Filed 2026-04-06 · Period ending 2025-12-31 · 60,765 words · SEC EDGAR
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# iQSTEL Inc (IQST) — 10-K
**Filed:** 2026-04-06
**Period ending:** 2025-12-31
**Accession:** 0001663577-26-000094
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1527702/000166357726000094/)
**Origin leaf:** d0ebc6cba60e3f682582b4aeca88667a0d82af730dea2a71e08a3aa685e83208
**Words:** 60,765
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K**
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ANNUAL REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the fiscal year ended
December 31, 2025 | |
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the transition period
from _________ to ________ | |
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Commission file number: 001-42644 | |
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IQSTEL
Inc. | |
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(Exact
name of registrant as specified in its charter) | |
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Nevada |
45-2808620 | |
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(State or other jurisdiction of incorporation
or organization)
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(I.R.S. Employer Identification
No.) | |
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300
Aragon Avenue, Suite 375
Coral
Gables, FL |
33134 | |
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(Address of principal executive offices)
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(Zip Code) | |
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Registrants telephone number: (954)
951-8191
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Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class |
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Trading
symbol(s) |
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Name
of each exchange on which registered | |
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Common
Stock |
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IQST |
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The
Nasdaq Capital Market | |
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Securities registered under Section 12(g) of
the Exchange Act:
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Title
of each class | |
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Common
Stock, par value of $0.001 | |
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
**Yes [ ] No****[X]**
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. **Yes [ ] No****[X]**
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
**Yes****[X] No [ ]**
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). **Yes****[X] No [ ]**
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.
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Large accelerated
filer |
Accelerated filer | |
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Non-accelerated
Filer |
Smaller reporting company | |
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Emerging
growth company | |
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant has filed a report
on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
[ ]
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. [ ]
Indicate by check mark whether any of those error corrections are
restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers
during the relevant recovery period pursuant to 240.10D-1(b). [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). **Yes [ ] No****[X]**
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter **$33,157,217****.**
Indicate the number of shares outstanding of each of the registrants
classes of common stock, as of the latest practicable date **5,070,743****common shares as of March 31, 2026.**
****
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| Table of Contents | |
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**TABLE OF CONTENTS**
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Page | |
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PART I
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Item 1. |
Business |
3 | |
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Item 1A. |
Risk Factors |
12 | |
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Item 1B. |
Unresolved
Staff Comments |
27 | |
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Item 1C. |
Cybersecurity |
28 | |
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Item 2. |
Properties |
28 | |
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Item 3. |
Legal
Proceedings |
28 | |
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Item 4. |
Mine Safety
Disclosures |
28 | |
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PART II
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Item 5. |
Market
for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities |
29
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Item 6. |
[Reserved] |
30 | |
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Item 7. |
Managements
Discussion and Analysis of Financial Condition and Results of Operations |
30 | |
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Item 8. |
Financial
Statements and Supplementary Data |
39 | |
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Item 9. |
Changes
In and Disagreements With Accountants on Accounting and Financial Disclosure |
40 | |
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Item 9A. |
Controls
and Procedures |
40 | |
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Item 9B. |
Other
Information |
41 | |
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Item 9C. |
Disclosure
Regarding Foreign Jurisdictions that Prevent Inspections |
41 | |
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PART III
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Item 10. |
Directors,
Executive Officers and Corporate Governance |
42 | |
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Item 11. |
Executive
Compensation |
47 | |
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Item 12. |
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
49 | |
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Item 13. |
Certain
Relationships and Related Transactions, and Director Independence |
50 | |
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Item 14. |
Principal
Accountant Fees and Services |
51 | |
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PART IV
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Item 15. |
Exhibits,
Financial Statement Schedules |
52 | |
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Item 16. |
Form 10-K
Summary |
53 | |
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| Table of Contents | |
****
**PART I**
**Forward-Looking Statements**
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially
from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. All
statements other than statements of historical facts are forward-looking statements. In some cases, you can identify these forward-looking
statements by words such as may, will, should, anticipate, estimate,
plans, potential, projects, continuing, ongoing, expects,
management believes, we believe, we intend or the negative of these words or other variations
on these words or comparable terminology. The statements that contain these or similar words should be read carefully because these statements
discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other
forward-looking information. These forward-looking statements include, by way of example and not in limitation:
our expectations regarding future revenue growth, including
contributions from our telecom, fintech (e.g., GlobeTopper digital gift card platform), and developing AI and blockchain initiatives;
our ability to integrate recent acquisitions (such as
QXTEL and GlobeTopper) and realize anticipated synergies or cost efficiencies;
our plans to expand operations, enter new markets, develop
new products/services (including AI-enhanced solutions for telecom and enterprise use), and pursue additional mergers and acquisitions;
our expectations regarding profitability, liquidity,
capital requirements, and our ability to continue as a going concern;
the impact of regulatory changes, economic conditions,
competition, intellectual property matters, and cybersecurity risks on our business; and
other statements regarding our business strategy, plans,
objectives, and future financial condition or performance
These statements are based on assumptions that we
believe are reasonable, but they are subject to substantial risks and uncertainties, including those described in detail under Item
1A. Risk Factors and elsewhere in this Annual Report (such as our history of losses and accumulated deficit, dependence on financing,
challenges in achieving and maintaining profitability, risks associated with international operations and acquisitions, intense price
competition and technological changes in telecommunications, evolving fintech and AI markets, concentration of revenue among key customers,
potential network disruptions or security breaches, goodwill impairment, and our ability to manage growth and integrate acquired businesses).
New risks and uncertainties emerge from time to time and it is not possible for us to predict all of them or assess their potential impact.
Factors beyond our control, including legislative or regulatory changes, economic conditions, competition, and cybersecurity threats,
could cause actual results to differ materially from those expressed or implied.
You should not place undue reliance on any forward-looking
statements, as they speak only as of the date they are made. We expressly disclaim any obligation or undertaking to update or revise
any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable
law. The occurrence of any of the events described as risk factors or other future events could have a material adverse effect on our
business, results of operations, and financial position.
**Item 1. Business**
**Company Description**
IQSTEL Inc. (the Company when making reference to
consolidated company) is a technology company with operations in 20 countries (Argentina, Armenia, Austria, Canada, Colombia, Germany,
Greece, Guatemala, India, Italy, Pakistan, Romania, Serbia, Spain, Switzerland, Turkey, UAE, UK, USA and Venezuela) and over 100 employees
that offers leading-edge services through its subsidiaries in the telecommunications, fintech, and AI-enhanced industries. Our global
presence includes offices in USA, Argentina, UK, Switzerland, Turkey, and Dubai, and we target diverse and high-growth markets. We maintain
more than 603 high value network interconnections around the world, delivering international voice, SMS, and connectivity services that
form the core of our business. Our strategy focuses on leveraging synergies among our subsidiaries to drive innovation, operational efficiency,
and growth through organic development and strategic acquisitions.
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Our Telecom Division, which represents the majority
of current operations and accounted for 91% of our revenues for the year ended December 31, 2025, offers Voice over Internet Protocol
(VoIP), SMS, proprietary Internet of Things (IoT) solutions, and international fiber-optic connectivity through its subsidiaries: Etelix
(www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com),
IoT Labs (www.iotlabs.mx), QGlobal SMS (www.qglobalsms.com), and QXTEL Limited (www.qxtel.com).
Also under the Telecom Division, our developing Blockchain
Platform Business Line offers our proprietary Mobile Number Portability Application (MNPA) through our subsidiary, itsBchain (www.itsbchain.com).
The Companys developing Fintech Business Line
offers a complete Fintech ecosystem including a MasterCard Debit Card, US Bank Account (No SSN Needed), and a Mobile App/Wallet for remittances
and mobile top-up services. Our Fintech subsidiary, Global Money One Inc., aims to provide immigrants access to reliable financial services
that makes it easier to manage their money and stay connected with their families back home. Additionally, GlobeTopper LLC (www.globetopper.com),
our most recent acquisition, supports expansion and integration of our business divisions through its B2B digital gift card and incentives
platform, which represented 9% and 0% of our revenues for the years ended December 31, 2025 and 2024.
Our Artificial Intelligence (AI) division, Reality
Border (www.realityborder.com), initially developed an AI-enhanced immersive digital experience platform. Building on that early development
workincluding conversational interfaces, multilingual models, and AI-driven workflowsReality Border now develops practical
AI software solutions for enterprise and telecommunications applications.
Reality Border currently serves as IQSTELs AI innovation and product development platform. Its activities include AI agents and
related software solutions designed for web, voice, and contact center environments, as well as integration with telecommunications infrastructure,
business systems, and security layers. The Companys AI strategy includes solutions such as Airweb.ai for AI-powered customer engagement
across web and phone channels, IQ2Call.ai for AI-enabled call center and customer care applications, and IQCortex.ai for broader AI platform
capabilities and enterprise use cases.
Reality Borders current development efforts include software functionality, workflow orchestration, multilingual interaction,
system integration, and operational deployment models intended for business use. Reality Borders earlier immersive platform work
contributed to capabilities that are now being applied in its AI products; however, the current business emphasis is on AI solutions
for enterprise and telecommunications operations rather than metaverse-based environments.
The information contained on our websites is not
incorporated by reference into this annual report and should not be considered part of this or any other report filed with the SEC.
**Operating Subsidiaries**
IQSTEL's mission is to serve basic human needs in
today's modern world by making the necessary tools accessible regardless of race, ethnicity, religion, socioeconomic status, or identity.
We recognize that access to ubiquitous communications, virtual banking, and information/content is critical to the pursuit of human needs
(physiological, safety, relationships, esteem, and self-actualization). IQSTEL operates through business divisions focused on telecommunications
(communications), fintech (financial freedom), and AI services (information and content). The Company continues to grow and expand its
suite of products and services both organically and through mergers and acquisitions (M&A).
Our telecommunication business currently represents
91% of our 2025 revenues, fintech services represent 9%, while our other business lines (including blockchain and certain AI initiatives)
are in a pre-revenue stage for the financial periods presented.
**Telecom Subsidiaries for voice services:**
**Etelix.com USA LLC**, a wholly owned subsidiary
of IQSTEL Inc., is a US based international telecom carrier founded in 2008 that provides telecom and technology solutions worldwide,
with commercial presence in North America, Latin America, and Europe. Etelix provides International Long-Distance voice services for
Telecommunications Operators (ILD Wholesale), and Submarine Fiber Optic Network capacity for internet (4G and 5G).
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Etelix is interconnected to the most important players
in the industry, with a very strong focus on Asian and Latin-American markets, among which it is worth mentioning: China Telecom, PCCW,
Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean),
Cable and Wireless Panama, Millicom (TIGO), Telefonica de Espaa (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus
(NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel.
In 2013, Etelix participated in a consortium of telecommunications
carriers that upgraded the Maya-1 submarine cable system, which runs from Hollywood, Florida to Tol, Colombia. As part of this
arrangement, Etelix held 10 Gbps of capacity, which was subsequently sold to a third party customer. This transaction expanded Etelixs
ability at that time to provide additional international connectivity capacity to support customer demand.
**SwissLink Carrier AG**, a 51% owned subsidiary
of IQSTEL Inc., strengthens the companys international telecommunications portfolio as a Switzerland-based carrier with global
VoIP connectivity and notable commercial presence across Europe, the CIS, and Latin America. In addition to its license as a Swiss-licensed
operator, SwissLink expanded its regulatory footprint in February 2026 by obtaining two key licenses in Italy: (a) Network Infrastructure
& Provision, which authorizes the management of network infrastructure, licensed spectrum applications, number-hosting, transit operations,
and the support of third-party ISPs; and (b) Publicly Available Telephone Services, enabling the provision of fixed voice services and
direct interconnection agreements for voice resellers and value-added services. These dual Italian licenses, alongside its Swiss authorization,
position SwissLink as a full-cycle operator in Italy, granting end-to-end autonomy, technical sovereignty, enhanced reliability, cost
optimization, operational agility, and complete regulatory compliance. Thanks to its strategic position in Europe, SwissLink enables
the IQSTEL group to be highly competitive in capturing voice traffic destined for Asian and African markets. Notably, more than 50% of
traffic terminating in Africa originates from European customers, while nearly 40% of traffic to Asia also flows from Europe, underscoring
Europes crucial role as an international telecommunications hub. SwissLinks robust interconnections with leading carriersincluding
Orange Wholesale International, CJC Global Connections & Consulting LLC, iBASIS Communications AG, U.S. South Communications, Inc.,
Belgacom International Carrier, Bell Canada Inc., and SWISSCOM (SCHWEIZ) AGfurther extend IQSTELs reach and operational
efficiency, supporting expansion in high-growth regions across Asia and Africa.
**Whisl Telecom LLC**, a 51% owned subsidiary
of IQSTEL Inc., significantly enhances the companys telecom business through its provision of high-quality services and innovative,
out-of-the-box solutions. As a U.S.-based company, Whisl Telecom primarily serves the Carrier-to-Carrier Global industry, while also
maintaining the network infrastructure necessary to deliver services directly to retail end users (endpoints). Distinguished as one of
the few U.S. carriers with substantial Tier 1 capacity, Whisl offers true high-capacity voice termination, supporting high calls per
second (CPS) and ensuring optimal call quality.
Whisl Telecoms capabilities contribute
a comprehensive suite of services to IQSTELs telecom portfolio, including: (1) US/Canada Inbound/Origination, (2) US/Canada DIDs,
(3) US/Canada Toll-Free Numbers, (4) Global DIDs, and (5) Global Toll-Free Numbers.
**Smartbiz Telecom LLC**. Is a 51% owned subsidiary
of IQSTEL Inc. acquired in June 2022. Smartbiz is a US based company that provides international voice termination to niche markets.
With this acquisition IQSTEL expanded its telecommunication services offer to markets the company was not serving before. Smartbiz has
commercial relations with relevant players in the industry, among which it is worth mentioning the following: Telefonica Global Solutions.
S.L, Telintel Ltd, Teliax, Inc Tf, Sistemas Satelitales de Colombia S.A. Esp, and IDT Global Limited.
**QXTEL Limited** is a 51% owned subsidiary of
IQSTEL Inc. acquired in April 2024. QXTEL is one of the most advanced and diversified telecommunications and technology services provider
focused on platform services for wholesale, retail and cloud communications service providers, wholesale carrier voice, wholesale carrier
messaging (A2P SMS) and carrier technology services with over 20 years in the telecom industry switching more than 5 billion voice and
A2P SMS transactions over 200 interconnections worldwide. QXTEL is headquartered in London (UK) with regional offices in Florida (USA),
Buenos Aires (Argentina), Dubai (UAE), Belgrade (Serbia) and Istanbul (Turkey). QXTEL maintains commercial relations with significant
players in the industry such as BTS Business Telecommunications Service Inc., China Mobile International Limited, Deutsche Telekom AG,
Digicel Jamaica Limited, Emirates Telecom Etisalat, Hutchison Global Communication, iBASIS Communications AG, IDT Global Limited, Messagebird,
Orange Wholesale International, Tata Communications (Canada) Ltd, Telekom Deutschland Gmbh (T-Mobile), T-Mobile USA, Inc., and Vodafone
US Inc.
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With the combination of the technology capabilities
of these five subsidiaries, IQSTEL has put together a complete portfolio of services for carriers and end users. These services include:
**International
Voice Termination for carriers**: This service enables the routing of international voice calls to their final destinations across
various countries. Telecom carriers use this to handle large volumes of cross-border voice traffic by connecting through intermediary
providers or directly to in-country networks.
**US/Canada
Inbound / Origination**: This refers to the ability to receive incoming calls originating in the United States or Canada. It ensures
seamless connectivity for businesses or carriers looking to establish a local presence in these regions by offering local or toll-free
numbers.
**Global
DIDs**: These are virtual phone numbers that allow users to receive calls from specific geographic locations, regardless of where
they are physically located. They are essential for businesses seeking global reach, providing local numbers for customers worldwide.
**Global
Toll-Free Numbers**: Toll-free numbers work internationally, allowing customers to call businesses without incurring charges. These
numbers are ideal for companies serving global clients, offering free and easy access to customer service or sales teams.
**PBX
(Private Branch Exchange) for small businesses**: A PBX is a private telephone network used within an organization, enabling efficient
internal and external communication. For small businesses, modern PBX systems often come as cloud-based or hosted solutions, offering
affordability and advanced features like call routing and voicemail.
**SIP
Trunking:** SIP Trunking enables voice communication over the internet rather than traditional phone lines. It connects a businesss
PBX system to the telephone network, offering cost savings, scalability, and support for voice, video, and messaging services.
Telecom services represented 100% of our consolidated
revenue in 2024. In 2025, revenue from the telecom services represented 91% of the total revenue.
Voice services accounted for 59.83% of the total
revenue in 2025 ($189,605,526 out of the total $316,899,498) compared to 66.09% of the total revenue in 2024 ($187,194,236 out of the
total $283,220,442).
**Telecom Subsidiaries for SMS services**:
**QGlobal SMS LLC** is a 100% owned subsidiary
of IQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specializing in international and domestic SMS termination. QGlobal
SMS has a commercial presence in Europe, USA and Latin America, with robust international interconnection with Tier-1 SMS Aggregators,
guaranteeing its customers high quality and low termination rates, in over more than 100 countries. Main customers are Computer-Tel Inc.,
iBasis Communications AG, Telefonica Global Solutions. S.L, Telintel Ltd., and Twilio Ireland Limited.
**IoT Labs LLC** is a 51% owned subsidiary of
IQSTEL Inc. IoT Labs is an SMS service provider based in Austin, TX. Specialized in the SMS traffic exchange between US and Mexico. Main
customers are Aztek Corporative Properties Inc, Bytescale C., Codek Connect LLC, and Nuvoteq LLC.
The Company entered into the SMS business in 2020
through the acquisition of QGlobal and IoT Labs. Both companies specialize in international and domestic SMS termination, with emphasis
on the Applications to Person (A2P), Person to Person (P2P) and OmniChannel Marketing Services for several markets: Wholesale Carrier,
Government, Corporate, Enterprise, Small and Medium Companies.
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The Global A2P SMS Market is expected to grow at
a CAGR of 4.1% to account for $101 billion in 2030, according to Transparency Market Research. This market has experienced significant
growth and adoption rate in the past few years and is expected to experience notable growth and adoption in years to come.
The Companys role in these services is to
ensure seamless voice and SMS communication across international borders by establishing peering agreements with other telecommunication
entities. This is possible using sophisticated algorithms to determine the most cost-effective and reliable paths for voice/SMS traffic,
managing media protocols such as SIP (Session Initiation Protocol) and RTP (Real-time Transport Protocol) to ensure smooth communication
between different networks ensuring efficient call routing.
*
The Company acts as a transit network that allows
the completion of voice calls, or SMSs connecting the network where the calls/SMSs are originated and the network where the calls/SMSs
are intended to terminate. The graphic below shows the path of a voice call or SMS, all parties involved and where the Company is situated
in that ecosystem.
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**Fintech services:**
****
**GlobeTopper, Inc.** In July 2025, the Company
acquired a 51% controlling interest in GlobeTopper, Inc., a global business-to-business (B2B) digital gift card and incentives
platform. GlobeTopper provides enterprises with the infrastructure, catalog access, and operational support required to design, source,
and manage digital gift card programs across multiple geographies. Its platform enables clients to incorporate digital gift cards into
customer acquisition, loyalty, rewards, employee incentives, and other promotional or payment-adjacent use cases. The company continues
to expand its catalog and geographic coverage of more than 4,000 merchant brands across multiple regions and industry categories, adding
new brands and markets on an ongoing basis. Since 2024, GlobeTopper has processed over 1 million digital gift card transactions through
its platform. GlobeTopper operations reported 9% of our revenues for the year ended December 31, 2025.
****
**New businesses subsidiaries:**
**ItsBchainLLC**is a 75% owned subsidiary
of IQSTEL Inc. ItsBchain is a blockchain technology developer and solution provider, with a strong focus on the telecom sector. The company
has focused on the development of solutions aimed at using the blockchain ledger and smart contracts to enable more efficiency, quickness
in execution and fraud-prevention in the telecommunications industry. Specifically, the company has developed a solution that will enable
users and carriers to transfer mobile phone numbers with just a few clicks, allowing users and carriers the ability to transfer retail
users from one mobile carrier to another instantly.
The Company has done research covering 35 countries
where number portability is mandatory by law. Those 35 countries have a total of 3.3 billion in population and 4.0 billion phone lines
that can be ported from one carrier to another. It is estimated that an average of 5% of the total phone lines are ported every year.
Number portability is executed and supervised by
a third independent party, who acts as a database administrator and has the responsibility to guarantee all transactions requested by
the customers will be completed and his/her phone number will be ported from Carrier A to Carrier B. In the countries under our analysis
there are 11 different database administrators.
In terms of dollar value, the number portability
market in the countries under our analysis is estimated at over $86 million per year. This is based on the actual cost carriers and/or
customers have to pay to get the lines ported. Revenues of the Data Base Administrators comes from a monthly fee charged to all participant
carriers, plus a fee for every transaction completed over the platform. The monthly fee and the transactions fee vary from country to
country.
Our objective is to offer the market conformity by
data-based administrators a much more cost-effective solution, which will not only reduce the operating cost, but that will also make
the transactions to complete faster without any additional CAPEX.
Our mobile number portability solution is now being
tested prior to its commercial release.
**Global Money One Inc**. Is a 75% owned subsidiary
of IQSTEL Inc. The company offers a complete Fintech ecosystem including a MasterCard Debit Card, US Bank Account (No SSN Needed), and
a Mobile App/Wallet to manage Remittances and Mobile Top Up. Our focus is to provide immigrants access to reliable financial services
that make it easier to manage their money and stay connected with their families back home.
All available services can be managed through our
mobile App GlobalMoneyOne available for IOS and Android. The first non-commercial release of the Fintech suite was done
in June 2022. Since that date all services have been tested including the known-your-customer (KYC) process for the issuance of debits
cards, the settlement process with the issuer bank, the intermediary entities handling the remittances, and the intermediaries and cellular
operators for the Top Up, as well as the proper training of our customer care agents.
According to recent estimates from the World Bank,
remittances to low- and middle-income countries continued their upward trajectory, approaching nearly $700billion in 2025. Transfers
to Latin America and the Caribbean reached record levels, driven largely by strong labor-market participation of regional migrants in
the United States. Within the region, remittances grew sharply in several countries: Nicaragua registered increases of over 22%, Guatemala
saw growth of around 14%, and Colombia reported gains of more than 14% during the first half of the year. In contrast, Mexico experienced
a decline of roughly 4.6% after more than a decade of uninterrupted growth. As a share of GDP, the most recent data show remittances
remaining highly significant across Central America and the Caribbean, with El Salvador and Honduras maintaining ratios above 24% and
25% respectively, while Jamaica and Haiti continue to depend heavily on inflows despite varying economic conditions. These metrics show
there are business opportunities in the remittances arena and Global Money One has a developed platform to take advantage of them.
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**Reality Border LLC** initially developed an
early proof-of-concept immersive digital platform for IQSTEL. Building on that early development work, Reality Border now develops AI
software solutions for enterprise and telecommunications applications. Reality Border currently serves as IQSTELs AI innovation
and product development platform, with activities that include AI agents and related software solutions for web, voice, and contact center
environments, as well as integration with telecommunications infrastructure, business systems, and security layers. Reality Borders
current development efforts include software functionality, workflow orchestration, multilingual interaction, system integration, and
operational deployment models intended for business use.
**Regulations**
The following is a summary of what we believe to
be the material current and proposed international, federal, state, and local laws, regulations, orders, and legislation that could have
a material effect on our business, financial condition, and results of operations. This summary is not exhaustive, and new or changed
requirements could impose additional material obligations or costs.
**Regulation of Telecom in the United States**
Telecommunications services in the United States
are subject to comprehensive regulation at the federal, state, and local levels. Non-compliance with applicable requirements may result
in enforcement actions, including the imposition of interest, fines, or other penalties. The Federal Communications Commission (FCC)
exercises jurisdiction over all telecommunications common carriers to the extent they provide interstate or international services, including
the use of local networks to originate or terminate such traffic. State public utility commissions regulate these same carriers with
respect to the provision of intrastate and local services. In addition, local governmental authorities may indirectly affect our operations
through zoning restrictions, taxation, permitting and right-of-way requirements, and franchise obligations. Any material changes to the
laws, rules, or regulatory frameworks administered by these federal, state, or local authorities could adversely affect our business,
operating results, and financial condition.
**Regulation of Telecom by the Federal Communications Commission**
**Universal Service and Other Regulatory Fees and
Charges**
In 1997, the FCC issued an order, referred to as
the Universal Service Order, which requires all telecommunications carriers providing interstate telecommunications services to contribute
to universal service support programs administered by the FCC (known as the Universal Service Fund). These periodic contributions are
currently assessed based on a percentage of each contributors interstate and international end user telecommunications revenues
reported to the FCC. Etelix and our other US-based telecom subsidiaries also contribute to several other regulatory funds and programs,
most notably Telecommunications Relay Service and FCC Regulatory Fees (collectively, the Other Funds). Due to the manner
in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions
In addition, based on the nature of our current business,
we receive certain exemptions from federal Universal Service Fund contributions. Changes in our business (including growth in our fintech
or AI operations) could eliminate our ability to qualify for some or all of these exemptions. Changes in regulations may also have an
impact on the availability of some or all of these exemptions. If even some of these exemptions become unavailable, they could materially
increase our federal Universal Service Fund or Other Funds contributions and have a material adverse effect on the cost of our
operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business. We cannot be certain
of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds
in general and the Telecommunications Relay Service Fund in particular can impact our profitability. Whether these contribution factors
will be stable in the future is unknown, but it is possible that we will be subject to significant increases.
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**Regulation of TelecomInternational**
In connection with our international operations,
we have obtained licenses or are otherwise authorized to provide telecommunications services in Switzerland and Italy (including SwissLinks
recent expansion of its regulatory footprint in Italy in February 2026). In several of the jurisdictions in which we currently operate
or intend to operate, our activities are subject to local laws and regulatory frameworks that, among other provisions, may restrict or
limit the ability of private telecommunications providers to compete with state-owned or state-authorized incumbent carriers. These regulatory
constraints can materially affect the scope and manner in which we are permitted to offer telecommunications services in those markets,
increase compliance costs, or require additional licensing or approvals.
**Regulation of Internet Telephony**
The provision of voice communications services over
the Internet and private IP networks is generally subject to a less burdensome regulatory framework than traditional circuit-switched
telephony in the United States and many foreign jurisdictions. In numerous markets, these IP-based services are not currently subject
to certain taxes, fees, or regulatory assessments that apply to legacy telephony and that would otherwise increase our operating costs.
