Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-53461

High Wire Networks, Inc.

(Exact name of registrant as specified in its charter)

Nevada		81-5055489
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

30 North Lincoln Street, Batavia, Illinois		60510
(Address of principal executive offices)		(Zip Code)

952-974-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ YES ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ YES ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES ☒ NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock		HWNI		OTCQB

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The registrant had 240,620,455 common shares issued and outstanding as of May 17, 2024.

Table of Contents

PART I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II - OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
SIGNATURES		41

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim condensed consolidated financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars, unless otherwise noted.

High Wire Networks, Inc.

		Page
		Number

Condensed consolidated balance sheets as of March 31, 2024 (unaudited) and December 31, 2023		2

Condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 (unaudited)		3

Condensed consolidated statements of stockholders’ deficit for the three months ended March 31, 2024 and 2023 (unaudited)		4

Condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 (unaudited)		5

Notes to unaudited condensed consolidated financial statements		6

High Wire Networks, Inc.

Condensed consolidated balance sheets

	March 31,			December 31,
	2024			2023
	(Unaudited)
ASSETS
Current assets:
Cash	$	263,619		$	333,357
Accounts receivable, net of allowances of $291,298 and $311,610, respectively, and unbilled revenue of $80,000 and $99,916, respectively		4,483,151			2,294,324
Prepaid expenses and other current assets		312,252			117,030
Total current assets		5,059,022			2,744,711

Property and equipment, net of accumulated depreciation of $540,409 and $477,763, respectively		977,368			1,026,293
Goodwill		3,162,499			3,162,499
Intangible assets, net of accumulated amortization of $2,475,751 and $2,350,059, respectively		3,494,564			3,620,256
Operating lease right-of-use assets		252,521			277,995
Total assets	$	12,945,974		$	10,831,754

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities		6,816,109			6,417,525
Contract liabilities		384,253			382,576
Current portion of loans payable to related parties, net of debt discount of $19,132 and $10,968, respectively		315,868			254,032
Current portion of loans payable, net of debt discount of $93,052 and $96,552, respectively		2,714,094			2,995,803
Current portion of convertible debentures, net of debt discount of $1,045,344 and $614,556, respectively		1,653,940			326,005
Factor financing		2,745,950			1,361,656
Warrant liabilities		1,031,222			833,615
Operating lease liabilities, current portion		93,056			89,318
Total current liabilities		15,754,492			12,660,530

Long-term liabilities:
Loans payable to related parties, net of current portion, net of debt discount of $0 and $25,297, respectively		-			44,703
Convertible debentures, net of current portion, net of debt discount of $0 and $464,839, respectively		-			685,161
Operating lease liabilities, net of current portion		163,163			190,989
Total long-term liabilities		163,163			920,853

Total liabilities		15,917,655			13,581,383

Commitments and contingencies (Note 14)

Series B preferred stock; $3,500 stated value; 1,000 shares authorized; 1,000 issued and outstanding as of March 31, 2024 and December 31, 2023		-			-
Total mezzanine equity		-			-

Stockholders’ deficit:
Common stock; $0.00001 par value; 1,000,000,000 shares authorized; 240,620,455 and 239,876,900 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		2,406			2,399
Series D preferred stock; $10,000 stated value; 1,590 shares authorized; 943 issued and outstanding as of March 31, 2024 and December 31, 2023		7,745,643			7,745,643
Series E preferred stock; $10,000 stated value; 650 shares authorized; 311 issued and outstanding as of March 31, 2024 and December 31, 2023		4,869,434			4,869,434
Additional paid-in capital		31,370,744			31,178,365
Accumulated deficit		(46,959,908	)		(46,545,470	)
Total stockholders’ deficit		(2,971,681	)		(2,749,629	)

Total liabilities and stockholders’ deficit	$	12,945,974		$	10,831,754

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

High Wire Networks, Inc.

Condensed consolidated statements of operations

(Unaudited)

	For the three months ended
	March 31,
	2024			2023


Revenue	$	7,650,981		$	10,165,171

Operating expenses:
Cost of revenue		4,150,739			8,731,668
Depreciation and amortization		188,338			202,620
Salaries and wages		1,769,697			1,993,016
General and administrative		1,194,543			1,868,810
Total operating expenses		7,303,317			12,796,114

Income (loss) from operations		347,664			(2,630,943	)

Other income (expense):
Interest expense		(243,036	)		(185,652	)
Amortization of debt discounts		(432,934	)		(508,564	)
Warrant expense		(214,737	)		-
Gain on change in fair value of warrant liabilities		241,993			-
Exchange loss		(14,888	)		(1,456	)
Penalty fee		(100,000	)		-
Gain on change in fair value of derivative liabilities		-			3,140,404
Gain on extinguishment of derivatives		-			1,692,232
Other income		1,500			-
Total other (expense) income		(762,102	)		4,136,964

Net (loss) income from continuing operations before income taxes		(414,438	)		1,506,021

Provision for income taxes		-			-

Net (loss) income from continuing operations		(414,438	)		1,506,021

Net loss from discontinued operations, net of tax		-			(1,337,712	)

Net (loss) income attributable to High Wire Networks, Inc. common shareholders	$	(414,438	)	$	168,309

(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, basic:
Net (loss) income from continuing operations	$	(0.00	)	$	0.01
Net loss from discontinued operations, net of taxes	$	-		$	(0.01	)
Net (loss) income per share	$	(0.00	)	$	0.00

(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, diluted:
Net (loss) income from continuing operations	$	(0.00	)	$	0.01
Net loss from discontinued operations, net of taxes	$	-		$	(0.01	)
Net (loss) income per share	$	(0.00	)	$	0.00

Weighted average common shares outstanding
Basic		240,538,746			197,475,692
Diluted		240,538,746			217,325,280

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

High Wire Networks, Inc.

Condensed consolidated statements of stockholder’s deficit

(Unaudited)

	For the three months ended March 31, 2024
	Common stock				Series D preferred stock				Series E preferred stock				Additional paid-in		Accumulated
	Shares		$		Shares		$		Shares		$		capital		Deficit			Total

Balances, January 1, 2024		239,876,900	$	2,399		943	$	7,745,643		311	$	4,869,434	$	31,178,365	$	(46,545,470	)	$	(2,749,629	)

Issuance of common stock and warrants upon issuance of debt		743,555		7		-		-		-		-		56,279		-			56,286
Stock-based compensation		-		-		-		-		-		-		136,100		-			136,100
Net income for the period		-		-		-		-		-		-		-		(414,438	)		(414,438	)

Ending balance, March 31, 2024		240,620,455	$	2,406		943	$	7,745,643		311	$	4,869,434	$	31,370,744	$	(46,959,908	)	$	(2,971,681	)

	For the three months ended March 31, 2023
	Common stock				Series D preferred stock				Series E preferred stock				Additional paid-in		Accumulated
	Shares		$		Shares		$		Shares		$		capital		deficit			Total

Balances, January 1, 2023		164,488,370	$	1,645		-	$	-		-	$	-	$	20,338,364	$	(32,059,470	)	$	(11,719,461	)

Issuance of common stock upon conversion of Series A preferred stock		3,750,000		38		-		-		-		-		722,060		-			722,098
Issuance of common stock pursuant to PIPE transaction		50,233,334		502		-		-		-		-		3,424,498		-			3,425,000
Issuance of common stock upon conversion of Series D preferred stock		6,511,628		65		-		-		-		-		1,445,155		-			1,445,220
Issuance of common stock to third-party vendors		2,800,000		28		-		-		-		-		242,172		-			242,200
Reclassification of Series D and E preferred stock to permanent equity		-		-		1,125		9,245,462		526		5,104,658		-		-			14,350,120
Stock-based compensation		-		-		-		-		-		-		285,791		-			285,791
Net income for the period		-		-		-		-		-		-		-		168,309			168,309

Ending balance, March 31, 2023		227,783,332	$	2,278		1,125	$	9,245,462		526	$	5,104,658	$	26,458,040	$	(31,891,161	)	$	8,919,277

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

High Wire Networks, Inc.

Condensed consolidated statements of cash flows

(Unaudited)

	For the three months ended
	March 31,
	2024			2023

Cash flows from operating activities:
Net (loss) income from continuing operations	$	(414,438	)	$	1,506,021

Adjustments to reconcile net (loss) income to net cash used in operating activities:
Amortization of discounts on convertible debentures and loans payable		432,934			508,564
Depreciation and amortization		188,338			202,620
Amortization of operating lease right-of-use assets		25,474			24,339
Stock-based compensation related to stock options		136,100			285,791
Gain on change in fair value of warrant liabilities		(241,993	)		-
Warrant expense		214,737			-
Penalty fee		100,000			-
Gain on change in fair value of derivative liabilities		-			(3,140,404	)
Stock-based compensation related to third-party vendors		-			242,200
Gain on extinguishment of derivatives		-			(1,692,232	)
Loss on disposal of subsidiary		-			1,434,392
Changes in operating assets and liabilities:
Accounts receivable		(2,188,827	)		(3,111,505	)
Prepaid expenses and other current assets		(195,222	)		373,982
Accounts payable and accrued liabilities		398,586			91,462
Contract liabilities		1,677			(857,786	)
Operating lease liabilities		(24,088	)		(31,564	)
Net cash used in operating activities of continuing operations		(1,566,722	)		(4,164,120	)
Net cash used in operating activities of discontinued operations		-			(995,089	)
Net cash used in operating activities		(1,566,722	)		(5,159,209	)

Cash flows from investing activities:
Purchase of fixed assets		(13,721	)		-
Cash received in connection with disposal of JTM		-			50,000
Net cash (used in) provided by investing activities		(13,721	)		50,000

Cash flows from financing activities:
Proceeds from loans payable		-			1,250,000
Repayments of loans payable		(285,211	)		(1,293,023	)
Proceeds from convertible debentures		431,150			-
Repayments of convertible debentures		(19,528	)		-
Proceeds from factor financing		5,035,007			3,251,007
Repayments of factor financing		(3,650,713	)		(897,051	)
Securities Purchase Agreement proceeds		-			3,425,000
Net cash provided by financing activities of continuing operations		1,510,705			5,735,933
Net cash used in financing activities of discontinued operations		-			(297,508	)
Net cash provided by financing activities		1,510,705			5,438,425

Net (decrease) increase in cash		(69,738	)		329,216

Cash, beginning of period		333,357			649,027

Cash, end of period	$	263,619		$	978,243

Supplemental disclosures of cash flow information:
Cash paid for interest	$	132,219		$	2,681
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Original issue discounts on loans payable and convertible debentures	$	58,250		$	530,000
Issuance of common stock and warrants upon issuance of debt	$	56,286		$	-
Common stock issued for conversion of Series A preferred stock	$	-		$	722,098
Common stock issued for conversion of Series D preferred stock	$	-		$	1,445,220

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

High Wire Networks, Inc.

Notes to the unaudited condensed consolidated financial statements

March 31, 2024

1.	Organization

HWN, Inc., (d/b/a High Wire Network Solutions, Inc.) (“HWN” or the “Company”) was incorporated in Delaware on January 20, 2017. The Company is a global provider of managed cybersecurity, managed networks, and tech enabled professional services delivered exclusively through a channel sales model. The Company’s Overwatch managed security platform-as-a-service offers organizations end-to-end protection for networks, data, endpoints and users via multiyear recurring revenue contracts in this fast-growing technology segment.

HWN and JTM Electrical Contractors, Inc. (“JTM”), an Illinois Corporation, entered into an operating agreement through which High Wire owned 50% of JTM.

On June 16, 2021, the Company completed a merger with Spectrum Global Solutions, Inc. On January 7, 2022, Spectrum Global Solutions, Inc. legally changed its name to High Wire Networks, Inc. (“High Wire” or, collectively with HWN, “the Company”). The merger was accounted for as a reverse merger. At the time of the reverse merger, High Wire’s subsidiaries included ADEX Corporation, ADEX Puerto Rico LLC, ADEX Canada, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively “ADEX” or the “ADEX Entities”), AW Solutions Puerto Rico, LLC (“AWS PR”), and Tropical Communications, Inc. (“Tropical”). For accounting purposes, HWN is the surviving entity.

