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Item 8. Financial Statements and Supplementary Data

2024-04-01 compared with 2023-04-14 · 291 added, 369 removed, 725 unchanged (48% of the section changed)

3 unchanged sentences

Audited Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID 1013 );

Report of Independent Registered Public Accounting

Firm (PCAOB ID 1013 );

Consolidated Balance Sheets as of December 31, 2023 and 2022;

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Notes to Consolidated Financial Statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors

iQST EL, Inc.

Coral Gables,

of Independent Registered Public Accounting Firm

the Stockholders and Board of Directors iQSTEL, Inc.

on the Consolidated Financial Statements

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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 each of the years then ended , in conformity with accounting principles generally

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.

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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.

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.

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

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:

Obtained and read contract

source documents for each selection and other documents that were part of the agreement, if applicable.

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.

We tested the mathematical

accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

We confirmed significant

customer balances.

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 on

executing its business plan and ultimately to 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.

procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others:

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.

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.

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.

Audit Matter Description

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.

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.

related audit effort in evaluating management’s judgments in determining revenue recognition for customer agreements required a

high degree of auditor judgment.

the Critical Audit Matter was Addressed in the Audit

principal audit procedures related to the Company’s revenue recognition for customer agreements included the following:

gained an understanding of internal controls related to revenue recognition.

evaluated management’s significant accounting policies for reasonableness.

selected a sample of revenues recognized and performed the following procedures:

and read contract source documents for each selection and other documents that were part

of the agreement, if applicable.

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.

tested the mathematical accuracy of management’s calculations of revenue and the associated

timing of revenue recognized in the financial statements.

confirmed significant customer balances.

Going Concern

Audit Matter Description

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.

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.

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.

audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among

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.

reviewed and evaluated management's plans for dealing with adverse effects of these conditions

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its ability to continue as a going concern was adequately disclosed.

Urish Popeck & Co., LLC

We have served as

the Company's auditor since 2020.

Consolidated Balance Sheets

Popeck & Co., LLC

have served as the Company's auditor since 2020.

Pittsburgh, Pennsylvania

Balance Sheets

receivable, net

from related parties

and other current assets

Current Assets

Accounts receivable, net

Due from related parties

Prepaid and other current assets

Total Current Assets

Property and equipment, net

Intangible assets

Deferred tax assets

LIABILITIES AND STOCKHOLDERS' EQUITY

and equipment, net

AND STOCKHOLDERS' EQUITY

and other current liabilities

to related parties

payable - net of discount of $ 32,334

payable - related parties

note - net of discount of $ 10,428

Current Liabilities

Accounts payable

Accrued and other current liabilities

Due to related parties

Loans payable - net of discount of $ 0 and $ 7,406

Loans payable - related parties

Derivative liabilities

Total Current Liabilities

Loans payable, non-current

Employee benefits, non-current

TOTAL LIABILITIES

Stockholders' Equity

Preferred stock:

payable, non-current

benefits, non-current

Stockholders'

1,200,000 authorized;

$ 0.001 par value

Series A Preferred stock:

10,000 designated;

A Preferred stock:

shares issued and outstanding

B Preferred stock:

par value, 31,080

shares issued and outstanding, respectively

Series B Preferred stock:

200,000 designated;

$ 0.001 par value,

C Preferred stock:

par value, No

shares issued and outstanding

Series C Preferred

par value, No shares issued and outstanding

Common stock:

D Preferred stock:

par value, No

shares issued and outstanding

300,000,000 authorized;

$ 0.001 par value

161,595,511 and 147,477,358 shares issued and outstanding, respectively

Additional paid in capital

Accumulated deficit

172,129,630 and

161,595,511 shares

issued and outstanding, respectively

paid in capital

( 26,084,133 )

( 24,504,395 )

Accumulated other comprehensive loss

Equity attributed to stockholders of iQSTEL Inc.

