What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 282 added, 253 removed, 51 unchanged (91% of the section changed)

2 unchanged sentences

Forward-Looking Statements

This quarterly report contains forward-looking statements.

Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives

for our future operations.

In some cases, you can identify forward-looking statements by terminology such as “may”, “should”,

“expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,

“potential” or “continue” or the negative of these terms or other comparable terminology.

These statements are

only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk

Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance

or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied

by these forward-looking statements.

These risks include, by way of example and not in limitation:

uncertainty of profitability based upon our history of losses;

• legislative

or regulatory changes concerning telecommunications;

related to failure to obtain adequate financing on a timely basis and on acceptable terms;

related to our operations and uncertainties related to our business plan and business strategy;

in economic conditions;

• uncertainty

with respect to intellectual property rights, protecting those rights and claims of infringement

of other’s intellectual property;

• competition;

• cybersecurity

This list is not an exhaustive list of the factors

that may affect any of our forward-looking statements.

These and other factors should be considered carefully, including those contained

in our Annual Report on Form 10-K under “Risk Factors” for the year ended December 31, 2023, and readers should not place

undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and

opinions on the date the statements are made, and we undertake no obligation to update forward-looking statements if these beliefs, estimates

and opinions or other circumstances should change.

Although we believe that the expectations reflected in the forward-looking statements

are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Except as required by applicable

law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these

statements to actual results.

(www.iqstel.com) is a technology company with a presence in 20 countries and over 100 employees that offers leading-edge services

through its four business divisions in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries.

presence is global, with offices in Miami, Venezuela, Argentina, UK, Switzerland, Turkey, and Dubai, we target diverse and high-growth

We maintain more than 400 high value network interconnections around the world, delivering international voice, SMS, and connectivity

services that form the core of our business.

The company’s strategy focuses on leveraging synergies between its 11 subsidiaries

to drive innovation and capture emerging opportunities.

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,

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), QGlobal SMS (www.qglobalsms.com), and QXTEL Limited (www.qxtel.com).

Also under the Telecom Division,

our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA)

to serve the in-country portability needs through its subsidiary, itsBchain.

Our developing Fintech Business

Line (www.globalmoneyone.com) (www.maxmo.vip) offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed),

Mobile App/Wallet (Remittances, Mobile Top Up).

Our Fintech subsidiary, Global Money One, is to provide immigrants access to reliable

financial services that makes it easier to manage their money and stay connected with their families back home.

Our developing Electric Vehicle

(EV) Business Line (www.evoss.net) offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia,

and Venezuela.

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 developing Artificial

Intelligence (AI)-Enhanced Metaverse Division (information and content) (www.realityborder.com) 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

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.

Our developing metaverse

leverages advanced AI to introduce Non-Player Characters (NPCs) that significantly enhance user engagement and functionality within virtual

environments.

These NPCs are not mere static elements;

rather, they are powered by OpenAI's latest language models, enabling dynamic interaction

This AI-driven interaction allows NPCs to serve as sales and brand assistants, guiding users through immersive experiences

that can extend to purchasing products from external websites.

Furthermore, these intelligent agents can control access to gated spaces

within the metaverse based on user interactions, showcasing a personalized approach to user experience.

A key innovation in our AI

implementation is the NPCs' ability to autonomously make decisions based on their understanding of user interactions.

This is achieved

through state-of-the-art natural language processing and understanding capabilities, which are supported in seven languages.

Additionally,

our NPCs utilize advanced text-to-speech and speech-to-text technologies to facilitate seamless communication with users across diverse

linguistic backgrounds.

The incorporation of "function call" features further enhances the NPCs' ability to perform complex

tasks and interact meaningfully with the environment and the users.

Our reference to our technology

as "cutting-edge" is grounded in our commitment to continuous improvement and innovation.

We consistently integrate the latest

advancements in AI, particularly in the areas of chatbots, language understanding, and user interaction technologies.

This ensures that

our metaverse remains at the forefront of AI application in virtual spaces, offering an unparalleled user experience that goes beyond

traditional virtual environments.

We are currently in an advanced

phase of development, with ongoing enhancements to AI functionalities and user interaction models.

Our team is dedicated to exploring

and implementing the latest AI technologies to ensure that our metaverse remains a leading example of innovation in virtual space technology.

The information contained

on our websites is not incorporated by reference into this prospectus and should not be considered part of this or any other report filed

with the SEC.

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,”

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

“will,” “would,” “will be,” “will continue,” “will likely result,” and similar

We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained

in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which

may cause actual results to differ materially from the forward-looking statements.

Our ability to predict results or the actual effect

of future plans or strategies is inherently uncertain.

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

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

changes in economic conditions, legislative/regulatory changes, availability

of capital, interest rates, competition, and generally accepted accounting principles.

These risks and uncertainties should also be considered

in evaluating forward-looking statements and undue reliance should not be placed on such statements.

We undertake no obligation to update

or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Further information

concerning our business, including additional factors that could materially affect our financial results, is included herein and in our

other filings with the SEC.

(www.IQSTEL.com) is a technology company

with a presence in 20 countries (Argentina, Armenia, Austria, Canada, Colombia, Germany, Greece, Guatemala, India, Italy, Pakistan, Romania,

Serbia, Spain, Switzerland, Turkey, UAE, UK, USA and Venezuela) and over 100 employees that offers leading-edge services through its four

business divisions in the telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries.

Our presence is global,

with offices in USA, Argentina, UK, Switzerland, Turkey, and Dubai, and we target diverse and high-growth markets.

We maintain more than

603 high value network interconnections around the world, delivering international voice, SMS, and connectivity services that form the

core of our business.

The company’s strategy focuses on leveraging synergies between its 9 subsidiaries to drive innovation and

capture emerging opportunities.

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, offers Voice over

Internet Protocol (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), QGlobal SMS (www.qglobalsms.com), and QXTEL Limited (www.qxtel.com).

Also under the Telecom Division, our developing BlockChain

Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country

portability needs through our subsidiary, itsBchain.

Our developing Fintech Business Line (www.globalmoneyone.com)

(www.maxmo.vip) offers a complete Fintech ecosystem MasterCard Debit Card, US Bank Account (No SSN Needed), Mobile App/Wallet (Remittances,

Mobile Top Up).

Our Fintech subsidiary, Global Money One, is to provide immigrants access to reliable financial services that makes it

easier to manage their money and stay connected with their families back home.

Our developing Electric Vehicle (EV) Business Line

offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia.

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 developing Artificial Intelligence (AI)-Enhanced

Metaverse Division (information and content) (www.realityborder.com) 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.

Our developing metaverse leverages advanced AI to

introduce Non-Player Characters (NPCs) that significantly enhance user engagement and functionality within virtual environments.

NPCs are not mere static elements;

rather, they are powered by OpenAI's latest language models, enabling dynamic interaction with users.

This AI-driven interaction allows NPCs to serve as sales and brand assistants, guiding users through immersive experiences that can extend

to purchasing products from external websites.

Furthermore, these intelligent agents can control access to gated spaces within the metaverse

based on user interactions, showcasing a personalized approach to user experience.

A key innovation in our AI implementation is the NPCs'

ability to autonomously make decisions based on their understanding of user interactions.

This is achieved through state-of-the-art natural

language processing and understanding capabilities, which are supported in seven languages.

Additionally, our NPCs utilize advanced text-to-speech

and speech-to-text technologies to facilitate seamless communication with users across diverse linguistic backgrounds.

The incorporation

of "function call" features further enhances the NPCs' ability to perform complex tasks and interact meaningfully with the environment

and the users.

Our reference to our technology as "cutting-edge"

is grounded in our commitment to continuous improvement and innovation.

We consistently integrate the latest advancements in AI, particularly

in the areas of chatbots, language understanding, and user interaction technologies.

This ensures that our metaverse remains at the forefront

of AI application in virtual spaces, offering an unparalleled user experience that goes beyond traditional virtual environments.

We are currently in an advanced phase of development,

with ongoing enhancements to AI functionalities and user interaction models.

Our team is dedicated to exploring and implementing the latest

AI technologies to ensure that our metaverse remains a leading example of innovation in virtual space technology.

The information contained on our websites is

not incorporated by reference into this quarterly report and should not be considered part of this or any other report filed with the

Results of Operations

Our total revenue reported for the three months ended

September 30, 2024 was $54,249,614, compared with $39,757,203 for the three months ended September 30, 2023.

These numbers reflect an

increase of 36.45% quarter over quarter on our consolidated revenues.

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

2024 was $184,346,412, compared with $97,248,561 for the nine months ended September 30, 2023.

These numbers reflect an increase of 89.56%

year over year on our consolidated revenues.

March 31, 2025 was $57,632,816, compared with $51,414,878 for the three months ended March 31, 2024.

These numbers reflect an increase

of 12% quarter over quarter on our consolidated revenues.

When looking at the numbers by subsidiary, we have

the following breakout for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30,

Revenue for the Three Months Ended September

Revenue for the Nine Months Ended September

the following breakout for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Three Months Ended

March 31, 2025

Three Months Ended

March 31, 2024

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

QXTEL Limited

Inter-company sales

Intercompany eliminations

(13,409,141 )

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 the synergies

among all our subsidiaries.

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.

Cost of Revenues

Our total cost of revenues for the three months ended

September 30, 2024 increased to $52,229,695, compared with $38,728,682 for the three months ended September 30, 2023.

Our total cost of

revenues for the nine months ended September 30, 2024 increased to $178,737,687, compared with $94,218,838 for the nine months ended September

When looking at the numbers by subsidiary, we have

the following breakout for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30,

Cost of Revenue for the Three Months Ended September

Cost of Revenue for the Nine Months Ended September

March 31, 2025 increased to $55,697,858, compared with $50,035,852 for the three months ended March 31, 2024.

When looking at the numbers by subsidiary,

we have the following breakout for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Cost of Revenue

Three Months Ended

March 31, 2025

Cost of Revenue

Three Months Ended

March 31, 2024

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

QXTEL Limited

Inter-company sales

Intercompany eliminations

(13,397,244 )

Our cost of revenues consists of direct charges

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

These costs primarily consist of usage charges for calls and

SMS terminated in vendor’s network.

Our cost of revenues consists of direct charges from

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

These costs primarily consist of usage charges for calls and SMS

terminated in vendor networks.

The behavior in the costs shows a logical correlation

with the behavior of the revenue commented above.

We have reached a higher volume of sales and every additional unit sold (minutes and

SMS) has its corresponding termination cost.

The gross profit for the three months ended September

30, 2024 increased to $2,019,919 from $1,028,521 for the same period of year 2023.

For the nine months ended September 30, 2024 the gross

profit increased to $5,608,725 from $3,029,723 for the same period of year 2023.

It is important to remark on the evolution of the

Gross Profit expressed as a percentage of Revenue.

It went up to 3.72% for the three months ended September 2024 from 2.58% for the same

period of 2023, but also from 2.75% for the three months ended June 30, 2024.

with the behavior of the revenue commented on above.

We have reached a higher volume of sales and every additional unit sold (minutes

and SMS) has its corresponding termination cost.

As can be noticed in the analysis of the Gross Margin

in the section below, there is an important increase in the margins of Etelix, Whisl and Smartbiz.

This increase in the gross margins

of Etelix, Whisl and Smartbiz is related to the lower revenue reported by those subsidiaries.

These three subsidiaries eliminated routes

and destinations of low margins;

while the inclusion of QXTEL compensates for the revenue of those low-margin routes in Etelix, Whisl

and Smartbiz.

This portfolio restructuring is the result of the

synergies achieved through the commercial and operational integration of all subsidiaries.

This can also be noticed in the high volume

of intercompany business.

We expect this to impact positively the revenues and the margins in the future.

Our gross margin, which is simply the difference between our revenues

and our cost of sales, discussed above, was $1,934,958 for the three months ended March 31, 2025 compared to $1,379,026 for the three

months ended March 31, 2024.

This represents an increase of 40% in the gross margin quarter over quarter.

Gross Margin %

Three Months Ended

March 31, 2025

Gross Margin %

Three Months Ended

March 31, 2024

Etelix.com USA, LLC

SwissLink Carrier AG

Consolidated Gross Margin % for the three months ended March 31, 2025 was

3.36% compared to 2.68% for the same period of 2024.

This represents an increase of 25.37% quarter over quarter.

As mentioned before, this increment in the gross margin is the result of

the commercial and operational synergies implemented among all subsidiaries.

Operating Expenses

Operating expenses increased to $2,539,184 for the

three months ended September 30, 2024 from $957,768 for the three months ended September 30, 2023.

Operating expenses increased to $6,144,677 for the

nine months ended September 30, 2024 from $3,529,218 for the nine months ended September 30, 2023.

The details by major category for the

nine months ended September 30, 2024 and 2023 is reflected in the table below:

Nine Months Ended

September 30,

three months ended March 31, 2025 from $1,562,478 for the three months ended March 31, 2024.

The detail by major category is reflected

in the table below.

Three Months Ended

Salaries, Wages and Benefits

1 unchanged sentence

Legal and Regulatory

Bad Debt Expense

Travel and Events

Bank Services and Fees

Financial Costs

Depreciation and Amortization

Office, Facility and Other

Bad debt expense

Stock-based compensation

Total Operating Expense

The main reasons for the overall increase in operating

expenses for the nine months ended September 30, 2024 compared to the same period of 2023 is due to the increase in salaries, wages and

the professional fees;

office, facilities and other.

As it can be seen in the table below, where

operating expenses are shown by subsidiary, 56% of the total increase in operating expenses is due to the inclusion of QXTEL, which was

not part of the group of companies in year 2023.

When looking at the numbers by subsidiary,

we have the following breakout for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:

Nine Months Ended

September 30,

Total Operating Expenses

When looking at the numbers by subsidiary, we have the following breakout

for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Three Months Ended

Global Money One

Smartbiz Telecom

Whisl Telecom

QXTEL Limited

Inter-company eliminations

The most significant differences are:

(1) the increase

in technology expenses related to the deployment and upgrade of the Switching platform to allocate all subsidiaries;

(2) the increases

in other items such as salaries, wages and benefits, or depreciation and amortization, or office, facility and other are the result of

the addition of QXTEL to our consolidated financial statements.

We are continually identifying operational synergies

among all of our subsidiaries to be more cost efficient.

The investment we are currently making in the development of a unique voice and

SMS switching platform that will allow us to reduce costs between fifty and sixty thousand dollars per quarter.

Operating Income

The Company had an operating loss of $56,553 for the

three months ended September 30, 2024 compared with operating income of $70,753 for the three months ended September 30, 2023.

The Company had an operating loss of $535,952 for

the nine months ended September 30, 2024 compared with an operating loss of $499,495 for the nine months ended September 30, 2023

Our Telecom Division, the division presently generating

revenue, has positive operating income when presented separately from the rest of our Company.

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.

When comparing the tables below,

we can see a tremendous evolution of our telecom division comparing the revenues, gross profit and operating income for the three and

nine months ended September 30, 2024 versus the same periods of year 2023.

As we have indicated on several occasions, our strategy is

to strengthen our telecommunications division so that it can serve as a lever for the development of new lines of business.

Months Ended September 30, 2024

Cost of revenue

The Company showed negative Operating Income for the

three months ended March 31, 2025 of $604,226 compared with a negative result of $183,452 for the three months ended March 31, 2024.

Our Telecom Division, which is the one generating

revenue at the present time, generated 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.

Telecom Division

Pre Revenue Subsidiaries

Cost of revenues

Operating expenses

2 unchanged sentences

Operating income/(loss)

Months Ended September 30, 2023

Cost of revenue

Other Expenses/Other Income

We had total other expenses, net of $519,660 for the

three months ended March 31, 2025, as compared with other expenses of $396,764 for the same period ended 2024.

The other expenses in 2025

are largely due to $531,726 in Interest Expense associated with the financing for the acquisition of QXTEL, which allows us to drive the

organic growth of the Company.

We finished the three months ended March 31, 2025

with a net loss of $1,144,461, as compared to a loss of $580,216 during the three months ended March 31, 2024.

The net loss as of March

31, 2025 is highly impacted by increased operating expenses and interest expense incurred in the acquisition of QXTEL;

however, the increase

in the Company's value and the beneficial effects of this acquisition could be observed in the $829,064 of gross profit added to our operations

for the three months ended March 31, 2025 which represents 43% of the total consolidated gross profit.

Our Telecom Division, the division presently

generating revenue, has a positive operating income when presented separately from the rest of our Company.

As we have indicated on several

occasions, our strategy is to strengthen our telecommunications division so that it can serve as a lever for the development of new lines

of business, such as Fintech and Cybersecurity.

Ended March 31, 2025

and administration

Operating Expenses

General and administration

Total Operating Expenses

Operating income/(loss)

Other Expenses/Other Income

We had other expenses of $2,646,275 for the nine months

ended September 30, 2024, as compared with other income of $224,938 for the same period ended 2023.

The difference between the compared

periods is primarily in due to a change in fair value of derivative liabilities of $(1,063,789);

and Interest Expense of $(1,533,820).

Net Income/Loss

The Company finished the three months ended September

30, 2024 with a net loss of $773,004, as compared to a net income $45,909 during the three months ended September 30, 2023.

finished the nine months ended September 30, 2024 with a loss of $3,317,107, as compared to a loss of $274,557 during the nine months

ended September 30, 2023.

The net results of the periods reported are highly

impacted by the expenses in the holding entity (iQSTEL), which has a high component of interest and other financial expenses related to

the funds borrowed for the acquisition of QXTEL Limited.

income (expense)

income (loss) before income taxes

income (loss)

and Amortization

non-recurrent

In evaluating our financial performance, we utilize

Adjusted EBITDA as a supplemental measure to provide insights into the profitability of our core operations.

(Please see Adjusted EBITDA,

which is reconciled to the Net Income in the table above.) Adjusted EBITDA excludes, in addition to non-operational expenses like interest

expenses, taxes, depreciation and amortization;

items that we believe are not indicative of our operating performance, such as:

FX Gains and Losses.

Stock-Based Compensation:

As a non-cash expense, this adjustment eliminates variability caused by

equity-based incentives.

Other non-recurrent expenses:

Adjusted EBITDA removes one-time, irregular, or non-recurring expenses

to reflect the company's sustainable earnings.

We believe Adjusted EBITDA offers a clearer view of

the cash-generating potential of our business, excluding non-recurring, non-cash, and non-operational impacts.

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

while this isn’t 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.

Management has also identified areas for cost-cutting and operational improvements

and has acted in that direction.

Liquidity and Capital Resources

As of September 30, 2024, we had total current assets

As of March 31, 2025, we had total current assets

of $26,043,799 and current liabilities of $30,279,641, resulting in a negative working capital of $4,235,842.

This compares with a positive

working capital of $1,878,228 at December 31, 2023.

Our operating activities used $2,526,651 in the nine

months ended September 30, 2024 as compared with $434,701 used in operating activities in the nine months ended September 30, 2023.

Investing activities used $2,950,367 for the

nine months ended September 30, 2024 as compared with $340,583 used in investing activities in the nine months ended September 30, 2023.

Use of funds in investing activities were primarily for the acquisition of subsidiary (QXTEL) for $2,730,121.

Financing activities provided $6,239,489 in the nine

months ended September 30, 2024 compared with $1,454,756 provided in the nine months ended September 30, 2023.

Our positive financing

cash flow in 2024 was largely the result of the proceeds from convertible notes of $3,997,500, funds used in the acquisition of QXTEL.

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 a private equity offering to secure funding for operations.

Our operating activities used $1,906,969 for the three

months ended March 31, 2025 as compared with $536,888 used in operating activities in the three months ended March 31, 2024.

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.

Investing activities used $58,645 for the three

months ended March 31, 2025 as compared with $1,622,892 for the three months ended March 31, 2024.

Uses of funds in investing activities

in 2025 consisted primarily of the purchase of property and equipment.

Uses of funds on investing activities in 2024 were primarily the

acquisition of QXTEL.

Financing activities provided $540,303 in the three

months ended March 31, 2025 compared with $3,522,683 provided in the three months ended March 31, 2024.

Our positive financing cash flow

in 2025 and 2024 was largely the result of the financing secured to complete the acquisition of QXTEL.

We intend to fund operations through increased

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

There can be no assurance that

3 unchanged sentences

There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

We have 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.

As of March 31, 2025, the Company did not receive payment of $100,000 and the Option was not in effect,

but we anticipate completing the registration statement and receiving the $100,000 from ADI Funding at some point in the near future.

If activated, the exercise price per share of the common stock under

the Option shall be 70% of the VWAP of the common stock during the then 10 Trading Days immediately preceding but not including the date

The obligation to exercise each specified portion of the Option is subject to the exercise price, being not less than $8.80

per share on the relevant Option exercise date.

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, 2024.

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, 2025.

Critical Accounting Polices

“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.

Our accounting policies are discussed in detail in the footnotes to our Annual Report on Form 10-K for the year ended December

31, 2023 and in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the nine months ended September

We consider our critical accounting policies to be those related to warrant accounting and complex debt instruments,

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.

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, 2025;

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, 2024, there were no off-balance

sheet arrangements.

As of March 31, 2025, there were no off-balance sheet

arrangements.

Recent Accounting Pronouncements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis