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iQSTEL Inc

iQSTEL IncIQSTEarnings & Financial Report

Nasdaq

What changed in iQSTEL Inc's 10-K — 2022 vs 2023

Top changes in iQSTEL Inc's 2023 10-K

183 paragraphs added · 86 removed · 69 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

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Once this certification is obtained, we will begin manufacturing the first units for sale to the public. The Metaverse initiative , consist in a platform to offer our telecommunication carrier clients a white label solution enabling them to interact with their customers (end users, and enterprises) through the metaverse.
Once this certification is obtained, we will begin manufacturing the first units for sale to the public. 6 The Metaverse initiative , consist in a platform to offer our telecommunication carrier clients a white label solution enabling them to interact with their customers (end users, and enterprises) through the metaverse.
Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases. Money Transmitter and Payment Instrument Laws and Regulations The consumer payment services offerings, prepaid debit cards, remittances, Top Up, are industries heavily regulated.
Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases. Money Transmitter and Payment Instrument Laws and Regulations 7 The consumer payment services offerings, prepaid debit cards, remittances, Top Up, are industries heavily regulated.
However, since the end of 2022 we have expanded the list of certified suppliers and at this time we have a minimum inventory of parts, pieces and finished products to start the marketing process of both devices. New businesses subsidiaries: ItsBchain LLC is a 75% owned subsidiary of iQSTEL Inc.
However, since the end of 2022 we have expanded the list of certified suppliers and at this time we have a minimum inventory of parts, pieces and finished products to start the marketing process of both devices. 5 New businesses subsidiaries: ItsBchain LLC is a 75% owned subsidiary of iQSTEL Inc.
On November 12, 2020, the Company entered into partnership Agreement (the “Agreement”) with PAYMENT VIRTUAL MOBILE SOLUTIONS, LLC (PayVMS), a Delaware Corporation regarding the incorporation of Global Money One Inc, in which iQSTEL owns 75% of the shares and PayVMS owns the remaining 25%.
On November 12, 2020, the Company entered into partnership Agreement with PAYMENT VIRTUAL MOBILE SOLUTIONS, LLC (PayVMS), a Delaware Corporation regarding the incorporation of Global Money One Inc, in which iQSTEL owns 75% of the shares and PayVMS owns the remaining 25%.
On April 15, 2020, the Company entered into a Company Acquisition Agreement (the “Agreement”) with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (“loT Labs”). The loT Labs’ principal business activity is the sale of SMS between USA and Mexico.
On April 15, 2020, the Company entered into a Company Acquisition Agreement with Francisco Bunt regarding the acquisition of 51% of the shares in loT Labs, LLC (“loT Labs”). The loT Labs’ principal business activity is the sale of SMS between USA and Mexico.
On June 1, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Smartbiz Telecom LLC (“Smartbiz”).
On June 1, 2022, the Company entered into a Company Acquisition Agreement regarding the acquisition of 51% of the shares in Smartbiz Telecom LLC (“Smartbiz”). 8
This represents an increase of 268% year over year. 5 Table of Contents Telecom Subsidiaries for SMS services : QGlobal SMS LLC is a 100% owned subsidiary of iQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specialized in international and domestic SMS termination.
This represents an increase of 56% year over year. Telecom Subsidiaries for SMS services : QGlobal SMS LLC is a 100% owned subsidiary of iQSTEL Inc. QGlobal SMS is a USA based company founded in 2020 specialized in international and domestic SMS termination.
Number portability is executed and supervised by a third independent party, who act as a data-base administrator and has the responsibility to guarantee all transactions requested by the customers will be completed and his/her phone number will be ported from Carrier A to Carrier B.
Number portability is executed and supervised by a third independent party, who act as a data-base administrator and has the responsibility to guarantee all transactions requested by the customers will be completed and his/her phone number will be ported from Carrier A to Carrier B. In the countries under our analysis there are 11 different data-base administrators.
Both companies, IoT Labs and QGlobal carried 8.5 billion SMS and short codes in year 2022 compared to 7.1 billion in year 2021. This represents an increment of 1.4 billion SMS year over year or 19.72%. IoT Labs is also responsible for the development of our award-winning Internet of Things devices SmartGas and SmartTank.
Both companies, IoT Labs and QGlobal carried 11.3 billion SMS and short codes in year 2022 compared to 8.5 billion in year 2022. This represents an increment of 2.8 billion SMS year over year or 32.94%. IoT Labs is also responsible for the development of our award-winning Internet of Things devices SmartGas and SmartTank.
This particular license is named a Section 214 license, after the section in the Communications Act of 1934. 7 Table of Contents Etelix.com USA, LLC was authorized by the Federal Communications Commission to provide facility-based services in accordance with section 63.18(e)(1) of the Commission’s rules; and also to provide resale services in accordance with section 63.18(e)(2) under license number ITC-214-20090625-00303.
Etelix.com USA, LLC was authorized by the Federal Communications Commission to provide facility-based services in accordance with section 63.18(e)(1) of the Commission’s rules; and also to provide resale services in accordance with section 63.18(e)(2) under license number ITC-214-20090625-00303.
In the countries under our analysis there are 11 different data-base administrators. 6 Table of Contents In terms of dollar value, the number portability market in the countries under our analysis is estimated over $86 million per year. This is based in the actual cost carriers and/or customers have to pay to get the lines ported.
In terms of dollar value, the number portability market in the countries under our analysis is estimated over $86 million per year. This is based in the actual cost carriers and/or customers have to pay to get the lines ported.
