The following table provides unaudited proforma results, prepared in accordance with ASC 805, for the three and nine months ended September 30, 2019, and 2018 respectively, as if Infiniti Mobile and Apeiron had been acquired on January 1, 2018:

NOTE 3 – BASIS OF PRESENTATION

Interim Financial Statements

The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2018.

Basis of Presentation2019.

The accompanying financial statements have been prepared using the accrual basis of accounting.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment, software, licenses, and customer lists. Actual results could differ from those estimates.

Basis of Consolidation

The condensed consolidated financial statements include the Company and three (3) wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems and Infiniti Mobile. The condensed consolidated financial statements for the nine-month period ended September 30, 2019, include the Company and its three (3) wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron and Infiniti Mobile (February through September). The condensed consolidated balance sheet for year ended December 31, 2018, includes the Company and the wholly-owned corporate subsidiaries, KonaTel Nevada and Apeiron. The condensed consolidated statements of operations, cash flows, and stockholders’ equity (deficit) for the nine-month period ended September 30, 2018, include the Company and the wholly owned corporate subsidiary, KonaTel Nevada.IM Telecom. All significant intercompany transactions are eliminated.

Going ConcernNet Income/(Loss) Per Share

AsBasic income/(loss) per common share calculations are determined by dividing net income/(loss) by the Company did not generate net incomeweighted average number of shares of common stock outstanding during the nine-monthperiod. Diluted income/(loss) per common share calculations are determined by dividing net income/(loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. Dilutive common share equivalents are computed by using the “Treasury Stock Method,” which computes the number of new shares that may potentially be created by unexercised options. Diluted common share equivalents are stock based compensation options. The dilutive common shares for the three and nine months periods ended September 30, 2019, and 2018,are not included in the Company has been dependent upon equity financingcomputation of diluted earnings per share, because to support its operations. The Company incurred losses of $1,077,822 and $1,255,609 for the nine-month periods ended September 30, 2019, and 2018, respectively. The Company has had significant improvement in providing cash from the operations. Net cash provided by operating activities was $32,282 and used in operating activities was ($1,302,189) for the nine-months ended September 30, 2019, and 2018, respectively. The accumulated deficit as of September 30, 2019, is $5,429,895.do so would be anti-dilutive.

The Company has ameliorated any substantial doubt issues by generating additional cash flow sincefollowing table reconciles the completionshares outstanding and net income/(loss) used in the computations of our merger with KonaTel Nevada on December 18, 2017, including: the acquisitionboth basic and diluted earnings per share of Apeiron and Infiniti Mobile; receiving cash investments through the private placement of shares of our common stock; and revenues from the growth of our Virtual ETC program, all of which has contributed to an improvement in our working capital, without the use of additional lines of credit or borrowings. Additionally, the Company also has two options to finance our mobile phone equipment purchases whereby multiple equipment suppliers provide us short term credit terms of up to 60 days on mobile phone purchases and a bank line of credit for purchases of select mobile phones.stockholders:

Net Loss Per Share

Basic lossincome/(loss) per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding. As

Dilutive common share equivalents are computed using the Treasury Stock Method, which computes the number of new shares that may potentially be created by unexercised options. The effects of incremental shares under stock-based compensation would be anti-dilutive because no options are in the money during the reporting periods. The number of shares that would have been reported had the options been in the money would have been 3,400,000 and 2,650,000 respectively for both the three month and nine-month periods ended September 30, 2019,2020, and December 31, 2018, there are 4,575,000 and 4,325,000 potentially dilutive common shares, respectively. The dilutive common shares are not included in the computation of diluted earnings per share, because to do so would be anti-dilutive.2019.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of receivables, cash, and cash equivalents.

All cash and cash equivalents and restricted cash and cash equivalents are held at high credit financial institutions. These deposits are generally insured under the FDIC’s deposit insurance coverage; however, from time to time, the deposit levels may exceed FDIC coverage levels.

