Business Context and Reporting Period
This Form 8-K Current Report was filed by iQSTEL Inc. (Nasdaq: IQSTEL) on October 10, 2025. The filing reports a corporate governance event involving the amendment of the company's capital structure, specifically regarding its Series D Preferred Stock.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt levels, or liquidity ratios. The document focuses exclusively on the terms of a securities amendment.
Material Changes
On October 10, 2025, the Company filed a Second Amended and Restated Certificate of Designation for its Series D Preferred Stock with the Nevada Secretary of State. Key changes include:
- True-Up Adjustment: A new mechanism was introduced to the conversion rate. Conversions may include additional shares based on a comparison of the original conversion price (10-day VWAP with a 20% discount) to the lowest daily VWAP in the five trading days preceding conversion (with an additional 20% discount). This adjustment has a floor of $1.00 and a maximum True-Up Ratio of 2.5.
- Authorized Shares: The number of authorized Series D Preferred Stock shares remains at 100,000.
- Dividend Rights: Maintained at a 12% cumulative dividend, payable as and when declared by the Board, accruing from issuance.
- Conversion Rights: After a three-month lock-up, shares are convertible at a base rate of 12.5 common shares per preferred share, subject to the new True-Up Adjustment.
- Redemption: The Company retains the right to redeem shares at 105% of the price paid by the holder with no more than three trading days' notice.
- Liquidation Preference: Senior to common stock, Series A, and Series C; on parity with Series B.
- Leak-Out Restriction: Post-lock-up conversions and sales are limited to 10% of the average daily trading volume per holder.
Guidance, Outlook, and Risks
The filing contains no management commentary, financial guidance, or outlook for future periods. The primary risk disclosed relates to the dilution potential for common shareholders due to the new True-Up Adjustment mechanism, which allows for a higher conversion ratio if the stock price declines relative to the issuance price. Additionally, the leak-out restriction limits the immediate liquidity of converted shares.
Investor Verification Checklist
- Verify the full text of the Second Amended and Restated Certificate of Designation (Exhibit 3.1) to confirm the mathematical application of the True-Up Adjustment.
- Confirm the current number of outstanding Series D Preferred Stock shares to assess potential dilution impact.
- Review the Company's recent 10-Q or 10-K filings for the most recent liquidity and debt position, as this 8-K does not contain financial statements.
- Monitor the 10-day VWAP and daily VWAP of the common stock to understand the trigger points for the conversion price adjustments.