What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-04-14 compared with 2021-04-06 · 84 added, 107 removed, 137 unchanged (58% of the section changed)

12 unchanged sentences

Overview of Current and Planned Business Operations

We are a cellular reseller of wholesale priced minutes,

text, and data, including traditional post-paid cellular services, primarily operating on mobile networks of major communications companies

like Verizon and AT&T;

and we are a Sprint authorized agent of cellular services and products that principally include business to

business and business to customer products and services, mostly B2B Mobile Service and Internet of Things or wireless data.

coming year, we plan to devote additional sales resources to IoT, and we have direct wholesale data agreements with Verizon and AT&T

to provide us with our required wireless services.

We also presently provide Lifeline Program service through a virtual eligible telecommunications

carrier with a Lifeline Program license;

and we own an eligible telecommunications carrier (ETC), IM Telecom.

We primarily distribute

all of our products and services through independent field agents.

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 6 of this Annual Report.

In addition, we continue to pursue expanded market distribution

opportunities, development of new products and services, the addition of new lines of business (i.e., the FCC’s anticipated ACP

service expansion), and accretive acquisition opportunities that may enhance or expand our current product and service offerings.

Comparison of the Year Ended December 31, 2021,

1 unchanged sentence

Results of Operations

In comparing our Statements of Operations between

the years ended December 31, 2021, and 2020, we grew revenue, realized increased costs of revenue and operating expenses, and increased

For the year ended December 31, 2021, we had $12,834,844

in revenues from operations compared to the year ended December 31, 2019, where we had $9,173,520 in revenue from operations.

of revenue for the year ended December 31, 2020, was $5,823,552, compared to $6,303,053 for the year ended December 31, 2019.

gross profit of $3,535,447 for the year ended December 31, 2020, and $2,870,467 for the year ended December 31, 2019.

For the year ended December 31, 2020, and the year

ended December 31, 2019, total operating expenses were $3,895,466 and $4,515,662, respectively, for a decrease of $620,196.

in revenues from operations compared to $9,358,999 in the prior year ended December 31, 2020, for a total revenue increase of $3,475,845

The increase in 2021 revenue was caused by an increase in both our Hosted Services and Mobile Services segments, with Mobile

Services expanding largely due to the introduction of the EBB program that added additional revenues for the distribution of high-speed

mobile data service to low-income consumers.

For the year ended December 31, 2021, our cost of

revenue was $7,105,464 compared to $5,823,552 in the prior year ended December 31, 2020, for a cost of revenue increase of $1,281,912

Our 2021 cost of revenue increase was primarily the result of increased network, handset and sales commission costs related to

distributing additional services.

For the year ended December 31, 2021, we had a gross

profit of $5,729,380 compared to $3,535,447 in the prior year ended December 31, 2020, for a gross profit increase of $2,193,933 in 2021.

For the year ended December 31, 2021, total operating

expenses were $5,091,033 compared to $3,895,466 in the prior the year ended December 31, 2020, for an increase of $1,195,567 in 2021.

This increase was due primarily to increases in payroll and related expenses resulting mostly from the hiring of management level operations

positions in both Apeiron Systems and IM Telecom.

For the year ended December 31, 2021, other income

(expense) was $598,637 compared to ($38,209) for the year ended December 31, 2019.

For the years ended December 31, 2020 and December

31, 2019, we had net income of $238,618 and net loss of $1,584,904, respectively.

In comparing our Statements of Operations between

the years ended December 31, 2020, and 2019, we grew revenue and reduced expenses.

The increase in revenue was primarily caused by growth

in IP Voice revenue from Apeiron Systems and increased Lifeline subscriber revenue.

The expense decrease was due primarily to the reduced

operating and maintenance expenses resulting from improved cost control.

(expense) was ($15,361) compared to $598,637 in the prior year ended December 31, 2020 (see Note to of our Consolidated Financial Statements

included in this Annual Report).

For the year ended December 31, 2021, we had net income

of $622,986 compared to $238,618 in the prior year ended December 31, 2020.

Liquidity and Capital Resources

As of December 31, 2020, we have $ 715,195 in cash

and cash equivalents on hand.

As of December 31, 2021, we had $932,785 in cash and

cash equivalents on hand.

The ability to continue as a business is dependent

1 unchanged sentence

liabilities arising from normal business operations when they come due.

Management intends to finance operating costs over the next (6)

six months with profits from our operations.

Management intends to finance operating costs over the next twelve

(12) months with revenues from our operations.

In comparing liquidity between the years ending December

31, 2020, and 2019, cash and short-term assets increased by 103%.

The increase was caused through continuing focus on products that are

paid in advance.

Additionally, we received $458,900 in Federal SBA Paycheck Protection Loan Program introduced in 2020, of which $309,000

will be forgiven.

Liabilities and total overall debt showed a 15% decrease in 2020 when compared to 2019.

Stockholder debt had a net decrease

as a shareholder loan was repaid in full.

The revolving lines of credit were eliminated through payments in 2020.

Going forward, equity

investment and growth of new service offerings are expected to provide the liquidity for our business.

Working capital increased by 109% for the year ending

December 31, 2020, compared to 2019, resulting from our larger cash balance and reduction in accounts payable and accrued expenses.

Overall, the current ratio (current assets divided

by our current liabilities) was 1.05 and .36 as of December 31, 2020, and 2019, respectively.

31, 2021, and 2020, cash increased by 30.4%.

The increase was the result of improved revenues and margins.

Liabilities and total overall

debt showed a 10% decrease in 2021 when compared to 2020.

Our revolving lines of credit were eliminated through payments in 2020.

forward, growth from new service offerings is expected to

provide additional liquidity for our business.

capital increased by $1,943,386 for the year ended December 31, 2021, resulting from increases in cash, accounts receivable and inventory.

Our current ratio (current assets divided by current

liabilities) was 2.91 as of December 31, 2021, and 0.94 in 2020.

Cash Flow from Operations

1 unchanged sentence

ended December 31, 2020, cash flow provided by operating activities was $211,929 and $571,546, respectively.

Cash flows provided

by operating activities were primarily attributable to the Company’s net income of $238,618 and a decrease in stock-based compensation

Decreased cash flows

provided by operating activities were primarily attributable to a material increase in inventory purchases to support increased distribution

of Mobile Services.

Cash Flows from Investing Activities

During the year ended December 31, 2021, and the year

ended December 31, 2019, cash flow provided by (used in) investing activities was $(10,833) and $58,603, respectively.

The cash used in

investing activities during 2020 were created through the purchase of assets.

ended December 31, 2020, cash flow used in investing activities was $(10,000) and ($10,833), respectively.

The cash used in investing

activities during 2021 was the result of the purchase of assets.

Cash Flows from Financing Activities

During the year ended December 31, 2021, and the year

ended December 31, 2019, cash flow used in financing activities was ($36,992) and ($30,937), respectively.

The funds provided by financing

were comprised of proceeds from Federal SBA PPP & EIDL Loans and grants of $468,900 in 2020 and $0 in 2019;

dividends paid to former

Apeiron Systems shareholders, ($310,129) in 2020 and $0 for 2019;

repayment of notes payable of ($112,168) in 2020 and $0 for 2019;

of amounts due to related party were ($151,357) in 2020 and ($139,795) in 2019;

repayment of revolving line of credit of ($12,237) in

2020 and ($91,142) in 2019;

and Advances made by Stockholders of $0 in 2020 and $200,000 in 2019.

ended December 31, 2020, cash flow provided by (used in) financing activities was $15,661 and ($36,992), respectively.

The funds provided

by financing were comprised of cash received from the exercise of incentive stock options in 2021 of $110,000 and proceeds received from

the PPP loans and notes payable of $548,900 in 2020.

Cash flow used in financing activities in 2021 was ($94,339) for repayments of notes

payable and repayments of amounts due to a related party ($151,357);

repayment of revolving lines of credit ($12,237);

repayment of notes

payable ($112,168), and as part of the Apeiron Systems Merger Agreement’s “surplus net working capital settlement provision,”

a paid-in-full payment paid as a dividend to the two (2) former Apeiron Systems shareholders of ($310,130) in 2020.

Going Concern

1 unchanged sentence

the year ended December 31, 2021.

In 2019, the Company had been dependent upon equity financing to support its operations.

to net income of $238,618 and net loss of $1,584,904 for the years ended December 31, 2020, and 2019, respectively, the Company experienced

positive cash flow of $523,721 and $134,964, respectively.

The accumulated deficit as of December 31, 2020, is $5,968,489.

We had two (2) consecutive years of net income, in 2021 and 2020.

The Company experienced positive cash

flow of $217,590 and $523,721 in 2021 and 2020, respectively.

The accumulated deficit as of December 31, 2021, was $5,345,504, which continues

The Company has continued to ameliorate any substantial

going concern doubt by generating additional cash flow in 2019 and 2020 respectively and generating net income in 2020.

Reduction of costs

in our CPaaS business and increase in revenues from the growth of our ETC customer base has allowed the Company to retire debt and other

lines of credit, all of which has contributed to an improvement in our working capital, without the use of additional lines of credit

or borrowings.

going concern doubt by generating additional cash flow in 2021 and 2020, respectively, and generating net income in 2021 and 2020.

of costs in our Hosted Services and Mobile Services businesses and increase in revenues from the growth of our Mobile Services customer

base has allowed the Company to retire debt and other lines of credit, all of which have contributed to an improvement in our working

capital, without the use of lines of credit, borrowings or shareholder dilution.

Off-Balance Sheet Arrangements

1 unchanged sentence

as a result of the purchase of Apeiron Systems.

The former Apeiron Systems stockholders have a $1.00 “Guaranteed Value” if

the Company’s common stock trading price does not reach or exceed $1.00 per share over a ten (10) consecutive day period between

The former Apeiron Systems stockholders had a $1.00 “Guaranteed Value” if

the Company’s common stock trading price did not reach or exceed $1.00 per share over a ten (10) consecutive day period between

December 31, 2020 and ending on December 31, 2021.

If the share price is not reached, the Company shall issue to the Apeiron Systems

stockholders for each such share of the Company’s common stock that is equal to the number of “Qualifying Shares” multiplied

by the difference between the Guaranteed Value and the highest “Calculated Value” achieved during the “Valuation Period.”

See Section 5.10 of the Apeiron Systems Merger Agreement that was filed as an Exhibit to the Company’s 8-K Current Report dated

December 31, 2018, and filed with the SEC on December 31, 2018, and which is accessible by Hyperlink in Part IV, Item 15, under the heading

“Apeiron Systems Merger Current Reports.”

This condition was fully satisfied effective June 16, 2021.

See the Company’s

8-KA Current Report dated and filed with the SEC on that date and which is available by Hyperlink in Part IV, Item 15.

Critical Accounting Policies and Estimates

64 unchanged sentences

through the provision of telecommunications and other services.

We account for these revenues under Accounting Standards Update (ASU)

2014-09, “Revenue from Contracts with Customers” (Topic 606), which we adopted on January 1, 2018, using the modified retrospective

This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops

a common revenue standard U.S.

The standard update also amends current guidance for the recognition of costs to obtain and fulfill

contracts with customers such that incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred

and amortized consistent with the transfer of the related good or service.

Revenue from these services is generally recognized monthly

as the services are provided.

Such revenue is recognized based on usage, which can vary from month to month or at a contractually committed

amount, net of credits or other billing adjustments.

Advance billings for future service in the form of monthly recurring charges are

not recognized as revenue until the service is provided.

We account for these revenues under Accounting Standards Codification

(ASC) 606, “Revenue from Contracts with Customers.” This standard update, along with related subsequently issued updates,

clarifies the principles for recognizing revenue and develops a common revenue standard U.S.

The standard update also amends current

guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining and direct

costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good or service.

Revenue from these services is generally recognized monthly as the services are provided.

Such revenue is recognized based on usage, which

can vary from month to month or at a contractually committed amount, net of credits or other billing adjustments.

Advance billings for

future service in the form of monthly recurring charges are not recognized as revenue until the service is provided.

Stock-Based Compensation

2 unchanged sentences

This requires that such transactions be accounted for using a fair-value-based method.

The Company recognizes the cost of all share-based

awards on a graded vesting basis over the vesting period of the award.

The Company recognizes the cost of all

share-based awards on a graded vesting basis over the vesting period of the award.

We account for equity instruments issued in exchange

2 unchanged sentences

issued, whichever is more reliably measurable.

The value of equity instruments issued for consideration other than employee services is

determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

The value of equity instruments issued for consideration other than employee services

is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

We account for income taxes in accordance with FASB

16 unchanged sentences

was any significant interest expense recognized during the years ended December 31, 2021, and 2020.

On December 22, 2018, the United States Government

passed new tax legislation that, among other provisions, will lower the corporate tax rate from 35% to 21%.

In addition to applying

the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use

and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets recorded on our balance

Given that the deferred tax assets are offset by a full valuation allowance, these changes will have no net impact on the

Company’s financial position and net loss.

In 2020 we were profitable, and we will receive a reduced benefit from our deferred tax

assets resulting from the tax rate change in 2018.

Had this legislation passed prior to our December 31, 2019, fiscal year-end, the effect

of the legislation would have been a reduction in deferred tax assets and the corresponding valuation allowance.

Earnings Per Share

5 unchanged sentences

During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

the year ended December 31, 2020, stock equivalents’ calculations were anti-dilutive and were not recorded in the earnings per share.

As the Company incurred losses for the year ended December 31, 2019, dilutive loss per share is the same as loss per share.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis