NOTE 10 – STOCKHOLDERS’ EQUITY

Common Stock

The Company’s authorized common stock consists of 26,000,000 shares of common stock with a par value of $0.001 per share.

During the six months ended June 30, 2026, the Company issued 5,384,655 shares of common stock, valued at fair market value on issuance as follows:

·         3,983,053 shares upon conversion of Series D Preferred Stock

·         895,000 shares for cash proceeds of $168,860 and receivable of $653,076 under equity purchase agreement, which the Company received in July 2026.

·         3,750 shares issued as compensation to our directors valued at $7,596

·         129,717 shares for service from third parties valued at $535,290

·         373,135 shares issued in connection with a financing agreement, valued at $500,000

At June 30, 2026, and December 31, 2025, 10,052,672 and 4,668,017 shares of common stock were issued and outstanding, respectively.

Dividend Declaration

In January 2026, QXTEL, a subsidiary of the Company, paid cash dividend of $9,873 and non-cash dividend of $150,000 to QXTEL’s minority (non-controlling) shareholders for fiscal year 2025. In addition, QXTEL declared a dividend of $900,000 for fiscal year 2026 to its shareholders, of which $459,000 to IQSTEL was eliminated on consolidation. During the three and six months ended June 30, 2026, the Company paid $174,339 and $265,797, respectively, to QXTEL’s minority (non-controlling) shareholders, and as of June 30, 2026, $185,076 was recorded as dividend payable to minority shareholders under accrued and other current liabilities.

Equity Purchase Agreement

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, 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

The Commitment Period began on the date the Registration Statement was 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, 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 of which was issued on the Execution Date; half on the 12-month anniversary or earlier termination), subject to a 20% daily volume leak-out restriction.

Preferred Stock

The Company’s authorized preferred stock consists of 1,200,000 shares of preferred stock with a par value of $0.001 per share.

Series A Preferred Stock

On November 3, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock, consisting of up 10,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series A Preferred Stock will participate on an equal basis per-share with holders of our common stock in any distribution upon winding up, dissolution, or liquidation. Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to stockholders at a rate of 51% of the total vote of stockholders.

The rights of the holders of Series A Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on November 3, 2020

At June 30, 2026, and December 31, 2025, 10,000 shares of Series A Preferred Stock were issued and outstanding.

Series B Preferred Stock

On November 11, 2020, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series B Preferred Stock, consisting of up 200,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series B Preferred Stock will receive a liquidation preference of $81 per share in any distribution upon winding up, dissolution, or liquidation of the Company before junior security holders, as provided in the designation. Holders of Series B Preferred Stock are entitled to receive as, when, and if declared by the Board of Directors, dividends in kind at an annual rate equal to twenty four percent (24%) of $81 per share for each of the then outstanding shares of Series B Preferred Stock, calculated on the basis of a 360-day year consisting of twelve 30-day months. Holders of Series B Preferred Stock do not have voting rights but may convert into common stock after twelve months from the issuance date, at a conversion rate of twelve point five (12.5) shares of Common Stock for every one (1) share of Series B Preferred Stock. Upon conversion, the shares are subject to a one-year restriction on sales into the market of no more than 5% previous month’s stock liquidity.

At June 30, 2026, and December 31, 2025, 59,276 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 200,000 shares, par value $0.001. Under the Certificate of Designation, holders of Series C Preferred Stock will rank junior to the Series B Preferred Stock, but on par with common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation of the Company, as provided in the designation. The holders of shares of Series C Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose. Holders of Series C Preferred Stock do not have voting rights but may convert into common stock after twenty four months from the issuance date, at a conversion rate of twelve point five (12.5) shares of Common Stock for every one (1) share of Series C Preferred Stock. Upon conversion, the shares are subject to a one-year restriction on sales into the market of no more than 5% previous month’s stock liquidity.

The rights of the holders of Series C Preferred Stock are defined in the relevant Certificate of Designation filed with the Nevada Secretary of State on January 7, 2021.

At June 30, 2026, and December 31, 2025, no Series C Preferred Stock was issued or outstanding.

Series D Preferred Stock

On November 3, 2023, pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series D Preferred Stock, consisting of up 75,000 shares, par value $0.001. Under the Certificate of Designation, in the event of any dissolution, liquidation or winding up of the Corporation, the Holders of Series D Preferred Stock shall be entitled to participate in any distribution out of the assets of the Corporation before the holders of the Common Stock, Series A Preferred Stock and Series C Preferred Stock, but shall be considered on parity to the liquidation rights of the Series B Preferred Stockholders. The holders of shares of Series D Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose. Holders of Series D Preferred Stock do not have voting rights but may convert into common stock at a conversion rate of twelve point five (12.5) shares of Common Stock for every one (1) share of Series D Preferred Stock.

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.

• Dividend Rights: 12% cumulative dividend, payable as, when, and if declared by the Board of Directors, calculated on a 360-day year, accruing from the date of issuance and ceasing the day prior to conversion, with pro rata dividends for partial-year holdings.
• Conversion Rights: Following three months from the issuance date, the Series D Preferred Stock is convertible into common stock at a rate of 12.5 shares of common stock per share (the “Base Shares”), subject to adjustment for stock splits, dividends, or reorganizations. Additionally, a True-Up Adjustment mechanism applies, whereby the conversion may include additional shares based on a comparison of the original conversion price (based on the 10-day VWAP with a 20% discount at the time of issuance) to the lowest daily VWAP during the five trading days preceding the conversion date with a further 20% discount applied to such lowest daily VWAP (the “Adjusted Conversion Price”), with a floor of $1.00 and a maximum True-Up Ratio of 5.
• Redemption Provisions: Optional redemption by the Company at 105% of the price paid by the holder, upon not more than three trading days’ notice.
• Liquidation Preference: Senior to common stock, Series A Preferred Stock, and Series C Preferred Stock, and on parity with Series B Preferred Stock, in any liquidation, dissolution, or winding up of the Company.
• Voting Rights: No voting rights, except as required by law or for amendments to the Certificate of Designation or Articles of Incorporation that would alter the Series D Preferred Stock’s rights.
• Leak-Out Restriction: After three months, conversions to common stock and sales are limited to 10% of the average daily trading volume of the Company’s common stock per holder.

During the six months ended June 30, 2026, the Company issued 248,763 shares of Series D Preferred Stock as follows,

·         1,623 shares as dividend of Series D Preferred Stock, valued at $36,720

·         247,140 shares for settlement of debt, valued at $4,426,537

During the six months ended June 30, 2026, 249,918 shares of Series D Preferred Stock were converted into 3,983,053 shares of common stock.

At June 30, 2026 and December 31, 2025, 16,865 shares and 18,020 shares Series D Preferred Stock were issued and outstanding, respectively.