Core Insights - IQSTEL Inc. has announced a partnership with Mobility Tech to integrate AI-powered call center technologies with human agents, aiming to enhance customer service in the U.S. health services sector [1][2][4] Company Overview - IQSTEL Inc. operates in the telecom and digital solutions space, with a focus on AI, fintech, and cybersecurity, and is forecasting $340 million in revenue for FY-2025, targeting a $1 billion valuation by 2027 [6] Partnership Details - The collaboration will create AI-human hybrid call center services, leveraging Reality Border's AI solutions and Mobility Tech's expertise in health services [2][4] - The AI agents will handle calls in over 50 languages, providing 24/7 service with zero wait times and seamless human handoffs [8] Strategic Goals - Both companies aim to grow this partnership into a six-digit annual revenue business by 2026, enhancing service efficiency and competitiveness in the health services sector [8]

IQST - IQSTEL Reports Q2 2025 Results – $17.41 Assets per Share, Beating Several Metrics Including Net Shareholders' Equity, Gross Revenue, Gross Margin, Net Income, and Adjusted EBITDA of the Operating Business, Alongside Strong Equity Growth, Margin Expansion, and Rising Profitability The company is evolving from a Telecom and Technology business into a Global Connectivity & AI Technology Corporation New York, NY – Aug. 14, 2025 – IQSTEL Inc. (NASDAQ: IQST) today announced its financial results for the se ...

Core Viewpoint - IQSTEL Inc. has set an intermediate goal of achieving a $15 million EBITDA run rate by 2026 as part of its long-term plan to reach $1 billion in revenue by 2027, supported by a two-pronged growth strategy involving acquisitions and operational efficiencies [1][2][3]. Financial Goals - The company aims for a $15 million EBITDA run rate by 2026, which could lead to an implied market capitalization of $150 million to $300 million based on industry valuation multiples [2]. - IQSTEL forecasts $340 million in revenue for FY-2025, reinforcing its trajectory toward the $1 billion revenue target by 2027 [5]. Growth Strategy - The growth strategy consists of a "pincer strategy" focusing on strategic acquisitions and operational streamlining [2][4]. - IQSTEL plans to pursue 2-3 key acquisitions, each expected to contribute approximately $5 million to the EBITDA run rate [4]. - The company is also focusing on operational efficiencies to strengthen margins and support EBITDA growth [4]. Market Position and Confidence - The CEO of IQSTEL expressed confidence in the company's strategy and its ability to deliver on its financial goals, highlighting the recent institutional investment as a validation of market confidence [3]. - Approximately 12 institutional investors now hold about 4% of IQSTEL's shares, indicating growing institutional support [3]. Company Overview - IQSTEL Inc. operates in the technology sector, providing advanced solutions across Telecom, Fintech, AI-Powered Telecom Platforms, and Cybersecurity, with operations in 21 countries and a team of 100 employees [4].

PART I – FINANCIAL INFORMATION [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents IQSTEL Inc.'s unaudited consolidated financial statements for Q2 2025, covering balance sheets, operations, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities significantly decreased from December 2024 to June 2025, primarily due to reductions in accounts receivable and accrued liabilities, while stockholders' equity increased | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $51,408,498 | $79,007,738 | | Total Liabilities | $37,120,498 | $67,107,475 | | Total Stockholders' Equity | $14,288,000 | $11,900,263 | | Current Assets | $35,555,030 | $63,015,046 | | Current Liabilities | $36,843,884 | $63,821,196 | - **Accounts receivable, net** decreased from **$57,158,967** at December 31, 2024, to **$30,627,972** at June 30, 2025[12](index=12&type=chunk) - **Accrued and other current liabilities** significantly decreased from **$55,624,784** at December 31, 2024, to **$20,572,944** at June 30, 2025[12](index=12&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a wider net loss for both the three and six months ended June 30, 2025, compared to 2024, driven by higher operating and other expenses despite slightly decreased revenues | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $72,183,236 | $78,635,764 | $129,816,052 | $130,050,642 | | Gross profit | $1,871,487 | $2,163,624 | $3,806,445 | $3,542,650 | | Operating loss | $(656,229) | $(342,103) | $(1,260,455) | $(525,555) | | Net loss | $(2,348,914) | $(1,963,887) | $(3,493,375) | $(2,544,103) | | Basic and diluted loss per common share | $(0.82) | $(0.90) | $(1.28) | $(1.28) | - **Revenues decreased by 8.21%** for the three months and **0.18%** for the six months ended June 30, 2025, compared to the same periods in 2024[145](index=145&type=chunk) - **Operating loss widened significantly** for both the three-month (from **$(342,103)** to **$(656,229)**) and six-month (from **$(525,555)** to **$(1,260,455)**) periods ended June 30, 2025, compared to 2024[15](index=15&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased from December 2024 to June 2025, primarily due to common stock issuances for compensation, debt conversion, and settlement, partially offset by net losses | Metric | December 31, 2024 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $11,900,263 | $14,288,000 | | Common Stock Shares Issued & Outstanding | 2,537,209 | 3,504,454 | | Additional Paid-in Capital | $39,943,924 | $45,961,191 | | Accumulated Deficit | $(32,703,410) | $(36,405,475) | - During the six months ended June 30, 2025, the company issued **967,245 shares of common stock** for compensation (**$55,198**), conversion of debt (**$3,227,904**), and settlement of debt (**$1,886,658**)[87](index=87&type=chunk)[88](index=88&type=chunk) - The company also issued **6,571 shares of Series B Preferred Stock** to settle salary payable for its CEO and CFO, resulting in a **loss on settlement of salary payable of $216,981**[91](index=91&type=chunk)[101](index=101&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operating activities decreased significantly, investing outflows dropped sharply, and financing activities provided less cash, indicating a shift towards working capital management | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(1,649,283) | $(3,151,688) | | Net cash used in investing activities | $(173,812) | $(2,720,197) | | Net cash provided by financing activities | $1,351,026 | $5,306,444 | | Net change in cash | $(472,069) | $(565,441) | | Cash, end of period | $2,038,288 | $797,227 | - **Operating cash burn decreased** due to favorable working capital changes, especially accounts receivable and accounts payable, despite a larger net loss[175](index=175&type=chunk) - **Investing outflows dropped sharply**, indicating a pause in the company's M&A campaign, with acquisitions of subsidiaries decreasing from **$2,505,121** in 2024 to **$50,000** in 2025[21](index=21&type=chunk)[176](index=176&type=chunk) - **Financing inflows dropped significantly**, indicating reduced reliance on equity and convertible debt, with proceeds from convertible notes decreasing from **$3,722,500** in 2024 to **$987,500** in 2025[21](index=21&type=chunk)[176](index=176&type=chunk) [Notes to the Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, financial health, and specific financial items, including diverse business divisions, a reverse stock split, credit risk, and going concern uncertainty [NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS](index=9&type=section&id=NOTE%201%20-ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) IQSTEL Inc. is a technology company operating in 20 countries with four main business divisions: Telecom, Fintech, Electric Vehicle (EV), and AI-Enhanced Metaverse, with Telecom being the primary revenue source - IQSTEL Inc. operates in **20 countries** with approximately **100 employees**, offering services through four business divisions: Telecom, Fintech, Electric Vehicle (EV), and AI-Enhanced Metaverse[25](index=25&type=chunk) - The **Telecom Division** is the majority of current operations and the sole source of revenue, providing VoIP, SMS, IoT solutions, and international fiber-optic connectivity[26](index=26&type=chunk) - Developing business lines include a Blockchain Platform (Mobile Number Portability Application), Fintech (MasterCard Debit Card, US Bank Account, Mobile App/Wallet for immigrants), Electric Vehicle (electric motorcycles and EV Mid Speed Car development), and AI-Enhanced Metaverse (white-label immersive content services with AI-powered NPCs)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%20-SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's accounting policies, including interim financial statement presentation, consolidation, a retroactive 1-for-80 reverse stock split, and ASC 606 revenue recognition for telecommunication services - The company's consolidated financial statements include its wholly-owned subsidiaries: Etelix.com USA, LLC, SwissLink Carrier AG, ITSBCHAIN, LLC, QGLOBAL SMS, LLC, IoT Labs, LLC, Global Money One Inc, Whisl Telecom LLC, Smartbiz Telecom LLC, and QXTEL LIMITED[34](index=34&type=chunk) - A **1-for-80 reverse stock split** was effective on May 2, 2025, retroactively adjusting all share and per share information in the financial statements[35](index=35&type=chunk)[36](index=36&type=chunk) - Revenue from telecommunication services (usage charges and other recurring charges) is recognized over time in accordance with **ASC 606**, as the customer receives and consumes benefits as the service is performed[51](index=51&type=chunk)[53](index=53&type=chunk)[56](index=56&type=chunk) - The company has significant concentrations of credit risk, with **25 customers representing 86.05% of revenue** for the six months ended June 30, 2025, and approximately **80% of total accounts receivable** concentrated in the top 30 customers[42](index=42&type=chunk)[43](index=43&type=chunk) [NOTE 3 - GOING CONCERN](index=13&type=section&id=NOTE%203%20-%20GOING%20CONCERN) Recurring losses, negative working capital, and insufficient revenue raise substantial doubt about the company's ability to continue as a going concern, necessitating additional capital - The company has suffered recurring losses from operations, negative working capital, and lacks an established revenue source sufficient to cover operating costs, raising substantial doubt about its ability to continue as a going concern[59](index=59&type=chunk) - Future cash requirements relate to ongoing business development, maintaining industry standing, and marketing efforts, potentially leading to a cash shortfall[60](index=60&type=chunk) - The company plans to raise additional capital through future public or private offerings of stock or loans, but there is no assurance such financing will be available on acceptable terms[61](index=61&type=chunk) [NOTE 4 – PREPAID AND OTHER CURRENT ASSETS](index=13&type=section&id=NOTE%204%20%E2%80%93%20PREPAID%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid and other current assets decreased from December 2024 to June 2025, primarily due to a reduction in prepaid expenses | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Prepaid expenses | $1,453,912 | $2,020,288 | | Other receivable | $110,070 | $115,685 | | Tax receivable | $77,589 | $42,673 | | Total | $2,148,774 | $2,684,349 | [NOTE 5 – PROPERTY AND EQUIPMENT](index=14&type=section&id=NOTE%205%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) Net property and equipment slightly increased from December 2024 to June 2025, driven by telecommunication software and other equipment, partially offset by depreciation | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Telecommunication equipment | $709,417 | $709,417 | | Telecommunication software | $784,425 | $690,742 | | Other equipment | $157,441 | $155,935 | | Total property and equipment | $1,651,283 | $1,556,094 | | Accumulated depreciation | $(1,041,890) | $(994,292) | | Net property and equipment | $609,393 | $561,802 | - Depreciation expense for the six months ended June 30, 2025, was **$47,598**, a decrease from **$68,939** in the same period of 2024[65](index=65&type=chunk) [NOTE 6 – INTANGIBLE ASSETS](index=14&type=section&id=NOTE%206%20%E2%80%93%20INTANGIBLE%20ASSETS) Net intangible assets decreased from December 2024 to June 2025, primarily due to amortization of interconnection agreements | Category | June 30, 2025 (Net) | December 31, 2024 (Net) | | :-------------------------- | :------------------ | :-------------------- | | New gas regulator intangible | $99,592 | $99,592 | | Interconnection agreements | $7,098,436 | $7,339,062 | | Total Intangible Assets | $7,198,028 | $7,438,654 | - Amortization expense for the six months ended June 30, 2025, was **$240,626**, compared to **$0** in the same period of 2024[66](index=66&type=chunk) Estimated Future Amortization Expense as of June 30, 2025 | Year | Amount | | :---------------------- | :----------- | | 2025 (6 months remaining) | $240,624 | | 2026 | $481,250 | | 2027 | $481,250 | | 2028 | $481,250 | | 2029 | $481,250 | | Thereafter | $4,932,812 | | **Total** | **$7,098,436** | [NOTE 7 – ACCRUED AND OTHER CURRENT LIABILITIES](index=15&type=section&id=NOTE%207%20%E2%80%93%20ACCRUED%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued and other current liabilities significantly decreased from December 2024 to June 2025, primarily due to a substantial reduction in cost provision | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cost provision | $18,442,141 | $53,939,336 | | Accrued liabilities | $1,329,285 | $928,858 | | Salary payable - management | $172,946 | $420,447 | | Total | $20,572,944 | $55,624,784 | [NOTE 8 - LOANS PAYABLE](index=15&type=section&id=NOTE%208%20-%20LOANS%20PAYABLE) Total loans payable (net of discount) increased from December 2024 to June 2025, with new borrowings from third parties and a decrease in related party loans | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total loans payable (net of discount) | $4,455,875 | $2,455,641 | | Loans payable - related parties | $352,007 | $720,485 | - During the six months ended June 30, 2025, the company borrowed **$3,215,000** from third parties and repaid **$1,260,562**[70](index=70&type=chunk) - The company settled notes payable by issuing **264,980 shares of common stock**, resulting in a **loss on settlement of debt of $801,255**[72](index=72&type=chunk) [NOTE 9 - CONVERTIBLE LOANS](index=16&type=section&id=NOTE%209%20-%20CONVERTIBLE%20LOANS) Total convertible notes (net of discount) decreased from December 2024 to June 2025, primarily due to significant conversions into common stock and cash settlements, despite new borrowings | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total convertible notes | $2,082,673 | $4,876,358 | | Current portion | $2,082,673 | $1,864,432 | | Long-term convertible notes | $0 | $3,011,926 | - During the six months ended June 30, 2025, one note holder converted **$3,222,222** in principal and accrued interest into **694,914 shares of common stock**[76](index=76&type=chunk) - The company settled **$671,870** in principal of convertible notes by paying **$725,000 cash**, resulting in a **loss on settlement of debt of $77,337**[76](index=76&type=chunk) - New convertible notes totaling **$1,113,316** were borrowed in fiscal year 2025, with interest rates ranging from **14% to 24%** and various payment/conversion terms[77](index=77&type=chunk)[78](index=78&type=chunk) [NOTE 10 – STOCK PURCHASE OPTION](index=18&type=section&id=NOTE%2010%20%E2%80%93%20STOCK%20PURCHASE%20OPTION) A Common Stock Purchase Option issued to ADI Funding LLC expired unexercised, having no financial statement impact as the company did not receive the funds - A Common Stock Purchase Option for **$100,000**, granting the right to acquire up to **187,500 shares**, was issued to ADI Funding LLC on January 14, 2025, and expired on July 14, 2025[85](index=85&type=chunk) - The company did not receive the **$100,000**, and the options were not exercised, resulting in no impact on the financial statements as of June 30, 2025[85](index=85&type=chunk) [NOTE 11 – STOCKHOLDERS' EQUITY](index=18&type=section&id=NOTE%2011%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) Common stock outstanding increased due to a reverse stock split adjustment and issuances for compensation, debt conversion, and settlement, with details on various Preferred Stock series - A **1-for-80 reverse stock split** was approved and became effective on May 2, 2025, reducing authorized common stock from **300,000,000 to 3,750,000 shares**[86](index=86&type=chunk) - As of June 30, 2025, **3,504,454 common shares** were issued and outstanding, up from **2,537,209** at December 31, 2024[87](index=87&type=chunk) - **Series A Preferred Stock** holders have **51% of total stockholder voting rights** and participate equally with common stock in distributions[89](index=89&type=chunk) - **Series B Preferred Stock** holders have a **$81 per share liquidation preference**, **24% annual dividends**, no voting rights, and can