10-Q/A: iQSTEL Inc. Amends Q2 2026 Filing, Reports Revenue Growth Amidst Net Losses

iQSTEL Inc. filed an amendment to its Q2 2026 Form 10-Q to correct errors in preferred stock conversion rates, while also reporting a 51.10% increase in quarterly revenue, though net losses persisted.

Summary

• This filing is an amendment to iQSTEL Inc.'s quarterly report for the period ended June 30, 2026, primarily to correct errors in Note 10 regarding the conversion rates of Series B and Series D Preferred Stock.
• The company reported total revenues of $109,068,246 for the three months ended June 30, 2026, an increase of 51.10% compared to $72,183,236 in the same period of 2025.
• For the six months ended June 30, 2026, total revenues were $206,988,082, a 59.45% increase from $129,816,052 in the prior year period.
• Despite revenue growth, the company reported a net loss of $2,405,621 for the three months ended June 30, 2026, compared to a loss of $2,348,914 in the prior year period.
• The six-month net loss was $3,791,557, an increase from $3,493,375 in the comparable period of 2025.
• Operating expenses increased by 53% for the three months ended June 30, 2026, contributing to a widened operating loss of $1,120,819, up from $656,229 in the prior year period.
• The company's ability to continue as a going concern is subject to substantial doubt due to recurring losses from operations and negative cash flows from operating activities.
• Management is seeking additional capital through debt and/or equity financing arrangements to support liquidity and capital resources.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the continued net losses, widening operating loss, and the substantial doubt raised about the company's ability to continue as a going concern, despite revenue growth.

Positives

• Significant revenue growth: Quarterly revenue increased by 51.10% to $109,068,246, and six-month revenue grew by 59.45% to $206,988,082.
• Strong organic growth: Organic growth accounted for 65% of the total revenue increase in the first six months of 2026.
• Positive gross margin trends: Gross margin increased by 26.82% for the six months ended June 30, 2026, compared to the prior year.
• Synergies from acquisitions: The integration of GlobeTopper LLC and QXTEL Limited is contributing to revenue growth and operational efficiencies.
• Positive working capital: The company maintained a positive working capital of $2,708,785 as of June 30, 2026.

Negatives

• Continued net losses: The company reported net losses for both the three-month ($2,405,621) and six-month ($3,791,557) periods ended June 30, 2026.
• Widening operating loss: The operating loss increased to $1,120,819 for the quarter and $2,078,828 for the six months, compared to the prior year periods.
• Going concern doubt: Substantial doubt exists regarding the company's ability to continue as a going concern due to recurring losses and negative operating cash flows.
• Increased operating expenses: Operating expenses rose significantly, particularly in technology and advertising, impacting profitability.
• High interest expenses: Interest expenses related to recent acquisitions (QXTEL and GlobeTopper) significantly impacted net results.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt due to recurring losses from operations and negative cash flows.
• Failure to secure additional capital through future debt or equity offerings could adversely affect the business plan and operations.
• The company faces risks related to its significant customer concentration, with approximately 80% of total accounts receivable concentrated among its top 13 customers as of June 30, 2026.
• The company has identified material weaknesses in its internal control over financial reporting, including inadequate segregation of duties and insufficient written policies and procedures.

Future Outlook

The company's strategy remains focused on strengthening the telecommunications segment as a growth engine to support new business lines, including the Fintech Division. Management expects continued revenue growth and improved market positioning. However, the company acknowledges substantial doubt about its ability to continue as a going concern and plans to seek additional debt and/or equity financing.

Management Comments

• 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, particularly those engaged in VOIP Telecom services.
• The organic growth during the three and six months ended June 30, 2026 was 65% and 65% respectively, of the total revenue increase for those periods. This reflects the solid foundation of our revenue and the growth capacity the Company has with its current operations.
• Our strategy remains centered on strengthening the telecommunications segment to serve as a growth engine for the development and expansion of new business lines.
• Based on the analysis of our Adjusted EBITDA, our Telecom Division is a high-performing division that generates strong operational profits. Consolidated figures show a slightly negative Adjusted EBITDA; while this isnt 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.

Industry Context

StockSavvy.ai notes that iQSTEL's performance reflects broader trends in the telecommunications and fintech sectors, where companies are seeking to leverage synergies between traditional services and emerging technologies like blockchain and AI. The company's focus on international markets and diverse service offerings (VoIP, SMS, IoT, Fintech, AI) aligns with industry efforts to capture growth in multiple segments.

Comparison to Industry Standards

• The company's revenue growth of over 50% quarter-over-quarter is strong, but the persistent net losses and widening operating loss are concerning when compared to industry peers that have achieved profitability.
• The substantial doubt about going concern is a significant deviation from industry standards for established public companies, highlighting financial fragility.
• While many telecom and fintech companies are investing in AI and blockchain, iQSTEL's reported progress in these areas needs to translate into tangible financial results to be competitive.
• The company's customer concentration risk is higher than typically observed in mature, diversified telecom operators, which often have a broader customer base and less reliance on a few large clients.

Corporate Governance

Legal Proceedings

• The company is not a party to any material pending legal proceedings.

Related Party Transactions

• Amounts due from related parties were $509,020 as of June 30, 2026.
• Amounts due to related parties were $65,829 as of June 30, 2026.
• Loans to related parties were made during the six months ended June 30, 2026.
• Management salaries and stock-based compensation bonuses were recorded for CEO and CFO.

Stakeholder Impact

• Shareholders: Continued net losses and going concern doubt may negatively impact share value and investor confidence. Potential dilution from future equity raises.
• Creditors: Increased risk due to going concern issues and reliance on future financing.
• Employees: Uncertainty regarding the company's financial stability could impact job security.
• Management: Amendments to employment agreements include base salary increases and potential equity compensation, subject to shareholder approval.

Next Steps

• Continue to strengthen the telecommunications segment as a growth engine.
• Develop and expand new business lines, including Fintech and AI.
• Seek additional capital through debt and/or equity financing arrangements.
• Implement cost-cutting measures and operational improvements.
• Obtain shareholder approval for equity compensation changes.

Key Dates

Recommendation

The company's persistent net losses, widening operating loss, and the substantial doubt raised about its ability to continue as a going concern are significant red flags. While revenue growth is positive, it is not translating into profitability, and the company's reliance on future financing creates considerable risk. The identified material weaknesses in internal controls further add to the concerns.

Keywords

telecommunications, fintech, revenue growth, net loss, operating expenses, going concern, equity financing, preferred stock