iQSTEL Inc
For the period ended Dec 31, 2025. Filed Apr 6, 2026.
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.
FY2025 · Filed Apr 6, 2026
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 2024-12-31; filed 2025-03-31.
0001663577-25-000086
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-04-06.
0001663577-26-000094
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 43 previous paragraphs and 101 current paragraphs.
22 unchanged; 17 reworded; 61 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 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 (61)
Current report
The continued growth in revenue is the result of the development of our commercial strategy, including the strengthening of our commercial and operational activities, as well as intercompany synergies developed throughout the year. The largest revenue concentration comes from IOT, which increased by 25% compared to last year, and QXTEL, which since its inclusion in mid-2024 continues to represent the highest share of revenue, accounting for 39% of the total volume for this period. The increase also includes the contribution from the newly acquired subsidiary, GlobeTopper LLC, which was consolidated starting July 1, 2025.
Current report
In 2024, our revenue was entirely derived from telecommunications services, with approximately 33.91% generated from SMS and 66.09% from voice. In 2025, our revenue mix evolved meaningfully: SMS increased to 36.6%, voice represented 54.51%, and our newly launched fintech operations contributed 8.89% of total revenue. The continued expansion of SMS traffic is strategically beneficial, as SMS services generally carry higher gross margins than traditional voice offerings, supporting improvements in our overall profitability profile. In addition, the introduction of fintech as a new revenue-generating segment reflects the early stages of a broader diversification strategy, reducing reliance on a single business line and positioning the Company with a more balanced and resilient revenue base over time.
Current report
Intercompany eliminations rose as well, driven by higher transactions among group entities, which are removed to avoid double counting at the consolidated level.
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
Our cost of revenue for the year ended December 31, 2025 was $307,442,244 as compared with $ 274,948,693 for the year ended December 31, 2024. These numbers reflect an increase of 12% year over year.
Current report
The consolidation of GlobeTopper, along with the traffic volumes generated by QXTEL and the portfolio reorganization among subsidiaries, highlights the synergies created through the group’s commercial and operational integration. As a result, intercompany transactions have increased, supporting our strategy to optimize routing and improve cost efficiency. This is expected to contribute positively to future revenue and margin performance.
Current report
The Company’s traffic mix continues to shift toward higher-margin services, reinforcing the strategic evolution of its telecom portfolio. In 2025, the business carried 17.4 billion SMS and short-code messages, up from 13.9 billion in 2024, an increase of 3.5 billion messages or 25.18% year over year. While this growth follows an exceptional 32.94% expansion from 2023 to 2024, the sustained double-digit trajectory highlights the strengthening role of SMS within the Company’s service mix. Because SMS consistently delivers superior gross margins compared to traditional voice, this shift not only expands volumes but also enhances the overall profitability profile of the communications segment, signaling a deliberate and effective enrichment of the Company’s product offering
Current report
This trend is reflected in our quarterly performance: total gross margin increased from 2.74% in the fourth quarter of 2024 to 3.46% in the fourth quarter of 2025, representing a 26.17% year-over-year improvement.
Current report
General and administration expenses increased from $9,105,813 to $13,709,264 as of December 2025. IQSTEL represents the largest share of general and administration expenses for the period at 30%, followed by QXTEL with 28%.
Current report
The increase compared to the prior year is mainly driven by the expansion of the group and the consolidation of QXTEL and GlobeTopper. The most significant variations include the increase in technology expenses related to the deployment and upgrade of the switching platform to support all subsidiaries, which is expected to generate cost efficiencies once the migration process is completed.
Current report
Additionally, the Company recognized a non-cash goodwill impairment of $2,168,552. Including this effect, total operating expenses reached $13,709,264, representing an increase of 50.56% compared to the prior year. This adjustment is non-recurring in nature and does not impact cash flow.
Current report
The underlying increase in operating expenses is primarily related to higher salaries, depreciation and amortization, and general administrative costs, in line with the growth of the business and the integration of newly consolidated subsidiaries. Advertising expenses also increased to support commercial expansion, while insurance expenses decreased during the period.
Current report
We are continually identifying operational synergies among all of our subsidiaries to be more cost efficient.
Current report
Additionally, during 2025, the Company recognized a non-cash goodwill impairment of $2,168,552, which represents a material, non-recurring expense for the period and does not impact the Company’s cash flow. Excluding this effect, the variation in net loss would have been less pronounced.
Current report
A comparison of the tables below highlights the progress of our Telecom Division, as evidenced by the increase in revenue, gross profit, and operating income for both the three- and twelve-month periods ended December 31, 2025. As we have previously stated, our strategy remains centered on strengthening the telecommunications segment to serve as a growth engine for the development and expansion of new business lines.
Current report
On the other hand, our Fintech division continues to strengthen its position within the Group’s strategy. For the year ended 2025, the division reported revenues of $27,955,101 and operating expenses of $547,002, resulting in operating income of $4,868 and net income of $2,176.
Current report
This performance reflects the initial contribution from GlobeTopper, which was incorporated during 2025 and represents an important milestone for the development of this business line. While the division did not generate profits in 2024, the progress achieved in 2025 demonstrates the Company’s commitment to expanding its presence in the fintech segment and leveraging new opportunities that can also support the growth of our other business lines.
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
· Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives.
Current report
· Impairment loss of Goodwill: This represents a non-cash, non-recurring charge related to the deterioration in the value of goodwill and does not impact the Company’s cash flow.
Current report
· Tax Provision: This adjustment reflects the recognition of income tax expense, which may vary depending on jurisdictional results and does not directly reflect the Company’s core operating performance.
Current report
According to our adjusted EBITDA analysis, our Telecommunications division continues to be a high-performing segment generating solid operating profits, as adjusted EBITDA for the current period increased by 2.35% compared to the prior period. Meanwhile, the contribution of our Fintech business, which debuted with an EBITDA of $19,983, representing a significant milestone in the diversification of our business lines and supporting the Company's long-term growth strategy.
Current report
Goodwill Impairment Analysis
Current report
During the year ended December 31, 2025, the Company performed its annual goodwill impairment assessment in accordance with ASC 350,Intangibles—Goodwill and Other. Consistent with our policy, each reporting unit was evaluated by comparing its estimated fair value to its carrying amount. Management engaged an independent valuation firm to assist in the determination of fair value using a discounted cash flow approach and market participant assumptions. The analysis indicates,“the carrying value of SwissLink Carrier AG, IoT Labs, LLC, Smartbiz Telecom, LLC and Whisl Telecom are in excess of its fair value indicating impairment in the amount of $402,445, $81,782, $796,690, and $887,635, respectively.”
Current report
Based on this analysis, the Company recorded total goodwill impairment charges of approximately $2.17 million for the year ended December 31, 2025. These non-cash charges reflect changes in the long-term financial outlook of the affected reporting units, including updated assumptions regarding revenue growth, margin performance, and discount rates. The impairment charges do not impact the Company’s liquidity, cash flows from operations, or compliance with debt covenants. Management will continue to monitor macroeconomic conditions, reporting-unit performance, and other triggering events that may require interim impairment testing.
Current report
Material Cash Requirements
Current report
The Company’s material cash requirements include:
Current report
Working capital needs associated with high-volume telecom traffic settlement cycles.
Current report
Vendor and carrier payments, including interconnection fees, SMS termination costs, and network capacity charges.
Current report
Debt service obligations, including interest and scheduled principal payments under existing credit facilities.
Current report
Capital expenditures related to network infrastructure, platform development, and AI-driven software enhancements.
Current report
Regulatory and compliance costs, including licensing, audits, and data protection requirements across multiple jurisdictions.
Current report
Accounts Receivable and Allowance for Uncollectible Accounts
Current report
Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. No allowance for doubtful accounts was recorded as of December 31, 2025 or 2024. During the years ended December 31, 2025 and 2024, the Company recorded bad debt expense of $6,397 and $1,991, respectively.
Current report
Long-Lived Assets
Current report
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Current report
Intangible Assets
Current report
Intangible assets represent mainly the interconnection agreements acquired from the acquisition of QXTEL. The acquired intangible asset was recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective asset. The estimated useful life of the acquired interconnection agreements is 16 years.
Current report
Impairment of tangible and intangible assets
Showing the first 40 of 61 passages. Open the source sections for the rest.
Removed paragraphs (4)
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 new acquisitions. In fact, 38% of the increase was organic grow, while the remaining 62% was due to the acquisition of QXTEL Inc.
Previous report
Operating Expenses by subsidiary are as follows:
Previous 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.
Previous 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.
Reworded paragraphs (17)
Previous 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.
Current wording
Our net revenue for the year ended December 31, 2025 was $316,899,498 as compared with $283,220,442 for the year ended December 31, 2024. These numbers reflect an increase of 12% year over year on our consolidated Revenues.
Previous 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.
Current wording
Our total cost of revenue for the year ended December 31, 2025 was $307,442,244 as compared with $274,948,693 for the year ended December 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 our vendors’ 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, as well as the costs of the digital prepaid products related to Fintech (GlobeTopper) operations.
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 revenue 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 (Telecom and Fintech) 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 $4,672,013 in 2023 to $8,271,749 in 2024, which is an increase of 77.05% 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 $8,271,749 in 2024 to $9,457,254 in 2025, which is an increase of 14% year-over-year.
Previous 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.
Current wording
Operating expenses for the year ended December 31, 2025 were $13,709,264 as compared with $9,105,813 for the year ended December 31, 2024. The detail by major category is reflected in the table below:
Previous 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.
Current wording
We had other expenses of $4,136,551 for the year ended December 31, 2025, as compared with other expense of $3,951,942 for the year ended December 31, 2024. The increase in Other Expenses in 2025 compared to 2024 is due largely to the loss on settlement of debt and salary payable of $2,441,462 for the year ended December 31, 2025 compared to $482,085 for the year ended December 31, 2024.
Previous wording
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 wording
We finished the year ended December 31, 2025 with a net loss of $8,510,266 as compared to a loss of $5,180,036 during the year ended December 31, 2024. The results for the period were significantly impacted by expenses at the holding entity (IQSTEL), which include a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited.
Previous wording
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 wording
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. 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 which is already generating revenue, Cybersecurity and AI.
Previous wording
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 wording
Our telecom division revenues have increased year over year. Additionally, its gross profit has risen by 6%, going from $8,271,749 to $8,737,399.
Previous wording
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 wording
Consolidated figures show a negative Adjusted EBITDA; while this isn’t ideal, 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
Previous 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.
Current wording
As of December 31, 2025 we had total current assets of $36,162,424, compared with total current liabilities of $34,606,407, resulting in a positive working capital of $ 1,556,017 and a current ratio of approximately 1.04 to 1.
Previous 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.
Current wording
Our operating activities used $3,844,872 in the year ended December 31, 2025, as compared with $2,930,306 used in operating activities in the year ended December 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.
Previous 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.
Current wording
Investing activities used $239,651 for the year ended December 31, 2025, as compared with $3,162,971 used in investing activities for the year ended December 31, 2024. The cash used in 2024 in investing activities is largely due to the acquisition of QXTEL, where the Company invested $2,955,121, while in 2025 the cash used in investing activities was largely purchases of property and equipment totaling $113,020.
Previous wording
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 wording
Financing activities provided $3,729,525 for the year ended December 31, 2025, as compared to $7,240,966 provided for the year ended December 31, 2024. The cash provided in 2025 was largely from loans. We have financed our operations largely through private placements and secured and unsecured debt.
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. 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.
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. 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.
Previous wording
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 wording
In November 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to provide disaggregated disclosures of certain income statement expense captions in the notes to the financial statements. The ASU does not change the presentation of expense captions on the face of the income statement. This guidance will be effective for the Company on January 1, 2027, and the Company is currently evaluating the impact of adoption.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
When looking at the numbers by subsidiary, we have the following: