iQSTEL Inc 10-Q for FY2024 Q3

iQSTEL Inc (IQST)

10-Q 2024-11-14 For: 2024-09-30

Added on April 07, 2026

About this 10-Q

iQSTEL Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $54.25M; up 36.5% from $39.76M a year earlier
Net loss: $773K; compared with net income of $45.91K a year earlier
Diluted EPS: -$0.01; compared with -$0.01 a year earlier

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

		For the quarterly period ended September 30, 2024

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

		For the transition period from __________ to__________

		Commission File Number: 000-55984


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)

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

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	10
Item 4:	Controls and Procedures	10
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

F-1	Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023;
F-2	Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited);
F-3	Consolidated Statements of Stockholder’s Equity for the three and nine months ended September 30, 2024 and 2023 (unaudited);
F-4	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited); and
F-5	Notes to Consolidated Financial Statements (unaudited).


	September 30,			December 31,
	2024			2023
ASSETS
Current Assets
Cash	$	2,125,139		$	1,362,668
Accounts receivable, net		14,982,958			12,539,774
Inventory		30,658			27,121
Due from related parties		635,715			340,515
Prepaid and other current assets		1,890,516			1,449,094
Total Current Assets		19,664,986			15,719,172

Property and equipment, net		578,734			522,997
Intangible asset		99,592			99,592
Goodwill		10,677,045			5,172,146
Deferred tax assets		426,755			426,755
Other asset		992,006			214,991
TOTAL ASSETS	$	32,439,118		$	22,155,653

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	8,756,934		$	2,966,279
Accrued and other current liabilities		6,296,717			9,993,585
Due to related parties		26,613			26,613
Loans payable - net of discount of $294,484 and $3,750, respectively		3,232,009			264,988
Loans payable - related parties		926,069			259,447
Convertible notes - net of discount of $490,022 and $39,012, respectively		3,549,946			330,032
Contingent liability for acquisition of subsidiary		1,000,000			—
Derivative liabilities		277,946			—
Total Current Liabilities		24,066,234			13,840,944

Loans payable, non-current		—			99,099
Employee benefits, non-current		283,586			169,738
TOTAL LIABILITIES		24,349,820			14,109,781

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, 31,080 shares issued and outstanding		31			31
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: 300,000,000 authorized; $0.001 par value 186,176,651 and 172,129,630 shares issued and outstanding, respectively		186,176			172,130
Additional paid in capital		37,231,686			34,360,884
Accumulated deficit		(29,825,840	)		(26,084,133	)
Accumulated other comprehensive loss		(25,340	)		(25,340	)
Equity attributed to stockholders of iQSTEL Inc.		7,566,723			8,423,582
Equity (Deficit) attributable to noncontrolling interests		522,575			(377,710	)
TOTAL STOCKHOLDERS' EQUITY		8,089,298			8,045,872

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	32,439,118		$	22,155,653


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023

Revenues	$	54,249,614		$	39,757,203		$	184,346,412		$	97,248,561
Cost of revenue		52,229,695			38,728,682			178,737,687			94,218,838
Gross profit		2,019,919			1,028,521			5,608,725			3,029,723

Operating expenses
General and administration		2,076,472			957,768			6,144,677			3,529,218
Total operating expenses		2,076,472			957,768			6,144,677			3,529,218

Operating income (loss)		(56,553	)		70,753			(535,952	)		(499,495	)

Other income (expense)
Other income		7,006			2,607			88,151			3,126
Other expenses		(5,770	)		(32,505	)		(6,620	)		(105,714	)
Interest expense		(672,266	)		(34,219	)		(1,533,820	)		(54,322	)
Change in fair value of derivative liabilities		51,721			39,273			(1,063,789	)		381,848
Loss on settlement of debt		(27,537	)		—			(130,197	)		—
Total other income (expense)		(646,846	)		(24,844	)		(2,646,275	)		224,938

Net income (loss) before provision for income taxes		(703,399	)		45,909			(3,182,227	)		(274,557	)
Income taxes		(69,605	)		—			(134,880	)		—
Net income (loss)		(773,004	)		45,909			(3,317,107	)		(274,557	)
Less: Net income attributable to noncontrolling interests		150,784			107,922			424,600			364,586
Net loss attributed to iQSTEL Inc.	$	(923,788	)	$	(62,013	)	$	(3,741,707	)	$	(639,143	)

Dividend on Series B Preferred Stock		—			(816,480	)		—			(816,480	)
Net loss attributed to stockholders of iQSTEL Inc.	$	(923,788	)	$	(878,493	)	$	(3,741,707	)	$	(1,455,623	)

Comprehensive income (loss)
Net income (loss)	$	(773,004	)	$	45,909		$	(3,317,107	)	$	(274,557	)
Foreign currency adjustment		—			(4,428	)		—			142
Total comprehensive income (loss)		(773,004	)	$	41,481		$	(3,317,107	)	$	(274,415	)
Less: Comprehensive income attributable to noncontrolling interests		150,784			105,753			424,600			364,656
Net comprehensive loss attributed to iQSTEL Inc.	$	(923,788	)	$	(64,272	)	$	(3,741,707	)	$	(639,071	)

Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.01	)

Weighted average number of common shares outstanding - Basic and diluted		184,284,588			168,185,122			179,312,685			165,640,341


	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		172,129,630	$	172,130	$	34,360,884	$	(26,084,133	)	$	(25,340	)	$	8,423,582		$	(377,710	)	$	8,045,872

Common stock issued for compensation		—		—		—		—		150,000		150		30,915		—			—			31,065			—			31,065
Common stock issued for settlement of debt		—		—		—		—		1,770,000		1,770		277,890		—			—			279,660			—			279,660
Common stock issued in conjunction with convertible notes		—		—		—		—		3,535,354		3,535		594,242		—			—			597,777			—			597,777
Net income (loss)		—		—		—		—		—		—		—		(809,767	)		—			(809,767	)		229,551			(580,216	)
Balance - March 31, 2024		10,000	$	10		31,080	$	31		177,584,984	$	177,585	$	35,263,931	$	(26,893,900	)	$	(25,340	)	$	8,522,317		$	(148,159	)	$	8,374,158

Common stock issued for compensation		—		—		—		—		150,000		150		46,450		—			—			46,600			—			46,600
Common stock issued for warrant exercises		—		—		—		—		1,822,216		1,822		398,178		—			—			400,000			—			400,000
Resolution of derivative liabilities upon exercise of warrant		—		—		—		—		—		—		239,323		—			—			239,323			—			239,323
Acquisition of subsidiary		—		—		—		—		—		—		—		—			—			—			475,685			475,685
Net income (loss)		—		—		—		—		—		—		—		(2,008,152	)		—			(2,008,152	)		44,265			(1,963,887)
Balance - June 30, 2024		10,000	$	10		31,080	$	31		179,557,200	$	179,557	$	35,947,882	$	(28,902,052	)	$	(25,340	)	$	7,200,088		$	371,791		$	7,571,879

Common stock issued for conversion of debt		—		—		—		—		3,064,394		3,064		334,019		—			—			337,083			—			337,083
Common stock issued for compensation		—		—		—		—		150,000		150		31,670		—			—			31,820			—			31,820
Common stock issued for warrant exercises		—		—		—		—		3,405,057		3,405		171,595		—			—			175,000			—			175,000
Common stock payable		—		—		—		—		—		—		100,000		—			—			100,000			—			100,000
Resolution of derivative liabilities upon exercise of warrant		—		—		—		—		—		—		646,520		—			—			646,520			—			646,520
Net income (loss)		—		—		—		—		—		—		—		(923,788	)		—			(923,788	)		150,784			(773,004	)
Balance - September 30, 2024		10,000	$	10		31,080	$	31		186,176,651	$	186,176	$	37,231,686	$	(29,825,840	)	$	(25,340	)	$	7,566,723		$	522,575		$	8,089,298


	September 30,		December 31,
	2024		2023
Other receivable	$	127,569	$	312,116
Prepaid expenses		1,203,450		738,050
Advance payment		21,000		21,000
Tax receivable		52,294		428
Deposit for acquisition of asset		357,500		357,500
Security deposit		128,703		20,000
	$	1,890,516	$	1,449,094