The Company also has a concentration of risk with respect to trade receivables from customers and other cellular providers. As of September 30, 2019,2020, the Company had noa significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables). due from two customers in the amounts of 112,248, or 40.3% and $42,563, or 15.3%, of total accounts receivable respectively. As of December 31, 2018,2019, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from twothree customers in the amounts of $441,934,$89,078, or 42.7%.24.4%, $77,662, or 21.3% and $48,475, or 13.3%, respectively.

Concentration of Major Customer

A significant amount of the revenue is derived from contracts with major customers and cellular providers.partners. For the nine months ended September 30, 2020, the Company had one customer that accounted for $2,332,716 or 34.6%, of revenue. For the nine-month period ended September 30, 2019, the Company had one customer that accounted for $1,810,875, or 25.0%, and one cellular provider that accounted for $2,028,814, or 28.0%27.0%, of the total revenue. For the three-month period ended September 30, 2020, the Company had one customer that accounted for $1,023,386 or 40.5%, of revenue. For the three-month period ended September 30, 2019, the Company had one customer that accounted for $634,668, or 27.0% and one cellular provider that accounted for $612,092, or 26.1% of the total revenue.

Effect of Recent Accounting Pronouncements

On February 25, 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. Early application is permitted. The Company has determined that adoption of the standard will begin January 1, 2019. The Company currently has four equipment operating leases and one Property lease; and the Property lease expires in April 2020. The Company has determined that this pronouncement will not have a material impact on the financial statements (see NOTE 5).

The Company has evaluated all other recent accounting pronouncements and believes that none will have a significant effect on the Company’s financial statement.

Emerging Growth Company

The Company is an emerging growth company and 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 Securities Exchange ActAct.

NOTE 2 – TRANSACTIONS

January 2019 Transaction – IM Telecom Acquisition

Effective February 7, 2018, we entered into an Agreement for the Purchase and Sale of 1934,Membership Interest (the “PMSI”) dated as of February 5, 2018, with the transaction documents being deposited in escrow on February 7, 2018, respecting the acquisition of 100% of the membership interest in IM Telecom d/b/a “Infiniti Mobile” from its sole owner, Trevan Morrow.  The principal asset of IM Telecom was a “Lifeline Program” license (an FCC approved Compliance Plan), the transfer of ownership of which required prior approval of the FCC. Following the FCC approval of the transfer of the Lifeline Program license to us on October 23, 2018, the PSMI was completed on January 31, 2019.  At the closing, we also engaged Mr. Morrow as an independent consultant for ninety (90) days in consideration of $100 and granted him an incentive stock option to purchase 500,000 shares of our common stock at an exercise price of $0.20 per share. The incentive stock option to purchase 500,000 shares was cancelled under a Settlement Agreement and Release between the Company and Mr. Morrow dated September 4, 2019, under the indemnifying obligations of Mr. Morrow under the PSMI, as amended, (the “Exchange Act”).by reason of an overpayment made to IM Telecom of $168,277.

The purchase price of $583,690 consisted of payments of debt and accounts payable made by the Company on behalf of IM Telecom from the PMSI effective date of February 7, 2018, until January 31, 2019, the closing date. The purchase price allocation included the FCC license valued at $634,252, cash of $14,318, accounts receivable of $123,959, prepaid other assets of $2,400, furniture and equipment of $1,309. As part of the transaction, the Company also agreed to assume accounts payable of $24,271.

The transaction was accounted for under the purchase method. The purchase price allocation to assets and liabilities assumed in the transaction was:

The following table provides unaudited proforma results, prepared in accordance with ASC 805, for the nine months ended September 30, 2020, and 2019, respectively:

NOTE 43 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following major classifications as of September 30, 2019,2020, and December 31, 2018:2019:

Depreciation and amortization expenserelated to Property and Equipment amounted to $21,649 and $21,649 for the nine-month periods ended September 30, 2020, and 2019, respectively; and 2018$7,216 and $7,217 and $7,216 for the three-month periods ended September 30, 2019,2020, and 2018,2019, respectively. Depreciation and amortization expense are included as a component of operating expenses in the accompanying statements of operations.

