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Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 394 added, 180 removed, 693 unchanged (45% of the section changed)

Financial Statements

Our unaudited consolidated financial statements included in this Form 10-Q

are as follows:

Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024;

Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 (unaudited);

Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (unaudited);

Consolidated Statements of Stockholder’s Equity for the three months ended March 31, 2025 and 2024 (unaudited);

Our unaudited consolidated financial statements included

in this Form 10-Q are as follows:

Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024;

Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (unaudited);

Consolidated Statements of Stockholder’s Equity for the three and six months ended June 30, 2025 and 2024 (unaudited).

Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited);

Notes to Consolidated Financial Statements (unaudited).

These interim consolidated financial statements have been prepared in

accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC

instructions to Form 10-Q.

These interim consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States of America for interim financial information and the

SEC instructions to Form 10-Q.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

Operating results for the interim period ended March 31, 2025 are not necessarily indicative of the results that can be expected for

the full year.

Operating results for the interim period ended June 30, 2025 are not necessarily indicative of the results that can be expected for the

Consolidated Balance Sheets

3 unchanged sentences

Due from related parties

Deposit for acquisition

Prepaid and other current assets

27 unchanged sentences

$ 0.001 par value,

35,537 shares issued and outstanding

42,108 and 35,537 shares issued and outstanding, respectively

Series C Preferred stock:

6 unchanged sentences

3,750,000 authorized;

$ 0.001 par value;

2,637,628 and 2,537,209 shares issued and outstanding, respectively

$ 0.001 par value 3,504,454 and 2,537,209 shares issued and outstanding, respectively

Additional paid in capital

11 unchanged sentences

Three Months Ended

Six Months Ended

$ 129,816,052

$ 130,050,642

Cost of revenue

3 unchanged sentences

Operating loss

( 1,260,455 )

Other income (expense)

1 unchanged sentence

Interest expense

Change in fair value of derivative liabilities

( 1,115,510 )

Loss on settlement of debt

Loss on settlement of salary payable

Total other expense

( 1,600,989 )

( 1,556,509 )

( 2,120,649 )

( 1,953,273 )

Net loss before provision for income taxes

1 unchanged sentence

( 1,898,612 )

( 3,381,104 )

( 2,478,828 )

( 2,348,914 )

( 1,963,887 )

( 3,493,375 )

( 2,544,103 )

Net income attributable to noncontrolling interests

2 unchanged sentences

$ ( 2,008,152 )

$ ( 3,564,936 )

$ ( 2,817,919 )

Comprehensive loss

3 unchanged sentences

$ ( 2,544,103 )

( 2,348,914 )

$ ( 1,963,887 )

$ ( 3,493,375 )

$ ( 2,544,103 )

Comprehensive income attributable to noncontrolling interests

2 unchanged sentences

$ ( 2,008,152 )

$ ( 3,564,936 )

$ ( 2,817,919 )

Basic and diluted loss per common share

3 unchanged sentences

Consolidated Statements of Changes in Stockholders’

Equity (Deficit)

For the three months ended March 31, 2025 and

Series A Preferred Stock

Series B Preferred Stock

Additional Paid in Capital

Accumulated Deficit

Accumulated Comprehensive Loss

Non Controlling Interest

Total Stockholders' Equity

Balance - December 31, 2024

For the three and six months ended June 30,

2025 and 2024

A Preferred Stock

B Preferred Stock

Paid in Capital

Comprehensive Loss

Non Controlling

Stockholders' Equity

December 31, 2024

$ ( 32,703,410 )

Common stock issued for compensation

Common stock issued for conversion of debt

Common stock issued for common stock payable

Dividend to non-controlling interest

Net income (loss)

issued for compensation

issued for conversion of debt

issued for common stock payable

to non-controlling interest

income (loss)

( 1,157,958 )

3 unchanged sentences

$ ( 33,930,013 )

Preferred stock issued for settlement of salary payable

issued for compensation

issued for conversion of debt

issued for settlement of debt

split adjustment

to non-controlling interest

income (loss)

( 2,406,978 )

( 2,348,914 )

- June 30, 2025

$ ( 36,405,475 )

Series A Preferred Stock

15 unchanged sentences

$ ( 148,159 )

Common stock issued for compensation

Common stock issued for warrant exercises

Resolution of derivative liabilities upon exercise of warrant

Acquisition of subsidiary

Net income (loss)

( 2,008,152 )

( 1,963,887 )

Balance - June 30, 2024

$ ( 28,902,052 )

The accompanying notes are an integral part of

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Amortization of debt discount

Change in fair value of derivative liabilities

Loss on settlement of debt

Loss on settlement of salary payable

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable

( 9,519,447 )

Accrued and other current liabilities

3 unchanged sentences

( 1,649,283 )

( 3,151,688 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Deposit for acquisitions of subsidiary

Acquisitions of subsidiary, net of cash received

( 2,505,121 )

1 unchanged sentence

Payment of loan receivable - related party

of amounts due from related parties

Net cash used in investing activities

4 unchanged sentences

Repayments of note payable issued for acquisition of subsidiary

( 1,244,786 )

Proceeds from loans payable - related parties

Repayment of loans payable - related parties

Proceeds from exercise of warrants

Proceeds from stock purchase option

Proceeds from convertible notes

Repayment of convertible notes

Dividend paid to non-controlling interest

( 1,064,269 )

Dividends paid to non-controlling interest

Net cash provided by financing activities

Net change in cash

( 1,425,311 )

Cash, beginning of period

4 unchanged sentences

Non-cash transactions:

Series B Preferred stock issued for settlement of salary payable

Common stock issued for settlement of debt

1 unchanged sentence

Common stock issued for conversion of debt

Common stock issued

for stock payable

Resolution of derivative liabilities

Note payable issued for acquisition of subsidiary

Contingent liability for acquisition of subsidiary

The accompanying notes are an integral part of

1 unchanged sentence

Notes to the Unaudited Consolidated Financial

March 31, 2025

June 30, 2025

NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS

14 unchanged sentences

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.

of Things (IoT) solutions, 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

22 unchanged sentences

the accompanying unaudited interim consolidated financial statements contain all the adjustments necessary (consisting only of normal

recurring accruals) to present the financial position of the Company as of March 31, 2025 and the results of operations and cash flows

recurring accruals) to present the financial position of the Company as of June 30, 2025 and the results of operations and cash flows

for the periods presented.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the operating

The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the operating

results for the full fiscal year or any future period.

30 unchanged sentences

The Company had no cash

equivalents at March 31, 2025 and December 31, 2024.

equivalents at June 30, 2025 and December 31, 2024.

Accounts Receivable and Allowance for Uncollectible

6 unchanged sentences

factors that could affect collectability.

During the three months ended March 31, 2025 and 2024, the Company recorded bad debt expense

During the six months ended June 30, 2025 and 2024, the Company recorded bad debt expense

of $ 4,442 and $ 1,801 , respectively.

12 unchanged sentences

Series B Preferred stock and convertible notes, and these were excluded from the computation of diluted net loss per share as the result

was anti-dilutive for the three months ended March 31, 2025 and 2024.

was anti-dilutive for the six months ended June 30, 2025 and 2024.

Concentrations of Credit Risk

4 unchanged sentences

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

During the three months ended March 31, 2025,

we had 19 customers representing 86 % of our revenue compared to 8 customers representing 86 % of our revenue for the

three months ended March 31, 2024.

Based on the Federal Deposit

Insurance Corporation (FDIC) applicable in the United Sates, Switzerland’s deposit protection system (Esisuisse) and the Financial

Services Compensation Scheme (FSCS) applicable in the U.K., 49.13% of our cash and cash equivalent are protected by the applicable government

insurance limits.

During the six months ended June 30, 2025, we

had 25 customers representing 86.05 % of our revenue compared to 19 customers representing 86.41 % of our revenue for

the six months ended June 30, 2024.

This is a significant improvement in the revenue concentration.

For the three months ended March 31,

For the six months ended June 30,

2025 and 2024, 41 % and 38 % 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.

Approximately 80 % of total accounts receivable

are concentrated in balances from the Company’s top 30 customers.

The largest customer represented 9.36% of the total.

This concentration

may expose the Company to a medium-to-low level of credit risk, as most of these customers are bilateral, meaning they also have accounts

payable with the Company.

Financial Instruments

57 unchanged sentences

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.

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 strictly confidential, and disclosed only to those employees or personnel with a need to know.

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 strictly confidential, and disclosed only to those employees or personnel with a need to know.

The Company recognizes revenue from telecommunication

31 unchanged sentences

Revenues are recognized at the probable amount of consideration expected in exchange for transferring control

Under ASC 606, voice and SMS termination services

typically qualify for over time recognition because the customer receives and consumes the benefits as the entity performs

Each call or message is terminated in real time.

The customer cannot "stockpile" the

service — it's consumed instantly.

The service is indivisible and recurring, with

no alternative use.

Cost of revenue

42 unchanged sentences

NOTE 4 – PREPAID AND OTHER CURRENT

Prepaid and other current assets at March 31,

Prepaid and other current assets at June 30,

2025 and December 31, 2024 consisted of the following:

5 unchanged sentences

Security deposit

prepaid and other current assets

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2025 and

December 31, 2024 consisted of the following:

Property and equipment at June 30, 2025 and December

31, 2024 consisted of the following:

Telecommunication equipment

5 unchanged sentences

Total property and equipment

Depreciation expense for the three months ended

March 31, 2025 and 2024 amounted to $6,682 and $35,161, respectively.

Depreciation expense for the six months ended

June 30, 2025 and 2024 amounted to $47,598 and $68,939, respectively.

NOTE 6 – INTANGIBLE ASSETS

Intangible assets at March 31, 2025 and December

Intangible assets at June 30, 2025 and December

31, 2024 consisted of the following:

7 unchanged sentences

$ ( 601,564 )

Gross carrying amount

Accumulated amortization

Net carrying amount

New gas regulator intangible

Not yet in service

Interconnection agreements

Amortization expense for the three months ended

March 31, 2025 and 2024 amounted to $ 120,313 and $ 0 , respectively.

carrying amount

New gas regulator

Interconnection

$ ( 360,938 )

Amortization expense for the six months ended

June 30, 2025 and 2024 amounted to $ 240,626 and $ 0 , respectively.

The following table outlines the estimated future

amortization expense as of March 31, 2025:

amortization expense as of June 30, 2025:

Years ending December 31

2025 (9 months

2025 (6 months remaining)

NOTE 7 – ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities at March

Accrued and other current liabilities at June

30, 2025 and December 31, 2024 consisted of the following

5 unchanged sentences

Other current liabilities

accrued and other current liabilities

other accrued liabilities

NOTE 8 - LOANS PAYABLE

Loans payable at March 31, 2025 and December

Loans payable at June 30, 2025 and December 31,

2024 consisted of the following:

18 unchanged sentences

Note was issued February 3, 2025 and due on September 30, 2025

Promissory note payable

Note was issued April 24, 2025 and due on December 5, 2025

Promissory note payable

Note was issued May 9, 2025 and due on December 20, 2025

Promissory note payable

Note was issued May 27, 2025 and due on January 7, 2026

Promissory note payable

Note was issued June 5, 2025 and due on January 16, 2026

Promissory note payable

Note was issued June 9, 2025 and due on January 20, 2026

Promissory note payable

Note was issued June 27, 2025 and due on February 7, 2026

Unamortized debt discount

4 unchanged sentences

Long-term loans payable

Loans payable - related parties at March 31,

Loans payable - related parties at June 30, 2025

and December 31, 2024 consisted of the following:

7 unchanged sentences

Long-term loans payable - related parties

During the three months ended March 31, 2025

and 2024, the Company borrowed from third parties totaling $ 543,478 and $ 0 , which includes original issue discount and

financing costs of $ 48,478 and $ 0 and repaid the principal amount of $ 449,438 and $ 8,885 , respectively.

During the three months ended March 31, 2025,

the Company issued a note payable of $ 1,000,000 for the earn out payment related to the April 1, 2024 acquisition of a subsidiary.

During the three months ended March 31, 2025

and 2024, the Company recorded interest expense of $ 99,675 and $ 9,053 and recognized amortization of discount, included

During the six months ended June 30, 2025 and

2024, the Company borrowed from third parties totaling $ 3,215,000 and $ 699,525 , which includes original issue discount

and financing costs of $ 226,374 and $ 0 and repaid the principal amount of $ 1,260,562 and $ 147,253 ,

respectively.

During the six months ended June 30, 2025, the

Company issued a note payable of $ 1,000,000 for the earn out payment related to the April 1, 2024 acquisition of a subsidiary.

During the six months ended June 30, 2025 and

2024, the Company recorded interest expense of $ 169,502 and $ 47,665 and recognized amortization of discount, included

in interest expense, of $ 77,883 and $ 68,519 , respectively.

During the six months ended June 30, 2025, the

Company settled the principal amount and accrued interest of notes payable issued in June through October 2024 by issuing 264,980

shares of common stock.

As a result, the Company recorded a loss on settlement of debt of $ 801,255 .

During the six months ended June 30, 2024, the

Company settled the principal amount and accrued interest of a note payable issued in April 2023 by issuing 22,125 shares of

common stock.

As a result, the Company recorded a loss on settlement of debt of $ 102,660 .

NOTE 9 - CONVERTIBLE LOANS

Convertible loans at March 31, 2025 and

Convertible loans at June 30, 2025 and

December 31, 2024 consisted of the following:

6 unchanged sentences

Long-term convertible notes

During the three months ended March 31, 2025

and 2024, the Company recorded interest expense of $ 245,821 and $ 139,979 and recognized amortization of discount,

included in interest expense, of $ 150,125 and $ 203,992 , respectively.

During the three months ended March 31,

2025, one note holder converted notes with principal amounts of $ 833,334 and conversion fee of $ 2,500 into 94,981

shares of common stock.

During the six months ended June 30, 2025 and

2024, the Company recorded interest expense of $ 477,508 and $ 345,092 and recognized amortization of discount, included

in interest expense, of $ 265,951 and $ 400,278 , respectively.

During the six months ended June 30, 2025,

one note holder converted notes with principal amounts of $ 3,222,222 , debt discount of $ 127,652 , accrued interest of $ 125,834 and

conversion fee of $ 7,500 into 694,914 shares of common stock.

During the six months ended June 30, 2025, the

Company settled the principal amount of convertible notes of $ 671,870 , debt discount of $ 58,573 and accrued interest of $ 34,366 issued

in June 2024 through February 2025 to two notes holders by paying cash of $ 725,000 .

As a result, the Company recorded a loss on settlement

of debt of $ 77,337 .

Issued in fiscal year 2025

During the three months ended March 31, 2025,

the Company borrowed amounts from third parties totaling $ 1,113,316 , which includes original issue discount and financing costs of $ 125,816 .

During the six months ended June 30, 2025, the

Company borrowed amounts from third parties totaling $ 1,113,316 , which includes original issue discount and financing costs of $ 125,816 .

February 26, 2025

37 unchanged sentences

issued 8,081 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 during the year ended December 31, 2024.

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 during the year ended December

Additionally, during the year ended December

25 unchanged sentences

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 187,500 shares of common stock.

Stock Purchase Option (the “Option”) to ADI Funding LLC (“ADI Funding”) under a stock purchase agreement for $ 100,000 that

expired on July 14, 2025, for the right to acquire up to 187,500 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 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 $8.80 per share on the relevant Option exercise date .

As of March 31, 2025, the Company did not receive the

$ 100,000 and the options were not in effect, and the Options had no impact to the accompanying financial statements.

As of June 30, 2025, the Company did not receive the $ 100,000 and

the options were not in effect, and the Options had no impact to the accompanying financial statements.

On July 14, 2025, the stock purchase

agreement was terminated.

NOTE 11 – STOCKHOLDERS’ EQUITY

3 unchanged sentences

The Company amended its certificate of incorporation

to reduce the number of authorized shares of Common Stock that it may issue from 300,000,000 shares to 3,750,000 shares with a par value

of $ 0.001 per share.

During the three months ended March 31, 2025,

the Company issued 100,419 shares of common stock, valued at fair market value on issuance as follows:

• 1,875 shares for compensation to our directors valued at $ 32,815 .

• 94,981 shares for conversion of debt of $ 835,834 .

3,563 shares for common stock payable value at $ 82,194 .

As of March 31, 2025 and December 31, 2024, 2,637,628

and 2,537,209 shares of common stock were issued and outstanding, respectively.

to reduce the number of authorized shares of Common Stock that it may issue from 300,000,000 shares to 3,750,000 shares

with a par value of $ 0.001 per share.

During the six months ended June 30, 2025, the

Company issued 967,245 shares of common stock, valued at fair market value on issuance as follows:

• 3,750 shares

for compensation to our directors valued at $ 55,198 .

• 694,914 shares

for conversion of debt of $ 3,227,904 .

shares for settlement of debt of $ 1,886,658

• 3,563 shares

for common stock payable value at $ 82,194 .

shares for reverse stock split adjustment

As of June 30, 2025 and December 31, 2024, 3,504,454 and 2,537,209 shares

of common stock were issued and outstanding, respectively.

Series A Preferred Stock

9 unchanged sentences

Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020.

As of March 31, 2025 and December 31, 2024, 10,000 shares

As of June 30, 2025 and December 31, 2024, 10,000 shares

of Series A Preferred Stock were issued and outstanding.

15 unchanged sentences

than 5% previous month’s stock liquidity.

As of March 31, 2025 and December 31, 2024, 35,537

shares of Series B Preferred Stock were issued and outstanding.

During the six months ended June 30, 2025, the

Company issued 6,571

shares of Series B Preferred Stock to settle salary payable for our CEO and CFO of $ 631,500 .

As a result, the Company recorded a loss on settlement of salary payable of $ 216,981 .

As of June 30, 2025 and December 31, 2024, 42,108

and 35,537 shares of Series B Preferred Stock were issued and outstanding, respectively.

Series C Preferred Stock

2 unchanged sentences

consisting of up 200,000 shares, par value $ 0.001 .

Under the Certificate of Designation, holders of Series C

U nder 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

3 unchanged sentences

for that purpose .

Holders of Series C Preferred Stock do not have voting rights but may convert into common stock after twenty

four months from the issuance date, at a conversion rate of twelve point five (12.5) shares of Common Stock for every one (1) share of

Series C Preferred Stock.

Holders of Series C Preferred Stock do not have voting rights but may convert into common stock after

twenty four months from the issuance date, at a conversion rate of twelve point five (12.5) 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

2 unchanged sentences

Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on January 7, 2021.

As of March 31, 2025 and December 31, 2024, no Series

As of June 30, 2025 and December 31, 2024, no Series

C Preferred Stock was issued or outstanding.

7 unchanged sentences

shall be considered on parity to the liquidation rights of the Series B Preferred Stockholders .

T he holders of shares of Series

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

4 unchanged sentences

Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2023.

As of March 31, 2025 and December 31, 2024, no Series

As of June 30, 2025 and December 31, 2024, no Series

D Preferred Stock was issued or outstanding.

1 unchanged sentence

Due from related party

During the three months ended March 31, 2025

and 2024, the Company loaned $ 9,462 and $ 51,230 to a related party, respectively.

As of March 31, 2025 and December 31, 2024, the

During the six months ended June 30, 2025 and

2024, the Company loaned $ 29,462 and $ 111,602 and collected $839 and $0, respectively to a related party.

As of June 30, 2025 and December 31, 2024, the

Company had amounts due from related parties of $ 659,338 and $ 630,715 , respectively.

The loans are unsecured, non-interest bearing

and due on demand.

The loans are unsecured, non-interest

bearing and due on demand.

Due to related parties

As of March 31, 2025 and December 31, 2024, the

As of June 30, 2025 and December 31, 2024, the

Company had amounts due to related parties of $ 26,613 .

1 unchanged sentence

Employment agreements

During the three months ended March 31, 2025

and 2024, the Company recorded management salaries of $ 211,500 , and stock-based compensation bonuses of $32,815 and $31,065,

On June 23, 2025, the board of directors of the

Company approved amended employment agreements in favor of its Chief Executive Officer, Leandro Iglesias, and its Chief Financial Officer,

Alvaro Quintana Cardona.

In case the monthly remuneration is not set

in full on time , the amended agreements provide that Messrs.

Iglesias and Quintana may convert their accrued salary/bonus

into shares of common stock or Series B Preferred Stock of the Company.

For common stock, the number of shares issuable is determined

by considering the average price per share of common stock on the Nasdaq Capital Market during the last 10 days and applying

a discount of 25% and then dividing the accrued salary by the average price per share.

For Series B Preferred stock, the number of shares

issuable is determined by considering the discounted average price per share of common stock on the Nasdaq Capital Market during the

last 10 days, dividing the accrued salary by the discounted average price per share, and then dividing that number of shares by 12.5.

During the six months ended June 30, 2025, the

Company issued 6,571 shares of Series B Preferred Stock to settle salary payable for our CEO and CFO of $ 631,500 .

As a result, the Company

recorded a loss on settlement of salary payable of $ 216,981 .

During the six months ended June 30, 2025 and

2024, the Company recorded management salaries of $ 549,000 and $ 423,000 , and stock-based compensation bonuses of $ 55,198 and $ 77,665 ,

respectively.

As of March 31, 2025 and December 31, 2024, the

As of June 30, 2025 and December 31, 2024, the

Company recorded and accrued management salaries of $ 172,946 and $ 420,447 , respectively.

4 unchanged sentences

The Company leases facilities which the term is 12 months .

For the three months ended March 31,

For the six months ended June 30, 2025

and 2024, the Company incurred rent expense of $ 14,324 and $ 14,028 , respectively.

10 unchanged sentences

The following table shows operating activities

information by geographic segment for the three months ended March 31, 2025 and 2024:

Three months ended March 31, 2025

information by geographic segment for the three and six months ended June 30, 2025 and 2024:

Three months ended June 30, 2025

NOTE 14 - SEGMENT - Operating Activities by Geographic

10 unchanged sentences

income (expense)

( 1,529,016 )

( 1,600,989 )

income (loss)

2 unchanged sentences

$ ( 2,348,914 )

Three months ended March 31, 2024

Three months ended June 30, 2024

$ ( 798,620 )

wages and benefits

and regulatory

services and fees

and amortization

facility and other

and administration

income (loss)

income (expense)

( 1,597,506 )

( 1,556,509 )

income (loss)

$ ( 2,223,207 )

$ ( 1,963,887 )

months ended June 30, 2025

$ ( 25,333,644 )

$ 129,816,052

Cost of revenue

11 unchanged sentences

General and administration

Operating loss

Operating income (loss)

( 1,513,700 )

( 1,260,455 )

Other income (expense)

( 1,993,405 )

( 2,120,649 )

Income tax expense

2 unchanged sentences

$ ( 355,779 )

Asset Information

The following table shows asset information

by geographic segment as of March 31, 2025 and December 31, 2024:

March 31, 2025

$ ( 3,493,375 )

months ended June 30, 2024

$ ( 2,530,918 )

$ 130,050,642

Cost of revenue

( 2,530,918 )

Operating expenses

Salaries, wages and benefits

Professional fees

Legal and regulatory

Travel and events

Bank services and fees

Depreciation and amortization

Office, facility and other

Bad debt expense

Stock-based compensation

General and administration

Operating income (loss)

Other income (expense)

( 2,032,989 )

( 1,953,273 )

Income tax expense

Net income (loss)

$ ( 2,835,267 )

$ ( 2,544,103 )

following table shows asset information by geographic segment as of June 30, 2025 and December 31, 2024:

June 30, 2025

Current assets

14 unchanged sentences

NOTE 15 – SUBSEQUENT EVENTS .

Subsequent to March 31, 2025 and through the

date that these financials were made available, the Company had the following subsequent events:

Subsequent to June 30, 2025 and through the date

that these financials were made available, the Company had the following subsequent events:

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:

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.

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.

The Board of Directors of the Company approved

a reverse stock split of the Company’s authorized, issued and outstanding shares of Common Stock at a ratio of 1-for-80, effective

on May 2, 2025.

The Company amended its certificate of incorporation to reduce the number of authorized shares of Common Stock that it

may issue from 300,000,000 shares to 3,750,000 shares of Common Stock with a par value of $0.001 per share.

All share and per share amounts

and related stockholders' equity balances presented herein have been retroactively adjusted to reflect the Reverse Stock Split.

memorandum of understanding (“ASII 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 initially

agreed to execute the Purchase Agreement no later than June 1, 2025 but on July 31, 2025, the parties agreed to extend the ASII MOU expiration

date to September 30, 2025.

On May 29, 2025, the Company entered into a Unit

Purchase Agreement (the “Agreement”) with Craig Span (the “Seller”) and Globetopper, LLC, a Delaware limited liability

company (the “Globetopper”), pursuant to which the Company agreed to acquire fifty-one percent (51%) of the membership interests

of Globetopper (the “Transferred Membership Interest”) from the Seller.

Pursuant to the Agreement, the Company will

acquire the Transferred Membership Interests of Globetopper for a total purchase price consisting of $700,000, payable as follows:

upon execution of the Agreement;

$50,000 in cash on the Closing Date;

in cash 30 days after the Closing Date, secured by a promissory note and pledge agreement;

$50,000 in cash 60 days after the Closing

Date, secured by a promissory note and pledge agreement;

$500,000 in restricted common shares of the Company, calculated at a 20% discount

to the volume weighted average price (VWAP) during the five days preceding the Closing Date.

payments based on Globetopper’s EBITDA growth, payable in common shares of the Company at a 20% discount to the greater of the

VWAP during the five days following the applicable period or preceding the payment date, will be payable as follows:

50% of the positive difference between EBITDA at acquisition and EBITDA 12 months post-Closing.

50% of the positive difference between EBITDA 12 months and 24 months post-Closing.

closing is expected to occur on or before July 1, 2025, subject to the satisfaction of customary closing conditions, including due diligence

and the accuracy of representations and warranties.

Either party may terminate the Agreement if the closing does not occur by July 10,

The Company will invest up to $1,200,000 in Globetopper

over 24 months post-Closing in monthly installments of $50,000, subject to the achievement of specified quarterly financial targets.

The Seller will remain as Chief Executive Officer

of Globetopper for at least two years post-Closing, with a reasonable salary and benefits to be agreed upon.

The operating agreement of Globetopper was amended

to reflect a new board of directors consisting of three members, with the Company designating two members and the Seller designating one,

with decisions made by majority vote.

Both parties agreed to mutual indemnification

for breaches of representations, warranties, or covenants, with the Seller’s indemnification liability capped at 10% of the purchase

price received.

On July 3, 2025, the Company executed two separate

Debt Exchange Agreements (collectively, the “Exchange Agreements”) with M2B Funding Corp.

and ADI Funding LLC (collectively,

the “Creditors”).

