8-K: iQSTEL Amends Series D Preferred Stock Terms

iQSTEL Inc. has filed an amendment to its Series D Preferred Stock, introducing a True-Up Adjustment mechanism for conversion rates and revising other key provisions.

Summary

• iQSTEL Inc. filed a Second Amended and Restated Certificate of Designation for its Series D Preferred Stock on October 10, 2025, amending terms originally established on November 3, 2023, and first amended on July 7, 2025.
• The number of authorized Series D Preferred Stock shares remains at 100,000.
• Dividend Rights: Holders are entitled to a 12% cumulative dividend, calculated on a 360-day year, accruing from issuance and ceasing the day prior to conversion, with pro rata dividends for partial-year holdings.
• Conversion Rights: After three months from issuance, Series D Preferred Stock is convertible into common stock at a base rate of 12.5 shares of common stock per preferred share.
• A True-Up Adjustment mechanism is introduced: if the Adjusted Conversion Price (lowest daily VWAP during the 5 trading days preceding conversion with a 20% discount, minimum $1.00) is lower than the Original Conversion Price (10-day VWAP with 20% discount at issuance), additional common shares will be issued based on a True-Up Ratio (Original Conversion Price / Adjusted Conversion Price), with a maximum ratio of 2.5.
• Redemption Provisions: The Company has an optional right to redeem Series D Preferred Stock at 105% of the price paid by the holder, with not more than three trading days' notice.
• Liquidation Preference: Series D Preferred Stock is senior to common stock, Series A, and Series C Preferred Stock, and on parity with Series B Preferred Stock.
• Voting Rights: Holders have no voting rights, except as required by law or for amendments altering Series D rights.
• Leak-Out Restriction: After three months, conversions and sales of common stock are limited to 10% of the average daily trading volume of the Company's common stock per holder.

Sentiment

Score: 5

Explanation: The amendment introduces terms that could be seen as favorable to preferred shareholders (e.g., True-Up Adjustment, 12% dividend, redemption premium) but potentially dilutive to common shareholders. It's a structural change with mixed implications, not inherently positive or negative for the company's overall operational performance.

Positives

• The 12% cumulative dividend offers an attractive return for Series D preferred shareholders.
• The True-Up Adjustment mechanism provides protection for preferred shareholders against a decline in the common stock price, potentially resulting in more common shares upon conversion.
• The optional redemption provision at 105% of the price paid offers a premium for preferred shareholders if the company chooses to redeem their shares.

Negatives

• The True-Up Adjustment mechanism could lead to significant dilution for common shareholders if the common stock price declines, as more common shares would be issued upon conversion.
• The leak-out restriction limits the immediate liquidity for preferred shareholders converting to common stock, as they cannot sell all converted shares at once.
• Series D preferred shareholders generally have no voting rights, limiting their influence on corporate decisions.

Risks

• Dilution Risk: The True-Up Adjustment mechanism has the potential to significantly dilute common stock if the Adjusted Conversion Price falls below the Original Conversion Price, leading to a greater number of common shares being issued upon conversion.
• Market Price Volatility: The conversion rate and the number of common shares issued are directly tied to the volume-weighted average price (VWAP) of the common stock, making the value of conversions sensitive to market fluctuations.
• Liquidity Risk for Preferred Holders: The 10% leak-out restriction on conversions and sales of common stock per holder could limit the ability of preferred shareholders to quickly liquidate their holdings after conversion.

Future Outlook

The filing primarily details amendments to existing preferred stock terms and does not contain explicit forward-looking statements or guidance on future company performance or strategic direction beyond the mechanics of the preferred stock.

Management Comments

• Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. iQSTEL Inc. /s/ Leandro Iglesias Leandro Iglesias Chief Executive Officer Date: October 10, 2025

Industry Context

This filing reflects a common practice in corporate finance where companies adjust terms of their preferred stock to manage capital structure, attract or retain investors, or adapt to market conditions. The introduction of a 'True-Up Adjustment' mechanism is a specific feature often used in convertible securities to protect investors against significant declines in the underlying common stock price, which can be particularly relevant for smaller or growth-oriented companies where stock price volatility might be higher.

Corporate Governance

Stakeholder Impact

• Shareholders (Series D Preferred): Potentially positive due to the 12% cumulative dividend, True-Up Adjustment mechanism offering protection against common stock price declines, and optional redemption at a premium.
• Shareholders (Common Stock): Potentially negative due to increased dilution risk from the True-Up Adjustment mechanism if the common stock price falls, leading to more common shares being issued upon conversion.
• Company: Provides flexibility in managing its capital structure and obligations related to Series D Preferred Stock, but also commits to specific dividend and conversion terms.

Next Steps

• The Company will calculate and notify holders of any True-Up Adjustment within two business days following a conversion date, providing reasonable supporting documentation.
• Holders of Series D Preferred Stock may convert their shares into common stock after three months from the Original Issue Date, subject to the new conversion terms and leak-out restrictions.

Key Dates

Recommendation

The filing details an amendment to preferred stock terms, which introduces both potential benefits for preferred shareholders (e.g., 12% dividend, True-Up Adjustment) and potential dilution risks for common shareholders. Without additional financial or operational context, this structural change alone does not warrant a strong buy or sell recommendation. Investors should hold and monitor the impact of these revised terms on the company's capital structure and future common stock performance.

Keywords

iQSTEL, IQST, Series D Preferred Stock, True-Up Adjustment, Conversion Rights, Dividend Rights, Redemption Provisions, Corporate Governance, SEC Filing, 8-K, Preferred Stock Amendment, Dilution