MPHASE TECHNOLOGIES, INC. [XDSL] Filings

10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

☐	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 000-30202

mPHASE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

New Jersey

22-2287503

(State of

incorporation)

(I.R.S. Employer

Identification No.)

1101 Wootton Parkway, #1040

Rockville, MD 20852

20878

(Address of principal executive offices)

(Zip Code)

(301) 329-2700

Registrant’s telephone number, including area code:

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

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 the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes ☒ No

As of June 13, 2022, there were 84,979,729 shares of the issuer’s common stock, $0.01 par value per share, outstanding.

mPHASE TECHNOLOGIES, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Unaudited Financial Statements	2
	Consolidated Balance Sheets – March 31, 2022 (Unaudited) and June 30, 2021	2
	Consolidated Unaudited Statements of Operations and Other Comprehensive Income (Loss) - Three and Nine Months Ended March 31, 2022 and 2021	3
	Consolidated Unaudited Statements of Changes in Stockholders Equity - Nine Months Ended March 31, 2022 and 2021	4
	Consolidated Unaudited Statements of Cash Flows - Nine Months Ended March 31, 2022 and 2021	5
	Condensed Notes to Consolidated Unaudited Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43

SIGNATURES		44

ITEM 1. FINANCIAL STATEMENTS

mPhase Technologies, Inc.

Consolidated Balance Sheets

		March 31, 2022			June 30, 2021
	March 31, 2022			June 30, 2021
	(Unaudited)
Assets
Current Assets
Cash	$	32,724		$	2,473,386
Accounts receivable, net		24,252,009			15,784,081
Inventories		5,718			-
Prepaid expenses		226,340			238,927
Other assets		473,705			422,254
Total Current Assets		24,990,496			18,918,648
Property and equipment, net		7,548			16,518
Goodwill		3,628			3,669
Intangible assets - purchased software, net		1,343,059			2,079,047
Other assets		37,635			3,645
Total Assets	$	26,382,366		$	21,021,527

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	7,568,135		$	4,158,006
Accrued expenses		1,175,098			1,368,367
Contract liabilities		366,749			350,689
Due to related parties		90,222			87,688
Notes payable to officer		641,822			691,942
Notes payable		51,484			323,218
Convertible notes payable, net		3,508,619			1,991,036
Liabilities in arrears with convertible features		109,000			109,000
Liabilities of discontinued operations		82,795			82,795
Total Current Liabilities		13,593,924			9,162,741

Notes payable, net of current portion		146,890			146,890
Total Liabilities		13,740,814			9,309,631

Commitments and Contingencies (Note 11)		-			-

Stockholders’ Equity
Preferred stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at March 31, 2022 and June 30, 2021		10			10
Common stock, $0.01 par value; 500,000,000 shares authorized, 85,008,099 shares issued and 84,979,729 shares outstanding at March 31, 2022, and 78,612,608 shares issued and 78,584,238 shares outstanding at June 30, 2021		849,799			785,844
Additional paid-in-capital		238,565,946			236,935,277
Common stock to be issued		91,250			63,700
Accumulated other comprehensive income (loss)		18,493			(11,526	)
Accumulated deficit		(226,883,946	)		(226,061,409	)
Total Stockholders’ Equity		12,641,552			11,711,896
Total Liabilities and Stockholders’ Equity	$	26,382,366		$	21,021,527

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

mPhase Technologies, Inc.

Consolidated Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

		2022			2021			2022			2021
	For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,
	2022			2021			2022			2021
Revenue	$	8,500,469		$	7,659,348		$	25,066,056		$	22,882,648
Cost of revenue		5,736,320			5,626,081			16,986,353			16,876,480
Gross Profit		2,764,149			2,033,267			8,079,703			6,006,168
Operating Expenses:
Software development costs		(1,376	)		601,186			313,288			601,186
Salaries and benefits		469,475			216,498			928,366			1,005,130
General and administrative expenses		1,066,313			37,473			3,043,555			707,215
Total Operating Expenses		1,534,412			855,157			4,285,209			2,313,531
Operating Income (Loss)		1,229,737			1,178,110			3,794,494			3,692,637
Other (Expense) Income:
Interest expense		(76,296	)		(407,773	)		(254,604	)		(525,512	)
Amortization of debt discounts, deferred financing costs, and original issue discounts		(995,753	)		(477,168	)		(3,072,802	)		(971,352	)
Loss on debt extinguishments and settlements		(134,428	)		(430,548	)		(249,625	)		(399,278	)
Loss on AR Factoring agreement		(1,040,000	)		-			(1,040,000	)		-
Initial derivative liability expense		-			(1,874,840	)		-			(2,240,908	)
Gain on change in fair value of derivative liability		-			2,347,504			-			2,505,404
Total Other (Expense) Income		(2,246,477	)		(842,825	)		(4,617,031	)		(1,631,646	)
(Loss) income before income taxes		(1,016,740	)		335,285			(822,537	)		2,060,991
Income taxes		-			-			-			-
Net (loss) income	$	(1,016,740	)	$	335,285		$	(822,537	)	$	2,060,991

