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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-04-01 · 106 added, 113 removed, 143 unchanged (60% of the section changed)

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Such factors are discussed

at the forepart of this Annual Report under the heading “Forward-Looking Statements” on page 2 hereof, and further, below,

under “Trends and Uncertainties.”

at the forepart of this Annual Report under the heading “Forward-Looking Statements” on page 2 hereof.

Overview of Current and Planned Business Operations

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Markets” summary contained on page 7 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 and accretive acquisition opportunities that may enhance

or expand our current product and service offerings.

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.

Comparison of the Year Ended December 31, 2024,

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In comparing our Statements of Operations between

the years ended December 31, 2023, and 2022, we had declines in revenue, costs of revenue, operating expenses and lower net income.

the years ended December 31, 2024, and 2023, we had declines in revenue and costs of revenue, increases in operating expenses, and lower

For the year ended December 31, 2024, we had $15,503,251

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The decrease in 2024 revenue was due to fewer activations within our Mobile Services segment.

Influencing factors of this decline

in revenue were partially the result of the replacement of the EBB program (which had temporarily higher reimbursements) with the ACP

program in March, 2022, which reduced government subsidized revenues, as well our change in strategy in late 2022 to focus on the IM Telecom

sales in the eleven (11) Lifeline states, which suspended growth in early 2023, resulting in future period revenue decreases.

A major influence in this decline

in revenue was the result of the ACP Program ending on June 1, 2024, which reduced government subsidized revenues for Infiniti Mobile.

For the year ended December 31, 2024, our cost of

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Our cost of revenue decrease was the result of delivering fewer devices to subscribers, which reduced the costs of devices, network

and compensation.

and compensation, as a result of the elimination of the ACP Program.

For the year ended December 31, 2024, we had gross

profit of $3,373,640 compared to $4,989,607 in the prior year ended December 31, 2022, for a gross profit decrease of ($1,615,967) in

This decline was partially due to reduced activations within our Mobile Services segment, as well as in early 2022, we received

higher per activation claims on government subsidies through the EBB program, which was replaced with the ACP program in March, 2022.

In late 2022, we changed strategy towards higher ARPU locations, which required temporary suspensions in activity as selling teams relocated.

Additionally, we required an OSS/BSS system change to accommodate growth of new sales activity, which caused a pause in growth during

this implementation.

During lower or reduced activity periods, we had temporary improvements in profit, as compared with high growth activity

periods, where our business is required to recognize up-front costs and show reduced or negative profits.

Because of these factors, swings

in profit occur depending on the level of activations.

profit of $3,414,307 compared to $3,373,640 in the prior year ended December 31, 2023, for a gross profit increase of $40,667 in 2024.

This increase was primarily due to a reduction in acquisition costs in 2024.

For the year ended December 31, 2024, total operating

expenses were $6,494,243 compared to $7,544,292 in the prior year ended December 31, 2022, for a decrease of ($1,050,049) in 2023.

decrease was due primarily to lower payroll and related expenses resulting from a reduction in staff.

expenses were $7,953,378 compared to $6,494,243 in the prior year ended December 31, 2023, for an increase of $1,459,135

This increase was due primarily due to higher payroll and related expenses for Apeiron Systems.

For the year ended December 31, 2024, other income

(expense) was $9,213,940 compared to ($820,224) in the prior year ended December 31, 2023.

This increase is due primarily to interest

expense related to our CCUR Loan.

This increase was due primarily to our sale

of 49% of the Membership Interest in IM Telecom to Excess Telecom on January 22, 2024, for an aggregate purchase price of $10,000,000,

and, if approved the FCC, Excess can acquire the remaining 51% for $100.

For the year ended December 31, 2024, we had a net

loss of ($3,940,827) compared to a net loss of ($2,952,360) in the prior year ended December 31, 2022.

income of $4,490,818 compared to a net loss of ($3,940,827) in the prior year ended December 31, 2023.

The increase in net income

was also primarily the result of the sale of the 49% Membership Interest in IM Telecom to Excess Telecom in the first quarter of 2024.

Liquidity and Capital Resources

As of December 31, 2023, we had $777,103 in cash and

cash equivalents on hand.

As of December 31, 2024, we had $1,679,345 in cash

and cash equivalents on hand.

Our ability to continue as a business is dependent

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Management intends to finance operating costs over the next twelve

(12) months with revenues from operations, cash on hand and the use of financing available to the business.

(12) months with revenues from operations, cash on hand and potentially the use of financing for growth accelerating opportunities.