High Wire was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, High Wire reincorporated in the province of British Columbia, Canada.

On November 4, 2021, the Company closed on its acquisition of Secure Voice Corp (“SVC”). The closing of the acquisition was facilitated by a senior secured promissory note.

On February 15, 2022, HWN sold its 50% interest in JTM, which qualified for discontinued operations treatment.

On March 6, 2023, HWN divested the ADEX Entities. The divestiture of the ADEX Entities qualified for discontinued operations treatment (refer to Note 17, Discontinued Operations, for additional detail).

On July 31, 2023, the Company paused the operations of its AWS PR subsidiary and sold off certain assets.

On August 4, 2023, the Company formed a new entity – incorporated as Overwatch Cyberlab, Inc. (“OCL”) – which is 80% owned by the Company and 20% owned by John Peterson.

On November 3, 2023, the Company paused the operations of its Tropical subsidiary.

The Company’s AWS PR and Tropical subsidiaries are professional, multi-service line, telecommunications infrastructure companies that provide outsourced services to the wireless and wireline industry. The Company’s SVC subsidiary is a wholesale network services provider with network footprint and licenses in the Northeast and Southeast United States as well as Texas. This network carries VoIP and other traffic for other service providers. OCL has not begun to generate revenue as of March 31, 2024.

2.	Significant Accounting Policies

Condensed Financial Statements

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

Basis of Presentation/Principles of Consolidation

These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These unaudited condensed consolidated financial statements include the accounts of the Company as well as High Wire and its subsidiaries, AWS PR, Tropical, SVC, and OCL. All subsidiaries are wholly-owned.

All inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not billed. Management reviews a customer’s credit history before extending credit. The Company maintains an allowance for doubtful accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance for doubtful accounts at March 31, 2024 and December 31, 2023 was $291,298 and $311,610, respectively.

Property and Equipment

Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:

Computers and office equipment		3-7 years straight-line basis
Vehicles		3-5 years straight-line basis
Leasehold improvements		5 years straight-line basis
Software		5 years straight-line basis
Machinery and equipment		5 years straight-line basis

Goodwill

The Company has two reporting units, HWN and SVC, and tests its goodwill for impairment at least annually on December 31 and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results.

The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during the three months ended March 31, 2024 and 2023.

Intangible Assets

At March 31, 2024 and December 31, 2023, definite-lived intangible assets consisted of tradenames and customer relationships which are being amortized over their estimated useful lives of 10 years.

The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.

For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. There were no impairment charges during the three months ended March 31, 2024 and 2023.

Long-lived Assets

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. There were no impairment charges during the three months ended March 31, 2024 and 2023.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company conducts business, and files federal and state income, franchise or net worth, tax returns in United States, in various states within the United States and the Commonwealth of Puerto Rico. The Company determines its filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2020 to 2023. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of the U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above.

Significant management judgment is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company’s deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods. The realization of these assets is dependent on generating future taxable income.

The Company follows the guidance set forth within ASC 740, “Income Taxes” which prescribes a two-step process for the financial statement recognition and measurement of income tax positions taken or expected to be taken in an income tax return. The first step evaluates an income tax position in order to determine whether it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position. The second step measures the benefit to be recognized in the financial statements for those income tax positions that meet the more likely than not recognition threshold. ASC 740 also provides guidance on de-recognition, classification, recognition and classification of interest and penalties, accounting in interim periods, disclosure and transition. Penalties and interest, if incurred, would be recorded as a component of current income tax expense.

Prior to 2021, the Company had elected to be treated as a Subchapter S Corporation for income tax purposes, and as such recognized no income tax liability or benefit.

Revenue Recognition

The Company recognizes revenue based on the five criteria for revenue recognition established under ASC 606, “Revenue from Contracts with Customers”: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

Contract Types

The Company’s contracts fall under two main types: 1) fixed-price and 2) time-and-materials. Fixed-price contracts are based on purchase order line items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include employees working on an as needed basis at customer locations and materials costs incurred by those employees.

A significant portion of the Company’s revenues come from customers with whom the Company has a master service agreement (“MSA”). These MSA’s generally contain customer specific service requirements.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company’s different revenue service types, the performance obligation is satisfied at different times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases, this may be each day or each week, depending on the customer. For construction services, the performance obligation is met when the work is completed and the customer has approved the work.

Revenue Service Types

The following is a description of the Company’s revenue service types, which include Technology Solutions and Managed Services:

●

Technology Solutions: The Technology Solutions group is all service and project revenue generated globally by HWN, Tropical, and AWS PR. These business perform project-based professional services for the Enterprise, SMB, Data Center, Carrier Wireline, Carrier Wireless, and Network Service Provider markets.

●

Managed Services are services provided to the clients where the Company monitors, maintains, handles break/fix issues and protects customer networks. The Managed Services Segment encompasses all of the Company’s recurring revenue businesses including Overwatch Managed Security, all network managed services, all managed services performed under a Statement of Work (SoW), and the Company’s SVC revenue.

Disaggregation of Revenues

The Company disaggregates its revenue from contracts with customers by service type. See the below table:

Revenue by service type	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023
Technology Solutions	$	6,221,238	$	8,475,401
Managed Services		1,429,743		1,689,770
Total	$	7,650,981	$	10,165,171

The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information).

Contract Assets and Liabilities

Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the unaudited condensed consolidated balance sheets. At March 31, 2024 and December 31, 2023, the Company did not have any contract assets.

Contract liabilities include payment received for incomplete performance obligations and are included in contract liabilities on the unaudited condensed consolidated balance sheets. At March 31, 2024 and December 31, 2023, contract liabilities totaled $384,253 and $382,576, respectively.

Cost of Revenues

Cost of revenues includes all direct costs of providing services under the Company’s contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment, direct materials, insurance claims and other direct costs.

Research and Development Costs

Research and development costs are expensed as incurred.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the grant date fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718, at either the grant date fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Accounting Standards Update (“ASU”) 2018-07. In accordance with ASU 2016-09, the Company accounts for forfeitures as they occur.

The Company uses certain pricing models to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period, which is generally the vesting period.

(Loss) Income per Share

The Company computes (loss) income per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the (loss) income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the conversion of convertible debentures or preferred stock and the exercise of stock options or warrants. Diluted EPS excludes dilutive potential shares if their effect is anti-dilutive. As of March 31, 2024 and December 31, 2023, respectively, the Company had 159,029,949 and 145,710,627 common stock equivalents outstanding. As of March 31, 2023, 19,849,588 of the common stock equivalents were dilutive.

Leases

ASC 842, “Leases” requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Certain of the Company’s lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.

The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

Going Concern Assessment

Management assesses going concern uncertainty in the Company’s unaudited condensed consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited condensed consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

While the Company had operating income during the three months ended March 31, 2024, the Company generated an operating loss in the three months ended March 31, 2023, and High Wire has historically generated operating losses since its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and related party debt to support cash flow from operations. As of and for the three months ended March 31, 2024, the Company had operating income of $347,664, cash flows used in continuing operations of $1,566,722, and a working capital deficit of $10,695,470. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business.

Management believes that based on relevant conditions and events that are known and reasonably knowable, its forecasts of operations for one year from the date of the filing of the unaudited condensed consolidated financial statements in the Company’s Quarterly Report on Form 10-Q indicate improved operations and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months.

Recent Accounting Pronouncements

In November 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company’s annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topics 740): Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. As of March 31, 2024, there were no cash balances in excess of provided insurance.

The Company provides credit to customers on an uncollateralized basis after evaluating client creditworthiness. For the three months ended March 31, 2024, one customer accounted for 49% of consolidated revenues for the period. In addition, amounts due from this customer represented 55% of trade accounts receivable as of March 31, 2024. For the three months ended March 31, 2023, two customers accounted for 36%, and 23%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 26%, and 20%, respectively, of trade accounts receivable as of March 31, 2023.

The Company’s customers are primarily located within the domestic United States of America and Puerto Rico. Revenues generated within the domestic United States of America accounted for approximately 100% and 98% of consolidated revenues for the three months ended March 31, 2024 and 2023, respectively. Revenues generated from customers in Puerto Rico accounted for approximately 0% and 2% of consolidated revenues for the three months ended March 31, 2024 and 2023, respectively.

Fair Value Measurements

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets;

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Warrant liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the three months ended March 31, 2024 and 2023. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

The Company’s financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2024 and December 31, 2023 consisted of the following:

	Total fair value at March 31, 2024		Quoted prices in active markets (Level 1)		Quoted prices in active markets (Level 2)		Quoted prices in active markets (Level 3)
Description:
Warrant liabilities (1)	$	1,031,222	$	-	$	-	$	1,031,222

	Total fair value at December 31, 2023		Quoted prices in active markets (Level 1)		Quoted prices in active markets (Level 2)		Quoted prices in active markets (Level 3)
Description:
Warrant liabilities (1)	$	833,615	$	-	$	-	$	833,615

(1)

The Company estimated the fair value of these warrant liabilities using either the Black-Scholes model or the price of the Company’s common stock.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Refer to Note 9, Warrant Liabilities, for additional information.

Warrant Liabilities

The Company accounts for its liability-classified warrants in accordance with ASC 480, “Distinguishing Liabilities from Equity” and all warrant liabilities are reflected as liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its warrant liabilities. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of March 31, 2024 and December 31, 2023, respectively, the Company had warrant liabilities of $1,031,222 and $833,615.

Sequencing Policy

Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy.

3.	Property and Equipment

Property and equipment as of March 31, 2024 and December 31, 2023 consisted of the following:

	March 31			December 31
	2024			2023
Computers and office equipment	$	186,743		$	175,008
Vehicles		11,938			11,938
Leasehold improvements		6,113			6,113
Software		474,183			472,197
Machinery and equipment		838,800			838,800
Total		1,517,777			1,504,056

Less: accumulated depreciation		(540,409	)		(477,763	)

Equipment, net	$	977,368		$	1,026,293

During the three months ended March 31, 2024 and 2023, the Company recorded depreciation expense of $62,646 and $32,746, respectively.

4.	Intangible Assets

Intangible assets as of March 31, 2024 and December 31, 2023 consisted of the following:

	Cost		Accumulated Amortization			Accumulated Impairment			Net carrying value at March 31, 2024		Net carrying value at December 31, 2023
Customer relationship and lists	$	5,266,705	$	(1,917,772	)	$	(438,374	)	$	2,910,559	$	3,007,702
Trade names		1,141,984		(557,979	)		-			584,005		612,554
Total intangible assets	$	6,408,689	$	(2,475,751	)	$	(438,374	)	$	3,494,564	$	3,620,256

During the three months ended March 31, 2024 and 2023, the Company recorded amortization expense of $125,692 and $169,874, respectively.

The estimated future amortization expense for the next five years and thereafter is as follows:

Year ending December 31,
2024	$	377,076
2025		502,768
2026		502,768
2027		502,768
2028		502,768
Thereafter		1,106,416
Total	$	3,494,564

5.	Related Party Transactions

Loans Payable to Related Parties

As of March 31, 2024 and December 31, 2023, the Company had outstanding the following loans payable to related parties:

	March 31,			December 31,
	2024			2023
Promissory note issued to Mark Porter, 9% interest, unsecured, matured December 15, 2021, due on demand	$	100,000		$	100,000
Convertible promissory note issued to Mark Porter, 18% interest, secured, matures March 25, 2025, net of debt discount of $19,132 and $25,297, respectively		50,868			44,703
Convertible promissory note issued to Mark Porter, 12% interest, secured, matures February 5, 2024, net of debt discount of $0 and $10,968, respectively		165,000			154,032
Convertible promissory note issued to Keith Hayter, 10% interest, unsecured, matures March 31, 2023		-			-
Total	$	315,868		$	298,735

Less: Current portion of loans payable to related parties		(315,868	)		(254,032	)

Loans payable to related parties, net of current portion	$	-		$	44,703

Promissory note, Mark Porter, 9% interest, unsecured, matures December 15, 2021

On June 1, 2021, the Company issued a $100,000 promissory note to the Chief Executive Officer of the Company in connection with the 2021 merger transaction. The note was originally due on December 15, 2021 and bears interest at a rate of 9% per annum.

On December 15, 2021, this note matured and is now due on demand.

As March 31, 2024, the Company owed $100,000 pursuant to this agreement.

Convertible promissory note, Mark Porter, 18% interest, secured, matures March 25, 2025

In connection with the Securities Purchase Agreement discussed in Note 8, Convertible Debentures, on September 25, 2023, the Company issued to Mark Porter a senior subordinated secured convertible promissory note in the aggregate principal amount of $70,000. The interest on the outstanding principal due under the note accrues at a rate of 18% per annum. All principal and accrued but unpaid interest under the note are due on March 25, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued Mark Porter a warrant to purchase 700,000 shares of the Company’s common stock at an exercise price of $0.15 per share. These warrants expire on September 25, 2028.

The warrants, including those issued to the placement agent, had a relative fair value of $31,852, which resulted in a debt discount of $31,852. The amount is also included within additional paid-in capital.

As of March 31, 2024, the Company owed $70,000 pursuant to this note and will record accretion equal to the debt discount of $19,132 over the remaining term of the note.

Convertible promissory note, Mark Porter, 12% interest, unsecured, matures February 5, 2024

On December 6, 2023, the Company issued to Mark Porter an unsecured promissory note in the aggregate principal amount of $165,000. The Company received cash of $150,000 and recorded a debt discount of $15,000. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. All outstanding principal and accrued interest under the note was due on February 5, 2024.

The note matured on February 5, 2024 and is now due on demand.

As of March 31, 2024, the Company owed $165,000 pursuant to this note.

6.	Loans Payable

As of March 31, 2024 and December 31, 2023, the Company had outstanding the following loans payable:

	March 31,		December 31,
	2024		2023
Future receivables financing agreement with Cedar Advance LLC, non-interest bearing, matured February 16, 2024, net of debt discount of $23,040	$	590,492	$	623,118
Future receivables financing agreement with Pawn Funding, non-interest bearing, matured February 22, 2024, net of debt discount of $18,240		650,511		692,885
Future receivables financing agreement with Slate Advance LLC, non-interest bearing, matured December 22, 2023, net of debt discount of $26,786		592,592		630,092
Future receivables financing agreement with Meged Funding Group, non-interest bearing, matured January 17, 2024, net of debt discount of $24,986		663,099		700,059
Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand		217,400		217,400
Future receivables financing agreement with Arin Funding LLC, non-interest bearing, matures January 12, 2024, net of debt discount of $1,000		-		47,741
Future receivables financing agreement with Arin Funding LLC, non-interest bearing, matures January 23, 2024, net of debt discount of $2,500		-		84,508
Total	$	2,714,094	$	2,995,803

The Company’s loans payable have an effective interest rate range of 0.0% to 144.3%.

Future receivables financing agreement with Cedar Advance LLC, non-interest bearing, matured February 16, 2024

On May 15, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Cedar Advance LLC. Under the Financing Agreement, the Financing Parties sold to Cedar Advance future receivables in an aggregate amount equal to $1,280,000 for a purchase price of $1,228,800. The Company received cash of $1,228,800 and recorded a debt discount of $51,200.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Cedar Advance $43,840 each week, including interest, based upon an anticipated 10% of its future receivables until such time as $1,753,600 has been paid, a period Cedar Advance and the Financing Parties estimate to be approximately nine months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $633,842 of the original balance under the agreement, along with $374,478 of interest.

During the three months ended March 31, 2024, the Company paid $32,626 of the original balance under the agreement.

As of March 31, 2024, the Company owed $613,532 pursuant to this agreement and will record accretion equal to the debt discount of $23,040 over the remaining term of the note.

Future receivables financing agreement with Pawn Funding, non-interest bearing, matured February 22, 2024

On May 15, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Pawn Funding. Under the Financing Agreement, the Financing Parties sold to Pawn Funding future receivables in an aggregate amount equal to $1,280,000 for a purchase price of $1,280,000. The Company received cash of $1,241,600 and recorded a debt discount of $38,400.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Pawn Funding $43,840 each week, including interest, based upon an anticipated 4% of its future receivables until such time as $1,753,600 has been paid, a period Pawn Funding and the Financing Parties estimate to be approximately nine months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $568,874 of the original balance under the agreement, along with $351,765 of interest.

During the three months ended March 31, 2024, the Company paid $42,375 of the original balance under the agreement.

As of March 31, 2024, the Company owed $668,751 pursuant to this agreement and will record accretion equal to the debt discount of $18,240 over the remaining term of the note.

Future receivables financing agreement with Slate Advance LLC, non-interest bearing, matured December 22, 2023

On June 9, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Slate Advance. Under the Financing Agreement, the Financing Parties sold to Slate Advance future receivables in an aggregate amount equal to $1,500,000 for a purchase price of $1,425,000. The Company received cash of $1,425,000 and recorded a debt discount of $75,000.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Slate Advance $75,000 each week, including interest, based upon an anticipated 25% of its future receivables until such time as $2,100,000 has been paid, a period Slate Advance and the Financing Parties estimate to be approximately seven months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $843,121 of the original balance under the agreement, along with $506,879 of interest.

During the three months ended March 31, 2024, the Company paid $37,501 of the original balance under the agreement.

As of March 31, 2024, the Company owed $619,378 pursuant to this agreement and will record accretion equal to the debt discount of $26,786 over the remaining term of the note.

Future receivables financing agreement with Meged Funding Group, non-interest bearing, matured January 17, 2024

On July 25, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Meged Funding Group. Under the Financing Agreement, the Financing Parties sold to Slate Advance future receivables in an aggregate amount equal to $1,200,000 for a purchase price of $1,151,950. The Company received cash of $1,151,950 and recorded a debt discount of $48,050.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Meged Funding Group $67,200 each week, including interest, based upon an anticipated 25% of its future receivables until such time as $1,680,000 has been paid, a period Meged Funding Group and the Financing Parties estimate to be approximately six months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $474,955 of the original balance under the agreement, along with $331,445 of interest.

During the three months ended March 31, 2024, the Company paid $36,960 of the original balance under the agreement.

As of March 31, 2024, the Company owed $688,085 pursuant to this agreement and will record accretion equal to the debt discount of $24,986 over the remaining term of the note.

Future receivables financing agreement with Arin Funding LLC, non-interest bearing, matures January 12, 2024

On August 25, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Arin Funding LLC. Under the Financing Agreement, the Financing Parties sold to Arin Funding LLC future receivables in an aggregate amount equal to $200,000 for a purchase price of $195,000. The Company received cash of $195,000 and recorded a debt discount of $5,000.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Arin Funding LLC $13,000 each week, including interest, based upon an anticipated 5% of its future receivables until such time as $260,000 has been paid, a period Arin Funding LLC and the Financing Parties estimate to be approximately five months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $151,259 of the original balance under the agreement, along with $56,741 of interest.

During the three months ended March 31, 2024, the Company paid $48,741 of the original balance under the agreement. As a result of these payments, the amount owed at March 31, 2024 was $0.

Future receivables financing agreement with Arin Funding LLC, non-interest bearing, matures January 23, 2024

On September 5, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Arin Funding LLC. Under the Financing Agreement, the Financing Parties sold to Arin Funding LLC future receivables in an aggregate amount equal to $300,000 for a purchase price of $290,000. The Company received cash of $290,000 and recorded a debt discount of $10,000.

Pursuant to the terms of the Financing Agreement, the Company agreed to pay Arin Funding LLC $19,500 each week, including interest, based upon an anticipated 8% of its future receivables until such time as $390,000 has been paid, a period Arin Funding LLC and the Financing Parties estimate to be approximately five months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions.

During the year ended December 31, 2023, the Company paid $212,992 of the original balance under the agreement, along with $79,508 of interest.

During the three months ended March 31, 2024, the Company paid $87,008 of the original balance under the agreement. As a result of these payments, the amount owed at March 31, 2024 was $0.

Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand

On June 15, 2021, in connection with the 2021 merger transaction, the Company assumed High Wire’s promissory note issued to InterCloud Systems, Inc. The note was originally issued on February 27, 2018 in the principal amount of $500,000. As of June 15, 2021, $217,400 remained outstanding. The note is non-interest bearing and is due on demand.

As of March 31, 2024, the Company owed $217,400 pursuant to this agreement.

7.	Convertible Debentures

As of March 31, 2024 and December 31, 2023, the Company had outstanding the following convertible debentures:

	March 31,			December 31,
	2024			2023
Convertible promissory note, Jeffrey Gardner, 18% interest, unsecured, matured September 15, 2021, due on demand	$	125,000		$	125,000
Convertible promissory note, James Marsh, 18% interest, unsecured, matured September 15, 2021, due on demand		125,000			125,000
Convertible promissory note issued to Roger Ponder, 10% interest, unsecured, matures March 31, 2024		23,894			23,894
Convertible promissory note issued to Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025, net of debt discount of $221,302 and $282,945, respectively		478,698			417,055
Convertible promissory note issued to Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025, net of debt discount of $142,266 and $181,894, respectively		307,734			268,106
Convertible promissory note issued to Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024, net of debt discount of $272,148 and $407,890, respectively		238,964			36,555
Convertible promissory note issued to FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024, net of debt discount of $137,889 and $206,666, respectively		117,666			15,556
Convertible promissory note issued to Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025, net of debt discount of $254,085		95,915			-
Convertible promissory note issued to 1800 Diagonal Lending LLC, 12% interest, unsecured, matures November 15, 2024, net of debt discount of $17,654		141,069			-
Total		1,653,940			1,011,166

Less: Current portion of convertible debentures, net of debt discount/premium		(1,653,940	)		(326,005	)

Convertible debentures, net of current portion, net of debt discount	$	-		$	685,161

The Company’s convertible debentures have an effective interest rate range of 11.2% to 136.4%.

Convertible promissory note, Jeffrey Gardner, 18% interest, unsecured, due on demand

On June 15, 2021 the Company issued to Jeffrey Gardner an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the 2021 merger transaction.

The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note is due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share.

On September 15, 2021, this note matured and is now due on demand. Additionally, the interest rate increased to 18% per annum.

As of March 31, 2024, the Company owed $125,000 pursuant to this agreement.

Convertible promissory note, James Marsh, 18% interest, unsecured, due on demand

On June 15, 2021 the Company issued to James Marsh an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the 2021 merger transaction.

The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note are due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share.

On September 15, 2021, this note matured and is now due on demand. Additionally, the interest rate increased to 18% per annum.

As of March 31, 2024, the Company owed $125,000 pursuant to this agreement.

Convertible promissory note, Roger Ponder, 10% interest, unsecured, matures August 31, 2022

On June 15, 2021, in connection with the 2021 merger transaction, the Company assumed High Wire’s convertible promissory note issued to Roger Ponder. The note was originally issued on August 31, 2020 in the principal amount of $23,894. Interest accrues at 10% per annum. All principal and accrued but unpaid interest under the note are due on August 31, 2022. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.06 per share, subject to adjustment based on the terms of the note. The embedded conversion option does not qualify for derivative accounting. As a result of the conversion price being fixed at $0.06, the note has a conversion premium of $58,349, and the fair value of the note is $19,000.

On September 30, 2022, the Company and the holder of the note mutually agreed to extend the maturity date to December 31, 2022. The terms of the note were unchanged.

On December 31, 2022, the Company and the holder of the note mutually agreed to extend the maturity date to March 31, 2023. The terms of the note were unchanged.

On March 31, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to June 30, 2023. The terms of the note were unchanged.

On June 30, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to September 30, 2023. The terms of the note were unchanged.

On September 30, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to December 31, 2023. The terms of the note were unchanged.

On December 31, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to March 31, 2024. The terms of the note were unchanged.

On March 31, 2024, the Company and the holder of the note mutually agreed to extend the maturity date to June 30, 2024. The terms of the note were unchanged.

As of March 31, 2024, the Company owed $23,894 pursuant to this agreement.

