Business Context and Reporting Period
Company: iQSTEL Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 11, 2020
Event: Entry into a material definitive agreement and creation of a direct financial obligation via an amendment to a convertible promissory note.
Key Financial Metrics and Obligations
This filing details specific debt obligations rather than comprehensive financial performance metrics (revenue, profit, cash flow, or margins are not reported in this document).
- Original Note Principal: $1,120,000 (issued March 20, 2019 to Labrys Fund, LP).
- Outstanding Balance: Approximately $892,626.41 (principal, interest, and default interest) as of the Effective Date.
- New Cash Payment Obligations:
- $100,000 due on or before March 6, 2020.
- Subsequent payments of no less than $50,000 due on the 6th of each month thereafter until the Note is satisfied.
- Equity Reservations:
- 5,000,000 shares reserved immediately via irrevocable instruction.
- 5,000,000 shares to be reserved by February 25, 2020.
- 5,000,000 shares to be reserved by March 17, 2020.
Material Changes and Agreements
The company amended a convertible promissory note originally executed on March 20, 2019. The amendment, dated February 11, 2020, addresses existing events of default regarding share reservations. In exchange for the waiver of these defaults, the company agreed to the specific cash payment schedule and share reservation milestones listed above.
Guidance, Risks, and Contingencies
Management Commentary: The filing states that the description of the Amendment is not complete and is subject to the full text of the Amendment included as Exhibit 4.1.
Risks and Contingencies: The existence of "events of default" prior to this amendment indicates prior liquidity or covenant compliance issues. The company now faces strict monthly cash outflows ($50,000+) and significant potential dilution (15,000,000 shares total reserved) to satisfy the debt.
Investor Verification Checklist
- Verify the company's current cash position to ensure it can meet the immediate $100,000 payment due March 6, 2020, and subsequent monthly payments.
- Confirm the status of the 15,000,000 share reservations with the transfer agent to assess potential dilution impact.
- Review the full text of the Amendment (Exhibit 4.1) for additional covenants or default triggers not summarized in the 8-K.
- Check for any other outstanding defaults or litigation related to the original March 2019 note.