UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period endedDecember 31, 2017

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from __________ to __________

Commission file number333-176376

iQSTEL Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:(732) 566-8264

CopiesSecurities registered pursuant to Section 12(b) of communications to:

the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [X] No [   ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [   ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Indicate by check mark whether the registrant is a shell company (as defined in ruleRule 12b-2 of the Exchange Act). Yes

[   ] Yes [X] No [X]

TheState the number of shares outstanding of each of the registrant’sissuer’s classes of common stock, outstanding as of February 16, 2018 was 974,986,610 shares.the latest practicable date: 136,881,964 common shares as of May 14, 2021

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PURESNAX INTERNATIONAL, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-QTABLE OF CONTENTS

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PART I. FINANCIAL INFORMATION

Item 1. Interim Financial Statements (unaudited)

PURESNAX INTERNATIONAL, INC.

Condensed Balance Sheets

(Expressed in US Dollars)

See notes to the unaudited condensed financial statements.

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PURESNAX INTERNATIONAL, INC.

Condensed Statements of Operations (unaudited)

(Expressed in US Dollars)

See notes to the unaudited condensed financial statements.

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PURESNAX INTERNATIONAL, INC.

Condensed Statements of Operations (unaudited)

(Expressed in US Dollars)

SeeItem 1. Financial Statements

iQSTEL INC

Consolidated Balance Sheets

(Unaudited)

The accompanying notes to theare an integral part of these unaudited condensedconsolidated financial statements. 

iQSTEL INC

Consolidated Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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PURESNAX INTERNATIONAL, INC.iQSTEL INC

CondensedConsolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the years ended March 31, 2021 and December 31, 2020

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

iQSTEL INC

Consolidated Statements of Cash Flows (unaudited)

(Expressed in US Dollars)(Unaudited)

SeeThe accompanying notes to theare an integral part of these unaudited condensedconsolidated financial statements.

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PURESNAX INTERNATIONAL, INC.iQSTEL INC

Notes to the CondensedUnaudited Consolidated Financial Statements

DecemberMarch 31, 2017 (unaudited)2021

NOTE 1 – NATURE-ORGANIZATION AND DESCRIPTION OF BUSINESS AND CONTINUANCE OF OPERATIONS

PureSnax International,Organization and Operations

iQSTEL Inc. (the(“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011. On March 8, 2017,2011 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 exitedbeen 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.

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 previous License Agreement with the Canadian Licensoroperations and will no longer represent that brand.in markets served. The Company intendshas instituted some and may take additional temporary precautionary measures intended to develophelp ensure the well-being of its own brandemployees and develop its own products for manufacture, distribution, salesminimize business disruption. The Company considered the impact of COVID-19 on the assumptions and marketingestimates used and determined that there were no material adverse impacts on the Company’s results of various products within the health foodsoperations and snacks industry.

PureSnax International is a wellness brand focused on bringing healthy snacks and foods to consumers. PSI plans to offer a wide assortment of sugar free, vegan, peanut free, Kosher, low fat, low sodium and Non GMO certified products. With new nutritional standards being rolled out through schools in the United States, we believe we are poised to capitalize on these regulations by offering good for you, functional foods and snacks that meet these new regulatory standards. Product categories include marshmallow squares (made without Gelatin and that are vegan), protein bars, mints, gum and various condiments as well as offering Xylitol, a natural, diabetic friendly, sweetener.

We intend to distribute delicious tasting, very healthy snack foods meeting the highest of standards and compliance for the US consumers with plans to evolve into an international audience. With a socially responsible mandate supported by education and driven by integrity and sincerity, PSI will provide people with healthier snack and food choices by utilizing wholesome, natural, high quality ingredients that promote healthier lifestyles. We have chosen to specialize in the development, sourcing, branding and distribution of high quality, healthy food and snack products. It is our vision to brand PureSnax International as onefinancial position at March 31, 2021. The full extent of the trusted names in the healthy food and snack industry.

With major illnesses, such as diabetes, obesity, cancer, and heart diseasefuture impacts of COVID-19 on the rise, people are looking for ways to minimize the risks in developing these diseases. People are starting to readCompany’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and understand labels looking for healthier choices. We believe that the demand for healthier products is driving a fundamental change in the food and snack markets. This demand will provide enormous opportunities for PureSnax International to position itself in the healthy food and snack industry.

