The following discussion should be read in conjunction with our Consolidated Financial Statements and notes thereto included in Part II, Item 8 of this Report. The results shown herein are not necessarily indicative of the results to be expected in any future periods. This discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see "Item 1A. Risk Factors" and our other periodic reports and documents filed with the SEC.

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Overview

We are an integrated communications provider. Through our subsidiaries, we provide high quality, reliable and scalable Internet access, web hosting, equipment colocation, customized live help desk outsourcing services, mass notification services using text messages and automated telephone calls, as well as advanced voice and data solutions.

All of the markets in which we are active are extremely competitive. We anticipate that competition will continue to intensify. The tremendous growth and potential market size of these markets has attracted many new start-ups as well as existing businesses from a variety of industries. We believe that extensive easy-to-use features, a reliable network, knowledgeable salespeople and the quality of technical support are currently the primary competitive factors in our targeted market and that price is usually secondary to these factors.

As long as we are a provider of telecommunications related services, we are affected by regulatory proceedings in the ordinary course of our business at the state and Federal levels. These include proceedings before both the Federal Communications Commission and the Oklahoma Corporation Commission ("OCC"). In addition, in our operations we rely on obtaining many of our underlying telecommunications services and/or facilities from incumbent local exchange carriers or other carriers pursuant to interconnection or other agreements or arrangements.





Results of Operations

The following table sets forth certain statement of operations data as a percentage of revenues for the years ended December 31, 2022 and 2021:





                                          For the Years Ended December 31
                                          2022                       2021
                                              Percentage                 Percentage
                                  Amount      of revenue     Amount      of revenue
REVENUE                         $4,268,263    100.0        $4,135,516    100.0
COST OF REVENUE                 907,222       21.3         741,127       17.9
Gross Profit                    3,361,041     78.7         3,394,389     82.1

OPERATING EXPENSES
Sales and marketing             628,716       14.7         488,065       11.8

General and administrative 1,886,431 44.2 1,723,131 41.7 Depreciation and amortization 15,741 0.4 10,213 0.2



Total operating expenses        2,530,888     59.3         2,221,409     53.7

Income from operations          830,153       19.4         1,172,980     28.4
Other Income                    72,605        1.7          20,835        0.5

Income tax benefit (expense) (230,522) (5.4) (300,838) (7.3) Net income from operations $672,236 15.7 $892,977 21.6%






     Year Ended December 31, 2022 Compared to Year Ended December 31, 2021



Revenue

Revenue increased $132,747 or 3.2% to $4,268,263 for the year 2022 from $4,135,516 for the year 2021. This increase was primarily attributable to the net addition of new customers and the sale of additional services to existing customers and reflects an increased interest in our automated group text and voice message delivery service, some of which may be attributable to changes in human interactions and communications during the COVID-19 pandemic. If so, this rate of increase may not continue once the COVID-19 pandemic subsides.

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In 2022, we had other income of $72,605, consisting of interest income of $40,833 and income from debt extinguishment of $31,772. In 2021, we had other income of $20,835, which consisted primarily of the settlement of a property damage claim.





Cost of Revenue

Cost of revenue increased $166,095 or 22.4% to $907,222 for the year 2022 from $741,127 for the year 2021. This increase was primarily related to price increases from our vendors and increases in costs of servicing new customers added through growth of business.





Gross Profit

Gross profit as a percentage of revenue decreased 3.4% to 78.7% for the year 2022 from 82.1% for the year 2021. This decrease was primarily related to price increases from our vendors combined with increased utilization of higher cost components of our service offerings.





Operating Expenses

Sales and marketing expenses increased $140,651 or 28.8% to $628,716 for the year 2022 from $488,065 for the year 2021. This increase was primarily a result of increases in advertising of $140,651. Sales and marketing expense as a percentage of total revenues increased to 14.7% for the year 2022 compared to 11.8% for the year 2021.

General and administrative expenses increased $163,300 or 9.5% to $1,886,431 for the year 2022 from $1,723,131 for the year 2021. This increase was primarily a result of increases in employee costs, professional services, and bank and credit card fees of $104,702, $25,213 and $17,702, respectively. General and administrative expenses as a percentage of total revenues increased to 44.2% for the year 2022 compared to 41.7% for the year 2021.

Depreciation and amortization expense increased $5,528 or 54.1% to $15,741 for the year 2022 from $10,213 for the year 2021, primarily related to the purchase of leasehold improvements in the second quarter of 2022.





Income Taxes

Our deferred tax asset balance of $38,359 at December 31, 2021, related primarily to net operating loss carryforwards for income tax purposes and were fully utilized in the 1st quarter of 2022. Income tax expense for the year ending December 31, 2022 was $230,522. Income tax expense for the year ending December 31, 2021 was $300,838.

Liquidity and Capital Resources

As of December 31, 2022, we had $2,753,551 in cash and $1,629,406 in current liabilities. Current liabilities consist primarily of $475,472 in accrued and other liabilities, of which $212,546 is owed to our officers and directors, and $1,001,298 represents deferred revenue. Our officers and directors, who are also major shareholders, have informally agreed to not seek payment of any of the amounts owed to them if such payment would jeopardize our ability to continue as a going concern. The deferred revenue represents advance payments for services from our customers which will be satisfied by our delivery of services in the normal course of business and will not require settlement in cash.

At December 31, 2022, we had positive working capital of $1,162,469. At December 31, 2021, we had positive working capital of $1,114,565. We do not have a line of credit or credit facility to serve as an additional source of liquidity. Historically we have relied on shareholder loans as an additional source of funds.

At December 31, 2022, of the $18,999 we owed to our trade creditors, $13,445 was past due. At December 31, 2022, no amounts were owed to related parties.

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Cash flows for the years ended December 31, 2022 and 2021, consist of the
following:



                                                 For the Years Ended December 31
                                                    2022                2021
Net cash flow provided by operating activities $774,364           $1,419,055
Net cash flow used in investing activities     (49,519)           (5,847)

Net cash flow provided by (used in) financing (626,407) (166,013) activities

Cash used for the purchase of property and equipment was $49,519 and $5,847, respectively, for the years ended December 31, 2022 and 2021.

No intangible assets were purchased in 2022 and 2021.

During the year ended December 31, 2022, we paid $51,143 in dividends on our Series A convertible preferred stock and $652,587 in dividends on our common stock. During the year ended December 31, 2021, we paid $168,079 in dividends on our Series A convertible preferred stock.

In December 2022, we issued 50,000 shares of our Series A convertible preferred stock to settle a related party liability of $50,000.

During the year ended December 31, 2022, employee stock options for 1,746,633 shares of our common stock were exercised for $26,174. During the year ended December 31, 2021, employee stock options for 689,000 shares of our common stock were exercised for $2,066.

Growth of our business and the anticipated continued payment of common stock dividends may require additional capital to fund capital expenditures. These additional capital expenditure requirements could include:

•Mergers and acquisitions;

•Improvement of existing services, development of new services; and

•Further development of operations support systems and other automated back-office systems.

Because our cost of developing new networks and services, funding other strategic initiatives, and operating our business depend on a variety of factors (including, among other things, the number of customers and the service for which they subscribe, the nature and penetration of services that may be offered by us, regulatory changes, and actions taken by competitors in response to our strategic initiatives), it is almost certain that actual costs and revenues will materially vary from expected amounts and these variations could increase our future capital requirements.

Our ability to fund these potential capital expenditures and other potential costs in the near term will depend upon, among other things, our ability to generate consistent net income and positive cash flow from operations as well as our ability to seek and obtain additional financing if necessary. Each of these factors is, to a large extent, subject to economic, financial, competitive, political, regulatory, and other factors, many of which are beyond our control.





As of December 31, 2022, our material contractual obligations and commitments
were:



                                      Payments Due by Period
                   Total   Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
Operating leases $304,466  $152,234         $152,232  $-        $-

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Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect certain reported amounts and disclosures. In applying these accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. As might be expected, the actual results or outcomes are generally different than the estimated or assumed amounts. These differences are usually minor and are included in our consolidated financial statements as soon as they are known. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

We periodically review the carrying value of our intangible assets when events and circumstances warrant such a review. One of the methods used for this review is performed using estimates of future cash flows. If the carrying value of our intangible assets is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the intangible assets exceeds the fair value. We believe that the estimates of future cash flows and fair value are reasonable. Changes in estimates of these cash flows and fair value, however, could affect the calculation and result in additional impairment charges in future periods.

We periodically review the carrying value of our property and equipment whenever business conditions or events indicate that those assets may be impaired. If the estimated future undiscounted cash flows to be generated by the property and equipment are less than the carrying value of the assets, the assets are written down to fair market value and a change is recorded to current operations. Significant and unanticipated changes in circumstances, including significant adverse changes in business climate, adverse actions by regulators, unanticipated competition, loss of key customers and/or changes in technology of markets, could require a provision for impairment in a future period.

We review loss contingencies and evaluate the events and circumstances related to these contingencies. We disclose material loss contingencies that are possible or probable, but cannot be estimated. For loss contingencies that are both estimable and probable the loss contingency is accrued and expense is recognized in the financial statements.

All of our revenues are recognized over the life of the contract as services are provided. Revenue that is received in advance of the services provided is deferred until the services are provided. Revenue related to set up charges is also deferred and amortized over the life of the contract. We classify certain taxes and fees billed to customers and remitted to governmental authorities on a net basis in revenue.

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