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

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

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plan", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited condensed consolidated financial statements are stated in United States dollars ($) and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

All references to "common stock" refer to the common shares in our capital stock.

Unless specifically set forth to the contrary, when used in this report the terms "we", "our", the "Company" and similar terms refer to High Wire Networks, Inc., a Nevada corporation, and its consolidated subsidiaries.

The information that appears on our website at www.HighWireNetworks.com is not part of this report.

Description of Business

Business Overview

HWN, Inc., (d/b/a High Wire Network Solutions, Inc.) ("HWN") was incorporated in Delaware on January 20, 2017. HWN is a global provider of managed cybersecurity and managed networks delivered exclusively through a channel sales model. Our Overwatch managed security platform-as-a-service offers organizations end-to-end protection for networks, data, endpoints and users via multiyear recurring revenue contracts in this fast-growing technology segment. HWN has continuously operated under the High Wire Networks brand for more than 20 years.

HWN and JTM Electrical Contractors, Inc. ("JTM"), an Illinois Corporation, entered into an operating agreement through which High Wire owned 50% of JTM. On February 15, 2022, HWN sold its 50% interest in JTM.

On June 16, 2021, we completed a merger with Spectrum Global Solutions, Inc. On January 7, 2022, Spectrum Global Solutions, Inc. legally changed its name to High Wire Networks, Inc. ("High Wire"). The merger was accounted for as a reverse merger. At the time of the reverse merger, High Wire's subsidiaries included ADEX Corporation, ADEX Puerto Rico LLC, ADEX Canada, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively "ADEX" or the "ADEX Entities"), AW Solutions Puerto Rico, LLC ("AWS PR"), and Tropical Communications, Inc. ("Tropical"). For accounting purposes, HWN is the surviving entity. On March 6, 2023, HWN divested the ADEX Entities. On July 31, 2023, HWN paused the operations of its AWS PR subsidiary. On November 3, 2023, HWN paused the operations of its Tropical subsidiary.

On November 4, 2021, we closed on the acquisition of Secure Voice Corp ("SVC"). The closing of the acquisition was facilitated by a senior secured promissory note which has been repaid.

On August 4, 2023, we formed a new entity - incorporated as Overwatch Cyberlab, Inc. ("OCL") - which is 80% owned by our company and 20% owned by John Peterson.

On June 27, 2024, HWN entered into an asset purchase agreement with INNO4 LLC pursuant to which INNO4 LLC agreed to purchase certain assets of HWN related to our technology services business unit. Additionally, the asset purchase agreement includes a non-compete which precludes our company from operating businesses similar to that of AWS PR and Tropical.

Our SVC subsidiary is a wholesale network services provider with network footprint in the Northeast United States. This network carries VoIP and other traffic for other service providers.

We provide the following category of offerings to our customers:

●

Security: High Wire's award-winning Overwatch Managed Security offers organizations end-to-end protection for networks, data, endpoints, and users via multiyear recurring revenue contracts in this fast-growing technology segment. This segment is nearly 100% recurring revenue with multi-year contracts. Overwatch delivers services through Managed Service Providers (MSPs), strategic partnerships and alliances, Value Added Resellers (VARs), Distributors, and Network Service Providers.

Recent Developments

On July 1, 2025, the Company received formal notice from Helena Partners on behalf of Helena Global Investment Opportunities 1 Ltd. ("Helena"), the Company's senior secured lender, stating that the Company remained in default under its loan and security agreements and was required to liquidate and sell its assets no later than August 15, 2025. The notice further advised that Helena would initiate foreclosure proceedings if the asset sale was not completed by that deadline and that Helena was willing to release its perfected security interests solely to facilitate a qualifying sale approved in advance

Consistent with that directive, on August 13, 2025 the Company and its subsidiaries executed two asset purchase agreements with wholly owned subsidiaries of Tego Cyber Inc. ("Tego Cyber") to divest substantially all operating assets of its cybersecurity and voice network business units.

●

Under the first agreement, OW Cyber LLC acquired substantially all assets of HWN, Inc., High Wire's managed cybersecurity services division, for total consideration of 750,000 Series B preferred stock of Tego Cyber Inc. with a stated value of $3.0M and assumed liabilities.

●

Under the second agreement, Secure Voice LLC acquired substantially all assets of Secure Voice Corp, High Wire's wholesale network services subsidiary, for total consideration of 250,000 Series B preferred stock of Tego Cyber Inc. with a stated value of $1.0M and assumed liabilities.

In connection with these transactions, Helena provided a limited release of its security interest in the specific assets conveyed to OW Cyber and Secure Voice in exchange for $300,000 of Series A preferred stock of Tego Cyber Inc. as partial satisfaction of High Wire's outstanding secured debt. Helena's August 15, 2025 correspondence confirmed its consent to the sales and stated that it retained its senior perfected security interest in all remaining assets of High Wire and its subsidiaries until the remaining balance of $150,000 is repaid in full.

Our Operating Units

Our company is comprised of the following:

●

Managed Services: The Managed Services Segment encompasses all of our recurring revenue businesses including our Overwatch Managed Cybersecurity, all network managed services, all managed services performed under a Statement of Work (SoW), and

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SVC, which is a wholesale network services provider with network footprint in the Northeast United States. This network carries VoIP and other traffic for other service providers revenue.

Results of Operations for the Three-Month Periods Ended June 30, 2025 and 2024

Our operating results for the three-month periods ended June 30, 2025 and 2024 are summarized as follows:

		For The Three Months Ended
		June 30,
		2025				2024
Statement of Operations Data:
Revenue		$	2,256,454			$	1,937,618
Operating expenses			3,645,636				4,941,332
Loss from operations			(1,389,182	)			(3,003,714	)
Total other (expense) income			(511,122	)			(757,865	)
Net income from discontinued operations, net of tax			-				7,860,514
Net loss attributable to common shareholders		$	(1,900,304	)		$	4,098,935

Revenues

Our revenue increased from $1,937,618 for the three months ended June 30, 2024 to $2,256,454 for the three months ended June 30, 2025, an increase of $318,836. The improvement in the revenue was primarily related to an improvement in software provider contracts as well as efficiencies resultant in a larger install base.

A significant portion of our services are performed under master service agreements and other arrangements with customers that extend for periods of one or more years. We are currently party to numerous master service agreements, and typically have multiple agreements with each of our customers. Master Service Agreements (MSAs) generally contain customer-specified service requirements, such as discreet pricing for individual tasks. To the extent that such contracts specify exclusivity, there are often a number of exceptions, including the ability of the customer to issue work orders valued above a specified dollar amount to other service providers, perform work with the customer's own employees and use other service providers when jointly placing facilities with another utility. In most cases, a customer may terminate an agreement for convenience with written notice. The remainder of our services are provided pursuant to contracts for specific projects. Long-term contracts relate to specific projects with terms in excess of one year from the contract date. Short-term contracts for specific projects are generally three to four months in duration. The percentage of revenue from long-term contracts varies between periods depending on the mix of work performed under our contracts.

Operating Expenses

During the three months ended June 30, 2025, our operating expenses were $3,645,636, compared to $4,941,332 for the same period of 2024. The decrease of $1,295,696 is primarily related to a $1,158,926 decrease in salaries and wages and a $544,514 decrease in general and administrative expense due to certain cost cutting measures, partially offset by an increase of $458,052 in costs of revenue. In 2025, there was increased headcount included in cost of revenue as compared to 2024 and due to the increase in sales discussed above.

Other Expense

During the three months ended June 30, 2025, we had other expense of $511,122, compared to $757,865 for the same period of 2024. The decrease of $246,743 is primarily related to a decrease in interest expense of $322,551, a decrease in amortization of debt discount of $264,773 compared to the same period of 2024 and no such loss on settlement of debt in 2025, offset by no gain on extinguishment of warrant liabilities in 2025 as compared to $921,422 in the same period of 2024.

Net Income from Discontinued Operations, Net of Tax

For the three months ended June 30, 2025, we had net income from discontinued operations, net of tax of $0, compared to a net income from discontinued operations, net of tax of $7,860,514 in the same period of 2024. The 2024 period included loss from operations of $90,259 and other income of $7,950,773.

Net Loss

For the three months ended June 30, 2025, we had net loss attributable to High Wire Networks, Inc. common shareholders of $1,900,304, compared to a net income of $4,098,935 in the same period of 2024.

Results of Operations for the Six-Month Periods Ended June 30, 2025 and 2024

Our operating results for the six-month periods ended June 30, 2025 and 2024 are summarized as follows:

		For The Six Months Ended
		June 30,
		2025				2024
Statement of Operations Data:
Revenue		$	4,428,080			$	3,999,121
Operating expenses			7,138,775				8,530,160
Loss from operations			(2,710,695	)			(4,531,039	)
Total other (expense) income			(1,746,186	)			(1,521,467	)
Net income from discontinued operations, net of tax			-				9,737,003
Net loss attributable to common shareholders		$	(4,456,881	)		$	3,684,497

Revenues

Our revenue increased from $3,999,121 for the six months ended June 30, 2024 to $4,428,080 for the six months ended June 30, 2025, an increase of $428,959. The improvement in the revenue was primarily related to an improvement in software provider contracts as well as efficiencies resultant in a larger install base.

A significant portion of our services are performed under master service agreements and other arrangements with customers that extend for periods of one or more years. We are currently party to numerous master service agreements, and typically have multiple agreements with each of our customers. Master Service Agreements (MSAs) generally contain customer-specified service requirements, such as discreet pricing for individual tasks. To the extent that such contracts specify exclusivity, there are often a number of exceptions, including the ability of the customer to issue work orders valued above a specified dollar amount to other service providers, perform work with the customer's own employees and use other service providers when jointly placing facilities with another utility. In most cases, a customer may terminate an agreement for convenience with written notice. The remainder of our services are provided pursuant to contracts for specific projects. Long-term contracts relate to specific projects with terms in excess of one year from the contract date. Short-term contracts for specific projects are generally three to four months in duration. The percentage of revenue from long-term contracts varies between periods depending on the mix of work performed under our contracts.

Operating Expenses

During the six months ended June 30, 2025, our operating expenses were $7,138,775, compared to $8,530,160 for the same period of 2024. The decrease of $1,391,385 is primarily related to a $1,460,536 decrease in salaries and wages and a $622,505 decrease in general and administrative expense due to certain cost cutting measures, partially offset by an increase of $746,088 in costs of revenue. In 2025, there was increased headcount included in cost of revenue as compared to 2024 and due to the increase in sales discussed above.

Other Expense

During the six months ended June 30, 2025, we had other expense of $1,746,186, compared to $1,521,467 for the same period of 2024. The increase is primarily related to no such gain on extinguishment of warrant liabilities in 2025 as compared to $921,422 in the same period of 2024, an increase in termination and penalty fee of $310,571 in 2025 as compared to the same period in 2024, offset by decrease in interest expense of $405,002 in 2025 as compared to the same period in 2024, decrease in warrant expense of $233,877 and no such loss on settlement of debt in 2025 as compared to $467,060 in the same period of 2024.

Net Income from Discontinued Operations, Net of Tax

For the six months ended June 30, 2025, we had net income from discontinued operations, net of tax of $0, compared to a net income from discontinued operations, net of tax of $9,737,003 in the same period of 2024. The 2024 period included income from operations of $1,784,730 and other income of $7,952,273.

Net Loss

For the six months ended June 30, 2025, we had net loss attributable to High Wire Networks, Inc. common shareholders of $4,456,881, compared to a net income of $3,684,497 in the same period of 2024.

Liquidity and Capital Resources

As of June 30, 2025, our total current assets were $1,360,200 and our total current liabilities were $10,721,324 resulting in a working capital deficit of $9,361,124, compared to a working capital deficit of $6,224,966 as of December 31, 2024.

We have historically suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have historically raised additional capital through equity offerings and loan transactions.

Cash Flows

		For The Six Months Ended
		June 30,
		2025				2024
Net cash used in operating activities		$	(1,343,657	)		$	(2,350,561	)
Net cash used in investing activities		$	-			$	9,766,983
Net cash provided by (used in) financing activities		$	1,234,749			$	(3,559,394	)
Change in cash		$	(108,908	)		$	3,857,028

For the six months ended June 30, 2025, cash decreased $108,908, compared to an increase in cash of $3,857,028 for the same period of 2024. For the six months ended June 30, 2025, net cash provided by financing activities included net proceeds from of loans payable to related parties of $92,000, proceeds from convertible debentures of $910,000 and net repayments of loans payable of $7,251. Net cash used in operating activities included the net loss from continuing operations of $4,456,881, partially offset by a net cash inflow from changes in operating assets and liabilities of $1,418,204.

As of June 30, 2025, we had cash of $111,916 compared to $220,824 as of December 31, 2024.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The effect of inflation on our revenue and operating results has not been significant.