As a result, we are able, in many jurisdictions, to offer VoIP services at pricing levels that are more competitive than those applicable
to traditional telephone services. However, legislative and regulatory bodies in the United States and abroad have undertaken efforts
to align the regulatory treatment of VoIP with that of traditional telephony. Such initiatives could impose additional fees, taxes, charges,
or regulatory obligations on IP-based communications services, which could materially increase our costs and diminish or eliminate our
pricing advantages. Moreover, several foreign governments have enacted, or are considering, laws or regulations that restrict or prohibit
the provision of voice services over the Internet or private IP networks. These measures could similarly impair our ability to offer
VoIP services in affected markets.
**Money Transmitter and Payment Instrument Laws
and Regulations**
Our consumer payment services offeringsincluding prepaid
debit cards, remittances, and mobile top-up services provided through Global Money One and GlobeTopperare heavily regulated industries.
Accordingly, we, and the products and services that we offer in consumer payment services, are subject to a variety of federal and state
laws and regulations, including:
Banking laws and regulations;
Money transmitter and payment instrument laws and regulations
(which may require state licensing and ongoing compliance);
Anti-money laundering laws (including the Bank Secrecy
Act and related know-your-customer (KYC) and customer due diligence requirements);
Privacy and data security laws and regulations (including
applicable state and federal requirements and, where relevant, international frameworks such as GDPR for European operations);
Consumer protection laws and regulations;
Unclaimed property laws; and
Card association and network organization rules (including
Mastercard rules applicable to our debit card offerings).
Compliance with these requirements involves significant ongoing costs,
reporting obligations, and risk of penalties for noncompliance. Failure to maintain necessary licenses or adhere to these regulations
could materially restrict our ability to offer or expand fintech services.
**Employees**
Attracting and retaining qualified personnel familiar
with our businesses who head our different businesses units is critical to our success. As of December 31, 2025, we had a total of 100
employees, including all subsidiaries.
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Our human capital resources objectives include identifying,
recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants. To achieve this, our compensation practices
aim to attract and retain qualified personnel and align their interests with our goals and the best interests of our stockholders. Our
compensation philosophy is to provide remuneration that meets our current needs and growth initiatives and to offer incentives for achieving
our long-term plans, including equity and cash incentive plans that attract, retain, and reward personnel through stock-based and cash-based
compensation awards. We consider talent attraction and retention essential for achieving our strategy, and we recognize that a trained,
diverse, and engaged workforce is crucial to meeting our objectives. Our recruiting process targets a broad spectrum of potential employees,
and we employ a rigorous screening process to identify and hire qualified professionals.
We are committed to diversity and inclusion in the
workforce, implementing a policy of non-discriminatory treatment and respect for human rights for all current and prospective employees.
We prohibit discrimination based on an individuals race, religion, creed, color, sex, sexual orientation, age, marital status,
disability, national origin, or veterans status, which is illegal in many jurisdictions. We respect the human rights of all employees
and strive to treat them with dignity in accordance with standards and practices recognized by the international community.
**Corporate History**
IQSTEL, formerly known as PureSnax International,
Inc., was incorporated under the laws of the State of Nevada on June 24, 2011. PureSnax was previously a wellness brand focused on bringing
healthy snacks and foods to consumers. On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor.
From March of 2017 until its acquisition of Etelix.com USA, LLC, PureSnax was working to develop its own brand and its own products for
manufacture, distribution, sales and marketing of various products within the health foods and snacks industry and to pursue related
business opportunities. PureSnax acquired Etelix.com USA, LLC on June 25, 2018. The company left the healthy snacks and foods business
to focus on the Telecommunications Business.
On August 30, 2018, PureSnax changed its name to
IQSTEL Inc. and received a new CUSIP number: 46265G107, as well as a new trading symbol IQST in order to
better resemble its new name. IQSTEL also changed the Standard Industrial Classification (SIC Code) to 4813, Telephone Communications,
Except Radiotelephone.
On April 1, 2019, the Company entered into a Company
Purchase Agreement by and between the Company and the Ralf Kohler, which agreement provides for the purchase of 51% of the equity and
certain assets of SwissLink Carrier AG (SwissLink) (www.swisslink-carrier.com), a Swiss corporation, by the Company.
On February 10, 2020, the Company entered into a
Company Acquisition Agreement with Jesus Vega regarding the acquisition of 51% of the shares in QGlobal, LLC (QGlobal).
QGlobal is a company with the capacity to provide Short Messages (SMS), A2P and P2P messaging services.
On February 21, 2020, the Company entered into a
Company Acquisition Agreement with Miguel Scavo regarding the acquisition of 75% of the shares in ItsBchain, LLC (ItsBchain)
a company specialized in the development of Blockchain applications for telecommunications.
On April 15, 2020, the Company entered into a Company
Acquisition Agreement with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (loT Labs). The
loT Labs principal business activity is the sale of SMS between USA and Mexico.
On November 12, 2020, the Company entered into partnership
Agreement with Payment Virtual Mobile Solutions, LLC (PayVMS), a Delaware Corporation regarding the incorporation of Global Money One
Inc, in which IQSTEL owns 75% of the shares and PayVMS owns the remaining 25%. Global Money One is a Fintech company with a complete
infrastructure to provide top-up services, international remittances and prepaid debit cards.
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On October 1, 2021, the Company entered into an agreement
with Jesus Vega regarding the acquisition of the remaining 49% of the shares in QGlobal, LLC (QGlobal). By means of this
transaction IQSTEL increased its ownership of QGlobal to 100%.
On May 13, 2022, the Company entered into a Company
Acquisition Agreement regarding the acquisition of 51% of the shares inWhisl telecom LLC (Whisl).
On June 1, 2022, the Company entered into a Company
Acquisition Agreement regarding the acquisition of 51% of the shares inSmartbiz Telecom LLC (Smartbiz).
On March 20, 2023, the Company entered into a Memorandum
of Understanding (the MOU) with Got My Idol, Inc., a Delaware corporation (GotMy). The MOU concerns the formation
of a joint venture to implement the commercial development of Metaverse products using the current intellectual property
of Got My Idol, improving it, and packaged as products under the to be formed joint venture company and using the to be formed joint
venture brand that will be owned by the to be formed joint venture company. Our equity position in the new company will be 51% and GotMy
shall hold the remaining 49% of the to be formed joint venture entity.
On January 19, 2024, the Company entered into a Share
Purchase Agreement with Yukon River Holdings, Ltd. (Yukon River), a corporation formed under the laws of the British Virgin
Islands concerning the contemplated sale by Yukon River and the purchase by us of 51% of the ordinary shares Yukon River holds in QXTEL
LIMITED, a company incorporated in England and Wales.
On November 1, 2024, the Company entered into a binding
Memorandum of Understanding (the Agreement) with Mr. Ralf Koehler ("Ralf"), SwissLink Carrier Ltd., ("SwissLink")
and Impact Trading & Consulting LLC ("Impact") for the purpose of outlining the understanding regarding the exchange of
49% ownership in SwissLink for our shares.
On May 14, 2025, the Company started trading in The
NASDAQ Capital Market under the ticker symbol IQST. This milestone marks a defining moment in the companys journeyfrom
a telecom operator to a high-tech global enterprise.
On May 29, 2025, the Company entered into a Unit
Purchase Agreement (the Agreement) with Craig Span and GlobeTopper, LLC, a Delaware limited liability company ( GlobeTopper),
pursuant to which the Company agreed to acquire fifty-one percent (51%) of the membership interests of GlobeTopper. The closing occurred
on July 1, 2025.
**Item 1A. Risk Factors**
You should carefully consider the risks described
below together with all of the other information included in this registration statement before making an investment decision with regard
to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that
are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed.
In that case, you may lose all or part of your investment. In addition to other information in this registration statement and in other
filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating
our business as they may have a significant impact on our business, operating results and financial condition. If any of the following
risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely
affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should
not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results
or trends in future periods.*
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**Risks Relating to Business and Financial Condition**
**Because the Company has identified that substantial
doubt exists within their ability to continue as a going concern, there is an increased risk associated with an investment in our Company.**
We have continually operated at a loss with an accumulated
deficit of $43,276,006 as of December 31, 2025. We have not attained profitable operations and, even though the Company maintains a cash
position very close to one third year's operating expenses, we are dependent upon obtaining financing or generating revenue from operations
to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable
operations. We may seek additional funds through private placements of our common stock and/or through debt financing; however, we have
no formal commitments or arrangements for such funding, and there can be no assurance that financing will be available on acceptable
terms or at all. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue
as a going concern. As a result, there is a risk that you could lose the entire amount of your investment in our Company.
**Because we have a limited operating history,
you may not be able to accurately evaluate our operations.**
We have a limited operating history upon which to
evaluate the merits of investing in our Company, particularly with respect to our recent diversification into fintech and AI initiatives.
Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises.
The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in
connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated issues
relating to generating sufficient cash flow, managing rapid growth from acquisitions, integrating new business lines, and controlling
costs that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize
that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history
upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
**We are dependent on outside financing for the
continuation of our operations.**
Because we currently operate at a loss, we are completely
dependent on the continued availability of financing in order to continue our business operations. There can be no assurance that financing
sufficient to enable us to continue our operations will be available to us in the future.
We will need additional funds to complete further
development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues. There is no assurance
that any additional financing will be available or if available, on terms that will be acceptable to us.
Our failure to obtain future financing or to generate
sufficient revenue to meet our financial needs could result in our inability to continue as a going concern, and, as a result, our investors
could lose their entire investment.
**We may be unable to achieve some, all or any
of the benefits that we expect to achieve from our plan to expand our operations.**
In the future we may require additional financing
for capital requirements and growth initiatives, including integration of recent acquisitions and development of fintech and AI capabilities.
Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital
markets to maintain and expand our business. We may need to incur debt on terms and at interest rates that may not be as favorable. If
additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business
as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage
of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial
condition and results of operations.
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**As a growing Company, we have yet to achieve
a profit and may not achieve a profit in the near future, if at all.**
We have revenues but we are not profitable and may
not be in the near future, if at all. Further, many of our competitors have a significantly larger industry presence and revenue stream
but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions,
increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can
be assured.
**Risk Factors Related to Our International Operations**
**Our operations and performance depend significantly
on global and regional economic conditions and adverse economic conditions can adversely affect our business, results of operations and
financial condition.**
A deterioration in economic conditions and related
drivers of global uncertainty and change, such as reduced business activity, high unemployment, rising interest rates, housing prices,
and energy prices (including the price of gasoline), increased consumer indebtedness, lack of available credit, currency volatility,
the rate of inflation, and perceptions of the economy, as well as other factors, such as terrorist attacks, protests, looting, and other
forms of civil unrest, cyber-attacks and data breaches, public health emergencies (such as the COVID-19 pandemic and other epidemics),
extreme weather conditions and climate change, significant changes in the political environment, political instability, armed conflict
(such as the ongoing military conflict between Ukraine and Russia and tensions involving Iran and the Middle East) and/or public policy,
including increased state, local or federal taxation, tariffs, sanctions or trade restrictions could adversely affect our operating results
and financial condition.
Major public health issues, including pandemics,
have adversely affected, and could in the future materially adversely affect, us due to their impact on the global economy and demand
for our telecommunications and fintech services; the imposition of protective public safety measures, such as shutdowns and restrictive
health mandates; and disruptions in our operations, supply chain, network interconnections, and sales channels, resulting in interruptions
to our business and the supply of current products and offering of existing services, and delays in production ramps of new products
and development of new services.
In addition to an adverse impact on demand for our
regenerative products and services, uncertainty about, or a decline in, global or regional economic conditions can have a significant
impact on our suppliers, contract manufacturers, logistics providers, distributors, and other channel partners, and developers. Potential
outcomes include financial instability; inability to obtain credit to finance business operations; and insolvency.
As a result, our operating results may be impacted
by the health of the global economy. Volatility and disruption in global capital and credit markets may lead to slowdowns or declines
in client spending which could adversely affect our business and financial performance. Our business and financial performance, including
new business bookings and collection of our accounts receivable, may be adversely affected by current and future economic conditions
(including a reduction in the availability of credit, higher energy costs, rising interest rates, financial market volatility and lower
than expected economic growth) that cause a slowdown or decline in client spending. Reduced purchases by our clients or changes in payment
terms could adversely affect our revenue growth and cause a decrease in our cash flow from operations. Bankruptcies or similar events
affecting clients may cause us to incur bad debt expenses at levels higher than historically experienced. Further, volatility and disruption
in global financial markets may also limit our ability to access the capital markets at a time when we would like, or need, to raise
capital, which could have an impact on our ability to react to changing economic and business conditions. Accordingly, if global financial
and economic volatility continues or worsens, our business, results of operations and financial condition could be materially and adversely
affected.
Adverse economic conditions can also lead to increased
credit and collectability risk on our trade receivables; the failure of derivative counterparties and other financial institutions; limitations
on our ability to issue new debt; reduced liquidity; and declines in the fair values of our financial instruments. These and other impacts
can materially adversely affect our business, results of operations, financial condition and stock price.
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**We have substantial revenue derived from customers
outside of the United States, and we may lose revenues and market share due to exchange rate fluctuations and political and economic
changes related to foreign business.**
A significant portion of our revenue comes from customers
and traffic outside of the United States, including high volumes routed to Asia, Africa, and Latin America. Any company conducting foreign
business is always subject to economic, political and regulatory uncertainties and risks that are unique to each area of the world. Fluctuations
in exchange rates may also affect the prices that foreign customers are willing to pay and may put us at a price disadvantage compared
to other competitors. Potentially volatile shifts in exchange rates may negatively affect our financial position and results.
**We operate a global business that exposes us
to currency, economic and regulatory risks.**
Our revenue comes primarily from sales and traffic
outside the U.S. and our growth strategy is largely focused on emerging markets in Latin America, Asia, Africa, and the Middle East.
Our success delivering solutions and competing in international markets is subject to our ability to manage various risks and difficulties,
including, but not limited to:
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our ability
to effectively staff, provide technical support and manage operations in multiple countries; | |
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fluctuations in currency
exchange rates; | |
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timely collecting of
accounts receivable from customers located outside of the U.S.; | |
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trade restrictions,
political instability, disruptions in financial markets, and deterioration of economic conditions; | |
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compliance with the
U.S. Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; | |
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variations and changes
in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights;
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compliance with export
regulations, tariffs and other regulatory barriers. | |
**Our global operations subject us to many different
and complex laws and rules, and we may face difficulty in compliance.**
Due to our global operations across 20 countries
and recent acquisitions (including QXTEL with offices in the UK, Argentina, Dubai, Serbia, and Turkey), we are subject to many laws governing
international relations (including but not limited to the Foreign Corrupt Practices Act, the U.S. Export Administration Act the EU General
Data Protection Regulation, and the U.K. Modern Anti-Slavery Act); which prohibit improper payments to government officials and restrict
where and how we can do business, what information or products we can supply to certain countries, what personal information we can transfer,
and what information we can provide to a non-U.S. government. Although we have procedures and policies in place that should mitigate
the risk of violations of these laws, there is no guarantee that they will be sufficiently effective. If, and when we acquire new businesses,
we may not be able to ensure that the pre-existing controls and procedures meant to prevent violations of the rules and laws were effective,
and we may not be able to implement effective controls and procedures to prevent violations quickly enough when integrating newly acquired
businesses. Acquisitions of new businesses in new non-U.S. jurisdictions may also subject us to new regulations and laws, and we may
face difficulties ensuring compliance with these new requirements.
These challenges include: (1) compliance with complex
and changing laws, regulations and policies of governments that may impact our operations, such as foreign ownership restrictions, import
and export controls, tariffs, and trade restrictions; (2) compliance with U.S. and foreign laws that affect the activities of companies
abroad, such as anti-corruption laws, competition laws, currency regulations, and laws affecting dealings with certain nations; (3) the
difficulties involved in managing an organization doing business in many different countries; (4) rapid changes in government policy,
acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation; and (5) currency exchange rate fluctuations.
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**Risk Factors Related to the Business of the Company**
**Our telecommunications line of business is
highly sensitive to declining prices, which may adversely affect our revenues and margins.**
The telecommunications industry is characterized
by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute
termination costs.
A reduction in our prices to compete with any other
offers in the market will not always guarantee an increase in traffic, which may result in a reduction of revenue. If these trends in
pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses
and/or our gross margins. The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber have
adversely affected the use of traditional phone communications. We expect this IP-based service, which offers voice communications for
free, to continue to increase, which may result in increased substitution on our service offerings.
**Our subsidiary GlobeTopper operates in a rapidly
evolving digital payments and incentives market, and its business model may not continue to achieve market acceptance.**
****
GlobeToppers services depend on continued
adoption of digital gift cards, digital incentives, and related payment technologies by enterprises, distribution partners, and end users.
Market preferences may shift toward alternative incentive mechanisms, new payment technologies, or competing platforms. If GlobeTopper
fails to adapt its offerings to evolving customer needs or technological changes, its growth prospects and financial performance could
be adversely affected.
**Our products face intense competitive challenges,
including rapid technological changes, and pricing pressure from competitors, which could adversely affect our business.**
All of our product lines are subject to significant
competition from existing and future competitors, market conditions and technological change, or a combination of them, and our sales
revenues and gross margins may suffer protracted and serious declines with the result that we would likely incur protracted losses. Further,
the barriers to entry in several of our lines of business are relatively low, so we may face competition from new entrants who undercut
our prices with products or services that possess superior technological attributes or offer better value to customers. In this instance,
we could incur protracted and significant losses and holders of our common stock would suffer losses thereby.
From time to time, we may need to reduce our prices
in response to competitive and customer pressures and to maintain our market share. Competition and customer pressures may also restrict
our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit
margins decrease, as a result of a reduction in prices, increased input costs or other factors, and if we are unable to increase sales
volumes to offset those profit margin decreases. We may also need to increase spending on marketing, advertising and new product innovation
to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties
about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance market share and could result
in lower profitability.
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**Our operating results may fluctuate, which
could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.**
Our results of operations may fluctuate as a result
of a number of factors, some of which are beyond our control including but not limited to:
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general economic conditions
in the geographies and industries where we sell our services and conduct operations; legislative and regulatory policies where we
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the budgetary
constraints of our customers; seasonality; | |
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the success of our strategic
growth initiatives; | |
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costs associated with
the launching or integration of new or acquired businesses; | |
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timing of new product
introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; | |
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the mix, by state and
country, of our revenues, personnel and assets; | |
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movements in interest
rates or tax rates; | |
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of, accounting rules; | |
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litigation matters. | |
As a result of these factors, we may not succeed
in our business, and we could go out of business.
**The termination of our carrier agreements and
our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which
could reduce our revenues and profits.**
We rely upon our carrier agreements to provide our
telecommunications services to our customers. These carrier agreements are, in most cases for finite terms and, therefore, there can
be no guarantee that these agreements will be renewed at all or on favorable terms to us. Our ability to compete would be adversely affected
if our carrier agreements were terminated or we were unable to enter into carrier agreements in the future to provide our telecommunications
services to our customers, which could result in a reduction of our revenues and profits.
**Our subsidiary GlobeTopper relies
on access to a large catalog of merchant brands, and the loss of key merchant relationships could materially impact its business.**
GlobeToppers value proposition depends on
maintaining access to more than 4,000 merchant brands across multiple geographies. Merchant partners may change their distribution strategies,
impose new restrictions, or terminate relationships. Any reduction in catalog breadth, particularly among high-demand brands, could reduce
client demand and negatively affect revenue.
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**Our customers could experience financial difficulties,
which could adversely affect our revenues and profitability if we experience difficulties in collecting our receivables.**
As a provider of international long-distance services,
we depend upon sales of transmission and termination of traffic to other long-distance providers and the collection of receivables from
these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness
in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers
our profitability may be substantially reduced. While our most significant customers, from a revenue perspective, vary from quarter to
quarter, our 37 largest customers (representing approximately 5.37% of our total customer base) collectively accounted for 90% of total
consolidated revenues in fiscal year 2025. Although we are somewhat insulated from nonpayment because approximately 30% of our revenue
is prepaid, this concentration of revenue increases our exposure to non-payments and we may experience significant write-offs if any
of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability.
**We may fail to successfully integrate our acquisitions
or otherwise be unable to benefit from pursuing acquisitions.**
We intend to make acquisitions of complementary (including
competitive) businesses, products and technologies. However, any future acquisitions may result in material transaction costs, increased
interest and amortization expenses related to goodwill and other intangible assets, increased depreciation expenses and increased operating
expenses, any of which could have an adverse effect on our operating results and financial position. Acquisitions will require integration
of acquired assets and management into our operations to realize economies of scale and control costs. Acquisitions may involve other
risks, including diversion of management attention that would otherwise be available for ongoing internal development of our business
and risks inherent in entering markets in which we have no or limited prior experience. In connection with future acquisitions, we may
make potentially dilutive issuances of equity securities. In addition, consummation of acquisitions may subject us to unanticipated business
uncertainties, contingent liabilities or legal matters relating to those acquired businesses for which the sellers of the acquired businesses
may not fully indemnify us. There can be no assurance that our business will grow through acquisitions, as anticipated.
We believe there are meaningful opportunities to
grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively
identifying and acquiring businesses with complementary products and services. We may be unable to identify, negotiate, and complete
suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully
integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of
the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:
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diversion
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use of resources that
are needed in other areas of our business; | |
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in the case of an acquisition,
implementation or remediation of controls, procedures and policies of the acquired company; | |
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in the case of an acquisition,
difficulty integrating the accounting systems and operations of the acquired company; | |
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in
the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and
additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company and
difficulty converting the customers of the acquired company onto our systems, platforms and contract terms, including disparities
in the revenues, licensing, support or professional services model of the acquired company; | |
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in
the case of an acquisition, difficulty integrating, supporting or enhancing acquired product lines or services, including difficulty
in transitioning acquired solutions developed with different source code architectures to our integrated platforms, difficulty in
supporting feature development across our full suite of house-built and acquired solutions and strain on resources from marketing
and supporting multiple platforms prior to integration; | |
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in
the case of an acquisition, retention and integration of employees from the acquired company, and preservation of our corporate culture; | |
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in
the case of an acquisition, reliance on certain existing executive teams of acquired companies in new industries; | |
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in
the case of an acquisition or divestiture, difficulty delivering on our product strategy, including building a platform that enables
us to drive value across our full ecosystem of merchants, suppliers and consumers; | |
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unforeseen costs or
liabilities; | |
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adverse
effects to our existing business relationships with partners and customers as a result of the acquisition, investment or divestiture; | |
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the possibility of adverse
tax consequences; | |
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in
the case of an acquisition or divestiture, we may not be able to secure required regulatory approvals or otherwise satisfy closing
conditions for a proposed transaction in a timely manner, or at all; | |
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fluctuations
in the value of our investments, impairment to the value of our investments, or the failure to realize a return on such investments; | |
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regulatory
risks, litigation or other claims inherited from or arising in connection with the acquired company, investment or divestiture; | |
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in
the case of a divestiture, unforeseen loss of institutional knowledge, resources, know-how, or other assets; | |
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in
the case of a divestiture, potential contractual obligations may trigger, such as change of control obligations, which may negatively
impact our ability to execute on such divestiture, our business, our financial condition, or our operating results; and | |
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in
the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular
economic, currency, political and regulatory risks associated with specific countries. | |
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We
may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent that such
opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable
to us. In addition, the acquisitions and investments that we consummate may fail to achieve our strategic objectives, in which case
we may shut down, divest, or otherwise exit the acquired business or investment, which could harm our reputation and adversely affect
our financial position and results of operations. | |
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**Natural disasters, terrorist acts, acts of
war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt
our operations.**
Our inability to operate our telecommunications networks
because of the events listed above, even for a limited period, may result in loss of revenue, significant expenses, which could have
a material adverse effect on our results of operations and financial condition.
We could be harmed by network disruptions, security
breaches, or other significant disruptions or failures of our IT infrastructure and related systems. To be successful, we need to continue
to have available a high capacity, reliable and secure network for our and our customers use. As any other company, we face the
risk of a security breach, whether through cyber-attacks, malware, computer viruses, sabotage, or other significant disruption of our
IT infrastructure and related systems. There is a risk of a security breach or disruption of the systems we operate, including possible
unauthorized access to our proprietary or classified information. We are also subject to breaches of our network resulting in unauthorized
utilization of our services, which subject us to the costs of providing those services, which are likely not recoverable. The secure
maintenance and transmission of our information is a critical element of our operations. Our information technology and other systems
that maintain and transmit customer information may be compromised by a malicious third-party penetration of our network security, or
impacted by advertent or inadvertent actions or inactions by our employees, or those of a third-party service provider or business partner.
As a result, our or our customers information may be lost, disclosed, accessed or taken without the customers consent,
or our services may be used without payment.
Although we make significant efforts to maintain
the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures
will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the
growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or
to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted
and successful cyber-attacks in the past. We have researched the situation and do not believe that any material internal or customer
information has been compromised.
**If we are unable to successfully manage growth,
our operations could be adversely affected.**
Our progress is expected to require the full utilization
of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth
effectively will depend on our ability to improve and expand operations, including our financial and management information systems,
and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business,
we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies
and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient
manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure
to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating
plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with
our current or potential customers.
**Risks Related to Legal Uncertainty**
**We may be subject to securities litigation,
which is expensive and could divert management attention.**
In the past, companies that have experienced volatility
in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation
in the future. Litigation of this type could result in substantial costs and diversion of managements attention and resources,
which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.
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**We may be subject to tax and regulatory audits
which could subject us to liabilities.**
We are subject to tax and regulatory audits which
could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory
authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date
the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by
the auditing entity.
**Changes in regulations or user concerns regarding
privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.**
Federal, state, and international laws and regulations
govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users particularly
in our fintech and telecommunications operations. The use of consumer data by online service providers is a topic of active interest
among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws
requiring notification to users where there is a security breach for personal data, such as Californias Information Practices
Act. We face similar risks in international markets where our products and services are offered. Any failure, or perceived failure, by
us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international
privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings
or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of
users, which could potentially have an adverse effect on our business.
In addition, various federal, state and foreign legislative
or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection
issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely
impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating
that user data regarding users in their country be maintained in their country (data localization requirements). In addition, the EU
General Data Protection Regulation (GDPR) and similar frameworks impose operational and compliance requirements that differ from those
currently in place in other jurisdictions and include significant penalties for non-compliance.
