UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the quarterly period ended | |
| Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the transition period from __________ to__________ | |
| Commission File Number: |
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
|
| |
| (Address of principal executive offices) | |
| ( | |
| (Registrant’s telephone number) | |
|
_______________________________________________________ | |
| (Former name, former address and former fiscal year, if changed since last report) | |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||
(The Nasdaq Capital Market) |
Indicate by check mark 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.
[X]
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). [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒ |
|
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 is a
shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X]
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common shares as of May 20, 2026
| 1 |
| TABLE OF CONTENTS | ||
| Page | ||
|
PART I – FINANCIAL INFORMATION
| ||
| Item 1: | Financial Statements | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4: | Controls and Procedures | 12 |
|
PART II – OTHER INFORMATION
| ||
| Item 1: | Legal Proceedings | 13 |
| Item 1A: | Risk Factors | 13 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 3: | Defaults Upon Senior Securities | 13 |
| Item 4: | Mine Safety Disclosures | 13 |
| Item 5: | Other Information | 13 |
| Item 6: | Exhibits | 14 |
| 2 |
Item 1. Financial Statements
Our unaudited consolidated financial statements included in this Form 10-Q are as follows:
| F-1 | Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025; |
| F-2 | Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (unaudited); |
| F-3 | Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited); and |
| F-4 | Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025 (unaudited); and |
| F-5 | Notes to Consolidated Financial Statements (unaudited). |
These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2026 are not necessarily indicative of the results that can be expected for the full year.
| 3 |
IQSTEL INC
Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Due from related parties | ||||||||
| Prepaid and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset, net | ||||||||
| Goodwill | ||||||||
| Deferred tax assets | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued and other current liabilities | ||||||||
| Contract liabilities | ||||||||
| Due to related parties | ||||||||
| Loans payable - net of discount of $83,053 and $127,170, respectively | ||||||||
| Loans payable - related parties | ||||||||
| Contingent liability for acquisition of subsidiary | ||||||||
| Stock payable for acquisition of subsidiary | ||||||||
| Total Current Liabilities | ||||||||
| Loans payable, non-current | ||||||||
| Employee benefits, non-current | ||||||||
| TOTAL LIABILITIES | ||||||||
| Stockholders' Equity | ||||||||
| Preferred stock: authorized; par value | ||||||||
| Series A Preferred stock: designated; par value, shares issued and outstanding | ||||||||
| Series B Preferred stock: designated; par value, shares issued and outstanding, respectively | ||||||||
| Series C Preferred stock: designated; par value, shares issued and outstanding | ||||||||
| Series D Preferred stock: designated; par value, and shares issued and outstanding, respectively | ||||||||
| Common stock: authorized; par value and shares issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Equity attributed to stockholders of IQSTEL Inc. | ||||||||
| Equity attributable to noncontrolling interests | ||||||||
| TOTAL STOCKHOLDERS' EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
IQSTEL INC
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administration | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income | ||||||||
| Other expenses | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss before provision for income taxes | ( | ) | ( | ) | ||||
| Income taxes | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Less: Net (loss) / income attributable to noncontrolling interests | ( | ) | ||||||
| Net loss attributed to IQSTEL Inc. | $ | ( | ) | $ | ( | ) | ||
| Undeclared dividends on Series D Preferred Stock | ( | ) | ||||||
| Net loss attributed to stockholders of IQSTEL Inc. | $ | ( | ) | $ | ( | ) | ||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Total loss | $ | ( | ) | $ | ( | ) | ||
| Less: Comprehensive (loss) income attributable to noncontrolling interests | ( | ) | ||||||
| Net comprehensive loss attributed to IQSTEL Inc. | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
IQSTEL INC
Consolidated Statements of Changes in Stockholders’ Equity
For the three months ended March 31, 2026 and 2025
(Unaudited)
| 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 Comprehensive Loss | Total | Non Controlling Interest | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of series D preferred stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend to non-controlling interest | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2026 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid in Capital | Accumulated Deficit | Accumulated Comprehensive Loss | Total | Non Controlling Interest | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
| Common stock issued for compensation | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of debt | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for common stock payable | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividend to non-controlling interest | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
IQSTEL INC
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Bad debt expense | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued and other current liabilities | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Payment of loan receivable - related party | ( | ) | ( | ) | ||||
| Collection of amounts due from related parties | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from loans payable | ||||||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Repayments of note payable issued for acquisition of subsidiary | ( | ) | ||||||
| Repayment of loans payable - related parties | ( | ) | ( | ) | ||||
| Proceeds from convertible notes | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Dividend paid to non-controlling interest | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash transactions: | ||||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
| Note payable issued for acquisition of subsidiary | $ | $ | ||||||
| Non-cash dividend paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
IQSTEL INC
Notes to the Unaudited Consolidated Financial Statements
March 31, 2026
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization and Operations
IQSTEL Inc. (“IQSTEL”, “we”, “us”, or the “Company”) was incorporated under the laws of the State of Nevada on June 24, 2011 under the name of B-Maven Inc. The Company changed its name to PureSnax International, Inc. on September 18, 2015, and more recently it changed its name to IQSTEL Inc. on August 7, 2018.
The Company has been engaged in the business of telecommunication services as a wholesale carrier of voice, SMS and data for other telecom companies around the World with over 603 active interconnection agreements with mobile companies, fixed line companies and other wholesale carriers.
The Company is a technology company with 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 87% of all of the Company’s revenues for the three months ended March 31, 2026, 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 Company’s developing Blockchain Platform Business Line offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, ItsBchain, LLC.
The Company’s developing Fintech Business Line offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances, Mobile Top Up). The Company’s Fintech subsidiary, Global Money One Inc., is to provide immigrants access to reliable financial services that makes it easier to manage their money and stay connected with their families back home. 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 13% of our revenues for the three months ended March 31, 2026.
Our developing Artificial Intelligence (AI) division, Reality Border (www.realityborder.com), was initially developed as 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 accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2026 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on April 6, 2026, and amended on April 23, 2026.
| F-5 |
Reclassification
Certain amounts in the consolidated financial statements of prior year periods have been reclassified to conform to the current period’s presentation.
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.
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.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks,
money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible
to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had
Accounts Receivable and Allowance for Uncollectible Accounts
Substantially all of the Company’s accounts
receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest.
The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts
receivable. The Company estimates expected credit losses related to accounts receivable balances based on a review of available and relevant
information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other
factors that could affect collectability. No allowance for doubtful accounts was recorded as of March 31, 2026 and December 31, 2025.
During the three months ended March 31, 2026 and 2025, the Company recorded bad debt expense of $
Allowance for Credit Losses Rollforward:
| Balance, at beginning of period | $ | |||
| Provision for credit losses | ||||
| Deductions | ( | ) | ||
| Balance at end of period | $ |
The Company has adopted Accounting Standards Codification (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 period. 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 three months ended March 31, 2026 and 2025.
| F-6 |
Concentrations of Credit Risk
The Company’s financial instruments subject to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and related party payables. The Company maintains its cash and cash equivalents with financial institutions that management believes to be of high credit quality. At times, balances maintained with a single financial institution may exceed applicable governmental insurance limits. Based on Federal Deposit Insurance Corporation coverage in the United States, Switzerland’s deposit protection system (Esisuisse), and the Financial Services Compensation Scheme applicable in the United Kingdom, 47.16% and 58.55% of cash and cash equivalents as of March 31, 2026 and December 31, 2025, respectively, were covered by applicable governmental insurance limits.
As of March 31, 2026, approximately 80% of total accounts receivable was concentrated among the Company’s top 23 customers, compared with the same percentage concentrated among 17 customers as of December 31, 2025. The largest customer represented 20.33% of total accounts receivable as of March 31, 2026, compared with 15.06% as of December 31, 2025. In each such period, 12 of these customers were repeat customers and accounted for 58% and 75% of total accounts receivable as of March 31, 2026 and December 31, 2025, respectively. This concentration may expose the Company to a moderate to low level of credit risk, as most of these customers are bilateral counterparties that also maintain accounts payable with the Company.
During the three months ended March 31, 2026, we had 20 customers representing 85% of our revenue compared to 19 customers representing 86% of our revenue for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, 31% and 38% of revenue, respectively, comes from customers under prepayment conditions, which means there are no credit or bad debt risks on that portion of the customers’ portfolio.
Financial Instruments
The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The carrying values of our financial instruments, including, cash; accounts receivable; prepaid and other current assets; 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.
| F-7 |
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due to related parties due to their related party nature.
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 Company’s payment terms vary by client.
Usage charges refer to the fees that customers are billed based on their actual usage of the services. For voice services, this typically means charges 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. |
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.
| F-8 |
Fintech
The Company’s 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. |
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 Company’s 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.
| F-9 |
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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.
NOTE 3 - GOING CONCERN
The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has suffered recurring losses from operations, has negative working capital and does not have an established source of revenues sufficient to cover its operating costs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its business plan and eventually attain profitable operations.
During the next year, the Company's foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing in the industry and continuing its marketing efforts. The Company may experience a cash shortfall and be required to raise additional capital.
Historically, the Company has relied upon funds from its stockholders and loans from third parties. Management may raise additional capital through future public or private offerings of the Company's stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company's failure to do so could have a material and adverse effect upon its operations and its stockholders.
