iQSTEL Inc
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 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-Q
Period ended 2024-09-30; filed 2024-11-14.
0001663577-24-000281
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001663577-25-000148
Item 2. 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 58 previous paragraphs and 65 current paragraphs.
22 unchanged; 18 reworded; 24 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 14 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 (24)
Current report
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.
Current report
We expect that our revenue will continue to grow consistently over the coming quarters providing a projected total of $340 million for the year ending December 31, 2025.
Current report
As can be noticed in the analysis of the Gross Margin in the section below, there is an important increase in the margins of Etelix, Whisl and Smartbiz. This increase in the gross margins of Etelix, Whisl and Smartbiz is related to the lower revenue reported by those subsidiaries. These three subsidiaries eliminated routes and destinations of low margins; while the inclusion of QXTEL compensates for the revenue of those low-margin routes in Etelix, Whisl and Smartbiz.
Current report
This portfolio restructuring is the result of the synergies achieved through the commercial and operational integration of all subsidiaries. This can also be noticed in the high volume of intercompany business. We expect this to impact positively the revenues and the margins in the future.
Current report
Gross Margin
Current report
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, was $1,934,958 for the three months ended March 31, 2025 compared to $1,379,026 for the three months ended March 31, 2024. This represents an increase of 40% in the gross margin quarter over quarter.
Current report
Consolidated Gross Margin % for the three months ended March 31, 2025 was 3.36% compared to 2.68% for the same period of 2024. This represents an increase of 25.37% quarter over quarter.
Current report
As mentioned before, this increment in the gross margin is the result of the commercial and operational synergies implemented among all subsidiaries.
Current report
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; (2) the increases in other items such as salaries, wages and benefits, or depreciation and amortization, or office, facility and other are the result of the addition of QXTEL to our consolidated financial statements.
Current report
We are continually identifying operational synergies among all of our subsidiaries to be more cost efficient. The investment we are currently making in the development of a unique voice and SMS switching platform that will allow us to reduce costs between fifty and sixty thousand dollars per quarter.
Current report
The Company showed negative Operating Income for the three months ended March 31, 2025 of $604,226 compared with a negative result of $183,452 for the three months ended March 31, 2024.
Current report
We had total other expenses, net of $519,660 for the three months ended March 31, 2025, as compared with other expenses of $396,764 for the same period ended 2024. The other expenses in 2025 are largely due to $531,726 in Interest Expense associated with the financing for the acquisition of QXTEL, which allows us to drive the organic growth of the Company.
Current report
Net Loss
Current report
We finished the three months ended March 31, 2025 with a net loss of $1,144,461, as compared to a loss of $580,216 during the three months ended March 31, 2024. The net loss as of March 31, 2025 is highly impacted by increased operating expenses and interest expense incurred in the acquisition of QXTEL; 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, 2025 which represents 43% of the total consolidated gross profit.
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
• FX Gains and Losses.
Current report
• Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives.
Current report
• Other non-recurrent expenses: Adjusted EBITDA removes one-time, irregular, or non-recurring expenses to reflect the company's sustainable earnings.
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.
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
Our operating activities used $1,906,969 for the three months ended March 31, 2025 as compared with $536,888 used in operating activities in the three months ended March 31, 2024. 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 report
We have an outstanding Option with ADI Funding under a stock purchase agreement for $100,000 that expires on July 14, 2025, for the right to acquire up to 187,500 shares of common stock upon an effective registration statement. As of March 31, 2025, the Company did not receive payment of $100,000 and the Option was not in effect, but we anticipate completing the registration statement and receiving the $100,000 from ADI Funding at some point in the near future.
Current report
If activated, the exercise price per share of the common stock under the Option shall be 70% of the VWAP of the common stock during the then 10 Trading Days immediately preceding but not including the date of exercise. The obligation to exercise each specified portion of the Option is subject to the exercise price, being not less than $8.80 per share on the relevant Option exercise date.
Removed paragraphs (18)
Previous report
This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:
Previous report
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully, including those contained in our Annual Report on Form 10-K under “Risk Factors” for the year ended December 31, 2023, and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made, and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Previous report
When looking at the numbers by subsidiary, we have the following breakout for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:
Previous report
When looking at the numbers by subsidiary, we have the following breakout for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:
Previous report
Gross Profit
Previous report
The gross profit for the three months ended September 30, 2024 increased to $2,019,919 from $1,028,521 for the same period of year 2023. For the nine months ended September 30, 2024 the gross profit increased to $5,608,725 from $3,029,723 for the same period of year 2023.
