iQSTEL Inc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC. Overview IQSTEL Inc. (the Company when making reference to consolidated company) is a technology company with operations in 20 countries (Argentina, Armenia, Austria, Canada, Colombia, Germany, Greece, Guatemala, India, Italy, Pakistan, Romania, Serbia, Spain, Switzerland, Turkey, UAE, UK, USA and Venezuela) and over 100 employees that offers leading-edge services through its subsidiaries in the telecommunications, fintech, and AI-enhanced industries. Our global presence includes offices in USA, Argentina, UK, Switzerland, Turkey, and Dubai, and we target diverse and high-growth markets. We maintain more than 603 high value network interconnections around the world, delivering international voice, SMS, and connectivity services that form the core of our business. Our strategy focuses on leveraging synergies among our subsidiaries to drive innovation, operational efficiency, and growth through organic development and strategic acquisitions. Our Telecom Division, which represents the majority of current operations and accounted for 87% of our revenues for the three months ended March 31, 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). Also under the Telecom Division, our developing Blockchain Platform Business Line offers our proprietary Mobile Number Portability Application (MNPA) through our subsidiary, itsBchain (www.itsbchain.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 three months ended March 31, 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—Reality Border now develops practical AI software solutions for enterprise and telecommunications applications. 4 Table of Contents Reality Border currently serves as IQSTEL’s AI innovation and product development platform. Its activities include AI agents and related software solutions designed for web, voice, and contact center environments, as well as integration with telecommunications infrastructure, business systems, and security layers. The Company’s AI strategy includes solutions such as Airweb.ai for AI-powered customer engagement across web and phone channels, IQ2Call.ai for AI-enabled call center and customer care applications, and IQCortex.ai for broader AI platform capabilities and enterprise use cases. Reality Border’s current development efforts include software functionality, workflow orchestration, multilingual interaction, system integration, and operational deployment models intended for business use. Reality Border’s earlier immersive platform work contributed to capabilities that are now being applied in its AI products; however, the current business emphasis is on AI solutions for enterprise and telecommunications operations rather than metaverse-based environments. The information contained on our websites is not incorporated by reference into this quarterly report and should not be considered part of this or any other report filed with the SEC. Methods of Valuation We use supplemental measures of our performance which are derived from our consolidated financial information but are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include: Adjusted EBITDA and gross revenue. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies. Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity. It is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. Adjusted EBITDA excludes, in addition to non-operational expenses like interest expenses, taxes, depreciation and amortization, items that we believe are not indicative of our operating performance, such as: • Change in Fair Value of Derivative Liabilities: These adjustments reflect unrealized gains or losses that are non-operational and subject to market volatility. • Loss on Settlement of Debt: This represents non-recurring expenses associated with specific financing activities and does not impact ongoing business operations. • Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives. The Company believes Adjusted EBITDA offers a clearer view of the cash-generating potential of its business, excluding non-recurring, non-cash, and non-operational impacts. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes, non-cash and certain other items that may vary for different companies for reasons unrelated to overall operating performance and also believes this information is useful to investors. 5 Table of Contents Gross revenue, which equals revenue before intercompany eliminations, represents a key performance metric that management uses to measure the aggregate scale and commercial activity of the Company’s operating segments prior to consolidation adjustments. Gross Revenue is particularly useful in evaluating: Total transactional volume Growth trends across business units Underlying demand and commercial activity independent of consolidation structure Gross Revenue is a non-GAAP measure and should be evaluated together with the Company’s GAAP revenue, which includes the effect of intercompany eliminations required under consolidation accounting. Non-GAAP financial measures have inherent limitations and should not be considered superior to, or a substitute for, GAAP results. The Company provides reconciliations of each non-GAAP financial measure to the most directly comparable GAAP