iQSTEL Inc
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
IQST$0.81+5.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001663577-24-000092
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001663577-25-000086
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 35 previous paragraphs and 43 current paragraphs.
19 unchanged; 12 reworded; 12 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Certain statements in this Annual Report constitute forward-looking statements. See " Forward-Looking Statements" immediately prior to Item 1 of Part I of this report for factors relating to these statements and "Risk Factors" in Item 1A of Part I of this report for a discussion of certain risk factors applicable to our business, financial condition, results of operations, liquidity or prospects.
Current report
There is a significant increase of 82.57% in Operating Expenses for 2024 when compared with 2023; however, more than half of that increase (54%) is due to the inclusion of QXTEL in the consolidated financial statements in the year 2024. Another 29% of that increase is due to an increment in IQSTEL's operating expenses concentrated in the categories of Salaries, Wages and Benefits ($442,003 higher than in 2023), Advertising ($372,908 higher than in 2023) and Stock-based compensation ($180,329 higher than in 2023) Finally, the third largest expense item contributing to the increase of Operating Expanses is related to technology.
Current report
We finished the year ended December 31, 2024 with a loss of $5,180,036 as compared to a loss of $219,436 during the year ended December 31, 2023. 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.
Current report
Our Telecom Division, the division presently generating revenue, has positive operating income when presented separately from the rest of our Company. As we have indicated on several occasions, our strategy is to strengthen our telecommunications division so that it can serve as a lever for the development of new lines of business, such as Fintech and Cybersecurity.
Current report
Our telecom division revenues have increased by 96% from $144,502,351 in 2023 to $283,220,442 in 2024. Additionally, its gross profit has risen by 77%, going from $4,672,013 to $8,271,749; operating income has grown by 40% from $1,474,218 to $2,063,148; and net income has increased by 33%, rising from $1,290,646 to $1,710,241. These double-digit growth figures demonstrate the strong performance of our telecommunications division.
Current report
In evaluating our financial performance, we utilize Adjusted EBITDA as a supplemental measure to provide insights into the profitability of our core operations. (Please see Adjusted EBITDA, which is reconciled to the Net Income in the table above.) Adjusted EBITDA excludes, in addition to non-operational expenses like interest expenses, taxes, depreciation and amortization; items that we believe are not indicative of our operating performance, such as:
Current report
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.
Current report
Based on the analysis of our Adjusted EBITDA our Telecom Division is a high-performing division that generates strong operational profits. Adjusted EBITDA has increased 86% from $1,419,383 as of December 31, 2023 to $2,645,417 as of December 31, 2024.
Current report
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.
Current report
Financing activities provided $7,240,966 for the year ended December 31, 2024, as compared to $1,833,965 provided for the year ended December 31, 2023. The cash provided in 2024 was largely from loans, convertible debt and warrant exercises, offset by repayments on loans. We have financed our operations through private placements, convertible notes, and unsecured debt, and we have also issued debt in our company secured by all of our assets.
Current report
In November 2024, the FASB issued ASU 2024-03 final standard on Income Statement: Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance will be effective for us on January 1, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03.
Current report
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.
Removed paragraphs (4)
Previous report
Gross margins were 3.23% and 1.92% of revenues, respectively. This is a clear sign the Company is improving it sales margin.
Previous report
We finished the year ended December 31, 2023 with a loss of $219,436 as compared to a loss of $5,865,761 during the year ended December 31, 2022. These two figures compared result in an important improvement in the Company’s performance during 2023 versus the previous year. This can be perfectly noted when looking at the evolution of the Operating Income and the Net Income by quarter in 2023.
Previous report
Financing activities provided $1,833,965 for the year ended December 31, 2023, as compared to $1,767,982 provided for the year ended December 31, 2022. Our positive financing cash flow in 2023 was largely the result of the $1,400,000 from the exercise of warrants.
Previous report
We do not expect the adoption of these or other recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.
Reworded paragraphs (12)
Previous wording
Our net revenue for the year ended December 31, 2023 was $144,502,351 as compared with $93,203,532 for the year ended December 31, 2022. These numbers reflect an increase of 55% year over year on our consolidated Revenues.
Current wording
Our net revenue for the year ended December 31, 2024 was $283,220,442 as compared with $144,502,351 for the year ended December 31, 2023. These numbers reflect an increase of 96% year over year on our consolidated Revenues.
Previous wording
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 new acquisitions.
Current wording
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 new acquisitions. In fact, 38% of the increase was organic grow, while the remaining 62% was due to the acquisition of QXTEL Inc.
Previous wording
Our total cost of sales for the year ended December 31, 2023 was $139,830,338 as compared with $91,412,016 for the year ended December 31, 2022.
Current wording
Our total cost of revenue for the year ended December 31, 2024 was $274,948,693 as compared with $139,830,338 for the year ended December 31, 2023.
Previous wording
The behavior in the costs shows a logical correlation with the behavior of the revenue commented above. We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost.
Current wording
The behavior in the costs shows a logical correlation with the behavior of the revenue commented above. We have reached a higher volume of revenue and every additional unit sold (minutes and SMS) has its corresponding termination cost.
Previous wording
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $1,791,516 in 2022 to $4,672,013 in 2023; represented an increase of 161% year over year.
Current wording
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $4,672,013 in 2023 to $8,271,749 in 2024, which is an increase of 77.05% year-over-year.
Previous wording
Operating expenses for the year ended December 31, 2023 were $4,987,516, as compared with $4,983,176 for the year ended December 31, 2022. The detail by major category is reflected in the table below.
Current wording
Operating expenses for the year ended December 31, 2024 were $9,105,813, as compared with $4,987,516 for the year ended December 31, 2023. The detail by major category is reflected in the table below.
Previous wording
We had other income of $96,067 for the year ended December 31, 2023, as compared with other expenses of $2,674,101 for the year ended December 31, 2022. The positive change in Other Income (Expenses) in 2023 compared to 2022 is due to the positive Change in fair value of derivative liabilities of $381,848 for the year ended December 31, 2023 from a negative value of $2,650,369 for the year ended December 31, 2022.
Current wording
We had other expenses of $3,951,942 for the year ended December 31, 2024, as compared with other income of $96,067 for the year ended December 31, 2023. The increase in Other Expenses in 2024 compared to 2023 is due to (1) the negative change in fair value of derivative liabilities of $1,393,046 for the year ended December 31, 2024 from a positive value of $381,848 for the year ended December 31, 2023; (2) the increase of interest expenses to $2,159,425 in 2024 from $94,908 in 2023 and (3) a loss on settlement of debt of $482,085 in 2024.
Previous wording
As of December 31, 2023 we had total current assets of $15,719,172, compared with current liabilities of $13,840,944, resulting in a positive working capital of $1,878,228 and a current ratio of approximately 1.14 to 1 which represent an important improvement compared to a ratio of 0.99 to 1 as of December 31, 2022.
Current wording
As of December 31, 2024 we had total current assets of $63,015,046, compared with total current liabilities of $63,821,196, resulting in a negative working capital of $ 806,150 and a current ratio of approximately 0.99 to 1. The negative working capital is due largely to loans payable of $2,455,641.
Previous wording
Following is a table with summary data from the consolidated statement of cash flows for the year ended December 31, 2023 and 2022, as presented.
Current wording
Following is a table with summary data from the consolidated statements of cash flows for the years ended December 31, 2024 and 2023, as presented.
Previous wording
Our operating activities used $1,483,801 in the year ended December 31, 2023, as compared with $1,765,060 used in operating activities in the year ended December 31, 2022. Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
Current wording
Our operating activities used $2,930,306 in the year ended December 31, 2024, as compared with $1,483,801 used in operating activities in the year ended December 31, 2023. Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
Previous wording
Investing activities used $332,550 for the year ended December 31, 2023, as compared with $2,001,506 used in investing activities for the year ended December 31, 2022. Our negative investing cash flow for 2023 is largely due to the purchase of property and equipment.
Current wording
Investing activities used $3,162,971 for the year ended December 31, 2024, as compared with $332,550 used in investing activities for the year ended December 31, 2023. The cash used in investing activities is largely due to the acquisition of QXTEL, where the Company invested $2,955,121, and the purchase of $151,620 of property and equipment.
Previous wording
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. The Company has received the qualification of an Offering Statement under Form S-1 for the sale of up to 15,000,000 common stocks. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. We also plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Current wording
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we are dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. Aside from cash exercises as set forth under an outstanding option that expires on July 14, 2025, we do not have any formal commitments or arrangements for the advancement or loan of funds. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.