891 | ) |
| | | | | | | | | |
| Comprehensive income (loss) | | | | | | | | |
| Net income (loss) | | $ | (3,864,001 | ) | | $ | (6,699,482 | ) |
| Foreign currency adjustment | | | 74,849 | | | | (146,373 | ) |
| Total comprehensive income (loss) | | $ | (3,789,152 | ) | | $ | (6,845,855 | ) |
| Less: Comprehensive income attributable to noncontrolling interests | | | 10,448 | | | | (197,314 | ) |
| Net comprehensive income (loss) attributed to stockholders of iQSTEL Inc. | | $ | (3,799,600 | ) | | $ | (6,648,541 | ) |
| | | | | | | | | |
| Basic and diluted loss per common share | | $ | (0.03 | ) | | $ | (0.10 | ) |
| | | | | | | | | |
| Weighted average number of common shares outstanding - Basic and diluted | | | 135,383,893 | | | | 63,941,222 | |
The accompanying notes are an integral part of these consolidated financial statements.
iQSTEL INC
B-MAVEN, INC.
(a Development Stage Company)
StatementConsolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the years ended December 31, 2021 and 2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Series A Preferred Stock | | | | Series B Preferred Stock | | | | Common Stock | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Shares | | | | Amount | | | | Shares | | | | Amount | | | | Shares | | | | Amount | | | | Additional Paid in Capital | | | | Accumulated Deficit | | | | Accumulated Other 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) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock issued for conversion of common stock | | | 10,000 | | | | 10 | | | | — | | | | — | | | | (100,000 | ) | | | (100 | ) | | | 90 | | | | — | | | | — | | | | — | | | | — | | | — |
| Common stock issued for cash | | | — | | | | — | | | | — | | | | — | | | | 23,937,500 | | | | 23,938 | | | | 1,891,067 | | | | — | | | | — | | | | 1,915,005 | | | | — | | | 1,915,005 |
| Common stock issued for settlement of debt | | | — | | | | — | | | | — | | | | — | | | | 12,818,145 | | | | 12,818 | | | | 876,275 | | | | — | | | | — | | | | 889,093 | | | | — | | | 889,093 |
| Common stock issued for services | | | — | | | | — | | | | — | | | | — | | | | 6,267,600 | | | | 6,268 | | | | 641,590 | | | | — | | | | — | | | | 647,858 | | | | — | | | 647,858 |
| Common stock issued for forbearance of debt | | | — | | | | — | | | | — | | | | — | | | | 1,150,000 | | | | 1,150 | | | | 91,100 | | | | — | | | | — | | | | 92,250 | | | | — | | | 92,250 |
| Common stock issued for conversion of debt | | | — | | | | — | | | | — | | | | — | | | | 46,575,378 | | | | 46,575 | | | | 1,349,865 | | | | — | | | | — | | | | 1,396,440 | | | | — | | | 1,396,440 |
| Common stock issued for exercised cashless warrant | | | — | | | | — | | | | — | | | | — | | | | 9,476,218 | | | | 9,476 | | | | (9,476 | ) | | | — | | | | — | | | | — | | | | — | | | — |
| Common stock issued for acquisition of Itsbchain LLC | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | | | | — | | | | — | | | | 50,000 | | | | — | | | 50,000 |
| Acquisition of IoT Lab | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 94,366 | | | 94,366 |
| Resolution of derivative liabilities | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,136,222 | | | | — | | | | — | | | | 5,136,222 | | | | — | | | 5,136,222 |
| Acquisition of IoT Lab | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 94,366 | | | 94,366 |
| Foreign currency translation adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (74,650 | ) | | | (74,650 | ) | | | (71,723 | ) | | (146,373) |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (6,573,891 | ) | | | — | | | | (6,573,891 | ) | | | (125,591 | ) | | (6,699,482) |
| 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 and subscription receivable | | | — | | | | — | | | | — | | | | — | | | | 41,562,500 | | | | 41,563 | | | | 6,394,687 | | | | — | | | | — | | | | 6,436,250 | | | | — | | | 6,436,250 |
| Common stock issued for settlement of debt | | | — | | | | — | | | | — | | | | — | | | | 2,230,394 | | | | 2,230 | | | | 2,054,300 | | | | — | | | | — | | | | 2,056,530 | | | | — | | | 2,056,530 |
| Common stock issued for service | | | — | | | | — | | | | — | | | | — | | | | 195,000 | | | | 195 | | | | 284,505 | | | | — | | | | — | | | | 284,700 | | | | — | | | 284,700 |
| Common stock issued for compensation | | | — | | | | — | | | | — | | | | — | | | | 1,320,000 | | | | 1,320 | | | | 1,036,248 | | | | — | | | | — | | | | 1,037,568 | | | | — | | | 1,037,568 |
| 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 |
| Common stock payable | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 52,161 | | | | — | | | | — | | | | 52,161 | | | | — | | | 52,161 |
| Related party debt to equity swap | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,647,150 | | | | — | | | | — | | | | 1,647,150 | | | | — | | | 1,647,150 |
| 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,173 | | | | 38,173 | | | | 36,676 | | | 74,849 |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,837,773 | ) | | | — | | | | (3,837,773 | ) | | | (26,228 | ) | | (3,864,001) |
| Balance - December 31, 2021 | | | 10,000 | | | $ | 10 | | | | 21,000 | | | $ | 21 | | | | 147,477,358 | | | $ | 147,477 | | | $ | 25,842,982 | | | $ | (18,536,921 | ) | | $ | (36,658 | ) | | $ | 7,416,911 | | | $ | (996,013 | ) | | $6,420,898 |
SeeThe accompanying notes to theare an integral part of these consolidated financial statements.
iQSTEL INC
B-MAVEN, INC.
(a Development Stage Company)
StatementConsolidated Statements of Cash Flows
| | | | | | | | | |
| | | | Years Ended | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net loss | | $ | (3,864,001 | ) | | $ | (6,699,482 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Stock based compensation and cancellation | | | 1,284,325 | | | | 697,858 | |
| Bad debt | | | — | | | | 137,749 | |
| Write-off of due from related party | | | 10,148 | | | | 43,375 | |
| Depreciation and amortization | | | 91,474 | | | | 68,602 | |
| Amortization of debt discount | | | 450,771 | | | | 2,221,506 | |
| Change in fair value of derivative liabilities | | | (317,080 | ) | | | (255,614 | ) |
| Loss on settlement of debt | | | 528,794 | | | | 154,629 | |
| Prepayment and default penalty | | | 122,020 | | | | 358,046 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (39,862 | ) | | | 167,077 | |
| Prepaid and other current assets | | | (91,066 | ) | | | 21,629 | |
| Accounts payable | | | (1,231,946 | ) | | | 432,872 | |
| Other current liabilities | | | (95,758 | ) | | | 535,579 | |
| Net cash used in operating activities | | | (3,152,181 | ) | | | (2,116,174 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Acquisition of subsidiary, net of cash acquired | | | (60,000 | ) | | | 15,781 | |
| Purchase of property and equipment | | | (153,183 | ) | | | (90,192 | ) |
| Purchase of intangible assets | | | (77,717 | ) | | | — | |
| Payment of loan receivable - related party | | | (220,674 | ) | | | (18,888 | ) |
| Collection of due from related parties | | | 226 | | | | 2,088 | |
| Net cash used in investing activities | | | (511,348 | ) | | | (91,211 | ) |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Proceeds from loans payable | | | 600,000 | | | | 1,239,620 | |
| Repayments of loans payable | | | (344,483 | ) | | | (969,664 | ) |
| Proceeds from loans payable - related parties | | | — | | | | 20,182 | |
| Repayment of loans payable - related parties | | | (90,787 | ) | | | (20,197 | ) |
| Common stock issued | | | 6,336,250 | | | | 1,915,005 | |
| Proceeds from convertible notes | | | — | | | | 1,420,000 | |
| Repayment of convertible notes | | | (250,000 | ) | | | (942,190 | ) |
| Net cash provided by financing activities | | | 6,250,980 | | | | 2,662,756 | |
| | | | | | | | | |
| Effect of exchange rate changes on cash | | | (5,954 | ) | | | 27,442 | |
| | | | | | | | | |
| Net change in cash | | | 2,581,497 | | | | 482,813 | |
| Cash, beginning of period | | | 753,316 | | | | 270,503 | |
| Cash, end of period | | $ | 3,334,813 | | | $ | 753,316 | |
| | | | | | | | | |
| Supplemental cash flow information | | | | | | | | |
| Cash paid for interest | | $ | 126,818 | | | $ | 976,234 | |
| Cash paid for taxes | | $ | — | | | $ | — | |
| | | | | | | | | |
| Non-cash transactions: | | | | | | | | |
| Derivative liabilities recognized as debt discount | | $ | — | | | $ | 1,673,393 | |
| Common stock payable | | $ | 52,161 | | | $ | — | |
| Common stock issued for conversion of debt | | $ | 422,295 | | | $ | 1,396,440 | |
| Cashless warrant exercised | | $ | — | | | $ | 9,476 | |
| Resolution of derivative liabilities | | $ | 708,611 | | | $ | 5,136,222 | |
| Related party debt to equity swap | | $ | 1,647,150 | | | $ | — | |
| Common stock issued for settlement of debt | | $ | 2,056,530 | | | $ | 889,093 | |
| Amount owing for acquisition of IOT | | $ | — | | | $ | 60,000 | |
| Common stock issued for forbearance of debt | | $ | 49,925 | | | $ | 92,250 | |
| Replacement of convertible notes to note payable | | $ | — | | | $ | 1,000,000 | |
| Preferred stock issued for conversion of common stock | | $ | 21 | | | $ | 10 | |
| Subscription receivable | | $ | 100,000 | | | $ | — | |
For the Period June 24, 2011 (inception) through June 30, 2011
| | |
CASH FLOW FROM OPERATING ACTIVITIES: | | |
Net loss | $ | (5,665) |
Accrued expenses, increase in | | 665 |
Shares issued for organizational expense | | 5,000 |
Net Cash Provided by Operating Activities | | - |
CASH FLOW FROM FINANCING ACTIVITIES | | - |
CASH FLOW FROM INVESTING ACTIVITIES | | - |
CHANGE IN CASH | | - |
CASH AT BEGINNING OF PERIOD | | - |
CASH AT END OF PERIOD | $ | - |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | |
| | |
Cash paid for: | | |
Interest | $ | - |
Income taxes | $ | - |
Non-cash investing and financing activities: | | |
Stock issuance for acquiring formulas and product samples | $ | 2,500 |
| | |
SeeThe accompanying notes to theare an integral part of these consolidated financial statements.