Securities Purchase Agreement – September 2023

On September 25, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company may issue to accredited investors (the “Investors”) 18% Senior Secured Convertible Promissory Notes having an aggregate principal amount of up to $5,000,000 (the “Notes”) and Common Share Purchase Warrants (the “Warrant”) to purchase up to 1,000,000 shares of common stock (“Common Stock”) of the Company per $100,000 of principal amount of the Notes (the “Warrant Shares”).

The Notes mature 18 months after issuance (the “Maturity Date”), bear interest at a rate of 18% per annum and are convertible into Common Stock (the “Conversion Shares” and, together with the Warrant Shares, the “Underlying Shares”), at the Investor’s election at any time after the Maturity Date, at an initial conversion price equal to $0.10, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. The Company may prepay all, but not less than all, of the then outstanding principal amount of the Notes by paying to the Investor an amount equal to the product of (i) the sum of (a) the outstanding principal amount of the Notes, plus (b) accrued and unpaid interest hereon, plus (c) all other amounts, costs, expenses and liquidated damages due in respect of the Notes, multiplied by (ii) (x) 1.18 if the Company prepays the Notes during the first month following the original issue date and (y) if the Company prepays thereafter, 1.18 minus 0.01 for every month following the closing until the Maturity Date. The Notes contain a number of customary events of default.

The Notes constitute senior secured indebtedness of the Company, subject to a preexisting senior lien, and are guaranteed by all existing or future formed, direct and indirect, domestic subsidiaries of the Company (the “Guarantors”) pursuant to a subsidiary guarantee (the “Subsidiary Guarantee”) with the collateral agent for the Investor (the “Agent”). On September 25, 2023, the Company, the Investor, the Guarantors and the Agent also entered into a security agreement (the “Security Agreement”) pursuant to which the Notes are secured by a lien in, and security interest upon, and a right of set-off against all of its right, title and interest of whatsoever kind and nature in and to, all assets of the Company and the Guarantors, subject to customary and mutually agreed permitted liens.

The Warrant is exercisable at an initial exercise price of $0.15 per share for a term ending on the 5-year anniversary of the date of issuance. The exercise price of the Warrant is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances.

As of March 31, 2024, the Company had issued an aggregate of $1,220,000 of principal and an aggregate of 12,200,000 warrants to debt holders in connection with the Purchase Agreement.

Additionally, the placement agent for the Purchase agreement receives 7% cash and 7% warrant compensation on amounts closed on pursuant to the agreement. As of March 31, 2024, the placement agent had received an aggregate of 854,000 warrants.

For information on the debt issued under the agreement, refer to the “Convertible promissory note, Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025” and “Convertible promissory note, Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025” sections of this note, along with the “Convertible promissory note, Mark Porter, 18% interest, secured, matures March 25, 2025” section of Note 5, Loans Payable to Related Parties.

Convertible promissory note, Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025

On September 25, 2023, the Company issued to Herald Investment Management Limited a senior subordinated secured convertible promissory note in the aggregate principal amount of $700,000. The Company received cash of $669,687 and recorded a debt discount of $30,313. The interest on the outstanding principal due under the note accrues at a rate of 18% per annum. All principal and accrued but unpaid interest under the note are due on March 25, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued Herald Investment Management Limited a warrant to purchase 7,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share. These warrants expire on September 25, 2028.

The warrants, including those issued to the placement agent, had a relative fair value of $318,523, which resulted in an additional debt discount of $318,523. The amount is also included within additional paid-in capital.

As of March 31, 2024, the Company owed $700,000 pursuant to this note and will record accretion equal to the debt discount of $221,302 over the remaining term of the note.

Convertible promissory note, Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025

On September 25, 2023, the Company issued to Kings Wharf Opportunities Fund, LP a senior subordinated secured convertible promissory note in the aggregate principal amount of $450,000. The Company received cash of $430,513 and recorded a debt discount of $19,487. The interest on the outstanding principal due under the note accrues at a rate of 18% per annum. All principal and accrued but unpaid interest under the note are due on March 25, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued Kings Wharf Opportunities Fund, LP a warrant to purchase 4,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share. These warrants expire on September 25, 2028.

The warrants, including those issued to the placement agent, had a relative fair value of $204,765 which resulted in an additional debt discount of $204,765. The amount is also included within additional paid-in capital.

As of March 31, 2024, the Company owed $450,000 pursuant to this note and will record accretion equal to the debt discount of $142,266 over the remaining term of the note.

Securities Purchase Agreement – December 2023

On December 7, 2023, the Company entered into a securities purchase agreement pursuant to which the Company may issue to accredited investors (the “Investors”) 12% senior promissory notes having an aggregate principal amount of up to $2,250,000, up to 4,780,000 shares of common stock as a commitment fee (the “commitment shares”), common share purchase warrants for the purchase of up to 5,400,000 shares of common stock at an initial price per share of $0.125 (the “First Warrants”), as well as common share purchase warrants for the purchase of up to 37,500,000 shares of common stock at an initial price per share of $0.001 (the “Second Warrants”).

The notes have a term of one year from the date of issuance. The First Warrants have a term of five years from the date of issuance. The Second Warrants have a term of five years from the date of a triggering event as defined in the terms of the agreement.

As of March 31, 2024, the Company had issued an aggregate of $1,016,667 of principal, an aggregate of 2,159,850 commitment shares, an aggregate of 2,439,999 First Warrants, and an aggregate of 16,944,443 Second Warrants to debt holders in connection with the agreement.

For information on the debt issued under the agreement, refer to the “Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024”, and “Convertible promissory note, FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024”, and “Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025” sections of this note.

In connection with the issuances of debt discussed below, the Company issued 321,990 First Warrants to a broker.

Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024

On December 7, 2023, the Company issued to Mast Hill Fund, L.P. a senior convertible promissory note in the aggregate principal amount of $444,445. The Company received cash of $357,000, net of legal fees of $43,000, which resulted in an original issue discount of $44,445. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on March 7, 2024 and principal on June 7, 2024, with all remaining amounts under the note due on December 7, 2024. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued Mast Hill Fund, L.P. 944,197 commitment shares, 1,066,666 First Warrants with an exercise price of $0.125 which expire on December 7, 2028, and 7,407,407 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement.

On December 7, 2023, the Company issued 944,197 commitment shares to Mast Hill Fund, L.P. The shares had a fair value of $80,713, which resulted in an additional debt discount of $80,713.

The warrants qualified for warrant liability accounting under ASC 480 “Distinguishing Liabilities from Equity”. The initial fair value of the warrants was $609,116, which resulted in an additional debt discount of $319,287 and warrant expense of $332,819, which was recorded on the consolidated statement of operations for the year ended December 31, 2023.

A total of $80,703 was recorded to additional paid-in capital in connection with the issuance of debt and warrants.

On January 1, 2024, $66,667 was added to the principal balance of the note as the Company had not yet filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. This amount was recorded as a penalty fee on the unaudited condensed consolidated statement of operations for the three months ended March 31, 2024.

As of March 31, 2024, the Company owed $511,112 pursuant to this note and will record accretion equal to the debt discount of $272,148 over the remaining term of the note.

Convertible promissory note, FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024

On December 11, 2023, the Company issued to FirstFire Global Opportunities Fund, LLC a senior convertible promissory note in the aggregate principal amount of $222,222. The Company received cash of $178,500, net of legal fees of $21,500, which resulted in an original issue discount of $22,222. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on March 11, 2024 and principal on June 11, 2024, with all remaining amounts under the note due on December 11, 2024. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued FirstFire Global Opportunities Fund, LLC 472,098 commitment shares, 533,333 First Warrants with an exercise price of $0.125 which expire on December 11, 2028, and 3,703,703 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement.

On December 11, 2023, the Company issued 472,098 commitment shares to FirstFire Global Opportunities Fund, LLC. The shares had a fair value of $38,540, which resulted in an additional debt discount of $38,540.

The warrants qualified for warrant liability accounting under ASC 480 “Distinguishing Liabilities from Equity”. The initial fair value of the warrants was $291,964, which resulted in an additional debt discount of $161,460 and warrant expense of $151,999, which was recorded on the consolidated statement of operations for the year ended December 31, 2023.

A total of $38,535 was recorded to additional paid-in capital in connection with the issuance of debt and warrants.

On January 1, 2024, $33,333 was added to the principal balance of the note as the Company had not yet filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. This amount was recorded as a penalty fee on the unaudited condensed consolidated statement of operations for the three months ended March 31, 2024.

As of March 31, 2024, the Company owed $255,555 pursuant to this note and will record accretion equal to the debt discount of $137,889 over the remaining term of the note.

Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025

On January 11, 2024, the Company issued to Mast Hill Fund, L.P. a senior convertible promissory note in the aggregate principal amount of $350,000. The Company received cash of $281,150, net of legal fees of $33,850, resulting in an original issue discount of $35,000. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on April 11, 2024 and principal on July 11, 2024, with all remaining amounts under the note due on January 11, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share.

Additionally, in connection with the note, the Company issued Mast Hill Fund, L.P. 743,555 commitment shares, 840,000 First Warrants with an exercise price of $0.125 which expire on January 11, 2029, and 5,833,333 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement.

On January 11, 2024, the Company issued 743,555 commitment shares to Mast Hill Fund, L.P. The shares had a fair value of $56,286.

The warrants qualified for warrant liability accounting under ASC 480 “Distinguishing Liabilities from Equity”. The initial fair value of the warrants was $439,600, which resulted in an additional debt discount of $182,782 and warrant expense of $256,818, which was recorded on the unaudited condensed consolidated statement of operations for the three months ended March 31, 2024.

A total of $56,279 was recorded to additional paid-in capital in connection with the issuance of debt and warrants.

As of March 31, 2024, the Company owed $350,000 pursuant to this note and will record accretion equal to the debt discount of $254,085 over the remaining term of the note.

Convertible promissory note, 1800 Diagonal Lending LLC, 12% interest, unsecured, matures November 15, 2024

On January 24, 2024, the Company issued to 1800 Diagonal Lending LLC an unsecured convertible promissory note in the aggregate principal amount of $178,250. The Company received cash of $150,000, net of legal fees of $5,000, resulting in an original issue discount of $23,250. A one-time interest charge of 12%, or $21,390, was applied on the issuance date. The principal and accrued interest is to be paid in nine equal payments beginning on March 15, 2024, with the final principal and accrued interest payment due on November 15, 2024. In the event of a default, the note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.07 per share.

During the three months ended March 31, 2024, the Company paid $19,528 of the original balance under the agreement.

As of March 31, 2024, the Company owed $158,722 pursuant to this note and will record accretion equal to the debt discount of $17,654 over the remaining term of the note.

8.	Factor Financing

On February 22, 2023, ADEX, a former subsidiary of the Company, entered into an amendment to its factor financing agreement, pursuant to which ADEX agreed to sell and assign and Bay View Funding agreed to buy and accept, certain accounts receivable owing to ADEX. The amendment amended the agreement to include the Company’s HWN and SVC subsidiaries. Under the terms of the Amendment, upon the receipt and acceptance of each assignment of accounts receivable, Bay View Funding will pay ADEX, HWN and SVC, individually and together, ninety percent (90%) of the face value of the assigned accounts receivable, up to maximum total borrowings of $9,000,000 outstanding at any point in time. ADEX, HWN and SVC additionally granted Bay View Funding a continuing security interest in, and lien upon, all accounts receivable, inventory, fixed assets, general intangibles, and other assets.

Under the factoring agreement, HWN and SVC may borrow up to the lesser of $4,000,000 or an amount equal to the sum of all undisputed purchased receivables multiplied by the advance percentage, less any funds in reserve. HWN and SVC will pay to Bay View Funding a factoring fee upon purchase of receivables by Bay View Funding equal to 0.45% of the gross face value of the purchased receivable for the first 30 day period from the date said purchased receivable is first purchased by Bay View Funding, and a factoring fee of 0.25% per 15 days thereafter until the date said purchased receivable is paid in full or otherwise repurchased by HWN and SVC or otherwise written off by Bay View Funding within the write off period. HWN and SVC will also pay a finance fee to Bay View Funding on the outstanding advances under the agreement at a floating rate per annum equal to the Prime Rate plus 1.75%. The finance rate will increase or decrease monthly, on the first day of each month, by the amount of any increase or decrease in the Prime Rate, but at no time will the finance fee be less than 9.25%.