Previous report
It is important to remark on the evolution of the Gross Profit expressed as a percentage of Revenue. It went up to 3.72% for the three months ended September 2024 from 2.58% for the same period of 2023, but also from 2.75% for the three months ended June 30, 2024.
Previous report
Operating expenses increased to $2,076,472 for the three months ended September 30, 2024 from $957,768 for the three months ended September 30, 2023.
Previous report
The main reasons for the overall increase in operating expenses for the nine months ended September 30, 2024 compared to the same period of 2023 is due to the increase in salaries, wages and benefits; technology; the professional fees; office, facilities and other.
Previous report
As it can be seen in the table below, where operating expenses are shown by subsidiary, 56% of the total increase in operating expenses is due to the inclusion of QXTEL, which was not part of the group of companies in year 2023.
Previous report
When looking at the numbers by subsidiary, we have the following breakout for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:
Previous report
The Company had an operating loss of $56,553 for the three months ended September 30, 2024 compared with operating income of $70,753 for the three months ended September 30, 2023.
Previous report
The Company had an operating loss of $535,952 for the nine months ended September 30, 2024 compared with an operating loss of $499,495 for the nine months ended September 30, 2023
Previous report
We had other expenses of $2,646,275 for the nine months ended September 30, 2024, as compared with other income of $224,938 for the same period ended 2023. The difference between the compared periods is primarily in due to a change in fair value of derivative liabilities of $(1,063,789); and Interest Expense of $(1,533,820).
Previous report
Net Income/Loss
Previous report
The Company finished the three months ended September 30, 2024 with a net loss of $773,004, as compared to a net income $45,909 during the three months ended September 30, 2023. The Company finished the nine months ended September 30, 2024 with a loss of $3,317,107, as compared to a loss of $274,557 during the nine months ended September 30, 2023.
Previous report
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.
Previous report
Our operating activities used $2,526,651 in the nine months ended September 30, 2024 as compared with $434,701 used in operating activities in the nine months ended September 30, 2023.
Reworded paragraphs (18)
Previous wording
iQSTEL Inc. (www.iqstel.com) is a technology company with a presence in 20 countries and over 100 employees that offers leading-edge services through its four business divisions in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries. Our presence is global, with offices in Miami, Venezuela, Argentina, UK, Switzerland, Turkey, and Dubai, we target diverse and high-growth markets. We maintain more than 400 high value network interconnections around the world, delivering international voice, SMS, and connectivity services that form the core of our business. The company’s strategy focuses on leveraging synergies between its 11 subsidiaries to drive innovation and capture emerging opportunities.
Current wording
IQSTEL Inc. (www.IQSTEL.com) is a technology company with a presence 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 four business divisions in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries. Our presence is global, with 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. The company’s strategy focuses on leveraging synergies between its 9 subsidiaries to drive innovation and capture emerging opportunities.
Previous wording
Our Telecom Division, which represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), 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).
Current wording
Our Telecom Division, which represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented, offers Voice over Internet Protocol (VoIP), SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), 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).
Previous wording
Also under the Telecom Division, our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, itsBchain.
Current wording
Also under the Telecom Division, our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through our subsidiary, itsBchain.
Previous wording
Our developing Electric Vehicle (EV) Business Line (www.evoss.net) offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia, and Venezuela. EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family.
Current wording
Our developing Electric Vehicle (EV) Business Line offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia. EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family.
Previous wording
The information contained on our websites is not incorporated by reference into this prospectus and should not be considered part of this or any other report filed with the SEC.
Current wording
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.
Previous wording
Our total revenue reported for the three months ended September 30, 2024 was $54,249,614, compared with $39,757,203 for the three months ended September 30, 2023. These numbers reflect an increase of 36.45% quarter over quarter on our consolidated revenues. Our total revenue reported for the nine months ended September 30, 2024 was $184,346,412, compared with $97,248,561 for the nine months ended September 30, 2023. These numbers reflect an increase of 89.56% year over year on our consolidated revenues.