convert to common stock after 12 months at a **12.5:1 ratio**[90](index=90&type=chunk) - **Series C and D Preferred Stock** have specific liquidation preferences and conversion rights but no voting rights, with no Series C or D shares issued/outstanding as of December 31, 2024[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [NOTE 12 - RELATED PARTY TRANSACTIONS](index=20&type=section&id=NOTE%2012%20-%20RELATED%20PARTY%20TRANSACTIONS) The company has unsecured, non-interest bearing, due-on-demand amounts due from and to related parties, with employment agreements allowing CEO/CFO salary conversion into stock | Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Due from related parties | $659,338 | $630,715 | | Due to related parties | $26,613 | $26,613 | | Management salaries | $549,000 (6 months) | $423,000 (6 months) | | Stock-based compensation | $55,198 (6 months) | $77,665 (6 months) | - Amended employment agreements allow the CEO and CFO to convert accrued salary/bonus into common stock (at a **25% discount to 10-day average VWAP**) or Series B Preferred Stock (at a further **12.5:1 ratio**)[100](index=100&type=chunk) - During the six months ended June 30, 2025, **6,571 shares of Series B Preferred Stock** were issued to settle **$631,500** of CEO and CFO salary payable, resulting in a **$216,981 loss on settlement**[101](index=101&type=chunk) [NOTE 13 – COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%2013%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company has no long-term leases, contracts, or commitments, only short-term facility leases, with rent expense for the six months ended June 30, 2025, being $14,324 - The company has not entered into any long-term leases, contracts, or commitments, only 12-month facility leases[104](index=104&type=chunk) - Rent expense for the six months ended June 30, 2025, was **$14,324**, compared to **$14,028** for the same period in 2024[104](index=104&type=chunk) [NOTE 14 - SEGMENT](index=21&type=section&id=NOTE%2014%20-%20SEGMENT) The company operates in one industry segment (telecommunication services) across three geographic segments (USA, UK, and Switzerland), with the Telecom Division remaining the primary revenue generator - The company operates in one industry segment (telecommunication services) and three geographic segments (USA, UK, Switzerland)[105](index=105&type=chunk) Revenues by Geographic Segment (Six Months Ended June 30) | Segment | 2025 | 2024 | | :---------- | :----------- | :----------- | | USA | $78,290,551 | $99,044,789 | | Switzerland | $10,589,061 | $2,062,716 | | UK | $66,270,084 | $31,474,055 | | Elimination | $(25,333,644) | $(2,530,918) | | **Total** | **$129,816,052** | **$130,050,642** | Gross Profit by Geographic Segment (Six Months Ended June 30) | Segment | 2025 | 2024 | | :---------- | :----------- | :----------- | | USA | $1,608,845 | $2,156,479 | | Switzerland | $460,743 | $342,473 | | UK | $1,959,492 | $1,043,698 | | Elimination | $(222,635) | $0 | | **Total** | **$3,806,445** | **$3,542,650** | [NOTE 15 – SUBSEQUENT EVENTS](index=24&type=section&id=NOTE%2015%20%E2%80%93%20SUBSEQUENT%20EVENTS.) Subsequent events include the potential sale of ItsBchain, acquisition of Globetopper, debt exchange for Series D Preferred Stock, and a non-binding MOU with Cycurion Inc. for AI-powered cybersecurity - The company signed a non-binding MOU to potentially sell its **75% equity interest in ItsBchain, LLC** to Accredited Solutions, Inc. (ASII), with the expiration date extended to September 30, 2025[111](index=111&type=chunk) - An agreement was made to acquire **51% of Globetopper, LLC** for **$700,000** (cash and restricted common shares), with additional payments based on EBITDA growth and a **$1,200,000 investment** over 24 months[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - On July 3, 2025, **$3,546,136 in outstanding debt** was exchanged for **37,110 shares of newly amended Series D Preferred Stock**, which now includes a **12% cumulative dividend**, conversion rights after three months, and a **10% leak-out restriction** on sales[117](index=117&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk)[126](index=126&type=chunk) - A non-binding MOU was signed with Cycurion Inc. to explore a **$1,000,000 stock exchange transaction** and expand strategic partnership in AI-powered cybersecurity services[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting slight revenue decrease but increased gross profit due to synergies, widened operating losses from growth investments, and a focus on consolidation and cash preservation [Overview](index=26&type=section&id=Overview) IQSTEL Inc. is a global technology company with four divisions: telecommunications, EV, fintech, and AI-enhanced metaverse, with Telecom as the main revenue source and a strategy of leveraging synergies and AI - IQSTEL Inc. operates globally in **20 countries** with offices in USA, Argentina, UK, Switzerland, Turkey, and Dubai, maintaining over **603 network interconnections**[128](index=128&type=chunk) - The **Telecom Division** is the main revenue source, offering VoIP, SMS, IoT solutions, and international fiber-optic connectivity through subsidiaries like Etelix and SwissLink Carrier[129](index=129&type=chunk) - Developing business lines include a Blockchain Platform (MNPA), Fintech (MasterCard Debit Card, US Bank Account, Mobile App/Wallet), Electric Vehicle (electric motorcycles, EV Mid Speed Car), and AI-Enhanced Metaverse (white-label immersive content with AI-powered NPCs for dynamic interaction and sales assistance)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Methods of Valuation](index=27&type=section&id=Methods%20of%20Valuation) The company uses non-GAAP measures, Adjusted EBITDA