Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 expressions. 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 provisions. 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.

Overview

IQSTEL Inc. (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 10 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 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 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. Additionally, Globetopper LLC (www.globetopper.com) our most recent acquisitions, plays a strategic role in supporting the expansion and integration of our business divisions. Through its 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 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. These 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 SEC.

Methods of Valuation

We use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include: Adjusted EBITDA and gross revenue.

The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are "non-GAAP financial measures" as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company's core operating performance and provide greater transparency into the Company's results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company's financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company's GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.

Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity. It is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. 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:

	•	Change in Fair Value of Derivative Liabilities: These adjustments reflect unrealized gains or losses that are non-operational and subject to market volatility.
	•	Loss on Settlement of Debt: This represents non-recurring expenses associated with specific financing activities and does not impact ongoing business operations.
	•	Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives.

The Company believes Adjusted EBITDA offers a clearer view of the cash-generating potential of its business, excluding non-recurring, non-cash, and non-operational impacts. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes, non-cash and certain other items that may vary for different companies for reasons unrelated to overall operating performance and also believes this information is useful to investors.

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

Results of Operations

Revenues

Our total revenue reported for the three months ended 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 nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024:

		Revenue for the Three Months Ended September 30,								Revenue for the Nine Months Ended September 30,
Company		2025				2024				2025				2024
IQSTEL Inc		$	51,000			$	-			$	152,511			$	-
Etelix.com USA, LLC			10,381,880				9,781,863				25,852,156				43,124,776
SwissLink Carrier AG			10,692,833				1,048,201				21,281,894				3,157,073
QGlobal LLC			334,622				290,256				1,359,003				1,119,332
IoT Labs LLC			33,871,983				21,738,854				87,586,615				70,525,343
Smartbiz Telecom			3,311,154				4,145,464				10,042,099				17,321,777
Whisl Telecom			979,202				648,316				2,228,009				3,558,314
QXTEL Limited			44,651,352				17,202,173				110,921,435				48,676,228
GlobeTopper LLC			14,290,694				-				14,290,694				-
		$	118,564,720			$	54,855,127			$	273,714,416			$	187,482,843
Intercompany eliminations			(15,697,167	)			(605,513	)			(41,030,811	)			(3,136,431	)
		$	102,867,553			$	54,249,614			$	232,683,605			$	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 periods. 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 to optimize operations across subsidiaries by leveraging more efficient routing alternatives for our voice and SMS services, cost reductions, and improved service delivery. This synergy among our entities strengthens our position in the market and contributes to enhanced gross margin results.

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, 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 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 nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024:

		Cost of Revenue for the Three Months Ended September 30,								Cost of Revenue for the Nine Months Ended September 30,
Company		2025				2024				2025				2024
IQSTEL Inc		$	24,870			$	-			$	24,870			$	-
Etelix.com USA, LLC			10,164,248				9,628,111				25,324,055				42,690,403
SwissLink Carrier AG			10,493,612				822,313				20,621,929				2,542,555
QGlobal LLC			175,711				236,530				879,482				817,913
IoT Labs LLC			33,482,896				21,352,526				87,015,654				69,379,146
Smartbiz Telecom			3,077,831				3,894,823				9,392,303				16,622,745
Whisl Telecom			878,229				502,365				1,849,128				2,992,458
QXTEL Limited			43,389,711				16,165,751				107,700,303				46,596,109
GlobeTopper LLC			13,979,041				-				13,979,041				-
		$	115,666,149			$	52,602,419			$	266,786,765			$	181,641,329
Intercompany eliminations			(15,539,311	)			(372,724	)			(40,650,320	)			(2,903,642	)
		$	100,126,838			$	52,229,695			$	226,136,445			$	178,737,687

Our cost of revenue 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, 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.

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.

Gross Margin

Our gross margin, which is simply the difference between 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 by 58.91% for the three months ended September 30, 2025, compared to the same period in 2024. For 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,
		2025				2024				2025				2024
Salaries, wages and benefits		$	1,381,090			$	1,207,781			$	3,448,128			$	2,351,470
Technology			360,197				337,042				1,052,706				879,182
Professional fees			282,228				8,769				845,061				1,072,816
Legal and regulatory			107,539				28,581				308,995				180,221
Travel and events			24,282				70,268				206,793				167,757
Public cost			-				8,268				118,850				93,646
Advertising			606,627				157,787				1,243,894				659,784
Bank services and fees			49,199				49,800				84,464				171,366
Depreciation and amortization			161,918				35,122				450,142				104,061
Office, facility and other			81,595				121,378				301,000				311,512
Insurance			5,980				19,856				7,786				41,576
Financial Expenses			-				43,772				-				43,772
Bad debt expense			-				-				4,536				1,801
		$	3,060,655			$	2,044,652			$	8,072,355			$	6,035,192
Stock-based compensation			239,143				31,820				294,343				109,485
Total Operating Expense		$	3,299,798			$	2,076,472			$	8,366,698			$	6,144,677

When looking at the numbers by subsidiary, we have 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,
		2025				2024				Difference
IQSTEL Inc		$	3,147,692			$	2,024,621			$	1,123,071
Etelix.com USA, LLC			347,832				297,124				50,708
SwissLink Carrier AG			665,984				701,427				(35,443	)
ItsBchain			1,594				14,582				(12,988	)
QGlobal LLC			268,472				405,275				(136,803	)
IoT Labs LLC			219,282				190,179				29,103
Global Money One			729				550				179
Smartbiz Telecom			780,398				684,061				96,337
Whisl Telecom			265,508				645,639				(380,131	)
QXTEL Limited			2,473,764				1,414,008				1,059,756
GlobeTopper LLC			233,339				-				233,339
Intercompany Elimination			(37,896	)			(232,789	)			194,893
		$	8,366,698			$	6,144,677			$	2,222,021

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, 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 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.

Operating Income/Loss

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 of revenue for the Company, continued to generate positive Operating Income. Meanwhile, our pre-revenue companies are operating with minimal expenses, focused solely on completing product and service development prior to their market launch.

A comparison of the tables below highlights the significant progress of our Telecom Division, as evidenced by the increase in revenue, gross profit, and operating income for both the three- and 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 development and expansion of new business lines.

		Telecom Division								Fintech Division								Pre-revenue companies								IQSTEL								Consolidated
		Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025
Revenues			88,525,859				218,240,400				14,290,694				14,290,694				-				-				51,000				152,511				102,867,553				232,683,605
Cost of revenue			86,122,927				212,132,534				13,979,041				13,979,041				-				-				24,870				24,870				100,126,838				226,136,445
Gross profit			2,402,932				6,107,866				311,653				311,653				-				-				26,130				127,641				2,740,715				6,547,160
Operating expenses
General and administration			2,010,974				4,983,344				233,339				233,339				453				2,323				1,055,032				3,147,692				3,299,798				8,366,698
Total Operating Expenses			2,010,974				4,983,344				233,339				233,339				453				2,323				1,055,032				3,147,692				3,299,798				8,366,698
Operating income/(loss)			391,958				1,124,522				78,314				78,314				(453	)			(2,323	)			(1,028,902	)			(3,020,051	)			(559,083	)			(1,819,538	)

		Telecom Division								Fintech Division								Pre-revenue companies								IQSTEL								Consolidated
		Three Months Ended Sept 30, 2024				Nine Months Ended Sept 30, 2024				Three Months Ended Sept 30, 2024				Nine Months Ended Sept 30, 2024				Three Months Ended Sept 30, 2024				Nine Months Ended Sept 30, 2024				Three Months Ended Sept 30, 2024				Nine Months Ended Sept 30, 2024				Three Months Ended Sept 30, 2024				Nine Months Ended Sept 30, 2024
Revenues			54,249,614				184,346,412				-				-				-				-				-				-				54,249,614				184,346,412
Cost of revenue			52,229,695				178,737,687				-				-				-				-				-				-				52,229,695				178,737,687
Gross profit			2,019,919				5,608,725				-				-				-				-				-				-				2,019,919				5,608,725
Operating expenses
General and administration			1,471,644				4,104,924				-				-				348				15,132				604,480				2,024,621				2,076,472				6,144,677
Total Operating Expenses			1,471,644				4,104,924				-				-				348				15,132				604,480				2,024,621				2,076,472				6,144,677
Operating income/(loss)			548,275				1,503,801				-				-				(348	)			(15,132	)			(604,480	)			(2,024,621	)			(56,553	)			(535,952	)

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.

Net Loss

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 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								IQSTEL								Consolidated
		Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025				Three Months Ended Sept 30, 2025				Nine Months Ended Sept 30, 2025
Revenues			88,525,859				218,240,400				14,290,694				14,290,694				-				-				51,000				152,511				102,867,553				232,683,605
Cost of revenue			86,122,927				212,132,534				13,979,041				13,979,041				-				-				24,870				24,870				100,126,838				226,136,445
Gross profit			2,402,932				6,107,866				311,653				311,653				-				-				26,130				127,641				2,740,715				6,547,160
Operating expenses
General and administration			2,010,974				4,983,344				233,339				233,339				453				2,323				1,055,032				3,147,692				3,299,798				8,366,698
Total Operating Expenses			2,010,974				4,983,344				233,339				233,339				453				2,323				1,055,032				3,147,692				3,299,798				8,366,698
Operating income/(loss)			391,958				1,124,522				78,314				78,314				(453	)			(2,323	)			(1,028,902	)			(3,020,051	)			(559,083	)			(1,819,538	)
Other income (expense)			(16,287	)			(67,971	)			(1,823	)			(1,823	)			-				-				(1,676,757	)			(3,745,722	)			(1,694,867	)			(3,815,516	)
Net income (loss) before income taxes			375,671				1,056,551				76,491				6,491				(453	)			(2,323	)			(2,705,659	)			(6,765,773	)			(2,253,950	)			(5,635,054	)
Income taxes			(71,919	)			(184,190	)			-				-				-				-				-				-				(71,919	)			(184,190	)
Net income (loss)			303,752				872,361				76,491				76,491				(453	)			(2,323	)			(2,705,659	)			(6,765,773	)			(2,325,869	)			(5,819,244	)
Depreciation and Amortization			161,918				450,142				-				-				-				-				-				-				161,918				450,142
Interest expense			8,952				26,373				2,191				2,191				-				-				330,868				1,304,260				342,011				1,332,824
FX Gains/Losses			(12,144	)			(45,435	)			(7	)			(7	)			-				-				(504	)			(1,501	)			(12,655	)			(46,943	)
Loss on settlement of debt			-				-				-				-				-				-				1,345,889				2,224,481				1,345,889				2,224,481
Loss on settlement of salary payable			-				-				-				-				-				-				-				216,981				-				216,981
Stock-based compensation			-				-				-				-				-				-				15,947				294,343				15,947				294,343
Other non-recurring			49,437				190,421				-				-				-				-				-				-				49,437				190,421
Taxes			92,599				216,966				-				-				-				-				-				-				92,599				216,966
Adjusted EBITDA			604,514				1,710,828				78,675				78,675				(453	)			(2,323	)			(1,013,459	)			(2,727,209	)			(330,723	)			(940,029	)

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 EBITDA; 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, 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 30, 2024. 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 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. Financing 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 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 and debt and/or equity financing arrangements to strengthen our liquidity and capital resources. We also plan to seek additional financing in public and private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Inflation

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, 2025.

Critical Accounting Polices

A "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 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, 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, 2025, there were no off-balance sheet arrangements.

Recent Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position, or cash flow.