Deficit attributable to noncontrolling interests

TOTAL STOCKHOLDERS' EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

The accompanying notes are

an integral part of these consolidated financial statements.

other comprehensive loss

attributed to stockholders of iQSTEL Inc.

attributable to noncontrolling interests

STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements

of Operations

Cost of revenue

$ 144,502,351

and administration

operating expenses

General and administration

Total operating expenses

Operating loss

( 3,191,660 )

income (expense)

in fair value of derivative liabilities

( 2,650,369 )

other income (expense)

Other expenses

Interest expense

Change in fair value of derivative liabilities

( 2,674,101 )

Loss on settlement of debt

Total other expense

( 2,674,101 )

Net loss before provision for income taxes

loss before provision for income taxes

( 5,865,761 )

Net income attributable to noncontrolling interests

loss attributed to iQSTEL Inc.

$ ( 763,258 )

$ ( 5,967,474 )

Net income (loss) attributable to noncontrolling interests

Net loss attributed to stockholders of iQSTEL Inc.

on Series B Preferred Stock

loss attributed to stockholders of iQSTEL Inc.

$ ( 1,579,738 )

$ ( 5,967,474 )

Comprehensive income (loss)

Comprehensive

income (loss)

$ ( 219,436 )

$ ( 5,865,761 )

Foreign currency adjustment

Total comprehensive loss

currency adjustment

comprehensive loss

$ ( 203,324 )

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Comprehensive income attributable to noncontrolling interests

Net comprehensive loss attributed to stockholders of iQSTEL Inc.

comprehensive loss attributed to iQSTEL Inc.

$ ( 755,041 )

$ ( 5,964,373 )

Basic and diluted loss per common share

Weighted average number of common shares outstanding - Basic and diluted

and diluted loss per common share

average number of common shares outstanding - Basic and diluted

The accompanying notes are

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31, 2023 and 2022

A Preferred Stock

B Preferred Stock

Series A Preferred Stock

Series B Preferred Stock

Paid in Capital

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Stockholders’ Deficit

Balance - December 31, 2020

$ ( 14,699,148 )

$ ( 1,388,575 )

$ ( 1,006,461 )

- December 31, 2021

$ 18,536,921 )

stock issued for conversion of common stock

$ ( 996,013 )

stock issued for cash and subscription receivable

stock issued for settlement of debt

stock issued for service

stock issued for cash

stock issued for acquisitions of subsidiaries

stock issued for asset acquisition

stock issued for compensation

stock issued for forbearance of debt

stock issued for conversion of debt

stock issued for settlement of debt

stock issued for warrant exercises

stock payable

party debt to equity swap

of common stock

( 1,294,600 )

of derivative liabilities

of derivative liabilities upon exercise of warrants

currency translation adjustments

( 3,837,773 )

( 3,864,001 )

Balance - December 31, 2021

(loss) income

( 5,967,474 )

issued for cash

issued for acquisitions of subsidiaries

issued for asset acquisition

issued for compensation

issued for settlement of debt

issued for warrant exercises

of derivative liabilities upon exercise of warrants

Foreign currency

translation adjustments

(loss) income

( 5,865,761 )

- December 31, 2022

$ ( 24,504,395 )

$ ( 924,377 )

B Preferred stock issued as dividend

stock issued for compensation

stock issued for warrant exercises

of derivative liabilities upon exercise of warrant

to non-controlling interest

currency translation adjustments

- December 31, 2023

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Bad debt expense

Write-off of due from related party

Loss on disposal of asset

Depreciation and amortization

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Change in fair value of derivative liabilities

Loss on settlement of debt

Prepayment and default penalty

Deferred tax assets

Changes in operating assets and liabilities:

Accounts receivable

( 8,010,726 )

Prepaid and other current assets

Due from related party

Accounts payable

( 1,085,279 )

Due from related parties

Accounts payable

Accrued and other current liabilities

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Purchase of property and equipment

Purchase of intangible assets

Payment of loan receivable - related party

Advances of loan receivable - related party

Collection of amounts due from related parties

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Repayments of loans payable

Repayment of loans payable - related parties

Proceeds from common stock issued

Proceeds from exercise of warrants

Proceeds from issuance of common stock purchase options

Proceeds from convertible notes

Deposit for option

Repayment of convertible notes

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Common Stock payable

Common stock issued

for asset acquisition

Common stock issued

for acquisitions of subsidiaries

Series B Preferred stock issued as dividend

Common stock issued for asset acquisition

Common stock issued for acquisitions of subsidiaries

Common stock issued for conversion of debt

Common stock issued

for exercise of cashless warrants

Resolution of derivative

liabilities upon exercise of warrants

Related party debt

Common stock issued

for settlement of debt

Common stock issued for forbearance of debt

Preferred stock issued for conversion of common stock

Subscription receivable

Common stock issued for exercise of cashless warrants

Common stock issued for settlement of debt

Non-cash dividend for collection of loan receivable - related parties

Resolution of derivative liabilities upon exercise of warrants

The accompanying notes are

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has been engaged in the business of telecommunication services as a wholesale carrier of voice, SMS and data for other telecom companies

around the World with 404 active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers.

around the World with over 400 active interconnection agreements with mobile companies, fixed

line companies and other wholesale carriers.

On May 13, 2022, we entered into a Company Acquisition

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are detailed in Note 4.

A novel strain

of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization

on March 11, 2020.

As a result of the outbreak, many companies experienced disruptions in their operations and in markets served.

Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees

and minimize business disruption.

The Company considered the impact of COVID-19 on the assumptions and estimates used and determined

that there were no material adverse impacts on the Company’s results of operations and financial position at December 31, 2022.

The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain.

A new prolonged outbreak could have

a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company

to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients.

is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying

value of its assets or lia bilities as of April 14, 2023, the d ate of issuance of this Annual

Report on Form 10-K.

These estimates may change, as new events occur, and additional information is obtained.

NOTE 2 -SUMMARY

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credit losses in its existing accounts receivable .

The Company reviews its allowance for doubtful accounts daily and past due balances

over 60 days and a specified amount are reviewed individually for collectability.

Account balances are charged off after all means of

collection have been exhausted and the potential for recovery is considered remote.

During the years ended December 31, 2022 and 2021,

the Company recorded bad debt expense of $ 34,376 and $ 0 , respectively.

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.

the years ended December 31, 2023 and 2022, the Company recorded bad debt expense of $ 8,815 and $ 34,376 , respectively.

consisting of smart gas parts, are primarily accounted for using the first-in-first-out (“FIFO”) method of accounting.

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Benefit Costs

defined contribution retirement benefit schemes 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.

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.

benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being

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and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

the year ended December 31, 2022 12 customers represented 88 % of

our revenue compared to 7 customers representing 88 % of

our revenue for the year ended December 31, 2021.

For the years ended December 31, 2022 and 2021, 57 % and 68 % 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.

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

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.

follows ASC 820, “ Fair Value Measurements and Disclosures, ” which defines fair value as the exchange price that would

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Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, “ Financial

Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments.

” ASU 2016-13 requires a financial asset

(or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes

the Company’s accounts receivable.

This ASU is effective for the Company for reporting periods beginning after December 15, 2022.

The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated financial statements.

In June 2022,

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of the consideration paid by the Company:

Value of Consideration:

Fair Value of Consideration:

1,461,653 shares of common stock

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Unaudited combined proforma results of operations

for the year ended December 31, 2022 and 2021 as though the Company acquired Smartbiz and Whisl on January 1, 2021, are set forth below:

for the year ended December 31, 2022 as though the Company acquired Smartbiz and Whisl on January 1, 2022, are set forth below:

$ 103,353,405

3 unchanged sentences

( 4,125,703 )

( 2,856,060 )

Other expense

1 unchanged sentence

$ ( 6,799,804 )

$ ( 3,736,172 )

NOTE 5 – PREPAID

1 unchanged sentence

other current assets at December 31, 2023 and 2022 consisted of the following:

Subscription receivable

Other receivable

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at December 31, 2023 and 2022 consisted of the following:

Note was issued on November 1, 2020 and due on January 30, 2022

Note was issued on October 23, 2018 and due on January 2, 2024

Swisspeers AG

Note was issued on April 8, 2019 and due on October 4, 2022

Darlene Covid19

Note was issued on April 1, 2020 and due on March 31, 2025

Promissory note payable

Note was issued April 4, 2023 and due on April 4, 2024

Promissory note payable

Note was issued December 6, 2023 and due on October 15, 2024

Unamortized debt discount

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- related parties at December 31, 2023 and 2022 consisted of the following:

49% Shareholder of SwissLink

49% of Shareholder of SwissLink

Note is due on demand

49% Shareholder of SwissLink

49% of Shareholder of SwissLink

Note is due on demand

Current portion of loans payable

Long-term loans payable

Current portion of loans payable –related parties

Long-term loans payable – related parties

During the years

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During the years

ended December 31, 2022 and 2021, the Company recorded interest expense of $ 22,234 and $ 191,281 and recognized amortization

of discount, included in interest expense, of $ 7,407 and $ 78,481 , respectively.

year ended December 31, 2021, a $ 1,647,150 (CHF 1,518,909) related party loan was forgiven and the Company recorded it as additional

paid in capital.

