iQSTEL Inc 10-K

IQSTEL INC. 10-K, December 31, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________ Commission file number: 000-55984 IQSTEL Inc. (Exact name of registrant as specified in its charter) Nevada 45-2808620 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 300 Aragon Avenue , Suite 375 Coral Gables , FL 33134 (Address of principal executive offices) (Zip Code) Registrant’s telephone number: ( 954 ) 951-819 1 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered none not applicable Securities registered under Section 12(g) of the Exchange Act: Title of each class Common Stock, par value of $0.001 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated Filer ☒ Smaller reporting company ☐ Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $ 22,926,663 .22. Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date 176,329,933 common shares as of March 27, 2024. TABLE OF CONTENTS Page PART I Item 1. Business 3 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 20 Item 1C. Cybersecurity 20 Item 2. Properties 20 Item 3. Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 PART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. [ Reserved ] 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 8. Financial Statements and Supplementary Data 26 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 27 Item 9A. Controls and Procedures 27 Item 9B. Other Information 28 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 28 PART III Item 10. Directors, Executive Officers and Corporate Governance 29 Item 11. Executive Compensation 33 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 36 Item 13. Certain Relationships and Related Transactions, and Director Independence 37 Item 14. Principal Accountant Fees and Services 37 PART IV Item 15. Exhibits, Financial Statement Schedules 38 Item 16. Form 10-K Summary 39 2 PART I Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Item 1. Business Company Description iQSTEL Inc. (the “Company”) (OTCQX: IQST) (www.iqstel.com) is a technology company with presence in 19 countries and 70 employees that is offering leading-edge services through its business divisions. Our Telecom Division, which represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic connectivity through its subsidiaries: Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), and QGlobal SMS (www.qglobalsms.com). Our developing Fintech Business Line (www.globalmoneyone.com) (www.maxmo.vip) offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances, Mobile Top Up). Our Fintech subsidiary, Global Money One, is to provide immigrants access to reliable financial services that makes it easier to manage their money and stay connected with their families back home. Our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, itsBchain. Our developing Electric Vehicle (EV) Business Line (www.evoss.net) offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia, and Venezuela. EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family. Our Artificial Intelligence (AI)-Enhanced Metaverse Division (information and content) is currently developing a groundbreaking white-label solution designed specifically for corporations, businesses, and the telecommunications industry. Delivering a full suite of immersive content services, creating a comprehensive virtual experience that can be accessed through the Web or our proprietary mobile apps. The features include up to four simultaneous video screens for versatile content presentation, various virtual halls such as the main hall, home hall, auditorium, exhibition space, shopping center, and meeting rooms. Stands for mobile application downloads, clickable gates for immediate purchasing, and direct communication tools are seamlessly integrated to foster collaboration, engagement, and interactivity. It goes beyond traditional virtual spaces by utilizing cutting-edge AI technology. This ensures video conferencing and real-time communication with other users within the Metaverse, offering our customers a collective and fully immersive experience that caters to diverse needs such as content acquisition, entertainment, and shared virtual experiences. It is a future-ready platform that encourages creativity, connectivity, and collaboration like never before. The information contained on our websites is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered part of this or any other report filed with the SEC. 3 Operating Subsidiaries iQSTEL's mission is to serve basic human needs in today's modern world by making the necessary tools accessible regardless of race, ethnicity, religion, socioeconomic status, or identity. iQSTEL recognizes that in today’s modern world, the pursuit of the human hierarchy of needs (physiological, safety, relationship, esteem, and self-actualization) is marginalized without access to ubiquitous communications, the freedom of virtual banking, clean affordable mobility and information and content. iQSTEL has 4 Business Divisions delivering accessibly to the necessary tools in today's pursuit of basic human needs: 1) Telecommunications (communications). 2) Fintech (financial freedom). 3) Electric Vehicles (mobility). 4) Metaverse. (Information and content). The company continues to grow and expand its suite of products and services both organically and through mergers and acquisitions (M&A). Our telecommunication business currently represents 100% of our revenues, while our other business lines are in a pre-revenue stage. Telecom Subsidiaries for voice services: Etelix.com USA LLC , a wholly owned subsidiary of iQSTEL Inc., is US based international telecom carrier founded in 2008 that provides telecom and technology solutions worldwide, with commercial presence in North America, Latin America, and Europe. Etelix provides International Long-Distance voice services for Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G). Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian and Latin-American 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 become 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. 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. 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. Africa continues to be the market with the higher contribution to margin and Asia concentrate one third of the termination traffic in the industry. Estimations show that more than 50% of the traffic terminating in Africa is originated from customers in Europe; while the corresponding percentage of traffic terminated in Asia is close to 40%. Based on these numbers the goal to expand the participation in the Asian and African traffic goes through establishing a strong presence in Europe. Whisl Telecom LLC . Is a 51% owned subsidiary of iQSTEL Inc., acquired in May 2022. Whisl Telecom is an US based Company that provides high quality services and “out of the box” solutions to its customers. Whisl predominantly serves the Carrier-to-Carrier Global industry but also has network infrastructure to provide services to the retail end users (endpoints). Whisl Telecom is one of the few US carriers to have a significant Tier1 capacity (true capacity with high calls per second, CPS) to terminate calls with the highest quality. With the acquisition of Whisl Telecom, iQSTEL incorporated to its telecom portfolio the following services: (1) US/Canada Inbound/Origination. (2) US/Canada DIDs. (3) US/Canada Toll Free Numbers. (4) Global DIDs and (5) Global Toll-Free Numbers. Smartbiz Telecom LLC . Is a 51% owned subsidiary of iQSTEL Inc. acquired in June 2022. Smartbiz is an US based Company that provides international voice termination to niche markets. With this acquisition iQSTEL is expanding its telecommunication services offer to markets the company was not serving before. 4 With the combination of the technology capabilities of these four subsidiaries, iQSTEL has put together a complete portfolio of services for carriers and end user. These services include: • International Voice Termination for carriers. • US/Canada Inbound / Origination. • Global DIDs. • Global Toll-Free Numbers. • PBX (Private Branch Exchange) for small businesses. • SIP Trunking. The voice services represented in year 2023 46.85% of the total revenue of the company ($67,698,574 out of the total $144,502,351) while in year 2022 voice services represented 42.50% of the total revenue ($39,614,081 out of the total $93,203,532). All our subsidiaries carried 4.2 billion minutes of voice during year 2023, compared to 2.7 billion in year 2022. This represents an increase of 56% year over year. Telecom Subsidiaries for SMS services : QGlobal SMS LLC is a 100% owned subsidiary of iQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specialized in international and domestic SMS termination. QGlobal SMS has commercial presence in Europe, USA and Latin America, with robust international interconnection with Tier-1 SMS Aggregators, guarantying to its customers high quality and low termination rates, in over more than 100 countries. IoT Labs LLC is a 51% owned subsidiary of iQSTEL Inc. IoT Labs is a SMS service provider based in Austin, TX. Specialized in the SMS traffic exchange between US and Mexico. The Company has entered into the SMS business in 2020 through the acquisition of QGlobal and IoT Labs. Both companies specialize in international and domestic SMS termination, with emphasis on the Applications to Person (A2P), Person to Person (P2P) and OmniChannel Marketing Services for several markets: Wholesale Carrier, Government, Corporate, Enterprise, Small and Medium Companies. The Global A2P SMS Market is expected to grow at a CAGR of 4.1% to account for US$ 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. Our SMS services represented in year 2023 53.15% of the total revenue, while it was 57.50% in year 2022. Gross margin in the SMS business increases in 2023 to 0.62% from 0.40% in year 2022. But it is important to remark that the gross margin of the products deployed by QGlobal SMS was 21%, being the main objective in the SMS segment to increase the sales of those services due to its huge gross margins. Both companies, IoT Labs and QGlobal carried 11.3 billion SMS and short codes in year 2022 compared to 8.5 billion in year 2022. This represents an increment of 2.8 billion SMS year over year or 32.94%. IoT Labs is also responsible for the development of our award-winning Internet of Things devices SmartGas and SmartTank. The SmartGas device is perfectly focused on retail households using traditional LP gas tanks, while the SmartTank device is more oriented for industrial purposes. The Company’s product is a sensor and control chip that can be mounted on gas tanks in less than one minute, that converts the gas tank into an IoT connected device through the Company’s proprietary web portal and phone apps, allowing for constant monitoring, alerting, and refilling through the Company’s gas partners. An important milestone to highlight is that the company has received the patent for the invention and development of these devices. We continue working closely with BASF Corporation to adapt the SmartTank device to their specifications. project that has suffered some delays due to limited inventories and the slowness of the global distribution chains of microchips. However, since the end of 2022 we have expanded the list of certified suppliers and at this time we have a minimum inventory of parts, pieces and finished products to start the marketing process of both devices. 5 New businesses subsidiaries: 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 has focused on the development of solutions aimed at using the blockchain ledger and smart contracts to enable more efficiency, quickness in execution and fraud-prevention in the telco industry. Specifically, the company has developed 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. The Company has done research covering 35 countries where number portability is mandatory by law. Those 35 countries have a total of 3.3 billion population and 4.0 billion of phone lines that can be ported from one carrier to another. It is estimated that an average of 5% of the total phone lines are ported every year. Number portability is executed and supervised by a third independent party, who act as a data-base administrator and has the responsibility to guarantee all transactions requested by the customers will be completed and his/her phone number will be ported from Carrier A to Carrier B. In the countries under our analysis there are 11 different data-base administrators. In terms of dollar value, the number portability market in the countries under our analysis is estimated over $86 million per year. This is based in the actual cost carriers and/or customers have to pay to get the lines ported. Revenues of the Data Base Administrators comes from a monthly fee charged to all participant carriers, plus a fee for every transaction completed over the platform. The monthly fee and the transactions fee vary from country to country. Our objective is to offer the market conformed by data-based administrators a solution a much more cost effective solution; which will not only reduce the operating cost, but that will also make the transactions to complete faster without any additional CAPEX. Our mobile number portability solution is now being tested prior to its commercial release in June 2023. Global Money One Inc . Is a 75% owned subsidiary of iQSTEL Inc. The company offers a complete Fintech ecosystem including a MasterCard Debit Card, US Bank Account (No SSN Needed), and a Mobile App/Wallet to manage Remittances and Mobile Top Up. Our focus is to provide immigrants access to reliable financial services that make it easier to manage their money and stay connected with their families back home. All available services can be managed through our mobile App “GlobalMoneyOne” available for IOS and Android. A first non-commercial release of the Fintech suite was done in June 2022. Since that date all services have been tested including the known-your-customer (KYC) process for the issuance of debits cards, the settlement process with the issuer bank, the intermediary entities handling the remittances, and the intermediaries and cellular operators for the Top Up, as well as the proper training of our customer care agents. According to a World Bank Migration and Development brief, remittances to low- and middle-income countries reached $626 billion in 2022. The brief also stated the remittances to Latin America and the Caribbean are estimated to have grown 9.3% in 2022 to $142 billion; with increments of 45% for Nicaragua, 20% for Guatemala, 15% for Mexico, and 9% for Colombia. Stronger employment of migrants from Latin America in the United States contributed to remittance flows. As a share of GDP, remittances exceed 20% in El Salvador, Honduras, Jamaica, and Haiti. The Electric Vehicle division (TuVolten) consist in an initiative to offer clean and affordable mobility through Electric Motorcycles, and Electric Mid Speed Cars. TuVolten is going to offer theirs EV Motorcycles and EV Cars in Spain, Portugal, USA, and some countries of Latin America. As recently announced, all previous electric motorcycle designs and tests have come together in a new electric motorcycle now rolling off the factory for the final validation tests under the European Union Standards E-Mark certification process. Once this certification is obtained, we will begin manufacturing the first units for sale to the public. 