iQSTEL Inc 10-K

iQSTEL Inc. - 10-K - December 31, 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________ Commission file number: 000-55984 IQSTEL Inc. (Exact name of registrant as specified in its charter) Nevada 45-2808620 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 300 Aragon Avenue , Suite 375 Coral Gables , FL 33134 (Address of principal executive offices) (Zip Code) Registrant’s telephone number: ( 954 ) 951-8191 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered none not applicable Securities registered under Section 12(g) of the Exchange Act: Title of each class Common Stock, par value of $0.001 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated Filer ☒ Smaller reporting company ☐ Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $ 30,555,138 . Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date 210,710,170 common shares as of March 24, 2025. Table of Contents TABLE OF CONTENTS Page PART I Item 1. Business 3 Item 1A. Risk Factors 12 Item 1B. Unresolved Staff Comments 26 Item 1C. Cybersecurity 26 Item 2. Properties 27 Item 3. Legal Proceedings 27 Item 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. [ Reserved ] 30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 8. Financial Statements and Supplementary Data 35 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 36 Item 9A. Controls and Procedures 36 Item 9B. Other Information 37 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 37 PART III Item 10. Directors, Executive Officers and Corporate Governance 38 Item 11. Executive Compensation 42 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 45 Item 13. Certain Relationships and Related Transactions, and Director Independence 46 Item 14. Principal Accountant Fees and Services 46 PART IV Item 15. Exhibits, Financial Statement Schedules 47 Item 16. Form 10-K Summary 48 2 Table of Contents PART I Forward-Looking Statements Except for statements of historical fact, some information in this Annual Report on Form 10-K contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other forward-looking information. These risks include, by way of example and not in limitation: • the uncertainty of profitability based upon our history of losses; • legislative or regulatory changes concerning telecommunications; • risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; • risks related to our operations and uncertainties related to our business plan and business strategy; • changes in economic conditions; • uncertainty with respect to intellectual property rights, protecting those rights and claims of infringement of other’s intellectual property; • competition; and • cybersecurity concerns. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able accurately to predict or control. Further, we urge you to be cautious of the forward-looking statements which are contained in this registration statement because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. The factors listed in the sections captioned “Risk Factors” and “Description of Business,” as well as other cautionary language in this Annual Report and events in the future may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this Annual Report are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise. The occurrence of any of the events described as risk factors or other future events could have a material adverse effect on our business, results of operations and financial position. Item 1. Business Company Description IQSTEL Inc. (www.IQSTEL.com) is a technology company with a presence in 20 countries (Argentina, Armenia, Austria, Canada, Colombia, Germany, Greece, Guatemala, India, Italy, Pakistan, Romania, Serbia, Spain, Switzerland, Turkey, UAE, UK, USA and Venezuela) and over 100 employees that offers leading-edge services through its four business divisions in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries. Our presence is global, with offices in USA, Argentina, UK, Switzerland, Turkey, and Dubai, and we target diverse and high-growth markets. We maintain more than 603 high value network interconnections around the world, delivering international voice, SMS, and connectivity services that form the core of our business. The company’s strategy focuses on leveraging synergies between its 9 subsidiaries to drive innovation and capture emerging opportunities. 3 Table of Contents Our Telecom Division, which represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented, offers Voice over Internet Protocol (VoIP), SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic connectivity through its subsidiaries: Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), QGlobal SMS (www.qglobalsms.com), and QXTEL Limited (www.qxtel.com). Also under the Telecom Division, our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through our subsidiary, itsBchain. Our developing Fintech Business Line (www.globalmoneyone.com) (www.maxmo.vip) offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances, Mobile Top Up). Our Fintecsubsidiary, Global Money One, is to provide immigrants access to reliable financial services that makes it easier to manage their money and stay connected with their families back home. Our developing Electric Vehicle (EV) Business Line offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia. EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family. Our developing Artificial Intelligence (AI)-Enhanced Metaverse Division (information and content) (www.realityborder.com) is currently developing a groundbreaking white-label solution designed specifically for corporations, businesses, and the telecommunications industry. Delivering a full suite of immersive content services, creating a comprehensive virtual experience that can be accessed through the Web or our proprietary mobile apps. The features include up to four simultaneous video screens for versatile content presentation, various virtual halls such as the main hall, home hall, auditorium, exhibition space, shopping center, and meeting rooms. Stands for mobile application downloads, clickable gates for immediate purchasing, and direct communication tools are seamlessly integrated to foster collaboration, engagement, and interactivity. It goes beyond traditional virtual spaces by utilizing cutting-edge AI technology. This ensures video conferencing and real-time communication with other users within the Metaverse, offering our customers a collective and fully immersive experience that caters to diverse needs such as content acquisition, entertainment, and shared virtual experiences. It is a future-ready platform that encourages creativity, connectivity, and collaboration like never before. Our developing metaverse leverages advanced AI to introduce Non-Player Characters (NPCs) that significantly enhance user engagement and functionality within virtual environments. These NPCs are not mere static elements; rather, they are powered by OpenAI's latest language models, enabling dynamic interaction with users. This AI-driven interaction allows NPCs to serve as sales and brand assistants, guiding users through immersive experiences that can extend to purchasing products from external websites. Furthermore, these intelligent agents can control access to gated spaces within the metaverse based on user interactions, showcasing a personalized approach to user experience. A key innovation in our AI implementation is the NPCs' ability to autonomously make decisions based on their understanding of user interactions. This is achieved through state-of-the-art natural language processing and understanding capabilities, which are supported in seven languages. Additionally, our NPCs utilize advanced text-to-speech and speech-to-text technologies to facilitate seamless communication with users across diverse linguistic backgrounds. The incorporation of "function call" features further enhances the NPCs' ability to perform complex tasks and interact meaningfully with the environment and the users. Our reference to our technology as "cutting-edge" is grounded in our commitment to continuous improvement and innovation. We consistently integrate the latest advancements in AI, particularly in the areas of chatbots, language understanding, and user interaction technologies. This ensures that our metaverse remains at the forefront of AI application in virtual spaces, offering an unparalleled user experience that goes beyond traditional virtual environments. We are currently in an advanced phase of development, with ongoing enhancements to AI functionalities and user interaction models. Our team is dedicated to exploring and implementing the latest AI technologies to ensure that our metaverse remains a leading example of innovation in virtual space technology. The information contained on our websites is not incorporated by reference into this annual report and should not be considered part of this or any other report filed with the SEC. 4 Table of Contents Operating Subsidiaries IQSTEL's mission is to serve basic human needs in today's modern world by making the necessary tools accessible regardless of race, ethnicity, religion, socioeconomic status, or identity. IQSTEL recognizes that in today’s modern world, the pursuit of the human hierarchy of needs (physiological, safety, relationship, esteem, and self-actualization) is marginalized without access to ubiquitous communications, the freedom of virtual banking, clean affordable mobility and information and content. IQSTEL has 4 Business Divisions delivering accessibly to the necessary tools in today's pursuit of basic human needs: 1) Telecommunications (communications), 2) Fintech (financial freedom), 3) Electric Vehicles (mobility), and 4) Metaverse (information and content). The Company continues to grow and expand its suite of products and services both organically and through mergers and acquisitions (M&A). Our telecommunication business currently represents 100% of our revenues, while our other business lines are in a pre-revenue stage. Telecom Subsidiaries for voice services: Etelix.com USA LLC , a wholly owned subsidiary of IQSTEL Inc., is a US based international telecom carrier founded in 2008 that provides telecom and technology solutions worldwide, with commercial presence in North America, Latin America, and Europe. Etelix provides International Long-Distance voice services for Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G). Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian and Latin-American markets, among which it is worth mentioning: China Telecom, PCCW, Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel. An important milestone in the evolution of Etelix was in 2013, when the company become part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia. This consortium is led by Orange Telecom and Orbitel, where Etelix participates with 10 Gbps of capacity. The bulk of this contract was sold to Millicom (Tigo Costa Rica). This capacity considerably enhanced Tigo’s ability to deploy world-class 4G services to its customers in Costa Rica. SwissLink Carrier AG is a 51% owned subsidiary of IQSTEL Inc. SwissLink Carrier AG is a Switzerland based international Telecommunications Carrier founded in 2015 providing international VoIP connectivity worldwide, with commercial presence in Europe, CIS and Latin America. SwissLink Carrier AG is a Swiss licensed Operator. The acquisition of Swisslink strengthened the Company’s presence in Europe putting us in a very competitive position to capture traffic to Asian and African countries. Africa continues to be the market with the higher contribution to margin and Asia concentrates one third of the termination traffic in the industry. Estimations show that more than 50% of the traffic terminating in Africa - originated from customers in Europe; while the corresponding percentage of traffic terminated in Asia is close to 40%. Based on these numbers the goal to expand the participation in the Asian and African traffic goes through establishing a strong presence in Europe. Main interconnections are with Orange Wholesale International, CJC Global Connections & Consulting LLC, iBASIS Communications AG, U.S. South Communications, Inc., Belgacom International Carrier, Bell Canada Inc., SWISSCOM (SCHWEIZ) AG among many other important carriers. Whisl Telecom LLC . is a 51% owned subsidiary of IQSTEL Inc., acquired in May 2022. Whisl Telecom is an US based Company that provides high quality services and “out of the box” solutions to its customers. Whisl predominantly serves the Carrier-to-Carrier Global industry but also has network infrastructure to provide services to the retail end users (endpoints). Whisl Telecom is one of the few US carriers to have a significant Tier1 capacity (true capacity with high calls per second, CPS) to terminate calls with the highest quality. With the acquisition of Whisl Telecom, IQSTEL has incorporated into its telecom portfolio the following services: (1) US/Canada Inbound/Origination, (2) US/Canada DIDs, (3) US/Canada Toll Free Numbers, (4) Global DIDs and (5) Global Toll-Free Numbers. 5 Table of Contents Smartbiz Telecom LLC . is a 51% owned subsidiary of IQSTEL Inc. acquired in June 2022. Smartbiz is a US based Company that provides international voice termination to niche markets. With this acquisition IQSTEL is expanding its telecommunication services offer to markets the company was not serving before. Smartbiz has commercial relations with relevant players in the industry, among which it is worth mentioning the following: Telefonica Global Solutions. S.L, Telintel Ltd, Teliax, Inc Tf, Sistemas Satelitales de Colombia S.A. Esp, and IDT Global Limited. QXTEL Limited is a 51% owned subsidiary of IQSTEL Inc. acquired in April 2024. QXTEL is one of the most advanced and diversified telecommunications and technology services provider focused on platform services for wholesale, retail and cloud communications service providers, wholesale carrier voice, wholesale carrier messaging (A2P SMS) and carrier technology services with over 20 years in the telecom industry switching more than 5 billion voice and A2P SMS transactions over 200 interconnections worldwide. QXTEL is headquartered in London (UK) with regional offices in Florida (USA), Buenos Aires (Argentina), Dubai (UAE), Belgrade (Serbia) and Istanbul (Turkey). QXTEL maintains commercial relations with significant players in the industry such as BTS Business Telecommunications Service Inc., China Mobile International Limited, Deutsche Telekom AG, Digicel Jamaica Limited, Emirates Telecom Etisalat, Hutchison Global Communication, iBASIS Communications AG, IDT Global Limited, Messagebird, Orange Wholesale International, Tata Communications (Canada) Ltd, Telekom Deutschland Gmbh (T-Mobile), T-Mobile USA, Inc., and Vodafone US Inc. With the combination of the technology capabilities of these five subsidiaries, IQSTEL has put together a complete portfolio of services for carriers and end users. These services include: • International Voice Termination for carriers: This service enables the routing of international voice calls to their final destinations across various countries. Telecom carriers use this to handle large volumes of cross-border voice traffic by connecting through intermediary providers or directly to in-country networks. • US/Canada Inbound / Origination: This refers to the ability to receive incoming calls originating in the United States or Canada. It ensures seamless connectivity for businesses or carriers looking to establish a local presence in these regions by offering local or toll-free numbers. • Global DIDs: These are virtual phone numbers that allow users to receive calls from specific geographic locations, regardless of where they are physically located. They are essential for businesses seeking global reach, providing local numbers for customers worldwide. • Global Toll-Free Numbers: Toll-free numbers work internationally, allowing customers to call businesses without incurring charges. These numbers are ideal for companies serving global clients, offering free and easy access to customer service or sales teams. • PBX (Private Branch Exchange) for small businesses: A PBX is a private telephone network used within an organization, enabling efficient internal and external communication. For small businesses, modern PBX systems often come as cloud-based or hosted solutions, offering affordability and advanced features like call routing and voicemail. • SIP Trunking: SIP Trunking enables voice communication over the internet rather than traditional phone lines. It connects a business’s PBX system to the telephone network, offering cost savings, scalability, and support for voice, video, and messaging services. Voice services in 2024 were 66.09% of the total revenue of the company ($187,194,236 out of the total $283,220,442) while in 2023 voice services represented 46.85% of the total revenue ($67,698,574 out of the total $144,502,351). Our subsidiaries carried 5.2 billion minutes of voice during 2024, compared to 4.2 billion in 2023. This represents an increase of 23.81% year over year. 6 Table of Contents Telecom Subsidiaries for SMS services : QGlobal SMS LLC is a 100% owned subsidiary of IQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specializing in international and domestic SMS termination. QGlobal SMS has a commercial presence in Europe, USA and Latin America, with robust international interconnection with Tier-1 SMS Aggregators, guarantying to its customers high quality and low termination rates, in over more than 100 countries. Main customers are: Computer-Tel Inc., iBasis Communications AG, Telefonica Global Solutions. S.L, Telintel Ltd., and Twilio Ireland Limited. IoT Labs LLC is a 51% owned subsidiary of IQSTEL Inc. IoT Labs is an SMS service provider based in Austin, TX. Specialized in the SMS traffic exchange between US and Mexico. Main customers are Aztek Corporative Properties Inc, Bytescale C., Codek Connect LLC, and Nuvoteq LLC. The Company entered into the SMS business in 2020 through the acquisition of QGlobal and IoT Labs. Both companies specialize in international and domestic SMS termination, with emphasis on the Applications to Person (A2P), Person to Person (P2P) and OmniChannel Marketing Services for several markets: Wholesale Carrier, Government, Corporate, Enterprise, Small and Medium Companies. The Global A2P SMS Market is expected to grow at a CAGR of 4.1% to account for $101 billion in 2030, according to Transparency Market Research. This market has experienced significant growth and adoption rate in the past few years and is expected to experience notable growth and adoption in years to come. Our SMS services represented 33.91% of the total revenue in the 2024, while it was 53.15% in 2023. Gross margin in the SMS business increased 211% in 2024 to 1.93% from 0.62% in 2023. This is the result of a higher business volume of the products deployed by QGlobal SMS and QXTEL gross margin of which is greater than 20%, being the main objective in the SMS segment to increase the sales of those services due to its relatively higher gross margins. IoT Labs, QGlobal and QXTEL carried 13.9 billion SMS and short codes in 2024 compared to 11.3 billion in 2023. This represents an increase of 2.8 billion SMS year over year or 32.94%. IoT Labs is also responsible for the development of our award-winning Internet of Things devices SmartGas and SmartTank. The SmartGas device is perfectly focused on retail households using traditional LP gas tanks, while the SmartTank device is more oriented for industrial purposes. The Company’s product is a sensor and control chip that can be mounted on gas tanks in less than one minute, that converts the gas tank into an IoT connected device through the Company’s proprietary web portal and phone apps, allowing for constant monitoring, alerting, and refilling through the Company’s gas partners. An important milestone to highlight is that in 2018 the company received a patent in Mexico for the invention and development of these devices. However, since the end of 2022, we have expanded the list of certified suppliers and at this time we have a minimum inventory of parts, pieces and finished products to start the marketing process of both devices. The Company’s role in these services is to ensure seamless voice and SMS communication across international borders by establishing peering agreements with other telecommunication entities. This is possible using sophisticated algorithms to determine the most cost-effective and reliable paths for voice/SMS traffic, managing media protocols such as SIP (Session Initiation Protocol) and RTP (Real-time Transport Protocol) to ensure smooth communication between different networks ensuring efficient call routing. 