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

As previously discussed in our second quarter, 2022 quarterly report (Form 10-Q), due to growth opportunities within our Mobile Services market segment, through our wholly owned subsidiary, Infiniti Mobile, Management accelerated Mobile Services growth in the second and third quarters of this year.

We continue to expand our distribution channels, including field agents and internet sales. As a result, the Company recognized increases in Mobile Services revenue and direct costs during the quarter ending September 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 Mobile Services growth, Management foresaw and previously disclosed a temporary reduction of Mobile Services gross profit; however, as we follow a managed/stepped approach to growth, starting in the fourth quarter 2022, Management will marginally reduce Mobile Services growth to allow gross profit to accelerate.

In addition to growth within our Mobile Services segment, we also continue to develop our Hosted Services market segment through our wholly owned subsidiary, Apeiron Systems. As a result of an increase in cloud communications sales opportunities, we are experiencing an increase in overall SMS & MMS messaging, voice usage (origination & termination of domestic and international traffic), and LTE data volume across our national CPaaS cloud network. Additionally, Apeiron recently executed a new three-year agreement (extension) with one of its largest customers. Apeiron's national cloud communications platform supports this customers' network, which provides inmate communications services to prisons across the United States. This new agreement runs until September 2025 and includes monthly minimum revenue commitments at twice the previous commitment, totaling a minimum commitment of at least $7.2 million over the full term of the contract.

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

For the three months ended September 30, 2022, we had $5,880,333 in revenues from operations compared to $3,612,861 for the three months ended September 30, 2021, for a total revenue increase of $2,267,472. 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 September 30, 2022, our cost of revenue was $4,969,251 compared to $1,988,624 in the three months ended September 30, 2021, for a cost of revenue increase of $2,980,627. 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 September 30, 2022, we had gross profit of $911,082 compared to $1,624,237 in the three months ended September 30, 2021, for a gross profit decrease of $713,155. This decline is directly related to up-front costs incurred by accelerating growth to acquire new customers within our Mobile Services segment.





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For the three months ended September 30, 2022, total operating expenses were $2,054,037 compared to $1,252,632 in the three months ended September 30, 2021, for an increase of $801,405. 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 of our subsidiaries, Apeiron Systems and IM Telecom.

For the three months ended September 30, 2022, other income (expense) was $(202,559) compared to $(51,770) in the quarter ended September 30, 2021.

For the three months ended September 30, 2022, we had a net loss of $1,345,514 compared to net income of $319,836 in the three months ended September 30, 2021. The loss for the three months ended September 30, 2022, was impacted by an acceleration of growth in our Mobile Services segment that increased our customer acquisition costs. Customer acquisition costs may not be amortized over the life of the customer, but must be recorded in full at the time of customer activation.

Comparison of the nine months ended September 30, 2022, to the nine months ended September 30, 2021

For the nine months ended September 30, 2022, we had $15,231,288 in revenues from operations compared to $8,919,573 for the nine months ended September 30, 2021, for a total revenue increase of $6,311,715. 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 programs. The revenues were derived as a result of delivering high-speed mobile data service to low-income consumers.

For the nine months ended September 30, 2022, our cost of revenue was $12,230,378 compared to $4,946,786 for the nine months ended September 30, 2021, for a cost of revenue increase of $7,283,592. Our cost of revenue increase was primarily the result of increased network, handset and sales compensation costs related to distributing additional services.

For the nine months ended September 30, 2022, we had a gross profit of $3,000,910 compared to $3,972,787 for the nine months ended September 30, 2021, for a gross profit decrease of $971,877. This decline is directly related to up-front costs incurred by accelerating growth to acquire new customers within our Mobile Services segment.

For the nine months ended September 30, 2022, total operating expenses were $5,470,296 compared to $3,377,950 for the nine months ended September 30, 2021, for an increase of $2,092,346. 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 of our subsidiaries, Apeiron Systems and IM Telecom.

For the nine months ended September 30, 2022, other income (expense) was $(398,931) compared to $(166,638) for the nine months ended September 30, 2021.

For the nine months ended September 30, 2022, we had a net loss of $2,868,317 compared to net income of $428,199 for the nine months ended September 30, 2021. The loss for the nine months ended September 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 September 30, 2022, we had $2,243,195 in cash and cash equivalents on hand.

In comparing liquidity between the nine-month periods ending September 30, 2022, and September 30, 2021, cash increased by 65.1%. This increase was primarily attributable to short-term debt financing secured in Q2 2022. Liabilities and total overall debt increased by 238.4% in the nine-month period ended September 30, 2022, when compared to September 30, 2021. This change was primarily the result of the short-term loan received in Q2 2022. 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 .88 as of September 30, 2022, compared to 2.05 as of September 30, 2021. Working capital decreased by 142.3%.





Cash Flow from Operations

During the nine months ended September 30, 2022, cash flow used in operating activities was $1,606,058, and for the nine months ended September 30, 2021, cash flow provided by operating activities was $636,557.





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Cash Flows from Investing Activities

During the nine months ended September 30, 2022, no cash flow was used in investing activities. During the nine months ended September 30, 2021, $10,000 cash flow was used in investing activities.

Cash Flows from Financing Activities

During the nine months ended September 30, 2022, net cash flow provided by financing activities was $2,916,468, due to securing short-term debt financing for the business. For the nine months ended September 30, 2021, net cash flow used in financing activities was $16,970, for net cash received from exercises of stock options after repayments of notes payable.





Going Concern

For the nine months ended September 30, 2022, the Company generated a net loss of $2,868,317, compared to net income for the nine months ended September 30, 2021, of $428,199. The Company sourced short-term financing during the second quarter to help facilitate its growing Mobile Services segment and support higher customer acquisition costs (sales). The accumulated deficit as of September 30, 2022, is $8,213,821.

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 September 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 September 30, 2022, there are 4,490,000 potentially dilutive common shares derived from stock options, and as of September 30, 2021, there are 2,676,266 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 September 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 $1,305,264, or 86.8%. 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 nine months ended September 30, 2022, the Company had two (2) customers that accounted for $9,915,189 or 65.1% and $2,639,730 or 17.3% of revenue, respectively. For the nine-month period ended September 30, 2021, the Company had two (2) customers that accounted for $3,297,984, or 37.0% and $2,818,465 or 31.6%, of revenue.





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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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