UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(mark one)

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

For the fiscal year ended July 31, ~~2022~~2023

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

For the transition period from _______to _________

Commission File Number: 001-15687

DIGERATI TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		74-2849995
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

8023 Vantage Dr, Suite 660 San Antonio, Texas		78230
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (210) 614-7240

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

Securities registered under Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

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

Common Stock, Par Value $0.001 Per Share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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, a 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer was $19,283,849 based on the closing price of $0.~~1380~~0882 per share on January 31, ~~2022~~2023, as reported by the OTCQB.

There were ~~144~~161,~~598~~921,~~039~~685 shares of issuer’s Common Stock outstanding as of ~~October~~November 3120, ~~2022~~2023.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	87
Item 1B.	Unresolved Staff Comments	8
Item 2.	Properties	8
Item 3.	Legal Proceedings	8
Item 4.	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosure	8
PART II
Item 5.	Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities	9
Item 6.	[Reserved]	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1110
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	2019
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	2120
Item 9A.	Controls and Procedures	2120
Item 9B.	Other Information	2221
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	22
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	23
Item 11.	Executive Compensation	2425
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	3031
Item 13.	Certain Relationships and Related Transactions, and Director Independence	3133
Item 14.	Principal Accountant Fees and Services	3233
PART IV
Item 15.	Exhibits, and Financial Statement Schedules	3334
SIGNATURES		34
Item 16.	Form 10-K Summary	37
	SIGNATURES	38

PART I

ITEM 1. BUSINESS.

Overview

Digerati Technologies, Inc., a Nevada corporation (including our subsidiaries, “we,” “us,” “Company” or “Digerati”), through its operating subsidiaries, in(i) ~~Texas,~~Verve ~~Florida~~Cloud, ~~and~~Inc. ~~California~~(formerly ~~that~~known ~~includes~~as ~~Shift8~~T3 ~~Networks~~communications, Inc.), ~~dba,~~a T3Nevada ~~Communications~~corporation (a“Verve ~~Texas entity~~Cloud Nevada”), (ii) T3Verve ~~Communications~~Cloud, Inc. (aformerly ~~Florida~~known ~~entity)~~as ~~(with~~Shift8 ~~both~~Networks, T3Inc.), ina ~~Florida~~Texas ~~and~~corporation T3(“Verve inCloud Texas”), ~~being~~(iii) ~~referred~~T3 ~~to herein~~Communications, ~~collectively,~~ asInc., a Florida corporation (“T3 Communications”), (iv) Nexogy, Inc., (a Florida ~~entity~~corporation (“Nexogy”), and (v) NextLevel Internet, Inc., (a California ~~entity~~corporation (“Next Level” and, together with Verve Cloud Nevada, Verve Cloud Texas, T3 Communications and Nexogy, the “Operating Subsidiaries”)., which, as of June 1, 2023, operate as a single business unit under the Verve Cloud name and have locations in Texas, Florida and California, provides cloud services specializing in Unified Communications as a Service (“UCaaS”) and broadband connectivity solutions for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through our cloud application platform and session-based communication network and network services including Internet broadband, fiber, mobile broadband, and cloud ~~WAN~~Wide ~~solutions~~Area ~~(SD~~Network ~~WAN). We provide enterprise-class, carrier-grade services to the small-to-medium-sized business~~ (“~~SMB~~WAN”) ator ~~cost~~Software-~~effective monthly~~defined ~~rates.~~Wide ~~Our~~Area ~~UCaaS~~Network ~~or cloud communication services include fully hosted IP/PBX, video conferencing, mobile applications, Voice over Internet Protocol~~ (“~~VoIP~~SD WAN”) ~~transport,~~solutions. ~~SIP~~Digerati ~~trunking~~Technologies, ~~and~~Inc. ~~customized~~was ~~VoIP~~incorporated ~~services all delivered Only~~ in the ~~Cloud™. Our~~State ~~broadband connectivity solutions for the delivery~~ of ~~digital~~Nevada ~~oxygen~~in ~~are designed for reliability, business continuity and to optimize bandwidth for businesses using the Company’s cloud communication services and other cloud-based applications~~1994.

~~As a~~We ~~provider~~provide ofenterprise-class, ~~cloud~~carrier-grade ~~communications~~services to ~~solutions~~the small-to-medium-sized ~~the~~business (“SMB,”) weat ~~are~~cost-effective ~~seeking~~monthly torates. ~~capitalize~~Our onUCaaS ~~the~~or ~~migration~~cloud bycommunication ~~businesses~~services ~~from the legacy~~include ~~telephone~~fully ~~network~~hosted ~~to the~~ Internet Protocol (“IP”)/private ~~telecommunication~~branch ~~network~~exchange ~~and~~(“PBX”), ~~the~~video ~~migration~~conferencing, ~~from~~mobile ~~hardware-based on-premise~~applications, ~~telephone~~Voice ~~systems~~over toInternet ~~software-based~~Protocol ~~communication~~(“VoIP”) ~~systems~~transport, inSession ~~the~~Initiation ~~cloud.~~Protocol ~~Most~~(“SIP”) ~~SMBs are lagging in technical capabilities and advancement and seldom reach the economies of scale that their larger counterparts enjoy~~trunking, ~~due to their achievement of a critical mass~~ and ~~ability~~customized toVoIP ~~deploy~~services aall ~~single~~delivered ~~solution~~Only toin athe ~~large number of workers~~Cloud™. ~~SMBs~~Our ~~are~~broadband ~~typically~~connectivity ~~unable to afford comprehensive enterprise~~ solutions ~~and, therefore,~~for ~~need to integrate a combination of business solutions to meet their needs. Cloud computing has revolutionized~~ the ~~industry and~~delivery ~~opened the door for businesses~~ of ~~all~~digital ~~sizes to gain access to enterprise applications with affordable pricing. This especially holds~~oxygen ~~true for cloud telephony applications, but SMBs~~ are ~~still~~designed ~~a higher-touch sale that requires customer support~~ for ~~system integration~~reliability, ~~network~~ ~~installation,~~business ~~cabling,~~continuity and ~~troubleshooting.~~to Weoptimize ~~have~~bandwidth ~~placed~~for abusinesses ~~significant~~using ~~emphasis~~the onCompany’s ~~that~~cloud ~~“local” touch when selling,~~communication ~~delivering,~~services and ~~supporting~~other ~~our~~cloud-based ~~services which we believe differentiate us from the national providers that are experiencing high attrition rates due to poor customer support~~applications.

~~The adoption~~As a provider of cloud ~~communication~~communications ~~services~~solutions ~~is being driven by~~ to the ~~convergence~~SMB, ofwe ~~several~~are ~~market~~seeking ~~trends,~~to ~~including~~capitalize on the ~~increasing~~migration ~~costs of~~by ~~maintaining~~businesses ~~installed~~from the legacy ~~communications~~telephone ~~systems,~~network to the ~~fragmentation~~IP ~~resulting~~telecommunication ~~from~~network and ~~use~~the ofmigration ~~multiple~~from hardware-based on-premise telephone systems, ~~and~~to software-based communication systems in the ~~proliferation~~ ofcloud. ~~personal~~Most ~~smartphones~~SMBs ~~used~~are lagging in technical capabilities and advancement and seldom reach the ~~workplace.~~economies ~~Today~~of scale that their larger counterparts enjoy, ~~businesses~~due ~~are~~to their ~~increasingly~~achievement ~~looking~~of ~~for~~a ancritical ~~affordable~~mass ~~path~~and ability to ~~modernizing their~~deploy ~~communications~~a ~~system~~single solution to ~~improve~~a ~~productivity~~large number of workers. SMBs are typically unable to afford comprehensive enterprise solutions and, therefore, need to integrate a combination of business ~~performance~~solutions ~~and~~to ~~customer~~meet ~~experience~~their needs. ~~Modernization~~Cloud computing has ~~also~~revolutionized ~~led~~the toindustry and opened the door for businesses of all sizes to gain access to enterprise applications with ~~adopting~~affordable ~~other~~pricing. This especially holds true for cloud~~-based~~ ~~business~~telephony applications, ~~including~~but ~~CRM~~SMBs are still a higher-touch sale that requires customer support for system integration, ~~payroll~~network installation, cabling, and ~~accounting~~troubleshooting. ~~software~~We have placed a significant emphasis on that “local” touch when selling, ~~placing~~delivering, anand ~~even~~supporting ~~more~~our ~~important~~services ~~emphasis~~which we believe will differentiate us from the national onproviders ~~reliable~~that ~~Internet~~are ~~connectivity~~experiencing high attrition rates due to poor customer support.

~~Our~~ The adoption of cloud ~~solutions~~communication ~~offer~~services is being driven by the ~~SMB~~convergence ~~reliable,~~of ~~robust,~~several ~~and~~market ~~full-featured~~trends, ~~services~~including atthe ~~affordable~~increasing ~~monthly~~costs ~~rates~~of ~~that~~maintaining ~~eliminates~~installed ~~high-cost~~legacy ~~capital~~communications systems, ~~expenditures~~the ~~and~~fragmentation ~~provides~~resulting ~~for~~from ~~integration~~use ~~with~~of ~~other~~multiple ~~cloud~~on-~~based~~premise systems, and the proliferation of personal smartphones used in the workplace. Today, Bybusinesses ~~providing~~are aincreasingly ~~variety~~looking offor ~~comprehensive~~an ~~and~~affordable ~~scalable~~path ~~solutions~~to modernizing their communications system to improve productivity, webusiness ~~can~~performance ~~cater~~and customer experience. Modernization has also led to businesses ofadopting ~~different~~other ~~sizes~~cloud-based onbusiness aapplications, including ~~monthly~~customer ~~subscription~~relationship ~~basis~~management (“CRM”), ~~regardless~~payroll, ofand ~~the~~accounting ~~stage~~software, ofplacing ~~development~~an ~~for~~even ~~the~~more ~~business~~important emphasis on reliable Internet connectivity.

~~Recent~~Our cloud solutions offer the SMB reliable, robust, and full-featured services ~~Developments~~at affordable monthly rates that eliminates high-cost capital expenditures and provides for integration with other cloud-based systems. By providing a variety of comprehensive and scalable solutions, we can cater to businesses of different sizes on a monthly subscription basis, regardless of the stage of development for the business.

~~Acquisitions~~ 1

~~On February~~Recent 4, 2022, the Company closed on the acquisition of Next Level Internet, Inc. (“NextLevel”). NextLevel, based in San Diego, California, is engaged in the business of providing cloud communications, Unified Communications as a Service, collaboration, contact center, managed broadband connectivity and other voice and data services to the SMB market. The acquisition of NextLevel expands the Company’s growing nationwide footprint and adds a strong West Coast presence with nearly 1,000 SMB clients in California.Developments

1Acquisitions

On ~~December~~ 31February 4, ~~2021~~2022, the Company closed on the acquisition of ~~substantially~~Next ~~all~~Level ofInternet, ~~the~~Inc. ~~assets of Skynet Telecom LLC~~ (“~~Skynet~~NextLevel”). NextLevel, a ~~Texas-~~based ~~provider~~in ofSan ~~VoIP~~Diego, ~~communication~~California, ~~services~~is engaged in the business of providing cloud communications, UCaaS, ~~and~~collaboration, contact center, managed broadband connectivity and other voice and data services to the SMB market. ~~Pursuant~~The toacquisition ~~the Asset~~of ~~Purchase~~NextLevel ~~Agreement,~~expands the Company’s ~~acquired~~growing ~~the~~nationwide ~~customer~~footprint ~~base,~~and ~~certain~~adds ~~equipment,~~a ~~certain~~strong ~~intellectual~~West ~~property,~~Coast ~~inventory,~~presence ~~contract~~with ~~rights,~~nearly ~~software and other licenses~~1,000 ~~and~~SMB ~~miscellaneous~~clients ~~assets used~~ in ~~connection with the operation of Skynet’s telecommunications business~~California.

On ~~November~~ 17December 31, ~~2020~~2021, the Company closed on the ~~acquisitions~~acquisition of substantially all of ~~Nexogy,~~the ~~Inc.~~assets of Skynet Telecom LLC (“~~Nexogy~~Skynet”), ~~and~~a ~~the~~Texas-based ~~assets~~provider of ~~ActiveServe,~~VoIP ~~Inc.~~communication services, aUCaaS, ~~Florida~~and ~~corporation~~broadband ~~that~~connectivity ~~constitute~~services to the ~~ActivePBX~~SMB ~~business~~market. ~~(“ActivePBX”)~~Pursuant to the Asset Purchase Agreement, ~~leading~~the ~~providers~~Company ofacquired ~~cloud~~the ~~communication~~customer base, ~~UCaaS~~certain equipment, certain intellectual property, inventory, contract rights, software and ~~broadband~~other ~~solutions~~licenses, ~~tailored~~and ~~for~~miscellaneous ~~businesses~~assets used in connection with the operation of Skynet’s telecommunications business.

~~As a~~Termination ~~combined business, NextLevel, Skynet, Nexogy, ActivePBX, and T3, serve over 4,000 business customers and approximately 45,000 business users. The business model~~ of ~~the~~Minority ~~combined~~Equality ~~entities is supported by strong and predictable recurring revenue with high gross margins under~~Opportunities ~~contracts~~Acquisition ~~with business customers in various industries including banking, healthcare, financial services, legal, insurance, hotels, real estate, staffing, municipalities, food services, and education~~Inc. ~~We expect the acquisitions to have a positive impact on the revenues and operating income of the Company during the fiscal year that will end on July 31~~, ~~2023,~~(“MEOA”) ~~due~~Business ~~to the anticipated cost synergies and consolidation savings.~~Combination

~~MEOA~~On August 30, 2022, Digerati entered into a Business Combination Agreement (as amended, supplemented and otherwise modified from time to time, the “Business Combination Agreement”), by and among Digerati, MEOA, a Delaware corporation, and Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of MEOA (“Merger Sub”).

OnThe Business Combination ~~August~~Agreement 30provided, ~~2022~~among other things, ~~Digerati~~that ~~entered~~Merger Sub was to merge with and into Digerati, with Digerati as the surviving company in the merger and, after giving effect to such merger, Digerati being a ~~Business~~wholly-owned ~~Combination~~subsidiary ~~Agreement~~of MEOA (asthe it“Merger”). ~~may~~In addition, MEOA was to be ~~amended,~~renamed ~~supplemented~~Verve orTechnologies ~~otherwise~~Corporation. ~~modified~~In ~~from time~~accordance with the terms and subject to ~~time,~~the conditions of the “Business Combination Agreement”), byat ~~and~~the closing, among ~~Digerati~~other things, ~~Minority~~each ~~Equality~~share ~~Opportunities~~of ~~Acquisition~~Digerati common stock outstanding as of immediately prior to the closing ~~Inc.,~~was ato ~~Delaware~~be ~~corporation~~exchanged ~~(“MEOA”),~~for ~~and~~shares ~~Merger~~of ~~Sub~~MEOA common stock, ~~Inc~~par value $0.0001 per share, abased ~~Delaware~~upon ~~corporation~~the ~~and~~exchange aratio ~~wholly~~set ~~owned~~forth ~~subsidiary of~~in ~~MEOA~~the ~~(“Merger~~Business Combination ~~Sub”)~~Agreement.

~~The~~On June 15, 2023, Digerati terminated the Business Combination Agreement ~~and~~pursuant to Section 7.1(d) of the ~~transactions~~Business ~~contemplated~~Combination ~~thereby~~Agreement ~~were~~because ~~approved~~the bytransaction did not close on or prior to the ~~board~~June of15, ~~directors~~2023 oftermination ~~each~~date. ofOn May 24, 2023, The Nasdaq Stock Market halted the trading MEOA ~~and~~securities. ~~Digerati~~Following this halt, the parties to the Business Combination Agreement did not obtain, prior to June 15, 2023, Nasdaq’s approval of the initial listing application for the combined company in connection with the transactions contemplated by the Business Combination Agreement.

~~The Business~~As ~~Combination~~of ~~Agreement~~July ~~provides~~31, ~~among other things~~2023, ~~that Merger Sub will merge with and into Digerati, with Digerati as the~~neither ~~surviving~~party ~~company~~has insought ~~the merger and, after giving effect to such merger, Digerati shall be~~ a ~~wholly-owned~~termination ~~subsidiary~~fee ofpursuant ~~MEOA (the “Merger”). In addition, MEOA will be renamed Digerati Holdings, Inc. The Merger and the other transactions contemplated by the Business Combination Agreement are hereinafter referred~~ to as the “Business Combination”. ~~Other capitalized terms used, but not defined, herein, shall have the respective meanings given to such terms in the Business Combination~~ Agreement.

~~In accordance~~Products ~~with the terms~~ and subject to the conditions of the Business Combination Agreement, at the Effective Time, among other things: (i) each share of Digerati common stock outstanding as of immediately prior to the Effective Time will be exchanged for shares of MEOA common stock, par value $0.0001 per share (each, an “MEOA Share” and collectively, the “MEOA Shares”), based upon the exchange ratio set forth in the Business Combination Agreement (the “Exchange Ratio”); (ii) all vested and unvested stock options of Digerati will be assumed by MEOA and thereafter be settled or exercisable for MEOA Shares, as applicable, determined based on the Exchange Ratio; (iii) each warrant to purchase shares of Digerati common stock will be canceled in exchange for a warrant to purchase MEOA Shares determined based on the Exchange Ratio; (iv) any shares of the Series A Preferred Stock of Digerati outstanding as of the Effective Time will thereafter be convertible into a number of MEOA Shares determined by multiplying the number of shares of Digerati common stock into which such preferred shares would have been convertible immediately prior to the Effective Time by the Exchange Ratio; (v) certain convertible notes of Digerati issued following the signing of the Business Combination Agreement and outstanding as of the Effective Time will thereafter be convertible into a number of MEOA Shares determined by multiplying the number of shares of Digerati common stock into which such convertible notes would have been convertible immediately prior to the Effective Time by the Exchange Ratio; and (vi) each share of MEOA Class A common stock, par value $0.0001 per share (the “MEOA Class A Common Stock”), and each share of MEOA Class B common stock, par value $0.0001 per share (the “MEOA Class B Common Stock”), that is issued and outstanding immediately prior to the Effective Time shall become one MEOA Share following the consummation of the Business Combination.Services

~~The Business~~We ~~Combination~~provide isa ~~expected~~comprehensive tosuite ~~close~~of cloud services specializing in UCaaS solutions for the ~~first~~business ~~calendar~~market. ~~quarter~~Our ofproduct ~~2023,~~line ~~following~~includes ~~the~~a ~~receipt~~portfolio of ~~the~~Internet-based ~~required~~telephony ~~approval~~products byand services ~~the~~delivered through our cloud application platform and session-based communication network and network services including Internet ~~stockholders~~broadband, offiber, ~~MEOA~~mobile broadband, and ~~Digerati~~cloud WAN or SD-WAN solutions. We provide enterprise-class, ~~approval~~carrier-grade byservices to the ~~Nasdaq~~SMB at ~~Stock~~cost-effective ~~Market~~monthly ~~(“Nasdaq”)~~rates. ofOur ~~MEOA’s~~UCaaS ~~initial~~or ~~listing~~cloud communication services include fully hosted IP/PBX, video conferencing, mobile applications, ~~application~~VoIP ~~filed~~transport, SIP trunking, and customized VoIP services all delivered Only in ~~connection~~the ~~with~~Cloud™. Our broadband connectivity solutions for the ~~Business~~delivery ~~Combination~~of digital oxygen are designed for reliability, business continuity and to optimize bandwidth for businesses using the ~~fulfillment~~Company’s ofcloud ~~other~~communication ~~customary~~services ~~closing~~and ~~conditions~~other cloud-based applications.

~~Products and~~Voice ~~Services~~over Internet Protocol Networks

~~We provide~~The abasic ~~comprehensive~~technology ~~suite~~ of ~~cloud~~traditional ~~services~~telecommunications systems ~~specializing~~was indesigned ~~UCaaS~~for ~~solutions~~slow ~~for~~mechanical switches. Communications over the ~~business~~traditional ~~market.~~telephone ~~Our~~network ~~product~~are ~~line~~routed ~~includes~~through acircuits ~~portfolio~~that must dedicate all circuit resources to each call from its inception until the call ends, regardless of ~~Internet-based~~whether ~~telephony~~anyone ~~products~~is ~~and~~actually talking ~~services~~on ~~delivered~~the ~~through~~circuit. ~~our~~This ~~cloud~~circuit-switching ~~application~~technology ~~platform~~incurs a significant cost per call and ~~session-based~~does ~~communication~~not efficiently support the integration ~~network~~of ~~and~~voice ~~network~~with data services. ~~including~~Data ~~Internet broadband~~networks, ~~fiber~~however, ~~mobile~~were ~~broadband,~~designed ~~and~~for ~~cloud~~electronic ~~WAN~~switching. orThey ~~SD-WAN~~break ~~(Software-defined~~the ~~Wide~~data ~~Area~~stream into small, individually ~~Network~~addressed packages of data (“packets”) ~~solutions.~~that Weare ~~provide~~routed ~~enterprise-class,~~independently ~~carrier-grade~~of ~~services~~each other from the origin to the ~~SMB~~destination. atTherefore, data ~~cost-effective~~networks ~~monthly~~do ~~rates.~~not ~~Our~~require ~~UCaaS~~a orfixed ~~cloud communication~~amount ~~services~~of ~~include~~bandwidth ~~fully~~to ~~hosted~~be ~~IP/PBX,~~reserved ~~video~~between ~~conferencing,~~the ~~mobile~~origin ~~applications,~~and ~~VoIP~~destination ~~transport,~~of ~~SIP~~each ~~trunking,~~call and ~~customized~~they do not waste ~~VoIP~~bandwidth ~~services~~when ~~all~~it ~~delivered~~is ~~Only~~not inbeing ~~the~~used ~~Cloud™.~~for ~~Our~~actual ~~broadband~~transmission ~~connectivity~~of ~~solutions~~information. ~~for~~This ~~the~~allows ~~delivery~~multiple ofvoice ~~digital oxygen~~or ~~are~~voice ~~designed~~and ~~for~~data ~~reliability~~calls to be pooled, ~~business~~resulting ~~continuity~~in ~~and~~these networks being able to ~~optimize~~carry more calls with an equal amount of bandwidth. ~~for~~Moreover, ~~businesses~~they ~~using~~do not require the same ~~Company’s~~complex ~~cloud~~switching ~~communication~~methods required by traditional voice telephone networks, instead using a multiplicity of routers to direct each ~~services~~packet to its destination and ~~other~~automatically ~~cloud-based~~routing ~~applications~~packets around blockages, congestion, or outages.

~~Voice~~Packet switching can be used within a data network or across networks, including the public Internet. The Internet itself is not a single data network owned by any single entity, but rather a loose interconnection of networks belonging to many owners that communicate using the IP. By converting voice signals to digital data and handling the voice signals as data, it can be transmitted through the more efficient switching networks designed for data transmissions and through the Internet using the IP. The transmission of voice signals as digitalized data streams over the Internet ~~Protocol~~is ~~Networks~~known as VoIP. A VoIP network has the following advantages over traditional networks:

~~The basic~~● ~~technology~~Simplification: ofAn ~~traditional~~integrated ~~telecommunications~~infrastructure ~~systems was designed for slow mechanical switches. Communications over the traditional telephone network are routed through circuits~~ that ~~must~~supports ~~dedicate~~ all ~~circuit~~forms ~~resources to each call from its inception until the call ends, regardless~~ of ~~whether~~communication anyone is actually talking on the circuit. This circuit-switching technology incurs a significant cost per call and does not efficiently support the integration of voice with data services. Data networks, however, were designed for electronic switching. They break the data stream into small, individually addressed packages of data (“packets”) that are routed independently of each other from the origin to the destination. Therefore, they do not require a fixed amount of bandwidth to be reserved between the origin and destination of each call and they do not waste bandwidth when it is not being used for actual transmission of information. This allows ~~multiple voice or voice and data calls to be pooled, resulting in these networks being able to carry~~ more ~~calls with an equal amount of bandwidth. Moreover~~standardization, ~~they~~a dosmaller ~~not~~equipment ~~require the same complex switching methods required by traditional voice telephone networks~~complement, ~~instead~~ ~~using a multiplicity of routers to direct each packet to its destination~~ and ~~automatically~~less ~~routing~~equipment ~~packets around blockages, congestion, or outages~~management.

~~Packet switching~~● ~~can~~Network beEfficiency: ~~used~~The ~~within~~integration aof ~~data~~voice ~~network~~and ordata ~~across~~fills ~~networks,~~up ~~including~~ the ~~public Internet. The Internet itself is not a single~~ data ~~network~~ ~~owned~~communication bychannels ~~any single entity~~efficiently, ~~but~~thus ~~rather~~providing abandwidth ~~loose~~consolidation ~~interconnection~~and reduction of ~~networks~~the ~~belonging~~costs toassociated ~~many~~with ~~owners~~idle ~~that communicate using the Internet Protocol~~bandwidth. ByThis ~~converting~~combined ~~voice~~infrastructure ~~signals to digital data and handling the voice signals as data, it~~ can besupport ~~transmitted~~dynamic ~~through the~~bandwidth ~~more~~optimization ~~efficient~~and ~~switching~~a ~~networks~~fault ~~designed~~tolerant ~~for~~design. ~~data~~The ~~transmissions~~differences ~~and~~between ~~through~~ the ~~Internet~~traffic ~~using~~patterns ~~the Internet Protocol. The transmission~~ of voice ~~signals~~and ~~as digitalized~~ data ~~streams~~offer ~~over~~further ~~the~~opportunities ~~Internet~~for issignificant ~~known~~efficiency ~~as VoIP~~improvements. ~~A VoIP network has the following advantages over traditional networks:~~

● ~~Simplification~~Co-existence with traditional communication mediums: AnIP ~~integrated~~telephony ~~infrastructure~~can ~~that~~be ~~supports~~used ~~all~~in ~~forms~~conjunction ofwith ~~communication~~existing ~~allows~~public ~~more~~telephone ~~standardization~~system switches, aleased ~~smaller~~and ~~equipment~~dial-up ~~complement~~lines, PBXs and ~~less~~other customer premise equipment, ~~management~~enterprise local area networks (“LANs”), and Internet connections. IP telephony applications can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability.

● ~~Network~~Cost ~~Efficiency~~reduction: ~~The~~Under ~~integration of voice and data fills up~~ the ~~data~~VoIP ~~communication channels efficiently~~network, ~~thus~~the ~~providing~~connection ~~bandwidth~~is ~~consolidation~~directly ~~and~~to ~~reduction of~~ the ~~costs~~Internet ~~associated~~backbone ~~with idle bandwidth. This combined infrastructure can support dynamic bandwidth optimization~~ and as a ~~fault~~result ~~tolerant design. The differences between~~ the ~~traffic~~telephony ~~patterns~~access ofcharges, ~~voice~~ and ~~data~~settlement ~~offer~~fees ~~further~~are ~~opportunities for significant efficiency improvements~~avoided.

●The ~~Co-existence~~growth ~~with~~of ~~traditional~~voice ~~communication~~over ~~mediums:~~the IPInternet ~~telephony~~was ~~can~~limited in bethe ~~used~~past due to poor sound quality caused by technical issues such as delays in ~~conjunction~~packet ~~with~~transmission ~~existing~~and ~~public~~by ~~telephone~~bandwidth ~~system~~limitations ~~switches,~~related to ~~leased~~Internet network capacity and ~~dial-up~~local ~~lines~~access constraints. However, ~~PBXs~~the ~~and~~expansion ~~other~~of ~~customer~~IP ~~premise~~network ~~equipment~~infrastructure, ~~enterprise~~improvements in ~~LANs~~packet switching and compression technology, new software algorithms and ~~Internet~~improved ~~connections~~hardware have substantially reduced delays in packet transmissions and resulted in superior sound quality to that of the legacy telephone network. IPThe ~~telephony~~continued ~~applications~~improvement ~~can~~and beexpansion of ~~implemented~~the ~~through~~Internet ~~dedicated~~Protocol ~~gateways,~~network ~~which~~has resulted in ~~turn~~the ~~can~~use beof ~~based~~this ontechnology ~~open~~for ~~standards~~other ~~platforms~~communication ~~for~~media, ~~reliability~~including video conferencing and ~~scalability~~instant messaging.

●Cloud ~~Cost reduction: Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access charges, and settlement fees are avoided.~~Communications

~~The growth~~Cloud ~~of voice over the Internet was limited in the past due to poor sound quality caused by technical issues such as delays in packet~~communications are ~~transmission and by bandwidth limitations related to~~ Internet-based ~~network~~voice ~~capacity~~ and ~~local~~data ~~access~~communications ~~constraints.~~where ~~However,~~telecommunications ~~the expansion of Internet Protocol network infrastructure~~applications, ~~improvements in packet~~ switching and ~~compression~~storage ~~technology,~~are ~~new~~hosted ~~software~~by ~~algorithms~~a ~~and improved~~third-party ~~hardware~~service ~~have~~provider ~~substantially~~outside ~~reduced~~of ~~delays~~the inorganization ~~packet~~using ~~transmissions~~the ~~and~~services. ~~resulted~~Services inare ~~superior~~accessed ~~sound~~by ~~quality~~the touser ~~that~~over of the ~~legacy~~public ~~telephone network~~Internet. Cloud telephony refers ~~The~~specifically ~~continued~~to ~~improvement~~voice services and ~~expansion~~more ofspecifically the ~~Internet~~replacement ~~Protocol~~of ~~network~~conventional ~~has~~business ~~resulted~~telephone inequipment (such ~~the~~as ~~use~~a PBX) ofwith ~~this~~VoIP ~~technology~~service ~~for~~hosted ~~other communication~~by ~~media,~~a ~~including~~third-party ~~video~~service ~~conferencing~~provider and ~~instant~~delivered ~~messaging~~over the Internet.

3We operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes, with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide our customers with virtually any type of telephony solution, including video conferencing, on a global basis.

~~Cloud Communications~~3

~~Cloud~~Our ~~communications are~~cloud ~~Internet-based~~communication ~~voice~~solutions, ~~and~~also ~~data~~known ~~communications~~as ~~where telecommunications applications~~UCaaS, ~~switching and storage~~ are ~~hosted~~ bydesigned ato ~~third-party~~minimize ~~service~~upfront ~~provider~~capital ~~outside~~costs, ofincrease the ~~organization~~scalability ~~using~~and flexibility of the ~~services.~~customer’s ~~Services~~communications ~~are~~network ~~accessed~~and byservice ~~the~~environment, ~~user~~provide ~~over~~robust ~~the~~features ~~public Internet. Cloud~~and ~~telephony refers~~functionality ~~specifically~~ to ~~voice~~increase ~~services~~ productivity and ~~more~~reduce ~~specifically~~ the ~~replacement~~overall cost of ~~conventional business telephone equipment (such as a PBX) with VoIP service hosted by a third-party service provider and delivered over the Internet~~communications.

WeBroadband operate a cloud communication network that consists of a VoIP switching system and cloud telephony application platform. Our network allows us to provide end-to-end cloud telephony solutions designed to provide significant benefits to businesses of all sizes, with single or multiple locations. The integration of our cloud communication platform and global VoIP network allows us to provide our customers with virtually any type of telephony solution, including video conferencing, on a global basis.Connectivity

~~Our cloud~~Broadband ~~communication~~connectivity ~~solutions,~~or ~~also~~Internet ~~known~~access asis ~~UCaaS,~~the ~~are~~ability ~~designed~~of individuals and organizations to ~~minimize~~connect ~~upfront~~to ~~capital~~the ~~costs~~Internet using computer terminals, ~~increase~~computers, ~~the~~and ~~scalability~~other devices and ~~flexibility~~to access services or applications ofhosted on the ~~customer’s~~Internet ~~communications~~or ~~network~~in ~~and~~the cloud. Internet service ~~environment,~~providers ~~provide~~(“ISPs”) ~~robust~~deliver ~~features~~connectivity ~~and~~at ~~functionality~~a towide ~~increase~~range ~~productivity and~~of ~~reduce~~data ~~the~~transfer rates ~~overall~~using ~~cost~~various ofnetworking ~~communications~~technologies.

~~Broadband~~We operate as an ISP in California and Florida through a broadband network ~~Connectivity~~engineered and built to deliver broadband solutions to our customers in the regional markets served by the Company. The Company’s broadband network utilizes various network technologies, including fiber and wireless technology. Our IP layer of the ISP network incorporates SD WAN technology for optimization of bandwidth and business continuity. The Company also deploys mobile broadband solutions to serve as a diverse network back-up for Internet connectivity.

Broadband connectivity or Internet access is the ability of individuals and organizations to connect to the Internet using computer terminals, computers, and other devices and to access services or applications hosted on the Internet or in the cloud. Internet service providers (ISPs) deliver connectivity at a wide range of data transfer rates using various networking technologies.Strategy

~~We operate~~Our asstrategy anis ~~ISP~~to intarget ~~California~~the small to medium-sized business market and ~~Florida~~capitalize ~~through~~on athe ~~broadband~~wave ~~network~~of ~~engineered~~migration ~~and~~from ~~built~~the legacy telephone network to ~~deliver~~cloud ~~broadband~~telephony. ~~solutions~~We will continue to concentrate our ~~customers in~~sales ~~the~~and ~~regional~~marketing ~~markets~~efforts ~~served~~on bydeveloping ~~the~~vertically ~~Company.~~oriented ~~The~~solutions ~~Company’s~~for ~~broadband~~targeted ~~network~~markets ~~utilizes~~primarily ~~various~~focusing ~~network~~on ~~technologies~~municipalities, ~~including~~ ~~fiber~~banking, healthcare, legal services, and ~~wireless~~real ~~technology~~estate. ~~Our~~In ~~Internet~~addition, ~~Protocol~~we will continue to partner with our distributors and Value-Added Resellers (“IPVARs”) ~~layer~~to ofexpand ~~the~~our ~~ISP~~customer ~~network~~base. ~~incorporates~~Our SDtypical ~~WAN~~VAR, ~~(Software-defined Wide~~also ~~Area~~referred ~~Network)~~to as a Partner, is an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator that has established relationships with businesses in its local market. These VARs are currently providing local customer support for ~~optimization~~other ofIT ~~bandwidth~~or PBX services but lack the technology infrastructure to provide cloud communication and ~~business~~VoIP ~~continuity~~services to their customers. ~~The~~Our ~~Company~~strategy ~~also~~allows ~~deploys~~these ~~mobile~~VARs ~~broadband~~to ~~solutions~~focus on their strength of providing first tier support to ~~serve~~their ascustomers while we provide the second and third tier technical support required to operate a ~~diverse~~cloud communication and VoIP network. ~~back-up~~In addition, we transform our VARs’ business model by introducing new cloud telephony services and adding a new and lucrative recurring revenue stream that increases the VARs’ value proposition for ~~Internet~~its ~~connectivity~~current and prospective customers.

~~Strategy~~Our cloud-based technology platform enables us and our VARs to deliver enhanced voice services to their business customers. The features supported on our cloud communication platform include all standard telephone features and value-added applications such as voicemail to email, VoIP peering, teleconferencing, interactive voice response (“IVR”) auto attendant, and dial-by-name directory. Our system provides our customers and VARs with a migration path from a traditional PBX system to a complete cloud-based PBX solution.

Our ~~strategy~~ isstrategic toinitiatives ~~target the small~~ to ~~medium-sized~~successfully ~~business market and capitalize on the wave of migration from the legacy telephone network~~meet ~~to cloud telephony. We will continue to concentrate~~ our sales and marketing efforts on developing vertically oriented solutions for targeted markets primarily focusing on municipalities, banking, healthcare, legal services, and real estate. In addition, we will continue to partner with our distributors and Valuelong-~~Added~~term Resellers (“VARs”) to expand our customer base. Our typical VAR, also referred to as a Partner, is an information technology services firm, traditional PBX vendor, managed service provider, or systems integrator that has established relationships with businesses in its local market. These VARs are currently providing local customer support for other IT or PBX services but lack the technology infrastructure to provide cloud communication and VoIP services to their customers. Our strategy allows these VARs to focus on their strength of providing first tier support to their customers while we provide the second and third tier technical support required to operate a cloud communication and VoIP network. In addition, we transform our VARs’ business ~~model~~objectives ~~by introducing new cloud telephony services and adding a new and lucrative recurring revenue stream that increases the VARs’ value proposition for its current and prospective customers.~~include:

~~Our cloud-based~~● ~~technology~~A ~~platform~~continued ~~enables~~emphasis uson ~~and~~ our ~~VARs~~UCaaS/cloud tocommunication ~~deliver enhanced voice services to their~~ business, ~~customers.~~which ~~The~~operates ~~features supported~~in ona ~~our~~segment ~~cloud~~of ~~communication~~the ~~platform~~telecommunications ~~include~~industry ~~all~~that ~~standard~~continues ~~telephone~~to ~~features~~experience ~~and~~solid ~~value-added~~growth ~~applications such~~ as ~~voicemail to~~businesses ~~email,~~migrate ~~VoIP~~from ~~peering,~~legacy ~~teleconferencing,~~phone ~~IVR~~systems ~~auto~~to ~~attendant, and dial~~cloud-~~by-name~~based ~~directory.~~telephony ~~Our~~systems ~~system provides our customers~~ and ~~VARs with~~implement ahybrid ~~migration~~‘stay ~~path~~at ~~from~~home’ ateleworking ~~traditional PBX system to a complete cloud-based PBX solution~~environments.

4● Enhancements to our UCaaS solutions to include collaboration tools and integration with third-party systems that improves our business customers’ internal communication and engagement with underlying customers.

~~Our strategic~~● ~~initiatives~~Continued enhancements to ~~successfully~~our ~~meet~~broadband ~~our~~product ~~long-term~~portfolio ~~business~~and ~~objectives~~the ~~include:~~delivery of “digital oxygen” to our business customers.

● A ~~continued~~disciplined ~~emphasis~~approach onto ~~our~~evaluating additional accretive acquisitions as we continue to target local and/or regional UCaaS/cloud ~~communication~~telephony ~~business~~providers, which ~~operates~~have excelled in atheir ~~segment~~market ofwith ~~the~~that ~~telecommunications~~“local” ~~industry~~touch ~~that~~when ~~continues~~serving totheir ~~experience~~business ~~solid~~customers. ~~growth~~The asCompany ~~businesses~~will ~~migrate~~assimilate ~~from~~best ~~legacy~~practices ~~phone~~from ~~systems~~its acquisitions to ~~cloud-based~~optimize ~~telephony~~productivity ~~systems~~ and ~~implement~~performance ~~hybrid~~throughout ~~‘stay~~the ~~at home’ teleworking environments~~organization.

● ~~Enhancements~~A tocontinued ~~our~~focus ~~UCaaS~~on ~~solutions~~the toU.S. ~~include~~market ~~collaboration~~of ~~tools~~SMBs, ~~and~~of ~~integration~~which ~~with~~a ~~third-party~~significant ~~systems~~portion ~~that~~has ~~improves~~not ~~our~~yet ~~business~~migrated ~~customers’~~to ~~internal~~a ~~communication~~UCaaS ~~and~~or ~~engagement~~cloud ~~with~~communication ~~underlying customers~~solution.

~~● Continued enhancements to our broadband product portfolio and the delivery of “digital oxygen” to our business customers.~~4

● A ~~disciplined~~continued ~~approach~~emphasis toon ~~evaluating~~the ~~additional~~Company’s ~~accretive~~channel ~~acquisitions~~strategy asthat weenables ~~continue~~its toagents ~~target~~and ~~local~~Partners ~~and/or~~to ~~regional~~offer ~~UCaaS/~~cloud ~~telephony~~and ~~providers,~~session-based ~~which~~communication ~~have~~services ~~excelled~~to inthe ~~their~~business market, ~~with~~primarily ~~that “local” touch when serving their business customers. The Company will assimilate best practices from its acquisitions to optimize productivity and performance throughout~~ the ~~organization~~SMB.

● AContinued ~~continued~~enhancement ~~focus~~of onour ~~the~~infrastructure ~~U.S.~~and ~~market~~back-office ofsystems ~~SMBs,~~to ofstreamline ~~which~~operations aand ~~significant~~automate ~~portion~~processes ~~has~~for ~~not~~efficiency, ~~yet~~all ~~migrated~~which tosupport aboth ~~UCaaS~~its ororganic ~~cloud~~and ~~communication~~acquisition ~~solution~~growth model.

● AImplementing ~~continued~~a ~~emphasis~~total onsupport ~~the~~model ~~Company’s~~(pre ~~channel strategy that enables its agents~~ and ~~Partners~~post tosales) ~~offer~~for ~~cloud~~building ~~and~~a ~~session~~world-~~based~~class ~~communication~~service ~~services~~delivery toand ~~the~~help ~~business~~desk ~~market, primarily the SMB~~organization.

●Competitive ~~Continued enhancement of our infrastructure and back-office systems to streamline operations and automate processes for efficiency, all which support both its organic and acquisition growth model.~~Conditions

●The ~~Implementing~~cloud aservices ~~total~~industry, ~~support~~including ~~model~~the ~~(pre~~provisioning of cloud communications services, cloud connectivity, cloud storage and ~~post~~cloud ~~sales)~~computing, ~~for~~as ~~building~~well aas ~~world~~carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors, specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our market. Similarly, the business services market includes competitors who may be significantly larger and have substantially greater market presence, financial, technical, operational and marketing resources than we do, including Tier 1 carriers, cable companies and premise-~~class~~based solutions providers that are implementing cloud communication services. In the event that such a competitor expends significant sales and marketing resources in one or several markets where we compete with them, we may not be able to compete successfully in those markets. Specialized cloud services providers, who focus on one or more cloud service ~~delivery~~or application, could adopt aggressive pricing and ~~help~~promotion ~~desk~~practices ~~organization~~that could impact our ability to compete. We also believe that competition will continue to increase, placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce our costs commensurate with the price reductions of our competitors. In addition, the pace of technological change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the same or similar services offered or proposed to be offered by us. If our competitors were to provide better and more cost-effective services than ours, we may not be able to increase our revenues or capture any significant market share.

~~Competitive~~The VoIP and Internet telephony market are highly ~~Conditions~~competitive. Our competitors include major telecommunications carriers in the U.S., national UCaaS providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price and service offerings from existing competitors and new market entrants in the future. The principal competitive factors in our market include price, coverage, customer service, technical response times, reliability, and network size/capacity. The competitive landscape is rapidly altering the number, identity, and competitiveness of the marketplace, and we are unable to determine with certainty the impact of potential consolidation in our industry.

~~The cloud~~Many ~~services industry, including the provisioning~~ of cloud communications services, cloud connectivity, cloud storage and cloud computing, as well as carrier voice and data services, is highly competitive, rapidly evolving and subject to constant technological change and intense marketing by providers with similar products and services. We expect that new, smaller, but very agile competitors, specializing in providing service to regional and emerging markets at low margin and hence low cost, may have an impact on our ~~market. Similarly, the business services market includes~~ competitors ~~who may be significantly larger and~~ have substantially greater ~~market presence,~~ financial, technical, ~~operational~~ and marketing resources, ~~than~~larger wecustomer dobases, ~~including~~longer ~~Tier~~operating ~~1 carriers~~histories, ~~cable~~greater ~~companies~~name recognition and ~~premise-based~~more ~~solutions providers~~established ~~that~~relationships ~~are~~in ~~implementing~~the ~~cloud~~industry ~~communication~~than ~~services~~we have. InAs ~~the event that such~~ a ~~competitor~~result, ~~expends~~certain ~~significant~~of ~~sales~~these ~~and~~competitors ~~marketing resources in one or several markets where we compete with them, we~~ may ~~not~~ be able to ~~compete~~adopt ~~successfully in those markets. Specialized cloud services providers, who focus on one or~~ more ~~cloud service or application, could adopt~~ aggressive pricing ~~and promotion practices that~~policies that could ~~impact~~hinder our ability to ~~compete~~market our services. We ~~also~~ believe that ~~competition will continue to increase, placing downward pressure on prices. Such pressure could adversely affect~~ our ~~gross~~key ~~margins~~competitive ifadvantages we are ~~not~~our ~~able~~ability to ~~reduce~~deliver ~~our costs commensurate with the price reductions~~reliable, ofhigh ~~our~~quality ~~competitors.~~voice Inservice ~~addition,~~over the ~~pace~~Internet ofin ~~technological~~a ~~change~~cost-effective ~~makes~~manner, itsuperior ~~impossible~~customers ~~for~~service usand toour ~~predict~~VAR ~~whether~~distribution wemodel. ~~will face new competitors~~We ~~using~~cannot ~~different technologies to~~ provide ~~the~~assurances, ~~same~~however, orthat ~~similar~~these ~~services~~advantages ~~offered~~will orenable ~~proposed to be offered by~~ us. ~~If our competitors were~~ to ~~provide~~succeed ~~better~~against ~~and~~comparable ~~more~~service ~~cost-effective~~offerings ~~services~~from ~~than ours, we may not be able to increase~~ our ~~revenues or capture any significant market share~~competitors.

~~The VoIP~~Government and Internet telephony market are highly competitive. Our competitors include major telecommunications carriers in the U.S., national UCaaS providers, and numerous small cloud telephony operators. We expect to face continuing competition based on price and service offerings from existing competitors and new market entrants in the future. The principal competitive factors in our market include price, coverage, customer service, technical response times, reliability, and network size/capacity. The competitive landscape is rapidly altering the number, identity, and competitiveness of the marketplace, and we are unable to determine with certainty the impact of potential consolidation in our industry.Regulation

~~Many~~As a provider of Internet voice communications services, we are subject to regulation in the U.S. by the Federal Communications Commission (“FCC”). Some of ~~our~~these ~~competitors~~regulatory ~~have~~obligations ~~substantially~~include ~~greater~~contributing to ~~financial,~~the ~~technical~~Federal Universal Service Fund, Telecommunications Relay Service Fund and ~~marketing~~federal ~~resources,~~programs ~~larger~~related ~~customer~~to ~~bases,~~number ~~longer~~administration; ~~operating~~providing ~~histories,~~access ~~greater~~to ~~name~~E-911 ~~recognition~~services; protecting customer information; and ~~more~~porting ~~established~~phone ~~relationships~~numbers inupon a valid customer request, and complying with rules to mitigate Robocalls under the ~~industry~~Pallone-Thune ~~than~~Telephone weRobocall ~~have.~~Abuse AsCriminal aEnforcement ~~result~~and Deterrence (“TRACED”) Act, ~~certain~~FCC’s Secure Telephone Identity Revisited (STIR”)/Signature-based Handling of ~~these~~Asserted ~~competitors~~Information Using toKENs (“SHAKEN”) ~~may~~protocols, beand ~~able~~any response to ~~adopt~~Traceback ~~more~~requests ~~aggressive~~from ~~pricing~~the ~~policies~~FCC’s ~~that~~industry ~~could~~consortium- ~~hinder~~Industry ~~our~~Traceback ~~ability~~Group. We are also required to ~~market~~pay ~~our~~state and local 911 fees and contribute to state universal service funds in those states that assess Internet voice communications services. We ~~believe~~are ~~that~~a ~~our~~competitive ~~key~~local ~~competitive advantages~~exchange carrier (“CLEC”) in Florida. We are ~~our~~subject ~~ability~~to the same FCC regulations applicable to ~~deliver~~telecommunications ~~reliable~~companies, ~~high~~as ~~quality~~well ~~voice~~as ~~service~~regulation ~~over~~by the ~~Internet~~public utility commission in these states. Specific regulations vary on a ~~cost~~state-~~effective~~by-state ~~manner~~basis, ~~superior~~but ~~customers service~~generally ~~and~~include ~~our~~the ~~VAR~~requirement ~~distribution~~to ~~model.~~register Weor ~~cannot~~seek certification to provide ~~assurances~~telephone services, ~~however~~to file and update tariffs setting forth the terms, ~~that~~conditions, ~~these~~and ~~advantages~~prices ~~will~~for ~~enable~~our usintrastate services and to ~~succeed~~comply ~~against~~with various reporting, record-keeping, ~~comparable~~surcharge ~~service~~collection, ~~offerings~~and ~~from~~consumer ~~our~~protection ~~competitors~~requirements.

~~Government~~The effect of any future laws, regulations, and ~~Regulation~~orders on our operations, including, but not limited to, our cloud-based communications and collaboration services, cannot be determined. But as a general matter, increased regulation and the imposition of additional funding obligations increases service costs that may or may not be recoverable from our customers, which could result in making our services less competitive with traditional telecommunications services if we increase our prices or decreasing our profit margins if we attempt to absorb such costs.

~~As a~~Federal, ~~provider~~state, oflocal, ~~Internet~~and ~~voice~~foreign ~~communications~~governmental organizations ~~services, we~~ are ~~subject~~considering toother ~~regulation~~legislative inand ~~the U.S. by the FCC. Some of these~~ regulatory ~~obligations include~~proposals ~~contributing~~that towould ~~the~~regulate ~~Federal Universal Service Fund, Telecommunications Relay Service Fund~~ and/or ~~federal~~tax ~~programs~~applications ~~related~~running toover ~~number~~the ~~administration;~~Internet. ~~providing~~We ~~access~~cannot topredict ~~E-911~~whether ~~services;~~new ~~protecting~~taxes ~~customer~~will ~~information;~~be ~~and~~imposed ~~porting~~on ~~phone~~our ~~numbers upon a valid customer request~~services, and ~~complying~~depending ~~with~~on ~~rules to mitigate Robocalls under~~ the ~~federal~~type ~~TRACED~~of ~~Act,~~taxes ~~FCC’s STIR/SHAKEN protocols~~imposed, ~~and~~whether ~~any response to Traceback requests from the FCC’s industry consortium- Industry Traceback Group. We are also required to pay state~~ and ~~local~~ ~~911~~how ~~fees~~our ~~and contribute to state universal service funds in those states that assess Internet voice communications~~ services. Wewould ~~are~~be ~~a competitive~~affected ~~local exchange carrier (CLEC) in Florida~~thereafter. WeIncreased ~~are~~regulation ~~subject~~of to the ~~same~~Internet ~~FCC~~may ~~regulations~~decrease ~~applicable~~its togrowth ~~telecommunications~~and ~~companies,~~hinder technological asdevelopment, ~~well~~which asmay ~~regulation~~negatively byimpact the ~~public~~cost ~~utility~~of ~~commission~~doing inbusiness ~~these~~via ~~states. Specific regulations vary on a state-by-state basis, but generally include~~ the ~~requirement~~Internet ~~to register~~ or ~~seek~~otherwise ~~certification~~materially toadversely ~~provide~~affect ~~telephone~~our ~~services~~business, ~~to file and update tariffs setting forth the~~ ~~terms,~~financial ~~conditions~~condition, and ~~prices~~results ~~for~~of ~~our intrastate services and to comply with various reporting, record-keeping, surcharge collection, and consumer protection requirements~~operations.

~~The effect~~Regulation of ~~any future laws, regulations, and orders on our operations, including, but not limited to, our cloud~~Internet-based ~~communications and~~ ~~collaboration~~Telecommunication ~~services,~~Services ~~cannot~~in ~~be determined. But as a general matter, increased regulation and~~ the ~~imposition~~United of additional funding obligations increases service costs that may or may not be recoverable from our customers, which could result in making our services less competitive with traditional telecommunications services if we increase our prices or decreasing our profit margins if we attempt to absorb such costs.States

~~Federal,~~We have the necessary authority under Section ~~state,~~214 ~~local~~of ~~and~~the ~~foreign~~Communications ~~governmental~~Act ~~organizations~~to ~~are~~operate ~~considering~~as ~~other~~a ~~legislative~~domestic and ~~regulatory~~international ~~proposals~~telecommunications ~~that~~carrier. ~~would~~We ~~regulate~~are ~~and/or~~considered a non-dominant ~~tax~~domestic ~~applications~~interstate ~~running~~carrier ~~over~~subject to minimal regulation by the ~~Internet~~FCC. We ~~cannot~~are ~~predict~~not ~~whether~~required ~~new~~to ~~taxes~~obtain ~~will~~FCC beauthority ~~imposed~~to oninitiate or expand our ~~services~~domestic interstate operations, ~~and~~but ~~depending~~we onare ~~the type~~required ofto ~~taxes~~obtain ~~imposed,~~FCC ~~whether~~approval ~~and~~to ~~how~~transfer ~~our~~control ~~services~~or ~~would~~discontinue beservice ~~affected~~and ~~thereafter.~~are ~~Increased~~required to ~~regulation~~file ofvarious ~~the~~reports ~~Internet~~and ~~may~~pay ~~decrease~~various ~~its growth~~fees and ~~hinder~~assessments. ~~technological~~In ~~development~~addition, ~~which~~we ~~may~~must ~~negatively~~offer ~~impact~~service ~~the~~on ~~cost~~a ofnon-discriminatory ~~doing~~basis ~~business~~at ~~via~~just and ~~the~~reasonable ~~Internet~~rates orand ~~otherwise~~are ~~materially adversely~~subject ~~affect~~to ~~our~~the ~~business,~~FCC’s ~~financial~~complaint ~~condition~~jurisdiction. Generally, ~~and~~our ~~results~~international ofvoice ~~operations~~traffic is subject to minimal regulation by state and local jurisdictions.

~~Regulation~~As a CLEC in Florida. We are subject to the same FCC regulations ofapplicable ~~Internet-based~~to ~~Telecommunication~~telecommunications ~~Services~~companies, as well as regulation by the public utility commission in Florida. As a CLEC, we are generally required to register or seek certification to provide certain services, to file and update tariffs setting forth the ~~United~~terms, ~~States~~ conditions and prices for our intrastate services and to comply with various consumer protection, reporting, record-keeping, surcharge collection requirements.

~~We have~~The ~~the~~FCC ~~necessary~~requires ~~authority~~Internet voice ~~under~~communications ~~Section~~service ~~214~~providers, ofsuch ~~the~~as ~~Communications~~our ~~Act~~company, to ~~operate~~provide asE-911 aservice ~~domestic~~in ~~and~~all ~~international~~geographic ~~telecommunications carrier.~~areas Wecovered ~~are~~by ~~considered~~the atraditional wire-line ~~non~~E-~~dominant~~911 ~~domestic~~network. ~~interstate~~Under ~~carrier~~the ~~subject~~FCC’s torules, ~~minimal~~Internet ~~regulation~~voice bycommunications providers must transmit the ~~FCC.~~caller’s Wephone number ~~are~~and ~~not~~registered ~~required~~location information to ~~obtain~~ ~~FCC~~the ~~authority~~appropriate topublic ~~initiate~~safety answering point, or ~~expand~~PSAP, ~~our~~for ~~domestic~~the ~~interstate~~caller’s ~~operations,~~registered location. ~~but~~The weFCC ~~are~~also ~~required~~requires tointerconnected ~~obtain~~VoIP ~~FCC~~service ~~approval~~providers to ~~transfer~~make Universal Service Fund (“USF”) contributions. ~~control~~We orbelieve ~~discontinue~~that ~~service~~our ~~and~~services are ~~required~~currently tocompliant ~~file~~with ~~various~~all ~~reports~~applicable ~~and~~requirements ~~pay~~of ~~various~~the ~~fees~~FCC, and ~~assessments.~~we Inhave ~~addition,~~made weand ~~must~~are ~~offer~~making the ~~service~~required oncontributions ato ~~nondiscriminatory~~the ~~basis~~USF. However, should we at ~~just~~some ~~and~~time ~~reasonable~~fail ~~rates~~to ~~and~~meet ~~are~~certain ~~subject~~requirements toor ~~the~~fail ~~FCC’s~~to ~~complaint~~make ~~jurisdiction.~~required ~~Generally~~contributions, ~~our~~we ~~international~~could ~~voice~~be ~~traffic is~~ subject to ~~minimal~~revocation ~~regulation~~of byour ~~state~~authority ~~and~~to ~~local~~operate ~~jurisdictions~~or to fines or penalties.

As a ~~competitive~~result ~~local~~of ~~exchange~~the ~~carrier~~FCC’s preemption ~~(CLEC)~~of states’ ability to regulate certain aspects of VoIP service, and a trend in ~~Florida. We~~state legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to ~~the~~relatively ~~same~~few ~~FCC~~state ~~regulations~~regulatory ~~applicable~~requirements, toaside ~~telecommunications~~from collection ~~companies,~~of state and local E911 fees and state Universal Service support obligations as well as ~~regulation~~some bystate ~~the~~communication ~~public~~service ~~utility~~and ~~commission~~sales intaxes, when ~~Florida~~applicable. AsWe abelieve ~~CLEC~~that our VoIP services are currently compliant with all applicable state requirements, and we have made and are ~~generally~~making the required contributions to ~~register~~E911, orstate ~~seek certification~~USF, toand ~~provide~~other ~~certain~~funds. The state regulatory framework for our VoIP services, continues to ~~file~~evolve, ~~and~~so ~~update~~we, ~~tariffs~~in ~~setting~~conjunction ~~forth~~with ~~the~~our ~~terms~~professional advisors, ~~conditions~~monitor the actions of the various state regulatory agencies and ~~prices~~endeavor to ~~for~~ensure ~~our~~that ~~intrastate~~we are in compliance with applicable state law, including any new statutes or regulations that may be passed. However, ~~services~~there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that we will always be fully compliant with applicable rules and regulations. Should we fail to ~~comply~~be compliant with ~~various~~applicable ~~consumer~~state ~~protection~~regulations, ~~reporting,~~or ~~record-keeping~~to file required reports with state regulatory agencies, ~~surcharge~~we ~~collection~~could ~~requirements~~be subject to fines and/or penalties.

~~The FCC~~In ~~requires~~addition to regulations addressing Internet ~~voice~~telephony ~~communications~~and ~~service~~broadband ~~providers~~services, ~~such~~other asregulatory ~~our~~issues ~~company,~~relating to ~~provide~~the ~~E-911~~Internet ~~service~~generally incould ~~all~~affect ~~geographic~~our ~~areas covered~~ability byto ~~the~~provide ~~traditional~~our ~~wire-line E-911 network~~services. ~~Under~~Congress ~~the~~has ~~FCC’s~~adopted ~~rules,~~legislation ~~Internet~~that ~~voice~~regulates ~~communications~~certain ~~providers~~aspects ~~must~~of ~~transmit~~ the ~~caller’s phone~~Internet ~~number~~including ~~and~~online ~~registered~~content, ~~location~~user privacy, ~~information~~taxation, toliability ~~the~~for ~~appropriate~~third-party ~~public~~activities ~~safety~~and ~~answering~~jurisdiction. ~~point,~~In ~~or PSAP~~addition, ~~for~~a ~~the~~number ~~caller’s~~of ~~registered location.~~initiatives ~~The~~pending ~~FCC~~in ~~also~~Congress ~~requires~~and state ~~interconnected~~legislatures ~~VoIP~~would ~~service~~prohibit ~~providers~~or torestrict ~~make~~advertising ~~Universal~~or ~~Service~~sale ~~Fund~~of ~~(“USF”)~~certain ~~contributions. We~~products ~~believe~~and ~~that our~~ services ~~are~~on ~~currently compliant with all applicable requirements of~~ the ~~FCC~~Internet, ~~and~~which wemay have ~~made and are making~~ the ~~required~~effect ~~contributions~~of toraising the ~~USF.~~cost ~~However, should we at some time fail to meet certain requirements or fail to make required contributions, we could be subject to revocation~~ of ~~our~~doing ~~authority~~business toon ~~operate~~the orInternet ~~to fines or penalties~~generally.

~~As a~~International result of the FCC’s preemption of states’ ability to regulate certain aspects of VoIP service, and a trend in state legislatures to affirmatively deregulate VoIP services for most purposes, our VoIP services are subject to relatively few state regulatory requirements, aside from collection of state and local E911 fees and state Universal Service support obligations as well as some state communication service and sales taxes, when applicable. We believe that our VoIP services are currently compliant with all applicable state requirements, and we have made and are making the required contributions to E911, state USF, and other funds. The state regulatory framework for our VoIP services continues to evolve, so we, in conjunction with our professional advisors, monitor the actions of the various state regulatory agencies and endeavor to ensure that we are in compliance with applicable state law, including any new statutes or regulations that may be passed. However, there can be no assurance that we will become aware of all applicable requirements on a timely basis, or that we will always be fully compliant with applicable rules and regulations. Should we fail to be compliant with applicable state regulations, or to file required reports with state regulatory agencies, we could be subject to fines and/or penalties.Regulation

~~In addition~~The toregulatory ~~regulations~~treatment ~~addressing~~of Internet telephony outside ~~and~~of ~~broadband~~the ~~services,~~U.S. ~~other~~varies ~~regulatory~~widely ~~issues~~from ~~relating~~country to ~~the~~country. ~~Internet~~A ~~generally could~~number ~~affect~~of ~~our~~countries ~~ability~~that tocurrently ~~provide~~prohibit ~~our~~competition ~~services.~~in ~~Congress~~the ~~has~~provision of ~~adopted~~voice ~~legislation~~telephony ~~that~~also ~~regulates~~prohibit ~~certain~~Internet ~~aspects~~telephony. ofOther ~~the~~countries permit but regulate Internet ~~including online~~telephony. ~~content,~~Some ~~user~~countries ~~privacy,~~will ~~taxation,~~evaluate proposed ~~liability~~Internet ~~for~~telephony ~~third~~service on a case-~~party~~by-case ~~activities~~basis and ~~jurisdiction.~~determine Inwhether ~~addition,~~it should be regulated as a ~~number~~voice ofservice ~~initiatives~~or ~~pending~~as another intelecommunications ~~Congress~~service. ~~and~~In ~~state~~many ~~legislatures~~countries, ~~would~~Internet ~~prohibit~~telephony orhas ~~restrict~~not ~~advertising~~yet orbeen ~~sale~~addressed ofby ~~certain~~legislation ~~products~~or ~~and~~regulation. ~~services~~Increased regulation onof the Internet, ~~which may~~and/or ~~have~~Internet telephony providers or the ~~effect~~prohibition of ~~raising~~Internet ~~the~~telephony ~~cost~~in ofone ~~doing~~or more countries could adversely affect our business onand ~~the~~future ~~Internet~~prospects ~~generally~~if we decide to expand globally.

~~International Regulation~~Federal Robocall Mitigation Efforts and Regulations

~~The regulatory~~Beginning ~~treatment~~in ofMarch ~~Internet~~2020, ~~telephony~~the ~~outside~~FCC ofbegan to implement rules pursuant to the TRACED ~~U.S.~~Act ~~varies~~to ~~widely~~mitigate ~~from~~illegal ~~country~~and fraudulent robocalls to ~~country~~consumer subscribers. AThe ~~number~~rules ofapply ~~countries~~to ~~that~~all ~~currently prohibit~~IP ~~competition~~Enabled Communication Services operating in the ~~provision~~U.S., ofincluding ~~voice~~interconnected ~~telephony~~VoIP ~~also~~services ~~prohibit~~like ~~Internet~~our ~~telephony~~services. ~~Other~~The ~~countries~~FCC ~~permit~~also ~~but~~implemented ~~regulate~~a ~~Internet~~STIR/SHAKEN caller ID authentication ~~telephony.~~framework ~~Some~~be ~~countries~~integrated ~~will~~by ~~evaluate~~all ~~proposed~~VoIP ~~Internet~~services ~~telephony~~which ~~service~~requires oncertain aidentification ~~case-by-case~~processes ~~basis~~in ~~and~~their ~~determine~~Internet ~~whether~~Protocol itnetworks ~~should~~no belater ~~regulated~~than asJune a30, ~~voice~~2022. ~~service~~We ortook asaction ~~another~~to ~~telecommunications~~implement ~~service.~~STIR/SHAKEN Inin ~~many~~advance ~~countries,~~of ~~Internet~~the ~~telephony~~FCC’s ~~has~~deadlines ~~not~~and ~~yet~~are ~~been~~compliant ~~addressed~~with all applicable bySTIR/SHAKEN ~~legislation~~requirements orand ~~regulation~~TRACED Act requirements. ~~Increased~~We ~~regulation~~have ofalso registered and coordinated with the ~~Internet~~FCC’s delegated industry consortium for tracking of robocalls through its Industry Traceback Group and~~/or~~ ~~Internet~~stand ~~telephony~~ready ~~providers~~should oraction ~~the~~be ~~prohibition~~required. ofThe ~~Internet~~FCC continues ~~telephony~~to inadopt ~~one~~rules orrelated ~~more~~to ~~countries~~illegal ~~could~~robocalls, ~~adversely~~and ~~affect~~we ~~our~~continue ~~business~~to ~~and~~monitor ~~future~~the ~~prospects~~FCC ifefforts weas ~~decide~~they further develop in order to ~~expand~~ensure ~~globally~~continued compliance with robocall mitigation rules.

~~Federal Robocall~~Customers ~~Mitigation Efforts~~ and ~~Regulations~~ Suppliers

~~Beginning in~~We ~~March~~rely ~~2020,~~on ~~the~~various ~~FCC~~suppliers ~~began~~ to ~~implement~~provide ~~rules pursuant to the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence~~services ~~(TRACED)~~in ~~Act~~connection towith ~~mitigate~~our ~~illegal~~VoIP and ~~fraudulent~~UCaaS ~~robocalls to consumer subscribers~~offerings. ~~The~~Our ~~rules~~customers ~~apply~~include tobusinesses ~~all IP Enabled Communication Services operating~~ in ~~the~~various ~~U.S.,~~industries including ~~interconnected~~Healthcare, ~~VoIP services like our services. The FCC also implemented a STIR/SHAKEN caller ID authentication~~Banking, ~~framework~~Financial beServices, ~~integrated~~Legal, byReal ~~all VoIP services which requires certain identification processes in their Internet Protocol networks no later than June 30~~Estate, ~~2022. We took action to implement STIR/SHAKEN in advance of the FCC’s deadlines~~ and ~~are compliant with all applicable STIR/SHAKEN requirements and TRACED Act requirements~~Construction. We ~~have~~are ~~also~~not ~~registered~~dependent ~~and~~upon ~~coordinated~~any ~~with~~single ~~the~~supplier ~~FCC’s~~or ~~delegated industry consortium for tracking of robocalls through its Industry Traceback Group and stand ready should action be required~~customer. The FCC continues to adopt rules related to illegal robocalls, and we continue to monitor the FCC efforts as they further develop in order to ensure continued compliance with robocall mitigation rules.

~~Customers~~ During the years ended July 31, 2023 and ~~Suppliers~~2022, the Company did not derive revenues of 10% or more from any single customer.

~~We rely~~As onof ~~various~~July ~~suppliers~~31, to2023 ~~provide services in connection with our VoIP~~ and ~~UCaaS~~2022, ~~offerings.~~the ~~Our~~Company ~~customers include businesses in various~~did ~~industries~~not ~~including~~have ~~Healthcare,~~outstanding ~~Banking,~~accounts ~~Financial~~receivable ~~Services,~~of ~~Legal,~~10% ~~Real~~or ~~Estate,~~more ~~and~~from ~~Construction. We are not dependent upon~~ any single ~~supplier~~ or customer.

~~During the years ended July 31, 2022, and 2021, the Company did not derive revenues of 10% or more from any single customer.~~Employees

As of July 31, ~~2022~~2023, ~~and~~we ~~2021~~had 78 full-time total employees. All of our employees performed sales, ~~the~~operational, ~~Company~~technical, ~~did~~and ~~not~~administrative ~~have~~functions. ~~outstanding~~We ~~accounts~~believe ~~receivable~~our future success will depend to a large extent on our continued ability to attract and retain highly skilled and qualified employees. We consider our employee relations to be good. None of ~~10%~~these oraforementioned ~~more~~employees ~~from~~belong ~~any~~to ~~single~~labor ~~customer~~unions.

~~Employees~~ITEM 1A. RISK FACTORS.

~~As of~~Not ~~July~~applicable ~~31, 2022, we had 90 employees, all of whom performed sales, operational, technical, and administrative functions. We believe our future success will depend~~ to asmaller ~~large~~reporting ~~extent on our continued ability to attract and retain highly skilled and qualified employees~~companies. ~~We consider our employee relations to be good. None of these aforementioned employees belong to labor unions.~~

ITEM 1A 1B. ~~RISK~~UNRESOLVED ~~FACTORS.~~STAFF COMMENTS.

Not ~~Applicable~~ applicable to smaller reporting companies.

ITEM 1B2. ~~UNRESOLVED STAFF COMMENTS~~PROPERTIES.

~~Not Applicable~~As of August 1, 2022, we have relocated to ~~smaller~~a new ~~reporting~~headquarter ~~companies~~office in San Antonio, Texas and leased offices and facilities in a number of other locations. Below is a list of our primary leased offices and other facilities as of July 31, 2023.

ITEM 2. PROPERTIES.

Location	Annual Rent		Lease Expiration Date	Business Use	Approx. Sq. Ft.

8023 Vantage Dr., Suite 660, San Antonio, Texas 78230	$	49,136	Sep-27	Executive offices		2,843
10967 Via Frontera, San Diego, CA 92127	$	369,229	Mar-26	Office space		18,541
1610 Royal Palm Avenue, Suite 300, Fort Myers, FL 33901	$	83,260	Dec-25	Office space and network facilities		6,800
2121 Ponce de Leon Blvd., Suite 200, Coral Gables FL 33134	$	106,553	Dec-27	Office space & wireless internet network		4,623
7218 McNeil Dr., FL-1, Austin, TX 78729	$	21,000	Mar-24	Network facilities		25
9701 S. John Young Parkway, Orlando, FL 32819	$	25,440	May-26	Network facilities		540
8333 NW 53rd St, Doral, FL 33166	$	14,021	Jul-25	Wireless internet network		100
100 SE 2nd Street, Miami, FL 33131	$	36,466	Jan-24	Wireless internet network		100
9055 SW 73rd Ct, Miami, FL 33156	$	8,787	Dec-23	Wireless internet network		100
9517 Fontainebleau Blvd., Miami, FL 33172	$	11,907	Aug-24	Wireless internet network		100

~~As of~~We ~~August~~believe 1,that ~~2022,~~our ~~we have relocated to a new headquarter office in San Antonio Texas and~~ leased ~~offices and~~ facilities inare ~~a number of~~suitable ~~other locations. Below is a list of our primary leased offices~~ and ~~other~~adequate ~~facilities~~for astheir ofintended ~~July 31, 2022~~use.

Location	Annual Rent		Lease Expiration Date	Business Use	Approx. Sq. Ft.
8023 Vantage Dr., Suite 660, San Antonio, Texas 78230	$	49,136	Sep-27	Executive offices		2,843
10967 Via Frontera, San Diego, CA 92127	$	369,229	Mar-26	Office space		18,541
1610 Royal Palm Avenue, Suite 300, Fort Myers, FL 33901	$	83,260	Dec-25	Office space and network facilities		6,800
2121 Ponce de Leon Blvd., Suite 200, Coral Gables FL 33134	$	128,301	Dec-27	Office space & wireless internet network		4,623
7218 McNeil Dr., FL-1, Austin, TX 78729	$	21,000	Mar-24	Network facilities		25
6606 Lyndon B. Johnson, Fwy., FL1, Suite 125, Dallas, TX 75240	$	17,040	Dec-22	Network facilities		25
9701 S. John Young Parkway, Orlando, FL 32819	$	25,440	May-23	Network facilities		540
50 NE 9th St, Miami, FL 3313	$	41,300	May-23	Network facilities		25
350 NW 215 St., Miami Gardens, FL 33169	$	29,254	May-23	Wireless internet network		100
8333 NW 53rd St, Doral, FL 33166	$	14,021	Jul-25	Wireless internet network		100
100 SE 2nd Street, Miami, FL 33131	$	36,466	Jan-24	Wireless internet network		100
9055 SW 73rd Ct, Miami, FL 33156	$	8,787	Dec-23	Wireless internet network		100
9517 Fontainebleau Blvd., Miami, FL 33172	$	11,907	Aug-24	Wireless internet network		100

ITEM 3. LEGAL PROCEEDINGS.

WeFrom time to time, the Company may become a defendant in litigation arising ~~believe~~out ~~that~~of ~~our~~the ~~leased~~ordinary ~~facilities~~course ~~are~~of ~~suitable~~business. ~~and~~As ~~adequate~~of ~~for~~July ~~their~~31, ~~intended~~2023, ~~use~~the Company is not party to any material pending legal proceedings.

ITEM 3 4. ~~LEGAL~~MINE ~~PROCEEDINGS.~~SAFETY DISCLOSURES

~~On April~~Not 16, 2021, a lawsuit was filed against T3 by Carolina Financial Securities, LLC (“CFS”), in North Carolina State Court (Forsyth County Superior Court), claiming that T3 owed CFS a placement fee of $576,000 pursuant to an engagement letter between the two companiesApplicable. The Company removed the case to the United States District Court for the Middle District of North Carolina. The Company mediated the case, and on September 21, 2021, entered into a settlement agreement that resolved all issues and claims related to the lawsuit. Pursuant to the settlement agreement, T3 agreed to pay CFS a total of $300,000, payable as follows: $100,000 by October 15, 2021, and $200,000 payable in 15 monthly installments of $13,333.33 beginning November 15, 2021. As of July 31, 2021, and 2022, the outstanding balances related to the settlement were $300,000 and $80,000 respectively.

~~ITEM 4. MINE SAFETY DISCLOSURES~~8

~~Not~~PART ~~Applicable.~~II

8ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

~~PART~~Market IIfor Common Equity

~~ITEM~~Our 5common stock is quoted on the OTCQB under the symbol “DTGI”. ~~MARKET~~Price ~~FOR~~quotations ~~REGISTRANT’S~~on ~~COMMON~~the ~~EQUITY~~OTCQB reflect inter-dealer prices, ~~RELATED~~without retail ~~STOCKHOLDER~~mark-up, ~~MATTERS~~markdown, ~~AND~~or ~~ISSUER~~commission, ~~PURCHASES~~and OFmay ~~EQUITY~~not ~~SECURITIES~~necessarily represent actual transactions.

~~Market for Common Equity~~Holders

~~Our~~As ~~common~~of ~~stock~~October ~~is quoted on the OTCQB under the symbol “DTGI”. Price quotations on the OTCQB reflect inter-dealer prices~~10, ~~without retail mark-up~~2023, ~~markdown,~~there orwere ~~commission,~~approximately ~~and~~357 ~~may~~record ~~not~~holders ~~necessarily~~of ~~represent~~our ~~actual~~common ~~transactions~~stock.

~~Holders~~Dividends

AsWe ofhave ~~October~~not ~~20,~~paid ~~2022~~cash dividends on our common stock, ~~there~~and ~~were~~we ~~approximately~~do ~~346~~not ~~record~~anticipate ~~holders~~paying ofa ~~our~~dividend ~~Common~~in ~~Stock~~the foreseeable future.

~~Dividends~~Sales of Unregistered Securities

WeDuring ~~have~~the ~~not~~year ~~paid~~ended ~~cash~~July ~~dividends~~31, on2023, ~~our~~the Company issued 6,014,407 shares of common stock in connection with new convertible promissory notes sold to various Noteholders with conversion prices of $0.0956, $0.10, and we$0.15 doper ~~not~~share. ~~anticipate~~At ~~paying~~the atime ~~dividend~~of inissuances, the ~~foreseeable~~Company ~~future~~recognized the relative fair market value of the shares of common stock of approximately $463,000 as debt discount, received net proceeds of approximately $4,495,000 and it will be amortized to interest expense during the term of the promissory notes.

~~Equity~~During ~~Compensation~~the ~~Plans~~year ended July 31, 2023, the Company issued 6,170,000 shares of common stock as consideration for the extension of maturity dates for the convertible promissory notes with various Noteholders. The Company recognized the fair market value of the shares of common stock of approximately $693,000 which was recognized as interest at the time of each extension.

~~The~~On ~~following~~ April ~~table~~30, ~~provides~~2023, ~~information~~the ~~regarding~~Company ~~securities~~issued ~~that~~1,370,551 ~~have~~shares ~~been~~of orcommon ~~are~~stock ~~authorized~~in toconjunction bewith ~~issued~~incentive plan ~~under~~accomplishments ~~our~~to ~~equity~~Mr. ~~compensation plans~~Art asSmith, ofMr. ~~July~~Antonio 31Estrada, ~~2022~~and Mr. Craig Clement.

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity Compensation plans approved by security holders		-0-		--		-0-
Equity Compensation Plans not approved by security holders		9,130,000	$	0.17		-0-
Total		9,130,000	$	0.17		-0-

On May 10 2023, the Company issued 1,180,000 shares of common stock to one option holder for the exercise of 1,180,000 stock options, with an exercise price of $0.042 per share and secured $49,560 in proceeds.

~~Sales~~On September 28, 2022, December 1, 2022, January 30, 2023, and May 19, 2023, the Company issued 105,726, 320,192, 429,132, and 83,333 shares of ~~Unregistered~~common ~~Securities~~stock, respectively, to four Series A Preferred Shareholders who converted 225,000 Series A Convertible Preferred Stock shares and $56,516 of accrued dividends.

On ~~August~~October 3112, ~~2021~~2022, ~~the~~October ~~Company~~19, ~~entered~~2022 ~~into~~and aNovember ~~$75~~17,~~000~~ ~~promissory note~~2022, ~~with~~the aCompany ~~maturity~~issued ~~date of August 31~~96,774, ~~2022~~63,854, and ~~annual interest rate of 8%. In conjunction with the promissory note~~9,677 ~~we issued 150,000~~ shares of common stock~~. At the time of issuance~~, ~~the Company recognized~~respectively, ~~the~~to ~~relative~~nine ~~fair~~warrant ~~market~~holders ~~value~~for of the ~~shares~~exercise of ~~$13~~170,~~635~~305 ~~as debt discount~~warrants, ~~and~~with itan ~~will~~exercise beprice ~~amortized~~of to$0.13 ~~interest~~per ~~expense~~warrant ~~during~~and ~~the~~secured ~~term of~~$22,139 ~~the~~in ~~promissory note~~proceeds.

On ~~September~~November 297, ~~2021,~~2022 and ~~the~~April ~~Company entered into a $75~~18,~~000~~ ~~promissory note~~2023, ~~with~~the aCompany ~~maturity~~issued ~~date of September 29~~1, ~~2022~~500, 000 and ~~annual interest rate of 8%. In conjunction with the promissory note~~1, ~~we issued 150~~500,000 shares of common stock., ~~At the time of issuance~~respectively, ~~the~~in ~~Company~~connection ~~recognized the~~with ~~relative fair market value of~~ the ~~shares~~conversion of $10150,~~788~~000 asof ~~debt~~convertible ~~discount,~~promissory ~~and~~notes itwith a ~~will~~conversion beprice ~~amortized~~of to$0.05 ~~interest~~per ~~expense~~share ~~during~~to ~~the~~one ~~term of the promissory note~~Noteholder.

OnThe ~~October~~sales ~~22,~~and ~~2021,~~issuances of the ~~Company~~securities ~~entered~~described ~~into~~above awere ~~$150,000~~made ~~promissory~~pursuant ~~note,~~to ~~with~~the aexemptions ~~maturity~~from ~~date~~registration contained into Section 4(a)(2) of ~~October~~the ~~22,~~Securities ~~2022~~Act of 1933, as amended (the “Securities Act”) and ~~annual~~Regulation ~~interest rate~~D ofunder 8%the Securities Act. InEach ~~conjunction~~purchaser represented ~~with~~that ~~the~~such ~~promissory~~purchaser’s ~~note,~~intention weto ~~issued~~acquire ~~300,000~~the shares offor ~~common~~investment ~~stock~~only and not with a view toward distribution. We Atrequested ~~the~~our ~~time~~stock oftransfer ~~issuance,~~agent ~~the~~to ~~Company~~affix ~~recognized~~ appropriate legends to the ~~relative~~stock ~~fair~~certificate ~~market~~issued ~~value~~to ofeach purchaser and the ~~shares~~transfer agent ofaffixed ~~$13,965~~the asappropriate ~~debt~~legends. ~~discount,~~Each ~~and~~purchaser itwas ~~will~~given beadequate ~~amortized~~access to ~~interest~~sufficient ~~expense~~information ~~during~~about ~~the~~us ~~term~~to make an informed investment decision. None of the ~~promissory~~securities ~~note~~were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.

OnITEM ~~January 21, 2022, the Company secured two promissory notes for $460,000, with a maturity date of October 21, 2022, and annual interest rate of 8%~~6. In conjunction with the promissory notes, we issued 600,000 shares of common stock. At the time of issuance, the Company recognized the relative fair market value of the shares of $60,892 as debt discount, and it will be amortized to interest expense during the term of the promissory note.[RESERVED]

OnITEM ~~February 14, 2022, the Company entered into a note extension agreement, and as consideration for the extension, the Company issued 250,000 shares of common stock with a fair market value of $34,150~~7. InMANAGEMENT’S ~~addition,~~DISCUSSION ~~the~~AND ~~Company~~ANALYSIS ~~agreed~~OF toFINANCIAL ~~add~~CONDITION ~~$75,000~~AND toRESULTS ~~the~~OF ~~principal amount outstanding~~OPERATIONS. The Company evaluated the amendment and accounted for these changes as an extinguishment of debt. The Company recognized a loss on extinguishment of debt for both the $75,000 increase in principal and $34,150 fair value of shares issued and charged the total $109,150 to interest expense at the time of the extension.

OnThis Annual Report on Form 10-K contains “forward-looking ~~July~~statements” 1pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements describe management’s beliefs and expectations about the future. We have identified forward-looking statements by using words such as “anticipate,” ~~2022~~“believe,” “could,” “estimate,” “may,” “expect,” and “intend,” or words of similar import. Although we believe these expectations are reasonable, our operations involve a number of risks and uncertainties, and actual results may be materially different than our expectations. Factors that would cause or contribute to such differences include, actions by significant customers or competitors, reliance on key customers and lack of new customer business, continued acceptance of the Company’s ~~issued~~products ain ~~total~~the marketplace, lack of 1new products,~~500~~ innovation,~~000~~ ~~shares~~and technological changes, competitive developments, general domestic and International economic conditions such as inflation and rising interest rates, the Company’s past due promissory notes (including receipt of ~~common~~default ~~stock~~notices, ~~for~~lack of liquidity, our current going concern, the ~~professional~~medical ~~services~~leave ~~provided~~of byabsence of aMr. ~~consultant~~Art Smith (our CEO), and the decreased availability of capital. The factors listed above are not exhaustive. Other sections of Atthis Form 10-K include additional factors that could materially and adversely impact the Company’s business, financial condition and results of operations. Moreover, the Company operates in a very competitive and rapidly changing environment. New factors emerge from time to time and it is not possible for management to predict the impact of ~~issuance~~all these factors on the Company’s business, financial condition or results of operations or the ~~fair~~extent ~~market~~to ~~value~~which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. Any or all of the ~~common~~forward-looking ~~stock~~statements ~~issued~~contained in ~~was~~this ~~$125~~Form 10-K and any other public statement made by the Company or its management may turn out to be incorrect. The Company expressly disclaims any obligation to update or revise any forward-looking statements,~~250~~ whether as a result of new information, future events or otherwise, except as required by law.

OnThe ~~July~~following ~~26,~~is ~~2022,~~a ~~the~~discussion ~~Company~~of ~~entered~~the ~~into~~consolidated afinancial ~~note~~condition ~~extension agreement,~~ and asresults ~~consideration~~of operations for the ~~extension,~~fiscal ~~the~~years ~~Company~~ended ~~issued~~July ~~300~~31,~~000~~ 2023, ~~shares~~and of2022, ~~common~~and ~~stock~~should ~~with~~be aread ~~fair~~in ~~value~~conjunction ofwith ~~$30,000.~~our InConsolidated ~~addition~~Financial Statements, the ~~Company~~Notes ~~agreed to add $50~~thereto,~~000~~ toand the ~~principal~~other ~~amount~~financial ~~outstanding.~~information ~~The~~included ~~Company~~elsewhere ~~evaluated~~in ~~the~~this ~~amendment~~Annual ~~and~~Report ~~accounted~~on ~~for~~Form ~~these~~10-K. ~~changes~~For aspurposes ~~an extinguishment~~ of ~~debt.~~the ~~The~~following ~~Company~~discussion, ~~recognized~~FY a2023 ~~loss~~or on2023 ~~extinguishment of~~refers ~~debt~~to ~~for~~the ~~both~~year ~~the~~ended July ~~$50~~31,~~000~~ ~~increase in principal and $30~~2023,~~000~~ ~~fair value of shares issued~~ and ~~charged~~FY ~~the~~2022 ~~total~~or ~~$80,000~~2022 refers to ~~interest expense at~~ the ~~time~~year ofended ~~the~~July ~~extension~~31, 2022.

OnRecent ~~July~~Activity 27, 2022, the Company entered into a variable convertible promissory note with an aggregate principal amount of $165,000, annual interest rate of 8% and a maturity date of April 27, 2023. After payment of transaction-related expenses and closing fees of $19,500, net proceeds to the Company from the Note totaled $100,000. Additionally, the Company recorded $19,500 as a discount to the Note which is amortized over the term of the note. In connection with the execution of the note, the Company issued 300,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $22,093 as debt discount, and it will be amortized to interest expense during the term of the promissory note.

OnTermination ~~various dates in August and September 2022, the Company entered into several note extension agreements and as consideration for the extensions, the Company issued a total~~ of ~~1,460,000~~MEOA ~~shares~~Business ~~with a fair value of $179,680. The Company also agreed to add a total of $242,500 to the principal amounts owed to the noteholders.~~Combination

On ~~October~~August 2130, 2022, ~~the~~Digerati ~~Company~~ entered into ~~several~~a ~~note~~Business ~~extension~~Combination ~~agreements and as consideration for the extensions~~Agreement, ~~the~~by ~~Company~~and ~~issued 600,000~~among ~~shares with a fair value of $72~~Digerati,~~660.~~ ~~The Company agreed to add a total of $60~~MEOA,~~000~~ toand ~~the~~Merger ~~principal amounts owed to the noteholders~~Sub.

The ~~sales~~ Business ~~and~~Combination ~~issuances~~Agreement ofprovided, ~~the~~among ~~securities~~other ~~described~~things, ~~above~~that ~~were~~Merger ~~made~~Sub ~~pursuant~~was to ~~the~~merge with ~~exemptions~~and ~~from~~into ~~registration~~Digerati, ~~contained~~with ~~into~~Digerati ~~Section~~as ~~4(a)(2) of~~ the ~~Securities~~surviving ~~Act~~company ~~and~~in ~~Regulation D under~~ the ~~Securities~~merger ~~Act.~~and, ~~Each~~after ~~purchaser~~giving effect ~~represented~~to ~~that~~ such ~~purchaser’s~~merger, ~~intention~~Digerati ~~to acquire~~being ~~the~~a ~~shares~~wholly-owned ~~for~~subsidiary ~~investment~~of ~~only~~MEOA. ~~and~~In ~~not~~addition, ~~with~~MEOA was ato ~~view~~be ~~toward~~renamed ~~distribution.~~Verve WeTechnologies ~~requested~~Corporation. ~~our~~In ~~stock~~accordance ~~transfer~~with ~~agent~~the toterms ~~affix~~and ~~appropriate~~subject ~~legends~~ to the ~~stock~~conditions ~~certificate~~of ~~issued~~the toBusiness ~~each~~Combination ~~purchaser~~Agreement, ~~and~~at the ~~transfer~~closing, ~~agent~~among ~~affixed~~other ~~the~~things, each ~~appropriate~~share ~~legends.~~of ~~Each~~Digerati ~~purchaser~~common ~~was given~~stock ~~adequate~~outstanding ~~access~~as toof ~~sufficient~~immediately ~~information~~prior ~~about us~~ to ~~make~~the anclosing ~~informed~~was to ~~investment~~be ~~decision.~~exchanged ~~Except~~for asshares ~~described~~of inMEOA ~~this~~common ~~prospectus~~stock, ~~none~~ ofpar ~~the~~value ~~securities~~$0.0001 ~~were~~per ~~sold~~share, ~~through~~based anupon the ~~underwriter~~exchange ~~and~~ratio ~~accordingly,~~set ~~there~~forth ~~were~~in nothe ~~underwriting~~Business ~~discounts~~Combination ~~or commissions involved~~Agreement.

On ~~ITEM~~ June 615, 2023, Digerati terminated the Business Combination Agreement pursuant to Section 7.1(d) ~~[RESERVED]~~of the Business Combination Agreement because the transaction did not close on or prior to the June 15, 2023 termination date. On May 24, 2023, The Nasdaq Stock Market halted the trading of MEOA securities. Following this halt, the parties to the Business Combination Agreement did not obtain, prior to June 15, 2023, Nasdaq’s approval of the initial listing application for the combined company in connection with the transactions contemplated by the Business Combination Agreement.

~~Not~~As ~~Applicable~~of July 31, 2023, neither party has sought a termination fee pursuant to ~~smaller~~the ~~reporting~~Business ~~companies~~Combination Agreement.

~~ITEM~~Results 7.of ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~Operations

~~This~~Cloud ~~Annual~~Software ~~Report~~and ~~contains~~Service ~~“forward-looking~~Revenue. ~~statements”~~Cloud ~~that~~software ~~describe~~and ~~management’s~~service ~~beliefs~~revenue ~~and~~increased ~~expectations~~by ~~about~~$7,469,000, or 31%, from the ~~future~~year ended July 31, 2022 as compared to the year ended July 31, 2023. The increase in revenue is primarily attributed to the increase in total customers between Weperiods ~~have~~due ~~identified~~to ~~forward-looking~~the ~~statements~~acquisitions byof ~~using~~Skynet ~~words~~in ~~such~~December as2021 ~~“anticipate,”~~and ~~“believe,”~~of ~~“could,”~~Next Level Internet in February 2022. Our total number of customers ~~“estimate,”~~increased ~~“may~~from 4,”023 ~~“expect~~for the year ended July 31,” ~~and~~2022 ~~“intend~~to 4,”671 orcustomers ~~words~~for ofthe ~~similar~~year ~~import~~ended July 31, 2023. ~~Although~~As wepart ~~believe~~of the acquisitions, ~~these~~our ~~expectations~~primary ~~are~~emphasis ~~reasonable,~~is ~~our~~on ~~operations~~integrating ~~involve~~the asecured ~~number~~customers ofbase, ~~risks~~consolidating products and ~~uncertainties~~services, ~~and~~retaining ~~actual~~the ~~results~~monthly ~~may~~recuring revenue, beand ~~materially~~providing ~~different than~~exceptional ~~our~~customer ~~expectations~~support.

~~The~~Cost ~~following~~of isServices a(exclusive ~~discussion~~ of ~~the~~depreciation ~~consolidated~~and ~~financial~~amortization). ~~condition~~The ~~and~~cost ~~results~~ of ~~operations~~services ~~for~~increased ~~the~~by ~~fiscal~~$1,940,000, ~~years~~or ~~ended~~21%, from the year ended July 31, 2022~~, and~~ ~~2021,~~as ~~and~~compared ~~should~~to bethe ~~read~~year inended ~~conjunction~~July ~~with~~31, ~~our~~2023. ~~Consolidated~~Our ~~Financial~~total ~~Statements,~~number ~~the~~of ~~Notes~~customers ~~thereto~~increased from 4,023 ~~and~~for the ~~other~~year ~~financial~~ended ~~information~~July ~~included~~31, ~~elsewhere~~2022 into ~~this~~4,671 ~~annual~~customers ~~report~~for onthe ~~Form~~year ~~10-K~~ended July 31, 2023. ~~For~~Our ~~purposes~~consolidated ofgross ~~the~~margin ~~following~~improved ~~discussion~~by $5,529,000, FYor ~~2022~~37%, orfrom the year ended July 31, 2022 ~~refers~~as compared to the year ended July 31, ~~2022,~~2023. ~~and~~We FYare ~~2021~~not oraware ~~2021~~of ~~refers~~any events that are reasonably likely to cause a material change in the ~~year~~relationship ~~ended~~between ~~July~~our ~~31,~~costs ~~2021~~and our revenues.

~~Recent~~Selling, General and Administrative (SG&A) ~~Activity~~Expenses (exclusive of legal and professional fees and stock compensation expense). SG&A expenses increased by $4,744,000, or 39%, from the year ended July 31, 2022 as compared to year ended July 31, 2023. The increase in SG&A is attributed to the acquisition of Skynet in December 2021 and the acquisition of Next Level Internet in February 2022; the Company absorbed all of the employees responsible for service delivery for the customer base, technical support, sales, customer service, and administration.

~~Acquisitions~~Stock Compensation expense. Stock compensation expenses increased by $657,000, or 293%, from the year ended July 31, 2022 as compared to the year ended July 31, 2023. The increase to stock-based compensation expense was primarily due to stock modifications (the exchange and extension of the expiration date) on 3,460,000 previously issued stock options to various employees until December 1, 2027. In addition, the Company issued 5,895,000 new stock options to company executives and to the Chairman of the Board of the Directors which vested immediately and have an expiration date of December 1, 2027.

OnLegal and professional fees. Legal and ~~February~~professional 4fees increased by $497,000, ~~2022~~or 16%, from the ~~Company~~year ~~closed~~ended onJuly 31, 2022 to the ~~acquisition~~year ofended ~~Next~~July ~~Level~~31, ~~Internet~~2023, ~~Inc.~~which ~~(“NextLevel”).~~include ~~NextLevel~~legal and professional fees that relate to due diligence, ~~based~~audits infor ~~San Diego~~the acquisitions, ~~California~~purchase price allocation, islegal ~~engaged~~fees paid in accordance with the ~~business~~Credit Agreement, dated as of ~~providing~~November ~~cloud~~17, ~~communications~~2020 (as amended, ~~Unified~~supplemented ~~Communications~~or asotherwise amodified ~~Service~~from (time to time, the “~~UCaaS~~Credit Agreement”), ~~collaboration,~~ ~~contact~~among ~~center~~the Operating Subsidiaries, ~~managed~~Post ~~broadband~~Road ~~connectivity~~Special ~~and~~Opportunity ~~other~~Fund ~~voice~~II ~~and~~LLP ~~data~~(“PRSOF”), ~~services~~as toa lender, the other ~~SMB~~lenders ~~market.~~party ~~The~~thereto ~~acquisition~~and ~~of NextLevel~~Post ~~expands~~Road ~~the~~Administrative ~~Company’s~~LLC ~~growing~~(“PR ~~nationwide~~Administrative” ~~footprint~~ and, ~~adds~~together awith ~~strong~~its ~~West~~affiliate ~~Coast~~PRSOF, “Post ~~presence~~Road”), ~~with~~as ~~nearly~~administrative 1agent for the lenders,~~000~~ ~~SMB~~to ~~clients in~~counsel ~~California~~for Post Road, and investor relations.

OnBad ~~December~~debt. ~~31,~~Bad ~~2021,~~debt ~~the~~increased ~~Company~~by ~~closed~~$17,000, onor ~~the~~17%, ~~acquisition~~from ~~of substantially all of~~ the ~~assets~~year ofended ~~Skynet~~July ~~Telecom LLC (“Skynet”)~~31, a ~~Texas-based~~2022 ~~provider~~to ofthe ~~Voice~~year ~~Over~~ended ~~Internet~~July ~~Protocol (“VoIP”) communication services~~31, ~~UCaaS,~~2023. ~~and~~The ~~broadband~~increase ~~connectivity services~~is attributed to the ~~SMB~~recognition ~~market.~~of ~~Pursuant~~$115,000 toin ~~the~~bad ~~Asset~~debt ~~Purchase~~for ~~Agreement,~~accounts ~~the~~deemed ~~Company~~uncollectible ~~acquired~~during the ~~customer~~year ~~base,~~ended ~~certain~~July ~~equipment~~31, ~~certain intellectual~~2023. ~~property,~~During ~~inventory,~~the ~~contract~~year ~~rights~~ended July 31, ~~software and other licenses~~2022, ~~and~~the ~~miscellaneous~~Company ~~assets~~recognized ~~used~~$98,000 in ~~connection~~bad ~~with the operation of Skynet’s telecommunications business~~debt.

OnDepreciation ~~November~~and 17amortization. Depreciation and amortization increased by $993,000, ~~2020~~or 34%, from the ~~Company~~year ~~closed~~ended onJuly 31, 2022 to the ~~acquisitions~~year ofended July ~~Nexogy~~31, ~~Inc~~2023. ~~(“Nexogy”),~~The increase is primarily attributed to the acquisitions and ~~ActivePBX~~related ~~(“ActivePBX”),~~amortization for intangible assets and the additional ~~leading~~depreciation ~~providers~~related ofto ~~cloud~~the ~~communication,~~assets ~~UCaaS,~~acquired from Skynet and ~~broadband~~NextLevel. ~~solutions~~In ~~tailored~~addition, the Company experienced an increase in amortization for ~~businesses~~Right-of-Use assets.

~~As a~~Operating ~~combined~~loss. ~~business,~~The ~~NextLevel,~~Company ~~Skynet,~~reported ~~Nexogy,~~an operating ~~ActivePBX,~~loss ~~and~~of T3$5,055,000 ~~will~~for ~~serve~~the ~~over~~year ~~4,000~~ended ~~business~~July ~~customers~~31, ~~and~~2023 ~~approximately~~as ~~45,000 business~~compared ~~users.~~to ~~The~~an ~~business~~operating ~~model~~loss of ~~the~~$3,676,000 ~~combined~~for ~~entities~~the isyear ~~supported~~ended byJuly ~~strong~~31, 2022. ~~and~~The ~~predictable~~increase ~~recurring~~in ~~revenue~~operating ~~with~~loss ~~high~~of ~~gross margins~~$1,379,000, ~~under~~or ~~contracts~~38%, ~~with~~between ~~business~~periods ~~customers~~is inprimarily ~~various~~due ~~industries~~to ~~including~~net ~~banking,~~increases ~~healthcare,~~in ~~financial~~SG&A (including stock-based ~~services,~~compensation) ~~legal,~~of ~~insurance~~$5, ~~hotels~~401, ~~real estate~~000, ~~staffing,~~an ~~municipalities,~~increase ~~food~~in ~~services,~~legal and ~~education.~~professional Wefees ~~expect~~of ~~the~~$497,000, ~~acquisitions~~increases toin ~~have~~cost aof ~~positive~~services ~~impact on~~(exclusive ~~the~~of ~~revenues~~depreciation and ~~operating~~amortization) ~~income~~ of ~~the~~$1,940,000, ~~Company~~$17,000 ~~during~~for ~~the~~bad ~~fiscal~~debt, ~~year~~and ~~that~~$993,000 ~~will~~for ~~end~~depreciation onand ~~July~~amortization 31expense, ~~2023,~~partially offset ~~due~~by to the ~~anticipated~~improvement ~~cost~~in ~~synergies and~~gross ~~consolidation~~margin ~~savings~~of $5,529,000.

~~MEOA~~Gain ~~Business~~on ~~Combination~~derivative instruments. The gain on derivative instruments increased by $340,000, or 5%, from the year ended July 31, 2022 to the year ended July 31, 2023. We are required to re-measure all derivative instruments at the end of each reporting period and adjust those instruments to market. As a result of the re-measurement of all derivative instruments we recognized a gain or loss between periods.

~~On August~~Gain 30(loss) on extinguishment of debt. For the year ended July 31, ~~2022~~2023, ~~Digerati~~the ~~entered~~gain ~~into~~on aextinguishment ~~Business~~of ~~Combination~~debt ~~Agreement~~was ~~(as~~$55,000. itFor ~~may~~the beyear ~~amended~~ended July 31, ~~supplemented~~2022, orthe ~~otherwise~~loss ~~modified~~on ~~from~~extinguishment of debt was $5,481,000. ~~time~~On toDecember ~~time~~20, 2021, the ~~“Business~~Operating ~~Combination~~Subsidiaries and Post Road entered into an amendment to the Credit Agreement (the “Amendment”) in connection with which Verve Cloud Nevada incurred additional indebtedness under the Credit Agreement in a principal amount of $3,500,000, accrued byinterest of $187,442, and ~~among~~an ~~Digerati~~amendment fee of $1,418,744 ~~Minority~~which ~~Equality~~were ~~Opportunities~~recapitalized ~~Acquisition Inc~~under the revised A&R Term Loan A. Pursuant to the Amendment, a$6,000,000 ~~Delaware~~was ~~corporation~~applied ~~(“MEOA”)~~to fund the acquisition of Skynet Telecom LLC’s assets, professional fees and ~~Merger~~other ~~Sub,~~fees and ~~Inc~~expenses with respect to the transactions contemplated by the Amendment and for general corporate and working capital purposes of the Operating Subsidiaries., aThe ~~Delaware~~Company ~~corporation~~determined that the recapitalization of the debt under the Credit Agreement under the Amendment constituted an extinguishment of debt and recognized a ~~wholly~~loss ~~owned~~on ~~subsidiary~~extinguishment of debt of $5,480,000, which is comprises the full amortization debt discount of ~~MEOA~~$4,061,000 ~~(“Merger~~and ~~Sub”)~~amendment fees of $1,419,000.

~~The Business Combination Agreement and the transactions contemplated thereby were approved by the board of directors of each of MEOA and Digerati.~~11

~~The~~Other ~~Business~~income ~~Combination~~(expense). ~~Agreement~~Other ~~provides,~~income ~~among~~(expense) ~~other~~increased ~~things~~by $439,000, ~~that~~or ~~Merger Sub will merge with and into Digerati~~1,688%, ~~with~~from ~~Digerati as~~ the ~~surviving~~ ~~company~~year inended ~~the~~July ~~merger and~~31, ~~after~~2022 ~~giving effect~~ to ~~such~~the ~~merger,~~year ~~Digerati~~ended ~~shall be a wholly-owned subsidiary of MEOA (the “Merger”).~~July ~~In addition~~31, ~~MEOA will be renamed Digerati Holdings, Inc~~2023. The ~~Merger~~increase ~~and~~in ~~the~~ other ~~transactions~~income ~~contemplated~~is bymostly ~~the~~due ~~Business~~to ~~Combination Agreement~~the ~~are~~recognition ~~hereinafter~~of ~~referred~~a togain ason ~~the~~a ~~“Business~~settlement ~~Combination”.~~of ~~Other~~conversion ~~capitalized~~premium ~~terms~~of ~~used~~$466,000 ~~but not defined,~~from ~~herein,~~a ~~shall~~convertible ~~have the respective meanings given to such terms in the Business Combination Agreement~~note.

11Interest expense. Interest expense increased by $5,338,000, or 89%, from the year ended July 31, 2022 to the year ended July 31, 2023. During the year ended July 31, 2023, the Company recognized amortization of debt discount of $2,930,000 related to the adjustment to the present value of various convertible notes, debt, and warrants. Additionally, the Company recognized $2,289,000 in interest cash payments to Post Road and other lenders, accrual of approximately $2,465,000 for interest expense for various promissory notes and $589,000 fair value of shares issued, as well $2,886,361 consisting of $2,108,724 interest to Post Road, and $777,637 added to various other promissory notes, all charged to interest expense as consideration for extension of the maturity dates.

~~The~~Income tax ~~Business~~expense. ~~Combination~~During ~~is expected to close in~~ the ~~first~~year ~~calendar quarter~~ended ofJuly 31, 2023, ~~following~~ the ~~receipt~~Company ofrecognized ~~the~~an ~~required~~income ~~approval~~tax byexpense ~~the stockholders~~ of ~~MEOA and Digerati~~$192,000. ~~approval~~During by the ~~Nasdaq~~year ~~Stock~~ended ~~Market~~July ~~(“Nasdaq”) of MEOA’s initial listing application filed in connection with the Business Combination~~31, ~~and the~~2022 ~~fulfillment of other customary closing conditions. There can be no assurance that~~ the Company ~~will~~recognized bean ~~able~~income totax ~~close~~expense ~~the~~of ~~Business Combination or that it will approve by Nasdaq as per the stipulated timeline. If the Company is unable to complete the Business Combination as planned~~$419, ~~the Company could be required to explore other options, currently there’s no other consideration being explored~~000. ~~For further information, please refer to Note 18 to the Consolidated Financial Statements.~~

~~The Business~~Net ~~Combination~~loss ~~Agreement may be terminated under certain customary and limited circumstances at any time prior to the closing,~~ including, ~~without~~noncontrolling ~~limitation, (i) by the mutual written consent of MEOA and Digerati; (ii) by MEOA, subject to certain exceptions, if~~interest. ~~any~~Net ofloss ~~the representations or warranties made by Digerati are not true and correct or if Digerati fails to perform any of its covenants or agreements under the Business Combination Agreement (~~including annoncontrolling ~~obligation~~interest tofor ~~consummate~~ the ~~closing)~~year ~~such~~ended ~~that~~July certain conditions to our obligations could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (A) thirty (30) days after written notice thereof31, ~~and~~2022 ~~(B)~~was ~~February 25~~$9, ~~2023 (the “Termination Date”); (iii) by Digerati~~354,000 ~~subject~~as tocompared ~~certain exceptions, if any of the representations or warranties made by our company or Merger Sub are not true and correct or if MEOA or Merger Sub fails~~ to ~~perform~~ ~~any of its covenants or agreements under~~ the ~~Business~~net ~~Combination~~loss ~~Agreement (including an obligation to consummate the closing) such that the condition to the obligations~~ of Digerati could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (A) thirty (30) days after written notice thereof$9, ~~and (B) the Termination Date; (iv) by either MEOA or Digerati~~529, ~~if the closing does~~000 ~~not~~for ~~occur on or prior to~~ the ~~Termination~~year ~~Date,~~ended ~~unless~~July the breach of any covenants or obligations under the Business Combination Agreement by the party seeking to terminate proximately caused the failure to consummate the transactions contemplated by the Business Combination Agreement; (v) by either MEOA or Digerati31, if (A) any governmental entity shall have issued an order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Business Combination Agreement and such order or other action shall have become final and non-appealable; or (B) if the Required MEOA Stockholder Consent is not obtained; (vi) by MEOA, if (A) Digerati does not deliver, or cause to be delivered to MEOA a Transaction Support Agreement duly executed by certain Digerati stockholders or (B) the Digerati stockholders meeting has been held, has concluded, the Digerati stockholders have duly voted, and Digerati stockholder approval was not obtained; (vii) by MEOA, if Digerati does not deliver, or cause to be delivered, to MEOA a duly executed copy of the PRG Resolution Agreement on or prior to October 15, 20222023. The ~~parties~~decrease are currently negotiating an extension to this deadline. There can be no assurance that an agreement on this matter will be reached; (viii) by Digerati, should MEOA not have timely taken such actions as are reasonably necessary to extend the period of time to complete an initial business combination for an additional period of three months from November 30, 2022; provided, that it shall be the obligation of Digerati to timely make the deposit into the Trust Account in ~~connection~~net ~~with~~loss ~~such~~including ~~extension,~~noncontrolling ~~and~~interest ~~Digerati~~between ~~shall~~periods ~~not~~is ~~have~~primarily adue ~~right~~ to ~~terminate the Business Combination Agreement as~~ a ~~result~~decrease ~~of Digerati’s failure to make such deposit; (ix) by MEOA should Digerati not deposit into the Trust Account~~ in atotal ~~timely~~other ~~manner the~~expense ~~funds necessary to extend the period for our company to complete an initial business combination for an additional period~~ of ~~three months from November 30~~$1, ~~2022~~204,000 inpartially ~~accordance~~offset ~~with, and as required pursuant to, the Business Combination Agreement; and (x)~~ by ~~MEOA~~an ~~should: (A)~~increase ~~Nasdaq not approve the initial listing application for the combined company with Nasdaq~~ in ~~connection with~~ the ~~Business~~operating ~~Combination; (B)~~loss ~~the combined company not have satisfied all applicable initial listing requirements~~ of ~~Nasdaq; or (C) the common stock of the combined company not have been approved for listing on Nasdaq prior to the date of the closing~~$1,379,000.

~~If the~~Net ~~Business~~loss ~~Combination~~attributable ~~Agreement is validly terminated, none of the parties~~ to ~~the~~Digerati’s ~~Business Combination Agreement will have any liability~~shareholders. orNet ~~any~~loss ~~further~~for ~~obligation under~~ the ~~Business~~year ~~Combination~~ended ~~Agreement~~July ~~other than customary confidentiality obligations~~31, ~~except~~2023 inwas the case of a willful breach of any covenant or agreement under the Business Combination Agreement or fraud, provided, that (A) if MEOA terminates the Business Combination Agreement pursuant to clauses (ii), (vi), (vii) or (viii) of the preceding paragraph, Digerati shall pay to MEOA, promptly following such termination, and in any event within not less than five business days following delivery of notice of termination, a termination fee in the amount of $28,~~000~~291,000, ~~(B)~~as ifcompared ~~Digerati terminates the Business Combination Agreement pursuant~~ to clauses (iii) or (ix) of the preceding paragraph, MEOA shall pay to Digerati promptly following such termination, and in any event within not less than five business days following delivery of notice of termination, a ~~termination~~net ~~fee~~loss infor the ~~amount~~year ofended ~~$2,000,000~~July ~~and (C) in the event of a termination by MEOA pursuant to clauses (ix) or (x) of the preceding paragraph~~31, ~~Digerati~~2022 ~~shall pay to us, promptly following such termination, and in any event within not less than five business days following delivery~~ of ~~notice of termination, a termination fee in the amount of~~ $18,~~265~~013,000.

12Deemed dividend on Series A Convertible Preferred Stock. Dividend accrued on convertible preferred stock for the year ended July 31, 2023 and 2022 was $8,000 and $19,000, respectively.

~~Forbearance~~Net loss attributable to Digerati’s ~~Agreement~~common shareholders. Net loss for the year ended July 31, 2023 was $8,299,000 compared to a net loss for the year ended July 31, 2022 of $8,032,000.

~~On June~~Non-GAAP ~~13,~~Financial ~~2022,~~Measures T3- ~~Communications, Inc., a Nevada entity that is a majority owned subsidiary~~ Reconciliation of ~~the~~Net ~~Company~~Income (~~“T3 Nevada”~~Loss)~~, four~~ ~~operating entities (Shift8 Networks, Inc., dba, T3 Communications (a Texas entity), T3 Communications, Inc. (a Florida entity), Nexogy Inc., and NextLevel) collectively referred~~ to asAdjusted ~~the~~EBITDA ~~“Guarantors”~~– ~~(T3~~OPCO ~~Nevada~~ and ~~the~~Adjusted ~~Guarantors,~~EBITDA ~~collectively,~~– the “Loan Parties”), Post Road Administrative LLC (the “Agent”) and its affiliate Post Road Special Opportunity Fund II LLP (collectively, with the Agent, “Post Road”), entered into a Forbearance Agreement and Third Amendment to Credit Agreement (“Forbearance Agreement”).Income

~~The Forbearance~~EBITDA ~~Agreement~~from ~~was~~operations ~~entered~~and ~~into~~income, ~~because~~as ~~certain~~adjusted, ~~events~~are ofnon-GAAP ~~default~~measures and ~~related~~should be considered in addition to, ~~both~~not ~~the~~as ~~Credit~~a ~~Agreement~~substitute for, net income (~~originally~~loss), ~~entered~~cash ~~into~~flow and other measures of financial performance reported in ~~November~~accordance ~~2020~~with ~~and~~GAAP. ~~amended~~In inaddition, ~~December~~this ~~2021~~measure does not reflect cash available to fund requirements and ~~February~~excludes ~~2022)~~items, such as corporate expenses, transactional legal expenses, stock option expense, and ~~the~~depreciation ~~Joinder~~and ~~(entered~~amortization, ~~into~~which are significant components in ~~February~~assessing ~~2022)~~the ~~have~~Company’s ~~occurred~~financial performance. The ~~events~~ Company believes that the presentation of ~~default~~EBITDA ~~related~~from tooperations ~~financial~~and ~~covenants~~income, as ~~were~~adjusted, ~~failure~~provides touseful ~~maintain~~information aregarding ~~Senior~~the ~~Leverage~~Company’s ~~Ratio~~operations ~~(as~~and ~~defined~~other infactors that affect the ~~Credit~~Company’s ~~Agreement)~~reported results. ofSpecifically, ~~less~~the Company believes that by excluding certain one-time or non-cash items such as transactional legal fees and ~~than~~depreciation ~~4.05~~and toamortization, ~~1.00~~as well as potential distortions between periods caused by factors such as financing and ~~failure~~capital tostructures, the ~~comply~~Company provides users of its consolidated financial statements with ainsight ~~Credit~~into ~~Agreement~~both ~~provision~~its ~~whereby~~operations as well as the ~~Loan~~factors ~~Parties~~that affect reported results between periods but which the Company believes are not ~~allowed~~representative toof ~~make~~its ~~annual~~operations. ~~Capital~~As a result, users of ~~Expenditures~~the ~~(as~~Company’s ~~defined~~consolidated financial statements are better able to evaluate changes in the ~~Credit~~financial ~~Agreement)~~consolidated ~~greater~~results ~~than~~of ~~$379,190~~the Company across different periods.

~~On October 17, 2022, and the Loan Parties and Post Road agreed to amend the Forbearance Agreement dated June 13, 2022, pursuant to an Amendment to Forbearance Agreement (the “Amendment”).~~12

The ~~Amendment~~following ~~was~~tables ~~entered~~provide ~~into~~information ~~because~~regarding certain ~~events~~non-GAAP offinancial ~~default~~measures ~~related~~for toDigerati ~~both~~for the ~~Credit~~years ~~Agreement~~ended ~~and~~July ~~the Joinder that had occurred prior to the parties’ entering into the Forbearance Agreement were continuing (the “Prior Existing Defaults”)~~31, ~~certain~~2023 ~~additional~~and ~~events~~2022. ofManagement ~~default~~utilizes ~~related~~these metrics to ~~the~~track ~~Credit~~and ~~Agreement~~forecast ~~had~~revenue ~~occurred~~trends ~~since the date of the Forbearance Agreement (the “Additional Existing Defaults”),~~ and ~~the~~expected ~~parties~~results ~~anticipated~~from ~~that additional events of default with respect to the Credit Agreement will occur (the “Anticipated Defaults”).~~operations:

~~The Additional~~Consolidated ~~Existing~~Statement ~~Defaults related to financial covenants were failure to maintain a Senior Leverage Ratio (as defined in the Credit Agreement)~~ of less than 4.06 to 1.00 for the fiscal quarter ended July 31, 2022, and failure to maintain Minimum Liquidity (as defined in the Credit Agreement) of $2.0 million for the fiscal quarter ended July 31, 2022. The Anticipated Defaults related to financial covenants are failure to maintain a Senior Leverage Ratio of less than 4.05 to 1.00 for the fiscal quarter ending October 31, 2022, and failure to maintain Minimum Liquidity of $2.0 million for the fiscal quarter ending October 31, 2022.Operations

~~The Additional~~(In Existing Defaults and Anticipated Defaults unrelated to financial covenants relate to the Loan Parties’ failure to deliver a compliance certificate for the fiscal quarter ended July 31, 2022, and ending October 31, 2022, respectively and, with respect to the Additional Existing Defaults, to timely deliver an executed copy of an amendment to a lease agreement.thousands)

Pursuant to the Amendment, Post Road agreed to forbear through the Amended Forbearance Period (as defined below) from (i) exercising its rights and remedies with regard to the Prior Existing Defaults, the Additional Existing Defaults, and the Anticipated Defaults and (ii) requiring compliance with the financial covenants set forth in Section 11.12 of the Credit Agreement. The “Amended Forbearance Period” is from June 13, 2022, through the earlier of (a) November 15, 2022, (b) the date on which any other event of default not enumerated in the Amendment occurs or is deemed to have occurred, or (c) the date of any failure of any Loan Party to comply with any term, condition, or provision of the Forbearance Agreement as amended by the Amendment. The Amendment does not constitute a waiver of the defaults enumerated therein nor does it impair the ability of Post Road to exercise its rights and remedies after the expiration of the Amended Forbearance Period.

	Year ended July 31,
	2023			2022			Variances			%
OPERATING REVENUES:
Cloud-based hosted services	$	31,623		$	24,154		$	7,469			31	%

Total operating revenues		31,623			24,154			7,469			31	%

Cost of services (exclusive of depreciation and amortization)		11,286			9,346			1,940			21	%
Selling, general and administrative expense		16,954			12,210			4,744			39	%
Stock compensation expense		881			224			657			293	%
Legal and professional fees		3,533			3,036			497			16	%
Bad debt		115			98			17			17	%
Depreciation and amortization expense		3,909			2,916			993			34	%

Total operating expenses		36,678			27,830			8,848			32	%

OPERATING LOSS		(5,055	)		(3,676	)		(1,379	)		38	%

OTHER INCOME (EXPENSE):
Gain (loss) on derivative instruments		6,526			6,186			340			5	%
Gain (loss) on extinguishment of debt		55			(5,481	)		5,536			-101	%
Other income (expense)		465			26			439			1688	%
Interest expense		(11,328	)		(5,990	)		(5,338	)		89	%
Income tax expense		(192	)		(419	)		227			-54	%
Total other income (expense)		(4,474	)		(5,678	)		1,204			-21	%
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		(9,529	)		(9,354	)		(175	)		2	%

Less: Net loss attributable to the noncontrolling interests		1,238			1,341			(103	)		-8	%

NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI’S SHAREHOLDERS	$	(8,291	)	$	(8,013	)	$	(278	)		3	%

Deemed dividend on Series A Convertible preferred stock		(8	)		(19	)		11			-58	%

NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI’S COMMON SHAREHOLDERS	$	(8,299	)	$	(8,032	)	$	(267	)		3	%

The events of default unrelated to financial covenants were the Loan Parties’ failure to: (a) deliver certain certificates, financial information and projections, lease, landlord, and control agreements, and evidence of a UCC-3 filing; (b) close or consolidate certain bank accounts; (c) provide ten (10) business days’ notice prior to the Company filing certain filings with the Securities and Exchange Commission (the “SEC”) and the Nevada Secretary of State; and (d) engage an industry consultant acceptable to the Agent to consult with the Loan Parties on integration strategy, future acquisitions, operating performance, and various business issues.13

13Reconciliation of Net Income (Loss) to Adjusted EBITDA - OPCO, Net of Non-Cash Expenses & Transactional

~~The~~(In Company anticipates implementing remedies by November 15, 2022, to resolve the financial covenants breaches and the breaches regarding delivering a compliance certificate, financial projections, and a landlord agreement along with engaging an industry consultant. The Company and Post Road have agreed to work in good faith to adjust the financial covenants set forth in Section 11.12 of the Credit Agreement to include the financial impact of the acquisition of Skynet and Next Level. As of the date of this filing, the Company cannot predict the final outcome of the negotiations with Post Road. For further information, please refer to Note 10 to the Consolidated Financial Statements.thousands)

Key Performance indicators:

	Year ended July 31,
	2023			2022			Variances			%
NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI’S SHAREHOLDERS, as reported	$	(8,291	)	$	(8,013	)	$	(278	)		3	%

EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP
ADJUSTMENTS:
Stock compensation & warrant expense		881			224			657			293	%
Corp Expenses (Net of stock compensation, Legal fees & Transactional cost)		1,529			1,385			144			10	%
Legal, professional fees & transactional costs		3,510			2,703			807			30	%
Depreciation and amortization expense		3,909			2,916			993			34	%
OTHER ADJUSTMENTS
Gain (loss) on derivative instruments		(6,526	)		(6,186	)		(340	)		5	%
Gain (loss) on extinguishment of debt		(55	)		5,481			(5,536	)		-101	%
Other income (expense)		(465	)		(26	)		(439	)		1688	%
Interest expense		11,328			5,990			5,338			89	%
Income tax expense		192			419			(227	)		-54	%
Less: Net loss attributable to the noncontrolling interests		(1,238	)		(1,341	)		103			-8	%
ADJUSTED EBITDA – OPCO	$	4,774		$	3,552		$	1,222			34	%
ADD-BACKS Expenses
Corp Expenses (Net of stock compensation, Legal fees & Transactional cost)		1,529			1,385			144			10	%
ADJUSTED EBITDA – INCOME	$	3,245		$	2,167		$	1,078			50	%

EBITDA from operations, as adjusted is a non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as corporate expenses, transactional legal expenses, stock option expense, and depreciation and amortization, which are significant components in assessing the Company’s financial performance. The Company believes that the presentation of EBITDA from operations, as adjusted provides useful information regarding the Company’s operations and other factors that affect the Company’s reported results. Specifically, the Company believes that by excluding certain one-time or non-cash items such as transactional legal fees and depreciation and amortization, as well as potential distortions between periods caused by factors such as financing and capital structures, the Company provides users of its consolidated financial statements with insight into both its operations as well as the factors that affect reported results between periods but which the Company believes are not representative of its operations. As a result, users of the Company’s consolidated financial statements are better able to evaluate changes in the financial consolidated results of the Company across different periods

	Year ended July 31,
*Other Key Metrics*	2023		2022		Variances		%
Total Customers		4,671		4,023		648		16	%

The following tables provide information regarding certain key performance indicators for Digerati for the years ended July 31, 2022, and 2021. Management utilizes these metrics to track and forecast revenue trends and expected results from operations:14

	(In thousands)
	For the Years ended July 31,
	2022			2021			Variances			%
OPERATING REVENUES:
Cloud software and service revenue	$	24,154		$	12,416		$	11,738			95	%
Total operating revenues		24,154			12,416			11,738			95	%
Cost of services (exclusive of depreciation and amortization)		9,346			5,135			4,211			82	%
GROSS MARGIN		14,808			7,281			7,527			103	%
GPM%		61.31	%		58.64	%		2.66	%
EXPENSES:
Selling, general and administrative expense		11,158			5,230			5,928			113	%
Bad debt expense		98			17			81			476	%
Total expenses		11,256			5,247			6,009			115	%
EBITDA FROM OPERATIONS, as adjusted		3,552			2,034			1,518			75	%
Reconciliation to Operating loss, as reported
Other Expenses
Corporate expenses & stock compensation expenses		1,609			1,783			(174	)		-10	%
Corporate legal, professional fees and transactional expenses		2,703			900			1,803			200	%
Depreciation and amortization expense		2,916			1,749			1,167			67	%
Total other expenses		7,228			4,432			2,796			63	%
OPERATING LOSS, as reported	$	(3,676	)	$	(2,398	)	$	(1,278	)		53	%
Other Key Metrics
Total Customers		4,023			2,655			1,368			52	%

Cloud software and service revenue increased by $7,469,000, or 31%, from the year ended July 31, 2022 as compared to the year ended July 31, 2023. In addition, our gross margin increased by $5,529,000, or 37%, during Fiscal Year 2023. The increase in revenue and gross margin for the entirety of fiscal year 2023 versus only part of fiscal year 2022 is primarily attributed to the increase in total customers between years due to the acquisitions of Skynet in December 2021 and NextLevel in February 2022.

~~Cloud software~~EBITDA ~~and~~from ~~service~~operations, ~~revenue~~as ~~increased~~adjusted, increased by $111,~~738~~222,000, or 9534%, from the year ended July 31, ~~2021,~~2022 to the year ended July 31, ~~2022~~2023. InThe primary reason for the improvement in EBITDA ~~addition,~~from ~~our~~operations is due to the increase in gross margin ~~increased~~of by $75,~~527~~529,000 ~~from~~during Fiscal Year 2023. The improvement in gross margin was offset by the ~~year~~increase ~~ended~~in ~~July~~total ~~31,~~operational ~~2021,~~expenses tobetween the ~~year~~years ended July 31, 2022 and 2023. ~~The~~(See ~~increase~~table inabove for the adjustments to ~~revenue~~Net ~~and~~Income ~~gross~~(Loss) ~~margin~~attributable ~~between~~to ~~years~~Digerati isshareholders.) ~~primarily~~EBITDA ~~attributed~~from operations, as adjusted, is not intended to represent cash flows for the ~~increase~~periods inpresented, ~~total~~nor ~~customers~~have ~~between~~they ~~years~~been ~~due~~presented as an alternative to ~~the~~operating ~~acquisitions~~income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of ~~Nexogy,~~performance ~~ActivePBX,~~prepared ~~Skynet,~~in ~~and~~accordance ~~NextLevel~~with accounting principles generally accepted in the United States of America (“GAAP”).

EBITDA from ~~operations~~income, as adjusted, increased ~~from~~ by $1,~~518~~078,000, or 7550%, from the year ended July 31, ~~2021,~~2022 to the year ended July 31, ~~2022~~2023. The primary reason for the improvement in EBITDA from operations is due to the increase in gross margin of $75,~~527~~529,000 ~~between~~during ~~the~~Fiscal ~~year~~Year ~~ended July 31,2021 and 2022~~2023. ~~The improvement in gross margin was offset by the increase in total operational expenses of $6,009,000 between the years ended July 31, 2021, and 2022.~~ EBITDA from ~~operations~~income, as adjusted, is not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our total customers increased from 24,~~655~~023 during the year ended July 31, ~~2021,~~2022 to 4,~~023~~671 for the year ended July 31, ~~2022~~2023. ~~The increase in customers is attributed to the acquisitions and consolidation of Skynet and NextLevel during the year ended July 31, 2022.~~ Going forward, absent future ~~further~~ acquisitions, we expect a net increase in our number of customers of 1% to 5% each fiscal year.

14Liquidity and Capital Resources

~~Sources~~Cash Position: We had a consolidated cash balance of ~~revenue:~~approximately $924,000 as of July 31, 2023. Net cash used in operating activities during the year ended July 31, 2023 was approximately $3,222,000. The increase in net cash used in operating activities resulted primarily from the net loss incurred during the year ended July 31, 2023 as a result of operating expenses, that included $881,000 in stock compensation and warrant expense, bad debt expense of $115,000, amortization of right-of-use assets of $696,000, amortization of debt discount of $2,930,000, depreciation and amortization expense of $3,909,000, debt extension fee charged to interest expense of $864,000, warrants issued for debt extension for $170,000, and common stock issued for debt extension charged to interest expense of $589,000, partially offset by gain on settlement of conversion premium of $466,000, gain on derivative liability of $6,526,000, gain on extinguishment of debt of $55,000, and change in operating assets and liabilities resulted in a net increase of $3,200,000.

~~Cloud Software~~Cash ~~and~~used ~~Service~~in ~~Revenue:~~investing Weactivities ~~provide~~during ~~UCaaS~~the ~~or cloud communication services and managed cloud-based solutions to small and medium~~year ~~size~~ended ~~enterprise~~July ~~customers and to other resellers. Our Internet-based services include fully hosted IP/PBX services~~31, ~~SIP~~2023 ~~trunking,~~was ~~call center applications~~$436, ~~auto attendant~~000, ~~voice~~which ~~and~~was ~~web~~used ~~conferencing,~~for ~~call~~the ~~recording,~~acquisition ~~messaging,~~of ~~voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized IP/PBX features in a hosted or cloud environment~~equipment. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, mobile broadband, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery.

~~Direct~~Cash ~~Costs:~~provided by financing activities during the year ended July 31, 2023 was $3,073,000. The net increase in cash provided by financing was primarily due to the Company securing $4,541,000 from convertible notes, net of issuance costs and discounts and securing $250,000 from debt financing from a related party, net of issuance costs and discounts, proceeds from the exercise of warrants of $22,000, proceeds from the exercise of stock options of $50,000, partially offset by principal payments of $785,000 on various convertible notes, principal payments of $298,000 on debt, principal payments of $568,000 on related party notes, and principal payments of $139,000 on equipment financing.

~~Cloud Software~~Overall, ~~and~~our ~~Service:~~net Weoperating, ~~incur~~investing, ~~bandwidth~~ and ~~colocation charges in connection with our UCaaS or cloud communication services. The~~financing ~~bandwidth~~activities ~~charges~~during ~~are incurred as part of~~ the ~~connectivity~~year ~~between~~ended ~~our~~July ~~customers~~31, to2023 ~~allow~~resulted ~~them~~in ~~access~~a tonet ~~our~~decrease ~~various~~in ~~services.~~cash Weand ~~also incur~~cash ~~costs~~equivalents ~~from underlying providers~~ for ~~fiber~~$585, ~~Internet broadband, and telecommunication circuits in connection with our data and connectivity solutions~~000.

~~Results~~Digerati’s consolidated financial statements for the year ended July 31, 2023 have been prepared on a going concern basis, which contemplates the realization of ~~Operations~~assets and the settlement of liabilities in the normal course of business. Since the Company’s inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $121,684,000 and a working capital deficit of approximately $65,279,000 which raises substantial doubt about Digerati’s ability to continue as a going concern.

~~Cloud~~We ~~Software~~are ~~and~~currently ~~Service~~taking ~~Revenue.~~initiatives ~~Cloud~~to ~~software~~reduce ~~and~~our ~~service~~overall ~~revenue~~cash ~~increased~~deficiencies byon ~~$11~~a monthly basis. During Fiscal Year 2023,~~738,000,~~ orcertain ~~95%~~members of ~~from~~our ~~the~~management ~~year~~team ~~ended~~continued ~~July~~to ~~31,~~receive ~~2021,~~ a portion of their compensation in common stock to reduce the ~~year~~depletion ~~ended~~of ~~July~~our 31available cash. To strengthen our business, ~~2022.~~we ~~The~~intend ~~increase~~to inadopt ~~revenue~~best ispractices ~~primarily~~from ~~attributed~~our torecent ~~the~~acquisitions ~~increase~~and invest in ~~total~~a ~~customers~~marketing ~~between~~and ~~years due~~sales strategy to ~~the~~grow ~~acquisitions~~our ofmonthly ~~Nexogy,~~recurring ~~ActivePBX,~~revenue; ~~Skynet~~we anticipate utilizing our value-added resellers and ~~NextLevel.~~channel ~~Our~~partners ~~total~~to ~~number~~tap into new sources of ~~customers~~revenue ~~increased~~streams; ~~from~~and ~~2,655~~we ~~for~~have ~~the~~also ~~year~~secured numerous agent agreements through our recent acquisitions that we anticipate will ~~ended~~accelerate ~~July~~revenue ~~31,~~growth. ~~2021~~In addition, we will continue to ~~4,023~~focus ~~customers~~on ~~for~~selling ~~the~~a ~~year~~greater ~~ended~~number ~~July~~of ~~31,~~comprehensive ~~2022.~~services Asto ~~part~~our ofexisting customer ~~the~~base. ~~acquisitions~~Further, in an effort to increase our ~~primary~~revenues, ~~emphasis~~we iswill oncontinue ~~integrating~~ to evaluate the ~~secured~~acquisition ~~customers~~of ~~base,~~various ~~consolidating~~assets ~~products~~with emphasis in VoIP Services and ~~services~~Cloud Communication Services. As a result, ~~retaining~~during the ~~monthly~~process ~~recuring~~of ~~revenue,~~evaluating ~~and~~such ~~providing~~acquisitions ~~exceptional~~we ~~customer~~anticipate incurring ~~support~~significant legal and professional fees.

Cost of Services (exclusive of depreciation and amortization). The cost of services increased by $4,211,000, or 82% from the year ended July 31, 2021, to the year ended July 31, 2022. The increase in cost of services is primarily attributed to the consolidation of various networks and key vendors as part of the increase in total customers between periods due to the acquisitions of Nexogy, ActivePBX, Skynet and NextLevel. Our total number of customers increased from 2,655 for the year ended July 31, 2021, to 4,023 customers for the year ended July 31, 2022. However, our consolidated gross margin improved by $7,527,000 from the year ended July 31, 2021, to the year ended July 31, 2022. We are not aware of any events that are reasonably likely to cause a material change in the relationship between our costs and our revenues.15

~~Selling,~~The ~~General~~Company ~~and~~anticipates ~~Administrative~~issuing ~~(SG&A)~~additional ~~Expenses~~equity, ~~(exclusive~~entering ofinto ~~legal~~additional convertible notes and/or ~~professional~~obtaining ~~fees~~other ~~and~~indebtedness ~~stock~~to ~~compensation~~secure the ~~expense)~~funding required to meet these cash needs. ~~SG&A expenses~~There ~~increased~~can bybe ~~$5,815,000,~~no ~~from~~assurance that the ~~year~~Company ~~ended~~will ~~July~~be ~~31,~~able ~~2021,~~ to ~~the~~raise ~~year~~additional ~~ended~~funds ~~July~~or ~~31,~~raise them ~~2022.~~on ~~The~~acceptable ~~increase~~terms. inIf ~~SG&A~~the Company is ~~attributed~~ unable to ~~acquisition~~obtain offinancing ~~Nexogy,~~on ~~ActivePBX~~acceptable terms, ~~Skynet~~the ~~and~~Company ~~NextLevel~~may not be able to meet its interest payments, ascapital ~~part~~expenditures ofand ~~the~~operational ~~consolidation~~needs. As a result, the Company ~~absorbed~~will ~~all~~be required to negotiate with its lender the terms of the ~~employees~~current ~~responsible for~~financing ~~managing~~agreements, in addition to postponing the ~~customer~~timing ~~base,~~of ~~technical~~deployment ~~support,~~of ~~sales,~~its ~~customer~~capital ~~service,~~expenditures and ~~administration~~extending the timing of the operational cash needs.

~~Stock Compensation~~The ~~expense.~~Credit ~~Stock~~Agreement ~~compensation~~contains ~~expense~~customary ~~decreased by $400~~representations,~~000~~ warranties, orand ~~64%~~indemnification ~~from the year ended July 31, 2021, to the year ended July 31, 2022~~provisions. The ~~decrease~~Credit ~~between~~Agreement ~~periods~~also iscontains ~~attributed~~affirmative ~~to the Company only recognizing $97,863 in stock option expense associated with stock options awarded to various employees~~ and ~~recognized~~negative ~~$125,250~~covenants in stock issued to consultants for professional services during the year ended July 31, 2022. In comparison, during the year ended July 31, 2021, the Company recognized stock option expense of $135,000 associated with ~~stock~~respect ~~options awarded~~ to ~~various employees, recognized $247,000 in stock compensation expense associated with~~ the ~~funding~~ operation of the ~~401(K)-profit~~business ~~sharing~~and ~~plan,~~properties ~~recognized $18,000 in stock compensation for stock issued in lieu~~ of ~~cash~~the ~~payments~~loan toparties aas ~~former~~well ~~employee, and~~as ~~recognized~~financial ~~$223,000 in stock issued to consultants for professional services~~performance.

~~Legal~~Below ~~and~~are ~~professional fees.~~key ~~Legal~~financial ~~and~~covenant ~~professional fees increased by $2~~requirements,~~142,000, or 240% from the year ended July 31, 2021, to the year ended July 31,~~ ~~2022.~~(measured ~~The~~quarterly) ~~increase~~for ~~between periods is attributed to~~ the ~~recognition~~fiscal ~~during~~quarter ~~the year~~ ended July 31, ~~2022, of $1,850,000 in legal and professional fees related to due diligence, audits for the acquisitions, purchase price allocation, legal fees paid to counsel for Post Road, and investor relations.~~2023:

~~Bad debt.~~● ~~Bad~~Maximum–Allowed ~~debt~~- ~~increased~~Senior ~~between~~Leverage ~~the~~Ratio ~~periods~~of ~~by $81,000~~3.55 ~~The increase is attributed~~ to ~~the recognition of $98,000 in bad debt during the year ended July 31, 2022, for accounts deemed uncollectable~~1. ~~During the year ended July 31, 2021, the Company recognized $17,000 in bad debt.~~00

15● Minimum–Allowed – EBITDA (on an annualized basis) of $4,394,867

~~Depreciation and~~● ~~amortization.~~Minimum–Allowed ~~Depreciation~~- ~~and~~Liquidity ~~amortization increased by $1,167,000, from the year ended July 31, 2021, to the year ended July 31, 2022. The increase is primarily attributed to the acquisitions and related amortization~~ of $2,~~414,~~000 ~~for intangible assets~~, ~~and the additional depreciation related to the depreciation for the assets acquired from Nexogy, ActivePBX, Skynet and NextLevel.~~000

~~Operating~~● ~~loss.~~Maximum ~~The Company~~Allowed ~~reported~~- anCapital ~~operating~~Expenditures ~~loss~~ of $394,~~676,000~~798 for the year ended July 31, 2022, compared to an operating loss of $2,398,000 for the year ended July 31, 2021. The increase in operating loss between periods is primarily due to the increase of SG&A of $5,815,000, legal fees of $2,142,000, bad debt of $81,000, and depreciation expense of $1,167,000. These increases were slightly offset by the increase in margin of $7,527,000 and the decrease in stock compensation expense of $400,000.(Quarterly)

~~Gain (loss)~~● onMinimum–Allowed ~~derivative~~– ~~instruments. Loss~~Fixed onCharge ~~derivative~~Coverage ~~instruments~~Ratio ~~decreased~~of ~~by $16,121,000 from the year ended July 31, 2021, to the year ended July 31, 2022~~1.50 ~~We are required~~ to re-measure all derivative instruments at the end of each reporting period and adjust those instruments to market, as a result of the re-measurement of all derivative instruments we recognized an increase between periods1.00

~~Gain (loss)~~● onMaximum ~~settlement~~Allowed of- ~~debt. Loss~~Churn ~~on settlement~~ of ~~debt increased by $6,041,000 from the year ended July 31, 2021, to the year ended July 31, 2022~~3.00% Onat ~~December~~any 20, 2021, the Company and our lender entered into an amendment to a Credit Agreement, as described in Note 10, in connection with the amendment, the Company recognized a loss on extinguishment of debt for the amendment fee of $1,419,000 and the debt discount associated with the note of $4,061,000 was also recognized as a loss on extinguishment of debt.time

~~Income tax~~As ~~benefit~~of ~~(expense).~~July ~~During~~31, 2023, the ~~year~~Company ~~ended~~was ~~July~~not ~~31,~~in ~~2022,~~compliance with the ~~Company~~financial ~~recognized~~covenants anunder ~~income~~the ~~tax~~Credit ~~expense~~Agreement. ofThis ~~$419~~noncompliance,~~000.~~ ~~During~~together ~~the~~with certain other events of default that have occurred ~~year~~and ~~ended~~are ~~July~~continuing ~~31,~~under ~~2021~~the Credit Agreement, resulted in our classifying the ~~Company~~indebtedness ~~recognized~~under anthe ~~income~~Credit ~~tax~~Agreement ~~expense~~as ofa ~~$183,000~~current liability.

~~Other~~The ~~income~~Operating Subsidiaries’ obligations under the Credit Agreement are secured by first priority security interests in (~~expense~~a). ~~Other~~the ~~expense~~equity interests ~~decreased~~of bythe ~~$320~~Operating Subsidiaries (other than Verve Cloud Nevada),~~000~~ orpursuant ~~109%~~to the Pledge Agreement, dated November 17, 2020 (the “Pledge Agreement”), made by Verve Cloud Nevada in favor of Post Road Administrative and (b) substantially all of the ~~year~~other assets ~~ended~~of ~~July~~the Operating Subsidiaries, pursuant to the Guaranty and Collateral Agreement, dated November 17, 2020, subsequently amended on December 31, 2021, February 4, 2022, ~~compared~~December to15, 2022, and February 3, 2023 (the ~~year~~“Guaranty ~~ended~~and ~~July~~Collateral 31Agreement”), ~~2021~~among the Operating Subsidiaries and Post Road Administrative.

~~Interest~~During ~~Income~~the ~~(expense).~~period ~~Interest~~beginning ~~income~~on ~~(expense)~~August ~~increased by $~~1,~~225,000~~ ~~from the year ended July 31,~~ 2021, toand ~~the~~ending ~~year~~on ~~ended~~ July 31, ~~2022.~~ ~~During the year ended July 31~~2023, ~~2022,~~ the Company ~~recognized amortization of debt discount of $2,064,000 related to the adjustment to the present value of various convertible notes~~ and ~~debt. Additionally, the Company recognized $2,400,000 in interest cash payments to~~ Post Road, ~~$75,000~~entered ininto ~~interest~~several ~~cash~~amendments ~~payments~~and ~~on various promissory notes, accrual of $147,000 for interest expense for various promissory~~other ~~notes~~modifications ~~and $64,000 fair value of shares issued as well as $1,195,000 added~~ to the ~~principal~~Credit ~~balance of various promissory notes, all charged to interest expense as consideration for extension of the maturity dates~~Agreement. Specifically:

~~Net loss~~● ~~including~~On ~~noncontrolling~~December ~~interest. Net loss including noncontrolling interest for the year ended July 31~~15, 2022, ~~was~~Post ~~$9,354,000, a~~Road ~~decrease~~agreed ~~in net loss of $7,661,000, as compared~~ to aforbear ~~net~~from ~~loss~~exercising ~~for~~its ~~the~~remedies ~~year ended July 31, 2021, of $17,015,000. The decrease~~ in ~~net loss~~connection ~~including~~with ~~noncontrolling~~the ~~interest~~Company’s ~~between~~failure ~~periods is primarily due~~ to ~~the~~comply ~~improvement~~with ~~in gain on derivative instruments of $16,121,000, increase in margin of $7,527,000,~~ the ~~decrease~~financial incovenants ~~stock compensation expense of $400,000 and increase~~ in ~~other income of $320,000. These improvements were slightly offset by~~ the ~~increase~~Credit inAgreement ~~SG&A~~as of ~~$5,815,000,~~ the ~~increase~~last inday ~~legal fees~~ of ~~$2,142,000, increase in bad debt of $81,000, and~~ the ~~increase~~fiscal inquarter ~~depreciation~~ended ~~and~~October ~~amortization of $1~~31,~~167,000.~~ ~~In addition to the increase in interest expense of $1~~2022,~~225,000,~~ ~~increase~~as ofwell ~~income~~as ~~tax~~certain ~~expense~~other ofspecified ~~$236~~defaults,~~000,~~ ~~and~~until ~~the~~December ~~loss on gain on settlement of debt of $6~~23,~~041,000~~ 2022.

~~Net loss~~● ~~attributable~~On February 3, 2023, with an effective date of December 23, 2022, Digerati, the Operating Subsidiaries and Post Road entered into a Consent, Limited Waiver and Fourth Amendment to Credit Agreement and Amendment to Notes (the ~~noncontrolling~~“Fourth ~~interest~~Amendment”). ~~During~~Among other things, the ~~years~~Fourth ~~ended~~Amendment ~~July~~(a) 31conditionally revised each of the six financial covenants set forth in the Credit Agreement (related to maximum leverage, ~~2022~~minimum liquidity, minimum EBITDA, maximum capital expenditures, minimum interest coverage (a provision that replaced the minimum fixed charge coverage ratio provision), and ~~2021~~maximum churn), (b) conditionally waived all then-existing events of default under the ~~consolidated~~Credit ~~entity~~Agreement ~~recognized net~~and ~~loss~~(c) inmodified ~~noncontrolling~~the interest rates payable under the Credit Agreement. In addition, the Fourth Amendment provided that none of the revised financial covenants (other than minimum liquidity of $1,~~341~~000,000, which was tested and ~~$332~~met as of January 21,~~000~~ 2023) would be tested as of the last day of the fiscal quarter ended January 31, ~~respectively~~2023 so long as no additional events of default occurred prior to such date. The ~~noncontrolling~~conditional ~~interest~~revisions isto ~~presented~~the asfinancial acovenants ~~separate line~~and ~~item~~the conditional waivers of existing events of default in the ~~Company’s~~Fourth ~~stockholders’~~Amendment ~~equity~~were ~~section~~contingent on the consummation of the ~~balance~~Merger ~~sheet~~with MEOA by February 28, 2023 (the “Merger Outside Closing Date”). If the Merger was not consummated by the Merger Outside Closing Date, the terms of the financial covenants would revert to the terms in effect immediately prior to the Fourth Amendment and the existing events of default would continue unwaived. The Merger Outside Closing Date was, as described below, extended several times, but the termination of the Business Combination Agreement with MEOA has effectively nullified the revisions to the financial covenants and conditional waivers set forth in the Fourth Amendment.

~~Net loss attributable to Digerati’s shareholders. Net loss for the year ended July 31, 2022, was $8,013,000 compared to a net loss for the year ended July 31, 2021, of $~~16~~,683,000.~~

~~Deemed dividend~~● onOn ~~Series~~March A13, ~~Convertible~~2023, ~~Preferred~~Digerati, ~~Stock.~~the ~~Dividend~~Operating ~~declared~~Subsidiaries, onand ~~convertible~~Post ~~preferred~~Road ~~stock~~entered ~~for~~into the ~~year~~Fifth ~~ended~~Amendment ~~July~~to ~~31,~~Credit ~~2022~~Agreement, ~~was~~ ~~$19,000~~with ~~compared~~an toeffective adate ~~deemed~~of ~~dividend~~February on28, ~~convertible~~2023, ~~preferred~~which ~~stock~~specifically ~~for~~extended the ~~year~~Merger ~~ended~~Outside ~~July~~Closing 31Date from February 28, ~~2021~~2023, ofto ~~$20~~April 28,~~000~~ 2023.

~~Net loss~~● ~~attributable~~On toApril 3, 2023, Digerati’s, ~~common~~the ~~shareholders.~~Operating ~~Net~~Subsidiaries, ~~loss~~and ~~for~~Post Road entered into a Sixth Amendment to its Credit Agreement (the ~~year~~“Sixth ~~ended~~Amendment”), ~~July~~which 31(a) deferred the cash interest otherwise due and payable on April 1, ~~2022~~2023, ~~was~~to $8May 1,~~032~~ 2023,~~000~~ ~~compared~~and to(b) aincreased the net ~~loss~~ ~~for~~principal amount of additional convertible notes the ~~year~~Company ~~ended~~was ~~July~~permitted ~~31,~~by ~~2021~~the Credit Agreement to have outstanding from $3,000,000 ofto $163,~~703~~500,000.

16● On May 1, 2023, with an effective date of April 28, 2023, Digerati, the Operating Subsidiaries, and Post Road entered into a Seventh Amendment to Credit Agreement (the “Seventh Amendment”), pursuant to which the Merger Outside Closing Date was extended from April 28, 2023, to May 31, 2023, or such later date as agreed to in writing by Post Road in its sole discretion.

~~Liquidity~~ ● On August 16, 2023, Digerati, the Operating Subsidiaries and ~~Capital~~Post ~~Resources~~Road entered into a letter agreement, pursuant to which Post Road agreed that all accrued interest that was originally due and payable in cash by the Operating Subsidiaries on April 3, 2023, May 1, 2023, June 1, 2023, July 3, 2023 and August 1, 2023 would, instead, be added to the outstanding principal balances of Term Loan A and Term Loan C, as applicable, under the Credit Agreement on the effective date of the letter agreement, and due on the maturity dates of such loans, along with all other principal and interest amounts thereunder.