In comparing liquidity between the years ending December

31, 2023, and 2022, cash decreased by 62%.

The decrease was primarily the result of growth in our mobile services sector, which requires

up-front expenditures to acquire consumers.

Total liabilities increased by 57% in 2023 when compared to 2022, as a result of the CCUR

Loan delayed draw received in 2023, and the device financing from ACP Finance, which was also established in 2023.

We had a working

capital deficit of ($3,859,200) for the year ended December 31, 2023, primarily resulting from the addition of the CCUR Loan delayed draw

and the financing of devices through ACP Finance.

In January 2024, and as noted under the heading “Events Subsequent to December

31, 2023” in Part I, Item I, Business, the CCUR Loan and the outstanding obligations to ACP Finance, were fully paid off with proceeds

from the sale of IM Telecom, which is discussed under that heading.

31, 2024, and 2023, cash increased by 116%.

The increase was primarily the result of the sale of the 49% Membership Interest in IM Telecom

to Excess Telecom in the first quarter of 2024.

Total liabilities decreased by 64.2% in 2024 when compared to 2023, as the result

of the repayment of the CCUR Loan and the ACP Finance loan for device financing from funds received from Excess Telecom under the Excess

Telecom Purchase Agreement.

We also had working capital of $2,006,701 for the year ended December 31, 2024, also primarily

resulting from the additional cash and cash equivalents received from the Excess Telecom Purchase Agreement.

In January, 2024, the CCUR

Loan and the outstanding obligations to ACP Finance, were fully paid off with a part of these proceeds.

Our current ratio (current assets divided by current liabilities) was

1.78 as of December 31, 2024, and .48 as of December 31, 2023.

Cash Flow from Operations

Cash Flows from Operations

During the year ended December 31, 2024, and the year

ended December 31, 2023, cash flow used in operating activities was $(3,992,767) and $(1,792,032), respectively.

Cash flows used in operating

activities were mainly impacted by the Company’s net loss and higher inventory due to end of year device purchases.

Cash flows provided by

operating activities were mainly impacted by the adjustment to net income due to the gain on sale of 49% of IM Telecom.

Cash Flows from Investing Activities

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ended December 31, 2023, cash flow provided by investing activities was $8,558,509 and $0, respectively.

The cash provided by investing activities

during 2022 was the result of the sale of assets.

This increase was the result

of the sale of the 49% Membership Interest in IM Telecom to Excess Telecom.

Cash Flows from Financing Activities

the year ended December 31, 2023, and the year ended December 31, 2022, cash flow provided by financing activities was $513,501 and $2,934,718,

respectively.

In 2023, cash flow generated from financing activities consisted of $554,750 cash received from short-term notes payable

($132,000), cash used for payment of loan origination costs and $90,751 cash received from stock option exercises.

2022, cash flow generated from financing activities consisted of $3,150,000 cash received from short-term notes payable;

($173,532) cash

used for payment of loan origination costs;

($150,000) cash used for repayment of notes payable;

and $108,250 cash received from the exercise

of incentive stock options.

During the year ended December 31, 2024, and the year

ended December 31, 2023, cash flow provided by (used in) financing activities was ($3,663,500) and $513,501, respectively.

In 2024, cash

flow used in financing activities consisted of ($3,704,750) cash used to repay CCUR loan principal and loan fees, and $41,250 cash received

from incentive or non-compensatory stock options that were exercised.

In 2023, cash flow generated from financing activities consisted

of $554,750 cash received from short-term notes payable, ($132,000) cash used for payment of loan origination costs and $90,751 cash received

from incentive or non-compensatory stock option exercises.

Going Concern

We generated a net loss of ($3,940,827) during the

year ended December 31, 2023 and we had a net loss of ($2,952,360) in 2022.

We generated a net income of $4,490,818 during

the year ended December 31, 2024, and we had a net loss of ($3,940,827) in 2023.

The Company had a net change in cash of $902,242 and

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The accumulated deficit as of December 31, 2024, was ($7,747,873).

The Company sourced short-term financing in June,

2022, of $3,150,000.

In June, 2023, the Company agreed to additional financing with CCUR, up to an additional $2,000,000 in delayed draw

As of June, 2023, we had received an initial delayed draw in the amount of $500,000 to help facilitate our growing Mobile

Services segment and support higher customer acquisition costs (sales).

In late 2023, we secured additional device financing through ACP

Finance (up to $5M), to further provide for growth and which also afforded repayment of device costs over an extended timeframe.

All outstanding

liabilities owing under the foregoing arrangements

were paid in full on the Initial Closing Date of

the Excess Purchase Agreement.