During the year

ended December 31, 2021, the Company settled loans payable of $ 1,516,667 by issuing 2,230,394 shares of common stock

valued at $ 2,056,530 .

As a result, the Company recorded loss on settlement of debt of $539,863.

CONVERTIBLE LOANS

31, 2022 and 2021, there were no convertible loans.

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.

During the years

ended December 31, 2022 and 2021, the Company repaid notes of $ 0 and $ 250,000 and accrued interest of $ 0 and $ 6,027 , respectively.

During the year

ended December 31, 2021, the Company converted notes with principal amounts and accrued interest of $ 422,295 into 6,080,632 shares

of common stock.

The corresponding derivative liability at the date of conversion of $ 708,611 was settled through additional

paid in capital.

During the year

ended December 31, 2021, the Company recorded gain on settlement of debt of $11,069.

CONVERTIBLE LOANS

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.

unpaid interest and outstanding principal shall be paid in 10 payments each in the amount of $31,893 beginning on July 16, 2023 .

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 .

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

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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.

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.

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 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

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activity regarding warrants issued as follows:

Warrants Outstanding

Weighted Average

Weighted Average Remaining

Exercise Price

Contractual life (in years)

life (in years)

Outstanding, December 31, 2021

3 unchanged sentences

Outstanding, December 31, 2022

Increase in number of warrants by VWAP

( 10,294,119 )

( 18,080,921 )

Outstanding, December 31, 2023

NOTE 10 – DERIVATIVE

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Changes to these inputs could produce a significantly higher or lower fair value measurement.

The fair value of warrants is estimated

using the Black-Scholes valuation model.

For the years

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Expected average volatility

145 % - 241 %

Expected dividend yield

4 unchanged sentences

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, 2020

Settled on issuance of common stock

Change in fair value of the derivative

Value Measurements Using Significant Observable Inputs (Level 3)

Balance - December 31, 2021

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Balance - December 31, 2022

Settled on issuance of common stock

Change in fair value of the warrants

Balance – December 31, 2023

The following

4 unchanged sentences

Change in fair value of derivative liabilities

$ ( 317,080 )

NOTE 11 – STOCKHOLDERS’

1 unchanged sentence

authorized capital consists of 300,000,000 shares of common stock with a par value of $ 0.001 per share.

the year ended December 31, 2023, the Company issued 10,534,119 shares of common stock, valued at fair market value on issuance as

shares for compensation to our directors valued at $ 42,890 ;

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:

shares issued for cash of $ 1,000,000

shares for acquisitions of Whisl and Smartbiz valued at $ 1,550,000

shares for asset acquisition valued at $ 357,500

shares for compensation to our directors valued at $ 107,600

shares for settlement of debt valued at $ 80,674

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.

Preferred Stock

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month’s stock liquidity.

During the year

ended December 31, 2021, 21,000,000 shares of common stock were converted into 21,000 shares of Series B Preferred

Stock by our management.

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, 2022 and 2021, 21,000 shares of Series B Preferred Stock were issued and outstanding.

31, 2023 and 2022, 31,080 and 21,000 shares of Series B Preferred Stock were issued and outstanding, respectively.

Preferred Stock

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31, 2023 and 2022, no Series C Preferred Stock was issued or outstanding.

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:

shares issued for cash of $ 1,000,000

shares for acquisitions of Whisl and Smartbiz valued at $ 1,550,000

shares for asset acquisition valued at $ 357,500

shares for compensation to our directors valued at $ 107,600

shares for settlement of debt valued at $ 80,674

shares for exercise of warrants for $ 400,000

During the year

ended December 31, 2021, the Company issued 51,638,526 shares of common stock, valued at fair market value on issuance as follows;

shares issued for cash of $ 6,536,250 , of which $ 100,000 was recorded as subscription receivable as of December 31, 2021.