Our goal is to utilize education, integrity and honesty to earn the public’s trust and become that trusted brand that provides healthy food and snack products to the growing percentage of the population wanting to make healthier life choices.

We intend to become pioneers in a dynamic and growing segment of the industry where future demand will be and it means addressing the new public awareness of healthier food and snack products. The snack products developed must not only meet healthy product guidelines but also taste good. Our Marshmallow Squares are sugar-free, Gluten-free, vegan, contains very little salt, Gelatin Free, kosher, nut free and taste great! We are developing and are constantly continuing to work on other recipes for healthier products that meet the highest standards of quality.

These financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. For the period from inception on June 24, 2011 through December 31, 2017, the Company has incurred accumulated losses totalling $618,221. The continuationoperations of the Company, as a going concern is dependent uponincluding the continued financial support from its shareholders,timing and ability of the Company to collect accounts receivable and the ability of the Company to obtain necessary equity financingcontinue to continue operations,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 of May 14, 2021, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.additional information is obtained.

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NOTE 2 – SUMMARY-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements and Basis of Presentation

The accompanying unaudited condensed interimconsolidated 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,statements and with the rulesinstructions to Form 10-Q and regulationsRegulation S-X of the United States Securities and Exchange Commission (the “SEC”(“SEC”) set forth in Article 8 of Regulation S-X.. Accordingly, they do not includecontain all of the information and footnotes required by U.S. GAAPaccounting principles generally accepted in the United States of America for completeannual financial statements. The

In the opinion of the Company’s management, the accompanying unaudited condensed interim financial statements furnished reflectcontain all the adjustments necessary (consisting only of normal recurring accruals) which are, into present the opinion of management, necessary to a fair statementfinancial position of the Company as of March 31, 2021 and the results of operations and cash flows for the interim periods presented. Unaudited interimThe results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full fiscal year.year or any future period. These unaudited condensed interim financial statements should be read in conjunction with the financial statements ofand related notes thereto included in the CompanyCompany’s Annual Report on Form 10-K for the year ended June 30, 2017 and notes thereto contained in our 10-K Annual ReportDecember 31, 2020 filed with the SEC on October 13, 2017.April 15, 2021.

a. Basis of Presentation - TheseConsolidation Policy

The consolidated financial statements of our companythe Company include the accounts of the Company and its owned subsidiaries, Etelix.com USA, LLC, SwissLink Carrier AG, ITSBCHAIN, LLC, QGLOBAL SMS, LLC and IoT Labs, LLC. All significant intercompany balances and transactions have been preparedeliminated in accordance with generally accepted accounting principles in the United States and are expressed in United States dollars. Our company’s fiscal year end is June 30.consolidation.

b. Use of Estimates and Assumptions -

The preparation of the consolidated financial statements in conformity with GAAP in the United States generally accepted accounting principlesof America 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 statementsstatements. The estimates and judgments will also affect the reported amounts offor certain revenues and expenses during the reporting period. Our company regularly evaluatesActual results could differ from these good faith estimates and assumptions related to deferred income tax asset valuation allowances. Our company bases our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affectedjudgments.

c. Cash Equivalents - For purposes ofiQSTEL INC

Notes to the balance sheet and statement of cash flows,Unaudited Consolidated Financial Statementsthe Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The company has no cash equivalents

March 31, 2021

d. Financial Instruments - Our Company’s financial instruments consist principally of cash, accounts payableNOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation and accrued liabilities, and related party payables, notes payable. Re-measurement

The fair value of our company’s cash equivalents is determined based on “Level 1” inputs, which consist of quoted pricesCompany translates its foreign operations to U.S. dollar in active markets for identical assets. The carrying value of accounts payable and accrued liabilities and related party payables approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion our company is not exposed to significant interest, currency or credit risks arising from these financial instruments.accordance with ASC 830, “Foreign Currency Matters”.

The company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities,Company’s, Etelix’s, QGlobal’s and IoT Labs’ functional currency and reporting currency is the derivative instrumentU.S. dollar, SwissLink’s functional currency is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-base derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instrument at inception and on subsequent valuation dates. The classification of derivative instrument, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of December 31, 2017, the Company’s derivative financial instruments were four convertible debt notes and one of then includes convertible warrant that are derivative due to the “reset” and “dilutive issuance” clause in the note relating to the conversion price from dilute share issuance. As of December 31, 2016, the Company’s derivative financial instruments were three convertible debt notes and one of then includes convertible warrant that are derivative due to the “reset” and “dilutive issuance” clause in the note relating to the conversion price from dilute share issuance.

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Fair Value MeasurementsSwiss Franc (“CHF”).

ASC Topic 820, “Fair Value Measurements and Disclosures”, requires disclosure ofThe Company’s subsidiaries, whose functional currency is not the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments”, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are definedU.S. dollar, translate their records into U.S. dollar as follows:

·Level 1 inputs toAssets and liabilities at the valuation methodology are quoted prices for identical assets or liabilitiesrate of exchange in active markets.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 shareholders’ equity.

Level 2 inputs to the valuation methodology include quoted pricesAccounts Receivable and Allowance for similar assets and liabilities in the active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full termUncollectible Accounts

Substantially all of the financial instrument.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, past due balances over 60 days and a specified amount are reviewed individually for collectability. Account balances are charged off after all means of collection have been exhausted and the potential for recovery is considered remote. During the three months ended March 31, 2021 and 2020, the Company did not record bad debt expense.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurements.Net Income (Loss) Per Share of Common Stock

The Company’s derivative instruments were reported at fair value using Level 2 inputs as discussed in Note 7.

The Company uses level 2 inputs for its valuation methodology forhas adopted ASC 260, ”Earnings per Share” which requires presentation of basic earnings per share on the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liability is adjusted to reflect fair value at each period end, with any increase or decrease inface of the fair value being recorded in resultstatements of operations as adjustments to fair valuefor all entities with complex capital structures and requires a reconciliation of derivatives.

At December 31, 2017the numerator and 2016,denominator of the Company identifiedbasic earnings per share computation. In the following liabilities that are required to be presented on the balance sheet at fair value:

The Company valued the conversion features of convertible debtnotes and warrants.

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The following table presentwarrant using the computationBlack Scholes valuation model. During the three months ended March 31, 2021, the fair value of basic and diluted net loss per share:the derivative liability for new notes was $0, as there were no notes that became convertible.

f. Foreign Currency Translation -NOTE 7 – DERIVATIVE LIABILITY

The Company’s initial operations willCompany 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 the United States however global expansion is anticipated which results in exposure to market risks from changes in foreign currency exchange rates. The financial risk is the riskthere being no explicit limit to the Company’s operations that arise from fluctuationsnumber of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in foreign exchange rates andAccounting for Derivative Liabilities

ASC 815 requires we assess the degreefair market value of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company's functional currency for all operations worldwide is the U.S. dollar. Nonmonetary assets and liabilities are translated into their U.S. dollar equivalents at historical rates and monetary assets and liabilities are translated at exchange rates in effectliability at the end of the year. Revenueseach reporting period and expenses are translated at average rates for the year. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included in current results of operations.

g. Income Taxes - Our Company accounts for income taxes using the asset and liability method which provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. Our company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

h. Recently Issued Accounting Pronouncements - Jumpstart Our Business Startup’s Act (“JOBS Act”) Transition Accounting: pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company”. This election will permit us to delay the adoption of new or revised accounting standards that will have difference effective dates for public and private companies until those standards apply to private companies. Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.

In April 2016, the FASB issued Accounting Standards Update (ASU) 2016-10, Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing (ASU 2016-10). ASU 2016-10 was issued by the Board to improve Topic 606 by reducing:

The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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To achieve that core principle, an entity should apply the following steps:

The amendments in ASU 2016-10 clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guide, while retaining the related principles for those areas. The effective date and transition requirements for the amendments in ASU 2016-10 are for annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. FASB ASU 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company is currently assessing this guidance for future implementation.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 was issued as part of the Board’s Simplification Initiative. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, Accounting for Income Taxes, Classification of Excess Tax Benefits on the Statement of Cash Flows, Forfeitures, Minimum Statutory Tax Withholding Requirements, Classification of Employee Taxes Paid on the Statement of Cash Flows When an Employer Withholds Shares for Tax-Withholding Purposes, Practical Expedient- Expected Term, and Intrinsic Value. The amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently assessing this guidance for future implementation.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires entities to recognize lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be includedany change in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities,fair market value as other than those that depend on an indexincome or a rate or are in substance fixed payments.

