10-Q: WHEN Reports Q3 Loss, IHQ Deal Terminated Amid Going Concern Doubt

World Health Energy Holdings reported a net loss for Q3 2025, terminated a key technology agreement, and faces substantial doubt about its ability to continue as a going concern.

Summary

• Net loss for the nine months ended September 30, 2025, was $2.61 million, an improvement from $3.60 million in the prior year.
• Revenues increased to $169,825 for the nine months ended September 30, 2025, from $123,173 in the prior year, driven by global telecom services.
• Gross profit shifted to a loss of $112,043 for the nine months ended September 30, 2025, compared to a profit of $36,641 in the prior year, due to significantly higher cost of sales.
• The company faces substantial doubt about its ability to continue as a going concern, with existing cash sufficient only until November 2025.
• The IHQ Agreement was terminated on July 28, 2025, leading to the derecognition of associated intangible assets and redeemable shares.
• Disclosure controls and procedures were deemed not effective as of September 30, 2025, due to material weaknesses in financial reporting processes and segregation of duties.
• A tentative settlement has been reached in the lawsuit filed by Eli Gal Levy regarding 23 billion shares.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with a going concern warning, a worsening working capital deficiency, and the termination of a significant technology agreement. While revenue increased in the telecom segment and net loss decreased, these positives are overshadowed by fundamental operational and financial risks, including ineffective internal controls.

Positives

• Net loss decreased to $2.61 million for the nine months ended September 30, 2025, from $3.60 million in the prior year.
• Operating loss significantly reduced to $2.04 million for the nine months ended September 30, 2025, from $3.62 million in the prior year.
• Revenues increased by 37.88% to $169,825 for the nine months ended September 30, 2025, primarily due to growth in the global telecom segment.
• Cash and cash equivalents increased to $125,254 as of September 30, 2025, from $63,188 at December 31, 2024.
• The global telecom segment (CrossMobile) saw a substantial revenue increase to $155,236 for the nine months ended September 30, 2025, from $49,925 in the prior year.
• CrossMobile has signed approximately 11,000 pre-paid contract subscribers.
• Research and development expenses decreased significantly to $736,069 for the nine months ended September 30, 2025, from $1,280,767 in the prior year.
• Selling and marketing expenses decreased to $40,302 for the nine months ended September 30, 2025, from $140,504 in the prior year.
• General and administrative expenses decreased to $1,147,371 for the nine months ended September 30, 2025, from $2,232,494 in the prior year.
• A tentative settlement agreement-in-principle has been reached in the Eli Gal Levy lawsuit.

Negatives

• Gross profit for the nine months ended September 30, 2025, was a loss of $112,043, a significant decline from a profit of $36,641 in the prior year, primarily due to a substantial increase in cost of sales.
• Working capital deficiency worsened to $1,023,044 as of September 30, 2025, from $728,138 at September 30, 2024.
• Accumulated deficit increased to $30,122,260 as of September 30, 2025.
• Revenues for the three months ended September 30, 2025, decreased to $65,333 from $71,250 in the prior year.
• Gross profit for the three months ended September 30, 2025, was a loss of $204,724, compared to a profit of $19,266 in the prior year.
• Financing expenses, net, increased to $110,977 for the nine months ended September 30, 2025, from financing income of $20,846 in the prior year, mainly due to currency exchange differences and interest expenses from related parties.
• The cybersecurity technology segment experienced a decrease in revenue for both the three and nine months ended September 30, 2025.
• The termination of the IHQ Agreement resulted in the derecognition of intangible assets and redeemable shares.

Risks

• Going Concern Uncertainty: Substantial doubt exists regarding the company's ability to continue as a going concern, with current cash sufficient only until November 2025.
• Funding Risk: Management endeavors to secure sufficient financing through equity sales or strategic partnerships, but additional funds may not be available on favorable terms or at all. Failure to secure financing may lead to cessation of operations.
• Business Development Risks: Inherent risks and uncertainties associated with the development of its business, including finalization of the development process, demand and market acceptance of products, effects of technological changes, competition, and ability to manage growth.
• Operating Costs and Losses: Expectation to continue incurring significant operating costs and losses in connection with product development and marketing efforts.
• Geopolitical Instability (Israel-Hamas War): The ongoing conflict in Israel and the broader regional instability (including Operation Nation Rises Like a Lion and the fall of the Assad regime in Syria) could materially and adversely affect operations, ability to deliver services, and the company's economic standing. Consultants and employees may be called for reserve duty.
• Internal Control Weaknesses: Disclosure controls and procedures were not effective as of September 30, 2025, due to material weaknesses including insufficient accounting expertise, inadequate supervisory review, lack of controls over business operations disclosure, and inadequate segregation of duties. This could lead to errors in financial statements.
• Reliance on Third-Party Accounting: Material dependence on third parties for accounting consulting services, which may mitigate but not eliminate the impact of material weaknesses.
• Dilution from Capital Raises: If additional capital is raised through equity offerings, existing stockholders' ownership interest will be diluted.
• Debt Covenants: If additional capital is raised through debt financing, the company may be subject to covenants limiting or restricting specific actions.

Future Outlook

The company plans to accelerate market penetration and expand strategic partnerships for its Neural Nexus platform, focusing initially on the United States with global expansion into Europe and North Africa. This is subject to securing additional growth capital. Management expects to continue generating losses and negative cash flows for the foreseeable future and is actively seeking additional financing to fund operations beyond November 2025.

Management Comments

• Management currently is of the opinion that its existing cash will be sufficient to fund operations until November, 2025.
• Management endeavors to secure sufficient financing through the sale of additional equity securities or capital inflows from strategic partnerships.
• We expect to continue incurring substantial expenses for the next several years as we continue to develop our product lines.
• We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred.
• We believe that the acquisition of CrossMobile provides an opportunity in our evolution and provides us with a strong foothold in the European mobile telecom market.
• We expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe will mitigate the impact of the material weaknesses discussed above.
• Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls and procedures, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.

Industry Context

World Health Energy Holdings operates in the rapidly evolving global telecom and cybersecurity technology sectors. The company's strategy to combine mobile virtual network operator (MVNO) services with proprietary AI-driven cybersecurity solutions through its Neural Nexus platform aligns with the growing demand for integrated security in telecommunications. The global telecom services market was valued at $172.32 billion in 2023, with a projected CAGR of 6.2% to 2030, while the global cybersecurity market is expected to grow to $424.97 billion by 2030 at a CAGR of 4.51%. WHEN aims to differentiate itself by offering value-added services that address both B2B and B2C needs, particularly in parental control and enterprise behavioral threat detection, positioning itself within these high-growth markets.

Corporate Governance

Legal Proceedings

• Eli Gal Levy filed a lawsuit on or about January 19, 2022, in the Delaware Court of Chancery seeking to remove the restrictive legend from approximately 23,000,000,000 shares of Common Stock.
• Trial dates for the Eli Gal Levy lawsuit were cancelled as parties commenced settlement talks.
• A tentative settlement agreement-in-principle has been reached, and the parties are working on the terms.

Related Party Transactions

• Mr. Baumeohl, a director, provided $805,000 in subscription proceeds during the nine months ended September 30, 2025, as part of a $3 million equity investment agreement.
• As of the date of the report, Mr. Baumeohl has provided an aggregate of $3,149,767, completing his investment commitment, for which he is entitled to 21,101,836,667 shares of common stock at prices ranging from $0.0001 to $0.0004 per share.
• The company has a long-term loan from its parent company, UCG, amounting to $2,753,080 as of September 30, 2025, bearing an annual interest rate of 7.5%.
• Giora Rozensweig (CEO) and George Baumeohl (director) are also the sole shareholders and directors of UCG, Inc., the principal shareholder of the company.
• Giora Rosenzweig holds 40.67% and George Baumeohl holds 3.33% of the issued preferred share capital of CrossMobile.

Stakeholder Impact

• Shareholders: Potential for significant dilution if future capital raises involve equity offerings. The going concern warning poses a substantial risk to investment value. The reverse stock split, if effective, could impact per-share price. The Eli Gal Levy lawsuit settlement could affect share distribution.
• Employees: The company's financial instability and going concern risk could impact job security and future compensation. Share-based compensation is a significant component.
• Customers (B2B & B2C): Continued development of cybersecurity and telecom products aims to provide enhanced security and value-added services. However, the company's financial health could impact service continuity and product development.
• Suppliers/Creditors: The going concern risk and negative working capital could raise concerns about the company's ability to meet its financial obligations.
• Regulatory Authorities: Ineffective disclosure controls and procedures could lead to increased scrutiny and potential regulatory actions.

Next Steps

• Secure sufficient financing through additional equity sales or capital inflows from strategic partnerships.
• Continue to generate revenues and reduce expenditures.
• Build a strong telecom brand empowered by state-of-the-art technology, competitive pricing, and a product mix including proprietary AI and WHEN's cybersecurity solutions through CrossMobile.
• Add advanced B2B and B2C Cyber Care bundled with audio-video systems and security cameras as an integrated part of GSM solutions.
• Replicate the combined Cyber Care and Mobile Telecom model to other selected markets in North Africa, the USA, and Europe by Q2 2026.
• Accelerate market penetration, expand strategic partnerships, and position Neural Nexus as the foundation for next-generation protective intelligence worldwide, subject to securing additional growth capital.
• Refine operational models, regulatory compliance frameworks, and partner integrations in the U.S. market.
• Develop and execute tailored marketing campaigns in the U.S. for B2B and B2C product portfolio, starting with the Parental System.
• Work on the terms of the tentative settlement agreement-in-principle for the Eli Gal Levy lawsuit.
• Record the returned IHQ Consideration Shares as treasury shares at their par value upon re-assignment.
• Address material weaknesses in internal controls over financial reporting, including hiring a CFO with U.S. GAAP expertise and establishing an audit committee.

Key Dates

Recommendation

The company explicitly states 'substantial doubt regarding the Company's ability to continue as a going concern,' with existing cash only sufficient until November 2025. This fundamental risk, coupled with a worsening working capital deficiency, the termination of a key technology agreement (IHQ), and the declaration of 'not effective' disclosure controls and procedures due to material weaknesses, paints a dire financial and operational picture. While there was some revenue growth in the telecom segment and a reduction in net loss, these are overshadowed by the severe liquidity issues, governance failures, and the urgent need for capital with no commitments secured. The stock carries extreme risk, and a seasoned investor would likely recommend divesting.

Keywords

Cybersecurity, Telecom, MVNO, AI, Neural Nexus, CrossMobile, OTOGRAPH, KidGuard, Parental System, SEC Filing, 10-Q, Financial Report, Going Concern, Risk Factors, Israel-Hamas War, Internal Controls, Equity Investment, Technology Cooperation, Endpoint Security