On March 6, 2023, in connection with the divestiture of the ADEX Entities, the amounts owed and related to ADEX accounts receivable were assumed by the buyer.

During the three months ended March 31, 2024, the Company paid $100,992 in factoring fees. These amounts are included within general and administrative expenses on the unaudited condensed consolidated statement of operations.

During the three months ended March 31, 2024, the Company received an aggregate of $5,035,007 and repaid an aggregate of $3,650,713.

The Company owed $2,745,950 under the agreement as of March 31, 2024.

9.	Warrants Liabilities

Certain of the warrants related to the convertible debentures described in Note 6, Convertible Debentures, qualify for liability classification under ASC 480, “Distinguishing Liabilities from Equity”. The fair value of the warrant liabilities was measured upon issuance and is re-measured at the end of every reporting period, with the change in fair value reported in the consolidated statement of operations as a gain or loss on change in fair value of warrant liabilities.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 warrant liabilities for the three months ended March 31, 2024:

	March 31,
	2024
Balance at the beginning of the period	$	833,615
Issuance of warrants		439,600
Change in fair value of warrant liabilities		(241,993	)
Balance at the end of the period		1,031,222

*	The current and long-term breakout of warrant liabilities is based on the current and long-term breakout of the associated convertible debentures.

The Company uses Level 3 inputs for its valuation methodology for the warrant liabilities as their fair values were determined by using either the Black-Scholes model based on various assumptions or the price of the Company’s common stock.

Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:

	Expected volatility	Risk-free interest rate	Expected dividend yield	Expected life (in years)
At March 31, 2024	197%	4.21%	0%	4.69 - 4.78
At December 31, 2023	221 - 222%	4.11 - 4.25%	0%	4.94 - 4.95

10.

Common Stock

Authorized shares

The Company has 1,000,000,000 common shares authorized with a par value of $0.00001.

11.

Preferred Stock

See below for a description of each of the Company’s outstanding classes of preferred stock, including historical and current information.

Series B

On April 16, 2018, High Wire designated 1,000 shares of Series B preferred stock with a stated value of $3,500 per share. The Series B preferred stock is neither redeemable nor convertible into common stock. The principal terms of the Series B preferred stock shares are as follows:

Issue Price — The stated price for the Series B preferred stock shares shall be $3,500 per share.

Redemption — The Series B preferred stock shares are not redeemable.

Dividends — The holders of the Series B preferred stock shares shall not be entitled to receive any dividends.

Preference of Liquidation — The Corporation’s Series A preferred stock (the “Senior Preferred Stock) shall have a liquidation preference senior to the Series B preferred stock. Upon any fundamental transaction, liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the shares of the Series B preferred stock shares shall be entitled, after any distribution or payment is made upon any shares of capital stock of the Company having a liquidation preference senior to the Series B preferred stock shares, including the Senior Preferred Stock, but before any distribution or payment is made upon any shares of common stock or other capital stock of the Company having a liquidation preference junior to the Series B preferred stock shares, to be paid in cash the sum of $3,500 per share. If upon such liquidation, dissolution or winding up, the assets to be distributed among the Series B preferred stock holders and all other shares of capital stock of the Company having the same liquidation preference as the Series B preferred stock shall be insufficient to permit payment to said holders of such amounts, then all of the assets of the Company then remaining shall be distributed ratably among the Series B preferred stock holders and such other capital stock of the Company having the same liquidation preference as the Series B preferred stock, if any. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after provision is made for Series B preferred stock holders and all other shares of capital stock of the Company having the same liquidation preference as the Series B preferred stock, if any, then-outstanding as provided above, the holders of common stock and other capital stock of the Company having a liquidation preference junior to the Series B preferred stock shall be entitled to receive ratably all remaining assets of the Company to be distributed.

Voting — The holders of shares of Series B preferred stock shall be voted together with the shares of common stock such that the aggregate voting power of the Series B preferred stock is equal to 51% of the total voting power of the Company.

Conversion — There are no conversion rights.

In accordance with ASC 480 Distinguishing Liabilities from Equity, the Company has classified the Series B preferred stock shares as temporary equity or “mezzanine.”

Series D

On June 14, 2021, High Wire designated 1,590 shares of Series D preferred stock with a stated value of $10,000 per share. The Series D preferred stock is not redeemable.

On December 13, 2021, the Company made the first amendment to the Certificate of Designation of its Series D preferred stock which changed the conversion right. As a result of this amendment, the Company recorded a deemed dividend of $5,852,000 for the year ended December 31, 2021 in accordance with ASC 260-10-599-2.

Subsequent to the first amendment, the principal terms of the Series D preferred stock shares are as follows:

Issue Price — The stated price for the Series D preferred stock shares shall be $10,000 per share.

Redemption — The Series D preferred stock shares are not redeemable.

Dividends — The holders of the Series D preferred stock shares shall not be entitled to receive any dividends.

Preference of Liquidation — Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall (i) first be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to $10,000 for each share of Series D before any distribution or payment shall be made to the holders of any other securities of the Corporation and (ii) then be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series D were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

Voting — Except as otherwise provided in the agreement or as required by law, the Series D shall be voted together with the shares of common stock, par value $0.00001 per share of the Corporation (“Common Stock”), and any other series of preferred stock then outstanding that have voting rights, and except as provided in Section 7, not as a separate class, at any annual or special meeting of stockholders of the Corporation, with respect to any question or matter upon which the holders of Common Stock have the right to vote, such that the voting power of each share of Series D is equal to the voting power of the shares of Common Stock that each such share of Series D would be convertible into pursuant to Section 6 if the Series D Conversion Date was the date of the vote. The Series D shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation and may act by written consent in the same manner as the holders of Common Stock of the Corporation.

Conversion — Beginning ninety (90) days from the date of issuance, all or a portion of the Series D may be converted into Common Stock at the greater of the Fixed Price and the Average Price (as defined below). On the business day immediately preceding the listing of the Common Stock on a national securities exchange (the “Automatic Series D Conversion Date”), without any further action, all shares of Series D shall automatically convert into shares of Common Stock at the Fixed Price, which is defined as the closing price of the Common Stock on the trading day immediately preceding the date of issuance of the Series D ( subject to adjustment for any reverse or forward split of the Common Stock). The Series D shares were issued on June 16, 2021, and the closing price of the Company’s common stock was $0.225 on June 15, 2021. The Average Price is defined as the average closing price of the Company’s common stock for the 10 trading days immediately preceding, but not including, the conversion date.

Vote to Change the Terms of or Issuance of Series D — The affirmative vote at a meeting duly called for such purpose, or written consent without a meeting, of the holders of not less than fifty-one (51%) of the then outstanding shares of Series D shall be required for any change to the Certificate of Designation, Preferences, Rights and Other Rights of the Series D.

As of March 31, 2024, the carrying value of the Series D Preferred Stock was $7,745,643. This amount is recorded within equity on the unaudited condensed consolidated balance sheet.

Series E

On December 20, 2021, the Company designated 650 shares of Series E preferred stock with a stated value of $10,000 per share. The Series E preferred stock is not redeemable.

The principal terms of the Series E preferred stock shares are as follows:

Issue Price — The stated price for the Series E preferred stock shares shall be $10,000 per share.

Redemption — The Series E preferred stock shares are not redeemable.

Dividends — The holders of the Series E preferred stock shares shall not be entitled to receive any dividends.

Preference of Liquidation — Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall (i) first be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to $10,000 for each share of Series E before any distribution or payment shall be made to the holders of any other securities of the Corporation and (ii) then be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series E were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

Voting — Except as otherwise provided herein or as required by law, the Series E shall be voted together with the shares of common stock, par value $0.00001 per share of the Corporation (“Common Stock”), and any other series of preferred stock then outstanding that have voting rights, and except as provided in Section 7, below, not as a separate class, at any annual or special meeting of stockholders of the Corporation, with respect to any question or matter upon which the holders of Common Stock have the right to vote, such that the voting power of each share of Series E is equal to the voting power of the shares of Common Stock that each such share of Series E would be convertible into pursuant to Section 6 if the Series E Conversion Date was the date of the vote. The Series E shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation and may act by written consent in the same manner as the holders of Common Stock of the Corporation.

Conversion — Beginning ninety (90) days from the date of issuance, all or a portion of the Series E may be converted into Common Stock at the Fixed Price (as defined below). On the business day immediately preceding the listing of the Common Stock on a national securities exchange (the “Automatic Series E Conversion Date”), without any further action, all shares of Series E shall automatically convert into shares of Common Stock at the Fixed Price. “Fixed Price” shall be defined as the closing price of the Common Stock on the trading day immediately preceding the date of issuance of the Series E (subject to adjustment for any reverse or forward split of the Common Stock or similar occurrence). The Series E shares were issued on December 30, 2021, and the closing price of the Company’s common stock was $0.23075 on December 29, 2021.

Vote to Change the Terms of or Issuance of Series E — The affirmative vote at a meeting duly called for such purpose, or written consent without a meeting, of the holders of not less than fifty-one (51%) of the then outstanding shares of Series E shall be required for any change to the Certificate of Designation, Preferences, Rights and Other Rights of the Series E.

As of March 31, 2024, the carrying value of the Series E Preferred Stock was $4,869,434. This amount is recorded within equity on the consolidated balance sheet.

12.

Share Purchase Warrants and Stock Options

In connection with the issuance of new convertible debentures during December 2023 and January 2024, the associated warrants qualified for liability classification. The fair value of these warrants was $1,031,222 and $833,615 as of March 31, 2024 and December 31, 2023, respectively. This amount is included in warrant liabilities on the unaudited condensed consolidated balance sheet. The weighted-average remaining life on the share purchase warrants as of March 31, 2024 was 2.6 years. The weighted-average remaining life on the stock options as of March 31, 2024 was 3.3 years. With the exception of those issued during February 2021 and June 2021, the stock options outstanding at March 31, 2024 were subject to vesting terms.

The following table summarizes the activity of share purchase warrants for the period of January 1, 2023 through March 31, 2024:

	Number of warrants		Weighted average exercise price		Intrinsic value
Balance at December 31, 2023		39,076,249	$	0.09	$	738,889
Granted		6,784,182		0.02		379,167
Exercised		-		-
Expired/forfeited		-		-
Outstanding at March 31, 2024		45,860,431	$	0.08	$	889,583
Exercisable at March 31, 2024		28,915,988	$	0.13	$	-

As of March 31, 2024, the following share purchase warrants were outstanding:

Number of warrants		Exercise price		Issuance Date	Expiry date	Remaining life
	200,000		0.25	12/14/2021	12/14/2024		0.71
	400,000		0.25	12/14/2021	12/14/2024		0.71
	12,500,000		0.10	11/18/2022	11/18/2027		3.64
	7,000,000		0.15	9/25/2023	9/25/2028		4.49
	4,500,000		0.15	9/25/2023	9/25/2028		4.49
	700,000		0.15	9/25/2023	9/25/2028		4.49
	854,000		0.15	9/25/2023	9/25/2028		4.49
	1,066,666		0.125	12/7/2023	12/7/2028		4.69
	7,407,407		0.001	12/7/2023	*		*
	140,760		0.125	12/7/2023	12/7/2028		4.69
	533,333		0.125	12/11/2023	12/11/2028		4.70
	3,703,703		0.001	12/11/2023	*		*
	70,380		0.125	12/11/2023	12/11/2028		4.70
	840,000		0.125	1/11/2024	1/11/2029		4.79
	5,833,333		0.001	1/11/2024	*		*
	110,849		0.125	1/11/2024	1/11/2029		4.79
	45,860,431

*	These warrants expire five years from the date of a triggering event as defined in the terms of the agreements discussed in Note 6, Convertible Debentures.

The following table summarizes the activity of stock options for the period of January 1, 2024 through March 31, 2024:

	Number of stock options		Weighted average exercise price		Intrinsic value
Balance at December 31, 2023		26,514,617	$	0.18	$	-
Issued		-		-
Exercised		-		-
Cancelled/expired/forfeited		-		-
Outstanding at March 31, 2024		26,514,617	$	0.18	$	-
Exercisable at March 31, 2024		19,439,733	$	0.20	$	-

As of March 31, 2024, the following stock options were outstanding:

Number of stock options		Exercise price		Issuance Date	Expiry date	Remaining Life
	961,330		0.58	2/23/2021	2/23/2026		1.90
	3,318,584		0.25	6/16/2021	6/16/2026		2.21
	100,603		0.25	8/11/2021	8/11/2026		2.36
	5,767,429		0.25	8/18/2021	8/18/2026		2.38
	185,254		0.54	11/3/2021	11/3/2026		2.59
	120,128		0.19	3/21/2022	3/21/2027		2.97
	95,238		0.11	5/16/2022	5/16/2027		3.13
	1,205,714		0.09	9/28/2022	9/28/2027		3.50
	894,737		0.10	2/8/2023	2/8/2028		3.86
	600,000		0.30	2/8/2023	2/8/2026		1.86
	1,552,174		0.12	2/27/2023	2/27/2028		3.91
	8,022,000		0.11	5/17/2023	5/17/2028		4.13
	1,047,131		0.11	5/30/2023	5/30/2028		4.17
	1,014,577		0.12	7/18/2023	7/18/2028		4.30
	1,104,604		0.07	10/24/2023	10/24/2028		4.57
	525,114		0.07	12/31/2023	12/31/2028		4.76
	26,514,617

The remaining stock-based compensation expense on unvested stock options was $310,108 as of March 31, 2024.

13.

Leases

The Company leases certain office space and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities.

The following table sets forth the operating lease right of use (“ROU”) assets and liabilities as of March 31, 2024 and December 31, 2023:

	March 31,		December 31,
	2024		2023
Operating lease assets	$	252,521	$	277,995

Operating lease liabilities:
Current operating lease liabilities		93,056		89,318
Long term operating lease liabilities		163,163		190,989
Total operating lease liabilities	$	256,219	$	280,307

Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three months ended March 31, 2024 and 2023, the Company recognized operating lease expense of $28,667 and $25,136, respectively. Operating lease costs are included within general and administrative expenses on the unaudited condensed consolidated statements of operations. During the three months ended March 31, 2024 and 2023, short-term lease costs were $0 and $15,877, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were $27,280 and $32,361, respectively, for the three months ended March 31, 2024 and 2023. These amounts are included in operating activities in the unaudited condensed consolidated statements of cash flows. During the three months ended March 31, 2024 and 2023, the Company reduced its operating lease liabilities by $24,088 and $31,564, respectively, for cash paid.

The operating lease liabilities as of March 31, 2024 reflect a weighted average discount rate of 5%. The weighted average remaining term of the leases is 2.3 years. Remaining lease payments as of March 31, 2024 are as follows:

Year ending December 31,
2024		84,115
2025		116,965
2026		70,179
Total lease payments		271,259
Less: imputed interest		(15,040	)
Total	$	256,219

14.

Commitments and Contingencies

Leases

The Company leases its principal offices under a lease that expires in 2026. Leases with an initial term of 12 months or less and immaterial leases are not recorded on the balance sheet (refer to Note 13, Leases, for amounts expensed during the three months ended March 31, 2024 and 2023).

Legal proceedings

In the normal course of business or otherwise, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

15.

Segment Disclosures

During the three months ended March 31, 2024 and 2023, the Company had three operating segments including:

●

Technology, which is comprised of AWS PR, Tropical, OCL, and HWN.

	●	SVC, which consists of the Company’s SVC subsidiary.

	●	Corporate, which consists of the rest of the Company’s operations.

Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the SVC and Corporate reporting segments in one geographical area (the United States) and the AWS PR/ Tropical/OCL/HWN operating segment in two geographical areas (the United States and Puerto Rico).

Financial statement information by operating segment for the three months ended March 31, 2024 is presented below:

	Three Months Ended March 31, 2024
	Corporate			Technology		SVC		Total

Net sales	$	-		$	6,635,306	$	1,015,675	$	7,650,981
Operating (loss) income		(281,422	)		627,650		1,436		347,664
Interest expense		160,820			82,216		-		243,036
Depreciation and amortization		-			58,361		129,977		188,338
Total assets as of March 31, 2024		28,429			7,174,947		5,742,598		12,945,974

Geographic information as of and for the three months ended March 31, 2024 is presented below:

	Revenues For The Three Months Ended March 31, 2024		Long-lived Assets as of December 31, 2023

Puerto Rico and Canada	$	-	$	-
United States		7,650,981		7,886,952
Consolidated total		7,650,981		7,886,952

Financial statement information by operating segment for the three months ended March 31, 2023 is presented below:

	Three Months Ended March 31, 2023
	Corporate			Technology			SVC			Total

Net sales	$	-		$	9,342,776		$	822,395		$	10,165,171
Operating (loss) income		(1,070,177	)		(1,446,412	)		(114,354	)		(2,630,943	)
Interest expense		182,486			3,166			-			185,652
Depreciation and amortization		-			51,780			150,840			202,620
Total assets as of December 31, 2023		14,929			4,990,874			5,825,951			10,831,754

Geographic information as of December 31, 2023 and for the three months ended March 31, 2024 is presented below:

	Revenues For The Three Months Ended March 31, 2023		Long-lived Assets as of December 31, 2023

Puerto Rico and Canada	$	224,187	$	-
United States		9,940,984		8,087,043
Consolidated total		10,165,171		8,087,043

16.

Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023:

	For the three months ended
	March 31,
	2024			2023

Numerator:
Net (loss) income attributable to High Wire Networks, Inc. common shareholders	$	(414,438	)	$	168,309

Denominator
Weighted average common shares outstanding, basic		240,538,746			197,475,692
Effect of dilutive securities		-			19,849,588
Weighted average common shares outstanding, diluted		240,538,746			217,325,280

(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, basic:
Net (loss) income from continuing operations	$	(0.00	)	$	0.01
Net loss from discontinued operations, net of taxes	$	-		$	(0.01	)
Net (loss) income per share	$	(0.00	)	$	0.00

(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, diluted:
Net (loss) income from continuing operations	$	(0.00	)	$	0.01
Net loss from discontinued operations, net of taxes	$	-		$	(0.01	)
Net (loss) income per share	$	(0.00	)	$	0.00

17.

Discontinued Operations

On March 6, 2023, HWN divested the ADEX Entities. The divestiture of the ADEX Entities qualified for discontinued operations treatment.

The results of operations of the ADEX Entities have been included within net loss from discontinued operations, net of taxes, on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2023.

The following table shows the statement of operations for the Company’s discontinued operations for the three months ended March 31, 2023:

	For the three months ended
	March 31, 2023

Revenue	$	4,759,216

Operating expenses:
Cost of revenues		3,824,134
Depreciation and amortization		107,627
Salaries and wages		197,456
General and administrative		532,396
Total operating expenses		4,661,613

Income from operations		97,603

Other (expenses) income:
Loss (gain) on disposal of subsidiary		(1,434,392	)
Exchange loss		(923	)
Interest expense		-
PPP loan forgiveness		-
Total other (expense) income		(1,435,315	)

Pre-tax (loss) income from operations		(1,337,712	)

Provision for income taxes		-

Net (loss) income from discontinued operations, net of taxes	$	(1,337,712	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plan”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited condensed consolidated financial statements are stated in United States dollars ($) and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

All references to “common stock” refer to the common shares in our capital stock.

Unless specifically set forth to the contrary, when used in this report the terms “we”, “our”, the “Company” and similar terms refer to High Wire Networks, Inc., a Nevada corporation, and its consolidated subsidiaries.

The information that appears on our website at www.HighWireNetworks.com is not part of this report.

Description of Business

Business Overview

HWN, Inc., (d/b/a High Wire Network Solutions, Inc.) (“HWN”) was incorporated in Delaware on January 20, 2017. HWN is a global provider of managed cybersecurity, managed networks, and tech enabled professional services delivered exclusively through a channel sales model. Our Overwatch managed security platform-as-a-service offers organizations end-to-end protection for networks, data, endpoints and users via multiyear recurring revenue contracts in this fast-growing technology segment. HWN has continuously operated under the High Wire Networks brand for 23 years.

HWN and JTM Electrical Contractors, Inc. (“JTM”), an Illinois Corporation, entered into an operating agreement through which High Wire owned 50% of JTM. On February 15, 2022, HWN sold its 50% interest in JTM.

On June 16, 2021, we completed a merger with Spectrum Global Solutions, Inc. On January 7, 2022, Spectrum Global Solutions, Inc. legally changed its name to High Wire Networks, Inc. (“High Wire”). The merger was accounted for as a reverse merger. At the time of the reverse merger, High Wire’s subsidiaries included ADEX Corporation, ADEX Puerto Rico LLC, ADEX Canada, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively “ADEX” or the “ADEX Entities”), AW Solutions Puerto Rico, LLC (“AWS PR”), and Tropical Communications, Inc. (“Tropical”). For accounting purposes, HWN is the surviving entity. On March 6, 2023, HWN divested the ADEX Entities. On July 31, 2023, HWN paused the operations of its AWS PR subsidiary. On November 3, 2023, HWN paused the operations of its Tropical subsidiary.

On November 4, 2021, we closed on the acquisition of Secure Voice Corp (“SVC”). The closing of the acquisition was facilitated by a senior secured promissory note which has been repaid.

On August 4, 2023, we formed a new entity – incorporated as Overwatch Cyberlab, Inc. (“OCL”) – which is 80% owned by our company and 20% owned by John Peterson.

Our AWS PR and Tropical subsidiaries are professional services organizations that deliver services for Enterprise clients as well as wireline and wireless carriers. These subsidiaries are operated as part of our Technology segment. Our SVC subsidiary is a wholesale network services provider with network footprint in the Northeast United States. This network carries VoIP and other traffic for other service providers. OCL has not begun to generate revenue as of March 31, 2024.

We provide the following categories of offerings to our customers:

●

Security: High Wire’s award-winning Overwatch Managed Security offers organizations end-to-end protection for networks, data, endpoints, and users via multiyear recurring revenue contracts in this fast-growing technology segment. This segment is nearly 100% recurring revenue with multi-year contracts. Overwatch delivers services through Managed Service Providers (MSPs), strategic partnerships and alliances, Value Added Resellers (VARs), Distributors, and Network Service Providers.

●

Technology Solutions: We provide technology enabled professional and managed services for a wide array of clients exclusively through our channel partner relationships with the largest technology companies in the world. We deliver in the Enterprise, Wireline Carrier, Wireless Carrier, Network Backbone Carriers, State and Local Government, Federal Government, and Data Center market segments. We deliver services for most of the Fortune 500 alongside our channel partners. We deliver a wide array of services across a wide variety of technologies that include Wi-Fi, networking, SD-WAN, Distributed Antenna Systems, Wireless Carrier Networking, Fiber Backhaul, and many more. We provide planning, installation, project management, and ongoing support for break/fix services. We operate 24/7/365 around the world. We leverage our own technology platform, Workview, to deliver these services cost effectively and in a highly efficient and scalable manner.

Our Technology Solutions division is supported by our subsidiaries: HWN, Inc.; AW Solutions Puerto Rico, LLC and Tropical Communications, Inc. (collectively known as “AWS” or the “AWS Entities”); and SVC.

Our Operating Units

Our company is comprised of the following:

	●	Managed Services: The Managed Services Segment encompasses all of our recurring revenue businesses including our Overwatch Managed Security, all network managed services, all managed services performed under a Statement of Work (SoW), and our SVC revenue.

	●	Technology Solutions: The Technology Solutions group is all service and project revenue generally globally by HWN, Tropical, and AWS PR. These business perform professional services for the Enterprise, SMB, Data Center, Carrier Wireline, Carrier Wireless, and Network Service Provider markets.

Results of Operations for the Three-Month Periods Ended March 31, 2024 and 2023

Our operating results for the three-month periods ended March 31, 2024 and 2023 are summarized as follows:

	For the three months ended
	March 31,
	2024			2023
Statement of Operations Data:
Revenue	$	7,650,981		$	10,165,171
Operating expenses		7,303,317			12,796,114
Income (loss) from operations		347,664			(2,630,943	)
Total other (expense) income		(762,102	)		4,136,964
Net loss from discontinued operations, net of tax		-			(1,337,712	)
Net (loss) income attributable to common shareholders		(414,438	)		168,309

Revenues

Our revenue decreased from $10,165,171 for the three months ended March 31, 2023 to $7,650,981 for the three months ended March 31, 2024. The decrease in revenue of $2,514,190 is offset by an improvement in gross profit (revenue minus cost of revenue) of $2,066,739. The improvement in the gross profit as a percentage of revenue from 14.1% for the three months ended March 31, 2023 to 45.7% for the three months ended March 31, 2024 was primarily related to a more efficient project management delivery effort, improved project profitability during the bid quoting process, as well as suspension of unprofitable business segments (Tropical and AWS PR) in the third quarter of 2023.

A significant portion of our services are performed under master service agreements and other arrangements with customers that extend for periods of one or more years. We are currently party to numerous master service agreements, and typically have multiple agreements with each of our customers. Master Service Agreements (MSAs) generally contain customer-specified service requirements, such as discreet pricing for individual tasks. To the extent that such contracts specify exclusivity, there are often a number of exceptions, including the ability of the customer to issue work orders valued above a specified dollar amount to other service providers, perform work with the customer’s own employees and use other service providers when jointly placing facilities with another utility. In most cases, a customer may terminate an agreement for convenience with written notice. The remainder of our services are provided pursuant to contracts for specific projects. Long-term contracts relate to specific projects with terms in excess of one year from the contract date. Short-term contracts for specific projects are generally three to four months in duration. The percentage of revenue from long-term contracts varies between periods depending on the mix of work performed under our contracts.

Operating Expenses

During the three months ended March 31, 2024, our operating expenses were $7,303,317, compared to $12,796,114 for the same period of 2023. The decrease of $5,492,797 is primarily related to a decrease in cost of revenue of $4,580,929 due to the decrease in sales discussed above as well as higher margin contracts during the current year. There were also decreases of $674,267 and $223,319, respectively, in general and administrative expenses and salaries and wages due to certain cost cutting measures.

Other (Expense) Income

During the three months ended March 31, 2024, we had other expense of $762,102, compared to other income of $4,136,964 for the same period of 2023. The change of $4,799,066 is primarily related to the gain on change in fair value of derivative liabilities and gain on extinguishment of derivatives of $3,140,404 and $1,692,232, respectively, in the prior year, as well as $214,737 of warrant expense during the current year. The change was partially offset by the gain on change in fair value of warrant liabilities of $241,993 in the current year.

Net (Loss) Income

For the three months ended March 31, 2024, we had a net loss attributable to High Wire Networks, Inc. common shareholders of $414,438, compared to net income of $168,309 in the same period of 2023.

Liquidity and Capital Resources

As of March 31, 2024, our total current assets were $5,059,022 and our total current liabilities were $15,754,492, resulting in a working capital deficit of $10,695,470, compared to a working capital deficit of $9,915,819 as of December 31, 2023.

While we had income from operations during the three months ended March 31, 2024, we have historically suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have historically raised additional capital through equity offerings and loan transactions.

Cash Flows

	For the years ended
	December 31,
	2023			2022

Net cash used in operating activities	$	(1,566,722	)	$	(5,159,209	)
Net cash (used in) provided by investing activities	$	(13,721	)	$	50,000
Net cash provided by financing activities	$	1,510,705		$	5,438,425
Change in cash	$	(69,738	)	$	329,216

For the three months ended March 31, 2024, cash decreased $69,738, compared to an increase in cash of $329,216 for the same period of 2023. Net cash used in operating activities included the net loss from continuing operations of $414,438, as well as a net cash outflow from changes in operating assets and liabilities of $2,007,874. Net cash provided by financing activities included net proceeds from factor financing and convertible debentures of $1,384,294 and $411,622, respectively.

As of March 31, 2024, we had cash of $263,619 compared to $333,357 as of December 31, 2023.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Inflation

The effect of inflation on our revenue and operating results has not been significant.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our Chief Executive Officer concluded that, as a result of the material weaknesses described below, as of March 31, 2024, our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:

Due to our small size, we do not have a proper segregation of duties in certain areas of our financial reporting process. The areas where we have a lack of segregation of duties include cash receipts and disbursements, approval of purchases and approval of accounts payable invoices for payment. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the consolidated financial statements will not be prevented or detected on a timely basis;

we do not have any formally adopted internal controls surrounding our cash and financial reporting procedures; and

the lack of the quantity of resources to implement an appropriate level of review controls to properly evaluate the completeness and accuracy of transactions entered into by our company.

We are committed to improving our financial organization. In addition, we will look to increase our personnel resources and technical accounting expertise within the accounting function to resolve non-routine or complex accounting matters.

Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

Item 1A. Risk Factors

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On January 11, 2024, we issued 743,555 shares of our common stock to Mast Hill Fund, L.P. in connection with the issuance of a convertible debenture.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit #		Exhibit Description
31.1*		Certification of the Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Label Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	High Wire Networks, Inc.

Date: May 20, 2024	By:	/s/ Mark W. Porter
		Mark W. Porter
		Chief Executive Officer

	High Wire Networks, Inc.

Date: May 20, 2024	By:	/s/ Curtis E. Smith
		Curtis E. Smith
		Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

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Exhibit 31.1

CERTIFICATION

I, Mark W. Porter, certify that:

I have reviewed this Quarterly Report on Form 10-Q of High Wire Networks, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 20, 2024

	By:	/s/ Mark W. Porter
		Mark W. Porter
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Curtis E. Smith, certify that:

I have reviewed this Quarterly Report on Form 10-Q of High Wire Networks, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 20, 2024

	By:	/s/ Curtis E. Smith
		Curt E. Smith
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32.1

Section 1350 CERTIFICATION

In connection with this Quarterly Report of High Wire Networks, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Mark W. Porter, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 20, 2024

	By:	/s/ Mark W. Porter
		Mark W. Porter
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 32.2

Section 1350 CERTIFICATION

In connection with this Quarterly Report of High Wire Networks, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Curtis E. Smith, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 20, 2024

	By:	/s/ Curtis E. Smith
		Curt E. Smith
		Chief Financial Officer
		(Principal Financial Officer)

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 17, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Amendment Flag	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Information [Line Items]
Entity Registrant Name	High Wire Networks, Inc.
Entity Central Index Key	0001413891
Entity File Number	000-53461
Entity Tax Identification Number	81-5055489
Entity Incorporation, State or Country Code	NV
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Contact Personnel [Line Items]
Entity Address, Address Line One	30 North Lincoln Street
Entity Address, City or Town	Batavia
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60510
Entity Phone Fax Numbers [Line Items]
City Area Code	952
Local Phone Number	974-4000
Entity Listings [Line Items]
Title of 12(b) Security	Common stock
Trading Symbol	HWNI
Security Exchange Name	NONE
Entity Common Stock, Shares Outstanding		240,620,455

Condensed Consolidated Balance Sheets - USD ($)

Mar. 31, 2024

Dec. 31, 2023

Current assets:

Cash

$ 263,619

$ 333,357

Accounts receivable, net of allowances of $291,298 and $311,610, respectively, and unbilled revenue of $80,000 and $99,916, respectively

4,483,151

2,294,324

Prepaid expenses and other current assets

312,252

117,030

Total current assets

5,059,022

2,744,711

Property and equipment, net of accumulated depreciation of $540,409 and $477,763, respectively

977,368

1,026,293

Goodwill

3,162,499

Intangible assets, net of accumulated amortization of $2,475,751 and $2,350,059, respectively

3,494,564

3,620,256

Operating lease right-of-use assets

252,521

277,995

Total assets

12,945,974

10,831,754

Current liabilities:

Accounts payable and accrued liabilities

6,816,109

6,417,525

Contract liabilities

384,253

382,576

Current portion of loans payable, net of debt discount of $93,052 and $96,552, respectively

2,714,094

2,995,803

Current portion of convertible debentures, net of debt discount of $1,045,344 and $614,556, respectively

1,653,940

326,005

Factor financing

2,745,950

1,361,656

Warrant liabilities

^[1]

1,031,222

833,615

Operating lease liabilities, current portion

93,056

89,318

Total current liabilities

15,754,492

12,660,530

Long-term liabilities:

Convertible debentures, net of current portion, net of debt discount of $0 and $464,839, respectively

685,161

Operating lease liabilities, net of current portion

163,163

190,989

Total long-term liabilities

163,163

920,853

Total liabilities

15,917,655

13,581,383

Commitments and contingencies (Note 14)

Preferred stock value

Common stock; $0.00001 par value; 1,000,000,000 shares authorized; 240,620,455 and 239,876,900 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

2,406

2,399

Additional paid-in capital

31,370,744

31,178,365

Accumulated deficit

(46,959,908)

(46,545,470)

Total stockholders’ deficit

(2,971,681)

(2,749,629)

Total liabilities and stockholders’ deficit

12,945,974

10,831,754

Related Party

Current liabilities:

Current portion of loans payable to related parties, net of debt discount of $19,132 and $10,968, respectively

315,868

254,032

Long-term liabilities:

Loans payable to related parties, net of current portion, net of debt discount of $0 and $25,297, respectively

44,703

Series B Preferred Stock

Long-term liabilities:

Preferred stock value

Series D Preferred Stock

Long-term liabilities:

Preferred stock value

7,745,643

Series E Preferred Stock

Long-term liabilities:

Preferred stock value

$ 4,869,434

[1]	The Company estimated the fair value of these warrant liabilities using either the Black-Scholes model or the price of the Company’s common stock.

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Accounts receivable, net of allowances (in Dollars)	$ 291,298	$ 311,610
unbilled revenue (in Dollars)	80,000	99,916
Property and equipment, net of accumulated depreciation (in Dollars)	540,409	477,763
Intangible assets, net of accumulated amortization (in Dollars)	2,475,751	2,350,059
Current portion of loans payable, net of debt discount (in Dollars)	93,052	96,552
Current portion of convertible debentures, net of debt discount (in Dollars)	1,045,344	614,556
Convertible debentures, net of current portion, net of debt discount (in Dollars)	$ 0	$ 25,297
Common stock, par value (in Dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	240,620,455	239,876,900
Common stock, shares outstanding	240,620,455	239,876,900
Related Party
Current portion of loans payable to related parties, net of debt discount (in Dollars)	$ 19,132	$ 10,968
Loans payable to related parties,net of debt discount (in Dollars)	$ 0	$ 25,297
Series B Preferred Stock
Preferred stock, par value (in Dollars per share)	$ 3,500	$ 3,500
Preferred stock, shares authorized	1,000	1,000
Preferred stock, shares issued	1,000	1,000
Preferred stock, shares outstanding	1,000	1,000
Series D Preferred Stock
Common stock, par value (in Dollars per share)	$ 0.00001
Preferred stock, par value (in Dollars per share)	$ 10,000	$ 10,000
Preferred stock, shares authorized	1,590	1,590
Preferred stock, shares issued	943	943
Preferred stock, shares outstanding	943	943
Series E Preferred Stock
Preferred stock, par value (in Dollars per share)	$ 10,000	$ 10,000
Preferred stock, shares authorized	650	650
Preferred stock, shares issued	311	311
Preferred stock, shares outstanding	311	311

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenue	$ 7,650,981	$ 10,165,171
Operating expenses:
Cost of revenue	4,150,739	8,731,668
Depreciation and amortization	188,338	202,620
Salaries and wages	1,769,697	1,993,016
General and administrative	1,194,543	1,868,810
Total operating expenses	7,303,317	12,796,114
Income (loss) from operations	347,664	(2,630,943)
Other income (expense):
Interest expense	(243,036)	(185,652)
Amortization of debt discounts	(432,934)	(508,564)
Warrant expense	(214,737)
Gain on change in fair value of warrant liabilities	241,993
Exchange loss	(14,888)	(1,456)
Penalty fee	(100,000)
Gain on change in fair value of derivative liabilities		3,140,404
Gain on extinguishment of derivatives		1,692,232
Other income	1,500
Total other (expense) income	(762,102)	4,136,964
Net (loss) income from continuing operations before income taxes	(414,438)	1,506,021
Provision for income taxes
Net (loss) income from continuing operations	(414,438)	1,506,021
Net loss from discontinued operations, net of tax		(1,337,712)
Net (loss) income attributable to High Wire Networks, Inc. common shareholders	$ (414,438)	$ 168,309
(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, basic:
Net (loss) income from continuing operations (in Dollars per share)	$ 0	$ 0.01
Net loss from discontinued operations, net of taxes (in Dollars per share)		(0.01)
Net (loss) income per share (in Dollars per share)	0	0
(Loss) income per share attributable to High Wire Networks, Inc. common shareholders, diluted:
Net (loss) income from continuing operations (in Dollars per share)	0	0.01
Net loss from discontinued operations, net of taxes (in Dollars per share)		(0.01)
Net (loss) income per share (in Dollars per share)	$ 0	$ 0
Weighted average common shares outstanding
Basic (in Shares)	240,538,746	197,475,692
Diluted (in Shares)	240,538,746	217,325,280

Condensed Consolidated Statements of Stockholder’S Deficit (Unaudited) - USD ($)	Common Sock	Preferred Stock Series D	Preferred Stock Series E	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2022	$ 1,645			$ 20,338,364	$ (32,059,470)	$ (11,719,461)
Balance (in Shares) at Dec. 31, 2022	164,488,370
Issuance of common stock upon conversion of Series A preferred stock	$ 38			722,060		722,098
Issuance of common stock upon conversion of Series A preferred stock (in Shares)	3,750,000
Issuance of common stock pursuant to PIPE transaction	$ 502			3,424,498		3,425,000
Issuance of common stock pursuant to PIPE transaction (in Shares)	50,233,334
Issuance of common stock upon conversion of Series D preferred stock	$ 65			1,445,155		1,445,220
Issuance of common stock upon conversion of Series D preferred stock (in Shares)	6,511,628
Issuance of common stock to third-party vendors	$ 28			242,172		242,200
Issuance of common stock to third-party vendors (in Shares)	2,800,000
Reclassification of Series D and E preferred stock to permanent equity		$ 9,245,462	$ 5,104,658			14,350,120
Reclassification of Series D and E preferred stock to permanent equity (in Shares)		1,125	526
Stock-based compensation				285,791		285,791
Net income for the period					168,309	168,309
Balance at Mar. 31, 2023	$ 2,278	$ 9,245,462	$ 5,104,658	26,458,040	(31,891,161)	8,919,277
Balance (in Shares) at Mar. 31, 2023	227,783,332	1,125	526
Balance at Dec. 31, 2023	$ 2,399	$ 7,745,643	$ 4,869,434	31,178,365	(46,545,470)	(2,749,629)
Balance (in Shares) at Dec. 31, 2023	239,876,900	943	311
Issuance of common stock and warrants upon issuance of debt	$ 7			56,279		56,286
Issuance of common stock and warrants upon issuance of debt (in Shares)	743,555
Stock-based compensation				136,100		136,100
Net income for the period					(414,438)	(414,438)
Balance at Mar. 31, 2024	$ 2,406	$ 7,745,643	$ 4,869,434	$ 31,370,744	$ (46,959,908)	$ (2,971,681)
Balance (in Shares) at Mar. 31, 2024	240,620,455	943	311

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Cash Flows [Abstract]
Net (loss) income from continuing operations	$ (414,438)	$ 1,506,021
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Amortization of discounts on convertible debentures and loans payable	432,934	508,564
Depreciation and amortization	188,338	202,620
Amortization of operating lease right-of-use assets	25,474	24,339
Stock-based compensation related to stock options	136,100	285,791
Gain on change in fair value of warrant liabilities	(241,993)
Warrant expense	214,737
Penalty fee	100,000
Gain on change in fair value of derivative liabilities		(3,140,404)
Stock-based compensation related to third-party vendors		242,200
Gain on extinguishment of derivatives		(1,692,232)
Loss on disposal of subsidiary		1,434,392
Changes in operating assets and liabilities:
Accounts receivable	(2,188,827)	(3,111,505)
Prepaid expenses and other current assets	(195,222)	373,982
Accounts payable and accrued liabilities	398,586	91,462
Contract liabilities	1,677	(857,786)
Operating lease liabilities	(24,088)	(31,564)
Net cash used in operating activities of continuing operations	(1,566,722)	(4,164,120)
Net cash used in operating activities of discontinued operations		(995,089)
Net cash used in operating activities	(1,566,722)	(5,159,209)
Cash flows from investing activities:
Purchase of fixed assets	(13,721)
Cash received in connection with disposal of JTM		50,000
Net cash (used in) provided by investing activities	(13,721)	50,000
Cash flows from financing activities:
Proceeds from loans payable		1,250,000
Repayments of loans payable	(285,211)	(1,293,023)
Proceeds from convertible debentures	431,150
Repayments of convertible debentures	(19,528)
Proceeds from factor financing	5,035,007	3,251,007
Repayments of factor financing	(3,650,713)	(897,051)
Securities Purchase Agreement proceeds		3,425,000
Net cash provided by financing activities of continuing operations	1,510,705	5,735,933
Net cash used in financing activities of discontinued operations		(297,508)
Net cash provided by financing activities	1,510,705	5,438,425
Net (decrease) increase in cash	(69,738)	329,216
Cash, beginning of period	333,357	649,027
Cash, end of period	263,619	978,243
Supplemental disclosures of cash flow information:
Cash paid for interest	132,219	2,681
Cash paid for income taxes
Non-cash investing and financing activities:
Original issue discounts on loans payable and convertible debentures	58,250	530,000
Issuance of common stock and warrants upon issuance of debt	56,286
Common stock issued for conversion of Series A preferred stock		722,098
Common stock issued for conversion of Series D preferred stock		$ 1,445,220

Organization

3 Months Ended

Mar. 31, 2024

Organization [Abstract]

Organization

1.	Organization

HWN and JTM Electrical Contractors, Inc. (“JTM”), an Illinois Corporation, entered into an operating agreement through which High Wire owned 50% of JTM.

On November 4, 2021, the Company closed on its acquisition of Secure Voice Corp (“SVC”). The closing of the acquisition was facilitated by a senior secured promissory note.

On February 15, 2022, HWN sold its 50% interest in JTM, which qualified for discontinued operations treatment.

On July 31, 2023, the Company paused the operations of its AWS PR subsidiary and sold off certain assets.

On August 4, 2023, the Company formed a new entity – incorporated as Overwatch Cyberlab, Inc. (“OCL”) – which is 80% owned by the Company and 20% owned by John Peterson.

On November 3, 2023, the Company paused the operations of its Tropical subsidiary.

Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2.	Significant Accounting Policies

Condensed Financial Statements

Basis of Presentation/Principles of Consolidation

All inter-company balances and transactions have been eliminated.

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Accounts Receivable

Property and Equipment

Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:

Computers and office equipment		3-7 years straight-line basis
Vehicles		3-5 years straight-line basis
Leasehold improvements		5 years straight-line basis
Software		5 years straight-line basis
Machinery and equipment		5 years straight-line basis

Goodwill

Intangible Assets

At March 31, 2024 and December 31, 2023, definite-lived intangible assets consisted of tradenames and customer relationships which are being amortized over their estimated useful lives of 10 years.

Long-lived Assets

Income Taxes

Prior to 2021, the Company had elected to be treated as a Subchapter S Corporation for income tax purposes, and as such recognized no income tax liability or benefit.

Revenue Recognition

Contract Types

Performance Obligations

Revenue Service Types

The following is a description of the Company’s revenue service types, which include Technology Solutions and Managed Services:

●

Disaggregation of Revenues

The Company disaggregates its revenue from contracts with customers by service type. See the below table:

Revenue by service type	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023
Technology Solutions	$	6,221,238	$	8,475,401
Managed Services		1,429,743		1,689,770
Total	$	7,650,981	$	10,165,171

The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information).

Contract Assets and Liabilities

Cost of Revenues

Research and Development Costs

Research and development costs are expensed as incurred.

Stock-based Compensation

(Loss) Income per Share

Leases

Going Concern Assessment

Recent Accounting Pronouncements

Concentrations of Credit Risk

Fair Value Measurements

Level 1 – quoted prices for identical instruments in active markets;

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2024 and December 31, 2023 consisted of the following:

	Total fair value at March 31, 2024		Quoted prices in active markets (Level 1)		Quoted prices in active markets (Level 2)		Quoted prices in active markets (Level 3)
Description:
Warrant liabilities (1)	$	1,031,222	$	-	$	-	$	1,031,222

	Total fair value at December 31, 2023		Quoted prices in active markets (Level 1)		Quoted prices in active markets (Level 2)		Quoted prices in active markets (Level 3)
Description:
Warrant liabilities (1)	$	833,615	$	-	$	-	$	833,615

(1)

The Company estimated the fair value of these warrant liabilities using either the Black-Scholes model or the price of the Company’s common stock.

Warrant Liabilities

Sequencing Policy

Property and Equipment

3 Months Ended

Mar. 31, 2024

Property and Equipment [Abstract]

Property and Equipment

3.	Property and Equipment

Property and equipment as of March 31, 2024 and December 31, 2023 consisted of the following:

	March 31			December 31
	2024			2023
Computers and office equipment	$	186,743		$	175,008
Vehicles		11,938			11,938
Leasehold improvements		6,113			6,113
Software		474,183			472,197
Machinery and equipment		838,800			838,800
Total		1,517,777			1,504,056

Less: accumulated depreciation		(540,409	)		(477,763	)

Equipment, net	$	977,368		$	1,026,293

During the three months ended March 31, 2024 and 2023, the Company recorded depreciation expense of $62,646 and $32,746, respectively.

Intangible Assets

3 Months Ended

Mar. 31, 2024

Intangible Assets [Abstract]

Intangible Assets

4.	Intangible Assets

Intangible assets as of March 31, 2024 and December 31, 2023 consisted of the following:

	Cost		Accumulated Amortization			Accumulated Impairment			Net carrying value at March 31, 2024		Net carrying value at December 31, 2023
Customer relationship and lists	$	5,266,705	$	(1,917,772	)	$	(438,374	)	$	2,910,559	$	3,007,702
Trade names		1,141,984		(557,979	)		-			584,005		612,554
Total intangible assets	$	6,408,689	$	(2,475,751	)	$	(438,374	)	$	3,494,564	$	3,620,256

During the three months ended March 31, 2024 and 2023, the Company recorded amortization expense of $125,692 and $169,874, respectively.

The estimated future amortization expense for the next five years and thereafter is as follows:

Year ending December 31,
2024	$	377,076
2025		502,768
2026		502,768
2027		502,768
2028		502,768
Thereafter		1,106,416
Total	$	3,494,564

Related Party Transactions

3 Months Ended

Mar. 31, 2024

Related Party Transactions

5.	Related Party Transactions

Loans Payable to Related Parties

As of March 31, 2024 and December 31, 2023, the Company had outstanding the following loans payable to related parties:

	March 31,			December 31,
	2024			2023
Promissory note issued to Mark Porter, 9% interest, unsecured, matured December 15, 2021, due on demand	$	100,000		$	100,000
Convertible promissory note issued to Mark Porter, 18% interest, secured, matures March 25, 2025, net of debt discount of $19,132 and $25,297, respectively		50,868			44,703
Convertible promissory note issued to Mark Porter, 12% interest, secured, matures February 5, 2024, net of debt discount of $0 and $10,968, respectively		165,000			154,032
Convertible promissory note issued to Keith Hayter, 10% interest, unsecured, matures March 31, 2023		-			-
Total	$	315,868		$	298,735

Less: Current portion of loans payable to related parties		(315,868	)		(254,032	)

Loans payable to related parties, net of current portion	$	-		$	44,703