Comprehensive (loss) income:
Unrealized gain (loss) on currency translation adjustment		15,387			8,290			30,019			(21,735	)
Comprehensive (loss) income	$	(1,001,353	)	$	343,575		$	(792,518	)	$	2,039,256

(Loss) Income per common share:
(Loss) income per common share – basic	$	(0.01	)	$	0.00		$	(0.01	)	$	0.03

(Loss) income per common share – diluted	$	(0.01	)	$	0.00		$	(0.01	)	$	0.03

Weighted average shares outstanding – basic		83,489,922			77,012,310			80,842,605			71,357,141

Weighted average shares outstanding – diluted		83,489,922			81,530,897			80,842,605			74,463,385

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

mPhase Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

For the Nine Months Ended March 31, 2022 and 2021

(Unaudited)


	Preferred Stock				Common Stock
	Shares		$0.01 Par Value		Shares		$0.01 Par Value		Additional Paid in Capital		Common Stock to be Issued			Accumulated Comprehensive Income (Loss)			Accumulated Deficit			Stockholders’ Equity
Balance June 30, 2021		1,000	$	10		78,584,238	$	785,844	$	236,935,277	$	63,700		$	(11,526	)	$	(226,061,409	)	$	11,711,896

Issuance of common stock for vendor services						543,425		5,454		142,226		(63,700	)								83,960
Stock-based compensation for restricted shares under employment agreement										19,466											19,466
Stock-based compensation for restricted shares under employment agreement, shares
Relative fair value of warrants issued with convertible promissory notes										125,252											125,252

Other comprehensive income															13,059						13,059
Net income				-														293,761			293,761
Balance September 30, 2021		1,000	$	10		79,127,663	$	791,278	$	237,222,221	$	-		$	1,533		$	(225,767,648	)	$	12,247,394

Issuance of common stock for conversions of convertible promissory notes						2,500,000		25,000		641,625											666,625
Stock-based compensation for restricted shares under employment agreements										26,403											26,403
Issuance of common stock for Board of Directors services												30,000									30,000
Other comprehensive income															1,573						1,573
Net loss				-														(99,558	)		(99,558	)
Balance December 31, 2021		1,000	$	10		81,627,663	$	816,278	$	237,890,249	$	30,000		$	3,106		$	(225,867,206	)	$	12,872,437

Issuance of common stock for extinguishment of Chief Executive Officer promissory note						3,352,066		33,521		629,518											663,039
Stock-based compensation for restricted shares under employment agreements										36,113											36,113
Stock-based compensation for stock options issued for Board of Directors services										10,066											10,066
Issuance of common stock for Board of Directors services												61,250									61,250
Other comprehensive income															15,387						15,387
Net loss				-														(1,016,740	)		(1,016,740	)
Balance March 31, 2022		1,000	$	10		84,979,729	$	849,799	$	238,565,946	$	91,250		$	18,493		$	(226,883,946	)	$	12,641,552

	Preferred Stock				Common Stock
	Shares		$0.01 Par Value		Shares			$0.01 Par Value			Additional Paid in Capital			Common Stock to be Issued			Accumulated Comprehensive Income (Loss)			Accumulated Deficit			Stockholders’ Equity
Balance June 30, 2020		1,000	$	10		19,174,492		$	191,745		$	231,984,704		$	955,466		$	113,070		$	(227,727,420	)	$	5,517,575

Issuance of common stock for conversions of convertible promissory notes						16,331,766			163,318			544,954												708,272
Issuance of common stock for exchange of warrants						37,390,452			373,905			(220,604	)											153,301
Stock-based compensation for restricted shares under employment agreement												10,737												10,737
Issuance of common stock for vendor services						200,000			2,000			4,820												6,820
Other comprehensive loss																		(121,163	)					(121,163	)
Net income				-											-						720,494			720,494
Balance September 30, 2020		1,000	$	10		73,096,710		$	730,968		$	232,324,611		$	955,466		$	(8,093	)	$	(227,006,926	)	$	6,996,036