~~Cash Position:~~Additionally, Weon ~~had~~November a22, ~~consolidated~~2023 ~~cash~~(with ~~balance~~effect from ofNovember $12,~~509~~ 2023),~~000~~ asVerve ~~of July 31~~Cloud, ~~2022~~Inc. ~~Net~~(“Verve ~~cash~~Cloud”) ~~consumed~~and byVerve ~~operating~~Cloud’s ~~activities~~subsidiaries ~~during the~~(Verve ~~year~~Cloud ~~ended~~and ~~July~~its 31subsidiaries, ~~2022~~ collectively, ~~was~~the ~~approximately~~“Verve $1Cloud Nevada Parties”),~~960,000,~~ ~~primarily~~Digerati asand aPost ~~result~~Road ofentered ~~operating~~into ~~expenses,~~a ~~that~~Second ~~included~~Forbearance ~~$98~~Agreement,~~000~~ ~~in stock~~Amendment ~~compensation~~to Loan Documents and ~~warrant~~Limited ~~expense~~Consent, ~~stock~~which ~~issued~~(a) ~~for~~extends ~~services~~the maturity date of ~~$126,000,~~our ~~bad~~Term ~~debt~~Loan ~~expense~~C ofNote ~~$78,000,~~with ~~amortization~~Post ofRoad ~~debt~~from ~~discount~~November ~~of $~~2,~~064~~ 2023,~~000,~~ to ~~gain~~December on31, ~~derivative~~2023, ~~liability~~(b) ofprovides ~~$6,186,000,~~that ~~depreciation~~Post Road and ~~amortization~~the ~~expense~~other oflenders ~~$2,916,000,~~under ~~accrued~~the ~~expense~~Credit ofAgreement ~~$566~~shall forbear through December 31,~~000,~~ ~~accounts~~2023 ~~receivable~~from ofexercising ~~$484,000~~their rights and ~~deferred~~remedies ~~revenue~~under ofthe ~~$911,000.~~loan ~~Additionally,~~documents ~~accounts~~and ~~payable~~applicable ~~$860,000,~~law ~~prepaid~~with ~~expenses~~respect ~~and~~to ~~other current~~(i) ~~assets~~certain existing events of ~~$20,000,~~default ~~other~~under ~~assets~~the ofloan ~~$131,000,~~documents ~~inventory~~and (ii) certain events of ~~$18,000,~~default athat ~~loss~~are onexpected ~~settlement~~to ofarise ~~debt~~before ofDecember $531,~~481~~ 2023,~~000,~~ ~~the~~and ~~recognition~~(c) amends certain provisions of ~~$225,000~~the ~~debt~~Credit ~~extension~~Agreement ~~fee~~and ~~charged~~the toother ~~interest~~loan ~~expense,~~documents ~~gain~~to onallow ~~ActivePBX~~the ~~contingent~~company ~~earnout~~to ~~recognized~~incur inup ~~other~~to ~~income~~an ofadditional $242,000,000 of working capital financing. For additional information regarding the Second Forbearance Agreement, Amendment to Loan Documents and ~~stock~~Limited Consent, ~~issued~~see ~~for~~Note ~~debt~~18 ~~extension~~- ofSubsequent ~~$65~~Events to the Consolidated Financial Statements; see also Part II,~~000~~ Item 9B, Other Information to this Annual Report on Form 10-K.

~~Cash used~~We have been successful in ~~investing~~raising ~~activities~~debt ~~during~~and equity capital in the ~~year~~past ~~ended~~and ~~July~~as 31described in Notes 10, ~~2022~~11, ~~was~~and $12~~,885,000,~~ ~~which~~to ~~included~~the ~~$272,000~~financial ~~for~~statements. ~~the~~We ~~purchase~~have offinancing ~~equipment,~~efforts in place to continue ~~the~~to raise cash ~~paid~~through ofdebt ~~$12,791,000,~~and ~~net~~equity ofofferings. ~~cash~~Although ~~received,~~we ~~for~~have successfully completed financings and reduced expenses in the ~~acquisitions~~past, we ofcannot ~~VoIP~~assure ~~assets~~you ~~from~~that ~~Skynet~~our ~~and~~plans ~~NextLevel~~to ~~and~~address these matters in the future will be successful. The Company ~~received~~will continue to work with ~~$178~~various funding sources to secure additional debt and equity financings. However,~~000~~ ~~from~~Digerati ~~Nexogy~~cannot asoffer anany ~~adjustment~~assurance ~~consideration~~that ~~for~~it ~~payables~~will ~~from~~be successful in executing the ~~acquisition~~aforementioned plans to continue as a going concern.

~~Cash provided~~Management bybelieves ~~financing~~that ~~activities~~available ~~during~~resources ~~the~~as of ~~year ended~~ July 31, ~~2022~~2023, ~~was~~will ~~$14~~not be sufficient to fund the Company’s operations,~~865,000~~ debt service and corporate expenses over the next 12 months. The Company’s ~~secured~~ability ~~$806,000~~to ~~from~~continue ~~convertible~~to meet its obligations and to achieve its business objectives is dependent upon, among ~~notes~~other things, ~~net~~raising additional capital, issuing stock-based compensation to certain members of ~~issuance~~the ~~costs~~executive management team in lieu of cash, and/or ~~discounts~~generating sufficient revenue in excess of costs. InAt ~~addition,~~such time as the Company ~~secured~~requires ~~$15~~additional funding,~~530,000~~ the Company will seek to secure such best-efforts funding from ~~promissory~~various ~~notes~~possible sources, ~~net~~including equity or debt financing, sales of ~~issuance~~assets, ~~costs.~~or collaborative ~~(See~~arrangements. ~~Note~~If ~~10)~~the ~~The~~ Company ~~made~~raises ~~principal~~additional ~~payments~~capital through the issuance of ~~$250~~equity securities or securities convertible into equity,~~000~~ stockholders onwill ~~various~~experience ~~notes~~dilution, ~~principal~~and ~~payments~~such ofsecurities ~~$425~~may have rights,~~000~~ onpreferences, ~~convertible notes~~or ~~and~~privileges ~~principal~~senior ~~payments~~to those of ~~816,000~~the onholders of ~~related~~common ~~party~~stock or convertible senior notes. ~~Overall~~If the Company raises additional funds by issuing debt, ~~our~~the ~~net~~Company ~~operating~~may be subject to limitations on its operations, ~~investing~~through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, ~~and~~the ~~financing~~Company ~~activities~~may ~~during~~be required to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the ~~year~~Company ~~ended~~is ~~July~~unable 31to obtain financing on acceptable terms, ~~2022~~it may be unable to execute its business plan, ~~contributed~~the ~~approximately~~Company ~~$20~~could be required to curtail its operations,~~000~~ ofand ~~our~~the ~~available~~Company ~~cash~~may not be able to pay off its obligations, if and when they come due.

Digerati’s consolidated financial statements for the year ended July 31, 2022, have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company’s inception in 1993, Digerati has incurred net losses and accumulated a deficit of approximately $113,393,000 and a working capital deficit of approximately $29,323,000 which raises substantial doubt about Digerati’s ability to continue as a going concern.17

~~We are~~Our ~~currently~~current ~~taking initiatives to reduce our overall~~ cash ~~deficiencies~~expenses onare aexpected ~~monthly~~to ~~basis.~~be ~~During fiscal 2023 we anticipate certain~~approximately ~~members~~$1,300,000 ofper ~~our~~month, ~~management~~including ~~team~~wages, torent, ~~take~~utilities, acorporate ~~portion~~expenses, ofand ~~their~~legal ~~compensation~~professional infees ~~common~~associated ~~stock~~with topotential ~~reduce the depletion of our available cash~~acquisitions. ToAs ~~strengthen~~described ~~our~~elsewhere ~~business~~herein, we ~~intend~~are tonot ~~adopt~~generating ~~best~~sufficient ~~practices~~cash from oroperations ~~recent~~to ~~acquisitions~~pay ~~and~~for ~~invest~~our incorporate ~~a marketing~~ and ~~sales~~ongoing ~~strategy~~operating expenses, or to ~~grow~~pay our ~~monthly~~current ~~recurring~~liabilities. ~~revenue;~~As ~~we anticipate utilizing our value-added resellers and channel partners to tap into new sources~~ of ~~revenue~~July ~~streams~~31, we2023, ~~have~~our ~~also~~total ~~secured~~liabilities ~~various~~were ~~agent~~approximately ~~agreements~~$69,276,000, towhich ~~accelerate~~included ~~revenue~~$4,125,000 in ~~growth~~derivative liabilities. InWe ~~addition, we~~ will continue to ~~focus on~~use ~~selling~~our aavailable ~~greater~~cash ~~number~~on ofhand ~~comprehensive services~~ to cover our ~~existing~~deficiencies ~~customer~~in ~~base~~operating expenses. ~~Further,~~Our incash requirements ~~an effort~~ to ~~increase~~meet our ~~revenues, we~~interest ~~will~~payments ~~continue~~ to ~~evaluate~~Post ~~the~~Road, ~~acquisition~~capital ofexpenditure ~~various~~needs, ~~assets with emphasis in VoIP Services~~ and ~~Cloud~~operational ~~Communication~~cash ~~Services.~~flow Asneeds ~~a result,~~over ~~during~~ the ~~due~~next ~~diligence~~18 ~~process~~months are weestimated ~~anticipate~~to ~~incurring~~be ~~significant~~approximately ~~legal and professional fees~~$3,500,000.

~~Our cash~~Critical ~~requirements~~Accounting toPolicies ~~meet our interest payments to Post Road, capital expenditure needs,~~ and operational cash flow needs over the next 18 months are estimated to be approximability $3,500,000. The Company anticipates issuing additional equity or entered into additional Convertible Notes to secure the funding required meet these cash needs. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, the Company may not be able to meet its interest payments, capital expenditures and operational needs. As a result, the Company will be required to negotiate with its lender the terms of the current financing agreements, in addition to postponing the timing of deployment of its capital expenditures and extending the timing of the operational cash needs.Estimates

The consolidated financial statements are prepared ~~Credit~~in ~~Agreement~~accordance with ~~Post~~GAAP. ~~Road~~In ~~contains~~connection ~~affirmative~~with ~~and~~the ~~negative~~preparation ~~covenants~~of ~~with~~our ~~respect~~financial statements, we are required to ~~operation~~make ofassumptions and estimates about future events and apply judgments that affect the ~~business~~reported amounts of assets, liabilities, revenue, expenses, and ~~properties~~the related disclosures. ofWe T3base ~~Nevada~~our asassumptions, ~~well~~estimates, asand judgments on historical experience, current trends, and other factors believed to be relevant at the time the consolidated financial ~~performance~~statements are prepared. ~~Below~~Because ~~are~~future ~~key~~events ~~covenants~~and ~~requirements~~their effects cannot be determined with certainty, actual ~~(measured~~results ~~quarterly):~~could differ from our assumptions and estimates, and such differences could be material.

~~1. Maximum~~We ~~Allowed~~believe -that ~~Senior~~our ~~Leverage~~accounting ~~Ratio~~policies ofand ~~4.06~~estimates are critical to 1aid in fully understanding and evaluating our reported financial results.00

2Valuation of Goodwill and Intangible Assets. Goodwill and other intangible assets include the cost of the acquired business in excess ~~Minimum~~of ~~Allowed~~the -fair ~~EBITDA~~value of $3the tangible net assets recorded in connection with an acquisition. Other intangible assets include customer relationships,~~719~~ non-compete agreements,~~589~~ and trademarks. The Company uses a third-party specialty valuation firm to value its intangible assets acquired in its business combination and asset acquisitions.

3In accordance with FASB ASC 350-20-35, “Intangibles - Goodwill and Other,” a third-party specialty valuation firm tested our goodwill for impairment. Based upon their impairment analysis performed during the fourth quarter of fiscal year 2023, management of ~~Minimum~~the ~~Allowed~~Company has agreed with our third-party valuation ~~Liquidity~~firm in their conclusion that there was no impairment of $2goodwill at July 31,~~000,000~~ 2023.

4.In ~~Maximum~~accordance ~~Allowed~~with FASB ASC 360-10-35, ~~Capital~~“Property, ~~Expenditures~~Plant, and Equipment,” a third-party specialty valuation firm reviewed our long-lived asset groups, including property and equipment and other intangible assets, for impairment whenever events indicate that their carrying amounts may not be recoverable. When it is determined that one or more impairment indicators are present for an asset group, it is necessary to compare the carrying amount of ~~$94~~the asset group to net future undiscounted cash flows that the asset group is expected to generate. If the carrying amount of the asset group is greater than the net future undiscounted cash flows,~~798~~ ~~(Quarterly)~~an impairment loss is recognized for the excess of the carrying amount of the asset group over its fair value. The management of the Company has agreed with the third-party specialty valuation firm in their conclusion that there were no impairment indicators relating to our long-lived assets as July 31, 2023.

5Revenue Recognition. The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) ~~Minimum~~Accounting ~~Allowed~~Standards -Codification ~~Fixed~~(“ASC”) ~~Charge~~Topic ~~Coverage~~606, ~~Ratio~~Revenues offrom ~~1.5~~Contracts towith 1Customers (“ASC 606”).00

6The Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity ~~Maximum~~solutions ~~Allowed~~through multiple broadband technologies including cloud WAN or SD-WAN, ~~Churn~~fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied.~~00%~~ Substantially all of the Company’s revenue is recognized over time, on a monthly basis, as services are rendered or at ~~any~~a point in time when control of the products transfers to the customer.

While Digerati, the parent company of T3 Nevada, is not subject to these financial covenants, they have had and will continue to have a material impact on T3 Nevada’s expenditures and ability to raise funds.18

17Derivative financial instruments. Digerati does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. However, Digerati analyzes its convertible instruments and free-standing instruments such as warrants for derivative liability accounting.

InFor ~~addition,~~derivative ~~our~~financial ~~Term~~instruments ~~Loan~~that Care ~~Note~~accounted ~~with~~for ~~Post~~as ~~Road~~liabilities, ~~with~~the aderivative ~~maturity~~instrument ~~date~~is ofinitially ~~August~~recorded 4,at ~~2023,~~its ~~requires~~fair ~~a full principal payment (currently $10,000,000)~~value and ~~accrued~~is ~~interest~~then byre-valued ~~the~~at ~~maturity~~each ~~date.~~reporting ~~We will work with our equity partners to secure additional financings to meet this obligation by the maturity~~ date. InAny ~~addition,~~changes wein ~~will~~fair ~~work~~value ~~with~~is ~~our~~recorded ~~lender~~as ~~on the current terms to the Term Loan C Note~~non-operating, tonon-cash ~~extend~~income ~~the maturity date~~ or ~~restructure~~expense ~~the terms of the note. There can be no assurance that the Company will be able to raise additional funds or raise~~for ~~them~~each onreporting ~~acceptable terms to meet the cash payment requirements on the Term Loan C Note~~period. InFor ~~addition,~~derivative ~~there~~notes ~~can~~payable beconversion nooptions ~~assurance~~Digerati ~~that~~uses ~~we will be able to restructure~~ the ~~terms~~Black-Scholes oroption-pricing ~~extend~~model ~~the maturity date of the Term Loan C Note with Post Road. If the Company is not able~~ to ~~restructure the financing or repay the Term Loan C Note by the August 4th maturity date and Post Road declares an event~~value ~~of default, it would have a material adverse effect on our business and financial condition, including~~ the ~~possibility~~derivative ~~of Post Road foreclosing on some or all of our assets~~instruments.

~~Management believes that available resources as of July 31, 2022, will not be sufficient to fund the Company’s operations, debt service and corporate expenses over the next 12 months.~~ The ~~Company’s ability to continue to meet its obligations and to achieve its business~~ ~~objectives~~classification ~~is dependent upon, and other things, raising additional capital, issuing stock-based compensation to certain members~~ of ~~the executive~~derivative ~~management team in lieu of cash~~instruments, orincluding ~~generating~~whether ~~sufficient~~such ~~revenue~~instruments inshould ~~excess~~be ofrecorded ~~costs. At such time~~ as ~~the~~liabilities ~~Company requires additional funding, the Company will seek to secure such best-efforts funding from various possible sources, including equity~~ or ~~debt financing,~~as ~~sales of assets, or collaborative arrangements. If the Company raises additional capital through the issuance of~~ equity ~~securities or securities convertible into equity~~, ~~stockholders~~is ~~will experience dilution, and such securities may have rights, preferences, or privileges~~re-assessed ~~senior~~at ~~to those of~~ the ~~holders~~end of ~~common~~each ~~stock~~reporting ~~or convertible senior notes~~period. IfDerivative ~~the~~instrument ~~Company~~liabilities ~~raises~~are ~~additional~~classified ~~funds~~in ~~by issuing debt,~~ the ~~Company~~ ~~may~~balance besheet ~~subject~~as tocurrent ~~limitations on its operations, through debt covenants~~ or ~~other restrictions. If the Company obtains additional~~non-current ~~funds~~based ~~through~~on ~~arrangements~~whether ~~with collaborators~~ or ~~strategic~~not ~~partners,~~net-cash ~~the~~settlement ~~Company~~of ~~may be required to relinquish its rights to certain technologies. There can be no assurance that~~ the ~~Company~~derivative ~~will~~instrument ~~be able to raise additional funds or raise them on acceptable terms. If the Company~~ is ~~unable~~probable towithin ~~obtain financing on acceptable terms, it may be unable to execute its business plan,~~ the ~~Company~~next ~~could~~12 bemonths ~~required to~~from ~~curtail its operations, and~~ the ~~Company~~balance ~~may not be able to pay off its obligations, if and when they come due~~sheet date.

~~Our~~OFF ~~current~~BALANCE ~~cash~~SHEET expenses are expected to be approximately $1,300,000 per month, including wages, rent, utilities, corporate expenses, and legal professional fees associated with potential acquisitions. As described elsewhere herein, we are not generating sufficient cash from operations to pay for our corporate and ongoing operating expenses, or to pay our current liabilities. As of July 31, 2022, our total liabilities were approximately $67,503,000, which included $10,588,000 in derivative liabilities. We will continue to use our available cash on hand to cover our deficiencies in operating expenses.ARRANGEMENTS

WeAs ~~have~~of ~~been~~July ~~successful in raising debt capital and equity capital in the past and as described in Notes 10~~31, 112023, ~~and~~we 12do tonot ~~our consolidated financial statements. We~~ have ~~financing~~any ~~efforts~~off-balance insheet ~~place~~arrangements, toas ~~continue~~defined ~~to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses~~ in ~~the~~Item ~~past,~~303(a)(4)(ii) weof ~~cannot~~SEC ~~assure~~Regulation ~~you that our plans to address these matters in the future will be successful~~S-K.

~~Critical Accounting~~ITEM ~~Policies~~7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~Revenue~~Not ~~Recognition.~~Applicable ~~The~~to ~~Company~~smaller ~~recognizes~~reporting ~~revenue in accordance with Accounting Standards Codification (ASC) 606, Revenues from Contracts with Customers (ASC 606)~~companies.

The Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized at the time control of the products transfers to the customer.19

18ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

~~Service Revenue~~INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Service revenue from subscriptions to the Company’s cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively, customers may choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as services are activated for the customer

	Page
Consolidated Financial Statements of Digerati Technologies, Inc., and Subsidiaries
Report of Independent Registered Public Accounting Firm (PCAOB ID 206)	F-2
Consolidated Balance Sheets as of July 31, 2023 and 2022	F-3
Consolidated Statements of Operations for the Years Ended July 31, 2023 and 2022	F-4
Consolidated Statements of Stockholders’ Deficit for the Years Ended July 31, 2023 and 2022	F-5
Consolidated Statements of Cash Flows for the Years Ended July 31, 2023 and 2022	F-6
Notes to Consolidated Financial Statements	F-7

~~Product Revenue~~F-1

~~The~~REPORT ~~Company~~OF ~~recognizes~~INDEPENDENT ~~product~~REGISTERED ~~revenue~~PUBLIC ~~for~~ACCOUNTING telephony equipment at a point in time, when transfer of control has occurred, which is generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience.FIRM

~~Goodwill, Intangible Assets,~~To ~~and Long-Lived Assets. Goodwill is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis at~~ the ~~end~~Shareholders ~~of each fiscal year, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows~~ and ~~marketplace~~Board data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350. The Company completed an evaluation of ~~goodwill~~Directors ~~at July 31, 2022 and determined that there was no impairment.~~of

~~The~~Digerati ~~fair~~Technologies, ~~value of the Company’s reporting unit is dependent upon the Company’s estimate of future cash flows and other factors~~Inc. The Company’s estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company’s market capitalization plus a suitable control premium at date of the evaluation.

~~The~~Opinion ~~financial~~on ~~and credit market volatility directly impacts~~ the ~~Company’s~~Financial fair value measurement through the Company’s weighted average cost of capital that the Company uses to determine its discount rate and through the Company’s stock price that the Company uses to determine its market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded.Statements

~~The~~We ~~Company~~have ~~recognizes~~audited ~~an acquired~~the ~~intangible~~accompanying ~~asset~~consolidated balance ~~apart~~sheets ~~from~~of ~~goodwill~~Digerati ~~whenever~~Technologies, ~~the~~Inc. ~~intangible~~and ~~asset~~its ~~arises~~subsidiaries ~~from~~(collectively, ~~contractual~~the or“Company”) ~~other~~as ~~legal~~of ~~rights~~July 31, or2023 ~~when~~and it2022, ~~can~~and bethe ~~separated~~related orconsolidated ~~divided~~statements ~~from~~of ~~the~~operations, ~~acquired~~stockholders’ ~~entity~~deficit, and ~~sold,~~cash ~~transferred,~~flows ~~licensed,~~for ~~rented~~the oryears ~~exchanged~~then ended, ~~either~~and ~~individually~~the ~~or in combination~~related ~~with~~notes a(collectively ~~related~~referred ~~contract,~~to ~~asset~~as orthe ~~liability~~“financial statements”). ~~Such~~In ~~intangibles~~our ~~are~~opinion, ~~amortized~~the ~~over~~financial ~~their~~statements ~~useful~~present ~~lives.~~fairly, ~~Impairment~~in all ~~losses~~material ~~are~~respects, ~~recognized if~~the financial position of the ~~carrying~~Company ~~amount~~as of anJuly ~~intangible~~31, ~~asset~~2023 ~~subject~~and to2022, ~~amortization~~and isthe ~~not~~results ~~recoverable~~of ~~from~~their ~~expected~~operations ~~future~~and their cash flows ~~and~~for ~~its~~the ~~carrying amount~~years ~~exceeds~~then ~~its~~ended, ~~fair~~in ~~value~~conformity with accounting principles generally accepted in the United States of America.

~~The~~Going ~~Company~~Concern reviews its long-lived assets, including property and equipment, identifiable intangibles, and goodwill annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets.Matter

~~Intangible Assets.~~The ~~Our~~accompanying ~~intangible~~financial ~~assets consist of customer relationships, developed technologies,~~statements ~~trademarks~~have ~~and~~been ~~trade~~prepared ~~name.~~assuming ~~The~~that ~~Company recognizes an acquired intangible asset apart from goodwill whenever~~ the ~~intangible~~Company ~~asset arises~~will ~~from~~continue ~~contractual~~as ora ~~other~~going ~~legal~~concern. ~~rights,~~As ordiscussed ~~when~~in itNote ~~can~~2 beto ~~separated or divided from~~ the ~~acquired~~financial ~~entity and sold~~statements, ~~transferred,~~the ~~licensed,~~Company ~~rented,~~has orsuffered ~~exchanged,~~recurring ~~either~~losses ~~individually~~from oroperations inand ~~combination~~has ~~with~~ a ~~related~~net ~~contract,~~capital ~~asset,~~deficiency orthat ~~liability.~~raises ~~The~~substantial ~~intangible~~doubt ~~assets are~~about ~~amortized~~its ~~following~~ability to ~~the~~continue ~~patterns~~as ina ~~which~~going ~~the economic benefits are consumed or straight-line over the estimated useful life~~concern. WeManagement’s ~~periodically review~~plans ~~the~~in ~~estimated~~regard ~~useful~~to ~~lives of our intangible assets and review~~ these ~~assets~~matters ~~for~~are ~~impairment~~also ~~whenever~~described ~~events or changes~~ in ~~circumstances indicate~~Note ~~that the carrying value of the assets may not be recoverable~~2. The ~~determination~~financial ofstatements ~~impairment is based on estimates of future~~do ~~undiscounted~~not ~~cash~~include ~~flows.~~any Ifadjustments anthat ~~intangible~~might ~~asset~~result isfrom ~~considered to be impaired,~~ the ~~amount~~outcome of ~~the~~this ~~impairment will be equal to the excess of the carrying value over the fair value of the asset~~uncertainty.

~~Long-Lived~~Basis ~~Assets. The~~for Company reviews its long-lived assets, including property and equipment and identifiable intangibles annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets.Opinion

~~Impairment~~These offinancial ~~Long-Lived Assets.~~statements ~~Digerati~~are ~~reviews~~ the ~~carrying value~~ responsibility of ~~its~~the ~~long-lived~~Company’s ~~assets~~management. ~~annually~~Our orresponsibility ~~whenever~~is ~~events~~to orexpress ~~changes~~an inopinion ~~circumstances indicate~~on ~~that~~ the ~~value~~Company’s offinancial anstatements ~~asset~~based ~~may~~on ~~no longer be appropriate~~our audits. ~~Digerati~~We ~~assesses~~are ~~recoverability~~a ofpublic ~~the~~accounting ~~carrying~~firm ~~value~~registered ofwith the ~~asset by~~Public ~~estimating~~Company ~~the~~Accounting ~~future~~Oversight ~~net~~Board ~~cash~~(United ~~flows~~States) ~~expected~~(“PCAOB”) and toare ~~result~~required ~~from~~to ~~the~~be ~~asset,~~independent ~~including~~with ~~eventual~~respect ~~disposition.~~to If the ~~future~~Company ~~net~~in ~~cash~~accordance ~~flows are~~with ~~less~~the ~~than~~U.S. ~~the~~federal ~~carrying~~securities ~~value~~laws ofand the ~~asset,~~applicable rules anand ~~impairment~~regulations ~~loss~~of ~~is recorded equal to~~ the ~~difference~~Securities ~~between~~and ~~the~~Exchange ~~asset’s~~Commission ~~carrying value~~ and ~~fair~~the ~~value~~PCAOB.

~~Business combinations.~~We ~~Each~~conducted ~~investment~~our inaudits a business is being measured and determined whether the investment should be accounted for as a cost-basis investment, an equity investment, a business combination, or a common control transaction. An investment in ~~which~~accordance ~~the~~with ~~Company do not have a controlling interest and which~~ the ~~Company~~standards isof ~~not~~ the ~~primary beneficiary but where the Company has the ability to exert significant influence is accounted for under the equity method of accounting~~PCAOB. ~~For~~Those ~~those~~standards ~~investments~~require that we ~~account~~plan ~~for~~and inperform ~~accordance ASC~~the ~~805,~~audit ~~Business~~to ~~Combinations,~~obtain ~~the~~reasonable ~~Company~~assurance ~~records~~about whether the ~~assets~~financial ~~acquired~~statements ~~and~~are ~~liabilities~~free ~~assumed at management’s estimate~~ of ~~their fair~~material ~~values~~misstatement, onwhether ~~the~~due ~~date~~to oferror ~~the~~or ~~business combination~~fraud. The ~~assessment~~Company ofis ~~the~~not ~~estimated~~required ~~fair~~to ~~value of each of these can~~ have, anor ~~material~~were ~~effect~~we onengaged ~~the~~to ~~reported~~perform, ~~results~~an asaudit ~~intangible~~of ~~assets~~its ~~are~~internal ~~amortized~~control over ~~various~~financial ~~lives~~reporting. ~~Furthermore,~~As ~~according~~part toof ~~ASC~~our ~~805-50-30-5,~~audits ~~when accounting~~we ~~for~~are arequired ~~transfer~~to ofobtain ~~assets~~an ~~or exchange~~ understanding of ~~shares~~internal ~~between entities under common~~ control, ~~the~~over ~~entity~~financial ~~that~~reporting ~~receives~~but ~~the~~not ~~net~~for ~~assets or~~ the ~~equity~~purpose ~~interests~~of ~~shall~~expressing ~~initially~~an ~~measure~~opinion on the ~~recognized~~effectiveness ~~assets~~of ~~and liabilities transferred at their carrying amounts in~~ the ~~accounts~~Company’s internal ofcontrol ~~the~~over ~~transferring~~financial ~~entity~~reporting. atAccordingly, ~~the~~we ~~date~~express ofno ~~transfer~~such opinion.

19Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~Stock-based~~Critical ~~compensation. The~~Audit Company accounts for its share-based awards under ASC 718, Compensation – Stock Compensation. Employee and non-employee stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. During FY 2022 and 2021, the Company issued 1,500,000 common shares and 7,858,820 common shares, respectively, to professionals for exchange of services and various employees as part of our profit sharing-plan contribution and stock in lieu of cash. During FY 2022 and 2021 we recognized stock-based compensation expense of $125,250 and $264,712, respectively, equivalent to the market value of the shares issued calculated based on the share’s closing price at the grant dates. During FY 2022 we recognized stock-based compensation expense of $97,863 related to stock options previously issued to various employees.Matters

~~Treasury Shares.~~The Ascritical aaudit ~~result~~matters ofare ~~entering into various convertible debt instruments which contained a variable conversion feature with~~matters noarising ~~floor,~~from ~~warrants~~the ~~with~~current ~~fixed~~period ~~exercise~~audit ~~price,~~of ~~and~~the ~~convertible~~financial ~~notes~~statements ~~with~~that ~~fixed~~were ~~conversion~~communicated ~~price~~ or ~~with~~required ato ~~conversion~~be ~~price~~communicated ~~floor,~~to ~~we reserved~~the ~~30,000,000~~audit ~~treasury~~committee and ~~shares~~that: ~~for~~(1) ~~consideration~~relate ~~for~~to ~~future~~accounts ~~conversions~~or ~~and~~disclosures ~~exercise~~that ofare ~~warrants.~~material ~~The~~to ~~Company will evaluate~~ the ~~reserved~~ ~~treasury~~financial ~~shares~~statements ~~on a quarterly basis,~~ and if(2) ~~necessary,~~involved ~~reserve~~our ~~additional~~especially ~~treasury shares. As of July 31~~challenging, ~~2022~~ subjective, weor ~~believe that~~complex ~~the treasury shares reserved are sufficient for any future conversions of these instruments~~judgments. AsWe adetermined ~~result,~~that ~~these~~there ~~debt instruments and warrants~~ are ~~excluded~~no ~~from~~critical ~~derivative~~audit ~~consideration~~matters.

~~Derivative financial~~/s/ ~~instruments. Digerati does not use derivative instruments to hedge exposures to cash flow~~MaloneBailey, ~~market, or foreign currency risks. However, Digerati analyzes its convertible instruments and free-standing instruments such as warrants for derivative liability accounting.~~LLP

~~For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date~~www. ~~Any changes in fair value is recorded as non-operating, non-cash income or expense for each reporting period~~malonebailey. ~~For derivative notes payable conversion options Digerati uses the Black-Scholes option-pricing model to value the derivative instruments.~~com

~~The classification~~We ofhave ~~derivative~~served ~~instruments, including whether such instruments should be recorded~~ as ~~liabilities or as equity, is re-assessed at~~ the ~~end~~Company’s ~~of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current~~auditor ~~based~~since ~~on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date~~2018.

~~Fair Value~~Houston, of Financial Instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows:Texas

~~Level 1~~November –22, ~~Quoted prices in active markets for identical assets or liabilities.~~2023

~~Level~~ F-2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Level 3~~PART –1. ~~Unobservable~~FINANCIAL inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.INFORMATION

~~For certain~~ITEM of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments1. ~~The~~FINANCIAL carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities.STATEMENTS

~~Critical~~DIGERATI ~~Accounting~~TECHNOLOGIES, INC. ~~Estimates~~AND SUBSIDIARIES

~~Valuation of~~CONSOLIDATED ~~Goodwill and Intangible Assets. Goodwill and other intangible assets include the cost of the acquired business in excess~~BALANCE of the fair value of the tangible net assets recorded in connection with an acquisition. Other intangible assets include customer relationships, non-compete agreements, and trademarks. The Company uses a third-party specialty valuation firm to value its intangible assets acquired in its business combination and asset acquisitions. SHEETS

~~During~~(In the year ended July 31, 2022, the Company acquired Skynet Telecom LLC and Next Level Internet, Inc. the acquisitions were accounted for under the purchase method of accounting, with the Company identified as the accounting acquirer. Accordingly, the purchase prices of acquired tangible and intangible assets and liabilities were recorded and allocated at fair value on a relative basis as of acquisition dates. The Company based its estimates on historical experience, discounted cash flows and on various other assumptions that are believed to be reasonable in the circumstances at the time of acquisition, the results of which form the basis for making judgments about the fair value of the intangible assets acquired that are not readily apparent from other sources. The actual results from these acquisitions may differ from these estimates. thousands)

OFF BALANCE SHEET ARRANGEMENTS

	July 31,			July 31,
	2023			2022

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	924		$	1,509
Accounts receivable, net		749			622
Prepaid and other current assets		650			383
Total current assets		2,323			2,514

LONG-TERM ASSETS:
Intangible assets, net		12,211			15,188
Goodwill		19,380			19,380
Property and equipment, net		1,346			1,647
Other assets		437			273
Investment in Itellum		185			185
Right-of-Use assets - financing		578			62
Right-of-Use assets - operating		1,912			2,436
Total assets	$	38,372		$	41,685

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	5,373		$	3,222
Accrued liabilities		9,877			9,627
Equipment financing		228			21
Convertible note payable, current, net of discount of $960 and $120, respectively		8,216			3,948
Note payable, current, related party, net of discount of $0 and $40, respectively		500			833
Note payable, current, net of discount of $60 and $181, respectively		36,497			870
Acquisition payable		1,000			1,000
Deferred income		1,124			931
Derivative liability		4,125			10,588
Operating lease liability, current		662			797
Total current liabilities		67,602			31,837

LONG-TERM LIABILITIES:
Note payable, net of discount $0 and $313, respectively		-			33,335
Convertible note payable		-			500
Equipment financing		354			43
Operating lease liability, net of current portion		1,320			1,788
Total long-term liabilities		1,674			35,666
Total liabilities		69,276			67,503
Commitments and contingencies
STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.001, 50,000,000 shares authorized
Convertible Series A Preferred stock, $0.001, 1,500,000 shares designated, 0 and 225,000 issued and outstanding, respectively		-			-
Convertible Series B Preferred stock, $0.001, 1,000,000 shares designated, 425,442 and 425,442 issued and outstanding, respectively		-			-
Convertible Series C Preferred stock, $0.001, 1,000,000 shares designated, 55,400 and 55,400 issued and outstanding, respectively		-			-
Series F Super Voting Preferred stock, $0.001, 100 shares designated, 100 and 100 issued and outstanding, respectively		-			-
Common stock, $0.001, 500,000,000 shares authorized, 160,931,685 and 142,088,039 issued and outstanding (109,000,000 and 30,000,000, respectively, reserved in Treasury)		161			142
Additional paid in capital		93,911			89,487
Accumulated deficit		(121,684	)		(113,393	)
Other comprehensive income		1			1
Total Digerati’s stockholders’ deficit		(27,611	)		(23,763	)
Noncontrolling interest		(3,293	)		(2,055	)
Total stockholders’ deficit		(30,904	)		(25,818	)
Total liabilities and stockholders’ deficit	$	38,372		$	41,685

~~As of~~See ~~July~~accompanying ~~31,~~notes ~~2022,~~to weconsolidated ~~do not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K~~financial statements.

~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~ F-3

~~Not Applicable~~DIGERATI toTECHNOLOGIES, ~~smaller~~INC. ~~reporting~~AND ~~companies.~~SUBSIDIARIES

20CONSOLIDATED STATEMENTS OF OPERATIONS

~~ITEM 8.~~(In ~~FINANCIAL~~thousands, ~~STATEMENTS~~except ~~AND~~per ~~SUPPLEMENTARY~~share ~~DATA~~amounts)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	For the Years Ended July 31,
	2023			2022
OPERATING REVENUES:
Cloud software and service revenue	$	31,623		$	24,154

Total operating revenues		31,623			24,154

OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)		11,286			9,346
Selling, general and administrative expense		17,835			12,434
Legal and professional fees		3,533			3,036
Bad debt expense		115			98
Depreciation and amortization expense		3,909			2,916
Total operating expenses		36,678			27,830

OPERATING LOSS		(5,055	)		(3,676	)

OTHER INCOME (EXPENSE):
Gain (loss) on derivative instruments		6,526			6,186
Gain (loss) on extinguishment of debt		55			(5,481	)
Other income (expense)		465			26
Interest expense		(11,328	)		(5,990	)
Income tax expense		(192	)		(419	)
Total other income (expense)		(4,474	)		(5,678	)

NET LOSS INCLUDING NONCONTROLLING INTEREST		(9,529	)		(9,354	)

Less: Net loss attributable to the noncontrolling interests		1,238			1,341

NET LOSS ATTRIBUTABLE TO DIGERATI’S SHAREHOLDERS		(8,291	)		(8,013	)

Deemed dividend on Series A Convertible preferred stock		(8	)		(19	)
NET LOSS ATTRIBUTABLE TO DIGERATI’S COMMON SHAREHOLDERS	$	(8,299	)	$	(8,032	)

LOSS PER COMMON SHARE - BASIC	$	(0.05	)	$	(0.05	)

LOSS PER COMMON SHARE - DILUTED	$	(0.05	)	$	(0.05	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC		151,491,158			139,594,358

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED		151,491,158			139,594,358

	Page
Consolidated Financial Statements of Digerati Technologies, Inc., and Subsidiaries
Report of Independent Registered Public Accounting Firm (PCAOB ID 206)	F-2
Consolidated Balance Sheets as of July 31, 2022, and 2021	F-3
Consolidated Statements of Operations for the Years Ended July 31, 2022, and 2021	F-4
Consolidated Statements of Stockholders’ Deficit for the Years Ended July 31, 2022, and 2021	F-5
Consolidated Statements of Cash Flows for the Years Ended July 31, 2022, and 2021	F-6
Notes to Consolidated Financial Statements	F-7

See accompanying notes to consolidated financial statements.

F-14

~~REPORT OF~~DIGERATI ~~INDEPENDENT~~TECHNOLOGIES, ~~REGISTERED~~INC. ~~PUBLIC~~AND ~~ACCOUNTING FIRM~~SUBSIDIARIES

~~To the~~CONSOLIDATED ~~Shareholders~~STATEMENTS ~~and~~OF ~~Board~~STOCKHOLDERS’ ~~of Directors of~~DEFICIT

~~Digerati Technologies~~FOR THE YEARS ENDED JULY 31, ~~Inc.~~2023 AND 2022

~~Opinion on~~(In ~~the~~thousands, ~~Financial~~except ~~Statements~~for share amounts)

We have audited the accompanying consolidated balance sheets of Digerati Technologies, Inc., and its subsidiaries (collectively, the “Company”) as of July 31, 2022, and 2021, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2022, and 2021, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

	Equity Digerati’s Shareholders
	Preferred
	Convertible																								Additional			Other
	Series A					Series B				Series C				Series F				Common				Paid-in			Accumulated			Comprehensive		Stockholders			Noncontrolling
	Shares			Par		Shares		Par		Shares		Par		Shares		Par		Shares		Par		Capital			Deficit			Income		Equity			Interest			Totals
BALANCE, July 31, 2021		225,000			-		425,442		-		55,400		-		100		-		138,538,039		139	$	89,100		$	(105,380	)	$	1	$	(16,140	)	$	(714	)	$	(16,854	)
Amortization of employee stock options		-			-		-		-		-		-		-		-		-		-		98			-			-		98			-			98
Common stock issued for services		-			-		-		-		-		-		-		-		1,500,000		1		125			-			-		126			-			126
Common stock issued for debt extension		-			-		-		-		-		-		-		-		550,000		1		64			-			-		65			-			65
Common stock issued concurrent with convertible debt		-			-		-		-		-		-		-		-		1,500,000		1		119			-			-		120			-			120
Dividends accrued		-			-		-		-		-		-		-		-		-		-		(19	)		-			-		(19	)		-			(19	)
Net Ioss		-			-		-		-		-		-		-		-		-		-		-			(8,013	)		-		(8,013	)		(1,341	)		(9,354	)
BALANCE, July 31, 2022		225,000			-		425,442		-		55,400		-		100		-		142,088,039	$	142	$	89,487		$	(113,393	)	$	1	$	(23,763	)	$	(2,055	)	$	(25,818	)
Amortization of employee stock options		-			-		-		-		-		-		-		-		-		-		881			-			-		881			-			881
Common stock issued to employees		-			-		-		-		-		-		-		-		1,370,551		1		(1	)		-			-		-			-			-
Common stock issued for exercise of employee stock options		-			-		-		-		-		-		-		-		1,180,000		1		49			-			-		50			-			50
Common stock issued for conversion of Convertible Series A Preferred stock		(225,000	)		-		-		-		-		-		-		-		938,383		1		56			-			-		57			-			57
Common stock issued for exercise of warrants		-			-		-		-		-		-		-		-		170,305		-		22			-			-		22			-			22
Common stock issued for debt extension		-			-		-		-		-		-		-		-		6,170,000		6		583			-			-		589			-			589
Common stock issued for debt conversion and settlement		-			-		-		-		-		-		-		-		3,000,000		3		148			-			-		151			-			151
Common stock issued concurrent with convertible debt		-			-		-		-		-		-		-		-		6,014,407		7		456			-			-		463			-			463
Warrant issued with debt - debt discount		-			-		-		-		-		-		-		-		-		-		730			-			-		730			-			730
Warrant issued with debt extension		-			-		-		-		-		-		-		-		-		-		170			-			-		170			-			170
Beneficial conversion feature on convertible debt - debt discount		-			-		-		-		-		-		-		-		-		-		1,338			-			-		1,338			-			1,338
Dividends accrued		-			-		-		-		-		-		-		-		-		-		(8	)		-			-		(8	)		-			(8	)
Net loss		-			-		-		-		-		-		-		-		-		-		-			(8,291	)		-		(8,291	)		(1,238	)		(9,529	)
BALANCE, July 31, 2023		-			-		425,442		-		55,400		-		100		-		160,931,685	$	161	$	93,911		$	(121,684	)	$	1	$	(27,611	)	$	(3,293	)	$	(30,904	)

~~Going Concern~~See ~~Matter~~accompanying notes to consolidated financial statements.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.F-5

~~Basis~~DIGERATI TECHNOLOGIES, ~~for~~INC. ~~Opinion~~AND SUBSIDIARIES

~~These financial~~CONSOLIDATED ~~statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s~~STATEMENTS ~~financial~~OF ~~statements~~CASH based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.FLOWS

~~We conducted~~(In our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.thousands)

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

	For the Years Ended July 31,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,529	)	$	(9,354	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization expense		3,909			2,916
Stock compensation and warrant expense		881			98
Stock issued for services		-			126
Bad debt expense		115			78
Non-cash lease expense		696			626
Amortization of debt discount		2,930			2,064
(Gain) loss on derivative liabilities		(6,526	)		(6,186	)
(Gain) loss on extinguishment of debt		(55	)		5,481
(Gain) on settlement of conversion premium on Notes		(466	)		-
Gain on contingent earnout		-			(24	)
Debt extension fee charged to interest expense		864			225
Common stock issued for debt extension charged to interest expense		589			65
Warrants issued for debt extension		170			-
Changes in operating assets and liabilities:
Accounts receivable		(242	)		484
Prepaid expenses and other current assets		(281	)		(20	)
Inventory		14			(18	)
Other assets		(218	)		(131	)
Right of use operating lease liability		(775	)		(727	)
Accounts payable		2,151			860
Accrued expenses		2,358			566
Deferred income		193			911
Net cash used in operating activities		(3,222	)		(1,960	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisition of equipment		(436	)		(272	)
Proceeds from the acquisition of Nexogy		-			178
Acquisition of VoIP assets, net of cash received		-			(12,791	)
Net cash used in investing activities		(436	)		(12,885	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from convertible debt, net of original issuance cost and discounts		4,541			806
Borrowings from debt, net of original issuance cost and discounts		-			15,530
Proceeds from the exercise of warrants		22			-
Proceeds from the exercise of stock options		50			-
Borrowings from related party notes, net of original issuance cost and discounts		250			-
Principal payments on debt, net		(298	)		(250	)
Principal payments on convertible debt, net		(785	)		(425	)
Principal payments on related party notes, net		(568	)		(816	)
Principal payment on equipment financing		(139	)		20
Net cash provided by financing activities		3,073			14,865

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(585	)		20
CASH AND CASH EQUIVALENTS, beginning of period		1,509			1,489

CASH AND CASH EQUIVALENTS, end of period	$	924		$	1,509

SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	2,289		$	2,508

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued interest rolled into principal	$	2,109		$	970
Incentive earnout adjustment on Active PBX acquisition	$	-		$	120
Debt discount from common stock issued with debt	$	463		$	120
Debt discount from derivative liabilities	$	64		$	-
Debt discount from warrants issued with debt	$	730		$	-
Beneficial conversion feature on convertible note	$	1,338		$	-
Common stock issued for debt conversion and settlement	$	151		$	-
Common Stock issued for the conversion of Preferred Stock Series A	$	57		$	-
Dividends accrued	$	8		$	19
Right-of-use Assets recognized from operating and finance leases	$	829		$	940

~~Critical Audit~~See ~~Matters~~accompanying notes to consolidated financial statements.

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.F-6

~~/s/~~DIGERATI ~~MaloneBailey~~TECHNOLOGIES, ~~LLP~~ INC.

~~www.malonebailey.com~~AND SUBSIDIARIES

WeNOTES ~~have~~TO ~~served~~CONSOLIDATED asFINANCIAL ~~the Company’s auditor since 2018.~~STATEMENTS

~~Houston,~~NOTE ~~Texas~~1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~October~~Description ~~31,~~of ~~2022~~Business.

~~F-2~~Unless otherwise indicated or the context otherwise requires, references in this subsection to “we,” “us,” “our,” “the Company,” and other similar terms refer to Digerati and its subsidiaries.

~~PART~~Digerati Technologies, Inc., a Nevada corporation, through its operating 1subsidiary, Verve Cloud, Inc., ~~FINANCIAL~~with ~~INFORMATION~~locations in Texas, Florida, and California, provides cloud services specializing in Unified Communications as a Service (“UCaaS”) and broadband connectivity solutions for the business market. Digerati’s product line includes a portfolio of Internet-based telephony products and services delivered through its cloud application platform and session-based communication network and network services including Internet broadband, fiber, mobile broadband, and cloud Wide Area Network (“WAN”) or Software-defined Wide Area Network (“SD WAN”) solutions.

~~ITEM~~Digerati formerly had four (4) operating subsidiaries: (i) Verve Cloud, 1Inc., ~~FINANCIAL~~a ~~STATEMENTS~~Texas entity (this entity was formerly known as Shift8 Networks, Inc.); (ii) T3 Communications, Inc., a Florida entity; (iii) Nexogy, Inc., a Florida entity; and (iv) NextLevel Internet, Inc., a California entity. Each of these entities was a subsidiary of Verve Cloud, Inc., a Nevada entity (formerly known as T3 Communications, Inc.) which was formed on March 27, 2023. Effective June 1, 2023, each of our operating subsidiaries were consolidated as one single entity reporting as Verve Cloud, Inc.

~~DIGERATI TECHNOLOGIES~~Digerati provides enterprise-class, ~~INC~~carrier-grade services to the small-to-medium-sized business (“SMB”) at cost-effective monthly rates. ~~AND~~Digerati’s ~~SUBSIDIARIES~~UCaaS or cloud communication services include fully hosted Internet Protocol (“IP”)/private branch exchange (“PBX”), video conferencing, mobile applications, Voice over Internet Protocol (“VoIP”) transport, Session Initiation Protocol (“SIP”) trunking, and customized VoIP services all delivered Only in the Cloud™.

~~CONSOLIDATED~~Principles ~~BALANCE~~of ~~SHEETS~~Consolidation.

~~(In~~The ~~thousands)~~consolidated financial statements include the accounts of Digerati, and its subsidiaries, which are majority owned by Digerati in accordance with ASC 810-10-05, Consolidation. All significant inter-company transactions and balances have been eliminated.

	July 31,			July 31,
	2022			2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,509		$	1,489
Accounts receivable, net		622			617
Prepaid and other current assets		383			232
Total current assets		2,514			2,338
LONG-TERM ASSETS:
Intangible assets, net		15,188			8,527
Goodwill		19,380			3,931
Property and equipment, net		1,647			529
Other assets		273			76
Investment in Itellum		185			185
Right-of-use asset		2,498			934
Total assets	$	41,685		$	16,520
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	3,222			1,653
Accrued liabilities		9,627			2,570
Equipment financing		21			37
Convertible note payable, current, net of debt discount of $120 and $340, respectively		3,948			1,049
Note payable, current, related party, net of debt discount of $40 and $0, respectively		833			998
Note payable, current, net of debt discount of $181 and $714, respectively		870			2,963
Acquisition payable		1,000			-
Deferred income		931			20
Derivative liability		10,588			16,773
Operating lease liability, current		797			503
Total current liabilities		31,837			26,566
LONG-TERM LIABILITIES:
Notes payable, related party, net of debt discount $0 and $0, respectively		-			136
Note payable, net of debt discount $313 and $4,641 respectively		33,335			6,241
Convertible note payable, net of debt discount of $0 and $0, respectively		500			-
Equipment financing		43			-
Operating lease liability, net of current portion		1,788			431
Total long-term liabilities		35,666			6,808
Total liabilities		67,503			33,374
Commitments and contingencies
STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.001, 50,000,000 shares authorized
Convertible Series A Preferred stock, $0.001, 1,500,000 shares designated, 225,000 and 225,000 issued and outstanding, respectively		-			-
Convertible Series B Preferred stock, $0.001, 1,000,000 shares designated, 425,442 and 425,442 issued and outstanding, respectively		-			-
Convertible Series C Preferred stock, $0.001, 1,000,000 shares designated, 55,400 and 55,400 issued and outstanding, respectively		-			-
Series F Super Voting Preferred stock, $0.001, 100 shares designated, 100 and 100 issued and outstanding, respectively		-			-
Common stock, $0.001, 500,000,000 shares authorized, 142,088,039 and 138,538,039 issued and outstanding, respectively (30,000,000 reserved in Treasury)		142			139
Additional paid in capital		89,487			89,100
Accumulated deficit		(113,393	)		(105,380	)
Other comprehensive income		1			1
Total Digerati’s stockholders’ deficit		(23,763	)		(16,140	)
Noncontrolling interest		(2,055	)		(714	)
Total stockholders’ deficit		(25,818	)		(16,854	)
Total liabilities and stockholders’ deficit	$	41,685		$	16,520

Cost Method Investment.

~~See~~On ~~accompanying~~June ~~notes~~14, 2019, the Company, entered into a Stock Purchase Agreement (the “Agreement”) to ~~consolidated~~acquire a 12% minority interest in Itellum Comunicacions Costa Rica, S.R.L. The Company paid $100,000 in cash, issued 500,000 shares of common stock with a market value of $85,000. As result, the Company holds a minority interest in Itellum for an investment of $185,000. The Company has no influence over the operating and financial ~~statements~~ policies of Itellum. The Company has no controlling interest, is not the primary beneficiary and does not have the ability to exert significant influence. As a result, we accounted for this investment using the measurement alternative, defined as cost, less impairment, plus or minus changes resulting from observable price changes for identical or similar investments of the same issuer.

~~F-3~~Use of Estimates.

~~DIGERATI~~In ~~TECHNOLOGIES~~preparing financial statements, ~~INC~~management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the statement of operations. ~~AND~~Actual ~~SUBSIDIARIES~~results could differ from those estimates.

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~F-7

~~(In~~Beneficial ~~thousands,~~conversion ~~except per share amounts)~~features.

	For the Years ended July 31,
	2022			2021
OPERATING REVENUES:
Cloud software and service revenue	$	24,154		$	12,416
Total operating revenues		24,154			12,416
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)		9,346			5,135
Selling, general and administrative expense		12,434			7,019
Legal and professional fees		3,036			894
Bad debt expense		98			17
Depreciation and amortization expense		2,916			1,749
Total operating expenses		27,830			14,814
OPERATING LOSS		(3,676	)		(2,398	)
OTHER INCOME (EXPENSE):
Gain (loss) on derivative instruments		6,186			(9,935	)
Gain (loss) on settlement of debt		(5,481	)		560
Income tax benefit (expense)		(419	)		(183	)
Other income (expense)		26			(294	)
Interest expense		(5,990	)		(4,765	)
Total other income (expense)		(5,678	)		(14,617	)
NET LOSS INCLUDING NONCONTROLLING INTEREST		(9,354	)		(17,015	)
Less: Net loss attributable to the noncontrolling interests		1,341			332
NET LOSS ATTRIBUTABLE TO DIGERATI’S SHAREHOLDERS		(8,013	)		(16,683	)
Deemed dividend on Series A Convertible preferred stock		(19	)		(20	)
NET LOSS ATTRIBUTABLE TO DIGERATI’S COMMON SHAREHOLDERS	$	(8,032	)	$	(16,703	)
LOSS PER COMMON SHARE - BASIC	$	(0.05	)	$	(0.13	)
LOSS PER COMMON SHARE - DILUTED	$	(0.05	)	$	(0.13	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC		139,594,358			129,411,947
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED		139,594,358			129,411,947

The Company evaluates the conversion feature for whether it was beneficial as described in ASC 470-30. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

~~See~~Related ~~accompanying notes to consolidated financial statements~~parties.

~~F-4~~The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures (“ASC 850”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

~~DIGERATI~~Concentration ~~TECHNOLOGIES,~~of ~~INC~~Credit Risk. ~~AND SUBSIDIARIES~~

~~CONSOLIDATED~~Financial ~~STATEMENTS~~instruments OFthat ~~STOCKHOLDERS~~potentially subject Digerati to concentration of credit risk consist primarily of trade receivables. In the normal course of business, Digerati provides credit terms to its customers. Accordingly, Digerati performs ongoing credit evaluations of its customers and maintains allowances for possible losses, which, when realized, have been within the range of management’s ~~DEFICIT~~expectations. Digerati maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. Digerati has not experienced any losses in such accounts and Digerati does not believe it is exposed to any significant credit risk on cash and cash equivalents.

~~YEARS~~Revenue ~~ENDED JULY 31, 2021 AND 2022~~Recognition.

~~(In~~The ~~thousands~~Company recognizes revenue in accordance with ASC 606, ~~except~~Revenues ~~for~~from ~~share~~Contracts ~~amounts~~with Customers (“ASC 606”).

	Equity Digerati’s Shareholders
	Preferred Convertible																				Additional						Other
	Series A				Series B				Series C				Series F				Common				Paid-in			Accumulated			Comprehensive		Stockholders			Noncontrolling
	Shares		Par		Shares		Par		Shares		Par		Shares		Par		Shares		Par		Capital			Deficit			Income		Equity			Interest			Totals
BALANCE, July 31, 2020		225,000		-		407,477		-		-		-		-		-		101,323,590		101	$	86,364		$	(88,697	)	$	1	$	(2,231	)	$	(382	)	$	(2,613	)
Amortization of employee stock options		-		-		-		-		-		-		-		-		-		-		135			-			-		135			-			135
Common stock issued for services, to employees		-		-		-		-		-		-		-		-		7,858,820		8		257			-			-		265			-			265
Common stock issued for services		-		-		-		-		-		-		-		-		4,250,000		4		219			-			-		223			-			223
Common stock issued for debt conversion and settlement		-		-		-		-		-		-		-		-		21,275,629		21		407			-			-		428			-			428
Common stock issued concurrent with convertible debt		-		-		-		-		-		-		-		-		2,100,000		2		145			-			-		147			-			147
Beneficial conversion feature on convertible debt		-		-		-		-		-		-		-		-		-		-		282			-			-		282			-			282
Common stock issued for settlement of accounts payable		-		-		-		-		-		-		-		-		1,000,000		1		59			-			-		60			-			60
Common stock issued for exercise of warrants		-		-		-		-		-		-		-		-		330,000		1		33			-			-		34			-			34
Common stock issued, extension of debt		-		-		-		-		-		-		-		-		400,000		1		59			-			-		60			-			60
Convertible Series B Preferred stock issued for debt settlement		-		-		17,965		-		-		-		-		-		-		-		18			-			-		18			-			18
Convertible Series C Preferred stock issued for AP settlement		-		-		-		-		55,400		-		-		-		-		-		554			-			-		554			-			554
Super Voting Preferred Stock Series F		-		-		-		-		-		-		100		-		-		-		-			-			-		-			-			-
Derivative liability resolved to APIC due to note conversion		-		-		-		-		-		-		-		-		-		-		588			-			-		588			-			588
Dividends declared		-		-		-		-		-		-		-		-		-		-		(20	)		-			-		(20	)		-			(20	)
Net Ioss		-		-		-		-		-		-		-		-		-		-		-			(16,683	)		-		(16,683	)		(332	)		(17,015	)
BALANCE, July 31, 2021		225,000		-		425,442		-		55,400		-		100		-		138,538,039		139	$	89,100		$	(105,380	)	$	1	$	(16,140	)	$	(714	)	$	(16,854	)
Amortization of employee stock options		-		-		-		-		-		-		-		-		-		-		98			-			-		98			-			98
Common stock issued for services		-		-		-		-		-		-		-		-		1,500,000		1		125			-			-		126			-			126
Common stock issued for debt extension		-		-		-		-		-		-		-		-		550,000		1		64			-			-		65			-			65
Common stock issued concurrent with convertible debt		-		-		-		-		-		-		-		-		1,500,000		1		119			-			-		120			-			120
Dividends declared		-		-		-		-		-		-		-		-		-		-		(19	)		-			-		(19	)		-			(19	)
Net Ioss		-		-		-		-		-		-		-		-		-		-		-			(8,013	)		-		(8,013	)		(1,341	)		(9,354	)
BALANCE, July 31, 2022		225,000		-		425,442		-		55,400		-		100		-		142,088,039		142	$	89,487		$	(113,393	)	$	1	$	(23,763	)	$	(2,055	)	$	(25,818	)

Sources of revenue:

~~See~~Cloud-based hosted Services. The Company recognizes cloud-based hosted ~~accompanying~~services ~~notes~~revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice, and web conferencing, call recording, messaging, voicemail to ~~consolidated~~email ~~financial~~conversion, ~~statements~~integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN, fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized over time, on a monthly basis, as services are rendered or at a point in time when control of the products transfers to the customer.

F-58

~~DIGERATI TECHNOLOGIES, INC~~Service Revenue. ~~AND SUBSIDIARIES~~

~~CONSOLIDATED~~Service ~~STATEMENTS~~revenue OFfrom ~~CASH~~subscriptions ~~FLOWS~~to the Company’s cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively, customers may choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as services are activated for the customer.

~~(In~~Product ~~thousands)~~Revenue.

	For the Years ended July 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,354	)	$	(17,015	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization expense		2,916			1,707
Stock compensation and warrant expense		98			624
Stock issued for services		126			-
Bad debt expense		78			17
Amortization of ROU Asset - operating		626			328
Amortization of debt discount		2,064			2,809
Loss (gain) on derivative liabilities		(6,186	)		9,935
Loss (gain) on settlement of debt		5,481			(560	)
Accrued interest added to principal		-			510
Debt extension fee charged to interest expense		225			-
Gain on contingent earnout		(24	)		-
Preferred stock C issued for settlement of AP from current year		-			333
Stock issued for debt extension		65			59
Changes in operating assets and liabilities:
Accounts receivable		484			(69	)
Prepaid expenses and other current assets		(20	)		46
Other assets		(131	)		-
Inventory		(18	)		(27	)
Right of use operating lease liability		(727	)		(328	)
Accounts payable		860			99
Accrued expenses		566			1,083
Deferred income		911			(259	)
Net cash used in operating activities		(1,960	)		(708	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisition of equipment		(272	)		(410	)
Proceeds from Nexogy		178			-
Acquisitions of VoIP assets, net of cash received		(12,791	)		(10,390	)
Net cash used in investing activities		(12,885	)		(10,800	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from convertible debt, net of original issuance cost and discounts		806			1,078
Proceeds from sale of stock and warrants		-			34
Borrowings from debt, net of original issuance cost and discounts		15,530			13,036
Principal payments on debt, net		(250	)		(1,338	)
Principal payments on convertible notes, net		(425	)		(266	)
Principal payments on related party notes, net		(816	)		(169	)
Principal payment on equipment financing		20			(63	)
Net cash provided by financing activities		14,865			12,312
NET INCREASE IN CASH AND CASH EQUIVALENTS		20			804
CASH AND CASH EQUIVALENTS, beginning of period		1,489			685
CASH AND CASH EQUIVALENTS, end of period	$	1,509		$	1,489
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	2,508		$	1,111
Income tax paid	$	-		$	-
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued interest rolled into principal	$	970		$	-
Beneficial conversion feature on convertible debt	$	-		$	282
Incentive earnout adjustment on Active PBX acquisition	$	120		$	-
Debt discount from common stock issued with debt	$	120		$	147
Debt discount from derivative liabilities	$	-		$	358
Debt discount from PRG warrant derivative	$	-		$	6,462
Promissory note reclassed to convertible debt	$	-		$	15
Capitalization of ROU assets and liabilities - operating	$	940		$	440
Preferred Stock Series B issued for debt conversion and settlement	$	-		$	18
Preferred Stock Series C issued for AP settlement	$	-		$	221
Common Stock issued for debt conversion	$	-		$	429
Common Stock issued for accounts payable	$	-		$	60
Dividend declared	$	19		$	20
Derivative liability resolved to APIC due to debt conversion	$	-		$	588

The Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience.

~~See~~Disaggregation of Cloud-based ~~accompanying~~hosted ~~notes~~revenues. ~~to consolidated financial statements~~

~~F-6~~Summary of disaggregated revenue is as follows (in thousands):

DIGERATI TECHNOLOGIES, INC.

	For the Years Ended July 31,
	2023		2022

Cloud software and service revenue	$	31,370	$	23,871
Product revenue		253		283
Total operating revenues	$	31,623	$	24,154

~~AND SUBSIDIARIES~~Contract Assets.

~~NOTES~~Contract TOassets ~~CONSOLIDATED~~are ~~FINANCIAL~~recorded ~~STATEMENTS~~for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the initial month’s services or equipment are discounted. Contract assets are included in prepaid and other current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract assets as of July 31, 2023 and 2022, were $0 and $6,701, respectively.

~~NOTE~~Deferred Income. ~~1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Description~~Deferred income represents billings or payment received in advance of ~~Business~~revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of July 31, 2023 and 2022, was $281,294 and $66,167, respectively. All of the deferred revenue as of July 31, 2022 were recognized as revenues during the year ended July 31, 2023.

~~Digerati~~Customer ~~Technologies, Inc~~deposits., a Nevada corporation (including our subsidiaries, “we,” “us,” “Company” or “Digerati”), through its operating subsidiaries in Texas, Florida, and California that includes Shift8 Networks, Inc., dba, T3 Communications, T3 Communications, Inc. (both referred to herein as “T3”), Nexogy Inc., and NextLevel Internet, Inc., provides cloud services specializing in Unified Communications as a Service (“UCaaS”) and broadband connectivity solutions for the business market. Our product line includes a portfolio of Internet-based telephony products and services delivered through our cloud application platform and session-based communication network and network services including Internet broadband, fiber, mobile broadband, and cloud WAN solutions (SD WAN). We provide enterprise-class, carrier-grade services to the small-to-medium-sized business (“SMB”) at cost-effective monthly rates. Our UCaaS or cloud communication services include fully hosted IP/PBX, video conferencing, mobile applications, Voice over Internet Protocol (“VoIP”) transport, SIP trunking, and customized VoIP services all delivered Only in the Cloud™.

~~Principles~~The Company in some instances requires customers to make deposits for the last month of ~~Consolidation~~services, equipment, installation charges and training. As equipment is installed and training takes places the deposits are then applied to revenue. The deposit for the last month of services is applied to any outstanding balances if services are cancelled. If the customer’s account is paid in full, the Company will refund the full deposit in the month following service termination. As of July 31, 2023 and 2022, Digerati’s customer deposits balance was $842,956 and $864,345, respectively. The customer deposit balance is included as part of deferred income on the consolidated balance sheets.

~~The consolidated financial statements include the accounts of Digerati, and its subsidiaries, which are majority owned by Digerati in accordance with ASC 810~~F-~~10-05. All significant inter-company transactions and balances have been eliminated.~~9

~~Cost Method Investment~~Costs to Obtain a Customer Contract.

OnDirect incremental ~~June~~costs ~~14,~~of ~~2019,~~obtaining ~~the~~a ~~Company~~contract, ~~entered~~consisting ~~into~~of asales ~~Stock~~commissions, ~~Purchase~~are ~~Agreement (the~~deferred, ~~“Agreement”)~~and toamortized ~~acquire~~over athe ~~12%~~estimated ~~minority~~life ~~interest~~of inthe customer, ~~Itellum~~which ~~Comunicacions~~currently ~~Costa~~averages ~~Rica,~~36 Smonths.~~R.L.~~ The Company ~~paid~~calculates ~~$100,000 in~~the ~~cash,~~estimated ~~issued~~life ~~500,000 shares~~ of ~~common~~the ~~stock~~customer ~~with~~on aan ~~market~~annual ~~value of $85,000~~basis. AsThe ~~result, the~~ Company classifies ~~holds~~deferred acommissions ~~minority~~as ~~interest~~prepaid inexpenses ~~Itellum for~~or another ~~investment~~noncurrent ofassets ~~$185,000.~~based ~~The~~on ~~Company~~the ~~has~~timing noof ~~influence~~when ~~over~~it ~~the~~expects ~~operating~~to ~~and~~recognize ~~financial~~the expense. ~~policies~~As of ~~Itellum.~~July ~~The~~31, 2023, the Company has $798,555 in deferred nocommissions/contract ~~controlling interest~~costs, of iswhich ~~not~~ the ~~primary~~current ~~beneficiary~~portion ~~and~~of ~~does~~$340,224 ~~not~~is ~~have~~included ~~the~~in ~~ability~~prepaid toand ~~exert~~other ~~significant~~current ~~influence.~~assets Asand athe ~~result,~~long-term weportion ~~accounted~~of ~~for~~$458,331 ~~this~~in other ~~investment~~assets ~~using~~in the ~~measurement~~consolidated ~~alternative,~~balance ~~defined~~sheets. asSales ~~cost,~~commissions ~~less~~expensed ~~impairment,~~for ~~plus~~the oryear ~~minus~~ended ~~changes~~July ~~resulting~~31, ~~from~~2023 ~~observable~~and ~~price changes~~2022, ~~for~~were ~~identical~~$2,818,681 orand ~~similar investments of the same issuer~~$2,262,129, respectively.

~~Use~~Direct ofCosts ~~Estimates~~- Cloud-based hosted Services.

InWe ~~preparing~~incur ~~financial~~bandwidth ~~statements,~~and ~~management~~colocation ~~makes~~charges ~~estimates~~in ~~and~~connection ~~assumptions~~with ~~that~~our ~~affect~~UCaaS ~~the~~or ~~reported~~cloud ~~amounts~~communication ofservices. ~~assets~~The ~~and~~bandwidth ~~liabilities~~charges are incurred inas part of the ~~balance~~connectivity ~~sheet~~between ~~and~~our ~~revenue~~customers ~~and~~to ~~expenses~~allow inthem ~~the~~access ~~statement~~to ofour ~~operations~~various services. ~~Actual~~We ~~results~~also ~~could~~incur ~~differ~~costs from ~~those~~underlying ~~estimates~~providers for fiber, internet broadband, and telecommunication circuits in connection with our data and connectivity solutions.

~~Beneficial~~Cash ~~conversion~~and ~~features~~cash equivalents.

The Company ~~evaluates~~considers ~~the~~all ~~conversion~~bank ~~feature~~deposits ~~for~~and ~~whether~~highly itliquid ~~was~~investments ~~beneficial~~with asoriginal ~~described~~maturities ~~in ASC 470-30. The intrinsic value~~ of athree ~~beneficial conversion~~months ~~feature~~or ~~inherent~~less to ~~a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not~~ be ~~settled in~~ cash ~~upon~~and ~~conversion, is treated as a discount to the convertible note payable. This discount~~cash ~~is amortized over the period from the date of issuance to the date the note is due using the effective interest method~~equivalents. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

~~F-7~~Allowance for Doubtful Accounts.

~~Related~~Bad ~~parties~~debt expense is recognized based on management’s estimate of likely losses each year based on past experience and an estimate of current year uncollectible amounts. As of July 31, 2023 and 2022, Digerati’s allowance for doubtful accounts balance was $37,962 and $74,628, respectively.

~~The~~Property Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interestsequipment. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

~~Concentration~~Property and equipment are recorded at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of ~~Credit~~equipment ~~Risk~~are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are one (1) to seven (7) years.

~~Financial instruments that potentially subject Digerati to concentration of credit risk consist primarily of trade receivables~~Goodwill. ~~In the normal course~~ of business, Digerati provides credit terms to its customers. Accordingly, Digerati performs ongoing credit evaluations of its customers and maintains allowances for possible losses, which, when realized, have been within the range of management’s expectations. Digerati maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. Digerati has not experienced any losses in such accounts and Digerati does not believe it is exposed to any significant credit risk on cash and cash equivalents.

~~Revenue~~Goodwill ~~Recognition~~is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at July 31, 2023 and 2022 and determined that there was no impairment.

The fair value of the Company’s ~~recognizes~~reporting ~~revenue~~unit inis ~~accordance~~dependent ~~with~~upon ~~Accounting~~the ~~Standards~~Company’s ~~Codification~~estimate ~~(ASC)~~of ~~606,~~future ~~Revenues~~cash flows and other factors. The Company’s estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from ~~Contracts~~actual ~~with~~future ~~Customers~~cash ~~(ASC~~flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the ~~606)~~Company’s market capitalization plus a suitable control premium at date of the evaluation.

~~Sources~~The financial and credit market volatility directly impacts the Company’s fair value measurement through the Company’s weighted average cost of ~~revenue:~~capital that the Company uses to determine its discount rate and through the Company’s stock price that the Company uses to determine its market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded.

~~Cloud~~F-based hosted Services. The Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice, and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized at the time control of the products transfers to the customer.10

~~Service Revenue~~Intangible Assets.

~~Service~~Our ~~revenue~~intangible ~~from~~assets ~~subscriptions~~consist toof ~~the~~customer ~~Company’s~~relationships, ~~cloud-based~~developed ~~technology~~technologies, ~~platform~~trademarks isand ~~recognized~~trade ~~over~~name. ~~time~~The Company onrecognizes aan ~~ratable~~acquired ~~basis~~intangible ~~over~~asset ~~the contractual~~apart ~~subscription~~from ~~term~~goodwill ~~beginning~~whenever on the ~~date~~intangible ~~that~~asset ~~the~~arises ~~platform~~from iscontractual ~~made~~or ~~available~~other tolegal rights, ~~the~~or ~~customer.~~when ~~Payments~~it ~~received~~can inbe ~~advance of~~separated ~~subscription~~or ~~services~~divided ~~being~~from ~~rendered~~the ~~are~~acquired ~~recorded~~entity asand asold, ~~deferred~~transferred, ~~revenue.~~licensed, ~~Usage~~rented, ~~fees~~or exchanged, either individually ~~bundled~~ or ~~not~~in ~~bundled~~combination with a related contract, asset, or liability. The intangible assets are ~~recognized~~amortized following the patterns ~~when~~in which the ~~Company~~economic ~~has~~benefits aare ~~right~~consumed toor ~~invoice.~~straight-line ~~Professional~~over ~~services~~the ~~for~~estimated ~~configuration,~~useful ~~system~~life. ~~integration,~~We ~~optimization,~~periodically ~~customer~~review ~~training~~the estimated useful lives of our intangible assets and~~/or~~ ~~education~~review ~~are~~these ~~primarily~~assets ~~billed~~for onimpairment awhenever ~~fixed-fee~~events ~~basis~~or ~~and~~changes ~~are~~in ~~performed~~circumstances byindicate that the ~~Company~~carrying value ~~directly.~~of ~~Alternatively,~~the ~~customers~~assets may ~~choose to~~not ~~perform~~be ~~these~~recoverable. ~~services~~The ~~themselves~~determination orof ~~engage~~impairment ~~their~~is ~~own~~based ~~third-party~~on ~~service~~estimates ~~providers~~of future undiscounted cash flows. If ~~Professional~~an ~~services~~intangible ~~revenue~~asset is ~~recognized~~considered ~~over time~~to be impaired, ~~generally~~the asamount ~~services~~of ~~are~~the ~~activated~~impairment ~~for~~will be equal to the ~~customer~~excess of the carrying value over the fair value of the asset.

~~Product~~Valuation ~~Revenue.~~of Goodwill and Intangible Assets.

~~The~~Goodwill ~~Company~~and ~~recognizes~~other ~~product~~intangible ~~revenue~~assets ~~for~~include ~~telephony~~the ~~equipment~~cost atof athe ~~point~~acquired business in ~~time,~~excess ~~when~~of ~~transfer~~the offair ~~control~~value ~~has~~of ~~occurred,~~the ~~which~~tangible isnet ~~generally~~assets recorded ~~upon~~in ~~delivery~~connection with an acquisition. ~~Sales~~Other ~~returns~~intangible ~~are~~assets ~~recorded~~include ascustomer relationships, non-compete agreements, and trademarks. The Company uses a ~~reduction~~third-party specialty valuation firm to ~~revenue~~value ~~estimated~~its ~~based~~intangible onassets ~~historical~~acquired ~~experience~~in its business combination and asset acquisitions.

~~F-8~~During the year ended July 31, 2022, the Company acquired Skynet Telecom LLC and Next Level Internet, Inc. the acquisitions were accounted for under the purchase method of accounting, with the Company identified as the accounting acquirer. Accordingly, the purchase prices of acquired tangible and intangible assets and liabilities were recorded and allocated at fair value on a relative basis as of acquisition dates. The Company based its estimates on historical experience, discounted cash flows and on various other assumptions that are believed to be reasonable in the circumstances at the time of acquisition, the results of which form the basis for making judgments about the fair value of the intangible assets acquired that are not readily apparent from other sources. The actual results from these acquisitions may differ from these estimates.

~~Disaggregation of Cloud~~Long-~~based~~Lived ~~hosted revenues~~Assets.

~~Summary~~The ofCompany ~~disaggregated~~reviews ~~revenue~~its islong-lived asassets, ~~follows~~including (property and equipment and identifiable intangibles annually or whenever events or changes in ~~thousands):~~circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets.

	For the Years ended July 31,
	2022		2021
Cloud software and service revenue	$	23,871	$	12,153
Product revenue		283		263
Total operating revenues	$	24,154	$	12,416

Impairment of Long-Lived Assets.

~~Contract Assets~~Digerati reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the value of an asset may no longer be appropriate. Digerati assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.

~~Contract~~Business ~~assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed~~combinations. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the initial month’s services or equipment are discounted. Contract assets are included in prepaid and other current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract assets as of July 31, 2022, and July 31, 2021, were $6,701 and $17,661, respectively.

~~Deferred Income~~Each investment in a business is being measured and determined whether the investment should be accounted for as a cost-basis investment, an equity investment, a business combination, or a common control transaction. An investment in which the Company does not have a controlling interest and which the Company is not the primary beneficiary but where the Company has the ability to exert significant influence is accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805, Business Combinations, the Company records the assets acquired and liabilities assumed at the management’s estimate of their fair values on the date of the business combination. The assessment of the estimated fair value of each of these can have a material effect on the reported results as intangible assets are amortized over various lives. Furthermore, according to ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer.

Deferred income represents billings or payment received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12F-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of July 31, 2022, and July 31, 2021, were $66,167 and $19,984, respectively.11

~~Customer~~Treasury ~~deposits~~Shares.

~~The~~As ~~Company~~a inresult ~~some~~of ~~instances~~entering ~~requires~~into ~~customers~~various toconvertible ~~make~~debt ~~deposits~~instruments ~~for~~which ~~the~~contained ~~last~~a ~~month~~variable ofconversion ~~services,~~feature ~~equipment,~~with ~~installation~~no ~~charges~~floor, ~~and training.~~warrants Aswith ~~equipment~~fixed isexercise ~~installed~~price, and ~~training~~convertible ~~takes~~notes ~~places~~with ~~the~~fixed ~~deposits~~conversion ~~are~~price ~~then~~or ~~applied~~with toa ~~revenue.~~conversion ~~The~~price ~~deposit~~floor, ~~for~~we ~~the~~reserved ~~last month of services~~109,000,000 istreasury ~~applied~~shares tofor ~~any~~consideration ~~outstanding~~for ~~balances~~future ifconversions ~~services~~and ~~are~~exercise ~~cancelled~~of warrants. IfThe ~~the~~Company ~~customer’s~~will ~~account~~evaluate ~~is paid in full,~~ the ~~Company~~reserved ~~will~~treasury ~~refund~~shares ~~the~~on ~~full~~a ~~deposit~~quarterly inbasis, ~~the~~and ~~month~~if ~~following~~necessary, ~~service~~reserve ~~termination~~additional treasury shares. As of July 31, ~~2022~~2023, ~~and~~we ~~July~~believe ~~31,~~that ~~2021,~~the ~~Digerati’s~~treasury ~~customer~~share ~~deposits~~reserved ~~balance~~are ~~was~~sufficient ~~$864,345~~for ~~and~~any ~~$0,~~future ~~respectively.~~conversions ~~The~~of ~~customer~~these ~~deposit~~instruments. ~~balance~~As isa ~~included~~result, asthese ~~part~~debt ofinstruments ~~deferred~~and ~~income~~warrants onare ~~the~~excluded ~~consolidated~~from ~~balance~~derivative ~~sheets~~consideration.

~~Costs to Obtain a Customer Contract~~Derivative financial instruments.

~~Direct~~Digerati ~~incremental~~does ~~costs~~not ofuse ~~obtaining~~derivative ainstruments ~~contract,~~to ~~consisting~~hedge ofexposures ~~sales~~to ~~commissions,~~cash ~~are deferred~~flow, ~~and amortized over the estimated life of the customer~~market, ~~which currently averages 36 months. The Company calculates the estimated life of the customer on an annual basis. The Company classifies deferred commissions as prepaid expenses~~ or ~~other~~foreign ~~noncurrent~~currency ~~assets based on the timing of when it expects to recognize the expense~~risks. ~~As of July 31~~However, ~~2022,~~Digerati ~~the~~analyzes ~~Company has $184,808 in deferred commissions/contract costs. Sales commissions~~its ~~expensed~~convertible ~~for~~instruments ~~the year ended July 31, 2022,~~ and ~~the~~free-standing ~~year~~instruments ~~ended~~such ~~July 31, 2021, were $2,262,129 and $871,561, respectively. The cost to obtain customer contract balance is included~~ as ~~part~~warrants offor ~~prepaid~~derivative ~~expenses~~liability ~~on the consolidated balance sheets~~accounting.

~~Direct~~For ~~Costs~~derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued ~~Cloud~~at each reporting date. Any changes in fair value are recorded as non-~~based~~operating, ~~hosted~~non-cash ~~Services~~income or expense for each reporting period. For derivative notes payable conversion options and warrants Digerati uses the Black-Scholes option-pricing model to value the derivative instruments.

WeThe ~~incur~~classification ~~bandwidth~~of ~~and~~derivative ~~colocation~~instruments, ~~charges~~including inwhether ~~connection~~such ~~with~~instruments ~~our~~should ~~UCaaS~~be orrecorded ~~cloud~~as ~~communication~~liabilities ~~services.~~or ~~The~~as ~~bandwidth~~equity, ~~charges~~is ~~are incurred~~re-assessed asat ~~part~~the end of ~~the~~each ~~connectivity~~reporting ~~between~~period. ~~our~~Derivative ~~customers~~instrument toliabilities ~~allow~~are ~~them~~classified ~~access~~in tothe ~~our~~balance ~~various~~sheet ~~services.~~as Wecurrent ~~also~~or ~~incur~~non-current based ~~costs~~on ~~from~~whether ~~underlying~~or ~~providers for~~not ~~fiber,~~net-cash ~~internet~~settlement ~~broadband,~~of ~~and~~the ~~telecommunication~~derivative ~~circuits~~instrument inis ~~connection~~probable ~~with~~within ~~our~~the ~~data~~next ~~and~~12 ~~connectivity~~months ~~solutions~~from the balance sheet date.

~~F-9~~Fair Value of Financial Instruments.

~~Cash~~Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and ~~cash~~minimize ~~equivalents~~the use of unobservable inputs when measuring fair value. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows:

~~The~~Level ~~Company~~1 ~~considers~~– ~~all~~Quoted ~~bank~~prices ~~deposits~~in ~~and~~active ~~highly~~markets ~~liquid~~for ~~investments~~identical ~~with~~assets ~~original maturities of three months~~ or ~~less to be cash and cash equivalents~~liabilities.

~~Allowance~~Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for ~~Doubtful~~similar ~~Accounts.~~assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Bad~~Level ~~debt~~3 ~~expense~~– isUnobservable ~~recognized~~inputs ~~based~~that onare ~~management’s~~supported ~~estimate~~by oflittle ~~likely~~or ~~losses~~no ~~each~~market ~~year~~activity ~~based~~and onthat ~~past~~are ~~experience~~financial ~~and~~instruments anwhose ~~estimate of~~values ~~current~~are ~~year~~determined ~~uncollectible~~using ~~amounts.~~pricing Asmodels, ofdiscounted ~~July~~cash ~~31,~~flow ~~2022~~methodologies, ~~and~~or ~~2021~~similar techniques, ~~Digerati’s~~as ~~allowance~~well as instruments for ~~doubtful~~which the ~~accounts~~determination ~~balance~~of ~~was~~fair ~~$74,628 and~~value ~~$29,000,~~requires ~~respectively~~significant judgment or estimation.

~~Property~~For certain of our financial instruments, including cash and ~~equipment~~cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities.

~~Property and~~Our ~~equipment~~derivative ~~are~~liabilities ~~recorded~~as atof ~~cost.~~July ~~Additions~~31, ~~are capitalized~~ 2023 and ~~maintenance~~2022 ~~and~~amounted ~~repairs are charged~~ to ~~expense~~$4,125,429 ~~as incurred. Gains~~ and ~~losses~~ ~~on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets~~$10,587,717, ~~which are one (1) to seven (7) years~~respectively.

~~Goodwill.~~ F-12

~~Goodwill is carried at cost~~The ~~and~~following istable ~~not~~provides ~~amortized. The Company tests goodwill for impairment on an annual basis at~~ the ~~end~~fair ofvalue ~~each fiscal year, relying on a number~~ of ~~factors~~the ~~including~~derivative ~~operating~~financial ~~results,~~instruments ~~business~~measured plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at ~~July 31,~~fair ~~2022~~value ~~and~~using ~~2021~~significant ~~and determined that there was no~~unobservable ~~impairment.~~inputs:

The fair value of the Company’s reporting unit is dependent upon the Company’s estimate of future cash flows and other factors. The Company’s estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company’s market capitalization plus a suitable control premium at date of the evaluation.

			Fair value measurements at reporting date using:
Description	Fair Value		Quoted prices in active markets for identical liabilities (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Convertible promissory notes derivative liability at July 31, 2022	$	10,587,717		-		-	$	10,587,717
Convertible promissory notes derivative liability at July 31, 2023	$	4,125,429		-		-	$	4,125,429

The ~~financial~~fair ~~and credit~~ market ~~volatility~~ ~~directly impacts the Company’s fair~~ value ~~measurement through the Company’s weighted average cost~~ of ~~capital~~all ~~that~~derivatives during the ~~Company~~year ~~uses~~ended toJuly ~~determine~~31, ~~its~~2023, ~~discount~~was ~~rate~~determined ~~and~~using ~~through~~ the ~~Company’s~~Black-Scholes ~~stock~~option ~~price~~pricing ~~that~~model ~~the~~which ~~Company~~used ~~uses to determine its market capitalization. Therefore, changes in~~ the ~~stock~~following ~~price may also affect the amount of impairment recorded.~~assumptions:

Intangible Assets.


Expected dividend yield			0.00%
Expected stock price volatility			169.54% - 178.58%
Risk-free interest rate			3.97% - 5.55%
Expected term			0.25 - 7.30 years

~~Our intangible assets consist of customer relationships, developed technologies, trademarks and trade name.~~ The ~~Company~~fair ~~recognizes an~~market ~~acquired~~value ~~intangible~~of ~~asset~~all ~~apart~~derivatives ~~from goodwill whenever the intangible asset arises from contractual or other legal rights, or when~~during ~~it can be separated or divided from~~ the ~~acquired~~year ~~entity~~ended ~~and~~July ~~sold~~31, ~~transferred~~2022, ~~licensed,~~was ~~rented,~~determined orusing ~~exchanged, either individually or in combination with a related contract, asset, or liability. The intangible assets are amortized following~~ the ~~patterns in which the economic benefits are consumed or straight~~Black-~~line~~Scholes ~~over~~option ~~the~~pricing ~~estimated~~model ~~useful~~which ~~life.~~used ~~We periodically review~~ the ~~estimated~~following useful lives of our intangible assets and review these assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The determination of impairment is based on estimates of future undiscounted cash flows. If an intangible asset is considered to be impaired, the amount of the impairment will be equal to the excess of the carrying value over the fair value of the asset.assumptions:

Valuation of Goodwill and Intangible Assets.


Expected dividend yield			0.00%
Expected stock price volatility			63.32% - 250.19%
Risk-free interest rate			0.03% - 2.98%
Expected term			0.05 - 9.50 years

~~Goodwill and~~The ~~other~~following ~~intangible~~table ~~assets~~provides ~~include~~a ~~the~~summary ~~cost~~ of the changes ~~acquired business~~ in ~~excess of the~~ fair value of the ~~tangible~~derivative ~~net~~financial ~~assets~~instruments ~~recorded in~~measured ~~connection~~at ~~with~~fair anvalue ~~acquisition.~~on ~~Other intangible assets include customer relationships, non-compete agreements, and trademarks. The Company uses~~ a ~~third-party~~recurring ~~specialty~~basis ~~valuation~~using ~~firm~~significant ~~to value its intangible assets acquired in its business combination and asset acquisitions.~~ unobservable inputs:

During the year ended July 31, 2022, the Company acquired Skynet Telecom LLC and Next Level Internet, Inc. the acquisitions were accounted for under the purchase method of accounting, with the Company identified as the accounting acquirer. Accordingly, the purchase prices of acquired tangible and intangible assets and liabilities were recorded and allocated at fair value on a relative basis as of acquisition dates. The Company based its estimates on historical experience, discounted cash flows and on various other assumptions that are believed to be reasonable in the circumstances at the time of acquisition, the results of which form the basis for making judgments about the fair value of the intangible assets acquired that are not readily apparent from other sources. The actual results from these acquisitions may differ from these estimates.

Balance at July 31, 2021	$	16,773,383
Derivative gain		(6,185,666	)
Balance at July 31, 2022	$	10,587,717
Derivative from new convertible promissory notes recorded as debt discount		63,805
Derivative gain		(6,526,093	)
Balance at July 31, 2023	$	4,125,429

~~Long-Lived Assets~~Income taxes.

~~The Company~~Digerati ~~reviews~~recognizes ~~its~~deferred ~~long-lived~~tax assets, ~~including~~and ~~property~~liabilities ~~and~~based ~~equipment~~on ~~and~~differences ~~identifiable~~between ~~intangibles~~the ~~annually~~financial orreporting ~~whenever~~and ~~events~~tax orbasis ~~changes~~of ~~in circumstances~~assets ~~indicate~~and ~~that~~liabilities using the ~~carrying~~enacted ~~amount~~tax ofrates ~~the~~and ~~assets~~laws ~~may~~that ~~not~~are beexpected ~~fully~~to ~~recoverable.~~be Toin ~~determine~~effect ~~recoverability~~when ofthe ~~its~~differences ~~long-lived assets,~~are ~~the~~expected ~~Company~~to ~~evaluates~~be ~~the~~recovered. ~~probability~~Digerati ~~that~~provides a ~~future~~valuation ~~undiscounted~~allowance ~~net~~for ~~cash~~deferred ~~flows~~tax ~~will~~assets befor ~~less~~which ~~than~~it ~~the~~does ~~carrying~~not ~~amount~~consider realization of ~~the~~such assets to be more likely than not.

~~Impairment~~Since January 1, 2007, Digerati accounts for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of ~~Long-Lived~~being ~~Assets~~realized upon settlement. As of July 31, 2023 and 2022, we have no liability for unrecognized tax benefits.

~~Digerati reviews the carrying value of its long~~F-lived assets annually or whenever events or changes in circumstances indicate that the value of an asset may no longer be appropriate. Digerati assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.13

FStock-10based compensation.

~~Business~~Stock-based ~~combinations~~compensation. The Company accounts for its share-based awards under ASC 718, Compensation – Stock Compensation. Employee and non-employee stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. During Fiscal Years 2023 and 2022, the Company issued 1,370,551 common shares and 1,500,000 common shares, respectively, to professionals for exchange of services and to various employees as stock in lieu of cash compensation. During FY 2023 and 2022, we recognized stock-based compensation expense of $0 (the stock-based compensation expense for the 1,370,551 common shares were expensed in a prior fiscal year) and $125,250, respectively, equivalent to the market value of the shares issued calculated based on the share’s closing price at the grant dates. During Fiscal Year 2023, we recognized stock-based compensation expense of approximately $881,000 related to stock options previously issued to various employees.

~~Each~~Basic ~~investment in a business is being measured~~ and ~~determined~~diluted whether the investment should be accounted for as a cost-basis investment, an equity investment, a business combination, or a common control transaction. An investment in which the Company does not have a controlling interest and which the Company is not the primary beneficiary but where the Company has the ability to exert significant influence is accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805, Business Combinations, the Company records the assets acquired and liabilities assumed at the management’s estimate of their fair values on the date of the business combination. The assessment of the estimated fair value of each of these can have a material effect on the reported results as intangible assets are amortized over various lives. Furthermore, according to ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net ~~assets~~income or(loss) ~~the~~per ~~equity interests shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer~~share.

~~Treasury~~The ~~Shares~~basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended July 31, 2023 and 2022, potential dilutive securities including options and warrants were not included in the calculation of diluted net loss per common share as their effect would be anti-dilutive due to the Company’s net loss. Potential dilutive securities, which are not included in dilutive weighted average shares are as follows:

As a result of entering into various convertible debt instruments which contained a variable conversion feature with no floor, warrants with fixed exercise price, and convertible notes with fixed conversion price or with a conversion price floor, we reserved 30,000,000 treasury shares for consideration for future conversions and exercise of warrants. The Company will evaluate the reserved treasury shares on a quarterly basis, and if necessary, reserve additional treasury shares. As of July 31, 2022, we believe that the treasury share reserved are sufficient for any future conversions of these instruments. As a result, these debt instruments and warrants are excluded from derivative consideration.

	2023		2022
Options to purchase common stock	$	13,805,000	$	9,130,000
Warrants to purchase common stock		124,942,900		108,841,179
Convertible debt		105,431,080		43,628,667
Convertible Series A Preferred stock		-		750,000
Convertible Series B Preferred stock		28,967,703		25,575,847
Convertible Series C Preferred stock		35,404,971		31,259,369
Total	$	308,551,654	$	219,185,062

~~Derivative~~Noncontrolling ~~financial instruments~~interest.

~~Digerati~~The ~~does~~Company ~~not~~follows ~~use~~ASC ~~derivative~~Topic ~~instruments~~810, which togoverns ~~hedge~~the ~~exposures~~accounting tofor ~~cash~~and ~~flow~~reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, ~~market~~among other things, orthat ~~foreign~~NCIs ~~currency~~be ~~risks.~~treated ~~However~~as a separate component of equity, ~~Digerati~~not ~~analyzes~~as ~~its~~a liability, that increases and decreases in the parent’s ~~convertible~~ownership ~~instruments~~interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and ~~free-standing~~that ~~instruments~~losses of a partially owned consolidated subsidiary be allocated to the NCI even when such asallocation ~~warrants~~might ~~for~~result ~~derivative~~in a ~~liability~~deficit ~~accounting~~balance. The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).

~~For~~Recently ~~derivative~~issued ~~financial~~accounting ~~instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date~~pronouncements. Any changes in fair value are recorded as non-operating, non-cash income or expense for each reporting period. For derivative notes payable conversion options and warrants Digerati uses the Black-Scholes option-pricing model to value the derivative instruments.

~~The~~Recent ~~classification~~accounting ~~of derivative instruments~~pronouncements, ~~including~~other ~~whether~~than ~~such instruments should be recorded as liabilities or as equity~~below, isissued ~~re-assessed at~~by the ~~end~~FASB of(including ~~each~~its ~~reporting~~Emerging ~~period.~~Issues ~~Derivative~~Task ~~instrument~~Force), ~~liabilities~~the ~~are~~AICPA ~~classified~~and in the ~~balance~~SEC ~~sheet as current or non-current~~did ~~based~~not, ~~on whether~~ or are not, ~~net-cash~~believed ~~settlement~~by ofmanagement ~~the~~to ~~derivative~~have ~~instrument~~a ismaterial ~~probable~~effect ~~within~~on the ~~next~~Company’s 12present ~~months~~or ~~from~~future ~~the~~financial ~~balance sheet date~~statements.

~~Fair Value of Financial Instruments.~~F-14

~~Fair value~~In isAugust ~~defined~~2020, as the ~~exchange~~FASB ~~price~~issued ~~that~~“ASU ~~would~~2020-06, Debt bewith ~~received~~Conversion ~~for~~and anOther ~~asset~~Options or(Subtopic ~~paid~~470-20) toand ~~transfer~~Derivatives aand ~~liability~~Hedging—Contracts ~~(an~~in ~~exit~~Entity’s ~~price)~~Own inEquity ~~the principal~~(Subtopic or815-40)” ~~most~~which ~~advantageous~~simplifies ~~market~~the accounting for ~~the~~convertible ~~asset~~instruments. orThe ~~liability~~guidance inremoves ancertain ~~orderly~~accounting ~~transaction~~models ~~between~~which ~~market~~separate the ~~participants~~embedded onconversion features from the ~~measurement~~host ~~date. A~~contract ~~fair~~for ~~value~~convertible ~~hierarchy~~instruments. isEither ~~used~~a ~~which~~modified ~~requires~~retrospective anmethod ~~entity~~of totransition or ~~maximize~~a ~~the~~fully ~~use~~retrospective method of ~~observable~~transition ~~inputs~~is ~~and~~permissible ~~minimize~~for the ~~use~~adoption of ~~unobservable inputs~~this ~~when~~standard. ~~measuring~~Update ~~fair value~~No. ~~The~~2020-06 ~~fair~~is ~~value~~effective ~~hierarchy~~for ~~based~~fiscal years onbeginning ~~the~~after ~~three~~December ~~levels~~15, of2023, ~~inputs~~including ~~that~~interim ~~may~~periods bewithin ~~used~~those tofiscal ~~measure~~years. ~~fair~~The ~~value~~Company is currently evaluating the ~~are~~potential asimpact ~~follows:~~of this ASU on its financial statements.

~~Level~~In June 2016, the FASB issued “ASU 2016-13, 1Financial –Instruments—Credit ~~Quoted~~Losses ~~prices~~(Topic 326): Measurement of Credit Losses on Financial Instruments.” The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in ~~active~~scope. ~~markets~~Update No. 2016-13 is effective for ~~identical~~fiscal ~~assets~~years orbeginning ~~liabilities~~after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of this ASU on its financial statements.

~~Level~~ NOTE 2 – ~~Observable~~GOING inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.CONCERN

~~Level 3~~Financial – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.Condition

~~F-11~~The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Since the Company’s inception in 1993, the Company has incurred net losses and accumulated a deficit of approximately $121,684,000 and a working capital deficit of approximately $65,279,000 which raises substantial doubt about Digerati’s ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~For certain~~Management ofPlans ~~our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due~~ to ~~the~~Continue ~~short~~as ~~maturity~~a ~~of these instruments. The carrying value of our long-term debt~~Going ~~approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities.~~Concern

~~Our derivative~~Management ~~liabilities~~believes that available resources as of July 31, ~~2022~~2023, will not be sufficient to fund the Company’s operations and ~~2021~~corporate expenses over the next 12 months. The Company’s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, and other things, raising additional capital, issuing stock-based compensation to certain members of ~~$10~~the executive management team in lieu of cash,~~588~~ or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding,~~000~~ the Company will seek to secure such best-efforts funding from various possible sources, including equity or debt financing, sales of assets, or collaborative arrangements. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and ~~$16~~such securities may have rights,~~773~~ preferences,~~000~~ or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, ~~respectively~~the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to curtail its operations, and the Company may not be able to pay off its obligations, if and when they come due.

~~The~~We are currently taking initiatives to reduce ~~following~~our ~~table~~overall ~~provides~~cash deficiencies on a monthly basis. During Fiscal Year 2023, certain members of our executive management team have taken a significant portion of their compensation in common stock to reduce the ~~fair~~depletion of our available cash. To strengthen our business, we intend to adopt best practices from our recent acquisitions and invest in a marketing and sales strategy to grow our monthly recurring revenue; we anticipate utilizing our value-added resellers and channel partners to tap into new sources of revenue streams; and we have also secured numerous agent agreements through our recent acquisitions that we anticipate will accelerate revenue growth. In addition, we will continue to focus on selling a greater number of comprehensive services to our existing customer base. Further, in an effort to increase our revenues, we will continue to evaluate the ~~derivative~~acquisition ~~financial~~of ~~instruments~~various ~~measured~~assets atwith ~~fair~~emphasis ~~value~~in ~~using~~VoIP ~~significant~~Services ~~unobservable~~and Cloud Communication ~~inputs:~~Services. As a result, during the due diligence process we anticipate incurring significant legal and professional fees.

			Fair value measurements at reporting date using:
Description	Fair Value		Quoted prices in active markets for identical liabilities (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Convertible promissory notes derivative liability at July 31, 2021	$	16,773,383		-		-	$	16,773,383
Convertible promissory notes derivative liability at July 31, 2022	$	10,587,717		-		-	$	10,587,717

We have been successful in raising debt and equity capital in the past and as described in Notes 10, 11, and 12. We have financing efforts in place to continue to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot assure you that our plans to address these matters in the future will be successful.

~~The fair market value of all derivatives during the year ended July 31, 2022, was determined using the Black~~F-~~Scholes option pricing model which used the following assumptions:~~15

Expected dividend yield	0.00	%
Expected stock price volatility	63.32% - 250.19	%
Risk-free interest rate	0.03% - 2.98	%
Expected term	0.05 - 9.50 years

We require cash to meet our interest payments to Post Road (as defined below), capital expenditure needs, and operational cash flow needs. The Company anticipates issuing additional equity or entering into additional Convertible Notes to secure the funding required to meet these cash needs. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, the Company may not be able to meet its interest payments, capital expenditures, and operational needs. As a result, the Company will be required to negotiate with its lender the terms of the current financing agreements, in addition to postponing the timing of deployment of its capital expenditures and extending the timing of the operational cash needs.

~~The~~In November 2020, the Company and Verve Cloud, ~~fair~~Inc. ~~market~~(a ~~value~~Nevada ofentity) ~~all~~(“Verve ~~derivatives~~Cloud”) ~~during~~and ~~the~~Verve ~~year~~Cloud’s ~~ended~~subsidiaries ~~July~~(Verve 31Cloud and its subsidiaries, ~~2021~~collectively, “the ~~was~~Verve ~~determined~~Cloud ~~using~~Nevada Parties”) entered into a credit agreement (the ~~Black-Scholes~~“Credit ~~option~~Agreement”) ~~pricing~~with ~~model~~Post Road Administrative ~~which~~LLC ~~used~~and its affiliate Post Road Special Opportunity Fund II LLP (collectively, “Post Road”). The Company is a party to certain sections of the ~~following~~Credit ~~assumptions:~~Agreement. Next Level Internet, Inc. became a Verve Cloud Nevada Party in February 2022.

Expected dividend yield	0.00	%
Expected stock price volatility	125.60% - 283.01	%
Risk-free interest rate	0.05% - 1.65	%
Expected term	0.03 - 10.00 years

The Credit Agreement contains customary representations, warranties, and indemnification provisions. The Credit Agreement also contains affirmative and negative covenants with respect to the operation of the business and properties of the loan parties as well as financial performance.

~~The following~~Below ~~table~~are ~~provides~~key ~~a summary of the changes in fair value of the derivative~~ financial ~~instruments~~covenant requirements, (measured atquarterly) ~~fair~~for ~~value~~the onfiscal aquarter ~~recurring basis~~ended ~~using~~July ~~significant~~31, ~~unobservable inputs~~2023:

Balance at July 31, 2020	$	606,123
Derivative from new convertible promissory notes and warrants recorded as debt discount		6,820,108
Derivative liability resolved to additional paid in capital due to debt conversion		(588,097	)
Derivative loss		9,935,249
Balance at July 31, 2021	$	16,773,383
Derivative gain		(6,185,666	)
Balance at July 31, 2022	$	10,587,717

●

Maximum–Allowed - Senior Leverage Ratio of 3.55 to 1.00

~~Income taxes.~~● Minimum–Allowed – EBITDA (on an annualized basis) of $4,394,867

~~Digerati recognizes~~● ~~deferred~~Minimum–Allowed ~~tax~~- ~~assets~~Liquidity ~~and liabilities based on differences between the financial reporting and tax basis~~ of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Digerati provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.$2,000,000

~~Since January~~● 1,Maximum ~~2007,~~Allowed ~~Digerati~~- ~~accounts~~Capital ~~for~~Expenditures uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of ~~being realized upon settlement. As of July 31~~$94,798 ~~2022, we have no liability for unrecognized tax benefits.~~(Quarterly)

~~F-12~~● Minimum–Allowed – Fixed Charge Coverage Ratio of 1.50 to 1.00

~~Stock~~● Maximum Allowed -~~based compensation~~ Churn of 3.00% at any time

~~Stock-based~~As ~~compensation. The~~of ~~Company~~July ~~accounts~~31, ~~for its share-based awards under ASC 718~~2023, ~~Compensation~~the –Company ~~Stock~~was ~~Compensation.~~not ~~Employee~~in ~~and non-employee stock-based~~compliance ~~compensation~~with ~~is measured at~~ the ~~grant~~financial ~~date,~~covenants ~~based~~under on the ~~fair~~Credit ~~value of the award, and is recognized as an expense over the requisite service period~~Agreement. ~~During~~This ~~FY 2022 and 2021~~noncompliance, ~~the~~together ~~Company~~with ~~issued~~certain ~~1,500,000~~other ~~common~~events ~~shares and 7,858,820 common shares, respectively to professionals for exchange~~ of ~~services~~default ~~and~~that ~~various~~have ~~employees as part of our profit sharing-plan contribution and stock in lieu of cash. During FY 2022~~occurred and ~~2021~~are wecontinuing ~~recognized~~under ~~stock-based~~the ~~compensation~~Credit ~~expense of $125~~Agreement,~~250~~ ~~and~~resulted ~~$264,712,~~in ~~respectively~~our ~~equivalent~~classifying to the ~~market~~indebtedness ~~value~~under of the ~~shares~~ ~~issued~~Credit ~~calculated~~Agreement ~~based~~as ona ~~the~~current ~~share’s closing price at the grant dates~~liability. ~~During FY 2022 we recognized stock-based compensation expense of $97,863 related to stock options previously issued to various employees.~~

~~Basic~~On December 15, 2022, the lender agreed to forbear ~~and~~from ~~diluted~~exercising ~~net~~its ~~income~~remedies ~~(loss)~~in ~~per~~connection ~~share~~with the financial covenants that were not complied with during the quarter ended October 31, 2022, as well as certain other specified defaults, until December 23, 2022.

~~The~~On ~~basic~~February ~~net~~3, ~~loss~~2023, ~~per~~the ~~common~~Company, ~~share~~the isVerve ~~computed~~Cloud Nevada byParties ~~dividing~~(as ~~the~~defined ~~net loss~~in byNote 2 to the ~~weighted~~financial ~~average~~statements), ~~number~~and ofPost ~~common~~Road ~~shares~~entered ~~outstanding.~~into ~~Diluted~~a ~~net~~Consent, ~~loss~~Limited ~~per~~Waiver ~~common~~and ~~share~~Fourth isAmendment to ~~computed~~Credit byAgreement ~~dividing~~and ~~the~~Amendment ~~net~~to ~~loss adjusted~~the onNotes an(the “asFourth ~~if converted~~Amendment”). ~~basis~~The Fourth Amendment is effective as of December 23, by2022. Among other things, the ~~weighted~~Fourth ~~average~~Amendment ~~number~~conditionally revises each of ~~common~~the ~~shares~~six ~~outstanding~~financial ~~plus~~covenants ~~potential~~set ~~dilutive securities.~~forth ~~For~~in Section 11.12 of the ~~years~~Credit ~~ended~~Agreement ~~July~~(related 31to maximum leverage, ~~2022~~minimum liquidity, ~~and~~minimum ~~2021~~EBITDA, ~~potential~~maximum ~~dilutive~~capital ~~securities~~expenditures, ~~including~~minimum ~~options~~interest coverage (a provision that replaces the minimum fixed charge coverage ratio provision), and ~~warrants~~maximum ~~were~~churn). ~~not~~In ~~included~~addition, pursuant to the Fourth Amendment, none of the financial covenants contained in Section 11.12 of the ~~calculation~~Credit Agreement, as amended by the Fourth Amendment, were to be tested as of ~~diluted~~the ~~net~~January ~~loss~~31, ~~per~~2023 ~~common~~fiscal ~~share~~quarter end date so long as ~~their~~no ~~effect~~events ~~would~~of default had occurred, other than minimum liquidity of $1,000,000, which was tested and met as of January 31, 2023. The Fourth Amendment provides that these revised financial covenants will be ~~anti-dilutive~~null ~~due~~and tovoid if the Company’s ~~net~~planned ~~loss~~merger with MEOA does not close by February 28, 2023. ~~Potential~~On March 13, 2023, the Company, ~~dilutive~~the ~~securities~~Verve Cloud Nevada Parties, and Post Road entered into a Fifth Amendment of the Credit Agreement which ~~are~~extended ~~not~~the ~~included~~closing indate ~~dilutive~~of the ~~weighted~~planned ~~average~~merger ~~shares~~to ~~are~~April as28, ~~follows:~~2023.

	7/31/2022		7/31/2021
Options to purchase common stock		9,130,000		9,230,000
Warrants to purchase common stock		108,841,179		109,506,179
Convertible debt		43,628,667		20,506,684
Convertible Series A Preferred stock		750,000		750,000
Convertible Series B Preferred stock		25,575,847		24,936,847
Convertible Series C Preferred stock		31,259,369		30,478,369
Total:		219,185,062		195,408,079

F-16

~~Noncontrolling~~Pursuant to the Fourth Amendment, Post Road agreed ~~interest.~~to conditionally waive each and all of the Specified Defaults (as defined in the Fourth Amendment).

The ~~Company~~ ~~follows~~Fourth ~~Financial~~Amendment ~~Accounting~~amends ~~Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, which governs~~ the ~~accounting~~Credit ~~for and reporting of non-controlling interests (“NCIs”)~~Agreement ~~in partially owned consolidated subsidiaries~~ and the ~~loss~~Notes ofto ~~control~~modify ~~of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in~~ the ~~parent’s ownership~~ interest ~~that~~rate ~~leave~~payable ~~control~~by ~~intact~~Verve be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balanceCloud. ~~The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).~~

On ~~May~~ 1April 3, ~~2018~~2023, ~~T3 Communications~~the Company, ~~Inc.~~the ~~(“T3”),~~Verve aCloud Nevada ~~Corporation~~Parties, and Post Road entered into a ~~Stock~~Sixth ~~Purchase~~Amendment to its Credit Agreement (~~‘SPA~~the “Sixth Amendment”),. ~~whereby~~Pursuant ~~in an exchange for $250,000, T3 agreed~~ to ~~sell to~~ the ~~buyers~~Sixth ~~199~~Amendment,~~900~~ ~~shares~~Post ofRoad ~~common~~agreed ~~stock equivalent~~ to ~~19.99%~~increase of the ~~issued and~~aggregate ~~outstanding~~net ~~common~~unpaid ~~share~~principal ofamount ~~T3 Communications, Inc~~(i. ~~The $250~~e.,~~000~~ ofless ~~the~~original ~~cash~~issue ~~received~~discounts and ~~under this~~ transaction ~~was~~costs ~~recognized~~paid asin ~~an adjustment~~cash toby ~~the~~Company ~~carrying~~upon ~~amount of~~ the ~~noncontrolling~~closing ~~interest~~thereof and asdisclosed ~~an increase~~ in ~~additional~~writing ~~paid-in~~to ~~capital~~Post inRoad) ~~T3. At~~ the ~~option of the~~ Company, ~~and~~is ~~for~~allowed to aborrow ~~period~~in ~~of five years following~~ the ~~date~~form of ~~the~~convertible ~~SPA,~~loans ~~the~~to ~~199,900 shares of common stock in T3 may be converted into Common Stock of Digerati at a ratio of~~ $3,500,000.4 ~~shares~~This ofamount ~~DTGI~~was ~~Common~~increased ~~stock~~from ~~for everyone (1) share of T3 at any time after~~ the ~~DTGI Common Stock has a current market price of~~ $~~1.50~~3,000,000 oragreed ~~more~~to ~~per~~by ~~share~~Post ~~for~~Road 20pursuant to ~~consecutive~~the ~~trading~~Fourth ~~days~~Amendment.

~~F-13~~Pursuant to the Sixth Amendment, Post Road agreed to defer the cash interest otherwise due and payable on April 1, 2023 to the May 1, 2023 payment date.

~~For~~On May 1, 2023, the ~~years~~Company, ~~ended~~the ~~July~~Verve ~~31,~~Cloud ~~2022~~Nevada Parties, and ~~2021,~~Post ~~the~~Road ~~Company~~entered ~~accounted for~~into a ~~noncontrolling~~Seventh ~~interest~~Amendment to Credit Agreement (the “Seventh Amendment”). The Seventh Amendment is dated as of $May 1,~~341~~ 2023,~~000~~ ~~and~~with ~~$332,000,~~an ~~respectively.~~effective ~~Additionally~~date of April 28, ~~one~~2023. ofPursuant to the ~~buyers~~Seventh Amendment, ~~serves~~the asplanned amerger ~~Board~~closing ~~Member~~date was ofamended T3to ~~Communications~~May 31, ~~Inc.~~2023, aor ~~Florida~~such ~~Corporation~~later date as agreed to in writing by Post Road in its sole discretion. On June 15, ~~one~~2023, ofthe ~~our~~planned ~~operating~~merger with ~~subsidiaries~~MEOA was terminated.

~~Recently~~The Seventh Amendment ~~issued~~also ~~accounting~~modified ~~pronouncements~~the negative covenants set forth in the Credit Agreement to add a new section on material nonpublic information (“MNPI”). The Seventh Amendment’s modifications to the Credit Agreement provide that if Post Road elects not to receive MNPI from the Company during any period during which the Company is obligated to deliver a notice to Post Road which notice would include MNPI, the Company will inform Post Road of its obligation to deliver the notice, and Post Road will inform the Company whether it elects to receive such notice. If Post Road elects to receive the notice of MNPI, the Company shall deliver such notice in accordance with the Credit Agreement, and if Post Road elects not to receive such notice, the Company shall not deliver the notice and Post Road shall have waived its rights to receive delivery of the notice. Any election by Post Road to waive their right to receive delivery of any notice of MNPI applies only with respect to the specific notice and not to any subsequent notice.

InOn ~~the~~August ~~fourth~~16, ~~quarter~~2023, ofthe ~~fiscal~~Company, the ~~year~~Verve ~~2022~~Cloud Nevada Parties, and Post Road entered into the ~~Company~~Letter ~~early~~Agreement ~~adopted~~to ~~ASU~~the ~~No.~~Credit ~~2021-08,~~Agreement ~~Business~~(the “Letter Agreement”), ~~Combinations~~with an effective date of August 4, 2023 (~~Topic~~the ~~805~~“Effective Date”):. ~~Accounting~~Pursuant ~~for~~to ~~Contract~~the ~~Assets~~Letter Agreement, Post Road has agreed that all accrued and ~~Contract~~unpaid ~~Liabilities~~cash ~~from~~interest ~~Contracts~~that ~~with~~was ~~Customers~~originally due and payable by the Company on the April 3, ~~which~~2023, ~~generally~~May ~~required~~1, 2023, June 1, 2023, anJuly ~~acquirer~~3, in2023 aand ~~business~~August ~~combination~~1, to2023 ~~recognize~~would be capitalized and ~~measure~~added to the ~~acquired~~outstanding ~~contract~~principal ~~assets~~balances ~~and~~of ~~liabilities~~Term ~~consistent~~Loan ~~with~~A ~~how~~and ~~they~~Term Loan C on ~~were~~the ~~recognized~~effective date, and ~~measured~~shall inbe ~~the~~due ~~acquiree’s~~and ~~financial~~payable ~~statements.~~by Wethe ~~applied~~Company in cash on the ~~provisions~~maturity ofdates, ~~ASU~~November ~~2021-08~~17, to2024 ~~the~~and ~~acquisitions~~November 2, 2023, ofrespectively, ~~Next~~in ~~Level~~accordance ~~Internet,~~with ~~Inc.~~the credit agreement and ~~Skynet~~the ~~Telecom~~other ~~LLC~~loan documents.

~~Recent~~On November 22, 2023 (with effect from November ~~accounting~~2, ~~pronouncements~~2023), ~~other~~the ~~than~~Verve ~~below~~Cloud Nevada Parties, ~~issued~~Digerati byand ~~the~~Post ~~FASB~~Road ~~(including~~entered ~~its~~into ~~Emerging~~a ~~Issues~~Second ~~Task~~Forbearance ~~Force)~~Agreement, ~~the~~Amendment ~~AICPA~~to Loan Documents and ~~the~~Limited ~~SEC did not~~Consent, orwhich ~~are~~(a) ~~not,~~extends ~~believed~~the bymaturity ~~management~~date toof ~~have~~our aTerm ~~material~~Loan ~~effect~~C onNote ~~the~~with ~~Company’s~~Post ~~present~~Road orfrom ~~future~~November ~~financial~~2, ~~statements.~~2023, Into ~~August~~December 31, ~~2020~~2023, (b) provides that Post Road and the ~~FASB~~other ~~issued~~lenders ~~“ASU~~under ~~2020-06,~~the ~~Debt~~Credit ~~with~~Agreement ~~Conversion~~shall ~~and~~forbear ~~Other~~through ~~Options~~December ~~(Subtopic~~31, ~~47020)~~2023 from exercising their rights and ~~Derivatives~~remedies under the loan documents and ~~Hedging—Contracts in~~applicable ~~Entity’s~~law ~~Own~~with ~~Equity~~respect ~~(Subtopic~~to ~~815-40~~(i)” ~~which~~certain ~~simplifies~~existing ~~the~~events ~~accounting~~of ~~for~~default ~~convertible~~under ~~instruments.~~the loan ~~The~~documents ~~guidance~~and ~~removes~~ (ii) certain ~~accounting~~events ~~models~~of ~~which~~default ~~separate~~that ~~the~~are ~~embedded~~expected ~~conversion~~to ~~features~~arise ~~from~~before ~~the~~December ~~host~~31, ~~contract~~2023, ~~for~~and ~~convertible~~(c) ~~instruments.~~amends ~~Either~~certain provisions aof ~~modified~~the ~~retrospective~~Credit ~~method~~Agreement ofand ~~transition~~the orother aloan ~~fully~~documents ~~retrospective~~to ~~method~~allow ofthe ~~transition~~company isto ~~permissible~~incur ~~for~~up ~~the~~to ~~adoption~~an additional $2,000,000 of ~~this~~working ~~standard.~~capital ~~Update No~~financing. ~~2020-06~~For isadditional ~~effective~~information ~~for~~regarding ~~fiscal~~the ~~years~~Second ~~beginning~~Forbearance ~~after December 15~~Agreement, ~~2021,~~Amendment ~~including~~to ~~interim~~Loan ~~periods~~Documents ~~within~~and ~~those~~Limited ~~fiscal~~Consent, ~~years.~~see ~~Early~~Note ~~adoption~~18 is- ~~permitted~~Subsequent noEvents ~~earlier~~to ~~than~~ the ~~fiscal~~Consolidated ~~year~~Financial ~~beginning~~Statements; ~~after~~see ~~December~~also 15Part II, ~~2020.~~Item ~~The~~9B, ~~Company~~Other isInformation ~~currently~~to ~~evaluating the potential impact of~~ this ~~ASU~~Annual Report on ~~its~~Form ~~financial statements~~10-K.

~~NOTE~~While Digerati, the parent company of Verve Cloud, is not subject to 2these –financial ~~GOING~~covenants, ~~CONCERN~~they have had and will continue to have a material impact on Verve Cloud’s expenditures and ability to raise funds.

~~Financial Condition~~F-17

~~The~~Verve ~~Company~~Cloud’s ~~consolidated~~obligations ~~financial~~under ~~statements~~the ~~have been prepared~~Credit onAgreement aare ~~going~~secured, ~~concern~~in ~~basis~~part, ~~which~~by ~~contemplates~~a ~~the~~first-priority ~~realization~~security ofinterest ~~assets~~in ~~and~~all of the ~~settlement~~assets of ~~liabilities~~the inVerve ~~the~~Cloud ~~normal~~Nevada ~~course~~parties ofand ~~business.~~are ~~Since~~guaranteed ~~the~~by ~~Company~~Verve Cloud’s ~~inception~~other insubsidiaries ~~1993,~~pursuant to the ~~Company~~Guaranty ~~has~~and ~~incurred~~Collateral ~~net~~Agreement, ~~losses~~dated ~~and~~November ~~accumulated~~17, a2020, ~~deficit~~subsequently amended ofon ~~approximately~~December ~~$113~~31,~~393~~ 2021,~~000~~ February 4, 2022, December 15, 2022, and aFebruary ~~working~~3, ~~capital~~2023 ~~deficit~~by ofand ~~approximately~~among ~~$29~~Verve Cloud,~~323~~ the Company’s other subsidiaries,~~000~~ ~~which~~and ~~raises~~Post ~~substantial~~Road ~~doubt~~Administrative ~~about~~LLC ~~Digerati~~(the “Guaranty and Collateral Agreement”). In addition, Verve Cloud’s obligations ~~ability~~under the Credit Agreement are, pursuant to ~~continue~~a asPledge Agreement (the “Pledge Agreement”), secured by a pledge of a ~~going~~first ~~concern~~priority security interest in Verve Cloud’s 100% equity ownership of each of Verve Cloud’s operating companies.

~~Management~~The Company will continue to work with various ~~Plans~~funding sources to ~~Continue~~secure additional debt and equity financings. However, Digerati cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a ~~Going~~going ~~Concern~~concern.

~~Management believes~~NOTE ~~that~~3 ~~available~~– ~~resources~~INTANGIBLE asASSETS of July 31, 2022, will not be sufficient to fund the Company’s operations and corporate expenses over the next 12 months. The Company’s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, and other things, raising additional capital, issuing stock-based compensation to certain members of the executive management team in lieu of cash, or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company will seek to secure such best-efforts funding from various possible sources, including equity or debt financing, sales of assets, or collaborative arrangements. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences, or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to curtail its operations, and the Company may not be able to pay off its obligations, if and when they come due.

We Below are ~~currently~~summarized ~~taking~~changes ~~initiatives to reduce our overall cash deficiencies on a monthly basis. During fiscal 2022 certain members of our executive management team have taken a significant portion of their compensation~~ in ~~common~~intangible ~~stock to reduce the depletion of our available~~assets ~~cash.~~at ToJuly ~~strengthen our business~~31, we2023 ~~intend to adopt best practices from our recent acquisitions~~ and ~~invest~~July in a marketing and sales strategy to grow our monthly recurring revenue; we anticipate utilizing our value-added resellers and channel partners to tap into new sources of revenue streams; and we have also secured numerous agent agreements through our recent acquisitions that we anticipate will accelerate revenue growth. In addition31, we will continue to focus on selling a greater number of comprehensive services to our existing customer base. Further, in an effort to increase our revenues, we will continue to evaluate the acquisition of various assets with emphasis in VoIP Services and Cloud Communication Services. As a result, during the due diligence process we anticipate incurring significant legal and professional fees.2022:

We have been successful in raising debt and equity capital in the past and as described in Notes 10, 11 and 12. We have financing efforts in place to continue to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot assure you that our plans to address these matters in the future will be successful.

	Gross Carrying		Accumulated			Net Carrying
July 31, 2023	Value		Amortization			Amount
NetSapiens - license, 10 years	$	150,000	$	(150,000	)	$	-
Customer relationships, 5 years		40,000		(40,000	)		-
Customer relationships, 7 & 10 years		10,947,262		(3,989,768	)		6,957,494
Trademarks, 7 & 10 years		7,148,000		(1,980,728	)		5,167,272
Non-compete, 2 & 3 years		931,000		(844,583	)		86,417
Marketing & Non-compete, 5 years		800,263		(800,263	)		-
Total Definite-lived Intangible Assets		20,016,525		(7,805,342	)		12,211,183
Goodwill		19,380,080		-			19,380,080
Balance, July 31, 2023	$	39,396,605	$	(7,805,342	)	$	31,591,263

F-14

	Gross Carrying		Accumulated			Net Carrying
July 31, 2022	Value		Amortization			Amount
NetSapiens - license, 10 years	$	150,000	$	(150,000	)	$	-
Customer relationships, 5 years		40,000		(36,684	)		3,316
Customer relationships, 7 years		10,947,262		(2,573,052	)		8,374,210
Trademarks, 7 & 10 years		7,148,000		(993,806	)		6,154,194
Non-compete, 2 & 3 years		931,000		(394,583	)		536,417
Marketing & Non-compete, 5 years		800,263		(679,980	)		120,283
Total Definite-lived Intangible Assets		20,016,525		(4,828,105	)		15,188,420
Goodwill		19,380,080		-			19,380,080
Balance, July 31, 2022	$	39,396,605	$	(4,828,105	)	$	34,568,500

~~The current~~Total ~~Credit~~amortization ~~Agreement~~expense ~~with~~for ~~Post Road will allow~~ the ~~Company~~year ~~to continue acquiring UCaaS service providers that meet the Company’s~~ended ~~acquisition~~July ~~criteria.~~31, ~~Management~~2023, ~~anticipates~~and ~~that~~2022 ~~future~~was ~~acquisitions~~$2,977,238 ~~will~~and ~~provide~~$2,448,274, ~~additional operating revenues to the Company as it continues to execute on its consolidation strategy~~respectively. ~~There can be no guarantee that the planned acquisitions will close or that they will produce the anticipated revenues on the schedule anticipated by management.~~

The Company ~~will~~expects ~~continue~~ to ~~work~~record ~~with~~amortization ~~various~~expense ~~funding~~of ~~sources~~intangibles toassets ~~secure~~over ~~additional~~the ~~debt~~next five years and ~~equity~~thereafter ~~financings. However, Digerati cannot offer any assurance that it will be successful in executing the aforementioned plans to continue~~ as ~~a going concern.~~follows:

Digerati’s consolidated financial statements as of July 31, 2022, do not include any adjustments that might result from the inability to implement or execute Digerati’s plans to improve our ability to continue as a going concern.

Period Ending July 31,	Amortization
2024	$	2,159,804
2025		2,108,167
2026		1,856,869
2027		1,838,645
2028		1,560,074
2029 and thereafter		2,687,624
Total:	$	12,211,183

~~NOTE 3 – INTANGIBLE ASSETS~~ F-18

~~Below are~~NOTE ~~summarized~~4 ~~changes~~- inPROPERTY ~~intangible~~AND ~~assets at July 31, 2022, and July 31, 2021:~~EQUIPMENT

July 31, 2022	Gross Carrying Value		Accumulated Amortization			Net Carrying Amount
NetSapiens - license, 10 years	$	150,000	$	(150,000	)	$	-
Customer relationships, 5 years		40,000		(36,684	)		3,316
Customer relationships, 7 years		10,947,262		(2,573,052	)		8,374,210
Trademarks, 7 & 10 years		7,148,000		(993,806	)		6,154,194
Non-compete, 2 & 3 years		931,000		(394,583	)		536,417
Marketing & Non-compete, 5 years		800,263		(679,980	)		120,283
Total Definite-lived Intangible Assets		20,016,525		(4,828,105	)		15,188,420
Goodwill		19,380,080		-			19,380,080
Balance, July 31, 2022	$	39,396,605	$	(4,828,105	)	$	34,568,500

Following is a summary of Digerati’s property and equipment at July 31, 2023 and 2022 (in thousands):

July 31, 2021	Gross Carrying Value				Accumulated Amortization				Net Carrying Amount
	Useful lives		2023				2022
NetSapiens - license, 10 years	$	150,000			$	(150,000	)		$	-
Telecom equipment & software	1-7 years		$	3,345			$	2,878
Customer relationships, 5 years		40,000				(28,672	)			11,328
Less: accumulated depreciation				(1,999	)			(1,231	)
Customer relationships 7 years		6,790,000				(1,310,720	)			5,479,280
Net–property and equipment			$	1,346			$	1,647
Trademarks, 7 years		2,870,000				(307,500	)			2,562,500
Non-compete, 2 & 3 years		291,000				(97,500	)			193,500
Marketing & Non-compete, 5 years		800,000				(520,000	)			280,000
Total Definite-lived Intangible Assets		10,941,000				(2,414,392	)			8,526,608
Goodwill		3,931,298				-				3,931,298
Balance, July 31, 2021	$	14,872,298			$	(2,414,392	)		$	12,457,906

~~Total~~Depreciation ~~amortization~~ expense for the ~~year~~years ended July 31, ~~2022,~~2023 and ~~2021~~2022 was $2737,~~448,274~~000 and $1,~~396~~167,~~214~~000, respectively.

~~F-15~~NOTE 5 – INCOME TAXES

~~NOTE~~Digerati files a consolidated tax return. The 4current -tax ~~PROPERTY~~year ~~AND~~is ~~EQUIPMENT~~subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July 31, 2023, Digerati had net operating loss carryforwards of approximately $42,554,098 to reduce future federal income tax liabilities; net loss from 2018 and on will be carryforward indefinitely, the net loss carryforwards prior to 2018 started expiring in 2021. Under the enacted Tax Cuts and Jobs Act (“TCJA”), the new effective Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). Income tax benefit (provision) for the years ended July 31, 2023 and 2022 are as follows:

~~Following~~The effective istax arate ~~summary~~for of Digerati’s ~~property~~is ~~and~~reconciled ~~equipment~~to atstatutory ~~July~~rates ~~31,~~as ~~2022 and 2021 (in thousands)~~follows:

	Useful lives		2022				2021
	2023				2022
Telecom equipment & software	1-7 years		$	2,878			$	1,345
Expected Federal benefit (provision), at statutory rate		21.0	%			21.0	%
Less: accumulated depreciation				(1,231	)			(816	)
Change in valuation allowance		(21.0	)%			(21.0	)%
Net–property and equipment			$	1,647			$	529
		0.0	%			0.0	%

~~NOTE~~Deferred tax assets are comprised of the following 5as –of ~~INCOME~~July ~~TAXES~~31, 2023 and 2022:

Digerati files a consolidated tax return. The current tax year is subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July 31, 2022, Digerati had net operating loss carryforwards of approximately $26,356,740 to reduce future federal income tax liabilities; net loss from 2018 and on will be carryforward indefinitely, the net loss carryforwards prior to 2018 started expiring in 2021. Under the enacted Tax Cuts and Jobs Act (TCJA), the new effective Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). Income tax benefit (provision) for the years ended July 31, 2022, and 2021 are as follows:

	2023			2022
Net operating loss carryover	$	8,936,361		$	5,534,915
Valuation allowance		(8,936,361	)		(5,534,915	)
Total deferred tax asset, net	$	-		$	-

The change in the valuation allowance for 2023 ~~effective~~resulted in an increase of approximately $3,401,446. Management has evaluated and concluded that there are no significant uncertain tax positions ~~rate~~requiring ~~for~~recognition in Digerati’s consolidated financial statements. The current year remains open to examination by the major taxing jurisdictions in which Digerati is ~~reconciled~~subject to ~~statutory~~tax. ~~rates~~The asCompany ~~follows:~~files a calendar year return, and the net operating loss was adjusted for the fiscal year ended July 31, 2023.

	2022			2021
Expected Federal benefit (provision), at statutory rate		21.0	%		21.0	%
Change in valuation allowance		(21.0	)%		(21.0	)%
		0.0	%		0.0	%

The federal and state net operating losses (“NOLs”) may be subject to certain limitations under Section 382 of the Internal Revenue Code, which could significantly restrict the Company’s ability to use the NOLs to offset taxable income in subsequent years.

~~Deferred~~ We record unrecognized tax ~~assets~~benefits ~~are~~as ~~comprised~~liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the ~~following~~evaluate ason new information not previously available. Because of ~~July~~the 31complexity of some of these uncertainties, ~~2022~~the ~~and~~ultimate ~~2021:~~resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

	2022			2021
Net operating loss carryover	$	5,534,915		$	3,242,773
Valuation allowance		(5,534,915	)		(3,242,773	)
Total deferred tax asset, net	$	-		$	-

F-19

~~The~~NOTE ~~change~~6 in– ~~the~~STOCK-BASED ~~valuation~~COMPENSATION allowance for 2022 resulted in an increase of approximately $2,292,142. Management has evaluated and concluded that there are no significant uncertain tax positions requiring recognition in Digerati’s consolidated financial statements. The current year remains open to examination by the major taxing jurisdictions in which Digerati is subject to tax. The Company files a calendar year return, and the net operating loss was adjusted for the fiscal year ended July 31, 2022.

In November 2015, the Company adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the “Plan”). On May 25, 2023, the Company amended The ~~federal~~Plan ~~and~~which ~~state~~now ~~NOLs~~authorizes ~~may~~the grant of up to 15 million (previously 7.5 million) stock options, restricted becommon ~~subject~~shares, non-restricted common shares and other awards to employees, directors, and certain ~~limitations~~other ~~under~~persons. ~~Section 382~~The ofPlan is intended to permit the ~~Internal~~Company ~~Revenue~~to ~~Code,~~retain ~~which~~and ~~could~~attract ~~significantly~~qualified ~~restrict~~individuals who will contribute to the overall success of the Company. The Company’s ~~ability~~Board toof ~~use~~Directors determines the ~~NOLs~~terms toof ~~offset~~any ~~taxable~~grants ~~income~~under inthe ~~subsequent~~Plan. ~~years~~Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock options, restricted common stock, non-restricted common stock, and other awards vest based on the terms of the individual grant.

WeDuring ~~record~~the ~~unrecognized~~year ~~tax~~ended ~~benefits~~July as31, ~~liabilities~~2023, inthe ~~accordance~~Company ~~with~~extended ~~ASC~~the ~~740~~expiration ~~and~~date ~~adjust~~on 3,460,000 previously issued stock options to various employees until December 1, 2027; the exercise price of these ~~liabilities~~options ~~when~~was ~~our~~amended ~~judgment~~to ~~changes~~$0.095 asper share; and these options also vested immediately on June 1, 2023. The modification of these stock options created a ~~result~~stock-based compensation expense of $248,820 to the ~~evaluate~~Company. On July 24, 2023, the exercise price on ~~new~~these ~~information~~options ~~not~~was ~~previously~~amended ~~available~~to $0.032 ~~Because~~per ofshare. The modification to the exercise ~~complexity~~price ofresulted ~~some~~in ofan ~~these~~additional ~~uncertainties~~$6,618 stock-based compensation expense to the ~~ultimate~~Company for the 3,460,000 modified options. Additionally, ~~resolution~~the ~~may~~Company ~~result~~issued in5,895,000 anew ~~payment~~stock ~~that~~options isto ~~materially~~certain ~~different~~Company ~~from~~Executives ~~our~~and ~~current~~Board ~~estimate~~Members, which had an immediate vesting date of June ~~the~~1, ~~unrecognized~~2023; ~~tax~~an ~~benefit~~expiration ~~liabilities~~date of December 1, 2027; and an exercise price of $0. 095 per share. These ~~differences~~newly ~~will~~issued beoptions ~~reflected~~generated a asstock-based ~~increases~~compensation orexpense ~~decreases~~of $522,716 to ~~income~~the ~~tax~~Company. ~~expense~~On inJuly 24, 2023, the ~~period~~exercise price of these 5,895,000 options was amended to $0.032 per share. The modification to the exercise price resulted in ~~which~~an ~~new~~additional ~~information~~$11,275 isstock-based ~~available~~compensation expense to the Company for the newly issued 5,895,000 options.

~~F-16~~During the year ended July 31, 2022, the Company extended the expiration date on 1,150,000 previously issued stock options to various employees until July 31, 2025, and the exercise price of these options was set at $0.11 per share. The modification of these stock options created a nominal expense to the Company.

~~NOTE~~The 6fair –market ~~STOCK~~value of all options issued and modified during the year ended July 31, 2023, were determined using the Black-~~BASED~~Scholes ~~COMPENSATION~~option pricing model which used the following assumptions below. We did not issue any options during the year ended July 31, 2022.

In November 2015, the Company adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the “Plan”). The Plan authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards to employees, directors, and certain other persons. The Plan is intended to permit the Company to retain and attract qualified individuals who will contribute to the overall success of the Company. The Company’s Board of Directors determines the terms of any grants under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock options, restricted common stock, non-restricted common stock, and other awards vest based on the terms of the individual grant.

Expected dividend yield		0.00%
Expected stock price volatility		156.79% - 157.45%
Risk-free interest rate		3.90% - 4.13%
Expected term		4.5 years

~~During the~~Digerati ~~year~~recognized ~~ended~~approximately ~~July 31~~$881,000 ~~2022~~and $98,000 ~~the~~in ~~Company~~stock-based ~~extended~~compensation ~~the~~expense ~~expiration~~to ~~date~~employees onduring ~~1,150,000~~the ~~previously~~years ~~issued~~ended ~~stock options to various employees until~~ July 31, ~~2025,~~2023 and ~~the~~2022, ~~exercise~~respectively. ~~price~~Unamortized ofcompensation cost ~~these~~totaled ~~options~~$5,736 ~~was~~and ~~set~~$97,972 at ~~$0.11~~July ~~per~~31, ~~share.~~2023 ~~The~~and ~~modification~~July of31, ~~these~~2022, ~~stock options created a nominal expense to the Company~~respectively.

~~During~~The following is a summary of the stock option activity under the ~~year~~Plan ~~ended~~as of July 31, ~~2021~~2023, weand ~~issued~~the changes during Fiscal Years 2023 and 2022:

● 7,858,820 shares of common stock to various employees for services in lieu of cash compensation and as part of the Company’s Non-Standardized profit-sharing plan. The Company recognized stock-based compensation expense of $264,712 equivalent to the value of the shares calculated based on the share’s closing price at the grant dates.

				Weighted- average exercise		Weighted- average remaining contractual
	Options			price		term (years)
Outstanding at July 31, 2021		9,230,000		$	0.17		2.93
Granted		-			-		-
Exercised		-			-		-
Forfeited and cancelled		(100,000	)	$	0.25		-
Outstanding at July 31, 2022		9,130,000		$	0.17		2.93
Granted		5,895,000		$	0.03		4.40
Exercised		(1,180,000	)	$	0.04		-
Forfeited and cancelled		(40,000	)	$	0.45		-
Outstanding at July 31, 2023		13,805,000		$	0.05		3.68
Exercisable at July 31, 2023		13,519,606		$	0.05		3.70

●The ~~4,230,000~~aggregate ~~options~~intrinsic tovalue ~~purchase~~(the ~~common~~difference ~~shares~~between the toCompany’s ~~various~~closing ~~employees~~stock ~~with an exercise~~ price ~~ranging~~on ~~from~~the ~~$0.042~~last totrading ~~$0.1475~~day ~~per~~of ~~share~~the period and athe ~~term~~exercise ~~of 5 years. At issuance~~price, ~~200,000~~multiplied ofby the ~~options~~number ~~vested, 400,000~~ of in-the -money options) ~~will vest equally over a period~~ of ~~two~~the ~~years~~13,805,000 and 39,~~630~~130,000 ofstock ~~the~~ options ~~will~~outstanding ~~vest~~at ~~equally~~July ~~over~~31, a2023 ~~period~~and ofJuly ~~three~~31, ~~years.~~2022 Atwas ~~issuance~~$28,065 ~~the~~and ~~stock options had a fair market value of~~ $~~267~~191,~~343~~722, respectively.

~~The fair market value of all options issued during the year ended July 31, 2021, were determined using the Black~~F-~~Scholes option pricing model which used the following assumptions:~~20

Expected dividend yield	0.00	%
Expected stock price volatility	197.71% - 198.82	%
Risk-free interest rate	0.22% - 0.34	%
Expected term	2.0 - 3.0 years.

The aggregate intrinsic value of the 13,519,606 and 7,551,179 stock options exercisable at July 31, 2023 and July 31, 2022 was $28,065 and $110,380, respectively.

~~Digerati~~NOTE ~~recognized~~7 ~~approximately~~– $98,000 and $399,500 in stock-based compensation expense to employees during the years ended July 31, 2022, and 2021, respectively. Unamortized compensation cost totaled $97,972 and $195,835 at July 31, 2022, and July 31, 2021, respectively.WARRANTS

FDuring the year ended July 31, 2023, the Company issued 14,741,721 warrants under promissory notes and 2,500,000 warrants for extension of promissory note in which the warrants vested at the time of issuance. The warrants have an expiration term of five (5) years with an exercise price of $0.1195. Under the Black-17Scholes valuation method, the relative fair market value of the warrants at time of issuance was approximately $900,000 and was recognized as a discount on the promissory notes. The Company will amortize the debt discount as interest expense over 12 months.

~~A summary~~During of the ~~stock~~year ~~options~~ended ~~as of~~ July 31, 2022, ~~and July 31, 2021, and~~ the ~~changes~~Company did ~~during~~not ~~the~~issue ~~years~~any ~~ended July 31, 2022, and July 31, 2021:~~warrants.

	Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)
Outstanding at July 31, 2020		5,000,000		$	0.27		2.66
Granted		4,230,000		$	0.05		4.39
Exercised		-			-		-
Forfeited and cancelled		-			-		-
Outstanding at July 31, 2021		9,230,000		$	0.17		2.93
Granted		-			-		-
Exercised		-			-		-
Forfeited and cancelled		(100,000	)	$	0.25		-
Outstanding at July 31, 2022		9,130,000		$	0.17		2.39
Exercisable at July 31, 2022		7,551,179		$	0.20		2.11

On November 17, 2020, the Company issued 107,701,179 Warrants to Post Road Special Opportunity Fund II LP (the “Warrant”) to purchase, initially, twenty-five percent (25%) of the Company’s total shares, calculated on a fully-diluted basis as of the date of issuance (the “Warrant Shares”) and subject to a reduction to fifteen percent (15%) as described below.

The ~~aggregate~~ ~~intrinsic~~number ~~value~~of (Warrant Shares is adjustable to allow the ~~difference~~holder ~~between~~to maintain, subject to certain share issuances that are exceptions, the right to purchase twenty-five percent (25%) of the Company’s ~~closing~~total ~~stock~~shares, ~~price~~calculated on ~~the~~a ~~last~~fully-diluted ~~trading~~basis. ~~day~~The Warrant has an exercise price of ~~the~~$0.01 ~~period~~per share and the Warrant ~~exercise~~expires ~~price~~on November 17, ~~multiplied~~2030. bySeventy-five ~~the~~percent ~~number~~(75%) of ~~in-~~the Warrant Shares are immediately fully vested and not subject to forfeiture at any time for any reason. The remaining twenty-~~money~~five ~~options~~percent (25%) of the 9Warrant Shares are subject to forfeiture based on the Company achieving certain performance targets which,~~130,000~~ ~~and~~if 9achieved,~~230,000~~ ~~stock~~would ~~options~~result ~~outstanding~~in attwenty ~~July~~percent ~~31,~~(20%) warrant coverage. If the minority shareholders ~~2022~~of ~~and~~T3 ~~July~~Nevada 31convert their T3 Nevada shares into shares of the Company’s common stock, ~~2021~~par ~~was~~value $~~191~~0.001 per share (the “common stock”),~~722~~ ~~and~~the ~~$392~~Warrant Shares percentage shall also be lowered such that when combined with the achievement of the performance targets,~~891,~~ the ~~respectively~~warrant coverage could be reduced to fifteen percent (15%).

~~The~~In ~~aggregate~~connection ~~intrinsic~~with ~~value~~the issuance of the 7Warrant,~~551~~ the three executives of the Company,~~179~~ ~~and~~Art 6Smith,~~091~~ Antonio Estrada,~~863~~ and Craig Clement entered into a Tag-Along Agreement (the “Tag-Along Agreement”) whereby they agreed that the holder of the Warrant or Warrant Share will have the right to participate or “tag-along” in any agreements to sell any shares of their common stock that such executives enter into. The Company also agreed, in connection with ~~options~~the ~~exercisable~~issuance atof ~~July~~the 31Warrant and pursuant to a Board Observer Agreement (the “Board Observer Agreement”), ~~2022~~to grant Post Road the right to appoint a representative to each of the boards of directors of the Company and ~~July~~each 31of its subsidiaries, ~~2021~~to ~~was~~attend ~~$110~~all board meeting in a non-voting observer capacity. In addition,~~380~~ ~~and~~at issuance the Company recognized $916,~~978~~462,050 ~~respectively~~in derivative liability associated with these warrants.

~~NOTE~~A summary of the warrants as of July 31, 2023 7and –changes ~~WARRANTS~~during the Fiscal Years 2023 and 2022:

During the year ended July 31, 2022, the Company did not issue any warrants.

				Weighted- average exercise		Weighted- average remaining contractual
	Warrants			price		term (years)

Outstanding at July 31, 2021		109,506,179		$	0.01		9.17
Exercised		-			-		-
Forfeited and cancelled		(665,000	)	$	0.18		-
Outstanding at July 31, 2022		108,841,179		$	0.01		8.21
Issuances		17,241,721		$	0.12		4.46
Exercised		(170,305	)	$	0.13		-
Forfeited and cancelled		(969,695	)	$	0.30		-
Outstanding at July 31, 2023		124,942,900		$	0.03		6.89
Exercisable at July 31, 2023		98,017,606		$	0.03		6.83

~~During~~The aggregate intrinsic value (the difference between the ~~year~~Company’s ~~ended~~closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money warrants) of the 124,942,900 and 108,841,179 warrants outstanding at July 31, ~~2021~~2023 and July 31, we2022 ~~issued~~was ~~the~~$2,692,529 ~~following~~and $9,002,606, ~~warrants~~respectively.

~~On November~~The ~~17,~~aggregate ~~2020,~~intrinsic ~~the~~value ~~Company~~of ~~issued~~the ~~107~~98,~~701~~017,~~179~~606 ~~Warrants to Post Road Special Opportunity Fund II LP (the “Warrant”) to~~and ~~purchase~~81, ~~initially~~615,885 ~~twenty-five~~warrants ~~percent~~exercisable ~~(25%)~~at ofJuly ~~the~~31, ~~Company’s~~2023 ~~total~~and ~~shares~~July ~~(the “Warrant”)~~31, ~~calculated~~2022 onwas a$2,019,397 ~~fully-diluted basis as of the date of issuance (the “Warrant Shares”)~~ and ~~subject~~$6,757,037, ~~to a reduction to fifteen percent (15%) as described below~~respectively.

~~The number of Warrant Shares is adjustable to allow the holder to maintain, subject to certain share issuances that are exceptions, the right to purchase twenty~~F-five percent (25%) of the Company’s total shares, calculated on a fully-diluted basis. The Warrant has an exercise price of $0.01 per share and the Warrant expires on November 17, 2030. Seventy-five percent (75%) of the Warrant Shares are immediately fully vested and not subject to forfeiture at any time for any reason. The remaining twenty-five percent (25%) of the Warrant Shares are subject to forfeiture based on the Company achieving certain performance targets which, if achieved, would result in twenty percent (20%) warrant coverage. If the minority shareholders of T3 Nevada convert their T3 Nevada shares into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), the Warrant Shares percentage shall also be lowered such that when combined with the achievement of the performance targets, the warrant coverage could be reduced to fifteen percent (15%).21

~~In connection~~NOTE ~~with~~8 ~~the~~– ~~issuance of the Warrant, the three executives of the Company, Art Smith, Antonio Estrada, and Craig Clement entered into a Tag~~NON-~~Along~~STANDARDIZED ~~Agreement (the “Tag~~PROFIT-~~Along Agreement”) whereby they agreed that the holder of the Warrant or Warrant Share~~SHARING ~~will~~PLAN have the right to participate or “tag-along” in any agreements to sell any shares of their Common Stock that such executives enter into. The Company also agreed, in connection with the issuance of the Warrant and pursuant to a Board Observer Agreement (the “Board Observer Agreement”), to grant Post Road the right to appoint a representative to each of the boards of directors of the Company and each of its subsidiaries, to attend all board meeting in a non-voting observer capacity. In addition, at issuance the Company recognized $6,462,050 in derivative liability associated with these warrants.

FWe currently provide a Non-18Standardized Profit-Sharing Plan, adopted September 15, 2006. Under the plan our employees qualify to participate in the plan after one year of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000 per year. Contributions under the plan are fully vested upon funding.

~~A summary~~During of the ~~warrants~~years asended of July 31, ~~2022,~~2023 and ~~2021~~2022, ~~and~~ the Company ~~changes~~did ~~during~~not ~~the~~issue ~~years~~any ~~ended~~common ~~July~~shares ~~31,~~to ~~2022,~~employees ~~and~~as ~~2021~~part ~~are~~of ~~presented~~the ~~below:~~Company’s profit-sharing plan contribution.

	Warrants			Weighted- average exercise price		Weighted- average remaining contractual term (years)
Outstanding at July 31, 2020		2,540,000		$	0.33		1.61
Granted		107,701,179		$	0.01		9.50
Exercised		(330,000	)	$	0.10		-
Expired		(405,000	)	$	0.50		-
Outstanding at July 31, 2021		109,506,179		$	0.01		9.17
Exercised		-			-		-
Expired		(665,000	)	$	0.18		-
Outstanding at July 31, 2022		108,841,179		$	0.01		8.21
Exercisable at July 31, 2022		81,615,885		$	0.01		8.22

NOTE 9 – SIGNIFICANT CUSTOMERS

~~The aggregate~~During ~~intrinsic value (~~the ~~difference~~years ~~between~~ended ~~the~~July ~~Company’s~~31, ~~closing~~2023 ~~stock price on the last trading day of the period~~ and ~~the~~2022, ~~exercise~~the ~~price,~~Company ~~multiplied~~did bynot ~~the~~derive ~~number~~revenues of ~~in-the-money~~10% ~~warrants)~~or ofmore ~~the~~from ~~108,841,179~~any ~~and~~single ~~109,506,179 warrants outstanding at July 31, 2022 and July 31, 2021 was $9,002,606 and $14,795,002, respectively~~customer.

~~The~~As ~~aggregate~~of ~~intrinsic~~the ~~value~~year ofended ~~the~~July 8131,~~615,885~~ 2023 and 822022,~~280,885 warrants~~ ~~exercisable~~the atCompany ~~July~~did ~~31,~~not ~~2022~~have ~~and~~outstanding ~~July~~accounts ~~31,~~receivable ~~2021~~of ~~was~~10% ~~$6,757,037~~or ~~and~~more ~~$11,108,930,~~from ~~respectively~~any single customer.

NOTE 8 10 – NOTES PAYABLE NON-~~STANDARDIZED~~CONVERTIBLE ~~PROFIT-SHARING PLAN~~

WeOn October 22, 2018, the Company issued a secured ~~currently~~promissory ~~provide~~note for $50,000, bearing interest at a ~~Non-Standardized~~rate ~~Profit-Sharing~~of ~~Plan~~8% per annum, ~~adopted~~with ~~September~~maturity 15date of December 31, ~~2006~~2018. ~~Under~~The ~~the~~maturity ~~plan~~date ~~our~~was extended ~~employees~~multiple ~~qualify~~times toand ~~participate in~~subsequently on August 4, 2023, the ~~plan~~lender ~~after~~agreed ~~one~~to ~~year~~extend ofthe ~~employment~~maturity until January 31, 2024. ~~Contributions~~The ~~under~~promissory note ~~the~~is ~~plan~~

Filing Compare · Digerati Technologies, Inc.