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NOTE 4 - ACQUISITION

12 Months Ended

Dec. 31, 2020

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

We have agreed to pay a total of $180,000 for the 51% interest in the Company. The consideration shall occur with an installment of $60,000 on the date of the execution of the Agreement, followed by a second payment of $60,000 at closing and a final payment of $60,000 that is set to occur 60 days following the closing date. Under the Agreement, Mr. Bunt has the right to request that any of the aforementioned payments be made in shares of our common stock, which the parties have agreed to value at $2.00 per share. The shares are subject to adjustment after 180 days and up to 360 days after issuance if our stock trades at less than $2.00 per share. The Agreement provides for a right of return to Mr. Bunt of the shares in the Company if we fail to make timely payments.

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

		April 15,
		2020
Fair Value of Consideration:
Cash	$	180,000
Total Purchase Price	$	180,000

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

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

Total purchase price	$	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

SwissLink

On April 1, 2019, iQSTEL Inc. (the “Company”) entered into a Company Purchase Agreement (the “Purchase Agreement”) by and between the Company and the Ralf Kohler (the “Seller”), which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG (“SwissLink”) (www.swisslink-carrier.com), a Swiss corporation, by the Company for a consideration of $500,000.

On August 7, 2019, having completed all conditions under the Purchase Agreement, the Company closed the transaction with Seller, and paid $50,000 and issued a total of 343,512 shares of common stock at $1.31 per share to the Seller for the 51% equity interest and certain assets in SwissLink, including 51% of the loan in SwissLink.

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

		August 7,
Fair Value of Consideration:		2019
Cash	$	50,000
343,512 shares of common stock at $1.31 per share		450,000
Total Purchase Price	$	500,000

Swisslink has been included in our consolidated results of operations since their respective acquisition dates.

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


Total purchase price	$	500,000
Cash		289,516
Accounts receivable, net		1,462,786
Other current assets		101,629
Deferred tax assets		418,932
Property and equipment, net		12,070
Total identifiable assets		2,284,933
Accounts payable		(1,479,949)
Other current liabilities		(84,591)
Long term loans		(156,441)
Long term loans – related party		(2,199,907)
Employee benefits		(238,476)
Total liabilities assumed		(4,159,364)
Net assets		(1,874,431)
Non-controlling interest		918,471
Total net assets		(955,960)
Goodwill	$	1,455,960

Unaudited combined proforma results of operations for the year ended December 31, 2020 and 2019 as though the Company acquired IoT Labs and SwissLink on January 1, 2019, are set forth below:

		Year Ended
		December 31,
		2020		2019
Revenues	$	55,784,168	$	50,971,291
Cost of revenues		54,631,017		49,585,229
Gross profit		1,153,151		1,386,062

Operating expenses		4,224,903		1,919,871
Operating loss		(3,071,752)		(533,809)

Other expense		(3,487,315)		(4,798,447)
Net Loss	$	(6,559,067)	$	(5,332,256)