IQST 10-K & 10-Q changes, risk factors and insider trading

Because our auditorthe Company has issuedidentified that substantial doubt exists within their ability to continue as a going concern opinion regarding our company,concern, there is an increased risk associated with an investment in our company. Company.

We have continually operated at a loss with an accumulated deficit of $32,703,410$43,276,006 as of December 31, 2024.2025. We have not attained profitable operations andand, even though the companyCompany maintains a cash position very close to one third year's operating expenses, we are 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. We reserve the right tomay seek additional funds through private placements of our common stock and/or through debt financing.financing; Our ability to raise additional financing is unknown. Aside from cash exercises as set forth under an outstanding option that expires on July 14, 2025,however, we do not have any no formal commitments or arrangements for thesuch advancementfunding, and there can be no assurance that financing will be available on acceptable terms or loanat of funds.all. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is a risk that you could lose the entire amount of your investment in our company.Company.

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.Company, particularly with respect to our recent diversification into fintech and AI initiatives. 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. These potential problems include, but are not limited to, unanticipated problems issues relating to the ability to generategenerating sufficient cash flowflow, tomanaging operaterapid ourgrowth from acquisitions, integrating new business lines, and additional controlling costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. 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. If we are unsuccessful in addressing these risks, our business will most likely fail.

Our failure to obtain future financing or to produce levels ofgenerate sufficient 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.

In the future we may require additional financing for capital requirements and growth initiatives.initiatives, including integration of recent acquisitions and development of fintech and AI capabilities. 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. 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.

A deterioration in economic conditions and related drivers of global uncertainty and change, such as reduced business activity, high unemployment, rising interest rates, housing prices, and energy prices (including the price of gasoline), increased consumer indebtedness, lack of available credit, currency volatility, the rate of inflation, and perceptions of the economy, as well as other factors, such as terrorist attacks, protests, looting, and other forms of civil unrest, cyber-attacks and data breaches, public health emergencies (such as the COVID-19 pandemic and other epidemics), extreme weather conditions and climate change, significant changes in the political environment, political instability, armed conflict (such as the ongoing military conflict between Ukraine and Russia and thetensions emerginginvolving military conflict in IsraelIran and Gazathe Middle East) and/or public policy, including increased state, local or federal taxation, tariffs, sanctions or trade restrictions could adversely affect our operating results and financial condition.

Major public health issues, including pandemics such as the COVID-19 pandemic, pandemics, have adversely affected, and could in the future materially adversely affect, us due to their impact on the global economy and demand for our regenerativetelecommunications productsand fintech services; the imposition of protective public safety measures, such as shutdowns and restrictive health mandates; and disruptions in our operations, supply chainchain, network interconnections, and sales and distribution channels, resulting in interruptions to our business and the supply of current products and offering of existing services, and delays in production ramps of new products and development of new services.

We have somesubstantial revenue derived from customers outside of the United States, and we may lose revenues and market share due to exchange rate fluctuations and political and economic changes related to foreign business.

Some A significant portion of our revenue comes from customers and traffic outside of the United States.States, including high volumes routed to Asia, Africa, and Latin America. Any company conducting foreign business is always subject to economic, political and regulatory uncertainties and risks that are unique to each area of the world. Fluctuations in exchange rates may also affect the prices that foreign customers are willing to pay and may put us at a price disadvantage compared to other competitors. Potentially volatile shifts in exchange rates may negatively affect our financial position and results.

Our revenue comes primarily from sales and traffic outside the U.S. and our growth strategy is largely focused on emerging markets.markets in Latin America, Asia, Africa, and the Middle East. Our success delivering solutions and competing in international markets is subject to our ability to manage various risks and difficulties, including, but not limited to:

Due to our global operations,operations across 20 countries and recent acquisitions (including QXTEL with offices in the UK, Argentina, Dubai, Serbia, and Turkey), 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. 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. 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. 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. 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.

A reduction in our prices to compete with any other offers in the market will not always guarantee an increase in 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. 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 free, to continue to increase, which may result in increased substitution on our service offerings.

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. Further, the barriers to entry in several of our lines of business are notrelatively low, so significant that we may be facingface competition from othersnew entrants who see significant opportunities to enter the market and undercut our prices with products or services that possess superior technological attributes at prices thator offer our customers a better value.value to customers. In this instance, we could incur protracted and significant losses and peopleholders who acquireof our common stock would suffer losses thereby.

The termination of our carrier agreements or and 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.

As a provider of international long-distance services, we depend upon sales of transmission and termination of traffic to other long-distance providers and the collection of receivables from these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers our profitability may be substantially reduced. While our most significant customers, from a revenue perspective, vary from quarter to quarter, our 2737 largest customers (4.5%representing approximately 5.37% of our total customer base) collectively accounted for 89%90% of total consolidated revenues in fiscal year 2024.2025. Although we are somewhat insulated from nonpayment because 33%approximately 30% of our revenue is prepaid, this concentration of revenue 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.

Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched the situationssituation and do not believe that any material internal or customer information has been compromised.

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.users particularly in our fintech and telecommunications operations. 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. 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. 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.

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. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. country (data localization requirements). In addition, there currently is a data protection regulation applicable to member states of the EuropeanEU General UnionData thatProtection includes Regulation (GDPR) and similar frameworks impose operational and compliance requirements that arediffer different thanfrom those currently in place in other jurisdictions and that also includesinclude significant penalties for non-compliance.

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. For example, we offer web-based e-mail services,services and fintech operations, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail,communications, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service. 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.

As a critical infrastructure service provider,provider in telecommunications and fintech, we transmit large amounts of data over our systems, and process and store highly sensitive customer data. Consequently we, our third-party service providers, and our customers operate in an industry that is prone to cyber-attacks. Despite Despite our efforts to prevent these events, some of these attacks could result in a material adverse impact to our operations due to distributed distributed denial of service attacks, ransomware attacks, malware, virus, credential harvesting, man-in-the-middle attacks, or social engineering engineering attacks. We do not believe these incidents are likely to have a material adverse impact on our ability to serve our customers or our business, operations or financial results.

As a smaller reporting companycompany, andwe will be exempt areexempt from certain disclosure requirements, which could make our Common Stock less attractive to potential investors.

As aSimilar to emerging growth companies, smaller reporting companies company,are weable willto notprovide besimplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, being required and may not include a Compensation Discussion and Analysis section in our proxy statements; we willto provide only two years of audited financial statements; and we need not being required to provide the table of selected financial data.data, Wesupplemental financial information or risk factors. alsoThese will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.

The shares of authorized but unissued preferred stock may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation, conversion rights, voting rights and others.others, potentially diluting common stockholders or adversely affecting the market price of our common stock.

Our largest shareholders, officers and directors and related parties, Leandro Iglesias and Alvaro Quintana,Cardona, have substantial control over us and our policies as a result of their holdings in Series A Preferred Stock, and will be able to influence all corporate matters, which might not be in other shareholders’ interests.

There were 10,000 shares of Series A Preferred Stock outstanding as of the date of this Annual Report, with Mr. Iglesias holding 7,000 shares and Mr. QuintanaCardona the other 3,000 shares. There were 210,710,1705,070,743 shares of our common stock issued and outstanding as of the date of this Annual report, with Mr. Iglesias holding 2,095,363 18,436 shares and Mr. QuintanaCardona holding 1,331,84218,066 shares, which together accounts for just over 1.68%0.719% of our outstanding common stock. Holders of Series A Preferred Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of 51% of the total vote of shareholders, including the election of directors. Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. By virtue of their ownership of Series A Preferred Stock and common stock, they are able to vote at a rate of approximately 51.83%51.35% of the total vote of shareholders. They are therefore able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our company.Company. They could prevent transactions, which would be in the best interests of the other shareholders. Their interests may not necessarily be in the best interests of the shareholders in in general.

We do not expect to pay cash 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. The payment cash of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay cash dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.

• The establishment of partnerships with other telecom companies;

BecauseIf our common stock were to be delisted from the Nasdaq Capital Market, we arecould become subject to the SEC’s “Pennypenny Stockstock” rules, which could reduce the level of trading activity in our stock may be reduced.stock.

Our cost of revenues 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 ourvendor’s vendors’network, networks.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. We have reached a higher volume of revenue and every additional unit sold (minutes Telecom and SMSFintech) has its corresponding termination cost.

Operating expenses for the year ended December 31, 20242025 were $9,105,813, $13,709,264 as compared with $4,987,516$9,105,813 for the year ended December 31, 2023.2024. The detail by major category is reflected in the table below.below:

Operating ExpensesWhen looking at the numbers by subsidiarysubsidiary, arewe ashave the followsfollowing:

We finished the year ended December 31, 20242025 with a net loss of $5,180,036$8,510,266 as compared to a loss of $219,436$5,180,036 during the year ended December 31, 2023.2024. The net results offor the period periodswere reported are highlysignificantly impacted by the expenses inat the holding entity (IQSTEL), which hasinclude a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited.

Our Telecom Division, currently the divisionprimary source presentlyof generatingrevenue revenue,for hasthe Company, continued to generate positive operatingOperating incomeIncome. whenMeanwhile, presented separately from the rest of our Company.pre-revenue companies are operating with minimal expenses, focused solely on completing product and service development prior to their market launch. 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 which is already generating revenue, Cybersecurity and Cybersecurity.AI.

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. Wewe 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. direction

As of December 31, 20242025 we had total current assets of $63,015,046,$36,162,424, compared with total current liabilities of $63,821,196,$34,606,407, resulting in a negativepositive working capital of $ 806,1501,556,017 and a current ratio of approximately 0.991.04 to 1. The negative working capital is due largely to loans payable of $2,455,641.

Investing activities used $3,162,971$239,651 for the year ended December 31, 2024,2025, as compared with $332,550$3,162,971 used in investing activities for the year ended December 31, 2023.2024. The cash used in 2024 in investing activities is largely due to the acquisition of QXTEL, where the Company invested $2,955,121, andwhile in 2025 the purchasecash ofused in $151,620investing activities was largely purchases of property and equipment.equipment totaling $113,020.

Financing activities provided $7,240,966$3,729,525 for the year ended December 31, 2024,2025, as compared to $1,833,965$7,240,966 provided for the year ended December 31, 2023. 2024. The cash provided in 20242025 was largely from loans, convertible debt and warrant exercises, offset by repayments on loans. We have financed our operations largely through private placements,placements convertibleand notes,secured and unsecured debt, and we have also issued debt in our company secured by all of our assets.debt.

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We have not attained profitable operations and even though the companyCompany maintains a cash position very close to one third year's operating expenses, we are 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. 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. Aside from cash exercises as set forth under an outstanding option that expires on July 14, 2025, weWe do not have any formal commitments or arrangements for the advancement or loan of funds. 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.

Our Telecom Division, which represents the majority of current operations and accounted for 87% of our revenues for the threesix months ended MarchJune 31,30, 2026, offers Voice over Internet Protocol (VoIP), SMS, proprietary Internet of Things (IoT) solutions, 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).

The Company’s developing Fintech Business Line offers a complete Fintech ecosystem including a MasterCard Debit Card, US Bank Account (No SSN Needed), and a Mobile App/Wallet for remittances and mobile top-up services. Our Fintech subsidiary, Global Money One Inc., aims 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 acquisition, supports expansion and integration of our business divisions through its B2B digital gift card and incentives platform, which represented 13% of our revenues for the threesix months ended MarchJune 31,30, 2026.

Our Artificial Intelligence (AI) division, Reality Border (www.realityborder.com), initially developed an AI-enhanced immersive digital experience platform. Building on that early development work—including conversational interfaces, multilingual models, and AI-driven workflows—workflows, Reality Border now develops practical AI AI software solutions for enterprise and telecommunications applications.

Our total revenue reported for the three months ended MarchJune 31,30, 2026 was $97,919,836,$109,068,246, compared with $57,632,816$72,183,236 for the three months ended MarchJune 31,30, 2025. These numbers reflect an increase of 70%51.10% yearquarter over yearquarter on our consolidated revenues. Our total revenue reported for the six months ended June 30, 2026 was $206,988,082, compared with $129,816,052 for the six months ended June 30, 2025; which reflect an increase of 59.45%.

When looking at the numbers by subsidiary, we have the following breakout for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025:

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 expanding the synergies among our subsidiaries, particularly those engaged in VOIP Telecom services,services. due to a higher volume of intercompany transactions. The increase also includes the contribution from a newly acquired subsidiary, GlobeTopper LLC, which closed on July 1, 2025.

A significant reduction in intercompany transactions is also observed for the quarterthree and six months ended MarchJune 31,30, 2026 compared to the quarter ended MarchJune 31,30, 2025, which did not impact the overall position. This reflects the joint efforts of the companies to strengthen their position with third parties through new commercial agreements.

The organic growth during the three and six months ended March 31,June 30, 2026 was 87%65% and 65% respectively, of the total revenue increase 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 1st, 20252025, represented the rest of the increment increase, showing the potential this subsidiary has of creating value to the organization.

Our total cost of revenuesrevenue for the three months ended MarchJune 31,30, 2026 increased to $95,839,138,$106,321,441, compared with $55,697,858$70,311,749 for the three months ended MarchJune 31,30, 2025. Our total cost of revenue for the six months ended June 30, 2026 increased to $202,160,579, compared with $126,009,607 for the six months ended June 30, 2025.

When looking at the numbers by subsidiary, we have the following breakout for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025:

This quarter, compared to same period of 2025, reflects the positive impact of the portfolio restructuring. While intercompany transactions decreased, traffic shifted toward third parties, strengthening external relationships. This transition helped maintain growth and is expected to continue supporting revenue and margins going forward.

Our gross margin, which is simply the difference between between our revenues and our cost of sales, discussedwas above,$4,827,503 for the six months ended June 30, 2026, compared to $3,806,445 for the six months ended June 30, 2025, representing an increase of 26.82%. For the three months ended June 30, 2026, our gross margin was $2,080,698$2,746,805, compared to $1,871,487 for the three months ended MarchJune 31,30, 20262025, compared to $1,934,958 for the three months ended March 31, 2025. This representsrepresenting an increase of 8% in the gross margin year over year.46.77%.

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 tremendoussignificant cost reductionreductions once all companies are migrated to the new platform; (2) the increase in advertising expenses, mainly related to marketing and promotional activities; and (3) the increases in other items such as technology; depreciation and amortization; andamortization, office, facility and other expenses are largely the result of the addition of QXTEL and GlobeTopper to our consolidated financial statements.

When looking at the numbers by subsidiary, we have the following breakout for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025:

The Company showed negative Operating Income for the three months ended March 31, 2026 of $958,009 compared with $604,226 forFor the three months ended MarchJune 31,30, 2026, the Company reported an operating loss of $1,120,819, representing a significant increase compared to the operating loss of $656,229 for the same period in 2025. Similarly, for the six months ended June 30, 2026, the operating loss widened to $2,078,828, up from $1,260,455 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.

InOur addition,Telecom Division, currently the primary source of revenue for the Company, continued to generate positive Operating Income. Meanwhile, our pre-revenue companies continueare to operateoperating with minimal expenses, focused solely on completing product and service development prior to their market launch.

We had total other expenses of $412,424$1,222,693 for the three months ended MarchJune 31,30, 2026, as compared with other expenses of $519,660$1,600,989 for the same period ended 2025. TheWe had other expenses areof largely$1,635,117 duefor tothe $350,998six andmonths $531,726ended June 30, 2026, as compared with other expenses of Interest Expense$2,120,649 for the threesame monthsperiod ended March 31, 2026 and 2025, respectively.2025. A significant portion of the 2026 interest expense was associated with the financing for the acquisition of Globetopper,GlobeTopper, which allowed us to drive the organicgrowth growth of the Company.

We finished the three months ended March 31, 2026 with a net loss of $1,385,936, as compared to a loss of $1,144,461 during the three months ended March 31, 2025. The 2026 net loss is highly impacted by interest expense incurred in the acquisitionlast ofacquisitions Globetopper(QXTEL and GlobeTopper); however, the increase in the Company's value and the beneficial effects of these this acquisitionacquisitions could be observed in the $829,064$2,872,337 of gross profit added to our operations for the threesix months ended March 31,June 30, 2026, which represents 43%59.50% of the total consolidated gross profit.

As of MarchJune 31,30, 2026, we had total current assets of $29,726,482$33,525,038 and current liabilities of $30,028,395,$30,816,253, resulting in a negativepositive working capital of $301,913.$2,708,785.

Our operating activities used $175,447$1,667,174 in the threesix months ended MarchJune 31,30, 2026 as compared with $1,906,969$1,649,283 used in operating activities in the threesix months ended MarchJune 31,30, 2025. Our negative negative operating cash flow for both periods is a result of our net loss and changes in operating assets and liabilities which varies depending depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. This is due to substantial non-cash adjustments and working capital changes:

- Accounts receivable: Large positive adjustment ($6.3M$3.5M in 2026 vs. $45.9M$33.4M in 2025), suggesting strong collections and reduced sales on credit.

Investing activities used $8,400$22,584 for the threesix months ended MarchJune 31,30, 2026, compared to $58,645$173,812 in the same period of 2025. The higher outflows in 2025 were mainly driven by the acquisition of QXTEL and Globetopper. The decrease in 2026 reflects lower investment activity compared to the prior period.

Financing activities provided $626,075$1,626,281 in the current period, compared to $540,304$1,351,026 in the prior period.year. The increase reflects higher net inflows from financing activities. This change is mainly due to increased proceeds from financing sources, partially offset by repayments and related outflows. Financing activities during the period include funding associated with the acquisition of Globetopper,GlobeTopper, as the Company continues to support its growth and investment strategy.

The Company is transitioning from an expansion phase in 2026,2025, marked by the acquisition of Globetopper,GlobeTopper, to a more consolidated approach during the first ninesix months of 2026, with a greater focus on cash preservation, working capital management, and non-cash financing tools. The Company’s debt repayments reflect a maturing capital structure. At the same time, the expansion of GlobetopperGlobeTopper during the year ended December 31, 2025 demonstrates the Company’s continued commitment to strengthening and scaling its other business divisions.

These conditions, including our recurring losses from operations, negative working capital, and negative operating cash flows, raise substantial doubt about the Company’s ability to continue as a going concern. See Note 3 to the consolidated financial statements for additional discussion.

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 three-monthsix-month period ended endedJune March 31,30, 2026.

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 threesix months ended MarchJune 31,30, 2026; however, we consider our critical accounting policies to be those related to the allowance for for doubtful accounts, valuation of assets, significant estimates in the valuation of financial instruments and income taxes. Management bases bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual 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.

As of MarchJune 31,30, 2026, there were no off-balance sheet arrangements.