SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K/A

Amendment No. 1

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 7, 2019

 

iQSTEL Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

000-55984

45-2808620

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

 

300 Aragon Avenue, Suite 375

Coral Gables, FL 33134

 

33134

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (954) 951-8191

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[   ]

Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)

 

 

[   ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

[  ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

[   ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [   ]

 

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. [   ]


 

 

Explanatory Note

 

On August 7, 2019, we filed a Current Report on Form 8-K to disclose the closing of a Company Purchase Agreement (the “Agreement”) with Ralf Kohler, described in Item 2.01 to that report, which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG. This Amendment to the Current Report on Form 8-K is filed to provide the required financial statements of the business acquired and pro forma financial information.


 

 

SECTION 2 - FINANCIAL INFORMATION

 

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

 

As previously disclosed, 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.

 

The consideration for the acquisition consists of $500,000 USD, payable as follows:

 

$50,000 USD shall be paid in cash upon execution of the Purchase Agreement; and  

 

The balance of $450,000 USD shall be paid at Closing in the form of 187,500 shares of common stock in the Company based upon an agreed upon price of $2.40 per share. Additional shares may be payable at Closing, if the Company’s stock is valued at less than $2.40 per share, to account for the full $450,000 USD.  

 

Under the Purchase Agreement, the acquisition includes both the 51% equity interest in SwissLink and what are referred to as Additional Assets, which include telecommunications equipment, telecommunications platform software for international long distance voice exchange (VAMP) designed by Swisslink, intellectual rights of the VAMP, receivables, cash in banks, interconnection and service agreements, company information in file and telecommunication license rights for Switzerland.

 

SwissLink is indebted to the Seller in the principal amount of CHF 200,000 (approximately $ 200,514.19 USD) as evidenced by a loan agreement dated December 22th, 2019. Under the Purchase Agreement, SwissLink is to repay the full amount of principal plus interest in two years from execution of the Purchase Agreement.

 

At the execution of this Purchase Agreement, SwissLink has a debt with the Seller of CHF 1,937,077 (approximately $1,941,893.41 USD) by December 31th 2018. With the acquisition of the 51% of the equity of SwissLink, the Company is acquiring 51% of the loan for the payment of CHF 0.51 (approximately $ 0.51 USD) to the Seller, meaning that after the execution of this Purchase Agreement, SwissLink owes to the Seller CHF 949,167.73 (approximately $ 951,432.22 USD) that represent the 49% of the debt, and at the same time, Swisslink owes to the Company CHF 987,909.27 (approximately $ 990,236.62 USD) that represent 51% of this debt.

 

Further under the Purchase Agreement, the Company has secured an option to, exercisable at 365 days from Closing, to acquire the remaining 49% interest in SwissLink. The Purchase Agreement outlines the purchase price, which is estimated at minimum of $750,000 USD.

 

The parties to the Purchase Agreement further agreed to extend employment agreements of SwissLink to two individuals at SwissLink for a period of three years, and to Mr. Ralf Kohler (The Seller) for a period of five years as CEO/COO. The Company believes these positions will allow for a continuity of operations of SwissLink.

 

There shall be three directors of SwissLink, two of whom will be Messrs. Leandro Iglesias and Alvaro Quintana Cardona, officers of our Company. Mr. Ralf Kohler will also be a member of the board of directors of SwissLink.

 

The Purchase Agreement may be terminated if either the Company or SwissLink are deemed economically unviable or bankrupt; if during due diligence process there is discovered

 

The Closing of the Purchase Agreement was scheduled for 90 days from execution, and was subject to conditions, which include the following:

 

The Company’s board of directors approving the transaction; 

 

Satisfactory due diligence of SwissLink by the Company; 

 

SwissLink has prepared financial statements that are auditable by a PCAOB auditor. 

 

On August 7, 2019, having completed all conditions under the Purchase Agreement, the Company closed the transaction with Seller, and issued 187,500 shares to Seller for the 51% equity interest and certain assets in Swisslink and another 510 shares to Seller for 51% of the loan in Swisslink.


 

 

The Purchase Agreement contains customary representations and warranties of the parties, including, among others, with respect to corporate organization, capitalization, corporate authority, financial statements and compliance with applicable laws. The representations and warranties of each party set forth in the Purchase Agreement were made solely for the benefit of the other parties to the Purchase Agreement, and investors are not third-party beneficiaries of the Purchase Agreement. In addition, such representations and warranties (a) are subject to materiality and other qualifications contained in the Purchase Agreement, which may differ from what may be viewed as material by investors, (b) were made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement and (c) may have been included in the Purchase Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts. Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding any of the parties or their respective businesses.

 

SECTION 3 - SECURITIES AND TRADING MARKETS

 

ITEM 3.02 - UNREGISTERED SALES OF EQUITY SECURITIES

 

The information provided in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

We claim an exemption from the registration requirements of the Securities Act, for the private placement of these securities pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the Seller is an accredited investor, the Purchaser acquired the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

 

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

 

(a) Financial Statements of Businesses Acquired. The financial statements of Swisslink required by Item 9.01(a) to this Current Report on Form 8-K will be filed by amendment within 71 calendar days after the date this report on Form 8-K must be filed.

 

(b) Pro Forma Financial Information. The pro forma financial information required by Item 9.01(b) to this Current Report on Form 8-K will be filed by amendment within 71 calendar days after the date this report on Form 8-K must be filed.

 

(d) Exhibits

 

Exhibit No.

Description

2.1

Company Purchase Agreement, dated April 1, 2019(1)

99.1

Closing Certificate(2)

99.2

Audited financials December 31, 2018

99.3

Unaudited interim financials for March 31, 2019

99.4

Pro-Formas

 

(1)Incorporated by reference to the Current Report on Form 8-K filed as Exhibit 2.1 on April 4, 2019. 

 

(2)Incorporated by reference to the Current Report on Form 8-K filed as Exhibit 99.1 on August 7, 2019. 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

iQSTEL Inc.

 

 

/s/ Leandro Iglesias

Leandro Iglesias
Chief Executive Officer

 

Date September 13, 2019

 

 

REPORT OF THE AUDITOR - SWISSLINK AG 31.12.18 (IFRS) EXHIBIT 99.2.JPG  


1


 

 

Grant Thornton AG

Claridenstrasse 35

P.O. Box

CH-8027 Zürich

T +41 43 960 71 71

F +41 43 960 71 00

www.grantthornton.ch

 

INDEPENDENT AUDITOR’S REPORT

 

to the Shareholders of SwissLink Carrier AG, Zug

 

Report on the Audit of the Financial Statements

 

Opinion

 

We have audited the financial statements of SwissLink Carrier AG (the Company), set out on pages 3 to 40 which comprise the income statement and statement of comprehensive income for the year ended December 31, 2018, the statement of financial position as at December 31, 2018, the statement of cash flows and the statement of changes in equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

 

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

 

Basis for Opinion

 

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Switzerland, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material Uncertainty Related to Going Concern

 

We draw attention to Note 4 of the financial statements, which indicate that the Company incurred a net loss of CHF 273’054 during the year ended December 31, 2018 and, as of that date, the Company’s total liabilities exceeded its total assets by CHF 1’901’955. As stated in Note 4, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern and the measures taken to improve the financial situation. Our opinion is not modified in respect of this matter.

 

Responsibilities of Management and Those Charged with Governance for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


2


 

 

Zurich, August 14, 2019

Grant Thornton AG

 

 

/s/ Erich Bucher

Erich Bucher

 

/s/ Henning Goeck

Henning Goeck

 

 

Enclosures:

 

– Financial statements (income statement and statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and notes)


3


 

 

INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

5

STATEMENT OF FINANCIAL POSITIONS

6

STATEMENT OF CASH FLOWS

8

STATEMENT OF CHANGES IN EQUITY

9

NOTES TO THE FINANCIAL STATEMENTS

10

GENERAL INFORMATION

10

BASIS OF ACCOUNTING

10

SIGNIFICANT ACCOUNTING POLICIES

11

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

18

REVENUE AND MATERIAL COSTS

19

PERSONNEL EXPENSES

19

FINANCIAL EXPENSE (NET)

20

INCOME TAXES

20

CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLES TRADE

22

OTHER CURRENT RECEIVABLES

23

ACCOUNTS PAYABLES, TRADE

23

OTHER CURRENT LIABILITIES

23

ACCRUALS AND DEFERRED INCOME

23

EMPLOYEE BENEFITS

23

EMPLOYEE BENEFITS – PENSION PLAN ASSET / LIABILITIES

24

PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS

26

LOANS AND BORROWINGS

28

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

29

RECOGNIZED FAIR VALUE MEASUREMENTS FOR FINANCIAL AND NON-FINANCIAL INSTRUMENTS

31

CONTINGENT LIABILITIES

31

LEASE COMMITMENTS

31

CURRENCY RATES APPLIED

32

RELATED PARTY DISCLOSURES

32

TRANSITION TO IFRS

33

EVENTS OCCURRING AFTER THE REPORTING PERIOD

40


4


 

 

Statement of comprehensive income for the year ended December 31, 2018

 

Income statement and statement of comprehensive income

 

 

 

 

 

 

Year ended 2018

 

Year ended 2017

 

Note

(in CHF)

 

(in CHF)

Continuing operations

 

 

 

 

Revenue

5

7,930,672

 

8,692,412

Material costs

5

(7,225,167)

 

(7,799,454)

Gross profit

 

705,505

 

892,958

Personnel expenses

6

(760,088)

 

(1,091,321)

Travelling expenses

 

(18,813)

 

(22,941)

Repair and maintenance costs

 

(112,110)

 

(176,243)

Insurance costs

 

(27,046)

 

(44,783)

Administration expenses

 

(31,487)

 

(28,939)

Consulting, legal and audit fees

 

(29,666)

 

(35,506)

Other Operating expenses

 

(53,390)

 

(134,752)

Operating result before interest and taxes (EBITDA)

 

(327,095)

 

(641,527)

Depreciation property, plant and equipment

16

(2,826)

 

(2,826)

Amortization of intangible assets

16

(5,944)

 

(5,944)

Operating result before interest and taxes (EBIT)

 

(335,865)

 

(650,297)

Financial expenses

7

(75,297)

 

(140,330)

Loss before tax

 

(411,162)

 

(790,627)

Tax income

8

69,897

 

134,407

Loss for the year

 

(341,265)

 

(656,220)

 

 

 

 

 

Other comprehensive income

 

 

 

 

Items that will not be reclassified subsequently to profit and loss:

 

 

 

 

Re-measurement of defined benefit obligation

15

82,182

 

(18,522)

Related tax

8

(13,971)

 

3,149

 

 

68,211

 

(15,373)

 

 

68,211

 

(15,373)

Other comprehensive income / (expenses) for the year, net of tax

 

 

 

 

 

 

 

 

 

Total comprehensive income / (expenses) for the year

 

(273,054)

 

(671,593)

 

 

The accompanying Notes 1 to 24 form an integral part of these financial statements.


5


 

 

Statement of financial positions as at 31 December 2018

 

 

 

December 31,

2018

(in CHF)

 

December 31,

2017

(in CHF)

 

January 1,

2017

(in CHF)

 

 

 

 

ASSETS

Note

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

9

280,884

 

119,723

 

346,329

Trade accounts receivable (net)

9

626,567

 

1,233,978

 

1,086,895

Other current receivables

10

81,817

 

149,017

 

70,746

Prepayments / accrued income

 

-

 

-

 

13,797

Total current assets

 

989,268

 

1,502,718

 

1,517,767

Non-current assets

 

-

 

-

 

-

Deferred tax assets

8

406,967

 

354,552

 

221,262

Property, plant and equipment

16

1,528

 

9,089

 

11,915

Intangible assets

16

-

 

23,775

 

25,289

Total non-current assets

 

408,495

 

387,416

 

258,466

TOTAL ASSETS

 

1,397,763

 

1,890,134

 

1,776,233

 

 

The accompanying Notes 1 to 25 form an integral part of these financial statements.


6


 

 

Statement of financial positions as at 31 December 2018

 

Statement of financial positions

 

 

 

 

 

 

 

 

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

Note

(in CHF)

 

(in CHF)

 

(in CHF)

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable, trade

11

737,280

 

931,103

 

579,773

Accruals and deferred income

13

55,670

 

35,996

 

9,032

Employee benefits

14

43,476

 

71,226

 

25,434

Other current liabilities

12

183,601

 

48,520

 

55,815

Total current liabilities

 

1,020,027

 

1,086,845

 

670,054

Non-current liabilities

 

 

 

 

 

 

Loans, shareholder

17

2,137,077

 

1,601,825

 

1,286,270

Loans, related parties

17

-

 

642,459

 

623,059

Deferred tax liabilities

8

-

 

3,511

 

7,777

Employee benefits

15

142,614

 

184,395

 

146,381

Total non-current liabilities

 

2,279,691

 

2,432,190

 

2,063,487

TOTAL LIABILITIES

 

3,299,718

 

3,519,035

 

2,733,541

 

 

 

 

 

 

 

Shareholders, equity

 

 

 

 

 

 

Share capital

 

100,000

 

100,000

 

100,000

Accumulated losses

 

(2,001,955)

 

(1,728,901)

 

(1,057,308)

Total Equity

 

(1,901,955)

 

(1,628,901)

 

(957,308)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

1,397,763

 

1,890,134

 

1,776,233

 

 

The accompanying Notes 1 to 25 form an integral part of these financial statements.


7


 

 

Statement of cash flow for the year ended December 31, 2018

 

Statement of cash flows

 

Year

 

Year

 

 

ended 2018

 

ended 2017

 

Note

(in CHF)

 

(in CHF)

Cash flow from operating activities

 

 

 

 

Loss for the year

 

(341,265)

 

(656,220)

Adjustments for:

 

 

 

 

Depreciation of fixed assets

16

2,826

 

2,826

Amortization of intangible assets

16

5,944

 

5,944

Change in employee benefits

15

38,974

 

18,403

Non-cash financial expense/(income), net Tax income

 

11,448

 

52,456

 

8

(69,897)

 

(134,407)

 

 

(351,970)

 

(710,998)

Changes in:

 

 

 

 

Trade and other receivables

 

674,611

 

(211,557)

Trade and other payables and accruals Current employee benefits

 

(39,068)

 

370,999

 

 

(27,750)

 

45,792

 

 

607,793

 

205,234

Income taxes paid

8

-

 

-

Cash-flow from operating activities

 

255,823

 

(505,764)

Cash flow from investing activities

 

 

 

 

Capital expenditures for tangible assets

16

-

 

(4,430)

Proceeds from sale of tangible assets Proceeds from sale of intangible assets

16

11,773

 

-

 

 

29,719

 

-

Net cash provided / (used in) by investing activities

 

41,492

 

(4,430)

Cash flow from financing activities

 

 

 

 

Proceeds of loans, shareholder

17

535,252

 

315,555

Proceeds of loans, related parties

17

-

 

174,400

Repayment of loans, related parties

17

(642,459)

 

(155,000)

Interest paid

17

(3,201)

 

(7,487)

Interest on shareholder loans paid

17

(12,938)

 

(21,229)

Bank fees and other finance fees paid

7

(14,887)

 

(33,432)

Net cash used in financing activities

 

(138,233)

 

272,807

Net increase / (decrease) in cash and cash equivalents

 

159,082

 

(237,387)

 

 

 

 

 

Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes

 

119,723

 

346,329

 

 

2,079

 

10,781

Cash and cash equivalents at end of year

 

280,884

 

119,723

 

 

The accompanying Notes 1 to 25 form an integral part of these financial statements.


8


 

 

Statement of changes in equity for the year ended December 31, 2018

 

Statement of changes in equity

Share capital

 

Translation

reserve

 

Accumulated

losses

 

Total equity

(in CHF)

 

 

 

 

 

 

 

 

Balance as at 31 December 2016 as originally presented according to Swiss Code of Obligations

100,000

 

-

 

(1,155,160)

 

(1,055,160)

Effect of Transition to IFRS (see Note 24)

-

 

-

 

97,852

 

97,852

Restated balance as at 1 January 2017

100,000

 

-

 

(1,057,308)

 

(957,308)

Loss for the year

-

 

-

 

(656,220)

 

(656,220)

Other comprehensive income / (expenses)

-

 

-

 

(15,373)

 

(15,373)

- Remeasurements of defined benefit obligation (see Note 15)

-

 

-

 

(18,522)

 

(18,522)

- Related tax (see Note 8)

-

 

-

 

3,149

 

3,149

Total comprehensive income / (expenses)

-

 

-

 

(671,593)

 

(671,593)

Balance as at 31 December 2017

100,000

 

-

 

(1,728,901)

 

(1,628,901)

Loss for the year

-

 

-

 

(341,265)

 

(341,265)

Other comprehensive income / (expenses)

-

 

-

 

68,211

 

68,211

- Remeasurements of defined benefit obligation (see Note 15)

-

 

-

 

82,182

 

82,182

- Related tax (see Note 8)

-

 

-

 

(13,971)

 

(13,971)

Total comprehensive income / (expenses)

-

 

-

 

(273,054)

 

(273,054)

Balance as at 31 December 2018

100,000

 

-

 

(2,001,955)

 

(1,901,955)

 

As of 1 January 2017, 31 December 2017 and 31 December 2018 the share capital consists of 1,000 shares, each with a par value of CHF 100. The share capital is fully liberated.

 

 

The accompanying Notes 1 to 25 form an integral part of these financial statements.


9


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

1.General information 

 

SwissLink Carrier AG (formerly Swissphone Carrier AG), (“The Company”) is a company incorporated and domiciled in Baar, Switzerland. The registered office is located at Schochenmühlestrasse 4, 6340 Baar, Switzerland. It was established on 22 September 2015.

 

SwissLink Carrier AG is a provider of international telephone traffic around the globe, which trades international VoIP (voice over IP) telephone minutes through its Software Management platform named VAMP.

 

2.Basis of accounting 

 

Statement of compliance

 

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements were authorized for issue by the Board of Directors on August 14, 2019. Details of the Company’s accounting policies are included in Note 3.

 

First-Time adoption of IFRS

 

The financial statements for the year ended 31 December 2018 are the Company’s first financial statements prepared in accordance with IFRSs and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. The accounting policies comply with each IFRS effective at 31 December 2018 and are the same for both periods respectively all three balance sheet dates, except for the mandatory exceptions and the optional exemptions applied by the Company (see Note 24) in accordance with IFRS 1.

 

In preparing these financial statements, the Company’s date of transition to IFRSs is 1 January 2017. Until 31 December 2018, the Company has applied Swiss accounting law in its financial statements. An explanation of how the transition to IFRSs has affected the reported financial position, financial performance and cash flows of the Company is provided in Note 24.

 

Standards and interpretations issued but not yet effective

 

These will be applied by the Company when they become effective, if they are relevant for the Company. No standards or interpretations, which are described below, have been adopted early.

 

New Standards or Interpretations

 

Standard / Interpretation

 

Effective date

 

Planned application

IFRS 16 Leases

 

January 1, 2019

 

Reporting year 2019

IFRIC 23 Uncertainty over Tax Treatments

 

January 1, 2019

 

Reporting year 2019

 

Revisions and amendments of Standards and Interpretations

 

Standard / Interpretation

 

Effective date

 

Planned application

Prepayment Features with Negative Compensation (Amendments to IFRS 9)

 

 

 

 

 

January 1, 2019

 

Reporting year 2019

 

 

 

 

 

Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)

 

 

 

 

 

January 1, 2019

 

Reporting year 2019

 

 

 

 

 

Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)

 

 

 

 

 

January 1, 2019

 

Reporting year 2019

 

 

 

 

 

Annual Improvements to IFRS Standards 2015 - 2017 Cycle - various standards

 

 

 

 

 

January 1, 2019

 

Reporting year 2019

 

 

 

 

 

Amendments to References to Conceptual Framework in IFRS Standards

 

 

 

 

 

January 1, 2020

 

Reporting year 2020


10


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

2.Basis of accounting (continued) 

 

IFRS 16 replaces the current guidance in IAS 17 and is a far-reaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 requires lessees to recognize a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

 

The Company does not expect significant impacts from new pronouncements issued but not yet effective.

 

3.Significant accounting policies 

 

Basis of accounting

 

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The principal accounting policies are set out below.

 

The financial statements for the year ended 31 December 2018 are the Company’s first financial statements prepared in accordance with IFRS. For further information please refer to Note 24.

 

Functional and presentation currency

 

The Company’s functional currency is US Dollar (USD). These financial statements are presented in Swiss Francs (CHF). The company was incorporated in 2016 in Switzerland and since that date the Swiss Franc has been adopted as presentation currency. Amounts in functional and foreign currencies are translated into the presentation currency at the actual monthly exchange rates published by the Swiss Federal Tax Authority.

 

Rounding of amounts

 

All amounts disclosed in the financial statements and notes have been rounded off to the nearest currency unit.

 

Foreign currencies

 

Business transactions in currencies other than the entity’s functional currency (foreign currencies) are translated into the functional currency at the transaction rate. Monetary assets and liabilities are translated at the year-end balance sheet rate and the resulting foreign exchange gains and losses are presented within financial income and expense. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

Fair value measurement

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

 

In the principal market for the asset or liability or 

In the absence of a principal market, in the most advantageous market for the asset or liability 

 

The principal or the most advantageous market must be accessible by the Company.

 

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits from the asset’s highest and best use or by selling it to another market participant that would utilize the asset in its highest and best use.

 

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.


11


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. This is described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities 

 

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable 

 

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable 

 

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

 

Composition and valuation of balance sheet items

 

Current versus non-current classification

 

Assets and liabilities are presented in the statement of financial position based on current/non-current classification. An asset is current when it is:

 

Expected to be realized or intended to sell or consumed in the normal operating cycle 

Held primarily for the purpose of trading 

Expected to be realized within 12 months after the balance sheet date, or 

Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period 

 

All other assets are classified as non-current. A liability is current when:

 

It is expected to be settled in the normal operating cycle 

It is held primarily for the purpose of trading 

It is due to be settled within twelve months after the reporting period, or 

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period 

 

All other liabilities are classified as non-current.

 

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

 

Financial assets

 

Classification

 

The Company classifies its financial assets in the following measurement categories:

 

a)those to be measured subsequently at fair value (either through other comprehensive income, or through the income statement), and 

 

b)those measured at amortized cost. 

 

For assets measured at fair value, gains and losses will either be recorded in the Income statement or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held.


12


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

Initial recognition and measurement

 

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the income statement. In the periods presented the Company does not have any financial assets categorized as FVTPL and FVOCI.

 

Subsequent measurements

 

Subsequent measurement of financial assets depends on the Company’s business model for managing the asset and the latter’s cash flow characteristics. The Company classifies its asset instruments into the following categories:

 

 

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in other income using the effective interest rate method. 

 

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets where the cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in the Income statement. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to the income statement and recognized in other gains / (losses). Interest income from these financial assets is included in other income using the effective interest rate method. 

 

Fair value through profit and loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit and loss. Interest income from these financial assets is included in other income. 

 

De-recognition of financial assets

 

A financial asset is derecognized only when:

 

the contractual rights to the cash flows from the financial asset expire; 

 

the Company has transferred a financial asset in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. 

 

Impairment of financial assets

 

The Company recognizes loss allowances for expected credit losses (ECLs) on financial assets measured at amortized cost. The Company measures loss allowances at an amount equal to lifetime ECLs, except for financial assets for which credit risk has not increased significantly since initial recognition; these are measured at 12-month ECLs.

 

For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires lifetime ECLs to be recognized from initial recognition of the trade receivables.

 

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information. The Company formulates a ,base-case, view of the future direction of relevant economic variables as well as a representative range of other possible forecast scenarios. This process involves developing additional economic scenarios and considering the relative probabilities of each outcome.


13


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 365 days past due. The Company considers a financial asset to be in default when:

 

the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realizing security (if any is held); or 

 

the financial asset is more than 360 days past due. 

 

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

 

Measurement of ECLs

 

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

 

Credit-impaired financial assets

 

At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ,credit-impaired, when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

 

Evidence that a financial asset is credit-impaired includes the following observable data:

 

significant financial difficulty of the borrower or issuer; 

a breach of contract such as a default; or 

it is probable that the borrower will enter bankruptcy or other financial reorganization. 

 

Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

 

Write-off

 

The gross carrying amount of a financial asset is written off on a case-by-case basis when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

 

Cash and cash equivalents

 

These include cash in hand; cash in transit, balances in postal and bank accounts, as well as short- term time deposits with an original term not exceeding 90 days. Cash and cash equivalents are measured at cost.

 

Accounts receivable & other receivable

 

Trade receivables and other receivables are recognized initially at their transaction price and subsequently measured at amortized cost using the effective interest method, which includes the deduction of expected credit losses.

 

Property, plant and equipment

 

Property, plant and equipment are carried at purchase or production cost less appropriate depreciation. In the case of an impairment loss, the appropriate charge is made to the income statement. Depreciation is charged on straight-line basis (difference between cost and residual value). For Hardware this period is usually 3-8 years.

 

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.


14


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

The assets, residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

 

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) at the date of the disposal is included in the income statement in the year the asset is derecognized.

 

Finance and operating leases

 

Assets acquired under lease agreements which effectively transfer substantially all the risks and rewards incidental to ownership from the lessor to the lessee are classified as finance leases. Finance leases on tangible fixed assets are capitalized at amounts equivalent to the lower of respective fair value of the tangible fixed asset or the estimated net present value of the future minimum lease payments plus any indirect costs associated with the lease. The same amount less finance costs is recorded correspondingly as a finance lease obligation. Assets under finance leases are amortized over the shorter of their estimated useful life and the term of the lease. The interest portion of the lease payment is recorded as interest expense in the income statement, calculated on the amortized cost.

 

Lease agreements which do not transfer substantially all risks and rewards to the Company are classified as operating leases. Payments are recorded pro-rata over the lease period. Rental costs for short-term operating leases are charged directly to the income statement on a straight-line basis. Operating leases are not included in the balance sheet; the corresponding obligations are fully reported in the notes.

 

Intangible assets

 

Intangible assets acquired separately

 

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for accordingly.

 

The amortization expense on intangible assets with finite lives is recognized in the income statement in the expense category consistent with the function of the intangible asset.

 

Intangible assets held by the Company with finite useful lives include Software only.

 

Software is capitalized at cost and is amortized on a straight-line basis over their useful life, typically not exceeding 6 years.

 

Impairment of tangible and intangible assets excluding goodwill

 

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 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.

 

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.


15


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

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.

 

Financial liabilities

 

Initial recognition and measurement

 

All financial liabilities are recognized initially at fair value and, in the case of financial liabilities not at FVTPL, net of directly attributable transaction costs.

 

Subsequent measurement

 

The measurement of financial liabilities depends on their classification, as described below:

 

Financial liabilities at amortized cost 

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. 

 

Loans and Borrowings

 

Borrowings are initially recognized at fair value, net of transaction cost incurred. Borrowings are subsequently measured at amortized cost. The transaction costs incurred for floating interest rate borrowings is amortized over the tenure of the loan based on the effective interest rate method.

 

De-recognition

 

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the income statement.

 

Provisions, contingent liabilities and contingent assets

 

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Company and amounts can be estimated reliably. The timing or amount of the outflow may still be uncertain.

 

Provisions are not recognized for future operating losses.

 

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.


16


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

No liability is recognized if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

 

Composition of items in the income statement

 

Revenue recognition

 

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it transfers control over a good or service to a customer. When the Company acts as principal, revenues are recorded gross. However, when, from an economic point of view, the Company acts only as a broker or agent, revenues are reported net of related costs.

 

The Company has entered into a number of interconnect agreements with other carriers. These agreements allow carriers to terminate traffic on their respective networks and to provide end-to-end routing of voice and data traffic.

 

The Entity is a provider of international telephone traffic around the globe, which trades international VoIP (voice over IP) telephone minutes through its trading-software platform. Besides VoIP-Revenues, there are no other revenue streams. Therefore, all of the Company’s revenues are recognized at a specific time, which is when the call has been completed. There are no revenues recognized over time.

 

There are no bonuses, kick-backs, etc.

 

Taxation

 

Income tax expense comprises current and deferred tax. It is recognized in profit or loss except items recognized directly in equity or in OCI.

 

Current income tax

 

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

 

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

 

Current tax assets and liabilities are offset only if certain criteria are met.

 

Deferred tax

 

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is considered more likely than not that sufficient taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is considered that more likely than not no longer sufficient taxable profits will be available to allow all or part of the asset to be recovered.


17


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

3.Significant accounting policies (continued) 

 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

4.Critical accounting judgements and key sources of estimation uncertainty 

 

In the application of the Company’s accounting policies, which are described in Note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

 

Going concern

 

The current and prior year ended with a loss. Beginning in 2018 the Management and the Board of Directors took several measures to improve the financial situation. Due to these measures the Management expects to reach break-even in the financial year 2019. Until Q2 2019 there are no indicators, that this goal can not be reached.

 

Furthermore, the Board of directors successfully raised new money. Until Q2 2019, shareholders and third parties invested additional CHF 200,000.

 

Besides, it is planned that SwissLink will seek further investors in Q3 2019. For the sale of 51% of Company shares, a Letter of Intent (LOI) is already available.

 

Therefore, the Company has determined that it will have the ability to continue as a going concern for the foreseeable future which as a minimum covers 12 months from the date of signing the Company’s financial statements. As such, the financial statements have been prepared on a going concern basis. For more details refer to Note 18.

 

Pension obligations

 

The Company provides employees with long-term employee benefits such as pensions. The long-term nature of these liabilities creates inherent uncertainties that are dependent on future events. Estimating the pension liability requires the Company to make an estimate of the expected return on plan assets, an appropriate discount rate, future salary increases, employee life expectancy and other projections. More details are disclosed in Note 15.


18


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

5.Revenue and Material costs 

 

Analysis of the Company’s revenue

 

The Company’s revenue is generated with only one product; VoIP (voice over IP) in the following countries:

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

United States

 

3,159,719

 

3,948,690

United Kingdom

 

1,184,237

 

1,159,874

Canada

 

843,993

 

537,184

Germany

 

761,452

 

330,309

Hong Kong

 

398,465

 

452,032

Spain

 

359,889

 

476,405

India

 

263,452

 

143,233

France

 

148,243

 

438,526

Norway

 

2,512

 

502,790

Others

 

808,710

 

703,369

Total Revenue

 

7,930,672

 

8,692,412

 

Assets and liabilities related to contracts with customers

 

The Company has not recognized any assets or liabilities related to contracts with customers.

 

Analysis of the Company’s Material costs

 

Material costs are fully related to the purchase of VoIP (voice over IP) capacity from several suppliers.

 

6.Personnel expenses 

 

Average number of employees

 

The average monthly number of employees (including executive directors) were 1.5 in 2018 and 2.5 in 2017.

 

Employee benefits expense

 

Their aggregate remuneration comprised:

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

Wages and salaries

 

(417,824)

 

(572,568)

Social security expenses

 

(25,699)

 

(37,781)

Pension – defined benefit plans (Note 15)

 

(69,987)

 

(54,085)

Other personnel expenses

 

(246,578)

 

(429,887)

Total employee benefit expense

 

(760,088)

 

(1,091,321)

 

Other personnel expenses mainly consist of costs for temporary external employees.


19


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

7.Financial expense (net) 

 

Financial Expenses

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

Financial income

 

-

 

-

Financial expenses

 

(75,297)

 

(140,330)

Total financial expenses, net

 

(75,297)

 

(140,330)

 

 

 

 

 

Interest on short- and long-term debt (at amortized cost)

 

(3,201)

 

(7,487)

Interest on loans from related parties (at amortized cost)

 

(12,938)

 

(21,229)

Total interest expenses

 

(16,139)

 

(28,716)

Foreign exchange losses

 

(42,844)

 

(77,093)

Interest (expenses) on plan assets (Note 15)

 

(1,427)

 

(1,089)

Bank charges

 

(14,887)

 

(33,432)

Total financial expenses

 

(75,297)

 

(140,330)

 

8.Income taxes 

 

Income taxes

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

Current tax on profits for the year

 

-

 

-

Total current income tax expense

 

-

 

-

Deferred income taxes - change in temporary differences

 

69,897

 

134,407

Deferred income tax income / (expense)

 

69,897

 

134,407

Total income tax

 

69,897

 

134,407

 

Reconciliation of income taxes

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

Profit / (loss) before income taxes  

 

(411,162)

 

(790,627)

Income tax rate of the parent company in %

 

17.00%

 

17.00%

Expected income tax (expense) / income

 

69,897

 

134,407

Tax effect of non-deductible expenses / (non-taxable income)

 

-

 

-

Tax effect of Current year losses not recognized

 

-

 

-

Taxes for prior years

 

-

 

-

Change in income tax rates

 

-

 

-

Effect from different tax rate applied at local level

 

-

 

-

Effective income tax

 

69,897

 

134,407


20


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

8.Income taxes (continued) 

 

Reconciliation of deferred taxes

 

Deferred tax assets and liabilities are attributed to the following items:

 

(in CHF)

 

 

 

 

Balance at December 31, 2018

 

Net balance at

January 1

Recognized in profit or loss

Exchange differences

Recognized in OCI

Net

Deferred tax assets

Deferred tax liabilities

 

 

 

 

 

 

 

 

Trade accounts receivables

(3,511)

10,570

-

-

7,059

7,059

-

Employee benefit liabilities

31,348

6,868

-

(13,971)

24,245

24,245

-

Tax loss carry-forwards

323,204

52,459

-

-

375,663

375,663

-

Gross Tax assets (liabilities)

351,041

69,897

-

(13,971)

406,967

406,967

-

Set-off of tax

 

 

 

 

 

-

-

Net tax assets (liabilities)

 

 

 

 

 

406,967

-

 

(in CHF)

 

 

 

 

Balance at December 31, 2017

 

Net balance at

January 1

Recognized in profit or loss

Exchange differences

Recognized in OCI

Net

Deferred tax assets

Deferred tax liabilities

 

 

 

 

 

 

 

 

Trade accounts receivables

(7,777)

4,266

-

-

(3,511)

-

3,511

Employee benefit liabilities

24,885

3,314

-

3,149

31,348

31,348

-

Tax loss carry-forwards

196,377

126,827

-

-

323,204

323,204

-

Gross Tax assets (liabilities)

213,485

134,407

-

3,149

351,041

354,552

3,511

Set-off of tax

 

 

 

 

 

-

-

Net tax assets (liabilities)

 

 

 

 

 

354,552

3,511

 

Deferred tax assets including assets for unused tax loss carry-forwards and expected tax credits are only recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

 

Tax loss carry forward

 

The Company have the following tax losses carry forward:

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Expiration in 1 year -

-

 

-

 

-

Expiration in 2 years -

-

 

-

 

-

Expiration in 3 years -

-

 

-

 

-

Expiration in 4 years

228,114

 

-

 

-

Expiration in 5 years

927,046

 

228,114

 

-

Expiration in 6 years

746,038

 

927,046

 

228,114

Expiration in 7 years

308,584

 

746,038

 

927,046

Total

2,209,782

 

1,901,198

 

1,155,160

 

The above listed tax losses have a potential tax benefit of CHF 375,663 (2017: CHF 323,204). The Company expects to be able to use all incurred tax losses in the foreseeable future and have therefore recognized a deferred tax asset, based on the applicable tax rate.

 

There is no unused tax loss carry forwards for which no deferred tax assets have been recognized.


21


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

9.Cash and cash equivalents, accounts receivables trade 

 

Cash and cash equivalents

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Cash at banks

280,884

 

119,723

 

346,329

Total cash and cash equivalents

280,884

 

119,723

 

346,329

 

The fair value of cash and short-term deposits equals their carrying amount.

 

Accounts receivables

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

Trade accounts receivables, gross - third

673,093

 

1,289,408

 

1,029,562

Trade accounts receivables, gross – related

-

 

-

 

62,666

Allowance for bad debts

(46,526)

 

(55,430)

 

(5,333)

Total trade accounts receivable, net

626,567

 

1,233,978

 

1,086,895

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

 

 

 

Allowance for bad debts as of opening balance

(55,430)

 

(5,333)

Impairment losses recognized on receivables

8,904

 

(50,097)

Impairment losses reversed

-

 

-

Amounts recovered during the year

-

 

-

Currency effects

-

 

-

Allowance for bad debts as at December 31

(46,526)

 

(55,430)

 

During the year, gains or losses of kCHF 9 (2017: kCHF -50) are included in the income statement.

 

Ageing analysis of receivables, trade (gross)

 

As at 31 December, the ageing analysis of receivables, trade (gross) is as follows:

 

 

 

 

past due gross

(in CHF)

Total

Current not due

< 30 days

31-60 days

61-180 days

> 180 days

2017

1,289,408

343,605

333,181

15,606

259,355

337,661

2018

673,093

157,312

114,050

35,419

158,814

207,498

 

The above balance is shown gross. The provision for doubtful accounts amounts to kCHF -47 (2017: kCHF -55) of which 100% are attributable to receivables past due more than 180 days.

 

The directors consider that the carrying amount of trade accounts receivables is approximately equal to the fair value.

 

Past due but not impaired

 

As at 31 December 2018, trade receivables of CHF 469,255 (2017: CHF 890,373) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.

 

The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due. The Company does not hold any collaterals in relation to these receivables.


22


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

10.Other current receivables 

 

Other receivables

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Prepayments to suppliers

30,741

 

113,861

 

52,212

VAT/sales tax receivables

51,076

 

35,156

 

18,534

Total prepayments and accrued income

81,817

 

149,017

 

70,746

 

11.Accounts payables, trade 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Accounts payables, trade

737,280

 

931,103

 

579,773

 

Accounts payables, trade are non-interest bearing and are normally settled on 30-day terms.

 

12.Other current liabilities 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Social security payables

241

 

27,491

 

45,398

Other current liabilities – related parties

183,360

 

21,229

 

10,417

Total other current liabilities

183,601

 

48,520

 

55,815

 

13.Accruals and deferred income 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Service received, invoice pending

55,670

 

35,996

 

9,032

Total Accruals and deferred income

55,670

 

35,996

 

9,032

 

14.Employee benefits 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Employee Benefits, current

-

 

-

 

-

Salaries/Bonuses

14,873

 

25,434

 

-

Holiday/Overtime accrual

28,603

 

45,792

 

25,434

Total employee benefit, current

43,476

 

71,226

 

25,434

 

 

 

 

 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Net defined benefit obligation (see Note 15)

142,614

 

184,395

 

146,381

Other employee benefits, non-current

-

 

-

 

-

Total employee benefit, non-current

142,614

 

184,395

 

146,381


23


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

15.Employee benefits – pension plan asset / liabilities 

 

General information

 

The Company maintains one defined benefit plan in Switzerland. This plan complies with prevailing legal requirements to cover the employees in the event of death, disability and retirement. The plan is financed by employer and employee contributions in compliance with local legal and fiscal regulations.

 

The Swiss pension plans are governed by the Swiss Federal Law on Occupational Retirement, Survivors, and Disability Pension Plans (BVG), which stipulates that pension plans are to be managed by independent, legally autonomous units. The assets of the pension plan are held within a separate foundation and cannot revert to the employer. Pension plans are overseen by a regulator as well as by a state supervisory body.

 

The Company’s pension fund is administered by AXA Pension Solutions AG.

 

The funding requirements are based on the pension fund,s actuarial measurement framework set out in the funding policies of the plan. The Fund is based on a separate actuarial valuation performed for funding purposes and may therefore differ from those used in assessing defined benefit liabilities.

 

Changes in the present value of defined benefit obligation and plan assets for the years ended December 31, 2018 and 2017 are as follows:

 

Amount recognized in balance sheet period end closing:

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Defined benefit obligation

(533,701)

 

(469,182)

 

(365,876)

Fair value of plan assets

391,087

 

284,787

 

219,495

Net defined benefit liability (asset)

(142,614)

 

(184,395)

 

(146,381)

 

Analysis of profit and loss charge/(credit)

 

(in CHF)

December 31,

2018

 

December 31,

2017

Service cost (employer)

69,987

 

54,085

Interest expense on defined benefit obligation

3,852

 

2,827

Interest (income) on plan assets

(2,425)

 

(1,738)

Administration expenses

235

 

183

Total charge/(credit) recognized in profit and loss

71,649

 

55,357

 

Change in the present value of defined benefit obligation during the period:

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

 

 

 

Defined benefit obligation, opening balance

(469,182)

 

(365,876)

Interest expense on defined benefit obligation

(3,852)

 

(2,827)

Current service cost (employer)

(69,987)

 

(54,085)

Contributions by plan participants

(25,558)

 

(29,345)

Benefits (paid) / deposited

(66,563)

 

7,501

Administration expenses

(235)

 

(183)

Actuarial (gain) / loss on DBO (balancing figure)

101,676

 

(24,367)

Defined benefit obligation, period end balance

(533,701)

 

(469,182)


24


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

15.Employee benefits – pension plan asset / liabilities (continued) 

 

Change in the present value of the plan assets during the period:

 

(in CHF)

December 31,

2018

 

December 31,

2017

Fair value of plan assets, opening balance

284,787

 

219,495

Interest income on plan assets

2,425

 

1,738

Contributions by the employer

31,248

 

35,865

Contributions by plan participants

25,558

 

29,345

Benefits (paid) / deposited

66,563

 

(7,501)

Return on plan assets excl. interest income

(19,494)

 

5,845

Defined benefit obligation, period end balance

391,087

 

284,787

 

Analysis of amounts recognized in OCI:

 

(in CHF)

December 31,

2018

 

December 31,

2017

Actuarial (gain) / loss on DBO

101,676

 

(24,367)

Return on plan assets excl. interest income

(19,494)

 

5,845

Total defined benefit cost recognized in OCI

82,182

 

(18522

 

Key financial assumptions:

 

 

 

2018

 

2017

 

 

 

 

 

Discount rate at 1.1.

 

0.70%

 

0.70%

Discount rate at 31.12.

 

0.90%

 

0.70%

Interest rate on retirement savings capital (IR) at 31.12.

 

0.90%

 

0.70%

Future salary increases (SI) at 31.12.

 

1.00%

 

1.00%

Date of last actuarial valuation

 

31/12/18

 

31/12/17

Mortality tables

 

BVG2015

 

BVG2015

 

 

GT

 

GT

 

Plan assets classes:

 

(in CHF)

 

2018

 

2017

 

 

 

 

 

Quoted market price

 

 

 

 

Cash and cash equivalents

 

5,699

 

4140

Equity Instruments

 

91,886

 

66,911

Debt instruments (e.g. bonds)

 

116,835

 

85,076

Real estate

 

91,015

 

66,277

Others

 

40,206

 

29,278

Total plan assets at fair value (quoted market price)

 

345,641

 

251,695

 

 

 

 

 

Non-quoted market price

 

 

 

 

Cash and cash equivalents

 

394

 

287

Equity instruments

 

-

 

-

Debt instruments (e.g. bonds) Real estate

 

2,346

 

1,707

Real estate

 

-

 

-

Others

 

42,706

 

31,098

Total plan assets at fair value (non-quoted market price)

 

45,446

 

33,092

 

 

 

 

 

Total plan assets at fair value

 

391,087

 

284,787


25


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

15.Employee benefits – pension plan asset / liabilities (continued) 

 

Sensitivity analysis – impact on DBO:

 

(in CHF)

 

2018

 

2017

DBO at 31.12. with DR -0.25%

 

558,001

 

492,271

DBO at 31.12. with DR +0.25%

 

511,216

 

447,837

DBO at 31.12. with IR -0.25%

 

524,200

 

462,571

DBO at 31.12. with IR +0.25%

 

543,455

 

475,945

DBO at 31.12. with SI -0.25%

 

531,433

 

465,550

DBO at 31.12. with SI +0.25%

 

537,201

 

474,209

DBO at 31.12. with life expectancy +1 year

 

539,634

 

472,695

DBO at 31.12. with life expectancy -1 year

 

527,906

 

465,938

SC of next year with DR +0.25%

 

25,426

 

64,983

SC of next year with DR -0.25%

 

28,157

 

71,456

 

Other information

 

 

 

2018

 

2017

Weighted average duration of defined benefit obligation in years

 

17.7

 

19.1

 

The Company expects to pay CHF 22,431 in contributions to its defined benefit plan in the next financial year.

 

16. Property, plant and equipment & Intangible assets 

 

(in CHF)

December 31,

2018

 

December 31,

2017

 

January 1,

2017

 

 

 

 

 

 

Property, plant and equipment (Hardware)

1,528

 

9,089

 

11,915

Intangible assets (Software)

-

 

23,775

 

25,289


26


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

16. Property, plant and equipment & Intangible assets (continued) 

 

Property, plant and equipment & Intangible assets

 

Cost

Hardware

 

Software

 

Other

 

Total

 

 

 

 

 

 

 

 

At January 1, 2017

14,128

 

25,289

 

-

 

39,417

Additions

-

 

4,430

 

-

 

4,430

Disposals

-

 

-

 

-

 

-

Exchange differences

-

 

-

 

-

 

-

At December 31, 2017

14,128

 

29,719

 

-

 

43,847

Additions

-

 

-

 

-

 

-

Disposals

(11,773)

 

(29,719)

 

-

 

41,492

Exchange differences

-

 

-

 

-

 

-

At December 31, 2018

2,355

 

-

 

-

 

2,355

 

 

 

 

 

 

 

 

Accumulated amortization and impairment

 

 

 

 

 

 

 

At January 1, 2017

2,213

 

-

 

-

 

2,213

Amortization/Depreciation for the period

2,826

 

5,944

 

-

 

8,770

Disposals

-

 

-

 

-

 

-

Exchange differences

-

 

-

 

-

 

-

At 31 December 2017

5,039

 

5,944

 

-

 

10,983

 

 

 

 

 

 

 

 

Amortization/Depreciation for the period

2,826

 

5,944

 

-

 

8,770

Disposals

(7,038)

 

(11,888)

 

-

 

(18,926)

Reclassifications / Transfer in use

-

 

-

 

-

 

-

Exchange differences

-

 

-

 

-

 

-

At December 31, 2018

827

 

-

 

-

 

827

 

 

 

 

 

 

 

 

Net book value as at January 1, 2017

11,915

 

25,289

 

-

 

37,204

 

 

 

 

 

 

 

 

Net book value as at December 31, 2017

9,089

 

23,775

 

-

 

32,864

 

 

 

 

 

 

 

 

Net book value as at December 31, 2018

1,528

 

-

 

-

 

1,528

 

In 2018 Soft- and Hardware was sold to Swissphone Wireless AG. The transaction took place at residual book value; therefore no gain or loss was realized.


27


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

17. Loans and borrowings 

 

Loans and borrowings

 

 

 

 

 

December 31,

2018

December 31,

2017

January 1, 2017

 

Interest rate %

Maturity

Original

currency

 

 

 

 

(in CHF)

(in CHF)

(in CHF)

 

 

 

 

 

 

 

Non-Current interest-bearing loans and borrowings

 

 

 

 

 

 

Loan from related party (Lorymo AG)

5%

10/23/2018

CHF

-

345,000

500,000

Total non-Current interest-bearing loans and borrowings

 

 

 

-

345,000

500,000

 

 

 

 

 

 

 

Non-Current non-interest-bearing loans and borrowings

 

 

 

 

 

 

Loan from shareholder

5%

none

CHF

2,137,077

1,601,825

1,286,270

Loan from related parties

5%

none

CHF

-

297,459

123,059

Total non-Current non-interest-bearing loans and borrowings

 

 

 

2,137,077

1,899,284

1,409,329

 

 

 

 

 

 

 

Total non-current loans and borrowings

 

 

 

2,137,077

2,244,284

1,909,329

Thereof under subordination

 

 

 

               2,137,077

               2,146,200

         1,909,329

 

Reconciliation of movements of liabilities to cash flows arising from financing activities

 

(in CHF)

Non-current,

shareholder

 

Non-current,

related parties

 

Non-current,

Total

Balance at 01/01/17

1,286,270

 

623,059

 

1,909,329

Changes from financing cash flows

 

 

 

 

 

Proceeds from loans and borrowings

315,555

 

174,400

 

489,955

Repayment of loans and borrowings

-

 

(155,000)

 

(155,000)

Total changes from financing cash flows

315,555

 

19,400

 

334,955

Effect of changes in foreign exchange rates

-

 

-

 

-

Interest expenses (see Note 7)

-

 

21,229

 

21,229

Interest paid

-

 

(21,229)

 

(21,229)

Total other changes

-

 

-

 

-

Balance at 31/12/17

1,601,825

 

642,459

 

2,244,284

Changes from financing cash flows

 

 

 

 

 

Proceeds from loans and borrowings

535,252

 

-

 

535,252

Repayment of loans and borrowings

-

 

(642,459)

 

(642,459)

Total changes from financing cash flows

535,252

 

(642,459)

 

(107,207)

Effect of changes in foreign exchange rates

-

 

-

 

-

Interest expenses (see Note 7)

-

 

12,938

 

12,938

Interest paid

-

 

(12,938)

 

(12,938)

Total other changes

-

 

-

 

-

Balance at 31/12/18

2,137,077

 

-

 

2,137,077


28


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

18. Financial risk management objectives and policies 

 

Capital management

 

The objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure. In order to maintain or adjust the capital structure, the Company may repay capital to shareholders, issue new capital or sell assets to reduce debt.

 

By ensuring the Company adheres to defined debt/equity ratio covenant limits and other covenants under the Company’s financing arrangements, management meets the primary capital risk objective.

 

The Company’s policy is to keep the net debt to adjusted equity ratio below 4. The Company’s adjusted net debt to equity ratio was as follows.

 

(in CHF)

December 31,

2018

 

December 31,

2017

Total liabilities

3,299,718

 

3,519,035

Less: Total loans under subordination

(2,137,077)

 

(2,146,200)

Less: cash and cash equivalents

(280,884)

 

(119,723)

Net debt adjusted

881,757

 

1,253,112

Total equity

(1,901,955)

 

(1,628,901)

Total loans under subordination

2,137,077

 

2,146,200

Total adjusted equity

235,122

 

517,299

Net debt to adjusted equity ratio

3.75

 

2.42

 

Capital risk management

 

The Company’s board of directors has overall responsibility for establishment and oversight of the Company’s risk management framework. Risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and to monitor risks and adherence to limits. These related processes are regularly performed in order to reflect changes in market conditions and the Company’s activities.

 

The Company’s principal financial instruments comprise shareholder loans and cash. The main purpose of these financial instruments was to finance the operations of the Company. The Company has various other financial assets and liabilities such as trade receivables and payables, which arise directly from its operations.

 

The main risks arising from the Company’s financial instruments are credit, and liquidity risks. The Board reviews and determines policies for managing each of these risks, as summarized below. The general entrepreneurial risks include operational, strategic and legal risks which the Company also monitors, analyses and controls. The interest rate risk and the foreign currency risk is only minor for the Company. As of 31 December 2018, there is no interest-bearing loan. Furthermore, does the Company not have significant balance sheet items in foreign currencies.

 

Credit risk

 

Credit risk contains the danger of a financial loss that arises from one third party being unable or unwilling to fulfil its contractual payment obligations. The credit risk thus contains not only the immediate risk of default but also the risk of an impaired credit rating along with the risk of concentration of individual risk. The Company has a well distributed customer base. On one hand this helps to reduce the credit risk, on the other hand this may present some additional risk as a material portion of the business is done in very small transactions. The Company has set up a policy to minimize credit risk and monitor its clients. Key customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts was not significant.

 

The maximum exposure to the credit risk is represented by the carrying amount of each financial asset. To reduce the possibility of bad debt, it is the Company’s policy to have an as short as possible trading term of payment from its customers, which is usually between 3-30 days. It is recognized however that in certain countries and for certain customers, this policy has to be extended. The Company therefore monitors, at an individual customer level, its accounts receivable by payment due date rather than the number of days from invoice date. No concentrations of credit risk are currently present.


29


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

18. Financial risk management objectives and policies (continued) 

 

A provision for bad debt is determined on both an individual basis and a general basis. An individual provision is determined when a customer disputes the amount due or if legal steps have been taken to recover the overdue amount. For all other amounts, a general bad debt provision is determined. Ageing and bad debt movements are disclosed in Note 9.

 

With respect to credit risk arising from other financial assets of the Company (e.g. cash and cash equivalents), the Company’s exposure to credit risk arises from the default of the counterparty, with a maximum amount equal to the carrying amount of these instruments.

 

Liquidity risk

 

Liquidity risk is the danger that the Company will be not able to meet its financial obligations as they fall due (e.g. settlement of its financial debt or paying its suppliers). Beyond net working capital and cash management, the Company mitigates liquidity risk by arranging borrowing facilities of varying terms mainly with the shareholder.

 

The table below reflects all contractually fixed pay–offs for settlement, interest and repayments resulting from recognized financial liabilities. The risk implied from the values shown in the table, reflects the one-sided scenario of cash outflow only. Trade payables and other financial liabilities mainly originate from the financing of assets used in ongoing operations such as property, plant, equipment and investments in working capital e.g. trade receivables. These assets are to be considered against the cash outflows mentioned.

 

The envisaged financing structure results in a well-balanced plan of cash flow in line with the financial and macroeconomic environment that allows the Company an improved control of the liquidity risk in the coming years. Unused loan facilities at the end of 2018 amounted to CHF 0 (2017: CHF 0). Current budget and midterm planning shows the Company’s ability to maintain a sufficient level of liquidity headroom.

 

Maturity profile of financial liabilities

 

2018 (in CHF)

 

 

Contractual cash flows

 

Weighted

average

effective

interest

Carrying

Amount

Maturity

< 1 year

Maturity

> 1-5 year

Maturity

> 6-10 year

Maturity

> 10 year

 

 

 

 

 

 

 

 

Account payables, trade

n/a

737,280

737,280

-

-

-

All other current liabilities

n/a

282,506

282,506

-

-

-

Loans, shareholder

5%

2,137,077

106,854

427,415

534,269

2,137,077

Total

 

3,156,863

1,126,640

427,415

534,269

2,137,077

 

2017 (in CHF)

 

 

Contractual cash flows

 

Weighted average effective interest

Carrying Amount

Maturity

< 1 year

Maturity

> 1-5 year

Maturity

> 6-10 year

Maturity

> 10 year

 

 

 

 

 

 

 

 

Account payables, trade

n/a

931,103

931,103

-

-

-

All other current liabilities

n/a

128,251

128,251

-

-

-

Loans, shareholder

5%

1,601,825

80,091

320,365

400,456

1,601,825

Loans, related parties

5%

642,459

32,123

674,582

-

-

Total

 

3,303,638

1,171,568

994,947

400,456

1,601,825

 

Company Liquidity analysis for its derivative financial instruments

 

The Company does not hold any open derivative financial instruments as at 31 December 2018 or 31 December 2017. Therefore, no liquidity analysis for derivative financial instruments is to be disclosed in 2018 or 2017.


30


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

19. Recognized fair value measurements for financial and non-financial instruments 

 

Comparison by category of Company’s financial and non-financial instruments

 

This note explains the judgements and estimates made in determining the fair values of the financial and non-financial assets that are recognized and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial and non-financial assets and liabilities into the three levels prescribed under the accounting standards. An explanation of each level is provided in Note 3.