The interpretation and application of privacy, data
protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally.
These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices,
complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted
and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business
practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause
us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results.
**We may be subject to legal liability associated
with providing online services or content.**
We host and provide a wide variety of services and
technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos,
videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically
and internationally. The law relating to the liability of providers of online services and products for activities of their users is
currently unsettled both within the United States and internationally. We may be subject to domestic or international actions alleging
that certain content we have generated or third-party content that we have made available within our services violates laws in domestic
and international jurisdictions.
It is also possible that if any information provided
directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For example,
we offer web-based e-mail services and fintech operations, which expose us to potential risks, such as liabilities or claims, by our
users and third parties, resulting from unsolicited communications, lost or misdirected messages, illegal or fraudulent use of e-mail,
alleged violations of policies, property interests, privacy protections, including civil or criminal laws, or interruptions or delays
in service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based
services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services
or technologies are used to spread or facilitate malicious or harmful code or applications.
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Investigating and defending these types of claims
are expensive, even if the claims are without merit or do not ultimately result in liability and could subject us to significant monetary
liability or cause a change in business practices that could negatively impact our ability to compete.
**Security breaches, denial of service attacks,
or other hacking and phishing attacks on our systems or other security breaches, including internal security failures, could harm our
reputation or subject us to significant liability, and adversely affect our business and financial results.**
As a critical infrastructure service provider in
telecommunications and fintech, we transmit large amounts of data over our systems, and process and store highly sensitive customer data.
Consequently we, our third-party service providers, and our customers operate in an industry that is prone to cyber-attacks. Despite
our efforts to prevent these events, some of these attacks could result in a material adverse impact to our operations due to distributed
denial of service attacks, ransomware attacks, malware, virus, credential harvesting, man-in-the-middle attacks, or social engineering
attacks. We do not believe these incidents are likely to have a material adverse impact on our ability to serve our customers or our
business, operations or financial results.
Cyber-attacks on our systems may stem from a variety
of sources and take many forms. Cyber-attacks can put at risk personally identifiable information, customer data or protected information,
thereby implicating stringent domestic and foreign data protection laws. These threats may also arise from failure or intrusions of systems
owned, operated or controlled by other unaffiliated third-party operators, upon whom we are materially reliant to operate our business.
Various other factors could intensify these risks, including, (i) our maintenance of information in digital form stored on servers connected
to the Internet, (ii) our use of open- and software-defined networks, (iii) the challenges of operating and maintaining our complex multi-continent
network composed of legacy and acquired properties, which is more difficult to safeguard than newer fully-integrated networks, (iv) growth
in the size and sophistication of our customers and their service requirements, (v) increased use of our network due to greater demand
for data services, (vi) the large number of our employees working from remote locations, (vii) our IT support agreements with purchasers
of businesses we have divested over the past few years and (viii) as further discussed below, the difficulty of defending against increasingly
sophisticated attacks.
Cyber-attacks could (i) disrupt the proper functioning
of our networks and systems, which could in turn disrupt the operations of our customers, (ii) result in the destruction, loss, theft,
misappropriation or release of proprietary, confidential, sensitive, classified or otherwise valuable information of ours, our employees,
our customers or our customers end users, (iii) require us to notify customers, regulatory agencies or the public of data incidents,
(iv) damage our reputation or result in a loss of business, (v) require us to provide credits for future service to our customers or
to offer expensive incentives to retain customers, (vi) subject us to claims by our customers or regulators for damages, fines, penalties,
license or permit revocations or other remedies, (vii) result in the loss of industry certifications or (viii) require significant management
attention or financial resources to remedy the resulting damages or to change our systems. Any or all of the foregoing developments could
have a material adverse impact on us.
We believe the importance of our network to global
internet data flows will continue to make it a target to a wide range of threat actors, including nation state actors and other advanced
persistent threat actors. Moreover, the risk of incidents is likely to continue to increase due to several factors, including (i) the
increasing use of machine learning, AI and other sophisticated techniques to initiate cyber and phishing attacks, (ii) the wider accessibility
of cyber-attack tools that can circumvent security controls and evade detection, which can delay and limit our ability to accurately
assess and fully remediate the impact of the attack, and (iii) growing threats from Chinese, Russian and other state actors due to heightened
geopolitical tensions and rivalries, and the attendant increased possibility of cyber warfare targeting us in the event of a direct conflict.
It should also be noted that defenses against cyber-attacks currently available to us and others are unlikely to prevent intrusions by
a highly-determined, highly-sophisticated threat actor. Thus far, none of our past security incidents have had a material adverse effect
on us, and we continue to take steps designed to limit our cyber risks. Nonetheless, we cannot assure you that future cyber incidents
or events will not ultimately have a material adverse impact on our business, operations or financial results.
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**Provisions in the Nevada Revised Statutes and
our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of
their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.**
Members of our board of directors and our officers
will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant
to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138
of the Nevada Revised Statutes provides that a director or officer is not individually liable to the Company or its stockholders or creditors
for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1)
the directors or officers act or failure to act constituted a breach of his or her fiduciary duties as a director or officer
and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law. This provision is intended
to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits
alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our
directors or officers even if they have breached their fiduciary duty of care. In addition, our Bylaws allow us to indemnify our directors
and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means
that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses
they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification
obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations
and cash flows, and adversely affect prevailing market prices for our common stock.
**Nevada law and certain anti-takeover provisions
of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even
if it would benefit our shareholders.**
Certain provisions of Nevada law may have an anti-takeover
effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her
best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety
by reference to Nevada law.
The issuance of shares of preferred stock, the issuance
of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be
used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business
combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances,
the issuance of preferred stock could adversely affect the voting power of holders of our common stock.
Under Nevada law, a director, in determining what
he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests
of the corporations shareholders in any takeover matter but may also, in his discretion, may consider any of the following:
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The interests of the corporations
employees, suppliers, creditors and customers; | |
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The economy of the state and nation; | |
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The impact of any action
upon the communities in or near which the corporations facilities or operations are located; | |
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The long-term interests
of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence
of the corporation; and | |
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(v) |
Any other factors relevant to promoting or preserving
public or community interests. | |
Because our board of directors is not required to
make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders,
our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders
might believe to be in their best interests or in which such shareholders might receive a premium for their stock over the then market
price of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock,
unless otherwise required by law or applicable stock exchange rules.
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**As a smaller reporting company, we areexempt
from certain disclosure requirements, which could make our Common Stock less attractive to potential investors.**
We are a smaller reporting company, and we will remain
a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates
is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100 million
during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million
measured on the last business day of our second fiscal quarter.
Since we are no longer eligible for emerging growth
company status, we will be subject to the reporting obligations of a smaller reporting company and, if we continue to grow, we may be
subject to increased reporting requirements applicable to accelerated filers, which are more onerous than those applicable to smaller
reporting companies.
Similar to emerging growth companies, smaller reporting
companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section
404, and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of
audited financial statements and not being required to provide selected financial data, supplemental financial information or risk factors.
These scaled disclosure requirements are less comprehensive than issuers that are not smaller reporting companies which could make our
Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.
**If we fail to maintain an effective system
of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results
of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common shares.**
We are required, under Section 404 of the Sarbanes-Oxley
Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This
assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more
than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected
on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public
accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain a smaller reporting
company, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm
attestation requirement.
Our compliance with Section 404 will require that
we incur substantial accounting expense and expend significant management efforts. We may not be able to complete our evaluation, testing
and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses
in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
Our management identified the following material
weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate
segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial
reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We cannot assure you that there will not be material
weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal
control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations
or cash flows. This may expose us, including individual executives, to potential liability which could significantly affect our business.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public
accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once
that firm begins its audits of internal control over financial reporting, we could lose investor confidence in the accuracy and completeness
of our financial reports, the market price of our common shares could decline, and we could be subject to sanctions or investigations
by FINRA, the SEC, or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting,
or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the
capital markets.
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**Our disclosure controls and procedures may
not prevent or detect all errors or acts of fraud.**
Our disclosure controls and procedures are designed
to reasonably assure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of
1934 is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in
the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the
controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error
or fraud may occur and not be detected.
**Deficiencies in disclosure controls and procedures
and internal control over financial reporting could result in a material misstatement in our financial statements.**
We could be adversely affected if there are deficiencies
in our disclosure controls and procedures or in our internal controls over financial reporting. The design and effectiveness of our disclosure
controls and procedures and our internal controls over financial reporting may not prevent all errors, misstatements or misrepresentations.
Consistent with other entities in similar stages of development, we have a limited number of employees currently in the accounting group,
limiting our ability to provide for segregation of duties and secondary review. A lack of resources in the accounting group could lead
to material misstatements resulting from undetected errors occurring from an individual performing primarily all areas of accounting
with limited secondary review. Deficiencies in internal controls over financial reporting which may occur could result in material misstatements
of our results of operations, restatements of financial statements, other required remediations, a decline in the price of our common
shares, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
**Risks Relating to Our Securities**
**We have the right to issue additional common
stock and preferred stock without the consent of stockholders which would have the effect of diluting investors ownership and
could decrease the value of their investment.**
We have additional authorized, but unissued shares
of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders
percentage ownership of our Company.
In addition, our certificate of incorporation authorizes
the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights,
preferences, designations and limitations of which may be set by the Board of Directors. Our certificate of incorporation has authorized
issuance of up to 26,000,000 shares of common stock and up to 1,200,000 shares of preferred stock in the discretion of our Board.
The shares of authorized but unissued preferred stock
may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations
and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock.
Such terms could include, among others, preferences as to dividends and distributions on liquidation, conversion rights, voting rights
and others, potentially diluting common stockholders or adversely affecting the market price of our common stock.
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**Our largest shareholders, officers and directors
and related parties, Leandro Iglesias and Alvaro Cardona, have substantial control over us and our policies as a result of their holdings
in Series A Preferred Stock, and will be able to influence all corporate matters, which might not be in other shareholders interests.**
There were 10,000 shares of Series A Preferred Stock
outstanding as of the date of this Annual Report, with Mr. Iglesias holding 7,000 shares and Mr. Cardona the other 3,000 shares. There
were 5,070,743 shares of our common stock issued and outstanding as of the date of this Annual report, with Mr. Iglesias holding 18,436
shares and Mr. Cardona holding 18,066 shares, which together accounts for just over 0.719% of our outstanding common stock. Holders of
Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders
at a rate of 51% of the total vote of shareholders, including the election of directors. Our common stock is entitled to one vote per
share on all matters submitted to a vote of the stockholders, including the election of directors. By virtue of their ownership of Series
A Preferred Stock and common stock, they are able to vote at a rate of approximately 51.35% of the total vote of shareholders. They are
therefore able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors,
the approval of significant corporate transactions, and any change of control of our Company. They could prevent transactions, which
would be in the best interests of the other shareholders. Their interests may not necessarily be in the best interests of the shareholders
in general.
**We do not expect to pay cash dividends in the foreseeable future.
Any return on investment may be limited to the value of our common stock.**
We do not anticipate paying cash dividends on our
common stock in the foreseeable future. The payment cash of dividends on our common stock will depend on earnings, financial condition
and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay cash
dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
**Risks Related to the Market for our Securities**
**If a market for our common stock does not develop,
stockholders may be unable to sell their shares.**
Our common stock is listed on the Nasdaq Capital
Market under the symbol IQST. Although our shares are listed on a national securities exchange, trading in our common stock
has historically been limited, and there can be no assurance that an active or sustained trading market will develop. Limited liquidity
may make it difficult for stockholders to sell their shares without adversely affecting the market price. Unless we are able to generate
and maintain increased investor interest in our securities, the market price of our common stock may continue to experience significant
volatility.
**The market price of our common stock is likely
to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.**
Our stock price is subject to a number of factors,
including:
Technological
innovations or new products and services by us or our competitors;
Government
regulation of our products and services;
The
establishment of partnerships with other companies;
Intellectual
property disputes;
Additions
or departures of key personnel;
Sales
of our common stock or preferred stock;
Our
ability to integrate operations, technology, products and services;
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Our
ability to execute our business plan;
Operating
results below or exceeding expectations;
Whether
we achieve profits or not;
Loss
or addition of any strategic relationship;
Industry
developments;
Economic
and other external factors; and
Period-to-period
fluctuations in our financial results.
Our stock price may fluctuate widely as a result
of any of the above. In addition, the securities markets have from time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely
affect the market price of our common stock.
**If our common stock were to be delisted from
the Nasdaq Capital Market, we could become subject to the SECs penny stock rules, which could reduce the level of
trading activity in our stock.**
Although our common stock is currently listed on the Nasdaq Capital Market and therefore exempt from the SECs penny stock rules,
any delisting could result in our securities being subject to those rules. The SEC generally defines a penny stock as an
equity security with a market price of less than $5.00 per share, subject to certain exemptions. The penny stock rules impose additional
sales practice and disclosure requirements on broker-dealers that effect transactions in penny stocks, including providing a standardized
risk disclosure document, disclosing current bid and ask quotations, detailing broker-dealer compensation, and obtaining a written determination
of suitability from the purchaser. These requirements could reduce the level of trading activity in our stock and make it more difficult
for investors to sell their shares if our securities become subject to the penny stock rules.
**We will likely conduct further offerings of
our equity securities in the future, in which case your proportionate interest may become diluted.**
We will likely be required to conduct equity offerings
in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares
are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate
continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common
stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
**If securities or industry analysts do not publish
research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.**
The trading market for our common stock will, to
some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have
any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares,
our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us,
we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
**Item 1B. Unresolved Staff
Comments**
None.
| | 27 | | |
| Table of Contents | |
**Item 1C. Cybersecurity**
As a technology and communications company that globally
transmits large amounts of information over our networks, we recognize the critical importance of maintaining the security and integrity
of information and systems under our control. We view cybersecurity risk as one of our principal enterprise-wide risks, subject to control
and monitoring at various levels of management throughout our Company. We dedicate resources commensurate with our risk profile and business
size to programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats.
As described in Item 1A Risk Factors,
several features of our operations heighten our susceptibility to cyber-attacks, including (i) our material reliance on systems owned,
operated or controlled by unaffiliated third-party operators (including carriers and network partners), (ii) our processing and storage
of large amounts of sensitive customer data in our telecommunications and fintech operations, and (iii) the complexity of our multi-continent
network composed of legacy and acquired systems. Cyber-attacks on our systems may be initiated by a wide variety of intruders, including
employees, cyber-criminals, nation state actors and other advanced persistent threat actors, and may include attempts by outside parties
to gain access to sensitive data that is stored in or transmitted across our network. Cyber-attacks can take many forms, including computer
hackings, computer viruses, ransomware, worms or other destructive or disruptive software, denial of service attacks, or other malicious
activities.
We have implemented cybersecurity risk management
procedures, in accordance with our risk profile and business size. We rely on our information technology to operate our business. As
such, we have policies and processes designed to protect our information technology systems, some of which are managed by third parties,
and resolve issues in a timely manner in the event of a cybersecurity threat or incident.
We have designed our business applications to minimize
the impact that cybersecurity incidents could have on our business and have identified back-up systems where appropriate. We seek to
further mitigate cybersecurity risks through a combination of monitoring and detection activities, use of anti-malware applications,
employee training, quality audits and communication and reporting structures, among other processes. We have a trained group of people
to carry out the activities of monitoring and detection of cybersecurity threats and respond to any cybersecurity threats or incidents.
The Head of IT department is responsible for oversight of cybersecurity risks and addressing potential cybersecurity risks to business
programs, employees, clients, vendors and partners. The Head of IT Department reports to our Chief Executive Officer who reports to the
Audit Committee at the board-level, as appropriate.
As of December 31, 2025, the Company has not identified
any cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, our business strategy, results
of operations, or financial condition.
The Company continues to monitor its systems and
third-party environments for potential threats and to evaluate and enhance our cybersecurity controls as our business evolves, including
following acquisitions and the expansion of fintech services.
**Item 2. Properties**
We do not own any material real property. Our principal
executive offices are located at 300 Aragon Avenue, Suite 375, Coral Gables, FL 33134. We lease office and operational space in multiple
locations to support our global operations, including facilities in the United States, Argentina, the United Kingdom, Switzerland, Turkey,
and Dubai. These leases are generally short-term or cancellable with reasonable notice and are used for administrative, technical, and
network operations. The disclosures concerning our leased properties and operational facilities are contained in Item 1. Business above
and incorporated herein by reference. We believe our current facilities are adequate for our present needs and that suitable additional
or alternative space will be available as required.
**Item 3. Legal Proceedings**
We are not currently a party to any material legal
proceedings. From time to time, we may become involved in various legal proceedings arising in the ordinary course of our business. We
have no current legal proceedings that we believe would have a material adverse effect on our business, financial condition, or results
of operations.
**Item 4. Mine Safety Disclosures**
Not applicable.
| | 28 | | |
| Table of Contents | |
**PART II**
**Item 5. Market for Registrants
Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities**
**Market Information**
Our common stock is listed on The Nasdaq Capital
Market under the symbol IQST, where it has traded since May 14, 2025. Prior to that date, our common stock was quoted on
the OTCQX marketplace.
The Company did not repurchase any shares of its
common stock during the fiscal year ended December 31, 2025.
The following table sets forth the high and low sales
prices per share of our common stock for the periods indicated. These prices reflect inter-dealer prices, without retail mark-up, markdown
or commission, and may not necessarily represent actual transactions.
|
Fiscal
Year Ending December 31, 2025 | |
|
| |
| |
| |
|
Quarter
Ended | |
High $ | |
Low $ | |
|
| December
31, 2025 | | |
| 3.050 | | |
| 2.840 | | |
|
| September
30, 2025 | | |
| 6.850 | | |
| 6.200 | | |
|
| June
30, 2025 | | |
| 9.825 | | |
| 9.550 | | |
|
| March
31, 2025 | | |
| 12.000 | | |
| 11.760 | | |
|
Fiscal
Year Ending December 31, 2024 | |
|
| |
| |
| |
|
Quarter
Ended | |
High $ | |
Low $ | |
|
| December
31, 2024 | | |
| 24.752 | | |
| 21.200 | | |
|
| September
30, 2024 | | |
| 14.320 | | |
| 13.040 | | |
|
| June
30, 2024 | | |
| 22.624 | | |
| 19.760 | | |
|
| March
31, 2024 | | |
| 31.600 | | |
| 28.000 | | |
On March 31, 2026, the last sales price per share of our common stock
was $1.59.
**Holders of Our Common Stock**
As of March 31, 2026, we had 5,070,743 shares of
our common stock issued and outstanding, held by approximately 82 stockholders of record at our transfer agent, with additional stockholders
holding our shares in street name.
**Dividends**
We currently intend to retain future earnings
for the operation of our business. We have never declared or paid cash dividends on our common stock, and we do not anticipate paying
any cash dividends in the foreseeable future.
In the event that a dividend is declared,
common stockholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common
stock by our board of directors from funds legally available.
| | 29 | | |
| Table of Contents | |
There are no restrictions in our articles of incorporation
or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where,
after giving effect to the distribution of the dividend:
|
|
1. |
We would not
be able to pay our debts as they become due in the usual course of business; or | |
|
|
2. |
Our total assets
would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of stockholders who
have preferential rights superior to those receiving the distribution. | |
**Securities Authorized for Issuance under Equity
Compensation Plans**
We do not have an equity compensation plan.
**Recent Sales of Unregistered Securities**
During the year ended December 31, 2025, the Company
issued2,130,808 shares of common stock valued at fair market value on issuance as follows:
|
|
|
475,125
shares for conversion of Series D Preferred Stock; | |
|
|
|
| |
|
|
|
7,500 shares for compensation
to our directors valued at $81,813; | |
|
|
|
| |
|
|
|
1,271,720 shares for
conversion of debt of $5,640,893; | |
|
|
|
| |
|
|
|
264,980 shares for settlement
of debt of $1,886,658; | |
|
|
|
| |
|
|
|
32,400 shares for service
valued at $223,200; | |
|
|
|
| |
|
|
|
3,563 shares for common
stock payable value at $82,194; | |
|
|
|
| |
|
|
|
75,529 shares for stock
dividend valued at $500,000; | |
|
|
|
| |
|
|
|
(9) shares for reverse
stock split adjustment. | |
These securities were issued pursuant to Section
4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities
for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed
investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock
certificates with the appropriate restrictive legend affixed to the restricted stock.
**Item 6. [Reserved]**
**Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations**
Certain statements in this Annual Report constitute
forward-looking statements. See " Forward-Looking Statements" immediately prior to Item 1 of Part I of this report for factors
relating to these statements and "Risk Factors" in Item 1A of Part I of this report for a discussion of certain risk factors
applicable to our business, financial condition, results of operations, liquidity or prospects.
| | 30 | | |
| Table of Contents | |
**Results of Operations for the Years Ended December
31, 2025 and 2024**
**Net Revenue**
Our net revenue for the year ended December 31, 2025
was $316,899,498 as compared with $283,220,442 for the year ended December 31, 2024. These numbers reflect an increase of 12% year over
year on our consolidated Revenues.
When looking at the numbers by subsidiary, we have
the following breakout for the years ended December 31, 2025 and 2024:
|
| |
Revenue
Year Ended December 31, | |
|
Subsidiary | |
2025 | |
2024 | |
|
IQSTEL Inc | |
$ | 220,755 | | |
$ | | | |
|
Etelix.com USA, LLC | |
| 31,748,230 | | |
| 75,405,682 | | |
|
SwissLink Carrier AG | |
| 22,394,346 | | |
| 13,349,998 | | |
|
QGlobal LLC | |
| 1,766,881 | | |
| 1,694,891 | | |
|
IoT Labs LLC | |
| 117,370,459 | | |
| 94,170,000 | | |
|
Smartbiz Telecom | |
| 12,743,474 | | |
| 21,435,486 | | |
|
Whisl Telecom | |
| 2,916,447 | | |
| 4,301,577 | | |
|
QXTEL Limited | |
| 141,624,991 | | |
| 95,681,790 | | |
|
GlobeTopper LLC | |
| 27,955,101 | | |
| | | |
|
| |
$ | 358,740,684 | | |
$ | 306,039,424 | | |
|
| |
| | | |
| | | |
|
Intercompany
eliminations | |
| (41,841,186 | ) | |
| (22,818,982 | ) | |
|
| |
$ | 316,899,498 | | |
$ | 283,220,442 | | |
The continued growth in revenue is the
result of the development of our commercial strategy, including the strengthening of our commercial and operational activities, as well
as intercompany synergies developed throughout the year. The largest revenue concentration comes from IOT, which increased by 25% compared
to last year, and QXTEL, which since its inclusion in mid-2024 continues to represent the highest share of revenue, accounting for 39%
of the total volume for this period. The increase also includes the contribution from the newly acquired subsidiary, GlobeTopper LLC,
which was consolidated starting July 1, 2025.
In 2024, our revenue was entirely derived
from telecommunications services, with approximately 33.91% generated from SMS and 66.09% from voice. In 2025, our revenue mix evolved
meaningfully: SMS increased to 36.6%, voice represented 54.51%, and our newly launched fintech operations contributed 8.89% of total
revenue. The continued expansion of SMS traffic is strategically beneficial, as SMS services generally carry higher gross margins than
traditional voice offerings, supporting improvements in our overall profitability profile. In addition, the introduction of fintech as
a new revenue-generating segment reflects the early stages of a broader diversification strategy, reducing reliance on a single business
line and positioning the Company with a more balanced and resilient revenue base over time.
Intercompany eliminations rose as well,
driven by higher transactions among group entities, which are removed to avoid double counting at the consolidated level.
These intercompany transactions are part of our strategy
to optimize operations across subsidiaries by leveraging more efficient routing alternatives for our voice and SMS services, cost reductions,
and improved service delivery. This synergy among our entities strengthens our position in the market and contributes to enhanced gross
margin results.
| | 31 | | |
| Table of Contents | |
**Cost of Revenue**
Our total cost of revenue for the year ended
December 31, 2025 was $307,442,244 as compared with $274,948,693 for the year ended December 31, 2024.
When looking at the numbers by subsidiary, we have
the following breakout for the years ended December 31, 2025 and 2024:
|
| |
Cost of
Revenue Year Ended December 31, | |
|
Subsidiary | |
2025 | |
2024 | |
|
IQSTEL Inc | |
$ | 52,770 | | |
$ | | | |
|
Etelix.com USA, LLC | |
| 31,097,001 | | |
| 74,848,503 | | |
|
SwissLink Carrier AG | |
| 21,568,250 | | |
| 12,541,394 | | |
|
QGlobal LLC | |
| 1,183,985 | | |
| 1,300,453 | | |
|
IoT Labs LLC | |
| 116,258,375 | | |
| 92,196,261 | | |
|
Smartbiz Telecom | |
| 11,801,401 | | |
| 20,508,454 | | |
|
Whisl Telecom | |
| 2,441,573 | | |
| 3,606,438 | | |
|
QXTEL Limited | |
| 136,995,565 | | |
| 92,486,843 | | |
|
GlobeTopper LLC | |
| 27,403,231 | | |
| | | |
|
| |
$ | 348,802,151 | | |
$ | 297,488,346 | | |
|
| |
| | | |
| | | |
|
Intercompany
eliminations | |
| (41,359,907 | ) | |
| (22,539,653 | ) | |
|
| |
$ | 307,442,244 | | |
$ | 274,948,693 | | |
Our cost of revenue consists of direct charges from
vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls and SMS
terminated in vendors network, as well as the costs of the digital prepaid products related to Fintech (GlobeTopper) operations.
The behavior in the costs shows a logical correlation
with the behavior of the revenue commented above. We have reached a higher volume of revenue and every additional unit sold (Telecom
and Fintech) has its corresponding termination cost.
Our cost of revenue for the year ended December 31,
2025 was $307,442,244 as compared with $ 274,948,693 for the year ended December 31, 2024. These numbers reflect an increase of 12% year
over year.
The consolidation of GlobeTopper, along with the
traffic volumes generated by QXTEL and the portfolio reorganization among subsidiaries, highlights the synergies created through the
groups commercial and operational integration. As a result, intercompany transactions have increased, supporting our strategy
to optimize routing and improve cost efficiency. This is expected to contribute positively to future revenue and margin performance.
**Gross Margin**
Our gross margin, which is simply the difference
between our revenues and our cost of sales, discussed above, increased from $8,271,749 in 2024 to $9,457,254 in 2025, which is an increase
of 14% year-over-year.