For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

The accounting applied by a lessor is largely unchanged from that applied under previous GAAP.item.

The Company has implemented all new accounting pronouncements that aredetermined 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 March 31, 2021. 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 effectthe future, 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 havethe dividend rate. Changes to these inputs could produce a material impact on its financial positionsignificantly higher or results of operations.lower fair value measurement.

NOTE 3 – RELATED PARTY TRANSACTIONSiQSTEL INC

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

AtNOTE 7 – DERIVATIVE LIABILITY (CONTINUED)

For the three months ended March 31, 2021 and the year ended December 31, 2017, Mr. Patrick Gosselin loaned2020, the Company $21,579, Gosselin Consulting Group, Inc. loanedestimated fair values of the Company $4,880. liabilities measured on a recurring basis are as follows:

The amounts owed are unsecured, non-interest bearing, with an interest imputed at 2.09% per annum,following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2021:

The following table summarizes the change in fair value of derivative liability included in the income statement for the three months ended March 31, 2021 and have no specified repayment terms. The loan to related parties is $26,459 as of December 31, 2017.2020, respectively.

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NOTE 48 – STOCKHOLDERS’SHAREHOLDERS’ EQUITY

The Company’s authorized capital consists of 1,500,000,0001,200,000 shares of preferred stock and 300,000,000 shares of common stock with a par value of $0.001 per shareshare.

Common Stock

During the three months ended March 31, 2021, the Company issued 42,988,132 shares of common stock, valued at fair market value on issuance as follows;

·35,862,500 shares issued for cash of $3,586,250

·600,000 shares issued to our management for compensation valued at $564,000

·6,080,632 shares issued for conversion of debt of $422,295

·195,000 shares for services valued at $284,700

·250,000 shares for forbearance of debt valued at $49,925

During the three months ended March 31, 2021, the Company cancelled 1,294,600 shares of common stock which was issued for service.

As of March 31, 2021 and 6,375,000December 31, 2020, 138,826,964 and 118,133,432 shares of common stock were issued and outstanding, respectively.

iQSTEL INC

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 8 – SHAREHOLDERS’ EQUITY (CONTINUED)

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 with aentitled Series A Preferred Stock, consisting of up 10,000 shares, par value $0.001. Under the Certificate of $0.001 per share.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 shareholders at a rate of 51% of the total vote of shareholders.

The rights of the holders of Series A Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020

As of March 31, 2021 and December 31, 2020, 10,000 shares of Series A Preferred Stock were issued and outstanding, respectively.

Series B Preferred Stock

On June 1, 2015,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 boardCertificate of directors approvedDesignation, holders of Series B Preferred Stock will receive a forward splitliquidation preference of $81 per share in any distribution upon winding up, dissolution, or liquidation of the issuedCompany 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 common shares of Series B Preferred Stock, calculated on the basis of 40 newa 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 each 1 existing common share.every one (1) share of Series B Preferred Stock. Upon effectivenessconversion, 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.

During the forward split, the issued and outstandingthree months ended March 31, 2021, 21,000,000 shares of common stock increased from 10,000,000were converted into 21,000 shares of Series B Preferred Stock by our management.

As of March 31, 2021 and December 31, 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 400,000,000. All share and per share amounts have been retroactively adjusted to reflect the forward stock split. On June 11, 2015, the Company’sArticle III of our Articles of Incorporation, were amended reflect these changes.

On July 13, 2017, Typenex electedour Board of Directors voted to convert $5,960designate a class of its convertible promissory notepreferred 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 principal amountdesignation. The holders of $115,000 into 23,841,344 shares of Series C Preferred Stock have no dividend rights except as may be declared by the company’sBoard in its sole and absolute discretion, out of funds legally available for that purpose. Holders of Series B Preferred Stock do not have voting rights but may convert into common stock after twenty four months from the issuance date, at a conversion pricerate of $0.001.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.

