EX-99.3 4 f8ka121018_ex99z3.htm EXHIBIT 99.3 IQSTEL PROFOMA FINANCIALS Exhibit 99.3 iQSTEL Profoma Financials

 

EXHIBIT 99.3

 

IQSTEL INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

 

The following unaudited pro forma combined financial statements give effect to the sale purchase transaction (the “Transaction”) between iQSTEL Inc. (the “Company”, “iQSTEL”, “we”, “us”, “our”) and Etelix.com USA, LLC (“Etelix”).

 

 

 

Page

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2018

2

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2018

3

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2017

4

1

IQSTEL INC.

Pro Forma

Balance Sheet – Unaudited

March 31, 2018

 

 

iQSTEL Inc.

 

Etelix.com

USA, LLC

 

Proforma

 

Proforma

 

March 31, 2018

 

March 31, 2018

 

Adjustments

 

As Adjusted

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

-

 

$

27,784

 

$

-

 

$

27,784

Refund receivable

 

20,237

 

 

-

 

 

-

 

 

20,237

Allowance for doubtful accounts

 

(20,237)

 

 

-

 

 

-

 

 

(20,237)

Accounts receivable, net of allowance for doubtful accounts

 

-

 

 

1,996,611

 

 

-

 

 

1,996,611

Total current assets

 

-

 

 

2,024,395

 

 

-

 

 

2,024,395

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment - Net

 

-

 

 

286,170

 

 

-

 

 

286,170

TOTAL ASSETS

$

-

 

$

2,310,565

 

$

-

 

$

2,310,565

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Cash overdraft

$

108

 

$

-

 

$

-

 

$

108

Accounts payable

 

-

 

 

1,119,951

 

 

-

 

 

1,119,951

Accrued expenses

 

79,672

 

 

-

 

 

-

 

 

79,672

Loans payable

 

-

 

 

239,542

 

 

-

 

 

239,542

Loans – related party

 

26,593

 

 

-

 

 

-

 

 

26,593

Other current liabilities

 

-

 

 

550,906

 

 

-

 

 

550,906

Total current liabilities

 

106,373

 

 

1,910,399

 

 

-

 

 

2,016,772

 

 

 

 

 

 

 

 

 

 

 

 

Long-term loans payable - related parties

 

-

 

 

90,837

 

 

-

 

 

90,837

TOTAL LIABILITIES

 

106,373

 

 

2,001,236

 

 

-

 

 

2,107,609

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT):

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 8,500,000 shares authorized; 3,187,500 shares issued and outstanding at March 31, 2018

 

3,188

 

 

-

 

 

-

 

 

3,188

Common stock, $0.001 par value; 2,000,000,000 shares authorized; 75,004 shares (pre-adjustment) and 13,826,879 shares (post adjustment) issued and outstanding at March 31, 2018

 

75

 

 

-

 

 

13,752

 

 

13,827

Membership equity

 

-

 

 

853,515

 

 

(853,515)

 

 

-

Additional paid-in capital

 

647,684

 

 

-

 

 

82,443

 

 

730,127

Retained earnings (accumulated deficit)

 

(757,320)

 

 

(544,186)

 

 

757,320

 

 

(544,186)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

(106,373)

 

 

309,329

 

 

-

 

 

202,956

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT

$

-

 

$

2,310,565

 

$

-

 

$

2,310,565

 

See notes to the unaudited pro forma combined financial statements.

2

IQSTEL INC.

Pro Forma

Statement of Operations for the Three Months Ended March 31, 2018 – Unaudited

 

 

 

 

 

 

 

 

 

 

 

Proforma

 

iQSTEL Inc.

 

Etelix.com USA, LLC

 

 

 

As Adjusted

 

For the three months ended

 

For the three months ended

 

Proforma

 

For the three months ended

 

March 31, 2018

 

March 31, 2018

 

Adjustments

 

March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

-

 

$

2,180,165

 

$

-

 

$

2,180,165

Cost of revenue

 

-

 

 

1,967,159

 

 

-

 

 

1,967,159

Gross profit

 

-

 

 

213,006

 

 

-

 

 

213,006

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

-

 

 

123,976

 

 

-

 

 

123,976

Consulting and other expenses

 

10,172

 

 

-

 

 

(10,172)

 

 

-

Website and hosting

 

45

 

 

-

 

 

(45)

 

 

-

Other expenses

 

293

 

 

-

 

 

(293)

 

 

-

Total operating expenses

 

10,510

 

 

123,976

 

 

(10,510)

 

 

123,976

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

-

 

 

(12,935)

 

 

-

 

 

(12,935)

Interest expense

 

(156)

 

 

(57,054)

 

 

156

 

 

(57,054)

Derivative expense

 

(128,433)

 

 

-

 

 

128,433

 

 

-

Total other income/(expense)

 

(128,589)

 

 

(69,989)

 

 

128,589

 

 

(69,989)

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax

 

(139,099)

 

 

19,041

 

 

139,099

 

 

19,041

Provision for income tax

 

-

 

 

-

 

 

-

 

 

-

Net loss

$

(139,099)

 

$

19,041

 

$

139,099

 

$

19,041

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per common share

$

(2.51)

 

$

-

 

$

-

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted (1)

 

55,515

 

 

-

 

 

 

 

 

13,826,879

 

See notes to the unaudited pro forma combined financial statements.

3

 

IQSTEL INC.

Pro Forma

Statement of Operations for the Year Ended December 31, 2017 – Unaudited

 

 

 

 

 

 

 

 

 

 

 

Proforma

 

iQSTEL Inc.

 

Etelix.com USA, LLC

 

 

 

As Adjusted

 

For the twelve months ended

 

For the year ended

 

Proforma

 

For the twelve months ended

 

December 31, 2017

 

December 31, 2017

 

Adjustments

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

-

 

$

7,514,855

 

$

-

 

$

7,514,855

Cost of revenue

 

-

 

 

6,896,806

 

 

-

 

 

6,896,806

Gross profit

 

-

 

 

618,049

 

 

-

 

 

618,049

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

-

 

 

692,053

 

 

-

 

 

692,053

Professional fees and consulting

 

92,084

 

 

-

 

 

(92,084)

 

 

-

Website and hosting

 

793

 

 

-

 

 

(793)

 

 

-

Loss on Inventory

 

12,187

 

 

-

 

 

(12,187)

 

 

-

Other expenses

 

8,595

 

 

-

 

 

(8,595)

 

 

-

Total operating expenses

 

113,659

 

 

692,053

 

 

(113,659)

 

 

692,053

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(196,000)

 

 

(240,778)

 

 

196,000

 

 

(240,778)

Derivative expense

 

(41,864)

 

 

-

 

 

41,864

 

 

-

Change in derivative liability

 

105,383

 

 

-

 

 

(105,383)

 

 

-

Other expense

 

-

 

 

(40,924)

 

 

-

 

 

(40,924)

Total other income (expense)

 

(132,481)

 

 

(281,702)

 

 

132,481

 

 

(281,702)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income tax

 

(246,140)

 

 

(355,706)

 

 

246,140

 

 

(355,706)

Provision for income tax

 

-

 

 

-

 

 

-

 

 

-

Net loss

$

(246,140)

 

$

(355,706)

 

$

246,140

 

$

(355,706)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

(6.35)

 

 

-

 

 

 

 

 

(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted (1)

 

38,753

 

 

-

 

 

 

 

 

13,796,323

 

See notes to the unaudited pro forma combined financial statements.

4

 

IQSTEL INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

On June 25, 2018, iQSTEL Inc. (the “Company”, “iQSTEL”, “we”, “us”, “our”), a company incorporated under the laws of the State of Nevada, USA, entered into a membership interest purchase agreement with Etelix.com USA, LLC (“Etelix”) and Etelix’s membership holders whereby the Company issued 13,751,875 new common shares in exchange for all of the outstanding ordinary membership of Etelix, which totaled 100% membership interest. Etelix has been engaged in the business of telecommunication services as a wholesale carrier of voice and data for other telecom companies around the World with more than 150 active interconnection agreements with mobile companies, fix line companies and other wholesale carriers. The transaction under the membership interest purchase agreement has been accounted for as a reverse-merger and recapitalization of the Company where the Company (the legal acquirer) is considered the accounting acquiree and Etelix (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of Etelix.

 

1. BASIS OF PRO FORMA PRESENTATION

 

The unaudited pro forma condensed combined balance sheets have been derived from the historical March 31, 2018 balance sheet of Etelix after giving effect to the acquisition with iQSTEL. The pro forma balance sheet and statement of operations and comprehensive loss present this transaction as if they had been consummated as of March 31, 2018 as required under Article 11 of Regulation S-X.

 

Historical financial information has been adjusted in the pro forma balance sheet to pro forma events that are: (1) directly attributable to the Acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the Company’s results of operations. The pro forma adjustments presented in the pro forma condensed combined balance sheet and statement of operations are described in Note 3— Pro Forma Adjustments.

 

The unaudited pro forma combined financial information is for illustrative purposes only. These companies may have performed differently had they actually been combined for the periods presented. You should not rely on the pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the merger. Unaudited pro forma financial information and the notes thereof should be read in conjunction with the accompanying historical financial statements of Etelix included elsewhere in this report.

 

2. ACCOUNTING PERIODS PRESENTED

 

Certain pro forma adjustments were made to conform Etelix’s accounting policies to the Company’s accounting policies as noted below.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2018 is presented as if the Etelix acquisition had occurred on March 31, 2018 and combines the historical balance sheet of the Company at March 31, 2018 and the historical balance sheet of Etelix at March 31, 2018.

 

The unaudited pro forma condensed combined statement of operations of the Company and Etelix for the period ended March 31, 2018 are presented as if the acquisition had taken place on March 31, 2018. The pro forma statement of operations for the period ended March 31, 2018 combines the historical results of the Company for the three months ended March 31, 2018 and the historical results of Etelix for three months ended March 31, 2018.

 

The unaudited pro forma combined statement of operations for the year ended December 31, 2017 has been prepared by combining the Company’s historical consolidated statement of operations for the year ended December 31, 2017, with the historical consolidated statement of income of Etelix for the year ended December 31, 2017.

 

3. PRO FORMA ADJUSTMENTS

 

The adjustments included in the pro forma balance sheet and statement of operations are as follows:

 

 

●

To record 13,751,875 shares of iQSTEL common stock issued in exchange for 100% membership interest of Etelix.

 

 

 

 

●

To eliminate the accumulated loss of iQSTEL incurred before the date of the membership interest purchase agreement.

 

 

 

 

●

To adjust share capital of Etelix.com USA to additional paid-in capital.

 

5