measure in the accompanying tables. Management believes these reconciliations provide investors with transparency into the adjustments made and enhance the overall understanding of the Company’s operating performance. Results of Operations Revenues Our total revenue reported for the three months ended March 31, 2026 was $97,919,836, compared with $57,632,816 for the three months ended March 31, 2025. These numbers reflect an increase of 70% year over year on our consolidated revenues. When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025: Revenue for the Three Months Ended March 31, Subsidiary 2026 2025 IQSTEL Inc $ — $ — Etelix.com USA, LLC 20,436,467 8,720,701 SwissLink Carrier AG 989,033 1,349,162 QGlobal LLC 374,342 660,926 IoT Labs LLC 28,785,144 24,904,457 Smartbiz Telecom 4,591,779 3,478,939 Whisl Telecom 1,218,644 772,775 QXTEL Limited 29,223,827 31,154,997 GlobeTopper LLC 12,993,408 — $ 98,612,644 $ 71,041,957 Intercompany eliminations (692,808 ) (13,409,141 ) $ 97,919,836 $ 57,632,816 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, 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 quarter ended March 31, 2026 compared to the quarter ended March 31, 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. 6 Table of Contents The organic growth during the three months ended March 31, 2026 was 87% of the total revenue for those periods. This reflects the solid foundation of our revenue and the growth capacity the Company has with its current operations. We consider organic growth the revenues reported by our existing subsidiaries once fully integrated to our operations. These subsidiaries include Etelix, SwissLink, QGlobal, IoT Labs, Smartbiz, Whisl, QXTEL. GlobeTopper, acquired on July 1st, 2025 represented the rest of the increment increase, showing the potential this subsidiary has of creating value to the organization. Cost of Revenues Our total cost of revenues for the three months ended March 31, 2026 increased to $95,839,138, compared with $55,697,858 for the three months ended March 31, 2025. When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025: Cost of Revenue for the Three Months Ended March 31, Subsidiary 2026 2025 IQSTEL Inc $ — $ — Etelix.com USA, LLC 20,213,681 8,574,584 SwissLink Carrier AG 697,009 1,080,854 QGlobal LLC 290,228 476,330 IoT Labs LLC 28,693,128 24,809,932 Smartbiz Telecom 4,349,376 3,246,341 Whisl Telecom 1,056,679 581,128 QXTEL Limited 28,351,638 30,325,933 GlobeTopper LLC 12,734,958 — $ 96,386,697 $ 69,095,102 Intercompany eliminations (547,559 ) (13,397,244 ) $ 95,839,138 $ 55,697,858 Our cost of revenue consists of direct charges from vendors that the Company incurs to deliver services to its customers. These costs primarily consist of usage charges for calls and SMS terminated in vendor’s network, as well as the costs of the digital prepaid products related to Fintech (Globetopper) operations. The behavior in the costs shows a logical correlation with the behavior of the revenue commented above, as each additional unit sold (minutes and SMS) has its corresponding termination cost. A similar pattern is observed in the virtual gift-card business, where each incremental digital prepaid product delivered to customers includes the associated wholesale acquisition cost payable to the issuing partner. As a result, cost of revenue moves directionally in line with transactional volume across both business lines, reflecting the variable-cost nature of these operations. The inclusion of GlobeTopper in the consolidation process, along with the traffic volumes by QXTEL, Etelix and Swisslink, and the reorganizing of the portfolio among subsidiaries, reflects the synergies derived from the commercial and operational integration of all group companies. This quarter, compared to 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. 7 Table of Contents Gross Margin Our gross margin, which is simply the difference between our revenues and our cost of sales, discussed above, was $2,080,698 for the three months ended March 31, 2026 compared to $1,934,958 for the three months ended March 31, 2025. This represents an increase of 8% in the gross margin year over year. Gross Margin % for the Three Months Ended March 31, Subsidiary 2026 2025 IQSTEL Inc — — Etelix.com USA, LLC 1.09 % 1.68 % SwissLink Carrier AG 29.53 % 19.89 % QGlobal LLC 22.47 % 27.93 % IoT Labs LLC 0.32 % 0.38 % Smartbiz Telecom 5.28 % 6.69 % Whisl Telecom 13.29 % 24.80 % QXTEL Limited 2.98 % 2.66 % GlobeTopper LLC 1.99 % — Operating Expenses Operating expenses increased to $3,038,707 for the three months ended March 31, 2026 from $2,539,184 for the three months ended March 31, 2025. The detail by major category is reflected in the table below. Operating Expenses for the Three Months Ended March 31, Category 2026 2025 Salaries, Wages and Benefits $ 933,119 $ 955,159 Technology 552,788 425,593 Professional Fees 325,967 309,049 Legal & Regulatory 110,859 166,438 Travel & Events 115,689 89,050 Public Cost 60,293 66,559 Advertising 267,092 218,880 Bank Services and Fees 62,069 21,441 Depreciation and Amortization 172,646 126,995 Office, Facility and Other 384,729 126,302 Insurances 34,172 903 Bad debt expense 14,364 — $ 3,033,787 $ 2,506,369 Stock-based compensation 4,920 32,815 $ 3,038,707 $ 2,539,184 The most significant differences are: (1) the increase in technology expenses related to the deployment and upgrade of the Switching platform to allocate all subsidiaries, which will result in tremendous cost reduction once all companies are migrated to the new platform; (2) the increases in other items such as technology; depreciation and amortization; and office, facility and other are largely the result of the addition of QXTEL and GlobeTopper to our consolidated financial statements. 8 Table of Contents When looking at the numbers by subsidiary, we have the following breakout for the three months ended March 31, 2026 compared to the three months ended March 31, 2025: Operating Expenses for the Three Months Ended March 31, Subsidiary 2026 2025 IQSTEL Inc $ 1,007,360 $ 749,131 Etelix.com USA, LLC 112,521 119,377 SwissLink Carrier AG 271,214 185,820 Itsbchain 329 1,190 QGlobal LLC 92,879 112,299 IoT Labs LLC 61,628 68,826 Global Money One 293 243 Smartbiz Telecom 256,907 361,296 Whisl Telecom 118,559 98,418 QXTEL Limited 872,939 740,514 GlobeTopper LLC 269,013 — $ 3,063,642 $ 2,437,114 Intercompany eliminations (24,935 ) 102,070 $ 3,038,707 $ 2,539,184 The largest portion of the increase comes from IQSTEL, which is currently bearing most of the technology-related expenses, and from QXTEL, which since its incorporation has maintained a higher cost structure compared to the other subsidiaries, although it has remained consistent over time. Additionally, starting July 1, 2025, Globetopper’s expenses were incorporated, which were not included in previous periods. We are continually identifying operational synergies among all of our subsidiaries to be more cost efficient. Operating Income The Company showed negative Operating Income for the three months ended March 31, 2026 of $958,009 compared with $604,226 for the three months ended March 31, 2025. These results reflect an overall rise in operating expenses, largely associated with ongoing investments in development and growth initiatives. Our Telecom Division, currently the primary source of revenue for the Company, shows continued progress, as evidenced by the increase in revenue and gross profit. However, it reported a negative operating income for the three months ended March 30, 2026, mainly driven by the increase in general and administrative expenses. This contrasts with the period ended March 31, 2025, which showed a positive operating income. The Fintech Division also reflects its current position following the inclusion of Globetopper. In addition, our pre-revenue companies continue to operate with minimal expenses, focused solely on completing product and service development prior to market launch. Other Expenses/Other Income We had total other expenses of $412,424 for the three months ended March 31, 2026, as compared with other expenses of $519,660 for the same period ended 2025. The other expenses are largely due to $350,998 and $531,726 of Interest Expense for the three months ended March 31, 2026 and 2025, respectively. A significant portion of the 2026 interest expense was associated with the financing for the acquisition of Globetopper, which allowed us to drive the organic growth of the Company. 9 Table of Contents Net Loss 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 acquisition of Globetopper; however, the increase in the Company's value and the beneficial effects of this acquisition could be observed in the $829,064 of gross profit added to our operations for the three months ended March 31, 2026, which represents 43% of the total consolidated gross profit. The net results of the periods reported are highly impacted by the expenses in the holding entity (IQSTEL), which has a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited and GlobeTopper LLC. As previously stated, our strategy remains focused on strengthening the telecommunications segment as the main growth engine to support the development and expansion of new business lines, including our Fintech Division with the inclusion of Globetopper, which we expect to contribute positively to future performance and enhance our market positioning. In evaluating our financial performance, we utilize Adjusted EBITDA as a supplemental measure to provide insights into the profitability of our core operations. (Please see Adjusted EBITDA, which is reconciled to the Net Income in the table below.) Adjusted EBITDA excludes, in addition to non-operational expenses like interest expenses, taxes, depreciation and amortization, items that we believe are not indicative of our operating performance, such as: - FX Gains and Losses. - Stock-Based Compensation: As a non-cash expense, this adjustment eliminates variability caused by equity-based incentives. - Other non-recurrent expenses: Adjusted EBITDA removes one-time, irregular, or non-recurring expenses to reflect the company's sustainable earnings. We believe Adjusted EBITDA offers a clearer view of the cash-generating potential of our business, excluding non-recurring, non-cash, and non-operational impacts. Based on the analysis of our Adjusted EBITDA, our Telecom Division is a high-performing division that generates strong operational profits. Consolidated figures show a slightly negative Adjusted EBITDA; while this isn’t ideal, in our opinion it implies the Company is close to breaking even and might achieve positive Adjusted EBITDA with small improvements in efficiency or revenue growth. We are in a transitional period, scaling operations and investing heavily in growth initiatives with the execution of our M&A plan. Management has also identified areas for cost-cutting and operational improvements and has acted in that direction. Telecom Division Fintech Division Pre-revenue companies IQSTEL Consolidated Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 Revenues 84,926,428 57,632,816 12,993,408 — — — — — 97,919,836 57,632,816 Cost of revenue 83,104,180 55,697,858 12,734,958 — — — — — 95,839,138 55,697,858 Gross profit 1,822,248 1,934,958 258,450 — — — — — 2,080,698 1,934,958 Operating expenses General and administration 1,761,712 1,668,305 269,013 — 622 1,433 1,007,360 869,446 3,038,707 2,539,184 Total Operating Expenses 1,761,712 1,668,305 269,013 — 622 1,433 1,007,360 869,446 3,038,707 2,539,184 Operating income/(loss) 60,536 266,653 (10,563 ) — (622 ) (1,433 ) (1,007,360 ) (869,446 ) (958,009 ) (604,226 ) Other income (expense) (62,727 ) 1,210 (96 ) — — (349,601 ) (520,870 ) (412,424 ) (519,660 ) Net income (loss) before income taxes (2,191 ) 267,863 (10,659 ) — (622 ) (1,433 ) (1,356,961 ) (1,390,316 ) (1,370,433 ) (1,123,886 ) Income taxes (15,503 ) (20,575 ) — — — (15,503 ) (20,575 ) Net income (loss) (17,694 ) 247,288 (10,659 ) — (622 ) (1,433 ) (1,356,961 ) (1,390,316 ) (1,385,936 ) (1,144,461 ) Depreciation and Amortization 166,335 126,995 6,311 — — — — — 172,646 126,995 Interest expense 1,594 10,852 121 — — — 257,342 520,869 259,057 531,721 FX Gains/Losses 18,696 31,939 18 — — — — (401 ) 18,714 31,538 Stock-based compensation — — — — — — 4,920 32,815 4,920 32,815 Other non recurrent — 150,984 — — — — — — — 150,984 Taxes 15,503 25,548 — — — — — — 15,503 25,548 Adjusted EBITDA 184,434 593,606 (4,209 ) — (622 ) (1,433 ) (1,094,699 ) (837,033 ) (915,096 ) (244,860 ) 10 Table of Contents Liquidity and Capital Resources As of March 31, 2026, we had total current assets of $29,726,482 and current liabilities of $30,028,395, resulting in a negative working capital of $301,913. Our operating activities used $175,447 in the three months ended March 31, 2026 as compared with $1,906,969 used in operating activities in the three months ended March 31, 2025. Our negative operating cash flow for both periods is a result of our net loss and changes in operating assets and liabilities which varies depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. This is due to substantial non-cash adjustments and working capital changes: - Depreciation and amortization increased, reflecting higher non-cash expenses. - Bad debt expense remained low, indicating stable receivables quality. - Accounts receivable: Large positive adjustment ($6.3M in 2026 vs. $45.9M in 2025), suggesting strong collections and reduced sales on credit. - Accounts payable and accrued liabilities: Large negative adjustments, especially accrued liabilities, indicating significant payments during the period. The Company’s operating cash flow is still negative, but the gap between net loss and cash used is bridged by non-cash charges and working capital management. Investing activities used $8,400 for the three months ended March 31, 2026, compared to $58,645 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 in the current period, compared to $540,304 in the prior period. 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, as the Company continues to support its growth and investment strategy. The Company is transitioning from an expansion phase in 2026, marked by the acquisition of Globetopper, to a more consolidated approach during the first nine 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 Globetopper 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. We intend to fund our operations through increased sales, as well as debt and/or equity financing arrangements, to support liquidity and capital resources. We also plan to seek additional funding through public and private equity offerings. However, there can be no assurance that we will be successful in raising additional capital. If we are unable to secure such funding, our business plan and operations could be adversely affected. Additionally, there can be no assurance that such financing will be available 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 three-month period ended March 31, 2026. 11 Table of Contents Critical Accounting Polices A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are discussed in detail in the footnotes to our financial statements included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026; 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. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See the Consolidated Financial Statements in this Quarterly Report for a complete discussion of our significant accounting policies. Off Balance Sheet Arrangements As of March 31, 2026, there were no off-balance sheet arrangements. Recent Accounting Pronouncements We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position, or cash flow. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.