B-MAVEN, INC.
(a Development Stage Company)iQSTEL INC
Notes to the Consolidated Financial Statements
June 30, 2011December 31, 2021
NOTE 1 – ORGANIZATION-ORGANIZATION AND DESCRIPTION OF BUSINESS
B-Maven,Organization and Operations
iQSTEL Inc. (the Company)(“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011.2011 under the name of B-Maven Inc. The Company issued 5,000,000 shares ofchanged its common stockname to PureSnax International, Inc. on September 18, 2015; and more recently it changed its founder at inception in exchange for organizational costs incurred upon incorporation. Following its formation, the Company issued 2,500,000 shares of its common stockname to our founder, as consideration for the purchase of product formulas and additional product samples. Our founder paid approximately $2,500 for product formulas and other product materials to develop further formulas. The acquisition was valued at $2,500.iQSTEL Inc. on August 7, 2018.
The Company plans to behas been engaged in the business of developing, manufacturing, marketingtelecommunication services as a wholesale carrier of voice, SMS and selling of a collection of cosmetic products, a skin caredata for other telecom companies around the World with more than 150 active interconnection agreements with mobile companies, fixed line combining science with nature to form an advanced beauty treatment. The Company owns the rights to its intellectual property, E-Scentual, an anti-aging formula that is the main ingredient in the E-Scentual Skin Care Collection.companies and other wholesale carriers.
The Company has not generated revenues from its planned principalincorporated a 75% owned subsidiary, Global Money One Inc. under the laws of the state of Delaware, on November 16, 2020.
COVID-19
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. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. 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 December 31, 2021. The full extent of the future impacts of COVID-19 on the Company’s operations is considereduncertain. A prolonged outbreak could have a development stage companymaterial 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 that termof April 15, 2022, the date of issuance of this Annual Report on Form 10-K. These estimates may change, as new events occur and additional information is defined by Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 915,Development Stage Entities.obtained.
NOTE 2 – SUMMARY-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of AccountingPresentation
The Company’sconsolidated financial statements areand related disclosures have been prepared usingpursuant to the accrual method of accounting. The Company has elected a June 30, year-end.
b. Cash Equivalents
For purposesrules and regulations of the balance sheetSecurities and statementExchange Commission (“SEC”). The financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) of cash flows,the United States of America. The Company’s fiscal year end is December 31.
Consolidation Policy
The consolidated financial statements of the Company considers all highly liquid instruments with maturity of three months or less atinclude the time of issuance to be cash equivalents.
c. Stock-based Compensation
The Company follows ASC 718-10,Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurementaccounts of the cost of employee services receivedCompany 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 exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.consolidation.
d. Use of Estimates and Assumptions
PreparationThe preparation of the consolidated financial statements in conformity with accounting principles generally acceptedGAAP in the United States of America requires management to make estimates and assumptions that affect certainthe reported amounts of assets and disclosures. Accordingly, actualliabilities 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.
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”.
The functional currency and reporting currency of Etelix, QGlobal, ItsBchain, IoT Labs and Global Money One is the U.S. dollar, while SwissLink’s functional currency 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 in stockholders’ equity.
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Spot CHF: USD exchange rate | | $ | 1.0974 | | | $ | 1.1304 | |
| Average CHF: USD exchange rate | | $ | 1.0969 | | | $ | 1.0662 | |
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had no cash equivalents at December 31, 2021 and 2020.
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 years ended December 31, 2021 and 2020, the Company had bad debt expense of $0 and $137,749, respectively.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Fixed Assets
Fixed assets, consisting of telecommunications equipment and software, is recorded at cost reduced by accumulated depreciation and amortization. Depreciation and amortization expense is recognized over the assets’ estimated useful lives of 3 years for computers and laptops, 5 years for telecommunications equipment and switches; and 5 years for software using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Impairment of tangible and intangible assets
Tangible and intangible assets (excluding goodwill) are assessed at each reporting date for indications that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. The asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those estimates. from other assets or groups of assets. Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the group of assets.
Goodwill
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
Retirement Benefit Costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the period in which they occur. They are recognized outside the income statement and are presented in other comprehensive income. Past service cost is recognized immediately in the income statement in the period in which it occurs.
The retirement benefit obligation recognized in the balance sheet represents the present value of the defined obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of the scheme assets. 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.
Net Income (Loss) Per Share of Common Stock
The Company has adopted the provisionsASC 260, ”Earnings per Share” which requires presentation of ASC 260.
e. Earnings (Loss) per Share
The basic earnings (loss)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 calculatedcomputed by dividing the Company’s net income available to common shareholdersloss by the weighted average number of shares of common sharesstock outstanding during the year. The dilutedDiluted earnings (loss) per share is calculatedcomputed by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the year. Theperiod 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. Dilutive potential common shares include outstanding Series B Preferred stock, and it was excluded from the computation of diluted weighted average number of shares outstanding isnet loss per share as the basic weighted number of shares adjustedresult was anti-dilutive for anythe year ended December 31, 2021. There were no potentially dilutive shares of common stock outstanding for the year ended December 31, 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 that it will likely incur in the near future. 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 year ended December 31, 2021 and 2020, 7 and 6 customers represented 88% and 70% of our revenues, respectively. For the year ended December 31, 2021 68% 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.
Financial Instruments
The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or equity. Diluted earnings (loss) per sharepaid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the sameasset or liability such as basic earnings (loss) per sharequoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The carrying values of our financial instruments, including, cash and cash equivalents; accounts receivable; prepaid and other current assets; accounts payable; other current liabilities; and due from/to related parties approximate their fair values due to the lackshort-term maturities of dilutive itemsthese financial instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due to related party’s due to their related party nature.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the Company.fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
f. Income Taxes
Income taxesThe Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are provideddetermined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 13).
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 exists, 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 client.
Cost of revenue
Costs of revenue represent direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls terminated in vendor’s network.
Lease
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.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated 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 - ACQUISITION
IoT Labs
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 IoT Labs, whose principal business activity is the sale of Short Messages (SMS) between USA and Mexico, for $180,000.