See heading “Events Subsequent

to December 31, 2023” in Part I, Item I, Business, hereof.

ACP Finance remains available to us as a growth financing partner, under

prior terms, and provides continuing growth financing for our mobile services segment.

Our business added distribution partners to higher

profit states in 2023, and started to show higher growth in the second half of the year.

High growth phases require immediate expense

recognition and as a result, management expects net operating losses during these growth periods.

We are one of only a few businesses to hold a national

ETC license, which provides us with additive reimbursement rates within the states we operate.

At the end of 2023, we held eleven (11)

state licenses.

This coverage area gives us additional reimbursements on claims, and we believe also increases the value of our ETC license

within the marketplace.

As a result of the Company’s ability to access additional financing and due to the significance of our ETC

license, we have ameliorated any substantial going concern doubt.

The Company’s

sale of the 49% Membership Interest in IM Telecom to Excess Telecom allowed us to pay off all outstanding debt and retain additive cash.

of only a few telecommunication carriers to hold a national wireless ETC Lifeline license, which provides us with additive reimbursement

rates within the states we operate.

In Q2 2024, we added an additional ten (10) state licenses, which continues to expand our nationally

licensed wireless service coverage.

We have continued to target and expand into additional ETC licensed states.

As of June 1, 2024, funding for the ACP Program ended,

which accounted for approximately 15% of our revenues in Q2 2024 and 33% of our revenues in Q1 2024.

Legislative efforts to extend funding

remain within Congress;

however, the decision to further fund the ACP Program (or a similar program) is still uncertain.

In light of this

uncertainty, we took initial steps to reduce costs in Q2 2024 while discussions continued in Congress, and we moved resources and focus

to our mobile services segment to California.

With the California Lifeline Program, through its additional state funding and Linkup program,

our business was able to retain continuity in the mobile services market.

In Q3 2024, we received a cease and desist letter from the State

of California CPUC, specific to a marketing program by one of our master distribution partners.

The inquiry into this matter impacted

the timing of payments on our qualified claims through Q4 2024 (see the heading “Concentration of Credit Risk” in NOTE 1 of our audited consolidated financial statements contained in Part

II, Item 8 hereof).

Since the end of the year, the cease and desist issue has been rectified and all payments are now being received timely.

As of December 31, 2024, and with no visible

progress towards an extension of the ACP Program within Congress, we took cost reduction measures, including reductions within our

Although we eliminated our outstanding debt and increased our cash position earlier in the year, uncertainty around the

ACP Program (or a similarly funded program), the impacts to our business in the State of California, the program launch timing of

VIVA-US Telecommunications, Inc.

(“VIVA-US”), and our ongoing health care sales initiative will play significant roles

in our ability to continue operations without additional reductions.

The lack of our success with any of these foregoing initiatives

raises substantial doubt about our ability to remain a going concern for the twelve (12) month period from the date of this Annual

Critical Accounting Policies and Estimates

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The preparation of financial statements in conformity

with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates in the accompanying financial statements could include the amortization period for intangible assets, valuation

and impairment valuation of intangible assets, depreciable lives of the property and equipment, valuation of warrant and beneficial conversion

feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.

with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ

from those estimates.

Significant estimates in the accompanying financial statements could include the amortization period for intangible

assets, valuation and impairment valuation of intangible assets, depreciable lives of the property and equipment, valuation of warrant

and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.

Impairment of Long-Lived Assets

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Revenue Recognition

We earn revenue from contracts with customers, primarily

through the provision of telecommunications and other services.

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.

We earn revenue from contracts with customers,

primarily through the provision of telecommunications and other services.

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.

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

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 distribute government subsidized mobile services

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that a deferred tax asset will not be realized.

Tax benefits of uncertain tax positions are recognized

only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return.

We had no liability

for uncertain tax positions as of December 31, 2023, and 2022.

Interest and penalties, if any, related to unrecognized tax benefits would

be recognized as interest expense.

We do not have any accrued interest or penalties

associated with unrecognized tax benefits, nor was

any significant interest expense recognized during the years ended December 31, 2023, and 2022.

Tax benefits of uncertain tax positions are

recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return.

had no liability for uncertain tax positions as of December 31, 2024, and 2023.

Interest and penalties, if any, related to

unrecognized tax benefits would be recognized as interest expense.

We do not have any accrued interest or penalties associated with

unrecognized tax benefits, nor was any significant interest expense recognized during the years ended December 31, 2024, and

Earnings Per Share

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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