When used in this Quarterly Report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Quarterly Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below under "Trends and Uncertainties," and include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

Overview of Current and Planned Business Operations

We continue to pursue market opportunities for the distribution of our current products and services described in our "Principal Products or Services and their Markets" summary on page 8 of this Quarterly Report. In addition, we continue to pursue expanded market distribution opportunities, development of new products and services, the addition of new lines of business and accretive acquisition opportunities that may enhance or expand our current product and service offerings.





Results of Operations

Due to the accelerating expansion of our Mobile Services customer base, Management has chosen, initially disclosed in our first quarter 2022 quarterly report (Form 10-Q), to accelerate growth within this segment, at least through the end of this year. This growth has been driven by expansion of our distribution channels, including field agents and internet sales, along with increased government subsidies and new wireless voice/data services for eligible low-income families. As a result, the Company recognized increases in Mobile Services revenue and direct costs during the quarter ending June 30, 2022. Since the Company may not capitalize customer acquisition costs over the average life of a customer, we recognize the full incremental cost of each new Mobile Service customer at the start of service, which is typically recovered within 120 days after activation. During this period of intentional accelerated growth, initially disclosed in our first quarter 2022 quarterly report (Form 10-Q), Management foresees a temporary reduction of gross profit as we expand our Mobile Services base.

Comparison of the three months ended June 30, 2022, to the three months ended June 30, 2021

For the three months ended June 30, 2022, we had $5,123,097 in revenues from operations compared to $2,913,873 for the three months ended June 30, 2021, for a total revenue increase of $2,209,224. This increase in revenue was directly related to the growth in our Mobile Services segment. Mobile Services expansion continued under the Lifeline and ACP program. The revenues were derived as a result of delivering high-speed mobile data service to low-income consumers.

For the three months ended June 30, 2022, our cost of revenue was $4,680,530 compared to $1,476,485 in the three months ended June 30, 2021, for a cost of revenue increase of $3,204,045. Our cost of revenue increase was primarily the result of increased network, handset and sales compensation costs related to distributing additional services.

For the three months ended June 30, 2022, we had gross profit of $442,567 compared to $1,437,388 in the three months ended June 30, 2021, for a gross profit decrease of $994,821. This decline is directly related to up-front costs incurred by accelerating growth to acquire new customers within our Mobile Services segment.

For the three months ended June 30, 2022, total operating expenses were $1,819,701 compared to $1,056,320 in the three months ended June 30, 2021, for an increase of $763,381. This increase was due primarily to additions in payroll and related expenses resulting from the hiring of operations management and customer support positions in both our subsidiaries, Apeiron Systems and IM Telecom.

For the three months ended June 30, 2022, other income (expense) was $(101,219) compared to $(39,983) in the quarter ended June 30, 2021.

For the three months ended June 30, 2022, we had a net loss of $1,478,353 compared to net income of $341,085 in the three months ended June 30, 2021. The loss for the three months ended June 30, 2022, was impacted by an acceleration of growth in our Mobile Services segment that increased our customer acquisition costs and may not be amortized over the life of the customer, but must be recorded in full at the time of customer activation.





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Comparison of the six months ended June 30, 2022, to the six months ended June 30, 2021

For the six months ended June 30, 2022, we had $9,350,954 in revenues from operations compared to $5,306,711 for the six months ended June 30, 2021, for a total revenue increase of $4,044,243. This increase in revenue was directly related to the growth in both our Hosted Services and Mobile Services segments. Mobile Services expansion continued under the Lifeline and ACP program. The revenues were derived as a result of delivering high-speed mobile data service to low-income consumers.

For the six months ended June 30, 2022, our cost of revenue was $7,261,127 compared to $2,958,162 for the six months ended June 30, 2021, for a cost of revenue increase of $4,302,965. Our cost of revenue increase was primarily the result of increased network, handset and sales compensation costs related to distributing additional services.

For the six months ended June 30, 2022, we had gross profit of $2,089,827 compared to $2,348,549 for the six months ended June 30, 2021, for a gross profit decrease of $258,722. This decline is directly related to up-front costs incurred by accelerating growth to acquire new customers within our Mobile Services segment.

For the six months ended June 30, 2022, total operating expenses were $3,416,258 compared to $2,125,317 for the six months ended June 30, 2021, for an increase of $1,290,941. This increase was due primarily to additions in payroll and related expenses resulting from the hiring of operations management and customer support positions in both our subsidiaries, Apeiron Systems and IM Telecom.

For the six months ended June 30, 2022, other income (expense) was $(196,372) compared to $(114,869) for the six months ended June 30, 2021.

For the six months ended June 30, 2022, we had a net loss of $1,522,803 compared to net income of $108,363 for the six months ended June 30, 2021. The loss for the six months ended June 30, 2022, was impacted by an acceleration of growth in our Mobile Services segment that increased our customer acquisition costs and may not be amortized over the life of the customer but must be recorded in full at the time of customer activation.

Liquidity and Capital Resources

As of June 30, 2022, we had $2,430,966 in cash and cash equivalents on hand.

In comparing liquidity between the six-month periods ending June 30, 2022, and June 30, 2021, cash increased by 208.4%. This increase was primarily attributable to short-term debt financing secured in the quarter. Liabilities and total overall debt increased by 221.1% in the six-month period ended June 30, 2022, when compared to June 30, 2021. This change was primarily the result of the short-term loan received during the quarter. As we scale capabilities alongside our growth strategy in our Mobile Services customer base, we expect it to provide long-term liquidity.

Our current ratio (current assets divided by our current liabilities) decreased to 1.14 as of June 30, 2022, compared to 1.51 as of June 30, 2021. Working capital increased by 5.8%.





Cash Flow from Operations

During the six months ended June 30, 2022, cash flow used in operating activities was $1,328,287, and for the six months ended June 30, 2021, cash flow provided by operating activities was $150,079.

Cash Flows from Investing Activities

During the six months ended June 30, 2022, and 2021, no cash flow was used in investing activities.

Cash Flows from Financing Activities

During the six months ended June 30, 2022, net cash flow provided by financing activities was $2,826,468, due to securing short-term debt financing for the business. For the six months ended June 30, 2021, net cash flow used in financing activities was $77,031, for repayments of notes payable.





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Going Concern

For the six months ended June 30, 2022, the Company generated a net loss of $1,522,803, compared to net income for the six months ended June 30, 2021, of $108,363. The Company sourced short-term financing during the 2nd quarter to help facilitate its growing Mobile Services segment and support higher customer acquisition costs (sales). The accumulated deficit as of June 30, 2022, is $6,868,307.

The Company has continued to ameliorate any substantial going concern doubt by generating additional cash flow in the first quarter of 2022, the year ended 2021 and the year ended 2020, and through securing financing in June, 2022. As the Company continues its growth strategy and increases its Mobile Services customer base, additional operating capital may be required to support the related increase in customer acquisition costs (sales).

Off-Balance Sheet Arrangements

We had no Off-Balance Sheet arrangements during the three-month period ended June 30, 2022.





Critical Accounting Policies



Earnings Per Share

We follow ASC Topic 260 to account for the earnings per share. Basic earnings per common share calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined by dividing net income available to common stockholders by the weighted average number of common shares and dilutive common share equivalents outstanding. As of June 30, 2022, there are 2,205,473 potentially dilutive common shares derived from stock options, and as of June 30, 2021, there are 2,538,352 potentially dilutive common shares derived from stock options.





Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of receivables, cash and cash equivalents.

All cash and cash equivalents are held at high credit financial institutions. These deposits are generally insured under the FDIC's deposit insurance coverage; however, from time to time, the deposit levels may exceed FDIC coverage levels.

The Company has a concentration of risk with respect to trade receivables from customers and cellular providers. As of June 30, 2022, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from one (1) customer in the amount of $1,308,193, or 92.1%. It should be noted that the largest customer is the FCC. As of December 31, 2021, the Company had a significant concentration of receivables from two (2) customers in the amounts of $783,431, or 63.9%, and $194,647, or 15.9%.

Concentration of Major Customer

A significant amount of the revenue is derived from contracts with major customers and cellular partners. For the six months ended June 30, 2022, the Company had two (2) customers that accounted for $5,741,697 or 61.4% and $1,826,412 or 19.5% of revenue, respectively. For the six-month period ended June 30, 2021, the Company had two (2) customers that accounted for $1,774,644, or 33.4% and $1,664,735 or 31.37%, of revenue.

Effect of Recent Accounting Pronouncements

The Company has evaluated all recent accounting pronouncements and believes that none will have a significant effect on the Company's financial statements.

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