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

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

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as "anticipate," "expects," "intends," "plans," "believes," "seeks" and "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company's stock. The following discussion and analysis should be read in conjunction with our financial statements and summary of selected financial data for iWallet Corporation Such discussion represents only the best present assessment from our Management.

Overview

iWallet Corporation (the "Company" or "iWallet") was incorporated on November 18, 2009, in the State of California as "Queensridge Mining Resources, Inc." On or about July 21, 2014, iWallet Corporation, a private California corporation, merged with and into our wholly owned Nevada subsidiary, iWallet Acquisition Corp., and iWallet Acquisition Corp. then immediately merged with and into the Company, with the Company immediately changing its name to "iWallet Corporation."

The Company is currently focused on designing and developing biometric locking wallets and related physical, personal security products, and providing consulting services in connection with protective wallets and other personal security products.

The Company's fiscal year end is December 31st, its telephone number is (858) 610-2958, and the address of its principal executive office is 401 Ryland St., Ste. 200A, Reno, Nevada.

The Company was previously a public company required to file reports with the United States Securities and Exchange Commission (the "SEC") as a result of effectiveness of prior registration statements we filed with the SEC in 2010 and 2014, but our reporting obligations were automatically suspended as a result of having less than 300 shareholders of record, and we subsequently filed a Form 15 (a Notice of the suspension of our duty to file reports under the Securities Exchange Act) and discontinued reporting in 2016.

Reports to Security Holders

The Company intends to furnish its stockholders with annual reports containing financial statements audited by its independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. The Company files Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet its timely and continuous disclosure requirements. The Company may also file additional documents with the Commission if those documents become necessary in the course of its operations.

The public may read and copy any materials that the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The site address is www.sec.gov.

Available Information

All reports of the Company filed with the SEC are available free of charge through the SEC's website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the three and nine months ended September 30, 2025 and 2024, which are included herein.

Our financial statements are stated in U.S. Dollars and are prepared in accordance with generally accepted accounting principles of the United States ("GAAP").

Going Concern Qualification

Several conditions and events cast substantial doubt about the Company's ability to continue as a going concern. The Company has incurred cumulative net losses of $5,970,934 since its inception through September 30, 2025, and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern.

Results of Operations for the three months ended September 30, 2025, compared with the three months ended September 30, 2024

Revenues

We generated revenues of $0 during the three months ended September 30, 2025 and 2024.

Operating Expenses

Operating expenses, which consisted of general and administrative expenses of $19,992 and research and development expenses of $161,882, increased to $181,874 in the three months ended September 30, 2025, from $7,678 in the three months ended September 30, 2024, primarily as a result of increased consulting and supplies in connection with the Company developing its new product.

Other Income (Expense)

We incurred interest expense of $12,475, during the three months ended September 30, 2025, as compared to interest expense of $10,857 during the three months ended September 30, 2024. Interest expense increased from the prior year because of the new notes added in the current period. The Company also incurred a gain on extinguishment of debt of $8,838 during the three months ended September 30, 2025.

Net Loss

The Company had a net loss of $185,511 for the three months ended September 30, 2025, as compared to a net loss of $18,535 for the three months ended September 30, 2024, as a result of the change in general and administrative expenses, research and development expenses and interest expense described above.

Results of Operations for the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024

Revenues

We generated revenues of $0 during the nine months ended September 30, 2025 and 2024.

Operating Expenses

Operating expenses, which consisted of general and administrative expenses of $37,761 and research and development expenses of $171,582, increased to $209,343 in the nine months ended September 30, 2025, from $24,394 in the nine months ended September 30, 2024, primarily as a result of increased consulting and supplies in connection with the Company developing its new product.

Other Income (Expense)

We incurred interest expense of $36,113, during the nine months ended September 30, 2025, as compared to interest expense of $31,253 during the nine months ended September 30, 2024. Interest expense increased from the prior year because of the new notes added in the current period. The Company also incurred a loss on extinguishment of debt of $135,609 during the nine months ended September 30, 2025.

Net Loss

The Company had a net loss of $381,065 for the nine months ended September 30, 2025, as compared to a net loss of $83,647 for the nine months ended September 30, 2024, as a result of the change in general and administrative expenses, research and development expenses and interest expense described above.

Liquidity and Capital Resources

At September 30, 2025, we had $229 of cash on hand and an accumulated deficit of $5,970,934. Our primary source of liquidity during the nine months ended September 30, 2025, has been from advances from a related party and bridge loans. As of September 30, 2025, the Company owed $14,282 in outstanding related party advances, with $0 in accrued interest on those advances, $44,271 in bridge loans with $3,031 in accrued interest on these loans and $260,000 in outstanding convertible debentures payable to outside parties, with $315,382 in accrued interest on these debentures.

Net cash used in operating activities was $50,479 during the nine months ended September 30, 2025 and $23,062 during the nine months ended September 30, 2024.

Net cash used in investing activities was $0 during the nine months ended September 30, 2025 and 2024.

Net cash provided by financial activities was $48,271 and $26,000 during the nine months ended September 30, 2025 and 2024.

Our expenses to date are largely due to professional fees that include accounting, audit and legal fees. To date, we have had minimal revenues, and we require additional financing in order to finance our business activities on an ongoing basis.

Cash Flow

Our primary source of liquidity during the nine months ended September 30, 2025, has been cash received from a bridge loan and advances from a related party.

Working Capital

We had current assets of $229 and $2,437, and current liabilities of $694,078 and $590,461, resulting in working capital deficits of $693,849 and $588,024 at September 30, 2025 and December 31, 2024, respectively.

Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("GAAP") and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Note 2, "Significant Accounting Policies," of the Notes to Financial Statements on the unaudited financial statements as of September 30, 2025 and December 31, 2024, and for the nine months ended September 30, 2025 and 2024 included in this Form 10-Q, describes the significant accounting policies and methods used in the preparation of the Company's financial statements. Management bases

its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

Management believes the Company's critical accounting policies and estimates are those related to revenue recognition, intangible assets, and income taxes. Management considers these policies critical because they are both important to the portrayal of the Company's financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company's management has reviewed these critical accounting policies and related disclosures.

Revenue Recognition

The Company's business plan is to derive revenue primarily from the sale and engraving of its wallets and consulting services within the smart wallet sector. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under ASC 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Intangible Assets

Patents and trademarks are measured at cost. Legal fees associated with patents and trademarks, which are expected to be issued, are recorded as patents and trademarks on the balance sheets. Upon approval by the relevant patent office, the patents and trademarks are amortized over their respective expected lives. Patent and trademark costs associated with patents or trademarks which are not approved or are abandoned, are expensed in the period in which such patents are not approved.

The Company expects to maintain patents for up to 20 years from the effective date and the trademark registrations for as long as the trademarks remain in use and the required filings are made to keep them in use. However, based on the Company's assessment of potential innovation or other competing technological developments a useful life of ten years has been assessed for both the patents and the trademarks.

Software consists of costs relating to the development of the software behind the biometric scanning and the other security programs involved in the wallets. Costs relating to the development of this software are capitalized and amortized over its estimated useful life of ten years.

Website development costs relating to website and mobile application and software development are also capitalized and amortized over its estimated useful life of three years.

ASC 350-20, Goodwill, and 350-30, General Intangibles Other than Goodwill, require intangible assets with a finite life be tested for impairment whenever events or circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated discounted cash flow used in determining the fair value of the asset.

Income Taxes

Income taxes are computed in accordance with the provisions of ASC 740, Income Taxes, which requires, among other things, a liability approach to calculating deferred income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company is required to make certain estimates and judgments about the application of tax law, the expected resolution of uncertain tax positions and other matters. In the

event that uncertain tax positions are resolved for amounts different than the Company's estimates, or the related statutes of limitations expire without the assessment of additional income taxes, the Company will be required to adjust the amounts of the related assets and liabilities in the period in which such events occur. Such adjustments may have a material impact on the Company's income tax provision and results of operations.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

Seasonality

We do not expect our sales to be impacted by seasonal demands for our products and services.