iQSTEL Inc 10-K

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.