7 Table of Contents The Company acts as a transit network that allows the completion of voice calls, or SMSs connecting the network where the calls/SMSs are originated and the network where the calls/SMSs are intended to terminate. The graphic below shows the path of a voice call or SMS, all parties involved and where the Company is situated in that ecosystem. New businesses subsidiaries: ItsBchain LLC is a 75% owned subsidiary of IQSTEL Inc. ItsBchain is a blockchain technology developer and solution provider, with a strong focus on the telecom sector. The company has focused on the development of solutions aimed at using the blockchain ledger and smart contracts to enable more efficiency, quickness in execution and fraud-prevention in the telecommunications industry. Specifically, the company has developed a solution that will enable users and carriers to transfer mobile phone numbers with just a few clicks, allowing users and carriers the ability to transfer retail users from one mobile carrier to another instantly. The Company has done research covering 35 countries where number portability is mandatory by law. Those 35 countries have a total of 3.3 billion in population and 4.0 billion phone lines that can be ported from one carrier to another. It is estimated that an average of 5% of the total phone lines are ported every year. Number portability is executed and supervised by a third independent party, who acts as a database administrator and has the responsibility to guarantee all transactions requested by the customers will be completed and his/her phone number will be ported from Carrier A to Carrier B. In the countries under our analysis there are 11 different database administrators. In terms of dollar value, the number portability market in the countries under our analysis is estimated at over $86 million per year. This is based in the actual cost carriers and/or customers have to pay to get the lines ported. Revenues of the Data Base Administrators comes from a monthly fee charged to all participant carriers, plus a fee for every transaction completed over the platform. The monthly fee and the transactions fee vary from country to country. Our objective is to offer market conformity by data-based administrators a much more cost-effective solution, which will not only reduce the operating cost, but that will also make the transactions to complete faster without any additional CAPEX. Our mobile number portability solution is now being tested prior to its commercial release. Global Money One Inc . Is a 75% owned subsidiary of IQSTEL Inc. The company offers a complete Fintech ecosystem including a MasterCard Debit Card, US Bank Account (No SSN Needed), and a Mobile App/Wallet to manage Remittances and Mobile Top Up. Our focus is to provide immigrants access to reliable financial services that make it easier to manage their money and stay connected with their families back home. All available services can be managed through our mobile App “GlobalMoneyOne” available for IOS and Android. The first non-commercial release of the Fintech suite was done in June 2022. Since that date all services have been tested including the known-your-customer (KYC) process for the issuance of debits cards, the settlement process with the issuer bank, the intermediary entities handling the remittances, and the intermediaries and cellular operators for the Top Up, as well as the proper training of our customer care agents. 8 Table of Contents According to a World Bank Migration and Development brief, remittances to low- and middle-income countries reached $669 billion in 2023. The brief also stated the remittances to Latin America and the Caribbean grew 8% in 2023; with increments of 12.5% for Nicaragua, 8.6% for Guatemala, 2.3% for Mexico, and 17.4% for Colombia according to research done by BBVA Bank. Stronger employment of migrants from Latin America in the United States contributed to remittance flows. As a share of GDP, remittances exceed 23.9% in El Salvador, 25% in Honduras, 19.1% in Jamaica and 21.4% in Haiti according to data published by the portal www.theglobaleconomy.com. The Electric Vehicle Division, through an entity named TuVolten to be formed in Europe, is an initiative to offer clean and affordable mobility through Electric Motorcycles, and Electric Mid Speed Cars. TuVolten plans to offer theirs EV Motorcycles and EV Cars in Spain, Portugal, USA, and some countries of Latin America. As recently announced, all previous electric motorcycle designs and tests have come together in a new electric motorcycle now rolling off the factory for the final validation tests under the European Union Standards E-Mark certification process. Once this certification is obtained, we will begin manufacturing the first units for sale to the public. Reality Border LLC developed the initial proof-of-concept for a white label, AI-Enhanced Metaverse tailored for IQSTEL. The app was released on the Google Play Store on June 28, 2023, on the Apple App Store on June 30, 2023, and on our website on August 28, 2023. The app offers our telecommunication carrier clients a white label solution enabling them to interact with their customers (end users, and enterprises) through the metaverse. The IQSTEL white label metaverse solution developed in partnership with GOTMY is tailored to provide telecom carriers with a distinctive and immersive customer experience. In line with GOTMY’s mission to offer universally accessible experiential spaces, the IQSTEL solution for telecom carriers is intended to accommodate all mobile phone users, not just those with high-end VR headsets. Regulations Telecommunications services are subject to extensive government regulation in the United States of America. Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The FCC has jurisdiction over all telecommunication common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services. Regulation of Telecom by the Federal Communications Commission Telecommunication License Anyone seeking to conduct telecommunications business where the telecommunication services will transpire between the United States of America and an international destination must obtain a license from the Federal Communications Commission (FCC). This particular license is named “a Section 214 license,” after the section in the Communications Act of 1934. Etelix.com USA, LLC was authorized by the Federal Communications Commission to provide facility-based services in accordance with section 63.18(e)(1) of the Commission’s rules, and also to provide resale services in accordance with section 63.18(e)(2) under license number ITC-214-20090625-00303. Since Etelix has no other network infrastructure outside the United States of America, no other licenses are required for us to operate as an international carrier service provider. Universal Service and Other Regulatory Fees and Charges In 1997, the FCC issued an order, referred to as the Universal Service Order, which requires all telecommunications carriers providing interstate telecommunications services to contribute to universal service support programs administered by the FCC (known as the Universal Service Fund). These periodic contributions are currently assessed based on a percentage of each contributor’s interstate and international end user telecommunications revenues reported to the FCC. Etelix also contributed to several other regulatory funds and programs, most notably Telecommunications Relay Service and FCC Regulatory Fees (collectively, the Other Funds). Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions. 9 Table of Contents In addition, based on the nature of our current business, we receive certain exemptions from federal Universal Service Fund contributions. Changes in our business could eliminate our ability to qualify for some or all of these exemptions. Changes in regulations may also have an impact on the availability of some or all of these exemptions. If even some of these exemptions become unavailable, they could materially increase our federal Universal Service Fund or Other Funds’ contributions and have a material adverse effect on the cost of our operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business. We cannot be certain of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds in general and the Telecommunications Relay Service Fund in particular can impact our profitability. Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases. Regulation of Telecom—International In connection with our international operations, we have obtained licenses or are otherwise authorized to provide telecommunications services in Switzerland. Money Transmitter and Payment Instrument Laws and Regulations The consumer payment services offerings, prepaid debit cards, remittances, Top Up, are heavily-regulated industries. Accordingly, we, and the products and services that we offer in consumer payment services, are subject to a variety of federal and state laws and regulations, including: • Banking laws and regulations; • Money transmitter and payment instrument laws and regulations; • Anti-money laundering laws;- • Privacy and data security laws and regulations; • Consumer protection laws and regulations; • Unclaimed property laws; and • Card association and network organization rules. Employees Attracting and retaining qualified personnel familiar with our businesses who head our different businesses units is critical to our success. As of December 31, 2024, we had a total of 100 employees, including all subsidiaries. Our human capital resources objectives include identifying, recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants. To achieve this, our compensation practices aim to attract and retain qualified personnel and align their interests with our goals and the best interests of our stockholders. Our compensation philosophy is to provide remuneration that meets our current needs and growth initiatives and to offer incentives for achieving our long-term plans, including equity and cash incentive plans that attract, retain, and reward personnel through stock-based and cash-based compensation awards. We consider talent attraction and retention essential for achieving our strategy, and we recognize that a trained, diverse, and engaged workforce is crucial to meeting our objectives. Our recruiting process targets a broad spectrum of potential employees, and we employ a rigorous screening process to identify and hire qualified professionals. We are committed to diversity and inclusion in the workforce, implementing a policy of non-discriminatory treatment and respect for human rights for all current and prospective employees. We prohibit discrimination based on an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin, or veteran’s status, which is illegal in many jurisdictions. We respect the human rights of all employees and strive to treat them with dignity in accordance with standards and practices recognized by the international community. 10 Table of Contents Corporate History IQSTEL, formerly known as PureSnax International, Inc., was incorporated under the laws of the State of Nevada on June 24, 2011. PureSnax was previously a wellness brand focused on bringing healthy snacks and foods to consumers. On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor. From March of 2017 until its acquisition of Etelix.com USA, LLC, PureSnax was working to develop its own brand and its own products for manufacture, distribution, sales and marketing of various products within the health foods and snacks industry and to pursue related business opportunities. PureSnax acquired Etelix.com USA, LLC on June 25, 2018. The company left the healthy snacks and foods business to focus on the Telecommunications Business. On August 30, 2018, PureSnax changed its name to “IQSTEL Inc.” and received a new CUSIP number: 46265G107, as well as a new trading symbol “IQST” in order to better resemble its new name. IQSTEL also changed the Standard Industrial Classification (SIC Code) to 4813, Telephone Communications, Except Radiotelephone. On April 1, 2019, the Company entered into a Company Purchase Agreement by and between the Company and the Ralf Kohler (the “Seller”), which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG (“SwissLink”) (www.swisslink-carrier.com), a Swiss corporation, by the Company. On February 10, 2020, the Company entered into a Company Acquisition Agreement with Jesus Vega regarding the acquisition of 51% of the shares in QGlobal, LLC (“QGlobal”). QGlobal is a company with the capacity to provide Short Messages (SMS), A2P and P2P messaging services. On February 21, 2020, the Company entered into a Company Acquisition Agreement with Miguel Scavo regarding the acquisition of 75% of the shares in ItsBchain, LLC (“ItsBchain”) a company specialized in the development of Blockchain applications for telecommunications. On April 15, 2020, the Company entered into a Company Acquisition Agreement with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (“loT Labs”). The loT Labs’ principal business activity is the sale of SMS between USA and Mexico. On November 12, 2020, the Company entered into partnership Agreement with Payment Virtual Mobile Solutions, LLC (PayVMS), a Delaware Corporation regarding the incorporation of Global Money One Inc, in which IQSTEL owns 75% of the shares and PayVMS owns the remaining 25%. Global Money One is a Fintech company with a complete infrastructure to provide top-up services, international remittances and prepaid debit cards. On October 1, 2021, the Company entered into an agreement with Jesus Vega regarding the acquisition of the remaining 49% of the shares in QGlobal, LLC (“QGlobal”). By means of this transaction IQSTEL increased its ownership of QGlobal to 100%. On May 13, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Whisl telecom LLC (“Whisl”). On June 1, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Smartbiz Telecom LLC (“Smartbiz”). On March 20, 2023, the Company entered into a Memorandum of Understanding (the “MOU”) with Got My Idol, Inc., a Delaware corporation (“GotMy”). The MOU concerns the formation of a joint venture to implement the commercial development of “Metaverse” products using the current intellectual property of Got My Idol, improving it, and packaged as products under the to be formed joint venture company and using the to be formed joint venture brand that will be owned by the to be formed joint venture company. Our equity position in the new company will be 51% and GotMy shall hold the remaining 49% of the to be formed joint venture entity. On January 19, 2024, the Company entered into a Share 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. 11 Table of Contents On November 1, 2024, the Company entered into a binding Memorandum of Understanding (the “Agreement”) with Mr. Ralf Koehler ("Ralf"), SwissLink Carrier Ltd., ("SwissLink") and Impact Trading & Consulting LLC ("Impact") for the purpose of outlining the understanding regarding the exchange of 49% ownership in SwissLink for our shares. On March 10, 2025, the Company signed a non-binding memorandum of understanding (“MOU”) with Accredited Solutions, Inc. (“ASII”) to set forth the preliminary terms and mutual understanding between the parties regarding the Company’s potential sale of its 75% equity interest in itsBChain, LLC (the “Subsidiary”) to ASII, subject to the negotiation and execution of a definitive Purchase Agreement. The parties have agreed to execute the Purchase Agreement no later than June 1, 2025, or sooner. Under the MOU, in exchange for the 75% interest in the Subsidiary, ASII proposes paying $1,000,000 to the Company as follows: • $500,000 in restricted preferred shares of ASII, the terms and features of which will be available prior to execution of the Purchase Agreement, but should contain preferential treatment on the stated value in any liquidation of ASII and a conversion price of the lowest stock price with a 10 day look back at conversion (but with a conversion limitation of 4.99%, but no greater than 9.99%), ensuring iQSTEL’s value is preserved regardless of fluctuations in ASII’s common stock price. • $500,000 in restricted common shares of ASII, which are expected to be registered by ASII in a resale offering that is filed on Form S-1 with the SEC within an agreed time from the close of the Purchase Agreement. At some time in the future, the Company plans to distribute the ASII common shares as dividends to its shareholders. Further under the MOU, the Company will retain a 1% lifetime royalty on the Subsidiary’s total sales. The Company acknowledges a remaining investment commitment of $65,000 related to the Subsidiary. This amount will be paid in monthly installments of $2,500 directly to the Subsidiary. On March 19, 2025, the Company signed a non-binding memorandum of understanding (“MOU”) with Craig Span (the “Seller”) to set forth the preliminary terms and mutual understanding between the parties regarding the Company’s potential purchase a 51% equity interest in GlobeTopper, LLC, a Delaware limited liability company (the “GlobeTopper”) held by the Seller, subject to the negotiation and execution of a definitive Purchase Agreement. The parties have agreed to execute the Purchase Agreement no later than July 1, 2025, or sooner. Under the MOU, in exchange for the 51% interest in the GlobeTopper, the Company proposes paying $700,000 to the Seller with $200,000 in cash over a period set forth in a schedule extending to September 1, 2025, and $500,000 in common stock of the Company with a share price calculated at a 20% discount to the Volume Weighted Average Price (VWAP) over the five days preceding execution of a definitive Purchase Agreement. Further under the MOU, the Company will pay performance bonuses in 2025 and 2026 based on EBITDA growth of GlobeTopper in shares of common stock of the Company using the same discounted VWAP formula above. To support GlobeTopper’s growth, the MOU provides that the Company will provide up to $1,200,000 in structured financing across 24 months after execution, disbursed in monthly installments of $50,000, contingent upon meeting quarterly financial targets. To ensure stability and operational continuity, the Seller will continue to serve as CEO to GlobeTopper, and 2 of the 3 board members will be selected by the Company. Item 1A. Risk Factors You should carefully consider the risks described below together with all of the other information included in this registration statement before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment. In addition to other information in this registration statement and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. 12 Table of Contents Risks Relating to Business and Financial Condition Because our auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our company. We have continually operated at a loss with an accumulated deficit of $32,703,410 as of December 31, 2024. We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we are dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. Aside from cash exercises as set forth under an outstanding option that expires on July 14, 2025, we do not have any formal commitments or arrangements for the advancement or loan of funds. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is a risk that you could lose the entire amount of your investment in our company. Because we have a limited operating history, you may not be able to accurately evaluate our operations. We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail. We are dependent on outside financing for the continuation of our operations. Because we currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business operations. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. We will need additional funds to complete further development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern, and, as a result, our investors could lose their entire investment. We may be unable to achieve some, all or any of the benefits that we expect to achieve from our plan to expand our operations. In the future we may require additional financing for capital requirements and growth initiatives. Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital markets to maintain and expand our business. We may need to incur debt on terms and at interest rates that may not be as favorable. If additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations. 13 Table of Contents As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all. We have revenues but we are not profitable and may not be in the near future, if at all. Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured. Risk Factors Related to Our International Operations Our operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can adversely affect our business, results of operations and financial condition. A deterioration in economic conditions and related drivers of global uncertainty and change, such as reduced business activity, high unemployment, rising interest rates, housing prices, and energy prices (including the price of gasoline), increased consumer indebtedness, lack of available credit, the rate of inflation, and perceptions of the economy, as well as other factors, such as terrorist attacks, protests, looting, and other forms of civil unrest, cyber-attacks and data breaches, public health emergencies (such as the COVID-19 pandemic and other epidemics), extreme weather conditions and climate change, significant changes in the political environment, political instability, armed conflict (such as the ongoing military conflict between Ukraine and Russia and the emerging military conflict in Israel and Gaza) and/or public policy, including increased state, local or federal taxation, could adversely affect our operating results and financial condition. Major public health issues, including pandemics such as the COVID-19 pandemic, have adversely affected, and could in the future materially adversely affect, us due to their impact on the global economy and demand for our regenerative products; the imposition of protective public safety measures, such as shutdowns and restrictive health mandates; and disruptions in our operations, supply chain and sales and distribution channels, resulting in interruptions to our business and the supply of current products and offering of existing services, and delays in production ramps of new products and development of new services. In addition to an adverse impact on demand for our regenerative products and services, uncertainty about, or a decline in, global or regional economic conditions can have a significant impact on our suppliers, contract manufacturers, logistics providers, distributors, and other channel partners, and developers. Potential outcomes include financial instability; inability to obtain credit to finance business operations; and insolvency. As a result, our operating results may be impacted by the health of the global economy. Volatility and disruption in global capital and credit markets may lead to slowdowns or declines in client spending which could adversely affect our business and financial performance. Our business and financial performance, including new business bookings and collection of our accounts receivable, may be adversely affected by current and future economic conditions (including a reduction in the availability of credit, higher energy costs, rising interest rates, financial market volatility and lower than expected economic growth) that cause a slowdown or decline in client spending. Reduced purchases by our clients or changes in payment terms could adversely affect our revenue growth and cause a decrease in our cash flow from operations. Bankruptcies or similar events affecting clients may cause us to incur bad debt expenses at levels higher than historically experienced. Further, volatility and disruption in global financial markets may also limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on our ability to react to changing economic and business conditions. Accordingly, if global financial and economic volatility continues or worsens, our business, results of operations and financial condition could be materially and adversely affected. Adverse economic conditions can also lead to increased credit and collectability risk on our trade receivables; the failure of derivative counterparties and other financial institutions; limitations on our ability to issue new debt; reduced liquidity; and declines in the fair values of our financial instruments. These and other impacts can materially adversely affect our business, results of operations, financial condition and stock price. 14 Table of Contents We have some revenue derived from customers outside of the United States, and we may lose revenues and market share due to exchange rate fluctuations and political and economic changes related to foreign business. Some of our revenue comes from customers outside of the United States. Any company conducting foreign business is always subject to economic, political and regulatory uncertainties and risks that are unique to each area of the world. Fluctuations in exchange rates may also affect the prices that foreign customers are willing to pay and may put us at a price disadvantage compared to other competitors. Potentially volatile shifts in exchange rates may negatively affect our financial position and results. We operate a global business that exposes us to currency, economic and regulatory risks. Our revenue comes primarily from sales outside the U.S. and our growth strategy is largely focused on emerging markets. Our success delivering solutions and competing in international markets is subject to our ability to manage various risks and difficulties, including, but not limited to: • our ability to effectively staff, provide technical support and manage operations in multiple countries; • fluctuations in currency exchange rates; • timely collecting of accounts receivable from customers located outside of the U.S.; • trade restrictions, political instability, disruptions in financial markets, and deterioration of economic conditions; • compliance with the U.S. Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; • variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights; and • compliance with export regulations, tariffs and other regulatory barriers. Our global operations subject us to many different and complex laws and rules, and we may face difficulty in compliance. Due to our global operations, we are subject to many laws governing international relations (including but not limited to the Foreign Corrupt Practices Act, the U.S. Export Administration Act the EU General Data Protection Regulation, and the U.K. Modern Anti-Slavery Act); which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries, what personal information we can transfer, and what information we can provide to a non-U.S. government. Although we have procedures and policies in place that should mitigate the risk of violations of these laws, there is no guarantee that they will be sufficiently effective. If, and when we acquire new businesses, we may not be able to ensure that the pre-existing controls and procedures meant to prevent violations of the rules and laws were effective, and we may not be able to implement effective controls and procedures to prevent violations quickly enough when integrating newly acquired businesses. Acquisitions of new businesses in new non-U.S. jurisdictions may also subject us to new regulations and laws, and we may face difficulties ensuring compliance with these new requirements. These challenges include: (1) compliance with complex and changing laws, regulations and policies of governments that may impact our operations, such as foreign ownership restrictions, import and export controls, tariffs, and trade restrictions; (2) compliance with U.S. and foreign laws that affect the activities of companies abroad, such as anti-corruption laws, competition laws, currency regulations, and laws affecting dealings with certain nations; (3) the difficulties involved in managing an organization doing business in many different countries; (4) rapid changes in government policy, acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation; and (5) currency exchange rate fluctuations. 15 Table of Contents Risk Factors Related to the Business of the Company Our telecommunications line of business is highly sensitive to declining prices, which may adversely affect our revenues and margins. The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs. A reduction in our prices to compete with any other offers in the market will not always guarantee an increase in traffic, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins. The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber have adversely affected the use of traditional phone communications. We expect this IP-based service, which offers voice communications for free to continue to increase, which may result in increased substitution on our service offerings. Our products face intense competitive challenges, including rapid technological changes, and pricing pressure from competitors, which could adversely affect our business. All of our product lines are subject to significant competition from existing and future competitors, market conditions and technological change, or a combination of them, and our sales revenues and gross margins may suffer protracted and serious declines with the result that we would likely incur protracted losses. Further, the barriers to entry in several of our lines of business are not so significant that we may be facing competition from others who see significant opportunities to enter the market and undercut our prices with products that possess superior technological attributes at prices that offer our customers a better value. In this instance, we could incur protracted and significant losses and people who acquire our common stock would suffer losses thereby. From time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share. Competition and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costs or other factors, and if we are unable to increase sales volumes to offset those profit margin decreases. We may also need to increase spending on marketing, advertising and new product innovation to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance market share and could result in lower profitability. Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall. Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to: • general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; • the budgetary constraints of our customers; seasonality; • the success of our strategic growth initiatives; • costs associated with the launching or integration of new or acquired businesses; • timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; • the mix, by state and country, of our revenues, personnel and assets; • movements in interest rates or tax rates; • changes in, and application of, accounting rules; • changes in the regulations applicable to us; • Litigation matters. As a result of these factors, we may not succeed in our business, and we could go out of business. The termination of our carrier agreements or our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits. We rely upon our carrier agreements to provide our telecommunications services to our customers. These carrier agreements are, in most cases for finite terms and, therefore, there can be no guarantee that these agreements will be renewed at all or on favorable terms to us. Our ability to compete would be adversely affected if our carrier agreements were terminated or we were unable to enter into carrier agreements in the future to provide our telecommunications services to our customers, which could result in a reduction of our revenues and profits. Our customers could experience financial difficulties, which could adversely affect our revenues and profitability if we experience difficulties in collecting our receivables. As a provider of international long-distance services, we depend upon sales of transmission and termination of traffic to other long-distance providers and the collection of receivables from these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers our profitability may be substantially reduced. While our most significant customers, from a revenue perspective, vary from quarter to quarter, our 27 largest customers (4.5% of our total customer base) collectively accounted for 89% of total consolidated revenues in fiscal year 2024. Although we are somewhat insulated from nonpayment because 33% of our revenue is prepaid, this concentration of revenue increases our exposure to non-payments and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability. We may fail to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions. We intend to make acquisitions of complementary (including competitive) businesses, products and technologies. However, any future acquisitions may result in material transaction costs, increased interest and amortization expenses related to goodwill and other intangible assets, increased depreciation expenses and increased operating expenses, any of which could have an adverse effect on our operating results and financial position. Acquisitions will require integration of acquired assets and management into our operations to realize economies of scale and control costs. Acquisitions may involve other risks, including diversion of management attention that would otherwise be available for ongoing internal development of our business and risks inherent in entering markets in which we have no or limited prior experience. In connection with future acquisitions, we may make potentially dilutive issuances of equity securities. In addition, consummation of acquisitions may subject us to unanticipated business uncertainties, contingent liabilities or legal matters relating to those acquired businesses for which the sellers of the acquired businesses may not fully indemnify us. There can be no assurance that our business will grow through acquisitions, as anticipated. 16 Table of Contents We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary products and services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material: • diversion of management time and focus from operating our business; • use of resources that are needed in other areas of our business; • in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company; • in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company; • in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company and difficulty converting the customers of the acquired company onto our systems, platforms and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; • in the case of an acquisition, difficulty integrating, supporting or enhancing acquired product lines or services, including difficulty in transitioning acquired solutions developed with different source code architectures to our integrated platforms, difficulty in supporting feature development across our full suite of house-built and acquired solutions and strain on resources from marketing and supporting multiple platforms prior to integration; • in the case of an acquisition, retention and integration of employees from the acquired company, and preservation of our corporate culture; • in the case of an acquisition, reliance on certain existing executive teams of acquired companies in new industries; • in the case of an acquisition or divestiture, difficulty delivering on our product strategy, including building a platform that enables us to drive value across our full ecosystem of merchants, suppliers and consumers; • unforeseen costs or liabilities; • adverse effects to our existing business relationships with partners and customers as a result of the acquisition, investment or divestiture; • the possibility of adverse tax consequences; • in the case of an acquisition or divestiture, we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in a timely manner, or at all; • fluctuations in the value of our investments, impairment to the value of our investments, or the failure to realize a return on such investments; • regulatory risks, litigation or other claims inherited from or arising in connection with the acquired company, investment or divestiture; • in the case of a divestiture, unforeseen loss of institutional knowledge, resources, know-how, or other assets; • in the case of a divestiture, potential contractual obligations may trigger, such as change of control obligations, which may negatively impact our ability to execute on such divestiture, our business, our financial condition, or our operating results; and 17 Table of Contents • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries. • We may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent that such opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us. In addition, the acquisitions and investments that we consummate may fail to achieve our strategic objectives, in which case we may shut down, divest, or otherwise exit the acquired business or investment, which could harm our reputation and adversely affect our financial position and results of operations. Natural disasters, terrorist acts, acts of war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations. Our inability to operate our telecommunications networks because of the events listed above, even for a limited period, may result in loss of revenue, significant expenses, which could have a material adverse effect on our results of operations and financial condition. We could be harmed by network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems. To be successful, we need to continue to have available a high capacity, reliable and secure network for our and our customers’ use. As any other company, we face the risk of a security breach, whether through cyber-attacks, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure and related systems. There is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our proprietary or classified information. We are also subject to breaches of our network resulting in unauthorized utilization of our services, which subject us to the costs of providing those services, which are likely not recoverable. The secure maintenance and transmission of our information is a critical element of our operations. Our information technology and other systems that maintain and transmit customer information may be compromised by a malicious third-party penetration of our network security, or impacted by advertent or inadvertent actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our or our customers’ information may be lost, disclosed, accessed or taken without the customers’ consent, or our services may be used without payment. Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched the situations and do not believe any material internal or customer information has been compromised. If we are unable to successfully manage growth, our operations could be adversely affected. Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively. If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers. 18 Table of Contents Risks Related to Legal Uncertainty We may be subject to securities litigation, which is expensive and could divert management attention. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities. We may be subject to tax and regulatory audits which could subject us to liabilities. We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity. Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business. Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks in international markets where our products and services are offered. Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business. In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance. The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results. We may be subject to legal liability associated with providing online services or content. We host and provide a wide variety of services and technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos, videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically and internationally. The law relating to the liability of providers of online services and products for activities of their users is currently unsettled both within the United States and internationally. We may be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions. 19 Table of Contents It is also possible that if any information provided directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For example, we offer web-based e-mail services, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services or technologies are used to spread or facilitate malicious or harmful code or applications. Investigating and defending these types of claims are expensive, even if the claims are without merit or do not ultimately result in liability and could subject us to significant monetary liability or cause a change in business practices that could negatively impact our ability to compete. Security breaches, denial of service attacks, or other hacking and phishing attacks on our systems or other security breaches, including internal security failures, could harm our reputation or subject us to significant liability, and adversely affect our business and financial results. As a critical infrastructure service provider, we transmit large amounts of data over our systems, and process and store highly sensitive customer data. Consequently we, our third-party service providers, and our customers operate in an industry that is prone to cyber-attacks. Despite our efforts to prevent these events, some of these attacks could result in a material adverse impact to our operations due to distributed denial of service attacks, ransomware attacks, malware, virus, credential harvesting, man-in-the-middle attacks, or social engineering attacks. We do not believe these incidents are likely to have a material adverse impact on our ability to serve our customers or our business, operations or financial results. Cyber-attacks on our systems may stem from a variety of sources and take many forms. Cyber-attacks can put at risk personally identifiable information, customer data or protected information, thereby implicating stringent domestic and foreign data protection laws. These threats may also arise from failure or intrusions of systems owned, operated or controlled by other unaffiliated third-party operators, upon whom we are materially reliant to operate our business. Various other factors could intensify these risks, including, (i) our maintenance of information in digital form stored on servers connected to the Internet, (ii) our use of open- and software-defined networks, (iii) the challenges of operating and maintaining our complex multi-continent network composed of legacy and acquired properties, which is more difficult to safeguard than newer fully-integrated networks, (iv) growth in the size and sophistication of our customers and their service requirements, (v) increased use of our network due to greater demand for data services, (vi) the large number of our employees working from remote locations, (vii) our IT support agreements with purchasers of businesses we have divested over the past few years and (viii) as further discussed below, the difficulty of defending against increasingly sophisticated attacks. Cyber-attacks could (i) disrupt the proper functioning of our networks and systems, which could in turn disrupt the operations of our customers, (ii) result in the destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive, classified or otherwise valuable information of ours, our employees, our customers or our customers’ end users, (iii) require us to notify customers, regulatory agencies or the public of data incidents, (iv) damage our reputation or result in a loss of business, (v) require us to provide credits for future service to our customers or to offer expensive incentives to retain customers, (vi) subject us to claims by our customers or regulators for damages, fines, penalties, license or permit revocations or other remedies, (vii) result in the loss of industry certifications or (viii) require significant management attention or financial resources to remedy the resulting damages or to change our systems. Any or all of the foregoing developments could have a material adverse impact on us. We believe the importance of our network to global internet data flows will continue to make it a target to a wide range of threat actors, including nation state actors and other advanced persistent threat actors. Moreover, the risk of incidents is likely to continue to increase due to several factors, including (i) the increasing use of machine learning, AI and other sophisticated techniques to initiate cyber and phishing attacks, (ii) the wider accessibility of cyber-attack tools that can circumvent security controls and evade detection, which can delay and limit our ability to accurately assess and fully remediate the impact of the attack, and (iii) growing threats from Chinese, Russian and other state actors due to heightened geopolitical tensions and rivalries, and the attendant increased possibility of cyber warfare targeting us in the event of a direct conflict. It should also be noted that defenses against cyber-attacks currently available to us and others are unlikely to prevent intrusions by a highly-determined, highly-sophisticated threat actor. Thus far, none of our past security incidents have had a material adverse effect on us, and we continue to take steps designed to limit our cyber risks. Nonetheless, we cannot assure you that future cyber incidents or events will not ultimately have a material adverse impact on our business, operations or financial results. 20 Table of Contents Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions. Members of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to the company or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law. This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty of care. In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock. Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even if it would benefit our shareholders. Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety by reference to Nevada law. The issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock. Under Nevada law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his discretion, may consider any of the following: (i) The interests of the corporation’s employees, suppliers, creditors and customers; (ii) The economy of the state and nation; (iii) The impact of any action upon the communities in or near which the corporation’s facilities or operations are located; (iv) The long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and (v) Any other factors relevant to promoting or preserving public or community interests. Because our board of directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules. 21 Table of Contents We are no longer an “emerging growth company” and therefore no longer eligible for reduced reporting requirements applicable to emerging growth companies. It has been thirteen years since our first registered sale of common stock in 2012, so we are no longer eligible for the reduced disclosure requirements applicable to “emerging growth companies.” Emerging growth companies may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of audited financial statements and not being required to provide selected financial data, supplemental financial information or risk factors. Since we are no longer eligible for emerging growth company status, we will be subject to the reporting obligations of a smaller reporting company and, if we continue grow, we may be subject to increased reporting requirements applicable to accelerated filers, which are more onerous than those applicable to smaller reporting companies. As a smaller reporting company and will be exempt from certain disclosure requirements, which could make our Common Stock less attractive to potential investors. Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: • had a public float of less than $250 million as of the last business day of our most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of our voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or • in the case of an initial registration statement under the Securities Act, or the Exchange Act, for shares of our common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or • in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. As a smaller reporting company, we will not be required and may not include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares. 22 Table of Contents If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common shares. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain a smaller reporting company, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. This may expose us, including individual executives, to potential liability which could significantly affect our business. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its audits of internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common shares could decline, and we could be subject to sanctions or investigations by FINRA, the SEC, or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected. 23 Table of Contents Deficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements. We could be adversely affected if there are deficiencies in our disclosure controls and procedures or in our internal controls over financial reporting. The design and effectiveness of our disclosure controls and procedures and our internal controls over financial reporting may not prevent all errors, misstatements or misrepresentations. Consistent with other entities in similar stages of development, we have a limited number of employees currently in the accounting group, limiting our ability to provide for segregation of duties and secondary review. A lack of resources in the accounting group could lead to material misstatements resulting from undetected errors occurring from an individual performing primarily all areas of accounting with limited secondary review. Deficiencies in internal controls over financial reporting which may occur could result in material misstatements of our results of operations, restatements of financial statements, other required remediations, a decline in the price of our common shares, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity. Risks Relating to Our Securities We have the right to issue additional common stock and preferred stock without the consent of stockholders which would have the effect of diluting investors’ ownership and could decrease the value of their investment. We have additional authorized, but unissued shares of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders’ percentage ownership of our company. In addition, our certificate of incorporation authorizes the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights, preferences, designations and limitations of which may be set by the Board of Directors. Our certificate of incorporation has authorized issuance of up to 300,000,000 shares of common stock and up to 1,200,000 shares of preferred stock in the discretion of our Board. The shares of authorized but unissued preferred stock may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation, conversion rights, voting rights and others. Our largest shareholders, officers and directors and related parties, Leandro Iglesias and Alvaro Quintana, have substantial control over us and our policies as a result of their holdings in Series A Preferred Stock, and will be able to influence all corporate matters, which might not be in other shareholders’ interests. There were 10,000 shares of Series A Preferred Stock outstanding as of the date of this Annual Report, with Mr. Iglesias holding 7,000 shares and Mr. Quintana the other 3,000 shares. There were 210,710,170 shares of our common stock issued and outstanding as of the date of this Annual report, with Mr. Iglesias holding 2,095,363 shares and Mr. Quintana holding 1,331,842 shares, which together accounts for just over 1.68% of our outstanding common stock. Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders, including the election of directors. Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. By virtue of their ownership of Series A Preferred Stock and common stock, they are able to vote at a rate of approximately 51.83% of the total vote of shareholders. They are therefore able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our company. They could prevent transactions, which would be in the best interests of the other shareholders. Their interests may not necessarily be in the best interests of the shareholders in general. We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates. 24 Table of Contents Risks Related to the Market for our Securities If a market for our common stock does not develop, stockholders may be unable to sell their shares. Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities. . Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Accordingly, it may be difficult to sell shares of our common stock without significantly depressing the value of the stock. Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to result in major fluctuations in the price of the stock. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control. Our stock price is subject to a number of factors, including: • Technological innovations or new products and services by us or our competitors; • Government regulation of our products and services; • The establishment of partnerships with other telecom companies; • Intellectual property disputes; • Additions or departures of key personnel; • Sales of our common stock or preferred stock; • Our ability to integrate operations, technology, products and services; • Our ability to execute our business plan; • Operating results below or exceeding expectations; • Whether we achieve profits or not; • Loss or addition of any strategic relationship; • Industry developments; • Economic and other external factors; and • Period-to-period fluctuations in our financial results. Our stock price may fluctuate widely as a result of any of the above. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. 25 Table of Contents Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced. The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities. We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted. We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted. If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. Item 1B. Unresolved Staff Comments This information is not required for smaller reporting companies. Item 1C. Cybersecurity As a technology and communications company that globally transmits large amounts of information over our networks, we recognize the critical importance of maintaining the security and integrity of information and systems under our control. We view cybersecurity risk as one of our principal enterprise-wide risks, subject to control and monitoring at various levels of management throughout our company. We dedicate resources commensurate with our risk profile and business size to programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats. As described in Item 1A “Risk Factors,” several features of our operations heighten our susceptibility to cyber-attacks, including (i) our material reliance on systems owned, operated or controlled by unaffiliated third-party operators and (ii) our processing and storage of large amounts of sensitive customer data. Cyber-attacks on our systems may be initiated by a wide variety of intruders, including employees, cyber-criminals, nation state actors and other advanced persistent threat actors, and may include attempts by outside parties to gain access to sensitive data that is stored in or transmitted across our network. Cyber-attacks can take many forms, including computer hackings, computer viruses, ransomware, worms or other destructive or disruptive software, denial of service attacks, or other malicious activities. 26 Table of Contents We have implemented cybersecurity risk management procedures, in accordance with our risk profile and business size. We rely on our information technology to operate our business. As such, we have policies and processes designed to protect our information technology systems, some of which are managed by third parties, and resolve issues in a timely manner in the event of a cybersecurity threat or incident. We have designed our business applications to minimize the impact that cybersecurity incidents could have on our business and have identified back-up systems where appropriate. We seek to further mitigate cybersecurity risks through a combination of monitoring and detection activities, use of anti-malware applications, employee training, quality audits and communication and reporting structures, among other processes. We have a trained group of people to carry out the activities of monitoring and detection of cybersecurity threats and respond to any cybersecurity threats or incidents. The Head of IT department is responsible for oversight of cybersecurity risks and addressing potential cybersecurity risks to business programs, employees, clients, vendors and partners. The Head of IT Department reports to our Chief Executive Officer who reports to the Audit Committee at the board-level, as appropriate. As of December 31, 2024, we have not identified an indication of a cybersecurity incident that would have a material impact on our business and consolidated financial statements. Item 2. Properties The disclosures concerning our properties are contained in Item 1 Business above and incorporated herein by reference. Item 3. Legal Proceedings We have no current legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 27 Table of Contents PART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a stockholder may be unable to resell his securities in our company. The following tables set forth the range of high and low bid information for our common stock for each of the periods indicated as reported by the OTCQX. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal Year Ending December 31, 2024 Quarter Ended High $ Low $ December 31, 2024 0.3094 0.2650 September 30, 2024 0.1790 0.1630 June 30, 2024 0.2828 0.2470 March 31, 2024 0.3950 0.3500 Fiscal Year Ending December 31, 2023 Quarter Ended High $ Low $ December 31, 2023 0.1550 0.1440 September 30, 2023 0.2250 0.2160 June 30, 2023 0.1340 0.1130 March 31, 2023 0.1549 0.1425 On March 24, 2025, the last sales price per share of our common stock was $0.1477. Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account. 28 Table of Contents In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities. Holders of Our Common Stock As of March 24, 2025, we had 210,710,170 shares of our common stock issued and outstanding, held by approximately 79 stockholders of record at our transfer agent, with additional stockholders holding our shares in street name. Dividends We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. In the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common stock by our board of directors from funds legally available. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 1. We would not be able to pay our debts as they become due in the usual course of business; or 2. Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution. Securities Authorized for Issuance under Equity Compensation Plans We do not have an equity compensation plan. Recent Sales of Unregistered Securities During the year ended December 31, 2024, the Company issued 30,847,055 shares of common stock and had a stock payable of 285,000 shares at year end, valued at fair market value on issuance as follows: • 600,000 shares for compensation to our directors valued at $141,025; • 3,007,173 shares for settlement of debt valued at $483,670; • 3,535,354 shares in conjunction with convertible notes valued at $597,777; • 10,000,000 shares for exercise of warrants for $1,100,000; and • 6,106,061 shares for conversion of debt of $671,666 • 2,450,000 shares issued for cash of $100,000 • 646,467 shares for the extension of debt valued at $116,364 • 4,502,000 shares for conversion of Series B Preferred Stock • 285,000 shares of stock payable for service valued at $82,194 recorded as additional paid in capital as of December 31, 2024. Shares were issued on January 16, 2025. 29 Table of Contents These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain statements in this Annual Report constitute forward-looking statements. See " Forward-Looking Statements" immediately prior to Item 1 of Part I of this report for factors relating to these statements and "Risk Factors" in Item 1A of Part I of this report for a discussion of certain risk factors applicable to our business, financial condition, results of operations, liquidity or prospects. Results of Operations for the Years Ended December 31, 2024 and 2023 Net Revenue Our net revenue for the year ended December 31, 2024 was $283,220,442 as compared with $144,502,351 for the year ended December 31, 2023. These numbers reflect an increase of 96% year over year on our consolidated Revenues. When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2024 and 2023: Subsidiary Revenue Year Ended December 31, 2024 Revenue Year Ended December 31, 2023 Etelix.com USA, LLC $ 69,833,265 $ 44,026,288 SwissLink Carrier AG 8,317,281 5,250,141 QGlobal LLC 1,539,434 1,228,865 IoT Labs LLC 94,170,000 75,574,912 Whisl 2,826,276 1,855,816 Smartbiz 20,499,830 16,566,329 QXTEL 86,034,356 — $ 283,220,442 $ 144,502,351 The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and new acquisitions. In fact, 38% of the increase was organic grow, while the remaining 62% was due to the acquisition of QXTEL Inc. Cost of Revenue Our total cost of revenue for the year ended December 31, 2024 was $274,948,693 as compared with $139,830,338 for the year ended December 31, 2023. 30 Table of Contents When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2024 and 2023: Subsidiary Cost of revenue Year Ended December 31, 2024 Cost of revenue Year Ended December 31, 2023 Etelix.com USA, LLC $ 69,334,112 $ 41,505,472 SwissLink Carrier AG 7,663,815 4,359,141 QGlobal LLC 1,144,324 832,282 IoT Labs LLC 92,196,261 74,662,656 Whisl 2,130,645 2,033,529 Smartbiz 19,572,904 16,437,258 QXTEL 82,906,632 — $ 274,948,693 $ 139,830,338 Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls and SMS terminated in our vendors’ networks. The behavior in the costs shows a logical correlation with the behavior of the revenue commented above. We have reached a higher volume of revenue and every additional unit sold (minutes and SMS) has its corresponding termination cost. Gross Margin Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $4,672,013 in 2023 to $8,271,749 in 2024, which is an increase of 77.05% year-over-year. Operating Expenses Operating expenses for the year ended December 31, 2024 were $9,105,813, as compared with $4,987,516 for the year ended December 31, 2023. The detail by major category is reflected in the table below. Years Ended December 31, 2024 2023 Salaries, Wages and Benefits $ 2,963,714 $ 1,560,366 Technology 1,192,185 328,710 Professional Fees 1,110,773 1,283,351 Legal and Regulatory 328,500 256,537 Travel & Events 234,295 136,051 Public Cost 102,773 36,349 Bad Debt Expense 1,991 8,815 Depreciation and Amortization 499,535 128,737 Advertising 968,206 595,298 Bank Services and Fees 211,591 77,292 Office, Facility and Other 529,892 309,376 Sales Commissions 675,605 211,830 Insurance 63,534 11,914 Subtotal 8,882,594 4,944,626 Stock-based compensation 223,219 42,890 Total Operating Expenses $ 9,105,813 $ 4,987,516 31 Table of Contents Operating Expenses by subsidiary are as follows: Years Ended December 31, 2024 2023 Difference IQSTEL $ 2,881,662 $ 1,692,056 $ 1,189,606 Etelix 428,603 322,932 105,671 SwissLink 974,233 723,712 250,521 ItsBchain 14,788 41,955 -27,167 QGlobal 552,388 253,160 299,228 Global Money One 762 55,710 -54,948 IoT Labs 246,254 172,709 73,545 Whisl 800,922 614,617 186,305 Smartbiz 978,760 1,110,665 -131,905 QXTEL 2,227,441 - 2,227,441 Total Operating Expenses $ 9,105,813 $ 4,987,516 $ 4,118,297 There is a significant increase of 82.57% in Operating Expenses for 2024 when compared with 2023; however, more than half of that increase (54%) is due to the inclusion of QXTEL in the consolidated financial statements in the year 2024. Another 29% of that increase is due to an increment in IQSTEL's operating expenses concentrated in the categories of Salaries, Wages and Benefits ($442,003 higher than in 2023), Advertising ($372,908 higher than in 2023) and Stock-based compensation ($180,329 higher than in 2023) Finally, the third largest expense item contributing to the increase of Operating Expanses is related to technology. Other Income (Expenses) We had other expenses of $3,951,942 for the year ended December 31, 2024, as compared with other income of $96,067 for the year ended December 31, 2023. The increase in Other Expenses in 2024 compared to 2023 is due to (1) the negative change in fair value of derivative liabilities of $1,393,046 for the year ended December 31, 2024 from a positive value of $381,848 for the year ended December 31, 2023; (2) the increase of interest expenses to $2,159,425 in 2024 from $94,908 in 2023 and (3) a loss on settlement of debt of $482,085 in 2024. Net Loss We finished the year ended December 31, 2024 with a loss of $5,180,036 as compared to a loss of $219,436 during the year ended December 31, 2023. The net results of the periods reported are highly impacted by the expenses in the holding entity (IQSTEL), which has a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited. Our Telecom Division, the division presently generating revenue, has positive operating income when presented separately from the rest of our Company. As we have indicated on several occasions, our strategy is to strengthen our telecommunications division so that it can serve as a lever for the development of new lines of business, such as Fintech and Cybersecurity. Our telecom division revenues have increased by 96% from $144,502,351 in 2023 to $283,220,442 in 2024. Additionally, its gross profit has risen by 77%, going from $4,672,013 to $8,271,749; operating income has grown by 40% from $1,474,218 to $2,063,148; and net income has increased by 33%, rising from $1,290,646 to $1,710,241. These double-digit growth figures demonstrate the strong performance of our telecommunications division. 32 Table of Contents Telecom Division Pre-revenue companies iQSTEL Consolidated Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2024 Year Ended December 31, 2023 Revenues 283,220,442 144,502,351 — — — — 283,220,442 144,502,351 Cost of revenue 274,948,693 139,830,338 — — — — 274,948,693 139,830,338 Gross profit 8,271,749 4,672,013 — — — — 8,271,749 4,672,013 Operating expenses General and administration 6,208,601 3,197,795 15,550 97,665 2,881,662 1,692,056 9,105,813 4,987,516 Total operating expenses 6,208,601 3,197,795 15,550 97,665 2,881,662 1,692,056 9,105,813 4,987,516 Operating income/(loss) 2,063,148 1,474,218 (15,550 ) (97,665 ) (2,881,662 ) (1,692,056 ) (834,064 ) (315,503 ) Other income (expense) 41,123 (183,572 ) (120 ) (100 ) (3,992,945 ) 279,740 (3,951,942 ) 96,067 Net income (loss) before income taxes 2,104,271 1,290,646 (15,670 ) (97,765 ) (6,874,607 ) (1,412,316 ) (4,786,006 ) (219,436 ) Income taxes (394,030 ) — — — — — (394,030 ) — Net income (loss) 1,710,241 1,290,646 (15,670 ) (97,765 ) (6,874,607 ) (1,412,316 ) (5,180,036 ) (219,436 ) Depreciation and amortization 499,535 128,737 — — — — 499,535 128,737 Interest expense 41,611 — — — 2,117,814 94,908 2,159,425 94,908 Change in fair value of derivative liabilities — — — — 1,393,046 (381,848 ) 1,393,046 (381,848 ) Loss on settlement of debt — — — — 482,085 — 482,085 — Stock-based compensation — — — — 223,219 42,890 223,219 42,890 Income taxes 394,030 — — — — — 394,030 — Adjusted EBITDA 2,645,417 1,419,383 (15,670 ) (97,765 ) (2,658,452 ) (1,656,366 ) (28,705 ) (334,749 ) In evaluating our financial performance, we utilize Adjusted EBITDA as a supplemental measure to provide insights into the profitability of our core operations. (Please see Adjusted EBITDA, which is reconciled to the Net Income in the table above.) Adjusted EBITDA excludes, in addition to non-operational expenses like interest expenses, taxes, depreciation and amortization; items that we believe are not indicative of our operating performance, such as: • Change in Fair Value of Derivative Liabilities: These adjustments reflect unrealized gains or losses that are non-operational and subject to market volatility. • Loss on Settlement of Debt: This represents non-recurring expenses associated with specific financing activities and does not impact ongoing business operations. • Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives. We believe Adjusted EBITDA offers a clearer view of the cash-generating potential of our business, excluding non-recurring, non-cash, and non-operational impacts. 33 Table of Contents Based on the analysis of our Adjusted EBITDA our Telecom Division is a high-performing division that generates strong operational profits. Adjusted EBITDA has increased 86% from $1,419,383 as of December 31, 2023 to $2,645,417 as of December 31, 2024. Consolidated figures show a slightly negative Adjusted EBITDA; while this isn’t ideal, in our opinion it implies the Company is close to breaking even and might achieve positive Adjusted EBITDA with small improvements in efficiency or revenue growth. We are in a transitional period, scaling operations and investing heavily in growth initiatives with the execution of our M&A plan. Management has also identified areas for cost-cutting and operational improvements and has acted in that direction. Liquidity and Capital Resources As of December 31, 2024 we had total current assets of $63,015,046, compared with total current liabilities of $63,821,196, resulting in a negative working capital of $ 806,150 and a current ratio of approximately 0.99 to 1. The negative working capital is due largely to loans payable of $2,455,641. Following is a table with summary data from the consolidated statements of cash flows for the years ended December 31, 2024 and 2023, as presented. 2024 2023 Net cash used in operating activities $ (2,930,306 ) $ (1,483,801 ) Net cash used in investing activities (3,162,971 ) (332,550 ) Net cash provided by financing activities 7,240,966 1,833,965 Effect of exchange rate changes on cash — 15,665 Net change in cash $ 1,147,689 $ 33,279 Our operating activities used $2,930,306 in the year ended December 31, 2024, as compared with $1,483,801 used in operating activities in the year ended December 31, 2023. Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Investing activities used $3,162,971 for the year ended December 31, 2024, as compared with $332,550 used in investing activities for the year ended December 31, 2023. The cash used in investing activities is largely due to the acquisition of QXTEL, where the Company invested $2,955,121, and the purchase of $151,620 of property and equipment. Financing activities provided $7,240,966 for the year ended December 31, 2024, as compared to $1,833,965 provided for the year ended December 31, 2023. The cash provided in 2024 was largely from loans, convertible debt and warrant exercises, offset by repayments on loans. We have financed our operations through private placements, convertible notes, and unsecured debt, and we have also issued debt in our company secured by all of our assets. Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we are dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. Aside from cash exercises as set forth under an outstanding option that expires on July 14, 2025, we do not have any formal commitments or arrangements for the advancement or loan of funds. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all. 34 Table of Contents Inflation Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the twelve-month period ended December 31, 2024. Critical Accounting Policies A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2024; however, we consider our critical accounting policies to be those related to the allowance for doubtful accounts, valuation of assets, significant estimates in the valuation of financial instruments and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See the Consolidated Financial Statements in this Annual Report for a complete discussion of our significant accounting policies. Off Balance Sheet Arrangements As of December 31, 2024, there were no off-balance sheet arrangements. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03 final standard on Income Statement: Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance will be effective for us on January 1, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03. 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. 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, 2024 and 2023; F-4 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023; F-5 Consolidated Statement of Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023; F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023; and F-7 Notes to Consolidated Financial Statements. 35 Table of Contents 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, 2024 and 2023, 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, 2024 and 2023, and the results of its operations and its cash flows for each of 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, negative working capital, 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 the 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, negative working capital, 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 March 31, 2025 F- 1 Table of Contents iQSTEL INC Consolidated Balance Sheets December 31, December 31, 2024 2023 ASSETS Current Assets Cash $ 2,510,357 $ 1,362,668 Accounts receivable, net 57,158,967 12,539,774 Inventory 30,658 27,121 Due from related parties 630,715 340,515 Prepaid and other current assets 2,684,349 1,449,094 Total Current Assets 63,015,046 15,719,172 Property and equipment, net 561,802 522,997 Intangible assets 7,438,654 99,592 Goodwill 6,750,045 5,172,146 Deferred tax assets 243,108 426,755 Other assets 999,083 214,991 TOTAL ASSETS $ 79,007,738 $ 22,155,653 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 2,129,241 $ 2,966,279 Accrued and other current liabilities 55,624,784 9,993,585 Due to related parties 26,613 26,613 Loans payable - net of discount of $ 62,898 and $ 3,750 , respectively 2,455,641 264,988 Loans payable - related parties 720,485 259,447 Convertible notes - net of discount of $ 138,654 and $ 39,012 , respectively 1,864,432 330,032 Contingent liability for acquisition of subsidiary 1,000,000 — Total Current Liabilities 63,821,196 13,840,944 Convertible notes - net of discount of $ 210,296 and $ 0 , respectively 3,011,926 — Loans payable, non-current — 99,099 Employee benefits, non-current 274,353 169,738 TOTAL LIABILITIES 67,107,475 14,109,781 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, 35,537 and 31,080 shares issued and outstanding, respectively 36 31 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 202,976,685 and 172,129,630 shares issued and outstanding, respectively 202,976 172,130 Additional paid in capital 39,743,485 34,360,884 Accumulated deficit ( 32,703,410 ) ( 26,084,133 ) Accumulated other comprehensive loss ( 25,340 ) ( 25,340 ) Equity attributed to stockholders of iQSTEL Inc. 7,217,757 8,423,582 Equity (Deficit) attributable to noncontrolling interests 4,682,506 ( 377,710 ) TOTAL STOCKHOLDERS' EQUITY 11,900,263 8,045,872 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 79,007,738 $ 22,155,653 The accompanying notes are an integral part of these consolidated financial statements. F- 2 Table of Contents iQSTEL INC Consolidated Statements of Operations Years Ended December 31, 2024 2023 Revenues $ 283,220,442 $ 144,502,351 Cost of revenue 274,948,693 139,830,338 Gross profit 8,271,749 4,672,013 Operating expenses General and administration 9,105,813 4,987,516 Total operating expenses 9,105,813 4,987,516 Operating loss ( 834,064 ) ( 315,503 ) Other income (expense) Other income 94,974 8,403 Other expenses ( 12,360 ) ( 199,276 ) Interest expense ( 2,159,425 ) ( 94,908 ) Change in fair value of derivative liabilities ( 1,393,046 ) 381,848 Loss on settlement of debt ( 482,085 ) — Total other (expense) income ( 3,951,942 ) 96,067 Net loss before provision for income taxes ( 4,786,006 ) ( 219,436 ) Income taxes ( 394,030 ) — Net loss ( 5,180,036 ) ( 219,436 ) Less: Net income attributable to noncontrolling interests 811,531 543,822 Net loss attributed to iQSTEL Inc. $ ( 5,991,567 ) $ ( 763,258 ) Dividend on Series B Preferred Stock ( 627,710 ) ( 816,480 ) Net loss attributed to stockholders of iQSTEL Inc. $ ( 6,619,277 ) $ ( 1,579,738 ) Comprehensive loss Net loss $ ( 5,180,036 ) $ ( 219,436 ) Foreign currency adjustment — 16,112 Total loss $ ( 5,180,036 ) $ ( 203,324 ) Less: Comprehensive income attributable to noncontrolling interests 811,531 551,717 Net comprehensive loss attributed to iQSTEL Inc. $ ( 5,991,567 ) $ ( 755,041 ) Basic and diluted loss per common share $ ( 0.04 ) $ ( 0.01 ) Weighted average number of common shares outstanding - Basic and diluted 182,211,063 167,281,028 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Table of Contents iQSTEL INC Consolidated Statements of Changes in Stockholders’ Equity (Deficit) For the years ended December 31, 2024 and 2023 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' Equity 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 Series B Preferred stock issued as dividend — — 8,959 10 — — 627,700 ( 627,710 ) — — — — Common stock issued for compensation — — — — 600,000 600 140,425 — — 141,025 — 141,025 Common stock issued for settlement of debt — — — — 3,007,173 3,007 480,663 — — 483,670 — 483,670 Common stock issued for conversion of debt — — — — 6,106,061 6,106 665,560 — — 671,666 — 671,666 Common stock issued in conjunction with convertible notes — — — — 3,535,354 3,535 594,242 — — 597,777 — 597,777 Common stock issued for the extension of debt — — — — 646,467 646 115,718 — — 116,364 — 116,364 Common stock issued for warrant exercises — — — — 10,000,000 10,000 1,090,000 — — 1,100,000 — 1,100,000 Common stock issued for conversion of series B preferred stock — — ( 4,502 ) ( 5 ) 4,502,000 4,502 ( 4,497 ) — — — — — Common stock issued for cash — — — — 2,450,000 2,450 97,550 — — 100,000 — 100,000 Resolution of derivative liabilities upon exercise of warrant — — — — — — 1,493,046 — — 1,493,046 — 1,493,046 Common stock payable — — — — — — 82,194 — — 82,194 — 82,194 Acquisition of subsidiary — — — — — — — — — — 4,248,685 4,248,685 Net income (loss) — — — — — — — ( 5,991,567 ) — ( 5,991,567 ) 811,531 ( 5,180,036 ) Balance - December 31, 2024 10,000 $ 10 35,537 $ 36 202,976,685 $ 202,976 $ 39,743,485 $ ( 32,703,410 ) $ ( 25,340 ) $ 7,217,757 $ 4,682,506 $ 11,900,263 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Table of Contents iQSTEL INC Consolidated Statements of Cash Flows Years Ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 5,180,036 ) $ ( 219,436 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 223,219 42,890 Bad debt expense 1,991 8,815 Loss on disposal of asset — 7,200 Depreciation and amortization 499,535 128,737 Amortization of debt discount 1,096,725 38,758 Change in fair value of derivative liabilities 1,393,046 ( 381,848 ) Loss on settlement of debt 482,085 — Deferred tax assets 183,647 53,568 Changes in operating assets and liabilities: Accounts receivable ( 56,091,437 ) ( 8,010,726 ) Inventory ( 3,537 ) ( 997 ) Prepaid and other assets ( 1,235,127 ) ( 1,085,279 ) Due from related parties ( 20,000 ) 93,264 Accounts payable 4,448,542 1,217,926 Accrued and other current liabilities 51,271,041 6,623,327 Net cash used in operating activities ( 2,930,306 ) ( 1,483,801 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of subsidiary, net of cash acquired ( 2,955,121 ) — Purchase of property and equipment ( 151,620 ) ( 220,045 ) Advance of loan receivable - related party ( 89,832 ) ( 192,154 ) Collection of amounts due from related parties 33,602 79,649 Net cash used in investing activities ( 3,162,971 ) ( 332,550 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans payable 2,494,852 375,000 Repayments of loans payable ( 1,846,139 ) ( 18,559 ) Proceeds from loans payable - related parties 1,000,000 — Repayment of loans payable - related parties ( 538,961 ) — Proceeds from common stock issued 100,000 — Proceeds from exercise of warrants 1,100,000 1,400,000 Proceeds from convertible notes 5,612,499 250,000 Proceeds from common stock payable 100,000 — Repayment of convertible notes ( 781,285 ) ( 172,476 ) Net cash provided by financing activities 7,240,966 1,833,965 Effect of exchange rate changes on cash — 15,665 Net change in cash 1,147,689 33,279 Cash, beginning of period 1,362,668 1,329,389 Cash, end of period $ 2,510,357 $ 1,362,668 Supplemental cash flow information Cash paid for interest $ 879,783 $ 45,282 Cash paid for taxes $ — $ — Non-cash transactions: Series B Preferred stock issued as dividend $ 627,710 $ 816,480 Common stock issued in connection with convertible notes $ 597,777 $ — Common stock issued for conversion of debt $ 671,666 $ — Common stock issued for modification of debts $ 600,034 $ — Common stock issued for conversion of preferred stock $ 4,502 $ — Cashless warrant exercised $ 1,814 $ — Non-cash dividend for collection of loan receivable - related parties $ — $ 5,050 Resolution of derivative liabilities upon exercise of warrant $ 1,493,046 $ 975,939 Note payable issued for acquisition of subsidiary $ 2,000,000 $ — Contingent liability for acquisition of subsidiary $ 1,000,000 $ — The accompanying notes are an integral part of these consolidated financial statements. F- 5 Table of Contents iQSTEL INC Notes to the Consolidated Financial Statements December 31, 2024 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 603 active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers. The Company is a technology company with presence in 20 countries and approximately 100 employees that is offering leading-edge services through its four business divisions. The Telecom Division, which represents the majority of current operations and which also represents the source for all of the Company’s revenues, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic connectivity through its subsidiaries: Etelix.com USA, LLC, SwissLink Carrier AG, Smartbiz Telecom LLC, Whisl Telecom LLC, IoT Labs, LLC, QGlobal SMS, LLC, and QXTEL LIMITED. Also under the Telecom Division, the Company’s developing BlockChain Platform Business Line offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, itsBchain, LLC. The Company’s developing Fintech Business Line offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances, Mobile Top Up). The Company’s Fintech subsidiary, Global Money One Inc., is to provide immigrants access to reliable financial services that makes it easier to manage their money and stay connected with their families back home. The Company’s developing Electric Vehicle (EV) Business Line offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia, and Venezuela. EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family. The Company’s developing Artificial Intelligence (AI)-Enhanced Metaverse Division offers a white-label solution designed specifically for corporations, businesses, and the telecommunications industry. Delivering a full suite of immersive content services, creating a comprehensive virtual experience that can be accessed through the Web or our proprietary mobile apps. 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. Reclassification Certain amounts have been reclassified to improve the clarity and comparability of the financial statements. These reclassifications had no effect on the reported results of operations. F- 6 Table of Contents 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”), Smartbiz Telecom LLC (“Smartbiz”) and QXTEL LIMITED (“QXTEL”). 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. 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, Global Money One and QXTEL is the U.S. dollar, while SwissLink’s functional currency was the Swiss Franc (“CHF”). As of January 1, 2024, we changed the functional currency of SwissLink from their respective local currency to the US dollar. The change in functional currency is due to increased exposure to the US dollar as a result of a change in facts and circumstances in the primary economic environment in which this subsidiary operates. The effects of the change in functional currency were not significant to our consolidated financial statements. 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, 2024 and 2023. 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, 2024 and 2023, the Company recorded bad debt expense of $ 1,991 and $ 8,815 , respectively. F- 7 Table of Contents 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 - 4 years for computers and laptops; 4 - 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. Intangible Assets Intangible assets represent mainly the interconnection agreements acquired from the acquisition of QXTEL. The acquired intangible asset was recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective asset. The estimated useful life of the acquired interconnection agreements is 16 years . 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. F- 8 Table of Contents 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. 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. The following table provides a summary of changes in the carrying amounts of goodwill Balance at January 1, 2023 $ 5,172,146 Additions — Balance at December 31, 2023 5,172,146 Additions 1,577,899 Balance at December 31, 2024 $ 6,750,045 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, 2024 and 2023. 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, accounts receivable, 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. F- 9 Table of Contents During the year ended December 31, 2024, we had 27 customers representing 89 % of our revenue compared to 12 customers representing 89 % of our revenue for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, 33 % and 52 % of revenue, respectively, comes from customers under prepayment conditions, which means there are no credit or bad debt risks on that portion of the customers’ portfolio. 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 Table of Contents 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 15). Revenue Recognition 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. Usage charges refer to the fees that customers are billed based on their actual usage of the services. For voice services, this typically means charges based on the duration of calls made. For SMS (text messaging), it usually means charges per message sent. Other recurring charges are referred to charges for services such as (1) Global DIDs, (2) Global Toll-Free Numbers, (3) PBX (Private Branch Exchange) for small businesses, and (4) SIP Trunking. The provision of these services usually has set-up fees and are offered on a subscription or month-to-month basis. Revenue is reported on a gross basis since the Company acts as the principal in the transaction, meaning it has control over the goods or services before they are transferred to the customer. This includes having the primary responsibility for fulfilling the contract and determining the price. With respect to the specific performance obligations of the Company in its contracts with its customers, our standard service agreement establishes the following: • The Company agrees to furnish to Customer, and Customer agrees to purchase from the Company, International Long Distance telecommunication services and/or SMS services at the rates agreed to in writing by the Parties. • The Company will provide, operate and maintain communications equipment, international links and network administration and support in the United States and other countries as may be agreed upon. • The Company will be responsible for its own expenses and will provide, operate, and maintain transmission facilities required to link its domestic network with the other Party's nearest point of presence (POP). • The Company shall provide Customer all required IP network addresses, Domain Name Server (DNS) information and, if necessary, the associated prefixes used to exchange voice traffic as provided on the provisioning form. • The Company shall take all appropriate security measures to protect its network from fraudulent traffic coming from unknown or unauthorized sources. Any and all IP and network information received by the Company from Customer for the purposes of this agreement shall be held in strict confidentiality, and disclosed only to those employees or personnel with a need to know. The Company recognizes revenue from telecommunication services in accordance with ASC 606. Topic 606 establishes a comprehensive 5 step framework for determining revenue recognition. Under this framework, the Company considers each service a single performance obligation, since typically, the Company provides a series of distinct services. F- 11 Table of Contents The application of the 5 step Topic 606 revenue recognition framework to the Company's operations is depicted as follows: Topic 606 Conceptual Framework Related Company Policy & Procedures Step 1 Identify the contract(s) with customer A contract is defined as an approved mutual agreement between the Company and a customer setting performance obligation, and criteria that must be met in accordance with the Company's customary commercial business practices and entered into with the probable expectation that all estimated consideration will be realized in the ordinary course of business. Step 2 Identify the performance obligations Performance obligations are identified in the customer agreement, and any subsequent amendments stated in per minute, time and message usage criteria. The Company considers each service a single performance obligation, including instances where the Company provides a series of services that are substantially the same and have the same pattern of transfer. Step 3 Determine the transaction price The transaction price is determined at contract inception and is subsequently reviewed periodically to reflect applicable rate amendments, trends in regulatory, market conditions and usage of service by a customer. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Step 4 Allocate the transaction price to the performance obligations The transaction price is allocated to each performance obligation based on the standalone contractual selling price of the time measured service, net of any related discount. Step 5 Recognize revenue when the entity satisfies a performance obligation The Company recognizes revenues from contracts with customers when control of the usage of the services has been transferred to the customer, as recorded and measured by the Company's internal information systems. Revenues are recognized at the probable amount of consideration expected in exchange for transferring control of usage. 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. F- 12 Table of Contents 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 November 2024, the FASB issued ASU 2024-03 Final Standard on Income Statement: Disaggregation of Income Statement Expenses , which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance will be effective for us on January 1, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03. 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. Recently adopted accounting standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting, which improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses among other disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted ASU 2023-07 on January 1, 2024. The amendments were applied retrospectively to all prior periods presented in the accompanying financial statements. The adoption of ASU 2023-07 has not had a material effect on the Company’s statements and disclosures. 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, negative working capital 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, and loans from third parties. Management may raise additional capital through future public or private offerings of the Company's stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company's failure to do so could have a material and adverse effect upon its operations and its stockholders. F- 13 Table of Contents NOTE 4 - ACQUISITIONS 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 (“QXTEL”), 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, which was credited against the Purchase Price. At closing, in addition to the $ 1,500,000 with the Escrow Agent that formed part of the Purchase Price, we were 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 could decide the form of payment between the Promissory Note or the shares of iQSTEL, and if a Promissory Note was chosen, we agreed to allow Seller the option to exchange the Promissory Note for shares of iQSTEL. On June 27, 2024, we entered into a second amendment to the Purchase Agreement (the “Amendment”) that required us to issue an amended and restated promissory note to the Seller. We had paid down $ 200,000 of the note, so the amended and restated promissory note was issued in the principal amount of US $ 1,800,000 . The amended and restated promissory note also changed the payment structure, from installment payments of $ 200,000 for each of the months of May through November ($1,400,000) with a balloon payment of $ 600,000 , to monthly installments of $ 75,000 plus interest during 2024, and $ 212,500 plus interest during the first 6 months of 2025 . We also revised the Earnout Payment due to the Seller. The Earnout Payment was redefined at $ 721,035 net income, to be achieved in Q2, Q3 and Q4 of 2024. The $ 1,000,000 payment that IQSTEL has to pay upon achievement of the Earnout Payment will be paid in monthly installments during the first half of 2025. During the year ended December 31, 2024, the Company repaid $ 725,000 on the Promissory Note. The acquisition was closed on April 1, 2024. QXTEL has been included in our consolidated results of operations since the acquisition date. The following table summarizes the fair value of the consideration paid by the Company: April 1, Fair Value of Consideration: 2024 Cash $ 3,000,000 Promissory note 2,000,000 Contingent liability 1,000,000 Total Purchase Price $ 6,000,000 The following table summarizes the identifiable assets acquired and liabilities assumed upon acquisition of QXTEL and the calculation of goodwill: Total purchase price $ 6,000,000 Cash 769,879 Accounts receivable 14,946,919 Due from related party 208,550 Other asset 214,564 Equipment 30,963 Total identifiable assets 16,170,875 Accounts payable ( 14,796,505 ) Other current liabilities ( 403,584 ) Total liabilities assumed ( 15,200,089 ) Net assets 970,786 Intangible assets recognized 7,700,000 Non-controlling interest - 49 % ( 4,248,685 ) Total net assets 4,422,101 Goodwill $ 1,577,899 F- 14 Table of Contents Unaudited combined proforma results of operations for the year ended December 31, 2024 and 2023 as though the Company acquired QXTEL on January 1, 2023, are set forth below: Years Ended December 31, 2024 2023 Revenues $ 310,903,903 $ 225,999,964 Cost of revenues 302,110,691 217,445,017 Gross profit 8,793,212 8,554,947 Operating expenses 9,734,475 7,557,105 Operating (loss) income ( 941,263 ) 997,842 Other (expense) income ( 3,951,942 ) 96,067 Income tax ( 394,030 ) ( 235,564 ) Net (loss) income $ ( 5,287,235 ) $ 858,345 NOTE 5 – PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets at December 31, 2024 and 2023 consisted of the following: December 31, December 31, 2024 2023 Other receivable $ 115,685 $ 312,116 Prepaid expenses 2,020,288 738,050 Advance payment 21,000 21,000 Tax receivable 42,673 428 Deposit for acquisition of asset 356,000 357,500 Security deposit 128,703 20,000 Total prepaid and other current assets $ 2,684,349 $ 1,449,094 NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment at December 31, 2024 and 2023 consisted of the following: December 31, December 31, 2024 2023 Telecommunication equipment $ 709,417 $ 386,700 Telecommunication software 690,742 836,840 Other equipment 155,935 99,892 Total property and equipment 1,556,094 1,323,432 Accumulated depreciation and amortization ( 994,292 ) ( 800,435 ) Total property and equipment $ 561,802 $ 522,997 Depreciation expense for the years ended December 31, 2024 and 2023 amounted to $ 138,597 and $ 128,737 , respectively. F- 15 Table of Contents NOTE 7 – INTANGIBLE ASSETS Intangible assets at December 31, 2024 and 2023 consisted of the following: 2024 Useful life Gross carrying amount Accumulated amortization Net carrying amount New gas regulator intangible * $ 99,592 $ — $ 99,592 Interconnection agreements 16 years 7,700,000 ( 360,938 ) 7,339,062 $ 7,799,592 $ ( 360,938 ) $ 7,438,654 (*) Not yet in service 2023 Useful life Gross carrying amount Accumulated amortization Net carrying amount New gas regulator intangible * $ 99,592 $ — $ 99,592 (*) Not yet in service Amortization expense for the years ended December 31, 2024 and 2023 amounted to $ 360,938 and $ 0 . The following table outlines the estimated future amortization expense as of December 31, 2024: 2025 $ 481,250 2026 481,250 2027 481,250 2028 481,250 2029 481,250 Thereafter 4,932,812 $ 7,339,062 NOTE 8 – ACCRUED AND OTHER CURRENT LIABILITIES Accrued and other current liabilities at December 31, 2024 and 2023 consisted of the following December 31, December 31, 2024 2023 Accrued liabilities $ 928,858 $ 28,042 Cost provision 53,939,336 9,613,332 Accrued interest 118,204 17,318 Salary payable - management 420,447 100,128 Salary payable and employee benefit 88,357 113,745 Other current liabilities 129,582 121,020 Total accrued and other current liabilities $ 55,624,784 $ 9,993,585 F- 16 Table of Contents NOTE 9 - LOANS PAYABLE Loans payable at December 31, 2024 and 2023 consisted of the following: December 31, December 31, Interest 2024 2023 Term rate Martus $ 103,738 $ 103,738 Note was issued on October 23, 2018 and due on January 2, 2025 5.0 % Darlene Covid19 80,019 99,099 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 217,391 — Note was issued June 11, 2024 and due on June 11, 2025 2.0 % Promissory note payable - acquisition of QXTEL 1,275,000 — Note was issued April 1, 2024 and due on June 30, 2025 4.9 % Promissory note payable 271,739 — Note was issued July 16, 2024 and due on July 16, 2025 2.0 % Promissory note payable 271,739 — Note was issued July 31, 2024 and due on July 31, 2025 2.0 % Promissory note payable 190,217 — Note was issued September 23, 2024 and due on September 23, 2025 2.0 % Promissory note payable 108,696 — Note was issued October 4, 2024 and due on September 23, 2025 2.0 % Total 2,518,539 367,837 Less: Unamortized debt discount ( 62,898 ) ( 3,750 ) Total loans payable 2,455,641 364,087 Less: Current portion of loans payable ( 2,455,641 ) ( 264,988 ) Long-term loans payable $ — $ 99,099 Loans payable - related parties at December 31, 2024 and 2023 consisted of the following: December 31, December 31, Interest 2024 2023 Term rate 49% of Shareholder of SwissLink $ 21,606 $ 21,606 Note is due on demand 0.0 % 49% of Shareholder of SwissLink 219,894 237,841 Note is due on demand 5.0 % Minority Shareholder of QXTEL 478,985 — Note is due on October 1, 2025 4.9 % Total 720,485 259,447 Less: Current portion of loans payable - related parties 720,485 259,447 Long-term loans payable - related parties $ — $ — During the years ended December 31, 2024 and 2023, the Company borrowed from third parties totaling $ 5,041,532 and $ 421,760 , which includes original issue discount and financing costs of $ 546,680 and $ 46,760 and repaid the principal amount of $ 2,571,139 and $ 18,559 , respectively. During the years ended December 31, 2024 and 2023, the Company recorded interest expense of $ 293,671 and $ 32,231 and recognized amortization of discount, included in interest expense, of $ 300,303 and $ 14,426 , respectively. F- 17 Table of Contents NOTE 10 - CONVERTIBLE LOANS Convertible loans at December 31, 2024 and 2023 consisted of the following: December 31, December 31, 2024 2023 Issued in fiscal year 2023 $ — $ 369,044 Issued in fiscal year 2024 5,225,308 — Total convertible notes payable 5,225,308 369,044 Less: Unamortized debt discount ( 348,950 ) ( 39,012 ) Total convertible notes 4,876,358 330,032 Less: current portion of convertible notes 1,864,432 330,032 Long-term convertible notes $ 3,011,926 $ — During the years ended December 31, 2024 and 2023, the Company recorded interest expense of $ 769,027 and $ 23,919 and recognized amortization of discount, included in interest expense, of $ 796,422 and $ 24,332 , respectively. Issued in fiscal year 2023 During the year ended December 31, 2023, the Company borrowed $ 284,760 and $ 256,760 from a third party totaling $541,520, which includes original issue discount and financing costs of $ 66,520 . The notes are due on June 1, 2024 and October 15, 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 and $ 28,757 beginning on July 16, 2023 and January 15, 2024, respectively . The notes are 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. Issued in fiscal year 2024 In 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 $ 3,888,889 in secured convertible promissory notes (the “Notes”) for an aggregate purchase price of $ 3,500,000 (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 in face value of Notes and 2,020,200 Kicker Shares, with an original issue discount of $ 222,222 ; second and third tranches were executed in March 2024 for $ 1,111,111 and $ 555,556 , respectively, in face value of Notes and 1,010,101 and 505,051 Kicker Shares, with an original issue discount of $ 111,111 and $ 55,556 , respectively. Each one year note bears interest at 18 % per annum. In October 2024, we entered into a Memorandum of Understanding (the “Agreement”) with M2B Funding Corp. to extend the maturity date on three promissory notes in exchange for stock consideration. Pursuant to the Agreement, the following promissory notes were extended by 12 months from their original date of maturity: • First Note: Originally due January 1, 2025, with an outstanding amount of $1,888,889, extended to January 1, 2026. • Second Note: Originally due March 12, 2025, with an outstanding amount of $1,111,111, extended to March 12, 2026. • Third Note: Originally due March 25, 2025, with an outstanding amount of $555,556, extended to March 25, 2026. In consideration for this extension, the Company issued 646,467 restricted common shares. As a result of the extension, the Company recognized the loss on debt extinguishment of $297,878 as debt extinguishment and debt discount of $61,818 as debt modification. F- 18 Table of Contents Additionally, during the year ended December 31, 2024, the Company borrowed amounts from a third party totaling $2,413,707, which includes original issue discount and financing costs of $248,707. Principal Issuance Maturity Interest Payment amount date date rate schedule $ 146,900 March 7, 2024 January 15, 2025 12 % 10 payments each in the amount of $ 16,453 beginning on April 15, 2024 $ 177,100 March 7, 2024 January 15, 2025 14 % 5 payments, one payment of $ 100,947 and four payments of $ 25,237 , beginning in September 2024 $ 179,400 July 10, 2024 April 30, 2025 14 % 9 payments each in the amount of $ 22,724 beginning on August 30, 202 4 $ 151,960 September 16, 2024 July 15, 2025 14 % 5 payments, one payment of $ 86,617 and four payments of $ 21,654 , beginning in March 2025 $ 179,400 October 15, 2024 July 15, 2025 14 % 9 payments each in the amount of $ 22,724 beginning on November 30, 2024 $ 1,578,947 December 6, 2024 June 4, 2025 24 % Outstanding balance shall be paid on June 4, 2025 The notes are 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. Conversion During the year ended December 31, 2024, one note holder converted notes with principal amounts of $ 666,666 and conversion fee of $ 5,000 into 6,106,061 shares of common stock. NOTE 11 – WARRANTS On February 12, 2024, we issued a Common Stock Purchase Option (the “Option”) to ADI Funding LLC (“ADI Funding”) for $ 100,000 that expired on December 31, 2024, for the right to acquire up to 10,000,000 shares of common stock. The exercise price per share of the common stock under the Option was (i) 70% of the VWAP of the common stock during the then 10 Trading Days immediately preceding, but not including the date of exercise if the VWAP is below $2.00 or (ii) seventy five percent (75%) of the VWAP of the common stock during the then 10 Trading Days immediately preceding, but not including the date of exercise if the VWAP is equal or above $2.00 . ADI Funding had the right and the obligation to exercise, on a “cash basis”, not less than (i) 2,000,000 of the shares of common stock underlying the option no later than the later of March 31, 2024 or the date on which there is an effective registration statement permitting the resale of the shares by ADI Funding. From and after the occurrence of the above-referenced exercise, each additional exercise of the Option could be in an amount not less than 1,000,000 shares, which shall occur every thirty (30) days and shall be exercised only on a cash basis. ADI Funding’s obligation to exercise each specified portion of the Option was subject to the exercise price being not less than $0.11 If the Company issues securities less than the exercise price of the option, ADI Funding had a right to also use that lesser price in the exercise of its Option. The Option also contained rights to any Company distributions and consideration in fundamental transactions. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. F- 19 Table of Contents The Company determined that the warrants had net cash settlement and categorized the warrants as a liability in the accompanying consolidated financial statements. 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, 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 Forfeited/canceled ( 18,080,921 ) — — Outstanding, December 31, 2023 — $ — — Granted 10,000,000 0.88 0.88 Exercised ( 10,000,000 ) 0.11 — Forfeited/canceled — — — Outstanding, December 31, 2024 — $ — — The intrinsic value of the warrants as of December 31, 2024 is $ 0 . NOTE 12 – 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, 2024. 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, 2024 and 2023, the estimated fair values of the liabilities measured on a recurring basis are as follows: Year ended December 31, 2024 2023 Expected term 0.04 - 0.65 years 0.75 - 1.49 years Expected average volatility 78 % - 194 % 88 % - 152 % Expected dividend yield — — Risk-free interest rate 4.44 % - 4.73 % 0.06 % - 4.73 % F- 20 Table of Contents The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2024 and 2023: Fair Value Measurements Using Significant Observable Inputs (Level 3) 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 $ — Addition of new derivatives recognized as cash received 100,000 Exercise on issuance of common stock ( 1,493,046 ) Change in fair value of the warrant 1,393,046 Balance - December 31, 2024 $ — The following table summarizes the change in fair value of derivative liabilities included in the income statement for the years ended December 31, 2024 and 2023, respectively. Year ended December 31, 2024 2023 Addition of new derivatives recognized as loss on derivatives $ — $ — Revaluation of derivative liabilities 1,393,046 ( 381,848 ) Change in fair value of derivative liability $ 1,393,046 $ ( 381,848 ) NOTE 13 – 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, 2024, the Company issued 30,847,055 shares of common stock and 285,000 shares payable, valued at fair market value on issuance as follows: • 600,000 shares for compensation to our directors valued at $ 141,025 ; • 3,007,173 shares for settlement of debt valued at $ 483,670 ; • 3,535,354 shares in conjunction with convertible notes valued at $ 597,777 ; • 10,000,000 shares for exercise of warrants for $ 1,100,000 ; and • 6,106,061 shares for conversion of debt of $ 671,666 • 2,450,000 shares issued for cash of $ 100,000 • 646,467 shares for the extension of debt valued at $ 116,364 • 4,502,000 shares for conversion of Series B Preferred Stock • 285,000 shares of stock payable for service valued at $ 82,194 recorded as additional paid in capital as of December 31, 2024. Shares were issued on January 16, 2025. F- 21 Table of Contents 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 . As of December 31, 2024 and 2023, 202,976,685 and 172,129,630 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 liquidatio n. 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, 2024 and 2023, 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. In August 2023, the Company declared and issued 10,080 shares Series B stock to our management as dividends, valued at $ 816,480 . In November 2024, the Company declared and issued 8,959 shares Series B stock to our management as dividends, valued at $627,710. In December 2024, a member of Company management converted 4,502 shares of Series B Preferred Stock into 4,502,000 shares of common stock. As of December 31, 2024 and 2023, 35,537 and 31,080 shares of Series B Preferred Stock were issued and outstanding, respectively. F- 22 Table of Contents Series C Preferred Stock On January 7, 2021, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock, consisting of up 200,000 shares, par value $ 0.001 . Under the Certificate of Designation, holders of Series C Preferred Stock will rank junior to the Series B Preferred Stock, but on par with common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation of the company, as provided in the designation . The holders of shares of Series C Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose . H olders 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, 2024 and 2023, 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, 2024 and 2023, no Series D Preferred Stock was issued or outstanding. NOTE 14 – 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. The following table presents a reconciliation of the income taxes presented in the Statement of Operations for the years ended December 31, 2024 and 2023 : Year Ended December 31 2024 2023 Current Federal $ 210,222 $ — State — — Deferred Federal 138,808 — State — — Income tax expense $ 394,030 $ — 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, 2024 and 2023, are as follows: December 31, December 31, 2024 2023 Net Operating loss carryforward $ 15,392,658 $ 13,457,361 Effective tax rate 21 % 21 % Deferred tax asset 3,232,458 2,826,046 Foreign taxes ( 16,895 ) ( 7,279 ) Less: valuation allowance ( 2,972,455 ) ( 2,392,012 ) Net deferred tax asset $ 243,108 $ 426,755 F- 23 Table of Contents As of December 31, 2024, the Company has approximately $ 15,400,000 of net operating losses (“NOL”) generated to December 31, 2024 carried forward to offset taxable income in future years which began to expire in 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 2018 through 2024 are subject to review by the tax authorities. NOTE 15 - RELATED PARTY TRANSACTIONS Due from related party During the years ended December 31, 2024 and 2023, the Company loaned $ 89,832 and $ 192,154 to a related party and collected $ 33,602 and $ 79,649 , respectively. As of December 31, 2024 and 2023, the Company had amounts due from related parties of $ 630,715 and $ 340,515 , respectively. The loans are unsecured, non-interest bearing and due on demand. Due to related parties As of December 31, 2024 and 2023, 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, 2024 and 2023, the Company recorded management salaries of $ 846,000 and $ 516,000 , respectively, and stock-based compensation bonuses of $ 223,219 and $ 42,890 , respectively. As of December 31, 2024 and 2023, the Company recorded and accrued management salaries of $ 420,447 and $ 100,128 , respectively. NOTE 16 – 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, 2024 and 2023, the Company incurred rent expense of $ 28,539 and $ 5,954 , respectively. F- 24 Table of Contents NOTE 17 - SEGMENT The Company operates in one industry segment, telecommunication services, and three geographic segments, USA, UK and Switzerland, where current assets and equipment are located. The Company's chief operating decision maker ("CODM") is its chief financial officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. The CODM uses operating activities and net assets to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow, the allocation of budget between cost of sales and operating expenses and the management of assets. Operating Activities The following table shows operating activities information by geographic segment for the years ended December 31, 2024 and 2023: NOTE 17 - SEGMENT - Geographic Segment (Details) Year ended December 31, 2024 USA Switzerland UK Elimination Total Revenues $ 197,007,636 $ 13,349,998 $ 95,681,790 $ ( 22,818,982 ) $ 283,220,442 Cost of revenue 192,460,109 12,541,394 92,486,843 ( 22,539,653 ) 274,948,693 Gross profit 4,547,527 808,604 3,194,947 ( 279,329 ) 8,271,749 Operating expenses Salaries, Wages and Benefits 1,699,833 238,334 1,025,547 — 2,963,714 Technology 683,620 331,149 370,725 ( 193,309 ) 1,192,185 Professional Fees 1,110,773 — — — 1,110,773 Legal and Regulatory 273,840 11,399 43,261 — 328,500 Travel & Events 126,623 29,962 77,710 — 234,295 Public Cost 102,773 — — — 102,773 Bad Debt Expense 1,991 — — — 1,991 Depreciation and Amortization 26,943 111,654 — 360,938 499,535 Advertising 968,206 — — — 968,206 Bank Services and Fees 59,848 72,246 79,497 — 211,591 Office, Facility and Other 309,278 29,550 211,064 ( 20,000 ) 529,892 Sales Commissions 231,125 149,939 360,561 ( 66,020 ) 675,605 Insurance 4,458 — 59,076 — 63,534 Stock-based compensation 223,219 — — — 223,219 Total Operating Expenses 5,822,530 974,233 2,227,441 81,609 9,105,813 Operating income (loss) ( 1,275,003 ) ( 165,629 ) 967,506 ( 360,938 ) ( 834,064 ) Other income (expense) ( 3,961,170 ) 28,801 ( 19,573 ) — ( 3,951,942 ) Income tax expense — ( 183,808 ) ( 210,222 ) — ( 394,030 ) Net income (loss) $ ( 5,236,173 ) $ ( 320,636 ) $ 737,711 $ — $ ( 5,180,036 ) F- 25 Table of Contents Year ended December 31, 2023 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 Salaries, Wages and Benefits 1,083,748 476,618 — 1,560,366 Technology 328,710 — — 328,710 Professional Fees 1,283,351 — — 1,283,351 Legal and Regulatory 256,537 — — 256,537 Travel & Events 116,637 19,414 — 136,051 Public Cost 36,349 — — 36,349 Bad Debt Expense 8,815 — — 8,815 Depreciation and Amortization 51,047 77,690 — 128,737 Advertising 595,298 — — 595,298 Bank Services and Fees 51,523 25,769 — 77,292 Office, Facility and Other 185,156 124,220 — 309,376 Sales Commissions 211,830 — — 211,830 Insurance 11,914 — — 11,914 Stock-based compensation 42,890 — — 42,890 Total Operating Expenses 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 ) $ 0 $ ( 219,436 ) Asset Information The following table shows asset information by geographic segment as of December 31, 2024 and 2023: December 31, 2024 USA Switzerland UK Elimination Total Assets Current assets $ 19,885,086 $ 8,055,475 $ 48,182,373 $ ( 13,107,888 ) $ 63,015,046 Non-current assets $ 19,447,105 $ 633,491 $ 8,096,658 $ ( 12,184,562 ) $ 15,992,692 Liabilities Current liabilities $ 21,386,520 $ 8,415,705 $ 47,126,859 $ ( 13,107,888 ) $ 63,821,196 Non-current liabilities $ 3,012,066 $ 169,599 $ 104,614 $ — $ 3,286,279 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 F- 26 Table of Contents NOTE 18 – SUBSEQUENT EVENTS . Subsequent to December 31, 2024 and through the date that these financials were made available, the Company had the following subsequent events: On January 14, 2025, the Company issued a Common Stock Purchase Option (the “Option”) to ADI Funding LLC (“ADI Funding”) under a Stock Purchase Agreement for $100,000 that expires on July 14, 2025, for the right to acquire up to 15,000,000 shares of common stock. The exercise price per share of the common stock under the Option shall be 70% of the VWAP of the common stock during the then 10 Trading Days immediately preceding but not including the date of exercise. The obligation to exercise each specified portion of the Option is subject to the exercise price, being not less than $0.11 per share on the relevant Option exercise date. On March 10, 2025, the Company signed a non-binding memorandum of understanding (“MOU”) with Accredited Solutions, Inc. (“ASII”) to set forth the preliminary terms and mutual understanding between the parties regarding the Company’s potential sale of its 75% equity interest in ItsBchain, LLC (the “Subsidiary”) to ASII, subject to the negotiation and execution of a definitive Purchase Agreement. The parties have agreed to execute the Purchase Agreement no later than June 1, 2025. Under the MOU, in exchange for the 75% interest in the Subsidiary, ASII proposes paying $1,000,000 to the Company as follows: • $500,000 in restricted preferred shares of ASII, the terms and features of which will be available prior to execution of the Purchase Agreement, but should contain preferential treatment on the stated value in any liquidation of ASII and a conversion price of the lowest stock price with a 10 day look back at conversion (but with a conversion limitation of 4.99%, but no greater than 9.99%), ensuring IQSTEL’s value is preserved regardless of fluctuations in ASII’s common stock price. • $500,000 in restricted common shares of ASII, which are expected to be registered by ASII in a resale offering that is filed on Form S-1 with the SEC within an agreed time from the close of the Purchase Agreement. At some time in the future, the Company plans to distribute the ASII common shares as dividends to its shareholders. Further under the MOU, the Company will retain a 1% lifetime royalty on the Subsidiary’s total sales. The Company acknowledges a remaining investment commitment of $65,000 related to the Subsidiary. This amount will be paid in monthly installments of $2,500 directly to the Subsidiary. On March 19, 2025, iQSTEL Inc. (the “Company”) signed a non-binding memorandum of understanding (“MOU”) with Craig Span (the “Seller”) to set forth the preliminary terms and mutual understanding between the parties regarding the Company’s potential purchase a 51% equity interest in GlobeTopper, LLC, a Delaware limited liability company (the “GlobeTopper”) held by the Seller, subject to the negotiation and execution of a definitive Purchase Agreement. The parties have agreed to execute the Purchase Agreement no later than July 1, 2025, or sooner. Under the MOU, in exchange for the 51% interest in the GlobeTopper, the Company proposes paying $700,000 to the Seller with $200,000 in cash over a period set forth in a schedule extending to September 1, 2025, and $500,000 in common stock of the Company with a share price calculated at a 20% discount to the Volume Weighted Average Price (VWAP) over the five days preceding execution of a definitive Purchase Agreement. Further under the MOU, the Company will pay performance bonuses in 2025 and 2026 based on EBITDA growth of GlobeTopper in shares of common stock of the Company using the same discounted VWAP formula above. To support GlobeTopper’s growth, the MOU provides that the Company will provide up to $1,200,000 in structured financing across 24 months after execution, disbursed in monthly installments of $50,000, contingent upon meeting quarterly financial targets. To ensure stability and operational continuity, the Seller will continue to serve as CEO to GlobeTopper, and 2 of the 3 board members will be selected by the Company. F- 27 Table of Contents Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes or disagreements with our accountants on accounting and financial disclosure. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2024. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report. Management’s Annual Report on Internal Control over Financing Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2024, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2025: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 36 Table of Contents Inherent Limitations Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting during the three month period ended December 31, 2024, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.. Item 9B. Other Information None Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None 37 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The following information sets forth the names, ages, and positions of our current directors and executive officers. Name Age Positions and Offices Held Leandro Iglesias 59 President, Chairman, Chief Executive Officer and Director Alvaro Quintana Cardona 53 Chief Operating Officer, Chief Financial Officer and Director Raul Perez 73 Director Jose Antonio Barreto 66 Director Italo Segnini 59 Director Set forth below is a brief description of the background and business experience of each of our current executive officers and directors. Leandro Iglesias Before founding Etelix in year 2008, where he has acted as President and CEO, Mr. Iglesias was the International Business Manager at CANTV/Movilnet (the Venezuelan biggest telecommunications services provider). He held this position between January 2003 and July 2008, while the company was under the control of Verizon. Previous to his position in Cantv/Movilnet Mr. Iglesias was Executive Vice President and responsible of the Latin America marketing division of American Internet Communications (August 1998 – December 2002). Leandro Iglesias has developed a career for more than 20 years in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables, satellite communications and international roaming services. He is Electronic Engineer graduate from Universidad Simon Bolivar and graduated from the Management Program at IESA Business School. He also holds an MBA from Universidad Nororiental Gran Mariscal de Ayacucho. Aside from that provided above, Mr. Iglesias does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. We believe that Mr. Iglesias is qualified to serve on our Board of Directors because of his wealth of experience in the telecom industry. Alvaro Quintana Cardona Alvaro Quintana has developed a career of more than twenty years of experience in the telecommunication industry with particular focus on regulatory affairs, strategic planning, value added services and international interconnection agreements. Before joining Etelix in year 2013 as Chief Operation Officer and Chief Financial Officer, Mr. Quintana acted between June 2004 and May 2013 as Interconnection and Value-Added Services Manager at Digitel (a mobile service provider in Venezuela, formerly a Telecom Italia Mobile subsidiary). He holds a Bachelor Degree in Business Administration and a Specialist Degree in Economics, both from the Universidad Catolica Andres Bello. He also holds a Master in Telecommunications from the EOI Business School in Spain. Aside from that provided above, Mr. Quintana does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. We believe that Mr. Quintana is qualified to serve on our Board of Directors because of his wealth of experience in the telecom industry. 38 Table of Contents Raul A Perez From December 1, 2014 to present, Mr. Perez serves as CFO of Deerbrook Family Dentistry, PC, Dental Practice in Humble, Texas. From November 1, 2017 to January 31, 2019, he served as Senior Accountant to Principrin School, PC, Day Care in Houston, Texas. Mr. Perez has been in finance for more than 40 years, starting in 1970 as analyst in treasury and finance departments and progressively assuming different positions up to corporate treasurer for large corporations. He served for Sudamtex of Venezuela, C.A for 5 years and Polar Brewery in Caracas, Venezuela for 10 year. Beginning in 2000, he accepted a position as a Director of the Security and Exchange Commission of Venezuela to have the surveillance of Venezuelan stock market participants. Also, in 2004 he completed the requirements and received his certification as a Venezuelan Investment Advisor. Later, as an independent contractor for three years, he was selected as the Corporate Compliance Officer for an especially important stock market broker dealer in Venezuela, Activalores Casa de Bolsa, in which he developed the Compliance Unit and manuals required by local and international anti money laundering laws. He also taught Advanced Institute of Finance (IAF) in Caracas being a professor of Corporate Finance and Managerial Accounting for 5 years. Mr. Perez has a Bachelor’s degree in accounting (1976), and MBA Finance (1982), gave me the overall knowledge of finance and how to plan, start up, run, and control a business. We have selected Mr. Perez to serve as an independent director because of his education, skills and experience in finance and his regulatory history. Jose Antonio Barreto From 2006 to the present, Mr. Barreto has been Chief Business Development Officer of Xpectra Remote Management / Mexico. There he was in charge of directing all aspects of account development and sales effort to close specific private and government opportunities and developing strategic accounts in Mexico and the LATAM region. From 2020 to present, he has been an advisor to our Board of Directors. Mr. Barreto has more than 30 years of experience working in telecommunications and technology companies. He has been directly responsible of leading the business development and operational in several telecommunication and technology companies’ acquisition activity, with the responsibility of leading the technical, operation and financial analysis. Over the last 14 years, Jose Antonio has been the North and Central American leader, spanning from Mexico to Panama, in the development of commercial processes in the technology security field, artificial intelligence, Internet of Things (IoT) platforms, as well as cutting edge technology solutions and software systems. He studied Electronic Engineering at the Universidad Simón Bolivar followed by a Master of Science Degree in Electrical and Computer Engineering at Rice University. He also completed the Master in Telecommunications Management offered by Universidad Simon Bolivar and the Telecom SudParis Institute. We have selected Mr. Barreto to serve as an independent director because of his education, skills and experience in technology companies. Italo R. Segnini From March 2020 to the present, Mr. Segnini has been serving as Global Carrier Partnership Director of Sierra Wireless. From June 2019 to February 2020, he served as an Independent Telecom Consultant. From 2017 to 2019, he served as Director of International Carrier Business for Televisa Telecom. From 2012 to 2019, he served as Director International Carrier Business for Millicom. Mr. Segnini is a long time Telecommunicaction industry professional who has had high level positions at Global Tier Ones for more than 20 years, Telefonica, Millicon and Televisa, Sierra Wireless to mention a few. Mr. Segnini has extensive executive experience in the Telecom areas like Voice, A2P, SMS, Data, Roaming, Mobility Services, B2B, MNO, MVNO, IoT, Interconnection, etc., and a solid business performance record spanning multiple functions including International commercial negotiations, management, sales, business development, sales, regulatory and operations. Italo R. Segnini holds a Juris Doctor degree from the Andres Bello Catholic University, a Telecommunication Masters Degree from Madrid Pontificia Comillas University and an MBA from IESA Business School 39 Table of Contents Term of Office Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements. Significant Employees We have no significant employees other than our officers and directors. Family Relationships There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers. Involvement in Certain Legal Proceedings During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including: 1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; 2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; 4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; 5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 40 Table of Contents 7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any Federal or State securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Director Independence The Board of Directors reviews the independence of our directors on the basis of standards adopted by the NASDAQ Stock Market (“NASDAQ”). As a part of this review, the Board of Directors considers transactions and relationships between our company, on the one hand, and each director, members of the director’s immediate family, and other entities with which the director is affiliated, on the other hand. The purpose of such a review is to determine which, if any, of such transactions or relationships were inconsistent with a determination that the director is independent under NASDAQ rules. As a result of this review, the Board of Directors has determined that none of our directors is an “independent director” within the meaning of applicable NASDAQ listing standards. Committees of the Board On August 25, 2021, the Board authorized the creation of an Audit Committee. Raul Perez (chair), Italo Segnini and Jose Antonio Barreto were appointed to serve on the Audit Committee. Each of Messrs Perez, Segnini and Barreto have been determined by the Board to be independent directors within the meaning of NASDAQ Rule 5605. Mr. Perez was identified and designated by the Board as an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K. On November 17, 2022, we authorized the creation of a Compensation Committee. The Compensation Committee’s responsibilities, which are discussed in detail in its Charter, include the following: • In consultation with our senior management, establish our general compensation philosophy and oversee the development and implementation of our compensation programs; • Recommend the base salary, incentive compensation and any other compensation for our Chief Executive Officer to the Board of Directors and review and approve the Chief Executive Officer’s recommendations for the compensation of all other officers of our company and its subsidiary; • Administer our incentive and stock-based compensation plans, and discharge the duties imposed on the Compensation Committee by the terms of those plans; • Review and approve any severance or termination payments proposed to be made to any current or former officer of our company; and • Perform other functions or duties deemed appropriate by the Board of Directors. The Committee is comprised of, Raul Perez, Jose Antonio Barreto, and Italo Segnini, with Mr. Segnini serving as Chairperson. Each of Messrs. Perez, Barreto and Segnini have been determined by the Board to be an independent director within the meaning of NASDAQ Rule 5605. 41 Table of Contents On June 12, 2023, our Board of Directors adopted a charter for our newly created Nominating and Governance Committee (the “Committee”). The Committee is responsible for the oversight of our director nominations process, including recommending nominees to the Board of Directors for approval and for the development and maintenance of our corporate governance policies. Our Board of Directors appointed the following persons to the Committee: Raul Perez, Jose Antonio Barreto and Italo Segnini, with Mr. Barreto serving as Chairperson. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2024. Code of Ethics On October 31, 2022, our Board of Directors approved and adopted a Code of Business Conduct and Ethics (the “Code of Ethics”). The Code of Ethics is applicable to all directors, officers and employees of our company, our company’s subsidiaries and any subsidiaries that may be formed in the future. The Code of Ethics addresses such individuals’ conduct with respect to, among other things, conflicts of interests; compliance with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure; competition and fair dealing; corporate opportunities; confidentiality; insider trading; protection and proper use of our assets; fair treatment; and reporting suspected illegal or unethical behavior. A copy of our Code of Ethics is posted on our website at http://IQSTEL.com/. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Business Conduct and Ethics on our website. The reference to the IQSTEL website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be part of this annual report. Item 11. Executive Compensation The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2024 and 2023. Name and principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) (1)(2) Total ($) Leandro Iglesias President, CEO and Director 2024 2023 432,000 240,000 — — — — — — — — 432,000 240,000 Alvaro Quintana Treasury, Secretary and Director 2024 2023 324,000 144,000 — — — — — — — — 324,000 144,000 Juan Carlos López Chief Commercial Officer(1) 2024 2023 — 60,000 — — — — — — — — — 60,000 (1) On March 1, 2024, Juan Carlos Lopez Silva resigned from his position as Chief Commercial Officer of the Company. Mr. Lopez will formally assume the position of CEO of the IQSTEL subsidiaries, Etelix and SwissLink, a position that he has been holding as interim in recent months. The existing employment agreement Mr. Lopez has with the Company will remain in effect with the change in position. 42 Table of Contents On May 2, 2019, the Company entered into Employment Agreements with the following persons: (i) Leandro Iglesias as President, CEO and Chairperson of the Company’s Board of Directors with an annual salary of $168,000 with an annual bonus of 3% of our net income; (ii) Juan Carlos Lopez Silva as Chief Commercial Officer with an annual salary of $120,000 with an annual bonus of 3% of our net income; and Alvaro Quintana Cardona as Chief Operating Officer and Chief Financial Officer with an annual salary of $144,000 with an annual bonus of 3% of our net income. The Employment Agreements have a term of 36 months, are renewable automatically for 24-month periods, unless the Company gives written notice at least 90 days prior to termination of the initial 36-month term. The Company shall have the right to terminate any of the employment agreements at any time without prior notice, but in that event, the Company shall pay these persons salaries and other benefits they are entitled to receive under their respective agreements for three years. The above executive officers agreed to two year non-compete and non-solicit restrictive covenants with the Company. If any of the executive officers are terminated for cause they shall forfeit any rights to severance. On November 1, 2020, our board of directors approved amended employments in favor of our Chief Executive Officer, Leandro Iglesias, our Chief Financial Officer, Alvaro Quintana, and our Chief Commercial Officer, Juan Carlos Lopez Silva. The amended employment agreement in favor of Mr. Iglesias extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Iglesias provides that we will compensate him with a salary of $17,000 monthly and he is eligible for quarterly bonus of 250,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock. For common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share of the Company’s common stock on the OTC Markets during the last 10 days and applying a discount of 25%.” For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten US Dollars ($10). Mr. Iglesias has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share. The amended employment agreement in favor of Mr. Quintana extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Quintana provides that he is eligible for quarterly bonus of 200,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Quintana may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock. For common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share of the Company’s common stock on the OTC Markets during the last 10 days and applying a discount of 25%.” For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten US Dollars ($10). Mr. Quintana has a further right to convert any common shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share. The amended employment agreement in favor of Mr. Silva extended the term of employment from 36 months to 60 months. Mr. Silva is eligible for quarterly bonuses of 150,000 shares of our common stock. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. On February 29, 2024, our board of directors approved amended and restated employment and indemnification agreements in favor of our Chief Executive Officer, Leandro Jose Iglesias and our Chief Financial Officer, Alvaro Quintana Cardona, to replace their existing agreements. The agreements are effective as of January 1, 2024. The new five year employment agreement with Mr. Iglesias provides that we will compensate him with a salary of $31,000 monthly and he is eligible for a bonus as follows: (i) up to two months of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 1,000,000 shares of our common stock, a determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. Mr. Iglesias agreed to two year non-compete and non-solicit restrictive covenants. If Mr. Iglesias is terminated for cause he shall forfeit any rights to severance, which is available to him in the event of termination without cause. 43 Table of Contents The new five year employment agreement with Mr. Quintana provides that we will compensate him with a salary of $22,000 monthly and he is eligible for a bonus as follows: (i) up to two months of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 800,000 shares of our common stock, a determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the agreement provides that Mr. Cardona may convert his accrued salary/bonus into shares of our common stock at the average price of our common stock during the last 10 days after applying a discount of 25%. Mr. Quintana agreed to two year non-compete and non-solicit restrictive covenants. If Mr. Quintana is terminated for cause he shall forfeit any rights to severance, which is available to him in the event of termination without cause. Option Grants We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans. Compensation of Directors All Directors shall receive reimbursement for reasonable travel expenses incurred to attend Board and committee meetings. Effective on July 1, 2021 and thereafter, all Directors shall be compensated monthly up to 4,000 shares of common stock cash of $1,000 for their service as Directors. The Chairman and Secretary of the Board shall receive an additional $2,000 per month in addition to the Director compensation. In lieu of the cash compensation set forth above, each Director may elect to receive shares of the Corporation's Common Stock equal to the total cash compensation divided by the average market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%. Effective on January 1, 2024, and thereafter, all Directors shall be compensated monthly with 10,000 shares of common stock cash of $2,500 for their service as Directors. The Chairman and Secretary of the Board shall receive an additional $2,500 per month in addition to the Director compensation. Each Director shall also be entitled to a bonus of up to 1% of our net income on a yearly basis. In lieu of the cash compensation set forth above, each Director may elect to receive shares of our Common Stock equal to the total cash compensation divided by the average market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%. Pension, Retirement or Similar Benefit Plans T here are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof. Compensation Committee The Company have a compensation committee of the board of directors. This committee is constituted by independent members of the Board and participates in the consideration of executive officer and director compensation. Indebtedness of Directors, Senior Officers, Executive Officers and Other Management None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding. 44 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth, as of March 24, 2025, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group. Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address of 300 Aragon Avenue, Suite 375, Coral Gables, FL 33134. The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner. Common Stock Name of Beneficial Owner Number of Shares Owned (1) Percent of Class (2) Leandro Iglesias 2,095,363 0.9944 % Alvaro Quintana Cardona 1,331,842 0.6320 % Raul Perez 210,000 0.0997 % Jose Antonio Barreto 210,000 0.0997 % Italo Segnini 60,000 0.0285 % All Directors and Executive Officers as a Group (5 persons) 3,907,205 1.8543 % Series A Preferred Stock Name of Beneficial Owner Number of Shares Owned (1) Percent of Class (3) Leandro Iglesias 7,000 70.00 % Alvaro Quintana Cardona 3,000 30.00 % Juan Carlos Lopez Silva — — Raul Perez — — Jose Antonio Barreto — — Italo Segnini — — All Directors and Executive Officers as a Group (6 persons) 10,000 100.00 % (1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity. (2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 210,710,170 voting shares as of March 24, 2025. (3) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 10,000 voting shares as of March 24, 2025. 45 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence Other than described below or the transactions described under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. Due from related party Due from related party During the years ended December 31, 2024 and 2023, the Company loaned $89,832 and $192,154 to a related party and collected $33,602 and $79,649, respectively. As of December 31, 2024 and 2023, the Company had amounts due from related parties of $630,715 and $340,515, respectively. The loans are unsecured, non-interest bearing and due on demand. Due to related parties As of December 31, 2024 and 2023, the Company had amounts due to related parties of $26,613. The amounts are unsecured, non-interest bearing and due on demand. Item 14. Principal Accounting Fees and Services Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audits of the Company’s annual financial statements for the years ended: Financial Statements for the Year Ended December 31 Audit Services Audit Related Fees Tax Fees Other Fees 2023 $ 175,000 $ 11,800 $ 0 $ 0 2024 $ 240,000 $ 7,511 $ 0 $ 0 46 Table of Contents PART IV Item 15. Exhibits, Financial Statements Schedules (a) Financial Statements and Schedules The following financial statements and schedules listed below are included in this Form 10-K. Financial Statements (See Item 8) (b) Exhibits Exhibit No. Description of Exhibit Exhibit 2.1 Membership Interest Purchase Agreement(1) Exhibit 2.2 Memorandum of Understanding and Shareholders Agreement dated February 21, 2020(5) Exhibit 2.3 Memorandum of Understanding and Shareholders Agreement dated February 12, 2020(6) Exhibit 2.4 Company Purchase Agreement, dated April 1, 2019(11) Exhibit 2.5 Share Purchase Agreement, dated January 19, 2024(23) Exhibit 2.6 Purchase Company Agreement, dated May 10, 2024(26) Exhibit 2.7 Second Amendment to Share Purchase Agreement, dated June 27, 2024(27) Exhibit 3.1 Articles of Incorporation of the Registrant(2) Exhibit 3.2 Certificate of Amendment(3) Exhibit 3.3 Certificate of Amendment(18) Exhibit 3.4 Certificate of Designation(20) Exhibit 3.5 Certificate of Designation(21) Exhibit 3.6 Certificate of Designation(22) Exhibit 3.7 Amended and Restated Bylaws of the Registrant(19) Exhibit 4.1 Amendment #2 to the Crown Capital Note dated March 2, 2020(4) Exhibit 4.2 Amendment #2 to the Auctus Fund Note dated March 2, 2020(4) Exhibit 4.2 Amendment #1 to the Labrys Fund Note dated February 11, 2020(7) Exhibit 4.3 Amendment #1 to the Apollo Note dated December 23, 2019(8) Exhibit 4.4 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.5 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.6 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.7 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.8 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.9 Amendment #1 to the Apollo Note dated December 24, 2019(8) Exhibit 4.10 Amendment #1 to the Crown Capital Note dated December 23, 2019(8) Exhibit 4.11 Amendment #1 to the Auctus Fund Note dated January 1, 2020(8) Exhibit 4.12 Senior Secured Convertible Promissory Note to Labrys Fund dated December 3, 2019(9) Exhibit 4.13 Purchase Company Agreement, dated April 21, 2022(12) Exhibit 4.14 Purchase Company Agreement, dated May 6, 2022(13) Exhibit 4.15 Common Stock Purchase Option with Apollo dated April 5, 2022(14) Exhibit 4.16 Amended Common Stock Purchase Option with Apollo dated September 29, 2022(15) Exhibit 4.17 Secured Convertible Promissory Note, dated January 24, 2024(23) Exhibit 4.18 Common Stock Purchase Option, dated February 12, 2024(24) Exhibit 10.1 Conversion Agreement with Carmen Cabell(1) Exhibit 10.2 Conversion Agreement with Patrick Gosselin(1) Exhibit 10.3 Conversion Agreement with Mark Engler(1) Exhibit 10.4 Employment Agreement with Leandro Iglesias(1) Exhibit 10.5 Employment Agreement with Alvaro Quintana Cardona(1) Exhibit 10.6 Employment Agreement with Juan Carlos Lopez Silva(1) Exhibit 10.7 Forbearance Agreement dated December 12, 2019(8) Exhibit 10.8 Temporary Forbearance Agreement dated December 18, 2019(8) Exhibit 10.9 Securities Purchase Agreement, dated December 3, 2019(9) Exhibit 10.10 Employment and Indemnification Agreements with Leandro Iglesias, dated May 2, 2019(10) Exhibit 10.11 Employment and Indemnification Agreements with Alvaro Quintana, dated May 2, 2019(10) Exhibit 10.12 Employment and Indemnification Agreements with Juan Carlos Lopez Silva, dated May 2, 2019(10) Exhibit 10.13 Registration Rights Agreement with ADI Funding dated April 5, 2022(16) Exhibit 10.14 Securities Purchase Agreement, dated January 24, 2024(23) Exhibit 10.15 Registration Rights Agreement with M2B Funding Corp., dated January 24, 2024(23) Exhibit 10.16 Security Agreement, dated January 24, 2024(23) Exhibit 10.17 Amended and Restated Employment Agreement with Mr. Iglesias, dated February 29, 2024(25) Exhibit 10.18 Amended and Restated Indemnification Agreement with Mr. Iglesias, dated February 29, 2024(25) Exhibit 10.19 Amended and Restated Employment Agreement with Mr. Cardona, dated February 29, 2024(25) Exhibit 10.20 Amended and Restated Indemnification Agreement with Mr. Cardona, dated February 29, 2024(25) Exhibit 10.21 Memorandum of Understanding, dated October 18, 2024(28) Exhibit 10.22 Memorandum of Understanding, dated November 1, 2024(29) Exhibit 14.1 Code of Business Conduct and Ethics(17) Exhibit 31.1** Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2** Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 101** The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Extensible Business Reporting Language (XBRL). Filed herewith** 47 Table of Contents 1. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on June 28, 2018. 2. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the US Securities and Exchange Commission on August 18, 2011. 3. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on August 31, 2018. 4. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on March 30, 2020. 5. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 25, 2020. 6. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 19, 2020. 7. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 13, 2020. 8. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 6, 2020. 9. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on December 11, 2019. 10. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 6, 2019. 11. Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 4, 2019. 12 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on April 26, 2022. 13 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 10, 2022. 14 Incorporated by reference to the Company’s Form S-1/A filed with the US Securities and Exchange Commission on September 22, 2022. 15 Incorporated by reference to the Company’s Form 8-K/A filed with the US Securities and Exchange Commission on October 6, 2022. 16 Incorporated by reference to the Company’s Form S-1/A filed with the US Securities and Exchange Commission on October 11, 2022. 17 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 2, 2022. 18 Incorporated by reference to the Company’s DEF 14C filed with the US Securities and Exchange Commission on May 12, 2020. 19 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on December 14, 2022. 20 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 8, 2021. 21 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 13, 2020. 22 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 6, 2020. 23 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on January 25, 2024. 24 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on February 13, 2024. 25 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on March 4, 2024. 26 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on May 10, 2024. 27 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on July 2, 2024. 28 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on October 22, 2024. 29 Incorporated by reference to the Company’s Form 8-K filed with the US Securities and Exchange Commission on November 4, 2024. Item 16. Form 10-K Summary None 48 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IQSTEL Inc. By: /s/ Leandro Iglesias Leandro Iglesias Chief Executive Officer, Principal Executive Officer March 31, 2025 By: /s/ Alvaro Quintana Cardona Alvaro Quintana Cardona Title: Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer Date: March 31, 2025 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Leandro Iglesias Leandro Iglesias Chief Executive Officer, Principal Executive Officer March 31, 2025 By: /s/ Alvaro Quintana Cardona Alvaro Quintana Cardona Title: Chief Operating Officer, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer Date: March 31, 2025 By: /s/ Raul Perez Raul Perez Title: Director Date: March 31, 2025 By: /s/ Jose Antonio Barreto Jose Antonio Barreto Title: Director Date: March 31, 2025 By: /s/ Italo Segnini Italo Segnini Title: Director Date: March 31, 2025 49