IQSTEL INC. - Form 10-Q - March 31, 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


	☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended March 31, 2025

	☐	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

		For the transition period from __________ to__________

		Commission File Number: 001-42644

IQSTEL Inc.

(Exact name of registrant as specified in its charter)


Nevada	45-2808620
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

300 Aragon Avenue, Suite 375 Coral Gables, FL 33134
(Address of principal executive offices)

(954) 951-8191
(Registrant’s telephone number)
_______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

	☐ Large accelerated filer	☐ Accelerated filer
	☒ Non-accelerated Filer	☒ Smaller reporting company
		☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 2,898,896 common shares as of May 15, 2025

Table of Contents

TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4:	Controls and Procedures	11
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	12
Item 1A:	Risk Factors	12
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3:	Defaults Upon Senior Securities	12
Item 4:	Mine Safety Disclosures	12
Item 5:	Other Information	12
Item 6:	Exhibits	12

Table of Contents

Item 1. Financial Statements

Our unaudited consolidated financial statements included in this Form 10-Q are as follows:

	F-1	Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024;
	F-2	Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 (unaudited);
	F-3	Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (unaudited); and
	F-4	Consolidated Statements of Stockholder’s Equity for the three months ended March 31, 2025 and 2024 (unaudited); and
	F-5	Notes to Consolidated Financial Statements (unaudited).

These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2025 are not necessarily indicative of the results that can be expected for the full year.

Table of Contents

IQSTEL INC

Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2025			2024
ASSETS
Current Assets
Cash	$	1,085,046		$	2,510,357
Accounts receivable, net		21,964,399			57,158,967
Inventory, net		30,658			30,658
Due from related parties		638,177			630,715
Prepaid and other current assets		2,325,519			2,684,349
Total Current Assets		26,043,799			63,015,046

Property and equipment, net		604,303			561,802
Intangible assets, net		7,318,341			7,438,654
Goodwill		6,750,045			6,750,045
Deferred tax assets		243,108			243,108
Other assets		1,060,769			999,083
TOTAL ASSETS	$	42,020,365		$	79,007,738

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	8,840,686		$	2,129,241
Accrued and other current liabilities		12,378,975			55,624,784
Due to related parties		26,613			26,613
Loans payable - net of discount of $75,271 and $62,898, respectively		3,537,307			2,455,641
Loans payable - related parties		548,659			720,485
Convertible notes - net of discount of $324,641 and $138,654, respectively		4,947,401			1,864,432
Contingent liability for acquisition of subsidiary		—			1,000,000
Total Current Liabilities		30,279,641			63,821,196

Convertible notes - net of discount of $0 and $210,296, respectively		—			3,011,926
Employee benefits, non-current		184,918			274,353
TOTAL LIABILITIES		30,464,559			67,107,475

Stockholders' Equity
Preferred stock: 1,200,000 authorized; $0.001 par value
Series A Preferred stock: 10,000 designated; $0.001 par value, 10,000 shares issued and outstanding		10			10
Series B Preferred stock: 200,000 designated; $0.001 par value, 35,537 shares issued and outstanding		36			36
Series C Preferred stock: 200,000 designated; $0.001 par value, No shares issued and outstanding		—			—
Series D Preferred stock: 75,000 designated; $0.001 par value, No shares issued and outstanding		—			—
Common stock: 3,750,000 authorized; $0.001 par value; 2,637,628 and 2,537,209 shares issued and outstanding, respectively		2,638			2,537
Additional paid in capital		40,812,472			39,943,924
Accumulated deficit		(33,930,013	)		(32,703,410	)
Accumulated other comprehensive loss		(25,340	)		(25,340	)
Equity attributed to stockholders of IQSTEL Inc.		6,859,803			7,217,757
Equity attributable to noncontrolling interests		4,696,003			4,682,506
TOTAL STOCKHOLDERS' EQUITY		11,555,806			11,900,263

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	42,020,365		$	79,007,738

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-1

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IQSTEL INC

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
	March 31,
	2025			2024

Revenues	$	57,632,816		$	51,414,878
Cost of revenue		55,697,858			50,035,852
Gross profit		1,934,958			1,379,026

Operating expenses
General and administration		2,539,184			1,562,478
Total operating expenses		2,539,184			1,562,478

Operating loss		(604,226	)		(183,452	)

Other income (expense)
Other income		23,228			71,777
Other expenses		(11,162	)		(407	)
Interest expense		(531,726	)		(365,474	)
Loss on settlement of debt		—			(102,660	)
Total other expense		(519,660	)		(396,764	)