 

December 31, 2018 (in CHF)

Note

Level 1

Level 2

Level 3

Total

Cash

9

-

-

-

280,884

Trade accounts receivable (net)

9

-

-

-

626,567

Other current receivables

 

-

-

-

30741

Total financial assets at amortized cost

 

-

-

-

657,308

Accounts payable, trade

11

-

-

-

737,280

Other current liabilities, accruals and deferred income

 

-

-

-

282,506

Long-term debt

17

-

-

-

2,137,077

Total financial liabilities at amortized cost

 

-

-

 

3,113,628

 

At December 31, 2017 (in CHF)

Note

Level 1

Level 2

Level 3

Total

 

 

 

 

 

 

Cash

9

-

-

-

119,723

Trade accounts receivable (net)

9

-

-

-

1,233,978

Other current receivables

 

-

-

-

113,861

Total financial assets at amortized cost

 

-

-

-

1,347,839

Accounts payable, trade

11

-

-

-

931,103

Other current liabilities, accruals and deferred income

 

-

-

-

128,251

Long-term debt

 

-

-

-

2,244,284

Total financial liabilities at amortized cost

 

-

-

-

3,259,903

 

 

 

 

 

 

At January 1,2017 (in CHF)

Note

Level 1

Level 2

Level 3

Total

 

 

 

 

 

 

Cash

9

-

-

-

346,329

Trade accounts receivable (net)

9

-

-

-

1,086,895

Other current receivables

 

-

-

-

66,009

Total financial assets at amortized cost

 

-

-

-

1,152,904

Accounts payable, trade

11

-

-

-

579,773

Other current liabilities, accruals and deferred income

 

-

-

-

90,281

Long-term debt

 

-

-

-

1,909,329

Total financial liabilities at amortized cost

 

-

-

-

2,553,949

 

In the periods presented the Company does not have any financial assets categorized as FVTPL and FVOCI. The carrying amounts of financial assets and financial liabilities equal the amortized cost values.

 

20.Contingent liabilities 

 

The Company does not have any contingent liabilities

 

21.Lease commitments 

 

Operating leases

 

The Company has not entered into any operating lease contract.

 

Finance leases

 

The Company has not entered into any finance lease contract.


31


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

22.Currency rates applied 

 

Currency Rates Table

 

(In CHF)

 

Average annual rates

2018

 

Year-end rates

2018

 

Average annual rates

2017

 

Year-end rates 2017

 

Year-end rates 2016

USD (US-Dollar)

 

0.97771

 

0.98319

 

0.09845

 

0.97380

 

1.01887

EUR (Euro)

 

1.15500

 

1.12640

 

1.11210

 

1.17070

 

1.07364

 

23.Related party disclosures 

 

Compensation of key management personnel

 

The following table provides the total compensation for 1.5 (2017: 2.5) directors and key management personnel of the Company:

 

(in CHF)

Period ended

 

Period ended

 

December 31,

2018

 

December 31,

2017

Short-term employee benefits

443,523

 

610,349

Post-employment pension benefits

67,380

 

58,118

Total compensation to key management

510,903

 

668,467

 

Director Loan

 

No Director loan was granted in 2017 and 2018.

 

Majority Shareholders / Ultimate controlling party

 

At 31 December 2018 Mr. Ralf Köhler owns 100% of the ordinary shares of the Company. As of December 31, 2017 and January 1, 2017 Swissphone Holding AG owned 95% of the shares. The residual 5% were hold by a third-party investor.

 

Balances with related parties

 

The following balances existed with related parties

 

(in CHF)

December 31,

2018

December 31,

2017

January 1,

2017

 

 

 

 

Other current liabilities

(183,601)

(21,229)

(45,157)

Loans, shareholder

(2,137,077)

(1,601,825)

(623,059)

Trade accounts receivables

-

-

62,666

 

The outstanding balances with related parties are priced on an arm’s length basis and are to be settled in cash. None of the balances is secured. No guarantees have been given or received.

 

The following transactions were carried out with related parties.

 

Transactions with related parties

 

(in CHF)

Period ended

 

Period ended

 

December 31, 2018

 

December 31, 2017

Material costs

(170,933)

 

(222,969)

Other operating expenses

(29,666)

 

(35,506)

Financial income (interests)

(12,938)

 

(21,229)


32


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

23.Related party disclosures (continued) 

 

Definition of related parties

 

Until 2018 the Company was a subsidiary of Swissphone Holding AG and therefore part of the Swissphone Group. As of 31. December 2017 and 1 January 2017 respectively for the period 2017 all subsidiaries of Swissphone Holding AG are a related party. As of 31. December 2018 and the period 2018 the Swissphone Group is third party.

 

Furthermore, as of 31. December 2018, 31 December 2017 and 1 January 2017, as well as the periods 2018 and 2017 the Lorymo AG, Mr. Ralf Köhler and Ms. Dinah Sarah Köhler are related parties.

 

24.Transition to IFRS 

 

As stated in Note 2, these are the Company’s first financial statements prepared in accordance with IFRSs.

 

The accounting policies set out in Notes 3 have been applied in preparing the financial statements for the year ended 31 December 2018, the comparative information presented for the year ended 31 December 2017 and in preparation of an opening IFRS statement of financial position at 1 January 2017 (the Company’s date of transition to IFRSs).

 

In preparing its opening IFRS statement of financial position, the Company has adjusted amounts reported previously in its financial statements prepared in accordance with Swiss Code of Obligations. An explanation of how the transition from Swiss Code of Obligations to IFRSs has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and the Notes that accompany the tables.

 

Exemptions applied

 

IFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain requirements under IFRS. The Company has applied the following exemptions:

 

IFRS 3 Business Combinations should not be applied to either acquisitions of subsidiaries that are considered businesses under IFRS, or acquisitions of interests in associates and joint ventures that occurred before 1 January 2017. Use of this exemption means that the Swiss Code of Obligations carrying amounts of assets and liabilities, that are required to be recognized under IFRS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with IFRS. Assets and liabilities that do not qualify for recognition under IFRS are excluded from the opening IFRS statement of financial position. 

 

The Company applies IFRS 1.D34 in connection with the practical expedient in IFRS 15.C(5)(c) and does not disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when the Company expects to recognise that amount as revenue for the year ended 31 December 2016. 

 

The Company applies the exemption in IFRS 1.D35 and does not restate contracts that were completed before 1 January 2017. A completed contract is a contract for which the Company has transferred all of the goods or services identified in accordance with Swiss Code of Obligations. 


33


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

Reconciliation of Equity

 

 

 

01/01/2017

In CHF

Note

Swiss Code of Obligations

Reclass

Effect of transition to IFRS

IFRS

 

 

 

 

 

 

Cash and cash equivalents

 

346,329

-

(45,748)

346,329

Trade accounts receivable

F

1,041,147

-

-

1,086,895

Other current receivables

 

70,746

-

-

70,746

Prepayments/accrued income

 

13,797

-

 

13,797

Total current assets

 

1,472,019

 

 

1,517,767

 

 

 

 

 

 

Deferred tax assets

A/C

-

-

221,262

221,262

Property, plant and equipment

E

37,204

(25,289)

-

11,915

Intangible assets

D/E

15,000

25,289

(15,000)

25,289

Total non-current assets

 

52,204

-

-

258,466

TOTAL ASSETS

 

1,524,223

-

-

1,776,233

Accounts payable, trade

 

579,773

-

-

579,773

 

 

 

 

 

 

Accruals and deferred income

B

34,466

(25,434)

-

9,032

Employee benefits

B

-

25,434

-

25,434

Other current liabilities

 

(55,574)

241

-

55,815

Total current liabilities

 

669,813

 

 

670,054

Long-term debt

 

623,059

-

-

623,059

Loans shareholder

 

1,286,270

-

 

1,286,270

Deferred tax liabilities

F

241

(241)

(7,777)

7,777

 

 

 

 

 

 

 

 

 

 

 

 

Employee benefits

A

-

-

146,381

146,381

Total non-current liabilities

 

1,909,570

-

-

2,063,487

TOTAL LIABILITIES

 

2,579,383

-

-

2,733,541

Share capital

 

100,000

-

-

100,000

 

 

 

 

 

 

Retained earnings

ACDF

(1,155,160)

-

97,852

(1,057,308)

TOTAL EQUITY

 

(1,055,160)

-

-

(957,308)

TOTAL LIAB. AND EQUITY

 

1,524,223

-

-

1,776,233

 

Notes to the reconciliation

 

Notes to the transition as of January 1, 2017

 

A)The Company has applied IAS 19 Employee Benefits to its post-employment benefit plan: The effect is to increase non-current employee benefit liabilities by CHF 146,381 at 1 January 2017. A deferred tax asset was capitalized using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 24,885. 

 

B)Reclass of holiday/social security accrual 

 

C)Capitalization of unused tax losses of CHF 1,155,160 using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 196,377. 

 

D)The amount of CHF 15,000 is related to a business combination before the transition date to IFRS. The Company applies the exemption, that IFRS 3 Business Combinations should not be applied to either acquisitions of subsidiaries that are considered businesses under IFRS, or acquisitions of interests in associates and joint ventures that occurred before 1 January 2017. The amount is fully eliminated against retained earnings. No deferred tax effect was accounted for, as the impairment or depreciation of such a Goodwill is not taxable expense according to Swiss tax law. 

 

E)Reclass Software to intangible assets 

F)Adjustment of bad debt reserve according to IFRS 9 and related tax effect. 


34


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

Reconciliation of Equity and Total Comprehensive Income

 

In CHF

 

 

 

 

 

 

 

12/31/17

 

Note

Swiss code

Of

Obligations

Reclass

Effect of

Transition

to IFRS

IFRS

Cash and cash equivalents

 

119,723

-

-

119,723

Trade accounts receivable

G

1,213,327

-

20,651

1,233,978

Other current receivables

 

149,017

-

-

149,017

Total current assets

 

1,482,067

 

 

1,502,718

Deferred tax assets

A/C

-

-

354,552

354,552

Property, plant and equipment

F

32,864

(23,775)

-

9,089

Intangible assets

D/F

15,000

23,775

-15,000

23,775

Total non-current assets

 

47,864

 

 

387,416

TOTAL ASSETS

 

1,529,931

 

 

1,890,134

Accounts payable, trade

 

931,103

-

-

931,103

Accruals and deferred income

B

107,222

(71,226)

-

35,996

Employee benefits

B

-

71,226

-

71,226

Other current liabilities

 

48,279

241

-

48,520

Total current liabilities

 

1,086,604

 

 

1,086,845

Long-term debt

 

642,459

-

-

642,459

Loans shareholder

 

1,601,825

-

-

1,601,825

Deferred tax liabilities

 

241

(241)

3,511

3,511

Employee benefits

A

-

-

184,395

184,395

Total non-current liabilities

 

2,244,525

 

 

2,432,190

TOTAL LIABILITIES

 

3,331,129

 

 

3,519,035

Share capital

 

100,000

-

-

100,000

Retained earnings

 

(1,901,198)

-

172,297

(1,728,901)

TOTAL EQUITY

 

(1,801,198)

 

 

(1,628,901)

TOTAL LIAB. AND EQUITY

 

1,529,931

 

 

1,890,134


35


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

In CHF

 

 

 

 

 

 

 

Period January 1 to December 31, 2017

 

Note

Swiss Code

of

Obligations

Reclass

Effect of

Transition

to IFRS

IFRS

Revenue

 

8,717,509

-

(25,097)

8,692,412

Material costs

G

(7,799,454)

-

-

(7,799,454)

Gross profit

 

918,055

 

 

892,958

Personnel expenses

A

(1,072,918)

-

(18,403)

(1,091,321)

Travelling expenses

 

(22,941)

-

-

(22,941)

Repair and maint.costs

 

(176,243)

-

-

(176,243)

Insurance costs

 

(44,783)

-

-

(44,783)

Administration expenses

 

(28,939)

-

-

(28,939)

Consult., legal and audit fees

 

(35,506)

-

-

(35,506)

Other Operating expenses

E

(68,200)

(66,552)

 

(134,752)

EBITDA

 

(531,475)

 

 

(641,527)

Depreciation property, plant

 

 

 

-

 

and equipment

 

(2,826)

-

 

(2,826)

Amortization of int. assets

 

(5,944)

-

-

(5,944)

EBIT

 

(540,245)

 

 

(650,297)

Financial income

 

-

-

-

-

Financial expenses

A

(139,241)

-

(1,089)

(140,330)

Profit before tax

 

(679,486)

 

 

-790,627

extraordinary expenses

E

(66,552)

66,552

-

-

extraordinary income

 

-

-

-

-

Tax income / expense

ACG

-

-

134,407

134,407

Profit for the year

 

(746,038)

 

 

(656,220)

Re-measurement of DBO

A

-

-

(18,522)

(18,522)

Related tax

A

-

-

3,149

3,149

OCI for the year, net of tax

 

-

 

 

(15,373)

Total comp. inc. for the year

 

(746,038)

 

 

(671,593)


36


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

Notes to the reconciliation

 

Notes to the transition as of January 31, 2017 and the period from January 1 to December 31, 2017

 

A)The Company has applied IAS 19 Employee Benefits to its post-employment benefit plan: The effect is to increase non-current employee benefit liabilities by CHF 184,395 at 31 December 2017. A deferred tax asset was capitalized using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 31,347. 

 

B)Reclass of holiday/social security accrual 

 

C)Capitalization of unused tax losses of CHF 1,901,198 using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 323,204. 

 

D)The amount of CHF 15,000 is related to a business combination before the transition date to IFRS. The Company applies the exemption, that IFRS 3 Business Combinations should not be applied to either acquisitions of subsidiaries that are considered businesses under IFRS, or acquisitions of interests in associates and joint ventures that occurred before 1 January 2017. The amount is fully eliminated against retained earnings. No deferred tax effect was accounted for, as the impairment or depreciation of such a Goodwill is not taxable expense according to Swiss tax law. 

 

E)Reclass of "extraordinary" items 

 

F)Reclass Software to intangible assets 

 

G)Adjustment of bad debt reserve according to IFRS 9 and related tax effect. 


37


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

Reconciliation of Equity and Total Comprehensive Income

 

In CHF

 

 

 

 

 

 

 

December 31, 2018

 

Note

Swiss Code

Of

Obligation

Reclass

Effect of

Transition to

IFRS

IFRS

Cash and cash equivalents

 

280,884

-

-

280,884

Trade accounts receivable

F

668,093

-

(41,526)

626,567

Other current receivables

 

81,817

-

-

81,817

Total current assets

 

1,030,794

 

 

989,268

Deferred tax assets

ACF

-

-

406,967

406,967

Property, plant and equipment

 

1,528

-

-

1,528

Intangible assets

D

15,000

-

(15,000)

-

Total non-current assets

 

16,528

 

 

408,495

TOTAL ASSETS

 

1,047,322

 

 

1,397,763

Accounts payable, trade

 

737,280

-

-

737,280

Accruals and deferred income

B

99,146

(43,476)

-

55,670

Employee benefits

B

-

43,476

-

43,476

Other current liabilities

 

183,360

241

-

183,601

Total current liabilities

 

1,019,786

 

 

1,020,027

Long-term debt

 

2,137,077

-

-

2,137,077

Loans shareholder

 

-

-

-

-

Deferred tax liabilities

 

241

(241)

-

-

Employee benefits

A

-

-

142,614

142,614

Total non-current liabilities

 

2,137,318

 

 

2,279,691

TOTAL LIABILITIES

 

3,157,104

 

 

3,299,718

Share capital

 

100,000

-

-

100,000

Retained earnings

 

(2,209,782)

-

207,827

(2,001,955)

TOTAL EQUITY

 

(2,109,782)

 

 

(1,901,955)

TOTAL LIAB. AND EQUITY

 

1,047,322

 

 

1,397,763


38


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

In CHF

 

 

 

 

 

 

 

Period January 1, to December 31, 2018

 

Note

Swiss Code

Of

Obligation

Reclass

Effect of

Transition

to IFRS

IFRS

Revenue

 

7,992,849

-

(62,177)

7,930,672

Material costs

F

(7,225,167)

-

-

(7,225,167)

Gross profit

 

767,682

 

 

705,505

Personnel expenses

 

(721,114)

-

(38,974)

(760,088)

Travelling expenses

 

(18,813)

-

-

(18,813)

Repair and maint.costs

 

(112,110)

-

-

(112,110)

Insurance costs

 

(27,046)

-

-

(27,046)

Administration expenses

 

(31,487)

-

-

(31,487)

Consult., legal and audit fees

 

(29,666)

-

-

(29,666)

Other Operating expenses

E

(18,671)

(34,179)

-

(53,390)

EBITDA

 

(191,225)

 

 

(327,095)

Depreciation Property, plant

 

 

 

-

 

and equipment

 

(2,826)

-

 

(2,826)

Amortization of int. assets

 

(5,944)

-

-

(5,944)

EBIT

 

(199,995)

 

 

(335,865)

Financial income

 

 

-

-

 

Financial expenses

 

(73,870)

-

(1,427)

(75,297)

Profit before tax

 

(273,865)

 

 

(411,162)

extraordinary expenses

E

(43,930)

43,930

-

-

extraordinary income

E

9,211

(9,211)

-

-

Tax income / expense

ACF

-

-

69,897

69,897

Profit for the year

 

(308,584)

 

 

(341,265)

Re-measurement of DBO

 

-

-

82,182

82,182

Related tax

 

-

-

(13,971)

(13,971)

OCI for the year, net of tax

 

-

 

 

68,211

Total comp. inc. for the year

 

(308,584)

 

 

(273,054)


39


 

 

Notes to the financial statements

for the year ended December 31, 2018

 

24.Transition to IFRS (continued) 

 

Notes to the reconciliation

 

Notes to the transition as of January 31, 2018 and the period from January 1 to December 31, 2018

 

A)The Company has applied IAS 19 Employee Benefits to its post-employment benefit plan: The effect is to increase non-current employee benefit liabilities by CHF 142,614 at 31 December 2018. A deferred tax asset was capitalized using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 24,244. 

 

B)Reclass of holiday/social security accrual 

 

C)Capitalization of unused tax losses of CHF 2,209,782 using the Company’s tax rate of 17%, which resulted in a deferred tax asset of CHF 375,663. 

 

D)The amount of CHF 15,000 is related to a business combination before the transition date to IFRS. The Company applies the exemption, that IFRS 3 Business Combinations should not be applied to either acquisitions of subsidiaries that are considered businesses under IFRS, or acquisitions of interests in associates and joint ventures that occurred before 1 January 2017. The amount is fully eliminated against retained earnings. No deferred tax effect was accounted for, as the impairment or depreciation of such a Goodwill is not taxable expense according to Swiss tax law. 

 

E)Reclass of "extraordinary" items 

 

F)Adjustment of bad debt reserve according to IFRS 9 and related tax effect. 

 

Explanation of material adjustments to statement of cash flows

 

According to Swiss Code of Obligations no Cash Flow Statements had to be disclosed. Therefore, no adjustments occurred.

 

25.Events occurring after the reporting period 

 

The Board of directors successfully raised new money. Until Q2 2019, shareholders and third parties invested additional CHF 200,000. It is planned that SwissLink will seek further investors in Q3 2019. For the sale of 51% of Company shares, a Letter of Intent (LOI) is already available.

 

Besides, no events took place between 31 December 2018 and August 14, 2019 that would require adjustments to the carrying amounts of the assets or liabilities in these financial statements or would need to be disclosed here.


40

 

 

EXHIBIT 99.3

 

SwissLink Carrier AG (formerly Swissphone Carrier AG)

 

Quarterly reporting for the period from 1 January to 31 March 2019

 

Unaudited figures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Registered office:Schochenmühlestrasse 4 

6340 Baar Switzerland


1


 

 

INCOME STATEMENT

3

BALANCE SHEET

4

STATEMENT OF CASH FLOWS

5

STATEMENT OF CHANGES IN SHAREHOLDER’ EQUITY

6


2


 

 

Statement of comprehensive income

for the period from January 1 to March 31, 2019

 

Income statement

 

 

 

 

 

 

Period

 

Year ended

2018

 

 

January 1, 2019

To

March 31, 2019

 

 

Note

(in CHF)

 

(in CHF)

Continuing operations

 

 

 

 

Revenue

 

1,361,292

 

7,930,672

Material costs

 

(1,150,599)

 

(7,225,167)

Gross profit

 

210,693

 

705,505

Personnel expenses

 

(112,874)

 

(760,088)

Travelling expenses

 

(4,780)

 

(18,813)

Repair and maintenance costs

 

(36,902)

 

(112,110)

Insurance costs

 

(16,955)

 

(27,046)

Administration expenses

 

(9,191)

 

(31,487)

Consulting, legal and audit fees

 

-

 

(29,666)

Other Operating expenses

 

(6,981)

 

(53,390)

Operating result before interest and taxes (EBITDA)

 

23,010

 

(327,095)

Depreciation PP&E

 

(553)

 

(2,826)

Amortisation of intangible assets

 

-

 

(5,944)

Operating result before interest and taxes (EBIT)

 

22,457

 

(335,865)

Other non operating expenses

 

(1,399)

 

-

Financial expenses

 

(3,141)

 

(75,297)

Profit/Loss before tax

 

17,917

 

(411,162)

Tax income

 

-

 

69,897

Profit/Loss for the period/year

 

17,917

 

(341,265)

 

 

 

 

 

Other comprehensive income

 

 

 

 

Items that will not be reclassified subsequently to profit and loss:

 

 

 

 

Re-measurement of defined benefit obligation

 

-

 

82,182

Related tax

 

-

 

(13,971)

-

 

-

 

68,211

Other comprehensive income / (expenses) for the year, net of tax

 

-

 

68,211

 

 

 

 

 

Total comprehensive income / (expenses) for the year

 

-

 

(273,054)

 

 

 

 


3


 

 

Balance sheet

as at March 31, 2019

 

Balance sheet

 

 

 

 

 

 

 

 

March 31, 2019

 

December 31, 2018

 

January 1, 2018

 

Note

(in CHF)

 

(in CHF)

 

(in CHF)

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

149,682

 

280,884

 

119,723

Trade accounts receivable (net)

 

1,270,434

 

626,567

 

1,233,978

Trade accounts receivable, shareholder

 

 

 

 

 

 

 

 

-

 

-

 

-

Other current receivables

 

76,958

 

81,817

 

149,017

Prepayments / accrued income

 

-

 

-

 

-

Total current assets

 

1,497,074

 

989,268

 

1,502,718

Non-current assets

 

 

 

 

 

 

Deferred tax assets

 

406,967

 

406,967

 

354,552

Property, plant and equipment

 

12,018

 

1,528

 

9,089

Intangible assets

 

-

 

-

 

23,775

Total non-current assets

 

418,985

 

408,495

 

387,416

TOTAL ASSETS

 

1,916,059

 

1,397,763

 

1,890,134

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable, trade

 

1,209,145

 

737,280

 

931,103

Accruals and deferred income

 

-

 

55,670

 

35,996

Employee benefits

 

-

 

43,476

 

71,226

Other current liabilities

 

213,305

 

183’601

 

48’520

Total current liabilities

 

1’422’450

 

1,020,027

 

1,086,845

Non-current liabilities

 

 

 

 

 

 

Loan, third party

 

97’956

 

-

 

-

Loans, shareholder

 

2,137,077

 

2,137,077

 

1,601,825

Loans, related parties

 

-

 

-

 

642,459

Deferred tax liabilities

 

-

 

-

 

3,511

Employee benefits

 

142,614

 

142,614

 

184,395

Total non-current liabilities

 

2,377,647

 

2,279,691

 

2,432,190

TOTAL LIABILITIES

 

3,800,097

 

3,299,718

 

3,519,035

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Share capital

 

100,000

 

100,000

 

100,000

Retained earnings

 

(1,984,038)

 

(2,001,955)

 

(1,728,901)

Total Equity

 

(1,884,038)

 

(1,901,955)

 

(1,628,901)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

1,916,059

 

1,397,763

 

1,890,134


4


 

 

Statement of cash flow

for the period from January 1 to March 31, 2019

 

Statement of cash flows

 

Period

January 1, 2019

To

March 31, 2019

(in CHF)

 

Year

ended 2018

(in CHF)

 

 

 

 

Note  

 

Cash flow from operating activities

 

 

 

 

Profit/Loss for the period/year

 

17,917

 

(341,265)

Adjustments for:

 

 

 

 

Depreciation of fixed assets

 

553

 

2,826

Amortization of intangible assets

 

-

 

5,944

Change in employee benefits

 

(43,476)

 

38,974

Non-cash financial expense/(income), net

 

-

 

11,448

Tax income  

 

-

 

(69,897)

 

 

(42,923)

 

(351,970)

Changes in:

 

 

 

 

Trade and other receivables

 

(639,008)

 

674,611

Trade and other payables and accruals

 

445,899

 

(39,068)

Current employee benefits

 

-

 

(27,750)

 

 

(193,109)

 

607,793

Income taxes paid

 

-

 

-

Cash-flow from operating activities

 

(218,115)

 

255,823

Cash flow from investing activities

 

 

 

 

Acquisition for intangible assets

 

-

 

-

Acquisition of tangible assets

 

(8,223)

 

11,773

Proceeds from sale of intangible assets

 

-

 

29’719

Net cash provided / (used in) by investing activities

 

(8,223)

 

41,492

Cash flow from financing activities

 

 

 

 

Proceeds of loans, shareholder

 

-

 

535,252

Proceeds of loans, third party

 

97,956

 

-

Repayment of loans, related parties

 

-

 

(642,459)

Interest paid

 

-

 

(3,201)

Interest on shareholder loans paid

 

-

 

(12,938)

Bank fees and other finance fees paid

 

-

 

(14,887)

Net cash used in financing activities

 

97,956

 

(138,233)

Net increase / (decrease) in cash and cash equivalents

 

(128,382)

 

159,082

Cash and cash equivalents at beginning of year

 

280,884

 

119,723

Effect of foreign exchange rate changes

 

(2,820)

 

2,079

Cash and cash equivalents at end of period/year

 

149,682

 

280,884

 

 

 

 


5


 

 

Statement of changes in shareholders' equity

for the period from 1 January to 31 March 2019

 

Statement of changes in shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in CHF)

Share capital

 

Translation reserve

 

Retained earnings

 

Total equity

Balance as at 1 January 2018

100,000

 

-

 

(1,728,901)

 

(1,628,901)

Loss for the year

-

 

-

 

(341,265)

 

(341,265)

Other comprehensive income / (expenses)

-

 

-

 

68,211

 

68,211

- Remeasurements of defined benefit obligation (see Note 15)

-

 

-

 

82,182

 

82,182

- Related tax (see Note 8)

-

 

-

 

(13,971)

 

(13,971)

Total comprehensive income / (expenses)

-

 

-

 

(273,054)

 

(273,054)

Balance as at 31 December 2018

100,000

 

-

 

(2,001,955)

 

(1,901,955)

Profit for the period/year

-

 

-

 

17,917

 

17,917

Other comprehensive income / (expenses)

-

 

-

 

-

 

-

- Remeasurements of defined benefit obligation (see Note 15)

-

 

-

 

-

 

-

- Related tax (see Note 8)

-

 

-

 

-

 

-

Total comprehensive income / (expenses)

-

 

-

 

17,917

 

17,917

Balance as at 31 March 2019

100,000

 

-

 

1,984,038

 

(1,884,038)

 

As of 31 March 2019 the share capital consists of 1’000 shares, each with a par value of CHF 100. The share capital is fully liberated.


6

 

EXHIBIT 99.4

 

IQSTEL INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

 

The following unaudited pro forma combined financial statements give effect to the acquisition of Swisslink Carrier AG (“Swisslink”).

 

 

Page

Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2019

2

Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2019

3

Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2018

4


1


 

 

IQSTEL INC.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2019

 

 

iQSTEL Inc

 

SwissLink

Carrier AG

 

Proforma

Adjustments

 

Notes

 

Proforma

As Adjusted

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

71,084

 

$

150,460

 

$

(50,000)

 

4(a)

 

$

171,544

Accounts receivable, net

 

1,853,614

 

 

1,277,040

 

 

-

 

 

 

 

3,130,654

Due form related parties

 

258,020

 

 

-

 

 

-

 

 

 

 

258,020

Prepaid and other current assets

 

61,554

 

 

77,358

 

 

-

 

 

 

 

138,912

Total Current assets

 

2,244,272

 

 

1,504,858

 

 

(50,000)

 

 

 

 

3,699,130

Deferred tax assets

 

-

 

 

409,083

 

 

-

 

 

 

 

409,083

Property and equipment, net

 

272,550

 

 

12,080

 

 

-

 

 

 

 

284,630

Goodwill

 

-

 

 

-

 

 

1,465,857

 

4(b)

 

 

1,465,857

Total Assets

$

2,516,822

 

$

1,926,021

 

$

1,415,857

 

 

 

$

5,858,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

1,075,033

 

$

1,215,433

 

$

-

 

 

 

$

2,290,466

Due to related parties

 

23,231

 

 

-

 

 

-

 

 

 

 

23,231

Loans payable

 

99,415

 

 

-

 

 

-

 

 

 

 

99,415

Loans payable - related parties

 

90,787

 

 

-

 

 

-

 

 

 

 

90,787

Convertible notes - net of discount of $607,654

 

151,596

 

 

-

 

 

-

 

 

 

 

151,596

Other current liabilities

 

355,849

 

 

214,414

 

 

-

 

 

 

 

570,263

Derivative liabilities

 

3,084,136

 

 

-

 

 

-

 

 

 

 

3,084,136

Total Current Liabilities

 

4,880,047

 

 

1,429,847

 

 

-

 

 

 

 

6,309,894

Loan

 

-

 

 

98,465

 

 

-

 

 

 

 

98,465

Loan - shareholder

 

-

 

 

2,148,190

 

 

-

 

 

 

 

2,148,190

Employee benefits

 

-

 

 

143,356

 

 

-

 

 

 

 

143,356

Total Liabilities

 

4,880,047

 

 

3,819,858

 

 

-

 

 

 

 

8,699,905

Stockholders’ Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock: 8,500,000 authorized; $0.0001 par value - no shares issued and outstanding

 

-

 

 

-

 

 

-

 

 

 

 

-

Common stock: 2,000,000,000 authorized; $0.001 par value 15,276,724 shares (pre-adjustment) and 15,620,236 share (post-adjustment) shares issued and outstanding

 

15,277

 

 

-

 

 

343

 

4(b)

 

 

15,620

Share capital

 

-

 

 

100,520

 

 

(100,520)

 

4(c)

 

 

-

Additional paid in capital

 

1,314,464

 

 

-

 

 

449,657

 

 

 

1,764,121

Accumulated deficit

 

(3,692,966)

 

 

(1,994,357)

 

 

1,994,357

 

 

 

(3,692,966)

Total iQSTEL Inc. Stockholder’s Deficit

 

(2,363,225)

 

 

(1,893,837)

 

 

2,343,837

 

 

 

 

(1,913,225)

Non-controlling interest

 

-

 

 

-

 

 

(927,980)

 

4(b)

 

 

(927,980)

Total Stockholders’ Deficit

 

(2,363,225)

 

 

(1,893,837)

 

 

1,415,857

 

 

 

 

(2,841,205)

Total Liabilities and Stockholders' Deficit

$

2,516,822

 

$

1,926,021

 

$

1,415,857

 

 

 

$

5,858,700

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.


2


 

 

IQSTEL INC.

Unaudited Pro Forma Condensed Combined Statement of Operations

Three Months Ended March 31, 2019

 

 

iQSTEL Inc

 

SwissLink

Carrier AG

 

Proforma

Adjustments

 

Notes

 

Proforma

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

4,163,203

 

$

1,368,371

 

$

-

 

 

 

$

5,531,574

Cost of Goods Sold

 

3,727,626

 

 

1,156,582

 

 

-

 

 

 

 

4,884,208

Gross Profit

 

435,577

 

 

211,789

 

 

-

 

 

 

 

647,366

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General and Administrative Expenses

 

190,507

 

 

189,930

 

 

-

 

 

 

 

380,437

Total Operating Expenses

 

190,507

 

 

189,930

 

 

-

 

 

 

 

380,437

Operating Loss

 

245,070

 

 

21,859

 

 

-

 

 

 

 

266,929

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

2,600

 

 

-

 

 

-

 

 

 

 

2,600

Interest expense

 

(265,037)

 

 

(2,443)

 

 

-

 

 

 

 

(267,480)

Other expenses

 

(142)

 

 

(1,406)

 

 

-

 

 

 

 

(1,548)

Change in fair value of derivative liabilities

 

(1,008,069)

 

 

-

 

 

-

 

 

 

 

(1,008,069)

Total other expense

 

(1,270,648)

 

 

(3,849)

 

 

-

 

 

 

 

(1,274,497)

Net income (loss) before provision for income taxes

 

(1,025,578)

 

 

18,010

 

 

-

 

 

 

 

(1,007,568)

Income taxes

 

-

 

 

-

 

 

-

 

 

 

 

-

Net Income (Loss)

 

(1,025,578)

 

 

18,010

 

 

-

 

 

 

 

(1,007,568)

Less: Net income attributable to noncontrolling interest

 

-

 

 

-

 

 

8,825

 

4(d)

 

 

8,825

Net loss attributable to shareholders of iQSTEL Inc.

$

(1,025,578)

 

$

18,010

 

$

8,825

 

 

 

$

(1,016,393)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and dilutive loss per common share

$

(0.07)

 

 

 

 

 

 

 

 

 

$

(0.07)

Weighted average number of common shares outstanding

 

15,039,588

 

 

 

 

 

343,512

 

4(b)(e)

 

 

15,620,236

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.


3


 

 

IQSTEL INC.

Unaudited Pro Forma Condensed Combined Statement of Operations

Year Ended December 31, 2018

 

 

iQSTEL Inc.

 

SwissLink