What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 143 added, 136 removed, 86 unchanged (76% of the section changed)

2 unchanged sentences

Forward-Looking Statements

Certain statements, other than purely historical

information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,

and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private

Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange

These forward-looking statements generally are identified by the words “believes,” “project,” “expects,”

Certain statements, other than purely historical information,

including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions

upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

forward-looking statements generally are identified by the words “believes,” “project,” “expects,”

“anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,”

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(the “Company”) (OTC Pink:

IQST) (www.iqstel.com) is a technology company with presence in 13 countries and 56

employees that is offering leading-edge services through its four business divisions.

IQST) (www.iqstel.com) is a technology company with presence in 19 countries and 70 employees that is offering leading-edge services through

its business divisions.

Our Telecom Division, which

represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented,

in this Prospectus, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and

international fiber-optic connectivity through its subsidiaries:

Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com),

Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), and QGlobal SMS (www.qglobalsms.com).

offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic

connectivity through its subsidiaries:

Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com),

Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), and QGlobal SMS (www.qglobalsms.com).

Our developing Fintech Business

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EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family.

Our Artificial Intelligence

(AI)-Enhanced Metaverse Division (information and content) is currently developing a groundbreaking white-label solution designed specifically

for corporations, businesses, and the telecommunications industry.

Delivering a full suite of immersive content services, creating a

comprehensive virtual experience that can be accessed through the Web or our proprietary mobile apps.

The features include up to four

simultaneous video screens for versatile content presentation, various virtual halls such as the main hall, home hall, auditorium, exhibition

space, shopping center, and meeting rooms.

Stands for mobile application downloads, clickable gates for immediate purchasing, and direct

communication tools are seamlessly integrated to foster collaboration, engagement, and interactivity.

It goes beyond traditional virtual

spaces by utilizing cutting-edge AI technology.

This ensures video conferencing and real-time communication with other users within the

Metaverse, offering our customers a collective and fully immersive experience that caters to diverse needs such as content acquisition,

entertainment, and shared virtual experiences.

It is a future-ready platform that encourages creativity, connectivity, and collaboration

like never before.

The information contained on our websites

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Our total revenue reported for the three months ended

June 30, 2023 was $32,824,829, compared with $23,699,716 for the three months ended June 30, 2022.

September 30, 2023 was $39,757,203, compared with $21,936,634 for the three months ended September 30, 2022.

These numbers reflect an

increase of 81.24% quarter over quarter on our consolidated revenues.

Our total revenue reported for the nine months ended September 30,

2023 was $97,248,561, compared with $65,055,661 for the nine months ended September 30, 2022.

These numbers reflect an increase of 49.49%

38.50% quarter over quarter on our consolidated revenues.

Our total revenue reported for the six months ended June 30, 2023 was $57,491,358,

compared with $43,119,027 for the six months ended June 30, 2022;

an increase of 33.33%.

When looking at the numbers by subsidiary,

we have the following breakout for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022:

Revenue for the Three Months Ended June

Revenue for the Six Months Ended June

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, 2023 compared to the nine months ended September 30, 2022:

Nine Months Ended

September 30, 2023

September 30, 2022

Etelix.com USA, LLC

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Whisl Telecom

The increase in revenue is due to an increment in the commercial efforts

and the result of commercial synergies amongst all companies.

Third-party revenues recognized at Whisl decreased, as this company further

focused its efforts to serve as the platform to develop new business for the other subsidiaries.

Intercompany revenues recognized by Whisl

that were eliminated during the three and six months ended June 30, 2023 were $814,762 and $1,731,700, respectively.

$ 101,377,905

Inter-company sales

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 new acquisitions.

Cost of Revenue

Our total cost of revenue for the three months ended

June 30, 2023 increased to $32,040,363, compared with $22,853,442 for the three months ended June 30, 2022.

Our total cost of revenue

for the six months ended June 30, 2023 increased to $55,490,156, compared with $41,788,693 for the six months ended June 30, 2022.

of the development of our business strategy, which includes the strengthening of our commercial and operating activities and the synergies

among all our subsidiaries.

Cost of Revenues

Our total cost of revenues for the three months ended

September 30, 2023 increased to $38,728,682, compared with $20,621,674 for the three months ended September 30, 2022.

Our total cost of

revenues for the nine months ended September 30, 2023 increased to $94,218,838, compared with $62,410,367 for the nine months ended September

When looking at the numbers by subsidiary, we have

the following breakout for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022:

Cost of Revenue for the Three Months Ended June

Cost of Revenue for the Six Months Ended June

the following breakout for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

Cost of Revenue

Nine Months Ended

September 30, 2023

September 30, 2022

Etelix.com USA, LLC

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Whisl Telecom

Our cost of revenue consists of direct charges from

Inter-company sales

Our cost of revenues consists of direct charges from

vendors that the Company incurs to deliver services to its customers.

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SMS) has its corresponding termination cost.

The Consolidated Gross Margin for the six months ended

June 30, 2023 was 3.48%, which compared to 3.09% for the six months ended June 30, 2022 represents an increase in our consolidated Gross

Margin of 12.62%.

The gross profit for the three months ended September

30, 2023 decreased to $1,028,521 from $1,314,960 for the same period of year 2022.

However, for the nine months ended September 30, 2023

the gross profit increased to $3,029,723 from $2,645,294 for the same period of year 2022.

When looking at the numbers by subsidiary,

we have the following breakout for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

Nine Months Ended

September 30, 2023

September 30, 2022

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

Operating Expenses

Operating expenses decreased to $1,037,184 for the

three months ended June 30, 2023 from $1,144,452 for the three months ended June 30, 2022.

Operating expenses increased to $2,571,450

for the six months ended June 30, 2023 from $2,133,950 for the six months ended June 30, 2022.

The detail by major category for the six

months ended June 30, 2023 and 2022 is reflected in the table below.

Six Months Ended June 30,

Operating expenses decreased to $957,768 for the three

months ended September 30, 2023 from $1,256,147 for the three months ended September 30, 2022.

But more importantly than comparing year

2023 with year 2022, we must highlight how the Operating Expenses have been decreasing every quarter during 2023, from $1,534,266 in the

first quarter, to $1,037,184 in the second quarter and to $957,768 in this third quarter.

Operating expenses increased to $3,529,218 for the

nine months ended September 30, 2023 from $3,390,097 for the nine months ended September 30, 2022.

The details by major category for the

nine months ended September 30, 2023 and 2022 is reflected in the table below:

Nine Months Ended September 30,

Salaries, Wages and Benefits

Professional Fees

Legal & Regulatory

Travel & Events

Legal and Regulatory

Bad Debt Expense

Travel and Events

Bank Services and Fees

Financial Expenses

Depreciation and Amortization

Penalties and Settlements

Office, Facility and Other

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Total Operating Expense

at the numbers by subsidiary, we have the following breakout for the six months ended June 30, 2023 compared to the six months ended June

Six Months Ended June 30,

The main reasons for the overall increase in operating

expenses for the nine months ended September 30, 2023 compared to the same period of 2022 is due to the increase in the professional fees.

When looking at the numbers by subsidiary,

we have the following breakout for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

Nine Months Ended September 30,

Global Money One

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Whisl Telecom

During the six months ended June 30, 2022 we were

consolidating Whisl from May 6 to June 30 and Smartbiz from June 1 to June 30 as a result of the Q2 2022 acquisitions.

Both subsidiaries

were consolidated for the full six-month periods ended June 30, 2023, which explains the significant increase of expenses in those two

subsidiaries and the overall increase in the expenses for the six months ended June 30, 2023 compared to the same period in 2022.

Operating Income

The Company showed negative Operating Income for the

three months ended June 30, 2023 of $252,718 compared with a negative result of $298,178 for the three months ended June 30, 2022.

The Company showed negative Operating Income for the

six months ended June 30, 2023 of $570,248 compared with a negative result of $803,616 for the six months ended June 30, 2022.

The decrease of the numbers for the three and the

six-month periods mentioned above shows a positive trend in the operating results, and Company management is forecasting positive operating

income for the year ending December 31, 2023.

Our Telecom Division, the division presently generating

revenue, has positive Operating Income.

The expenses of our pre-revenue companies are set at the minimum required to finish the development

of the product/services prior to market launch.

Management implemented a process that intends to reduce future general and administrative

expenses of iQSTEL to a maximum of $400,000 per quarter.

Months Ended June 30, 2023

and administration

Operating Expenses

Operating income/(loss)

The Operating Income increased to $70,753 for the

three months ended September 30, 2023 from $58,813 for the three months ended September 30, 2022.

When comparing these values for the nine months ended

September 30, 2023 with the same period in 2022, we also see an improvement going from a negative result of $744,803 in 2022, to a much

smaller loss in 2023 of $499,495.

Despite the operating loss incurred during the nine

months ended September 30, 2023, the Company has shown a positive evolution during year 2023 from an Operating loss of $317,530 in the

first quarter, to a loss of $252,718 in the second quarter, to a third quarter Operating Income of $70,753.

Other Expenses/Other Income

We had other income of $91,074 for the three months

ended June 30, 2023, as compared with other income of $12,721 for the same period ended 2022.

We had other income of $249,782 for the

six months ended June 30, 2023, as compared with other expenses of $6,572 for the same period ended 2022.

The increase in other income

is mainly due to the positive change in the fair value of derivative liabilities.

We finished the three months ended June 30, 2023 with

a loss of $161,644, as compared to a loss of $285,457 during the three months ended June 30, 2022.

We finished the six months ended June

30, 2023 with a loss of $320,466, as compared to a loss of $810,188 during the six months ended June 30, 2022.

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 $224,938 for the nine months

ended September 30, 2023, as compared with other expenses of $38,073 for the same period ended 2022.

The difference between the compared

periods in due to a positive change in fair value of derivative liabilities of $381,848.

Net Income/Loss

We finished the three months ended September 30, 2023

with a net income of $45,909, as compared to $27,312 during the three months ended September 30, 2022, which represent an increase of

We also finished the nine months ended September 30, 2023 with a smaller loss of $274,557, as compared to a loss of $782,876 during

the nine months ended September 30, 2022.

Liquidity and Capital Resources

As of June 30, 2023, we had total current assets of

$7,097,716 and current liabilities of $6,912,490, resulting in a positive working capital of $185,226.

This compares with the negative

As of September 30, 2023, we had total current assets

of $11,788,194 and current liabilities of $9,914,097, resulting in a positive working capital of $1,874,097.

This compares with a negative

working capital of $15,089 at December 31, 2022.

Our operating activities used $721,400 in the six

months ended June 30, 2023 as compared with $1,435,292 used in operating activities in the six months ended June 30, 2022.

operating cash flow for both periods is a result of our net loss and changes in operating assets and liabilities.

Investing activities used $279,086 for

the six months ended June 30, 2023 compared to $1,612,255 used during the same period of year 2022.

For the six months ended June 30,

2023 the uses of funds in investing activities consisted primarily of the purchases of property and equipment for $132,249 and Payment

of loan receivable - related parties for $149,537.

Financing activities provided $790,994 in the six

months ended June 30, 2023 compared with $1,367,982 provided in the six months ended June 30, 2022.

Our positive financing cash flow in

2023 is mainly the result of proceeds from loans, warrant exercises, and proceeds from convertible notes.

Our positive financing cash

flow in 2022 is mainly the result of proceeds from the issuance of common stock and the payment of an option.

Our cash balance as of June 30, 2023 was $1,126,770

compared to $1,329,389 at December 31, 2022.

financial condition has improved significantly with a positive working capital.

However, we intend to fund operations through increased

sales and debt and/or equity financing arrangements to strengthen our liquidity and capital resources.

We also plan to seek additional

financing in public and 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.

Our operating activities used $434,701 in the nine

months ended September 30, 2023 as compared with $1,488,901 used in operating activities in the nine months ended September 30, 2022.

Investing activities used $340,583 for the nine

months ended September 30, 2023.

Uses of funds in investing activities were primarily for the advances of amounts due from related parties

of $189,767 and the purchase of property and equipment for $164,715.

Financing activities provided $1,454,756 in the nine

months ended September 30, 2023 compared with $1,367,982 provided in the nine months ended September 30, 2022.

Our positive financing

cash flow in 2023 was largely the result of the proceeds from the exercise of warrants of $1,150,000.

financial condition has improved significantly with a positive working capital of $1,874,097 and

a cash position of $ 2,001,320 as of September 30, 2023.

However, we intend to fund operations

through increased sales and debt and/or equity financing arrangements to strengthen our liquidity and capital resources.

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

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 six-month period ended

June 30, 2023.

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, 2023.

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.

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 six

months ended June 30, 2023;

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

“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 nine months ended September 30, 2023;

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 June 30, 2023, there were no off-balance sheet

arrangements.

As of September 30, 2023, there were no off-balance

sheet arrangements.

Recent Accounting Pronouncements

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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