What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-15 · 92 added, 144 removed, 91 unchanged (72% of the section changed)

19 unchanged sentences

Factors which could have a material adverse effect on our operations and

future prospects on a consolidated basis include;

but are not limited to:

future prospects on a consolidated basis include, but are not limited to:

changes in economic conditions, legislative/regulatory changes,

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majority-owned subsidiaries SwissLink Carrier AG ( www.swisslink-carrier.com ),

QGlobal SMS, LLC (https://www.qglobalsms.com/);

IoT Labs, LLC (http://www.iotlabs.mx/);

Global Money One Inc.

(https://www.globalmoneyone.com/);

and ItsBChain (http://itsbchain.com/).

The information contained on our websites is not incorporated by reference into this Quarterly

Report on Form 10-Q and should not be considered part of this or any other report filed with the SEC.

QGlobal SMA (https://www.qglobalsms.com/), Smart Gas (http://iotsmartgas.com/) and ItsBChain (http://itsbchain.com/).

The information

contained on our websites is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered part of

this or any other report filed with the SEC.

Results of Operations

Our total revenue reported for the three months

ended September 30, 2021 was $16,516,739, compared with $13,291,698 for the three months ended September 30, 2020.

These numbers

reflect an increase of 24.26% quarter over quarter on our consolidated revenues.

Our total revenue reported for the nine months

ended September 30, 2021 was $46,842,717, compared with $29,439,196 for the nine months ended September 30, 2020.

These numbers

reflect an increase of 59.12% year over year on our consolidated revenues

When looking at the numbers by subsidiary, we have the

following breakout for the nine months ended September 30, 2021:

Months Ended September 30, 2021

Our total revenue reported for the three months ended

March 31, 2022 was $19,419,311, compared with $14,197,611 for the three months ended March 31, 2021.

These numbers reflect an increase

of 36.78% quarter over quarter on our consolidated revenues.

When looking at the numbers

by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31,

Three Months Ended

March 31, 2022

Three Months Ended

March 31, 2021

Etelix.com USA, LLC

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Our total cost of revenues for the three months ended

September 30, 2021 increased to $15,675,687, compared with $13,158,685 for the three months ended September 30, 2020.

Our total cost of

revenues for the nine months ended September 30, 2021 increased to $45,469,730, compared with $28,735,016 for the nine months ended September

March 31, 2022 increased to $18,935,251, compared with $13,710,241 for the three months ended March 31, 2021.

When looking at the numbers

by subsidiary, we have the following breakout for the nine months ended September 30, 2021 compared to the nine months ended September

by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31,

Cost of Revenue

Nine Months Ended

September 30, 2021

Three Months Ended

March 31, 2022

Cost of Revenue

Nine Months Ended

September 30, 2020

Three Months Ended

March 31, 2021

Etelix.com USA, LLC

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SMS) has its corresponding termination cost.

Our gross margin, which is simply the difference

between our revenues and our cost of sales, discussed above, was $484,060 for the three months ended March 31, 2022 compared to $487,370

for the three months ended March 31, 2021.

Operating Expenses

Operating expenses decreased to $989,498 for the three

months ended September 30, 2021 from $958,787 for the three months ended September 30, 2020.

Operating expenses increased to $3,664,473

for the nine months ended September 30, 2021 from $3,161,330 for the nine months ended September 30, 2020.

The detail by major category

for the nine months ended September 30, 2021 and 2020 is reflected in the table below.

Nine Months Ended September 30,

months ended March 31, 2022 from $1,498,111 for the three months ended March 31, 2021.

The detail by major category is reflected in the

Three Months Ended March 31,

Salaries, Wages and Benefits

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Total Operating Expense

The main reasons for the overall increase in operating

expenses for the nine months ended September 30, 2021 compared to the same period of 2020 is due to the following:

(1) Technology as a

result of the development of the blockchain solutions, the IoT devices, and the fintech platform;

(2) Legal & Regulatory expenses

due to the IoT devices certification process;

(3) Other expenses associated to new interconnection deployments;

and (3) Stock-based compensation.