Regulation of Telecom by the Federal Communications Commission Telecommunication License Anyone seeking to conduct telecommunications business where the telecommunication services will transpire between the United States of America and an international destination must obtain a license from the Federal Communications Commission (FCC).
Regulation of Telecom by the Federal Communications Commission Telecommunication License Anyone seeking to conduct telecommunications business where the telecommunication services will transpire between the United States of America and an international destination must obtain a license from the Federal Communications Commission (FCC). This particular license is named a Section 214 license, after the section in the Communications Act of 1934.
Operating Subsidiaries iQSTEL's mission is to serve basic human needs in today's modern world by making the necessary tools accessible regardless of race, ethnicity, religion, socioeconomic status, or identity. iQSTEL recognizes that in today’s modern world, the pursuit of the human hierarchy of needs (physiological, safety, relationship, esteem, and self-actualization) is marginalized without access to ubiquitous communications, the freedom of virtual banking, clean affordable mobility and information and content. iQSTEL has 4 Business Divisions delivering accessibly to the necessary tools in today's pursuit of basic human needs: 1) Telecommunications (communications). 2) Fintech (financial freedom). 3) Electric Vehicles (mobility). 4) Metaverse.
The information contained on our websites is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered part of this or any other report filed with the SEC. 3 Operating Subsidiaries iQSTEL's mission is to serve basic human needs in today's modern world by making the necessary tools accessible regardless of race, ethnicity, religion, socioeconomic status, or identity. iQSTEL recognizes that in today’s modern world, the pursuit of the human hierarchy of needs (physiological, safety, relationship, esteem, and self-actualization) is marginalized without access to ubiquitous communications, the freedom of virtual banking, clean affordable mobility and information and content. iQSTEL has 4 Business Divisions delivering accessibly to the necessary tools in today's pursuit of basic human needs: 1) Telecommunications (communications). 2) Fintech (financial freedom). 3) Electric Vehicles (mobility). 4) Metaverse.
This consortium is led by Orange Telecom and Orbitel, where Etelix participates with 10 Gbps of capacity. The bulk of this contract was sold to Millicom (Tigo Costa Rica). This capacity considerably enhanced Tigo’s ability to deploy world-class 4G services to its customers in Costa Rica. SwissLink Carrier AG is a 51% owned subsidiary of iQSTEL Inc.
The bulk of this contract was sold to Millicom (Tigo Costa Rica). This capacity considerably enhanced Tigo’s ability to deploy world-class 4G services to its customers in Costa Rica. SwissLink Carrier AG is a 51% owned subsidiary of iQSTEL Inc.
(4) Global DIDs and (5) Global Toll-Free Numbers. Smartbiz Telecom LLC . Is a 51% owned subsidiary of iQSTEL Inc. acquired in June 2022. Smartbiz is an US based Company that provides international voice termination to niche markets. With this acquisition iQSTEL is expanding its telecommunication services offer to markets the company was not serving before.
(4) Global DIDs and (5) Global Toll-Free Numbers. Smartbiz Telecom LLC . Is a 51% owned subsidiary of iQSTEL Inc. acquired in June 2022. Smartbiz is an US based Company that provides international voice termination to niche markets.
The FCC has jurisdiction over all telecommunications common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services.
Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The FCC has jurisdiction over all telecommunications common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services.
Our SMS services represented in year 2022 57.50% of the total revenue, while it was 68.89% in year 2021. Gross margin in the SMS business decreases in 2022 to 0.40% from 0.54% in year 2021.
Our SMS services represented in year 2023 53.15% of the total revenue, while it was 57.50% in year 2022. Gross margin in the SMS business increases in 2023 to 0.62% from 0.40% in year 2022.
Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian and Latin-American markets, among which it is worth mentioning: China Telecom, PCCW, Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel. 4 Table of Contents An important milestone in the evolution of Etelix was in 2013, when the company become part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia.
Etelix is interconnected to the most important players in the industry, with a very strong focus on Asian and Latin-American markets, among which it is worth mentioning: China Telecom, PCCW, Hutchinson Telecom, Vodafone India, KDDI, Airtel, Reliance, Viettel, TATA Communications, Flow Jamaica (Cable and Wireless Caribbean), Cable and Wireless Panama, Millicom (TIGO), Telefonica de España (Movistar), Telecom Italia (TIM), Portugal Telecom (MEU), Optimus (NOS), Belgacom (BICS), Deutsche Telekom, iBasis, Orbitel and Entel.
QGlobal is a company with the capacity to provide Short Messages (SMS), A2P and P2P messaging services. On February 21, 2020, the Company entered into a Company Acquisition Agreement (the “Agreement”) with Miguel Scavo regarding the acquisition of 75% of the shares in ItsBchain, LLC (“ItsBchain”) a company specialized in the development of Blockchain applications for telecommunications.
On February 21, 2020, the Company entered into a Company Acquisition Agreement with Miguel Scavo regarding the acquisition of 75% of the shares in ItsBchain, LLC (“ItsBchain”) a company specialized in the development of Blockchain applications for telecommunications.
On April 1, 2019, the Company entered into a Company Purchase Agreement (the “Purchase Agreement”) by and between the Company and the Ralf Kohler (the “Seller”), which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG (“SwissLink”) (www.swisslink-carrier.com), a Swiss corporation, by the Company. 3 Table of Contents On February 10, 2020, the Company entered into a Company Acquisition Agreement (the “Agreement”) with Jesus Vega regarding the acquisition of 51% of the shares in QGlobal, LLC (“QGlobal”).
On April 1, 2019, the Company entered into a Company Purchase Agreement by and between the Company and the Ralf Kohler (the “Seller”), which agreement provides for the purchase of 51% of the equity and certain assets of SwissLink Carrier AG (“SwissLink”) (www.swisslink-carrier.com), a Swiss corporation, by the Company.
With the combination of the technology capabilities of these four subsidiaries, iQSTEL has put together a complete portfolio of services for carriers and end user. These services include: • International Voice Termination for carriers. • US/Canada Inbound / Origination. • Global DIDs. • Global Toll-Free Numbers. • PBX (Private Branch Exchange) for small businesses. • SIP Trunking.
These services include: • International Voice Termination for carriers. • US/Canada Inbound / Origination. • Global DIDs. • Global Toll-Free Numbers. • PBX (Private Branch Exchange) for small businesses. • SIP Trunking.
PureSnax was previously a wellness brand focused on bringing healthy snacks and foods to consumers. On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor.
On March 8, 2017, PureSnax exited a previous License Agreement with a Canadian snack food Licensor.
The iQSTEL white label metaverse solution developed in partnership with GOTMY will be tailored to provide telecom carriers with a distinctive and immersive customer experience. In line with GOTMY’s mission to offer universally accessible experiential spaces, the iQSTEL solution for telecom carriers is intended to accommodate all mobile phone users, not just those with high-end VR headsets.
In line with GOTMY’s mission to offer universally accessible experiential spaces, the iQSTEL solution for telecom carriers is intended to accommodate all mobile phone users, not just those with high-end VR headsets.` Regulations Telecommunications services are subject to extensive government regulation in the United States of America.
Item 1. Business Company Description iQSTEL Inc. (the “Company”) (OTC Pink: IQST) (www.iqstel.com) is a technology company offering a wide array of services to global telecommunications and technology industries with presence in 13 countries.
Item 1. Business Company Description iQSTEL Inc. (the “Company”) (OTCQX: IQST) (www.iqstel.com) is a technology company with presence in 19 countries and 70 employees that is offering leading-edge services through its business divisions.
The voice services represented in year 2022 42.50% of the total revenue of the company ($39,614,081 out of the total $93,203,532) while in year 2021 voice services represented 31.11% of the total revenue ($20,127,139 out from a total of $64,702,018). Gross Margin in the voice services increased from 4.72% in year 2021 to 5.81% in year 2022.
The voice services represented in year 2023 46.85% of the total revenue of the company ($67,698,574 out of the total $144,502,351) while in year 2022 voice services represented 42.50% of the total revenue ($39,614,081 out of the total $93,203,532). All our subsidiaries carried 4.2 billion minutes of voice during year 2023, compared to 2.7 billion in year 2022.
The information contained on our websites is not incorporated by reference into this Annual Report, and such information should not be considered to be part of this Annual Report. History iQSTEL, formerly known as PureSnax International, Inc., was incorporated under the laws of the State of Nevada on June 24, 2011.
Employees iQSTEL, including all subsidiaries, has 70 employees as of December 31, 2023. Corporate History iQSTEL, formerly known as PureSnax International, Inc., was incorporated under the laws of the State of Nevada on June 24, 2011. PureSnax was previously a wellness brand focused on bringing healthy snacks and foods to consumers.
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The Company has an extensive portfolio of products and services for its clients such as: SMS, VoIP, 4G & 5G international infrastructure connectivity, Cloud-PBX, OmniChannel Marketing, IoT services, blockchain and payment solutions.
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Our Telecom Division, which represents the majority of current operations and which also represents the source for all of our revenues for the financial periods presented, offers VoIP, SMS, proprietary Internet of Things (IoT) solutions (www.iotsmartgas.com and www.iotsmarttank.com), and international fiber-optic connectivity through its subsidiaries: Etelix (www.etelix.com), SwissLink Carrier (www.swisslink-carrier.com), Smartbiz Telecom (www.smartbiztel.com), Whisl Telecom (www.whisl.com), IoT Labs (www.iotlabs.mx), and QGlobal SMS (www.qglobalsms.com).
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These services are grouped within four business divisions: Telecom, Fintech, Electric vehicles and Metaverse The company operates its business through its wholly-owned subsidiary Etelix.com USA, LLC (“Etelix”) (www.etelix.com) ; and its majority-owned subsidiaries SwissLink Carrier AG (www.swisslink-carrier.com), QGlobal SMS (https://www.qglobalsms.com/), Smart Gas (http://iotsmartgas.com/) and ItsBChain (http://itsbchain.com/), Whisl Telecom LLC (www.whisl.com), and Smartbiz Telecom LLC (www.smartbiztel.com).
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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.
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This is the result of the incorporation to our portfolio of product with higher gross margins. We expect this gross margin to increase in year 2023. All our subsidiaries carried 2.7 billion minutes of voice during year 2022, compared to 670 million in year 2021.
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Our developing BlockChain Platform Business Line (www.itsbchain.com) offers our proprietary Mobile Number Portability Application (MNPA) to serve the in-country portability needs through its subsidiary, itsBchain. Our developing Electric Vehicle (EV) Business Line (www.evoss.net) offers electric motorcycles for work and recreational use in the USA, Spain, Portugal, Panama, Colombia, and Venezuela.
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Regulations Telecommunications services are subject to extensive government regulation in the United States of America. Any violations of the regulations may subject us to enforcement actions, including interest and penalties.
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EVOSS is also working on the development of an EV Mid Speed Car to serve the niche of the 2nd car in the family. Our Artificial Intelligence (AI)-Enhanced Metaverse Division (information and content) is currently developing a groundbreaking white-label solution designed specifically for corporations, businesses, and the telecommunications industry.
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Employees iQSTEL, including all subsidiaries, has 56 employees as of December 31, 2022.
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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.
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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.
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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.
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An important milestone in the evolution of Etelix was in 2013, when the company become part of a consortium of major carriers for the upgrade of the Maya-1 submarine cable systems that runs from Hollywood, Florida to the city of Tolu in Colombia. This consortium is led by Orange Telecom and Orbitel, where Etelix participates with 10 Gbps of capacity.
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With this acquisition iQSTEL is expanding its telecommunication services offer to markets the company was not serving before. 4 With the combination of the technology capabilities of these four subsidiaries, iQSTEL has put together a complete portfolio of services for carriers and end user.
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The iQSTEL white label metaverse solution developed in partnership with GOTMY will be tailored to provide telecom carriers with a distinctive and immersive customer experience.
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On February 10, 2020, the Company entered into a Company Acquisition Agreement with Jesus Vega regarding the acquisition of 51% of the shares in QGlobal, LLC (“QGlobal”). QGlobal is a company with the capacity to provide Short Messages (SMS), A2P and P2P messaging services.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds.
We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds.
While our most significant customers, from a revenue perspective, vary from quarter to quarter, our twelve largest customers (2.97% of our total customer base) collectively accounted for 88% of total consolidated revenues in fiscal year 2022.
While our most significant customers, from a revenue perspective, vary from quarter to quarter, our 12 largest customers (2.6% of our total customer base) collectively accounted for 89% of total consolidated revenues in fiscal year 2023.
These carrier agreements are, in most cases for finite terms and, therefore, there can be no guarantee that these agreements will be renewed at all or on favorable terms to us.
We rely upon our carrier agreements in order to provide our telecommunications services to our customers. These carrier agreements are, in most cases for finite terms and, therefore, there can be no guarantee that these agreements will be renewed at all or on favorable terms to us.
These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities. 11 Table of Contents We do not expect to pay dividends in the foreseeable future.
These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
Any return on investment may be limited to the value of our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future.
Their interests may not necessarily be in the best interests of the shareholders in general. We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future.
Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; • variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights; and • compliance with export regulations, tariffs and other regulatory barriers.
Foreign Corrupt Practices Act, and other anti-bribery laws and regulations; • variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights; and • compliance with export regulations, tariffs and other regulatory barriers. If we are unable to successfully manage growth, our operations could be adversely affected.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to result in major fluctuations in the price of the stock. 18 The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
If additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations Risks Relating to Our Securities If a market for our common stock does not develop, stockholders may be unable to sell their shares.
If additional financing is not available when required or is not available on acceptable terms, we may be unable to operate our business as planned or at all, fund our expansion, successfully promote our business, develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations Risk Factors Related to the Business of the Company Our telecommunications line of business is highly sensitive to declining prices, which may adversely affect our revenues and margins.
We have continually operated at a loss with an accumulated deficit of $24,504,395 as of December 31, 2022. We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months.
We have not attained profitable operations and even though the company maintains a cash position very close to one third year's operating expenses, we dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations.
The termination of our carrier agreements or our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits. We rely upon our carrier agreements in order to provide our telecommunications services to our customers.
As a result of these factors, we may not succeed in our business, and we could go out of business. The termination of our carrier agreements or our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits.
These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity. 10 Table of Contents We may be unable to achieve some, all or any of the benefits that we expect to achieve from our plan to expand our operations.
We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity.
In the future we may require additional financing for capital requirements and growth initiatives. Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital markets to maintain and expand our business.
Accordingly, we will depend on our ability to generate cash flows from operations and to borrow funds and issue securities in the capital markets to maintain and expand our business. We may need to incur debt on terms and at interest rates that may not be as favorable.
Tax Risks We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations.
Any adverse determination in litigation could also subject us to significant liabilities. We may be subject to tax and regulatory audits which could subject us to liabilities. We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved.
Our telecommunications line of business is highly sensitive to declining prices, which may adversely affect our revenues and margins. The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs.
The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs. A reduction of our prices to compete with any other offers in the market will not always guarantee an increase in the traffic, which may result in a reduction of revenue.
Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities. Even though we currently have an active trading market, there can be no assurance that it will be sustained.
Risks Related to the Market for our Securities If a market for our common stock does not develop, stockholders may be unable to sell their shares. Our common stock is quoted under the symbol “IQST” on the OTCQX operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities.
Risk Factors Risks Relating to Business and Financial Condition Our business, operating results or financial condition could be materially adversely affected by any of the following risks. 8 Table of Contents Risk Factors Related to the Business of the Company Because our auditor has issued a going concern opinion regarding our company, there is a risk associated with an investment in our company.
Risks Relating to Business and Financial Condition Because our auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our company. We have continually operated at a loss with an accumulated deficit of $26,084,133 as of December 31, 2023.
The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber have adversely affected the use of traditional phone communications. We expect this IP-based service, which offers voice communications for free to continue to increase, which may result in increased substitution on our service offerings.
We expect this IP-based service, which offers voice communications for free to continue to increase, which may result in increased substitution on our service offerings. Our products face intense competitive challenges, including rapid technological changes, and pricing pressure from competitors, which could adversely affect our business.
A reduction of our prices to compete with any other offers in the market will not always guarantee an increase in the traffic, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins.
If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins. The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, Skype and Viber have adversely affected the use of traditional phone communications.
Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock. The extent to which the coronavirus ("COVID-19") outbreak impacts our business, results of operations and financial condition will depend on future developments, which cannot be predicted.
Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock. 14 Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even if it would benefit our shareholders.
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The Company has been qualified for a public offering of 10,000,000 shares of our common stock under a Form S-1. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold.
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Item 1A. Risk Factors You should carefully consider the risks described below together with all of the other information included in this registration statement before making an investment decision with regard to our securities.
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However, this concentration of revenues does not increase our exposure to non-payment by our larger customers, since 57% of our revenue is prepaid. 9 Table of Contents Natural disasters, terrorist acts, acts of war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations.
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The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed.
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We may need to incur debt on terms and at interest rates that may not be as favorable.
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In that case, you may lose all or part of your investment. In addition to other information in this registration statement and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition.
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The COVID-19 pandemic has caused and may continue to cause us to modify our business practices (including employee travel and employee work locations), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.
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If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected.
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There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. The COVID-19 pandemic and mitigation measures have caused, and may continue to cause, adverse impacts on global supply chains and economic conditions.
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Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods.
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These impacts could affect the development, deployment and maintenance, and the demand for our products and services, particularly the IoT SmartGas and SmartTank devices.
Added
Because we have a limited operating history, you may not be able to accurately evaluate our operations. We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company.
Removed
The extent to which the COVID-19 pandemic impacts our business, results of operations, cash flows and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning other strains of the virus and the actions to contain its impact.
Added
Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake.
Added
These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future.
Added
We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations.
Added
If we are unsuccessful in addressing these risks, our business will most likely fail. We are dependent on outside financing for the continuation of our operations. Because we have generated limited revenues and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business operations.
Added
There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. We will need additional funds to complete further development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues.
Added
We anticipate that we must raise for the next 12 months: $1,750,000 for acquisitions to fully implement our business plan to its fullest potential and achieve our growth plans.
Added
There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. 9 Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern, and, as a result, our investors could lose their entire investment.
Added
As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all. We have revenues but we are not profitable and may not be in the near future, if at all.
Added
Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
Added
We may be unable to achieve some, all or any of the benefits that we expect to achieve from our plan to expand our operations. In the future we may require additional financing for capital requirements and growth initiatives.
Added
All of our product lines are subject to significant competition from existing and future competitors, market conditions and technological change, or a combination of them, and our sales revenues and gross margins may suffer protracted and serious declines with the result that we would likely incur protracted losses.
Added
Further, the barriers to entry in several of our lines of business are not so significant that we may be facing competition from others who see significant opportunities to enter the market and undercut our prices with products that possess superior technological attributes at prices that offer our customers a better value.
Added
In this instance, we could incur protracted and significant losses and persons who acquire our common stock would suffer losses thereby. From time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share.
Added
Competition and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costs or other factors, and if we are unable to increase sales volumes to offset those profit margin decreases.
Added
We may also need to increase spending on marketing, advertising and new product innovation to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance.
Added
As a result, our increased expenditures may not maintain or enhance market share and could result in lower profitability. 10 Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.
Added
Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to: • general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; • the budgetary constraints of our customers; seasonality; • the success of our strategic growth initiatives; • costs associated with the launching or integration of new or acquired businesses; • timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; • the mix, by state and country, of our revenues, personnel and assets; • movements in interest rates or tax rates; • changes in, and application of, accounting rules; • changes in the regulations applicable to us; • Litigation matters.
Added
Although we are somewhat insulated from nonpayment because 52% of our revenue is prepaid, this concentration of revenues increases our exposure to non-payments and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability.
Added
We may fail to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions. We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary products and services.
Added
We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions.
Added
Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material: • difficulties integrating personnel from acquired entities and other corporate cultures into our business; • difficulties integrating information systems; • the potential loss of key employees of acquired companies; • the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or • the diversion of management attention from existing operations. 11 Natural disasters, terrorist acts, acts of war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations.
Added
Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel.
Added
There can be no absolute assurance that management will be able to manage growth effectively. If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly.
Added
If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products.
Added
Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers. 12 Risks Related to Legal Uncertainty We may be subject to securities litigation, which is expensive and could divert management attention.
Added
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business.
Added
Our global operations subject us to many different and complex laws and rules, and we may face difficulty in compliance. Due to our global operations, we are subject to many laws governing international relations (including but not limited to the Foreign Corrupt Practices Act, the U.S. Export Administration Act the EU General Data Protection Regulation, and the U.K.
Added
Modern Anti-Slavery Act); which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries, what personal information we can transfer, and what information we can provide to a non-U.S. government.
Added
Although we have procedures and policies in place that should mitigate the risk of violations of these laws, there is no guarantee that they will be sufficiently effective.
Added
If, and when we acquire new businesses, we may not be able to ensure that the pre-existing controls and procedures meant to prevent violations of the rules and laws were effective, and we may not be able to implement effective controls and procedures to prevent violations quickly enough when integrating newly acquired businesses.
Added
Acquisitions of new businesses in new non-U.S. jurisdictions may also subject us to new regulations and laws, and we may face difficulties ensuring compliance with these new requirements. Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.
Added
Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled.
Added
Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks in international markets where our products and services are offered.
Added
Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business.
Added
In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users.
Added
For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country.
Added
In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance. 13 The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally.
Added
These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions.
Added
If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results.
Added
Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results. We may be subject to legal liability associated with providing online services or content.
Added
We host and provide a wide variety of services and technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos, videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically and internationally.
Added
The law relating to the liability of providers of online services and products for activities of their users is currently unsettled both within the United States and internationally.
Added
We may be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions.
Added
It is also possible that if any information provided directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us.
Added
For example, we offer web-based e-mail services, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, or privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service.
Added
We may also face purported consumer class actions or state actions relating to our online services, including our fee-based services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services or technologies are used to spread or facilitate malicious or harmful code or applications.
Added
Investigating and defending these types of claims are expensive, even if the claims are without merit or do not ultimately result in liability, and could subject us to significant monetary liability or cause a change in business practices that could negatively impact our ability to compete.
Added
Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed11 unchanged
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account. 13 Table of Contents In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account. 21 In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock. 14 Table of Contents
We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
Holders of Our Common Stock As of April 10, 2023, we had 164,176,688 shares of our common stock issued and outstanding, held by approximately 73 stockholders of record at our transfer agent, with additional stockholders holding our shares in street name. Dividends We currently intend to retain future earnings for the operation of our business.
Holders of Our Common Stock As of March 27, 2024, we had 176,329,933 shares of our common stock issued and outstanding, held by approximately 73 stockholders of record at our transfer agent, with additional stockholders holding our shares in street name. Dividends We currently intend to retain future earnings for the operation of our business.
The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.
Fiscal Year Ending December 31, 2022 Quarter Ended High $ Low $ December 31, 2022 0.37 0.16 September 30, 2022 0.40 0.22 June 30, 2022 0.71 0.32 March 31, 2022 1.03 0.45 Fiscal Year Ending December 31, 2021 Quarter Ended High $ Low $ December 31, 2021 1.05 0.39 September 30, 2021 0.73 0.35 June 30, 2021 1.07 0.44 March 31, 2021 2.00 0.15 On April 10, 2023, the last sales price per share of our common stock was $0.1467.
Fiscal Year Ending December 31, 2023 Quarter Ended High $ Low $ December 31, 2023 0.1550 0.1440 September 30, 2023 0.2250 0.2160 June 30, 2023 0.1340 0.1130 March 31, 2023 0.1549 0.1425 Fiscal Year Ending December 31, 2022 Quarter Ended High $ Low $ December 31, 2022 0.37 0.16 September 30, 2022 0.40 0.22 June 30, 2022 0.71 0.32 March 31, 2022 1.03 0.45 On March 26, 2024, the last sales price per share of our common stock was $0.3372.
Recent Sales of Unregistered Securities During the year ended December 31, 2022, the Company issued 14,118,153 shares of common stock, valued at fair market value on issuance as follows: · 2,000,000 shares issued for cash of $1,000,000 · 5,066,667 shares for acquisitions of Whisl and Smartbiz valued at $1,550,000 · 550,000 shares for asset acquisition valued at $357,500 · 240,000 shares for compensation to our directors valued at $107,600 · 161,367 shares for settlement of debt valued at $80,674 · 6,100,119 shares for exercise of warrants for $400,000 These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder.
Recent Sales of Unregistered Securities During the year ended December 31, 2023, the Company issued 10,534,119 shares of common stock, valued at fair market value on issuance as follows: • 240,000 shares for compensation to our directors valued at $42,890; and • 10,294,119 shares for exercise of warrants for $1,400,000.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

18 edited+2 added−5 removed4 unchanged
Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2022; however, we consider our critical accounting policies to be those related to the allowance for doubtful accounts, valuation of assets, significant estimates in the valuation of financial instruments and income taxes.
Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2023; however, we consider our critical accounting policies to be those related to the allowance for doubtful accounts, valuation of assets, significant estimates in the valuation of financial instruments and income taxes.
The Company has received the qualification of an Offering Statement under Form S-1 for the sale of up to 10,000,000 common stocks. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold.
The Company has received the qualification of an Offering Statement under Form S-1 for the sale of up to 15,000,000 common stocks. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold.
Off Balance Sheet Arrangements As of December 31, 2022, there were no off-balance sheet arrangements. Recently Issued Accounting Pronouncements We do not expect the adoption of these or other recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.
Off Balance Sheet Arrangements As of December 31, 2023, there were no off-balance sheet arrangements. Recently Issued Accounting Pronouncements We do not expect the adoption of these or other recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.
These costs primarily consist of usage charges for calls and SMS terminated in our vendor’s networks. The behavior in the costs shows a logical correlation with the behavior of the revenue commented above.
These costs primarily consist of usage charges for calls and SMS terminated in our vendors’ networks. The behavior in the costs shows a logical correlation with the behavior of the revenue commented above.
There can be no assurance that such additional financing will be available to us on acceptable terms or at all. 17 Table of Contents 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 twelve-month period ended December 31, 2022.
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 twelve-month period ended December 31, 2023.
These numbers reflect an increase of 44% year over year on our consolidated Revenues.
These numbers reflect an increase of 55% year over year on our consolidated Revenues.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Years Ended December 31, 2022 and 2021 Net Revenue Our net revenue for the year ended December 31, 2022 was $93,203,532 as compared with $64,702,018 for the year ended December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Years Ended December 31, 2023 and 2022 Net Revenue Our net revenue for the year ended December 31, 2023 was $144,502,351 as compared with $93,203,532 for the year ended December 31, 2022.
The increase in Other Expenses in 2022 compared to 2021 is due to the Change in fair value of derivative liabilities of $(2,650,369) for the year ended December 31, 2022 from a positive $317,080 for the year ended December 31, 2021.
The positive change in Other Income (Expenses) in 2023 compared to 2022 is due to the positive Change in fair value of derivative liabilities of $381,848 for the year ended December 31, 2023 from a negative value of $2,650,369 for the year ended December 31, 2022.
Cost of Revenue Our total cost of sales for the year ended December 31, 2022 was $91,412,016 as compared with $63,168,303 for the year ended December 31, 2021.
Cost of Revenue Our total cost of sales for the year ended December 31, 2023 was $139,830,338 as compared with $91,412,016 for the year ended December 31, 2022.
Following is a table with summary data from the consolidated statement of cash flows for the year ended December 31, 2022 and 2021, as presented. 2022 2021 Net cash used in operating activities $ (1,765,060 ) $ (3,152,181 ) Net cash used in investing activities (2,001,506 ) (511,348 ) Net cash provided by financing activities 1,767,982 6,250,980 Effect of exchange rate changes on cash (6,840 ) (5,954 ) Net change in cash and cash equivalents $ (2,005,424) $ 2,581,497 Our operating activities used $1,765,060 in the year ended December 31, 2022, as compared with $3,152,181 used in operating activities in the year ended December 31, 2021.
Following is a table with summary data from the consolidated statement of cash flows for the year ended December 31, 2023 and 2022, as presented. 2023 2022 Net cash used in operating activities $ (1,483,801 ) $ (1,765,060 ) Net cash used in investing activities (332,550 ) (2,001,506 ) Net cash provided by financing activities 1,833,965 1,767,982 Effect of exchange rate changes on cash 15,665 (6,840 ) Net change in cash and cash equivalents $ 33,279 $ (2,005,424) Our operating activities used $1,483,801 in the year ended December 31, 2023, as compared with $1,765,060 used in operating activities in the year ended December 31, 2022.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2021 and 2020: Subsidiary Cost of revenue Year Ended December 31, 2022 Cost of revenue Year Ended December 31, 2021 Etelix.com USA, LLC 23,360,923 15,080,687 SwissLink Carrier AG 3,949,751 3,986,334 QGlobal LLC 243,493 563,528 IoT Labs LLC 52,842,202 43,537,754 Whisl 2,760,807 - Smartbiz 8,254,840 - 91,412,016 63,168,303 Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its customers.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2023 and 2022: Subsidiary Cost of revenue Year Ended December 31, 2023 Cost of revenue Year Ended December 31, 2022 Etelix.com USA, LLC $ 41,505,472 $ 23,360,923 SwissLink Carrier AG 4,359,141 3,949,751 QGlobal LLC 832,282 243,493 IoT Labs LLC 74,662,656 52,842,202 Whisl 2,033,529 2,760,807 Smartbiz 16,437,258 8,254,840 $ 139,830,338 $ 91,412,016 Our cost of revenues consists of direct charges from vendors that the Company incurs to deliver services to its customers.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2022 and 2021: Subsidiary Revenue Year Ended December 31, 2022 Revenue Year Ended December 31, 2021 Etelix.com USA, LLC 22,301,110 15,445,161 SwissLink Carrier AG 4,705,031 4,681,978 QGlobal LLC 350,050 666,887 IoT Labs LLC 53,239,401 43,907,992 Whisl 4,318,762 - Smartbiz 8,289,178 - 93,203,532 64,702,018 The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and new acquisitions.
When looking at the numbers by subsidiary, we have the following breakout for the years ended December 31, 2023 and 2022: Subsidiary Revenue Year Ended December 31, 2023 Revenue Year Ended December 31, 2022 Etelix.com USA, LLC $ 44,026,288 $ 22,301,110 SwissLink Carrier AG 5,250,141 4,705,031 QGlobal LLC 1,228,865 350,050 IoT Labs LLC 75,574,912 53,239,401 Whisl 1,855,816 4,318,762 Smartbiz 16,566,329 8,289,178 $ 144,502,351 $ 93,203,532 The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and new acquisitions.
We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost. 15 Table of Contents Gross Margin Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $1,533,715 in 2021 to $1,791,516 in 2022; represented an increase of 17% year over year Operating Expenses Operating expenses for the year ended December 31, 2022 were $4,983,176, as compared with $4,517,632 for the year ended December 31, 2021.
We have reached a higher volume of sales and every additional unit sold (minutes and SMS) has its corresponding termination cost. 23 Gross Margin Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, increased from $1,791,516 in 2022 to $4,672,013 in 2023; represented an increase of 161% year over year.
Liquidity and Capital Resources As of December 31, 2022 we had total current assets of $6,436,590, compared with current liabilities of $6,451,679, resulting in a negative working capital of $15,089 and a current ratio of approximately 0.99 to 1.
Liquidity and Capital Resources As of December 31, 2023 we had total current assets of $15,719,172, compared with current liabilities of $13,840,944, resulting in a positive working capital of $1,878,228 and a current ratio of approximately 1.14 to 1 which represent an important improvement compared to a ratio of 0.99 to 1 as of December 31, 2022.
Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Our negative operating cash flows in 2022 and 2021 is largely the result of our net loss for the years.
Our cash flow from operations varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. 25 Investing activities used $332,550 for the year ended December 31, 2023, as compared with $2,001,506 used in investing activities for the year ended December 31, 2022.
Investing activities used $2,001,506 for the year ended December 31, 2022, as compared with $511,348 used in investing activities for the year ended December 31, 2021. Our negative investing cash flow for 2022 is largely due to the acquisition of Whisl and Smartbiz of $1,889,132 and the purchase of $112,074 of equipment.
Our negative investing cash flow for 2023 is largely due to the purchase of property and equipment. Financing activities provided $1,833,965 for the year ended December 31, 2023, as compared to $1,767,982 provided for the year ended December 31, 2022. Our positive financing cash flow in 2023 was largely the result of the $1,400,000 from the exercise of warrants.
Years Ended December 31 2022 2021 Salaries, Wages and Benefits $ 1,662,192 $ 1,160,021 Technology 291,348 218,053 Professional Fees 901,082 441,490 Legal and Regulatory 511,598 106,001 Travel & Events 93,769 23,117 Public Cost 31,750 42,674 Allowance for Doubtful Accounts 34,376 - Depreciation and Amortization 120,117 91,474 Advertising 617,559 977,334 Bank Services and Fees 37,950 117,886 Office, Facility and Other 324,167 392,117 Commissions Financial Expenses 239,550 - Insurances 10,118 - Subtotal 4,875,576 3,570,167 Stock-based compensation 107,600 947,464 Total Operating Expenses $ 4,983,176 $ 4,517,631 Operating Expenses by subsidiary are as follow: Years Ended December 31, 2022 2021 Difference iQSTEL $ 1,762,904 $ 2,906,114 $ (1,143,210 ) Etelix 472,291 339,354 132,937 SwissLink 767,069 784,052 (16,983 ) ItsBchain 22,693 2,396 20,297 QGlobal 202,933 106,803 96,130 Global Money One 157,382 175,324 (17,942 ) IoT Labs 264,091 203,588 60,503 Whisl 821,979 - 821,979 Smartbiz 511,834 - 511,834 $ 4,983,176 $ 4,517,631 $ 465,545 The increment in the overall Operating Expenses is due to the new additions of Whisl and Smartbiz, totaling $1,333,813.
Years Ended December 31 2023 2022 Salaries, Wages and Benefits $ 1,560,366 $ 1,662,192 Technology 328,710 291,348 Professional Fees 1,283,351 901,082 Legal and Regulatory 256,537 511,598 Travel & Events 136,051 93,769 Public Cost 36,349 31,750 Bad Debt Expense 8,815 34,376 Depreciation and Amortization 128,737 120,117 Advertising 595,298 617,559 Bank Services and Fees 77,292 37,950 Office, Facility and Other 309,376 324,167 Sales Commissions 211,830 239,550 Insurance 11,914 10,118 Subtotal 4,944,626 4,875,576 Stock-based compensation 42,890 107,600 Total Operating Expenses $ 4,987,516 $ 4,983,176 Operating Expenses by subsidiary are as follows: Years Ended December 31, 2023 2022 Difference iQSTEL $ 1,692,056 $ 1,762,904 $ -70,848 Etelix 322,932 472,291 -149,359 SwissLink 723,712 767,069 -43,357 ItsBchain 41,955 22,693 19,262 QGlobal 253,160 202,933 50,227 Global Money One 55,710 157,382 -101,672 IoT Labs 172,709 264,091 -91,382 Whisl 614,617 821,979 -207,362 Smartbiz 1,110,665 511,834 598,831 $ 4,987,516 $ 4,983,176 $ 4,340 24 Other Income (Expenses) We had other income of $96,067 for the year ended December 31, 2023, as compared with other expenses of $2,674,101 for the year ended December 31, 2022.
Net Loss We finished the year ended December 31, 2022 with a loss of $5,865,761 as compared to a loss of $3,864,001 during the year ended December 31, 2021. The amount of year 2022 is highly impacted by the $(2,650,369) change in fair value of the derivative liabilities .
Net Loss We finished the year ended December 31, 2023 with a loss of $219,436 as compared to a loss of $5,865,761 during the year ended December 31, 2022. These two figures compared result in an important improvement in the Company’s performance during 2023 versus the previous year.
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If net revenues continue growing at a similar rate for the next twelve months, we believe that the company will reach a total consolidated revenue of approximately $105 million by December 31, 2023.
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Gross margins were 3.23% and 1.92% of revenues, respectively. This is a clear sign the Company is improving it sales margin. Operating Expenses Operating expenses for the year ended December 31, 2023 were $4,987,516, as compared with $4,983,176 for the year ended December 31, 2022. The detail by major category is reflected in the table below.
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The detail by major category is reflected in the table below.
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This can be perfectly noted when looking at the evolution of the Operating Income and the Net Income by quarter in 2023.
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This was partially offset by the $868,298 reduction in Operating Expenses by the remaining companies most significantly by iQSTEL, whose expenses were reduced by $1,143,210. 16 Table of Contents Other Expenses We had other expenses of $2,674,101 for the year ended December 31, 2022, as compared with other expenses of $880,085 for the year ended December 31, 2021.
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Financing activities provided $1,767,982 for the year ended December 31, 2022, as compared to $6,250,980 provided for the year ended December 31, 2021.
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Our positive financing cash flow in 2022 was largely the result of the $1,100,000 from the issuance of new common stock, $400,000 from the exercise of stock options and $500,000 from the issuance of common stock purchase options.

Other IQST 10-K year-over-year comparisons