The Companys traffic mix continues to shift
toward higher-margin services, reinforcing the strategic evolution of its telecom portfolio. In 2025, the business carried 17.4 billion
SMS and short-code messages, up from 13.9 billion in 2024, an increase of 3.5 billion messages or 25.18% year over year. While this growth
follows an exceptional 32.94% expansion from 2023 to 2024, the sustained double-digit trajectory highlights the strengthening role of
SMS within the Companys service mix. Because SMS consistently delivers superior gross margins compared to traditional voice, this
shift not only expands volumes but also enhances the overall profitability profile of the communications segment, signaling a deliberate
and effective enrichment of the Companys product offering
| | 32 | | |
| Table of Contents | |
This trend is reflected in our quarterly performance:
total gross margin increased from 2.74% in the fourth quarter of 2024 to 3.46% in the fourth quarter of 2025, representing a 26.17% year-over-year
improvement.
|
| |
Cost of Revenue for the Three Months
Ended December 31, | |
|
Description | |
2025 | |
2024 | |
|
Revenue | |
$ | 84,215,893 | | |
$ | 98,920,186 | | |
|
Cost of Revenue | |
| 81,305,798 | | |
| 96,211,006 | | |
|
| |
$ | 2,910,095 | | |
$ | 2,709,180 | | |
|
Gross margin % | |
| 3.46 | % | |
| 2.74 | % | |
**Operating Expenses**
Operating expenses for the year ended December 31, 2025 were $13,709,264
as compared with $9,105,813 for the year ended December 31, 2024. The detail by major category is reflected in the table below:
|
| |
Operating
Expenses Year Ended December 31, | |
|
Category | |
2025 | |
2024 | |
|
Salaries, Wages and Benefits | |
$ | 3,803,370 | | |
$ | 3,639,319 | | |
|
Technology | |
| 1,617,232 | | |
| 1,192,185 | | |
|
Professional Fees | |
| 916,349 | | |
| 1,110,773 | | |
|
Legal & Regulatory | |
| 351,570 | | |
| 328,500 | | |
|
Travel & Events | |
| 286,176 | | |
| 234,295 | | |
|
Public Cost | |
| 120,945 | | |
| 102,773 | | |
|
Advertising | |
| 1,878,274 | | |
| 968,206 | | |
|
Bank Services and Fees | |
| 238,725 | | |
| 211,591 | | |
|
Depreciation and Amortization | |
| 627,667 | | |
| 499,535 | | |
|
Office, Facility and Other | |
| 1,370,092 | | |
| 529,892 | | |
|
Insurances | |
| 18,902 | | |
| 63,534 | | |
|
Bad debt expense | |
| 6,397 | | |
| 1991 | | |
|
| |
$ | 11,235,699 | | |
$ | 8,882,594 | | |
|
| |
| | | |
| | | |
|
Stock-based compensation | |
| 305,013 | | |
| 223,219 | | |
|
Impairment loss
of goodwill | |
| 2,168,552 | | |
| | | |
|
| |
$ | 13,709,264 | | |
$ | 9,105,813 | | |
When looking at the numbers by subsidiary, we have
the following:
|
| |
Operating
Expenses Year Ended December 31, | |
|
Subsidiary | |
2025 | |
2024 | |
|
IQSTEL Inc | |
$ | 4,158,073 | | |
$ | 2,881,662 | | |
|
Etelix.com USA, LLC | |
| 495,897 | | |
| 428,603 | | |
|
SwissLink Carrier AG | |
| 989,396 | | |
| 974,233 | | |
|
Itsbchain | |
| 2,639 | | |
| 14,788 | | |
|
QGlobal LLC | |
| 380,029 | | |
| 552,388 | | |
|
IoT Labs LLC | |
| 293,111 | | |
| 246,254 | | |
|
Global Money One | |
| 1,006 | | |
| 762 | | |
|
Smartbiz Telecom | |
| 960,303 | | |
| 800,922 | | |
|
Whisl Telecom | |
| 334,937 | | |
| 978,760 | | |
|
QXTEL Limited | |
| 3,883,944 | | |
| 2,227,441 | | |
|
GlobeTopper LLC | |
| 547,002 | | |
| | | |
|
| |
$ | 12,046,337 | | |
$ | 9,105,813 | | |
|
Intercompany
eliminations | |
| (505,625 | ) | |
| | | |
|
| |
$ | 11,540,712 | | |
$ | 9,105,813 | | |
|
Impairment loss
of goodwill | |
| 2,168,552 | | |
| | | |
|
| |
$ | 13,709,264 | | |
$ | 9,105,813 | | |
| | 33 | | |
| Table of Contents | |
General and administration expenses increased
from $9,105,813 to $13,709,264 as of December 2025. IQSTEL represents the largest share of general and administration expenses for the
period at 30%, followed by QXTEL with 28%.
The increase compared to the prior year
is mainly driven by the expansion of the group and the consolidation of QXTEL and GlobeTopper. The most significant variations include
the increase in technology expenses related to the deployment and upgrade of the switching platform to support all subsidiaries, which
is expected to generate cost efficiencies once the migration process is completed.
Additionally, the Company recognized a
non-cash goodwill impairment of $2,168,552. Including this effect, total operating expenses reached $13,709,264, representing an increase
of 50.56% compared to the prior year. This adjustment is non-recurring in nature and does not impact cash flow.
The underlying increase in operating expenses is
primarily related to higher salaries, depreciation and amortization, and general administrative costs, in line with the growth of the
business and the integration of newly consolidated subsidiaries. Advertising expenses also increased to support commercial expansion,
while insurance expenses decreased during the period.
We are continually identifying operational synergies
among all of our subsidiaries to be more cost efficient.
**Other Income (Expenses)**
We had other expenses of $4,136,551 for
the year ended December 31, 2025, as compared with other expense of $3,951,942 for the year ended December 31, 2024. The increase in
Other Expenses in 2025 compared to 2024 is due largely to the loss on settlement of debt and salary payable of $2,441,462 for the year
ended December 31, 2025 compared to $482,085 for the year ended December 31, 2024.
**Net Loss**
We finished the year ended December
31, 2025 with a net loss of $8,510,266 as compared to a loss of $5,180,036 during the year ended December 31, 2024. The results for the
period were significantly impacted by expenses at the holding entity (IQSTEL), which include a high component of interest and other financial
expenses related to the funds borrowed for the acquisition of QXTEL Limited.
Additionally, during 2025, the Company
recognized a non-cash goodwill impairment of $2,168,552, which represents a material, non-recurring expense for the period and does not
impact the Companys cash flow. Excluding this effect, the variation in net loss would have been less pronounced.
Our Telecom Division, currently the primary
source of revenue for the Company, continued to generate positive Operating Income. Meanwhile, our pre-revenue companies are operating
with minimal expenses, focused solely on completing product and service development prior to their market launch. As we have indicated
on several occasions, our strategy is to strengthen our telecommunications division so that it can serve as a lever for the development
of new lines of business, such as Fintech which is already generating revenue, Cybersecurity and AI.
A comparison of the tables below highlights the progress
of our Telecom Division, as evidenced by the increase in revenue, gross profit, and operating income for both the three- and twelve-month
periods ended December 31, 2025. As we have previously stated, our strategy remains centered on strengthening the telecommunications
segment to serve as a growth engine for the development and expansion of new business lines.
Our telecom division revenues have increased
year over year. Additionally, its gross profit has risen by 6%, going from $8,271,749 to $8,737,399.
On the other hand, our Fintech division
continues to strengthen its position within the Groups strategy. For the year ended 2025, the division reported revenues of $27,955,101
and operating expenses of $547,002, resulting in operating income of $4,868 and net income of $2,176.
| | 34 | | |
| Table of Contents | |
This performance reflects the initial contribution
from GlobeTopper, which was incorporated during 2025 and represents an important milestone for the development of this business line.
While the division did not generate profits in 2024, the progress achieved in 2025 demonstrates the Companys commitment to expanding
its presence in the fintech segment and leveraging new opportunities that can also support the growth of our other business lines.
|
| |
Telecom
Division | |
Fintech
Division | |
Pre-revenue
companies | |
IQSTEL | |
Consolidated | |
|
| |
Year
Ended Dec 31, 2025 | |
Year
Ended Dec 31, 2024 | |
Year
Ended Dec 31, 2025 | |
Year
Ended Dec 31, 2024 | |
Year
Ended Dec 31, 2025 | |
Year
Ended Dec 31, 2024 | |
Year
Ended Dec 31, 2025 | |
Year
Ended Dec 31, 2024 | |
Year
Ended Dec 31, 2025 | |
Year
Ended Dec 31, 2024 | |
|
Revenues | |
| 288,723,642 | | |
| 283,220,442 | | |
| 27,955,101 | | |
| | | |
| | | |
| | | |
| 220,755 | | |
| | | |
| 316,899,498 | | |
| 283,220,442 | | |
|
Cost
of revenue | |
| 279,986,243 | | |
| 274,948,693 | | |
| 27,403,231 | | |
| | | |
| | | |
| | | |
| 52,770 | | |
| | | |
| 307,442,244 | | |
| 274,948,693 | | |
|
Gross
profit | |
| 8,737,399 | | |
| 8,271,749 | | |
| 551,870 | | |
| | | |
| | | |
| | | |
| 167,985 | | |
| | | |
| 9,457,254 | | |
| 8,271,749 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating
expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
General
and administration | |
| 6,831,992 | | |
| 6,208,601 | | |
| 547,002 | | |
| | | |
| 3,645 | | |
| 15,550 | | |
| 4,158,073 | | |
| 2,881,662 | | |
| 11,540,712 | | |
| 9,105,813 | | |
|
Impairment
loss of goodwill | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 2,168,552 | | |
| | | |
| 2,168,552 | | |
| | | |
|
Total Operating Expenses | |
| 6,831,992 | | |
| 6,208,601 | | |
| 547,002 | | |
| | | |
| 3,645 | | |
| 15,550 | | |
| 6,326,625 | | |
| 2,881,662 | | |
| 13,709,264 | | |
| 9,105,813 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operatingincome/(loss) | |
| 1,905,407 | | |
| 2,063,148 | | |
| 4,868 | | |
| | | |
| (3,645 | ) | |
| (15,550 | ) | |
| (6,158,640 | ) | |
| (2,881,662 | ) | |
| (4,252,010 | ) | |
| (834,064 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Other
income (expense) | |
| (113,219 | ) | |
| 41,124 | | |
| (2,692 | ) | |
| | | |
| | | |
| (120 | ) | |
| (4,020,640 | ) | |
| (3,992,946 | ) | |
| (4,136,551 | ) | |
| (3,951,942 | ) | |
|
Net income
(loss) before income taxes | |
| 1,792,188 | | |
| 2,104,272 | | |
| 2,176 | | |
| | | |
| (3,645 | ) | |
| (15,670 | ) | |
| (10,179,280 | ) | |
| (6,874,608 | ) | |
| (8,388,561 | ) | |
| (4,786,006 | ) | |
|
Income
taxes | |
| (118,143 | ) | |
| (394,030 | ) | |
| | | |
| | | |
| | | |
| | | |
| (3,562 | ) | |
| | | |
| (121,705 | ) | |
| (394,030 | ) | |
|
Net
income (loss) | |
| 1,674,045 | | |
| 1,710,242 | | |
| 2,176 | | |
| | | |
| (3,645 | ) | |
| (15,670 | ) | |
| (10,182,842 | ) | |
| (6,874,608 | ) | |
| (8,510,266 | ) | |
| (5,180,036 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Depreciation
and Amortization | |
| 619,253 | | |
| 499,535 | | |
| 8,414 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 627,667 | | |
| 499,535 | | |
|
Interest
expense | |
| 31,147 | | |
| 41,611 | | |
| 2,692 | | |
| | | |
| | | |
| | | |
| 1,120,567 | | |
| 2,117,814 | | |
| 1,154,406 | | |
| 2,159,425 | | |
|
FX Gains/Losses | |
| 43,461 | | |
| | | |
| 6,701 | | |
| | | |
| | | |
| | | |
| (1,501 | ) | |
| | | |
| 48,661 | | |
| | | |
|
Loss
on settlement of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 2,224,481 | | |
| 482,085 | | |
| 2,224,481 | | |
| 482,085 | | |
|
Loss
on settlement of salary payable | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 216,981 | | |
| | | |
| 216,981 | | |
| | | |
|
Stock-based
compensation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 305,013 | | |
| 223,219 | | |
| 305,013 | | |
| 223,219 | | |
|
Impairment
loss of goodwill | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 2,168,552 | | |
| | | |
| 2,168,552 | | |
| | | |
|
Other
non recurrent | |
| 153,786 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 153,786 | | |
| | | |
|
Taxes | |
| 189,365 | | |
| 394,030 | | |
| 0 | | |
| | | |
| | | |
| | | |
| 3,562 | | |
| | | |
| 192,927 | | |
| 394,030 | | |
|
Change
in fair value of derivatives | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 1,393,046 | | |
| | | |
| 1,393,046 | | |
|
Adjusted
EBITDA | |
| 2,711,057 | | |
| 2,645,418 | | |
| 19,983 | | |
| | | |
| (3,645 | ) | |
| (15,670 | ) | |
| (4,145,187 | ) | |
| (2,658,444 | ) | |
| (1,417,792 | ) | |
| (28,696 | ) | |
| | 35 | | |
| Table of Contents | |
In evaluating our financial performance, we utilize
Adjusted EBITDA as a supplemental measure to provide insights into the profitability of our core operations. (Please see Adjusted EBITDA,
which is reconciled to the Net Income in the table above.) Adjusted EBITDA excludes, in addition to non-operational expenses like interest
expenses, taxes, depreciation and amortization; items that we believe are not indicative of our operating performance, such as:
Change in Fair Value of Derivative Liabilities: These
adjustments reflect unrealized gains or losses that are non-operational and subject to market volatility.
Loss on Settlement of Debt: This represents non-recurring
expenses associated with specific financing activities and does not impact ongoing business operations.
Stock-Based Compensation: As a non-cash expense, this
adjustment eliminates variability caused by equity-based incentives.
Impairment loss of Goodwill: This represents a non-cash,
non-recurring charge related to the deterioration in the value of goodwill and does not impact the Companys cash flow.
Tax Provision: This adjustment reflects the recognition
of income tax expense, which may vary depending on jurisdictional results and does not directly reflect the Companys core operating
performance.
We believe Adjusted EBITDA offers a clearer view
of the cash-generating potential of our business, excluding non-recurring, non-cash, and non-operational impacts.
According to our adjusted EBITDA analysis, our Telecommunications
division continues to be a high-performing segment generating solid operating profits, as adjusted EBITDA for the current period increased
by 2.35% compared to the prior period. Meanwhile, the contribution of our Fintech business, which debuted with an EBITDA of $19,983,
representing a significant milestone in the diversification of our business lines and supporting the Company's long-term growth strategy.
Consolidated figures show a negative Adjusted EBITDA;
while this isnt ideal, we are in a transitional period, scaling operations and investing heavily in growth initiatives with the
execution of our M&A plan. Management has also identified areas for cost-cutting and operational improvements and has acted in that
direction
**Goodwill Impairment Analysis**
During the year ended December 31, 2025, the Company
performed its annual goodwill impairment assessment in accordance with ASC 350, *IntangiblesGoodwill and Other*. Consistent
with our policy, each reporting unit was evaluated by comparing its estimated fair value to its carrying amount. Management engaged an
independent valuation firm to assist in the determination of fair value using a discounted cash flow approach and market participant
assumptions. The analysis indicates, *the carrying value of SwissLink Carrier AG, IoT Labs, LLC, Smartbiz Telecom, LLC and Whisl
Telecom are in excess of its fair value indicating impairment in the amount of $402,445, $81,782, $796,690, and $887,635, respectively.*
Based on this analysis, the Company recorded total
goodwill impairment charges of approximately $2.17 million for the year ended December 31, 2025. These non-cash charges reflect changes
in the long-term financial outlook of the affected reporting units, including updated assumptions regarding revenue growth, margin performance,
and discount rates. The impairment charges do not impact the Companys liquidity, cash flows from operations, or compliance with
debt covenants. Management will continue to monitor macroeconomic conditions, reporting-unit performance, and other triggering events
that may require interim impairment testing.
| | 36 | | |
| Table of Contents | |
**Liquidity and Capital Resources**
As of December 31, 2025 we had total current assets
of $36,162,424, compared with total current liabilities of $34,606,407, resulting in a positive working capital of $ 1,556,017 and a
current ratio of approximately 1.04 to 1.
Following is a table with summary data from the consolidated statements
of cash flows for the years ended December 31, 2025 and 2024, as presented.
|
| |
2025 | |
2024 | |
|
Net cash used in operating activities | |
$ | (3,844,872 | ) | |
$ | (2,930,306 | ) | |
|
Net cash used in investing activities | |
| (239,651 | ) | |
| (3,162,971 | ) | |
|
Net cash provided by financing activities | |
| 3,729,525 | | |
| 7,240,966 | | |
|
Net change in cash | |
$ | (354,998 | ) | |
$ | 1,147,689 | | |
Our operating activities used $3,844,872 in the year
ended December 31, 2025, as compared with $2,930,306 used in operating activities in the year ended December 31, 2024. Our cash flow
from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade
accounts receivable and trade accounts payable.
Investing activities used $239,651 for the year ended
December 31, 2025, as compared with $3,162,971 used in investing activities for the year ended December 31, 2024. The cash used in 2024
in investing activities is largely due to the acquisition of QXTEL, where the Company invested $2,955,121, while in 2025 the cash used
in investing activities was largely purchases of property and equipment totaling $113,020.
Financing activities provided $3,729,525 for the
year ended December 31, 2025, as compared to $7,240,966 provided for the year ended December 31, 2024. The cash provided in 2025 was
largely from loans. We have financed our operations largely through private placements and secured and unsecured debt.
**Material Cash Requirements**
The Companys material cash requirements include:
- Working capital needs associated with high-volume
telecom traffic settlement cycles.
- Vendor and carrier payments, including interconnection
fees, SMS termination costs, and network capacity charges.
- Debt service obligations, including interest and
scheduled principal payments under existing credit facilities.
- Capital expenditures related to network infrastructure,
platform development, and AI-driven software enhancements.
- Regulatory and compliance costs, including licensing,
audits, and data protection requirements across multiple jurisdictions.
Based upon our current financial condition, we do
not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through
increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements.
We have not attained profitable operations and even though the Company maintains a cash position very close to one third year's operating
expenses, we are dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve
months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek
additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing
is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. If we are not able to secure
additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing
will be available to us on acceptable terms or at all.
**Inflation**
Although our operations are influenced by general
economic conditions, we do not believe that inflation had a material effect on our results of operations during the twelve-month period
ended December 31, 2025.
| | 37 | | |
| Table of Contents | |
**Critical Accounting Policies**
A critical accounting policy is one
which is both important to the portrayal of a companys financial condition and results, and requires managements most difficult,
subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our accounting policies are discussed in detail in
the footnotes to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025; however,
we consider our critical accounting policies to be those related to the allowance for doubtful accounts, valuation of assets, significant
estimates in the valuation of financial instruments and income taxes. Management bases its estimates and judgments on historical experience
and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different
assumptions or conditions. See the Consolidated Financial Statements in this Annual Report for a complete discussion of our significant
accounting policies.
**Accounts Receivable and Allowance for Uncollectible
Accounts**
Substantially all of the Companys 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 Companys 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. No allowance for doubtful accounts was recorded as of December 31, 2025 or 2024. During the
years ended December 31, 2025 and 2024, the Company recorded bad debt expense of $6,397 and $1,991, respectively.
****
**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.
****
**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.
| | 38 | | |
| Table of Contents | |
**Goodwill Impairment**
Goodwill represents the excess purchase consideration
over the fair value of identifiable net assets acquired in business combinations. We test goodwill for impairment at least annually,
or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable.
The impairment test requires significant judgment and the use of estimates, including projected future cash flows, long-term growth rates,
discount rates, and market participant assumptions.
For the annual impairment test performed as of December
31, 2025, the Company engaged an independent valuation specialist to assist in determining the fair value of each reporting unit. The
valuation was performed under ASC 350 using a discounted cash flow methodology and fair value measurement concepts under ASC 820. As
described in the analysis, fair value is defined as *the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.*
The analysis concluded that four reporting unitsSwissLink
Carrier AG, IoT Labs, LLC, Smartbiz Telecom, LLC, and Whisl Telecomhad carrying values that exceeded their estimated fair values,
resulting in goodwill impairments of $402,445, $81,782, $796,690, and $887,635, respectively. The determination of fair value is highly
sensitive to changes in key assumptions. For example, variations in discount rates, long-term growth rates, or projected cash flows could
materially affect the estimated fair value of a reporting unit and potentially result in additional impairment charges in future periods.
Management believes the assumptions used in the impairment
analysis are reasonable and consistent with those a market participant would apply. However, because these estimates involve inherent
uncertainty, actual results may differ, and future impairment charges may be required if reporting-unit performance falls short of expectations
or if macroeconomic conditions deteriorate.
**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 entitys 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; goodwill; 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.
| | 39 | | |
| Table of Contents | |
Transactions involving related parties cannot be
presumed to be carried out on an arms-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 arms-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.
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.
**Off Balance Sheet Arrangements**
As of December 31, 2025, there were no off-balance
sheet arrangements.
**Recently Issued Accounting Pronouncements**
In November 2024, the FASB issued ASU 2024-03, *Income
StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses*, which requires public business entities to provide disaggregated disclosures of certain income statement expense captions
in the notes to the financial statements. The ASU does not change the presentation of expense captions on the face of the income statement.
This guidance will be effective for the Company on January 1, 2027, and the Company is currently evaluating the impact of adoption.
In December 2023, the FASB issued ASU 2023-09, *Income
Taxes (Topic 740): Improvements to Income Tax Disclosures*, which enhances the transparency and decision-usefulness of income tax
disclosures, including expanded rate reconciliation categories and disaggregation of income taxes paid. This guidance is effective for
annual periods beginning after December 15, 2024. The adoption of the ASU had an impact on our annual income tax disclosures in our consolidated
financial statements. We added disclosures for income/(loss) before tax by jurisdiction. We expanded our rate reconciliation disclosures
to include disaggregated reconciling items by nature utilizing the 5% threshold and added applicable percentages for each item disclosed.
Additionally, we added expanded disclosures for income taxes paid, by jurisdiction utilizing a quantitative threshold of 5% of total
income taxes paid. The new standard allows for prospective or retrospective adoption of these disclosure items, and management adopted
the ASU on a prospective basis.
In December 2025, the FASB issued ASU 2025-11,*Interim
Reporting (Topic 270): Narrow-Scope Improvements*, which clarifies the guidance in Topic 270 to improve the consistency of interim
financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring
entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11
is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption
permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.
In December 2025, the FASB issued ASU No. 2025-12,
*Codification Improvements*. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify,
(2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant
changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December
15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating
the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
The Company has reviewed all other recently issued,
but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected
to cause a material impact on our financial statements.
| | 40 | | |
| Table of Contents | |
**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, 2025 and 2024; | |
|
F-4 |
Consolidated Statements
of Operations for the years ended December 31, 2025 and 2024; | |
|
F-5 |
Consolidated Statement
of Stockholders Equity (Deficit) for the years ended December 31, 2025 and 2024; | |
|
F-6 |
Consolidated Statements
of Cash Flows for the years ended December 31, 2025 and 2024; and | |
|
F-7 |
Notes to Consolidated Financial
Statements. | |
| | 41 | | |
| 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, 2025 and 2024, the related consolidated statements
of operations, changes in stockholders equity, 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, 2025 and 2024, 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 established
sources of revenue sufficient to cover its operating costs, which raise substantial doubt about its ability to continue as a going concern.
Managements 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 Companys management. Our responsibility is to express an opinion on the Companys
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 Companys 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.
****
| | F-1 | | |
| Table of Contents | |
****
Significant judgment is exercised
by the Company in determining revenue recognition for customer agreements, and includes the pattern of delivery (i.e., timing of when
revenue is recognized) for each distinct performance obligation.
The related audit effort in evaluating
managements 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 Companys revenue recognition for customer
agreements included the following:
We gained an understanding of internal controls related to revenue recognition.
We evaluated managements significant accounting policies for compliance with accounting
principles generally accepted in the United States of America.
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 managements 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 managements 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 Companys 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 Companys stock or through loans from private investors, in order satisfy the Companys
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 Companys ability
to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Companys available
capital and the risk of bias in managements judgments and assumptions in their determination. Our audit procedures related to the
Companys 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 Companys 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 Companys determination that there is substantial doubt
about its ability to continue as a
going concern was adequately disclosed.
Goodwill Impairment
****
*Critical Audit Matter Description*
**
As described in Note 2 to the consolidated
financial statements, the Company recorded
$2,168,552 of goodwill impairment
during the year ended December 31, 2025. The Company evaluates its goodwill and intangible assets annually or when events or circumstances,
such as declines in operating results or sustained market capitalization below the Companys carrying value, require.
*How the Critical Audit Matter was Addressed
in the Audit*
**
Our principal audit procedures related
to the Companys goodwill impairment analysis included the following:
We evaluated the design of certain internal controls over the Companys goodwill
impairment process
We evaluated the Companys assessment of the value of reporting units under the discounted
cash flow method.
We involved
valuation professionals with specialized skills and knowledge who assisted in evaluating the reasonableness of the valuation methodologies
and significant assumptions selected by management.
/s/ Urish Popeck & Co., LLC
We have served as the Company's
auditor since 2020. Pittsburgh, Pittsburgh, Pennsylvania
April 6, 2026
****
| | F-2 | | |
| Table of Contents | |
****
**IQSTEL INC**
**Consolidated Balance Sheets**
****
|
| |
December
31, | |
December
31, | |
|
| |
2025 | |
2024 | |
|
ASSETS | |
| |
| |
|
Current Assets | |
| | | |
| | | |
|
Cash | |
$ | 2,155,359 | | |
$ | 2,510,357 | | |
|
Accounts receivable, net | |
| 30,259,020 | | |
| 57,158,967 | | |
|
Inventory | |
| 30,658 | | |
| 30,658 | | |
|
Due from related parties | |
| 639,519 | | |
| 630,715 | | |
|
Prepaid and other
current assets | |
| 3,077,868 | | |
| 2,684,349 | | |
|
Total Current Assets | |
| 36,162,424 | | |
| 63,015,046 | | |
|
| |
| | | |
| | | |
|
Property and equipment, net | |
| 615,048 | | |
| 561,802 | | |
|
Intangible asset, net | |
| 6,957,404 | | |
| 7,438,654 | | |
|
Goodwill | |
| 5,790,049 | | |
| 6,750,045 | | |
|
Deferred tax assets | |
| 459,472 | | |
| 243,108 | | |
|
Other assets | |
| 1,103,538 | | |
| 999,083 | | |
|
TOTAL ASSETS | |
$ | 51,087,935 | | |
$ | 79,007,738 | | |
|
| |
| | | |
| | | |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | | |
|
Current Liabilities | |
| | | |
| | | |
|
Accounts payable | |
$ | 9,167,288 | | |
$ | 2,129,241 | | |
|
Accrued and other current liabilities | |
| 19,050,496 | | |
| 55,624,784 | | |
|
Contract liabilities | |
| 1,391,377 | | |
| | | |
|
Due to related parties | |
| 65,829 | | |
| 26,613 | | |
|
Loans payable - net of discount of $127,170
and $62,898, respectively | |
| 4,020,833 | | |
| 2,455,641 | | |
|
Loans payable - related parties | |
| 125,409 | | |
| 720,485 | | |
|
Convertible notes - net of discount of
$0
and $138,654,
respectively | |
| | | |
| 1,864,432 | | |
|
Contingent liability for acquisition of
subsidiary | |
| 285,175 | | |
| 1,000,000 | | |
|
Stock payable for
acquisition of subsidiary | |
| 500,000 | | |
| | | |
|
Total Current Liabilities | |
| 34,606,407 | | |
| 63,821,196 | | |
|
| |
| | | |
| | | |
|
Convertible notes - net of discount of
$0 and $210,296 | |
| | | |
| 3,011,926 | | |
|
Loans payable, non-current | |
| 31,302 | | |
| | | |
|
Employee benefits,
non-current | |
| 169,599 | | |
| 274,353 | | |
|
TOTAL LIABILITIES | |
| 34,807,308 | | |
| 67,107,475 | | |
|
| |
| | | |
| | | |
|
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, 59,276
and 35,537
shares issued and outstanding, respectively | |
| 59 | | |
| 36 | | |
|
Series C Preferred
stock: 200,000
designated; $0.001
par value, No
shares issued and outstanding | |
| | | |
| | | |
|
Series D Preferred
stock: 100,000
designated; $0.001
par value, 18,020
and 0
shares issued and outstanding, respectively | |
| 18 | | |
| | | |
|
Common stock: 26,000,000
authorized; $0.001 par value 4,668,017
and 2,537,209 shares issued and outstanding,
respectively | |
| 4,668 | | |
| 2,537 | | |
|
Additional paid in capital | |
| 54,455,615 | | |
| 39,943,924 | | |
|
Accumulated deficit | |
| (43,276,006 | ) | |
| (32,703,410 | ) | |
|
Accumulated other
comprehensive loss | |
| (25,340 | ) | |
| (25,340 | ) | |
|
Equity attributed to stockholders of
IQSTEL Inc. | |
| 11,159,024 | | |
| 7,217,757 | | |
|
Equity attributable
to noncontrolling interests | |
| 5,121,603 | | |
| 4,682,506 | | |
|
TOTAL STOCKHOLDERS'
EQUITY | |
| 16,280,627 | | |
| 11,900,263 | | |
|
| |
| | | |
| | | |
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY | |
$ | 51,087,935 | | |
$ | 79,007,738 | | |
The accompanying notes are an integral part of
these consolidated financial statements.
| | F-3 | | |
| Table of Contents | |
****
**IQSTEL INC**
**Consolidated Statements of Operations**
|
|
|
|
|
|
|
|
|
| |
|
| |
Years
Ended
December 31, | |
|
| |
2025 | |
2024 | |
|
| |
| |
| |
|
Revenues | |
$ | 316,899,498 | | |
$ | 283,220,442 | | |
|
Cost of revenue | |
| 307,442,244 | | |
| 274,948,693 | | |
|
Gross profit | |
| 9,457,254 | | |
| 8,271,749 | | |
|
| |
| | | |
| | | |
|
Operating expenses | |
| | | |
| | | |
|
General and administration | |
| 11,540,712 | | |
| 9,105,813 | | |
|
Impairment loss of
goodwill | |
| 2,168,552 | | |
| | | |
|
Total
operating expenses | |
| 13,709,264 | | |
| 9,105,813 | | |
|
| |
| | | |
| | | |
|
Operating loss | |
| (4,252,010 | ) | |
| (834,064 | ) | |
|
| |
| | | |
| | | |
|
Other income (expense) | |
| | | |
| | | |
|
Other income | |
| 118,833 | | |
| 94,974 | | |
|
Other expenses | |
| (199,523 | ) | |
| (12,360 | ) | |
|
Interest expense | |
| (1,614,399 | ) | |
| (2,159,425 | ) | |
|
Change in fair value of derivative liabilities | |
| | | |
| (1,393,046 | ) | |
|
Loss on settlement of debt | |
| (2,224,481 | ) | |
| (482,085 | ) | |
|
Loss on settlement
of salary payable | |
| (216,981 | ) | |
| | | |
|
Total
other expense | |
| (4,136,551 | ) | |
| (3,951,942 | ) | |
|
| |
| | | |
| | | |
|
Net loss before provision for income
taxes | |
| (8,388,561 | ) | |
| (4,786,006 | ) | |
|
Income taxes | |
| (121,705 | ) | |
| (394,030 | ) | |
|
Net loss | |
| (8,510,266 | ) | |
| (5,180,036 | ) | |
|
Less: Net income
attributable to noncontrolling interests | |
| 653,717 | | |
| 811,531 | | |
|
Net loss
attributed to IQSTEL Inc. | |
$ | (9,163,983 | ) | |
$ | (5,991,567 | ) | |
|
| |
| | | |
| | | |
|
Dividend on Series B Preferred Stock | |
| (624,486 | ) | |
| (627,710 | ) | |
|
Undeclared dividend
on Series D Preferred Stock | |
| (70,570 | ) | |
| | | |
|
Net loss
attributed to stockholders of IQSTEL Inc. | |
$ | (9,859,039 | ) | |
$ | (6,619,277 | ) | |
|
| |
| | | |
| | | |
|
Comprehensive loss | |
| | | |
| | | |
|
Net loss | |
$ | (8,510,266 | ) | |
$ | (5,180,036 | ) | |
|
Foreign currency
adjustment | |
| | | |
| | | |
|
Total loss | |
$ | (8,510,266 | ) | |
$ | (5,180,036 | ) | |
|
Less: Comprehensive
income attributable to noncontrolling interests | |
| 653,717 | | |
| 811,531 | | |
|
Net comprehensive
loss attributed to IQSTEL Inc. | |
$ | (9,163,983 | ) | |
$ | (5,991,567 | ) | |
|
| |
| | | |
| | | |
|
Basic and diluted
loss per common share | |
$ | (2.86 | ) | |
$ | (2.86 | ) | |
|
| |
| | | |
| | | |
|
Weighted average
number of common shares outstanding - Basic and diluted | |
| 3,452,198 | | |
| 2,314,413 | | |
The accompanying notes are an integral part of
these consolidated financial statements.
| | F-4 | | |
| Table of Contents | |
****
**IQSTEL INC**
**Consolidated Statements of Changes in Stockholders
Equity (Deficit)**
**For the years ended December 31, 2025 and
2024**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
Series
A Preferred Stock | |
Series
B Preferred Stock | |
Series
D Preferred Stock | |
Common
Stock | |
| |
| |
| |
| |
| |
| |
|
| |
Shares | |
Amount | |
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, 2023 | |
| 10,000 | | |
$ | 10 | | |
| 31,080 | | |
$ | 31 | | |
| | | |
$ | | | |
| 2,151,620 | | |
$ | 2,152 | | |
$ | 34,530,862 | | |
$ | (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 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 7,500 | | |
| 8 | | |
| 141,017 | | |
| | | |
| | | |
| 141,025 | | |
| | | |
| 141,025 | | |
|
Common stock
issued for settlement of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 37,590 | | |
| 38 | | |
| 483,632 | | |
| | | |
| | | |
| 483,670 | | |
| | | |
| 483,670 | | |
|
Common stock
issued for conversion of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 76,326 | | |
| 76 | | |
| 671,590 | | |
| | | |
| | | |
| 671,666 | | |
| | | |
| 671,666 | | |
|
Common stock
issued in conjunction with convertible notes | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 44,192 | | |
| 44 | | |
| 597,733 | | |
| | | |
| | | |
| 597,777 | | |
| | | |
| 597,777 | | |
|
Common stock
issued for the extension of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 8,081 | | |
| 8 | | |
| 116,356 | | |
| | | |
| | | |
| 116,364 | | |
| | | |
| 116,364 | | |
|
Common stock
issued for warrant exercises | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 125,000 | | |
| 125 | | |
| 1,099,875 | | |
| | | |
| | | |
| 1,100,000 | | |
| | | |
| 1,100,000 | | |
|
Common stock
issued for conversion of series B preferred stock | |
| | | |
| | | |
| (4,502 | ) | |
| (5 | ) | |
| | | |
| | | |
| 56,275 | | |
| 56 | | |
| (51 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common stock
issued for cash | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 30,625 | | |
| 31 | | |
| 99,969 | | |
| | | |
| | | |
| 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 | | |
| | | |
$ | | | |
| 2,537,209 | | |
$ | 2,538 | | |
$ | 39,943,923 | | |
$ | (32,703,410 | ) | |
$ | (25,340 | ) | |
$ | 7,217,757 | | |
$ | 4,682,506 | | |
$ | 11,900,263 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Series
B Preferred stock issued as dividend | |
| | | |
| | | |
| 17,168 | | |
| 17 | | |
| | | |
| | | |
| | | |
| | | |
| 624,469 | | |
| (624,486 | ) | |
| | | |
| | | |
| | | |
| | | |
|
Series B Preferred
stock issued for settlement of salary payable | |
| | | |
| | | |
| 6,571 | | |
| 6 | | |
| | | |
| | | |
| | | |
| | | |
| 848,475 | | |
| | | |
| | | |
| 848,481 | | |
| | | |
| 848,481 | | |
|
Series D Preferred
stock issued for settlement of debt | |
| | | |
| | | |
| | | |
| | | |
| 37,110 | | |
| 37 | | |
| | | |
| | | |
| 4,708,295 | | |
| | | |
| | | |
| 4,708,332 | | |
| | | |
| 4,708,332 | | |
|
Common stock
issued for conversion of series D preferred stock | |
| | | |
| | | |
| | | |
| | | |
| (19,090 | ) | |
| (19 | ) | |
| 475,125 | | |
| 475 | | |
| (456 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common stock
issued for compensation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 7,500 | | |
| 8 | | |
| 81,805 | | |
| | | |
| | | |
| 81,813 | | |
| | | |
| 81,813 | | |
|
Common stock
issued for conversion of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 1,271,720 | | |
| 1,271 | | |
| 5,639,622 | | |
| | | |
| | | |
| 5,640,893 | | |
| | | |
| 5,640,893 | | |
|
Common stock
issued for settlement of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 264,980 | | |
| 265 | | |
| 1,886,393 | | |
| | | |
| | | |
| 1,886,658 | | |
| | | |
| 1,886,658 | | |
|
Common stock
issued for service | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 32,400 | | |
| 32 | | |
| 223,168 | | |
| | | |
| | | |
| 223,200 | | |
| | | |
| 223,200 | | |
|
Common stock
issued for common stock payable | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 3,563 | | |
| 4 | | |
| (4 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common stock
dividend | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 75,529 | | |
| 75 | | |
| 499,925 | | |
| (500,000 | ) | |
| | | |
| | | |
| | | |
| | | |
|
Stock split
adjustment | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (9 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Dividend to
non-controlling interest | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (284,127 | ) | |
| | | |
| (284,127 | ) | |
| | | |
| (284,127 | ) | |
|
Acquisition of subsidiary | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (214,620 | ) | |
| (214,620 | ) | |
|
Net
income (loss) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (9,163,983 | ) | |
| | | |
| (9,163,983 | ) | |
| 653,717 | | |
| (8,510,266 | ) | |
|
Balance
- December 31, 2025 | |
| 10,000 | | |
$ | 10 | | |
| 59,276 | | |
$ | 59 | | |
| 18,020 | | |
$ | 18 | | |
| 4,668,017 | | |
$ | 4,668 | | |
$ | 54,455,615 | | |
$ | (43,276,006 | ) | |
$ | (25,340 | ) | |
$ | 11,159,024 | | |
$ | 5,121,603 | | |
$ | 16,280,627 | | |
The accompanying notes are an integral part of
these consolidated financial statements.
| | F-5 | | |
| Table of Contents | |
****
**IQSTEL INC**
**Consolidated Statements of Cash Flows**
|
|
|
|
|
|
|
|
|
| |
|
| |
December 31, Years Ended | |
|
| |
2025 | |
2024 | |
|
| |
| |
| |
|
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | | |
|
Net loss | |
$ | (8,510,266 | ) | |
$ | (5,180,036 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
|
Stock based compensation | |
| 305,013 | | |
| 223,219 | | |
|
Bad debt expense | |
| 6,397 | | |
| 1,991 | | |
|
Depreciation and amortization | |
| 627,667 | | |
| 499,535 | | |
|
Impairment loss | |
| 2,168,552 | | |
| | | |
|
Amortization of debt discount | |
| 458,610 | | |
| 1,096,725 | | |
|
Change in fair value of derivative liabilities | |
| | | |
| 1,393,046 | | |
|
Loss on settlement of debt | |
| 2,224,481 | | |
| 482,085 | | |
|
Loss on settlement of salary payable | |
| 216,981 | | |
| | | |
|
Deferred income tax (benefit) expense | |
| (216,364 | ) | |
| 138,808 | | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Accounts receivable | |
| 38,087,145 | | |
| (56,091,437 | ) | |
|
Inventory | |
| | | |
| (3,537 | ) | |
|
Prepaid and other assets | |
| (282,574 | ) | |
| (1,235,127 | ) | |
|
Due from related parties | |
| | | |
| (20,000 | ) | |
|
Accounts payable | |
| 2,023,127 | | |
| 4,448,542 | | |
|
Accrued and other current liabilities | |
| (40,953,641 | ) | |
| 51,315,880 | | |
|
Net cash used in operating activities | |
| (3,844,872 | ) | |
| (2,930,306 | ) | |
|
| |
| | | |
| | | |
|
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | | |
|
Acquisitions of subsidiary, net of cash received | |
| (70,469 | ) | |
| (2,955,121 | ) | |
|
Purchase of property and equipment | |
| (113,020 | ) | |
| (151,620 | ) | |
|
Payment of loan receivable - related party | |
| (56,162 | ) | |
| (89,832 | ) | |
|
Collection of amounts due from related parties | |
| | | |
| 33,602 | | |
|
Net cash used in investing activities | |
| (239,651 | ) | |
| (3,162,971 | ) | |
|
| |
| | | |
| | | |
|
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | | |
|
Proceeds from loans payable | |
| 6,965,000 | | |
| 2,494,852 | | |
|
Repayments of loans payable | |
| (30,825 | ) | |
| (1,846,139 | ) | |
|
Repayments of note payable issued for acquisition of subsidiary | |
| (2,275,000 | ) | |
| | | |
|
Proceeds from loans payable - related parties | |
| | | |
| 1,000,000 | | |
|
Repayment of loans payable - related parties | |
| (568,754 | ) | |
| (538,961 | ) | |
|
Proceeds from common stock payable | |
| | | |
| 100,000 | | |
|
Proceeds from exercise of warrants | |
| | | |
| 1,100,000 | | |
|
Proceeds from common stock issued | |
| | | |
| 100,000 | | |
|
Proceeds from convertible notes | |
| 987,500 | | |
| 5,612,499 | | |
|
Repayment of convertible notes | |
| (1,064,269 | ) | |
| (781,285 | ) | |
|
Dividend paid to non-controlling interest | |
| (284,127 | ) | |
| | | |
|
Net cash provided by financing activities | |
| 3,729,525 | | |
| 7,240,966 | | |
|
| |
| | | |
| | | |
|
Effect of exchange rate changes on cash | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Net change in cash | |
| (354,998 | ) | |
| 1,147,689 | | |
|
Cash, beginning of period | |
| 2,510,357 | | |
| 1,362,668 | | |
|
Cash, end of period | |
$ | 2,155,359 | | |
$ | 2,510,357 | | |
|
| |
| | | |
| | | |
|
Supplemental cash flow information | |
| | | |
| | | |
|
Cash paid for interest | |
$ | 534,163 | | |
$ | 879,783 | | |
|
| |
| | | |
| | | |
|
Non-cash transactions: | |
| | | |
| | | |
|
Series B Preferred stock issued as dividend | |
$ | 624,486 | | |
$ | 627,710 | | |
|
Series B Preferred stock issued for settlement of salary
payable | |
$ | 848,480 | | |
$ | | | |
|
Series D Preferred stock issued for settlement of debt | |
$ | 4,708,332 | | |
$ | | | |
|
Common stock issued for settlement of debt | |
$ | 1,886,658 | | |
$ | 279,660 | | |
|
Common stock issued in connection with convertible notes | |
$ | | | |
$ | 597,777 | | |
|
Common stock issued for conversion of debt | |
$ | 5,640,893 | | |
$ | 671,666 | | |
|
Common stock issued for modification of debts | |
$ | | | |
$ | 600,034 | | |
|
Cashless warrant exercised | |
$ | | | |
$ | 1,814 | | |
|
Common stock issued for conversion of preferred stock | |
$ | 475 | | |
$ | 4,502 | | |
|
Common stock issued for common stock payable | |
$ | 4 | | |
$ | | | |
|
Common stock dividend | |
$ | 500,000 | | |
$ | | | |
|
Resolution of derivative liabilities | |
$ | | | |
$ | 1,493,046 | | |
|
Note payable issued for acquisition of subsidiary | |
$ | 1,100,000 | | |
$ | 2,000,000 | | |
|
Contingent liability for acquisition of subsidiary | |
$ | 285,175 | | |
$ | 1,000,000 | | |
|
Stock payable for acquisition of subsidiary | |
$ | 500,000 | | |
$ | | | |
|
Purchase of vehicle with financing loan and a related party
advance | |
$ | 86,643 | | |
$ | | | |
|
Stock split adjustment | |
$ | 75 | | |
$ | | | |
The accompanying notes are an integral part of
these consolidated financial statements.
| | F-6 | | |
| Table of Contents | |
**IQSTEL INC**
**Notes to the Consolidated Financial Statements**
**December 31, 2025**
**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 ofNevadaonJune
24, 2011under 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 Worldwith over
603active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers.
The Company is a technology company with a presence
in 20 countries and approximately 100 employees that is offering leading-edge services through its three business divisions.
The Telecom Division, which represents the majority
of current operations and which also represents 91% of all of the Companys revenues, offers VoIP, SMS, proprietary Internet 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 Companys
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 Companys 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 Companys 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. Additionally, GlobeTopper LLC (www.GlobeTopper.com)
our most recent acquisition, plays a strategic role in supporting the expansion and integration of our business divisions. Through its
operations, the Company continues to strengthen its global presence and enhance the synergy in Fintech segments through its solution
for gift card programs, representing 9% of our revenues for the year ended December 31, 2025.
Our developing Artificial Intelligence (AI)
division, Reality Border (www.realityborder.com), initially developed an AI-enhanced immersive digital experience platform intended to
support customer interaction and content presentation in virtual environments. Building on that early development work, including conversational
interfaces, multilingual interaction models, and AI-driven workflow design, Reality Border now develops practical AI software solutions
for enterprise and telecommunications applications.
**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 Companys fiscal year end is December 31.
| | F-7 | | |
| 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),
QXTEL LIMITED (QXTEL) and GlobeTopper LLC (GlobeTopper). All significant intercompany balances and transactions
have been eliminated in consolidation.
**Reverse
stock split**
The Company announced a reverse stock split
effective on May 2, 2025 (the Market Effective Date). The Board of Directors of the Company approved a reverse stock split
of the Companys authorized, issued and outstanding shares of common stock, par value$0.001per
share (the Common Stock), at a ratio of 1-for-80. Prior to the Reverse Stock Split, the Company was authorized to issue
300,000,000 shares of Common Stock. As a result
of the Reverse Stock Split, the Company is authorized to issue 3,750,000
shares of Common Stock.As of December 31, 2024, there were 202,976,685 shares of Common Stock outstanding and there were 182,211,063
weighted average number of common shares outstanding for the year ended December 31, 2024. As a result of the Reverse Stock Split, there
were 2,537,209 shares of Common Stock outstanding
at December 31, 2024 and there were 2,314,413 weighted average number of common shares outstanding for the year ended December 31, 2024.
All issued and outstanding common stock, options and warrants to purchase common stock and per share amounts contained in this report
have been adjusted retroactively to reflect the change in capital structure for all periods presented.
All share and per share information in these
financial statements retroactively reflect this reverse stock split.
**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 Companys
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*.
| | F-8 | | |
| Table of Contents | |
The functional currency and reporting currency of Etelix, QGlobal, ItsBchain, IoT Labs, Whisl, Smartbiz, Global Money One, QXTEL and
GlobeTopper is the U.S. dollar, while SwissLinks functional currency was the Swiss Franc (CHF). At 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.
For the years ended December 31, 2025 and 2024,
the Company recorded exchange loss of $41,964
and $0, respectively,
recorded in General and administrative expense.
**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
hadnocash equivalents at December
31, 2025 and 2024.
**Accounts
Receivable and Allowance for Uncollectible Accounts**
Substantially all of the Companys 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 Companys 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.No allowance for doubtful accounts was recorded as of December 31, 2025 or 2024. During
the years ended December 31, 2025 and 2024, the Company recorded bad debt expense of$6,397
and $1,991, respectively.
**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 of3-4yearsfor
computers and laptops;4-5yearsfor
telecommunications equipment and switches; and5
yearsfor 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.
| | F-9 | | |
| Table of Contents | |
**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 is16
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.
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.
As a result of the evaluation of goodwill, the
Company recognized $2,168,552 impairment
loss of goodwill for the year ended December 31, 2025.
The following table provides a summary of changes
in the carrying amounts of goodwill.
|
| |
| | | |
|
Balance at December 31, 2023 | |
$ | 5,172,146 | | |
|
Additions | |
| 1,577,899 | | |
|
Balance at December 31, 2024 | |
$ | 6,750,045 | | |
|
Additions | |
| 1,208,556 | | |
|
Impairment loss | |
| (2,168,552 | ) | |
|
Balance at December 31, 2025 | |
$ | 5,790,049 | | |
****
| | F-10 | | |
| Table of Contents | |
****
**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 Companys 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 to common stockholders less
the cumulative undeclared preferred stock dividend 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 Series D Preferred stock and they were excluded from the computation of diluted
net loss per share as the result was anti-dilutive for the years ended December 31, 2025 and 2024.
**Concentrations
of Credit Risk**
The Companys 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. Based on the Federal
Deposit Insurance Corporation (FDIC) applicable in the United Sates, Switzerlands deposit protection system (Esisuisse) and the
Financial Services Compensation Scheme (FSCS) applicable in the U.K., 58.55% of our cash and cash equivalent are protected by the applicable
government insurance limits.
During the year ended December 31, 2025, we
had 37 customers representing90%of
our revenue compared to 28 customers representing90%of
our revenue for the year ended December 31, 2024. For the years ended December 31, 2025 and 2024,30%
and 33%
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.
Approximately80%of
total accounts receivable are concentrated in balances from the Companys top 17 customers as of December 31, 2025 compared to
the same percentage concentrated in 11 companies as of December 31, 2024. The largest customer as of December 31, 2025 represented15.06%of
the total compared to40.39%as
of December 31, 2024. 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.
| | F-11 | | |
| Table of Contents | |
**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 entitys
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; goodwill; 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 arms-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 arms-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-12 | | |
| 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**
*Telecommunications*
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 Companys 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 are 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
strictly confidential, and disclosed only to those employees or personnel with a need to know. |
| |
| | F-13 | | |
| Table of Contents | |
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.
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. | |
*Fintech*
The Companys primary performance obligation
is the transfer of digital prepaid products to customers upon purchase. Revenue is recognized at a point in time when the digital prepaid
products are made available to the customer, as this is when the customer obtains control and can benefit from the use of the products.
The Company has evaluated additional services, including API integration and technical support, and determined that these services are
not distinct performance obligations. These services are highly interdependent and integrated with the primary obligation to deliver
digital prepaid products. As such, revenue recognition for these services is bundled with the primary performance obligation and recognized
at the same point in time.
The transaction price is determined based on
the pricing appendix provided to customers at the time of contract signing, with the Company reserving the right to adjust prices with
a three-day notice. Since the Company has only one primary performance obligation, there is no allocation of the transaction price across
multiple obligations. 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; and digital prepaid
products. 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 and products 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 and digital prepaid products
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. | |
****
| | F-14 | | |
| Table of Contents | |
****
**Cost
of revenue**
Costs of revenue represent direct charges from
vendors that the Company incurs to deliver services to its customers. These costs include usage charges for voice and SMS termination
services, which are recognized over time consistent with the Companys revenue-recognition pattern for these services, as well
as the acquisition cost of digital prepaid products purchased from issuing partners for resale, which is recognized at a point in time
when the products are made available to customers.
**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 Companys accounting policy election, the Company
does not recognize the right-of-use asset and the lease liability arising from this lease.
**Reclassification**
****
Certain amounts in the consolidated financial
statements of prior year periods have been reclassified to conform to the current periods presentation.
**Recently
Issued Accounting Pronouncements**
In November 2024, the FASB issued ASU 2024-03*Final
Standard on Income Statement: Disaggregation of Income Statement Expenses*, which requires disaggregated disclosure of income statement
expenses for public business entities.The ASU does not change the expense captions an entity presents on the face of the income
statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes
to the financial statements. This guidance will be effective for us on January 1, 2027. The Company is currently evaluating the impact
of adopting ASU 2024-03.
In December 2025, the FASB issued ASU 2025-11,*Interim
Reporting (Topic 270): Narrow-Scope Improvements*, which clarifies the guidance in Topic 270 to improve the consistency of interim
financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring
entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11
is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption
permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.
In December 2025, the FASB issued ASU No. 2025-12,
*Codification Improvements*. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify,
(2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant
changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December
15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating
the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
The Company has reviewed all other recently
issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected
to cause a material impact on our financial statements.
| | F-15 | | |
| Table of Contents | |
**Recently
adopted accounting pronouncements**
****
In December 2023, the FASB issued ASU 2023-09,*Income
Taxes (Topic 740): Improvements to Income Tax Disclosures*, which requires public entities, on an annual basis, to provide disclosure
of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09
is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the
year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period.
**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 hassuffered recurring losses from operations, minimal or 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 Companys 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.
**NOTE
4 - ACQUISITIONS**
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, 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 acquired
the Transferred Membership Interests of GlobeTopper for a total purchase price consisting of$700,000,payable
as follows: $50,000 upon execution of the Agreement; $50,000 in cash on the closing date;$50,000 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.
Additional payments based on GlobeToppers
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:
|
|
|
September
30, 2026: 50% of the positive difference between EBITDA at acquisition and EBITDA 12 months post-Closing. | |
|
|
|
September
30, 2027: 50% of the positive difference between EBITDA 12 months and 24 months post-Closing. | |
The acquisition was closed on July 1, 2025.
GlobeTopper has been included in our consolidated results of operations since the acquisition date.
| | F-16 | | |
| Table of Contents | |
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 following table summarizes the fair value
of the consideration paid by the Company:
|
| |
July 1, | |
|
Fair Value of Consideration: | |
2025 | |
|
Cash | |
$ | 100,000 | | |
|
Promissory note | |
| 100,000 | | |
|
IQSTEL common stock | |
| 500,000 | | |
|
Contingent liability | |
| 285,175 | | |
|
Total Purchase Price | |
$ | 985,175 | | |
The following table summarizes the preliminary identifiable assets
acquired and liabilities assumed upon acquisition of GlobeTopper and the calculation of goodwill:
|
|
|
|
|
| |
|
Total purchase price | |
$ | 985,175 | | |
|
| |
| | | |
|
Assets Acquired: | |
| | | |
|
Cash | |
| 129,531 | | |
|
Prepaid expenses
and other current assets | |
| 306,310 | | |
|
Total identifiable
assets | |
| 435,841 | | |
|
| |
| | | |
|
Liabilities Assumed: | |
| | | |
|
Other current liabilities | |
| (71,580 | ) | |
|
Contract liabilities | |
| (703,262 | ) | |
|
Line of credit | |
| (99,000 | ) | |
|
Total liabilities
assumed | |
| (873,842 | ) | |
|
Net assets | |
| (438,001 | ) | |
|
| |
| | | |
|
Non-controlling
interest - 49% | |
| 214,620 | | |
|
Total net assets | |
| (223,381 | ) | |
|
Goodwill | |
$ | 1,208,556 | | |
**QXTEL**
OnJanuary
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 of51%of
the ordinary shares Seller holds in QXTEL LIMITED, a company incorporated in England and Wales.
The purchase price (the Purchase Price)
payable to the Seller for the shares was$5,000,000.
Upon the execution of the Purchase Agreement, we agreed to deposit$1,500,000of
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.
| | F-17 | | |
| Table of Contents | |
At closing, in addition to the$1,500,000with
the Escrow Agent that formed part of the Purchase Price, we were required to pay$1,500,000in
cash and$2,000,000to
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$200,000of
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$200,000for
each of the months of May through November ($1,400,000) with a balloon payment of$600,000,
to monthly installments of$75,000plus
interest during 2024, and$212,500plus
interest during the first 6 months of 2025. We also revised the Earnout Payment due to the Seller. The Earnout Payment was redefined
at$721,035net
income, to be achieved in Q2, Q3 and Q4 of 2024. The$1,000,000payment
that IQSTEL had to pay upon achievement of the Earnout Payment was paid in monthly installments during the first half of 2025.
During the years ended December 31, 2025 and
2024, the Company repaid$2,275,000
and $725,000on
the Promissory Note, respectively. The Company included $725,000
repayment in 2024 in acquisition of subsidiary under investing activities.
The acquisition was closed onApril 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 | | |
|
Intangible assets recognized | |
| 7,700,000 | | |
|
Total identifiable assets | |
| 23,870,875 | | |
|
| |
| | | |
|
Accounts payable | |
| (14,796,505 | ) | |
|
Other current liabilities | |
| (403,584 | ) | |
|
Total liabilities assumed | |
| (15,200,089 | ) | |
|
Net assets | |
| 8,670,786 | | |
|
| |
| | | |
|
Non-controlling interest -49% | |
| (4,248,685 | ) | |
|
Total net assets | |
| 4,422,101 | | |
|
Goodwill | |
$ | 1,577,899 | | |
| | F-18 | | |
| Table of Contents | |
Unaudited combined proforma results of operations for the years ended
December 31, 2025 and 2024 as though the Company acquired QXTEL and GlobeTopper on January 1, 2024, are set forth below:
|
|
|
|
|
|
|
|
|
| |
|
| |
Years Ended | |
|
| |
December 31, | |
|
| |
2025 | |
2024 | |
|
Revenues | |
$ | 342,565,167 | | |
$ | 350,392,337 | | |
|
Cost of revenues | |
| 332,569,239 | | |
| 340,754,714 | | |
|
Gross profit | |
| 9,995,928 | | |
| 9,637,623 | | |
|
| |
| | | |
| | | |
|
Operating expenses | |
| 14,035,274 | | |
| 10,392,695 | | |
|
Operating loss | |
| (4,039,346 | ) | |
| (755,072 | ) | |
|
| |
| | | |
| | | |
|
Other expense | |
| (4,140,878 | ) | |
| (3,934,773 | ) | |
|
Income tax | |
| (121,705 | ) | |
| (394,030 | ) | |
|
Net loss | |
$ | (8,301,929 | ) | |
$ | (5,083,875 | ) | |
****
**NOTE
5 PREPAID AND OTHER CURRENT ASSETS**
Prepaid and other current assets at December 31, 2025 and 2024 consisted
of the following:
|
|
|
|
|
|
|
|
|
| |
|
| |
December 31, | |
December 31, | |
|
| |
2025 | |
2024 | |
|
Other receivable | |
$ | 298,461 | | |
$ | 115,685 | | |
|
Prepaid expenses | |
| 2,192,508 | | |
| 2,020,288 | | |
|
Advance payment | |
| 21,000 | | |
| 21,000 | | |
|
Tax receivable | |
| 63,284 | | |
| 42,673 | | |
|
Deposit for acquisition of asset | |
| 356,000 | | |
| 356,000 | | |
|
Security deposit | |
| 146,615 | | |
| 128,703 | | |
|
Prepaid
Expenses | |
$ | 3,077,868 | | |
$ | 2,684,349 | | |
****
**NOTE
6 PROPERTY AND EQUIPMENT**
Property and equipment at December 31, 2025 and 2024 consisted of
the following:
|
|
|
|
|
|
|
|
|
| |
|
| |
December 31, | |
December 31, | |
|
| |
2025 | |
2024 | |
|
Telecommunication equipment | |
$ | 700,417 | | |
$ | 709,417 | | |
|
Telecommunication software | |
| 800,247 | | |
| 690,742 | | |
|
Vehicle | |
| 86,643 | | |
| | | |
|
Other equipment | |
| 159,451 | | |
| 155,935 | | |
|
Total property and equipment | |
| 1,746,758 | | |
| 1,556,094 | | |
|
Accumulated depreciation
and amortization | |
| (1,131,710 | ) | |
| (994,292 | ) | |
|
Total property
and equipment | |
$ | 615,048 | | |
$ | 561,802 | | |
Depreciation expense for the years ended December
31, 2025 and 2024 amounted to$146,417
and $138,597, respectively.
| | F-19 | | |
| Table of Contents | |
**NOTE
7 INTANGIBLE ASSETS**
Intangible assets at December 31, 2025 and 2024 consisted of the
following:
2025
|
| |
Useful
life | |
Gross
carrying amount | |
Accumulated
amortization | |
Net
carrying amount | |
|
New gas regulator intangible | |
Not yet in service | |
$ | 99,592 | | |
$ | | | |
| 99,592 | | |
|
Interconnection
agreements | |
16
years | |
| 7,700,000 | | |
| (842,188 | ) | |
| 6,857,812 | | |
|
| |
| |
$ | 7,799,592 | | |
$ | (842,188 | ) | |
$ | 6,957,404 | | |
2024
|
| |
Useful life | |
Gross carrying amount | |
Accumulated
amortization | |
Net carrying amount | |
|
New gas regulator intangible | |
Not yet in service | |
$99,592 | |
$ | | | |
$99,592 | |
|
Interconnection agreements | |
16
years | |
7,700,000 | |
| (360,938 | ) | |
7,339,062 | |
|
| |
| |
$7,799,592 | |
$ | (360,938 | ) | |
$7,438,654 | |
Amortization expense for the years ended December
31, 2025 and 2024 amounted to$481,250
and $360,938, respectively.
The following table outlines the estimated future
amortization expense at December 31, 2025:
|
2026 | | |
$ | 481,250 | | |
|
2027 | | |
| 481,250 | | |
|
2028 | | |
| 481,250 | | |
|
2029 | | |
| 481,250 | | |
|
2030 | | |
| 481,250 | | |
|
Thereafter | | |
| 4,451,562 | | |
|
| | |
$ | 6,857,812 | | |
**NOTE
8 ACCRUED AND OTHER CURRENT LIABILITIES**
Accrued and other current liabilities at December 31, 2025 and 2024
consisted of the following
|
| |
December
31, | |
December
31, | |
|
| |
2025 | |
2024 | |
|
Accrued liabilities | |
$ | 1,242,848 | | |
$ | 928,858 | | |
|
Cost provision | |
| 17,190,827 | | |
| 53,939,336 | | |
|
Accrued interest | |
| 84,174 | | |
| 118,204 | | |
|
Salary payable - management | |
| 68,364 | | |
| 420,447 | | |
|
Salary payable and employee benefit | |
| 71,956 | | |
| 88,357 | | |
|
Other current liabilities | |
| 241,492 | | |
| 129,582 | | |
|
Income tax payable | |
| 150,835 | | |
| 104,614 | | |
|
Total
accrued and other current liabilities | |
$ | 19,050,496 | | |
$ | 55,729,398 | | |
| | F-20 | | |
| Table of Contents | |
**NOTE
9 - LOANS PAYABLE**
Loans payable at December 31, 2025 and 2024 consisted of the following:
|
| |
December 31, | |
December 31, | |
| |
Interest | |
|
| |
2025 | |
2024 | |
Term | |
rate | |
|
Martus | |
$ | 97,401 | | |
$ | 103,738 | | |
Note was issued on October
23, 2018 and due on January
2, 2026 | |
| 5.0 | % | |
|
Darlene Covid19 | |
| 60,703 | | |
| 80,019 | | |
Note was issued on April
1, 2020 and due on March
31, 2026 | |
| 0.0 | % | |
|
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 | % | |
|
Promissory note payable | |
| 794,737 | | |
| | | |
Note was issued July
16, 2025 and due on February
26, 2026 | |
| 24.0 | % | |
|
Promissory note payable | |
| 794,737 | | |
| | | |
Note was issued August
8, 2025 and due on March
21, 2026 | |
| 24.0 | % | |
|
Promissory note payable | |
| 794,737 | | |
| | | |
Note was issued September
11, 2025 and due on April
24, 2026 | |
| 24.0 | % | |
|
Promissory note payable | |
| 531,579 | | |
| | | |
Note was issued October
14, 2025 and due on May
27, 2026 | |
| 24.0 | % | |
|
Promissory note payable | |
| 531,579 | | |
| | | |
Note was issued November
10, 2025 and due on June
23, 2026 | |
| 24.0 | % | |
|
Promissory note payable | |
| 531,579 | | |
| | | |
Note was issued December
22, 2025 and due on August
4, 2026 | |
| 24.0 | % | |
|
Financing loan | |
| 42,253 | | |
| | | |
$1,148.94
monthly payment for 48
months through January 2029 | |
| 7.87 | % | |
|
Total | |
| 4,179,305 | | |
| 2,518,539 | | |
| |
| | | |
|
Less: Unamortized
debt discount | |
| (127,170 | ) | |
| (62,898 | ) | |
| |
| | | |
|
Total loans payable | |
| 4,052,135 | | |
| 2,455,641 | | |
| |
| | | |
|
Less: Current portion
of loans payable | |
| (4,020,833 | ) | |
| (2,455,641 | ) | |
| |
| | | |
|
Long-term loans
payable | |
$ | 31,302 | | |
$ | | | |
| |
| | | |
| | F-21 | | |
| Table of Contents | |
Loans payable - related parties at December 31, 2025 and 2024 consisted
of the following:
|
| |
December 31, | |
December 31, | |
| |
Interest | |
|
| |
2025 | |
2024 | |
Term | |
rate | |
|
49% of Shareholder of SwissLink | |
$ | 21,606 | | |
$ | 21,606 | | |
Note
is due on demand | |
| 0.0 | % | |
|
49% of Shareholder of SwissLink | |
| 103,803 | | |
| 237,841 | | |
Note
is due on demand | |
| 5.0 | % | |
|
Minority Shareholder
of QXTEL | |
| | | |
| 461,038 | | |
Note was due on
October
1, 2025 | |
| 4.9 | % | |
|
Total | |
| 125,409 | | |
| 720,485 | | |
| |
| | | |
|
Less: Current portion
of loans payable - related parties | |
| 125,409 | | |
| 720,485 | | |
| |
| | | |
|
Long-term loans
payable - related parties | |
$ | | | |
$ | | | |
| |
| | | |
During the years ended December 31, 2025 and
2024, the Company borrowed from third parties totaling$7,420,322
and $5,041,532,
which includes original issue discount and financing costs of$455,322
and $546,680
and repaid the principal amount of$2,305,825,
including repayments of payable issued for acquisition of subsidiary of $2,275,000 and $2,571,139, respectively.
During the year ended December 31, 2025, the
Company issued a note payable of$1,000,000for
the earn out payment related to the April 1, 2024 acquisition of a subsidiary. During the year ended December 31, 2025, the Company issued
a note payable of$100,000for
consideration related to the July 1, 2025 acquisition of a subsidiary. These notes were fully repaid during the year ended December 31,
2025.
During the years ended December 31, 2025 and
2024, the Company recorded interest expense of$556,051
and $293,671
and recognized amortization of discount, included in interest expense, of$179,659
and $300,303,
respectively.
During the year ended December 31, 2025, the Company settled loans
as follows;
|
|
|
Principal
amount and accrued interest of 5 notes payable issued in June through October 2024 by issuing264,980shares
of common stock. As a result, the Company recorded a loss on settlement of debt of$801,255. |
| |
|
|
|
Principal
amount and accrued interest of 3 notes payable issued in June 2025 by issuing22,131shares
of Series D Preferred Stock. As a result, the Company recorded a loss on settlement of debt of$804,599. |
| |
|
|
|
Principal
amount and accrued interest of 4 notes payable issued in January through May 2025 by issuing14,979shares
of common stock. As a result, the Company recorded a loss on settlement of debt of$541,290. |
| |
|
|
|
|
| |
During the year ended December 31, 2024, the Company settled 2 loans
as follows:
|
|
|
Principal
amount and accrued interest of a note payable issued in April 2023 by issuing22,125shares
of common stock. As a result, the Company recorded a loss on settlement of debt of$102,660. |
| |
|
|
|
Principal
amount of future receipts loan issued in April 2024 by early settlement. As a result, the Company recorded a loss on settlement of
debt of$27,537. |
| |
| | F-22 | | |
| Table of Contents | |
**NOTE
10 - CONVERTIBLE LOANS**
Convertible loans atDecember 31, 2025 and 2024 consisted of
the following:
|
| |
December
31, | |
December
31, | |
|
| |
2025 | |
2024 | |
|
Issued
in fiscal year 2024 | |
$ | | | |
$ | 5,225,308 | | |
|
Total convertible notes payable | |
| | | |
| 5,225,308 | | |
|
Less: Unamortized
debt discount | |
| | | |
| (348,950 | ) | |
|
Total convertible notes | |
| | | |
| 4,876,358 | | |
|
| |
| | | |
| | | |
|
Less: current portion
of convertible notes | |
| | | |
| 1,864,432 | | |
|
Long-term convertible
notes | |
$ | | | |
$ | 3,011,926 | | |
During the years ended December 31, 2025 and
2024, the Company recorded interest expense of$599,738
and $769,027
and recognized amortization of discount, included in interest expense, of$278,951
and $796,422,
respectively.
*Conversion*
**
During the year ended December 31, 2025, one
note holder converted notes with principal amounts of$5,327,485,
debt discount of$137,242,
accrued interest of$434,150and
conversion fee of$16,500into1,271,720shares
of common stock.
During theyear ended December 31, 2024,
one note holder converted notes with principal amounts of$666,666and
conversion fee of$5,000into76,326shares
of common stock.
**
*Settlement*
During the year ended December 31, 2025, the
Company settled the principal amount of convertible notes of$671,870,
debt discount of$58,573and
accrued interest of$34,366issued
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 year ended December 31, 2025, the
Company borrowed amounts from third parties totaling$1,113,316,
which includes original issue discount and financing costs of$125,816.
|
Principal | |
Issuance | |
Maturity | |
Interest | |
Payment | |
|
amount | |
date | |
Date | |
rate | |
schedule | |
|
$ | 471,000 | | |
| February
26, 2025 | | |
| December
30, 2025 | | |
| 14% | |
5
payments, one payment of$268,470and
four payments of$67,118,
beginning in August 2025 | |
|
$ | 116,000 | | |
| February
26, 2025 | | |
| December
30, 2025 | | |
| 14% | |
5
payments, one payment of$66,120and
four payments of$16,530,
beginning in August 2025 | |
|
$ | 526,316 | | |
| March
4, 2025 | | |
| December
5, 2025 | | |
| 24% | |
The outstanding balance was paid onDecember
5, 2025 | |
The
notes were convertible at the option of the holders at any time following an event of default, and the conversion price was 75% multiplied
by the lowest trading price of Companys common stock during the 10 trading days prior to the conversion date. Certain notes allowed
for the conversion price to be a fixed price of $8.80 per share.
| | F-23 | | |
| Table of Contents | |
*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$3,888,889in
secured convertible promissory notes (the Notes) for an aggregate purchase price of$3,500,000(the
Purchase Price), which Notes were convertible into shares (Conversion Shares) of our common stock with an
initial conversion price of$8.8per
share.Each
noteholder received shares of common stock (Kicker Shares) in an amount equal to ten percent of the principal amount of
any Note issued divided by $8.8. The Notes were secured by all of our assets under a Security Agreement signed with the SPA.
The initial tranche was executed in January
2024 for$2,222,222in
face value of Notes and25,252Kicker
Shares, with an original issue discount of$222,222;
second and third tranches were executed in March 2024 for$1,111,111and$555,556,
respectively, in face value of Notes and12,626 and6,314Kicker Shares, with an original issue discount of$111,111and$55,556,
respectively. Eachone
yearnote bore interest at18%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 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.
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$16,453beginning
onApril
15, 2024 | |
|
$ | 177,100 | | |
| March
7, 2024 | | |
| January
15, 2025 | | |
| 14% | |
5
payments, one payment of$100,947and
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$22,724beginning
onAugust
30, 2024 | |
|
$ | 151,960 | | |
| September
16, 2024 | | |
| July
15, 2025 | | |
| 14% | |
5
payments, one payment of$86,617and
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$22,724beginning
onNovember
30, 2024 | |
|
$ | 1,578,947 | | |
| December
6, 2024 | | |
| June
4, 2025 | | |
| 24% | |
Outstanding balance was paid onJune
4, 2025 | |
The
notes were convertible at the option of the holders at any time following an event of default, and the conversion price was 75% multiplied
by the lowest trading price of Companys common stock during the 10 trading days prior to the conversion date.
| | F-24 | | |
| Table of Contents | |
**NOTE
11 WARRANTS**
On February 12, 2024, we issued a Common Stock
Purchase Option (the Option) toADI Funding LLC (ADI Funding) for$100,000that
expired on December 31, 2024, for the right to acquire up to125,000shares
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 $160.00 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) 25,000 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 12,500 shares, which shall occur every thirty (30) days and shall be exercised only
on a cash basis. ADI Fundings obligation to exercise each specified portion of the Option was subject to the exercise price being
not less than $8.8.
If the Company issued 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 warrants 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 Companys own common shares and whether the warrant
holders could potentially require net cash settlement in a circumstance outside of the Companys 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.
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, 2023 | | |
| | | |
$ | | | |
| | | |
|
Granted | | |
| 125,000 | | |
| 0.88 | | |
| 0.88 | | |
|
Exercised | | |
| (125,000 | ) | |
| 0.11 | | |
| | | |
|
Forfeited/canceled | | |
| | | |
| | | |
| | | |
|
Outstanding,
December 31, 2024 | | |
| | | |
$ | | | |
| | | |
The intrinsic value of the warrants at December
31, 2024 was$0.
No warrants were outstanding as of and for the year ended December 31, 2025.
| | F-25 | | |
| Table of Contents | |
**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 at 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 year ended December 31, 2024, the estimated
fair values of the liabilities measured on a recurring basis were as follows:
|
| |
| Year
ended | | |
|
| |
| December
31, | | |
|
| |
| 2024 | | |
|
Expected term | |
| 0.04-0.65years | | |
|
Expected average volatility | |
| 78%-194% | | |
|
Expected dividend yield | |
| | | |
|
Risk-free interest rate | |
| 4.44%-4.73% | | |
The following table summarizes the changes in the derivative liabilities
during the years ended December 31, 2024:
|
Fair Value Measurements Using Significant Observable Inputs
(Level 3) | |
|
| |
| |
|
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, 2025 and 2024, respectively.
|
| |
Year ended
December 31, | |
|
| |
2025 | |
2024 | |
|
Addition of new derivatives recognized as loss on derivatives | |
$ | | | |
$ | | | |
|
Revaluation of derivative
liabilities | |
| | | |
| 1,393,046 | | |
|
Change in fair value of derivative
liability | |
$ | | | |
$ | 1,393,046 | | |
There were no derivative liabilities outstanding as of and for the
year ended December 31, 2025.
| | F-26 | | |
| Table of Contents | |
**NOTE
13 STOCKHOLDERS EQUITY**
*Common Stock*
The Companys authorized capital consists
of26,000,000shares of common stock
with a par value of$0.001per
share.
During the year ended December 31, 2025, the
Company issued2,130,808shares
of common stock, valued at fair market value on issuance as follows:
475,125
shares for conversion of Series D Preferred Stock
7,500
shares for compensation to our directors valued at $81,813
1,271,720
shares for conversion of debt of $5,640,893
264,980
shares for settlement of debt of $1,886,658
32,400
shares for service valued at $223,200
3,563
shares for common stock payable value at $82,194
75,529
shares for stock dividend valued at $500,000
(9)
shares for reverse stock split adjustment
During the year ended December 31, 2024, the
Company issued385,589shares
of common stock and 3,563 shares payable, valued at fair market value on issuance as follows:
7,500shares
for compensation to our directors valued at$141,025
37,590shares
for settlement of debt valued at$483,670
44,192shares
in conjunction with convertible notes valued at$597,777
125,000shares
for exercise of warrants for$1,100,000
76,326shares
for conversion of debt of$671,666
30,625shares
issued for cash of$100,000
8,081shares
for the extension of debt valued at$116,364
56,275shares
for conversion of Series B Preferred Stock
3,563shares
of stock payable for service valued at$82,194recorded
as additional paid in capital at December 31, 2024. Shares were issued on January 16, 2025
At December 31, 2025 and 2024,4,668,017and2,537,209shares
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 up10,000shares,
par value$0.001.
Under the Certificate of Designation,holders
of Series A Preferred Stock will participate on an equal basis per-share with holders of our common stock in any distribution upon winding
up, dissolution, or liquidation.Holders
of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to stockholders
at a rate of 51% of the total vote of stockholders.
The rights of the holders of Series A Preferred
Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020
At December 31, 2025 and 2024,10,000shares
of Series A Preferred Stock were issued and outstanding.
| | F-27 | | |
| Table of Contents | |
*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 up200,000shares,
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 rightsbutmay
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 months stock liquidity.
In December 2025, the Company declared and issued17,168shares
Series B stock to our management as dividends, valued at$624,469.
In June 2025, the Company issued6,571shares
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.
In December 2024, a member of Company management
converted4,502shares
of Series B Preferred Stock into56,275
shares of common stock.
In November 2024, the Company declared and issued8,959shares
Series B stock to our management as dividends, valued at$627,710.
As of December 31, 2025 and 2024,59,276
and 35,537
shares of Series B Preferred Stock were issued and outstanding, respectively.
*Series C Preferred Stock*
On January 7, 2021, pursuant to Article III
of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock,
consisting of up200,000shares,
par value$0.001.Under
the Certificate of Designation,holders of Series C Preferred Stock will rank junior to the Series B Preferred Stock, but on par
with common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation of the Company, as provided
in the designation.The
holders of shares of Series C Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute
discretion, out of funds legally available for that purpose. Holders
of Series C Preferred Stock do not have voting rightsbutmay
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 5% previous months 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.
At December 31, 2025 and 2024,noSeries
C Preferred Stock was issued or outstanding.
| | F-28 | | |
| Table of Contents | |
*Series D Preferred Stock*
On October 10, 2025, the Company filed a Second
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, and first amended on July 7, 2025. The Second Amended and Restated Certificate of Designation maintains the number of authorized
shares at 100,000
and revises the terms by introducing a True-Up Adjustment mechanism to the conversion rate, as described below. The amended terms 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 (the Base Shares), subject to adjustment for stock splits, dividends, or reorganizations.
Additionally, a True-Up Adjustment mechanism applies, whereby the conversion may include additional shares based on a comparison of the
original conversion price (based on the 10-day VWAP with a 20% discount at the time of issuance) to the lowest daily VWAP during the
five trading days preceding the conversion date with a further 20% discount applied to such lowest daily VWAP (the Adjusted Conversion
Price), with a floor of $1.00 and a maximum True-Up Ratio of 2.5.
- 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 Stocks 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 Companys common stock per holder.
During the year ended December 31, 2025, the
Company issued37,110shares
of Series D Preferred Stock for settlement of debt of$4,708,332.
During the year ended December 31, 2025, 19,090
shares of Series D Preferred Stock were converted into 475,125
shares of common stock.
At December 31, 2025 and 2024,18,020
and 0
sharesSeries D Preferred Stock was issued or outstanding.
**NOTE
14 PROVISION FOR INCOME TAXES**
Income (loss) before provision for income taxes consisted of the
following for the years ended December 31, 2025 and 2024:
|
| |
2025 | |
2024 | |
|
United States | |
$ | (8,955,346 | ) | |
$ | (5,587,111 | ) | |
|
Foreign | |
| 566,785 | | |
| 801,105 | | |
|
Total loss before
income taxes | |
$ | (8,388,561 | ) | |
$ | (4,786,006 | ) | |
| | F-29 | | |
| Table of Contents | |
The following table presents a reconciliation
of the income taxes presented in the Statements of Operations for the years ended December 31, 2025 and 2024:
|
| |
2025 | |
2024 | |
|
The federal and state income tax provision
(benefit) is summarized as follows: | |
| | | |
| | | |
|
Current: | |
| | | |
| | | |
|
U.S. federal | |
$ | 10,785 | | |
$ | | | |
|
State and local | |
| 3,562 | | |
| | | |
|
Foreign | |
| 323,722 | | |
| 255,222 | | |
|
Total
current provision for income taxes | |
$ | 338,069 | | |
$ | 255,222 | | |
|
Deferred: | |
| | | |
| | | |
|
U.S. federal | |
$ | (517,250 | ) | |
$ | | | |
|
State and local | |
| | | |
| | | |
|
Foreign | |
| 300,886 | | |
| 138,808 | | |
|
Total
deferred provision for income taxes | |
$ | (216,364 | ) | |
$ | 138,808 | | |
|
Total: | |
| | | |
| | | |
|
U.S. federal | |
$ | (506,465 | ) | |
$ | | | |
|
State and local | |
| 3,562 | | |
| | | |
|
Foreign | |
| 624,608 | | |
| 394,030 | | |
|
Total provision
for income taxes | |
$ | 121,705 | | |
$ | 394,030 | | |
The Company paid income taxes as follows for
the years ended December 31, 2025 and 2024:
|
Income taxes paid: | |
2025 | |
2024 | |
|
Federal | |
$ | | | |
$ | | | |
|
Foreign - UK | |
| 289,968 | | |
| 279,578 | | |
|
State | |
| 4,485 | | |
| | | |
|
Total paid during the year | |
$ | 294,453 | | |
$ | 279,578 | | |
The tax effects of temporary differences that give
rise to significant components of the Companys deferred tax assets and liabilities are as follows:
|
| |
2025 | |
2024 | |
|
Deferred tax assets | |
| | | |
| | | |
|
Interest carryforward | |
$ | 796,380 | | |
$ | | | |
|
Other | |
| 17,181 | | |
| | | |
|
Net operating losses | |
| 6,199,209 | | |
| 3,215,563 | | |
|
Total deferred tax assets | |
| 7,012,770 | | |
| 3,215,563 | | |
|
Valuation allowance | |
| (6,484,923 | ) | |
| (2,972,455 | ) | |
|
Total deferred tax
assets, net | |
$ | 527,847 | | |
$ | 243,108 | | |
|
| |
| | | |
| | | |
|
Deferred tax liabilities | |
| | | |
| | | |
|
Intangibles | |
$ | (10,598 | ) | |
$ | | | |
|
Property and equipment | |
| (57,777 | ) | |
| | | |
|
Total deferred tax liabilities | |
| (68,375 | ) | |
| | | |
|
| |
| | | |
| | | |
|
Net deferred tax assets | |
$ | 459,472 | | |
$ | 243,108 | | |
| | F-30 | | |
| Table of Contents | |
The Change in the valuation allowance for the years
ended December 31, was as follows:
|
| |
2025 | |
2024 | |
|
Balance at beginning of year | |
$ | 2,972,455 | | |
$ | 2,392,012 | | |
|
Additions charged to tax expense | |
| 3,512,468 | | |
| 580,443 | | |
|
Balance at end of year | |
$ | 6,484,923 | | |
$ | 2,972,455 | | |
ASC 740 requires a valuation allowance to reduce
deferred tax assets if it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.
The Company performed a comprehensive review of its
uncertain tax positions and determined that no adjustments were necessary relating to unrecognized tax benefits as of December 31, 2025
and 2024. The Companys federal and state income tax returns are subject to examination for three years after filing and remain
open to examination for those periods.
The components of the Companys provision for income taxes
and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded at December 31, 2025, are as follows:
|
|
|
|
|
|
|
|
|
| |
|
| |
December 31, | |
|
| |
2025 | |
|
U.S. federal statutory
tax benefit on pretax loss | |
$ | (1,761,598 | ) | |
| 21.0 | % | |
|
State and local income taxes, net
of federal benefit | |
| 3,562 | | |
| 0.0 | % | |
|
Foreign tax effects | |
| 505,581 | | |
| (6.0 | )% | |
|
Switzerland | |
| | | |
| | | |
|
Changes in Valuation
Allowance | |
| 147,839 | | |
| (1.8 | )% | |
|
| |
| | | |
| | | |
|
Other | |
| 128,678 | | |
| (1.6 | )% | |
|
United Kingdom | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Other | |
| 229,064 | | |
| (2.7 | )% | |
|
| |
| | | |
| | | |
|
| |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Changes in Valuation Allowance | |
| 3,147,091 | | |
| (37.5 | )% | |
|
Nontaxable or nondeductible items | |
| 860,927 | | |
| (10.3 | )% | |
|
Tax effect of income
not subject to entity level federal income tax | |
| (109,282 | ) | |
| 1.3 | % | |
|
Equity Debt Settlement | |
| 512,707 | | |
| (6.1 | )% | |
|
Goodwill Impairment | |
| 455,396 | | |
| (5.4 | )% | |
|
Other | |
| 2,106 | | |
| 0.0 | % | |
|
| |
| | | |
| | | |
|
Other | |
| (2,633,857 | ) | |
| 31.4 | % | |
|
Change in 163j Interest
Limitation | |
| (2,189,057 | ) | |
| 26.1 | % | |
|
Change
in Net Operating Losses | |
| (444,800 | ) | |
| 5.3 | % | |
|
Total provision
for income taxes | |
$ | 121,705 | | |
| (1.5 | )% | |
| | F-31 | | |
| Table of Contents | |
The components of the Companys deferred
tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of December 31, 2024,
are as follows:
|
|
|
|
|
| |
|
| |
December 31, | |
|
| |
2024 | |
|
Net Operating loss carryforward | |
$ | 15,392,658 | | |
|
Effective tax rate | |
| 21 | % | |
|
Deferred tax asset | |
| 3,232,458 | | |
|
Foreign taxes | |
| (16,895 | ) | |
|
Less: valuation allowance | |
| (2,972,455 | ) | |
|
Net deferred tax asset | |
$ | 243,108 | | |
At December 31, 2025, the Company has approximately$15,400,000of
net operating losses (NOL) generated to December 31, 2025 carried forward to offset taxable income in future years which
began to expire in 2023. The Companys net operating loss carry forwards may be subject to annual limitations, which could eliminate,
reduce or defer the utilization of the losses because of an ownership change as defined in Section 382 of the Internal Revenue Code.
U.S. Federal tax returns are closed by statute for years through 2018. The status of state and non-U.S. tax examinations varies due to
the numerous legal entities and jurisdictions in which the Company operates.
**NOTE
15 - RELATED PARTY TRANSACTIONS**
*Due from related party*
During the years ended December 31, 2025 and 2024, the Company loaned$56,162
and $89,832to
a related party and collected$0
and $33,602,
respectively.
At December 31, 2025 and 2024, the Company had
amounts due from related parties of $639,519
and$630,715, respectively.
The loans are unsecured, non-interest bearing and due on demand.
*Due to related parties*
At December 31, 2025 and 2024, the Company had
amounts due to related parties of$65,829
and $26,613, respectively. The amounts are
unsecured, non-interest bearing and due on demand. During the years ended December 31, 2025, a related party paid$39,216to
purchase a vehicle on behalf of the Company. The amounts are unsecured, non-interest bearing and due on demand.
**Employment agreements**
During the years ended December 31, 2025 and
2024, the Company recorded management salaries and bonus of$972,000
and $846,000, respectively, and stock-based
compensation bonuses of$81,813
and $223,219,
respectively.
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 Quintanamay 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 Marketduring 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.
In June 2025, the Company issued6,571shares
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.
At December 31, 2025 and 2024, the Company recorded
and accrued management salaries of$68,365
and $420,447,
respectively.
| | F-32 | | |
| Table of Contents | |
**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 is12
months. For the years ended December 31, 2025 and 2024, the Company incurredrent expense of$34,366
and $28,539, respectively.
**NOTE
17 - SEGMENT**
The Company operates in two industry segments, telecommunication services and fintech 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.
The following tables show reportable operating
activities information by industrial segment for the years ended December 31, 2025 and 2024. The Company has two industrial segments
since the Company acquired GlobeTopper LLC in July 2025:
*Year ended December 31, 2025*
|
NOTE 17 - SEGMENT - Industrial
Segment (Details) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Telecom | |
Fintech | |
Corporate | |
Elimination | |
Total | |
|
Revenues | |
$ | 330,564,828 | | |
$ | 27,955,101 | | |
$ | 220,755 | | |
$ | (41,841,186 | ) | |
$ | 316,899,498 | | |
|
Cost of revenue | |
| 321,346,150 | | |
| 27,403,231 | | |
| 52,770 | | |
| (41,359,907 | ) | |
| 307,442,244 | | |
|
Gross profit | |
| 9,218,678 | | |
| 551,870 | | |
| 167,985 | | |
| (481,279 | ) | |
| 9,457,254 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating expenses | |
| 6,859,006 | | |
| 548,008 | | |
| 6,326,625 | | |
| (24,375 | ) | |
| 13,709,264 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating income (loss) | |
| 2,359,672 | | |
| 3,862 | | |
| (6,158,640 | ) | |
| (456,904 | ) | |
| (4,252,010 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Other income (expense) | |
| (88,873 | ) | |
| (2,693 | ) | |
| (3,740,139 | ) | |
| (304,846 | ) | |
| (4,136,551 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Income tax expense | |
| (118,143 | ) | |
| | | |
| (3,562 | ) | |
| | | |
| (121,705 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net income
(loss) | |
$ | 2,152,656 | | |
$ | 1,169 | | |
$ | (9,902,341 | ) | |
$ | (761,750 | ) | |
$ | (8,510,266 | ) | |
*Year ended December 31, 2024*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
Telecom | |
Corporate | |
Elimination | |
Total | |
|
Revenues | |
$ | 306,039,424 | | |
$ | | | |
$ | (22,818,982 | ) | |
$ | 283,220,442 | | |
|
Cost of revenue | |
| 297,488,346 | | |
| | | |
| (22,539,653 | ) | |
| 274,948,693 | | |
|
Gross profit | |
| 8,551,078 | | |
| | | |
| (279,329 | ) | |
| 8,271,749 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Operating expenses | |
| 6,224,151 | | |
| 2,800,053 | | |
| 81,609 | | |
| 9,105,813 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Operating income (loss) | |
| 2,326,927 | | |
| (2,800,053 | ) | |
| (360,938 | ) | |
| (834,064 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Other income (expense) | |
| 41,003 | | |
| (3,763,535 | ) | |
| (229,410 | ) | |
| (3,951,942 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Income tax expense | |
| (394,030 | ) | |
| | | |
| | | |
| (394,030 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Net income
(loss) | |
$ | 1,973,900 | | |
$ | (6,563,588 | ) | |
$ | (590,348 | ) | |
$ | (5,180,036 | ) | |
| | F-33 | | |
| Table of Contents | |
The following tables show operating activities
information by geographic segment for the years ended December 31, 2025 and 2024:
*Year ended December 31, 2025*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
USA | |
Switzerland | |
UK | |
Elimination | |
Total | |
|
Revenues | |
$ | 194,721,347 | | |
$ | 22,394,346 | | |
$ | 141,624,991 | | |
$ | (41,841,186 | ) | |
$ | 316,899,498 | | |
|
Cost
of revenue | |
| 190,238,336 | | |
| 21,568,250 | | |
| 136,995,565 | | |
| (41,359,907 | ) | |
| 307,442,244 | | |
|
Gross
profit | |
| 4,483,011 | | |
| 826,096 | | |
| 4,629,426 | | |
| (481,279 | ) | |
| 9,457,254 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating
expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Salaries,
wages and benefits | |
| 1,573,805 | | |
| | | |
| 2,229,565 | | |
| | | |
| 3,803,370 | | |
|
Technology | |
| 1,086,739 | | |
| 407,201 | | |
| 585,947 | | |
| (462,655 | ) | |
| 1,617,232 | | |
|
Professional
fees | |
| 880,058 | | |
| 36,293 | | |
| | | |
| | | |
| 916,349 | | |
|
Legal
and regulatory | |
| 334,258 | | |
| 17,312 | | |
| | | |
| | | |
| 351,570 | | |
|
Travel
and events | |
| 85,959 | | |
| 12,878 | | |
| 218,149 | | |
| (30,810 | ) | |
| 286,176 | | |
|
Public
cost | |
| 120,945 | | |
| | | |
| | | |
| | | |
| 120,945 | | |
|
Advertising | |
| 1,878,274 | | |
| | | |
| | | |
| | | |
| 1,878,274 | | |
|
Bank
services and fees | |
| 150,476 | | |
| (6,942 | ) | |
| 95,191 | | |
| | | |
| 238,725 | | |
|
Depreciation
and amortization | |
| 35,140 | | |
| 103,974 | | |
| 488,553 | | |
| | | |
| 627,667 | | |
|
Office,
facility and other | |
| 697,031 | | |
| 418,681 | | |
| 266,540 | | |
| (12,160 | ) | |
| 1,370,092 | | |
|
Insurance | |
| 18,902 | | |
| | | |
| | | |
| | | |
| 18,902 | | |
|
Bad
debt expense | |
| 6,397 | | |
| | | |
| | | |
| | | |
| 6,397 | | |
|
Stock-based
compensation | |
| 305,013 | | |
| | | |
| | | |
| | | |
| 305,013 | | |
|
General
and administration | |
| 7,172,995 | | |
| 989,397 | | |
| 3,883,945 | | |
| (505,625 | ) | |
| 11,540,712 | | |
|
Impairment
loss of goodwill | |
| 2,168,552 | | |
| | | |
| | | |
| | | |
| 2,168,552 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating
income (loss) | |
| (4,858,536 | ) | |
| (163,301 | ) | |
| 745,481 | | |
| 24,346 | | |
| (4,252,010 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Other
income (expense) | |
| (3,816,310 | ) | |
| 4,209 | | |
| (19,604 | ) | |
| (304,846 | ) | |
| (4,136,551 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Income
tax benefit (expense) | |
| 502,901 | | |
| (243,108 | ) | |
| (381,498 | ) | |
| | | |
| (121,705 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net
income (loss) | |
$ | (8,171,945 | ) | |
$ | (402,200 | ) | |
$ | 344,379 | | |
$ | (280,500 | ) | |
$ | (8,510,266 | ) | |
| | F-34 | | |
| Table of Contents | |
*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 | | |
|
General and administration | |
| 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 | | |
$ | (360,938 | ) | |
$ | (5,180,036 | ) | |
**
**Asset Information**
The following table shows asset and liability
information by industrial segment at December 31, 2025 and 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, 2025 | |
Telecom | |
Fintech | |
Corporate | |
Elimination | |
Total | |
|
Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Current assets | |
$ | 34,685,859 | | |
$ | 1,203,613 | | |
$ | 4,913,268 | | |
$ | (4,640,316 | ) | |
$ | 36,162,424 | | |
|
Non-current assets | |
$ | 8,676,244 | | |
$ | 153,229 | | |
$ | 19,465,775 | | |
$ | (13,369,737 | ) | |
$ | 14,925,511 | | |
|
Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Current liabilities | |
$ | 32,336,073 | | |
$ | 1,851,514 | | |
$ | 5,059,136 | | |
$ | (4,640,316 | ) | |
$ | 34,606,407 | | |
|
Non-current liabilities | |
$ | 169,599 | | |
$ | 31,302 | | |
$ | | | |
$ | | | |
$ | 200,901 | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, 2024 | |
Telecom | |
Corporate | |
Elimination | |
Total | |
|
Assets | |
| | | |
| | | |
| | | |
| | | |
|
Current assets | |
$ | 75,098,705 | | |
$ | 4,594,060 | | |
$ | (16,677,719 | ) | |
$ | 63,015,046 | | |
|
Non-current assets | |
$ | 9,097,736 | | |
$ | 19,079,518 | | |
$ | (12,184,562 | ) | |
$ | 15,992,692 | | |
|
Liabilities | |
| | | |
| | | |
| | | |
| | | |
|
Current liabilities | |
$ | 74,461,579 | | |
$ | 6,037,337 | | |
$ | (16,677,720 | ) | |
$ | 63,821,196 | | |
|
Non-current liabilities | |
$ | 274,353 | | |
$ | 3,011,926 | | |
$ | | | |
$ | 3,286,279 | | |
| | F-35 | | |
| Table of Contents | |
The following table shows asset and liability
information by geographic segment at December 31, 2025 and December 31, 2024:
****
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, 2025 | |
USA | |
Switzerland | |
UK | |
Elimination | |
Total | |
|
Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Current
assets | |
$ | 15,281,322 | | |
$ | 1,538,421 | | |
$ | 21,638,782 | | |
$ | (2,296,101 | ) | |
$ | 36,162,424 | | |
|
Non-current assets | |
$ | 20,377,490 | | |
$ | 331,914 | | |
$ | 7,585,844 | | |
$ | (13,369,737 | ) | |
$ | 14,925,511 | | |
|
Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Current liabilities | |
$ | 13,941,863 | | |
$ | 2,563,328 | | |
$ | 20,397,317 | | |
$ | (2,296,101 | ) | |
$ | 34,606,407 | | |
|
Non-current liabilities | |
$ | 31,302 | | |
$ | 169,599 | | |
$ | | | |
$ | | | |
$ | 200,901 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net Asset | |
| 21,685,647 | | |
| (862,592 | ) | |
| 8,827,309 | | |
| (13,369,737 | ) | |
| 16,280,627 | | |
****
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
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 | | |
****
**NOTE
18 SUBSEQUENT EVENTS**.
Subsequent to December 31, 2025 and through the date that these financials
were made available, the Company had no subsequent events.
| | F-36 | | |
| Table of Contents | |
**Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure**
There were no changes or disagreements with our accountants on accounting
and financial disclosure.
**Item 9A. Controls and Procedures**
**Evaluation of Disclosure Controls and Procedures**
As required by Rule 13a-15 under the Securities Exchange
Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period
covered by this annual report, being December 31, 2025. This evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and
other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information
required to be disclosed in our Companys reports filed under the Securities Exchange Act of 1934 is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and
Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered
by this annual report.
**Managements Annual Report on Internal Control over Financing
Reporting**
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934).
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As a result of this assessment, management concluded that, as of December 31, 2025, our internal control over financial reporting was
not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are
indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient
written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP
and SEC guidelines.
We plan to take steps to enhance and improve the
design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been
able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes
during our fiscal year ending December 31, 2026: (i) appoint additional qualified personnel to address inadequate segregation of duties
and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The
remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing
the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation
report of our registered public accounting firm regarding internal control over financial reporting. Managements report was not
subject to attestation by our independent registered public accounting firm pursuant to an exemption for non-accelerated filers set forth
in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
| | 42 | | |
| Table of Contents | |
**Inherent Limitations**
Our management, including our Chief Executive Officer
and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further,
the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular,
many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted
in erroneous reporting of financial data.
**Changes in Internal Controls over Financial Reporting**
There were no changes in our internal control over
financial reporting during the three month period ended December 31, 2025, which were identified in conjunction with managements
evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
**Item 9B. Other Information**
None
**Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections**
None
| | 43 | | |
| Table of Contents | |
****
**PART III**
**Item 10. Directors, Executive Officers and Corporate
Governance**
The following information sets forth the names, ages, and positions of
our current directors and executive officers.
|
Name | |
Age | |
Positions and Offices
Held | |
|
Leandro Iglesias | |
| 59 | | |
President, Chairman, Chief Executive Officer and
Director | |
|
Alvaro Quintana Cardona | |
| 53 | | |
Chief Operating Officer, Chief Financial Officer and Director | |
|
Raul Perez | |
| 73 | | |
Director | |
|
Jose Antonio Barreto | |
| 66 | | |
Director | |
|
Italo Segnini | |
| 59 | | |
Director | |
Set forth below is a brief description of the background and business
experience of each of our current executive officers and directors.
**Leandro Iglesias**
Before founding Etelix in year 2008, where he has
acted as President and CEO, Mr. Iglesias was the International Business Manager at CANTV/Movilnet (the Venezuelan biggest telecommunications
services provider). He held this position between January 2003 and July 2008, while the company was under the control of Verizon. Previous
to his position in Cantv/Movilnet Mr. Iglesias was Executive Vice President and responsible of the Latin America marketing division of
American Internet Communications (August 1998 December 2002). Leandro Iglesias has developed a career for more than 20 years
in the telecommunications industry with a particular emphasis in the international long-distance traffic business, submarine cables,
satellite communications and international roaming services. He is Electronic Engineer graduate from Universidad Simon Bolivar and graduated
from the Management Program at IESA Business School. He also holds an MBA from Universidad Nororiental Gran Mariscal de Ayacucho.
Aside from that provided above, Mr. Iglesias does
not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant
to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an
investment company under the Investment Company Act of 1940.
We believe that Mr. Iglesias is qualified to serve
on our Board of Directors because of his wealth of experience in the telecom industry.
**Alvaro Quintana Cardona**
Alvaro Quintana has developed a career of more than
twenty years of experience in the telecommunication industry with particular focus on regulatory affairs, strategic planning, value added
services and international interconnection agreements. Before joining Etelix in year 2013 as Chief Operation Officer and Chief Financial
Officer, Mr. Quintana acted between June 2004 and May 2013 as Interconnection and Value-Added Services Manager at Digitel (a mobile service
provider in Venezuela, formerly a Telecom Italia Mobile subsidiary). He holds a Bachelor Degree in Business Administration and a Specialist
Degree in Economics, both from the Universidad Catolica Andres Bello. He also holds a Master in Telecommunications from the EOI Business
School in Spain.
Aside from that provided above, Mr. Cardona does
not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant
to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an
investment company under the Investment Company Act of 1940.
We believe that Mr. Quintana is qualified to serve
on our Board of Directors because of his wealth of experience in the telecom industry.
| | 44 | | |
| Table of Contents | |
**Raul A Perez**
From December 1, 2014 to present, Mr. Perez serves
as CFO of Deerbrook Family Dentistry, PC, Dental Practice in Humble, Texas. From November 1, 2017 to January 31, 2019, he served as Senior
Accountant to Principrin School, PC, Day Care in Houston, Texas.
Mr. Perez has been in finance for more than 40 years,
starting in 1970 as analyst in treasury and finance departments and progressively assuming different positions up to corporate treasurer
for large corporations. He served for Sudamtex of Venezuela, C.A for 5 years and Polar Brewery in Caracas, Venezuela for 10 year. Beginning
in 2000, he accepted a position as a Director of the Security and Exchange Commission of Venezuela to have the surveillance of Venezuelan
stock market participants. Also, in 2004 he completed the requirements and received his certification as a Venezuelan Investment Advisor.
Later, as an independent contractor for three years, he was selected as the Corporate Compliance Officer for an especially important
stock market broker dealer in Venezuela, Activalores Casa de Bolsa, in which he developed the Compliance Unit and manuals required by
local and international anti money laundering laws. He also taught Advanced Institute of Finance (IAF) in Caracas being a professor of
Corporate Finance and Managerial Accounting for 5 years.
Mr. Perez has a Bachelors degree in accounting
(1976), and MBA Finance (1982), gave me the overall knowledge of finance and how to plan, start up, run, and control a business.
We have selected Mr. Perez to serve as an independent
director because of his education, skills and experience in finance and his regulatory history.
**Jose Antonio Barreto**
From 2006 to the present, Mr. Barreto has been Chief
Business Development Officer of Xpectra Remote Management / Mexico. There he was in charge of directing all aspects of account development
and sales effort to close specific private and government opportunities and developing strategic accounts in Mexico and the LATAM region.
From 2020 to present, he has been an advisor to our Board of Directors.
Mr. Barreto has more than 30 years of experience
working in telecommunications and technology companies. He has been directly responsible of leading the business development and operational
in several telecommunication and technology companies acquisition activity, with the responsibility of leading the technical,
operation and financial analysis. Over the last 14 years, Jose Antonio has been the North and Central American leader, spanning from
Mexico to Panama, in the development of commercial processes in the technology security field, artificial intelligence, Internet of Things
(IoT) platforms, as well as cutting edge technology solutions and software systems.
He studied Electronic Engineering at the Universidad
Simn Bolivar followed by a Master of Science Degree in Electrical and Computer Engineering at Rice University. He also completed
the Master in Telecommunications Management offered by Universidad Simon Bolivar and the Telecom SudParis Institute.
We have selected Mr. Barreto to serve as an independent director because
of his education, skills and experience in technology companies.
**Italo R. Segnini**
From March 2020 to the present, Mr. Segnini has been
serving as Global Carrier Partnership Director of Sierra Wireless. From June 2019 to February 2020, he served as an Independent Telecom
Consultant. From 2017 to 2019, he served as Director of International Carrier Business for Televisa Telecom. From 2012 to 2019, he served
as Director International Carrier Business for Millicom.
| | 45 | | |
| Table of Contents | |
Mr. Segnini is a long time Telecommunicaction industry
professional who has had high level positions at Global Tier Ones for more than 20 years, Telefonica, Millicon and Televisa, Sierra Wireless
to mention a few. Mr. Segnini has extensive executive experience in the Telecom areas like Voice, A2P, SMS, Data, Roaming, Mobility Services,
B2B, MNO, MVNO, IoT, Interconnection, etc., and a solid business performance record spanning multiple functions including International
commercial negotiations, management, sales, business development, sales, regulatory and operations. Italo R. Segnini holds a Juris Doctor
degree from the Andres Bello Catholic University, a Telecommunication Masters Degree from Madrid Pontificia Comillas University and an
MBA from IESA Business School
**Term of Office**
Our Directors are appointed for a one-year term to
hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our
officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements.
**Significant Employees**
We have no significant employees other than our officers
and directors.
**Family Relationships**
There are no family relationships between or among
the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
**Involvement in Certain Legal Proceedings**
During the past 10 years, none of our current directors,
nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation
S-K, including:
1. Any petition under the Federal bankruptcy laws
or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business
or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time
of such filing;
2. Any conviction in a criminal proceeding or being
named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Being subject to any order, judgment, or decree,
not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or
her from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by
the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association
or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal
commodities laws;
| | 46 | | |
| Table of Contents | |
4. Being subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities,
investment, insurance or banking activities, or to be associated with persons engaged in any such activity;
5. Being found by a court of competent jurisdiction
in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding
by the Commission has not been subsequently reversed, suspended, or vacated;
6. Being found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Being subject to, or a party to, any Federal or
State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an
alleged violation of:
i. Any Federal or State securities or commodities
law or regulation; or
ii. Any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire
fraud or fraud in connection with any business entity; or
8. Being subject to, or a party to, any sanction
or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))),
or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated
with a member.