Net loss before provision for income taxes		(1,123,886	)		(580,216	)
Income taxes		(20,575	)		—
Net loss		(1,144,461	)		(580,216	)
Less: Net income attributable to noncontrolling interests		13,497			229,551
Net loss attributed to IQSTEL Inc.	$	(1,157,958	)	$	(809,767	)

Comprehensive loss
Net loss	$	(1,144,461	)	$	(580,216	)
Total loss	$	(1,144,461	)	$	(580,216	)
Less: Comprehensive income attributable to noncontrolling interests		13,497			229,551
Net comprehensive loss attributed to IQSTEL Inc.	$	(1,157,958	)	$	(809,767	)

Basic and diluted loss per common share	$	(0.44	)	$	(0.37	)

Weighted average number of common shares outstanding - Basic and diluted		2,629,867			2,189,412

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-2

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IQSTEL INC

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the three months ended March 31, 2025 and 2024

(Unaudited)


	Series A Preferred Stock				Series B Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid in Capital			Accumulated Deficit			Accumulated Comprehensive Loss			Total			Non Controlling Interest		Total Stockholders' Equity
Balance - December 31, 2024		10,000	$	10		35,537	$	36		2,537,209	$	2,537	$	39,943,924		$	(32,703,410	)	$	(25,340	)	$	7,217,757		$	4,682,506	$	11,900,263

Common stock issued for compensation		—		—		—		—		1,875		2		32,813			—			—			32,815			—		32,815
Common stock issued for conversion of debt		—		—		—		—		94,981		95		835,739			—			—			835,834			—		835,834
Common stock issued for common stock payable		—		—		—		—		3,563		4		(4	)		—			—			—			—		—
Dividend to non-controlling interest		—		—		—		—		—		—		—			(68,645	)		—			(68,645	)		—		(68,645)
Net income (loss)		—		—		—		—		—		—		—			(1,157,958	)		—			(1,157,958	)		13,497		(1,144,461)
Balance - March 31, 2025		10,000	$	10		35,537	$	36		2,637,628	$	2,638	$	40,812,472		$	(33,930,013	)	$	(25,340	)	$	6,859,803		$	4,696,003	$	11,555,806

	Series A Preferred Stock				Series B Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid in Capital		Accumulated Deficit			Accumulated Comprehensive Loss			Total			Non Controlling Interest			Total Stockholders' Equity
Balance - December 31, 2023		10,000	$	10		31,080	$	31		2,151,620	$	2,152	$	34,530,862	$	(26,084,133	)	$	(25,340	)	$	8,423,582		$	(377,710	)	$	8,045,872

Common stock issued for compensation		—		—		—		—		1,875		2		31,063		—			—			31,063			—			31,065
Common stock issued for settlement of debt		—		—		—		—		22,125		22		279,638		—			—			279,638			—			279,660
Common stock issued in conjunction with convertible notes		—		—		—		—		44,192		44		597,733		—			—			597,733			—			597,777
Net income (loss)		—		—		—		—		—		—		—		(809,767	)		—			(809,767	)		229,551			(580,216)
Balance - March 31, 2024		10,000	$	10		31,080	$	31		2,219,812	$	2,220	$	35,439,296	$	(26,893,900	)	$	(25,340	)	$	8,522,317		$	(148,159	)	$	8,374,158

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-3

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IQSTEL INC

Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	March 31,
	2025			2024

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,144,461	)	$	(580,216	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		32,815			31,065
Bad debt expense		—			725
Depreciation and amortization		126,995			35,161
Amortization of debt discount		186,230			207,742
Loss on settlement of debt		—			102,660
Changes in operating assets and liabilities:
Accounts receivable		45,924,000			2,743,089
Inventory		—			185
Prepaid and other assets		(1,391,098	)		(552,204	)
Accounts payable		690,057			(556,055	)
Accrued and other current liabilities		(46,331,507	)		(1,969,040	)
Net cash used in operating activities		(1,906,969	)		(536,888	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit for acquisitions of subsidiary		—			(1,500,000	)
Purchase of property and equipment		(49,183	)		(71,662	)
Payment of loan receivable - related party		(9,462	)		(51,230	)
Net cash used in investing activities		(58,645	)		(1,622,892	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable		495,000			—
Repayments of loans payable		(9,438	)		(8,885	)
Repayments of note payable issued for acquisition of subsidiary		(440,000	)		—
Repayment of loans payable - related parties		(190,864	)		—
Proceeds from convertible notes		987,500			3,722,500
Repayment of convertible notes		(233,249	)		(190,932	)
Dividend paid to non-controlling interest		(68,645	)		—

SEC Form 10-Q filed by iQSTEL Inc.