NOTE 54 – RIGHT-TO-USERIGHT-OF-USE ASSETS

Right-to-UseRight-of-Use Assets consist of assets accounted for under ASC 842. The assets are recorded at present value using implied interest rates between 5.29% and 5.34%.

DepreciationAmortization amounted to $139,958 and $54,421 for the nine-month periodnine months ended September 30, 2020, and 2019, respectively; and $38,290 and $18,140 for the three-month periodthree months ended September 30, 2019. Depreciation2020, and 2019, respectively. Amortization expense is included as a component of operating expenses in the accompanying statementsCondensed Consolidated Statements of operations.Operations.

The Company has Right-of-Use Assets through leases of property under three non-cancelable leases with terms in excess of one year. The current lease liabilities expire January 1, 2021, December 1, 2021, and May 15, 2022. Future lease liability payments under the terms of these leases are as follows:

The Company also leases two office spaces on a month-to-month basis. Total lease expense for the nine months ended September 30, 2020, and 2019, amounted to $10,653 and $52,592, respectively, for these leases.

NOTE 65 – INTANGIBLE ASSETS

Intangible Assets with definite useful life consist of licenses, customer lists and software that were acquired through acquisitions:acquisitions.

Amortization expense amounted to $677,280 and $151,059 for the nine-month periods ended September 30, 2019, and 2018 and $225,761 and $20,903 for the three-month periods ended September 30, 2019, and 2018, respectively. Amortization expense is included as a component of operating expenses in the accompanying statements of operations. Amortization expense is expected to be as follows:

Intangible Assets with indefinite useful life consist of a licenseLifeline License granted by the FCC:FCC.

The Lifeline License, because of the nature of the asset and the limitation on the number of granted licenses by the FCC, will not be amortized. The Lifeline License was acquired through an acquisition. The fair market value of the License as of September 30, 2020, was $634,251.

Amortization expense amounted to $601,750 and $677,280 for the nine months ended September 30, 2020, and 2019, was $624,255.respectively; and $200,583 and $225,760 for the three months ended September 30, 2020, and 2019, respectively. Amortization expense is included as a component of operating expenses in the accompanying statements of operations.

NOTE 7 – LINES OF CREDIT

The Company has two lines of credit with a bank which provide aggregate maximum borrowing availability of $1,050,000 as of September 30, 2019, and December 31, 2018. The lines of credit are payable on demand and bear interest at a variable rate with rate ranges from 7.5%Amortization expense is expected to 8.0%. Outstanding advances under these line of credit arrangements amounted to $35,683 and $103,379 as of September 30, 2019, and December 31, 2018, respectively. The lines of credit mature on January 5, 2020, and February 14, 2020.

The lines are secured by the general assets of the Company and aggregate amounts drawn under the lines of credit may be limited to a borrowing base, as defined. The revolving lines of credit are guaranteed by an officer of the Company.

NOTE 8 – LEASES

The Company has right-to-use assets through leases of property under three non-cancelable leases with terms in excess of one year. The current lease liabilities expire April 30, 2020, September 1, 2020, and December 1, 2021. Future lease liability payments under the terms of these leases are as follows:

The Company also leases two office spaces on a month-to-month basis. Total lease expense for the nine-month periods ended September 30, 2019, and 2018 amounted to $52,592 and $110,023 and $15,392 and $33,677 for the three-month periods ended September 30, 2019, and 2018, respectively.

NOTE 96 – AMOUNT DUE TO STOCKHOLDER

As of September 30, 2019, and December 31, 2018, the Company’s principal shareholder, D. Sean McEwen was owed $4,344 and $91,152, respectively, for advances used for working capital under a note. The note bears a 10% per annum interest rate. The note matures on November 30, 2019.