**Director Independence**
The Board of Directors reviews the independence of
our directors on the basis of standards adopted by the NASDAQ Stock Market (NASDAQ). As a part of this review, the Board
of Directors considers transactions and relationships between our Company, on the one hand, and each director, members of the directors
immediate family, and other entities with which the director is affiliated, on the other hand. The purpose of such a review is to determine
which, if any, of such transactions or relationships were inconsistent with a determination that the director is independent under NASDAQ
rules. As a result of this review, the Board of Directors has determined that each of Messrs Perez, Segnini and Barreto is an independent
director within the meaning of applicable NASDAQ listing standards.
**Committees of the Board**
On August 25, 2021, the Board authorized the creation
of anAudit Committee. Raul Perez (chair), Italo Segnini and Jose Antonio Barreto were appointed to serve on theAudit Committee.
Mr. Perez was identified and designated by the Board
as an audit committeefinancial expert, as defined by the SEC in Item 407 of Regulation S-K.
| | 47 | | |
| Table of Contents | |
On November 17, 2022, we authorized the creation
of a Compensation Committee. The Compensation Committees responsibilities, which are discussed in detail in its Charter, include
the following:
|
|
|
In
consultation with our senior management, establish our general compensation philosophy and oversee the development and implementation
of our compensation programs; | |
|
|
|
Recommend
the base salary, incentive compensation and any other compensation for our Chief Executive Officer to the Board of Directors and
review and approve the Chief Executive Officers recommendations for the compensation of all other officers of our Company
and its subsidiary; | |
|
|
|
Administer
our incentive and stock-based compensation plans, and discharge the duties imposed on the Compensation Committee by the terms of
those plans; | |
|
|
|
Review
and approve any severance or termination payments proposed to be made to any current or former officer of our Company; and | |
|
|
|
Perform
other functions or duties deemed appropriate by the Board of Directors. | |
The Committee is comprised of, Raul Perez, Jose Antonio
Barreto, and Italo Segnini, with Mr. Segnini serving as Chairperson.
On June 12, 2023, our Board of Directors adopted
a charter for our newly created Nominating and Governance Committee (the Committee). The Committee is responsible for the
oversight of our director nominations process, including recommending nominees to the Board of Directors for approval and for the development
and maintenance of our corporate governance policies.
Our Board of Directors appointed the following persons
to the Committee: Raul Perez, Jose Antonio Barreto and Italo Segnini, with Mr. Barreto serving as Chairperson.
**Section 16(a) Beneficial Ownership Reporting Compliance**
Section 16(a) of the Exchange Act requires our directors
and executive officers and persons who beneficially own more than ten percent of a registered class of the Companys equity securities
to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent beneficial stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange
Act during fiscal year ended December 31, 2025.
**Code of Ethics**
On October 31, 2022, our Board of Directors approved
and adopted a Code of Business Conduct and Ethics (the Code of Ethics). The Code of Ethics is applicable to all directors,
officers and employees of our Company, our Companys subsidiaries and any subsidiaries that may be formed in the future. The Code
of Ethics addresses such individuals conduct with respect to, among other things, conflicts of interests; compliance with applicable
laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure; competition and fair dealing; corporate opportunities;
confidentiality; insider trading; protection and proper use of our assets; fair treatment; and reporting suspected illegal or unethical
behavior.
A copy of our Code of Ethics is posted on our website
at http://IQSTEL.com/. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of
Business Conduct and Ethics on our website. The reference to the IQSTEL website address does not constitute incorporation by reference
of the information contained at or available through our website, and you should not consider it to be part of this annual report.
| | 48 | | |
| Table of Contents | |
**Item 11. Executive Compensation**
The table below summarizes all compensation awarded
to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2025 and 2024.
|
Name and principal
Position |
Year |
Salary
($) |
Bonus
($) |
Stock
Awards
($) |
Option
Awards
($) |
All Other
Compensation
($) (1)(2) |
Total
($) | |
|
Leandro Iglesias
President, CEO and Director
|
2025
2024
|
432,000
432,000
|
|
|
|
|
432,000
432,000
| |
|
Alvaro Quintana
Treasury, Secretary and Director
|
2025
2024
|
324,000
324,000
|
|
|
|
|
324,000
324,000
| |
On May 2, 2019, the Company entered into Employment
Agreements with the following persons: (i) Leandro Iglesias as President, CEO and Chairperson of the Companys Board of Directors
with an annual salary of $168,000 with an annual bonus of 3% of our net income; and (ii) Alvaro Quintana Cardona as Chief Operating Officer
and Chief Financial Officer with an annual salary of $144,000 with an annual bonus of 3% of our net income. The Employment Agreements
have a term of 36 months, are renewable automatically for 24-month periods, unless the Company gives written notice at least 90 days
prior to termination of the initial 36-month term. The Company shall have the right to terminate any of the employment agreements at
any time without prior notice, but in that event, the Company shall pay these persons salaries and other benefits they are entitled to
receive under their respective agreements for three years. The above executive officers agreed to two year non-compete and non-solicit
restrictive covenants with the Company. If any of the executive officers are terminated for cause they shall forfeit any rights to severance.
On November 1, 2020, our board of directors approved
amended employments in favor of our Chief Executive Officer, Leandro Iglesias, and our Chief Financial Officer, Alvaro Quintana.
The amended employment agreement in favor of Mr.
Iglesias extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Iglesias provides
that we will compensate him with a salary of $17,000 monthly and he is eligible for quarterly bonus of 3,125 shares of our common stock.
If we do not have the cash available, the agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our
common stock or newly created Series A Preferred Stock. For common shares, the amount of accrued salary to be converted into shares must
be determined by considering the average price per share of the Companys common stock on the OTC Markets during the last 10 days
and applying a discount of 25%. For Series A Preferred Shares, the amount of accrued salary to be converted into shares is the
per share conversion price for common shares multiplied by ten US Dollars ($10). Mr. Iglesias has a further right to convert any common
shares under his control into Series A Preferred shares at any time at a rate of ten (10) common shares for each Series A Preferred share.
The amended employment agreement in favor of Mr.
Quintana extended the term of employment from 36 months to 60 months. The now five year employment agreement with Mr. Quintana provides
that he is eligible for quarterly bonus of 2,500 shares of our common stock. If we do not have the cash available, the agreement provides
that Mr. Quintana may convert his accrued salary/bonus into shares of our common stock or newly created Series A Preferred Stock. For
common shares, the amount of accrued salary to be converted into shares must be determined by considering the average price per share
of the Companys common stock on the OTC Markets during the last 10 days and applying a discount of 25%. For Series A Preferred
Shares, the amount of accrued salary to be converted into shares is the per share conversion price for common shares multiplied by ten
US Dollars ($10). Mr. Quintana has a further right to convert any common shares under his control into Series A Preferred shares at any
time at a rate of ten (10) common shares for each Series A Preferred share.
| | 49 | | |
| Table of Contents | |
On February 29, 2024, our board of directors approved
amended and restated employment and indemnification agreements in favor of our Chief Executive Officer, Leandro Jose Iglesias and our
Chief Financial Officer, Alvaro Quintana Cardona, to replace their existing agreements. The agreements are effective as of January 1,
2024.
The new five year employment agreement with Mr. Iglesias
provides that we will compensate him with a salary of $31,000 monthly and he is eligible for a bonus as follows: (i) up to two months
of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 12,500 shares of our common stock, as
determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the
agreement provides that Mr. Iglesias may convert his accrued salary/bonus into shares of our common stock at the average price of our
common stock during the last 10 days after applying a discount of 25%.
Mr. Iglesias agreed to two year non-compete and non-solicit
restrictive covenants. If Mr. Iglesias is terminated for cause he shall forfeit any rights to severance, which is available to him in
the event of termination without cause.
The new five year employment agreement with Mr. Quintana
provides that we will compensate him with a salary of $22,000 monthly and he is eligible for a bonus as follows: (i) up to two months
of salary on a yearly basis, (ii) up to 4% of our net income on a yearly basis, and (iii) up to 10,000 shares of our common stock, as
determined by our board of directors, all payable 15 days after our annual report is filed. If we do not have the cash available, the
agreement provides that Mr. Quintana may convert his accrued salary/bonus into shares of our common stock at the average price of our
common stock during the last 10 days after applying a discount of 25%.
Mr. Quintana agreed to two year non-compete and non-solicit
restrictive covenants. If Mr. Quintana is terminated for cause he shall forfeit any rights to severance, which is available to him in
the event of termination without cause.****
**Option Grants**
We have not granted any options or stock appreciation
rights to our named executive officers or directors since inception. We do not have any stock option plans.
**Compensation of Directors**
All Directors shall receive reimbursement for reasonable
travel expenses incurred to attend Board and committee meetings.
Effective on July 1, 2021 and thereafter, all Directors
shall be compensated monthly up to 4,000 shares of common stock cash of $1,000 for their service as Directors. The Chairman and Secretary
of the Board shall receive an additional $2,000 per month in addition to the Director compensation.
In lieu of the cash compensation set forth above,
each Director may elect to receive shares of the Corporation's Common Stock equal to the total cash compensation divided by the average
market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%.
Effective on January 1, 2024, and thereafter, all
Directors shall be compensated monthly with 10,000 shares of common stock cash of $2,500 for their service as Directors. The Chairman
and Secretary of theBoardshall receive an additional $2,500 per month in addition to the Directorcompensation.
Each Director shall also be entitled to a bonus of
up to 1% of our net income on a yearly basis.
In lieu of the cashcompensationset forth
above, each Director may elect to receive shares of our Common Stock equal to the total cashcompensationdivided by the average
market value of the Company's Common Stock during the last 10 trading days and applying a discount of 25%.
| | 50 | | |
| Table of Contents | |
**Pension, Retirement or Similar Benefit Plans**
There are no arrangements or plans in which we provide
pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant
to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted
at the discretion of the board of directors or a committee thereof.
**Compensation Committee**
The Company have a compensation committee of the
board of directors. This committee is constituted by independent members of the Board and participates in the consideration of executive
officer and director compensation.
**Indebtedness of Directors, Senior Officers, Executive Officers and
Other Management**
None of our directors or executive officers or any
associate or affiliate of our Company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support
agreement, letter of credit or other similar agreement or understanding currently outstanding.
**Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.**
The following table sets forth, as of March 31, 2026,
certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding
voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.
Unless otherwise indicated below, to our knowledge,
all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority
is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address
of 300 Aragon Avenue, Suite 375, Coral Gables, FL 33134.
The number of shares beneficially owned by each stockholder
is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other
purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or
investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60days
through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does
not constitute an admission that the named stockholder is a direct or indirect beneficial owner.
|
| |
Common
Stock | |
|
Name of Beneficial Owner | |
Number
of Shares Owned (1) | |
Percent
of Class (2) | |
|
Leandro Iglesias | |
| 18,436 | | |
| 0.376 | % | |
|
Alvaro Quintana Cardona | |
| 18,066 | | |
| 0.368 | % | |
|
Raul Perez | |
| 3,811 | | |
| 0.078 | % | |
|
Jose Antonio Barreto | |
| 3,811 | | |
| 0.078 | % | |
|
Italo Segnini | |
| 1,905 | | |
| 0.039 | % | |
|
All Directors and Executive Officers as a Group (5 persons) | |
| 46,029 | | |
| 0.939 | % | |
| | 51 | | |
| Table of Contents | |
|
| |
Series
A Preferred Stock | |
|
Name of Beneficial Owner | |
Number
of Shares Owned (1) | |
Percent
of Class (3) | |
|
Leandro Iglesias | |
| 7,000 | | |
| 70.00 | % | |
|
Alvaro Quintana Cardona | |
| 3,000 | | |
| 30.00 | % | |
|
Juan Carlos Lopez Silva | |
| | | |
| | | |
|
Raul Perez | |
| | | |
| | | |
|
Jose Antonio Barreto | |
| | | |
| | | |
|
Italo Segnini | |
| | | |
| | | |
|
All Directors and Executive Officers as a Group (6 persons) | |
| 10,000 | | |
| 100.00 | % | |
(1) Unless otherwise indicated, each person or entity
named in the table has sole voting power and investment power (or shares that power with that persons spouse) with respect to
all shares of voting stock listed as owned by that person or entity.
(2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange
Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also
any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or
warrants. The percent of class is based on 5,070,743 voting shares as of March 31, 2026.
(3) Pursuant to Rules 13d-3 and 13d-5 of the Exchange
Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also
any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or
warrants. The percent of class is based on 10,000 voting shares as of March 31, 2026.
**Item 13. Certain Relationships and Related Transactions,
and Director Independence**
Other than described below or the transactions described
under the heading Executive Compensation (or with respect to which such information is omitted in accordance with SEC regulations),
there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will
be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total
assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any
class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect
material interest.
**Due from related party**
During the years ended December 31, 2025 and 2024, the Company loaned$56,162
and $89,832 to a related party and collected$0 and $33,602, respectively.
At December 31, 2025 and 2024, the Company had
amounts due from related parties of $639,519 and$630,715, respectively. The loans are unsecured, non-interest bearing and due on
demand.
**Due to related parties**
At December 31, 2025 and 2024, the Company had
amounts due to related parties of$65,829 and $26,613, respectively. The amounts are unsecured, non-interest bearing and due on
demand. During the years ended December 31, 2025, a related party paid$39,216to purchase a vehicle on behalf of the Company.
The amounts are unsecured, non-interest bearing and due on demand.
| | 52 | | |
| Table of Contents | |
**Item 14. Principal Accounting Fees and Services**
Below are tables of Audit Fees (amounts in US$) billed
by our auditors in connection with the audits of the Companys annual financial statements for the years ended:
|
Financial
Statements for the
Year Ended December 31 |
|
Audit
Services |
|
Audit
Related Fees |
|
Tax
Fees |
|
Other
Fees | |
|
2025 |
|
|
$ |
206,700 |
|
|
$ |
15,770 |
|
|
$ |
0 |
|
|
$ |
0 |
| |
|
2024 |
|
|
$ |
240,000 |
|
|
$ |
7,511 |
|
|
$ |
0 |
|
|
$ |
0 |
| |
****
| | 53 | | |
| Table of Contents | |
****
**PART IV**
**Item 15. Exhibits, Financial Statements Schedules**
|
|
|
(a)
Financial Statements and Schedules | |
The following financial statements and schedules listed below are included in this Form 10-K.
Financial Statements (See Item 8)
|
|
|
(b)
Exhibits | |
|
Exhibit
No. |
|
Description
of Exhibit | |
|
Exhibit 2.1 |
|
Membership
Interest Purchase Agreement(1) | |
|
Exhibit 2.2 |
|
Memorandum
of Understanding and Shareholders Agreement dated February 21, 2020(5) | |
|
Exhibit 2.3 |
|
Memorandum
of Understanding and Shareholders Agreement dated February 12, 2020(6) | |
|
Exhibit 2.4 |
|
Company
Purchase Agreement, dated April 1, 2019(11) | |
|
Exhibit 2.5 |
|
Share
Purchase Agreement, dated January 19, 2024(23) | |
|
Exhibit 2.6 |
|
Purchase
Company Agreement, dated May 10, 2024(26) | |
|
Exhibit 2.7 |
|
Second
Amendment to Share Purchase Agreement, dated June 27, 2024(27) | |
|
Exhibit 3.1 |
|
Articles
of Incorporation of the Registrant(2) | |
|
Exhibit 3.2 |
|
Certificate
of Amendment(3) | |
|
Exhibit 3.3 |
|
Certificate
of Amendment(18) | |
|
Exhibit 3.4 |
|
Certificate
of Designation(20) | |
|
Exhibit 3.5 |
|
Certificate
of Designation(21) | |
|
Exhibit 3.6 |
|
Certificate
of Designation(22) | |
|
Exhibit 3.7 |
|
Amended
and Restated Bylaws of the Registrant(19) | |
|
Exhibit 3.8 |
|
Certificate
of Change, dated May 1, 2025(31) | |
|
Exhibit 3.9 |
|
Certificate
of Amendment, dated September 16, 2025(36) | |
|
Exhibit 3.10 |
|
Second
Amended and Restated Certificate of Designation for Series D Preferred Stock(38) | |
|
Exhibit 3.11 |
|
Third
Amended and Restated Certificate of Designation for Series D Preferred Stock(39) | |
|
Exhibit 4.1 |
|
Amendment
#2 to the Crown Capital Note dated March 2, 2020(4) | |
|
Exhibit 4.2 |
|
Amendment
#2 to the Auctus Fund Note dated March 2, 2020(4) | |
|
Exhibit 4.2 |
|
Amendment
#1 to the Labrys Fund Note dated February 11, 2020(7) | |
|
Exhibit 4.3 |
|
Amendment
#1 to the Apollo Note dated December 23, 2019(8) | |
|
Exhibit 4.4 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.5 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.6 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.7 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.8 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.9 |
|
Amendment
#1 to the Apollo Note dated December 24, 2019(8) | |
|
Exhibit 4.10 |
|
Amendment
#1 to the Crown Capital Note dated December 23, 2019(8) | |
|
Exhibit 4.11 |
|
Amendment
#1 to the Auctus Fund Note dated January 1, 2020(8) | |
|
Exhibit 4.12 |
|
Senior
Secured Convertible Promissory Note to Labrys Fund dated December 3, 2019(9) | |
|
Exhibit 4.13 |
|
Purchase
Company Agreement, dated April 21, 2022(12) | |
|
Exhibit 4.14 |
|
Purchase
Company Agreement, dated May 6, 2022(13) | |
|
Exhibit 4.15 |
|
Common
Stock Purchase Option with Apollo dated April 5, 2022(14) | |
|
Exhibit 4.16 |
|
Amended
Common Stock Purchase Option with Apollo dated September 29, 2022(15) | |
|
Exhibit 4.17 |
|
Secured
Convertible Promissory Note, dated January 24, 2024(23) | |
|
Exhibit 4.18 |
|
Common
Stock Purchase Option, dated February 12, 2024(24) | |
|
Exhibit 4.19 |
|
Common
Stock Purchase Option, dated January 14, 2025(30) | |
|
Exhibit 10.1 |
|
Conversion
Agreement with Carmen Cabell(1) | |
|
Exhibit 10.2 |
|
Conversion
Agreement with Patrick Gosselin(1) | |
|
Exhibit 10.3 |
|
Conversion
Agreement with Mark Engler(1) | |
|
Exhibit 10.4 |
|
Employment
Agreement with Leandro Iglesias(1) | |
|
Exhibit 10.5 |
|
Employment
Agreement with Alvaro Quintana Cardona(1) | |
|
Exhibit 10.6 |
|
Employment
Agreement with Juan Carlos Lopez Silva(1) | |
|
Exhibit 10.7 |
|
Forbearance
Agreement dated December 12, 2019(8) | |
|
Exhibit 10.8 |
|
Temporary
Forbearance Agreement dated December 18, 2019(8) | |
|
Exhibit 10.9 |
|
Securities
Purchase Agreement, dated December 3, 2019(9) | |
|
Exhibit 10.10 |
|
Employment
and Indemnification Agreements with Leandro Iglesias, dated May 2, 2019(10) | |
|
Exhibit 10.11 |
|
Employment
and Indemnification Agreements with Alvaro Quintana, dated May 2, 2019(10) | |
|
Exhibit 10.12 |
|
Employment
and Indemnification Agreements with Juan Carlos Lopez Silva, dated May 2, 2019(10) | |
|
Exhibit 10.13 |
|
Registration
Rights Agreement with ADI Funding dated April 5, 2022(16) | |
|
Exhibit 10.14 |
|
Securities
Purchase Agreement, dated January 24, 2024(23) | |
|
Exhibit 10.15 |
|
Registration
Rights Agreement with M2B Funding Corp., dated January 24, 2024(23) | |
|
Exhibit 10.16 |
|
Security
Agreement, dated January 24, 2024(23) | |
|
Exhibit 10.17 |
|
Amended
and Restated Employment Agreement with Mr. Iglesias, dated February 29, 2024(25) | |
|
Exhibit 10.18 |
|
Amended
and Restated Indemnification Agreement with Mr. Iglesias, dated February 29, 2024(25) | |
|
Exhibit 10.19 |
|
Amended
and Restated Employment Agreement with Mr. Cardona, dated February 29, 2024(25) | |
|
Exhibit 10.20 |
|
Amended
and Restated Indemnification Agreement with Mr. Cardona, dated February 29, 2024(25) | |
|
Exhibit 10.21 |
|
Memorandum
of Understanding, dated October 18, 2024(28) | |
|
Exhibit 10.22 |
|
Memorandum
of Understanding, dated November 1, 2024(29) | |
|
Exhibit 10.23 |
|
Stock
Purchase Agreement, dated January 14, 2025(30) | |
|
Exhibit 10.24 |
|
Registration
Rights Agreement, dated January 14, 2025(30) | |
|
Exhibit 10.25 |
|
Unit
Purchase Agreement, dated May 29, 2025(32) | |
|
Exhibit 10.26 |
|
Amendment
to Employment Agreement with Leandro Iglesias, dated June 23, 2025(33) | |
|
Exhibit 10.27 |
|
Amendment
to Employment Agreement with Alvaro Quintana Cardona, dated June 23, 2025(33) | |
|
Exhibit 10.28 |
|
Debt
Exchange Agreement, dated June 30, 2025 with ADI Funding, LLC(34) | |
|
Exhibit 10.29 |
|
Debt
Exchange Agreement, dated June 30, 2025 with M2B Funding Corp.(34) | |
|
Exhibit 10.30 |
|
Stock-For-Stock
Exchange Agreement, dated September 2, 2025(35) | |
|
Exhibit 10.31 |
|
Amendment
No. 1 to Stock-For-Stock Exchange Agreement, dated September 26, 2025(37) | |
|
Exhibit 14.1 |
|
Code
of Business Conduct and Ethics(17) | |
|
Exhibit 31.1** |
|
Certification of Chief Executive
Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 | |
|
Exhibit 31.2** |
|
Certification of Chief Financial
Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 | |
|
Exhibit 32.1** |
|
Certification of Chief Executive
Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 | |
|
Exhibit 101** |
|
The following materials from the Companys Annual
Report on Form 10-K for the year ended December 31, 2023 formatted in Extensible Business Reporting Language (XBRL). | |
Filed herewith**
| | 54 | | |
| Table of Contents | |
|
|
1. |
Incorporated
by reference to the Companys Form 8-K filed with the US Securities and Exchange Commission on June 28, 2018. | |
|
|
2. |
Incorporated by reference
to the Companys Registration Statement on Form S-1 filed with the US Securities and Exchange Commission on August 18, 2011. | |
|
|
3. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on August 31, 2018. | |
|
|
4. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on March 30, 2020. | |
|
|
5. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on February 25, 2020. | |
|
|
6. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on February 19, 2020. | |
|
|
7. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on February 13, 2020. | |
|
|
8. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on January 6, 2020. | |
|
|
9. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on December 11, 2019. | |
|
|
10. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on May 6, 2019. | |
|
|
11. |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on April 4, 2019. | |
|
|
12 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on April 26, 2022. | |
|
|
13 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on May 10, 2022. | |
|
|
14 |
Incorporated by reference
to the Companys Form S-1/A filed with the US Securities and Exchange Commission on September 22, 2022. | |
|
|
15 |
Incorporated by reference
to the Companys Form 8-K/A filed with the US Securities and Exchange Commission on October 6, 2022. | |
|
|
16 |
Incorporated by reference
to the Companys Form S-1/A filed with the US Securities and Exchange Commission on October 11, 2022. | |
|
|
17 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on November 2, 2022. | |
|
|
18 |
Incorporated by reference
to the Companys DEF 14C filed with the US Securities and Exchange Commission on May 12, 2020. | |
|
|
19 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on December 14, 2022. | |
|
|
20 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on January 8, 2021. | |
|
|
21 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on November 13, 2020. | |
|
|
22 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on November 6, 2020. | |
|
|
23 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on January 25, 2024. | |
|
|
24 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on February 13, 2024. | |
|
|
25 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on March 4, 2024. | |
|
|
26 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on May 10, 2024. | |
|
|
27 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on July 2, 2024. | |
|
|
28 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on October 22, 2024. | |
|
|
29 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on November 4, 2024. | |
|
|
30 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on January 17, 2025 | |
|
|
31 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on May 2, 2025 | |
|
|
32 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on May 30, 2025 | |
|
|
33 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on June 25, 2025 | |
|
|
34 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on July 9, 2025 | |
|
|
35 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on September 3, 2025 | |
|
|
36 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on September 19, 2025 | |
|
|
37 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on September 26, 2025 | |
|
|
38 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on October 10, 2025 | |
|
|
39 |
Incorporated by reference
to the Companys Form 8-K filed with the US Securities and Exchange Commission on February 3, 2026 | |
****
**Item 16. Form 10-K Summary**
None
| | 55 | | |
| Table of Contents | |
**SIGNATURES**
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
IQSTEL Inc. | |
|
|
| |
|
By: |
/s/ Leandro Iglesias | |
|
|
Leandro Iglesias
Chief Executive Officer, Principal Executive Officer | |
|
|
April 6, 2026 | |
|
By: |
/s/ Alvaro Quintana Cardona | |
|
|
Alvaro Quintana Cardona | |
|
Title: |
Chief Operating Officer, Chief Financial Officer, Principal
Financial Officer and Principal Accounting Officer | |
|
Date: |
April 6, 2026 | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
By: |
/s/ Leandro Iglesias | |
|
|
Leandro Iglesias
Chief Executive Officer, Principal Executive Officer | |
|
|
April 6, 2026 | |
|
By: |
/s/ Alvaro Quintana Cardona | |
|
|
Alvaro Quintana Cardona | |
|
Title: |
Chief Operating Officer, Chief Financial Officer, Principal
Financial Officer and Principal Accounting Officer | |
|
Date: |
April 6, 2026 | |
|
By: |
/s/ Raul Perez | |
|
|
Raul Perez | |
|
Title: |
Director | |
|
Date: |
April 6, 2026 | |
|
By: |
/s/ Jose Antonio Barreto | |
|
|
Jose Antonio Barreto | |
|
Title: |
Director | |
|
Date: |
April 6, 2026 | |
|
By: |
/s/ Italo Segnini | |
|
|
Italo Segnini | |
|
Title: |
Director | |
|
Date: |
April 6, 2026 | |
| | 56 | | |