What changed in this filing

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Item 1. Business

2021-04-15 compared with 2020-04-15 · 51 added, 228 removed, 34 unchanged (89% of the section changed)

1 unchanged sentence

(the “Company”) (OTC Pink:

IQST) is a leading-edge 21st Century Enhanced Telecommunications Service Provider offering a wide range of cloud-based enhanced services to the Tier-1 and Tier-2 carriers, enterprise market, as well as the retail market.

iQSTEL offers international and domestic VoIP services, SMS exchange for A2P and P2P, Internet of Things (IoT) applications, 4G & 5G international infrastructure connectivity, as well as blockchain-based payment and phone number mobility platforms to international and domestic Tier-1 carrier for VoIP, SMS, and Data.

The company operates three websites:

www.iQSTEL,com, www.etelix.com and www.SwissLink-Carrier.com.

IQST) (www.iqstel.com) is a technology company offering a wide array of services to global telecommunications and technology industries with presence in 13 countries.

The Company has an extensive portfolio of products and services for its clients such as:

SMS, VoIP, 4G & 5G international infrastructure connectivity, Cloud-PBX, OmniChannel Marketing, IoT services, blockchain and payment solutions.

These services are grouped within three business divisions:

Telecom, Technology and Fintech.

The company operates its business through its wholly-owned subsidiary Etelix.com USA, LLC (“Etelix”) (www.etelix.com);

and its majority-owned subsidiaries SwissLink Carrier AG (www.swisslink-carrier.com), QGlobal SMA ( https://www.qglobalsms.com/ ), Smart Gas ( http://iotsmartgas.com/ ) and ItsBChain ( http://itsbchain.com/ ).

The information contained on our websites is not incorporated by reference into this Annual Report, and such information should not be considered to be part of this Annual Report.

2 unchanged sentences

On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor.

From March of 2017 until its recent acquisition of Etelix.com USA, LLC, PureSnax was working to develop its own brand and its own products for manufacture, distribution, sales and marketing of various products within the health foods and snacks industry and to pursue related business opportunities.

PureSnax acquired Etelix.com USA, LLC on June 25, 2018, as disclosed in the 8-K the company filed on June 28, 2018 with the Securities and Exchange Commission.

From March of 2017 until its acquisition of Etelix.com USA, LLC, PureSnax was working to develop its own brand and its own products for manufacture, distribution, sales and marketing of various products within the health foods and snacks industry and to pursue related business opportunities.

PureSnax acquired Etelix.com USA, LLC on June 25, 2018.

The company left the healthy snacks and foods business to focus on the Telecommunications Business.

2 unchanged sentences

iQSTEL also changed the Standard Industrial Classification (SIC Code) to 4813, Telephone Communications, Except Radiotelephone.

iQSTEL Business Plan

In addition to pursuing the growth and development of the business of our subsidiaries, we plan to expand our services to the retail market offering international long-distance voice communications to corporate, small business and individuals (ILD retail), supported in part on our current infrastructure.

We are also exploring opportunities in new business areas and markets to be developed in several stages.

In stage one:

Short Message Service (SMS) for Applications to Person (A2P) and Person to Person (P2P), 5G international fiber-optic infrastructure, Internet of Things (IoT) solutions and Blockchain-based platforms as Settlement & Payment Marketplace Platform and Mobile App Number Portability.

In stage two, we will explore satellite communications, mobile services under the figure of a Mobile Virtual Network Operator (MVNO), and Data Centers.

In any case, we expect that these new ventures will be developed either through mergers or acquisitions, or through strategic partnerships.

Etelix.com USA, LLC

The transformative process is an ongoing effort.

However, in the last year the Company achieved the restructuring of its revenue from a 100% VoIP business to one where currently VoIP represents half of overall Company revenue, while SMS and value-added SMS services account for the other half.

SMS and value-added SMS is a much higher gross profit business, thus the Company’s bottom line has increased in tandem.

Operating Subsidiaries

Based on our current business infrastructure, the Company has expanded from its original VoIP services into new business areas:

Short Message Service (SMS) for Applications to Person (A2P) and Person to Person (P2P);

Internet of Things (IoT) solutions and Blockchain-based platforms.

Etelix.com USA LLC is a wholly owned subsidiary of iQSTEL Inc.

Etelix.com USA, LLC is a Miami, Florida-based international telecom carrier founded in 2008 that provides telecom and technology solutions worldwide, with commercial presence in North America, Latin America, and Europe.

Enabled by its 214-license granted by the Federal Communications Commission (FCC), Etelix provides International Long-Distance voice services for Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G).

Description of Etelix’s Facilities

Etelix operates from four facilities in connection with its business.

Our principal executive offices are located at 300 Aragon Avenue, Suite 375 Coral Gables, FL 31334 of shared use with our resident agent for a monthly fee of $274.

Etelix has rented a facility comprised of approximately 700 square feet office space located at 18650 NE 28th Ct.

in Aventura, Florida.

This office serves as Etelix’s commercial office.

The rent per month is $1,200.

Additionally, Etelix has rented another facility comprised of approximately 875 square feet office space located at Avenida de Buenos Aires, 5-6 piso 1, 1-B, in La Coruna, Spain.

This office serves as Etelix’s main sales office.

The rent per month is $700.

Lastly, Etelix has rented a third facility comprised of approximately 2500 square feet office space located at 199 E.

Flagler Street, Suite 655 in Miami, Florida.

This facility adapts to current needs and it is the location where all of Etelix’s telecommunications equipment is located.

The facility stores the equipment, provides broadband and constant electricity and other utilities needed to properly run the equipment.

This facility also offers onsite personnel support for necessary downtime or the rebooting of systems.

The rent per month is $5,500.

These facilities are suitable for Etelix’s business as International Long-Distance Telecommunications (ILD Wholesale) Operator.

Description of Etelix’s Equipment

The below is a description of the equipment Etelix uses in its business

Date in Service

Acquisition Cost in US$

Telecommunication Equipment

Computer Equipment

Equipment (Telecom)

Equipment/Software

Telecommunication Equipment

Software Telecommunication

Equipment (Servers)

Telecommunication Software

Etelix as International Long-Distance voice services (ILD Wholesale) Operator:

Etelix provides International Long-Distance voice termination in the ILD Wholesale market through over 200 interconnections with telecommunication carriers, PSTNs, PTTs, Mobile Operators, Mobile Virtual Network Operators (MVNOs), Long Distance Operators and Long Distance Wholesale Carriers.

Etelix supplies international connectivity and international call transit among all countries of the world.

Etelix is interconnected to the most important players in the industry, among which it is worth mentioning the following:

Verizon, KDDI, PCCW, Hutchinson, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, Vodafone India, Airtel, Reliance, Viettel, TATA Communications, iBasis, Orbitel, Entel, China Telecom, among many others.

The company provides 24x7 network monitoring through two Network Operation Centers (NOCs), one located in America and another one in Europe, with bilingual staff (English- Spanish).

All network platforms (switches, billing platform, router engines, session border controllers, Data Base servers, ERP platform) are located in Miami Downtown, FL, and are accessed remotely from all employees around the world using a secure data connection.

The Industry ILD Wholesale

The International Long-Distance traffic market size is estimated at $13 Billion in annual revenue, with 552 Billion Minutes exchanged yearly (Note 1) (Note 2).

It is estimated that Wholesale Carriers have a 68% total market share, carrying over 375 Billion Minutes per year (Note 1).

The number of minutes carried by wholesale carriers has been increasing during the last few years mostly due to retail service providers, such as mobile operators, calling-card providers, and new VoIP-based market entrants, relying heavily on wholesale carriers to transport and terminate their customers’ international calls.

Since the year 2013 the market of traditional international long distance calls has been reducing its size in about 2-3% per year (Note 1) (Note 3).

This recent decline comes to the hands of over-the-top (OTT) communication and app services.

Consumers can choose from a broad range of smartphone based communications apps, including WhatsApp, Facebook Messenger, WeChat, Viber, and Apple’s Facetime, among others.

However, the market is not experiencing a total migration of users to the new communication solutions;

since the numbers reveal that the existence of these new services has increased the total number of international calls.

In fact, it is estimated that today OTT applications account for a volume slightly higher than 550 million minutes per year on cross-border communications (Note 1).

Which means that the market has doubled its total numbers to the existing ones before the appearance of these new solutions.

While average prices have been declining globally, rates to a few destinations particularly mobile in some emerging market countries remain high, strengthening wholesale revenues.

A route-by-route comparison of international traffic with international wholesale revenues reveals destinations for which wholesale revenues are disproportionately high.

For example, the France to Tunisia route accounts for 1.5% of revenues, but only 0.25% of volume.

Similarly, The United States to Cuba route accounts for close to 2.6% of revenues while making up around 0.15% of volume.

Africa accounted for approximately 10% of wholesale traffic, but 33% of wholesale revenues (Note 1).

source Telegeography a Telecommunications market research and consulting firm (www.telegeography.com), year 2017

source International Telecommunications Union (www.itu.int).

Key 2005-2017 ICT Data

source Hot Telecom a Telecom Research and Consulting firm (www.hottelecom.com), The Future of International carrier report 2017.

ILD Wholesale Competitors

The wholesale industry is full of companies of all sizes and with many different business strategies and focus.

We can classify the market in three segments:

in this segment are allocated the telecom companies with global presence like Verizon, Telefonica of Spain (Movistar), Telecom Italia Mobile (TIM), Vodafone, Orange, British Telecom, Telia, Deutsche Telekom, among few others.

These companies are the most important traffic generators.

These are the companies that account for most end users (individuals, small and home business, as well as, big corporations).

Their main business is not international voice traffic, therefore their wholesale divisions are small business units in their structure.

They hold the strongest position in the market, since they own the traffic and the most extended networks, but they do not really complete in the wholesale business, on the contrary, they are the potential customers that all wholesale carries want to be interconnected with.

Big Carriers:

here are companies like TATA, iBasis, IDT, BTS, BICS (Belgacom).

These are companies with global operations.

Their only focus is on the wholesale industry and have no retail business at all or the offer on the retail segment is very limited.

These companies have been expanding their commercial offerings including solutions for international roaming, international peering and SMS hubbing.

They continue competing in the carrier business, but year after year, the contribution of the carrier business to their revenues diminishes;

prioritizing the new business areas.

Medium and Small Carriers:

this is the segment where Etelix is.

This is the segment where we find the most amount of companies.

The majority of these companies have a limited offerings in terms of routes and capacity.

Most of them work in two or three geographical markets (America and Asia, Africa and Asia or Europe and America), but not all of them offer global coverage.

In this segment we can find companies, like us, with a business strategy focused on becoming carriers with a real global offering, with termination capacity in all countries and commercial presence in every geographical market (America, Europe, Asia, Middle East and Africa).

Etelix is very well positioned to compete in the Medium and Small Carriers market segment.

The Company is fully interconnected with dozens of Operators that have commercial presence in more than one geographical market, thus allowing Etelix to offer a truly international and global voice service.

Etelix business strategy is benchmarked against the Top 10 Big Carries in order to allow Etelix to grow into this top 10 carriers in next few years.

Etelix ILD Wholesale Business Plan

Etelix’s current market share is less than 0.1%;

consequently, Etelix has space to grow to several times its current size.

With a methodical execution of its business plan and an adequate level of capitalization, the company believes that Etelix can maintain a steady growth rate (>30% year over year) well beyond 2020.

Etelix has outlined a business plan based on the following lines of actions:

 Strengthen the commercial position in Latin America where the company has developed deep commercial and personal relationships since its inception .

Latin America, including the Caribbean region, concentrates 28% of the termination traffic in the industry.

For that reason, the company plans to continue working on keeping a strong presence in the region.

 Deepen market presence in Asia and Africa :

These are new markets for the company.

Africa is currently the market with the highest contribution to operating margins and Asia concentrates one third of the termination traffic in the industry.

In 2016 the Company established a new office in Europe (La Coruña, Spain) making this the first move in our strategy to penetrate these two new markets.

Estimations show that 56% (Note 4) of the traffic terminating in Africa is originated from customers in Europe, so establishing a commercial point of presence in Europe is designed to put the company closer to the customer traffic.

 The new office in Spain is also believed to strengthen the development of the Asian market , since 37% (Note 4) of the traffic that terminates in that region is originated in Europe while 62% (Note 4) is originated from America where company already has a strong presence.

 Continue working on establishing global recognition to facilitate new markets presence.

 Develop new products associated with the wholesale business.

 Strengthen commercial relations with the main international traffic generators.

Note 4 source International Telecommunications Union (www.itu.int) Key 2005-2017 ICT Data

Etelix as Submarine Fiber Optic Network capacity provider for 4G and 5G

An important milestone in the evolution of Etelix was in 2013, when the company was part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia.

This consortium was led by Orange Telecom and Orbitel, where Etelix participated with 10 Gbps of capacity.

Etelix provides International Long-Distance voice services for Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G).

Etelix was founded in 2008.

Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian markets, among which it is worth mentioning:

China Telecom, PCCW, Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel.

An important milestone in the evolution of Etelix was in 2013, when the company became part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia.

This consortium is led by Orange Telecom and Orbitel, where Etelix participates with 10 Gbps of capacity.

The bulk of this contract was sold to Millicom (Tigo Costa Rica).

This capacity considerably enhanced Tigo’s ability to deploy world-class 4G services to its customers in Costa Rica.

The growing demand for internet connections in 4G and 5G in Latin America opened the need to increase the connectivity between Latin America and the USA, which is where most of the internet content that users are looking for in Latin America is.

This is the reason that Etelix will focus on finding business opportunities to acquire capacity in submarine cables in the region, participating as an Internet provider for 4G and 5G networks deployments in Latin America.

Operational and Commercial Highlights from January 2019 to December 2019

Telecom companies, as companies called to lead the current process of digital transformation, are going through a period of moderate growth in which we prepare ourselves to meet the needs associated with the accelerated emergence of the different technological innovations that are modifying our way of living, work and relate to society.

The emergence of technologies such as 5G, the Internet of Things (IoT), advances in artificial intelligence and blockchain, among others, are the main protagonists, and our responsibility as telecom companies is to prepare ourselves by adjusting our own organizations operationally and strategically to attend to the new needs of our clients and mitigate the risk of a scenario that is continually changing and evolving.

Also, the emergence of over-the-top service providers (OTT) such as Skype, Facebook, WhatsApp, among others, redefined communication standards, expanding the variety and quality of the services offered, the relationship of the telecom companies with their customers, and of course, the market price structures with their free applications.

At iQSTEL, aware of the accelerated changes that the industry imposes on us, we are constantly at work to rethink our processes and how we should adjust operationally and commercially to respond appropriately to new market needs, managing our costs to maintain our levels of competitiveness and profitability, simplifying the organizational structure, improving management processes with more technology and reinventing our sales and customer service models.

On that regards we want to highlight the following relevant aspects for 2019.

Evolution in management processes:

The implementation of HostSBC platform, a state-of-the-art tool for managing the wholesale voice business, was successfully completed, integrating all technical, commercial, accounting and financial processes 100%.

With this tool, not only it is possible to improve the quality of our services to customers, the integration of all internal processes and the activities of monitoring and control and follow-up on management, but it also evolves in the commercial offerings to customers developing new products and bids more focused on the specific needs of each customer.

With the completion of this activity, in which the organization was immersed for more than nine months during year 2019, is allowing savings that will translate for 2020 into lower operating costs of approximately $ 80,000/year.

Operational and Commercial Reorganization:

As a direct consequence of the implementation of HostSBC platform, on one side, and the implementation of processes to integrate management with the recently acquired subsidiary Swisslink to generate synergies in operational and commercial processes, on the other side, internal adjustments were also implemented in the organizational structure, which in addition to resulting in a slight reduction in personnel costs, allow the company to be more efficient and productive.

These reorganization processes were mainly impacting in:

a) The reorganization of the Network Management Center, where processes were optimized in order to offer a better customer service experience, and also their size was adjusted to improve the costs always guaranteeing the provision of an optimal 24/7 service.

By 2020, we are working to consolidate a single Network Management operation with Swisslink, which will undoubtedly generate a significant synergy.

b) The purification of the client portfolio by removing several dozen of carriers that did not add value to the company and increasing business with those companies that are strategic for the interests of the organization.

c) The adjustment of all the processes of the sales force, the technical-commercial support team, and the billing team, to reduce the problems of communication caused by diversity of the time zones where our clients are located.

In this process of organizational adjustments, the professional growth of the company's own resources were prioritized above all, attending to an expectation of internal loyalty of our employees and the general development of our people.

New customer and products and innovations in the way of doing business:

a) Establishment of automatic bids with differentiation in the quality and price of the service, which allows us to offer products tailored to the specific requirements of each customer.

b) Development of long distance voice products for carriers with origin and interest in services of the European voice market, all supported by the technological infrastructure available in SwissLink.

c) Expansion of the international offerings of voice for companies specialized in the provision of call center services supported by the flexibility and processing capacity of Host SBC platform.

d) The incorporation to our Sales Team of an Account Manager based in India with whom we now serve faster and in a more personalized way the major global telecommunications operators based in Asia, such as Airtel, Reliance, Vodafone India, China Telecom, Quickcom, Tata, among others.

Additionally, this new team member has developed new commercial relationships with more than a dozen of new boutique-type medium-sized Asian operators.

New Business Areas

iQSTEL plans to take advantage of the experience Etelix and SwissLink has in the Telecommunications business specifically to develop new business areas and opportunities.

SMS Exchange and A2P SMS

According to Research and Markets, and Ireland based research company, the Global A2P SMS Market is expected to grow at a CAGR of 4.1% during the forecast period 2018 – 2025, to account for US$ 60.55 billion in 2025.

This market has experienced significant growth and adoption rate in the past few years and is expected to experience notable growth and adoption in years to come, with 1.176 billion A2P SMS sent in year 2016 and 1.243 billion messages projected for year 2020.

The ubiquitous nature of SMS ensuring maximum reach out to customers has prompted marketers to switch to this communication channel.

The steady inclination towards using SMS for marketing and other allied activities has been very effective and consequently been adopted by various industry verticals.

Apart from that, SMS has also been adopted for security authentication purposes proving to be of high worth to BFSI vertical.

Banks and financial institutions, as well as Facebook, Google, Microsoft, Netflix among thousands of other use SMS for security authentication purposes.

The 2 main projects that the Company is developing are:

(1) a blockchain-based mobile phone portability solution and (2) a carrier exchange payment platform.

The Company had a Minimum Viable Product (MVP) or Pre-Beta Product based on a private Blockchain with smart contracts for the administration of the telephony numbering plans for number portability and presubscription.

The product currently has 5 blockchain nodes with fully developed working solution for wholesale carriers, running 24/7 thanks to a robot simulating customer behaviors.

The final product will be a blockchain-based platform to allow every cell users around the word to move their phone numbers from carrier to carrier with 3 clicks from an online mobile application.

This will revolutionize the ability for a user to switch carriers since they will be able to do it from home, online, thus avoiding a physical trip to a retail distributor or waiting for a new SIM card to be shipped.

The carrier exchange and payment platform would allow for carriers to exchange SMS, VoIP and data traffic on a blockchain market place that would validate all transactions and allow for daily payments.

In today’s current carrier market, all calls are tracked and verified real-time.

However, due to limitations in billing systems, admin verification and payment processing, all payments are actually finalized in with typical payment time frames of 35-40 days.

This same platform could quickly be upgraded to include SMS traffic and eventually data as well.

Acquisitions and Joint Ventures

SwissLink Carrier AG

On April 1, 2019, we entered into a Company Purchase Agreement (the “Purchase Agreement”) by and between our company and 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 our 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;

 The balance of $450,000 USD shall be paid at Closing in the form of 187,500 shares of common stock in our company based upon an agreed upon price of $2.40 per share.

Additional shares may be payable at Closing, if our 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, we are 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 us CHF 987,909.27 (approximately $ 990,236.62 USD) that represent the 51% of this debt.

Further under the Purchase Agreement, we have 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.

We believe 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.

Ralf Kohler will also be a member of the board of directors of SwissLink.

The Purchase Agreement may be terminated if either us or SwissLink are deemed economically unviable or bankrupt;

if during due diligence process there is discovered a material impact on the valuation of SwissLink;

or the parties mutually agreed to terminate the Purchase Agreement.

The Closing of the Purchase Agreement is scheduled for 90 days from execution, and is 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.

If the Purchase Agreement does not close on account of the foregoing conditions, the $50,000 paid at execution of the Purchase Agreement shall be returned to us.

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.

QGLOBAL SMS, LLC

On February 12, 2020, we entered into a Memorandum of Understanding and Shareholders Agreement with Jesus Vega and our officer and director, Leandro Iglesias.

The agreement concerns the formation of a joint venture named QGLOBAL SMS, LLC for the development of the wholesale SMS business.

Under the agreement, Mr.

Vega will contribute to the joint venture by developing the international SMS business in the areas of wholesale and retail (person to person (PSP) and application to person (A2P)) as well as the sale of such services internationally.

Vega will also contribute the entire volume of sales in the SMS business that he has in a company that he owns.

He will assign all contracts with suppliers and customers, the lease contract for the Interconnection platform, as well as the personnel currently working in the aforementioned company.

His current business has a monthly sales volume as of the end of January 2020 of $50,000.

Once QGLOBAL SMS, LLC reaches monthly sales of $50,000 for three consecutive months, provided the percentage of gross monthly margin is maintained above 12%, we are committed to invest $50,000 to prepay SMS providers, and an additional $200,000 to be used to pay SMS providers based on the amount of sales reached.

We have also agreed to transfer the interconnection agreements for SMS signed by our subsidiary, Etelix.com USA, LLC, within 30 days of execution of the joint venture.

Iglesias has agreed to transfer to us his 50% interest in the already formed QGLOBAL SMS, LLC.

Vega will transfer 1% of his interest for a total of 51% to us and 49% to Mr.

QGLOBAL SMS, LLC will have 4 board members, which will include Mr.

Iglesias, Italo Segnini, Mr.

Vega and our CFO, Alvaro Quintana.

Vega will be entitled to a salary of $3,500 per month and bonuses as set forth in the agreement to be paid in shares of our common stock at a value of $1.30 per share.

We have been granted an option to purchase Mr.

Vega’s interest in the joint venture after 18 months.

ITSBCHAIN, LLC

On February 21, 2020, we entered into a Memorandum of Understanding and Shareholders Agreement (“MOU”) with Miguel Scavo and our officer and director, Leandro Iglesias.

The agreement concerns the formation of a joint venture named ITSBCHAIN, LLC for the development of a telephone numbering plan administration for number portability and a wholesale carrier settlement and payment platform.

Under then MOU, Mr.

Scavo will contribute to the joint venture by tendering his intellectual property and software developed for the telephone numbering plan administration for number portability in exchange for $80,000 in cash and $50,000 in our common stock (iQSTEL) valued at $1.30 per share.

We also agreed to fund the joint venture with up to $500,000 within the first three years.

Iglesias has agreed to transfer to us his 50% interest in the already formed ITSBCHAIN, LLC.

Scavo will transfer 25% of his interest for a total of 75% to us and 25% to Mr.

ITSBCHAIN, LLC will have 4 board members, which will include Mr.

Iglesias, our CEO and director, Oscar Brito, our director, Mr.

Scavo and Alvaro Quintana, our CFO and director.

The MOU calls for the management agreements to be drafted for the three officers of the joint venture:

Iglesias as President and CEO, Mr.

Quintana as CFO and Mr.

Scavo as COO.

Until the board of directors of ITSBCHAIN, LLC reaches such an agreement with respect to Mr.

Scavo, he is entitled to a salary of $2,000 USD per month.

SwissLink Carrier AG is a 51% owned subsidiary of iQSTEL Inc.

SwissLink Carrier AG is a Switzerland based international Telecommunications Carrier founded in 2015 providing international VoIP connectivity worldwide, with commercial presence in Europe, CIS and Latin America.

SwissLink Carrier AG is a Swiss licensed Operator.

One of Company’s strategic line of actions is to expand the participation in Asian and African traffic.

Africa is currently the market with the higher contribution to margin and Asia represents one third of the termination traffic in the industry.

Estimations show that 56% (International Telecommunication Union) of the traffic terminating in Africa is originated from customers in Europe;

while the corresponding percentage of traffic terminated in Asia is 37% (International Telecommunication Union).

Based on these numbers the goal to expand the participation in the Asian and African traffic goes through establishing a strong presence in Europe.

The acquisition of Swisslink strengthened the Company’s presence in Europe putting us in a very competitive position to capture traffic to Asian and African countries;

however it will also give us the opportunity to compete in the European traffic, where we currently have a low participation.

QGlobal SMS LLC is a 51% owned subsidiary of iQSTEL Inc.

QGlobal SMS is a USA based company founded in 2020 specialized in international and domestic SMS termination.

IoT Labs LLC, is a 51% owned subsidiary of iQSTEL Inc.

IoT Labs is a SMS service provider based in Austin, TX.

The Company has entered into the SMS business in 2020 through the acquisition of QGlobal and IoT Labs.

Both companies specialize in international and domestic SMS termination, with emphasis on the Applications to Person (A2P), Person to Person (P2P) and OmniChannel Marketing Services for several markets:

Wholesale Carrier, Government, Corporate, Enterprise, Small and Medium Companies.

QGlobal SMS has commercial presence in Europe, USA and Latin America, with robust international interconnection with Tier-1 SMS Aggregators, guarantying to its customers high quality and low termination rates, in over more than 100 countries;

while IoT Labs is specialized in the SMS traffic exchange between US and Mexico.

With the acquisition of these two SMS providers we quickly began to cross-sell services to our existing client base.

The Global A2P SMS Market is expected to grow at a CAGR of 4.1% during the forecast period 2018 – 2030, to account for US$ 101 billion in 2030, according to Transparency Market Research.

This market has experienced significant growth and adoption rate in the past few years and is expected to experience notable growth and adoption in years to come

ItsBchain LLC is a 75% owned subsidiary of iQSTEL Inc.

ItsBchain is a blockchain technology developer and solution provider, with a strong focus on the telecom sector.

The company is in the final stage of development of a series of blockchain solutions aimed at using the blockchain ledger and smart contract solutions to enable more efficiency, quickness in execution and fraud-prevention in the telco industry.

Specifically, the company is developing a solution that will enable users and carriers to transfer mobile phone numbers with just a few clicks, allowing users and carriers the ability to transfer retail users from one mobile carrier to another instantly.

Telecommunications services are subject to extensive government regulation in the United States.

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and also to provide resale services in accordance with section 63.18(e)(2) under license number ITC-214-20090625-00303.

Since Etelix has no other network infrastructure outside the United States, no other licenses are required to us to operate as an international carrier service provider.

Since Etelix has no other network infrastructure outside the United States, no other licenses are required for us to operate as an international carrier service provider.

Universal Service and Other Regulatory Fees and Charges

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These periodic contributions are currently assessed based on a percentage of each contributor’s interstate and international end user telecommunications revenues reported to the FCC.

Etelix also contribute to several other regulatory funds and programs, most notably Telecommunications Relay Service and FCC Regulatory Fees (collectively, the Other Funds).

Etelix also contributed to several other regulatory funds and programs, most notably Telecommunications Relay Service and FCC Regulatory Fees (collectively, the Other Funds).

Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business