UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended:
or
For the Transition Period from ___________ to____________
Commission File Number:
(Exact Name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer I.D. No.) |
| incorporation) |
(Address of principal executive offices and Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
| OTCQB |
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 the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of May 7, 2025, there were shares outstanding of the registrant’s common stock.
WYTEC INTERNATIONAL, INC.
FORM 10-Q
March 31, 2025
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
WYTEC INTERNATIONAL, INC.
BALANCE SHEETS
(Unaudited)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Employee retention credit receivable | ||||||||
| Other current assets | ||||||||
| Inventory | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease, right-of-use assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Other payable | ||||||||
| Operating lease, right-of-use obligation, current portion | ||||||||
| Contract liability | ||||||||
| Convertible promissory notes | ||||||||
| Promissory notes, shareholders | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Operating lease, right-of-use obligation, long term portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note L) | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock, par value $ per share, shares authorized: | ||||||||
| Series A convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| Series B convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| Common stock, par value $ per share, shares authorized, and shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Repurchased shares | ( | ) | ( | ) | ||||
| Subscriptions payable | ||||||||
| Treasury stock: | ||||||||
| Series A convertible preferred stock, at cost, shares | ( | ) | ( | ) | ||||
| Series B convertible preferred stock, at cost, shares | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
See accompanying notes to unaudited financial statements
| 3 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Research and development | ||||||||
| Depreciation | ||||||||
| Operating expenses, net | ||||||||
| Net operating loss | ( | ) | ( | ) | ||||
| Other expense: | ||||||||
| Interest expense | ||||||||
| Total other expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and fully diluted | ||||||||
| Net loss per share - basic and fully diluted | $ | ) | $ | ) | ||||
See accompanying notes to unaudited financial statements
| 4 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three months ended March 31, 2025 and 2024
(Unaudited)
| Class A | Class B | Class C | ||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | – | |||||||||||||||||||||||||||||
| Issuance of stock owed | – | – | – | |||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2025 | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | – | |||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | – | |||||||||||||||||||||||||||||
| Cashless warrant exercised | – | – | – | |||||||||||||||||||||||||||||
| Stock issued to existing holders | – | – | – | |||||||||||||||||||||||||||||
| Extension of warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
See accompanying notes to unaudited financial statements
| 5 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three months ended March 31, 2025 and 2024
(Unaudited)
(Continued)
| Class A Preferred Treasury Stock | Class B Preferred Treasury Stock | Additional Paid-in | Repurchased | Subscriptions | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Shares | Payable | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of note payable into common stock | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of stock owed | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | ||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2025 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance, January 1, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of note payable into common stock | – | – | ||||||||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | ||||||||||||||||||||||||||||||||||
| Cashless warrant exercised | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Stock issued to existing holders | – | – | ||||||||||||||||||||||||||||||||||
| Extension of warrants | – | – | ||||||||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | ||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to unaudited financial statements
| 6 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months | ||||||||
| Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Non-cash lease expense | ||||||||
| Decrease (increase) in operating assets | ||||||||
| Employee retention credit receivable | ||||||||
| Inventory | ||||||||
| Other current assets | ( | ) | ( | ) | ||||
| Increase (decrease) in operating liabilities | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable, related party | ||||||||
| Contract liability | ( | ) | ( | ) | ||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from promissory notes, shareholders | ||||||||
| Proceeds from issuance of convertible promissory notes | ||||||||
| Payments on notes payable | ( | ) | ||||||
| Proceeds from exercise of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of accrued interest and note payable into common stock | $ | $ | ||||||
| ROU assets and operating lease obligations recognized | $ | $ | ||||||
See accompanying notes to unaudited financial statements
| 7 |
WYTEC INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”), have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2025. The results for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the year ended December 31, 2025. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Description of Business: Wytec International, Inc. Wytec International, Inc. (“Wytec,” “we,” “our,” “us,” or the “Company”), a Nevada corporation, is a designer and developer of patented small cell technology, which we call the “LPN-16,” and wide area networks designed to support 5G network deployments across the United States. Wytec offers in-building cellular (known as a distributed antenna system, “DAS”) and private Long-term Evolution (“private LTE”) solutions utilizing multiple vendors through Synnex Corporation, a leading distributor and solutions aggregator hosting more than 22,000 technology vendors. Concurrently, Wytec plans to commercialize a multichannel transmission product that integrates in-building cellular, private LTE, and gunshot detection services with its LPN-16 in the third quarter of 2025. Wytec was previously involved in the sale of wired and wireless services, including products, wireless data cards, back-office platform and rate plans to commercial and enterprise clients and was also engaged in the sale of Federal Communications Commission (“FCC”) registered links (“Links”) participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allowed qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment.
Basis of Accounting: The accompanying financial statements have been prepared by the Company’s management in accordance with U.S. GAAP and applied on a consistent basis.
