10-Q: IQSTEL Inc. Reports 12% Revenue Increase in Q1 2025, Fueled by Telecom Division Growth

Sentiment:

Quarterly Report 15 May 2025 3:38 PM

IQSTEL Inc. announces a 12% increase in revenue for Q1 2025, driven by its Telecom Division, while also reporting a net loss due to increased operating and interest expenses.

Capital raiseThe company may experience a cash shortfall and be required to raise additional capital.The company has 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.

Worse than expectedThe company's net loss increased compared to the same period last year due to higher operating and interest expenses.

Summary

IQSTEL Inc. reported a 12% increase in revenue for the three months ended March 31, 2025, reaching $57,632,816 compared to $51,414,878 for the same period in 2024.
The Telecom Division remains the primary revenue source for the company.
The company experienced a net loss of $1,144,461 for the quarter, compared to a loss of $580,216 in Q1 2024.
The increased net loss is attributed to higher operating expenses and interest expenses related to the acquisition of QXTEL.
The company's gross margin increased by 40% quarter over quarter.
Operating expenses rose to $2,539,184 from $1,562,478 in the same period last year.
The company's strategy focuses on leveraging synergies between its subsidiaries to drive innovation and capture emerging opportunities.
IQSTEL projects total revenue of $340 million for the year ending December 31, 2025.
The company is working on the development of a unique voice and SMS switching platform that will allow it to reduce costs between fifty and sixty thousand dollars per quarter.
The Board of Directors of the Company approved a reverse stock split of the Company's authorized, issued and outstanding shares of Common Stock at a ratio of 1-for-80, effective on May 2, 2025.

Sentiment

Score: 5

Explanation: The document presents mixed signals. Revenue is up, but so are expenses, leading to a larger net loss. The company is projecting strong growth, but also acknowledges potential cash shortfalls and the need for additional financing. The sentiment is neutral, with both positive and negative aspects.

Positives

Revenue increased by 12% compared to the same period last year.
Gross margin increased by 40% quarter over quarter.
The company projects total revenue of $340 million for the year ending December 31, 2025.
The company is working on the development of a unique voice and SMS switching platform that will allow it to reduce costs between fifty and sixty thousand dollars per quarter.
The company's strategy focuses on leveraging synergies between its subsidiaries to drive innovation and capture emerging opportunities.

Negatives

The company experienced a net loss of $1,144,461 for the quarter.
Operating expenses increased to $2,539,184.
The company had a negative working capital of $4,235,842 as of March 31, 2025.
The company's operating activities used $1,906,969 for the three months ended March 31, 2025.

Risks

The company has a negative working capital.
The company's operating activities used $1,906,969 for the three months ended March 31, 2025.
The company's ability to continue as a going concern is dependent upon its ability to successfully accomplish its business plan and eventually attain profitable operations.
The company may experience a cash shortfall and be required to raise additional capital.
There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
The company's management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Future Outlook

IQSTEL projects total revenue of $340 million for the year ending December 31, 2025.

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.
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.
We are continually identifying operational synergies among all of our subsidiaries to be more cost efficient.
Management has also identified areas for cost-cutting and operational improvements and has acted in that direction.

Industry Context

IQSTEL operates in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries, targeting diverse and high-growth markets.

Comparison to Industry Standards

The document does not provide enough information to compare IQSTEL's results to specific industry standards or comparable companies.
A detailed comparison would require benchmarking against competitors in each of its business divisions (telecom, EV, fintech, metaverse) regarding revenue growth, profitability, and key performance indicators.

Related Party Transactions

During the three months ended March 31, 2025 and 2024, the Company loaned $9,462 and $51,230 to a related party, respectively.
As of March 31, 2025 and December 31, 2024, the Company had amounts due from related parties of $638,177 and $630,715 , respectively.
As of March 31, 2025 and December 31, 2024, the Company had amounts due to related parties of $26,613.
During the three months ended March 31, 2025 and 2024, the Company recorded management salaries of $211,500 , and stock-based compensation bonuses of $32,815 and $31,065, respectively.
As of March 31, 2025 and December 31, 2024, the Company recorded and accrued management salaries of $518,947 and $420,447 , respectively.

Stakeholder Impact

Shareholders may be concerned about the increased net loss and the potential need for additional financing.
Employees may be affected by cost-cutting measures and operational improvements.
Customers may benefit from the company's focus on innovation and emerging opportunities.
Creditors may be concerned about the company's negative working capital and ability to repay debts.

Next Steps

The parties have agreed to execute the Purchase Agreement no later than June 1, 2025 regarding the Companys potential sale of its 75% equity interest in ItsBchain, LLC (the Subsidiary) to ASII.
The parties have agreed to execute the Purchase Agreement no later than July 1, 2025, or sooner regarding the Companys potential purchase a 51% equity interest in GlobeTopper, LLC, a Delaware limited liability company (the GlobeTopper) held by the Seller.
The company intends to fund operations through increased sales and debt and/or equity financing arrangements, to strengthen our liquidity and capital resources.

Key Dates

Date	Description
2011-06-24	IQSTEL Inc. was incorporated under the laws of the State of Nevada.
2015-09-18	The Company changed its name to PureSnax International, Inc.
2018-08-07	The company changed its name to IQSTEL Inc.
2020-11-03	Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock.
2020-11-11	Board of Directors voted to designate a class of preferred stock entitled Series B Preferred Stock.
2021-01-07	Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock.
2023-11-03	Board of Directors voted to designate a class of preferred stock entitled Series D Preferred Stock.
2024-01-24	We entered into a securities purchase agreement (the SPA) with M2B Funding Corp.
2025-01-14	The Company issued a Common Stock Purchase Option (the Option) to ADI Funding LLC (ADI Funding) under a stock purchase agreement for $100,000 that expires on July 14, 2025.
2025-03-10	The Company signed a non-binding memorandum of understanding (MOU) with Accredited Solutions, Inc. (ASII) to set forth the preliminary terms and mutual understanding between the parties regarding the Companys potential sale of its 75% equity interest in ItsBchain, LLC (the Subsidiary) to ASII.
2025-03-19	IQSTEL Inc. (the Company) signed a non-binding memorandum of understanding (MOU) with Craig Span (the Seller) to set forth the preliminary terms and mutual understanding between the parties regarding the Companys potential purchase a 51% equity interest in GlobeTopper, LLC, a Delaware limited liability company (the GlobeTopper) held by the Seller.
2025-05-02	The Board of Directors of the Company approved a reverse stock split of the Company's authorized, issued and outstanding shares of Common Stock at a ratio of 1-for-80, effective on May 2, 2025.
2025-05-15	Date of report signature.

Keywords

telecommunications, revenue, IQSTEL, financial results, Q1 2025, net loss, gross margin, operating expenses, Telecom Division, reverse stock split

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