6 The Metaverse initiative , consist in a platform to offer our telecommunication carrier clients a white label solution enabling them to interact with their customers (end users, and enterprises) through the metaverse. The iQSTEL white label metaverse solution developed in partnership with GOTMY will be tailored to provide telecom carriers with a distinctive and immersive customer experience. In line with GOTMY’s mission to offer universally accessible experiential spaces, the iQSTEL solution for telecom carriers is intended to accommodate all mobile phone users, not just those with high-end VR headsets.` Regulations Telecommunications services are subject to extensive government regulation in the United States of America. Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The FCC has jurisdiction over all telecommunications common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services. Regulation of Telecom by the Federal Communications Commission Telecommunication License Anyone seeking to conduct telecommunications business where the telecommunication services will transpire between the United States of America and an international destination must obtain a license from the Federal Communications Commission (FCC). This particular license is named a Section 214 license, after the section in the Communications Act of 1934. Etelix.com USA, LLC was authorized by the Federal Communications Commission to provide facility-based services in accordance with section 63.18(e)(1) of the Commission’s rules; 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 of America, no other licenses are required for us to operate as an international carrier service provider. Universal Service and Other Regulatory Fees and Charges In 1997, the FCC issued an order, referred to as the Universal Service Order, which requires all telecommunications carriers providing interstate telecommunications services to contribute to universal service support programs administered by the FCC (known as the Universal Service Fund). 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 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. In addition, based on the nature of our current business, we receive certain exemptions from federal Universal Service Fund contributions. Changes in our business could eliminate our ability to qualify for some or all of these exemptions. Changes in regulation may also have an impact on the availability of some or all of these exemptions. If even some of these exemptions become unavailable, they could materially increase our federal Universal Service Fund or Other Funds’ contributions and have a material adverse effect on the cost of our operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business. We cannot be certain of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds in general and the Telecommunications Relay Service Fund in particular can impact our profitability. Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases. Money Transmitter and Payment Instrument Laws and Regulations 7 The consumer payment services offerings, prepaid debit cards, remittances, Top Up, are industries heavily regulated. Accordingly, we, and the products and services that we offer in consumer payment services, are subject to a variety of federal and state laws and regulations, including: • Banking laws and regulations; • Money transmitter and payment instrument laws and regulations; • Anti-money laundering laws;- • Privacy and data security laws and regulations;- • Consumer protection laws and regulations; • Unclaimed property laws; and • Card association and network organization rules. Employees iQSTEL, including all subsidiaries, has 70 employees as of December 31, 2023. Corporate History iQSTEL, formerly known as PureSnax International, Inc., was incorporated under the laws of the State of Nevada on June 24, 2011. PureSnax was previously a wellness brand focused on bringing healthy snacks and foods to consumers. On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor. 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. On August 30, 2018, PureSnax changed its name to “iQSTEL Inc.” and received a new CUSIP number: 46265G107, as well as a new trading symbol “IQST” in order to better resemble its new name. iQSTEL also changed the Standard Industrial Classification (SIC Code) to 4813, Telephone Communications, Except Radiotelephone. On April 1, 2019, the Company entered into a Company Purchase Agreement by and between the Company and the Ralf Kohler (the “Seller”), which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG (“SwissLink”) (www.swisslink-carrier.com), a Swiss corporation, by the Company. On February 10, 2020, the Company entered into a Company Acquisition Agreement with Jesus Vega regarding the acquisition of 51% of the shares in QGlobal, LLC (“QGlobal”). QGlobal is a company with the capacity to provide Short Messages (SMS), A2P and P2P messaging services. On February 21, 2020, the Company entered into a Company Acquisition Agreement with Miguel Scavo regarding the acquisition of 75% of the shares in ItsBchain, LLC (“ItsBchain”) a company specialized in the development of Blockchain applications for telecommunications. On April 15, 2020, the Company entered into a Company Acquisition Agreement with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (“loT Labs”). The loT Labs’ principal business activity is the sale of SMS between USA and Mexico. On November 12, 2020, the Company entered into partnership Agreement with PAYMENT VIRTUAL MOBILE SOLUTIONS, LLC (PayVMS), a Delaware Corporation regarding the incorporation of Global Money One Inc, in which iQSTEL owns 75% of the shares and PayVMS owns the remaining 25%. Global Money One is a Fintech company with a complete infrastructure to provide top-up services, international remittances and prepaid debit cards. On October 1, 2021, the Company entered into an agreement with Jesus Vega regarding the acquisition of the remaining 49% of the shares in QGlobal, LLC (“QGlobal”). By means of this transaction iQSTEL increased its ownership in QGlobal to 100%. On May 13, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Whisl telecom LLC (“Whisl”) . On June 1, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Smartbiz Telecom LLC (“Smartbiz”). 8 Item 1A. Risk Factors You should carefully consider the risks described below together with all of the other information included in this registration statement before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment. In addition to other information in this registration statement and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. Risks Relating to Business and Financial Condition Because our auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our company. We have continually operated at a loss with an accumulated deficit of $26,084,133 as of December 31, 2023. We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is a risk that you could lose the entire amount of your investment in our company. Because we have a limited operating history, you may not be able to accurately evaluate our operations. We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail. We are dependent on outside financing for the continuation of our operations. Because we have generated limited revenues and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business operations. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. We will need additional funds to complete further development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues. We anticipate that we must raise for the next 12 months: $1,750,000 for acquisitions to fully implement our business plan to its fullest potential and achieve our growth plans. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. 9 Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern, and, as a result, our investors could lose their entire investment. As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all. We have revenues but we are not profitable and may not be in the near future, if at all. Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured. We may be unable to achieve some, all or any of the benefits that we expect to achieve from our plan to expand our operations. In the future we may require additional financing for capital requirements and growth initiatives. Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital markets to maintain and expand our business. We may need to incur debt on terms and at interest rates that may not be as favorable. If additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations Risk Factors Related to the Business of the Company Our telecommunications line of business is highly sensitive to declining prices, which may adversely affect our revenues and margins. The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs. A reduction of our prices to compete with any other offers in the market will not always guarantee an increase in the traffic, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins. The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber have adversely affected the use of traditional phone communications. We expect this IP-based service, which offers voice communications for free to continue to increase, which may result in increased substitution on our service offerings. Our products face intense competitive challenges, including rapid technological changes, and pricing pressure from competitors, which could adversely affect our business. All of our product lines are subject to significant competition from existing and future competitors, market conditions and technological change, or a combination of them, and our sales revenues and gross margins may suffer protracted and serious declines with the result that we would likely incur protracted losses. Further, the barriers to entry in several of our lines of business are not so significant that we may be facing competition from others who see significant opportunities to enter the market and undercut our prices with products that possess superior technological attributes at prices that offer our customers a better value. In this instance, we could incur protracted and significant losses and persons who acquire our common stock would suffer losses thereby. From time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share. Competition and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costs or other factors, and if we are unable to increase sales volumes to offset those profit margin decreases. We may also need to increase spending on marketing, advertising and new product innovation to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance market share and could result in lower profitability. 10 Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall. Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to: • general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; • the budgetary constraints of our customers; seasonality; • the success of our strategic growth initiatives; • costs associated with the launching or integration of new or acquired businesses; • timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; • the mix, by state and country, of our revenues, personnel and assets; • movements in interest rates or tax rates; • changes in, and application of, accounting rules; • changes in the regulations applicable to us; • Litigation matters. As a result of these factors, we may not succeed in our business, and we could go out of business. The termination of our carrier agreements or our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits. We rely upon our carrier agreements in order to provide our telecommunications services to our customers. These carrier agreements are, in most cases for finite terms and, therefore, there can be no guarantee that these agreements will be renewed at all or on favorable terms to us. Our ability to compete would be adversely affected if our carrier agreements were terminated or we were unable to enter into carrier agreements in the future to provide our telecommunications services to our customers, which could result in a reduction of our revenues and profits. Our customers could experience financial difficulties, which could adversely affect our revenues and profitability if we experience difficulties in collecting our receivables. As a provider of international long-distance services, we depend upon sales of transmission and termination of traffic to other long-distance providers and the collection of receivables from these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers our profitability may be substantially reduced. While our most significant customers, from a revenue perspective, vary from quarter to quarter, our 12 largest customers (2.6% of our total customer base) collectively accounted for 89% of total consolidated revenues in fiscal year 2023. Although we are somewhat insulated from nonpayment because 52% of our revenue is prepaid, this concentration of revenues increases our exposure to non-payments and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability. We may fail to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions. We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary products and services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material: • difficulties integrating personnel from acquired entities and other corporate cultures into our business; • difficulties integrating information systems; • the potential loss of key employees of acquired companies; • the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or • the diversion of management attention from existing operations. 11 Natural disasters, terrorist acts, acts of war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations. Our inability to operate our telecommunications networks because of the events listed above, even for a limited period, may result in loss of revenue, significant expenses, which could have a material adverse effect on our results of operations and financial condition. We could be harmed by network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems. To be successful, we need to continue to have available a high capacity, reliable and secure network for our and our customers’ use. As any other company, we face the risk of a security breach, whether through cyber-attacks, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure and related systems. There is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our proprietary or classified information. We are also subject to breaches of our network resulting in unauthorized utilization of our services, which subject us to the costs of providing those services, which are likely not recoverable. The secure maintenance and transmission of our information is a critical element of our operations. Our information technology and other systems that maintain and transmit customer information may be compromised by a malicious third-party penetration of our network security, or impacted by advertent or inadvertent actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our or our customers’ information may be lost, disclosed, accessed or taken without the customers’ consent, or our services may be used without payment. Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched the situations and do not believe any material internal or customer information has been compromised. We operate a global business that exposes us to currency, economic and regulatory risks. Our revenue comes primarily from sales outside the U.S. and our growth strategy is largely focused on emerging markets. Our success delivering solutions and competing in international markets is subject to our ability to manage various risks and difficulties, including, but not limited to: • our ability to effectively staff, provide technical support and manage operations in multiple countries; • fluctuations in currency exchange rates; • timely collecting of accounts receivable from customers located outside of the U.S.; • trade restrictions, political instability, disruptions in financial markets, and deterioration of economic conditions; • compliance with the U.S. Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; • variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights; and • compliance with export regulations, tariffs and other regulatory barriers. If we are unable to successfully manage growth, our operations could be adversely affected. Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively. If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers. 12 Risks Related to Legal Uncertainty We may be subject to securities litigation, which is expensive and could divert management attention. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities. We may be subject to tax and regulatory audits which could subject us to liabilities. We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity. Our global operations subject us to many different and complex laws and rules, and we may face difficulty in compliance. Due to our global operations, we are subject to many laws governing international relations (including but not limited to the Foreign Corrupt Practices Act, the U.S. Export Administration Act the EU General Data Protection Regulation, and the U.K. Modern Anti-Slavery Act); which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries, what personal information we can transfer, and what information we can provide to a non-U.S. government. Although we have procedures and policies in place that should mitigate the risk of violations of these laws, there is no guarantee that they will be sufficiently effective. If, and when we acquire new businesses, we may not be able to ensure that the pre-existing controls and procedures meant to prevent violations of the rules and laws were effective, and we may not be able to implement effective controls and procedures to prevent violations quickly enough when integrating newly acquired businesses. Acquisitions of new businesses in new non-U.S. jurisdictions may also subject us to new regulations and laws, and we may face difficulties ensuring compliance with these new requirements. Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business. Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks in international markets where our products and services are offered. Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business. In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance. 13 The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results. We may be subject to legal liability associated with providing online services or content. We host and provide a wide variety of services and technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos, videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically and internationally. The law relating to the liability of providers of online services and products for activities of their users is currently unsettled both within the United States and internationally. We may be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions. It is also possible that if any information provided directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For example, we offer web-based e-mail services, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, or privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services or technologies are used to spread or facilitate malicious or harmful code or applications. Investigating and defending these types of claims are expensive, even if the claims are without merit or do not ultimately result in liability, and could subject us to significant monetary liability or cause a change in business practices that could negatively impact our ability to compete. Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions. Members of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to the company or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law. This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty of care. In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock. 14 Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even if it would benefit our shareholders. Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety by reference to Nevada law. The issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock. Under Nevada law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his discretion, may consider any of the following: (i) The interests of the corporation’s employees, suppliers, creditors and customers; (ii) The economy of the state and nation; (iii) The impact of any action upon the communities in or near which the corporation’s facilities or operations are located; (iv) The long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and (v) Any other factors relevant to promoting or preserving public or community interests. Because our board of directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules. We are no longer an “emerging growth company” and therefore no longer eligible for reduced reporting requirements applicable to emerging growth companies. It has been twelve years since our first registered sale of common stock in 2012, so we are no longer eligible for the reduced disclosure requirements applicable to “emerging growth companies.” Emerging growth companies may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of audited financial statements and not being required to provide selected financial data, supplemental financial information or risk factors. 15 Since we are no longer eligible for emerging growth company status, we will be subject to the reporting obligations of a smaller reporting company and, if we continue grow, we may be subject to increased reporting requirements applicable to accelerated filers, which are more onerous than those applicable to smaller reporting companies. As a smaller reporting company and will be exempt from certain disclosure requirements, which could make our Common Stock less attractive to potential investors. Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: • had a public float of less than $250 million as of the last business day of our most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of our voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or • in the case of an initial registration statement under the Securities Act, or the Exchange Act, for shares of our common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or • in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. As a smaller reporting company, we will not be required and may not include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares. If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common shares. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain a smaller reporting company, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. 16 Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. This may expose us, including individual executives, to potential liability which could significantly affect our business. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its audits of internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common shares could decline, and we could be subject to sanctions or investigations by FINRA, the SEC, or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected. Deficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements. We could be adversely affected if there are deficiencies in our disclosure controls and procedures or in our internal controls over financial reporting. The design and effectiveness of our disclosure controls and procedures and our internal controls over financial reporting may not prevent all errors, misstatements or misrepresentations. Consistent with other entities in similar stages of development, we have a limited number of employees currently in the accounting group, limiting our ability to provide for segregation of duties and secondary review. A lack of resources in the accounting group could lead to material misstatements resulting from undetected errors occurring from an individual performing primarily all areas of accounting with limited secondary review. Deficiencies in internal controls over financial reporting which may occur could result in material misstatements of our results of operations, restatements of financial statements, other required remediations, a decline in the price of our common shares, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity. Risks Relating to Our Securities We have the right to issue additional common stock and preferred stock without consent of stockholders. This would have the effect of diluting investors’ ownership and could decrease the value of their investment. We have additional authorized, but unissued shares of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders’ percentage ownership of our company. 17 In addition, our certificate of incorporation authorizes the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights, preferences, designations and limitations of which may be set by the Board of Directors. Our certificate of incorporation has authorized issuance of up 300,000,000 shares of common stock and up to 1,200,000 shares of preferred stock in the discretion of our Board. The shares of authorized but unissued preferred stock may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation. Our largest shareholders, officers and directors and related parties, Leandro Iglesias and Alvaro Cardona, have substantial control over us and our policies as a result of their holdings in Series A Preferred Stock, and will be able to influence all corporate matters, which might not be in other shareholders’ interests. There were 10,000 shares of Series A Preferred Stock outstanding as of the date of this Annual Report, with Mr. Iglesias holding 7,000 shares and Mr. Cardona the other 3,000 shares. There were 176,329,933 shares of our common stock issued and outstanding as of the date of this Annual report, with Mr. Iglesias holding 542,932 shares and Mr. Cardona holding 1,121,842 shares, which together accounts for just over 0.9% of our outstanding common stock. Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders, including the election of directors. Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. By virtue of their ownership of Series A Preferred Stock and common stock, they are able to vote at a rate of approximately 51.47% of the total vote of shareholders. They are therefore able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our company. They could prevent transactions, which would be in the best interests of the other shareholders. Their interests may not necessarily be in the best interests of the shareholders in general. We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates. Risks Related to the Market for our Securities If a market for our common stock does not develop, stockholders may be unable to sell their shares. Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities. Even though we currently have an active trading market, there can be no assurance that it will be sustained. Our securities are very thinly traded. Accordingly, it may be difficult to sell shares of our common stock without significantly depressing the value of the stock. Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to result in major fluctuations in the price of the stock. 