Issuance of common stock for CloseComms acquisition						2,666,666			26,667			928,799			(955,466	)								-
Stock-based compensation for restricted shares under employment agreement												10,737												10,737
Other comprehensive loss																		(21,932	)					(21,932	)
Net income				-																	1,005,212			1,005,212
Balance December 31, 2020		1,000	$	10		75,763,376		$	757,635		$	233,264,147		$	-		$	(30,025	)	$	(226,001,714	)	$	7,990,053

Issuance of common stock for conversion of convertible promissory notes						4,384,984			43,850			844,765												886,615
Issuance of common stock for vendor services						559,076			5,591			68,207			15,000									88,798
Issuance of common stock for note payable issuance						450,000			4,500			117,000												121,500
Stock-based compensation for restricted shares under employment agreement						115,817			1,158			(63,602	)											(62,444	)
Cancellation of common stock of CEO						(3,352,066	)		(33,521	)		(462,585	)											(496,106	)
Other comprehensive income																		8,290						8,290
Other comprehensive income (loss)																		8,290						8,290
Net income				-																	335,285			335,285
Net income (loss)																					335,285			335,285
Balance March 31, 2021		1,000	$	10		77,921,187		$	779,213		$	233,767,932		$	15,000		$	(21,735	)	$	(225,666,429	)	$	8,873,991

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

mPhase Technologies, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

		2022			2021
	For the Nine Months Ended
	March 31,
	2022			2021
Cash flows from operating activities:
Net (loss) income	$	(822,537	)	$	2,060,991
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Amortization of debt discounts, deferred financing costs, and original issue discounts		3,072,802			971,352
Depreciation and amortization		682,292			694,467
Loss on AR Factoring agreement		1,040,000			-
Stock-based compensation		267,258			226,056
Loss on debt extinguishments and settlements		249,625			399,278
Initial derivative expense		-			2,240,908
Gain on change in fair value of derivative liability		-			(2,505,404	)
Changes in operating assets and liabilities:
Increase in accounts receivable		(17,007,928	)		(21,145,008	)
Increase in inventories		(5,718	)		-
Decrease (increase) in prepaid expenses		12,587			(187,800	)
Increase in other assets		(85,508	)		(53,440	)
Increase in contract liabilities		16,060			104,649
Increase in accounts payable and accrued expenses		10,868,745			17,929,728
Net cash (used in) provided by operating activities		(1,712,322	)		735,777

Cash flows from investing activities:
Capital expenditures		(2,357	)		(3,064	)
Net cash used in investing activities		(2,357	)		(3,064	)

Cash flows from financing activities:
Proceeds from issuance of convertible notes payable, net		156,248			853,800
Proceeds from issuance of note payable to related party		450,000			-
Proceeds from issuance of notes payable		-			288,000
Repayments of notes payable		(362,250	)		-
Repayments under settlement agreement		-			(15,000	)
Repayments of convertible notes payable		(1,000,000	)		(628,000	)
Net cash provided by financing activities		(756,002	)		498,800

Effect of foreign exchange rates changes on cash		30,019			(134,805	)
Net (decrease) increase in cash		(2,440,662	)		1,096,708
Cash at beginning of period		2,473,386			142,413
Cash at end of period	$	32,724		$	1,239,121

Supplemental disclosure:
Cash paid for interest	$	43,470		$	390,352
Cash paid for taxes	$	-		$	-

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

	For the Nine Months Ended
	March 31,
	2022		2021
Supplemental disclosure of non-cash operating activities:

Initial fair value of derivative liability recorded as debt discount	$	-	$	853,800

Supplemental disclosure of non-cash investing and financing activities:

Relative fair value of warrants issued with convertible promissory notes	$	125,252	$	-

Issuance of Common Stock for services
Value	$	147,660	$	80,618
Shares		543,425		759,076

Issuance of Common Stock to Board of Directors for services
Value	$	91,250	$	-
Shares		624,316		-

Issuance of Common Stock to CEO for extinguishment of note payable
Value	$	663,039	$	-
Shares		3,352,066		-

Issuance of Common Stock for conversions of convertible promissory notes and accrued interest
Value	$	666,625	$	1,596,887
Shares		2,500,000		20,716,750

Issuance of Common Stock for note payable issuance
Value	$	-	$	121,500
Shares		-		450,000

Cancellation of Common Stock of CEO
Value	$	-	$	496,106
Shares		-		3,352,066

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

mPHASE TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION

Organization and Nature of Business

mPhase Technologies, Inc., including its wholly-owned subsidiaries, are collectively referred to herein as “mPhase,” “XDSL”, “Company,” “us,” or “we.”

The Company was incorporated in the state of New Jersey in 1979 under the name Tecma Laboratory, Inc. and has subsequently operated under Tecma Laboratories, Inc., and Lightpaths TP Technologies, Inc., until June 2, 1997 when the Company changed its name to mPhase Technologies, Inc.

On January 11, 2019, the Company underwent a major change in management and control. New management of the Company is positioning the Company to be a technology leader in artificial intelligence (“AI”) and machine learning while enabling a more rapid commercial development of its patent portfolio and other intellectual property. The Company believes there are significant opportunities to embed artificial intelligence and machine learning into business operations, platform architectures, business services, and customer experiences, whereby its goal is to generate significant revenue from its artificial intelligence and machine learning technologies.

On February 15, 2019, the Company acquired Travel Buddhi, a software platform to enhance travel via ultra-customization tools that tailor a planned trip experience in ways not previously available.

On June 30, 2019, the Company acquired 99% of the outstanding common shares of Alpha Predictions LLP (“Alpha Predictions”). Alpha Predictions is an India-based technology company that has developed a suite of commercial data analysis products for use across multiple industries. This acquisition has been integrated into the Company’s international operations and as expected, has driven revenue growth and innovation.

On May 11, 2020, the Company acquired CloseComms, a patented, software application platform that can be integrated into a retail customer’s existing Wi-Fi infrastructure, giving the retailer important customer data and enabling AI-enhanced, targeted promotions to drive store traffic and sales.

During 2021, the Company announced that it would be adding EV+ (electric vehicle) charging network and consumer engagement platform as part of a major strategic initiative to monetize additional points of contact during consumer travel and travel planning. During the course of 2021, the Company actively planned pilot programs in EV+ (electric vehicle) charging network and, as part of a larger strategy to build an AI-driven consumer ecosystem. By late-2021, the Company transitioned into a “green” consumer company, serving as an important bridge between consumers, retailers, and service providers.

The Company can best be described as a technology company focused on consumer engagement using data analytics and artificial intelligence to create a monetizable link between consumers and retailers at opportunistic times and places. The Company is currently building a connected ecosystem that includes EV charging and software solutions that optimize consumer engagement within the framework of a SaaS/TaaS model. Branded under the mPower name, this ecosystem will empower the way people shop, dine, fuel and interact with the world to create a richer life experience. The mPower ecosystem is tailored to each individual’s tastes and needs, with particular emphasis on empowering tomorrow’s green consumer. The Company has data driven business units generating recurring revenue outside of its consumer ecosystem, in addition to legacy nanobattery technology and a related patent portfolio that are slated for future development. The Company plans to expand into other markets, both in the United States and globally, where it believes its technology and services will provide a distinct competitive advantage over its competition.

mPHASE TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued)

Concurrently, the Company continues to pursue strategic alternatives to best monetize its patent portfolio, including partnering to exploit opportunities for its drug delivery system. The Company continues seeking to obtain government funding available under the Departments of Defense and Homeland Security including The Department of Defense Ordnance Technology Consortium (“DOTC”), Small Business Innovative Research (“SBIR”), Cooperative Research and Development Agreements (“CRADA”) and similar programs for targeted applications for its smart nano-battery applications.

Basis of Presentation

The unaudited consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management, are necessary to fairly state the Company’s financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (the “SEC”); nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

The unaudited consolidated financial statements for the three and nine months ended March 31, 2022 and 2021 include the operations of mPhase and its wholly-owned subsidiaries, mPower Technologies, Inc., Medds, Inc., mPhase Technologies India Private Limited effective March 19, 2019, and Alpha Predictions LLP effective June 30, 2019. All significant intercompany accounts and transactions have been eliminated in the consolidation.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended June 30, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on October 13, 2021. The results of operations for the three and nine months ended March 31, 2022, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2022.

Impact of COVID-19 Pandemic

A novel strain of coronavirus, COVID-19, surfaced during December 2019 and has spread around the world, including to the United States. During March 2020, COVID-19 was declared a pandemic by the World Health Organization. During certain periods of the pandemic thus far, a number of U.S. states and various countries throughout the world had been under governmental orders requiring that all workers remain at home unless their work was critical, essential, or life-sustaining. As a result of these governmental orders, the Company temporarily closed its domestic and international offices and required all of its employees to work remotely. As economic activity has begun and continues recovering, the impact of the COVID-19 pandemic on our business has been more reflective of greater economic and marketplace dynamics. Furthermore, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could once again impact our operations and the operations of our customers and vendors as a result of quarantines, illnesses, and travel restrictions.

The ultimate impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, the Company could experience a material adverse effect on the Company’s financial condition, results of operations and cash flows.

Further, additional significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and financial condition. Many of our operations are currently, and will likely remain in the near future, in developing countries which are susceptible to outbreaks of disease and may lack the resources to effectively contain such an outbreak quickly. Such outbreaks may impact our ability to operate by limiting access to qualified personnel, increasing costs associated with ensuring the safety and health of our personnel, restricting transportation of personnel, equipment, and supplies to and from our areas of operation and diverting the time, attention and resources of government agencies which are necessary to conduct our operations. In addition, any losses we experience as a result of such outbreaks of disease which impact sales or delay production may not be covered by our insurance policies.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities. This determination may change as new events occur and additional information is obtained. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements. These estimates may change, as new events occur and additional information is obtained.

mPHASE TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

NOTE 2: GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has generated a net loss of $822,537 and has used cash in operating activities of $1,712,322 for the nine months ended March 31, 2022. At March 31, 2022, the Company had a working capital surplus of $11,396,572, and an accumulated deficit of $226,883,946. While these factors alone may raise doubt as to the Company’s ability to continue as a going concern, management believes the Company’s present and expected cash flows will enable it to meet its obligations for a period of twelve months from the date of this filing. The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In the event managements’ plans do not materialize, in order to meet the Company’s working capital needs through the next twelve months and to fund the growth of its nanotechnology, artificial intelligence, and machine learning technologies, as well as our EV charging initiatives, the Company may consider plans to raise additional funds through the issuance of equity or debt. Although the Company intends to obtain additional financing to meet its cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all. The Company’s ability to raise additional capital may also be impacted by the recent COVID-19 pandemic, which such ability is highly uncertain, cannot be predicted, and could have an adverse effect on the Company’s business and financial condition.

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Foreign Currency Translation and Transactions

The functional currencies of our operations in India and the United Kingdom are the Indian Rupee (“INR”) and the British Pound (“GBP”), respectively. Assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive income (loss) in our consolidated balance sheets. Our net investments in our Indian and United Kingdom operations are recorded at the historical rates and the resulting foreign currency translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income within stockholders’ equity in accordance with ASC 220 – Comprehensive Income.

mPHASE TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The exchange rates used to translate amounts in INR and GBP into USD for the purposes of preparing the consolidated financial statements were as follows:

Balance sheet:

	March 31, 2022		June 30, 2021
Period-end INR: USD exchange rate	$	0.01324	$	0.01349
Period-end GBP: USD exchange rate	$	1.31330	$	1.38510
Foreign currency translation exchange rate

Income statement:

MPHASE TECHNOLOGIES, INC. [XDSL] Filings
10-Q	[2022-06-17]
S-1	[2022-02-28]
10-Q	[2022-02-10]
10-Q	[2021-11-22]
10-K	[2021-10-13]
10-Q	[2021-05-17]
10-Q	[2021-02-22]
10-Q	[2021-01-19]
10-K	[2021-01-05]
S-1	[2020-08-14]
10-Q	[2020-05-20]
10-Q	[2020-02-19]
10-Q	[2019-11-19]
10-K	[2019-10-15]
S-1	[2019-07-22]
10-Q	[2019-05-21]
10-Q	[2019-02-20]
10-Q	[2018-11-14]
10-K	[2018-10-15]
10-Q	[2018-07-09]
10-Q	[2018-07-06]
10-Q	[2018-07-06]
10-K	[2018-06-18]
10-Q	[2018-06-08]
10-Q	[2018-06-08]
10-Q	[2018-06-08]
10-K	[2018-05-15]
10-Q	[2017-11-15]
10-Q	[2016-02-23]
10-Q	[2015-11-23]
10-K	[2015-10-13]
10-Q	[2015-05-21]
10-Q	[2015-02-17]
10-Q	[2014-11-14]
10-K	[2014-09-29]
10-Q	[2014-05-14]
10-Q	[2014-02-13]
10-Q	[2013-11-14]
10-K	[2013-09-30]
10-Q	[2013-05-13]
10-Q	[2013-02-11]
10-Q	[2012-11-14]
10-K	[2012-09-24]
10-Q	[2012-05-14]
10-Q	[2012-02-14]