It's an amendment to the S-1 filed on September 2, 2022. It's basically the same information in most regards. I may have missed something but it appears that the details regarding the potential company offering are mostly the same. And recall that the company offering can be used wholly, or in part, or not at all, as they see fit. It looks like they want to issue any such shares at $1.00 and the majority of the proceeds are expected to go to fund acquisitions, potential dilution for growth, and the plan should be to create plenty of extra shareholder value to more than outweigh any dilution.
Also, be sure to note the statements in red that explain that the prospectus is not complete and may be changed. (further amended). For example, if the share price trades at $2.00 or more later they would likely amend the target price to issue those shares at $2.00, or some other appropriate price.
The primary difference that I can see in the amended S-1 is that the amendment contains more details regarding the option that was purchased by Apollo. I'm no options expert and the details are complex for me, but if I understand correctly then Apollo may - and under the correct conditions and timeframes - be able to acquire shares under the $2.00 exercise price.
"the exercise price of $2.00, as may adjusted by certain provisions in the option, such as stock splits, price adjustments for future options with lower exercise prices, price adjustments in the event our stock trades below $2.00 on the initial exercise date with such new exercise price to be at a discount of 16% and up to 32% of the market price of our stock (if the stock falls below $1.50) on the date of exercise"
It may sound odd at first, but it's not necessarily as big a windfall for Apollo as it may seem. If we assume a share price of $.30 on September 30, and if Apollo could and did exercise then, and if they were able to get the maximum discount they could perhaps acquire 4.8 m shares at $.204. In theory, if they then sold those shares at $.30 they would make $460,800. That's less than what they paid for the option, so not so good a deal for them in that case.
So it looks like they potentially benefit with a low market price as of September 30. Perhaps the lower the better. But the flip side is that after September 30 they would benefit more with the highest share price they could get for selling. The higher the better for them.
If I got that right then take it as you wish, and keep in mind that I could be in error on some or all points.
But here is what I see is the takeaway points for shareholders. First, the company has not been profitable and the shortfall in cash has to come from somewhere. This option was a way to take care of some of that. The guidance is that Q4 may be profitable. We should hope that is the case, and also hope that this option, ($500,000) will carry their funding needs until they may become profitable.
No one wants to see dilution, but it would be much preferred in my opinion to come from the potential company share issuance, and at a higher price, such as the target $1.00 or more. Or better yet, that we can see operating expenses covered by profits in the future.
The option served its purpose, but I hope they don't have to do that again. It seems counter productive to have any party with a possible interest in seeing a lower share price. We (long) shareholders wish to see higher prices, but the company should also wish to see higher share prices so they can issue shares at higher prices rather than make deals that seem protective of those who provide the funds. It's just the kind of thing that has to be done sometimes to keep things going.
The bottom line is cash from operations, from profitability, can eliminate the need for these type of deals. We should hope iQSTEL can avoid these situations in the future as we, or they, should not want any parties hoping for lower prices at any time. But they had deficits and this is how they dealt with it, its done, or it should be done as they potentially deliver on profits. Also, It may help a bit to note that even with an exercise price at $.204, if that's what it turned out to be, that would bring in nearly another $1 million in cash for iQSTEL. (and thus indirectly to us shareholders).
The final takeaway is that further discussions on this issue is just looking at the past. The dilution potential is unpopular but relatively small and the company apparently felt it was necessary to continue operations. Unfortunately every time they file one of these S-1's it starts another round of discussion. Especially when market prices are weak.
But also consider that, while Apollo perhaps hopes for lower prices up to Sept 30, by October 1 they may be more interested in seeing higher prices, at least to our knowledge, if these thoughts are on target.
Of course most of the market is down and it may not help us that there may appear to be lots of possible good buys all over the place. I can't say what comes next for iQSTEL but I'm hopeful some solid good news appears such as a signed contract with BASF and related projections, or similar such regarding other IoT, Fintech, EV, Telecom, or etc.
Everyone has their own levels for risk tolerances, and their own opinion on risk vs reward. Should do their own DD and depend on that for investment decisions. My opinions, are just that and not investment advice. I feel good about iQSTEL long term, but I would reconsider if they miss performance targets. Thankfully they gave some pretty specific metrics in expectations for the next couple of quarters. Perhaps some amount of leeway could have merit, but its time to deliver, and I am looking for that. No precise dates, just looking for concrete progress, and I think that the guidance is promising, even if not as specific as we may desire yet.