Revenue Recognition. Revenue is recognized by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
| 8 |
The Company earns revenues from contracts with customers for sales and installation of cellular enhancement equipment and support agreements. Revenue from the sale and installation of cellular enhancement equipment is recognized either when the installation is completed or as the Company installs the cellular enhancement equipment, depending on the complexity of the system, such as the degree of customization of the equipment being installed, and the agreement with the customer. Revenue from the installation of systems, which management believes have an alternative use, is recognized upon customer acceptance. This assessment, at contract inception, is based on the combination of equipment ordered, the services performed and whether or not material effort, within the context of the contract, would be required to rework the equipment for another project. For example, such contracts are usually completed within 30-45 days. In larger more complex projects where the Company is creating an asset for the customer with no alternative use and has an enforceable right to payment for performance prior to contract completion, we recognize revenue utilizing the percentage of completion method. This method measures completion based on management’s estimate of total costs to complete each contract because management considers total costs to be the best available measure of progress on the contract. During the three months ended March 2025 and 2024, all sales and installation revenue were recognized when the installation was completed, per company policy.
Support agreements entered into with customers are generally for a period of one year, during which the Company stands ready to provide service and support for installed systems at the customer site. Support agreement amounts are billed in advance to the customer, as agreed in the contract, and recorded as a contract liability. During the period, the Company provides unspecified firmware upgrades to installed client equipment as they are available. Management estimates that straight line recognition of revenue over the period of the support agreement contract is representative of the pattern of delivery on the Company’s obligation under these agreements.
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
Sales tax is recorded on a net basis and excluded from revenue.
Inventory: Inventory is stated at the lower of cost or selling price less costs to complete and sell. Specific identification is used to track inventory and record cost of goods sold when the inventory is sold.
Operating Leases Right-of-use Assets and Operating Lease Obligations: If we determine that an arrangement is or contains a lease, we recognize a right-of-use (“ROU”) asset and lease obligation at the commencement date of the lease. ROU assets represent our right to use an underlying asset for the lease term and lease obligations represent our lease payments arising from the lease. Operating lease ROU assets and obligations are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Stock Based Compensation and Warrant Awards: The Company measures stock-based compensation expense for stock awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
| 9 |
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The Company previously engaged valuation specialists to assist with determining the fair value of our common stock prior to being listed on the OTCQB market. The Company provided the specialist with judgmental inputs and assumptions such as cash flow projections and future results of operations to the specialist.
After being listed for trading on the OTCBQ market on July 30, 2024, the Company fair valued its common stock based on the OTCQB market trading value. The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
NOTE B – GOING CONCERN
Our financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets
and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated
deficit of $
In addition, the Company expects to have ongoing requirements for capital investment to implement its business plan. Finally, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which it operates.
Since inception, operations have primarily been funded through private placements of equity and convertible debt. Management expects to continue to seek additional funding through private or public sources and will seek debt financing. The Company’s ability to continue as a going concern is ultimately dependent on its ability to generate sufficient cash from operations to meet cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in these efforts. These factors, among others, indicate substantial doubt that the Company will be able to continue as a going concern for a period of one year from the filing of these financial statements. Management plans to raise additional funding through a capital raise associated with a public offering and/or additional private capital raises.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should it be unable to continue as a going concern.
As of March 31, 2025, our cash balance was $
| 10 |
NOTE C – REVENUE AND ACCOUNTS RECEIVABLE
The Company recognizes revenue in accordance with its accounting policy described in NOTE A – SIGNIFICANT ACCOUNTING POLICIES. The Company invoices customers and recognizes accounts receivable in an amount it expects to receive from the customer. The Company has contracted payment terms with its customer of net 30 days. The Company recognized revenue from performance obligations satisfied as of a point in time and over time as disaggregated in the table below.
Timing of Revenue Recognition
| For the Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Point in Time | $ | $ | ||||||
| Over Time | ||||||||
| $ | $ | |||||||
The Company earns revenues from in-building cellular
systems and network services. Revenues from the sale and installation of in-building cellular systems, including fixed wireless, SmartDAS,
and 4G LTE, totaled $-
Revenues from network and other services totaled
$
The Company’s contracts for support services
are typically for terms of one year or less. The aggregate amount of contract performance obligation as of March 31, 2025 that the Company
expects to recognize over the next year is $
The Company is under no obligation and is not in the practice of providing customers with returns, rebates, discounts, or refunds. The Company, accordingly, does not recognize these obligations at the time of revenue recognition. The Company may receive future consideration from customers who enter into support agreements. Those services are delivered as of a point in time when the customer requests the service. Future consideration as described is excluded from the transaction price calculated for support agreement performance obligations.
| 11 |
NOTE D – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Telecommunication equipment and computers | $ | $ | ||||||
| Vehicle | ||||||||
| Office furniture and fixtures | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation expense for the three months ended
March 31, 2025 and 2024 was $
| 12 |
NOTE E – DEBT
The Company’s debt consists of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Unsecured promissory note payable to a director of the Company, at 7% per annum, due in August 2025 | $ | $ | ||||||
| Unsecured promissory note payable to the president of the Company, at 5% per annum, due in April 2025, paid in full in April 2025. | ||||||||
| Secured convertible promissory notes payable to various investors, at 9.5% per annum, due on December 31, 2025 | ||||||||
| Secured convertible promissory notes payable to various investors, at 9.5% per annum, due on December 31, 2025 | ||||||||
| Unsecured convertible promissory note payable to a shareholder, at 9.5% per annum, due on June 30, 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due on September 30, 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in October 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in December 2025 | ||||||||
| Secured convertible promissory notes payable to various investors, due on May 31, 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in January 2026 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in January 2026 | ||||||||
| Total | $ | $ | ||||||
| 13 |
In February 2020, we issued a note in the amount
of $
In October 2021, the president of the Company
loaned the Company $
In January 2023, the president of the Company
loaned the Company $
In February 2023, we commenced an offering
of up to $25,000,000 of 9.5% secured convertible promissory notes (“2023 Notes”) pursuant to a private placement in
accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The 2023
Notes together with all accrued and unpaid interest will be payable on or before December 31, 2024 and will be secured by a
perfected recorded first priority security interest in the Company’s LPN-16 patent. If the Company’s common stock is
listed on the NASDAQ Capital Markets on or before the maturity date, the outstanding 2023 Notes will automatically be converted into
shares of the Company’s common stock at a rate equal to the price per share in the public offering. If the 2023 Notes have not
otherwise been automatically converted into shares of the Company’s common stock, these noteholders will have the option, on
or before the maturity date, to convert all or a portion of their outstanding 2023 Notes into shares of the Company’s common
stock at a rate equal to $5.00 per share and, immediately upon the conversion, the converting noteholders will be issued a number of
new warrants from the Company equal to the dollar amount of the conversion divided by $5.00 (the “2023 Warrants”). The
2023 Warrants will be exercisable until December 31, 2024 at an exercise price equal to the greater of (i) five dollars ($5.00) or
(ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price if the Company’s
securities are trading on a public securities trading market. As of March 31, 2025, the Company had issued a total of $
In July 2024, we commenced
an offering of up to $10,000,000 of 9.5% secured convertible promissory notes (“2024 Notes”) pursuant to a private
placement in accordance with Rule 506(c) of Regulation D of the Securities Act. The 2024 Notes together with all accrued and unpaid
interest will be payable on or before December 31, 2025 and will be secured by a perfected recorded subordinate security interest in
the Company’s LP-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets on or before the
maturity date, the outstanding 2024 Notes will automatically be converted into shares of the Company’s common stock at a rate
equal to the price per share in a public offering or, in the event of a direct listing of the Company’s common stock, the
reference price on the closing date of the listing. If the 2024 Notes have not otherwise been automatically converted into shares of
the Company’s common stock, these noteholders will have the option, on or before the maturity date, to convert all or a
portion of their outstanding 2024 Notes into shares of the Company’s common stock at a rate equal to $5.00 per share and,
immediately upon the conversion, the converting noteholders will be issued a number of new warrants from the Company equal to the
dollar amount of the conversion divided by $5.00 (“2024 Warrants”). The 2024 Warrants will be exercisable until December
31, 2025 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day
moving average of the Company’s public trading price if the Company’s securities are trading on the NASDAQ Capital
Markets. As of March 31, 2025, the Company has issued a total of $
| 14 |
In October 2024, the president of the Company
loaned the Company $
In December 2024,
we amended an unsecured promissory note issued to one investor in the amount of $
In December 2024, the president of the Company
loaned the Company $
In January
2025, the president of the Company loaned the Company $
In February 2025, we commenced an offering
of up to $1,000,000 of convertible promissory notes (“2025 Notes”) pursuant to a private placement in accordance with
Rule 506(b) of Regulation D of the Securities Act (the “2025 Note Offering”). The 2025 Notes will be payable on or
before May 31, 2025 unless extended by the Company for six months up to two times. The 2025 Notes will automatically be converted
into shares of the Company’s common stock at price per share of $1.00 if on any trading day following the issuance of the 2025
Notes the Company’s common stock (i) trades an average daily trading volume of 50,000 or greater and (ii) achieves an intraday
or closing price of $5.00 (together, the “Trading Thresholds”). Upon the automatic conversion of the 2025 Notes, the
Company will, no later than 30 days from the date of such conversion following satisfaction of the Trading Thresholds, file with the
Securities and Exchange Commission a registration on Form S-1 (or such other form as may be available) to register the shares
underlying all outstanding 2025 Notes included; provided, however, that if such registration statement is due at a time in which the
Company cannot file such registration statement because the Company has stale financial statements, then the Company shall file such
registration statement by not later than ten days following the date on which the filing of such financial statements are due. If
the 2025 Notes have not otherwise been automatically converted into shares of the Company’s common stock, these noteholders
will have the option, on or before the maturity date, to convert all or a portion of their outstanding 2025 Notes into shares of the
Company’s common stock at a rate equal to $1.00 per share and, immediately upon the conversion, the converting noteholders
will be issued a number of new warrants from the Company equal to the dollar amount of the conversion divided by $1.00 (the
“2025 Warrants”). The 2025 Warrants will be exercisable until December 31, 2025 at an exercise price equal to the
greater of (i) one dollar ($1.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public
trading price as quoted on the OTC Markets or equivalent or higher public securities trading market on which the Company’s
common stock is then traded with the highest volume. As of March 31, 2025, the Company has issued a total of $
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NOTE F – REPURCHASE AGREEMENT
In April 2020, we entered into a Repurchase and
General Release Agreement with one shareholder pursuant to which we promised to pay the amount of $200,000 due on December 31, 2020 in
exchange for 40,000 shares of common stock and 40,000 shares of Series B Preferred Stock (which shares automatically converted into 40,000
shares of common stock in April 2022). The agreement stated that the Company was to make $10,000 monthly installments with the balance
payable on the maturity date. The agreement contains a feature that allows the Company to extend the maturity date of the amount payable
to March 31, 2021 in the Company’s sole discretion, and if the Company exercises this option, the $10,000 monthly installments will
continue until the extended maturity date on which date the remaining balance will be due. During the quarter ended December 31, 2020,
the Company extended the maturity date under the terms of the agreement to March 2021. The Company made payments in the amount of $
NOTE G – LEASES
Short Term Leases
The Company leased its office space on a month
to month basis until February 29, 2024. Total lease expense related to this short term lease was $-
Operating Leases
The Company leases its office space pursuant to
a two-year commercial lease amendment which commenced on March 1, 2024. For the three month periods ended March 31, 2025 and 2024, operating
lease expense totaled $
The remaining weighted average lease term is
Future minimum lease payments as of March 31, 2025 are as follows:
| 2026 | $ | |||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of minimum lease payment | ||||
| Less: current portion of lease obligation | ||||
| Long-term lease obligation | $ |
| 16 |
NOTE H – WARRANTS
The
Company has common stock purchase warrants outstanding at March 31, 2025 to purchase
To calculate the fair value of stock warrants at the date of grant, we use the Black-Scholes option pricing model. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and the prior transaction method approaches and determined a fair value of $5.00 before July 30, 2024 and at trading value after being listed on July 30, 2024. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issue with maturity dates through October 11, 2026, volatility estimates between 27.27% to 37.58% and risk-free rates 4.04% to 5.54% in the period.