Current wording
Our total revenue reported for the three months ended March 31, 2025 was $57,632,816, compared with $51,414,878 for the three months ended March 31, 2024. These numbers reflect an increase of 12% quarter over quarter 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 the synergies among all our subsidiaries.
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 expanding the synergies among our subsidiaries.
Previous wording
Our total cost of revenues for the three months ended September 30, 2024 increased to $52,229,695, compared with $38,728,682 for the three months ended September 30, 2023. Our total cost of revenues for the nine months ended September 30, 2024 increased to $178,737,687, compared with $94,218,838 for the nine months ended September 30, 2023.
Current wording
Our total cost of revenues for the three months ended March 31, 2025 increased to $55,697,858, compared with $50,035,852 for the three months ended March 31, 2024.
Previous wording
Our cost of revenues 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.
Current wording
Our cost of revenues 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 networks.
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 on above. We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost.
Previous wording
Operating expenses increased to $6,144,677 for the nine months ended September 30, 2024 from $3,529,218 for the nine months ended September 30, 2023. The details by major category for the nine months ended September 30, 2024 and 2023 is reflected in the table below:
Current wording
Operating expenses increased to $2,539,184 for the three months ended March 31, 2025 from $1,562,478 for the three months ended March 31, 2024. The detail by major category is reflected in the table below.
Previous wording
Our Telecom Division, the division presently generating revenue, has positive operating income when presented separately from the rest of our Company. The expenses of our pre-revenue companies are set at the minimum required to finish the development of the product/services prior to market launch. When comparing the tables below, we can see a tremendous evolution of our telecom division comparing the revenues, gross profit and operating income for the three and nine months ended September 30, 2024 versus the same periods of year 2023. 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.
Current wording
Our Telecom Division, the division presently generating revenue, has a 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.
Previous wording
As of September 30, 2024, we had total current assets of $19,664,986 and current liabilities of $24,066,234, resulting in a negative working capital of $4,401,248. This compares with a positive working capital of $1,878,228 at December 31, 2023.
Current wording
As of March 31, 2025, we had total current assets of $26,043,799 and current liabilities of $30,279,641, resulting in a negative working capital of $4,235,842.
Previous wording
Investing activities used $2,950,367 for the nine months ended September 30, 2024 as compared with $340,583 used in investing activities in the nine months ended September 30, 2023. Use of funds in investing activities were primarily for the acquisition of subsidiary (QXTEL) for $2,730,121.
Current wording
Investing activities used $58,645 for the three months ended March 31, 2025 as compared with $1,622,892 for the three months ended March 31, 2024. Uses of funds in investing activities in 2025 consisted primarily of the purchase of property and equipment. Uses of funds on investing activities in 2024 were primarily the acquisition of QXTEL.
Previous wording
Financing activities provided $6,239,489 in the nine months ended September 30, 2024 compared with $1,454,756 provided in the nine months ended September 30, 2023. Our positive financing cash flow in 2024 was largely the result of the proceeds from convertible notes of $3,997,500, funds used in the acquisition of QXTEL.
Current wording
Financing activities provided $540,303 in the three months ended March 31, 2025 compared with $3,522,683 provided in the three months ended March 31, 2024. Our positive financing cash flow in 2025 and 2024 was largely the result of the financing secured to complete the acquisition of QXTEL.
Previous wording
We intend to fund operations through increased sales and debt and/or equity financing arrangements to strengthen our liquidity and capital resources. 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
We intend to fund operations through increased sales and debt and/or equity financing arrangements, to strengthen our liquidity and capital resources. 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.
Previous wording
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 nine-month period ended September 30, 2024.
Current wording
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, 2025.
Previous wording
Our accounting policies are discussed in detail in the footnotes to our Annual Report on Form 10-K for the year ended December 31, 2023 and in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2024. We consider our critical accounting policies to be those related to warrant accounting and complex debt instruments, allowance for doubtful accounts, valuation of long-lived assets, 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.
Current wording
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, 2025; however, we consider our critical accounting policies to be those related to allowance for doubtful accounts, valuation of long-lived assets, 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our Telecom Division, which is the one generating revenue at the present time, generated positive Operating Income. The expenses of our Pre-revenue companies are set at the minimum required to finish the development of the product/services prior to market launch.