18 The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control. Our stock price is subject to a number of factors, including: • Technological innovations or new products and services by us or our competitors; • Government regulation of our products and services; • The establishment of partnerships with other telecom companies; • Intellectual property disputes; • Additions or departures of key personnel; • Sales of our common stock; • Our ability to integrate operations, technology, products and services; • Our ability to execute our business plan; • Operating results below or exceeding expectations; • Whether we achieve profits or not; • Loss or addition of any strategic relationship; • Industry developments; • Economic and other external factors; and • Period-to-period fluctuations in our financial results. Our stock price may fluctuate widely as a result of any of the above. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced. The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities. We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted. We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted. 19 If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. Item 1B. Unresolved Staff Comments This information is not required for smaller reporting companies. Item 1C. Cybersecurity We have implemented cybersecurity risk management procedures, in accordance with our risk profile and business size. We rely on our information technology to operate our business. As such, we have policies and processes designed to protect our information technology systems, some of which are managed by third parties, and resolve issues in a timely manner in the event of a cybersecurity threat or incident. We have designed our business applications to minimize the impact that cybersecurity incidents could have on our business and have identified back-up systems where appropriate. We seek to further mitigate cybersecurity risks through a combination of monitoring and detection activities, use of anti-malware applications, employee training, quality audits and communication and reporting structures, among other processes. We have a trained group of people to carry out the activities of monitoring and detection of cybersecurity threats and respond to any cybersecurity threats or incidents. The Head of IT department is responsible for oversight of cybersecurity risks and addressing potential cybersecurity risks to business programs, employees, clients, vendors and partners. The Head of IT Department reports to our Chief Executive Officer who reports to the Audit Committee at the board-level, as appropriate. As of December 31, 2023, we have not identified an indication of a cybersecurity incident that would have a material impact on our business and consolidated financial statements. Item 2. Properties The disclosures concerning our properties are contained in Item 1 Business above and incorporated herein by reference. Item 3. Legal Proceedings We have no current legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 20 PART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a stockholder may be unable to resell his securities in our company. The following tables set forth the range of high and low bid information for our common stock for the each of the periods indicated as reported by the OTCQX. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal Year Ending December 31, 2023 Quarter Ended High $ Low $ December 31, 2023 0.1550 0.1440 September 30, 2023 0.2250 0.2160 June 30, 2023 0.1340 0.1130 March 31, 2023 0.1549 0.1425 Fiscal Year Ending December 31, 2022 Quarter Ended High $ Low $ December 31, 2022 0.37 0.16 September 30, 2022 0.40 0.22 June 30, 2022 0.71 0.32 March 31, 2022 1.03 0.45 On March 26, 2024, the last sales price per share of our common stock was $0.3372. Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account. 21 In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities. Holders of Our Common Stock As of March 27, 2024, we had 176,329,933 shares of our common stock issued and outstanding, held by approximately 73 stockholders of record at our transfer agent, with additional stockholders holding our shares in street name. Dividends We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. In the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common stock by our board of directors from funds legally available. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 1. We would not be able to pay our debts as they become due in the usual course of business; or 2. Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution. Securities Authorized for Issuance under Equity Compensation Plans We do not have an equity compensation plan. Recent Sales of Unregistered Securities During the year ended December 31, 2023, the Company issued 10,534,119 shares of common stock, valued at fair market value on issuance as follows: • 240,000 shares for compensation to our directors valued at $42,890; and • 10,294,119 shares for exercise of warrants for $1,400,000. These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock. Item 6. [Reserved] 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Years Ended December 31, 2023 and 2022 Net Revenue Our net revenue for the year ended December 31, 2023 was $144,502,351 as compared with $93,203,532 for the year ended December 31, 2022. These numbers reflect an increase of 55% year over year on our consolidated Revenues. When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2023 and 2022: Subsidiary Revenue Year Ended December 31, 2023 Revenue Year Ended December 31, 2022 Etelix.com USA, LLC $ 44,026,288 $ 22,301,110 SwissLink Carrier AG 5,250,141 4,705,031 QGlobal LLC 1,228,865 350,050 IoT Labs LLC 75,574,912 53,239,401 Whisl 1,855,816 4,318,762 Smartbiz 16,566,329 8,289,178 $ 144,502,351 $ 93,203,532 The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and new acquisitions. Cost of Revenue Our total cost of sales for the year ended December 31, 2023 was $139,830,338 as compared with $91,412,016 for the year ended December 31, 2022. When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2023 and 2022: Subsidiary Cost of revenue Year Ended December 31, 2023 Cost of revenue Year Ended December 31, 2022 Etelix.com USA, LLC $ 41,505,472 $ 23,360,923 SwissLink Carrier AG 4,359,141 3,949,751 QGlobal LLC 832,282 243,493 IoT Labs LLC 74,662,656 52,842,202 Whisl 2,033,529 2,760,807 Smartbiz 16,437,258 8,254,840 $ 139,830,338 $ 91,412,016 Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls and SMS terminated in our vendors’ networks. The behavior in the costs shows a logical correlation with the behavior of the revenue commented above. We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost. 23 Gross Margin Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $1,791,516 in 2022 to $4,672,013 in 2023; represented an increase of 161% year over year. Gross margins were 3.23% and 1.92% of revenues, respectively. This is a clear sign the Company is improving it sales margin. Operating Expenses Operating expenses for the year ended December 31, 2023 were $4,987,516, as compared with $4,983,176 for the year ended December 31, 2022. The detail by major category is reflected in the table below. Years Ended December 31 2023 2022 Salaries, Wages and Benefits $ 1,560,366 $ 1,662,192 Technology 328,710 291,348 Professional Fees 1,283,351 901,082 Legal and Regulatory 256,537 511,598 Travel & Events 136,051 93,769 Public Cost 36,349 31,750 Bad Debt Expense 8,815 34,376 Depreciation and Amortization 128,737 120,117 Advertising 595,298 617,559 Bank Services and Fees 77,292 37,950 Office, Facility and Other 309,376 324,167 Sales Commissions 211,830 239,550 Insurance 11,914 10,118 Subtotal 4,944,626 4,875,576 Stock-based compensation 42,890 107,600 Total Operating Expenses $ 4,987,516 $ 4,983,176 Operating Expenses by subsidiary are as follows: Years Ended December 31, 2023 2022 Difference iQSTEL $ 1,692,056 $ 1,762,904 $ -70,848 Etelix 322,932 472,291 -149,359 SwissLink 723,712 767,069 -43,357 ItsBchain 41,955 22,693 19,262 QGlobal 253,160 202,933 50,227 Global Money One 55,710 157,382 -101,672 IoT Labs 172,709 264,091 -91,382 Whisl 614,617 821,979 -207,362 Smartbiz 1,110,665 511,834 598,831 $ 4,987,516 $ 4,983,176 $ 4,340 24 Other Income (Expenses) We had other income of $96,067 for the year ended December 31, 2023, as compared with other expenses of $2,674,101 for the year ended December 31, 2022. The positive change in Other Income (Expenses) in 2023 compared to 2022 is due to the positive Change in fair value of derivative liabilities of $381,848 for the year ended December 31, 2023 from a negative value of $2,650,369 for the year ended December 31, 2022. Net Loss We finished the year ended December 31, 2023 with a loss of $219,436 as compared to a loss of $5,865,761 during the year ended December 31, 2022. These two figures compared result in an important improvement in the Company’s performance during 2023 versus the previous year. This can be perfectly noted when looking at the evolution of the Operating Income and the Net Income by quarter in 2023. Liquidity and Capital Resources As of December 31, 2023 we had total current assets of $15,719,172, compared with current liabilities of $13,840,944, resulting in a positive working capital of $1,878,228 and a current ratio of approximately 1.14 to 1 which represent an important improvement compared to a ratio of 0.99 to 1 as of December 31, 2022. Following is a table with summary data from the consolidated statement of cash flows for the year ended December 31, 2023 and 2022, as presented. 2023 2022 Net cash used in operating activities $ (1,483,801 ) $ (1,765,060 ) Net cash used in investing activities (332,550 ) (2,001,506 ) Net cash provided by financing activities 1,833,965 1,767,982 Effect of exchange rate changes on cash 15,665 (6,840 ) Net change in cash and cash equivalents $ 33,279 $ (2,005,424) Our operating activities used $1,483,801 in the year ended December 31, 2023, as compared with $1,765,060 used in operating activities in the year ended December 31, 2022. Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. 25 Investing activities used $332,550 for the year ended December 31, 2023, as compared with $2,001,506 used in investing activities for the year ended December 31, 2022. Our negative investing cash flow for 2023 is largely due to the purchase of property and equipment. Financing activities provided $1,833,965 for the year ended December 31, 2023, as compared to $1,767,982 provided for the year ended December 31, 2022. Our positive financing cash flow in 2023 was largely the result of the $1,400,000 from the exercise of warrants. Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. The Company has received the qualification of an Offering Statement under Form S-1 for the sale of up to 15,000,000 common stocks. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. We also plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all. Inflation Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the twelve-month period ended December 31, 2023. Critical Accounting Policies A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2023; however, we consider our critical accounting policies to be those related to the allowance for doubtful accounts, valuation of assets, significant estimates in the valuation of financial instruments and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See the Consolidated Financial Statements in this Annual Report for a complete discussion of our significant accounting policies. Off Balance Sheet Arrangements As of December 31, 2023, there were no off-balance sheet arrangements. Recently Issued Accounting Pronouncements We do not expect the adoption of these or other recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow. Item 8. Financial Statements and Supplementary Data Index to Financial Statements Required by Article 8 of Regulation S-X: Audited Financial Statements: F-1 Report of Independent Registered Public Accounting Firm (PCAOB ID 1013 ); F-3 Consolidated Balance Sheets as of December 31, 2023 and 2022; F-4 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022; F-5 Consolidated Statement of Stockholders’ Deficit for the years ended December 31, 2023 and 2022; F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022; and F-7 Notes to Consolidated Financial Statements. 26 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors iQSTEL, Inc. Coral Gables, FL Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of iQSTEL, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty – See Also Critical Audit Matters Section Below The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition Critical Audit Matter Description The Company recognizes revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. Significant judgment is exercised by the Company in determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. The related audit effort in evaluating management’s judgments in determining revenue recognition for customer agreements required a high degree of auditor judgment. How the Critical Audit Matter was Addressed in the Audit Our principal audit procedures related to the Company’s revenue recognition for customer agreements included the following: · We gained an understanding of internal controls related to revenue recognition. · We evaluated management’s significant accounting policies for reasonableness. · We selected a sample of revenues recognized and performed the following procedures: o Obtained and read contract source documents for each selection and other documents that were part of the agreement, if applicable. o Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions. o We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. o We confirmed significant customer balances. Going Concern Critical Audit Matter Description As described further in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs. 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. Accordingly, the Company has determined that these factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. Management intends to continue to fund its business by way of public or private offerings of the Company’s stock or through loans from private investors, in order satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. However, the Company has not concluded that these plans alleviate the substantial doubt related to its ability to continue as a going concern. How the Critical Audit Matter was Addressed in the Audit We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination. Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: · We performed testing procedures such as analytical procedures to identify conditions and events that indicate that there could be substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. · We reviewed and evaluated management's plans for dealing with adverse effects of these conditions and events. · We inquired of Company management and reviewed company records to assess whether there are additional factors that contribute to the uncertainties disclosed. · We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed. /s/ Urish Popeck & Co., LLC We have served as the Company's auditor since 2020. Pittsburgh, Pennsylvania April 1, 2024 F- 1 iQSTEL INC Consolidated Balance Sheets December 31, December 31, 2023 2022 ASSETS Current Assets Cash $ 1,362,668 $ 1,329,389 Accounts receivable, net 12,539,774 4,209,125 Inventory 27,121 26,124 Due from related parties 340,515 326,324 Prepaid and other current assets 1,449,094 545,628 Total Current Assets 15,719,172 6,436,590 Property and equipment, net 522,997 401,021 Intangible asset 99,592 99,592 Goodwill 5,172,146 5,172,146 Deferred tax assets 426,755 440,135 Other asset 214,991 — TOTAL ASSETS $ 22,155,653 $ 12,549,484 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable 2,966,279 2,254,636 Accrued and other current liabilities 9,993,585 2,482,352 Due to related parties 26,613 26,613 Loans payable - net of discount of $ 32,334 and $ 0 , respectively 493,164 94,342 Loans payable - related parties 259,447 235,949 Convertible note - net of discount of $ 10,428 and $ 0 , respectively 101,856 — Derivative liabilities — 1,357,787 Total Current Liabilities 13,840,944 6,451,679 Loans payable, non-current 99,099 108,150 Employee benefits, non-current 169,738 154,238 TOTAL LIABILITIES 14,109,781 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 10 10 Series B Preferred stock: 200,000 designated; $ 0.001 par value, 31,080 and 21,000 shares issued and outstanding, respectively 31 21 Series C Preferred stock: 200,000 designated; $ 0.001 par value, No shares issued and outstanding — — Series D Preferred stock: 75,000 designated; $ 0.001 par value, No shares issued and outstanding — — Common stock: 300,000,000 authorized; $ 0.001 par value 172,129,630 and 161,595,511 shares issued and outstanding, respectively 172,130 161,595 Additional paid in capital 34,360,884 31,136,120 Accumulated deficit ( 26,084,133 ) ( 24,504,395 ) Accumulated other comprehensive loss ( 25,340 ) ( 33,557 ) Equity attributed to stockholders of iQSTEL Inc. 8,423,582 6,759,794 Deficit attributable to noncontrolling interests ( 377,710 ) ( 924,377 ) TOTAL STOCKHOLDERS' EQUITY 8,045,872 5,835,417 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,155,653 $ 12,549,484 The accompanying notes are an integral part of these consolidated financial statements. F- 2 iQSTEL INC Consolidated Statements of Operations Years Ended December 31, 2023 2022 Revenues $ 144,502,351 $ 93,203,532 Cost of revenue 139,830,338 91,412,016 Gross profit 4,672,013 1,791,516 Operating expenses General and administration 4,987,516 4,983,176 Total operating expenses 4,987,516 4,983,176 Operating loss ( 315,503 ) ( 3,191,660 ) Other income (expense) Other income 8,403 118,871 Other expenses ( 199,276 ) ( 112,962 ) Interest expense ( 94,908 ) ( 29,641 ) Change in fair value of derivative liabilities 381,848 ( 2,650,369 ) Total other income (expense) 96,067 ( 2,674,101 ) Net loss before provision for income taxes ( 219,436 ) ( 5,865,761 ) Income taxes — — Net loss ( 219,436 ) ( 5,865,761 ) Less: Net income attributable to noncontrolling interests 543,822 101,713 Net loss attributed to iQSTEL Inc. $ ( 763,258 ) $ ( 5,967,474 ) Dividend on Series B Preferred Stock ( 816,480 ) — Net loss attributed to stockholders of iQSTEL Inc. $ ( 1,579,738 ) $ ( 5,967,474 ) Comprehensive income (loss) Net loss $ ( 219,436 ) $ ( 5,865,761 ) Foreign currency adjustment 16,112 6,080 Total comprehensive loss $ ( 203,324 ) $ ( 5,859,681 ) Less: Comprehensive income attributable to noncontrolling interests 551,717 104,692 Net comprehensive loss attributed to iQSTEL Inc. $ ( 755,041 ) $ ( 5,964,373 ) Basic and diluted loss per common share $ ( 0.01 ) $ ( 0.04 ) Weighted average number of common shares outstanding - Basic and diluted 167,281,028 151,850,443 The accompanying notes are an integral part of these consolidated financial statements. F- 3 iQSTEL INC Consolidated Statements of Changes in Stockholders’ Equity (Deficit) For the years ended December 31, 2023 and 2022 Series A Preferred Stock Series B Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount Additional Paid in Capital Accumulated Deficit Accumulated Other 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 acquisitions of subsidiaries — — — — 5,066,667 5,067 1,544,933 — — 1,550,000 ( 33,056 ) 1,516,944 Common stock issued for asset acquisition — — — — 550,000 550 356,950 — — 357,500 — 357,500 Common stock issued for compensation — — — — 240,000 240 107,360 — — 107,600 — 107,600 Common stock issued for settlement of debt — — — — 161,367 161 80,513 — — 80,674 — 80,674 Common stock issued for warrant exercises — — — — 6,100,119 6,100 393,900 — — 400,000 — 400,000 Common stock payable — — — — — — 18,900 — — 18,900 — 18,900 Resolution of derivative liabilities upon exercise of warrants — — — — — — 1,792,582 — — 1,792,582 — 1,792,582 Foreign currency translation adjustments — — — — — — — — 3,101 3,101 2,979 6,080 Net (loss) income — — — — — — — ( 5,967,474 ) — ( 5,967,474 ) 101,713 ( 5,865,761 ) 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 Series B Preferred stock issued as dividend — — 10,080 10 — — 816,470 ( 816,480 ) — — — — Common stock issued for compensation — — — — 240,000 240 42,650 — — 42,890 — 42,890 Common stock issued for warrant exercises — — — — 10,294,119 10,295 1,389,705 — — 1,400,000 — 1,400,000 Resolution of derivative liabilities upon exercise of warrant — — — — — — 975,939 — — 975,939 — 975,939 Dividend to non-controlling interest — — — — — — — — — — ( 5,050 ) ( 5,050 Foreign currency translation adjustments — — — — — — — — 8,217 8,217 7,895 16,112 Net income (loss) — — — — — — — ( 763,258 ) — ( 763,258 ) 543,822 ( 219,436 ) Balance - December 31, 2023 10,000 $ 10 31,080 $ 31 172,129,630 $ 172,130 $ 34,360,884 $ ( 26,084,133 ) $ ( 25,340 ) $ 8,423,582 $ ( 377,710 ) $ 8,045,872 The accompanying notes are an integral part of these consolidated financial statements. F- 4 iQSTEL INC Consolidated Statements of Cash Flows Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 219,436 ) $ ( 5,865,761 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 42,890 126,500 Bad debt expense 8,815 34,376 Loss on disposal of asset 7,200 — Depreciation and amortization 128,737 120,117 Amortization of debt discount 38,758 7,407 Change in fair value of derivative liabilities ( 381,848 ) 2,650,369 Deferred tax assets 53,568 — Changes in operating assets and liabilities: Accounts receivable ( 8,010,726 ) ( 799,533 ) Inventory ( 997 ) ( 26,124 ) Prepaid and other current assets ( 1,085,279 ) ( 23,728 ) Due from related parties 93,264 96,863 Accounts payable 1,217,926 ( 265,511 ) Accrued and other current liabilities 6,623,327 2,179,965 Net cash used in operating activities ( 1,483,801 ) ( 1,765,060 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of subsidiaries, net of cash acquired — ( 1,889,132 ) Purchase of property and equipment ( 220,045 ) ( 112,074 ) Advances of loan receivable - related party ( 192,154 ) ( 1,000 ) Collection of amounts due from related parties 79,649 700 Net cash used in investing activities ( 332,550 ) ( 2,001,506 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans payable 375,000 — Repayments of loans payable ( 18,559 ) ( 232,018 ) Proceeds from common stock issued — 1,100,000 Proceeds from exercise of warrants 1,400,000 400,000 Proceeds from convertible notes 250,000 — Deposit for option — 500,000 Repayment of convertible notes ( 172,476 ) — Net cash provided by financing activities 1,833,965 1,767,982 Effect of exchange rate changes on cash 15,665 ( 6,840 ) Net change in cash 33,279 ( 2,005,424 ) Cash, beginning of period 1,329,389 3,334,813 Cash, end of period $ 1,362,668 $ 1,329,389 Supplemental cash flow information Cash paid for interest $ 45,282 $ 3,333 Cash paid for taxes $ — $ — Non-cash transactions: Common Stock payable $ — $ 18,900 Series B Preferred stock issued as dividend $ 816,480 — Common stock issued for asset acquisition $ — $ 357,500 Common stock issued for acquisitions of subsidiaries $ — $ 1,550,000 Common stock issued for conversion of debt $ — $ 80,674 Common stock issued for exercise of cashless warrants $ — $ 3,790 Common stock issued for settlement of debt $ — $ 80,674 Non-cash dividend for collection of loan receivable - related parties $ 5,050 $ — Resolution of derivative liabilities upon exercise of warrants $ 975,939 $ 1,792,582 The accompanying notes are an integral part of these consolidated financial statements. F- 5 iQSTEL INC Notes to the Consolidated Financial Statements December 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 over 400 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 consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States of America. The Company’s fiscal year end is December 31. 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 in the United States of America 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. F- 6 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 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”). 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 December 31, 2023 and 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 . The Company estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. During the years ended December 31, 2023 and 2022, the Company recorded bad debt expense of $ 8,815 and $ 34,376 , respectively. F- 7 Inventory Inventories, consisting of smart gas parts, are primarily accounted for using the first-in-first-out (“FIFO”) method of accounting. Inventories are measured at the lower of cost and net realizable value. The Company estimates the net realizable value of inventories based on an assessment of expected sales prices. Long-Lived Assets Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. Fixed Assets Fixed assets, consisting of telecommunications equipment and software, are recorded at cost reduced by accumulated depreciation and amortization. Depreciation and amortization expense is recognized over the assets’ estimated useful lives of 3 years for computers and laptops; 5 years for telecommunications equipment and switches; and 5 years for software using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. Impairment of tangible and intangible assets Tangible and intangible assets (excluding goodwill) are assessed at each reporting date for indications that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. The asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the group of assets. Goodwill We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. F- 8 The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. Retirement Benefit Costs Payments to defined contribution retirement benefit schemes for SwissLink are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme. For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the period in which they occur. They are recognized outside the income statement and are presented in other comprehensive income. Past service cost is recognized immediately in the income statement in the period in which it occurs. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of the scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. 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 year. 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 years ended December 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 year ended December 31, 2023, 12 customers represented 89 % of our revenue compared to 12 customers representing 88 % of our revenue for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, 52 % and 57 % 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- 9 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- 10 Income Taxes The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized. Related Parties The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 13). 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. Cost of revenue Costs of revenue represent direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls terminated in vendors’ networks. Lease The Company leases office space for corporate and network monitoring activities and to house telecommunications equipment. In accordance with ASC 842, “ Leases, ” we determine if an arrangement is a lease at inception. The office lease meets the definition of a short-term lease because the lease term is 12 months or less. Consequently, consistent with Company’s accounting policy election, the Company does not recognize the right-of-use asset and the lease liability arising from this lease. 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. 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. F- 11 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. 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 $ 1,250,000 1,461,653 shares of common stock 550,000 Total Purchase Price $ 1,800,000 F- 12 Smartbiz June 1, Fair Value of Consideration: 2022 Cash $ 800,000 2,850,330 shares of common stock 1,000,000 Total Purchase Price $ 1,800,000 An additional 754,684 shares of common stock were issued to the seller in December 2022 in accordance with the terms of the purchase agreement. 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 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 ) Accumulated deficit ( 74,834 ) Non-controlling interest ( 36,669 ) Total accumulated deficit ( 38,165 ) Goodwill $ 1,838,165 F- 13 Unaudited combined proforma results of operations for the year ended December 31, 2022 as though the Company acquired Smartbiz and Whisl on January 1, 2022, are set forth below: December 31, 2022 Revenues $ 103,353,405 Cost of revenues 101,717,011 Gross profit 1,636,394 Operating expenses 5,762,097 Operating loss ( 4,125,703 ) Other expense ( 2,674,101 ) Net Loss $ ( 6,799,804 ) NOTE 5 – PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets at December 31, 2023 and 2022 consisted of the following: December 31, December 31, 2023 2022 Other receivable $ 312,116 $ 120,139 Prepaid expenses 738,050 26,600 Advance payment 21,000 21,000 Tax receivable 428 389 Deposit for acquisition of asset 357,500 357,500 Security deposit 20,000 20,000 Total prepaid and other current assets $ 1,449,094 $ 545,628 NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment at December 31, 2023 and 2022 consisted of the following: December 31, December 31, 2023 2022 Telecommunication equipment $ 386,700 $ 317,958 Telecommunication software 836,840 640,566 Other equipment 99,892 99,126 Total property and equipment 1,323,432 1,057,650 Accumulated depreciation and amortization ( 800,435 ) ( 656,629 ) Total property and equipment $ 522,997 $ 401,021 Depreciation expense for the years ended December 31, 2023 and 2022 amounted to $ 128,737 and $ 120,117 , respectively. F- 14 NOTE 7 –LOANS PAYABLE Loans payable at December 31, 2023 and 2022 consisted of the following: December 31, December 31, Interest 2023 2022 Term rate Martus $ 103,738 $ 94,342 Note was issued on October 23, 2018 and due on January 2, 2024 5.0 % Darlene Covid19 99,099 108,150 Note was issued on April 1, 2020 and due on March 31, 2025 0.0 % Promissory note payable 165,000 — Note was issued April 4, 2023 and due on April 4, 2024 24.0 % Promissory note payable 256,760 — Note was issued December 6, 2023 and due on October 15, 2024 12.0 % Total 624,597 202,492 Less: Unamortized debt discount ( 32,334 ) — Total loans payable 592,263 202,492 Less: Current portion of loans payable ( 493,164 ) ( 94,342 ) Long-term loans payable $ 99,099 $ 108,150 Loans payable - related parties at December 31, 2023 and 2022 consisted of the following: December 31, December 31, Interest 2023 2022 Term rate 49% of Shareholder of SwissLink $ 21,606 $ 19,649 Note is due on demand 0 % 49% of Shareholder of SwissLink 237,841 216,300 Note is due on demand 5 % Total 259,447 235,949 Less: Current portion of loans payable –related parties 259,447 235,949 Long-term loans payable – related parties $ — $ — During the years ended December 31, 2023 and 2022, the Company borrowed from third parties totaling $ 421,760 and $ 0 , which includes original issue discount and financing costs of $ 46,760 and $ 0 and repaid the principal amount of $ 18,559 and $ 232,018 , respectively. During the years ended December 31, 2023 and 2022, the Company recorded interest expense of $ 32,231 and $ 22,234 and recognized amortization of discount, included in interest expense, of $ 14,426 and $ 7,407 , respectively. F- 15 NOTE 8 - CONVERTIBLE LOANS During the year ended December 31, 2023, the Company borrowed from a third party totaling $ 284,760 , which includes original issue discount and financing costs of $ 34,760 . The note is due on June 1, 2024 and a one-time interest charge of 12 % shall be applied. Accrued, unpaid interest and outstanding principal shall be paid in 10 payments each in the amount of $31,893 beginning on July 16, 2023 . The note is convertible at the option of the holders at any time following an event of default, and the conversion price is 75% multiplied by the lowest trading price of Company’s common stock during the 10 trading days prior to the conversion date . During the years ended December 31, 2023 and 2022, the Company recorded interest expense of $ 23,919 and $ 0 and recognized amortization of discount, included in interest expense, of $ 24,332 and $ 0 , respectively. NOTE 9 – 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 Shares Exercise Price Contractual life (in years) Outstanding, December 31, 2021 — $ — — Granted 4,800,000 2.00 1.49 Increase in number of warrants by VWAP 32,467,713 0.17 — Exercised ( 14,155,138 ) 0.18 0.97 Forfeited/canceled — — — 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 ( 10,294,119 ) 0.14 0.70 Expired ( 18,080,921 ) — — Outstanding, December 31, 2023 — $ — — F- 16 NOTE 10 – DERIVATIVE LIABILITIES Fair Value Assumptions Used in Accounting for Derivative Liabilities ASC 815 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 December 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 years ended December 31, 2023 and 2022, the estimated fair values of the liabilities measured on a recurring basis are as follows: Year ended December 31, 2023 2022 Expected term 0.00 - 0.70 years 0.75 - 1.49 years Expected average volatility 18 % - 187 % 83 % - 152 % Expected dividend yield — — Risk-free interest rate 4.67 % - 5.55 % 0.06 % - 4.73 % The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2023 and 2022: Fair Value Measurements Using Significant Observable Inputs (Level 3) Balance - December 31, 2021 — Addition of new derivatives recognized as cash received 500,000 Addition of new derivatives recognized as loss on derivatives 943,833 Settled on issuance of common stock ( 1,792,582 ) Change in fair value of the warrants 1,706,536 Balance - December 31, 2022 $ 1,357,787 Settled on issuance of common stock ( 975,939 ) Change in fair value of the warrants ( 381,848 ) Balance – December 31, 2023 $ — The following table summarizes the change in fair value of derivative liabilities included in the income statement for the years ended December 31, 2023 and 2022, respectively. Years ended December 31, 2023 2022 Addition of new derivatives recognized as loss on derivatives $ — $ 943,833 Revaluation of derivative liabilities ( 381,848 ) 1,706,536 ) Change in fair value of derivative liabilities $ ( 381,848 ) $ 2,650,369 ) F- 17 NOTE 11 – STOCKHOLDERS’ EQUITY Common Stock The Company’s authorized capital consists of 300,000,000 shares of common stock with a par value of $ 0.001 per share. During the year ended December 31, 2023, the Company issued 10,534,119 shares of common stock, valued at fair market value on issuance as follows: • 240,000 shares for compensation to our directors valued at $ 42,890 ; and • 10,294,119 shares for exercise of warrants for $ 1,400,000 . During the year ended December 31, 2022, the Company issued 14,118,153 shares of common stock, valued at fair market value on issuance as follows: • 2,000,000 shares issued for cash of $ 1,000,000 • 5,066,667 shares for acquisitions of Whisl and Smartbiz valued at $ 1,550,000 • 550,000 shares for asset acquisition valued at $ 357,500 • 240,000 shares for compensation to our directors valued at $ 107,600 • 161,367 shares for settlement of debt valued at $ 80,674 • 6,100,119 shares for exercise of warrants for $ 400,000 As of December 31, 2023 and 2022, 172,129,630 and 161,595,511 shares of common stock were issued and outstanding, respectively. 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 December 31, 2023 and 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. F- 18 In August 2023, the Company declared and issued 10,080 shares Series B stock to our management as dividends, valued at $ 816,480 . As of December 31, 2023 and 2022, 31,080 and 21,000 shares of Series B Preferred Stock were issued and outstanding, respectively. 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 December 31, 2023 and 2022, no Series C Preferred Stock was issued or outstanding. Series D Preferred Stock On November 3, 2023, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series D Preferred Stock, consisting of up 75,000 shares, par value $ 0.001 . Under the Certificate of Designation, in the event of any dissolution, liquidation or winding up of the Corporation, the Holders of Series D Preferred Stock shall be entitled to participate in any distribution out of the assets of the Corporation before the holders of the Common Stock, Series A Preferred Stock and Series C Preferred Stock, but shall be considered on parity to the liquidation rights of the Series B Preferred Stockholders. The holders of shares of Series D 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 D Preferred Stock do not have voting rights but may convert into common stock at a conversion rate of one thousand (1,000) shares of Common Stock for every one (1) share of Series D Preferred Stock. The rights of the holders of Series D Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2023. As of December 31, 2023 and 2022, no Series D Preferred Stock was issued or outstanding. NOTE 12 – PROVISION FOR INCOME TAXES The Company provides for income taxes under ASC 740, “ Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. F- 19 The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of December 31, 2023 and 2022, are as follows: December 31, December 31, 2023 2022 Net Operating loss carryforward $ 13,457,361 $ 15,540,294 Effective tax rate 21 % 21 % Deferred tax asset 2,826,046 3,263,462 Foreign taxes ( 7,276 ) ( 7,118 ) Less: valuation allowance ( 2,392,015 ) ( 2,816,209 ) Net deferred tax asset $ 426,755 $ 440,135 As of December 31, 2023, the Company has approximately $ 13,500,000 of net operating losses (“NOL”) generated to December 31, 2023 carried forward to offset taxable income in future years which expire commencing in fiscal 2023. NOLs generated in the United States for tax years prior to December 31, 2017, can be carried forward for twenty years, whereas NOLs generated after December 31, 2017 can be carried forward indefinitely. NOLs generated in Switzerland can be carried forward for 7 years. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets relating to NOLs for every period because it is more likely than not that all of the deferred tax assets will not be realized other than those recorded at SwissLink, because the Company anticipates utilizing the NOLs prior to their expiration. Utilization of the NOL carry forwards may be subject to an annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). These ownership changes may limit the amount of the NOL carry forwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. Tax returns for the years ended 2017 through 2023 are subject to review by the tax authorities. NOTE 13 - RELATED PARTY TRANSACTIONS Due from related party During the years ended December 31, 2023 and 2022, the Company loaned $ 192,154 and $ 1,000 to a related party and collected $ 79,649 and $ 700 , respectively. As of December 31, 2023 and 2022, the Company had amounts due from related parties of $ 340,515 and $ 326,324 , respectively. The loans are unsecured, non-interest bearing and due on demand. Due to related parties As of December 31, 2023 and 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 years ended December 31, 2023 and 2022, the Company recorded management salaries of $ 516,000 and $ 576,000 , respectively, and stock-based compensation bonuses of $ 42,890 and $ 107,600 , respectively. As of December 31, 2023 and 2022, the Company recorded and accrued management salaries of $ 100,128 and $ 79,628 , respectively. F- 20 NOTE 14 – 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 years ended December 31, 2023 and 2022, the Company incurred rent expense of $ 5,954 and $ 73,865 , respectively. NOTE 15 - SEGMENT At December 31, 2023 and 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 years ended December 31, 2023 and 2022: Year ended December 31, 2023 NOTE 15 - SEGMENT - Schedule of Operating Activities by Geographic Segment USA Switzerland Elimination Total Revenues $ 144,466,050 5,530,738 $ ( 5,494,437 ) $ 144,502,351 Cost of revenue 140,610,403 4,714,372 ( 5,494,437 ) 139,830,338 Gross profit 3,855,647 816,366 — 4,672,013 Operating expenses General and administration 4,263,805 723,711 — 4,987,516 Operating income (loss) ( 408,158 ) 92,655 — ( 315,503 ) Other income (expense) 189,284 ( 93,217 ) — 96,067 Net income (loss) $ ( 218,874 ) $ ( 562 ) $ — $ ( 219,436 ) Year ended December 31, 2022 USA Switzerland Elimination Total Revenues $ 94,188,685 4,913,216 $ ( 5,898,369 ) $ 93,203,532 Cost of revenue 93,162,695 4,147,690 ( 5,898,369 ) 91,412,016 Gross profit 1,025,990 765,526 — 1,791,516 Operating expenses General and administration 4,216,107 767,069 — 4,983,176 Operating loss ( 3,190,117 ) ( 1,543 ) — ( 3,191,660 ) Other income (expense) ( 2,679,759 ) 5,658 — ( 2,674,101 ) Net income (loss) $ ( 5,869,876 ) $ 4,115 $ — $ ( 5,865,761 ) F- 21 Asset Information The following table shows asset information by geographic segment as of December 31, 2023 and 2022: December 31, 2023 USA Switzerland Elimination Total Assets Current assets $ 14,537,969 $ 1,874,627 $ ( 693,424 ) $ 15,719,172 Non-current assets $ 11,810,606 $ 810,437 $ ( 6,184,562 ) $ 6,436,481 Liabilities Current liabilities $ 11,978,244 $ 2,556,124 $ ( 693,424 ) $ 13,840,944 Non-current liabilities $ 139 $ 268,698 $ — $ 268,837 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 16 – SUBSEQUENT EVENTS . Subsequent to December 31, 2023 and through the date that these financials were made available, the Company had the following subsequent events: Acquisition On January 19, 2024, we entered into a Share Purchase Agreement (“Purchase Agreement”) with Yukon River Holdings, Ltd. (“Yukon River”), a corporation formed under the laws of the British Virgin Islands (“Seller”) concerning the contemplated sale by Seller and the purchase by us of 51% of the ordinary shares Seller holds in QXTEL LIMITED, a company incorporated in England and Wales. The purchase price (the “Purchase Price”) payable to the Seller for the shares is $5,000,000. Upon the execution of the Purchase Agreement, we agreed to deposit $1,500,000 of the Purchase Price into the trust account of a law firm acting as escrow agent (the “Escrow Agent”) as a nonrefundable deposit to evidence our good faith intention to purchase the shares. If the Purchase Agreement does not close before April 30, 2024, the deposit is non-refundable. If the Purchase Agreement closes, the deposit will be credited against the Purchase Price. At closing, in addition to the $1,500,000 with the Escrow Agent that will form part of the Purchase Price, we are required to pay $1,500,000 in cash and $2,000,000 to the Seller, either (A) in the form of a promissory note (the “Promissory Note”), or (B) by the delivery of iQSTEL shares to Seller. Seller may decide the form of payment between the Promissory Note or the share of iQSTEL, and if a Promissory Note is chosen, we have agreed to allow Seller the option to exchange the Promissory Note for shares of iQSTEL. Debt On January 24, 2024, we entered into a securities purchase agreement (the “SPA”) with M2B Funding Corp., a Florida corporation, for it to purchase up to the principal amount of $3,888,888.89 in secured convertible promissory notes (the “Notes”) for an aggregate purchase price of $3,500,000.00 (the “Purchase Price”), which Notes are convertible into shares (“Conversion Shares”) of our common stock with an initial conversion price of $0.11 per share. Each noteholder shall receive shares of common stock (“Kicker Shares”) in an amount equal to ten percent of the principal amount of any Note issued divided by $0.11. The Notes are secured by all of our assets under a Security Agreement signed with the SPA. The initial tranche was executed in January 2024 for $2,222,222.22 in face value of Notes and Kicker Shares, with an original issue discount of $222,222.22, a second and a third tranches were executed in March 2024 for $1,111,111.11 and $555,555.56 respectively in face value of Notes and Kicker Shares, with an original issue discount of US $111,111.11 and $55,555.56 respectively. Each one-year note bears interest at 18% per annum. Share issuance • 1,770,000 shares of common stock were issued valued at $0.10. • 2,020,202 shares of common stock were issued valued at $0.11. • 1,010,101 shares of common stock were issued valued at $0.11. F- 22 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes or disagreements with our accountants on accounting and financial disclosure. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2023. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report. Management’s Annual Report on Internal Control over Financing Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2024: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 27 Inherent Limitations Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting during the three month period ended December 31, 2023, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.. Item 9B. Other Information None Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None 28 PART III Item 10. Directors, Executive Officers and Corporate Governance The following information sets forth the names, ages, and positions of our current directors and executive officers. Name Age Positions and Offices Held Leandro Iglesias 58 President, Chairman, Chief Executive Officer and Director Alvaro Quintana Cardona 52 Chief Operating Officer, Chief Financial Officer and Director Juan Carlos Lopez Silva 56 Chief Commercial Officer Raul Perez 72 Director Jose Antonio Barreto 65 Director Italo Segnini 58 Director Set forth below is a brief description of the background and business experience of each of our current executive officers and directors. Leandro Iglesias Before founding Etelix in year 2008, where he has acted as President and CEO, Mr. Iglesias was the International Business Manager at CANTV/Movilnet (the Venezuelan biggest telecommunications services provider). He held this position between January 2003 and July 2008, while the company was under the control of Verizon. Previous to his position in Cantv/Movilnet Mr. Iglesias was Executive Vice President and responsible of the Latin America marketing division of American Internet Communications (August 1998 – December 2002). Leandro Iglesias has developed a career for more than 20 years in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables, satellite communications and international roaming services. He is Electronic Engineer graduate from Universidad Simon Bolivar and graduated from the Management Program at IESA Business School. He also holds an MBA from Universidad Nororiental Gran Mariscal de Ayacucho. Aside from that provided above, Mr. Iglesias does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. We believe that Mr. Iglesias is qualified to serve on our Board of Directors because of his wealth of experience in the telecom industry. Alvaro Quintana Cardona Alvaro Quintana has developed a career of more than twenty years of experience in the telecommunication industry with particular focus on regulatory affairs, strategic planning, value added services and international interconnection agreements. Before joining Etelix in year 2013 as Chief Operation Officer and Chief Financial Officer, Mr. Quintana acted between June 2004 and May 2013 as Interconnection and Value-Added Services Manager at Digitel (a mobile service provider in Venezuela, formerly a Telecom Italia Mobile subsidiary). He holds a Bachelor Degree in Business Administration and a Specialist Degree in Economics, both from the Universidad Catolica Andres Bello. He also holds a Master in Telecommunications from the EOI Business School in Spain. 29 Aside from that provided above, Mr. Cardona does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. We believe that Mr. Quintana is qualified to serve on our Board of Directors because of his wealth of experience in the telecom industry. Juan Carlos Lopez Silva Juan Carlos Lopez Silva is an Engineer graduated from Universidad de Los Andes, with a Master degree in Project Management from the Pontificia Universidad Javeriana; and MBA from EADA Business School; with more than 20 years of experience in project management, negotiation, business development and management on international companies. Previous to joining Etelix in August 2011 as Chief Commercial Officer, Juan Carlos was International Carrier Relations Manager at Colombia Telecomunicaciones S.A. Esp. a subsidiary of Telefonica of Spain, between September 2003 and June 2011. Aside from that provided above, Mr. Silva does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. On March 1, 2024, Juan Carlos Lopez Silva resigned from his position as Chief Operating Officer of the Company. Mr. Lopez will formally assume the position of CEO of the IQSTEL subsidiaries, Etelix and SwissLink, a position that he has been holding as interim in recent months. The existing employment agreement Mr. Lopez has with the Company will remain in effect with the change in position. Raul A Perez From December 1, 2014 to present, Mr. Perez serves as CFO of Deerbrook Family Dentistry, PC, Dental Practice in Humble, Texas. From November 1, 2017 to January 31, 2019, he served as Senior Accountant to Principrin School, PC, Day Care in Houston, Texas. Mr. Perez has been in finance for more than 40 years, starting in 1970 as analyst in treasury and finance departments and progressively assuming different positions up to corporate treasurer for large corporations. He served for Sudamtex of Venezuela, C.A for 5 years and Polar Brewery in Caracas, Venezuela for 10 year. Beginning in 2000, he accepted a position as a Director of the Security and Exchange Commission of Venezuela to have the surveillance of Venezuelan stock market participants. Also, in 2004 he completed the requirements and received his certification as a Venezuelan Investment Advisor. Later, as an independent contractor for three years, he was selected as the Corporate Compliance Officer for an especially important stock market broker dealer in Venezuela, Activalores Casa de Bolsa, in which he developed the Compliance Unit and manuals required by local and international anti money laundering laws. He also taught Advanced Institute of Finance (IAF) in Caracas being a professor of Corporate Finance and Managerial Accounting for 5 years. Mr. Perez has a Bachelor’s degree in accounting (1976), and MBA Finance (1982), gave me the overall knowledge of finance and how to plan, start up, run, and control a business. We have selected Mr. Perez to serve as an independent director because of his education, skills and experience in finance and his regulatory history. 30 Jose Antonio Barreto From 2006 to the present, Mr. Barreto has been Chief Business Development Officer of Xpectra Remote Management / Mexico. There he was in charge of directing all aspects of account development and sales effort to close specific private and government opportunities and developing strategic accounts in Mexico and the LATAM region. From 2020 to present, he has been an advisor to our Board of Directors. Mr. Barreto has more than 30 years of experience working in telecommunications and technology companies. He has been directly responsible of leading the business development and operational in several telecommunication and technology companies’ acquisition activity, with the responsibility of leading the technical, operation and financial analysis. Over the last 14 years, Jose Antonio has been the North and Central American leader, spanning from Mexico to Panama, in the development of commercial processes in the technology security field, artificial intelligence, Internet of Things (IoT) platforms, as well as cutting edge technology solutions and software systems. He studied Electronic Engineering at the Universidad Simón Bolivar followed by a Master of Science Degree in Electrical and Computer Engineering at Rice University. He also completed the Master in Telecommunications Management offered by Universidad Simon Bolivar and the Telecom SudParis Institute. We have selected Mr. Barreto to serve as an independent director because of his education, skills and experience in technology companies. Italo R. Segnini From March 2020 to the present, Mr. Segnini has been serving as Global Carrier Partnership Director of Sierra Wireless. From June 2019 to February 2020, he served as an Independent Telecom Consultant. From 2017 to 2019, he served as Director of International Carrier Business for Televisa Telecom. From 2012 to 2019, he served as Director International Carrier Business for Millicom. Mr. Segnini is a long time Telecommunicaction industry professional who has had high level positions at Global Tier Ones for more than 20 years, Telefonica, Millicon and Televisa, Sierra Wireless to mention a few. Mr. Segnini has extensive executive experience in the Telecom areas like Voice, A2P, SMS, Data, Roaming, Mobility Services, B2B, MNO, MVNO, IoT, Interconnection, etc., and a solid business performance record spanning multiple functions including International commercial negotiations, management, sales, business development, sales, regulatory and operations. Italo R. Segnini holds a Juris Doctor degree from the Andres Bello Catholic University, a Telecommunication Masters Degree from Madrid Pontificia Comillas University and an MBA from IESA Business School Term of Office Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements. Significant Employees We have no significant employees other than our officers and directors. Family Relationships There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers. 31 Involvement in Certain Legal Proceedings During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including: 1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; 2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; 4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; 5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any Federal or State securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 32 Director Independence The Board of Directors reviews the independence of our directors on the basis of standards adopted by the NASDAQ Stock Market (“NASDAQ”). As a part of this review, the Board of Directors considers transactions and relationships between our company, on the one hand, and each director, members of the director’s immediate family, and other entities with which the director is affiliated, on the other hand. The purpose of such a review is to determine which, if any, of such transactions or relationships were inconsistent with a determination that the director is independent under NASDAQ rules. As a result of this review, the Board of Directors has determined that none of our directors is an “independent director” within the meaning of applicable NASDAQ listing standards. Committees of the Board Our full board serves the functions that would normally be served by a separately-designated Nominating Committee. Company has an Audit Committee with a financial expert on the Board and a majority of independent members. Company has a Compensation Committee with a majority of independent members. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2023. Code of Ethics On October 31, 2022, our Board of Directors approved and adopted a Code of Business Conduct and Ethics (the “Code of Ethics”). The Code of Ethics is applicable to all directors, officers and employees of our company, our company’s subsidiaries and any subsidiaries that may be formed in the future. The Code of Ethics addresses such individuals’ conduct with respect to, among other things, conflicts of interests; compliance with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure; competition and fair dealing; corporate opportunities; confidentiality; insider trading; protection and proper use of our assets; fair treatment; and reporting suspected illegal or unethical behavior. A copy of our Code of Ethics is posted on our website at http://iqstel.com/. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Business Conduct and Ethics on our website. The reference to the iQSTEL website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be part of this prospectus. Item 11. Executive Compensation The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2023 and 2022. Name and principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) (1)(2) Total ($) Leandro Iglesias President, CEO and Director 2023 2022 240,000 204,000 - - - - - - - - 240,000 204,000 Alvaro Quintana Treasury, Secretary and Director 2023 2022 144,000 144,000 - - - - - - - - 144,000 144,000 Juan Carlos López Chief Commercial Officer 2023 2022 60,000 120,000 - - - - - - - - 60,000 120,000 33 On May 2, 2019, the Company entered into Employment Agreements with the following persons: (i) Leandro Iglesias as President, CEO and Chairperson of the Company’s Board of Directors with an annual salary of $168,000 with an annual bonus of 3% of our net income; (ii) Juan Carlos Lopez Silva as Chief Commercial Officer with an annual salary of $120,000 with an annual bonus of 3% of our net income; and Alvaro Quintana Cardona as Chief Operating Officer and Chief Financial Officer with an annual salary of $144,000 with an annual bonus of 3% of our net income. The Employment Agreements have a term of 36 months, are renewable automatically for 24-month periods, unless the Company gives written notice at least 90 days prior to termination of the initial 36-month term. The Company shall have the right to terminate any of the employment agreements at any time without prior notice, but in that event, the Company shall pay these persons salaries and other benefits they are entitled to receive under their respective agreements for three years. The above executive officers agreed to two year non-compete and non-solicit restrictive covenants with the Company. If any of the executive officers are terminated for cause they shall forfeit any rights to severance. On November 1, 2020, our board of directors approved amended employments in favor of our Chief Executive Officer, Leandro Iglesias, our Chief Financial Officer, Alvaro Quintana, and our Chief Commercial Officer, Juan Carlos Lopez Silva. The amended employment agreement in favor of Mr. Iglesias extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Iglesias provides that we will compensate him with a salary of $17,000 monthly and he is eligible for quarterly bonus of 250,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock. For common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share of the Company’s common stock on the OTC Markets during the last 10 days and applying a discount of 25%.” For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten US Dollars ($10). Mr. Iglesias has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share. The amended employment agreement in favor of Mr. Quintana extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Quintana provides that he is eligible for quarterly bonus of 200,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Quintana may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock. For common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share of the Company’s common stock on the OTC Markets during the last 10 days and applying a discount of 25%.” For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten US Dollars ($10). Mr. Quintana has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share. The amended employment agreement in favor of Mr. Silva extended the term of employment from 36 months to 60 months. Mr. Silva is eligible for quarterly bonuses of 150,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. On February 29, 2024, our board of directors approved amended and restated employment and indemnification agreements in favor of our Chief Executive Officer, Leandro Jose Iglesias and our Chief Financial Officer, Alvaro Quintana Cardona, to replace their existing agreements. The agreements are effective as of January 1, 2024. The new five year employment agreement with Mr. Iglesias provides that we will compensate him with a salary of $31,000 monthly and he is eligible for a bonus as follows: (i) up to two months of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 1,000,000 shares of our common stock, a determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. 34 Mr. Iglesias agreed to two year non-compete and non-solicit restrictive covenants. If Mr. Iglesias is terminated for cause he shall forfeit any rights to severance, which is available to him in the event of termination without cause. The new five year employment agreement with Mr. Quintana provides that we will compensate him with a salary of $22,000 monthly and he is eligible for a bonus as follows: (i) up to two months of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 800,000 shares of our common stock, a determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the agreement provides that Mr. Cardona may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. Mr. Quintana agreed to two year non-compete and non-solicit restrictive covenants. If Mr. Quintana is terminated for cause he shall forfeit any rights to severance, which is available to him in the event of termination without cause. Option Grants We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans. Compensation of Directors All Directors shall receive reimbursement for reasonable travel expenses incurred to attend Board and committee meetings. Effective on July 1, 2021 and thereafter, all Directors shall be compensated monthly up to 4,000 shares of common stock cash of $1,000 for their service as Directors. The Chairman and Secretary of the Board shall receive an additional $2,000 per month in addition to the Director compensation. In lieu of the cash compensation set forth above, each Director may elect to receive shares of the Corporation's Common Stock equal to the total cash compensation divided by the average market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%. Effective on January 1, 2024, and thereafter, all Directors shall be compensated monthly with 10,000 shares of common stock cash of $2,500 for their service as Directors. The Chairman and Secretary of the Board shall receive an additional $2,500 per month in addition to the Director compensation. Each Director shall also be entitled to a bonus of up to 1% of our net income on a yearly basis. In lieu of the cash compensation set forth above, each Director may elect to receive shares of our Common Stock equal to the total cash compensation divided by the average market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%. Pension, Retirement or Similar Benefit Plans There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof. Compensation Committee The Company have a compensation committee of the board of directors. This committee is constituted by independent members of the Board and participates in the consideration of executive officer and director compensation. 35 Indebtedness of Directors, Senior Officers, Executive Officers and Other Management None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth, as of March 27, 2024, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group. Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address of 300 Aragon Avenue, Suite 375, Coral Gables, FL 33134. The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner. Common Stock Name of Beneficial Owner Number of Shares Owned (1) Percent of Class (2) Leandro Iglesias 542,932 0.3079 % Alvaro Quintana Cardona 1,121,842 0.6362 % Juan Carlos Lopez Silva 925,497 0.5249 % Raul Perez 8,000 0.0045 % Jose Antonio Barreto 8,000 0.0045 % Italo Segnini 8,000 0.0045 % All Directors and Executive Officers as a Group (6 persons) 2,614,271 1.4826 % Series A Preferred Stock Name of Beneficial Owner Number of Shares Owned (1) Percent of Class (3) Leandro Iglesias 7,000 70.00 % Alvaro Quintana Cardona 3,000 30.00 % Juan Carlos Lopez Silva — — Raul Perez — — Jose Antonio Barreto — — Italo Segnini — — All Directors and Executive Officers as a Group (6 persons) 10,000 100.00 % 36 (1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity. (2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 176,329,933 voting shares as of March 27, 2024. (3) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 10,000 voting shares as of March 27, 2024. Item 13. Certain Relationships and Related Transactions, and Director Independence Other than described below or the transactions described under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. Due from related party Due from related party During the years ended December 31, 2023 and 2022, the Company loaned $192,154 and $1,000 to a related party and collected $79,649 and $700, respectively. As of December 31, 2023 and 2022, the Company had amounts due from related parties of $370,860 and $326,324, respectively. The loans are unsecured, non-interest bearing and due on demand. Due to related parties As of December 31, 2023 and 2022, the Company had amounts due to related parties of $26,613. The amounts are unsecured, non-interest bearing and due on demand. Item 14. Principal Accounting Fees and Services Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audits of the Company’s annual financial statements for the years ended: Financial Statements for the Year Ended December 31 Audit Services Audit Related Fees Tax Fees Other Fees 2022 $ 145,000 $ 4,456 $ 0 $ 0 2023 $ 175,000 $ 11,800 $ 0 $ 0 37 PART IV Item 15. Exhibits, Financial Statements Schedules (a) Financial Statements and Schedules The following financial statements and schedules listed below are included in this Form 10-K. Financial Statements (See Item 8) (b) Exhibits Exhibit No. Description of Exhibit Exhibit 2.1 Membership Interest Purchase Agreement(1) Exhibit 2.2 Memorandum of Understanding and Shareholders Agreement dated February 21, 2020(5) Exhibit 2.3 Memorandum of Understanding and Shareholders Agreement dated February 12, 2020(6) Exhibit 2.4 Company Purchase Agreement, dated April 1, 2019(11) Exhibit 2.5 Share Purchase Agreement, dated January 19, 2024(23) Exhibit 3.1 Articles of Incorporation of the Registrant (2) Exhibit 3.2 Certificate of Amendment(3) Exhibit 3.3 Certificate of Amendment(18) Exhibit 3.4 Certificate of Designation(20) Exhibit 3.5 Certificate of Designation(21) Exhibit 3.6 Certificate of Designation(22) Exhibit 3.7 Amended and Restated Bylaws of the Registrant(19) Exhibit 4.1 Amendment #2 to the Crown Capital Note dated March 2, 2020(4) Exhibit 4.2 Amendment #2 to the Auctus Fund Note dated March 2, 2020(4) Exhibit 4.2 Amendment #1 to the Labrys Fund Note dated February 11, 2020(7) Exhibit 4.3 Amendment #1 to the Apollo Note dated December 23, 2019(8) Exhibit 4.4 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.5 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.6 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.7 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.8 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.9 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.10 Amendment #1 to the Crown Capital Note dated December 23, 2019(8) Exhibit 4.11 Amendment #1 to the Auctus Fund Note dated January 1, 2020(8) Exhibit 4.12 Senior Secured Convertible Promissory Note to Labrys Fund dated December 3, 2019(9) Exhibit 4.13 Purchase Company Agreement, dated April 21, 2022(12) Exhibit 4.14 Purchase Company Agreement, dated May 6, 2022(13) Exhibit 4.15 Common Stock Purchase Option with ADI Funding dated April 5, 2022(14) Exhibit 4.16 Amended Common Stock Purchase Option with ADI Funding dated September 29, 2022(15) Exhibit 4.17 Secured Convertible Promissory Note, dated January 24, 2024(23) Exhibit 4.18 Common Stock Purchase Option, dated February 12, 2024(24) Exhibit 10.1 Conversion Agreement with Carmen Cabell(1) Exhibit 10.2 Conversion Agreement with Patrick Gosselin(1) Exhibit 10.3 Conversion Agreement with Mark Engler(1) Exhibit 10.4 Employment Agreement with Leandro Iglesias(1) Exhibit 10.5 Employment Agreement with Alvaro Quintana Cardona(1) Exhibit 10.6 Employment Agreement with Juan Carlos Lopez Silva(1) Exhibit 10.7 Forbearance Agreement dated December 12, 2019(8) Exhibit 10.8 Temporary Forbearance Agreement dated December 18, 2019(8) Exhibit 10.9 Securities Purchase Agreement, dated December 3, 2019(9) Exhibit 10.10 Employment and Indemnification Agreements with Leandro Iglesias, dated May 2, 2019(10) Exhibit 10.11 Employment and Indemnification Agreements with Alvaro Quintana, dated May 2, 2019(10) Exhibit 10.12 Employment and Indemnification Agreements with Juan Carlos Lopez Silva, dated May 2, 2019(10) Exhibit 10.13 Registration Rights Agreement with ADI Funding dated April 5, 2022(16) Exhibit 10.14 Securities Purchase Agreement, dated January 24, 2024(23) Exhibit 10.15 Registration Rights Agreement with M2B Funding Corp., dated January 24, 2024(23) Exhibit 10.16 Security Agreement, dated January 24, 2024(23) Exhibit 14.1 Code of Business Conduct and Ethics(17) Exhibit 31.1** Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2** Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 101** The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Extensible Business Reporting Language (XBRL). Filed herewith** 38 1. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on June 28, 2018. 2. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the US Securities and Exchange Commission on August 18, 2011. 3. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on August 31, 2018. 4. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on March 30, 2020. 5. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 25, 2020. 6. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 19, 2020. 7. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 13, 2020. 8. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 6, 2020. 9. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on December 11, 2019. 10. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 6, 2019. 11. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 4, 2019. 12 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 26, 2022. 13 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 10, 2022. 14 Incorporated by reference to the Company’s Form S-1/A filed with the US Securities and Exchange Commission on September 22, 2022. 15 Incorporated by reference to the Company’s Form 8-K/A filed with the US Securities and Exchange Commission on October 6, 2022. 16 Incorporated by reference to the Company’s Form S-1/A filed with the US Securities and Exchange Commission on October 11, 2022. 17 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 2, 2022. 18 Incorporated by reference to the Company’s DEF 14C filed with the US Securities and Exchange Commission on May 12, 2020. 19 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on December 14, 2022. 20 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 8, 2021. 21 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 13, 2020. 22 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 6, 2020. 23 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 25, 2024. 24 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 13, 2024. Item 16. Form 10-K Summary None 39 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IQSTEL Inc. By: /s/ Leandro Iglesias Leandro Iglesias Chief Executive Officer, Principal Executive Officer April 1, 2024 By: /s/ Alvaro Quintana Cardona Alvaro Quintana Cardona Title: Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer Date: April 1, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Leandro Iglesias Leandro Iglesias Chief Executive Officer, Principal Executive Officer April 1, 2024 By: /s/ Alvaro Quintana Cardona Alvaro Quintana Cardona Title: Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer Date: April 1, 2024 By: /s/ Raul Perez Raul Perez Title: Director Date: April 1, 2024 By: /s/ Jose Antonio Barreto Jose Antonio Barreto Title: Director Date: April 1, 2024 By: /s/ Italo Segnini Italo Segnini Title: Director Date: April 1, 2024 40