During 2019, Joshua Ploude, CEO of Apeiron Systems, advanced the Company $200,000. The amount was used to provide a vendor security deposit. The note bears a 10% per annum interest rate until May 1, 2019, at which time, the interest rate will increase to 12% per annum. The note had an original maturity date of July 10, 2019. The loan has been extended without a defined maturity end date. The amount due as of September 30, 2020, was $41,692.

NOTE 7 – NOTES PAYABLE

In June 2020, the Company received a Small Business Administration (“SBA”) Emergency Injury Disaster Loan (“EIDL”) in the amount of $150,000. The maturity date of the 30-year note is June, 2050. Interest will accrue at a rate of 3.75% per annum. Payments will begin in June 2021.

The Company also received three separate SBA Payroll Protection Loans in the amounts of $186,300, $101,800, and $20,900 for a total of $309,000. Each loan includes an interest rate of 1% and a maturity date of April 14, 2022; however, the Company believes that 100% of these loans will be forgiven based upon current loan SBA forgiveness guidelines. As of September 30, 2020, all loan proceeds have been recorded as forgiven and have been recorded as Other Income.

In conjunction with the Notes Payable, the Company received $10,000 in an SBA Emergency Injury Disaster Grant. This amount was recorded as Other Income.

NOTE 108 – CONTINGENCIES AND COMMITMENTS

Litigation

From time to time, the Company may be subject to legal proceedings and claims which arise in the ordinary course of business. As of September 30, 2019,2020, there are no ongoing legal proceedings, except the following:proceedings.

On August 28, 2018, we filed a claim in AAA Arbitration against a former employee, Saul Glosser. In August 2019, the Company won an arbitration award (ratified by the court) from Mr. Glosser in the amount of $362,871 ($357,914 plus arbitrator compensation of

$4,957). The award has been deemed final as Mr. Glosser has not preserved any outstanding issues for review. At this time collectability is yet to be determined, and therefore the award is not currently reflected in the balance sheet.

Contract Contingency

The Company has the normal obligation for the completion of its cellular provider contracts in accordance with the appropriate standards of the industry and that may be provided in the contractual agreements.

Letters of Credit

The Company maintains irrevocable standby letter of credit arrangements with a certain cellular carrierscarrier in the aggregate amount of $63,000.$60,000. The letters of credit serve as collateral and security for various resale contracts the Company has with their suppliers. The letters of credit are unused as of September 30, 2019,2020, and December 31, 2018.2019, respectively. The letters of credit are not considered in the financial statements.

Regulatory Determinations

On May 17, 2019, Infiniti Mobile was notified by the United States Administrative Company (“USAC”) of an over-payment of Universal Service Fund reimbursements in the amount of $168,677. On July 25, 2019, the Company entered into a Letter of Acknowledgement with the FCC and requested a 24-month payment plan regarding the repayment of the over-payment amounts. The FCC decision regarding the payment plan request is pending and is expected before December 31, 2019. As required by the Letter of Acknowledgement requirements, Infiniti Mobile has made a good faith down payment in the amount of 10% of the total over-payment and continues to make regular monthly payments of 1/24th of the outstanding balance pending payment plan approval. The over-payment amount was recorded as a current acquisition expense.

The Company entered into a Settlement Agreement with the former owner of Infiniti Mobile regarding this matter, effective September 4, 2019, which was the date of delivery of the fully executed Settlement Agreement that was dated August 22, 2019, and filed with the SEC on September 4, 2019. Under the Settlement Agreement, and as part of the previous owner’s obligations to indemnify and hold the Company harmless from any liability arising from the breach of any representations and warranties in the initial Purchase and Sale Agreement dated February 5, 2019 (the “PSMI”), and filed with the SEC on February 6, 2019, which included this liability, the vested $0.20 per share 500,000 share incentive stock option grant that was awarded to the previous owner at the closing of the PSMI was cancelled and deemed null and void, and the previous owner was released from any liability for the $168,677 over-payment. All of the other terms and conditions of the PSMI remain in full force and effect, including the continuing indemnification provisions regarding all other representations and warranties.