The Company received

the $ 100,000 on January 3, 2022.

shares, valued at $ 2,056,530 , issued for settlement of debt of $ 1,516,667

shares for services valued at $ 284,700

shares issued to our management for compensation valued at $ 1,037,568

shares for forbearance of debt valued at $ 49,925

shares issued for conversion of debt of $ 422,295

During the year

ended December 31, 2021, the Company terminated a placement agent and advisory services agreement with a FINRA member dated September

22, 2020, and cancelled 1,294,600 shares of common stock, which was issued for those services.

The termination agreement allowed

the FINRA member to retain 400,000 shares of the Company’s common stock in connection with the services.

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, 2022 and 2021, 161,595,511 and 147,477,358 shares of common stock were issued and outstanding, respectively.

31, 2023 and 2022, no Series D Preferred Stock was issued or outstanding.

NOTE 12 – PROVISION

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Net deferred tax asset

December 31, 2022, the Company has approximately $ 15,540,000 of net operating losses (“NOL”) generated to

December 31, 2022 carried forward to offset taxable income in future years which expire commencing in fiscal 2022.

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 in USA, and can be carried forward for 7 years in Switzerland.

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

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.

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

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.

of the NOL carry forwards may be subject to an annual limitation due to ownership change limitations that may have occurred or that could

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related party

During the year

ended December 31, 2021, the Company loaned $ 220,674 to our CEO and applied to due to CEO of $ 8,004 .

During the year

ended December 31, 2021, the Company wrote off due from related party of $ 10,148 .

During the years

ended December 31, 2022 and 2021, the Company loaned $ 1,000 and $ 220,674 to a related party and collected $ 700 and $ 226 , respectively.

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, 2022 and 2021, the Company had due from related parties of $ 326,324 and $ 424,086 , respectively.

The loans are unsecured, non-interest

bearing and due on demand.

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

During the years

ended December 31, 2022 and 2021, the Company repaid $ 0 and $ 90,787 , respectively, to the CEO and CFO of the Company.

As of December

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due on demand.

Debt to Equity

During the year

ended December 31, 2021 the Company recorded a debt to equity swap of $ 1,647,150 as additional paid in capital.

During the years

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the years ended December 31, 2023 and 2022, the Company incurred rent expense of $ 5,954 and $ 73,865 , respectively.

2020, we appointed Oscar Brito as an advisor to our Board of Directors and agreed to pay him $ 5,000 per month for such services.

Brito acted as an advisor to our Board of Directors.

On February 11, 2021, the Company paid $ 12,600 and the service was

On January 4,

2021, the Company terminated a placement agent and advisory services agreement with a FINRA member dated September 22, 2020, and cancelled 1,294,600 shares

of common stock, which was issued for those services.

The termination agreement allowed the FINRA member to retain 400,000 shares

of the Company’s common stock in connection with the services.

31, 2023 and 2022, the Company operates in one industry segment, telecommunication services, and two geographic segments, USA and Switzerland,

6 unchanged sentences

$ 144,466,050

$ ( 5,494,437 )

$ 144,502,351

Cost of revenue

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General and administration

Operating loss

( 3,190,117 )

( 3,191,660 )

Operating income (loss)

Other income (expense)

1 unchanged sentence

$ ( 219,436 )

Net income (loss)

$ ( 5,869,876 )

$ ( 5,865,761 )

December 31, 2022

2 unchanged sentences

General and administration

Operating income (loss)

( 2,895,508 )

( 2,983,916 )

Operating loss

Other income (expense)

Net income (loss)

$ ( 3,793,015 )

$ ( 3,864,001 )

The following

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Current assets

$ ( 214,551 )

Non-current assets

$ ( 2,584,562 )

Current liabilities

$ ( 214,551 )

Non-current liabilities

2 unchanged sentences

December 31, 2023 and through the date that these financials were made available, the Company had the following subsequent events:

Subsequent to December 31, 2022,

the Company issued 2,941,177

shares for exercise of warrants and received $ 400,000 .

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

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.

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

shares of common stock were issued valued at $0.10.

shares of common stock were issued valued at $0.11.

Changes In and Disagreements

3 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data