In January 2024, the Company extended the expiration
date of 2,000,000 common stock purchase warrants owned by the President of the Company, to December 31, 2025. Due to the modification
of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before
the modification was recorded as a warrant expense, which was only applicable to service warrants. The total incremental increase in the
warrants was $
During the first quarter of 2024, the Company
issued
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Eagle Rock Investments, L.L.C., a limited liability company of which a majority of the outstanding equity is owned by Christopher Stuart, a director of the Company (“ERI”). Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
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In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of
shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock
purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $
In January 2024, the Company extended the
expiration date of
In May 2024, the Company issued shares of
the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total
proceeds of $
In May 2024, the Company made an offer to existing
warrant holders who obtained their warrants upon the conversion of their 9.5% convertible promissory notes pursuant to which such warrant
holders who agreed, on or before May 31, 2024, to exercise at least 50% of their warrants on or before June 30, 2024 would receive (i)
an extension of the expiration date of the balance of such warrants to December 31, 2025; (ii) removal of the following language related
to the exercise price of the warrants “provided, that ten (10) days after the common stock of the Company commences trading on a
public securities trading market, the amount per Share shall thereafter be the greater of (i) $5.00 or (ii) 85% of the average closing
price of the Company’s common stock, as quoted on the public securities trading market on which the Company’s common stock
is then traded with the highest volume, for ten (10) consecutive trading days immediately prior to the date of exercise;” and (iii)
payment of the legal expense to remove the 144 legend, after the applicable holding period, for both the shares issuable upon the exercise
of such warrants and the shares issued upon the conversion of their 9.5% convertible promissory notes. Pursuant to this offer, in May
2024, the Company issued a total of shares of the Company’s common stock upon the exercise of 2023 Warrants and
other common stock purchase warrants by a total of eight investors, including ERI, at an exercise price of $5.00 per share for total proceeds
of $
In July 2024, the Company issued
In July 2024, the Company issued shares of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $.
In August 2024, the Company issued a total of
In December 2024, the Company extended the expiration
date of
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In March 2025, the Company issued a total
of
The following is a summary of activity and outstanding common stock warrants:
| # of Warrants | ||||
| Balance, December 31, 2024 | ||||
| Warrants granted | ||||
| Warrants exercised | ||||
| Warrants expired | ||||
| Balance, March 31, 2025 | ||||
| Exercisable, March 31, 2025 | ||||
As of March 31, 2025, the outstanding and exercisable warrants have a weighted average remaining term of years and have an estimated $ aggregate intrinsic value. The intrinsic value is calculated by taking the difference between the exercise price and the fair market value of the stock at March 31, 2025 multiplied by the number of warrants.
NOTE I – STOCKHOLDERS’ EQUITY
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of
shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock
purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In May 2024, the Company issued shares of
the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total
proceeds of $
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In May 2024, in conjunction with the Company’s
offer to existing warrant holders described in Note H, the Company issued a total of shares of the Company’s common stock
upon the exercise of 2023 Warrants and other common stock purchase warrants by a total of eight investors, including ERI,
at an exercise price of $5.00 per share for total proceeds of $
In July 2024, the Company issued shares
of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for
total proceeds of $
In August 2024, the Company issued shares of common stock to the president of the Company in exchange for shares of Series C Preferred Stock in accordance with that certain exchange agreement, dated October 6, 2022, as amended on November 15, 2022 and July 30, 2024.
In August 2024, the Company issued a total of
During November 2024, the Company issued a total of 1,200 shares of common stock to one vendor for services rendered for total stock compensation recorded of $3,360.
During the year ended December 31, 2024, the Company issued a total of shares to the Company’s directors as compensation valued at $ for services performed during 2024 with an additional $ recorded as compensation for an additional shares accrued for at year end December 31, 2024.