	September 30,			December 31,				Interest
	2024			2023			Term	rate
Martus	$	103,738		$	103,738		Note was issued on October 23, 2018 and due on January 2, 2025		5.0	%
Darlene Covid19		80,019			99,099		Note was issued on April 1, 2020 and due on March 31, 2025		0.0	%
Promissory note payable		—			165,000		Note was issued April 4, 2023 and due on April 4, 2024		24.0	%
Promissory note payable		217,391			—		Note was issued June 11, 2024 and due on June 11, 2025		2.0	%⁽²⁾
Promissory note payable - acquisition of QXTEL		1,500,000			—		Note was issued April 1, 2024 and due on June 30, 2025		4.89	%
Promissory note payable		271,739			—		Note was issued July 16, 2024 and due on July 16, 2025		2.0	%⁽²⁾
Promissory note payable		271,739			—		Note was issued July 31, 2024 and due on July 31, 2025		2.0	%⁽²⁾
Promissory note payable		190,217			—		Note was issued September 23, 2024 and due on September 23, 2025		2.0	%⁽²⁾
Future receipts loan		891,650			—		Loan was issued September 9, 2024 and due in August 2025		Effective rate 92.2	%⁽¹⁾
Total		3,526,493			367,837
Less: Unamortized debt discount		(294,484	)		(3,750	)
Total loans payable		3,232,009			364,087
Less: Current portion of loans payable		(3,232,009	)		(264,988	)
Long-term loans payable	$	—		$	99,099

(1)	The purchase price is $665,000, net of financing fee of $13,425, and the amount to be paid is $651,575. The monthly payment amount is $81,009.
(2)	monthly interest rate.

	•	Principal amount and accrued interest of a note payable issued in April 2023 by issuing 1,770,000 shares of common stock. As a result, the Company recorded a loss on settlement of debt of $102,660.
	•	Principal amount of future receipts loan issued in April 2024 by early settlement. As a result, the Company recorded a loss on settlement of debt of $27,537.

Principal		Issuance		Maturity		Interest			Payment
amount		date		date		rate			schedule
$	146,900		March 7, 2024		January 15, 2025		12	%	10 payments each in the amount of $16,453 beginning on April 15, 2024
$	177,100		March 7, 2024		January 15, 2025		14	%	5 payments, one payment of $100,947 and four payments of $25,237, beginning in September 2024
$	179,400		July 10, 2024		April 30, 2025		14	%	9 payments each in the amount of $22,724 beginning on August 30, 2024
$	151,960		September 16, 2024		July 15, 2025		14	%	5 payments, one payment of $86,617 and four payments of $21,654, beginning in March 2025

	April 1,
Fair Value of Consideration:	2024
Cash	$	3,000,000
Promissory note		2,000,000
Contingent liability		1,000,000
Total Purchase Price	$	6,000,000


	Nine Months Ended
	September 30,
	2024			2023
Revenues	$	212,029,873		$	156,944,034
Cost of revenues		205,899,685			150,745,335
Gross profit		6,130,188			6,198,699

Operating expenses		6,773,339			5,747,451
Operating loss		(643,151	)		451,248

Other income (expense)		(2,646,275	)		224,938
Income tax		(134,880	)		(203,975	)
Net income (loss)	$	(3,424,306	)	$	472,211


	September 30,			December 31,
	2024			2023
Telecommunication equipment	$	709,417		$	386,700
Telecommunication software		676,403			836,840
Other equipment		152,671			99,892
Total property and equipment		1,538,491			1,323,432
Accumulated depreciation and amortization		(959,757	)		(800,435	)
Property and equipment, net	$	578,734		$	522,997


	USA			Switzerland			UK			Elimination			Total
Revenues	$	36,604,753		$	1,048,201		$	17,202,173		$	(605,513	)	$	54,249,614
Cost of revenue		35,614,356			822,312			16,165,751			(372,724	)		52,229,695
Gross profit		990,397			225,889			1,036,422			(232,789	)		2,019,919

Operating expenses
General and administration		1,303,275			257,881			748,105			(232,789	)		2,076,472

Operating income (loss)		(312,878	)		(31,992	)		288,317			—			(56,553	)

Other expense		(633,774	)		(6,544	)		(6,528	)		—			(646,846	)

Income tax expense		—			(162	)		(69,443	)		—			(69,605	)

Net income (loss)	$	(946,652	)	$	(38,698	)	$	212,346		$	—		$	(773,004	)


September 30, 2024	USA		Switzerland		UK		Elimination			Total
Assets
Current assets	$	8,735,079	$	850,772	$	10,792,038	$	(712,903	)	$	19,664,986
Non-current assets	$	23,373,710	$	830,653	$	754,331	$	(12,184,562	)	$	12,774,132
Liabilities
Current liabilities	$	13,130,629	$	1,705,110	$	9,943,398	$	(712,903	)	$	24,066,234
Non-current liabilities	$	139	$	169,599	$	113,848	$	—		$	283,586


December 31, 2023	USA		Switzerland		Elimination			Total
Assets
Current assets	$	14,537,969	$	1,874,627	$	(693,424	)	$	15,719,172
Non-current assets	$	11,810,606	$	810,437	$	(6,184,562	)	$	6,436,481
Liabilities
Current liabilities	$	11,978,244	$	2,556,124	$	(693,424	)	$	13,840,944
Non-current liabilities	$	139	$	268,698	$	—		$	268,837


	Warrants Outstanding
				Weighted Average		Weighted Average Remaining
	Shares			Exercise Price		Contractual life (in years)

Outstanding, December 31, 2023		—		$	—		—
Granted		10,000,000			0.88		0.88
Exercised		(5,227,273	)		0.11		—
Forfeited/canceled		—			—		—
Outstanding, September 30, 2024		4,772,727		$	0.11		0.25


Expected term			0.25 - 0.65 years
Expected average volatility			78% - 118%
Expected dividend yield			—
Risk-free interest rate			4.73% - 5.44%

Fair Value Measurements Using Significant Observable Inputs (Level 3)

Balance - December 31, 2023		—

Addition of new derivatives recognized as cash received		100,000
Exercise on issuance of common stock		(885,843	)
Change in fair value of the warrant		1,063,789
Balance - September 30, 2024	$	277,946

	•	First Note: Originally due January 1, 2025, with an outstanding amount of $1,888,888.89, now extended to January 1, 2026.
	•	Second Note: Originally due March 12, 2025, with an outstanding amount of $1,111,111.11, now extended to March 12, 2026.
	•	Third Note: Originally due March 25, 2025, with an outstanding amount of $555,555.56, now extended to March 25, 2026.

	•	The agreed valuation to purchase Ralf’s 49% ownership interest in SwissLink is set at $750,000 USD.
	•	The term of this agreement will be for five (5) years plus six (6) months (“Termination Date”), commencing on the date of the execution of the final agreement ("Final Agreement").
	•	Ownership will be transferred from Ralf to us in tranches, with each tranche comprising up to 10% of ownership per year.
	•	The option to execute each tranche can be initiated by Ralf within each one-year period through the submission of a "trigger letter" by e-mail to us. If Ralf does not exercise his right to trigger the agreement during any year, we reserve the right to initiate the tranche execution at any point thereafter.
	•	Share Calculation: The number of iQSTEL shares to be provided in exchange for each tranche will be determined based on the lowest closing price of iQSTEL shares over the 90 days preceding the delivery of the trigger letter.
	•	Discount: Ralf will receive a 20% discount on the above calculated share price; provided however, that the above calculated share price, without the discount, shall count toward the purchase price in determining whether Ralf has received the full $750,000 USD valuation for his 49% ownership interest in SwissLink.
	•	If, after the execution of all tranches, Ralf has not received the full $750,000 USD valuation, we or our legal successor will pay the difference in cash until the full valuation is realized based on the Weighted Volume Average Price (WVAP) of our shares for the last 15 trading days prior to the Termination Date for shares still in Ralf's possession, and/or the actual selling price for shares already sold by Ralf.

	Revenue for the Three Months Ended September						Revenue for the Nine Months Ended September
Subsidiary	2024			2023			2024			2023
Etelix.com USA, LLC	$	9,781,863		$	10,344,008		$	43,124,776		$	25,635,273
SwissLink Carrier AG		1,048,201			1,498,054			3,157,073			4,179,569
QGlobal LLC		290,256			462,331			1,119,332			780,934
IoT Labs LLC		21,738,854			20,802,592			70,525,343			53,279,140
Smartbiz Telecom		4,145,464			6,915,218			17,321,777			14,102,902
Whisl Telecom		648,316			866,406			3,558,314			3,400,087
QXTEL Limited		17,202,173			—			48,676,228			—
Inter-company sales		(605,513	)		(1,131,406	)		(3,136,431	)		(4,129,344	)
	$	54,249,614		$	39,757,203		$	184,346,412		$	97,248,561

	Cost of Revenue for the Three Months Ended September						Cost of Revenue for the Nine Months Ended September
Subsidiary	2024			2023			2024			2023
Etelix.com USA, LLC	$	9,628,110		$	10,224,778		$	42,690,403		$	25,364,275
SwissLink Carrier AG		822,313			1,266,475			2,542,555			3,568,774
QGlobal LLC		236,530			306,745			817,913			516,018
IoT Labs LLC		21,352,526			20,575,212			69,379,146			52,665,861
Smartbiz Telecom		3,894,823			6,697,793			16,622,745			13,435,881
Whisl Telecom		502,365			789,056			2,992,459			2,797,373
QXTEL Limited		16,165,752			—			46,596,108			—
Inter-company sales		(372,724	)		(1,131,377	)		(2,903,642	)		(4,129,344	)
	$	52,229,695		$	38,728,682		$	178,737,687		$	94,218,838

	Nine Months Ended September 30,
	2024		2023
Salaries, Wages and Benefits	$	2,351,471	$	1,218,946
Technology		879,182		273,786
Professional Fees		1,072,816		821,780
Legal and Regulatory		180,221		168,908
Bad Debt Expense		1,801		1,344
Travel and Events		167,757		119,845
Public Cost		93,646		28,526
Advertising		659,784		535,193
Insurances		41,576		10,543
Bank Services and Fees		127,594		44,136
Financial Costs		43,772		—
Depreciation and Amortization		104,061		103,246
Office, Facility and Other		311,511		172,020
Sub Total		6,035,192		3,498,273

Stock-based compensation		109,485		30,945
Total Operating Expense	$	6,144,677	$	3,529,218

	Telecom Division				Pre-revenue companies						iQSTEL						Consolidated
	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024		Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024			Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024			Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Revenues		54,249,614		184,346,412		—			—			—			—			54,249,614			184,346,412
Cost of revenue		52,229,695		178,737,687		—			—			—			—			52,229,695			178,737,687
Gross profit		2,019,919		5,608,725		—			—			—			—			2,019,919			5,608,725

Operating expenses
General and administration		1,471,644		4,104,924		348			15,132			604,480			2,024,621			2,076,472			6,144,677
Total Operating Expenses		1,471,644		4,104,924		348			15,132			604,480			2,024,621			2,076,472			6,144,677

Operating income/(loss)		548,274		1,503,801		(348	)		(15,132	)		(604,480	)		(2,024,621	)		(56,553	)		(535,952	)


Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 formatted in Extensible Business Reporting Language (XBRL).
	**Provided herewith

	IQSTEL INC.

	/s/Leandro Iglesias
	Leandro Iglesias Principal Executive Officer


	/s/ Alvaro Quintana Cardona
	Alvaro Quintana Cardona Principal Financial and Accounting Officer

By:	/s/ Leandro Iglesias
Name:	Leandro Iglesias
Title:	Principal Executive Officer
Date:	November 14, 2024

By:	/s/ Alvaro Quintana Cardona
Name:	Alvaro Quintana Cardona
Title:	Principal Financial Officer
Date:	November 14, 2024