and gross revenue, to evaluate performance, with Adjusted EBITDA excluding non-operational items for core performance and gross revenue measuring operational scale - The company uses non-GAAP financial measures: **Adjusted EBITDA** and **gross revenue**, to supplement GAAP financial information[140](index=140&type=chunk) - **Adjusted EBITDA** excludes interest expenses, taxes, depreciation, amortization, change in fair value of derivative liabilities, loss on settlement of debt, stock-based compensation, FX gains/losses, and other non-recurrent expenses to provide a clearer view of cash-generating potential[143](index=143&type=chunk)[147](index=147&type=chunk)[171](index=171&type=chunk) - **Gross revenue** (revenue before intercompany eliminations) is used to measure the scale of operations, monitor revenue trends, and evaluate sales and marketing effectiveness[144](index=144&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Consolidated revenue slightly decreased, but gross profit increased due to synergies; operating expenses rose from QXTEL consolidation and investments, leading to wider operating and net losses, mainly from holding entity financial expenses [Revenues](index=28&type=section&id=Revenues) Consolidated revenue slightly decreased, but gross revenues (pre-elimination) increased, reflecting organic growth and strategic optimization through intercompany transactions | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenue | $72,183,236 | $78,635,764 | $129,816,052 | $130,050,642 | | Gross Revenues (pre-elimination) | $84,107,739 | $79,434,384 | $155,149,696 | $132,581,560 | | Intercompany eliminations | $(11,924,503) | $(798,620) | $(25,333,644) | $(2,530,918) | - **Consolidated revenues decreased by 8.21%** for the three months and **0.18%** for the six months ended June 30, 2025, compared to the prior year[145](index=145&type=chunk) - **Gross revenues increased by 6%** for the three months and **17%** for the six months ended June 30, 2025, year-over-year, indicating strong organic growth (**100% of total revenue**)[148](index=148&type=chunk)[150](index=150&type=chunk) [Cost of Revenue](index=29&type=section&id=Cost%20of%20Revenue) Total cost of revenue decreased, aligning with revenue trends, while QXTEL's inclusion and portfolio restructuring led to significant intercompany transactions for cost efficiency | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Cost of Revenue | $70,311,749 | $76,472,140 | $126,009,607 | $126,507,992 | | Cost of Revenue (pre-elimination) | $82,025,514 | $77,270,760 | $151,120,616 | $129,038,910 | | Intercompany eliminations | $(11,713,765) | $(798,620) | $(25,111,009) | $(2,530,918) | - **Cost of revenue decreased by 8.05%** for the three months and **0.39%** for the six months ended June 30, 2025, compared to the prior year[151](index=151&type=chunk) - The inclusion of QXTEL and portfolio restructuring among subsidiaries resulted in a significant volume of intercompany transactions, aimed at optimizing routing and cost efficiency[154](index=154&type=chunk) [Gross Margin](index=30&type=section&id=Gross%20Margin) Gross profit increased by 7.45% for the six months ended June 30, 2025, reaching $3,806,445, with the consolidated gross margin percentage rising to 2.93% due to intercompany synergies | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Gross profit | $3,806,445 | $3,542,650 | | Consolidated Gross Margin % | 2.93% | 2.72% | - **Gross profit increased by 7.45%** for the six months ended June 30, 2025, compared to the same period in 2024[156](index=156&type=chunk)[157](index=157&type=chunk) - The increase in gross profit and margin is attributed to commercial and operational synergies achieved through intercompany collaboration and integrated service portfolio[157](index=157&type=chunk) [Operating Expenses](index=30&type=section&id=Operating%20Expenses) Total operating expenses, primarily general and administrative costs, increased by 24.55% for the six months ended June 30, 2025, due to QXTEL's full consolidation and investments in technology and salaries | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Total Operating Expense | $5,066,900 | $4,068,205 | | Salaries, wages and benefits | $2,067,038 | $1,143,692 | | Technology | $692,509 | $542,140 | | Professional fees | $562,834 | $1,064,047 | | Depreciation and amortization | $288,224 | $68,939 | - **Operating expenses increased by 24.55%** for the six months ended June 30, 2025, compared to the same period in 2024[158](index=158&type=chunk) - The increase is largely due to the full consolidation of QXTEL's expenses for the entire six-month period in 2025, compared to only three months in 2024, and investments in technology and salaries[159](index=159&type=chunk)[160](index=160&type=chunk) [Operating Income/Loss](index=31&type=section&id=Operating%20Income%2FLoss) The operating loss widened to $1,260,455 for the six months ended June 30, 2025, reflecting increased operating expenses from development and growth initiatives, though the Telecom Division remained profitable | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Consolidated Operating loss | $(656,229) | $(342,103) | $(1,260,455) | $(525,555) | | Telecom Division Operating income | $465,911 | $424,746 | $732,564 | $909,370 | | IQSTEL Operating loss | $(1,121,703) | $(762,731) | $(1,991,149) | $(1,420,141) | - The operating loss increased due to an overall rise in operating expenses associated with ongoing investments in development and growth initiatives[162](index=162&type=chunk) - The **Telecom Division continued to generate positive Operating Income**, serving as a growth engine for the development and expansion of new business lines[163](index=163&type=chunk)[164](index=164&type=chunk) [Other Expenses/Other Income](index=33&type=section&id=Other%20Expenses%2FOther%20Income) Other expenses increased for both the three and six months ended June 30, 2025, primarily due to a higher loss on settlement of debt and increased interest expenses | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total other expense | $(1,600,989) | $(1,556,509) | $(2,120,649) | $(1,953,273) | | Loss on settlement of debt | $(878,592) | $0 | $(878,592) | $(102,660) | | Interest expense | $(459,118) | $(496,080) | $(990,844) | $(861,554) | - The increase in other expenses for the six months ended June 30, 2025, is mainly due to a **higher loss on settlement of debt** and **increased interest expenses**[166](index=166&type=chunk) [Net Loss](index=33&type=section&id=Net%20Loss) The net loss widened to $3,493,375 for the six months ended June 30, 2025, largely influenced by significant interest and other financial expenses at the IQSTEL holding entity level | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Consolidated Net loss | $(2,348,914) | $(1,963,887) | $(3,493,375) | $(2,544,103) | | Telecom Division Net income (loss) | $321,321 | $(809,767) | $568,609 | $(580,216) | | IQSTEL Net loss | $(2,669,798) | $(762,731) | $(4,060,114) | $(1,420,141) | - The net loss is significantly impacted by **high interest and other financial expenses** incurred by the IQSTEL holding entity, related to funds borrowed for acquisitions like QXTEL Limited[168](index=168&type=chunk) - The **Telecom Division**, the primary revenue-generating division, maintains a **positive operating income**, supporting the development of new business lines[169](index=169&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had negative working capital, with improved operating cash flow but decreased investing and financing inflows, indicating a shift to consolidation and non-cash financing | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Current Assets | $35,555,030 | $63,015,046 | | Total Current Liabilities | $36,843,884 | $63,821,196 | | Working Capital | $(1,288,854) | $(806,150) | - Operating activities used **$1,649,283 in cash** for the six months ended June 30, 2025, a decrease from **$3,151,688** used in the same period of 2024, despite a larger net loss[175](index=175&type=chunk) - Investing activities used **$173,812**, down from **$2,720,197**, indicating a pause in M&A. Financing activities provided **$1,351,026**, down from **$5,306,444**, showing reduced reliance on equity and convertible debt[176](index=176&type=chunk) - The company is shifting from aggressive expansion to consolidation and cash preservation, relying heavily on working capital management and non-cash financing tools[177](index=177&type=chunk) [Inflation](index=35&type=section&id=Inflation) Management believes that inflation did not have a material effect on the company's results of operations during the six-month period ended June 30, 2025 - Inflation did not have a material effect on the company's results of operations during the six-month period ended June 30, 2025[180](index=180&type=chunk) [Critical Accounting Polices](index=35&type=section&id=Critical%20Accounting%20Polices) The company's critical accounting policies, involving significant management judgment and estimates, include allowance for doubtful accounts, valuation of long-lived assets, and income taxes - Critical accounting policies include allowance for doubtful accounts, valuation of long-lived assets, and income taxes, which require significant management judgment and estimates[182](index=182&type=chunk) [Off Balance Sheet Arrangements](index=35&type=section&id=Off%20Balance%20Arrangements) As of June 30, 2025, the company had no off-balance sheet arrangements - As of June 30, 2025, there were no off-balance sheet arrangements[183](index=183&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) The company does not expect the adoption of recently issued accounting pronouncements to significantly impact its financial statements, except for ASU 2024-03, effective January 1, 2027 - The company is currently evaluating the impact of adopting **ASU 2024-03**, which requires disaggregated disclosure of income statement expenses for public business entities, effective January 1, 2027[57](index=57&type=chunk) - The adoption of other recently issued, but not yet effective, accounting pronouncements is not expected to have a material impact on the company's financial statements[58](index=58&type=chunk)[184](index=184&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, IQSTEL Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, IQSTEL Inc. is not required to provide quantitative and qualitative disclosures about market risk[185](index=185&type=chunk) [Item 4: Controls and Procedures](index=35&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to inadequate segregation of duties, ineffective risk assessment, and insufficient written policies - The CEO and CFO concluded that **disclosure controls and procedures were ineffective** as of June 30, 2025[188](index=188&type=chunk) - Material weaknesses identified include inadequate segregation of duties, ineffective risk assessment, and insufficient written policies and procedures for accounting and financial reporting[188](index=188&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the six-month period ended June 30, 2025[192](index=192&type=chunk) PART II – OTHER INFORMATION [Item 1: Legal Proceedings](index=37&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not a party to any material pending legal proceedings, nor is it aware of any such proceedings involving its officers, directors, or significant beneficial holders - The company is not a party to any material pending legal proceeding[194](index=194&type=chunk) [Item 1A: Risk Factors](index=37&type=section&id=Item%201A%3A%20Risk%20Factors) The company refers readers to the "Risk Factors" section in its Annual Report on Form 10-K for the year ended December 31, 2024, for a comprehensive discussion of risks - Readers are directed to the "Risk Factors" section in the Annual Report on Form 10-K for the year ended December 31, 2024, for a comprehensive list of risks[195](index=195&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the six months ended June 30, 2025, the company issued 967,245 shares of common stock without registration, primarily for compensation, debt conversion, and settlement Common Stock Issued (Six Months Ended June 30, 2025) | Purpose | Shares Issued | Value | | :-------------------------------- | :------------ | :------------ | | Compensation to directors | 3,750 | $55,198 | | Conversion of debt | 694,914 | $3,227,904 | | Settlement of debt | 264,980 | $1,886,658 | | Common stock payable | 3,563 | $82,194 | | Reverse stock split adjustment | 38 | — | | **Total** | **967,245** | **$5,251,954** | [Item 3: Defaults Upon Senior Securities](index=37&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[197](index=197&type=chunk) [Item 4: Mine Safety Disclosures](index=37&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[197](index=197&type=chunk) [Item 5: Other Information](index=37&type=section&id=Item%205%3A%20Other%20Information) There is no other information to report under this item - There is no other information to report under this item[197](index=197&type=chunk) [Item 6: Exhibits](index=38&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and XBRL formatted financial statements - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[198](index=198&type=chunk) - The financial statements are provided in Extensible Business Reporting Language (XBRL) format[198](index=198&type=chunk)

Core Insights - IQSTEL Inc. reported preliminary revenue of approximately $35 million for July 2025, exceeding its $400 million annualized revenue run rate five months ahead of schedule [1] - The company projects $210 million in revenue for the second half of 2025, aiming for a total of $340 million for the full year [2] - IQSTEL has grown from $13 million in revenue in 2018 to nearly $300 million in 2024, with a target of reaching $1 billion in revenue by 2027 [3][10] Financial Performance - The company has reduced nearly $7 million in debt since its NASDAQ uplisting, enhancing its balance sheet and capacity for reinvestment [4] - Of the $7 million debt reduction, $3.5 million was converted into preferred shares, indicating confidence from debt holders in the company's strategic direction [5] - IQSTEL is upgrading its accounting systems for monthly reporting of revenue and EBITDA, introducing EBITDA per share as a key performance metric [6] Strategic Initiatives - IQSTEL signed a Memorandum of Understanding (MOU) with Cycurion Inc. to integrate high-tech, high-margin services into its business platform [7] - The collaboration aims to deliver AI-driven cybersecurity solutions to telecom operators, governments, and enterprises, supporting IQSTEL's goal of becoming a leader in the industry [8] - The company is actively pursuing acquisitions that could add $10 million in EBITDA, with a goal of achieving a $15 million EBITDA run rate by 2026 [6] Long-term Vision - IQSTEL's strategies are designed for sustained growth beyond the current planning horizon, focusing on increased revenue per share and net shareholders' equity [9] - Achieving $1 billion in revenue by 2027 is expected to close the valuation gap compared to sector leaders, unlocking substantial shareholder value [10] - The company operates in 21 countries, providing advanced solutions across Telecom, Fintech, and Cybersecurity, with a forecast of $340 million in revenue for FY-2025 [11]

Core Insights - IQSTEL Inc. and Cycurion Inc. have signed a Memorandum of Understanding (MOU) to become mutual equity partners through a planned $1 million stock exchange, enhancing shareholder value by distributing half of the exchanged shares as dividends [1][5][6] - The collaboration aims to create a strong presence in AI-driven cybersecurity for the global telecommunications industry, leveraging both companies' strengths [1][11][15] Investment and Shareholder Value - The stock exchange is designed to unlock shareholder value and is strategically timed to mitigate potential disruptions from U.S. tariffs [2][6] - Each company will issue $1 million worth of common stock to the other, with share distribution based on the lower of the Nasdaq Official Closing Price on the day before the agreement or the average price over the preceding five trading days [4][5] Strategic Collaboration - The agreement integrates the AI-focused Research and Development departments of both companies, aiming to deliver next-generation cybersecurity solutions for telecom, government, and enterprise clients [3][8] - The partnership is expected to create cross-selling opportunities, allowing IQSTEL to introduce its services to Cycurion's customer base and vice versa [7][12] Future Growth and Development - The MOU outlines an initial 60-day exploratory period, with plans to execute a definitive agreement within 30 days, focusing on further collaboration opportunities such as joint ventures and expanded R&D initiatives [13][14] - Both companies are committed to pooling resources and aligning strategic focus to maximize value for their combined shareholder base [11][14] Company Profiles - IQSTEL specializes in telecommunications, fintech, AI, and cybersecurity, with a goal to reach $1 billion in annual revenue by 2027 [16][18] - Cycurion focuses on IT cybersecurity solutions and has strong relationships within government and institutional sectors, enhancing its market presence [17][18]

Core Insights - ONAR Holding Corporation is expanding its strategic partnership with IQSTEL, Inc. to develop an AI-driven multi-agentic operating infrastructure, aiming to transform agency operations and client service delivery [1][2][5] - The initiative is designed to enhance human potential through AI, focusing on improving efficiency and outcomes for clients rather than replacing human roles [3][8] Company Overview - ONAR is a marketing technology company that provides performance-driven marketing services, targeting middle-market and growth-stage companies [9] - IQSTEL is a multinational technology company with a forecasted revenue of $340 million for FY-2025, aiming to become a $1 billion tech-driven enterprise by 2027 [10] Partnership Details - The expanded partnership follows a successful rebranding initiative in October 2024, establishing a unique ecosystem where every ONAR employee and client account will have dedicated AI agents [2][5] - The collaboration is expected to create unprecedented value for clients by combining IQSTEL's AI capabilities with ONAR's marketing expertise [5] AI Initiative Phases - Phase 1 focuses on operational streamlining and client intelligence, utilizing AI to centralize procedures and enhance decision-making [6] - Phase 2 aims at strategic enablement, where digital teams will leverage AI for actionable insights and high-impact strategies [6] - Phase 3 involves creative augmentation, enabling rapid content production while maintaining brand consistency [6] Expected Benefits - The AI system will automate repetitive tasks, enhance quality assurance, and identify optimization opportunities in real-time [7] - The initiative is projected to reduce operational costs and labor expenses while allowing for personalized service delivery without proportional headcount increases [8]

Latest Deployment of AIRWEB Underscores IQSTEL's Expansion into High-Tech, High-Margin Verticals — Driving Forward Its $1 Billion Revenue Strategy "This is much more than a software deployment — it's a strategic partnership," said Leandro Iglesias, President and CEO of IQSTEL. "ONAR knows our capabilities well, having worked closely with us as a marketing partner. After witnessing the power of IQSTEL Intelligence — through AIRWEB.ai, IQ2Call.ai, and RealityBorder.com — they've chosen to deploy our AI techno ...

Core Insights - IQSTEL Inc. has achieved a significant milestone by uplisting to NASDAQ without raising funds, demonstrating strong financial discipline and organic growth [4][5] - The company is on track to reach a nearly $400 million annual run rate by Q3 2025, up from $13 million in 2018, reflecting a robust growth strategy [6] - IQSTEL aims for $1 billion in annual revenue by 2027, projecting $20–30 million in EBITDA at that level, which aligns with industry peers [12][13] Financial Performance - The company is generating positive EBITDA and net income in its operating subsidiaries, with plans to report both revenue and EBITDA to reflect increasing profitability [7] - Forecasted revenue for FY-2025 is $340 million, reinforcing the trajectory towards the $1 billion goal [19] Business Segments - Approximately 80% of current revenue comes from telecom services, while fintech contributes 20%, with fintech's share expected to grow [8] - Recent AI-powered service launches include IQ2Call.ai and AIRWEB.ai, which are already generating revenue [9] Strategic Acquisitions - The acquisition of Globetopper in July 2025 is expected to add $60–70 million in annual revenue and positive EBITDA, with plans to grow its contribution to over $100 million [10][11] - The company has identified additional acquisition targets that will enhance EBITDA and reinforce its core capabilities [11] Shareholder Engagement - The management team is actively engaging with institutional investors and family offices to enhance shareholder value without issuing new shares [16] - The company emphasizes transparency and consistent communication with its over 20,000 shareholders [15]

Core Insights - IQSTEL Inc. has achieved significant milestones in its first two months on NASDAQ, including accelerated growth, a strengthened balance sheet, and the launch of high-margin technology products [1][2][3] Financial Performance - The company reported preliminary unaudited revenue of $128.8 million for the first half of 2025, with June contributing $27.3 million, indicating strong commercial momentum [4] - IQSTEL expects to surpass a $400 million revenue run rate during Q3, ahead of its original year-end target, driven by the acquisition of Globetopper, which is projected to add $5 to $6 million per month [5][8] Strategic Initiatives - The launch of AI-powered platforms like IQ2Call.ai is part of the company's strategy to build a scalable, high-margin business model, targeting the $750 billion global call center industry [12][6] - The acquisition of Globetopper is expected to contribute $60–70 million in annual revenue and is integral to relaunching the fintech division [8][9] Debt Management - The company has reduced its debt by $6.9 million, effectively eliminating around $2 of debt per share, which enhances shareholder value and reflects investor confidence in its long-term vision [15] Market Recognition - IQSTEL has gained independent analyst coverage from Hills Research, which initiated coverage with a price target range of $18 to $22 per share, indicating growing institutional awareness [10] Future Outlook - The company aims to achieve a revenue target of $1 billion by 2027, supported by a healthy balance sheet and a pipeline of high-tech, high-margin products [19][18]