When looking at the numbers

by subsidiary, we have the following breakout for the nine months ended September 30, 2021 compared to the nine months ended September

Nine Months Ended September 30,

by subsidiary, we have the following breakout for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:

Three Months Ended March 31,

Global Money One

The most significant difference is generated by iQSTEL

which is due to the following:

(1) the Salaries, Wages and Benefits as a result of the Management Team and Board members compensation;

(2) Advertising corresponds to the third-party consultancy for the design and implementation of a Social Media communication strategy

oriented to build and enhance our companies and brand image;

and (3) Stock-based compensation.

The most significant differences are:

(1) the decrease

in the Stock-based compensation of $717,457;

(2) the increases in Salaries of $41,098 due to sales commissions and new personnel;

(3) the increase in Professional Fees of $230,820 that includes the Audit and Accounting and other consulting fees.

Operating Income

The Company showed negative Operating Income for the

three months ended September 30, 2021 of $116,143 compared with a negative result of $825,774 for the three months ended September 30,

The Company showed negative Operating Income for the

nine months ended September 30, 2021 of $2,291,486 compared with a negative result of $2,457,150 for the nine months ended September 30,

Even when the company presents an operating loss,

the numbers reflect a positive evolution process that places us close to the breakeven point in operations.

three months ended March 31, 2022 of $505,438 compared with a negative result of $1,010,741 for the three months ended March 31, 2022.

though the Company showed a negative Operating Income, the number shows a trend of significant improvement year over year,

Other Expenses/Other Income

We had other income of $4,925 for the three months

ended September 30, 2021, as compared with other expenses of $144,451 for the same period ended 2020.

We had other expenses of $820,593

for the nine months ended September 30, 2021, as compared with other expenses of $1,044,813 for the same period ended 2020.

in other expenses is a consequence of not having interest expenses and other expenses related to derivatives.

We finished the three months ended September 30, 2021

with a net loss of $111,218, as compared to a loss of $970,225 during the three months ended September 30, 2020.

We also finished the

nine months ended September 30, 2021 with a loss of $3,112,079, as compared to a loss of $3,501,963 during the nine months ended September

The reasons for specific components are discussed

Overall, these are the main concepts impacting the net result:

(1) the Operating Expenses of the public entity of $2,395,047;

a loss in settlement of debt of $528,794;

and (3) interest expenses of $648,889.

It is important to remark the important reduction

in interest expenses when comparing the amount corresponding to the nine months ended September 30, 2021 ($648,889) versus the amount

corresponding to the same period of year 2020 ($2,368,107).

We had other expenses of $19,293 for the three months

ended March 31, 2022, as compared with other expenses of $867,748 for the same period ended 2021.

The decrease in other expenses is largely

due to the absence of derivative liabilities in 2022 and the decrease of interest expenses of $615,137 for the three months ended March

31, 2022 compared to the same period ended 2021.

We finished the three months ended March 31, 2022

with a net loss attributed to shareholders of iQSTEL Inc.

of $554,970, as compared to a loss of $1,942,391 during the three months ended

March 31, 2021.

When comparing the results year over year, these numbers show a significant improvement, as the fundamentals of the Company

are getting stronger quarter after quarter leading to our goal of generating positive net income.

Liquidity and Capital Resources

As of September 30, 2021, we had total current assets

of $5,202,360 and current liabilities of $3,916,317, resulting in a positive working capital of $1,286,043.

This compares with the working

capital deficit of $4,330,355 at December 31, 2020.

This increase in working capital, as discussed in more detail below, is primarily

the result of the increase of $437,488 in the cash position;

the increase of $879,498 in account receivable from the sales of services;

and a reduction of $3,995,622 in the liabilities (loans, convertible notes and derivatives).

Our operating activities used $2,486,045 in the nine

months ended September 30, 2021 as compared with $1,526,513 used in operating activities in the nine months ended September 30, 2020.

Investing activities used $378,071 for

the nine months ended September 30, 2021.

Uses of funds on investing activities were for acquisition of subsidiary of $60,000;

of property and equipment for value of $102,623 and Payment of loan receivable - related party of $215,674.

Financing activities provided $3,314,313 in the nine

months ended September 30, 2021 compared with $1,968,632 provided in the nine months ended September 30, 2020.

Our positive financing

cash flow in 2021 was largely the result of the proceed from the subscription of new common stocks under our Regulation A offering of

The working capital and the cash position of the company

has improved significantly;

but 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.

The Company has received the qualification of an Offering Statement

under Regulation A for the sale of up to 20,200,000 common shares.

This offering is being conducted on a “best efforts” basis,

which means that there is no guarantee that any minimum amount will be sold.

We also plan to seek additional financing in a private equity

offering to secure funding for operations.

As of March 31, 2022, we had total current assets

of $7,372,071 and current liabilities of $2,649,615, resulting in a positive working capital of $4,722,456 and a current ratio of approximately

This compares with the working capital of $4,203,509 at December 31, 2021.

Our operating activities used $447,652 in the three

months ended March 31, 2022 as compared with $1,042,192 used in operating activities in the three months ended March 31, 2021.

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.

Our negative operating cash flows in 2022 and 2021 is largely the result of our net loss

for the periods.

Investing activities used $24,918 for the three

months ended March 31, 2022 compared with $78,346 for the three months ended March 31, 2021.

Uses of funds on investing activities in

2022 were the acquisition of property and equipment.

Financing activities provided $1,367,982 in the three

months ended March 31, 2022 compared with $3,416,581 provided in the three months ended March 31, 2021.

Our positive financing cash flow

in 2022 was largely the result of the net proceeds from the subscription of new common stocks under our Regulation A offering $1,100,000.

Our current financial condition has improved

significantly since 2018.

However, we intend to fund operations through increased sales and debt and/or equity financing arrangements,

to strengthen our liquidity and capital resources.

The Company has received the qualification of an Offering Statement under Regulation

A for the sale of up to 80,000,000 common stocks.

This offering is being conducted on a “best efforts” basis, which means

that there is no guarantee that any minimum amount will be sold.

We also plan to seek additional financing in a private equity offering

to secure funding for operations.

There can be no assurance that we will be successful in raising additional funding.

not able to secure additional funding, the implementation of our business plan will be impaired.

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

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Although our operations are influenced by general

economic conditions, we do not believe that inflation had a material effect on our results of operations during the nine month period

ended September 30, 2021.

economic conditions, we do not believe that inflation had a material effect on our results of operations during the three month period

ended March 31, 2022.

Critical Accounting Polices

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matters that are inherently uncertain.

Our accounting

policies are discussed in detail in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the nine

months ended September 30, 2021;

however, we consider our critical accounting policies to be those related to allowance for doubtful accounts,

valuation of assets, significant estimates in the valuation of convertible debt and income taxes.

Management bases its estimates and judgments

on historical experience and other factors that are believed to be reasonable under the circumstances.

Actual results may differ from

these estimates under different assumptions or conditions.

See the Consolidated Financial Statements in this Quarterly Report for a complete

discussion of our significant accounting policies.

accounting policies are discussed in detail in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q

for the three months ended March 31, 2022;

however, we consider our critical accounting policies to be those related to allowance for

doubtful accounts, valuation of long-lived assets, and income taxes.

Management bases its estimates and judgments on historical experience

and other factors that are believed to be reasonable under the circumstances.

Actual results may differ from these estimates under different

assumptions or conditions.

See the Consolidated Financial Statements in this Quarterly Report for a complete discussion of our significant

accounting policies.

Off Balance Sheet Arrangements

As of September 30, 2021, there were no off-balance

sheet arrangements.

As of March 31, 2022, there were no off-balance sheet

arrangements.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards

Board (FASB) issued Accounting Standard Update No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (ASU

2019-12), which simplifies the accounting for income taxes.

This guidance will be effective for entities for the fiscal years, and interim

periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted.

We will adopt

the new standard effective January 1, 2021 and do not expect the adoption of this guidance to have a material impact on our consolidated

financial statements.

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic

470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in

Entity’s Own Equity”.

The standard reduced the number of accounting models for convertible debt instruments and convertible

preferred stock.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features

that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a

scope exception from derivative accounting;

and (2) convertible debt instruments issued with substantial premiums for which the premiums

are recorded as paid-in capital.

The amendments in this update are effective for fiscal years beginning after December 15, 2021, including

interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15,

2020, including interim periods within those fiscal years.

The Company is currently assessing the impact of the adoption of this standard

on its consolidated financial statements.

We do not expect the adoption of recently issued accounting

pronouncements to have a significant impact on our results of operation, financial position, or cash flow.

Quantitative and Qualitative Disclosures

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis