iQSTEL Inc 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements Required by Article 8 of Regulation S-X: Audited Financial Statements: F-1 Report of Independent Registered Public Accounting Firm (PCAOB ID 1013 ); F-3 Consolidated Balance Sheets as of December 31, 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.