Pursuant to the Exchange Agreements, the Company exchanged an aggregate of $3,546,136 in outstanding debt

of the Creditors, consisting of principal and accrued but unpaid interest on certain promissory notes, for a total of 37,110 shares of

the Company’s newly amended Series D Preferred Stock.

The number of shares of Series D Preferred issued

to each Creditor was determined by dividing the respective debt amount by the lowest End-of-Day Volume-Weighted Average Price (EOD VWAP)

of the Company’s common stock for the 10 trading days prior to July 3, 2025, less a 20% discount, divided by 12.5.

Company has agreed to file a resale registration statement for the common stock underlying the Series D Preferred Stock within 45 days

of July 3, 2025, on a best-efforts basis, pursuant to registration rights agreements with the Creditors.

On July 7, 2025, the Company filed a First Amended

and Restated Certificate of Designation for the Series D Preferred Stock (the “Certificate of Designation”) with the Secretary

of State of Nevada to amend and restate the terms of its Series D Preferred Stock, originally established on November 3, 2023, increasing

the authorized shares from 75,000 to 100,000 and revising the terms as described below.

The amended terms govern the 37,110 shares issued

to the Creditors and include the following key provisions:

Dividend Rights :

12% cumulative dividend, payable as, when, and if declared by the Board of Directors, calculated on a 360-day year, accruing from the date of issuance and ceasing the day prior to conversion, with pro rata dividends for partial-year holdings.

Conversion Rights:

Following three months from the issuance date, the Series D Preferred Stock is convertible into common stock at a rate of 12.5 shares of common stock per share, subject to adjustment for stock splits, dividends, or reorganizations, removing the prior requirement for conversion only upon a note default.

Redemption Provisions:

Optional redemption by the Company at 105% of the price paid by the holder, upon not more than three trading days’ notice.

Liquidation Preference:

Senior to common stock, Series A Preferred Stock, and Series C Preferred Stock, and on parity with Series B Preferred Stock, in any liquidation, dissolution, or winding up of the Company.

Voting Rights:

No voting rights, except as required by law or for amendments to the Certificate of Designation or Articles of Incorporation that would alter the Series D Preferred Stock’s rights.

Leak-Out Restriction:

After three months, conversions to common stock and sales are limited to 10% of the average daily trading volume of the Company’s common stock per holder.

On August 7, 2025, the Company entered into a

non-binding Memorandum of Understanding (the “MOU”) with Cycurion Inc.

(“Cycurion”), a Delaware corporation trading

on Nasdaq under the ticker CYCU.

The MOU outlines the mutual intention of the parties to explore a potential stock exchange transaction

and expand their strategic partnership in AI-powered cybersecurity services and other high-tech initiatives targeting the global telecom

Under the terms of the MOU, subject to satisfactory

due diligence, internal approvals, and regulatory compliance, the parties intend to consider a structure whereby each party would issue

$1,000,000 worth of its common stock to the other party.

The number of shares would be calculated based on the lower of (i) the Nasdaq

Official Closing Price on the trading day immediately preceding the signing of a binding agreement or (ii) the average Nasdaq Official

Closing Price over the five trading days immediately preceding such signing.

Additionally, subject to board and regulatory

approvals, each party intends to distribute up to 50% of the shares received in the exchange to its shareholders as a stock dividend.

The parties also plan to continue collaborating on AI-powered cybersecurity services and explore deeper commercial relationships, including

joint ventures, shared research and development, and potential structural integrations.

The MOU provides for a 60-day exploration period

from the effective date, during which the parties will conduct reviews, negotiate in good faith, and assess feasibility for a definitive

This period may be extended by mutual consent.

The MOU is non-binding, except for provisions related to confidentiality, its

non-binding nature, and governing law (Nevada law), and does not obligate either party to proceed unless a definitive agreement is executed.

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

What changed 10-Q

Item 1. Financial Statements