What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 121 added, 95 removed, 88 unchanged (71% of the section changed)

29 unchanged sentences

(the “Company”)

IQST) (www.iqstel.com) is a technology company offering a wide array of services to global telecommunications and technology

industries with presence in 13 countries.

IQST) (www.iqstel.com) is a technology company offering a wide array of services to global telecommunications and technology industries

with presence in 13 countries.

The Company has an extensive portfolio

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Marketing, IoT services, blockchain and payment solutions.

These services are grouped within three business divisions:

Telecom, Technology

company operates its business through its wholly-owned subsidiary Etelix.com USA, LLC (“Etelix”) (www.etelix.com);

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

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.

The company operates its business through

its wholly-owned subsidiary Etelix.com USA, LLC (“Etelix”) (www.etelix.com);

and its majority-owned subsidiaries SwissLink

Carrier AG (www.swisslink-carrier.com), QGlobal SMA (www.qglobalsms.com/), Smart Gas (www.iotsmartgas.com/) and ItsBChain (www.itsbchain.com/),

Smartbiz Telecom (www.smartbiztel.com) and Whisl Telecom (www.whisl.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

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.

June 30, 2022 was $23,699,716, compared with $16,128,367 for the three months ended June 30, 2021.

These numbers reflect an increase of

46.94% quarter over quarter on our consolidated revenues.

Our total revenue reported for the six months ended June 30, 2022 was $43,119,027,

compared with $30,325,978 for the six months ended June 30, 2021;

an increase of 42.19%.

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

by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

The continued growth of our

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Our total cost of revenues for the three months ended

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

June 30, 2022 increased to $22,853,442, compared with $16,083,802 for the three months ended June 30, 2021.

Our total cost of revenues

for the six months ended June 30, 2022 increased to $41,788,693, compared with $29,794,043 for the six months ended June 30, 2021.

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,

by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Cost of Revenue

Three Months Ended

March 31, 2022

Six Months Ended

June 30, 2022

Cost of Revenue

Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2021

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

Our cost of revenues consists of direct charges from

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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.

The Consolidated Gross Margin for the six months ended

June 30, 2022 was 3.09%, which compared to 1.75% for the six months ended June 30, 2021 represents an increase in our consolidated Gross

Margin of 76.57%.

When looking at the numbers

by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

Operating Expenses

Operating expenses decreased to $989,498 for the three

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,

Operating expenses decreased to $1,144,452 for the

three months ended June 30, 2022 from $1,209,167 for the three months ended June 30, 2021.

Operating expenses decreased to $2,133,950

for the six months ended June 30, 2022 from $2,707,278 for the six months ended June 30, 2021.

The detail by major category for the six

months ended June 30, 2022 and 2021 is reflected in the table below.

Six Months Ended June 30,

Salaries, Wages and Benefits

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Total Operating Expense

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, 2021:

Three Months Ended March 31,

The main reasons for the overall decrease in operating

expenses for the six months ended June 30, 2022 compared to the same period of 2021 is due to the a significant reduction in Stock-based

compensation.

at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2022 compared to the six months ended June

Six Months Ended June 30,

Global Money One

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.

Smartbiz Telecom

Whisl Telecom

Operating Income

The Company showed negative Operating Income for the

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,

three months ended June 30, 2022 of $298,178 compared with a negative result of $1,164,602 for the three months ended June 30, 2021.

The Company showed negative Operating Income for the

six months ended June 30, 2022 of $803,616 compared with a negative result of $2,175,343 for the six months ended June 30, 2021.

The decrease of the numbers for the six month period

above is primarily due to a reduction in the costs associated with the operation of the public entity (iQSTEL, Inc.) that decreased by

$954,665 year over year.

Other Expenses/Other Income

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.

We had other income of $12,721 for the three months

ended June 30, 2022, as compared with other income of $42,230 for the same period ended 2021.

We had other expenses of $6,572 for the

six months ended June 30, 2022, as compared with other expenses of $825,518 for the same period ended 2021.

The decrease in other expenses

is mainly due to the reduction in interest expense.

We finished the three months ended June 30, 2022 with

a loss of $285,457, as compared to a loss of $1,122,372 during the three months ended June 30, 2021.

We finished the six months ended

June 30, 2022 with a loss of $810,188, as compared to a loss of $3,000,861 during the six months ended June 30, 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 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.

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

financing will be available to us on acceptable terms or at all.

As of June 30, 2022, we had total current assets of

$6,818,441 and current liabilities of $3,607,416, resulting in a positive working capital of $3,211,025.

This compares with the working

capital of $4,203,509 at December 31, 2021.

This decrease in working capital, as discussed in more detail below, is primarily the result

of the cash used in the acquisition of subsidiaries.

Our operating activities used $1,435,292 in the six

months ended June 30, 2022 as compared with $2,093,398 used in operating activities in the six months ended June 30, 2021.

Investing activities used $1,612,255 for

the six months ended June 30, 2021.

Uses of funds in investing activities consisted primarily of the acquisition of subsidiaries for $1,564,132

and purchases of property and equipment for $47,223.

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

months ended June 30, 2022 compared with $3,353,854 provided in the six months ended June 30, 2021.

Our positive financing cash flow in

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

financial condition has improved significantly with a positive working capital and a cash position as of June 30, 2022 that represents

4.69 times the loss recognized during the three-month period then ended.

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 of which are available 12,500,000.

This offering

has been conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold

from the available shares.

We also plan to seek additional financing in a private equity offering to secure funding for operations.

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

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 financing will be available to us on acceptable

terms or at all.

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 three month period

ended March 31, 2022.

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

June 30, 2022.

Critical Accounting Polices

accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires

management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of

matters that are inherently uncertain.

“critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and

results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates

about the effect of matters that are inherently uncertain.

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.

for the six months ended June 30, 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

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Off Balance Sheet Arrangements

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

As of June 30, 2022, there were no off-balance sheet

arrangements.

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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