In March 2025, the Company issued a total of
NOTE J – RELATED PARTY TRANSACTIONS
The Company has an accounts payable balance owed
to Richardson & Associates in the amount of $
In 2021, ERI loaned the Company a total of $
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In August 2023, ERI purchased $
In January 2022, the Company issued warrants
to purchase up to
In the
first quarter of 2025, ERI purchased $
In February 2020,
Mr. Christopher Stuart, a director of the Company, purchased 12.5 units, each unit consisting of $
In February 2022, Mr. Stuart purchased for
$
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In November and December 2022, we borrowed a total
of $
In August 2023, Mr. Stuart purchased $
In January
2024, a total of
In August
2024, Mr. Stuart purchased $
In the
fourth quarter of 2024, Mr. Stuart purchased $
In October 2021,
the president of the Company loaned the Company $
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company to December 31, 2025.
In October 2022, the president of the Company entered into an agreement with the Company, as amended in November 2022 and July 2024, to exchange shares of the Company’s Series C Preferred Stock owned by him for shares of the Company’s common stock. In August 2024, shares of common stock were issued to the president of the Company in exchange for the shares of Series C Preferred Stock owed by him.
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In
January 2023, the president of the Company loaned $
In October
2024, the president of the Company loaned the Company $
In December
2024, the president of the Company loaned the Company $
In January
2025, the president of the Company loaned the Company $
In the
first quarter of 2025, the president of the Company purchased $
The Company
has an accounts payable balance owed to Mr. Robert Cook in the amount of $
NOTE K – CUSTOMER CONCENTRATIONS
For the three-month periods ending March 31, 2025
and 2024, the Company generated $
NOTE L – COMMITMENTS AND CONTINGENCIES
From time to time we are party to various legal proceedings arising in the ordinary course of business. Currently, we are not a party to any legal proceedings that management believes could have a material adverse effect on our financial statements.
At March 31, 2025 and December 31, 2024 our other
payable balance of $
See Note C in regards to commitments related to contracts with customers. See Note G in regards to commitments related to leases.
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NOTE O – EMPLOYEE RETENTION CREDIT
During the year ended December 31, 2022, the Company
applied for an employee retention credit for the third quarter 2021 under the COVID-19 Economic Relief Legislation. Based on that application,
the Company was awarded a total of $
NOTE N – SUBSEQUENT EVENTS
In April 2025, the Company issued a total of 18,750 shares of the Company’s common stock to the Company’s five directors as compensation for services provided to the Company during the first quarter of 2025, valued at a total of $93,750.
In April 2025, the president of the Company loaned the Company $30,900 pursuant to an unsecured promissory note due on April 11, 2026. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to four times.
In April 2025, the Company issued a total of 20,000 2025 Warrants and 20,000 shares of the Company’s common stock to two investors upon the conversion of $20,000 of 2025 Notes.
In April 2025, the Company repaid the $10,000 unsecured promissory note, dated October 21, 2021, plus accrued but unpaid interest in the amount $1,778 to the president of the Company.
In the second quarter of 2025, eight investors purchased a total of $93,000 of 2025 Notes pursuant to the Company’s 2025 Note Offering, including $20,000 of 2025 Notes purchased by Mr. Christopher Stuart, a director of the Company.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about Wytec International, Inc. (“Wytec,” “Company,” “us,” “we” or “our”), the industry in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” and variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important factors that could prevent the Company from achieving its stated goals include, but are not limited to, the following:
| (a) | volatility or decline of our stock price; | |
| (b) | potential fluctuation in quarterly results; | |
| (c) | failure to earn revenues or profits; | |
| (d) | inadequate capital to continue our business; | |
| (e) | insufficient revenues to cover operating costs; | |
| (f) | barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; | |
| (g) | dilution experienced by our shareholders in their ownership of the Company because of the issuance of additional securities by us, or the exercise of warrants or conversion of outstanding convertible securities; | |
| (h) | inability to complete research and development of our technology with little or no current revenue; | |
| (i) | lack of demand for our products and services; | |
| (j) | loss of customers; | |
| (k) | rapid and significant changes in markets; | |
| (l) | technological innovations causing our technology to become obsolete; |
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| (m) | increased competition from existing competitors and new entrants in the market; | |
| (n) | litigation with or legal claims and allegations by outside parties; | |
| (o) | inability to start or acquire new businesses, or lack of success of new businesses started or acquired by us, if any; | |
| (p) | inability to effectively develop or commercialize our technology; and | |
| (q) | inability to obtain patent or other protection for our proprietary intellectual property. |
Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our unaudited financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this annual report contain forward-looking statements and information that involves risks and uncertainties.
Overview of Current Operations
Wytec is a designer and developer of small cell technology and wide area networks designed to support 5G network deployments across the United States. Currently we offer in-building cellular (known as a distributed antenna system, “DAS”) and private Long-term Evolution “private LTE” solutions utilizing agreements with multiple vendors and a channel agreement with Synnex Corporation, a leading distributor and solutions aggregator hosting more than 22,000 technology vendors across the world. Concurrently, Wytec is the owner of patented small cell technology, known as the “LPN-16,” designed to support a dense neutral host citywide 5G network coverage. Small cell technology is purported by PricewaterhouseCoopers International Limited to be the key component to 5G deployment.
In August 2023, we entered into an agreement with Trabus Technologies (“Trabus”) to utilize Trabus’ algorithms for artificial intelligence (“AI”), and machine learning (“ML”) to facilitate the development of our gunshot detection and other smart sensors. Our agreement with Trabus also addresses the prototype we are currently developing for use in a pilot program (“Pilot Program”) to be offered to TXShare cooperative purchasing program members in the second or third quarter of 2025, which is expected to include our gunshot detection technology.
In October 2023, we entered into an agreement with Lemko Corporation (“Lemko”) to provide the wireless gateway and to enhance our LPN-16 technology in conjunction with our development of an integrated solution to supplement our in-building solution, including our gunshot detection and drug sensing solutions, utilizing the algorithms currently being developed by Trabus with Lemko’s small cells serving as a wireless communications channel. The Pilot Program is expected to utilize Lemko’s small cell technology employing the latest Federal Communications Commission (“FCC”) Citizens Broadband Radio Service radio with our in-building cellular services.
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In October 2023, we filed a provisional patent with the United States Patent and Trademark Office (“USPTO”) for our smart-sensor technology. In October 2024, we split the provisional patent into four separate patent applications, one of which we filed with the USPTO (“Smart Sensor System for Threat Detection,” filed as U.S. Application No. 18/902,824, describing a process for firearm discharge detection using multiple machine learning models) and all four of which we filed with the Patent Cooperation Treaty. In January 2025, we received notice of allowance for the patent we filed with the USPTO. We expect to file patent applications for the other three with the USPTO in 2025. With these additional patents we anticipate that we will be able to adapt our technology to different service industries.
We expect 5G to have a transformative impact on the economy and we believe that 5G citywide deployments will rely substantially on small cell technology to facilitate this impact. We believe our enhanced LPN-16 technology with our recent addition of AI and ML can solve many of the long-term challenges faced by operators needing access to implement their 5G initiatives. It can also assist cities challenged with on-going technology upgrades, network growth demands, political hurdles, and new business models needed to realize the benefits of a 5G network. In addition to aligning with technical and governmental issues, the LPN-16 is designed to meet the standards for 5G deployment and, for operator needs, adheres to the FCC policy initiatives addressing public safety and First Responder initiatives. Specifically, the FCC’s Report and Order 14-153, Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, adopts rules to help spur wireless broadband deployment by facilitating the sharing of wireless transmission equipment using “neutral host” functionality to simultaneously support multiple providers. The LPN-16 was specifically designed to support neutral host features and performance. The FCC’s goal of “shared use” and “neutral host” seeks to expand coverage and capacity more quickly, reduce costs, and promote access to infrastructure which reduces barriers to deployment and incentivize the sharing of resources, rather than relying on new builds for every stakeholder, thereby safeguarding environmental, aesthetic, historic and local land-use values.
We have implemented an aggressive intellectual property strategy and continue to pursue patent protection for new innovations. In addition to the LPN-16 covered by our current patent, we have identified additional upgrades and additions to the LPN-16 which further tie it to the goals and timelines of Wytec’s 5G development business model, FCC policy initiatives, and customer business usage which we believe could lead to additional patentable property. We intend to file for patent protection on these developments. Our strategy is to continually monitor the costs and benefits of our patent applications and pursue those that will best protect our business and expand the core values of the Company.
We have identified key engineering resources for intellectual property development, antenna development, hardware, software, and firmware engineering, as well as integration and testing that we believe will allow us to continue to expand our technology and intellectual property.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments, particularly those related to the determination of the estimated recoverable amounts of trade accounts receivable, impairment of long-lived assets, revenue recognition and deferred tax assets. We believe the following critical accounting policies require more significant judgment and estimates used in the preparation of the financial statements.
Revenue Recognition. Wytec International, Inc. follows the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606).” The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
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Our contracts for the sale of Cel-Fi systems generally include the performance obligation to sell and install (including testing, commissioning and integration services) equipment. The performance obligation is deemed satisfied once the equipment has been installed, placed in service and customer signs off on their acceptance, at a point in time.
Network service revenues are recognized each month as services are rendered.
The Company generally provides a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and will pass on the warranties from its vendors, if any, which generally covers this one-year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At March 31, 2025, the Company has estimated no product warranty accrual given the Company’s de minimis historical financial warranty experience.
Revenue is recorded and recognized when installation is complete. Maintenance and monitoring rates are pre-set based upon the building’s square footage. Cost of sales includes all equipment and labor that is connected to a project and all other costs are general and administrative. Laredo Independent School District projects are subject to contracted rates.
Stock Based Compensation and Warrant Awards: The Company measures stock-based compensation expense for stock and warrant awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The Company previously engaged valuation specialists to assist with determining the fair value of our common stock prior to being listed on the OTCQB market in August 2024. The Company provided the specialist with judgmental inputs and assumptions such as cash flow projections and future results of operations to the specialist. After July 30, 2024 and being listed for trading on the OTCQB market, the fair value of the Company’s common stock is valued at the OTCQB market trading value.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
Results of Operations for the Three Months Ended March 31, 2025 and 2024
Revenue for the three months ended March 31, 2025 and 2024 was $2,607 and $14,598, respectively. The decrease in revenue of $11,991 or 82% was primarily due to decrease in revenue from our in-building cellular systems.
Cost of sales for the three months ended March 31, 2025 and 2024 was $-0- and $263, respectively. This decrease of $263, or 100%, was primarily due to decrease in costs incurred related to the sales of our in-building cellular systems.
General and administrative expenses were $533,948 for the three months ended March 31, 2025, as compared to $1,327,216 for the three months ended March 31, 2024; this resulted in a decrease of $793,268 or 60%. Contributing factors to the decrease include a decrease in stock compensation of $795,485 and a decrease in professional and consulting fees of $81,225 which was offset by an increase in payroll of $23,477, an increase in marketing and advertising of $19,043, and an increase in insurance expense of $30,085 for the three months ended March 31, 2025.
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We estimate that we will need approximately $4,500,000 of capital or financing over the next twelve months to fund our planned operations, which we plan to satisfy as described below under “Satisfaction of our Cash Needs for the Next 12 Months.”
We anticipate that we will incur operating losses in the next twelve months. Our revenue is not expected to exceed our investment and operating costs in the next twelve months. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition, and results of operations.
Cash Flow from Operating Activities
Cash flows used in operating activities during the three months ended March 31, 2025 were $335,575 compared to $457,377 during the three months ended March 31, 2024. The 121,802 decrease in cash used in operating activities was primarily due to an increase of accounts payable and accrued expenses and receipt of the employee retention credit receivable during the three months ended March 31, 2025 compared to the same period in 2024.
Cash Flow from Investing Activities
Cash flows used by investing activities during the three months ended March 31, 2025 were $1,388 compared to the cash flows used by investing activities of $1,899 during the three months ended March 31, 2024. Capital expenditures totaled $1,388 and $1,899 during the three months ended March 31, 2025 and March 31, 2024, respectively.
Cash Flow from Financing Activities
Cash flows provided by financing activities during the three months ended March 31, 2025 were $563,000 compared to $290,633 during the three months ended March 31, 2024. These receipts represent proceeds from the sale of shares of the Company’s common stock and common stock purchase warrants, and the issuance of debt.
Satisfaction of Our Cash Obligations for the Next 12 Months
As of March 31, 2025, our cash balance was $336,736. Our plan for satisfying our cash requirements for the next twelve months is through a combination of sales -generated income, including revenue from our installation contracts with the Texas school districts, private placements of our capital stock, exercise of warrants, third party financing, and/or traditional bank financing. There is no assurance that we will be able to meet our working capital requirements through the private placement of equity or debt or from any other source.
Other Funding Arrangements
On September 28, 2023, (the “Effective Date”), we entered into a Share Purchase Agreement (the “SPA”) with Gem Global Yield LLC SCS (“GEM” or the “Purchaser”) and Gem Yield Bahamas Limited (“GYBL”). Pursuant to the SPA, we may sell to the Purchaser from time to time up to $100,000,000 (the “Aggregate Limit”) in shares of our common stock during the 36 month period after the first day on which the Company’s common stock trades on a nationally recognized United States stock exchange or any other exchange platform in the world (the “Public Listing Date”). Pursuant to the SPA, after the Public Listing Date, the Company may issue a draw down notice pursuant to which the Company may sell the Purchaser an amount of shares that shall not exceed 400% of the average daily trading volume for the 30 days immediately preceding the date on which the Company delivers the draw down notice. The per share price shall equal 90% of the average applicable Daily Closing Price (as defined in the SPA) of the Company’s common stock during the applicable Draw Down Pricing Period (as defined in the SPA). Notwithstanding the foregoing, within five trading days after the Public Listing Date, the Company may issue a draw down notice for an amount up to $10,000,000 of the Aggregate Limit. Unless earlier terminated as provided in the SPA, the SPA terminates automatically on the earliest of (i) thirty-six (36) consecutive months after the Public Listing Date; (ii) thirty-six (36) months from the Effective Date (as may be extended as provided in the SPA), and (iii) the date the Purchaser shall have purchased the Aggregate Limit.
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Pursuant to the SPA, in consideration for these services, we agreed to pay GYBL the following consideration: (i) a commitment fee equal to two (2) percent of the Aggregate Limit (the “Commitment Fee”) payable in cash from the proceeds of the Draw Downs (as defined in the SPA) or in freely tradeable shares of common stock of the Company valued at the Daily Closing Price (as defined in the SPA) at the time of each Draw Down (as defined in the SPA), at the option of Wytec, deliverable as described in the SPA so long as the entire Commitment Fee is paid on or before the first anniversary of the Public Listing Date and (ii) a warrant granting GYBL the right to purchase shares of our common stock having an expiration date that is the third anniversary of the Public Listing Date at the exercise price and upon the terms set forth more fully in the SPA, up to the number of shares of common stock that is equal to 3.7% of the total number of shares of common stock outstanding calculated on a fully diluted basis as of the Public Listing Date (the “Warrant”). The Commitment Fee will not be payable and the Warrant will not be issuable if the Company’s common stock does not become publicly listed.
Pursuant to a Registration Rights Agreement, dated September 28, 2023, between us and the Purchaser and GYBL (the “Registration Rights Agreement”), no later than thirty (30) calendar days after the Public Listing Date, we are obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) to register the shares of common stock issuable pursuant to the SPA. Pursuant to the Registration Rights Agreement, we are obligated to have the registration statement declared effective by the SEC on the earlier of (A) the 45th calendar day after the date on which the registration statement is filed with the SEC and (B) the fifth business day after the date the Company is notified by the SEC that the registration statement will not be reviewed.
Other Payable
The $335,000 other payable account balance at March 31, 2025 and December 31, 2024, represents sales of registered links and related equipment and services (“Links”) that have been funded by customers, for which the Company no longer expects to fulfill the related obligations to justify presenting as deferred revenue. The Company intends to relieve the remaining amount of this liability through a combination of exchanges for common stock and cash.
Going Concern
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $35,352,899 at March 31, 2025, and have reported negative cash flows from operations. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months from the date of this report. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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Recently Issued Accounting Standards
We have reviewed the standards issued by the Financial Accounting Standards Board (“FASB”) through March 31, 2025 and which are not yet effective. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncement will have a material impact on its financial statements.
On December 14, 2023, FASB issued ASU 2023-09: Improvement to Income Tax Disclosures (Topic 740). The new standard was issued with the intent of expanding income tax expense presentation and note disclosure requirements. The Company is currently evaluating the effects of this standard, but the Company does not expect the standard to have a material impact on the financial statements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer, Mr. William Gray, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15I under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, Mr. Gray has concluded that our disclosure controls and procedures are not effective in timely alerting him to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of the date of the report, there are no legal matters of which management is aware.
Item 1A. Risk Factors.
During the quarter ended March 31, 2025, there have been no material changes from the risk factors previously in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities.
In January 2025, the Company issued a total of 18,750 shares of common stock to the Company’s five directors as compensation for services rendered during the fourth quarter of 2024 in accordance with Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”).
During the first quarter of 2025, the Company issued a total of 6,262 shares of common stock and 6,262 common stock purchase warrants to one investor upon the conversion of a promissory note in the principal amount of $25,000 along with $1,308 of accrued interest in accordance with Rule 506(c) of Regulation D of the Securities Act.
During the first quarter of 2025, the Company issued a total of $503,000 of convertible promissory notes (the “2025 Notes”) to 28 investors, including $20,000 of 2025 Notes to an affiliate of a director of the Company and $10,000 of 2025 Notes to the president of the Company, pursuant to a private placement that commenced in February 2025 in accordance with Rule 506(b) of Regulation D of the Securities Act. The 2025 Notes will be payable on or before May 31, 2025 unless extended by the Company for six months up to two times. The 2025 Notes will automatically be converted into shares of the Company’s common stock at price per share of $1.00 if on any trading day following the issuance of the 2025 Notes the Company’s common stock (i) trades an average daily trading volume of 50,000 or greater and (ii) achieves an intraday or closing price of $5.00 (together, the “Trading Thresholds”). Upon the automatic conversion of the 2025 Notes, the Company will, no later than 30 days from the date of such conversion following satisfaction of the Trading Thresholds, file with the Securities and Exchange Commission a registration on Form S-1 (or such other form as may be available) to register the shares underlying all outstanding 2025 Notes included; provided, however, that if such registration statement is due at a time in which the Company cannot file such registration statement because the Company has stale financial statements, then the Company shall file such registration statement by not later than ten days following the date on which the filing of such financial statements are due. If the 2025 Notes have not otherwise been automatically converted into shares of the Company’s common stock, these noteholders will have the option, on or before the maturity date, to convert all or a portion of their outstanding 2025 Notes into shares of the Company’s common stock at a rate equal to $1.00 per share and, immediately upon the conversion, the converting noteholders will be issued a number of new warrants from the Company equal to the dollar amount of the conversion divided by $1.00. These warrants will be exercisable until December 31, 2025 at an exercise price equal to the greater of (i) one dollar ($1.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price as quoted on the OTC Markets or equivalent or higher public securities trading market on which the Company’s common stock is then traded with the highest volume.
In March 2025, the Company issued a total of 25,000 shares of common stock and 25,000 common stock purchase warrants to one investor upon the conversion of $25,000 of 2025 Notes in accordance with Rule 506(b) of Regulation D of the Securities Act.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the quarter ended March
31, 2025, no director or officer
Item 6. Exhibits.
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| Exhibit | Description |
| 10.8 | Amendment to Promissory Note, dated December 5, 2023 (8) |
| 10.9 | Amendment to Christopher Stuart Promissory Note, dated February 5, 2024 (9) |
| 14.1 | Code of Conduct (1) |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act * |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act * |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act* |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act * |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document)* |
| (1) | Incorporated by reference from the original filing of the Registration Statement on January 10, 2017. |
| (2) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated September 21, 2018. |
| (3) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 4, 2021. |
| (4) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 3, 2024. |
| (5) | Incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on June 25, 2021. |
| (6) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on October 13, 2022. |
| (7) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on November 28, 2023. |
| (8) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on December 6, 2023. |
| (9) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on February 5, 2024. |
| * | Filed herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WYTEC INTERNATIONAL, INC.
By: /s/ William H. Gray
William H. Gray, Chief Executive Officer and
President (Principal Executive Officer)
By: /s/ William H. Gray
William H. Gray, interim Chief Financial Officer
(Principal Accounting Officer)
Date: May 15, 2025
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