NOTE 4 – PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets at March 31, 2026 and December 31, 2025 consisted of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Other receivable | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Advance payment | ||||||||
| Tax receivable | ||||||||
| Deposit for acquisition of asset | ||||||||
| Security deposit | ||||||||
| $ | $ | |||||||
| F-10 |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2026 and December 31, 2025 consisted of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Telecommunication equipment | $ | $ | ||||||
| Telecommunication software | ||||||||
| Vehicle | ||||||||
| Other equipment | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment | $ | $ | ||||||
Depreciation expense for the three months ended
March 31, 2026 and 2025 amounted to $
NOTE 6 – INTANGIBLE ASSETS
Intangible assets at March 31, 2026 and December 31, 2025 consisted of the following:
March 31, 2026
| Useful life | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
| New gas regulator intangible | Not yet in service | $ | $ | |||||||||||
| Interconnection agreements | ( | ) | ||||||||||||
| $ | $ | ( | ) | $ | ||||||||||
December 31, 2025
| Useful life | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||
| New gas regulator intangible | Not yet in service | $ | $ | |||||||
| Interconnection agreements | ( | ) | ||||||||
| $ | $ | ( | ) | $ | ||||||
Amortization expense for the three months ended
March 31, 2026 and 2025 amounted to $
The following table outlines the estimated future amortization expense at March 31, 2026:
| 2026 (9 months remaining) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| $ |
| F-11 |
NOTE 7 – ACCRUED AND OTHER CURRENT LIABILITIES
Accrued and other current liabilities at March 31, 2026 and December 31, 2025 consisted of the following
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued liabilities | $ | $ | ||||||
| Cost provision | ||||||||
| Accrued interest | ||||||||
| Salary payable - management | ||||||||
| Salary payable and employee benefit | ||||||||
| Other current liabilities | ||||||||
| Income tax payable | ||||||||
| Dividend payable | ||||||||
| $ | $ | |||||||
NOTE 8 - LOANS PAYABLE
Loans payable at March 31, 2026 and December 31, 2025 consisted of the following:
| March 31, | December 31, | Interest | ||||||||||||
| 2026 | 2025 | Term | rate | |||||||||||
| Martus | $ | $ | Note was issued on | % | ||||||||||
| Darlene Covid19 | Note was issued on | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Promissory note payable | Note was issued | % | ||||||||||||
| Financing loan | $1,148.94 monthly payment for | % | ||||||||||||
| Total | ||||||||||||||
| Less: Unamortized debt discount | ( | ) | ( | ) | ||||||||||
| Total loans payable | ||||||||||||||
| Less: Current portion of loans payable | ( | ) | ( | ) | ||||||||||
| Long-term loans payable | $ | $ | ||||||||||||
| F-12 |
Loans payable - related parties at March 31, 2026 and December 31, 2025 consisted of the following:
| March 31, | December 31, | Interest | ||||||||||||
| 2026 | 2025 | Term | rate | |||||||||||
| 49% of Shareholder of SwissLink | $ | $ | % | |||||||||||
| 49% of Shareholder of SwissLink | % | |||||||||||||
| Total | ||||||||||||||
| Less: Current portion of loans payable - related parties | ( | ) | ( | ) | ||||||||||
| Long-term loans payable - related parties | $ | $ | ||||||||||||
During the three months ended March 31, 2026
and 2025, the Company borrowed from third parties totaling $
During the three months ended March 31, 2026
and 2025, the Company recorded interest expense of $
NOTE 9 – STOCKHOLDERS’ EQUITY
Common Stock
The Company’s authorized common stock consists of shares of common stock with a par value of per share.
During the three months ended March 31, 2026, the Company issued shares of common stock, valued at fair market value on issuance as follows:
· shares for conversion of Series D Preferred Stock
· shares for compensation to our directors valued at
At March 31, 2026 and December 31, 2025, and shares of common stock were issued and outstanding, respectively.
Preferred Stock
The Company’s authorized preferred stock consists of shares of preferred stock with a par value of per share.
| F-13 |
Series A Preferred Stock
On November 3, 2020, pursuant to Article III
of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock,
consisting of up shares, par value . Under the Certificate of Designation,
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 March 31, 2026 and December 31, 2025, shares of Series A Preferred Stock were issued and outstanding.
Series B Preferred Stock
On November 11, 2020, pursuant to Article III
of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series B Preferred Stock,
consisting of up shares, par value .
As of March 31, 2026 and December 31, 2025, shares of Series B Preferred Stock were issued and outstanding.
Series C Preferred Stock
On January 7, 2021, pursuant to Article III of
our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock,
consisting of up shares, par value .
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 March 31, 2026 and December 31, 2025, Series C Preferred Stock was issued or outstanding.
Series D Preferred Stock
On November 3, 2023, pursuant to Article III
of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series D Preferred
Stock, consisting of up shares, par value .
| F-14 |
On July 7, 2025, the Company filed a First Amended and Restated Certificate of Designation for the Series D Preferred Stock 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. On October 10, 2025, the Company filed a Second Amended and Restated Certificate of Designation for the Series D Preferred Stock 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. On February 3, 2026, the Company filed a Third Amended and Restated Certificate of Designation, which includes the following key terms.
During the three months ended March 31, 2026, shares of Series D Preferred Stock were converted into shares of common stock.
At March 31, 2026 and December 31, 2025, and shares Series D Preferred Stock were issued and outstanding, respectively.
NOTE 10 - RELATED PARTY TRANSACTIONS
Due from related parties
During the three months ended March 31, 2026
and 2025, the Company loaned $
At March 31, 2026 and December 31, 2025, the
Company had amounts due from related parties of $
Due to related parties
At March 31, 2026 and December 31, 2025, the
Company had amounts due to related parties of $
Employment agreements
During the three months ended March 31, 2026
and 2025, the Company recorded management salaries and bonus of $
At March 31, 2026 and December 31, 2025, the
Company recorded and accrued management salaries of $
| F-15 |
NOTE 11 – 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, the term of which is
NOTE 12 - SEGMENTS
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 operating activities information by geographic segment for the three months ended March 31, 2026 and 2025:
Three months ended March 31, 2026
| USA | Switzerland | UK | Elimination | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Cost of revenue | ( | ) | ||||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Salaries, wages and benefits | ||||||||||||||||||||
| Technology | ( | ) | ||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Legal and regulatory | ||||||||||||||||||||
| Travel and events | ||||||||||||||||||||
| Public cost | ||||||||||||||||||||
| Advertising | ||||||||||||||||||||
| Bank services and fees | ( | ) | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Office, facility and other | ( | ) | ||||||||||||||||||
| Insurance | ||||||||||||||||||||
| Bad debt expense | 14,364 | — | — | — | 14,364 | |||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| General and administration | ( | ) | ||||||||||||||||||
| Impairment loss of goodwill | ||||||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| F-16 |
Three months ended March 31, 2025
| USA | Switzerland | UK | Elimination | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Cost of revenue | ( | ) | ||||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Salaries, Wages and Benefits | ( | ) | ||||||||||||||||||
| Technology | ( | ) | ||||||||||||||||||
| Professional Fees | ||||||||||||||||||||
| Legal and Regulatory | ||||||||||||||||||||
| Travel & Events | ( | ) | ||||||||||||||||||
| Public Cost | ||||||||||||||||||||
| Advertising | ||||||||||||||||||||
| Bank Services and Fees | ( | ) | ||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||
| Office, Facility and Other | ||||||||||||||||||||
| Insurance | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| General and administration | ( | ) | ||||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
The following tables show reportable operating activities information by industrial segment for the three months ended March 31, 2026 and 2025. The Company has two industrial segments since the Company acquired GlobeTopper LLC in July 2025:
Three months ended March 31, 2026
| Telecom | Fintech | Corporate | Elimination | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Cost of revenue | ( | ) | ||||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||||||
| Operating expenses | ( | ) | ||||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| F-17 |
Three months ended March 31, 2025
| Telecom | Corporate | Elimination | Total | |||||||||||||
| Revenues | $ | $ | $ | ( | ) | $ | ||||||||||
| Cost of revenue | ( | ) | ||||||||||||||
| Gross profit | ( | ) | ||||||||||||||
| Operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Asset Information
The following table shows asset and liability information by industrial segment at March 31, 2026 and December 31, 2025:
| March 31, 2026 | Telecom | Fintech | Corporate | Elimination | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| December 31, 2025 | Telecom | Fintech | Corporate | Elimination | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current liabilities | $ | $ | $ | $ | $ | |||||||||||||||
The following table shows asset and liability information by geographic segment at March 31, 2026 and December 31, 2025:
| March 31, 2026 | USA | Switzerland | UK | Elimination | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| Net Asset | ( | ) | ( | ) | ||||||||||||||||
| F-18 |
| December 31, 2025 | USA | Switzerland | UK | Elimination | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Non-current liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| Net Asset | ( | ) | ( | ) | ||||||||||||||||
NOTE 13 – INCOME TAX
The Company regularly evaluates the realizability of its deferred tax assets by considering all available positive and negative evidence, including consideration of future taxable income. Primarily due to the Company’s history of incurred net losses, the Company maintains a full valuation allowance against its US deferred tax assets, as it is not more likely than not that these assets will be realized. Thus, the Company has not recognized material provisions or benefits for income taxes.
The Company’s tax provision and resulting effective tax rate for interim periods are determined using the estimated annual effective tax rate (“AETR”), which is updated each quarter and adjusted for discrete items recognized in the period. For the three months ended March 31, 2026, the AETR reflects expected taxable income of UK, and select US entities. The forecast is consistent with year-to-date actual results through March 31, 2026, and excludes any mark-to-market adjustments. While the overall tax provision remains immaterial due to the Company’s partial valuation allowance, the tax effect of the expected taxable entity income has been reflected in the AETR.
Income Taxes
The Company's income tax provision reflects an estimate of federal, state, and foreign income taxes based on enacted tax rates in the jurisdictions in which we operate. The provision is adjusted for the impact of allowable tax credits and deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in tax law.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA introduces various corporate and international tax law changes with staggered effective dates through 2027. Key provisions include immediate R&D expensing, permanent bonus depreciation, modifications to interest expense limitations, and changes to certain international tax rules. While the Company continues to evaluate the potential impact of the OBBBA on its consolidated financial statements, due to its partial valuation allowance position on U.S. and Swiss deferred tax assets, immaterial current tax liabilities, and insignificant foreign earnings from the UK, the Company does not expect the OBBBA to have a material impact on its financial position, results of operations, or effective tax rate.
NOTE 14 – SUBSEQUENT EVENTS.
Subsequent to March 31, 2026 and through the date that these financials were made available, the Company had the following subsequent events:
On April 30, 2026, the Company entered into (i) an Equity Purchase Agreement (the “Purchase Agreement”) and (ii) a Registration Rights Agreement (the “Registration Rights Agreement”) with M2B Funding Corp. (the “Investor”).
Pursuant to the Purchase Agreement, the Company may, from time to time during the Commitment Period, require the Investor to purchase up to $50,000,000 of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a per-share price equal to 94% of the lowest daily volume-weighted average price during the six Trading Days following delivery of a Put Notice, subject to volume-based caps, a daily maximum of $500,000, and an Exchange Cap of 19.99% of shares outstanding on the Execution Date (unless stockholder approval is obtained). The Investor is subject to a Beneficial Ownership Limitation (initially 4.99%, increasable to 9.99%).
| F-19 |
The Commitment Period begins on the date the Registration Statement (as defined below) is declared effective by the SEC (the “Effective Date”) and ends on the earlier of: (i) the date the Investor has purchased the full $50,000,000, (ii) the date that is sixty (60) months after the Effective Date, (iii) written termination notice by the Company (subject to the terms of the Purchase Agreement), or (iv) termination by the Investor as provided in the Purchase Agreement.
As consideration for the commitment, the Company will issue Commitment Shares valued at $1,000,000 (half on the Execution Date; half on the 12-month anniversary or earlier termination), subject to a 20% daily volume leak-out restriction.
The Registration Rights Agreement requires the Company to file a resale S-1 registration statement covering all Registrable Securities within 90 days and to use best efforts to have it declared effective within 180 days, with customary liquidated damages (0.25% per month, capped at 12% of the Maximum Commitment Amount) for delays. The Investor has customary review and comment rights on the registration statement and related prospectuses.
The agreements contain customary representations, warranties, covenants, conditions, and indemnification provisions. The Purchase Agreement may be terminated by the Company upon 30 days’ notice (subject to a termination fee) or upon certain other events. Proceeds will be used for general corporate purposes. There is no material relationship between the Company and the Investor other than as contemplated by the agreements.
On April 30, 2026, the Company issued the Initial Commitment Shares to the Investor pursuant to the Purchase Agreement. The shares were
issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation
D. The Investor represented that it is an accredited investor.
| F-20 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
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.
Our Telecom Division, which represents the majority of current operations and accounted for 87% of our revenues for the three months ended March 31, 2026, 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 Company’s 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 13% of our revenues for the three months ended March 31, 2026.
Our Artificial Intelligence (AI) division, Reality Border (www.realityborder.com), initially developed an AI-enhanced immersive digital experience platform. Building on that early development work—including conversational interfaces, multilingual models, and AI-driven workflows—Reality Border now develops practical AI software solutions for enterprise and telecommunications applications.
| 4 |
Reality Border currently serves as IQSTEL’s 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 Company’s 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 Border’s current development efforts include software functionality, workflow orchestration, multilingual interaction, system
integration, and operational deployment models intended for business use. Reality Border’s 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 quarterly report and should not be considered part of this or any other report filed with the SEC.
Methods of Valuation
We use supplemental measures of our performance which are derived from our consolidated financial information but are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include: Adjusted EBITDA and gross revenue.
The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.
Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity. It is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. 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.
The Company believes Adjusted EBITDA offers a clearer view of the cash-generating potential of its business, excluding non-recurring, non-cash, and non-operational impacts. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes, non-cash and certain other items that may vary for different companies for reasons unrelated to overall operating performance and also believes this information is useful to investors.
| 5 |
Gross revenue, which equals revenue before intercompany eliminations, represents a key performance metric that management uses to measure the aggregate scale and commercial activity of the Company’s operating segments prior to consolidation adjustments. Gross Revenue is particularly useful in evaluating:
Gross Revenue is a non-GAAP measure and should be evaluated together with the Company’s GAAP revenue, which includes the effect of intercompany eliminations required under consolidation accounting.
Non-GAAP financial measures have inherent limitations and should not be considered superior to, or a substitute for, GAAP results. The Company provides reconciliations of each non-GAAP financial measure to the most directly comparable GAAP measure in the accompanying tables. Management believes these reconciliations provide investors with transparency into the adjustments made and enhance the overall understanding of the Company’s operating performance.
Results of Operations
Revenues
Our total revenue reported for the three months ended March 31, 2026 was $97,919,836, compared with $57,632,816 for the three months ended March 31, 2025. These numbers reflect an increase of 70% year over year on our consolidated revenues.
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025:
| Revenue for the Three Months Ended March 31, | ||||||||
| Subsidiary | 2026 | 2025 | ||||||
| IQSTEL Inc | $ | — | $ | — | ||||
| Etelix.com USA, LLC | 20,436,467 | 8,720,701 | ||||||
| SwissLink Carrier AG | 989,033 | 1,349,162 | ||||||
| QGlobal LLC | 374,342 | 660,926 | ||||||
| IoT Labs LLC | 28,785,144 | 24,904,457 | ||||||
| Smartbiz Telecom | 4,591,779 | 3,478,939 | ||||||
| Whisl Telecom | 1,218,644 | 772,775 | ||||||
| QXTEL Limited | 29,223,827 | 31,154,997 | ||||||
| GlobeTopper LLC | 12,993,408 | — | ||||||
| $ | 98,612,644 | $ | 71,041,957 | |||||
| Intercompany eliminations | (692,808 | ) | (13,409,141 | ) | ||||
| $ | 97,919,836 | $ | 57,632,816 | |||||
The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and expanding the synergies among our subsidiaries, particularly those engaged in VOIP Telecom services, due to a higher volume of intercompany transactions. The increase also includes the contribution from a newly acquired subsidiary, GlobeTopper LLC, which closed on July 1, 2025.
A significant reduction in intercompany transactions is also observed for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, which did not impact the overall position. This reflects the joint efforts of the companies to strengthen their position with third parties through new commercial agreements.
| 6 |
The organic growth during the three months ended March 31, 2026 was 87% of the total revenue for those periods. This reflects the solid foundation of our revenue and the growth capacity the Company has with its current operations. We consider organic growth the revenues reported by our existing subsidiaries once fully integrated to our operations. These subsidiaries include Etelix, SwissLink, QGlobal, IoT Labs, Smartbiz, Whisl, QXTEL.
GlobeTopper, acquired on July 1st, 2025 represented the rest of the increment increase, showing the potential this subsidiary has of creating value to the organization.
Cost of Revenues
Our total cost of revenues for the three months ended March 31, 2026 increased to $95,839,138, compared with $55,697,858 for the three months ended March 31, 2025.
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025:
| Cost of Revenue for the Three Months Ended March 31, | ||||||||
| Subsidiary | 2026 | 2025 | ||||||
| IQSTEL Inc | $ | — | $ | — | ||||
| Etelix.com USA, LLC | 20,213,681 | 8,574,584 | ||||||
| SwissLink Carrier AG | 697,009 | 1,080,854 | ||||||
| QGlobal LLC | 290,228 | 476,330 | ||||||
| IoT Labs LLC | 28,693,128 | 24,809,932 | ||||||
| Smartbiz Telecom | 4,349,376 | 3,246,341 | ||||||
| Whisl Telecom | 1,056,679 | 581,128 | ||||||
| QXTEL Limited | 28,351,638 | 30,325,933 | ||||||
| GlobeTopper LLC | 12,734,958 | — | ||||||
| $ | 96,386,697 | $ | 69,095,102 | |||||
| Intercompany eliminations | (547,559 | ) | (13,397,244 | ) | ||||
| $ | 95,839,138 | $ | 55,697,858 | |||||
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 vendor’s 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, as each additional unit sold (minutes and SMS) has its corresponding termination cost. A similar pattern is observed in the virtual gift-card business, where each incremental digital prepaid product delivered to customers includes the associated wholesale acquisition cost payable to the issuing partner. As a result, cost of revenue moves directionally in line with transactional volume across both business lines, reflecting the variable-cost nature of these operations.
The inclusion of GlobeTopper in the consolidation process, along with the traffic volumes by QXTEL, Etelix and Swisslink, and the reorganizing of the portfolio among subsidiaries, reflects the synergies derived from the commercial and operational integration of all group companies.
This quarter, compared to 2025, reflects the positive impact of the portfolio restructuring. While intercompany transactions decreased, traffic shifted toward third parties, strengthening external relationships. This transition helped maintain growth and is expected to continue supporting revenue and margins going forward.
| 7 |
Gross Margin
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, was $2,080,698 for the three months ended March 31, 2026 compared to $1,934,958 for the three months ended March 31, 2025. This represents an increase of 8% in the gross margin year over year.
| Gross Margin % for the Three Months Ended March 31, | ||||||||
| Subsidiary | 2026 | 2025 | ||||||
| IQSTEL Inc | — | — | ||||||
| Etelix.com USA, LLC | 1.09 | % | 1.68 | % | ||||
| SwissLink Carrier AG | 29.53 | % | 19.89 | % | ||||
| QGlobal LLC | 22.47 | % | 27.93 | % | ||||
| IoT Labs LLC | 0.32 | % | 0.38 | % | ||||
| Smartbiz Telecom | 5.28 | % | 6.69 | % | ||||
| Whisl Telecom | 13.29 | % | 24.80 | % | ||||
| QXTEL Limited | 2.98 | % | 2.66 | % | ||||
| GlobeTopper LLC | 1.99 | % | — | |||||
Operating Expenses
Operating expenses increased to $3,038,707 for the three months ended March 31, 2026 from $2,539,184 for the three months ended March 31, 2025. The detail by major category is reflected in the table below.
| Operating Expenses for the Three Months Ended March 31, | ||||||||
| Category | 2026 | 2025 | ||||||
| Salaries, Wages and Benefits | $ | 933,119 | $ | 955,159 | ||||
| Technology | 552,788 | 425,593 | ||||||
| Professional Fees | 325,967 | 309,049 | ||||||
| Legal & Regulatory | 110,859 | 166,438 | ||||||
| Travel & Events | 115,689 | 89,050 | ||||||
| Public Cost | 60,293 | 66,559 | ||||||
| Advertising | 267,092 | 218,880 | ||||||
| Bank Services and Fees | 62,069 | 21,441 | ||||||
| Depreciation and Amortization | 172,646 | 126,995 | ||||||
| Office, Facility and Other | 384,729 | 126,302 | ||||||
| Insurances | 34,172 | 903 | ||||||
| Bad debt expense | 14,364 | — | ||||||
| $ | 3,033,787 | $ | 2,506,369 | |||||
| Stock-based compensation | 4,920 | 32,815 | ||||||
| $ | 3,038,707 | $ | 2,539,184 | |||||
The most significant differences are: (1) the increase in technology expenses related to the deployment and upgrade of the Switching platform to allocate all subsidiaries, which will result in tremendous cost reduction once all companies are migrated to the new platform; (2) the increases in other items such as technology; depreciation and amortization; and office, facility and other are largely the result of the addition of QXTEL and GlobeTopper to our consolidated financial statements.
| 8 |
When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025:
| Operating Expenses for the Three Months Ended March 31, | ||||||||
| Subsidiary | 2026 | 2025 | ||||||
| IQSTEL Inc | $ | 1,007,360 | $ | 749,131 | ||||
| Etelix.com USA, LLC | 112,521 | 119,377 | ||||||
| SwissLink Carrier AG | 271,214 | 185,820 | ||||||
| Itsbchain | 329 | 1,190 | ||||||
| QGlobal LLC | 92,879 | 112,299 | ||||||
| IoT Labs LLC | 61,628 | 68,826 | ||||||
| Global Money One | 293 | 243 | ||||||
| Smartbiz Telecom | 256,907 | 361,296 | ||||||
| Whisl Telecom | 118,559 | 98,418 | ||||||
| QXTEL Limited | 872,939 | 740,514 | ||||||
| GlobeTopper LLC | 269,013 | — | ||||||
| $ | 3,063,642 | $ | 2,437,114 | |||||
| Intercompany eliminations | (24,935 | ) | 102,070 | |||||
| $ | 3,038,707 | $ | 2,539,184 | |||||
The largest portion of the increase comes from IQSTEL, which is currently bearing most of the technology-related expenses, and from QXTEL, which since its incorporation has maintained a higher cost structure compared to the other subsidiaries, although it has remained consistent over time. Additionally, starting July 1, 2025, Globetopper’s expenses were incorporated, which were not included in previous periods.
We are continually identifying operational synergies among all of our subsidiaries to be more cost efficient.
Operating Income
The Company showed negative Operating Income for the three months ended March 31, 2026 of $958,009 compared with $604,226 for the three months ended March 31, 2025. These results reflect an overall rise in operating expenses, largely associated with ongoing investments in development and growth initiatives.
Our Telecom Division, currently the primary source of revenue for the Company, shows continued progress, as evidenced by the increase in revenue and gross profit. However, it reported a negative operating income for the three months ended March 30, 2026, mainly driven by the increase in general and administrative expenses. This contrasts with the period ended March 31, 2025, which showed a positive operating income. The Fintech Division also reflects its current position following the inclusion of Globetopper.
In addition, our pre-revenue companies continue to operate with minimal expenses, focused solely on completing product and service development prior to market launch.
Other Expenses/Other Income
We had total other expenses of $412,424 for the three months ended March 31, 2026, as compared with other expenses of $519,660 for the same period ended 2025. The other expenses are largely due to $350,998 and $531,726 of Interest Expense for the three months ended March 31, 2026 and 2025, respectively. A significant portion of the 2026 interest expense was associated with the financing for the acquisition of Globetopper, which allowed us to drive the organic growth of the Company.
| 9 |
Net Loss
We finished the three months ended March 31, 2026 with a net loss of $1,385,936, as compared to a loss of $1,144,461 during the three months ended March 31, 2025. The 2026 net loss is highly impacted by interest expense incurred in the acquisition of Globetopper; however, the increase in the Company's value and the beneficial effects of this acquisition could be observed in the $829,064 of gross profit added to our operations for the three months ended March 31, 2026, which represents 43% of the total consolidated gross profit.
The net results of the periods reported are highly impacted by the expenses in the holding entity (IQSTEL), which has a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited and GlobeTopper LLC.
As previously stated, our strategy remains focused on strengthening the telecommunications segment as the main growth engine to support the development and expansion of new business lines, including our Fintech Division with the inclusion of Globetopper, which we expect to contribute positively to future performance and enhance our market positioning.
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 below.) 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:
- FX Gains and Losses.
- Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives.
- Other non-recurrent expenses: Adjusted EBITDA removes one-time, irregular, or non-recurring expenses to reflect the company's sustainable earnings.
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.
Based on the analysis of our Adjusted EBITDA, our Telecom Division is a high-performing division that generates strong operational profits.
Consolidated figures show a slightly negative Adjusted EBITDA; while this isn’t ideal, in our opinion it implies the Company is close to breaking even and might achieve positive Adjusted EBITDA with small improvements in efficiency or revenue growth. We are in a transitional period, scaling operations and investing heavily in growth initiatives with the execution of our M&A plan. Management has also identified areas for cost-cutting and operational improvements and has acted in that direction.
| Telecom Division | Fintech Division | Pre-revenue companies | IQSTEL | Consolidated | ||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||
| Revenues | 84,926,428 | 57,632,816 | 12,993,408 | — | — | — | — | — | 97,919,836 | 57,632,816 | ||||||||||||||||||||||||||||||
| Cost of revenue | 83,104,180 | 55,697,858 | 12,734,958 | — | — | — | — | — | 95,839,138 | 55,697,858 | ||||||||||||||||||||||||||||||
| Gross profit | 1,822,248 | 1,934,958 | 258,450 | — | — | — | — | — | 2,080,698 | 1,934,958 | ||||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||||
| General and administration | 1,761,712 | 1,668,305 | 269,013 | — | 622 | 1,433 | 1,007,360 | 869,446 | 3,038,707 | 2,539,184 | ||||||||||||||||||||||||||||||
| Total Operating Expenses | 1,761,712 | 1,668,305 | 269,013 | — | 622 | 1,433 | 1,007,360 | 869,446 | 3,038,707 | 2,539,184 | ||||||||||||||||||||||||||||||
| Operating income/(loss) | 60,536 | 266,653 | (10,563 | ) | — | (622 | ) | (1,433 | ) | (1,007,360 | ) | (869,446 | ) | (958,009 | ) | (604,226 | ) | |||||||||||||||||||||||
| Other income (expense) | (62,727 | ) | 1,210 | (96 | ) | — | — | (349,601 | ) | (520,870 | ) | (412,424 | ) | (519,660 | ) | |||||||||||||||||||||||||
| Net income (loss) before income taxes | (2,191 | ) | 267,863 | (10,659 | ) | — | (622 | ) | (1,433 | ) | (1,356,961 | ) | (1,390,316 | ) | (1,370,433 | ) | (1,123,886 | ) | ||||||||||||||||||||||
| Income taxes | (15,503 | ) | (20,575 | ) | — | — | — | (15,503 | ) | (20,575 | ) | |||||||||||||||||||||||||||||
| Net income (loss) | (17,694 | ) | 247,288 | (10,659 | ) | — | (622 | ) | (1,433 | ) | (1,356,961 | ) | (1,390,316 | ) | (1,385,936 | ) | (1,144,461 | ) | ||||||||||||||||||||||
| Depreciation and Amortization | 166,335 | 126,995 | 6,311 | — | — | — | — | — | 172,646 | 126,995 | ||||||||||||||||||||||||||||||
| Interest expense | 1,594 | 10,852 | 121 | — | — | — | 257,342 | 520,869 | 259,057 | 531,721 | ||||||||||||||||||||||||||||||
| FX Gains/Losses | 18,696 | 31,939 | 18 | — | — | — | — | (401 | ) | 18,714 | 31,538 | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | 4,920 | 32,815 | 4,920 | 32,815 | ||||||||||||||||||||||||||||||
| Other non recurrent | — | 150,984 | — | — | — | — | — | — | — | 150,984 | ||||||||||||||||||||||||||||||
| Taxes | 15,503 | 25,548 | — | — | — | — | — | — | 15,503 | 25,548 | ||||||||||||||||||||||||||||||
| Adjusted EBITDA | 184,434 | 593,606 | (4,209 | ) | — | (622 | ) | (1,433 | ) | (1,094,699 | ) | (837,033 | ) | (915,096 | ) | (244,860 | ) | |||||||||||||||||||||||
| 10 |
Liquidity and Capital Resources
As of March 31, 2026, we had total current assets of $29,726,482 and current liabilities of $30,028,395, resulting in a negative working capital of $301,913.