NOTE 119 – SEGMENT REPORTING

The Company operates within four reportable segments. The Company’s management evaluates performance and allocates resources based on the profit or loss from operations. Because the Company is a service business with very few physical assets, management does not use total assets by segment to make decisions regarding operations, and therefore, the total assets disclosure by segment has not been included.

The reportable segments consist of Hosted Services, Mobile Services, Lifeline ETC (“Eligible Communications Carrier”), and Lifeline VETC (“Virtual Eligible Communications Carrier”).VETC.

Hosted Services – This segment includes a suite of hosted CPaaS (“Communications Platform as a Service”) services including SIP/VoIP services, SMS/MMS, BOT integration, NLP (“Natural Language Processing”), ML (“Machine Learning”), mobile numbers, toll free numbers, DID landline numbers, SMS to Email, Database Dip, SD-WAN, voice termination and numerous API driven services.  Apeiron Systems developed, owns, and supports its services through its dedicated national telecommunications network. Apeiron Systems provides telecommunications services to application developers, call centers and small and medium size businesses. Apeironbusinesses and markets these services through the Apeironits website, independent sales agents, ISOs (Independent Sales Organizations) and Social Media Optimization (“SCO”).SCOs.

Mobile Services – This segment includes retail and wholesale cellular voice/text/data services and mobile data (IoT or “Internet of Things”) services. KonaTelThe Company consolidated its wholesale and retail services with Apeiron’sApeiron Systems’ hosted CPaaS services, providing Apeiron Systems with an expanded portfolio of mobile services to bundle with its existing services. Apeiron’sApeiron Systems’ mobile voice/text/data and mobile data

services are supported by a blend of reseller agreements with selectselected national wireless carriers and national wireless wholesalers.  A wireless communications service reseller does not own the wireless network infrastructure over which services are provided to its customers.  Apeiron’sApeiron Systems’ mobile voice/text/data and mobile data solutions are generally sold as traditional post-paid or pre-paid service plans that may include voice/text/data or wireless data only plans. Sometimes equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers, and accessories. Apeiron Systems primarily markets its mobile services through independent sales agents and ISOs via the “Apeiron” brand.  These agents and ISOs generally market to small and medium sized businesses throughout the United States.  This type of marketing is also considered B2B (“Business to Business”) sales.

Lifeline ETC – This segment operates under its own FCC approved Compliance Plan and FCC wireless ETC designation in eight states, which currently include Georgia, Kentucky, Maryland, Nevada, Oklahoma, South Carolina, Vermont, and Wisconsin.  IM Telecom, operating under its Infiniti Mobile brand, currently markets its Lifeline service through its Internet presence, its storefront in Tulsa, Oklahoma, and through ISOs that specialize in the distribution of Lifeline services.  These ISOs typically support teams of field agents who market directly to Lifeline eligible individuals requesting Lifeline service.  We provide phones and wireless voice/text/data service to Lifeline eligible individuals requesting Lifeline service. In some states, and depending on government requirements, we may only provide voice/text service with no mobile data.

Lifeline VETC – This segment operates under the license ofthrough a single VETC agent agreement with another ETC.  We currently marketFollowing our acquisition of IM Telecom, thereby securing our own FCC approved Lifeline ETC license, we are phasing out this segment and we no longer distribute Lifeline service under this single VETC sales through ISOsagent agreement; however, we continue to collect monthly commissions for those Lifeline lines that specialize in the distribution of Lifeline services.  These ISOs typically support teams of field agents who market directly to Lifeline eligible individuals requesting Lifeline service. We provide phoneswe distributed and wireless voice/text/data service to Lifeline eligible individuals requesting Lifeline service. In some states and depending upon government requirements, we may only provide voice/text service with no mobile data.which remain active under this single VETC agent agreement.

The following table reflects the result of operations of the Company’s reportable segments:

NOTE 1210 – STOCKHOLDERS’ EQUITY

Common Stock

On March 8, 2018, theThe Company has not issued 4,750,000 shares of ourany common stock in a private placement to “accredited investors” at $0.20 per sharethrough September 30, 2020, nor for an aggregate amount of $950,000.the year ended December 31, 2019.

On April 13, 2018, the Company issued 1,000,000 shares in a private placement to “accredited investors” at $0.20 per share for an aggregate amount of $200,000, $100,000 of which was in cash and $100,000 of which was in settlement of an advance in that amount from this subscriber.

Stock Compensation

The Company offers stock option equity awards to directors and key employees. Options vestedvest in tranches and expire in five (5) years. During the nine-monthsnine months ended September 30, 2019,2020, and 2018,2019, the Company recorded vested options expense of $141,804$30,771 and $454,434,$259,962, respectively. For the three months ended September 30, 2020, and 2019, the Company recorded vested options expense of $10,257 and ($14,455), respectively. The option expense not taken as of September 30, 2019,2020, is $743,967,$51,285, with a weighted average term of 3.12.6 years.

The following table represents stock option activity as of and for the three-month periodnine months ended September 30, 2019:2020:

NOTE 1311 – SUBSEQUENT EVENTS

Below are events that have occurred since September 30, 2020:

Letters of Credit

As previously mentioned in NOTE 8, the Company had maintained an irrevocable standby letter of credit arrangement with a certain cellular carrier in the aggregate amount of $63,000. In late October 2020, the Company was notified by that carrier that it intended to cancel the letter of credit based upon the Company’s payment history and a lower requirement for security based upon usage. The Company has evaluated subsequent events through the daterelease of this filing and no material subsequent events have occurred.letter of credit will also cause the release of the UCC-1 currently held by our bank, Somerset Trust.

Effective October 15, 2019 (though executed October 17, 2019), the Company and Charles L. Schneider, Jr., the CEO of our wholly-owned subsidiary, KonaTel Nevada, and the President and CEO of our wholly-owned subsidiary, Infiniti Mobile, executed and delivered a Severance Agreement and Release (the “Severance Agreement”). In connection with the execution and delivery of the Severance Agreement, the parties also executed and delivered the following additional agreements: (i) various assignments to Mr. Schneider regarding the Company’s reseller agreement with Standup Wireless; (ii) an Amended Incentive Stock Option Agreement; and (iii) an Independent Contractor Agreement.

Pursuant to the Severance Agreement, Mr. Schneider’s Employment Agreement with the Company dated July 1, 2016, was terminated. The Company agreed to pay his salary (16,667 per month) and benefits through December 31, 2019; allowed him to retain his laptop, monitors, keyboard/mouse and printer; and assigned him certain Company contract rights as a reseller of Lifeline services for StandUp Wireless, another Lifeline provider, which he agreed to assume. The Company had determined that it was no longer interested in acting as a distributor of Lifeline services for StandUp Wireless and intended to focus its efforts on distributing Lifeline service under its own FCC Lifeline license. Additionally, the parties agreed that 500,000 of the 1,500,000 incentive stock options held by Mr. Schneider had vested; that the remaining 1,000,000 incentive stock options that he had been granted were void; and the Amended Incentive Stock Option Agreement was revised to include a customary “cashless” exercise feature for the 500,000 vested options. A Lock-Up/Leak-Out Agreement (the “LULO Agreement”) was also executed and delivered by the Company and Mr. Schneider, which provides for a Lock-Up Period of six (6) months from the exercise of the option to purchase any shares underlying the vested options; and an eighteen (18) month Leak-Out Period thereafter by which he

is limited to the resale of shares of common stock acquired in any such exercise (including shares currently owned or hereafter acquired) to the greater of (i) (5%) of the total shares of the Company publicly traded on any nationally recognized medium of a stature no less than the Pink OTC Markets, Inc. (the “OTC Pink Tier”) of the OTC Markets Group, Inc. (the “OTC Markets”) over the previous ten (10) trading days, or (ii) one percent (1%) of the total outstanding shares of the Company as reported in the Company’s most recently filed SEC report or registration statement in the Edgar Archives of the SEC, divided by thirteen (13) weeks.

Pursuant to the Independent Contractor Agreement (the “ICA”) entered into with the Company, Mr. Schneider has agreed to assist the Company in having its wholly-owned subsidiary, Infiniti Mobile, being granted its request for Eligible Telecommunications Carrier (“ETC”) status from the California Public Utilities Commission (“CPUC”) to distribute Lifeline cellular phone service within the State of California. In the event that the Company is successful in this process, Mr. Schneider will be granted a one (1) year Warrant with a customary “cashless” exercise feature to purchase 250,000 shares of the Company’s common stock at an exercise price to be determined on the date of any such approval. The ICA has a term of one (1) year and may be extended by the parties yearly. The LULO Agreement is applicable to any shares that may be acquired under any such Warrant, with the eighteen (18) month term commencing on the exercise of any such Warrant that may be issued. Mr. Schneider has more than thirty (30) year experience in the telecommunications industry should be invaluable to the Company in this process.

These agreements also contained customary representations and warranties, confidentiality provisions and non-disparagement provisions, as may have been applicable, among other customary terms and conditions

The Company also granted the Vice President of Operations of Infiniti Mobile and the Vice President of Finance stock options under its Form of Incentive Stock Option Agreement and incentive stock option plan, 300,000 options to each at an exercise price of $0.15 per share, which is the current public market price for the common stock of the Company on the OTC Pink Tier, with 100,000 shares each vesting on December 31, 2019, and with the remainder vesting at the rate of 100,000 shares each on December 31, 2020, and 2021.

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

When used in this Quarterly Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions and financial trends that may affect our future plans of operations, business strategy, operating results and financial position.  Persons reviewing this Quarterly Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors.  Such factors are discussed further below under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

Overview of Current and Planned Business Operations

Our Hosted Services (“CPaaS or Communications Platform as a Service”) include SIP/VoIP services, SMS/MMS, BOT integration, NLP (“Natural Language Processing”), ML (“Machine Learning”), mobile numbers, toll free numbers, DID landline numbers, SMS to Email, Database Dip, SD-WAN, voice termination and numerous API driven services. Apeiron Systems developed, owns, and supports its services through its dedicated national telecommunications network. Apeiron Systems provides telecommunications services to application developers, call centers and small and medium size businesses. ApeironIt markets these services through the Apeiron Systems website, independent sales agents, ISOs (Independent(“Independent Sales Organizations)Organizations”) and Social Media Optimization (“SCO”).

Our Mobile Services include our retail and wholesale cellular voice/text/data services and mobile data (IoT or– “Internet of Things”) services.We consolidated our wholesale and retail mobile services with Apeiron’sApeiron Systems’ hosted CPaaS services, providing Apeiron Systems with a bundled portfolio of mobile and hosted CPaaS services. Apeiron’sIts mobile voice/text/data and mobile data services are supported by a blend of reseller agreements with select national wireless carriers and national wireless wholesalers.  A wireless communications service reseller does not own the wireless network infrastructure over which services are provided to its customers. Apeiron’sApeiron Systems’ mobile voice/text/data and mobile data solutions are generally sold as traditional post-paid service plans that may include voice/text/data or wireless data only plans. Sometimes equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers, and accessories. ApeironIt primarily markets its mobile services through independent sales agents and ISOs via the “Apeiron” brand. These agents and ISOs generally market to small and medium sized businesses throughout the United States.  This type of marketing is also considered B2B (“Business to Business”) sales.