The following table summarizes the identifiable assets acquired and liabilities assumed upon acquisition of IoT Labs and the calculation of goodwill:
| | | | | |
| Total purchase price | | $ | 180,000 | |
| Cash | | | 135,781 | |
| Other current assets | | | 953 | |
| Property and equipment | | | 34,075 | |
| Intangible asset | | | 21,875 | |
| Total identifiable assets | | | 192,684 | |
| Accounts payable | | | (100 | ) |
| Total liabilities assumed | | | (100 | ) |
| Net assets | | | 192,584 | |
| Non-controlling interest | | | 94,366 | |
| Total net assets | | | 98,218 | |
| Goodwill | | $ | 81,782 | |
Unaudited combined proforma results of operations for the year ended December 31, 2020 as though the Company acquired IoT Labs on January 1, 2020, are set forth below:
| | | | | |
| | | December 31, |
| | | 2020 |
| Revenues | | $ | 55,784,168 | |
| Cost of revenues | | | 54,631,017 | |
| Gross profit | | | 1,153,151 | |
| | | | | |
| Operating expenses | | | 4,224,903 | |
| Operating loss | | | (3,071,752 | ) |
| | | | | |
| Other expense | | | (3,487,315 | ) |
| Net Loss | | $ | (6,559,067 | ) |
NOTE 5 – PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets at December 31, 2021 and 2020 consisted of the following:
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Subscription receivable | | $ | 100,000 | | | $ | — | |
| Other receivable | | | 143,187 | | | | 77,557 | |
| Prepaid expenses | | | 23,320 | | | | — | |
| Tax receivable | | | 603 | | | | 600 | |
| Total prepaid and other current assets | | $ | 267,110 | | $ | 78,157 |
NOTE 6 – PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2021 and 2020 consisted of the following:
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Telecommunication equipment | | $ | 258,871 | | | $ | 259,000 | |
| Telecommunication software | | | 618,125 | | | | 530,514 | |
| Other equipment | | | 108,805 | | | | 47,206 | |
| Total property and equipment | | | 985,801 | | | | 836,720 | |
| Accumulated depreciation and amortization | | | (576,419 | ) | | | (486,190 | ) |
| Total property and equipment | | $ | 409,382 | | | $ | 350,530 | |
Depreciation expense for the year ended December 31, 2021 and 2020 amounted to $91,474 and $68,602, respectively.
NOTE 7 –LOANS PAYABLE
Loans payable at December 31, 2021 and 2020 consisted of the following:
| | | | | | | | | | | | | | |
| | | | December 31, | | | | December 31, | | | | | | Interest |
| | | | 2021 | | | | 2020 | | | Term | | | 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, 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% |
| Bridge Loan | | | 222,222 | | | | — | | | Note was issued on November 1, 2021 and due on January 30, 2022 | | | 18.0% |
| Martus | | | 100,634 | | | | 108,609 | | | Note was issued on October 23, 2018 and due on January 3, 2022 | | | 5.0% |
| Swisspeers AG | | | 9,605 | | | | 49,187 | | | Note was issued on April 8, 2019 and due on October 4, 2022 | | | 7.0% |
| Darlene Covid19 | | | 109,690 | | | | 113,040 | | | Note was issued on April 1, 2020 and due on March 31, 2025 | | | 0.0% |
| Total | | | 442,151 | | | | 1,622,669 | | | | | | |
| Less: Unamortized debt discount | | | (7,406 | ) | | | (19,221 | ) | | | | | |
| Total loans payable | | | 434,745 | | | | 1,603,448 | | | | | | |
| Less: Current portion of loans payable | | | 315,450 | | | | 1,332,612 | | | | | | |
| Long-term loans payable | | $ | 119,295 | | | $ | 270,836 | | | | | | |
Loans payable - related parties at December 31, 2021 and 2020 consisted of the following:
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Alonso Van Der Biest | | $ | — | | | $ | 80,200 | |
| Alvaro Quintana | | | — | | | | 10,587 | |
| 49% of Shareholder of SwissLink | | | 19,929 | | | | 1,737,512 | |
| 49% of Shareholder of SwissLink | | | 219,379 | | | | 226,080 | |
| Total | | | 239,308 | | | | 2,054,379 | |
| Less: Current portion of loans payable | | | 239,308 | | | | 2,054,379 | |
| Long-term loans payable | | $ | — | | | $ | — | |
During the years ended December 31, 2021 and 2020, the Company borrowed from third parties totaling $600,000 and $1,239,620, which includes original issue discount and financing costs of $66,666 and $63,970 and repaid the principal amount of $344,483 and $969,664, respectively.
During the years ended December 31, 2021 and 2020, the Company recorded interest expense of $191,281 and $77,101 and recognized amortization of discount, included in interest expense, of $78,481 and $44,749, respectively.
During the year ended December 31, 2021, the related party loan of $1,647,150 (CHF 1,518,909) was swapped into capital and the Company recorded it as additional paid in capital.
During the year ended December 31, 2021, the Company settled loans payable of $1,516,667 by issuing 2,230,394 shares of common stock valued at $2,056,530. As a result, the Company recorded loss on settlement of debt of $539,863.
NOTE 8 – OTHER CURRENT LIABILITIES
Other current liabilities at December 31, 2021 and 2020 consisted of the following:
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Accrued liabilities | | $ | 61,153 | | | $ | 6,789 | |
| Accrued interest | | | 8,173 | | | | 170,960 | |
| Salary payable - management | | | 92,229 | | | | 28,300 | |
| Employee benefits | | | 105,221 | | | | 181,231 | |
| Other current liabilities | | | 40,273 | | | | 26,396 | |
| Total Other Current Liabilities | | $ | 307,049 | | | $ | 413,676 | |
NOTE 9 - CONVERTIBLE LOANS
At December 31, 2021 and 2020, convertible loans consisted of the following:
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Promissory notes – Issued in fiscal year 2019, with variable conversion features | | $ | — | | | $ | 5,000 | |
| Promissory notes – Issued in fiscal year 2020, with variable conversion features | | | — | | | | 623,660 | |
| Total convertible notes payable | | | — | | | | 628,660 | |
| Less: Unamortized debt discount | | | — | | | | (372,290 | ) |
| Total convertible notes | | | — | | | | 256,370 | |
| | | | | | | | | |
| Less: current portion of convertible notes | | | — | | | | 253,554 | |
| Long-term convertible notes | | $ | — | | | $ | 2,816 | |
During the years ended December 31, 2021 and 2020, the Company recorded interest expense of $33,429 and $487,012 and recognized amortization of discount, included in interest expense, of $372,290 and $2,176,757, respectively.
During the years ended December 31, 2021 and 2020, the Company repaid notes of $250,000 and $942,190 and accrued interest including prepayment penalty of $6,027 and $675,771, respectively.
Conversion
During the year ended December 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.
During the year ended December 31, 2020, the Company converted notes with principal amounts of $1,302,785 and accrued interest of $93,656 into 46,575,378 shares of common stock. The corresponding derivative liability at the date of conversion of $4,275,728 was settled through additional paid in capital.
Settlement
During the year ended December 31, 2021, the Company recorded gain on settlement of debt of $11,069.
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.
Promissory Notes - Issued in fiscal year 2019
During the year ended December 31, 2019, the Company issued a total of $2,544,250 in notes with the following terms:
| • | Terms ranging from 6 months to 3 years. |
| • | Annual interest rates ranging from of 8% to 12%. |
| • | Convertible at the option of the holders at issuance or 180 days from issuance. |
| • | Conversion prices are typically based on the discounted (39% or 0% discount) lowest trading prices of the Company’s shares during various periods prior to conversion. |
The convertible notes were also provided with a total of 661,216 common shares and warrant to purchase up to 92,000 shares of common stock at exercise price of $2.5 per share for 3 years.
Certain notes allow the Company to redeem the notes at rates ranging from 110% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. 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 year ended December 31, 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 allow the Company to redeem the notes at a range from 120% to 125% provided that no redemption is allowed after the 180th or 185th 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 with exercise price ranging from $0.02 to $0.03.
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 year ended December 31, 2020, amounted to $2,714,029. $1,673,393 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.
Warrants
A summary of activity during the year ended December 31, 2020 follows. There was no 2021 activity.
| | | | Warrants Outstanding | |
| | | | Shares | | | | Weighted Average Exercise Price | | | | Weighted Average Remaining Contractual life (in years) | |
| Outstanding, December 31, 2019 | | | 367,343 | | | $ | 0.480 | | | | 4.05 | |
| Granted | | | 6,500,000 | | | | 0.024 | | | | 6.00 | |
| Reset | | | 10,813,001 | | | | 0.014 | | | | 1.92 | |
| Cashless Exercised | | | (10,597,010 | ) | | | 0.023 | | | | 4.24 | |
| Settled | | | (7,083,334 | ) | | | 0.012 | | | | 1.64 | |
| Outstanding, December 31, 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 $0.0014 per share. We accounted for the issuance of the warrants as a liability and recognized the derivative liability.
NOTE 10 – 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 December 31, 2020. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. 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.
For the year ended December 31, 2021 and 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows:
| | | | | | | | |
| | | Year ended |
| | | 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% |
The following table summarizes the changes in the derivative liabilities during the year ended December 31, 2021 and 2020:
| Fair Value Measurements Using Significant Observable Inputs (Level 3) | |
| | | | | |
| Balance - December 31, 2019 | | $ | 4,744,134 | |
| | | | | |
| Addition of new derivatives recognized as debt discounts | | | 1,673,393 | |
| Addition of new derivatives recognized as loss on derivatives | | | 1,040,636 | |
| Settled on issuance of common stock | | | (5,136,222 | ) |
| Change in fair value of the derivative | | | (1,296,250 | ) |
| 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 - December 31, 2021 | | $ | — | |
The following table summarizes the change in fair value of derivative liability included in the income statement for the year ended December 31, 2021 and 2020, respectively.
| | | Years Ended |
| | | December 31, |
| | | 2021 | | 2020 |
| Addition of new derivatives recognized as loss on derivatives | | $ | — | | | $ | 1,040,636 | |
| Revaluation of derivative liabilities | | | (317,080 | ) | | | (1,296,250 | ) |
| (Gain) on change in fair value of the derivative | | $ | (317,080 | ) | | $ | (255,614 | ) |
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.
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 stockholders at a rate of 51% of the total vote of stockholders.
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
During the year ended December 31, 2020, 100,000 shares of common stock were converted into 10,000 shares of Series A Preferred Stock by our management.
As of December 31, 2021 and 2020, 10,000 shares of Series A Preferred Stock were issued and outstanding.
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 restriction on sales into the market of no more than 5% previous month’s stock liquidity.
During the year ended December 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 December 31, 2021 and 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 C 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 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.
As of December 31, 2021 and 2020, no Series C Preferred Stock was issued or outstanding.
Common Stock
During the year ended December 31, 2021, the Company issued 51,638,526 shares of common stock, valued at fair market value on issuance as follows;
| · | 41,562,500 shares issued for cash of $6,536,250, of which $100,000 was recorded as subscription receivable as of December 31, 2021. The Company received the $100,000 on January 3, 2022. |
| · | 2,230,394 shares, valued at $2,056,530, issued for settlement of debt of $1,516,667 |
| · | 195,000 shares for services valued at $284,700 |
| · | 1,320,000 shares issued to our management for compensation valued at $1,037,568 |
| · | 250,000 shares for forbearance of debt valued at $49,925 |
| · | 6,080,632 shares issued for conversion of debt of $422,295 |
During the year ended December 31, 2021, the Company terminated a placement agent and advisory services agreement with a FINRA member dated September 22, 2020, and cancelled 1,294,600 shares of common stock, which was issued for those services. The termination agreement allowed the FINRA member to retain 400,000 shares of the Company’s common stock in connection with the services.
During the year ended December 31, 2020, the Company issued 100,224,841 shares of common stock, valued at fair market value on issuance as follows;
- 23,937,500 shares issued for cash of $1,915,005
- 12,818,145 shares issued for settlement of debt of $889,093
- 6,267,600 shares issued for services valued at $647,858
- 1,150,000 shares issued for forbearance of debt of $92,250
- 46,575,378 shares issued for conversion of debt of $1,396,440
- 9,476,218 shares issued for cashless exercised warrant
As of December 31, 2021 and 2020, 147,477,358 and 118,133,432 shares of common stock were issued and outstanding, respectively.
NOTE 12 – PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740, “Income TaxesTaxes.”. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The components of the Company’s deferred tax asset or liability isand reconciliation of income taxes computed at the statutory rate to the income tax amount recorded for all temporary differences between financialas of December 31, 2021 and tax reporting and2020, are as follows:
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 |
| Net Operating loss carryforward | | $ | 12,332,310 | | | $ | 8,601,999 | |
| Effective tax rate | | | 21 | % | | | 21 | % |
| Deferred tax asset | | | 2,589,785 | | | | 1,806,420 | |
| Foreign taxes | | | (7,242 | ) | | | (5,112 | ) |
| Less: valuation allowance | | | (2,136,141 | ) | | | (1,341,272 | ) |
| Net deferred tax asset | | $ | 446,402 | | | $ | 460,036 | |
As of December 31, 2021, the Company has approximately $12,332,000 of net operating loss carry forwards. Deferredlosses (“NOL”) generated to December 31, 2021 carried forward to offset taxable income in future years which expire commencing in fiscal 2037. NOLs generated in tax expense (benefit) results fromyears prior to December 31, 2017, can be carryforward for twenty years, whereas NOLs generated after December 31, 2017 can be carryforward indefinitely. In assessing the net change during the yearrealization of deferred tax assets, and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
No provision was made for Federal income tax.
g. Advertising
Advertising will be expensed in the period in which it is incurred. There has been no advertising expense in the reporting period presented.
h. Intangible assets
Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.
i. Recently Issued Accounting Pronouncements
In April 2010, new accounting guidance was issued for the milestone method of revenue recognition. Under the new guidance, an entity can recognize revenue from consideration that is contingent upon achievement of a milestone in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. This guidance is effective prospectively for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The Company adopted the provisions of this guidance which does not have a material impact on its financial statements.
In February 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-09,Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”), which is included in the FASB Accounting Standards Codification (the “ASC”) Topic 855Subsequent Events. ASU 2010-09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued. ASU 2010-09 is effective upon the issuance of the final update and did not have a significant impact on the Company’s financial statements.
In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements.” This update will require (1) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (2) information about purchases, sales, issuances and settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs). This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and require disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs. The new disclosures and clarifications of existing disclosure are effective for fiscal years beginning after December 15, 2009, except for the disclosure requirements for related to the purchases, sales, issuances and settlements in the roll-forward activity of Level 3 fair value measurements. Those disclosure requirements are effective for fiscal years ending after December 31, 2010. The Company does not believe the adoption of this guidance will have a material impact to its financial statements. Management does not believe that other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants or the SEC have a material impact on the Company’s present or future financial statements.
In June 2009, the FASB issued guidance now codified as ASC 105,Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s financial statements, but did eliminate all references to pre-codification standards.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had negative working capital of $665 and a deficit accumulated during the development stage of $5,665 at June 30, 2011. As of June 30, 2011, it had not generated any revenue and had no committed sources of capital or financing.
While the Company is attempting to generate revenues from product formulas, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management believes that the actions presently being taken to further implement its business plan and generate additional products and revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to realize revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – SHARE CAPITAL
The Company is authorized to issue 100,000,000 shares of common stock and 1,000,000 shares of preferred stock. The Company issued 5,000,000 shares of its common stock to its incorporator, chief executive officer and president for organization costs/services. These services were valued at $5,000. Following its formation, the Company issued 2,500,000 shares of our common stock to our incorporator, chief executive officer and president, as consideration for the purchase of various product formulas and sample products. This individual paid approximately $2,500 in product purchases and labor costs to develop the formulas. The acquisition of the formulas and sample products was valued at $2,500.
At June 30, 2011, there are 7,500,000 shares of common stock issued and outstanding.
NOTE 5 – COMMITMENTS
The Company is obligated to certain professionals for costs related to its direct public offering. The Company’s in its capacity is solely obligated for these fees.
NOTE 6 – INCOME TAXES
As of June 30, 2011, the Company had net operating loss carry forwards of $5,665 that may be available to reduce future years’ taxable income through 2031.
| | |
| | As of June 30, 2011 |
| | |
Deferred tax assets: | | |
Net operating tax carryforwards | $ | 2,209 |
Other | | - |
Gross deferred tax assets | | 2,209 |
Valuation allowance | | (2,209) |
| | |
Net deferred tax assets | $ | - |
Realizationultimate realization of deferred tax assets is dependent upon sufficientthe generation of future taxable income during the period that deductibleperiods in which those temporary differences and carryforwards are expected to be available to reduce taxable income. Asbecome deductible. Management considers the achievementscheduled reversal of requireddeferred tax liabilities, projected future taxable income is uncertain,and tax planning strategies in making this assessment. Based on the Company recordedassessment, management has established a full valuation allowance.
NOTE 7 - SUBSEQUENT EVENTS
In accordance with ASC 855,Subsequent Events, the Company has evaluated subsequent events occurring after June 30, 2011 through August 17, 2011. During this period, the Company did not have any material recognizable subsequent events that required disclosure in these financial statements.
B-MAVEN, INC.
(a Development Stage Company)
Balance Sheets
| | | | |
| | March 31, 2012 | | June 30, 2011 |
ASSETS | | (unaudited) | | (audited) |
| | | | |
CURRENT ASSETS: | | | | |
Cash | $ | 1,708 | $ | - |
Prepaid expense | | 350 | | - |
Inventory | | 547 | | - |
Total Current Assets | | 2,605 | | - |
| | | | |
OTHER ASSETS: | | | | |
Deferred offering costs | | 26,724 | | - |
Intangible asset – Product formulas, net | | 1,562 | | 2,500 |
Total Other Assets | | 28,286 | | 2,500 |
TOTAL ASSETS | $ | 30,891 | $ | 2,500 |
| | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
| | | | |
CURRENT LIABILITIES: | | | | |
Accrued expenses | $ | 32,250 | $ | 665 |
Loans – related party | | 908 | | - |
Loans – unrelated parties | | 11,626 | | - |
TOTAL LIABILITIES | | 44,784 | | 665 |
| | | | |
| | | | |
STOCKHOLDERS’ EQUITY (DEFICIT): | | | | |
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding | | - | | - |
Common stock, $0.001 par value; 100,000,000 shares authorized; 7,500,000 shares issued and outstanding | | 7,500 | | 7,500 |
Additional paid in capital | | - | | - |
Deficit accumulated during development stage | | (21,393) | | (5,665) |
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | | (13,893) | | 1,835 |
| | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 30,891 | $ | 2,500 |
See notes to the financial statements.
B-MAVEN, INC.
(a Development Stage Company)
Statements of Operations
(unaudited)
| | | | | | |
| | For the three months ended March 31, 2012 | | For the nine months ended March 31, 2012 | | For the period June 24, 2011 (inception) through March 31, 2012 |
| | | | | | |
| | | | | | |
Revenue | $ | - | $ | - | $ | - |
| | | | | | |
Expenses: | | | | | | |
Samples/marketing expense | | 116 | | 1,204 | | 1,204 |
Consulting and other expense | | 5,222 | | 13,586 | | 13,586 |
Amortization expense | | 313 | | 938 | | 938 |
Organization expenses | | - | | - | | 5,665 |
Loss before provision for income taxes | | 5,651 | | 15,728 | | 21,393 |
| | | | | | |
Provision for income tax | | - | | - | | - |
| | | | | | |
Net loss | $ | (5,651) | $ | (15,728) | $ | (21,393) |
| | | | | | |
Basic and diluted loss per share | $ | (0.00) | $ | (0.00) | | |
| | | | | | |
Weighted average common shares outstanding - basic and diluted | | 7,500,000 | | 7,500,000 | | |
See notes to the financial statements.
B-MAVEN, INC.
(a Development Stage Company)
Statements of Cash Flows
(unaudited)
| | | | |
| | For the nine months ended March 31, 2012 | | For the period June 24, 2011 (inception) through March 31, 2012 |
| | | | |
CASH FLOW FROM OPERATING ACTIVITIES: | | | | |
Net loss | $ | (15,728) | $ | (21,393) |
Amortization | | 938 | | 938 |
Shares issued for organizational expense | | - | | 5,000 |
Adjustments to reconcile net loss to cash (used in) operating activities: | | | | |
Change in inventory | | (547) | | (547) |
Change in prepaid expense | | (350) | | (350) |
Change in accrued expenses | | 31,585 | | 32,250 |
Change in deferred offering costs | | (26,724) | | (26,724) |
Net Cash Provided by (Used in) Operating Activities | | (10,826) | | (10,826) |
| | | | |
CASH FLOW FROM INVESTING ACTIVITIES | | - | | - |
CASH FLOW FROM FINANCING ACTIVITIES: | | | | |
Loans from unrelated parties | | 16,626 | | 16,626 |
Repayment of loan from unrelated party | | (5,000) | | (5,000) |
Loan from related party | | 908 | | 908 |
Net Cash Provided by (Used In) Financing Activities | | 12,534 | | 12,534 |
CHANGE IN CASH | | 1,708 | | 1,708 |
CASH AT BEGINNING OF PERIOD | | - | | - |
CASH AT END OF PERIOD | $ | 1,708 | $ | 1,708 |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | |
Cash paid for: | | | | |
Interest | $ | - | $ | - |
Income taxes | $ | - | $ | - |
Non-cash investing and financing activities: | | | | |
Stock issuance for acquiring formulas and product samples | $ | - | $ | 2,500 |
| | | | |
See notes to the financial statements.
B-MAVEN, INC.
(a Development Stage Company)
Notes to the Financial Statements (unaudited)
March 31, 2012
NOTE 1 – ORGANIZATION
B-Maven, Inc. (the Company) was incorporated under the laws of the State of Nevada on June 24, 2011. The Company issued 5,000,000 shares of its common stock to its founder at inception in exchange for organizational costs incurred upon incorporation. Following its formation, the Company issued 2,500,000 shares of its common stock to our founder, as consideration for the purchase of her product formulas and additional product samples. Our founder paid approximately $2,500 for product formulas and other materials to develop further formulas. The acquisition was valued at $2,500.
The Company plans to be engaged in the business of developing, manufacturing, marketing and selling of a collection of cosmetic products, a skin care line combining science with nature to form an advanced beauty treatment of all natural products. The Company owns the rights to its intellectual property, E-Scentual, an anti-aging formula that is the main ingredient in the E-Scentual Skin Care Collection. The Company has distributed over 1,000 samples of its products to potential end-users in the Southern California and New England region, including New York.
The Company has not generated revenues from its planned principal operations and is considered a development stage company as that term is defined by Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 915,Development Stage Entities.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements and Basis of Presentation
The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S-X. Accordingly, they do not includeallowance against all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial statements of the Company for the period ended June 30, 2011 and notes thereto contained elsewhere in this Prospectus.
a. Basis of Accounting
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30, year-end.
b. Cash Equivalents
For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
c. Inventory
Inventory consists of containers and raw materials to be used for our skin care products and is valued at the lower of cost (first-in, first-out) or net realizable value. The Company evaluates its inventory for excess and obsolescence on a regular basis. In preparing the evaluation the Company will look at the expected demand for the product, as well as any changes in technology, in order to determine whether or not a reserve is necessary to record the inventory at net realizable value. No such reserve has been deemed necessary as of March 31, 2012. The Company expenses in the period that it disburses finished goods product as samples or testers to end users for evaluation. The Company for the three month and nine month period ended March 31, 2012 recognized $116 and $1,204, respectively, in sample expense.
d. Stock-based Compensation
The Company follows ASC 718-10,Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.
e. Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company has adopted the provisions of ASC 260.
f. Earnings (Loss) per Share
The basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
g. Income Taxes
Income taxes are provided in accordance with ASC 740,Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,relating to NOLs for every period because it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferredrealized other than those recorded at SwissLink, because the Company anticipates utilizing the NOLs prior to their expiration.
Utilization of the NOL carry forwards may be subject to an annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). These ownership changes may limit the amount of the NOL carry forwards that can be utilized annually to offset future taxable income and tax, assets and liabilities are adjustedrespectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders.
Tax returns for the effects of changes inyears ended 2016 through 2021 are subject to review by the tax laws and rates on the date of enactment.authorities.
No provision was made for Federal income tax.
h. Advertising
Advertising will be expensed in the period in which it is incurred. There has been no advertising expense in the reporting period presented.
i. Intangible assets
Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.
For the three month and nine month period ended March 31, 2012 we recognized $313 and $938, respectively, in amortization expense. Our product formulas were determined to have been placed in service through the distribution of sample products to potential customers. We amortize our product formulas over 24 months.
j. Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN13 - RELATED PARTY TRANSACTIONS
The accompanying financial statements have been prepared assuming thatDue from related party
During the year ended December 31, 2021, the Company will continue asloaned $220,674 to our CEO and applied to due to CEO of $8,004.
During the year ended December 31, 2021, the Company wrote off due from related party of $10,148.
During the year ended December 31, 2020, the Company loaned $20,182 to related parties who are a going concern. stockholder and a former director, collected $20,197 and wrote off amounts totaling $43,375.
During the years ended December 31, 2021 and 2020, the Company loaned $220,674 and $18,888 to a related party and collected $226 and $2,088, respectively.
As reflected in the accompanying financial statements,of December 31, 2021 and 2020, the Company had negative working capitaldue from related parties of $42,179 $424,086 and a deficit accumulated during$221,790, respectively. The loans are unsecured, non-interest bearing and due on demand.
Due to related parties
During the development stageyears ended December 31, 2021 and 2020, the Company borrowed $0 and $20,182 from CEO and CFO of $21,393 at Marchthe Company, and repaid $90,787 and $20,197 to the CEO and CFO, respectively.
During the year ended December 31, 2012. 2020, the Company borrowed $20,000 from Francisco Bunt who owns 49% of loT Labs and repaid $20,000.
As of MarchDecember 31, 2012,2021 and 2020, the Company had not generated any revenue amounts due to related parties of $26,613 and had no committed sources of capital or financing.$94,616, respectively, which included $0 and $60,000 to Francisco Bunt (Note 4), respectively. The amounts are unsecured, non-interest bearing and due on demand.
WhileDebt to Equity Swap
During the year ended December 31, 2021 the Company is attemptingrecorded a debt to begin the generationequity swap of revenues from the sale of products from our formulas, the Company’s cash position may not be significant enough to support the Company’s daily operations. The Company is actively seeking the assistance of a distribution and packaging business to assist$1,647,150 as additional paid in the generation of revenues. Management believes that the actions presently being taken to further implement its business plan and generate products and revenues provide the opportunity forcapital.
Employment agreements
On July 1, 2021, the Company appointed three independent directors. Effective on July 1, 2021 and thereafter, all directors shall be compensated monthly up to continue as a going concern. While the Company believes in the viability of its strategy to realize revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – SHARE CAPITAL
The Company is authorized to issue 100,000,000 4,000 shares of common stock and 1,000,000cash of $1,000 for their service as directors.
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 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. The above executive officers agreed to two year non-compete and non-solicit restrictive covenants with the Company. If any of the executive officers are terminated for cause they shall forfeit any rights to severance.
On November 1, 2020, our board of directors approved amended employments in favor of our Chief Executive Officer, Leandro Iglesias, our Chief Financial Officer, Alvaro Quintana, and our Chief Commercial Officer, Juan Carlos Lopez Silva.
The amended employment agreement in favor of Mr. Iglesias extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Iglesias provides that we will compensate him with a salary of $17,000 monthly and he is eligible for quarterly bonus of 250,000 shares of preferredour common stock. The Company issued 5,000,000 shares of its common stock to its incorporator, chief executive officer and president for organization costs/services. These services were valued at $5,000. Following its formation,If we do not have the Company issued 2,500,000cash 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). Mr. 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. 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). Mr. 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. Mr. 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%.
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 incorporator, chief executive officer and president,operations, policies or practices. The Company provided the severance package as consideration forfollows;
| • | 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. |
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 purchase of various product formulas and sample products. This individual paid approximately $2,500 in product purchases and labor costs to develop the formulas. The acquisitionfeatures of the formulasplan:
| • | 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 years ended December 31, 2021 and sample products2020, the Company recorded management salaries of $558,000 and $510,000 and bonuses of $976,200 and $0, respectively, of which $1,037,568 and $0 were stock based compensation.
During the year ended December 31, 2020, the Company settled accrued salary – management of $619,531 and issued 10,851,199 shares. As at December 31, 2021 and 2020, the Company recorded and accrued management salaries of $92,229 and $22,300, respectively.
NOTE 14 – 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 years ended December 31, 2021 and 2020, the Company incurred $37,823 and $18,400, 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. Mr. Brito acted as an advisor to our Board of Directors. On February 11, 2021, the Company paid $12,600 and the service was valued at $2,500.terminated.
At March 31, 2012, there are 7,500,000On January 4, 2021, the Company terminated a placement agent and advisory services agreement with a FINRA member dated September 22, 2020, and cancelled 1,294,600 shares of common stock, which was issued and outstanding.
NOTE 5 – LOANS - RELATED PARTIES
As of March 31, 2012for those services. The termination agreement allowed the Company received $908 in loan proceeds from our shareholder and founder in orderFINRA member to fund working capital expenses. This loan is unsecured and carries no interest rate or repayment terms.
NOTE 6 – LOANS - UNRELATED PARTIES
As of March 31, 2012 the Company received $11,626 in loan proceeds from two unrelated parties who are business acquaintances of our shareholder and founder in order to fund working capital expenses. These loans are unsecured and carry no interest rate or repayment terms.
NOTE 7 – DEFERRED OFFERING COSTS
Deferred offering costs consist principally of accounting fees, legal fees and other fees incurred through the balance sheet date that are related to the proposed common stock offering. Deferred offering costs related to the common stock offering will offset proceeds recorded as equity if the transaction is completed or charged to expense if the common stock offering is not completed. As of March 31, 2012, deferred offering costs are $26,724. The Company incurred $20,000 in deferred offering costs for legal services performed by our former securities counsel.
The Company entered into an arrangement with its former legal counsel in order to seek assistance in lending funds necessary to cover legal expenses associated with the filing of its Prospectus and direct public offering. Legal services were estimated to be approximately $60,000 and due and payable only upon Notice of Effectiveness by the Securities Exchange Commission. We terminated this arrangement and representation by our former securities counsel as of January 23, 2012. It was agreed that $20,000 was earned by our former securities counsel as settlement under this arrangement terminated on January 23, 2012. On March 7, 2012 we retained the services of new securities counsel to assist in the filingretain 400,000 shares of the Company’s direct public offering.common stock in connection with the services.
NOTE 815 - SEGMENT
At December 31, 2021 and 2020, 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 years ended December 31, 2021 and 2020:
Year ended December 31, 2021
NOTE 15 - SEGMENT - Schedule of Operating Activities by Geographic Segment
| | | | | | | | | | | | | | | | | |
| | | USA | | Switzerland | | Elimination | | Total |
| Revenues | | $ | 60,112,852 | | | | 4,681,978 | | | $ | (92,812 | ) | | $ | 64,702,018 | |
| Cost of revenue | | | 59,274,781 | | | | 3,986,334 | | | | (92,812 | ) | | | 63,168,303 | |
| Gross profit | | | 838,071 | | | | 695,644 | | | | — | | | | 1,533,715 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 3,733,579 | | | | 784,052 | | | | — | | | | 4,517,631 | |
| | | | | | | | | | | | | | | | | |
| Operating income (loss) | | | (2,895,508 | ) | | | (88,408 | ) | | | — | | | | (2,983,916 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | (897,507 | ) | | | 17,422 | | | | — | | | | (880,085 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (3,793,015 | ) | | $ | (70,986 | ) | | $ | — | | | $ | (3,864,001 | ) |
Year ended December 31, 2020
| | | | | | | | | | | | | | | | | |
| | | USA | | Switzerland | | Elimination | | Total |
| Revenues | | $ | 39,495,542 | | | $ | 5,432,022 | | | $ | (17,558 | ) | | $ | 44,910,006 | |
| Cost of revenue | | | 39,308,347 | | | | 4,656,865 | | | | (17,558 | ) | | | 43,947,654 | |
| Gross profit | | | 187,195 | | | | 775,157 | | | | — | | | | 962,352 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| General and administration | | | 3,359,237 | | | | 815,130 | | | | — | | | | 4,174,367 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (3,172,042 | ) | | | (39,973 | ) | | | — | | | | (3,212,015 | ) |
| | | | | | | | | | | | | | | | | |
| Other expense | | | (3,356,881 | ) | | | (130,434 | ) | | | — | | | | (3,487,315 | ) |
| Net loss | | $ | (6,528,923 | ) | | $ | (170,407 | ) | | $ | — | | | $ | (6,699,330 | ) |
Asset Information
The following table shows asset information by geographic segment as of December 31, 2021 and 2020:
| | | | | | | | | | | | | | | | | |
| December 31, 2021 | | USA | | Switzerland | | Elimination | | Total |
| Assets | | | | | | | | | | | | | | | | |
| Current assets | | $ | 5,783,859 | | | $ | 997,216 | | | $ | (214,551 | ) | | $ | 6,566,524 | |
| Non-current assets | | $ | 4,468,491 | | | $ | 609,189 | | | $ | (2,584,562 | ) | | $ | 2,493,118 | |
| Liabilities | | | | | | | | | | | | | | | | |
| Current liabilities | | $ | 1,070,972 | | | $ | 1,506,594 | | | $ | (214,551 | ) | | $ | 2,363,015 | |
| Non-current liabilities | | $ | — | | | $ | 275,729 | | | $ | — | | | $ | 275,729 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2020 | | USA | | Switzerland | | Elimination | | Total |
| Assets | | | | | | | | | | | | | | | | |
| Current assets | | $ | 3,245,725 | | | $ | 1,225,399 | | | $ | (889,540 | ) | | $ | 3,581,584 | |
| Non-current assets | | $ | 3,478,147 | | | $ | 561,551 | | | $ | (1,669,515 | ) | | $ | 2,370,183 | |
| Liabilities | | | | | | | | | | | | | | | | |
| Current liabilities | | $ | 5,630,060 | | | $ | 3,171,419 | | | $ | (889,540 | ) | | $ | 7,911,939 | |
| Non-current liabilities | | $ | 2,816 | | | $ | 432,048 | | | $ | — | | | $ | 434,864 | |
NOTE 16 – INCOME TAXESSUBSEQUENT EVENTS.
As of MarchSubsequent to December 31, 2012,2020 and through the date that these financials were made available, the Company had net operating loss carry forwards of $21,393 that may be available to reduce future years’ taxable income through 2031.the following subsequent events:
| | |
| | As of March 31, 2012 |
| | |
Deferred tax assets: | | |
Net operating tax carryforwards | $ | 8,343 |
Other | | - |
Gross deferred tax assets | | 8,343 |
Valuation allowance | | (8,343) |
| | |
Net deferred tax assets | $ | - |
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain,On March 31, 2022 the Company recordedsold 2,000,000 common shares under a valuation allowance.
NOTE 9 - SUBSEQUENT EVENTS
In accordance with ASC 855,Subsequent Events, the Company has evaluated subsequent events occurring after March 31, 2012 through April 3, 2012, the date the financial statements were available to be issued. The Company entered into an arrangement with an import/export business to exclusively distribute the Company’s products when available for sale in the Pacific Rim region. Thissubscription agreement is for a period of one year expiring on the first anniversary with an option by both parties to extendour Regulation A offering statement for an additional periodaggregated amount of two years.$1,000,000. The shares were issued on April, 6, 2022.
This prospectus is part of a registration statement we filed with the SEC. You should rely only on the information or representations provided in this prospectus. We have authorized no one to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of the document.
No one (including any salesman or broker) is authorized to provide oral or written information about this offering that is not included in this prospectus.
The information contained in this prospectus is correct only as of the date set forth on the cover page, regardless of the time of the delivery of this prospectus.
Until ________, 2012 (90 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
2,500,000 Shares
B-Maven, Inc.
Common Stock
PROSPECTUS
___________, __, 2012
TABLE OF CONTENTS
SUMMARY FINANCIAL DATA
6
RISK FACTORS
6
USE OF PROCEEDS
17
THE OFFERING
18
DETERMINATION OF OFFERING PRICE
20
DILUTION
20
DIVIDEND POLICY
21
MARKET FOR SECURITIES
21
NOTE REGARDING FORWARD-LOOKING STATEMENTS
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
23
BUSINESS
23
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
33
PRINCIPAL SHAREHOLDERS
36
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
36
DESCRIPTION OF CAPITAL STOCK
37
PLAN OF DISTRIBUTION
40
LEGAL MATTERS
44
EXPERTS
44
UNAUDITED INTERIM STATEMENTS
44
WHERE YOU CAN FIND MORE INFORMATION
45
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1313. Other Expenses of Issuance and Distribution
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Registrant is bearing all expenses in connection withestimated costs of this registration statement other than sales commissions, underwriting discounts and underwriter's expense allowances designated as such. Estimated expenses payable by the Registrant in connection with the registration and distribution of the Common Stock registered herebyOffering are as follows:
| | |
SEC Registration fee | $ | 2.91 |
NASD filing fee | | 100.00 |
*Accounting fees and expenses | | 5,000.00 |
*Legal fees and expenses | | 50,000.00 |
*Transfer agent fees | | 2,500.00 |
*Blue Sky fees and expenses | | 5,000.00 |
*Miscellaneous expenses | | 2,397.09 |
| | |
Total | $ | 65,000.00 |
| Expenses* | | | | |
| Securities and exchange Commission Registration Fee | | $ | _____ | |
| Transfer Agent Fees | | $ | 1,000 | |
| Accounting Fees and Expenses | | $ | 5,000 | |
| Legal Fees and Expenses | | $ | 4,000 | |
| Total* | | $ | 10,000 | |
*Indicates All amounts are estimates, other than the SEC's registration fee
We are paying all expenses that have been estimated for filing purposes.of the Offering listed above. No portion of these expenses will be paid by the selling security holders. The selling security holders, however, will pay any other expenses incurred in selling their shares, including any brokerage commissions or costs of sale.
ITEM 1414. Indemnification of Directors and Officers
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company hasUnder our bylaws, every person who was or is a provisionparty to, or is threatened to be made a party to, or is involved in its Certificateany action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of Incorporation at Article XI thereof providing for indemnification of its officers and directors as follows.
Our Articles of Incorporation at Article XI provide for indemnification as follows: "Nothe fact that he is or was our director or officer, of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary dutyis or was serving at our request as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the Corporation for actsfullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and loss (including attorneys’ fees judgments, fines, and amounts paid or omissions prior to be paid in settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired by such repealperson. The expenses of officers and directors incurred in defending a civil or modification."
criminal action, suit, or proceeding must be paid by us as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors, officers, or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law, or otherwise.
Without limiting the application of the foregoing, our board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause us to purchase and maintain insurance on behalf of any person who is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not we would have the power to indemnify such person. The indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors and administrators of such person.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers andor persons controlling persons of the Companyus pursuant to the foregoing provisions, or otherwise, the registrant haswe have been advisedinformed that in the opinion of the Securities and Exchange CommissionSEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event
We have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any such action, suit or proceeding) is asserted by such director, officer or controlling personderivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the securities being registered,fact that the Registrant will, unless inperson is or was our director or officer or any of our affiliated enterprises. We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in theSecurities Act, and will be governed by the final adjudication of such issue.or otherwise.
ITEM 1515. Recent Sales of Unregistered Securities
RECENT SALES OF UNREGISTERED SECURITIES
During the three years precedingyear ended December 31, 2021, the filingCompany issued 51,638,526 shares of this Form S-1, Registrant hascommon stock, valued at fair market value on issuance as follows;
| · | 41,562,500 shares issued for cash of $6,536,250, of which $100,000 was recorded as subscription receivable as of December 31, 2021. The Company received the $100,000 on January 3, 2022. |
| · | 2,230,394 shares, valued at $2,056,530, issued for settlement of debt of $1,516,667 |
| · | 195,000 shares for services valued at $284,700 |
| · | 1,320,000 shares issued to our management for compensation valued at $1,037,568 |
| · | 250,000 shares for forbearance of debt valued at $49,925 |
| · | 6,080,632 shares issued for conversion of debt of $422,295 |
During the six months ended June 30, 2022, the Company issued 4,081,653 shares of common stock, valued at fair market value on issuance as follows;
| · | 2,000,000 shares issued for cash of $1,000,000 |
| · | 120,000 shares for compensation to our directors valued at $71,629 |
| · | 1,461,653 shares for acquisition of Whisl valued at $550,000 |
| · | 500,000 shares for asset acquisition valued at $325,000 |
The offers, sales, and issuances of the securities withoutdescribed above were deemed to be exempt from registration under the Securities Act on the terms and circumstances described in the following paragraphs.
Of the 7,500,000 outstanding shares, 5,000,000 were issued to Ms. Jones, the Company’s president upon our incorporation in Nevada in June 2011 in exchange for organizational services incurred upon incorporation. Following its formation, the Company issued 2,500,000 shares of its common stock to Ms. Jones, as consideration for her product formulas and sample materials.
The foregoing issuances of securities were affected in reliance upon the exemption from registration provided by section 4(2) underon Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of 1933, (the “Act”) as amended.
Notwithstanding being accredited all security holders were providedsecurities in each of these transactions acquired the securities for investment only and not with a final pre-filing copyview to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the Company’s Registration Statementrecipients of securities in these transactions was an accredited or sophisticated person and acknowledged having read and reviewed same and having no further questions with respecthad adequate access, through employment, business or other relationships, to their respective investments.information about us.
ITEM 1616. Exhibits and Financial Statement Schedules
EXHIBITS
(a) Exhibits
See the Exhibit Index immediately following the signature page included in this registration statement, which is incorporated herein by reference.
(b) Financial Statement Schedules.
See “Index to Financial Statements” which is located on page 38 of this prospectus.
| 39 | |
*3.1
| | Articles of Incorporation
|
*3.2
| | By-Laws
|
5.1c
| | Opinion of Quick Law Group, P.C.
|
*10.1
| | Agreement between B-Maven, Inc., and Gary B. Wolff, P.C.
|
*10.2
| | Agreement regarding Conflict of Interest
|
**10.3
| | Termination Agreement between B-Maven, Inc., and Gary B. Wolff, P.C.
|
**10.4
| | International Distribution Agreement between B-Maven, Inc. and ELVIE Corporation
|
*14.1
| | Code of Ethics
|
23.1f
| | Consent of PLS CPA, a professional corporation
|
23.2f
| | Consent of Quick Law Group, P.C. (included in Exhibit 5.1b)
|
*99.1
| | Copy of Subscription Agreement
|
**99.1a
| | Copy of Subscription Agreement, as amended
|
***99.2
| | Fund Retention Agreement, as amended, with the Quick Law Group, P.C.
|
*Filed with initial filing.
** Filed with Pre-Effective Amendment No. 4.
*** Filed with Pre-Effective Amendment No. 5.
Exhibits are not part of the prospectus and will not be distributed with the prospectus.
ITEM 1717. Undertakings
UNDERTAKINGS
a.
(A) The undersigned registrant hereby undertakes:
1.
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii.
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increaseincreases or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation“Calculation of Registration Fee"Fee” table in the effective registration statement.
iii.statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;statement.
2.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
4.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
5.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: Thesecurities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
ii.
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
iii.
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
iv.
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
b.(6) To provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
Request for Acceleration of Effective Date or Filing of Registration Statement Becoming Effective Upon Filing.
(B) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(C) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the cityCity of San Diego,NewYork, State of CaliforniaNew York, on the 31st day of May, 2012.September 2, 2022.
MAVEN, INC.
| IQSTEL Inc. |
/s/ Anna C. Jones
| |
| By: | /s/ Leandro Iglesias |
| By: Anna C. Jones, President, CEO,Leandro Iglesias
Chief Executive Officer, Principal Executive Officer Treasurer, Chairman,and Director |
| September 2, 2022 |
| By: | /s/ Alvaro Quintana Cardona |
| Alvaro Quintana Cardona |
| Title: | Chief Operating Officer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer and Director |
| Date: | September 2, 2022 |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Leandro Iglesias and Alvaro Quintana Cardona with full power to act alone and without the others, his true and lawful attorney-in-fact, with full power of substitution, and with the authority to execute in the name of each such person, any and all amendments (including without limitation, post-effective amendments) to this registration statement, to sign any and all additional registration statements relating to the same offering of securities as this registration statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file such registration statements with the Securities and Exchange Commission, together with any exhibits thereto and other documents therewith, necessary or advisable to enable the registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, which amendments may make such other changes in the registration statement as the aforesaid attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statementregistration statement has been signed below by the following persons in the capacities and on the datedates indicated.
| By: | | /s/ Leandro Iglesias |
Signature(s)
| Title(s)
| Date
|
/s/ Anna C. Jones
| |
May 31, 2012
|
By: Anna C. JonesLeandro Iglesias
Chief Executive Officer, | President, CEO, Principal Executive Officer Treasurer, Chairman,and Director
|
| September 2, 2022 |
| By: | /s/ Alvaro Quintana Cardona |
| Alvaro Quintana Cardona |
| Title: | Chief Operating Officer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer and Director |
| Date: | September 2, 2022 |
| By: | /s/ Raul Perez |
| Raul Perez |
| Title: | Director |
| Date: | September 2, 2022 |
| By: | /s/ Jose Antonio Barreto |
| Jose Antonio Barreto |
| Title: | Director |
| Date: | September 2, 2022 |
| By: | /s/ Italo Segnini |
| Italo Segnini |
| Title: | Director |
| Date: | September 2, 2022 |
EXHIBIT INDEX
54
| Exhibit No. | | Description of Exhibit |
| Exhibit 2.1 | | Membership Interest Purchase Agreement(1) |
| Exhibit 2.2 | | Memorandum of Understanding and Shareholders Agreement dated February 21, 2020(5) |
| Exhibit 2.3 | | Memorandum of Understanding and Shareholders Agreement dated February 12, 2020(6) |
| Exhibit 2.4 | | Company Purchase Agreement, dated April 1, 2019(11) |
| Exhibit 3.1 | | Articles of Incorporation of the Registrant (2) |
| Exhibit 3.2 | | Bylaws of the Registrant (2) |
| Exhibit 3.3 | | Certificate of Amendment(3) |
| Exhibit 4.1 | | Amendment #2 to the Crown Capital Note dated March 2, 2020(4) |
| Exhibit 4.2 | | Amendment #2 to the Auctus Fund Note dated March 2, 2020(4) |
| Exhibit 4.2 | | Amendment #1 to the Labrys Fund Note dated February 11, 2020(7) |
| Exhibit 4.3 | | Amendment #1 to the Apollo Note dated December 23, 2019(8) |
| Exhibit 4.4 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.5 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.6 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.7 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.8 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.9 | | Amendment #1 to the Apollo Note dated December 24, 2019(8) |
| Exhibit 4.10 | | Amendment #1 to the Crown Capital Note dated December 23, 2019(8) |
| Exhibit 4.11 | | Amendment #1 to the Auctus Fund Note dated January 1, 2020(8) |
| Exhibit 4.12 | | Senior Secured Convertible Promissory Note to Labrys Fund dated December 3, 2019(9) |
| Exhibit 4.13 | | Purchase Company Agreement, dated April 21, 2022(12) |
| Exhibit 4.14 | | Purchase Company Agreement, dated May 6, 2022(13) |
| Exhibit 5.1 | | Opinion of The Doney Law Firm, with consent to use |
| Exhibit 10.1 | | Conversion Agreement with Carmen Cabell(1) |
| Exhibit 10.2 | | Conversion Agreement with Patrick Gosselin(1) |
| Exhibit 10.3 | | Conversion Agreement with Mark Engler(1) |
| Exhibit 10.4 | | Employment Agreement with Leandro Iglesias(1) |
| Exhibit 10.5 | | Employment Agreement with Alvaro Quintana Cardona(1) |
| Exhibit 10.6 | | Employment Agreement with Juan Carlos Lopez Silva(1) |
| Exhibit 10.7 | | Forbearance Agreement dated December 12, 2019(8) |
| Exhibit 10.8 | | Temporary Forbearance Agreement dated December 18, 2019(8) |
| Exhibit 10.9 | | Securities Purchase Agreement, dated December 3, 2019(9) |
| Exhibit 10.10 | | Employment and Indemnification Agreements with Leandro Iglesias, dated May 2, 2019(10) |
| Exhibit 10.11 | | Employment and Indemnification Agreements with Alvaro Quintana, dated May 2, 2019(10) |
| Exhibit 10.12 | | Employment and Indemnification Agreements with Juan Carlos Lopez Silva, dated May 2, 2019(10) |
| Exhibit 23.1 | | Consent of Independent Registered Public Accounting Firm |
Filed herewith**
| 1. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on June 28, 2018. |
| 2. | Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the US Securities and Exchange Commission on August 18, 2011. |
| 3. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on August 31, 2018. |
| 4. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on March 30, 2020. |
| 5. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 25, 2020. |
| 6. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 19, 2020. |
| 7. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 13, 2020. |
| 8. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 6, 2020. |
| 9. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on December 11, 2019. |
| 10. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 6, 2019. |
| 11. | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 4, 2019. |
| 12 | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 26, 2022. |
| 13 | Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 10, 2022. |
