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 March 31, 2023 (unaudited) and December 31, 2022; F-2 Consolidated Statements of Operations for the three and nine months ended March 31, 2023 and 2022 (unaudited); F-3 Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited); and F-4 Consolidated Statements of Stockholder’s Equity as of March 31, 2023 and 2022.(unaudited) 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 March 31, 2023 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) March 31, December 31, 2023 2022 ASSETS Current Assets Cash $ 1,777,226 $ 1,329,389 Accounts receivable, net 3,969,503 4,209,125 Inventory 26,124 26,124 Due from related parties 400,893 326,324 Prepaid and other current assets 563,221 545,628 Total Current Assets 6,736,967 6,436,590 Property and equipment, net 433,119 401,021 Intangible asset 99,592 99,592 Goodwill 5,172,146 5,172,146 Deferred tax assets 445,100 440,135 TOTAL ASSETS $ 12,886,924 $ 12,549,484 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable 2,270,211 2,254,636 Accrued and other current liabilities 2,748,968 2,482,352 Due to related parties 26,613 26,613 Loans payable 95,407 94,342 Loans payable - related parties 238,610 235,949 Derivative liabilities 921,222 1,357,787 Total Current Liabilities 6,301,031 6,451,679 Loans payable, non-current 100,255 108,150 Employee benefits, non-current 155,978 154,238 TOTAL LIABILITIES 6,557,264 6,714,067 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 164,596,688 and 161,595,511 shares issued and outstanding, respectively 164,597 161,595 Additional paid in capital 31,784,606 31,136,120 Accumulated deficit ( 24,867,580 ) ( 24,504,395 ) Accumulated other comprehensive loss ( 32,753 ) ( 33,557 ) Equity attributable to stockholders of iQSTEL Inc. 7,048,901 6,759,794 Deficit attributable to noncontrolling interests ( 719,241 ) ( 924,377 ) TOTAL STOCKHOLDERS' EQUITY 6,329,660 5,835,417 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,886,924 $ 12,549,484 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 March 31, 2023 2022 Revenues $ 24,666,529 $ 19,419,311 Cost of revenue 23,449,793 18,935,251 Gross profit 1,216,736 484,060 Operating expenses General and administration 1,534,266 989,498 Total operating expenses 1,534,266 989,498 Operating loss ( 317,530 ) ( 505,438 ) Other income (expense) Other income — 24,159 Other expenses ( 33,954 ) ( 28,564 ) Interest expense ( 3,645 ) ( 14,888 ) Change in fair value of derivative liabilities 196,307 — Total other income (expense) 158,708 ( 19,293 ) Net loss before provision for income taxes ( 158,822 ) ( 524,731 ) Income taxes — — Net loss ( 158,822 ) ( 524,731 ) Less: Net income attributable to noncontrolling interests 204,363 30,239 Net loss attributable to stockholders of iQSTEL Inc. $ ( 363,185 ) $ ( 554,970 ) Comprehensive income (loss) Net loss $ ( 158,822 ) $ ( 524,731 ) Foreign currency adjustment 1,577 ( 384 ) Total comprehensive (loss) $ ( 157,245 ) $ ( 525,115 ) Less: Comprehensive income attributable to noncontrolling interests 205,136 30,051 Net comprehensive (loss) attributable to stockholders of iQSTEL Inc. $ ( 362,381 ) $ ( 555,166 ) Basic and diluted loss per common share $ ( 0.00 ) $ ( 0.00 ) Weighted average number of common shares outstanding - Basic and diluted 164,034,479 147,539,580 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 months ended March 31, 2023 and 2022 (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' Deficit Balance - December 31, 2022 10,000 $ 10 21,000 $ 21 161,595,511 $ 161,595 $ 31,136,120 $ ( 24,504,395 ) $ ( 33,557 ) $ 6,759,794 $ ( 924,377 ) $ 5,835,417 Common stock issued for warrant exercises — — — — 2,941,177 2,942 397,058 — — 400,000 — 400,000 Common stock issued for compensation — — — — 60,000 60 11,170 — — 11,230 — 11,230 Resolution of derivative liabilities upon exercise of warrants — — — — — — 240,258 — — 240,258 — 240,258 Foreign currency translation adjustments — — — — — — — — 804 804 773 1,577 Net income (loss) — — — — — — — ( 363,185 ) — ( 363,185 ) 204,363 ( 158,822 ) Balance - March 31, 2023 10,000 $ 10 21,000 $ 21 164,596,688 $ 164,597 $ 31,784,606 $ ( 24,867,580 ) $ ( 32,753 ) $ 7,048,901 $ ( 719,241 ) $ 6,329,660 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, 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 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) Three Months Ended March 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 158,822 ) $ ( 524,731 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock based compensation 11,230 41,139 Depreciation and amortization 34,060 33,547 Amortization of debt discount — 7,407 Change in fair value of derivative liabilities ( 196,307 ) — Changes in operating assets and liabilities: Accounts receivable 564,365 ( 87,361 ) Prepaid and other current assets ( 16,204 ) 24,677 Due from related party 5,131 23,316 Accounts payable 537,667 73,445 Other current liabilities ( 583,957 ) ( 39,091 ) Net cash provided by (used in) operating activities 197,163 ( 447,652 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 63,247 ) ( 24,918 ) Payment of loan receivable - related party ( 80,000 ) — Collection of amounts due from related parties 300 — Net cash used in investing activities ( 142,947 ) ( 24,918 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of loans payable ( 9,006 ) ( 232,018 ) Proceeds from common stock issued — 1,100,000 Proceeds from exercise of warrants 400,000 — Proceeds from issuance of common stock purchase options — 500,000 Net cash provided by financing activities 390,994 1,367,982 Effect of exchange rate changes on cash 2,627 ( 3,181 ) Net change in cash 447,837 892,231 Cash, beginning of period 1,329,389 3,334,813 Cash, end of period $ 1,777,226 $ 4,227,044 Supplemental cash flow information Cash paid for interest $ — $ 3,333 Cash paid for taxes $ — $ — Non-cash transactions: Resolution of derivative liabilities upon exercise of warrants $ 240,258 $ — 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 March 31, 2023 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 404 active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers. 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 March 31, 2023 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2023 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, 2022 filed with the SEC on April 14, 2023. 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. 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. Foreign Currency Translation and Re-measurement The Company translates its foreign operations to U.S. dollars in accordance with ASC 830, “ Foreign Currency Matters ”. The functional currency and reporting currency of Etelix, QGlobal, ItsBchain, IoT Labs, Whisl, Smartbiz and Global Money One is the U.S. dollar, while SwissLink’s functional currency is the Swiss Franc (“CHF”). F- 5 Table of Contents SwissLink translates their records into U.S. dollars 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. Cash and Cash Equivalents Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had no cash equivalents at March 31, 2023 and December 31, 2022. 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. Under the expected credit loss model, 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 three months ended March 31, 2023 and 2022, the Company recorded no bad debt expense. 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. Dilutive potential common shares include outstanding Series B Preferred stock, and it was excluded from the computation of diluted net loss per share as the result was anti-dilutive for the three months ended March 31, 2023 and 2022. 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 three months ended March 31, 2023, 12 customers represented 86 % of our revenue compared to 4 customers representing 86 % of our revenue for the three months ended March 31, 2022. For the three months ended March 31, 2023 and 2022, 62 % and 64 % of the revenue comes from customers under prepayment conditions which means there is no credit or bad debt risk on that portion of the customers portfolio. F- 6 Table of Contents Financial Instruments The Company follows ASC 820, “ Fair Value Measurements and Disclosures, ” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying values of our financial instruments, including, cash; accounts receivable; prepaid and other current assets; accounts payable; accrued liabilities and other current liabilities; and due from/to related parties approximate their fair values due to the short-term maturities of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due to related parties due to their related party nature. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black-Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. F- 7 Table of Contents 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 exists, 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 client. Recent Accounting Pronouncements In June 2022, the FASB issued ASU 2022-03, ASC Subtopic “ Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ” These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update are effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments .” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable. This ASU is effective for the Company for reporting periods beginning after December 15, 2022. The Company adopted this accounting pronouncement on January 1, 2023 and it did not have any impact to its financial statements. The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our 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- 8 Table of Contents NOTE 4 – PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets as of March 31, 2023 and December 31, 2022 consisted of the following: March 31, December 31, 2023 2022 Other receivable $ 129,967 $ 120,139 Prepaid expenses 20,450 26,600 Advance payment 21,000 21,000 Tax receivable 394 389 Deposit for acquisition of asset 362,000 357,500 Security deposit 20,000 20,000 Process costing 9,410 — Total prepaid and other current assets $ 563,221 $ 545,628 NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment as of March 31, 2023 and December 31, 2022 consisted of the following: March 31, December 31, 2023 2022 Telecommunication equipment $ 332,944 $ 317,958 Telecommunication software 693,006 640,566 Other equipment 99,192 99,126 Total property and equipment 1,125,142 1,057,650 Accumulated depreciation and amortization ( 692,023 ) ( 656,629 ) Total property and equipment $ 433,119 $ 401,021 Depreciation expense for the three months ended March 31, 2023 and 2022 amounted to $ 34,060 and $ 33,547 , respectively. NOTE 6 –LOANS PAYABLE Loans payable as of March 31, 2023 and December 31, 2022 consisted of the following: March 31, December 31, Interest 2023 2022 Term rate Martus $ 95,407 $ 94,342 Note was issued on October 23, 2018 and due on January 2, 2024 5.0 % Darlene Covid19 100,255 108,150 Note was issued on April 1, 2020 and due on March 31, 2025 0.0 % Total 195,662 202,492 Less: Unamortized debt discount — — Total loans payable 195,662 202,492 Less: Current portion of loans payable ( 95,407 ) ( 94,342 ) Long-term loans payable $ 100,255 $ 108,150 F- 9 Table of Contents Loans payable - related parties as of March 31, 2023 and December 31, 2022 consisted of the following: March 31, December 31, Interest 2023 2022 Term rate 49% of Shareholder of SwissLink $ 19,870 $ 19,649 Note is due on demand 0 % 49% of Shareholder of SwissLink 218,740 216,300 Note is due on demand 5 % Total 238,610 235,949 Less: Current portion of loans payable 238,610 235,949 Long-term loans payable $ — $ — During the three months ended March 31, 2023 and 2022, the Company recorded interest expense of $ 3,645 and $ 7,481 and recognized amortization of discount, included in interest expense, of $ 0 and $ 7,407 , respectively. NOTE 7 – WARRANTS On April 5, 2022, we entered into a Common Stock Purchase Option Agreement with Apollo Management Group, Inc (Holder) 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 exercisable date on September 30, 2022 . The purchase price of this option was $ 500,000 . The Company determined that the warrants had a fixed monetary value with a variable number of shares at inception and categorized the warrants as a liability in the accompanying consolidated financial statements. The Holder and the Company agreed that the Holder had the right and the obligation to exercise, on a cashless basis, $1,000,000 of the Options not later than October 15, 2022 . Thereafter, the Holder shall undertake to exercise not less than (i) $ 400,000 of the Options on a “cash basis” not later than the later of (y) November 14, 2022 or (z) the date on which there is an effective registration statement permitting the issuance of the Option Shares to or resale of the Option Shares by the Holder and (ii) an additional $ 400,000 of the Options on a “cash basis” not later than the latest of (x) thirty (30) days following the exercise of the Option under subsection (i), above, (y) December 14, 2022, or (z) the date on which there is an effective registration statement permitting the issuance of the Option Shares to or resale of the Option Shares by the Holder. From and after the occurrence of the three above-referenced exercises, each additional exercise of Options hereunder shall be in an amount not less than $ 200,000 and exercised only on a cash basis. The Holder’s obligation to exercise each specified portion of this option on the specific dates above is subject to the volume-weighted average price (“VWAP”, market value), being not less than $0.20 per share on the relevant option exercise date. Adjusted option shares at VWAP of $0.20 shall be 48,000,000 shares. A summary of activity regarding warrants issued as follows: Warrants Outstanding Weighted Average Weighted Average Remaining Warrants Exercise Price Contractual life (in years) Outstanding, December 31, 2022 23,112,575 $ 0.17 0.75 Granted — — — Increase in number of warrants by VWAP 5,262,465 0.14 — Exercised ( 2,941,177 ) 0.14 0.70 Forfeited/canceled — — — Outstanding, March 31, 2023 25,433,863 $ 0.14 0.50 F- 10 Table of Contents NOTE 8 – DERIVATIVE LIABILITIES Fair Value Assumptions Used in Accounting for Derivative Liabilities ASC 815, “ Derivatives and Hedging ,” requires we assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense. The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2023. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. For the three months ended March 31, 2023 and year ended December 31, 2022, the estimated fair values of the liabilities measured on a recurring basis are as follows: Three months ended March 31, 2023 Year ended December 31, 2022 Expected term 0.50 - 0.70 years 0.75 - 1.49 years Expected average volatility 77 % - 81 % 83 % - 152 % Expected dividend yield — — Risk-free interest rate 4.67 % - 4.94 % 0.06 % - 4.73 % The following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2023 and 2022: Fair Value Measurements Using Significant Observable Inputs (Level 3) Balance - December 31, 2022 $ 1,357,787 Settled on issuance of common stock ( 240,258 ) Change in fair value of the warrant ( 196,307 ) Balance - March 31, 2023 $ 921,222 The following table summarizes the change in fair value of derivative liabilities included in the income statement for the three months ended March 31, 2023 and 2022, respectively. Three months ended March 31, 2023 2022 Addition of new derivatives recognized as loss on derivatives $ — $ — Revaluation of derivative liabilities ( 196,307 ) — Change in fair value of derivative liabilities $ ( 196,307 ) $ — F- 11 Table of Contents NOTE 9 – 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 March 31, 2023 and December 31, 2022, 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 restriction on sales into the market of no more than 5% previous month’s stock liquidity. As of March 31, 2023 and December 31, 2022, 21,000 shares of Series B Preferred Stock were issued and outstanding. 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 March 31, 2023 and December 31, 2022, no Series C Preferred Stock was issued or outstanding. Common Stock During the three months ended March 31, 2023, the Company issued 3,001,177 shares of common stock, valued at fair market value on issuance as follows: · 60,000 shares for compensation to our directors valued at $ 11,230 · 2,941,177 shares for exercise of warrants for $ 400,000 As of March 31, 2023 and December 31, 2022, 164,596,688 and 161,595,511 shares of common stock were issued and outstanding, respectively. F- 12 Table of Contents NOTE 10 - RELATED PARTY TRANSACTIONS Due from related party As of March 31, 2023 and December 31, 2022, the Company had amounts due from related parties of $ 400,893 and $ 326,324 , respectively. The loans are unsecured, non-interest bearing and due on demand. Due to related parties As of March 31, 2023 and December 31, 2022, the Company had amounts due to related parties of $ 26,613 . The amounts are unsecured, non-interest bearing and due on demand. Employment agreements During the three months ended March 31, 2023 and 2022, the Company recorded management salaries of $ 144,000 and stock-based compensation bonuses of $ 11,230 and $ 41,139 , respectively. As of March 31, 2023 and December 31, 2022, the Company recorded and accrued management salaries of $ 104,628 and $79,628, respectively. NOTE 11 – 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 three months ended March 31, 2023 and 2022, the Company incurred rent expense of $ 900 and $ 20,150 , respectively. NOTE 12 - SEGMENTS At December 31, 2022 and 2021, 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 months ended March 31, 2023 and 2022: Three months ended March 31, 2023 NOTE 12 - SEGMENT - Schedule of Operating Activities by Geographic Segment USA Switzerland Elimination Total Revenues $ 24,847,671 1,347,435 $ ( 1,528,577 ) $ 24,666,529 Cost of revenue 23,825,886 1,152,484 ( 1,528,577 ) 23,449,793 Gross profit 1,021,785 194,951 — 1,216,736 Operating expenses General and administration 1,350,956 183,310 — 1,534,266 Operating (loss) income ( 329,171 ) 11,641 — ( 317,530 ) Other income (expense) 174,955 ( 16,247 ) — 158,708 Net loss $ ( 154,216 ) $ ( 4,606 ) $ — $ ( 158,822 ) F- 13 Table of Contents Three months ended March 31, 2022 USA Switzerland Elimination Total Revenues $ 18,475,113 1,026,080 $ ( 81,882 ) $ 19,419,311 Cost of revenue 18,193,952 823,181 ( 81,882 ) 18,935,251 Gross profit 281,161 202,899 — 484,060 Operating expenses General and administration 781,300 208,198 — 989,498 Operating (loss) ( 500,139 ) ( 5,299 ) — ( 505,438 ) Other (expense) income ( 29,841 ) 10,548 — ( 19,293 ) Net (loss) income $ ( 529,980 ) $ 5,249 $ — $ ( 524,731 ) Asset Information The following table shows asset information by geographic segment as of March 31, 2023 and December 31, 2022: March 31, 2023 USA Switzerland Elimination Total Assets Current assets $ 6,419,124 $ 1,235,556 $ ( 917,713 ) $ 6,736,967 Non-current assets $ 11,631,453 $ 703,066 $ ( 6,184,562 ) $ 6,149,957 Liabilities Current liabilities $ 5,378,018 $ 1,840,726 $ ( 917,713 ) $ 6,301,031 Non-current liabilities $ — $ 256,233 $ — $ 256,233 December 31, 2022 USA Switzerland Elimination Total Assets Current assets $ 6,496,354 $ 1,172,889 $ ( 1,232,653 ) $ 6,436,590 Non-current assets $ 11,646,662 $ 650,794 $ ( 6,184,562 ) $ 6,112,894 Liabilities Current liabilities $ 5,967,729 $ 1,716,603 $ ( 1,232,653 ) $ 6,451,679 Non-current liabilities $ — $ 262,388 $ — $ 262,388 NOTE 13 – SUBSEQUENT EVENTS . Management has evaluated subsequent events through the date these consolidated financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure. F- 14 Table of Contents