On August 1, 2017, Typenex elected to convert $11,500The rights of its convertible promissory notethe holders of Series C Preferred Stock are defined in the principal amountrelevant Certificate of $115,000 into 31,944,444 sharesDesignation filed with the Nevada Secretary of the company’s common stock at a conversion price of $0.001.State on January 7, 2021.

On August 14, 2017, Typenex elected to convert 11,750 of its convertible promissory note in the principal amount of $115,000 into 32,638,889 shares of the company’s common stock at a conversion price of $0.001.

On August 29, 2017, Typenex elected to convert $8,550 of its convertible promissory note in the principal amount of $115,000 into 32,885,950 shares of the company’s common stock at a conversion price of $0.001.

On September 15, 2017, Typenex elected to convert $7,892 of its convertible promissory note in the principal amount of $115,000 into 32,885,263 shares of the company’s common stock at a conversion price of $0.001.

On September 25, 2017, Typenex elected to convert $7,893 of its convertible promissory note in the principal amount of $115,000 into 32,885,900 shares of the company’s common stock at a conversion price of $0.001.

On October 23, 2017, Adar Bays LLC elected to convert $5,000 of its convertible promissory note in the principal amount of $30,000 into 25,000,000 shares of the company’s common stock at a conversion price of $0.0002. The principal remaining after conversion was $25,000.

On November 2, 2017, Adar Bays LLC elected to convert $4,890.85 of its convertible promissory note in the principal amount of $30,000 into 32,605,667 shares of the company’s common stock at a conversion price of $0.00015. The principal remaining after conversion was $20,109.15.

On November 9, 2017, Adar Bays LLC elected to convert $5,134.9 of its convertible promissory note in the principal amount of $30,000 into 34,232,667 shares of the company’s common stock at a conversion price of $0.00015. The principal remaining after conversion was $14974.25.

On November 10, 2017, Adar Bays LLC elected to convert $5,391.13 of its convertible promissory note in the principal amount of $30,000 into 35,940,667 shares of the company’s common stock at a conversion price of $0.00015. The principal remaining after conversion was $9,583.13.

On November 22, 2017, Adar Bays LLC elected to convert $5,660.15 of its convertible promissory note in the principal amount of $30,000 into 37,734,333 shares of the company’s common stock at a conversion price of $0.00015. The principal remaining after conversion was $3,922.97.

On December 6, 2017, Adar Bays LLC elected to convert $3,000 of its convertible promissory note in the principal amount of $30,000 into 30,000,000 shares of the company’s common stock at a conversion price of $0.0001. The principal remaining after conversion was $922.97.

OniQSTEL INC

Notes to the Unaudited Consolidated Financial Statements

March 31, 2021

NOTE 9 - RELATED PARTY TRANSACTIONS

Due from related parties

During the three months ended March 31, 2021 and 2020, the Company loaned $0 and $13,399 to a related party, respectively.

As of March 31, 2021 and December 13, 2017, Adar Bays LLC elected31, 2020, the Company had due from related parties of $221,790. The loans are unsecured, non-interest bearing and due on demand.

Due to convertrelated parties

During the remaining $922.97 of its convertible promissory note inthree months ended March 31, 2021 and 2020, the principal amount of $30,000, plus another $1,809.54 of accrued interest into 27,325,100 sharesCompany borrowed $0 and $182 from CEO and CFO of the company’s common stock at a conversion priceCompany, and repaid $10,587 and $162 to the CEO and CFO, respectively.

As of $0.0001. March 31, 2021 and December 31, 2020, the Company had amounts due to related parties of $34,616 and $94,616, respectively. During the three months ended March 31, 2021, the Company paid $60,000 for the rest of consideration of acquisition of IoT Labs in 2020 The principal remaining after conversion was $0.amounts are unsecured, non-interest bearing and due on demand.

Employment agreements

12

During the three months ended March 31, 2021 and 2020, the Company recorded management fees of $135,000 and $126,000, bonus of $564,000 and $0 and paid $143,212 and $28,600, respectively. 

WarrantsNOTE 10 – COMMITMENTS AND CONTINGENCIES

Leases and Long-term Contracts

The Company issued several Notes in prior periods and converted them in the issuance of warrants. The following table summarizes information about the Company’s warrants at December 31, 2017: