UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 001-38910 TECTONIC FINANCIAL, INC. (Exact name of registrant as specified in its charter) | Texas | 82-0764846 | | --- | --- | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-42406 CORP. (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of (I.R.S. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-42406 HORIZON SPACE ACQUISITION II CORP. (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-40146 FORIAN INC. Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 001-41103 DRILLING TOOLS INTERNATIONAL CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 87-248870 ...

[PART I: Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Statements%20(Unaudited)) This section details the company's unaudited financial statements, management's analysis, market risks, and internal controls [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company presents its unaudited condensed consolidated financial statements, reporting a 10% revenue increase to **$82.3 million** but a net loss of **$4.1 million** for the first half of 2025 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$230.3 million** as of June 30, 2025, driven by acquisitions, while total liabilities rose to **$107.8 million** and shareholders' equity slightly increased | | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $66.1 | $68.1 | | **Total Assets** | $230.3 | $222.4 | | **Total Current Liabilities** | $32.0 | $31.0 | | **Revolving line of credit** | $33.1 | $27.1 | | **Total Liabilities** | $107.8 | $102.5 | | **Total Shareholders' Equity** | $122.5 | $120.0 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total revenue increased **10.5%** to **$82.3 million** for the six months ended June 30, 2025, but the company reported a net loss of **$4.1 million** due to increased expenses and a goodwill impairment | | Six months ended June 30, 2025 (in millions) | Six months ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | **Total revenue, net** | $82.3 | $74.5 | | Tool rental | $67.3 | $58.3 | | Product sale | $15.0 | $16.2 | | **Total costs and other deductions** | $85.8 | $70.2 | | Goodwill impairment | $1.9 | $0.0 | | **Net income (loss)** | $(4.1) | $3.5 | | **Diluted earnings (loss) per share** | $(0.11) | $0.12 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities remained stable at **$4.6 million**, while investing activities decreased to **$12.1 million** and financing activities significantly declined to **$2.4 million** | | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | **Net cash flows from operating activities** | $4.6 | $4.4 | | **Net cash flows from investing activities** | $(12.1) | $(26.7) | | **Net cash flows from financing activities** | $2.4 | $23.5 | | **Net change in cash** | $(5.0) | $0.8 | | **Cash at end of period** | $1.1 | $6.8 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail significant accounting policies, recent acquisitions, segment realignment, a **$1.9 million** goodwill impairment, and the initiation of a share repurchase program - The company completed four acquisitions: Casing Technologies Group (CTG) on March 15, 2024; Superior Drilling Products (SDPI) on July 31, 2024; European Drilling Projects (EDP) on October 3, 2024; and Titan Tools Group on January 2, 2025[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - In January 2025, the company realigned its operations into two reportable segments: Eastern Hemisphere and Western Hemisphere. This change was made to support strategic initiatives to expand global operations[90](index=90&type=chunk) - The segment realignment triggered a goodwill impairment test, resulting in a non-cash impairment loss of **$1.9 million** during the six months ended June 30, 2025[134](index=134&type=chunk) - On May 13, 2025, the company announced a share repurchase program for up to **$10.0 million**. During the quarter, **202,611 shares** were repurchased for **$0.6 million**[181](index=181&type=chunk)[182](index=182&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 10% revenue growth driven by acquisitions, the shift to a net loss, and market headwinds, while affirming liquidity Six Months Ended June 30, 2025 vs 2024 | | 2025 (in millions) | 2024 (in millions) | $ Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenue, net** | $82.3 | $74.5 | $7.8 | 10% | | Western Hemisphere Revenue | $78.8 | $73.9 | $4.9 | 7% | | Eastern Hemisphere Revenue | $11.1 | $5.4 | $5.7 | 105% | | **Net income (loss)** | $(4.1) | $3.5 | $(7.6) | -217% | | **Adjusted EBITDA** | $20.1 | $19.9 | $0.2 | 1% | - Revenue growth was driven by acquisitions, particularly in the Eastern Hemisphere, which saw a **105% increase** in revenue for the six-month period[194](index=194&type=chunk)[202](index=202&type=chunk) - The swing to a net loss was primarily due to a **$2.5 million** increase in depreciation and amortization, a **$1.7 million** increase in net interest expense, and a **$1.9 million** goodwill impairment charge[194](index=194&type=chunk) - The company is experiencing market headwinds, including declining rig counts. The weekly average Western Hemisphere rig count was **881** for H1 2025, down from **946** in H1 2024. The Eastern Hemisphere rig count was **719**, down from **760**[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies credit, concentration, foreign currency, and inflation as primary market risks, noting significant customer concentration and unhedged FX exposure - The company has significant customer concentration, with two customers representing **27% of revenue** for the six months ended June 30, 2025[56](index=56&type=chunk) - Foreign exchange risk is growing due to expansion in international markets. The company does not currently hedge this exposure[229](index=229&type=chunk)[230](index=230&type=chunk) - Rising international tariffs and inflation are identified as risks that could materially and adversely affect business, financial condition, and results of operations[231](index=231&type=chunk)[232](index=232&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to a continued material weakness in internal control over financial reporting - As of June 30, 2025, the Company's disclosure controls and procedures were deemed **ineffective** by management[235](index=235&type=chunk) - The ineffectiveness is due to a continued material weakness related to ineffective monitoring activities to assess the operation of internal control over financial reporting[236](index=236&type=chunk) [PART II: Other Information](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other relevant disclosures [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, with no specific material litigation disclosed - The company may become involved in various legal proceedings in the ordinary course of its business. Refer to Note 15 for further details on commitments and contingencies[166](index=166&type=chunk)[240](index=240&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K have been identified - No material changes to the risk factors from the Annual Report as of the date of this Quarterly Report have been identified[241](index=241&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company initiated a **$10.0 million** share repurchase program, repurchasing **202,611 shares** for **$0.6 million** in Q2 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid | Total Cost (in millions) | | :--- | :--- | :--- | :--- | | May 2025 | 61,528 | $2.60 | $0.2 | | June 2025 | 141,083 | $3.17 | $0.4 | | **Total** | **202,611** | **$3.00** | **$0.6** | - The company remains authorized to purchase an additional **$9.4 million** worth of common shares under the current repurchase program[242](index=242&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) A Rule 10b5-1 trading plan was adopted by an executive to sell up to **125,000 shares** over a 15-month period - Michael Domino, President of the Directional Tool Rentals Division, adopted a Rule 10b5-1 trading plan on May 16, 2025, to sell up to **125,000 shares** over 15 months[246](index=246&type=chunk)[247](index=247&type=chunk)

[PART I - Financial Information](index=5&type=section&id=PART%20I) This section presents the company's unaudited financial statements and management's discussion for the periods ended June 30, 2025 [Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Sotherly Hotels Inc. and LP's unaudited consolidated financial statements and detailed notes for Q2 2025 [Sotherly Hotels Inc. Financial Statements](index=5&type=section&id=Sotherly%20Hotels%20Inc.%20Financial%20Statements) Unaudited consolidated financial statements for Sotherly Hotels Inc. as of and for the period ended June 30, 2025 Balance Sheets | Financial Metric | June 30, 2025 (unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Total Assets | 411,117,831 | 414,375,920 | | **Liabilities & Equity** | | | | Total Liabilities | 366,835,493 | 372,777,154 | | Total Equity | 44,282,338 | 41,598,766 | | **Total Liabilities and Equity** | 411,117,831 | 414,375,920 | Statements of Operations | Income Statement Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total Revenue | 48,794,143 | 50,694,367 | | Net Operating Income | 6,574,752 | 9,299,783 | | Net Income | 1,556,424 | 4,664,232 | | Net Income Attributable to the Company | 1,577,985 | 4,616,081 | | Net (Loss) Attributable to Common Stockholders | (416,328) | 2,621,768 | | Basic and Diluted EPS | (0.02) | 0.13 | Statements of Cash Flows | Cash Flow Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 10,134,183 | 16,660,560 | | Net cash used in investing activities | (4,800,503) | (5,002,351) | | Net cash used in financing activities | (7,512,504) | (578,741) | | Net (decrease) increase in cash | (2,178,824) | 11,079,468 | [Sotherly Hotels LP Financial Statements](index=11&type=section&id=Sotherly%20Hotels%20LP%20Financial%20Statements) Unaudited consolidated financial statements for Sotherly Hotels LP as of and for the period ended June 30, 2025 Balance Sheets | Financial Metric | June 30, 2025 (unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Total Assets | 411,117,831 | 415,183,080 | | **Liabilities & Partners' Capital** | | | | Total Liabilities | 366,835,493 | 372,777,154 | | Total Partners' Capital | 44,282,338 | 42,405,926 | | **Total Liabilities and Partners' Capital** | 411,117,831 | 415,183,080 | Statements of Operations | Income Statement Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total Revenue | 48,794,143 | 50,694,367 | | Net Operating Income | 6,574,752 | 9,299,783 | | Net Income | 1,556,424 | 4,664,232 | | Net (Loss) Attributable to Unit Holders | (437,889) | 2,669,919 | | Basic and Diluted EPU | (0.02) | 0.13 | [Notes to Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations of accounting policies, significant transactions, debt obligations, and other financial statement items - The company's portfolio as of June 30, 2025, consists of investments in **ten hotel properties with 2,786 rooms**, plus two hotel commercial condominium units. Seven hotels operate under Hilton, DoubleTree, and Hyatt brands, while three are independent[48](index=48&type=chunk) - Management has noted a going concern risk due to mortgages maturing in **2025 (approx. $87.3 million)** and **2026 (approx. $68.4 million)** that the company will be unable to repay from working capital. The company is also out of compliance with a financial covenant on the DoubleTree by Hilton Jacksonville Riverfront mortgage[59](index=59&type=chunk) - As of June 30, 2025, the company was in default on the mortgage for the Georgian Terrace hotel, which matured on June 1, 2025. The company has requested a **1-year extension** from the special servicer[107](index=107&type=chunk)[113](index=113&type=chunk) - As of June 30, 2025, total undeclared and unpaid cumulative cash dividends on Series B, C, and D preferred stock were approximately **$21.9 million**[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, operating metrics, liquidity challenges, capital expenditures, and dividend policies for Q2 2025 [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Analysis of key operating metrics, revenue, and net income trends for the three and six months ended June 30, 2025 Composite Portfolio Metrics | Composite Portfolio Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Occupancy % | 70.8% | 73.4% | | ADR ($) | 183.88 | 187.51 | | RevPAR ($) | 130.20 | 137.67 | - For the three months ended June 30, 2025, total revenue decreased by **3.7% to $48.8 million**, and rooms revenue decreased by **5.9%**. This was driven by a **5.9% decrease in RevPAR**, resulting from lower occupancy and ADR. Net income fell to **$1.6 million from $4.7 million** in the prior-year period[199](index=199&type=chunk)[201](index=201&type=chunk)[213](index=213&type=chunk) - For the six months ended June 30, 2025, total revenue was nearly flat at **$97.1 million**. However, net income increased slightly to **$6.3 million from $6.0 million**, primarily due to a **$4.1 million gain** on involuntary conversion of assets related to hurricane damage at the Hotel Alba[214](index=214&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [Non-GAAP Financial Measures](index=58&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of non-GAAP financial measures, including FFO and Adjusted FFO, to GAAP net income FFO and Adjusted FFO Reconciliation | Reconciliation Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net Income | 1,556,424 | 4,664,232 | | FFO attributable to common stockholders | 4,317,262 | 7,355,591 | | Adjusted FFO attributable to common stockholders | 4,757,690 | 7,503,096 | | **Per Share & Unit** | | | | FFO per common share and unit | 0.21 | 0.37 | | Adjusted FFO per common share and unit | 0.23 | 0.38 | Hotel EBITDA Reconciliation | Reconciliation Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net Income | 6,289,950 | 5,987,053 | | Hotel EBITDA | 26,813,154 | 28,058,034 | [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) Discussion of cash position, significant debt maturities, capital expenditure plans, and strategies to address liquidity challenges - As of June 30, 2025, the company had approximately **$10.6 million in unrestricted cash** and **$16.0 million in restricted cash**[237](index=237&type=chunk) - The company faces significant liquidity challenges with approximately **$87.3 million in mortgages maturing in 2025** and **$68.4 million in 2026**, which it will be unable to repay out of working capital[247](index=247&type=chunk) - The company has entered into an agreement to sell the parking garage associated with The Georgian Terrace for **$17.75 million**, with proceeds intended to reduce the hotel's existing defaulted mortgage[184](index=184&type=chunk)[253](index=253&type=chunk) - Significant capital expenditures are planned for fiscal years 2025 and 2026, including approximately **$11.5 million for the Philadelphia property** and **$14.6 million for the Jacksonville property**, as required for franchise license renewals[245](index=245&type=chunk)[246](index=246&type=chunk) [Dividend Policy](index=66&type=section&id=Dividend%20Policy) Overview of the company's dividend policy, including cumulative unpaid preferred dividends and arrearage status - As of June 30, 2025, the cumulative unpaid dividends on the company's outstanding preferred shares amounted to approximately **$21.9 million**. The company resumed quarterly payments but has not yet addressed the arrearage[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's exposure to market risk, primarily interest rate risk from variable-rate debt - As of June 30, 2025, the company had approximately **$240.5 million of fixed-rate debt** and **$75.4 million of variable-rate debt**. A hypothetical **1% increase** in variable rates (SOFR and Prime Rate) would increase annual interest expense by approximately **$0.5 million**[279](index=279&type=chunk)[281](index=281&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management's evaluation of the effectiveness of disclosure controls and internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[283](index=283&type=chunk) - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[285](index=285&type=chunk) [PART II - Other Information](index=72&type=section&id=PART%20II) This section provides updates on legal proceedings, risk factors, equity sales, debt defaults, and other corporate information [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material legal proceedings outside of routine business litigation [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors from those disclosed in its prior annual report [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Disclosure of unregistered common stock shares issued upon redemption of Operating Partnership units on May 1, 2025 - On May 1, 2025, **364,086 Operating Partnership units** were redeemed for an equivalent number of common stock shares in an unregistered transaction[294](index=294&type=chunk) [Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Details significant defaults on preferred stock dividends and the Georgian Terrace hotel mortgage loan - Dividends on Series B, C, and D Preferred Stock are in arrears for **eleven quarterly periods**, entitling preferred stockholders to vote for the election of two additional directors[295](index=295&type=chunk) - The company received a Notice of Default for the mortgage on the Georgian Terrace hotel, which matured on June 1, 2025, with an outstanding obligation of approximately **$38.0 million** as of August 12, 2025[297](index=297&type=chunk) [Other Information](index=74&type=section&id=Item%205.%20Other%20Information) Announcement of the 2025 Annual Meeting of Stockholders and new deadlines for stockholder proposals - The 2025 Annual Meeting of Stockholders is scheduled for **November 17, 2025**, with a record date of **September 18, 2025**[302](index=302&type=chunk) [Exhibits](index=75&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Interactive Data Files

[Part I - Financial Information](index=4&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025, including balance sheets, statements of earnings, comprehensive income, stockholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.544 billion** as of June 30, 2025, from **$1.490 billion** at December 31, 2024, primarily driven by growth in total investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $1,042,892 | $966,391 | | Cash and cash equivalents | $79,318 | $140,546 | | Total Assets | $1,543,978 | $1,489,807 | | Total Liabilities | $1,189,223 | $1,151,025 | | Total Stockholders' Equity | $354,755 | $338,782 | [Condensed Consolidated Statements of Earnings](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) For the six months ended June 30, 2025, total revenues increased to **$172.3 million**, but net earnings declined to **$10.8 million** due to higher benefits and expenses Six Months Ended June 30, Performance Comparison (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $172,281 | $166,980 | | Total Benefits and Expenses | $158,373 | $147,971 | | Net Earnings | $10,845 | $14,746 | | Diluted EPS | $0.42 | $0.59 | Three Months Ended June 30, Performance Comparison (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $89,541 | $85,791 | | Total Benefits and Expenses | $81,205 | $76,402 | | Net Earnings | $6,506 | $7,272 | | Diluted EPS | $0.25 | $0.29 | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the six months ended June 30, 2025, was **$16.0 million**, driven by a **$5.1 million** positive change in other comprehensive income from unrealized gains on fixed maturity securities Comprehensive Income Comparison (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings | $10,845 | $14,746 | | Other Comprehensive Income (Loss), net of tax | $5,121 | $(1,412) | | **Comprehensive Income** | **$15,966** | **$13,334** | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased by **$16.0 million** during the first six months of 2025, primarily due to **$10.8 million** in net earnings and **$5.1 million** in other comprehensive income Roll-Forward of Stockholders' Equity (Six Months Ended June 30, 2025, in thousands) | Description | Amount | | :--- | :--- | | Beginning Balance (Dec 31, 2024) | $338,782 | | Net Earnings | $10,845 | | Other Comprehensive Income | $5,121 | | Stock Dividends | $(11,160) | | Net Treasury Stock & Other | $(8,833) | | **Ending Balance (June 30, 2025)** | **$354,755** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities sharply declined to **$1.9 million** for the first six months of 2025, with **$72.4 million** used in investing activities, resulting in a **$57.7 million** net decrease in cash Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,905 | $8,104 | | Net Cash from Investing Activities | $(72,443) | $13,384 | | Net Cash from Financing Activities | $12,839 | $(4,726) | | **Net Change in Cash** | **$(57,699)** | **$16,762** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, investments, segment performance, fair value measurements, and contingencies, including non-compliance with a debt covenant - The company is nearing completion of its implementation of ASU 2018-12 for long-duration insurance contracts, which will be adopted for the year ending December 31, 2025, and is expected to impact its financial statements[36](index=36&type=chunk) - Total investments increased to **$1.043 billion** as of June 30, 2025, from **$966.4 million** at year-end 2024, with notable growth in mortgage loans and real estate held for investment[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) - As of June 30, 2025, the company was not in compliance with the net income covenant of its Western Alliance Bank warehouse line of credit. The company is seeking waivers and believes it has sufficient cash to repay the outstanding **$12.8 million** if required[233](index=233&type=chunk) Segment Net Earnings (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Life Insurance | $10,549 | $12,329 | | Cemetery/Mortuary | $3,068 | $3,835 | | Mortgage | $(2,772) | $(1,418) | | **Total Net Earnings** | **$10,845** | **$14,746** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=78&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial condition and results of operations across its Insurance, Cemetery/Mortuary, and Mortgage segments, noting increased revenues but a decline in net earnings due to higher expenses and a wider loss in the Mortgage segment [Overview](index=78&type=section&id=Overview) The company's operational strategy focuses on growing niche insurance products, expanding its cemetery and mortuary business, and originating mortgage loans - The company's core strategy is focused on three pillars: niche insurance products (funeral plans), cemetery and mortuary operations, and mortgage loan origination[290](index=290&type=chunk) [Insurance Operations](index=78&type=section&id=Insurance%20Operations) The Insurance segment's total revenues for the first six months of 2025 increased by **3%** to **$104.0 million**, but segment net earnings decreased by **14%** to **$10.5 million** due to higher expenses Insurance Segment Financial Highlights (in thousands) | Period | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Q2** | Total Segment Revenues | $53,353 | $49,143 | 9% | | | Segment Net Earnings | $6,403 | $5,617 | 14% | | **H1** | Total Segment Revenues | $103,959 | $100,494 | 3% | | | Segment Net Earnings | $10,549 | $12,329 | (14%) | [Cemetery and Mortuary Operations](index=79&type=section&id=Cemetery%20and%20Mortuary%20Operations) For the first six months of 2025, the Cemetery and Mortuary segment's revenues declined by **5%** to **$16.4 million**, leading to a **20%** decrease in segment net earnings to **$3.1 million** Cemetery & Mortuary Segment Financial Highlights (in thousands) | Period | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Q2** | Total Segment Revenues | $8,225 | $8,363 | (2%) | | | Segment Net Earnings | $1,364 | $1,568 | (13%) | | **H1** | Total Segment Revenues | $16,429 | $17,234 | (5%) | | | Segment Net Earnings | $3,068 | $3,835 | (20%) | [Mortgage Operations](index=79&type=section&id=Mortgage%20Operations) The Mortgage segment's revenues for the first half of 2025 grew **5%** to **$55.4 million**, but its net loss widened by **95%** to **$2.8 million** due to higher costs, despite increased loan origination volume - For the six months ended June 30, 2025, the company originated **3,375 loans** with a total volume of **$1.135 billion**, compared to **3,494 loans** totaling **$1.090 billion** in the same period of 2024[301](index=301&type=chunk) Mortgage Segment Financial Highlights (in thousands) | Period | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Q2** | Total Segment Revenues | $29,950 | $30,422 | (2%) | | | Segment Net Earnings (Loss) | $(1,261) | $86 | (1,566%) | | **H1** | Total Segment Revenues | $55,406 | $52,998 | 5% | | | Segment Net Earnings (Loss) | $(2,772) | $(1,418) | (95%) | [Consolidated Results of Operations](index=80&type=section&id=Consolidated%20Results%20of%20Operations) For the first six months of 2025, total revenues rose **3.2%** to **$172.3 million**, but total benefits and expenses increased more significantly by **7.0%**, leading to a **26.5%** decline in net earnings - For Q2 2025 vs Q2 2024, total revenues increased **4.4%** to **$89.5 million**, while total benefits and expenses grew **6.3%** to **$81.2 million**[304](index=304&type=chunk)[316](index=316&type=chunk) - For H1 2025 vs H1 2024, total revenues increased **3.2%** to **$172.3 million**, while total benefits and expenses grew **7.0%** to **$158.4 million**[318](index=318&type=chunk)[331](index=331&type=chunk) [Liquidity and Capital Resources](index=83&type=section&id=Liquidity%20and%20Capital%20Resources) Cash flow from operations decreased significantly to **$1.9 million** in the first half of 2025, with total capitalization at **$477.7 million**, and the company is seeking waivers for a debt covenant non-compliance - Cash provided by operations for H1 2025 was **$1.9 million**, a significant decrease from **$8.1 million** in H1 2024, primarily due to lower net earnings[334](index=334&type=chunk) - As of June 30, 2025, the company was not in compliance with the net income covenant of its Western Alliance Bank warehouse line of credit and is in the process of receiving waivers[333](index=333&type=chunk) - The combined statutory capital and surplus of the life insurance subsidiaries was approximately **$127.1 million** as of June 30, 2025, an increase from **$120.2 million** at year-end 2024[341](index=341&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=84&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is not required to provide the information typically disclosed under this item - As a smaller reporting company, the Company is not required to provide information typically disclosed under this item[343](index=343&type=chunk) [Controls and Procedures](index=84&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO concluded that its disclosure controls and procedures were effective as of June 30, 2025, with no significant changes in internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[344](index=344&type=chunk) - No significant changes were made to the company's internal control over financial reporting during the quarter[345](index=345&type=chunk) [Part II - Other Information](index=85&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=85&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material legal proceedings outside the ordinary course of business that would have a material adverse effect on its financial condition - The Company is not a party to any material legal proceedings outside the ordinary course of business[347](index=347&type=chunk) [Risk Factors](index=85&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to provide the information typically disclosed under this item - As a smaller reporting company, this disclosure is not required[348](index=348&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities but repurchased **95,584 shares** of its Class A Common Stock at an average price of **$9.99** per share during Q2 2025 - The company executed a 10b5-1 agreement on April 22, 2025, to repurchase up to **$1 million** of its Class A Common Stock[350](index=350&type=chunk) Q2 2025 Share Repurchase Activity (Class A Stock) | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2025 | 24,039 | $9.88 | | May 2025 | 28,643 | $10.19 | | June 2025 | 42,902 | $9.80 | | **Total** | **95,584** | **$9.99** | [Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None reported[354](index=354&type=chunk) [Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - None reported[355](index=355&type=chunk) [Other Information](index=86&type=section&id=Item%205.%20Other%20Information) The company is evaluating the impact of the newly enacted 'One Big Beautiful Bill Act' (OBBBA) and reported no Section 16 officer or director trading arrangement changes - The 'One Big Beautiful Bill Act' (OBBBA) was enacted on July 4, 2025. The company is evaluating its impact but does not expect it to be material[356](index=356&type=chunk) - No Section 16 officers or directors adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025[357](index=357&type=chunk) [Exhibits](index=86&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include Sarbanes-Oxley certifications and Inline XBRL documents - The report includes standard exhibits such as CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL data files (101 series)[362](index=362&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2025 ☐ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to__________ Commission File Number: 001-42644 IQSTEL Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organiz ...

Management's Discussion and Analysis of Results of Operations and Financial Condition For the three and six months ended June 30, 2025 August 12, 2025 TA BL E O F CONTENTS | I | n | t | r | o | du | c | t | i | o | n | 1 | H | u | db | a | y's | B | u | s | i | n | e | s | s | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ...