iQSTEL Inc 10-Q

Item 1. Financial Statements Our unaudited consolidated financial statements included in this Form 10-Q are as follows: F-1 Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021; F-2 Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited); F-3 Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited); and F-4 Consolidated Statements of Stockholder’s Equity as of September 30, 2022; and 2021. F-5 Notes to Consolidated Financial Statements (unaudited). These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2022 are not necessarily indicative of the results that can be expected for the full year. 3 Table of Contents iQSTEL INC Consolidated Balance Sheets (Unaudited) September 30, December 31, 2022 2021 ASSETS Current Assets Cash $ 1,294,981 $ 3,334,813 Accounts receivable, net 3,922,778 2,540,515 Inventory 26,124 — Due from related parties 351,139 424,086 Prepaid and other current assets 546,160 267,110 Total Current Assets 6,141,182 6,566,524 Property and equipment, net 391,762 409,382 Intangible asset 99,592 99,592 Goodwill 5,172,146 1,537,742 Deferred tax assets 413,438 446,402 TOTAL ASSETS $ 12,218,120 $ 9,059,642 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable 1,913,304 1,474,595 Due to related parties 26,613 26,613 Loans payable - net of discount of $ 0 and $ 7,406 93,204 315,450 Loans payable - related parties 221,637 239,308 Other current liabilities 515,223 307,049 Total Current Liabilities 2,769,981 2,363,015 Loans payable, non-current 101,590 119,295 Employee benefits, non-current 144,883 156,434 TOTAL LIABILITIES 3,016,454 2,638,744 Stockholders' Equity Preferred stock: 1,200,000 authorized; $ 0.001 par value Series A Preferred stock: 10,000 designated; $ 0.001 par value, 10,000 shares issued and outstanding, respectively 10 10 Series B Preferred stock: 200,000 designated; $ 0.001 par value, 21,000 shares issued and outstanding 21 21 Series C Preferred stock: 200,000 designated; $ 0.001 par value, No shares issued and outstanding — — Common stock: 300,000,000 authorized; $ 0.001 par value 151,830,378 and 147,477,358 shares issued and outstanding, respectively 151,830 147,477 Additional paid in capital 29,437,832 25,842,982 Accumulated deficit ( 19,511,934 ) ( 18,536,921 ) Accumulated other comprehensive loss ( 37,935 ) ( 36,658 ) Equity attributed to stockholders of iQSTEL Inc. 10,039,824 7,416,911 Deficit attributable to noncontrolling interests ( 838,158 ) ( 996,013 ) Total Stockholders' Equity 9,201,666 6,420,898 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,218,120 $ 9,059,642 The accompanying notes are an integral part of these unaudited consolidated financial statements. F- 1 Table of Contents iQSTEL INC Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues $ 21,936,634 $ 16,516,739 $ 65,055,661 $ 46,842,717 Cost of revenue 20,621,674 15,675,687 62,410,367 45,469,730 Gross profit 1,314,960 841,052 2,645,294 1,372,987 Operating expenses General and administration 1,256,147 957,195 3,390,097 3,664,473 Total operating expenses 1,256,147 957,195 3,390,097 3,664,473 Operating income (loss) 58,813 ( 116,143 ) ( 744,803 ) ( 2,291,486 ) Other income (expense) Other income 43,219 11,252 38,591 40,431 Other expenses ( 71,027 ) 475 ( 54,247 ) ( 421 ) Interest expense ( 3,693 ) ( 6,802 ) ( 22,417 ) ( 648,889 ) Change in fair value of derivative liabilities — — — 317,080 Loss on settlement of debt — — — ( 528,794 ) Total other income (expense) ( 31,501 ) 4,925 ( 38,073 ) ( 820,593 ) Net income (loss) before provision for income taxes 27,312 ( 111,218 ) ( 782,876 ) ( 3,112,079 ) Income taxes — — — — Net income (loss) 27,312 ( 111,218 ) ( 782,876 ) ( 3,112,079 ) Less: Net income attributable to noncontrolling interests 96,175 87,736 192,137 16,642 Net loss attributed to stockholders of iQSTEL Inc. $ ( 68,863 ) $ ( 198,954 ) $ ( 975,013 ) $ ( 3,128,721 ) Comprehensive income (loss) Net income (loss) $ 27,312 $ ( 111,218 ) $ ( 782,876 ) $ ( 3,112,079 ) Foreign currency adjustment ( 1,096 ) 3,406 ( 2,503 ) 54,398 Total comprehensive income (loss) 26,216 $ ( 107,812 ) $ ( 785,379 ) $ ( 3,057,681 ) Less: Comprehensive income attributable to noncontrolling