Our operating activities used $175,447 in the three months ended March 31, 2026 as compared with $1,906,969 used in operating activities in the three months ended March 31, 2025. Our negative operating cash flow for both periods is a result of our net loss and changes in operating assets and liabilities which varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. This is due to substantial non-cash adjustments and working capital changes:
- Depreciation and amortization increased, reflecting higher non-cash expenses.
- Bad debt expense remained low, indicating stable receivables quality.
- Accounts receivable: Large positive adjustment ($6.3M in 2026 vs. $45.9M in 2025), suggesting strong collections and reduced sales on credit.
- Accounts payable and accrued liabilities: Large negative adjustments, especially accrued liabilities, indicating significant payments during the period.
The Company’s operating cash flow is still negative, but the gap between net loss and cash used is bridged by non-cash charges and working capital management.
Investing activities used $8,400 for the three months ended March 31, 2026, compared to $58,645 in the same period of 2025. The higher outflows in 2025 were mainly driven by the acquisition of QXTEL and Globetopper. The decrease in 2026 reflects lower investment activity compared to the prior period.
Financing activities provided $626,075 in the current period, compared to $540,304 in the prior period. The increase reflects higher net inflows from financing activities. This change is mainly due to increased proceeds from financing sources, partially offset by repayments and related outflows. Financing activities during the period include funding associated with the acquisition of Globetopper, as the Company continues to support its growth and investment strategy.
The Company is transitioning from an expansion phase in 2026, marked by the acquisition of Globetopper, to a more consolidated approach during the first nine months of 2026, with a greater focus on cash preservation, working capital management, and non-cash financing tools. The Company’s debt repayments reflect a maturing capital structure. At the same time, the expansion of Globetopper during the year ended December 31, 2025 demonstrates the Company’s continued commitment to strengthening and scaling its other business divisions.
These conditions, including our recurring losses from operations, negative working capital, and negative operating cash flows, raise substantial doubt about the Company’s ability to continue as a going concern. See Note 3 to the consolidated financial statements for additional discussion.
We intend to fund our operations through increased sales, as well as debt and/or equity financing arrangements, to support liquidity and capital resources. We also plan to seek additional funding through public and private equity offerings. However, there can be no assurance that we will be successful in raising additional capital. If we are unable to secure such funding, our business plan and operations could be adversely affected. Additionally, there can be no assurance that such financing will be available 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 three-month period ended March 31, 2026.
| 11 |
Critical Accounting Polices
A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026; 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 Quarterly Report for a complete discussion of our significant accounting policies.
Off Balance Sheet Arrangements
As of March 31, 2026, there were no off-balance sheet arrangements.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position, or cash flow.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
Item 4. Controls and Procedures
Disclosure Controls and Procedures - Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report.
These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were ineffective as of March 31, 2026. 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 believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.
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 Control over Financial Reporting - There were no changes in our internal control over financial reporting during the three-month period ended March 31, 2026, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 12 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Item 1A: Risk Factors
Our business faces many risks, a number of which are described in the section captioned “Risk Factors” in our Annual Report for the year ended December 31, 2025, filed with the SEC on April 06, 2026 and amended on April 23, 2026. The risks described may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report occur, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report, and the information contained in the section captioned “Forward-Looking Statements” and elsewhere in this Quarterly Report before deciding whether to invest in our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.
During the three months ended March 31, 2026, the Company issued 408,351 shares of common stock, valued at fair market value on issuance as follows:
· 406,476 shares for conversion of Series D Preferred Stock
· 1,875 shares for compensation to our directors valued at $4,920
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 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
None
| 13 |
Item 6. Exhibits
| Exhibit Number |
Description of Exhibit
|
| 31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 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 |
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 formatted in Extensible Business Reporting Language (XBRL). |
|
**Provided herewith |
| 14 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on May 20, 2026 on its behalf by the undersigned thereunto duly authorized.
| IQSTEL INC. | |
| /s/Leandro Iglesias | |
|
Leandro Iglesias Principal Executive Officer |
|
| /s/ Alvaro Quintana Cardona | |
|
Alvaro Quintana Cardona Principal Financial and Accounting Officer |
|
| 15 |