What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 204 added, 167 removed, 289 unchanged (56% of the section changed)

38 unchanged sentences

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).

of current operations and which also represents the source for 86% and 94% of our revenues for the three months and for the nine months

ended September 30, 2025 respectively, 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

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

Additionally, Globetopper LLC (www.globetopper.com)

our most recent acquisitions, plays a strategic role in supporting the expansion and integration of our business divisions.

operations, the Company continues to strengthen its global presence and enhance the synergy in Fintech segments through its solution for

gift card programs, currently representing 14% and 6% of our revenues for the three months and for the nine months ended September 30,

2025 respectively.

Our developing Electric Vehicle (EV) Business Line

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may vary for different companies for reasons unrelated to overall operating performance and also believes this information is useful to

revenue, which equals revenue before intercompany eliminations, represents a key performance metric that management uses to measure the

scale of the Company’s operations, monitor revenue trends across reporting segments, and evaluate the effectiveness of sales and

marketing initiatives on a consolidated basis prior to the impact of intercompany transactions.

Gross revenue, which equals revenue before intercompany

eliminations, represents a key performance metric that management uses to measure.

Results of Operations

Our total revenue reported for the three months ended

June 30, 2025 was $72,183,236, compared with $78,635,764 for the three months ended June 30, 2024.

These numbers reflect a decrease of

8.21% quarter over quarter on our consolidated revenues.

Our total revenue reported for the six months ended June 30, 2025 was $129,816,052,

compared with $130,050,642 for the six months ended June 30, 2024;

which reflect a decrease of 0.18%.

September 30, 2025 was $102,867,553, compared with $54,249,614 for the three months ended September 30, 2024.

These numbers reflect an

increase of 89.62% quarter over quarter on our consolidated revenues.

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

2025 was $232,683,605, compared with $184,346,412 for the nine months ended September 30, 2024;

which reflects an increase of 26.22%.

When looking at the numbers by companies,

we have the following breakout for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024:

Revenue for the Three Months Ended June 30,

Revenue for the Six Months Ended June 30,

we have the following breakout for the three and nine months ended September 30, 2025 compared to the three and nine months ended September

Revenue for the Three Months Ended September 30,

Revenue for the Nine Months Ended September 30,

Etelix.com USA, LLC

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QXTEL Limited

GlobeTopper LLC

$ 118,564,720

$ 273,714,416

$ 187,482,843

Intercompany eliminations

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$ 232,683,605

For the three months ended June 30, 2025, we recorded

an increase of 6% in gross revenues (revenue before intercompany eliminations) compared to the same period in 2024.

See Methods of Valuation

for a discussion of gross revenue.

Similarly, for the six months period ended June 30,

2025, gross revenues increased by 17% year-over-year.

However, due to a higher volume of intercompany transactions during both periods,

net consolidated revenue (revenue after eliminations) was lower compared to the prior year.

$ 184,346,412

For the three and nine months ended September 30,

2025, total consolidated revenue increased compared to the same period in 2024.

The growth mainly reflects higher activity across

most subsidiaries, particularly those engaged in VOIP Telecom services, due to a higher volume of intercompany transactions during both

The increase also includes the contribution from a newly acquired subsidiary, GlobeTopper LLC, which closed on July 1, 2025.

Intercompany eliminations rose as well, driven by

higher transactions among group entities, which are removed to avoid double counting at the consolidated level.

These intercompany transactions are part of our strategy

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margin results.

The organic growth during the three and six months

ended June 30, 2025 was 100% of the total revenue for those periods.

The organic growth during the three and nine months

ended September 30, 2025 was 70% of the total revenue for those periods.

This reflects the solid foundation of our revenue and the growth

capacity the Company has with its current operations.

We consider organic growth the revenues reported by

our existing subsidiaries once fully integrated to our operations.

These subsidiaries include Etelix, SwissLink, QGlobal, IoT Labs, Smartbiz,

Whisl and QXTEL.

We consider organic growth the revenues reported by our existing subsidiaries once

fully integrated to our operations.

These subsidiaries include Etelix, SwissLink, QGlobal, IoT Labs, Smartbiz, Whisl, QXTEL.

GlobeTopper, acquired on July 1 st , 2025

represented the rest of the increment, showing the potential this subsidiary has of creating value to the organization.

Cost of Revenue

Our total cost of revenue for the three months ended

June 30, 2025 decreased to $70,311,749, compared with $76,472,140 for the three months ended June 30, 2024.

Our total cost of revenue

for the six months ended June 30, 2025 decreased to $126,009,607, compared with $126,507,992 for the six months ended June 30, 2024.

September 30, 2025 increased to $100,126,838, compared with $52,229,695 for the three months ended September 30, 2024.

Our total cost

of revenue for the nine months ended September 30, 2025 increased to $226,136,445, compared with $178,737,687 for the nine months ended

September 30, 2024.

When looking at the numbers by subsidiary, we have

the following breakout for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024:

Cost of Revenue for the Three Months Ended June

Cost of Revenue for the Six Months Ended June

the following breakout for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30,

Cost of Revenue for the Three Months Ended September 30,

Cost of Revenue for the Nine Months Ended September 30,

Etelix.com USA, LLC

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QXTEL Limited

GlobeTopper LLC

$ 115,666,149

$ 266,786,765

$ 181,641,329

Intercompany eliminations

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$ 226,136,445

$ 178,737,687

Our cost of revenue consists of direct charges from

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These costs primarily consist of usage charges for calls and SMS

terminated in vendor’s network.

terminated in vendor’s network, as well as the costs of the digital prepaid products related to Fintech (Globetopper) operations.

The behavior in the costs shows a logical correlation

with the behavior of the revenue commented above, as each additional unit sold (minutes and SMS) has its corresponding termination cost.

In this sense, the inclusion of QXTEL in the consolidation

process, along with the restructuring of the portfolio among subsidiaries, reflects the synergies derived from the commercial and operational

integration of all group companies.

This integration has resulted in a significant volume of intercompany transactions, which are part

of our strategic approach to optimizing routing and cost efficiency.

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

The inclusion of GlobeTopper in the consolidation

process, along with the traffic volumes by QXTEL and the reorganizing of the portfolio among subsidiaries, reflects the synergies derived

from the commercial and operational integration of all group companies.

This integration has resulted in a significant volume of intercompany

transactions, which are part of our strategic approach to optimizing routing and cost efficiency.

We expect this to positively impact

revenues and margins in the future.

Our gross margin, which is simply the difference between

our revenues and our cost of sales, discussed above, was $3,806,445 for the six months ended June 30, 2025 compared to $3,542,650 for

six three months ended June 30, 2024, reflecting an increase of 7.45% quarter over quarter

Gross Margin % Three Months Ended June 30,

Gross Margin % Six Months Ended June 30,

Etelix.com USA, LLC

SwissLink Carrier AG

Smartbiz Telecom

Whisl Telecom

QXTEL Limited

The Consolidated Percentage of Gross Margin for the

six months ended June 30, 2025 was 2.93%, which represents an increase of 7.64% compared to the six months ended June 30, 2024.

For the six months ended June 30, 2025, gross profit

increased by 7.45% compared to the same period in 2024.

This growth is the result of commercial and operational synergies achieved through

intercompany collaboration.

We expect this trend to strengthen as we continue aligning internal operations and leveraging our integrated

service portfolio.

our revenues and our cost of sales, discussed above, was $6,547,160 for the nine months ended September 30, 2025 compared to $5,608,725

for the nine months ended September 30, 2024, reflecting an increase of 16.73% quarter over quarter

This growth is the result of commercial and operational

synergies achieved through intercompany collaboration.

We expect this trend to strengthen as we continue aligning internal operations

and leveraging our integrated service portfolio.

Operating Expenses

Operating expenses, which consist solely of general

and administrative costs, increased slightly by 0.94% for the three months ended June 30, 2025, compared to the same period in 2024.

the six months ended June 30, 2025, general and administrative expenses rose to $5,066,900 from $4,068,205 reported in the same period

of 2024, reflecting a 24.55% increase.

A detailed breakdown by major category for the three and six months ended June 30, 2025 and 2024

is presented in the table below:

Three Months Ended June 30,

Six Months Ended June 30,

and administrative costs, increased by 58.91% for the three months ended September 30, 2025, compared to the same period in 2024.

the nine months ended September 30, 2025, general and administrative expenses rose to $8,366,698 from $6,144,677 reported in the same

period of 2024, reflecting a 36.16% increase.

A detailed breakdown by major category for the three and nine months ended September 30,

2025 and 2024 is presented in the table below:

Three Months Ended September 30,

Nine Months Ended September 30,

Salaries, wages and benefits

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Office, facility and other

Financial Expenses

Bad debt expense

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When looking at the numbers by subsidiary, we have

the following breakout for the six months ended June 30, 2025 compared to the six months ended June 30, 2024:

Six Months Ended June 30,

the following breakout for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024:

Nine Months Ended September 30,

Etelix.com USA, LLC

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QXTEL Limited

GlobeTopper LLC

Intercompany Elimination

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;

in technology expenses related to the deployment and upgrade of the Switching platform to allocate all subsidiaries, which will result

in tremendous cost reduction once all companies are migrated to the new platform;

(2) the increases in other items such as salaries, wages

and benefits;

depreciation and amortization;

and office, facility and other are largely the result

of the addition of QXTEL to our consolidated financial statements.

For the six months ended June 30, 2024, QXTEL consolidated

only the expenses incurred between April and June 2024.

In contrast, for the same period in 2025, expenses from January through June were

This difference in the reporting periods explains the 113% increase in general and administrative expenses compared to the prior

and office, facility and other are largely the result of the addition of QXTEL and GlobeTopper

to our consolidated financial statements.

For the nine months ended September 30, 2024, QXTEL

consolidated only the expenses incurred between April and September 2024.

In contrast, for the same period in 2025, expenses from January

through September were included.

This difference in the reporting periods explains the 75% increase in general and administrative expenses

compared to the prior year.

Additionally, starting July 1, 2025, Globetopper’s

expenses were incorporated, which were not considered in previous periods.

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/Loss

For the three months ended June 30, 2025, the Company

reported an operating loss of $656,229, representing a significant increase compared to the operating loss of $342,103 for the same period

Similarly, for the six months ended June 30, 2025, the operating loss widened to $1,260,455, up from $525,555 reported during

the corresponding period in the prior year.

These results reflect an overall rise in operating expenses, largely associated with ongoing

investments in development and growth initiatives.

For the three months ended September 30, 2025, the

Company reported an operating loss of $559,083, representing a significant increase compared to the operating loss of $56,553 for the

same period in 2024.

Similarly, for the nine months ended September 30, 2025, the operating loss widened to $1,819,538, up from $535,952

reported during the corresponding period in the prior year.

These results reflect an overall rise in operating expenses, largely associated

with ongoing investments in development and growth initiatives.

Our Telecom Division, currently the primary source

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progress of our Telecom Division, as evidenced by the increase in revenue, gross profit, and operating income for both the three- and

six-month periods ended June 30, 2025.

nine-month periods ended September 30, 2025.

As we have previously stated, our strategy remains centered on strengthening the telecommunications

segment to serve as a growth engine for the develo pment and

expansion of new business lines.

Telecom Division

Pre-revenue companies

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Cost of revenue

segment to serve as a growth engine for the development and expansion of new business lines.

Months Ended Sept 30, 2025

and administration

Operating Expenses

General and administration

Total Operating Expenses

Operating income/(loss)

Months Ended June 30, 2024

income/(loss)

Months Ended Sept 30, 2024

and administration

Operating Expenses

Operating income/(loss)

Expenses/Other Income

had other expenses of $1,600,989 for the three months ended June 30, 2025, as compared with other expenses of $1,556,509 for the same

period ended 2024.

We had other expenses of $2,120,649 for the six months ended June 30, 2025, as compared with other expenses of $1,953,273

for the same period ended 2024.

The increase in other expenses for the six months ended June 30, 2025 is mainly due to the change

in the loss on settlement of debt, and increased interest expenses incurred.

We finished the three months ended June 30, 2025 with

a loss of $2,348,914, as compared to a loss of $1,963,887 during the three months ended June 30, 2024.

We finished the six months ended

June 30, 2025 with a loss of $3,493,375, as compared to a loss of $2,544,103 during the six months ended June 30, 2024.

income/(loss)

Other Expenses/Other Income

We had other expenses of $1,694,867 for the three

months ended September 30, 2025, as compared with other expenses of $646,846 for the same period ended 2024.

We had other expenses of

$3,815,516 for the nine months ended September 30, 2025, as compared with other expenses of $2,646,275 for the same period ended 2024.

The increase in other expenses for the nine months ended September 30, 2025 is mainly due to the change in the loss on settlement of debt.

We finished the three months ended September 30, 2025

with a loss of $2,325,869, as compared to a loss of $773,004 during the three months ended September 30, 2024.

We finished the nine months

ended September 30, 2025 with a loss of $5,819,244, as compared to a loss of $3,317,107 during the nine months ended September 30, 2024.

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.

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 .

the funds borrowed for the acquisition of QXTEL Limited and GlobeTopper LLC.

Our Telecom and Fintech Divisions, the divisions presently

generating revenue, have a positive operating income when presented separately.

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.

During this quarter, the Company began generating revenue in the Fintech area, marking an important step in

diversifying its sources of income and expanding its business model.

Telecom Division

Fintech Division

Pre-revenue companies

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Ended Sept 30, 2025

Ended Sept30, 2025

Ended Sept 30, 2025

Cost of revenue

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Stock-based compensation

Other non recurring costs

Other non-recurring

Adjusted EBITDA

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;

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:

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Liquidity and Capital Resources

As of June 30, 2025, we had total current assets of

$35,555,030 and current liabilities of $36,843,884, resulting in a negative working capital of $1,288,854.

Our operating activities used $1,649,283 in the six

months ended June 30, 2025 as compared with $3,151,688 used in operating activities in the six months ended June 30, 2024.

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

on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts

Despite a larger net loss, operating cash burn decreased due to working capital changes, especially receivables and payables.

As of September 30, 2025, we had total current assets

of $29,837,729 and current liabilities of $28,742,676, resulting in a positive working capital of $ 1,095,053.

Our operating activities used $2,602,320

in the nine months ended September 30, 2025 as compared with $2,526,651 used in operating activities in the nine months ended September

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

which varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable

and trade accounts payable.

Despite a larger net loss in 2025, cash used in operations only slightly increased.

This is due to substantial

non-cash adjustments and working capital changes:

Stock-based compensation, depreciation, and amortization increased, reflecting higher non-cash expenses.

Bad debt expense remained low, indicating stable receivables quality.

Loss on settlement of debt and salary payable were significant in 2025, reflecting restructuring

and settlements on debts.

Accounts receivable:

Large positive adjustment ($44.2M in 2025 vs.

$11.8M in 2024), suggesting strong

collections and reduced sales on credit.

Accounts payable and accrued liabilities:

Large negative adjustments, especially accrued liabilities

($44.8M outflow), indicating significant payments during the period.

The company’s operating cash flow is still negative, but the gap

between net loss and cash used is bridged by non-cash charges and working capital management.

Investing activities used $219,331 for

the six months ended June 30, 2025 compared to $2,720,197 used during the same period of year 2024.

Investing outflows dropped sharply,

indicating a pause in our M&A campaign.

Financing activities provided $1,351,026 in the six

months ended June 30, 2025 compared with $5,306,444 provided in the six months ended June 30, 2024.

Financing inflows dropped significantly,

indicating a reduced reliance on equity and convertible debt.

These figures show an improved operating cash flow

despite net losses and strategic use of equity for debt settlement.

the nine months ended September 30, 2025 compared to $2,950,367 used during the same period of year 2024.

Investing activities in 2024

were highly impacted by the acquisition of QXTEL.

The Company reduced investing outflows in the nine months ended September 30, 2025,

shifting from expansion to consolidation and cash preservation.

Financing activities provided $2,570,726

in the nine months ended September 30, 2025 compared with $6,239,489 provided in the nine months ended September 30, 2024.

inflows dropped significantly, indicating a reduced reliance on equity and convertible debt.

Additionally, note that proceeds from financing

activities in 2024 were largely used in the acquisition of QXTEL.

In 2025 financing inflows dropped sharply, indicating less reliance

on new debt or equity.

Proceeds from loans payable remained strong ($5.5M in 2025), but repayments and other outflows (e.g., repayments

of acquisition notes, dividends to non-controlling interests) offset much of this.

Convertible notes and equity-related inflows were

lower than in 2024, reflecting a more mature capital structure and less aggressive fundraising.

The Company is shifting from aggressive expansion

in 2024 with the acquisition of QXTEL to consolidation and cash preservation in these first six months of 2025, with a heavy reliance

in 2024 with the acquisition of QXTEL to consolidation and cash preservation in these first nine months of 2025, with a heavy reliance

on working capital management and non-cash financing tools.

The Company’s debt repayments suggest a maturing capital structure.

At the same time, the expansion of GlobeTopper during this quarter reflects the Company’s continued commitment to strengthening

and scaling the operations of its other business divisions.

We intend to fund operations through increased sales

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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 six-month period ended

June 30, 2025.

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, 2025.

Critical Accounting Polices

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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, 2025;

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, 2025;

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

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Off Balance Sheet Arrangements

As of June 30, 2025, there were no off-balance sheet

arrangements.

As of September 30, 2025, 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