interests 95,638 89,405 190,911 43,297 Net comprehensive loss attributed to stockholders of iQSTEL Inc. $ ( 69,422 ) $ ( 197,217 ) $ ( 976,290 ) $ ( 3,100,978 ) Basic income (loss) per common share $ 0.00 $ ( 0.00 ) $ ( 0.01 ) $ ( 0.02 ) Diluted income (loss) per common share $ 0.00 $ ( 0.00 ) $ ( 0.01 ) $ ( 0.02 ) Weighted average number of common shares outstanding - Basic and diluted 151,750,426 141,697,141 150,057,315 133,173,421 Weighted average number of common shares outstanding - Diluted 153,930,452 141,697,141 150,057,315 133,173,421 The accompanying notes are an integral part of these unaudited consolidated financial statements. F- 2 Table of Contents iQSTEL INC Consolidated Statements of Changes in Stockholders’ Equity (Deficit) For the three and nine months ended September 30, 2022 and 2021 (Unaudited) Series A Preferred Stock Series B Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount Additional Paid in Capital Accumulated Deficit Accumulated Comprehensive Loss Total Non Controlling Interest Total Stockholders’ Equity Balance - December 31, 2021 10,000 $ 10 21,000 $ 21 147,477,358 $ 147,477 $ 25,842,982 $ ( 18,536,921 ) $ ( 36,658 ) $ 7,416,911 $ ( 996,013 ) $ 6,420,898 Common stock issued for cash — — — — 2,000,000 2,000 998,000 — — 1,000,000 — 1,000,000 Common stock issued for compensation — — — — 60,000 60 41,079 — — 41,139 — 41,139 Foreign currency translation adjustments — — — — — — — — ( 196 ) ( 196 ) ( 188 ) ( 384 ) Net income (loss) — — — — — — — ( 554,970 ) — ( 554,970 ) 30,239 ( 524,731 ) Balance - March 31, 2022 10,000 $ 10 21,000 $ 21 149,537,358 $ 149,537 $ 26,882,061 $ ( 19,091,891 ) $ ( 36,854 ) $ 7,902,884 $ ( 965,962 ) $ 6,936,922 Common stock issued for compensation — — — — 60,000 60 30,430 — — 30,490 — 30,490 Common stock issued and to be issued for acquisition of subsidiaries — — — — 1,461,653 1,462 1,548,538 — — 1,550,000 ( 33,056 ) 1,516,944 Common stock issued for asset acquisition — — — — 500,000 500 324,500 — — 325,000 — 325,000 Common stock payable — — — — — — 18,900 — — 18,900 — 18,900 Warrant granted — — — — — — 500,000 — — 500,000 — 500,000 Foreign currency translation adjustments — — — — — — — — ( 522 ) ( 522 ) ( 501 ) ( 1,023 ) Net income (loss) — — — — — — — ( 351,180 ) — ( 351,180 ) 65,723 ( 285,457 ) Balance - June 30, 2022 10,000 $ 10 21,000 $ 21 151,559,011 $ 151,559 $ 29,304,429 $ ( 19,443,071 ) $ ( 37,376 ) $ 9,975,572 $ ( 933,796 ) $ 9,041,776 Common stock issued for compensation — — — — 60,000 60 20,440 — — 20,500 — 20,500 Common stock issued for settlement of debt — — — — 161,367 161 80,513 — — 80,674 — 80,674 Common stock issued for asset acquisition — — — — 50,000 50 32,450 — — 32,500 — 32,500 Foreign currency translation adjustments — — — — — — — — ( 559 ) ( 559 ) ( 537 ) ( 1,096 ) Net income (loss) — — — — — — — ( 68,863 ) — ( 68,863 ) 96,175 27,312 Balance - September 30, 2022 10,000 $ 10 21,000 $ 21 151,830,378 $ 151,830 $ 29,437,832 $ ( 19,511,934 ) $ ( 37,935 ) $ 10,039,824 $ ( 838,158 ) $ 9,201,666 Series A Preferred Stock Series B Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount Additional Paid in Capital Accumulated Deficit Accumulated Comprehensive Loss Total Non Controlling Interest Total Stockholders' Deficit Balance - December 31, 2020 10,000 $ 10 — $ — 118,133,432 $ 118,133 $ 13,267,261 $ ( 14,699,148 ) $ ( 74,831 ) $ ( 1,388,575 ) $ ( 1,006,461 ) $ ( 2,395,036 ) Preferred stock issued for conversion of common stock — — 21,000 21 ( 21,000,000 ) ( 21,000 ) 20,979 — — — — — Common stock issued for cash — — — — 35,862,500 35,863 3,550,387 — — 3,586,250 — 3,586,250 Common stock issued for service — — — — 195,000 195 284,505 — — 284,700 — 284,700 Common stock issued for compensation — — — — 600,000 600 563,400 — — 564,000 — 564,000 Common stock issued for forbearance of debt — — — — 250,000 250 49,675 — — 49,925 — 49,925 Common stock issued for conversion of debt — — — — 6,080,632 6,081 416,214 — — 422,295 — 422,295 Cancellation of common stock — — — — ( 1,294,600 ) ( 1,295 ) ( 88,809 ) — — ( 90,104 ) — ( 90,104 ) Resolution of derivative liabilities — — — — — — 708,611 — — 708,611 — 708,611 Foreign currency translation adjustments — — — — — — — — 54,905 54,905 52,751 107,656 Net income (loss) — — — — — — — ( 1,942,391 ) — ( 1,942,391 ) 63,902 ( 1,878,489 ) Balance - March 31, 2021 10,000 $ 10 21,000 $ 21 138,826,964 $ 138,827 $ 18,772,223 $ ( 16,641,539 ) $ ( 19,926 ) $ 2,249,616 $ ( 889,808 ) $ 1,359,808 Common stock issued for compensation — — — — 600,000 600 411,600 — — 412,200 — 412,200 Common stock issued for settlement of debt — — — — 2,230,394 2,230 2,054,300 — — 2,056,530 — 2,056,530 Debt forgiveness — — — — — — 807,103 — — 807,103 — 807,103 Foreign currency translation adjustments — — — — — — — — ( 28,899 ) ( 28,899 ) ( 27,765 ) ( 56,664 ) Net loss — — — — — — — ( 987,376 ) — ( 987,376 ) ( 134,996 ) ( 1,122,372 ) Balance - June 30, 2021 10,000 $ 10 21,000 $ 21 141,657,358 $ 141,657 $ 22,045,226 $ ( 17,628,915 ) $ ( 48,825 ) $ 4,509,174 $ ( 1,052,569 ) $ 3,456,605 Common stock issued for compensation — — — — 60,000 60 34,478 — — 34,538 — 34,538 Foreign currency translation adjustments — — — — — — — — 1,737 1,737 1,669 3,406 Net income (loss) — — — — — — — ( 198,954 ) — ( 198,954 ) 87,736 ( 111,218 ) Balance - September 30, 2021 10,000 $ 10 21,000 $ 21 141,717,358 $ 141,717 $ 22,079,704 $ ( 17,827,869 ) $ ( 47,088 ) $ 4,346,495 $ ( 963,164 ) $ 3,383,331 The accompanying notes are an integral part of these unaudited consolidated financial statements. F- 3 Table of Contents iQSTEL INC Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 782,876 ) $ ( 3,112,079 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 111,029 1,205,334 Bad debt 26,299 — Write-off of due from related party — 7,648 Depreciation and amortization 91,221 66,924 Amortization of debt discount 7,407 435,956 Change in fair value of derivative liabilities — ( 317,080 ) Loss on settlement of debt — 528,794 Prepayment and default penalty — 122,020 Changes in operating assets and liabilities: Accounts receivable ( 832,263 ) ( 943,615 ) Inventory ( 26,124 ) — Prepaid and other current assets ( 31,714 ) ( 108,338 ) Due from related parties ( 5,143 ) — Accounts payable ( 97,373 ) ( 239,857 ) Other current liabilities 50,636 ( 131,752 ) Net cash used in operating activities ( 1,488,901 ) ( 2,486,045 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of subsidiaries, net of cash acquired ( 1,814,132 ) ( 60,000 ) Purchase of property and equipment ( 86,491 ) ( 74,799 ) Purchase of intangible assets — ( 27,824 ) Payment of loan receivable - related parties ( 1,000 ) ( 215,674 ) Collection of amounts due from related parties 400 226 Net cash used in investing activities ( 1,901,223 ) ( 378,071 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans payable — 400,000 Repayments of loans payable ( 232,018 ) ( 331,150 ) Repayment of loans payable - related parties — ( 90,787 ) Proceeds from common stock issued 1,100,000 3,586,250 Proceed from issuance of common stock purchase option 500,000 — Repayment of convertible notes — ( 250,000 ) Net cash provided by financing activities 1,367,982 3,314,313 Effect of exchange rate changes on cash ( 17,690 ) ( 12,709 ) Net change in cash ( 2,039,832 ) 437,488 Cash, beginning of period 3,334,813 753,316 Cash, end of period $ 1,294,981 $ 1,190,804 Supplemental cash flow information Cash paid for interest $ 3,333 $ 117,198 Cash paid for taxes $ — $ — Non-cash transactions: Common stock issued for asset acquisition $ 357,500 $ — Common stock issued and to be issued for acquisition of subsidiaries $ 1,550,000 $ — Common stock issued for conversion of debt $ — $ 422,295 Resolution of derivative liabilities $ — $ 708,611 Related party debt forgiveness $ — $ 807,103 Common stock issued for settlement of debt $ 80,674 $ 2,056,530 Common stock issued for forbearance of debt $ — $ 49,925 Preferred stock issued for conversion of common stock $ — $ 21,000 The accompanying notes are an integral part of these unaudited consolidated financial statements. F- 4 Table of Contents iQSTEL INC Notes to the Unaudited Consolidated Financial Statements September 30, 2022 NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS Organization and Operations iQSTEL Inc. (“iQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011 under the name of B-Maven Inc. The Company changed its name to PureSnax International, Inc. on September 18, 2015; and more recently it changed its name to iQSTEL Inc. on August 7, 2018. The Company has been engaged in the business of telecommunication services as a wholesale carrier of voice, SMS and data for other telecom companies around the World with more than 150 active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers. Acquisitions On May 13, 2022, we entered into a Company Acquisition Agreement regarding the acquisition of 51 % of the shares in Whisl telecom LLC (“Whisl”) . On June 1, 2022, we entered into a Company Acquisition Agreement regarding the acquisition of 51 % of the shares in Smartbiz Telecom LLC (“Smartbiz”). Both acquisitions are detailed in Note 4. NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022. Consolidation Policy The consolidated financial statements of the Company include the accounts of the Company and its owned subsidiaries, Etelix.com USA, LLC (“Etelix”), SwissLink Carrier AG (“Swisslink”), ITSBCHAIN, LLC (“ItsBchain”), QGLOBAL SMS, LLC (“QGlobal”), IoT Labs, LLC (“IoT Labs”), Global Money One Inc (“Global Money One”), Whisl telecom LLC (“Whisl”) and Smartbiz Telecom LLC (“Smartbiz”). All significant intercompany balances and transactions have been eliminated in consolidation. F- 5 Table of Contents Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments. Business Combinations In accordance with ASC 805-10, “ Business Combinations ”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. Foreign Currency Translation and Re-measurement The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “ Foreign Currency Matters ”. The functional currency and reporting currency of the Company, Etelix, QGlobal, Itsbchain, IoT Labs, Global Money One, Whisl, and Smartbiz is the U.S. dollar, while the functional currency of SwissLink is the Swiss Franc (“CHF”). SwissLink translates their records into the U.S. dollar as follows: • Assets and liabilities at the rate of exchange in effect at the balance sheet date • Equities at historical rate • Revenue and expense items at the average rate of exchange prevailing during the period Adjustments arising from such translations are included in accumulated other comprehensive income (loss) in stockholders’ equity. Accounts Receivable and Allowance for Uncollectible Accounts Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company reviews its allowance for doubtful accounts daily and past due balances over 60 days and a specified amount are reviewed individually for collectability. Account balances are charged off after all means of collection have been exhausted and the potential for recovery is considered remote. During the nine months ended September 30, 2022 and 2021, the Company recorded bad debt expense of $26,299 and $0 respectively. Net Income (Loss) Per Share of Common Stock The Company has adopted ASC 260, ”Earnings per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive. There were 4,800,000 warrants outstanding during the nine months ended September 30, 2022, which were included in the calculation of the diluted earnings per share. There were no other potentially dilutive shares of common stock outstanding for the nine months ended September 30, 2021. F- 6 Table of Contents Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables. The Company places its cash and cash equivalents with financial institutions of high creditworthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. During the nine months ended September 30, 2022, 10 customers represented 87 % of our revenues. During the nine months ended September 30, 2021, 6 customers represented 87 % of our revenues. Revenue Recognition The Company recognizes revenue from telecommunication services in accordance with ASC 606, “ Revenue from Contracts with Customers.” The Company recognizes revenue related to monthly usage charges and other recurring charges during the period in which the telecommunication services are rendered, provided that persuasive evidence of a sales arrangement existed, and collection is reasonably assured. Management considers persuasive evidence of a sales arrangement to be a written interconnection agreement. The Company’s payment terms vary by clients. Recent Accounting Pronouncements Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. NOTE 3 - GOING CONCERN The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its business plan and eventually attain profitable operations. During the next year, the Company's foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing in the industry and continuing its marketing efforts. The Company may experience a cash shortfall and be required to raise additional capital. Historically, the Company has relied upon funds from its stockholders. Management may raise additional capital through future public or private offerings of the Company's stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company's failure to do so could have a material and adverse effect upon its operations and its stockholders. F- 7 Table of Contents NOTE 4 – ACQUISITIONS On May 13, 2022, we entered into a Company Acquisition Agreement (Purchase Agreement) with US Acquisitions, LLC, a California limited liability company (Seller) concerning the contemplated sale by Seller and the purchase by us of 51 % of the membership interests Seller held in Whisl, a Texas limited liability company. Whisl provides local US termination for Voice through its FCC license of VoIP Service number 832742; and is in the process to obtain a C-Lec FCC License over next 12 months. Whisl is one of the premier Intermediate Voice Providers in the USA. It has been a carrier since 2017 with billions of minutes traversing its network and provides its customers with multiple levels of Redundancy, Diversity, and Disaster Recovery for their applications and ability to make changes to underlying carrier configuration in real time. Whisl offers a single carrier solution for Voice Global services, and its customers benefit from hundreds of interconnection agreements that the company has cultivated since its inception. Pursuant to the Purchase Agreement, the closing of the purchase of the 51 % membership interests was $ 1,800,000 , which consisted of $ 1,250,000 in cash and $ 550,000 in our restricted common stock to Seller, which amounts to 1,461,653 shares of common stock. On June 1, 2022, we entered into a Purchase Agreement for the purchase of 51 % of the membership interests in Smartbiz, a Florida Corporation which provides telecommunication services, dedicated to VoIP business for wholesale and retail markets. The purchase price for the acquisition was $ 1,800,000 , which consisted of $ 800,000 in cash and $ 1,000,000 in our common stock to the seller, which amounts to 2,850,330 shares of common stock. Smartbiz and Whisl have been included in our consolidated results of operations since the acquisition dates. The following table summarizes the fair value of the consideration paid by the Company: Whisl May 13, Fair Value of Consideration: 2022 Cash $ 1,000,000 Payable to seller 250,000 1,461,653 shares of common stock 550,000 Total Purchase Price $ 1,800,000 Smartbiz June 1, Fair Value of Consideration: 2022 Cash $ 725,000 Payable to seller 75,000 2,850,330 shares of common stock 1,000,000 Total Purchase Price $ 1,800,000 The following table summarizes the identifiable assets acquired and liabilities assumed upon acquisition of Smartbiz and Whisl and the calculation of goodwill: Whisl Total purchase price $ 1,800,000 Cash 141,113 Accounts receivable 109,762 Total identifiable assets 250,875 Accounts payable ( 241,426 ) Other current liabilities ( 2,075 ) Total liabilities assumed ( 243,501 ) Net assets 7,374 Non-controlling interest 3,613 Total net assets 3,761 Goodwill $ 1,796,239 F- 8 Table of Contents Smartbiz Total purchase price $ 1,800,000 Cash 19,755 Accounts receivable 789,515 Total identifiable assets 809,270 Accounts payable ( 807,265 ) Other current liabilities ( 76,839 ) Total liabilities assumed ( 884,104 ) Net assets ( 74,834 ) Non-controlling interest ( 36,669 ) Total net assets ( 38,165 ) Goodwill $ 1,838,165 Unaudited combined proforma results of operations for the nine months ended September 30, 2022 and 2021 as though the Company acquired Smartbiz and Whisl on January 1, 2021, are set forth below: Nine Months Ended September 30, 2022 2021 Revenues $ 69,165,130 $ 59,028,492 Cost of revenues 66,683,557 56,430,726 Gross profit 2,481,573 2,597,766 Operating expenses 4,322,526 4,724,857 Operating loss ( 1,840,953 ) ( 2,127,091 ) Other expense ( 38,073 ) ( 820,593 ) Net Loss $ ( 1,879,026 ) $ ( 2,947,684 ) NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment at September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 Telecommunication equipment $ 301,462 $ 258,871 Telecommunication software 581,545 618,125 Other equipment 97,096 108,805 Total property and equipment 980,103 985,801 Accumulated depreciation and amortization ( 588,341 ) ( 576,419 ) Property and equipment, net $ 391,762 $ 409,382 Depreciation and amortization expense for the nine months ended September 30, 2022 and 2021 amounted to $ 91,221 and $ 66,924 , respectively. F- 9 Table of Contents NOTE 6 –LOANS PAYABLE Loans payable at September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, Interest 2022 2021 Term rate Bridge Loan $ — $ 222,222 Note was issued on November 1, 2020 and due on January 30, 2022 18.0 % Martus 93,204 100,634 Note was issued on October 23, 2018 and due on January 3, 2023 5.0 % Swisspeers AG — 9,605 Note was issued on April 8, 2019 and originally due on October 4, 2022 7.0 % Darlene Covid19 101,590 109,690 Note was issued on April 1, 2020 and due on March 31, 2025 0.0 % Total 194,794 442,151 Less: Unamortized debt discount — ( 7,406 ) Total loans payable 194,794 434,745 Less: Current portion of loans payable ( 93,204 ) ( 315,450 ) Long-term loans payable $ 101,590 $ 119,295 During the nine months ended September 30, 2022 and 2021, the Company borrowed from third parties totaling $ 0 and $ 444,444 , which includes original issue discount and financing costs of $0 and $44,444 and repaid the principal amount of $ 232,018 and $ 331,150 , respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded interest expense of $ 22,417 and $ 179,504 and recognized amortization of discount, included in interest expense, of $ 7,406 and $ 63,666 , respectively. In 2021, the Company recorded interest expense from convertible notes of $ 33,430 and recognized amortization of discount, included in interest expense, of $ 372,290 . During the nine months ended September 30, 2021, a related party loan of $ 807,103 (Euro 735,000) was forgiven and the Company recorded it as additional paid in capital. Loans payable to related parties at September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 49% of Shareholder of SwissLink $ 18,457 $ 19,929 49% of Shareholder of SwissLink 203,180 219,379 Total 221,637 239,308 Less: Current portion of loans payable –related parties 221,637 239,308 Long-term loans payable – related parties $ — $ — F- 10 Table of Contents NOTE 7 – OTHER CURRENT LIABILITIES Other current liabilities at September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 Accrued liabilities $ 30,825 $ 61,153 Payable for acquisition of subsidiaries 75,000 — Accrued interest — 8,173 Salary payable - management 89,628 92,229 Salary payable 3,708 — Employee benefits 112,309 105,221 Other current liabilities 203,753 40,273 $ 515,223 $ 307,049 NOTE 8 – STOCKHOLDERS’ EQUITY The Company’s authorized capital consists of 300,000,000 shares of common stock with a par value of $ 0.001 per share. Series A Preferred Stock On November 3, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock, consisting of up 10,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series A Preferred Stock will participate on an equal basis per-share with holders of our common stock in any distribution upon winding up, dissolution, or liquidation. Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to stockholders at a rate of 51% of the total vote of stockholders. The rights of the holders of Series A Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020. As of September 30, 2022 and December 31, 2021, 10,000 shares of Series A Preferred Stock were issued and outstanding. Series B Preferred Stock On November 11, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series B Preferred Stock, consisting of up 200,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series B Preferred Stock will receive a liquidation preference of $81 per share in any distribution upon winding up, dissolution, or liquidation of the Company before junior security holders, as provided in the designation. Holders of Series B Preferred Stock are entitled to receive as, when, and if declared by the Board of Directors, dividends in kind at an annual rate equal to twenty four percent (24%) of $81 per share for each of the then outstanding shares of Series B Preferred Stock, calculated on the basis of a 360-day year consisting of twelve 30-day months. Holders of Series B Preferred Stock do not have voting rights but may convert into common stock after twelve months from the issuance date, at a conversion rate of one thousand (1,000) shares of Common Stock for every one (1) share of Series B Preferred Stock. Upon conversion, the shares are subject to a one-year leak-out restriction on sales into the market of no more than 5% previous month’s stock liquidity. As of September 30, 2022 and December 31, 2021, 21,000 shares of Series B Preferred Stock were issued and outstanding. F- 11 Table of Contents Series C Preferred Stock On January 7, 2021, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock, consisting of up 200,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series C Preferred Stock will rank junior to the Series B Preferred Stock, but on par with common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation of the company, as provided in the designation. The holders of shares of Series C Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose. Holders of Series C Preferred Stock do not have voting rights but may convert into common stock after twenty four months from the issuance date, at a conversion rate of one thousand (1,000) shares of Common Stock for every one (1) share of Series C Preferred Stock. Upon conversion, the shares are subject to a one-year restriction on sales into the market of no more than 5% previous month’s stock liquidity. The rights of the holders of Series C Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on January 7, 2021. As of September 30, 2022 and December 31, 2021, no Series C Preferred Stock was issued or outstanding. Common Stock During the nine months ended September 30, 2022, the Company issued 4,353,020 shares of common stock, valued at fair market value on issuance as follows: • 2,000,000 shares issued for cash of $ 1,000,000 • 180,000 shares for compensation to our directors valued at $ 92,129 • 1,461,653 shares for acquisition of Whisl valued at $ 550,000 • 550,000 shares for asset acquisition valued at $ 357,500 • 161,367 shares for settlement of debt valued at $ 80,674 As of September 30, 2022 and December 31, 2021, 151,830,378 and 147,477,358 shares of common stock were issued and outstanding, respectively. Common Stock Purchase Option On April 25, 2022, we entered into a Common Stock Purchase Option Agreement with Apollo Management Group, Inc. to subscribe for and purchase from the Company, 4,800,000 shares of Common Stock with an exercise price per share of $ 2.00 ; and an initial exercise date September 30, 2022. The purchase price of this option is $ 500,000 . NOTE 9 - RELATED PARTY TRANSACTIONS Due from related parties During the nine months ended September 30, 2022 and 2021, the Company advanced $ 1,000 and $ 35,674 to related parties and collected $ 100 and $ 226 , respectively. During the nine months ended September 30, 2021, the Company loaned $ 180,000 to our CEO and wrote off amounts totaling $ 8,004 . During the nine months ended September 30, 2021, the Company wrote off due from related party of $ 7,648 . As of September 30, 2022 and December 31, 2021, the Company had amounts due from related parties of $ 351,139 and $ 424,086 . The loans are unsecured, non-interest bearing and due on demand. Due to related parties During the nine months ended September 30, 2022 and 2021, the Company repaid $ 0 and $ 90,787 to certain members of Company management. As of September 30, 2022 and December 31, 2021, the Company had amounts due to related parties of $ 26,613 . Employment agreements During the nine months ended September 30, 2022 and 2021, the Company recorded management fees of $ 405,000 and $ 414,000 , bonus of $ 0 and $ 976,200 and paid $ 407,602 and $ 411,300 , respectively. Additionally, management received stock-based compensation of $ 92,130 and $ 34,538 during the nine months ended September 30, 2022 and 2021, respectively . F- 12 Table of Contents NOTE 10 – COMMITMENTS AND CONTINGENCIES Leases and Long-term Contracts The Company has not entered into any long-term leases, contracts or commitments. The Company leases facilities which the term is 12 months . For the nine months ended September 30, 2022 and 2021, the Company incurred $ 56,405 and $ 32,023 , respectively. NOTE 11 - SEGMENTS At September 30, 2022, the Company operates in one industry segment, telecommunication services, and two geographic segments, USA and Switzerland, where current assets and equipment are located . Operating Activities The following table shows operating activities information by geographic segment for the three and nine months ended September 30, 2022 and 2021: Three months ended September 30, 2022 NOTE 11 - SEGMENTS - Schedule of Operating Activities by Geographic Segment USA Switzerland Elimination Total Revenues $ 22,364,201 1,291,688 $ ( 1,719,255 ) $ 21,936,634 Cost of revenue 21,226,541 1,114,388 ( 1,719,255 ) 20,621,674 Gross profit 1,137,660 177,300 — 1,314,960 Operating expenses General and administration 1,089,194 166,953 — 1,256,147 Operating income 48,466 10,347 — 58,813 Other expense ( 29,411 ) ( 2,090 ) — ( 31,501 ) Net income $ 19,055 $ 8,257 $ — $ 27,312 Three months Ended September 30, 2021 USA Switzerland Elimination Total Revenues $ 15,347,282 1,189,230 $ ( 19,773 ) $ 16,516,739 Cost of revenue 14,706,065 989,395 ( 19,773 ) 15,675,687 Gross profit 641,217 199,835 — 841,052 Operating expenses General and administration 738,578 218,617 — 957,195 Operating loss ( 97,361 ) ( 18,782 ) — ( 116,143 ) Other income 1,525 3,400 — 4,925 Net loss $ ( 95,836 ) $ ( 15,382 ) $ — $ ( 111,218 ) F- 13 Table of Contents Nine months ended September 30, 2022 USA Switzerland Elimination Total Revenues $ 63,898,961 3,554,591 $ ( 2,397,891 ) $ 65,055,661 Cost of revenue 61,838,539 2,969,719 ( 2,397,891 ) 62,410,367 Gross profit 2,060,422 584,872 — 2,645,294 Operating expenses General and administration 2,792,287 597,810 — 3,390,097 Operating loss ( 731,865 ) ( 12,938 ) — ( 744,803 ) Other income (expense) ( 45,938 ) 7,865 — ( 38,073 ) Net loss $ ( 777,803 ) $ ( 5,073 ) $ — $ ( 782,876 ) Nine months Ended September 30, 2021 USA Switzerland Elimination Total Revenues $ 43,404,674 3,474,215 $ ( 36,172 ) $ 46,842,717 Cost of revenue 42,487,024 3,018,878 ( 36,172 ) 45,469,730 Gross profit 917,650 455,337 — 1,372,987 Operating expenses General and administration 3,077,319 587,154 — 3,664,473 Operating loss ( 2,159,669 ) ( 131,817 ) — ( 2,291,486 ) Other income (expense) ( 839,316 ) 18,723 — ( 820,593 ) Net loss $ ( 2,998,985 ) $ ( 113,094 ) $ — $ ( 3,112,079 ) Asset Information The following table shows asset information by geographic segment as of September 30, 2022 and December 31, 2021: September 30, 2022 USA Switzerland Elimination Total Assets Current assets $ 5,628,559 $ 1,091,622 $ ( 578,999 ) $ 6,141,182 Non-current assets $ 11,660,618 $ 600,882 $ ( 6,184,562 ) $ 6,076,938 Liabilities Current liabilities $ 1,729,868 $ 1,619,112 $ ( 578,999 ) $ 2,769,981 Non-current liabilities $ — $ 246,473 $ — $ 246,473 December 31, 2021 USA Switzerland Elimination Total Assets Current assets $ 5,783,859 $ 997,216 $ ( 214,551 ) $ 6,566,524 Non-current assets $ 4,468,491 $ 609,189 $ ( 2,584,562 ) $ 2,493,118 Liabilities Current liabilities $ 1,070,972 $ 1,506,594 $ ( 214,551 ) $ 2,363,015 Non-current liabilities $ — $ 275,729 $ — $ 275,729 NOTE 12 – SUBSEQUENT EVENTS Management has evaluated subsequent events through the date these consolidated financial statements were available to be issued. The following subsequent event was identified: · The Company issued 3,790,597 shares of common stock for cashless exercise of warrants. F- 14 Table of Contents