iQSTEL Inc
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
View on SEC.govAbout this filing
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.
Jun 30, 2025 · Filed Aug 14, 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 2025-03-31; filed 2025-05-15.
0001663577-25-000148
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001663577-25-000264
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 65 previous paragraphs and 82 current paragraphs.
37 unchanged; 13 reworded; 31 added; 15 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 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 (31)
Current report
Methods of Valuation
Current report
We use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include: Adjusted EBITDA and gross revenue.
Current report
The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.
Current report
Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity. It is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. 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
§ Change in Fair Value of Derivative Liabilities: These adjustments reflect unrealized gains or losses that are non-operational and subject to market volatility.
Current report
§ Loss on Settlement of Debt: This represents non-recurring expenses associated with specific financing activities and does not impact ongoing business operations.
Current report
The Company believes Adjusted EBITDA offers a clearer view of the cash-generating potential of its business, excluding non-recurring, non-cash, and non-operational impacts. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes, non-cash and certain other items that may vary for different companies for reasons unrelated to overall operating performance and also believes this information is useful to investors.
Current report
Gross revenue, which equals revenue before intercompany eliminations, represents a key performance metric that management uses to measure the scale of the Company’s operations, monitor revenue trends across reporting segments, and evaluate the effectiveness of sales and marketing initiatives on a consolidated basis prior to the impact of intercompany transactions.
Current report
When looking at the numbers by companies, we have the following breakout for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024:
Current report
For the three months ended June 30, 2025, we recorded an increase of 6% in gross revenues (revenue before intercompany eliminations) compared to the same period in 2024. See Methods of Valuation for a discussion of gross revenue.
Current report
Similarly, for the six months period ended June 30, 2025, gross revenues increased by 17% year-over-year. However, due to a higher volume of intercompany transactions during both periods, net consolidated revenue (revenue after eliminations) was lower compared to the prior year.
Current report
These intercompany transactions are part of our strategy to optimize operations across subsidiaries by leveraging more efficient routing alternatives for our voice and SMS services, cost reductions, and improved service delivery. This synergy among our entities strengthens our position in the market and contributes to enhanced gross margin results.
Current report
The organic growth during the three and six months ended June 30, 2025 was 100% of the total revenue for those periods. This reflects the solid foundation of our revenue and the growth capacity the Company has with its current operations.
Current report
We consider organic growth the revenues reported by our existing subsidiaries once fully integrated to our operations. These subsidiaries include Etelix, SwissLink, QGlobal, IoT Labs, Smartbiz, Whisl and QXTEL.
Current report
Cost of Revenue
Current report
Our total cost of revenue for the three months ended June 30, 2025 decreased to $70,311,749, compared with $76,472,140 for the three months ended June 30, 2024. Our total cost of revenue for the six months ended June 30, 2025 decreased to $126,009,607, compared with $126,507,992 for the six months ended June 30, 2024.
Current report
When looking at the numbers by subsidiary, we have the following breakout for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024:
Current report
For the six months ended June 30, 2025, gross profit increased by 7.45% compared to the same period in 2024. This growth is the result of commercial and operational synergies achieved through intercompany collaboration. We expect this trend to strengthen as we continue aligning internal operations and leveraging our integrated service portfolio.
Current report
Operating expenses, which consist solely of general and administrative costs, increased slightly by 0.94% for the three months ended June 30, 2025, compared to the same period in 2024. For the six months ended June 30, 2025, general and administrative expenses rose to $5,066,900 from $4,068,205 reported in the same period of 2024, reflecting a 24.55% increase. A detailed breakdown by major category for the three and six months ended June 30, 2025 and 2024 is presented in the table below:
Current report
When looking at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2025 compared to the six months ended June 30, 2024:
Current report
For the six months ended June 30, 2024, QXTEL consolidated only the expenses incurred between April and June 2024. In contrast, for the same period in 2025, expenses from January through June were included. This difference in the reporting periods explains the 113% increase in general and administrative expenses compared to the prior year.
Current report
Operating Income/Loss
Current report
For the three months ended June 30, 2025, the Company reported an operating loss of $656,229, representing a significant increase compared to the operating loss of $342,103 for the same period in 2024. Similarly, for the six months ended June 30, 2025, the operating loss widened to $1,260,455, up from $525,555 reported during the corresponding period in the prior year. These results reflect an overall rise in operating expenses, largely associated with ongoing investments in development and growth initiatives.
Current report
Our Telecom Division, currently the primary source of revenue for the Company, continued to generate positive Operating Income. Meanwhile, our pre-revenue companies are operating with minimal expenses, focused solely on completing product and service development prior to their market launch.
Current report
A comparison of the tables below highlights the significant progress of our Telecom Division, as evidenced by the increase in revenue, gross profit, and operating income for both the three- and six-month periods ended June 30, 2025. As we have previously stated, our strategy remains centered on strengthening the telecommunications segment to serve as a growth engine for the develo pment and expansion of new business lines.
Current report
We had other expenses of $1,600,989 for the three months ended June 30, 2025, as compared with other expenses of $1,556,509 for the same period ended 2024. We had other expenses of $2,120,649 for the six months ended June 30, 2025, as compared with other expenses of $1,953,273 for the same period ended 2024. The increase in other expenses for the six months ended June 30, 2025 is mainly due to the change in the loss on settlement of debt, and increased interest expenses incurred.
Current 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.
Current report
Investing activities used $173,812 for the six months ended June 30, 2025 compared to $2,720,197 used during the same period of year 2024. Investing outflows dropped sharply, indicating a pause in our M&A campaign.
Current report
Financing activities provided $1,351,026 in the six months ended June 30, 2025 compared with $5,306,444 provided in the six months ended June 30, 2024. Financing inflows dropped significantly, indicating a reduced reliance on equity and convertible debt.
Current report
These figures show an improved operating cash flow despite net losses and strategic use of equity for debt settlement.
Current report
The Company is shifting from aggressive expansion in 2024 with the acquisition of QXTEL to consolidation and cash preservation in these first six months of 2025, with a heavy reliance on working capital management and non-cash financing tools. The Company’s debt repayments suggest a maturing capital structure.
Removed paragraphs (15)
Previous report
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 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.
Previous report
Cost of Revenues
Previous report
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 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.
Previous report
As mentioned before, this increment in the gross margin is the result of the commercial and operational synergies implemented among all subsidiaries.
Previous report
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 report
Operating Income
Previous 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.
Previous report
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.
Previous 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.
Previous report
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 report
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 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.
Previous 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.
Reworded paragraphs (13)
Previous 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.
Current wording
Our total revenue reported for the three months ended June 30, 2025 was $72,183,236, compared with $78,635,764 for the three months ended June 30, 2024. These numbers reflect a decrease of 8.21% quarter over quarter on our consolidated revenues. Our total revenue reported for the six months ended June 30, 2025 was $129,816,052, compared with $130,050,642 for the six months ended June 30, 2024; which reflect a decrease of 0.18%.
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 networks.
Current wording
Our cost of revenue 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.
Previous 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.
Current wording
The behavior in the costs shows a logical correlation with the behavior of the revenue commented above, as each additional unit sold (minutes and SMS) has its corresponding termination cost.
Previous wording
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 wording
In this sense, the inclusion of QXTEL in the consolidation process, along with the restructuring of the portfolio among subsidiaries, reflects the synergies derived from the commercial and operational integration of all group companies. This integration has resulted in a significant volume of intercompany transactions, which are part of our strategic approach to optimizing routing and cost efficiency. We expect this to positively impact revenues and margins in the future.
Previous wording
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 wording
Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, was $3,806,445 for the six months ended June 30, 2025 compared to $3,542,650 for six three months ended June 30, 2024, reflecting an increase of 7.45% quarter over quarter
Previous wording
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 wording
The Consolidated Percentage of Gross Margin for the six months ended June 30, 2025 was 2.93%, which represents an increase of 7.64% compared to the six months ended June 30, 2024.
Previous wording
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 wording
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; depreciation and amortization; and office, facility and other are largely the result of the addition of QXTEL to our consolidated financial statements.
Previous wording
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 wording
We finished the three months ended June 30, 2025 with a loss of $2,348,914, as compared to a loss of $1,963,887 during the three months ended June 30, 2024. We finished the six months ended June 30, 2025 with a loss of $3,493,375, as compared to a loss of $2,544,103 during the six months ended June 30, 2024.
Previous 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.
Current wording
As of June 30, 2025, we had total current assets of $35,555,030 and current liabilities of $36,843,884, resulting in a negative working capital of $1,288,854.
Previous wording
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 wording
Our operating activities used $1,649,283 in the six months ended June 30, 2025 as compared with $3,151,688 used in operating activities in the six months ended June 30, 2024. Our negative operating cash flow for both periods is a result of our net loss and changes in operating assets and liabilities which varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Despite a larger net loss, operating cash burn decreased due to working capital changes, especially receivables and payables.
Previous 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.
Current 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 public and 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.
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 three-month period ended March 31, 2025.
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 six-month period ended June 30, 2025.
Previous 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.
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 six months ended June 30, 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
• Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives.