UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

~~FORM 10-Q~~(Amendment No.1 to Form 10-Q)

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

For the quarterly period ended ~~March~~December 31, 2021

~~[ ]~~ ☐ 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: 000-56006

GALAXY NEXT GENERATION, INC.

~~(Exact~~(Exact Name of Registrant as Specified in Its Charter)



Nevada	61-1363026
(State of Incorporation)	(IRS Employer Identification No.)

285 N Big A Road Toccoa, Georgia	30577
(Address of Principal Executive Offices)	(Zip Code)	~~(Zip Code)~~

(706) 391-5030

(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: (None)


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

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 ~~[X]~~☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ~~Yes[X] No[ ]~~

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. (Check one):


Large accelerated filer ~~[ ]~~	~~Non-accelerated filer [ ]~~☐	Accelerated filer ~~[ ]~~☐
Non-accelerated filer	☒	Smaller reporting company ~~[X]~~	☒
		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 Act). Yes ~~[ ]~~☐ No ~~[X]~~

☒

The number of shares outstanding of the issuer's Common Stock, as of ~~May 7,~~February 11, 2022 was 3,492,086,272.

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $19,833,487 as of December 31, 2021, ~~was 3,040,944,203.~~based upon the average bid and asked price on the OTCQB.

EXPLANATORY NOTE

The Amendment no. 1 to Form 10-Q is being file to include the iXBRL InteractiveTable Exhibits

-i-

FORM 10-Q

GALAXY NEXT GENERATION, INC.

Table of Contents



	~~FORM 10-Q~~ ~~GGALAXY NEXT GENERATION, INC.~~
	~~Table of Contents~~	Page
			~~Page~~
	PART I. Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements and Footnotes	2


Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	2826
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3633
Item 4.	Controls and Procedures	3633
	PART II. Other Information
Item 1.Legal Proceedings	~~Legal Proceedings~~	3734
Item 1A.Risk Factors	~~Risk Factors~~	3734
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3936
Item 3.	Defaults Upon Senior Securities	3936
Item 4.	Mine Safety Disclosures	3936
Item 5.Other Information	~~Other Information~~	3936
Item 6.Exhibits	~~Exhibits~~	4037
Signatures	~~Signatures~~	4038

The accompanying unaudited interim condensed consolidated financial statements included herein, have been prepared by Galaxy Next Generation, Inc. (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated statements have been prepared in accordance with the Company's accounting policies described in the Company's Annual Report on Form 10-K for the year ended June 30, ~~2020~~2021 and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in that report. Unless the context indicates otherwise, references to the "Company," "we, " "us," "our" or "Galaxy" means Galaxy Next Generation, Inc. and its subsidiaries.

-1-

PART I – FINANCIAL INFORMATION

Item 1 – Unaudited Condensed Consolidated Financial Statements and Footnotes

The following unaudited condensed consolidated financial statements are included herein:


Condensed Consolidated Balance Sheets as of ~~March~~December 31, 2021 (unaudited) and June 30, ~~2020~~2021 (audited)		3
Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~March~~December 31, 2021 and 2020 (unaudited)		4
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the ~~Nine~~Six Months Ended ~~March~~December 31, 2021 (unaudited)		5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the ~~Nine~~Six Months Ended ~~March~~December 31, 2020 (unaudited)		6
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~March~~December 31, 2021 and 2020 (unaudited)		7-8
Notes to the Condensed Consolidated Financial Statements (unaudited)	9	9-25

-2-

GALAXY NEXT GENERATION, INC.
Condensed Consolidated Balance Sheets

March 31, 2021

June 30, 2020
Assets
(Unaudited)

(Audited)
Current Assets

Cash
$      742,382

$       412,391
Accounts receivable, net
                1,302,764

  798,162
Inventories, net
                   2,207,885

      738,091
Prepaid and other current assets
                     3,950

2,800
Total Current Assets
                4,256,981

1,951,444

Property and Equipment, net (Note 3)
                     58,290

52,049

Intangibles, net (Notes 4 and 14)
                1,335,928

  1,436,315

Goodwill (Notes 4 and 14)
                834,220

834,220

Operating right of use asset (Note 9)
                   176,624

  223,982
Total Assets
$ 6,662,043

$      4,498,010

Liabilities and Stockholders' Equity (Deficit)

Current Liabilities

Line of credit (Note 5)
$                991,598

$     1,236,598
Convertible notes payable, net of discount (Note 6)
                -

  1,101,900
Derivative liability, convertible debt features and
3,376,000

                246,612
     warrants (Note 7)
Current portion of long-term notes payable (Note 6)
                940,011

                  512,425
Accrued legal settlement payable (Note 12)
               600,000

                  1,282,000
Accounts payable
                906,228

                  1,804,269
Accrued expenses
                   434,165

                  371,912
Deferred revenue
                  815,214

                  1,133,992
Short term portion of related party notes and payables (Note 8)
            3,984,760

1,272,812
Total Current Liabilities
            12,047,976

                8,962,520
Noncurrent Liabilities

Long term portion of related party notes payable
                   -

                  2,075,000
     (Note 8)
Long term portion of accrued legal settlement payable
                318,240

                            718,000
     (Note 12)
Notes payable, less current portion (Note 6)
398,853

                      482,553
Total Liabilities
             12,765,069

12,238,073

Stockholders' Equity (Deficit)

Common stock
            252,850

                      59,539
Preferred stock - Series E, non-redeemable
                          50

                           50
Additional paid-in-capital
           40,934,014

                15,697,140
Accumulated deficit
         (47,289,940)

               (23,496,792)
Total Stockholders' Equity (Deficit)
            (6,103,026)

               (7,740,063)

Total Liabilities and Stockholders' Equity (Deficit)
$     6,662,043

$    4,498,010

GALAXY NEXT GENERATION, INC.

Condensed Consolidated Balance Sheets

	December 31, 2021		June 30, 2021
Assets	(Unaudited)		(Audited)
Current Assets
Cash	$	354,727	$	541,591
Accounts receivable, net		305,810		866,091
Inventories, net		1,379,853		3,267,667
Other current assets		3,950		3,950
Total Current Assets		2,044,340		4,679,299

Property and Equipment, net (Note 2)		370,057		86,812
Intangibles, net (Notes 1 and 12)		1,471,142		1,516,815
Goodwill (Note 1)		834,220		834,220
Operating right of use asset (Note 7)		222,336		208,051
Total Assets	$	4,942,095	$	7,325,197

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Line of credit (Note 3)	$	0-	$	991,598
Derivative liability, convertible debt features (Note 5)		0-		1,842,000
Current portion long term notes payable (Note 4)		1,147,856		552,055
Accounts payable		634,057		830,433
Accrued expenses		589,898		213,772
Deferred revenue		137,351		453,862
Short term portion of related party notes and payables (Note 6)		1,296,310		3,471,755
Total Current Liabilities		3,805,472		8,355,475
Noncurrent Liabilities
Related party notes payable, less current portion (Note 6)		287,947		0-
Notes payable, less current portion (Note 4)		774,558		405,007
Total Liabilities		4,867,977		8,760,482

Stockholders' Equity (Deficit)
Common stock		309,744		280,744
Preferred stock - Series E, non-redeemable		0-		50
Preferred stock - Series F, non-redeemable		11		0-
Additional paid-in-capital		50,543,538		46,215,049
Accumulated deficit		(50,779,175)		(47,931,128)
Total Stockholders' Equity (Deficit)		74,118		(1,435,285)

Total Liabilities and Stockholders' Equity (Deficit)	$	4,942,095	$	7,325,197

See accompanying notes to the condensed consolidated financial statements (unaudited).

-3-

GALAXY NEXT GENERATION, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

For the Three Months

For the Nine Months

Ended March 31,

Ended March 31,

2021

2020

2021

2020
Revenues
$
777,457
$
349,247
$
   2,754,463
$
     1,850,673
Cost of Sales

356,731

130,614

1,660,971

1,116,398

Gross Profit

420,726

218,633

1,093,492

734,275

General and Administrative Expenses

Stock compensation and stock issued for services

2,350

48,034

2,778,550

2,055,726
Asset impairment expense

-

2,000,287

-

2,000,287
General and administrative

1,697,410

1,662,359

4,347,555

4,263,887
Total General and Administrative Expenses

1,699,760

3,710,680

7,126,105

8,319,900
Loss from Operations

(1,279,034)

(3,492,047)

(6,032,613)

(7,585,625)

Other Income (Expense)

Other income

141,017

-

141,017

3,049
Expenses related to convertible notes payable:

        Change in fair value of derivative liability

343,000

695,300

(3,153,583)

2,717,557
        Interest accretion

-

(603,852)

(766,603)

(1,412,705)
Interest expense related to Equity Purchase Agreement (Note 13)

(1,805,687)

-

(6,807,587)

-
Interest expense

(289,585)

(1,860,498)

(7,173,779)

(3,822,927)

Total Other Income (Expense)

(1,611,255)

(1,769,050)

(17,760,535)

(2,515,026)

Net Loss before Income Taxes

(2,890,289)

(5,261,097)

(23,793,148)

(10,100,651)

Income Taxes (Note 11)

-

-

-

-

Net Loss
$
(2,890,289)
$
(5,261,097)
$
(23,793,148)
$
(10,100,651)
Net Basic and Fully Diluted Loss Per Share
$
(0.001)
$
(0.150)
$
         (0.008)
$
       (0.470)

Weighted average common shares outstanding

Basic

2,822,806,425

35,520,434

2,221,202,596

21,547,126
Fully diluted

3,387,367,710

585,972,958

3,433,133,044

339,856,357

	For the Three Months Ended December 31,				For the Six Months Ended December 31,
	2021		2020		2021		2020
Revenues	$	904,055	$	798,793	$	2,588,826	$	1,977,006
Cost of Sales		848,099		471,063		1,866,862		1,304,240

Gross Profit		55,956		327,730		721,964		672,766

General and Administrative Expenses
Stock compensation and stock issued for services		0-		13,200		32,750		2,776,200
Impairment expense		46,869		0-		46,869		0-
General and administrative		1,049,993		1,257,918		2,548,117		2,650,145

Total General and Administrative Expenses		1,096,862		1,271,118		2,627,736		5,426,345
Loss from Operations		(1,040,906)		(943,388)		(1,905,772)		(4,753,579)

Other Income (Expense)		5,878		0-		5,878		0-
Expenses related to convertible notes payable:
Change in fair value of derivative liability		834,000		(2,442,688)		1,842,000		(3,496,583)
Interest accretion		(15,540)		(366,667)		(24,290)		(766,603)
Interest expense related to Equity Purchase Agreement (Note 11)		(1,890,600)		(995,000)		(2,143,500)		(5,001,900)
Interest expense		(354,852)		(3,020,338)		(622,363)		(6,884,194)

Total Other Income (Expense)		(1,421,114)		(6,824,693)		(942,275)		(16,149,280)

Net Loss before Income Taxes		(2,462,020)		(7,768,081)		(2,848,047)		(20,902,859)

Income taxes (Note 9)		0-		0-		0-		0-

Net Loss	$	(2,462,020)	$	(7,768,081)	$	(2,848,047)	$	(20,902,859)

Net Basic and Fully Diluted Loss Per Share	$	(0.0007)	$	(0.0034)	$	(0.0009)	$	(0.0106)

Weighted average common shares outstanding
Basic		3,352,600,273		2,314,084,953		3,270,956,252		1,978,500,180
Fully diluted		3,352,600,620		2,776,901,944		3,270,956,598		3,205,073,044

See accompanying notes to the condensed consolidated financial statements (unaudited).

-4-

GALAXY NEXT GENERATION, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Nine Months Ended March 31, 2021
(Unaudited)

Total

Common Stock

Preferred Stock - Class E

Additional

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Paid-in Capital

Deficit

Deficit

Balance, July 1, 2020
628,039,242

$ 59,539

     500,000

$50

$15,697,140

$(23,496,792)

$ (7,740,063)

Common stock issued for services
          105,800,000

10,580

                -

                        -

         2,767,970

                      -

           2,778,550

Common stock issued in exchange for debt reduction
1,382,812,744

138,281

                -

                        -

            12,892,954

                      -

13,031,235

Issuance of common stock to warrant holders
249,792,217

             -

                -

                        -

            -

                      -

             -

Commitment shares issued
          57,500,000

            5,750

                -

                        -

1,171,250

                      -

    1,177,000

Common stock issued under Equity Purchase Agreement
377,000,000

37,700

                -

                        -

             8,254,700

                      -

        8,292,400

Common stock issued as collateral
50,000,000

-

-

-

-

-

-
Common stock issued in acquisition
10,000,000

1,000

-

-

150,000

151,000

Consolidated net loss
           -

             -

-

                        -

-

                     (23,793,148)

(23,793,148)
Balance March 31, 2021
2,860,944,203

$252,850

500,000

$50

        $40,934,014

$(47,289,940)

$ (6,103,026)

GALAXY NEXT GENERATION, INC.

Consolidated Statement of Changes in Stockholders' Equity (Deficit)

Six Months Ended December 31, 2021

(Unaudited)

	Common Stock				Preferred Stock Series E				Preferred Stock Series F				Additional Paid-in		Accumulated		Total Stockholders'
	Shares		Amount			Shares	Amount		Shares		Amount		Capital		Deficit		Deficit

Balance, July 1, 2021		3,139,882,882	$	280,744		500,000	$	50		0-	$	0-	$	46,215,049	$	(47,931,128)	$	(1,435,285)

Common Stock issued for services		2,500,000		250		-		-		-		-		32,500		-		32,750

Common stock issued under Equity Purchase Agreement		225,000,000		22,500		-		-		-		-		2,121,000		-		2,143,500

Preferred Series F issued in exchange for debt		-		-		-		-		11,414	$	11		1,824,989		-		1,825,000

Retirement of Preferred Series E		-		-		(500,000)		(50)		-		-		-		-		(50)

Common stock cancelled		(50,000,000)		-		-		-		-		-		-		-		-

Commitment shares issued		62,500,000		6,250		-		-		-		-		350,000		-		356,250

Consolidated net loss		-		-		-		-						-		(2,848,047)		(2,848,047)

Balance, December 31, 2021		3,379,882,882	$	309,744		0-	$	0-	$	11,414	$	11	$	50,543,538	$	(50,779,175)	$	74,118

See accompanying notes to the condensed consolidated financial statements (unaudited).

-5-

GALAXY NEXT GENERATION, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Nine Months Ended March 31, 2020
(Unaudited)

Total

Common Stock

Preferred Stock - Class E

Additional

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Paid-in Capital

Deficit

Deficit

Balance, July 1, 2019
11,318,901

$   1,072

-

$     -

$   4,859,731

$ (9,470,685)

$ (4,609,882)

Common stock issued for services
3,119,912

314

-

-

1,995,900

-

1,996,214

Common stock issued for debt reduction

95,988,567

9,598

-

-

4,137,688

-

4,147,286

Settlement of conversion features
-

-

-

-

152,374

-

152,374

Issuance of common stock to warrant holders
23,142,794

-

-

-

-

-

-

Common stock issued as compensation
144,511

14

-

-

59,497

-

59,511

Common stock issued in acquisition of Ehlert Solutions

and Interlock Concepts, Inc.
1,350,000

135

-

-

1,720,216

-

1,720,351

Common stock issued for convertible notes
500,000

50

-

-

219,950

-

220,000

Commitment shares issued
25,000

3

-

-

6,997

-

7,000

Issuance of Preferred Stock- Class E
-

-

500,000

50

499,950

-

500,000

Consolidated net loss
-

-

-

   -

              -

   (10,100,651)

  (10,100,651)
Balance March 31, 2020
135,589,685

$   11,186

500,000

$   50

$ 13,652,303

$ (19,571,336)

$ (5,907,797)

GALAXY NEXT GENERATION, INC.

Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)

Six Months Ended December 31, 2020

(Unaudited)

	Common Stock				Preferred Stock - Class E				Additional Paid-in		Accumulated		Total Stockholders'
	Shares		Amount			Shares	Amount		Capital		Deficit		Deficit

Balance, July 1, 2020		628,039,242	$	59,539	$	500,000	$	50	$	15,697,140	$	(23,496,792)	$	(7,740,063)

Common stock issued for services		105,750,000		10,375		-		-		2,765,625		-		2,776,000

Common stock issued for debt reduction		1,382,812,744		138,281		-		-		12,892,954		-		13,031,235

Issuance of common stock to warrant holders		249,792,217		-		-		-		-		-		-

Commitment shares issued		52,500,000		5,250		-		-		1,044,750		-		1,050,000

Common stock issued under Equity Purchase Agreement		242,000,000		24,200		-		-		3,927,700		-		3,951,900

Common stock issued as collateral		50,000,000		-		-		-		-		-		-

Common stock issued in acquisition		10,000,000		1,000		-		-		150,000		-		151,000

Consolidated net loss		-		-		-		-		-		(20,902,859)		(20,902,859)

Balance, December 31, 2020		2,720,894,203	$	238,645		500,000	$	50	$	36,478,169	$	(44,399,651)	$	(7,682,787)

See accompanying notes to the condensed consolidated financial statements (unaudited).

-6-

~~GALAXY NEXT GENERATION, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended March 31,

2021

2020
Cash Flows from Operating Activities

Net loss

$ (23,793,148)

$ (10,100,651)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

278,949

                       563,855
Goodwill and intangible assets impairment charge

-

2,000,287
Loss on disposal of property and equipment

-

13,236
Amortization of convertible debt discounts

                 265,953

308,062
Accretion and settlement of financing instruments

and change in fair value of derivative liability

3,827,600

(389,331)
Stock compensation and stock issued for services

2,789,130

                               -
Stock issued for payment of interest

13,826,684

-

Changes in assets and liabilities:

Accounts receivable

             (472,892)

323,444
Inventories

(1,260,363)

(194,699)
Prepaid expenses and other assets

-

18,098
Accounts payable

          (1,979,801)

                    217,307
Accrued expenses

             62,253

                  (365,562)
Deferred revenue

(318,778)

                    167,404
Net cash used in operating activities

(6,774,413)

               (7,438,550)

Cash Flows from Investing Activities

Acquisition of business, net of cash

                           38,836

                2,967,918
Purchased capitalized development costs

(120,404)

-
Purchases of property and equipment

                           -

                    (17,636)
Net cash provided by (used in) investing activities

                           (81,568)

                2,950,282

Cash Flows from Financing Activities

Proceeds from notes payable

                          332,500

                      -
Principal payments on financing lease obligations

-

(5,721)
Principal payments on notes payable

                    (1,878)

(48,331)
Payments on advances from stockholder, net

               (140,596)

                               -
Payments on convertible notes payable

(110,000)

(655,076)
Proceeds from convertible notes payable

1,956,000

4,550,684
Proceeds from notes payable related parties

543,613

672,084
Payments on line of credit, net

(245,000)

(100)
Proceeds from sale of common stock under Equity Purchase Agreement

4,851,333

-
Net cash provided by financing activities

7,185,972

4,513,540

Net Increase in Cash and Cash Equivalents

$        329,991

$          25,272

Cash, Beginning of Period

412,391

169,430
Cash, End of Period

$        742,382

$        194,702

GALAXY NEXT GENERATION, INC.

Consolidated Statements of Cash Flows

(Unaudited)

		Six Months Ended December 31,
		2021		2020
Cash Flows from Operating Activities
Net loss	$	(2,848,047)	$	(20,902,859)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		241,785		177,529
Amortization of convertible debt discounts		24,290		247,702
Impairment expense		46,869		0-
Change in fair value of derivative liability		(3,273,253)		4,126,813
Stock issued for services		32,961		2,786,775
Stock issued under Equity Purchase Agreement		2,166,000		11,893,497

Changes in assets and liabilities:
Accounts receivable		560,281		(401,935)
Inventories		1,887,814		(526,227)
Intangibles		0-		(120,404)
Right of use assets		(14,285)		0-
Accounts payable		(196,376)		(1,463,810)
Accrued expenses		376,126		(175,384)
Deferred revenue		(316,511)		(161,221)
Net cash provided by (used in) operating activities		(1,312,346)		(4,519,524)

Cash Flows from Investing Activities
Acquisition of business, net of cash		0-		38,836
Capitalization of development costs		(221,430)		0-
Purchases of property and equipment		(194,326)		0-

Net cash (used in) provided by investing activities		(415,756)		38,836

Cash Flows from Financing Activities
Principal payments on notes payable		(157,364)		(932)
Payments on advances from stockholder, net		(18,500)		(121,663)
Proceeds from convertible notes payable		1,075,000		1,956,000
Proceeds from convertible notes payable related party		0-		535,963
Payments on line of credit, net		(991,598)		(245,000)
Proceeds from sale of common stock under Equity Purchase Agreement		1,633,700		2,316,520

Net cash provided by financing activities		1,541,238		4,440,888

Net Decrease in Cash and Cash Equivalents		(186,864)		(39,800)

Cash, Beginning of Period		541,591		412,391
Cash, End of Period	$	354,727	$	372,591

-7-

Supplemental and Non Cash Disclosures

Noncash additions related to convertible debt

$        228,020

$        268,350
Cash paid for interest

$        163,314

$        176,379
Interest on shares issued under Equity Purchase Agreement

$     6,807,587

$                    -
Related party note payable issued for acquisition of business

$        194,526

$     1,484,473
Acquisition of goodwill and intangibles

$          46,869

$     3,760,287
Stock compensation and stock issued for services

$     2,778,550

$     2,055,873
Property leased with financing lease

$          25,317

$        37,979
Accretion of discount and change in fair value of derivatives

$     3,895,991

$                   -
Common stock issued in exchange for convertible debt reduction

$     4,117,650

$     3,447,912

Supplemental and Non Cash Disclosures
Noncash additions related to convertible debt	$	25,000	$	210,520

Cash paid for interest	$	51,401	$	35,888

Interest on shares issued under Equity Purchase Agreement	$	2,143,500	$	5,001,900

Related party note payable issued for acquisition of business	$	0-	$	194,526
Acquisition of goodwill and intangibles	$	0-	$	46,869
Stock issued for services	$	32,750	$	2,776,200

Property leased with financing lease	$	97,253	$	25,317

Change in fair value of derivatives	$	1,842,000	$	4,238,991

Common stock issued in exchange for convertible debt reduction	$	0-	$	4,117,650

Preferred stock issued in exchange for convertible debt reduction	$	1,825,000	$	0-

See accompanying notes to the condensed consolidated financial statements (unaudited).

-8-

Note 1 - Summary of Significant Accounting Policies

Corporate History, Nature of Business, Mergers and Acquisitions

Galaxy is a manufacturer and U.S. distributor of interactive learning technology hardware and software that allows the presenter and participant to engage in a fully collaborative instructional environment. Galaxy's products include Galaxy's own private-label interactive touch screen panel ~~its own Intercom, Bell, and Paging solution,~~ as well as numerous other national and international branded peripheral and communication ~~devices for safety and security purposes.~~devices. New technologies like Galaxy's own touchscreen panels are sold along with renowned brands such as Google Chromebooks, Microsoft Surface Tablets, Lenovo and Acer computers,Verizon WiFi and more. Galaxy's distribution channel consists of approximately 37 resellers across the U.S. who primarily sell its products within the commercial and educational market. Galaxy does not control where the resellers focus their resell efforts; however, the K-12 education market is the largest customer base for Galaxy products comprising nearly 90% of Galaxy's sales. In addition, Galaxy also possesses its own ~~OEM division~~reseller channel where it ~~manufacturers products for other vendors in their industry~~sells directly to the K-12 market, primarily throughout the Southeast region of the United States.

Ehlert Solutions Group, Inc. ("Solutions") and ~~white labels the products under other brands.~~

~~Solutions and~~Interlock Concepts, Inc. ("Concepts") are Arizona-based audio design and manufacturing companies creating innovative products that provide fundamental tools for building notification systems primarily to K-12 education market customers located primarily in the north and northwest United States. ~~These~~Solutions and Concepts' products and services allow institutions access to intercom, scheduling, and notification systems with improved ease of use. The products provide an open architecture solution to customers which allows the products to be used in both existing and new environments. Intercom, public announcement (PA), bell and control solutions are easily added and integrated within the open architecture design and software model. These products combine elements over a common internet protocol (IP) network, which minimizes infrastructure requirements and reduces costs by combining systems.

On October 15, 2020, ~~the Company entered into an Asset Purchase Agreement (AP), to acquire~~Galaxy acquired the assets of Classroom Technologies Solutions, Inc. ("Classroom Tech") for consideration of (a) paying off a secured Classroom Tech loan, not to exceed the greater of 50% of the value of the Classroom Tech assets acquired or $120,000; (b) the issuance of a promissory note in the amount of $44,526 to a Classroom Tech designee; and (c) the issuance of 10 million shares of common stock to the seller of Classroom Tech. Classroom Tech provides cutting-edge presentation products to schools, training facilities, churches, corporations and retail establishments. Their ~~high quality~~high-quality solutions are customized to meet a variety of needs and budgets in order to provide the best in education and presentation technology. Classroom Tech direct-sources and imports many devices and components which allows the Company to be innovative, nimble, and capable of delivering a broad range of cost-effective solutions. Classroom Tech also offers in-house service and repair facilities and carries many top brands.

~~Impact of Coronavirus Aid, Relief, and Economic Security Act~~

COVID-19 Update

The ~~Coronavirus Aid, Relief~~Covid-19 Pandemic that began in early 2020 caused shelter-in-place policies, unexpected factory closures, supply chain disruptions, and ~~Economic Security Act (the "CARES Act") was enacted in March 2020 in response to~~market volatilities across the globe. As a result of the economic disruptions and unprecedented market volatilities and uncertainties driven by the Covid-19 outbreak, the Company experienced some supply chain disruptions. However, the Company has not experienced any significant payment delays or defaults by our customers as a result of the COVID-19 pandemic.

The ~~CARES Act~~full impact of the Covid-19 outbreak continues to evolve as of the date of this report. The depth and related rules and guidelines include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments, and estimated income tax payments that we are deferring to future periods. As a result,duration of the ~~Company delayed payment~~pandemic remains unknown. Despite the availability of ~~certain payroll tax payments~~vaccines, recent surges in the ~~amount of $19,517 as of March 31, 2021 and June 30, 2020, respectively.~~

In April 2020, the Company applied for an unsecured loan (the "PPP Loan") under the Paycheck Protection Program (PPP). The PPP was established under The CARES Act and is administered by the U.S. Small Business Administration (SBA). The PPP loan was approved and funded,infection rate and the ~~Company entered into an unsecured loan~~detection of approximately $311,000. The PPP loan matures in April 2022 and accrues interest at an annual rate of 0.98%. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults and provisionsnew variants of the ~~promissory note. In accordance with~~virus have reinforced the ~~requirements~~general consensus that the containment of Covid-19 remains a challenge. Management is actively monitoring the ~~CARES Act, the Company used the proceeds from the PPP Loan primarily for payroll costs. See Note 6.~~global situation and its effect on its financial condition, liquidity, operations, suppliers, industry, and workforce.

In May 2020, the Company received a loan from the SBA under Section 7(b) of the Small Business Act. The $150,000 secured loan matures in May 2050 and accrues interest at an annual rate of 3.75%. The promissory note is collateralized by a security interest in substantially all assets of the Company. The loan proceeds are to fund working capital needs due to economic injury caused by the COVID-19 pandemic. See Note 6.

-9-

Basis of Presentation and Interim Financial Information

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission (the "SEC") pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our June 30, ~~2020~~2021 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.

Principles of Consolidation

The financial statements include the consolidated assets and liabilities of the combined company (collectively Galaxy Next Generation, Inc., Classroom Technology Solutions Inc., Interlock Concepts, Inc., and Ehlert Solutions Group, Inc. referred to collectively as the "Company"). See Note ~~14.~~

12.

All intercompany transactions and accounts have been eliminated in the consolidation.

The Company’s common stock is traded on the over-the-counter ~~markets~~public company traded under the stock symbol ~~GAXY.~~listing GAXY (formerly FLCR).

Capital Structure

~~In accordance with ASC 505, Equity, the~~The Company's capital structure is as follows:

March 31, 2021

Authorized

Issued

Outstanding

Common stock

     4,000,000,000

2,860,944,203

   2,810,905,578

$.0001 par value, one vote per share

Preferred stock

        200,000,000

                  -

                      -

$.0001 par value, one vote per share

Preferred stock - Class A

               750,000

                  -

                      -

$.0001 par value; no voting rights

Preferred stock - Class B

            1,000,000

                  -

                      -

Voting rights of 10 votes for
Preferred B share; 2% preferred dividend payable annually

Preferred stock - Class C

            9,000,000

                  -

                      -

$.0001 par value; 500 votes per share, convertible to common stock

Preferred stock - Class D

             1,000,000

                  -

                      -

$.0001 par value; no voting
rights, convertible to common stock, mandatory conversion to common stock 18 months after issue

Preferred stock - Class E

               500,000

          500,000

             500,000

$.0001 par value; no voting
rights, convertible to common
stock

	December 31, 2021
	Authorized	Issued	Outstanding

Common stock	4,000,000,000	3,379,882,882	3,379,844,257	$.0001 par value, one vote per share

Preferred stock	200,000,000	-	-	$.0001 par value, one vote per share

Preferred stock - Class A	750,000	-	-	$.0001 par value; no voting rights

Preferred stock - Class B	1,000,000	-	-	Voting rights of 10 votes for Preferred B share; 2% preferred dividend payable annually

Preferred stock - Class C	9,000,000	-	-	$.0001 par value; 500 votes per share, convertible to common stock

Preferred stock - Class F	15,000	11,414	11,414	$.001 par value; no voting rights, convertible to common stock at a fixed price of $0.37 per share; stated value is $1,000 per share

-10-


		June 30, 2020				June 30, 2021
		Authorized	Issued	Outstanding		Authorized	Issued	Outstanding

Common stock	Common stock	4,000,000,000	628,039,242	628,000,617	$.0001 par value, one vote per share	4,000,000,000	3,139,882,882	3,089,844,257	$.0001 par value, one vote per share

Preferred stock	Preferred stock	200,000,000	-	-	$.0001 par value, one vote per share	200,000,000	-	-	$.0001 par value, one vote per share

Preferred stock - Class A	Preferred stock - Class A	750,000	-	-	$.0001 par value; no voting rights	750,000	-	-	$.0001 par value; no voting rights

Preferred stock - Class B	Preferred stock - Class B	1,000,000	-	-	Voting rights of 10 votes for 1 Preferred B share; 2% preferred dividend payable annually	1,000,000	-	-	Voting rights of 10 votes for 1 Preferred B share; 2% preferred dividend payable annually

Preferred stock - Class C	Preferred stock - Class C	9,000,000	-	-	$.0001 par value; 500 votes per share, convertible to common stock	9,000,000	-	-	$.0001 par value; 500 votes per share, convertible to common stock

Preferred stock - Class D	Preferred stock - Class D	1,000,000	-	-	$.0001 par value; no voting rights, convertible to common stock, mandatory conversion to common stock 18 months after issue	1,000,000	-	-	$.0001 par value; no voting rights, convertible to common stock, mandatory conversion to common stock 18 months after issue


Preferred stock - Class E	Preferred stock - Class E	500,000	500,000	500,000	$.0001 par value; no voting rights, convertible to common stock	500,000	500,000	500,000	$.0001 par value; no voting rights, convertible to common stock

There is no publicly traded market for the preferred shares.

The Preferred Series D and E were retired in December 2021. Preferred Series F certificate of designation was filed on February 10, 2022.

There are ~~399,163,143~~434,891,143 common shares reserved at ~~March~~December 31, 2021 under terms of the convertible debt agreements, Stock Plan and Equity Purchase Agreement (see Notes 6, 1311 and ~~15)~~13).

There are ~~194,683,306~~104,764,231 issued common shares that are restricted as of ~~March~~December 31, 2021. The shares may become free-trading upon satisfaction of certain terms and regulatory conditions.

Supplier Agreement

Contract assets and contract liabilities are as follows:

	December 31, 2021		June 30, 2021
Contract assets	$	12,409	$	43,360
Contract liabilities		137,351		228,514

For the three months ended December 31, 2021 and 2020, the Company recognized $219,309 and $445,136 of revenues related to supplier agreements. For the six months ended December 31, 2021 and 2020, the Company recognized $637,746 and $500,075 of revenues related to supplier agreements.

-11-

Accounts Receivable

Management deemed no allowance for doubtful accounts was necessary at ~~March~~December 31, 2021 and June 30, ~~2020.~~2021. At ~~March~~December 31, 2021 and June 30, ~~2020, $758,481~~2021, $0 and ~~$670,031~~$190,779 of total accounts receivable were considered unbilled and recorded as deferred revenue.

The Company factored approximately $600,000 and $0 of accounts receivable during the nine months ended March 31, 2021 and year ended June 30, 2020, respectively. For the three months and nine months ended March 31, 2021, expenses on sale of trade receivables was inconsequential.

Inventories

Management estimates $67,635 of inventory reserves at ~~March~~December 31, 2021 and June 30, ~~2020.~~2021, respectively.

Goodwill, Intangible Assets and Product Development Costs

Goodwill, ~~and Intangible Assets~~

Management of the Company determined that a triggering event to assess goodwill impairment occurred during the year ended June 30, 2020 due to the separation of a key executive associated with their acquisition of Concepts and Solutions. While there was no single determinative event, the consideration in totality of several factors that developed led management to conclude that it was more likely than not that the fair values of certain intangible assets, and ~~goodwill acquired~~product development costs are comprised of the following at December 31, 2021:

	Cost		Accumulated Amortization		Net Book Value		Impairment		Total
Goodwill	$	834,220	$	0-	$	834,220	$	0-	$	834,220
Finite-lived assets:
Customer list	$	922,053	$	(376,351)	$	545,702	$	(41,053)	$	504,649
Vendor relationships		484,816		(215,550)		269,266		(5,816)		263,450
Capitalized product development cost		1,015,707		(312,664)		703,043		0-		703,043
	$	2,422,576	$	(904,565)	$	1,518,011	$	(46,869)	$	1,471,142

Goodwill, intangible assets, and product development costs are comprised of the following at June 30, 2021:

	Cost		Accumulated Amortization		Total
Goodwill	$	834,220	$	0-	$	834,220
Finite-lived assets:
Customer list	$	922,053	$	(314,166)	$	607,887
Vendor relationships		484,816		(168,474)		316,342
Product development costs		790,118		(197,532)		592,586
	$	2,196,987	$	(680,172)	$	1,516,815

-12-

Intangible assets such as ~~part~~customer lists and vendor relationships are stated at the lower of ~~that acquisition were below their carrying amounts. These factors included: a) former key executive separating~~cost or fair value. They are amortized on a straight-line basis over periods ranging from three to six years, representing the ~~Company; b) respective former key executive violating his noncompete changing~~period over which the ~~use~~Company expects to receive future economic benefits from these assets. Amortization of these intangible assets amounted to $44,700 and $69,953 for the three months ended December 31, 2021 and 2020. Amortization of these intangible assets amounted to $118,243 and $137,953 for the six months ended December 31, 2021 and 2020.

Costs incurred in designing and developing classroom technology products are expensed as research and development until technological feasibility has been established. Technological feasibility is established upon completion of a detail product design, or in its absence, completion of a working model. Upon the achievement of technological feasibility, development costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Management's judgment is required in determining whether a product provides new or additional functionality, the point at which various products enter the stages at which costs may be capitalized, assessing the ongoing value and impairment of ~~it; c) sustained decrease~~the capitalized costs and determining the estimated useful lives over which the costs are amortized.

Annual amortization expense is calculated based on the straight-line method over the product's estimated economic lives, which are typically three to six years. Amortization of product development costs incurred begins when the related products are available for general release to customers. Amortization of product development costs of $44,761 and $20,416 for the three months ended December 31, 2021 and 2020, and $115,134 and $32,927 for the six months ended December 31, 2021 and 2020, is included in cost of revenues in the Company's ~~share price which reduced market capitalization; and d) uncertainty in the United States and global economies due to Covid-19. As a result, the Company recorded a non-cash impairment loss~~unaudited condensed consolidated statements of ~~approximately $2,000,000, including $800,287 related to goodwill and $1,200,000~~operations.

Estimated amortization expense related to finite-lived intangible ~~assets. No such impairment charge was recorded during~~assets for the ~~three or nine months ended March 31, 2021.~~ next five years is: $555,920 for fiscal year 2023, $483,959 for fiscal year 2024, $314,272 for fiscal year 2025, $60,400 for fiscal year 2026, and $40,207 for fiscal year 2027 and $16,384 thereafter.

~~-11-~~

Recent Accounting Pronouncements

In January 2020, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update (ASU) No. 2020-01, ~~"Investments~~“Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815."” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU ~~2020-01~~2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company ~~is currently evaluating the impacts of adoption of the new guidance to~~adopted this ASU on July 1, 2021 with no significant impact on its unaudited condensed consolidated financial statements.

-13-

In December 2019, the FASB issued ASU No. 2019-12 ~~"Income~~“Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12") by removing certain exceptions to the general principles. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company ~~is currently evaluating the impacts of adoption of the new guidance to~~adopted this ASU on July 1, 2021 with no significant impact on its unaudited condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity and modifies the guidance on diluted EPS calculations as a result of these changes. The guidance in this ASU can be adopted using either a full or modified retrospective approach and becomes effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted. The Company ~~is currently evaluating the~~adopted this ASU on July 1, 2021 with no significant impact ~~of this standard~~ on its unaudited condensed consolidated financial ~~statements and disclosures.~~

statements.

The Company has implemented all new applicable accounting pronouncements that are in effect and applicable. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

~~Reclassification~~

~~Certain amounts in the current period financial statements have been reclassified in order to conform to the current year presentation.~~

Note 2 ~~- Contract Balances~~

~~Contract assets and contract liabilities are as follows:~~

March 31, 2021

June 30, 2020
Contract assets
$ -

$ -
Contract liabilities
217,134

463,961

~~For the three and nine months ended March 31, 2021, the Company recognized $214,992 and $715,067 of revenue.~~

~~-12-~~

~~Note 3~~ - Property and Equipment

Property and equipment are comprised of the following at:

March 31, 2021

June 30, 2020
Vehicles
$                      115,135

$                      115,135
Equipment
22,877

                             6,097
Furniture and fixtures
25,085

                           24,335

163,097

                         145,567
Accumulated depreciation
(104,807)

                          (93,518)

Property and equipment, net
$                        58,290

$                        52,049

~~Depreciation expense was $4,641 and $10,011 for the three months ended March 31, 2021 and 2020, respectively.~~

	December 31, 2021		June 30, 2021
Vehicles	$	212,658	$	115,135
Building		201,823		0-
Equipment		16,192		25,115
Leasehold improvements		31,000		31,000
Furniture and fixtures		28,321		25,085
		489,994		196,335
Accumulated depreciation		(119,937)		(109,523)

Property and equipment, net	$	370,057	$	86,812

~~Depreciation expense was $11,289 and $27,855 for the nine months ended March 31, 2021 and 2020, respectively.~~

Note ~~4 - Intangible Assets~~

~~Customer Lists and Vendor Relationships~~

Intangible assets are stated at the lower of cost or fair value. Customer lists and vendor relationships are amortized on a straight-line basis over five years, representing the period over which the Company expects to receive future economic benefits from these assets. Amortization of customer lists and vendor relationships was $70,343 and $0 for the three months ended March 31, 2021 and 2020, respectively. Amortization of customer lists and vendor relationships was $208,296 and $0 for the nine months ended March 31, 2021 and 2020, respectively. Amortization of these costs are included in general and administrative expenses in the Company's condensed consolidated statements of operations.

~~Product Development Costs~~

Annual amortization expense is calculated based on the straight-line method over the product's estimated economic life. Amortization of product development costs incurred begins when the related products are available for sale to customers. Amortization of product development costs was $26,436 and $0 for the three months ended March 31, 2021 and 2020, respectively. Amortization of product development costs was $59,364 and $0 for the nine months ended March 31, 2021 and 2020, respectively. Amortization of these costs are included in cost of sales in the Company's condensed consolidated statements of operations.

~~The following tables shows goodwill, finite-lived intangible assets, accumulated amortization, and the impairment charges:~~

March 31, 2021

Cost

Accumulated Amortization

Net Book Value

Impairment

Total
Goodwill
$                834,220

$                      -

$        834,220

$                  -

$ 834,220
Finite-lived assets:

Customer list
$                922,053

$       (268,063)

$        653,990

$                  -

$ 653,990
Vendor relationships
484,816

             (144,233)

340,583

                     -

340,583
Capitalized product development costs
                   402,255

             (60,900)

341,355

                     -

     341,355

$             1,809,124

$       (473,196)

$     1,335,928

$                  -

$1,335,928

June 30, 2020

Cost

Accumulated Amortization

Net Book Value

Impairment

Total
Goodwill
$             1,634,507

$                       -

$     1,634,507

$ (800,287)

$ 834,220
Finite-lived assets:

Customer list
$                881,000

$       (132,147)

$        748,853

$                  -

$ 748,853
Vendor relationships
                   479,000

             (71,847)

           407,153

                     -

     407,153
Noncompete agreements
                1,600,000

           (400,000)

        1,200,000

   (1,200,000)

                -
Capitalized product development costs
281,845

(1,536)

           280,309

                     -

     280,309

$             3,241,845

$       (605,530)

$     2,636,315

$(1,200,000)

$1,436,315

~~-13-~~

~~Estimated amortization expense related to intangible assets for the next five years is as follows:~~

Period ending March 31,

2022
$ 387,118
2023
387,118
2024
347,598
2025
187,885
2026
26,209

$ 1,335,928

~~Note 5~~3 - Lines of Credit

The Company ~~has an~~had $1,000,000 available ~~$1,000,000 and $1,250,000~~under a line of credit ~~at March 31, 2021 and June 30, 2020, respectively,~~ bearing interest at prime plus 0.5% (3.75% at ~~March 31, 2021 and 4.25% at~~ June 30, ~~2020).~~2021) which expired October 29, 2021. The bank provided a 30-day grace period to repay the line to November 29, 2021. The line of credit was ~~renewed in October 2020 at a reduced available credit line, change in collateral, and a new expiration date of October 29, 2021. The renewed line of credit is~~ collateralized by certain real estate owned by stockholders and a family member of a stockholder, ~~50,000,000~~7,026,894 shares of the Company's common stock ~~par value $0.0001 per share (the "Common Stock") and the~~owned by two stockholders, personal ~~stock~~guarantees of two stockholders, and a key man life insurance policy. ~~A minimum average bank~~In addition, a 20% curtailment of the outstanding balance ~~of $50,000 was required on the line of credit agreement at June 30, 2020, but this requirement was removed in October 2020.~~may occur any time prior to maturity. The outstanding balance iswas $0 and $991,598 ~~and $1,236,598~~ at ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, respectively.

The line of credit was completely paid off in November of 2021.

The Company has aup to $1,000,000 available credit line under an accounts receivable factoring agreement through July 30, 2022. ~~No amounts were outstanding~~Total available credit under the factoring agreement was $989,680 and $1,000,000 as of ~~March~~December 31, ~~2021.~~2021 and June 30, 2021, respectively. See Note ~~13.~~11.

-14-

Note 64 - Notes Payable

Long Term Notes Payable

March 31, 2021

June 30, 2020

Note payable with a bank bearing interest at 4% and maturing on June 26, 2020. The note was renewed by the lender with a revised maturity of June 26, 2021 and a lowered interest rate to 3%. The renewal provides for monthly interest payments and a balloon payment of outstanding principal and interest at maturity. The note is collateralized by a certificate of deposit owned by a related party.

$274,539

$274,900

Long term PPP loan under the CARES Act bearing interest at 0.98% and maturing in April 2022. Monthly installments of principal and interest of $13,137 begin in October 2020. Payments on the loan are subject to application for SBA forgiveness submitted in 2021.
310,832

310,832

Long term loan under Section 7(b) of the Economic Injury Disaster Loan program bearing interest at 3.75% and maturing in May 2050. Monthly installments of principal and interest of $731 begin in May 2021.
150,000

150,000

Note payable to an investor bearing interest of 10% and maturing on January 13, 2022 with monthly installments of principal and interest of $45,294 beginning in June 2021.
385,000

-

Financing lease liabilities for offices and warehouses with monthly installments of $12,449 (ranging from $1,083 to $3,524) over terms expiring through July 2023.
186,119

223,982

Financing leases with a related party for delivery vehicles with monthly installments totaling $813, including interest, over five year terms expiring through July 2020.
-

1,245

Note payable with a finance company for delivery vehicle with monthly installments totaling $679 including interest at 8.99% over a six year term expiring in December 2025.
32,374

34,019

Total Notes Payable
1,338,864

994,978

Current Portion of Notes Payable
940,011

512,425

Long-term Portion of Notes Payable
$ 398,853

$ 482,553

	December 31, 2021		June 30, 2021
Note payable with a bank bearing interest at 4% and maturing on June 26, 2020. The note was renewed by the lender with a revised maturity of June 26, 2021 and an interest rate of 3%. In July 2021, the note was renewed by the lender with a revised maturity date of July 7, 2026. The renewal provides for monthly interest payments and a balloon payment of outstanding principal and interest at maturity. The note is collateralized by a certificate of deposit owned by a related party.	$	223,823	$	237,039

Note payable to an investor bearing interest at 10% and maturing on January 13, 2022 with monthly installments of principal and interest of $45,294 beginning in June 2021.		100,845		348,456

Long term loan under Section 7(b) of the Economic Injury Disaster Loan program bearing interest at 3.75% and maturing in May 2050. Monthly installments of principal and interest of $731 begin upon notification by the SBA regarding note servicing.		150,000		150,000

Financing lease liabilities for offices and warehouses with monthly installments of $22,723 (ranging from $245 to $9,664) over terms expiring through December 2024.		222,336		208,051

Note payable with a finance company for delivery vehicle with monthly installments totaling $679 including interest at 8.99% over a 6 year term expiring in December 2025.		28,241		31,016

Note payable with a bank for delivery vehicle with monthly installments totaling $844 including interest at 6% over a 4 year term expiring in August 2025.		33,662		0-

Note payable with a finance company for delivery vehicle with monthly installments totaling $948 including interest at 5.9% over a 6 year term expiring in January 2027.		56,717		0-

Note payable to an investor bearing interest at 12% and maturing on May 26, 2023 with monthly installments of principal and interest of $120,185 beginning in May 2022.		1,222,222		0-

Total Notes Payable		2,037,846		974,562

Less: Unamortized original issue discount		115,432		17,500

Current Portion of Notes Payable		1,147,856		552,055

Long-term Portion of Notes Payable	$	774,558	$	405,007

-15-

Future minimum principal payments on the long-term notes payable to unrelated parties are as follows:

Period ending March 31,

2022
$        940,011
2023
149,076
2024
               26,305
2025
               16,035
2026
14,662
Thereafter
             192,775

$      1,338,864

~~Convertible Notes~~


	~~March 31, 2021~~	~~June 30, 2020~~

On March 28, 2019, the Company signed a convertible promissory note with an investor. The $225,000 note was issued at a discount of $20,000 and bears interest at 10% per year. The Company issued 25,000 common shares to the investor. Three draws of $56,250, $112,500, and $56,250 were borrowed under this note. The note principal and interest were convertible into shares of common stock at the lower of (a) 70% of the lowest traded price of the common stock during the 20 trading days immediately preceding the notice of conversion or (b) $3 per share, beginning in September 2019. The note had prepayment penalties ranging from 110% to 125% of the principal and interest outstanding if repaid within 60 to 180 days from issuance. The note matured in three intervals in March 2020, June 2020, and November 2020. The note was repaid by conversion to stock.


	~~$ -~~	~~$24,150~~


On November 18, 2019, the Company signed a convertible promissory note with an investor. The $110,000 note was issued at a discount of $10,000 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) 70% of the lowest traded price of common stock during the 15 trading days prior to the issue date or (b) 70% of the lowest traded price for the common stock during the 15 trading days prior to conversion of the note. The note matured in November 2020. The note had prepayment penalties between 115% and 125% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock.




	-	~~1,000~~
On December 11, 2019, the Company signed a convertible promissory note with an investor. The $220,430 note was issued at a discount of $15,430 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.46 per share or (b) 75% of the lowest trading price of common stock during the 10 trading days prior to conversion beginning in June 2020. The note matured in December 2020. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock.




	-	~~121,200~~

~~-16-~~


On November 25, 2019, the Company signed a convertible promissory note with an investor. The $1,000,000 note was issued at a discount of $70,000 and bore interest at 8% per year. The note principal and interest up to $250,000 every 30-day calendar period were convertible into shares of common stock at the lower of (a) 75% of the lowest traded price of the common stock during the 10 trading days immediately preceding the notice of conversion or (b) $0.46 per share. The note matured in November 2020. The note had a redemption premium of 115% of the principal and interest outstanding if repaid before maturity. The note was repaid by conversion to stock.




	-	~~825,000~~

On January 9, 2020, the Company entered into a $225,000 convertible note. The $225,000 note was issued at a discount of $13,500 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) 75% of the lowest traded price of the common stock during the 10 trading days immediately preceding the notice of conversion or (b) the lowest traded price of the common stock during the 10 trading days prior to the issuance of this note. The note matured in October 2020. The note had prepayment penalties of 110% to 125% of the principal and interest outstanding if repaid before 180 days from issuance. The principal amount of the note was increased by $25,000 due to the value of the stock price at conversion. The note was repaid by conversion to stock.	-	~~250,000~~

On March 25, 2020, the Company signed a convertible promissory note with an investor. The $338,625 note was issued at a discount of $23,625 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.46 per share or (b) 75% of the lowest trading price of common stock during the 10 trading days prior to conversion. The note matured in March 2021. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock.	-	~~338,625~~

On June 26, 2020, the Company signed a convertible promissory note with an investor. The $430,000 note was issued at a discount of $30,000 and bears interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.47 per share or (b) 70% of the lowest trading price of common stock during the 10 trading days prior to conversion. The had note maturity of June 2021. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock.	-	~~430,000~~



~~Total Convertible Notes Payable~~	-	~~1,989,975~~
~~Less: Unamortized original issue discounts~~	-	~~888,075~~
~~Current Portion of Convertible Notes Payable~~	-	~~1,101,900~~

~~Long-term Portion of Convertible Notes Payable~~	~~$ -~~	~~$ -~~

Period ending December 31,
	2022	$	1,147,856
	2023		513,508
	2024		103,336
	2025		86,431
	2026		42,149
	Thereafter		144,566
		$	2,037,846

~~-17-~~

The original issue discount is being amortized over the terms of the convertible notes using the effective interest method. During the three months ended March 31, 2021 and 2020, the Company amortized $8,750 and $91,338, respectively, of debt discounts to interest expense and $0 and $603,852, respectively, to interest accretion. During the nine months ended March 31, 2021 and 2020, the Company amortized $256,452 and $247,794, respectively, of debt discounts to interest expense and $766,603 and $1,412,705, respectively, to interest accretion.

~~Convertible notes are subordinate to the bank debt of the Company.~~

Accrued but unpaid interest on the notes is convertible by the lender into, and payable by the Company in common shares at a price per common share equal to the most recent closing price of the Company's common shares prior to the delivery to the Company of a request to convert interest, or the due date of interest, as applicable. Interest, when due, is payable either in cash or common shares.

The conversion features meet the definition of a derivative liability instrument because the conversion rate is variable and therefore does not meet the "fixed-for-fixed" criteria outlined in ASC 815-40-15. As a result, the conversion features of the notes are recorded as a derivative liability at fair value and marked-to-market each period with the changes in fair value each period charged or credited to other income (expense).

Note 75 - Fair Value Measurements

The following table presents information about the ~~assets and~~ liabilities that are measured at fair value on a recurring basis at ~~March~~December 31, 2021 and June 30, ~~2020~~2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

At March 31, 2021

Total
Level 1
Level 2
Level 3
Assets

Customer list
$653,990
-
-
$653,990

Vendor relationship
340,583
-
-
340,583

Development costs
341,355
-
-
341,355

$1,335,928
-
-
$1,335,928
Liabilities

Original issue discount, convertible debt
$3,376,000
-
-
$3,376,000

At June 30, 2020

Total
Level 1
Level 2
Level 3
Assets

Customer list
$748,853
-
-
$748,853

Vendor relationship
407,153
-
-
407,153

Development costs
280,309
-
-
280,309

$1,436,315
-
-
$1,436,315
Liabilities

Original issue discount, convertible debt
$213,300
-
-
$213,300

Derivative liability warrants
33,312
-
-
33,312
Total

$246,612
-
-
$246,612

At December 31, 2021
			Total		Level 1		Level 2		Level 3
	Derivative liability, convertible note features	$	0-	$	0-	$	0-	$	0-

As of March 31, 2021, and June 30, 2020, the only asset required to be measured on a nonrecurring basis was goodwill and the fair value of the asset amounted to $834,220 using level 3 valuation techniques.

At June 30, 2021
			Total		Level 1		Level 2		Level 3
	Derivative liability, convertible note features	$	1,842,000	$	0-	$	0-	$	1,842,000

The Company measures the fair market value of the Level 3 liability components using the Monte Carlo model and projected discounted cash flows, as appropriate. These models were prepared by an independent third party and consider management's best estimate of the conversion price of the stock, an estimate of the expected time to conversion, an estimate of the stock's volatility, and the risk-free rate of return expected for an instrument with a term equal to the duration of the convertible note.

~~-18-~~ In December 2021, the derivative liability was eliminated when we entered into an agreement to convert the convertible debt. (See Note 6).

-16-

The derivative liability was valued using the Monte Carlo pricing model with the following inputs:



At ~~March 31,~~June 30, 2021
	Risk-free interest rate:	~~0.05%~~0.17%
	Expected dividend yield:	0.00%
	Expected stock price volatility:	~~305.00%~~295.00%
	Expected option life in years:	~~0.62~~.037 to ~~0.95~~.70 years

~~At June 30, 2020~~
	~~Risk-free interest rate:~~	~~0.09%~~
	~~Expected dividend yield:~~	~~0.00%~~
	~~Expected stock price volatility:~~	~~300.00%~~
	~~Expected option life in years:~~	~~.089 to 1.69 years~~

The following table sets forth a reconciliation of changes in the fair value of the Company's convertible debt components classified as Level 3 in the fair value hierarchy at ~~March~~December 31, 2021 and June 30, ~~2020:~~



~~Balance at June 30, 2020~~	~~$ 246,612~~
~~Additional convertible securities at inception~~	~~2,000~~
~~Realized~~	~~(55,612)~~
~~Unrealized~~		~~3,183,000~~
~~Ending balance at March 31, 2021~~	~~$ 3,376,000~~

~~Balance at June 30, 2019~~	~~$ 1,025,944~~
~~Additional convertible securities at inception~~	~~2,027,000~~
~~Settlement of conversion features and warrants~~	~~(152,374)~~
~~Realized~~	~~(240,903)~~
~~Unrealized~~	~~(2,413,055)~~
~~Ending balance at June 30, 2020~~	~~$ 246,612~~

~~-19-~~2021:

Balance at June 30, 2021	$	1,842,000
Realized		(1,842,000)
Unrealized		0-
Balance at December 31, 2021	$	0-

Balance at June 30, 2020	$	246,612
Convertible securities at inception		4,000
Realized		(80,924)
Unrealized		1,672,312
Balance at June 30, 2021	$	1,842,000

As of December 31, 2021 and June 30, 2021, the only asset required to be measured on a nonrecurring basis was goodwill and the fair value of the asset amounted to $834,220 using level 3 valuation techniques.

-17-

Note 86 - Related Party Transactions

Notes Payable

March 31, 2021

June 30, 2020
Note payable to a stockholder in which the $200,000 principal plus $10,000 of interest was payable in December 2019. Borrowings under the note increased to $400,000 and the maturity was extended to November 2021. The note bears interest at 6% interest and is payable in cash or common stock, at the Company's option. If interest is paid in common stock, the conversion price will be the market price at the time of conversion. Principal on the note at maturity is convertible into 400,000 shares of Series D Preferred Stock. If principal is paid prior to maturity, the right of conversion is terminated.

$400,000

$400,000

Fair value of unsecured notes payable to seller of Concepts and Solutions, a related party, bearing interest at 3% per year, payable in annual installments through November 30, 2021. Payments are subject to adjustment based on the achievement of minimum gross revenues and successful completion of certain pre-acquisition withholding tax issues of Concepts and Solutions.
1,030,079

1,030,079

Note payable to a stockholder in which the note principal plus 6% interest is payable in November 2021. Note was amended in March 2020 by increasing the balance to $1,225,000 and extending the maturity to March 2022. Interest is payable in cash or common stock, at the holder's option. If interest is paid in common stock, the conversion price will be the market price at the time of conversion. Principal on the note at maturity is convertible into 1,000,000 shares of Series D Preferred Stock. If principal is paid prior to maturity, the right of conversion is terminated.
1,225,000

1,225,000

~~-20-~~

	December 31, 2021		June 30, 2021
Note payable to a stockholder in which the $200,000 principal plus $10,000 of interest was payable in December 2019. Borrowings under the note increased to $400,000 and the maturity was extended to November 13, 2021. The note bears interest at 6% per annum and is payable in cash or common stock, at the Company's option. If interest is paid in common stock, the conversion price will be the market price at the time of conversion. Principal on the note at maturity is convertible into 400,000 shares of Series D Preferred Stock. If principal is paid prior to maturity, the right of conversion is terminated. Extinguished by exchange for Series F Preferred Stock on December 28, 2021.	$	0-	$	400,000

Fair value of unsecured notes payable to seller of Concepts and Solutions, a related party, bearing interest at 3% per year, payable in annual installments through November 30, 2021. Payment is subject to adjustment based on the achievement of minimum gross revenues and successful completion of certain pre-acquisition withholding tax issues of Concepts and Solutions.		1,030,079		1,030,079

Note payable to a stockholder in which the note principal plus 6% interest was payable on November 7, 2021. Note was amended in March 2020 by increasing the balance to $1,225,000. Interest is payable in cash or common stock, at the holder's option. If interest is paid in common stock, the conversion price was to be the market price at the time of conversion. Principal on the note at maturity is convertible into 1,225,000 shares of Series D Preferred Stock. If principal was paid prior to maturity, the right of conversion is terminated. Extinguished by exchange for Series F Preferred Stock on December 27, 2021.		0-		1,225,000

Note payable to a stockholder in which the note principal plus 6% interest is payable in November 13, 2021. Interest was payable in cash or common stock, at the Company's option. If interest was paid in common stock, the conversion price will be the market price at the time of conversion. Principal on the note at maturity is convertible into 200,000 shares of Series D Preferred Stock. If principal was paid prior to maturity, the right of conversion is terminated. Extinguished by exchange for Series F Preferred Stock on December 20, 2021.		0-		200,000

Note payable to a stockholder in which the note principal plus 6% interest is payable in November 2021. Interest is payable in cash or common stock, at the Company's option. If interest is paid in common stock, the conversion price will be the market price at the time of conversion. Principal on the note at maturity is convertible into 200,000 shares of Series D Preferred Stock. If principal is paid prior to maturity, the right of conversion is terminated.
200,000

                                          200,000

Note payable to a stockholder in which the note principal plus interest at 10% is payable the earlier of 60 days after invoicing a certain customer, or December 31, 2021, due to an extension granted by the lender. The note is collateralized by a security interest in a certain customer purchase order.
385,000

                                          385,000

Note payable to a stockholder which is, upon the option of the stockholder, immediately convertible into restricted common shares.
500,000

-

Note payable related to acquisition of Classroom Tech in which the note principal is payable in 2021 with no interest obligations, upon the shareholder's resolution of a pre-acquisition liability with a bank.
111,164

-

Note payable related to the acquisition of Classroom Tech in which the note principal is payable in 2021 with no interest obligations.
44,526

-

Other short-term payables due to stockholders and related parties
88,991

                                          107,733

Total Related Party Notes Payable and Other Payables
                                 3,984,760

                                       3,347,812
Current Portion of Related Party Notes Payable and Other Payables
                                 3,984,760

                                       1,272,812

Long-term Portion of Related Party Notes Payable and Other Payables
$                -

$2,075,000

~~-21-~~-18-

~~Leases~~

Note payable to a stockholder in which the note principal plus interest at 15% is payable the earlier of 60 days after invoicing a certain customer, or April 2022 due to an extension granted by the lender. On December 23, 2021, an amendment extended the maturity to March 30, 2025, changed the interest rate to 10% with monthly payments of principal and interest of $8,823. The note is collateralized by a security interest in a certain customer purchase order.		385,000		385,000

Note payable related to the acquisition of Classroom Tech in which the note principal is payable in 2021 with no interest obligations, upon the shareholder’s resolution of a pre-acquisition liability with a bank.		125,690		155,690

Other short-term payables due to stockholders and related parties		43,488		75,986
Total Related Party Notes Payable and Other Payables		1,584,257		3,471,755
Current Portion of Related Party Notes Payable and Other Payables		1,296,310		3,471,755

Long-term Portion of Related Party Notes Payable and Other Payables	$	287,947	$	0-

As of December 31, 2021, related party notes payable maturities are as follows:

Period ending December 31,
	2022	$	1,296,310
	2023		105,876
	2024		105,876
	2025		76,195
		$	1,584,257

In December of 2021, $1,825,000 of related party convertible notes and 500,000 shares of Series E preferred stock were eliminated upon the execution of an agreement to exchange them for Series F preferred shares. In addition, the agreement of the exchange of the notes resulted in the elimination of the derivative liability related to the conversion features of the notes into Series D Preferred stock. The derivative liability was reduced by $1,842,000 resulting in additional paid in capital of approximately $1,825,000. On December 31, 2021, the recorded derivative liability is $0.

Related Party Leases

The Company leases property used in operations from a related party under terms of a financing lease. The term of the lease expires on December 31, 2021. The monthly lease payment is ~~$1,500~~$9,664 plus maintenance and property taxes, as defined in the lease agreement. ~~The lease was amended, and the monthly lease payment increased to $9,664 per month.~~ Rent expense for this lease was ~~$89,500~~$28,992 and ~~$98,500~~$4,500 for the three ~~and nine~~ months ended ~~March~~December 31, 2021 and 2020, respectively and $57,984 and $9,000 for the six months ended December 31, 2021 and 2020 respectively.

Other Related Party Agreements

A related party collateralizes the Company's short-term note with a certificate of deposit in the amount of $274,900, held at the same bank. The related party will receive a $7,500 collateral fee for this service (see Note 6)4).

-19-

Note 97 - Lease Agreements

Financing Lease Agreements

The Company ~~has~~leases offices, warehouses and equipment under financing lease ~~liabilities for offices and warehouses~~agreements with monthly installments of ~~$12,449~~$22,723 (ranging from ~~$1,083~~$245 to ~~$3,524) including imputed interest (ranging from 0% to 2%)~~$9,664), ~~over 2-year terms plus extensions,~~ expiring through ~~July 2023.~~December 2024.



~~Right-of-use assets:~~
	~~Operating right-of-use assets~~	~~$176,624~~
~~Operating lease liabilities:~~
	~~Current portion of long term payable~~	~~110,099~~
	~~Financing leases payable, less current portion~~	~~76,020~~

	~~Total financing lease liabilities~~	~~$186,119~~

Right-of-use assets:
Operating right-of-use assets	$	222,336
Operating lease liabilities:
Current portion of long term payable		134,095
Financing leases payable, less current portion		82,594

Total operating lease liabilities	$	216,689

As of ~~March~~December 31, 2021, financing lease maturities are as follows:

Period ending March 31,

2022
$110,099
2023
76,020

$186,119

Period ending December 31,
2022	$	134,095
2023		57,186
2024		25,408
	$	216,689

As of ~~March~~December 31, 2021, the weighted average remaining lease term was ~~1.2~~1.67 years.

Note 108 - Equity

For the six month ended December 31, 2021:

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company issued ~~105,800,000~~2,500,000 shares of common stock for services.

During the six months ended December 31, 2021, the Company issued 225,000,000 shares of common stock in exchange for proceeds under the Equity Purchase Agreement. These shares were valued at $2,143,500 upon issuance.

During the six months ended December 31, 2021, the Company issued 62,500,000 shares of common stock as commitment shares in a structured loan agreement. These shares were valued at $356,250 upon issuance.

During the six months ended December 31, 2021, the Company cancelled 50,000,000 shares of common stock which were previously held as collateral for a line of credit.

During the six months ended December 31, 2021, the Company entered into exchange agreements to issue 11,414 shares of Preferred Series F stock.

During the six months ended December 31, 2021, the Company cancelled 500,000 shares of Preferred Series E stock.

For six month ended December 31, 2020:

During the six months ended December 31, 2020, the Company issued 105,750,000 shares of common stock for professional consulting services. These shares were valued at ~~$2,778,550~~$2,776,200 upon issuance during the ~~nine~~six months ended ~~March~~December 31, ~~2021.~~

2020.

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued 1,382,812,744 shares of common stock for debt reduction. These shares were valued at ~~$13,031,235.~~

$13,031,235 upon issuance during the six months ended December 31, 2020.

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued 249,792,217 shares of common stock to warrant holders in six cashless transactions.

During the ~~nine~~six months ~~March~~ended December 31, ~~2021,~~2020, the Company issued 52,500,000 shares of common stock for commitment shares under ~~a two-year agreement entered into on May 31, 2020, between~~ the ~~Company and the investor, as amended and restated on July 9, 2020 and December 29, 2020 (the "Equity~~Equity Purchase ~~Agreement").~~Agreement. These shares were valued at $1,050,000 upon issuance during the ~~nine~~six months ended ~~March~~December 31, ~~2021.~~

2020.

During the ~~nine~~six months ended ~~the Company issued 5,000,000 shares of common stock for commitment shares under a one year note payable issued on January 13, 2021 to an investor.~~

~~During the nine months ended March~~December 31, 2021, the Company issued 377,000,000 shares of common stock in exchange for proceeds under the Equity Purchase agreement. These shares were valued at $8,292,400 upon issuance during the nine months ended March 31, 2021.

~~During the nine months ended March 31, 2021,~~2020, the Company issued 50,000,000 shares of common stock as collateral for the line of credit. The shares ~~are~~were held in the ~~Company’s~~Company's name and serve as ~~collateral.~~

collateral for a line of credit with a bank.

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued 10,000,000 shares of common stock for the acquisition of Classroom Technology Solutions, Inc. These shares were valued at $151,000 upon issuance during the ~~nine~~six months ended ~~March~~December 31, ~~2021.~~2020.

~~-22-~~During the six months ended December 31, 2020, the Company issued 242,000,000 shares of common stock in exchange for proceeds under the Equity Purchase Agreement. These shares were valued at $3,951,900 upon issuance during the six months ended December 31, 2020.

See the capital structure section in Note 1 for disclosure of the equity components included in the Company's consolidated financial statements.

Note 119 - Income Taxes

The Company's effective tax rate differed from the federal statutory income tax rate for the ~~nine~~six months ended ~~March~~December 31, 2021 ~~and 2020~~ as follows:



Federal statutory rate	~~21%~~21	%
State tax, net of federal tax effect	~~5.31%~~5.04	%
Valuation allowance	~~-26%~~-26	%
Effective tax rate	0%0	%

The Company had no federal or state income tax (benefit) for the ~~nine~~six months ended ~~March~~December 31, 2021 or 2020.

-20-

The Company's deferred tax assets and liabilities as of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, are summarized as follows:

March 31, 2021

June 30, 2020

Federal

Deferred tax assets
$              9,719,000

$                      4,825,100

Less valuation allowance
                (9,719,000)

                        (4,825,100)

Deferred tax liabilities
                              -

                                     -

                              -

                                     -

State

Deferred tax assets
                 2,595,300

                         1,290,900

Less valuation allowance
                (2,595,300)

                        (1,290,900)

Deferred tax liabilities
                              -

-

                              -

                                     -

Net Deferred Tax Assets
$                           -

$                                   -

	December 31, 2021		June 30, 2021
Federal
Deferred tax assets	$	11,226,100	$	10,226,700
Less valuation allowance		(11,226,100)		(10,226,700)
Deferred tax liabilities		0-		0-
		0-		0-
State
Deferred tax assets		2,837,200		2,730,800
Less valuation allowance		(2,837,200)		(2,730,800)
Deferred tax liabilities		0-		0-
		0-		0-
Net Deferred Tax Assets	$	0-	$	0-

The Company's policy is to provide for deferred income taxes based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. The Company has not generated taxable income and has not recorded any current income tax expense at ~~March~~December 31, 2021 and 2020, respectively.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred taxes is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment.

The Company's deferred tax assets are primarily comprised of net operating losses ("NOL") that give rise to deferred tax assets. The NOL carryforwards expire over a range from ~~2021~~2022 to 2037, with certain NOL carryforwards that have no expiration. There is no tax benefit for goodwill impairment, which is permanently non-deductible for tax purposes. Additionally, due to the uncertainty of the utilization of NOL carry forwards, a valuation allowance equal to the net deferred tax assets has been recorded.

The significant components of deferred tax assets as of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, are as follows:

March 31, 2021

June 30, 2020

Net operating loss carryforwards
$              11,962,800

$                      5,767,000
Valuation allowance
                (12,314,300)

                        (6,116,000)
Goodwill
256,800

                           278,900
Property and equipment
                    (13,500)

                            (10,500)
Intangible assets
63,400

                             35,800
Inventory allowance
                     17,800

                             17,800
Warranty accrual and other
                     27,000

                             27,000

Net Deferred Tax Assets
$                           -

$                                   -

	December 31, 2021		June 30, 2021

Net operating loss carryforwards	$	13,675,000	$	12,579,200
Valuation allowance		(14,063,300)		(12,957,500)
Goodwill		238,700		(20,400)
Property and equipment		(36,300)		251,600
Development costs		33,100		27,900
Intangible assets		106,300		72,900
Inventory allowance		17,600		17,800
Warranty accrual and other		28,200		28,500

Net Deferred Tax Assets	$	0-	$	0-

As of ~~March~~December 31, 2021, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next twelve months. As of ~~March~~December 31, 2021, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.

~~-23-~~

-21-

Note 1210 - Commitments, Contingencies, and Concentrations

Contingencies

Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the ~~Company's condensed~~Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

On September 4, ~~2020,~~2019, the Company recorded a pre-acquisition liability for approximately $591,000 relative to unpaid payroll tax liabilities and associated penalties and fees of Concepts and Solutions. The liability is included ~~with the seller note payable.~~

On August 14, 2021, the Company entered into a legal settlement agreement and recorded a liability for $2,000,000 related to a lawsuit by a previous creditor of Galaxy CO. The liability of $918,240 and $2,000,000 is included in the ~~consolidated balance sheets~~note payable to seller of $1,030,079 at ~~March~~December 31, 2021 and June 30, ~~2021. This legal settlement was fully repaid subsequent to March 31,~~ 2021 (Note ~~17)~~6).

Concentrations

Galaxy contracts the ~~manufacturer~~manufacture of its products with domestic and overseas suppliers. The Company's sales could be adversely impacted by a supplier's inability to provide Galaxy with an adequate supply of inventory.

Galaxy has one vendor that accounted for approximately 36% of purchases as of December 31, 2021.

Galaxy has four customers that accounted for approximately 78% of accounts receivable at December 31, 2021 and two customers that accounted for approximately 73% of accounts receivable at ~~March~~June 30, 2021. Galaxy has two customers that accounted for approximately 69% of total revenue for the three months ended December 31, ~~2021,~~2020. Galaxy has two customers that accounted for approximately 55% and three customers that accounted for approximately ~~79% of accounts receivable at June 30, 2020. Galaxy has four customers that accounted for approximately 52% and two customers that accounted for 34%~~51% of total revenue for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively.

Note 11 - Material Agreements

~~From time to time,~~Manufacturer and Distributorship Agreement

On September 15, 2018, the Company ~~has on deposit,~~signed an agreement with a company in ~~institutions whose accounts are insured by~~China for the ~~Federal Deposit Insurance Corporation, funds in excess~~manufacture of Galaxy’s SLIM series of interactive panels. The manufacturer agreed to manufacture, and the Company agreed to be the sole distributor of the ~~insured maximum.~~interactive panels in the United States for a term of two years. The ~~at-risk amount~~agreement includes a commitment by Galaxy to purchase $2 million of product during the first year beginning September 2018. If the minimum purchase is ~~subject to significant daily fluctuation. The Company has never experienced any losses related to these balances, and as such,~~not met, the manufacturer can require the Company ~~does not believe it~~to establish a performance improvement plan, and the manufacturer has the right to terminate the agreement. The payment terms are 20% in advance, 30% after the product is ~~exposed~~ready to ~~any significant risk.~~

~~-24-~~ship, and the remaining 50% 45 days after receipt. The manufacturer provides Galaxy with the product, including a three-year manufacturer’s warranty from the date of shipment. The agreement renews automatically in two year increments unless three months’ notice is given by either party.

-22-

~~Note 13 - Material Agreements~~

Equity Purchase Agreement

On May 31, 2020, the Company entered into a ~~two-year~~two year purchase agreement (the "Equity Purchase Agreement") with an investor, which was amended and restated on July 9, 2020 and then again on December 29, 2020. Pursuant to the terms of the Equity Purchase Agreement, the investor agreed to purchase up to $10 million of the Company's common stock (subject to certain limitations) from time to time during the term of the Equity Purchase Agreement. ~~The~~During the three months ended December 31, 2021 and 2020, the Company issued ~~a total of 50,000,000~~90,000,000 and 68,938,679 shares of common stock to the investor ~~as consideration~~in exchange for ~~its commitment to purchase shares of~~proceeds for working capital. During the ~~Company's common stock. Pursuant to the terms~~six months ended December 31, 2021 and ~~conditions of the second amended and restated agreement on December 29,~~ 2020, the Company ~~sold,~~issued 225,000,000 and ~~the investor purchased 100 million~~242,000,000 shares of ~~the Company’s~~ common stock ~~for an aggregate purchase price of $500,000. These shares are not yet issued and therefore, the purchase price is recorded as a related party payable~~ to the investor ~~(Note 8). The Company will use~~in exchange for proceeds ~~from shares issued to the investor~~ for working ~~capital and general and administrative expenses.~~capital.

Accounts Receivable Factoring Agreement

On July 30, 2020, the Company entered into a two-year accounts receivable factoring agreement with a financial services company to provide working capital. Pursuant the agreement, the financial services company will pay the Company as the purchase price for the purchased accounts, an amount up to eighty percent (80%). Factoring fees are 2.5% of the face value of the account receivable sold to the factoring agent per month until collected. For collections over 90 days from the invoice date, the fee increases to 3.5%. The agreement contains a credit line of $1,000,000 and requires a minimum of $300,000 of factored receivables per calendar quarter. The agreement includes early termination fees and is guaranteed by the Company and the by two of the stockholders individually. The Company ~~factored approximately $600,000~~paid collection fees of $13,243 and ~~$0 of accounts receivable as of March~~$16,602 during the three months ended December 31, 2021 and ~~June 30,~~2020, respectively. The Company paid collection fees of $36,224 and $21,377 during the six months ended December 31, 2021 and 2020, respectively.

Employment Agreements

On January 1, 2020, the Company entered into an employment agreement with the Chief Executive Officer (CEO) of the Company for a two-year term which was amended on September 1, 2020. Under the amended employment agreement, the CEO will receive annual compensation of $500,000, and an annual discretionary bonus based on profitability and revenue ~~growth.~~growth and preferred stock to maintain, together with the CFO, a minimum 25.5% of the total voting rights. The agreement includes a non-compete agreement and severance benefits of $90,000.

On January 1, 2020, the Company entered into an employment agreement with the Chief Finance Officer/Chief Operations Officer ~~(CFO)~~(CFO/COO) of the Company ~~who then also served as our Chief Operating Officer,~~ for a two-year term, which was amended on September 1, 2020. Under the amended employment agreement, the ~~CFO~~CFO/COO will receive annual compensation of $250,000, and an annual discretionary bonus based on profitability and revenue ~~growth.~~growth and preferred stock to maintain, together with the CEO, a minimum 25.5% of the total voting rights.. The agreement includes a non-compete agreement and severance benefits of $72,000.

On February 1, 2021, the Company entered into an employment agreement with the Chief Operations Officer (COO) of the Company for a one-year term. Under the employment agreement, the COO, will receive annual compensation of $140,000, and quarterly and annual discretionary bonus based on profitability and revenue growth. The agreement includes an initial issuance of common stock in the form of Rule 144 stock. Subsequent stock issuances to be available on an annual basis upon renewal of agreement.

~~Supply~~Supplier Agreement

The Company is party to a one-year supplier agreement to manufacture and sell audio products to a ~~buyer that is effective until July 2021.~~buyer. The initial order under this supplier agreement is for 4,000 units, at a discounted total price of $3,488,000, to be delivered over the agreement period. If the buyer does not meet the minimum floor of 4,000 units, then the contract becomes void and the buyer must pay the difference between the units sold and the total floor pricing of the $3,488,000. The buyer will pay tooling costs of $25 per unit shipped to them. The Company supplied ~~1,051~~3,729 units under this agreement as of ~~March~~December 31, 2021, with 860 units during the six months ended December 31, 2021 and 245 of the units during the three months period ended December 31, 2021. The ~~agreement was extended in July 2020 for a one-year term. The agreement can be extended for one additional year.~~

~~-25-~~

~~Note 14 - Acquisition~~

~~Concepts and Solutions~~

~~On September 4, 2019, Galaxy entered into a stock~~Company will continue to supply audio products under individual purchase agreement with Concepts and Solutions. Under the terms of the stock purchase agreement, 100% of the outstanding capital for both Concepts and Solutions was purchased by Galaxy. Concurrent with this acquisition, the Company applied pushdown accounting; therefore, the consolidated financial statements after completion of the acquisition include the assets, liabilities, and results of operations of the combined company from andorders after the closing date. As part of the stock purchase agreement, Galaxy issued 1,350,000 shares of common stock to the seller with a value of $1,485,000. In addition to the issuance of shares of common stock, the Company entered into three promissory notes with the sellerinitial order for a total note payable of $3,000,000. Payments under the notes are subject to adjustment based on the achievement of minimum gross revenues and successful resolution of certain pre-acquisition payroll withholding tax issues of Concepts and Solutions. The Company believes future earnings goals will not be met and valued the note payable at $1,484,473. The balance of the note payable4,000 units is ~~$1,030,079 at March 31, 2021 and June 30, 2020.~~

Management of the Company determined that a triggering event to assess the impairment of goodwill associated with the acquisition of Concepts and Solutions occurred during the year ended June 30, 2020. While there was no single event, the consideration in totality of several factors that developed during this year led management to conclude that it was more likely than not that the fair values of certain intangible assets and goodwill acquired as part of the acquisition were below their carrying amounts. See Note 4.

The following table summarizes the preliminary allocation of the fair value of the assets and liabilities as of the acquisition date through pushdown accounting. The preliminary allocation to certain assets and/or liabilities may be adjusted by material amounts as the Company finalizes fair value estimates.



~~Assets~~
	~~Cash~~	~~$ 201,161~~
	~~Accounts receivable~~	~~1,165,953~~
	~~Inventory~~	~~94,360~~
	~~Property and equipment~~	~~20,904~~
	~~Other assets~~	~~2,800~~
	~~Goodwill and other intangibles~~	~~3,760,287~~

	~~Total Assets~~	~~5,245,465~~

~~Liabilities~~
	~~Accounts payable~~	~~1,225,734~~
	~~Accrued expenses~~	~~783,540~~
	~~Short-term debt~~	~~96,941~~
	~~Deferred revenue~~	~~518,900~~

	~~Total Liabilities~~	~~2,625,115~~

	~~Net Assets~~	~~$ 2,620,350~~

~~Consideration~~
	~~Fair value of anti-dilution clause in employment agreement~~	~~$ 235,350~~
	~~Note payable to seller~~	~~900,000~~
	~~Stock~~	~~1,485,000~~

		~~$ 2,620,350~~

~~-26-~~complete.

~~Classroom Technologies Solutions, Inc.~~-23-

Note 12 - Acquisition

On October 15, 2020, the Company entered into an Asset Purchase Agreement, to acquire the assets of Classroom Technologies Solutions, Inc. ("Classroom Tech") for consideration of (a) paying off a secured Classroom Tech loan, not to exceed the greater of 50% of the value of the Classroom Tech assets acquired or $120,000; (b) the issuance of a promissory note in the amount of $44,526 to a Classroom Tech designee; and (c) the issuance of 10 million shares of common stock to the seller of Classroom Tech.

The following table summarizes the allocation of the fair value of the assets as of the acquisition date through pushdown accounting.


	~~Assets~~
			~~Cash~~		~~$ 38,836~~
			~~Accounts receivable~~		~~31,710~~
			~~Inventory~~		~~209,431~~
			~~Property and equipment~~		~~17,530~~
			~~Other assets~~		~~1,150~~
			~~Goodwill and other intangibles~~		~~46,869~~

			~~Total Assets~~		~~$ 345,526~~
~~Consideration~~
		~~Notes payable to seller and related party of seller~~		~~$ 164,526~~
		~~Bonus program~~		~~30,000~~
		~~Stock~~		~~151,000~~
				~~$ 345,526~~

Assets
Cash	$	38,836
Accounts receivable		31,710
Inventory		209,431
Property and equipment		17,530
Other assets		1,150
Intangibles		46,869

Total Assets	$	345,526

Consideration
Notes payable to seller and related party of seller	$	164,526
Bonus program		30,000
Stock		151,000
	$	345,526

Impairment expense relates to the Company's purchase price adjustment for the Classroom Tech acquisition on October 15, 2020. During the acquisition, customer lists and vendor relationship intangible assets were recorded in the amount of $46,869. In October 2021, the Company moved its Florida operations to a new leased location. Management discovered inventory items with missing parts that could not be sold. As a result, the bonus payable of $30,000 to the seller of Classroom Tech was removed, the inventory was written down and the intangible assets were impaired.

Note 1513 - Stock Plan

An Employee, Directors, and Consultants Stock Plan was established by the Company (the "Plan"). The Plan is intended to attract and retain employees, directors and consultants by aligning the economic interest of such individuals more closely with the Company's stockholders by paying fees or salaries in the form of shares of the Company's common stock. The ~~Plan is renewed annually or earlier. The~~ 2020 Plan iswas effective September 16, 2020 and ~~expires~~expired December 15, 2021. The 2019 Plan iswas effective December 13, 2018 and ~~expires~~expired June 1, 2020. ~~99,250,000 Shares~~Common shares of ~~Common Stock~~99,250,000 are reserved for stock awards under the Plans. There were 98,857,857 ~~and 965,000~~ shares awarded under the Plans as of ~~March~~December 31, 2021 and June 30, ~~2020, respectively.~~2021. No additional shares were awarded during the three or six months ended December 31, 2021.

-24-

Note 1614 - Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had negative working capital of approximately ~~$7,791,000~~$1,700,000, an accumulated deficit of approximately ~~$47,290,000,~~$51,000,000, and cash used in operations of approximately ~~$6,895,000~~$1,300,000 at ~~March~~December 31, 2021.

Shareholders equity increased by approximately $1,500,000 to almost break even at December 31, 2021.

The Company's operational activities ~~has~~have primarily been funded through issuance of common stock for services, related party advances, equity purchase agreement transactions for proceeds, accounts receivable factoring, debt financing and through the deferral of accounts payable and other expenses. The Company intends to raise additional capital through the sale of equity securities or borrowings from financial institutions and investors and possibly from related and nonrelated parties who may in fact lend to the Company on reasonable terms. Management believes that its actions to secure additional funding will allow the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving any of these objectives. These sources of working capital are not assured, and consequently do not sufficiently mitigate the risks and uncertainties disclosed above. The ability of the Company to continue as a going concern is dependent upon management's ability to raise capital from the sale of its equity and, ultimately, the achievement of operating revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 1715 - Subsequent Events

On ~~April 7, 2021, approximately $950,000 was paid to settle the legal settlement agreement discussed in Note 12.~~

On April 5, 2021, the Company issued 50,000,000 shares to an investor in exchange for proceeds of approximately $500,000 under the Purchase Agreement dated May 2020, as amended and restated on July 9, 2020 and on December 29, 2020 (Note 13).

On April 19, 2021, the Company issued 30,000,000 shares to an investor in exchange for expected proceeds of approximately $472,000 under the Purchase Agreement dated May 2020, as amended and restated on July 9, 2020 and on December 29, 2020 (Note 13).

~~On April 29, 2021,~~January 18, 2022, the Company issued 100,000,000 shares ~~to an investor to satisfy~~under a ~~$500,000 note payable to related party investor (Note 8).~~stock purchase agreement in exchange for $500,000.

On February 4, 2022 the Company issued 12,203,390 common shares for services.

~~-27-~~-25-

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Note on Forward Looking Statements

This Quarterly Report on Form 10-Q (this "Report")~~, including the section titled "~~~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~," contains forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In particular statements regarding future events and the future results of Galaxy Next Generation, Inc., which we refer to as "we," "us," "our", "Galaxy," or the "Company," ~~that~~including but not limited to, statements regarding the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities and the timing of any such financing, our future results of operations and financial position, business strategy and plan prospects are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, forecasts, and projections about our business, economic and market outlook, our results of operations, the industry in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "would," "will," "could," "may," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including the duration, extent, and impact of the COVID-19 pandemic, and our ability to successfully manage the demand, supply, and operational challenges associated with the COVID-19 pandemic. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Report under the section entitled "Risk Factors" in Item 1A of Part II, Part I Item 1A of our Annual Report on Form 10-K for the year ended June 30, ~~2020 (as amended, the~~2021 (the "Annual Report"), and in other reports we file with the U.S. Securities and Exchange Commission (the "SEC"). In addition, many of the foregoing risks and uncertainties are, and could be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result of the pandemic. While forward-looking statements are based on reasonable expectations of our management at the time that they are made, you should not rely on them. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, except as required by applicable law. We cannot at this time predict the extent of the impact of the COVID-19 pandemic and any resulting business or economic impact, but it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The following discussion is based upon our unaudited condensed consolidated financial statements included in Part 1, Item I, of this Report, which were prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the manufacturing and shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory, among other matters. In making these decisions, we consider various factors, including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. Each of these decisions has some impact on the financial results for any given period. To aid in understanding our operating results for the periods covered by this Report, we have provided an executive overview, which includes a summary of our business and market environment along with a financial results and key performance metrics overview. These sections should be read in conjunction with the more detailed discussion and analysis of our condensed consolidated financial condition and results of operations in this Item 2, our "Risk Factors" section included in Item 1A of Part II of this Report, and our unaudited condensed consolidated financial statements and notes thereto included in Item 1 of Part I of this Report, as well as our audited consolidated financial statements and notes included in Item 8 of Part II of our Annual Report.

~~-28-~~The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto and the other financial data appearing elsewhere in this Quarterly Report.

-26-

Business ~~and Market Environment~~Overview

Galaxy ~~works hand-in-hand with educators~~is a manufacturer and U.S. distributor of interactive learning technology hardware and software that allows the presenter and participant to ~~help them evolve how teaching and learning happens~~engage in ~~their 21st century classroom. This new approach leverages digital content, learning data, and one-of-a-kind technologies in order to create an immersive and interactive experience.~~

We help the administrators, teachers, students, and the IT staff incorporate meaningful digital content, leverage learning data, and creatively use our products to create an immersive and interactive experience.

a fully collaborative instructional environment. Galaxy's ~~products~~product offerings include Galaxy's own private-label interactive touch screen panel, its own Intercom, Bell, and Paging solution, as well as ~~numerous other national and international branded peripheral and communication devices.~~an audio amplification line of products that is currently supported by OEM relationships. Galaxy's distribution channel consists of a direct sales model, as well as approximately 37 resellers across the U.S. who primarily sell the ~~Company's~~ products offered by Galaxy within the commercial and educational market. Galaxy does not control where the resellers focus their ~~resell efforts, although generally,~~reselling efforts; however, the K-12 education market is the largest customer base for Galaxy products - comprising nearly 90% of Galaxy's sales. In addition, Galaxy’s OEM division also manufacturers products for other vendors in its industry and white labels the products under other brands.

We believe the market space for interactive technology in the classroom is a perpetual highway of business opportunity, especially in light of the COVID-19 pandemic as school systems have sought to expand their ability to operate remotely. Public and private school systems are in a continuous race to modernize their learning environments. Our ~~acquisition~~goal is to be an early provider of the best and most modern technology available.

We are striving to become the leader in the market for interactive flat panel technology, associated software, and peripheral devices for classrooms. Our goal is to provide an intuitive system to enhance the learning environment and create easy to use technology for the teacher, increasing student engagement and achievement. Our products are developed and backed by a management team with more than 30 combined years in the classroom technology space.

We were originally organized as a corporation in 2001. Our principal executive offices are located at 285 Big A Road Toccoa, Georgia 30577, and our telephone number is (706) 391-5030. Our website address is www.galaxynext.us. Information contained in our website does not form part of this Quarterly Report and is intended for informational purposes only.

On June 22, 2018, we consummated a reverse triangular merger whereby Galaxy Next Generation, Inc., a private company (co-founded by our now executives, Gary LeCroy (CEO) and Magen McGahee (CFO)), merged with and into our newly formed subsidiary, Galaxy MS, Inc. (Galaxy MS or Merger Sub), which was formed specifically for the transaction. Under the terms of the merger, the private company shareholders transferred all their outstanding shares of common stock to Galaxy MS, in return for shares of our Series C Preferred Stock. Prior to the merger, we operated under the name Full Circle Registry, Inc.’s (FLCR) and our operations were based upon our ownership of Georgetown 14 Cinemas, a fourteen-theater movie complex located on approximately seven acres in Indianapolis, Indiana. Prior to the merger, our sole business and source of revenue was from the operation of the theater, and as part of the merger agreement, we had the right to spinout the theater to the prior shareholders of FLCR. Effective February 6, 2019, we sold our interest in the theater to focus our resources on our technology operations.

On September 3, 2019, we acquired 100% of the outstanding capital stock of both Interlock Concepts, Inc. ~~("Concepts")~~(Concepts) and Ehlert Solutions Group, Inc. ~~("Solutions") in September 2019 increased our line~~(Solutions) pursuant to the terms of ~~product offerings.~~a stock purchase agreement that we entered into with Concepts and Solutions. The purchase price for the acquisition was 1,350,000 shares of common stock and a two year note payable to the seller in the principal amount of $3,000,000. The note payable to the seller is subject to adjustment based on the achievement of certain future earnings goals and successful completion of certain pre-acquisition withholding tax issues of Concepts and Solutions.

Solutions and Concepts are Arizona-based audio design and manufacturing companies creating innovative products that provide fundamental tools ~~and products~~ for building notification systems primarily to K-12 education market customers located primarily in the north and northwest United States. These products and services allow institutions access to intercom, scheduling, and notification systems with improved ease of use. The products provide an open architecture solution to customers which allows the products to be used in both existing and new environments. Intercom, public announcement (PA), bell and control solutions are easily added and integrated within the open architecture design and software model. These products combine elements over a common internet protocol (IP) network, which minimizes infrastructure requirements and reduces costs by combining systems.

~~In fiscal year 2021,~~-27-

On October 15, 2020, we ~~continued to execute on our product and solutions strategy and closed on an asset purchase~~acquired the assets of Classroom ~~Technology~~Technologies Solutions, Inc. ("~~CTS"~~Classroom Tech"), for consideration of (a) paying off a ~~designer, manufacturer, importer~~secured Classroom Tech loan, not to exceed the greater of 50% of the value of the Classroom Tech assets acquired or $120,000; (b) the issuance of a promissory note in the amount of $44,526 to a Classroom Tech designee; and ~~integrator~~(c) the issuance of ~~audio-visual~~10 million shares of common stock to the seller of Classroom Tech. Classroom Tech provides cutting-edge presentation products ~~with headquarters~~to schools, training facilities, churches, corporations and retail establishments. Their high-quality solutions are customized to meet a variety of needs and budgets in ~~Jacksonville, Florida.~~

~~We expect~~order to provide the ~~purchase of CTS's assets will prove~~best in education and presentation technology. Classroom Tech direct-sources and imports many devices and components which allows us to be ~~accretive to Galaxy's bottom line. As part~~innovative, nimble, and capable of ~~the purchase agreement, Galaxy is gaining access to not only years~~delivering a broad range of ~~customer support to the CTS brands, but~~cost-effective solutions. Classroom Tech also years of buying power from the CTS president, Cy Marshall. The new relationships with global vendors have already proven to be helpful to Galaxy's import activity by decreasing Galaxy's cost of goods, by an average of 50%, on several products sold under the G2offers in-house service and repair facilities and carries many top brands. ~~G2 is the Company’s self-branded product line. This is an important step for the Company as management strives towards profitability in the coming quarters.~~

~~During~~This Report contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Report, including logos, artwork and other visual displays, may appear without the ~~three months ended March 31, 2021,~~® or TM symbols, but such references are not intended to indicate, in any way, that we continued to experience strong demand for our products and services. We remain confident in our strategy and we are executing against our innovation roadmap. We believe our understanding of high-performance interactive technology products position us to effectively capitalize on the industry transition to remote classrooms. We have also continued to work on eliminating outstanding liabilities and keeping payables current and aligned with receivables and inventory. As listed in the subsequent events section of the condensed consolidated financial statements, we have eliminated approximately $1 million in liabilities as disclosed in Notes 12 and 17.

~~-29-~~

~~COVID-19 Pandemic Update~~

The ongoing outbreak of Coronavirus (COVID-19) has caused significant disruptions to national and global economies and government activities. However, during this time, we have continued to conduct our operationswill not assert, to the fullest extent ~~possible, while responding to~~under applicable law, our rights or the ~~outbreak with actions that include:~~

~~● coordinating closely with our suppliers and customers;~~

~~● instituting various aspects of our business continuity programs;~~

~~● planning for and working aggressively to mitigate disruptions that may occur; and~~

~~● supporting our communities and schools in addressing the challenges~~rights of the ~~pandemic, such as the production~~applicable licensor to these trademarks and ~~installation~~trade names. We do not intend our use or display of ~~COVID shields and providing products that allow educators~~other companies' trade names or trademarks to ~~operate in~~imply a ~~remote teaching environment.~~

As such, we have experienced strong revneues during the last three quarters as our customers face a greater need and willingness to spend on information technology. While we cannot guarantee this trend will continue, we believe our education customers have prioritized their budgets towards IT spending creating a more robust customer demand for remote enablement. relationship with, or endorsement or sponsorship of us by, any other companies.

The ~~pandemic has not had a substantial negative impact~~financial statements after the completion of the merger and acquisition include the consolidated assets and liabilities of the combined company (collectively Galaxy Next Generation, Inc., Interlock Concepts, Inc., Ehlert Solutions Group, Inc. and Classroom Tech referred to ~~our consolidated operating results or our liquidity position so far in fiscal year 2021. However, we~~collectively as the “Company”).

All intercompany transactions and accounts have experienced supply chain delays due to the pandemic. In addition, increased product demand has resulted in our increased need for additional funding. We continue to meet our short-term liquidity needs from revenue derived from product sales supplemented with proceeds from issuances of debt and equity, and we expect to maintain access to the capital markets. To date in fiscal year 2021, we have not observed any impairments of our assets or a significant changebeen eliminated in the fair value of assets due to the pandemic. We intend to continue to work with our employees and customers to implement safety measures to ensure that we are able to continue manufacturing and installing our products.consolidation.

However, given the global economic slowdown, and the other risks and uncertainties associated with the pandemic, our business, financial condition, results of operations and growth prospects could be materially adversely affected. The extent to which the COVID-19 pandemic impacts our business, the business of our suppliers and other commercial partners, our corporate development objectives, our ability to access capital and the value of and market for ourGalaxy’s common stock ~~par value $0.0001 per share (the "Common Stock"), will depend~~is traded on ~~future developments that are highly uncertain and cannot be predicted with confidence at this time, such as~~over-the-counter markets under the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the United States and other countries, and the effectiveness of actions taken globally to contain and treat the disease.stock symbol GAXY.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis discusses our consolidated financial statements which have been prepared in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP). The preparation of these consolidated financial statements ~~and related disclosures in conformity with U.S. GAAP~~ requires us to make ~~judgments,~~estimates and assumptions ~~and estimates~~ that affect the reported amounts ~~reported in the unaudited condensed consolidated financial statements~~of assets and liabilities and the ~~accompanying notes.~~disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and ~~assumptions. These~~judgments. We base our estimates and ~~assumptions are based~~judgments on ~~current facts,~~ historical experience and on various other factors that ~~we believe~~ are reasonable under the circumstances, ~~to determine reported amounts~~the results of which form the basis for making judgments about the carrying values of assets ~~liabilities, revenues,~~ and ~~expenses~~liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~During the three and nine months ended March 31, 2021, there were no material changes to our~~The critical accounting policies and estimates ~~as compared~~that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in Note 1 to ~~the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations~~our audited consolidated financial statements contained in ~~Part II, Item 7 of~~ our Annual Report.

~~-30-~~-28-

~~Recent Accounting Pronouncements and Accounting Policies~~

See Note 1, Basis of Presentation and Summary of Significant Accounting Policies, in the notes to the unaudited condensed consolidated financial statements in Item 1 of Part I of this Report, for a full description of the recent accounting standards not yet adopted, including the actual and expected dates of adoption and estimated effects on our consolidated results of operations and financial condition, which is incorporated herein by reference.

~~Recent Business Developments~~

On October 15, 2020, we continued to execute on our product and solutions strategy and entered into an Asset Purchase Agreement (APA), to acquire the assets of Classroom Technologies Solutions, Inc. ("Classroom Tech"), for consideration of (a) paying off a secured Classroom Tech loan, not to exceed the greater of 50% of the value of the Classroom Tech assets acquired or $120,000; (b) the issuance a promissory note in the amount of $44,526 to a Classroom Tech designee; and (c) the issuance of 10 million shares of our common stock to the seller of Classroom Tech.

~~Recent Financial Developments~~

The Company has approximately $6,000,000 available under a $10,000,000 Equity Line of Credit that was registered under Form S-1 in January 2021. The equity line is with an institutional investor and allows the Company to draw equity down at the amount and time of the Company’s discretion. The Company believes that this will be a great back stop for the Company and will eliminate the need to raise money from multiple investors in the convertible debt market. During the three and nine months ended March 31, 2021, we issued approximately 135,000,000 and 377,000,000 shares of our common stock, respectively pursuant to the terms of the equity line purchase agreement and received net proceeds from such issuances of $2,534,813 and $4,851,333, respectively.

The Company has an available $1,000,000 and $1,250,000 line of credit at March 31, 2021 and June 30, 2020, respectively, bearing interest at prime plus 0.5% (3.75% at March 31, 2021 and 4.25% at June 30, 2020). The line of credit was renewed in October 2020 at a reduced available credit line and change in collateral, and now expires on October 29, 2021. The renewed line of credit is collateralized by certain real estate owned by a family member of a stockholder, 50,000,000 shares of the Company's common stock, the personal stock of two stockholders, and a key man life insurance policy. A minimum average bank balance of $50,000 was required on the line of credit agreement at June 30, 2020, but requirement was removed as of March 31, 2021. The outstanding balance is $991,598 and $1,236,598 at March 31, 2021 and June 30, 2020, respectively.

~~-31-~~

Financial Results and Performance Metrics Overview

The table below presents an analysis of selected line items period-over-period in our interim Condensed Consolidated Statements of Operations for the periods indicated.

Net loss less stock compensation, and General and administrative expense, less stock compensation and impairment expenses, noted below, are non-GAAP measures and do not have standardized definitions under GAAP. The tables below provide a reconciliation of the non-GAAP financial measures, presented herein, to the most directly comparable financial measures calculated and presented in accordance with GAAP. These non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the non- GAAP financial measures provide additional perspective and insights when analyzing the core operating performance of the business. The non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.

Three months ended
March 31, 2021
December 31, 2020
September 30, 2020

Revenue
$777,457
$ 798,793
$ 1,178,213
Gross profit
420,726
327,730
345,036
General and administrative expense, less stock compensation and impairment expenses

1,697,410

1,257,118

1,392,227
Net Loss less stock compensation
(1,276,684)
(930,188)
(1,047,191)

Revenue

Total revenues recognized were ~~$2,754,463~~$904,055 and ~~$1,850,673~~$798,793 for the ~~nine~~three months ended ~~March~~December 31, 2021 and 2020, respectively, an increase of approximately ~~49%~~13%. ~~Additionally, deferred revenue amounted to $815,214 and $1,133,992 as of March 31, 2021 and June 30, 2020, respectively.~~ Total revenues recognized were ~~$777,457~~$2,588,826 and ~~$349,247~~$1,977,006 for the ~~three~~six months ~~ending March~~ended December 31, 2021 and 2020 respectively, an increase of approximately ~~123%~~31%. Additionally, deferred revenue amounted to $137,351 and $453,862 as of December 31, 2021 and June 30, 2021, respectively. Revenues increased during the three months and ~~nine~~six months ended ~~March~~December 31, 2021 due to the increase in the customer base for interactive panels and related products as well as additional revenues from OEM ~~customers and COVID related new products.~~customers.

Cost of Sales and Gross Margin

Our cost of sales was ~~$356,731~~$848,099 and ~~$130,614~~$471,063 for the three months ended ~~March~~December 31, 2021 and 2020, respectively, an increase of approximately ~~173%~~80%. Our cost of sales was ~~$1,660,971~~$1,866,862 and ~~$1,116,398~~$1,304,240 for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively, an increase of approximately ~~49%~~43%. Cost of sales consists primarily of manufacturing, freight, and installation costs. There are no significant overhead costs which impact cost of sales. Cost of sales increased from the three and ~~nine~~six months ended ~~March~~December 31, ~~2020~~2021 due to increased cost incurred to support revenues related to new products and new ~~relationships.~~relationships as well as an increase in freight cost.

General and Administrative

Three months ended
March 31, 2021

March 31, 2020
Stock compensation and stock issued for services
$       2,350

$      48,034
General and administrative
1,697,410

1,662,359
Asset impairment expense
-

2,000,287
Total General and Administrative Expenses
$   1,699,760

$   3,710,670

~~-32-~~


Six months ended	December 31, 2021	December 31, 2020
Stock compensation and stock issued for services	$ 32,750	$ 2,776,200
Impairment	46,869	-
General and administrative	2,548,117	2,650,145
Total General and Administrative Expenses	$ 2,627,736	$ 5,426,345

Total general and administrative expenses (including stock compensation expenses) were ~~$1,699,760~~$1,096,862 and ~~$3,710,670~~$1,271,118 for the three months ended ~~March~~December 31, 2021 and 2020, respectively. General and administrative expenses (including stock compensation expenses) were $2,627,736 and $5,426,345 for the six months ended December 31, 2021 and 2020, respectively, a decrease of approximately ~~54%~~52%.

Nine months ended
March 31, 2021

March 31, 2020
Stock compensation and stock issued for services
$       2,778,550

$      2,055,726
General and administrative
4,347,555

4,263,887
Asset impairment expense
-

2,000,287
Total General and Administrative Expenses
$   7,126,105

$   8,319,900

-29-

~~Total general~~Other Income (Expense)


Six months ended	December 31, 2021	December 31, 2020
Other Income	$ 5,878	$ -
Expenses related to convertible notes payable:
Change in fair value of derivative liability	1,842,000	(3,496,583)
Interest accretion	(24,290)	(766,603)
Interest related to equity purchase agreement	(2,143,500)	(5,001,900)
Interest expense	(622,363)	(6,884,194)

Total Other Income (Expense)	$ (942,275)	$ (16,149,280)

Interest expense amounted to $622,363 and ~~administrative expenses (including stock compensation expenses) were $7,126,105 and $8,319,900~~$6,884,194 for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively, a decrease of approximately 14%. General and administrative expenses consist primarily of salaries and stock compensation expense, office rent, travel expense, amortization expense, impairment charges and professional fees. Of this amount, $2,350 represent consulting fees and employee compensation paid through the issuance of stock, which did not impact cash, for the three months ended March 31, 2021. Consulting fees and employee compensation paid through the issuance of stock, which did not impact cash, was $2,778,550 for the nine months ended March 31, 2021.

~~Other Income (Expense)~~

Three months ended
March 31, 2021

March 31, 2020
Other income
$                141,017

$         -
Expenses related to convertible notes payable:

      Change in fair value of derivative liability
         343,000

695,300
Interest accretion
                 -

       (603,852)
Interest related to equity purchase agreement
               (1,805,687)

     -
Interest expense
          (289,585)

            (1,860,498)

Total Other Income (Expense)
$         (1,611,255)

$    (1,769,050)

~~-33-~~

~~Interest expense amounted to $2,095,272 and $1,860,498 for the three months ended March 31, 2021 and 2020, respectively, an increase of 13%~~90%. Interest expense of ~~$1,805,687~~$2,143,500 during the ~~three~~six months ended ~~March~~December 31, 2021, was due to sales of our common stock to investors under the Equity Purchase Agreement in exchange for proceeds of ~~$2,534,813.~~$1,633,700. Reduced interest expense of ~~$289,585~~$9,120,231 during the ~~three~~six months ended ~~March~~December 31, 2021, is attributed to the decrease in our overall debt.

Nine months ended
March 31, 2021

March 31, 2020
Other income
$                141,017

$         3,049
Expenses related to convertible notes payable:

      Change in fair value of derivative liability
         (3,153,583)

2,717,557
Interest accretion
                 (766,603)

       (1,412,705)
Interest expenses related to equity purchase agreement
               (6,807,587)

     -
Interest expense
          (7,173,779)

            (3,822,927)

Total Other Income (Expense)
$         (17,760,535)

$    (2,515,026)

Interest expense amounted to $13,981,366 and $3,822,927 for the nine months ended March 31, 2021 and 2020, respectively, an increase of 266%. Interest expense of $6,807,587 during the nine months ended March 31, 2021, was due to sales of our common stock to investors under the Equity Purchase Agreement in exchange for proceeds of $4,851,333. Interest expense increased by $10,158,439 primarily due to interest on the Equity Purchase Agreement and change in overall debt during the nine months ended March 31, 2021.

The ~~outstanding~~ conversion features in our ~~‘related party’~~related party preferred convertible notes payable meet the definition of a derivative liability instrument because the ~~exercise price~~conversion feature is for a variable number of ~~the conversion rates.~~shares at a variable price. As a result, the outstanding conversion features of the notes are recorded as a derivative liability at fair value and marked-to-market each period with the change in fair value charged or credited to income. A derivative liability of ~~$3,376,000~~$0 and ~~$246,612~~$1,842,000 is recorded at ~~March~~December 31, 2021 and June 30, ~~2020. During~~2021. The derivative liability was reduced due to the ~~nine months ended March 31, 2021 and 2020, we amortized $766,603 and $1,412,705~~extinguishment of ~~original issue debt discount on derivative instruments to interest accretion, respectively. Changes~~the related party preferred convertible notes by the agreed upon exchange for Series F Preferred Stock in ~~these amounts do not impact cash.~~December, 2021.

Net Loss for the Period

Net loss incurred for the three months ended ~~March~~December 31, 2021 and 2020 was ~~$2,890,289~~$2,462,020 and ~~$5,261,097,~~$7,768,081, respectively, a decrease of approximately ~~45%~~68%. Net loss incurred for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 was ~~$23,793,148~~$2,848,047 and ~~$10,100,651,~~$20,902,859, respectively, a ~~increase~~decrease of approximately ~~136%~~86%. Noncash contributing factors for the net loss incurred for the three ~~and nine~~ months ended ~~March~~December 31, 2021 and 2020 are as follows:

a) ~~$2,350~~. $13,200 and ~~$48,034~~$2,776,000 represent consulting fees ~~and employee compensation~~ paid through the issuance of stock for the three months ended ~~March~~December 31, 2021 and 2020, ~~respectively;~~respectively. $32,750 and ~~$2,778,550 and $2,055,726~~$2,776,200 represent consulting fees ~~and employee compensation~~ paid through the issuance of stock for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, ~~respectively~~respectively.

b). Interest expenses related to the equity purchase agreement of ~~$1,805,687~~$1,890,600 and $0$995,000 for the three months ended ~~March 31, 2021 and March 31, 2020, respectively; and $6,807,587 and $0 for the nine months ended March~~December 31, 2021 and 2020, ~~respectively~~respectively. Interest expense related to the equity purchase agreement of $2,143,500 and $5,001,900 for the six months ended December 31, 2021 and 2020, respectively.

c) ~~Impairment charges taken~~. Depreciation and amortization expenses related to intangibles and capitalized development costs of $0$92,661 and ~~$2,000,287~~$90,369 for the three ~~and nine~~ months ended ~~March~~December 31, 2021 and ~~March~~2020, respectively. Depreciation and amortization expenses related to intangibles and capitalized development costs of $233,377 and $170,880 for the six months ended December 31, 2021 and 2020, respectively.

~~-34-~~-30-

Liquidity and Capital Resources

~~Our~~Although our revenues generated from operations have ~~been insufficient~~become more sufficient, in order to support our operational activities ~~and have been~~our revenues we may still need to be supplemented by the proceeds from the issuance of securities, including equity and debt issuances. At December 31, 2021, we had a working capital deficit of $1,761,132 and an accumulated deficit of $50,779,175. As stated in Note 1614 to the notes to the unaudited condensed consolidated financial statements included in this Report, our ability to continue as a going concern is dependent upon management's ability to raise capital from the sale of its equity and, ultimately, the achievement of sufficient operating revenues. We anticipate that our current cash and revenue generated from operations will be sufficient for day-to-ay operations; however, we anticipate that we will need additional capital for business expansion and new product development. If our revenues continue to be insufficient to support our operational activities, we intend to raise additional capital through the sale of equity securities or borrowings from financial institutions and possibly from related and nonrelated parties who may in fact lend to us on reasonable terms and ultimately generating sufficient revenue from operations. Our operating loss continues to shrink, and investments will allow us to continue for several months until sufficient revenue is met. Management believes that its actions to secure additional funding will allow us to continue as a going concern. We currently do not have any committed sources of financing other than our ~~line of credits, our Equity Purchase Agreement, and~~ accounts receivable factoring agreement, each of which requires us to meet certain requirements to utilize. ~~Under the Amended and Restated Equity Purchase Agreement, we can issue up to an aggregate of $10 million worth of shares of our common stock at March 31, 2021.~~ There can be no assurance that we will meet all or any of the requirements pursuant to our line of credit, our Equity Purchase Agreement, and accounts receivable factoring agreement, and therefore those financing options may be unavailable to us. There is no guarantee we will be successful in raising capital outside of our current sources, and if so, that we will be able to do so on favorable terms.

Our cash totaled ~~$742,382~~$354,727 at ~~March~~December 31, 2021, as compared with ~~$412,391~~$541,591 at June 30, ~~2020, an increase~~2021, a decrease of ~~$329,991.~~$186,864. Net cash of ~~$6,894,817~~$1,312,346 and $415,756 was used byin operations and investing activities, respectively, for the ~~nine~~six months ended ~~March~~December 31, 2021. Cash used in operating activities for the six months ended December 31, 2021 was $1,312,346 as compared to $4,519,524 for the six month ended December 31, 2020. The decrease was primarily due to a decrease in inventories, accounts receivables, derivative liabilities and an overall decrease in operational expenses.

Net cash of ~~$7,185,972~~$1,541,238 was provided from financing activities for the ~~nine~~six months ended ~~March~~December 31, 2021, primarily due to proceeds from the Equity Purchase Agreement of $1,633,700 and ~~to a lesser extent convertible~~proceeds of $1,075,000 from notes ~~payable.~~

For the nine months ended March 31, 2021, we had $38,836 cash provided by investing activities, and for the nine months ended March 31, 2020, we had net cash provided by investing activities of $2,950,282 which resulted from our acquisition of Concepts and Solutions.

For the nine months ended March 31, 2021, we had $7,185,972 of cash provided by financing activities primarily related to $4,851,333 of proceeds from the sale of common stock under the Equity Purchase Agreement, $1,956,000 of proceeds from the sale of convertible notes, and approximately $544,000 of related party note proceeds offset by payments of approximately $245,000 under the line of credit. Total current liabilities are $12,047,976 and $8,962,520 as of March 31, 2021 and June 30, 2020, respectively, an increase of 34%. Our liabilities primarily consist of borrowings under a line of credit, related party notes payable, derivative liability, deferred revenue, accrued expenses and accounts payable.issued.

To implement our business plan, we ~~will~~may require additional financing. Further, current or future adverse capital and credit market conditions could limit our access to capital. We may be unable to raise capital or bear an unattractive cost of capital that could reduce our financial flexibility.

Our long-term liquidity requirements will depend on many factors, including the rate at which we grow our business and footprint in the industries. To the extent that the funds generated from operations are insufficient to fund our activities in the long term, we may be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us.

-31-

Off-Balance Sheet Arrangements

The Company did not have off-balance sheet arrangements or transactions as of and for the ~~three and nine~~six months ended ~~March~~December 31, 2021 and 2020.

~~-35-~~Non-GAAP Disclosure

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, Galaxy supplements its consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, Adjusted EBITDA as a non-GAAP financial measures of earnings. The tables below provide a reconciliation of the non-GAAP financial measures, presented herein, to the most directly comparable financial measures calculated and presented in accordance with GAAP. Adjusted EBITDA represents EBITDA (earnings before income taxes depreciation and amortization) . Galaxy management uses Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of the business model. The Company uses these non-GAAP financial measures to assess the strength of the underlying operations of the business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. Galaxy finds this especially useful when reviewing pro forma results of operations, which include large non-cash expenses including interest on the Equity Purchase Agreement, amortization of intangible assets and capitalized development costs and stock-based compensation. Investors should consider its non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. The non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.

Non-GAAP Adjusted EBITDA financial results for the three months ended December 31, 2021 and 2020:

During the three and six months ended December 31, 2021, we issued 135,000,000 and 225,000,000 shares of common stock respectively, in exchange for proceeds under the Equity Purchase Agreement. We received proceeds of $1,633,700 and recorded additional paid in capital of $2,121,000 upon issue.

These sales were made pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). The shares have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements of the Securities Act.


Three months ended	December 31, 2021	December 31, 2020

Revenue	$ 904,055	$ 798,793
Gross Profit	55,956	327,730
General and Administrative Expenses	1,096,862	1,271,118
Loss from Operations	(1,040,906)	(943,388)
Other Income (Expense)	(1,421,114)	(6,824,693)
Net Loss	(2,462,020)	(7,768,081)
Interest, Taxes, Depreciation, Stock Compensation and Amortization	2,005,260	1,109,539
Non-GAAP Adjusted EBITDA	$ (456,760)	$ (6,658,542)

Non-GAAP Adjusted EBITDA was a loss of $456,760 for the three months ended December 31, 2021 compared to the loss of $6,658,542 for the three months ended December 31, 2020.

-32-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under this Item is not required to be provided by smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and accounting officer), we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Report.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as of the end of the period covered by this Report. The Disclosure Controls evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer). Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure Controls are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation our Chief Executive Officer and Chief Financial Officer have concluded that, because of a material weakness in our internal control over financial reporting that existing at June 30, ~~2020~~2021 and had not been remediated by the end of the period covered by this Report, our disclosure controls and procedures were not effective as of the end of the period covered by this Report. This material weakness in the Company's internal control over financial reporting and the Company's remediation efforts are described below.

The material weakness relates to the fact that our management is relying on external consultants for purposes of preparing its financial reporting package; however, the officers may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous disclosure document. As a result of the deficiencies, we have discovered it is reasonably possible that internal controls over financial reporting may not have prevented or detected errors from occurring that could have been material, either individually or in the aggregate.

Remediation Measures

WeManagement began to discontinue outsourcing its bookkeeping beginning July 1, 2021. Outsourced bookkeeping was still utilized to a lesser extent for bookkeeping services through September 30, 2021 and we will continue to engage an outside CPA with SEC related experience to assist in correction of these material weaknesses. In addition, we continue to appoint an accountant to provide financial statements on a monthly basis and to assist withoutsource the preparation of ~~our SEC financial reports, which allows for proper segregation of duties as well as additional manpower for proper documentation.~~the Company's tax returns and tax provisions.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~-36-~~-33-

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of business litigation, regardless of the outcome could have a material adverse impact on us because of the defense and settlement costs, diversion of management resources and other factors. We are not currently subject to any legal proceedings that we believe will have a material impact on our business at this time.

In 2016, a previous creditor of Galaxy Co. filed a lawsuit alleging default on money owed and sought $4,000,000 in damages. On August 14, 2020, the Company entered into a legal settlement agreement and recorded a liability for $2,000,000. The liability of $918,240 and $2,000,000 is included in the consolidated balance sheets at March 31, 2021 and June 30, 2020. This liability has been eliminated as of April 7, 2021 and is listed as a subsequent event in our financial reports included in this Current Report on Form 10-Q. This legal proceeding will no longer be reported as a liability on future financial reports.

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should consider carefully the following risks, together with the risks specified in Item 1A of Part I of our Annual Report for the year ended June ~~30,2020~~30, 2021 and all the other information in this Report, including our condensed consolidated financial statements and notes thereto. If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely affected. As a result, the trading price of our common stock could decline, and you could lose part or all of your ~~investment.The~~investment. The following information updates should be read in conjunction with the information disclosed in Part 1, Item 1A, "Risk Factors," contained in our Annual Report for the year ended June ~~30,2020.~~30, 2021. Except as disclosed below, there have been no material changes from the risk factors and uncertainties disclosed in our Annual Report for the year ended June ~~30,2020.~~30, 2021.

We ~~may~~have incurred losses for the six months ended December 31, 2021 and 2020 and there can be no assurance that we will generate net income

For the three months ended December 31, 2021 and 2020 we had a net loss of $2,462,020 and $7,768,081, respectively. For the six months ended December 31, 2021 and 2020 we had a net loss of $2,848,047 and $20,902,859 respectively and for the year ended June 30, 2021, we had a net loss of $24,434,336. For the year ended June 30, 2020, we had a net loss of $14,026,107. There can be no assurance that our losses will not ~~be able to access~~continue in the ~~full amounts available under~~future, even if our revenues and expenditures for the ~~Amended~~products and ~~Restated Purchase Agreement, which could prevent us from accessing the capital~~solutions we ~~need~~sell and distribute increase. In addition, as of December 31, 2021, we had stockholders' equity of approximately $74,000 and cash used in operations of approximately $1,300,000. In addition, as of June 30, 2021, we had stockholders' deficit of approximately $1,400,000 and cash used in operations of approximately $6,300,000. These factors raise substantial doubt regarding our ability to continue as a going concern.

We require funds to operate and expand our ~~operations, which could have an adverse effect on our business.~~business.

During the six months ended December 31, 2021, our operating activities used net cash of $1,312,346 and our cash was $354,727. During the year ended June 30, 2021, our operating activities used net cash of approximately $6.3 million and our cash and cash equivalents was $541,591. As of December 31, 2021, our accumulated deficit totaled approximately $51 million on a consolidated basis. Although we have been able to mitigate our losses during the three months ended December 31, 2021, we expect to incur additional operating losses in the future and therefore expect our cumulative losses to increase. We ~~intend to rely on the Amended and Restated Purchase Agreement for our near-term capital needs. We may direct Tysadco Partners~~will require funds to purchase upadditional inventories, pay our vendors, and build our marketing and sales staff. If we do not succeed in raising additional funds on acceptable terms, we may be unable to ~~$10.0 million~~expand our business and could default on our obligations. There can be no assurance that such financing will be available and that the equity interests of ~~shares~~all of our common stock over a 24-month period, commencing upon the satisfaction of certain conditions. On any trading day selected by us, we may sell shares of common stock to Tysadco Partners in an amount equal to the lesser of $500,000 or 300% of the average shares traded for the 10 days prior to the closing request date, with a minimum request of $200,000. The purchase price shall be 85% of the lowest average daily traded price during the ten trading days commencing on the first trading day following delivery and clearing of the delivered shares (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse split or other similar transaction that occurs on or after the date of the Amended and Restated Purchase Agreement).

~~In addition, Tysadco partners will~~stockholders would not be ~~required to purchase any shares~~substantially diluted. Any additional sources of financing will likely involve the issuance of our ~~common stock if such sale would result in its beneficial ownership exceeding 4.99% of the then outstanding shares of our common stock. Our inability to access a portion~~equity or ~~the full amount available under the Amended and Restated Purchase Agreement, in the absence of any other financing sources, could~~debt securities, which will have a ~~material adverse~~dilutive effect on our ~~business.~~

~~The sale or issuance of~~stockholders. To the extent that we raise additional funds by issuing equity securities, our ~~common stock~~stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability to ~~Tysadco Partners may cause dilution and~~conduct our business. Our ability to raise capital through the sale of securities may be limited by the ~~shares~~rules of ~~common stock acquired by Tysadco Partners, or~~ the ~~perception~~SEC and the terms of the agreements that ~~such sales may occur, could cause the price~~we enter into. We currently do not have any committed sources of financing other than our ~~common stock~~accounts receivable factoring agreement, which requires us to ~~fall.~~meet certain conditions to utilize and there can be no assurance that we will meet those conditions.

Upon the execution of the Amended and Restated Purchase Agreement, we issued 50,000,000 Commitment Shares to Tysadco Partners in consideration for its commitment to purchase shares of our common stock under the Amended and Restated Purchase Agreement. The remaining shares of our common stock that may be issued under the Amended and Restated Purchase Agreement may be sold by us to Tysadco Partners at our discretion from time to time over a 24-month period commencing after the satisfaction of certain conditions set forth in the Amended and Restated Purchase Agreement, including that the registration statement registering the shares to be issued pursuant to the Amended and Restated Purchase Agreement remains effective. The purchase price for the shares that we may sell to Tysadco Partners under the Amended and Restated Purchase Agreement will fluctuate based on the price of our common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.-34-

We generally have the right to control the timing and amount of any future sales of our shares to Tysadco Partners. Additional sales of our common stock, if any, to Tysadco Partners will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Tysadco Partners all, some, or none of the additional shares of our common stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to Tysadco Partners, after Tysadco Partners has acquired the shares, Tysadco Partners may resell all or some of those shares at any time or from time to time in its discretion. Therefore, sales to Tysadco Partners by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Tysadco Partners, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

~~-37-~~

We may not be able to access the full amounts available under the Amended and Restated Purchase Agreement, which could prevent us from accessing the capital we need to continue our operations, which could have an adverse effect on our business

~~At March 31, 2021, we had cash of $742,382. We had an accumulated deficit of $47,289,940 at March 31, 2021, and at June 30, 2020, an accumulated deficit of $23,496,792.~~ We have generated significant losses to date and expect to continue to incur significant operating losses. To date, our revenue from operations have been insufficient to support our operational activities and has been supplemented by the proceeds from the issuance of securities. There is no guarantee that additional equity, debt or other funding will be available to us on acceptable terms, or at all.

Our ability to direct Tysadco Partners to purchase up to $10.0 million of shares of our common stock over a 24-month period is subject to the satisfaction of certain conditions. The extent we rely on Tysadco Partners as a source of funding will depend on a number of factors, including the prevailing market price of our common stock and the extent to which we are able to secure funding from other sources. If obtaining sufficient funding from Tysadco Partners were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs. Even if we sell all $10.0 million under the Amended and Restated Purchase Agreement to Tysadco Partners, weexpired. We may ~~still~~ need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.

Our inability to access ~~a portion or the full amount available under the Amended and Restated Purchase Agreement, in the absence of any~~ other financing sources, could have a material adverse effect on our business.

~~It is not possible to predict the actual number of shares we will sell under the Amended and Restated~~~~Purchase Agreement~~Risks Relating to the ~~Selling Stockholder, or the actual gross proceeds resulting from those sales.~~COVID-19 Pandemic

Subject to certain limitations in the Amended and Restated Purchase Agreement and compliance with applicable law, we have the discretion to deliver notices to the Selling Stockholder at any time throughout the term of the Amended and Restated Purchase Agreement. The actual number of shares that are sold to the Selling Stockholder may depend based on a number of factors,Pandemics, including the ~~market price~~COVID-19 pandemic, could have a material adverse effect on our operations, liquidity, financial condition, and financial results.

A serious global pandemic, including the current COVID-19 pandemic and variants of COVID-19, can adversely impact, shock and weaken the ~~common stock during the sales period. Actual gross proceeds may be less than $10.0 million, which~~global economy. These impacts can amplify other risk factors and could have a material impact on our operations, liquidity, financial conditions, and financial results.

COVID-19 pandemic-related risks may impact our ~~future liquidity. Because~~exposure to global regulatory, geopolitical, and societal changes; rapid degradation of global economic conditions, creating an increase in the ~~price per share~~volatility and the timing and level of ~~each share sold~~orders; supply chain disruptions, material shortages, and increases in the costs of components; changes in labor force availability, which could reduce our ability to ~~the Selling Stockholder will fluctuate during the~~operate across our business in development, sales ~~period, it is not currently possible~~and marketing, production, installation, and ongoing service and support; an increased risk being subjected to ~~predict the number of shares that will be sold or the actual gross proceeds~~contract performance claims if we are unable to ~~be raised in connection with those sales.~~

~~Sales of shares~~~~pursuant~~deliver according to the terms of our contract or commitments and cannot claim force majeure to mitigate or eliminate our exposure to such claims; increased geographic work restrictions that could impact our ability to market, sell, manufacture and/or install our products; an increase in our exposure to claims or litigation related to the ~~Amended and Restated Purchase will be sold at different times at different prices.~~

~~In connection with the sale of~~pandemic; limitations on our ~~common stock pursuant~~ability to meet the terms of our bank credit agreements that cause restrictions on our ability to access the ~~Amended~~liquidity under such agreements; reduced access to and ~~Restated Purchase Agreement, we will have discretion, subject~~an increase in the cost of capital; reduced access to ~~market demand,~~surety bonds or bank guarantees to ~~vary the~~secure customer orders; volatility and changes in foreign currency rates; delayed timing ~~prices,~~of collections and/or decreased collectability of receivables and ~~numbers of shares sold~~contract assets; and a material reduction to the ~~Selling Stockholder. Similarly, the Selling Stockholder may sell such shares at different times~~values of our assets including, but not limited to, inventory, deferred tax assets, goodwill, intangibles, and at different prices. Investors may experience a decline in the value of the shares they purchase from the Selling Stockholder in this offering as a result of sales made by us in future transactions to Selling Stockholder at prices lower than the prices they paid.property and equipment.

~~-38-~~-35-

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

For the six month ended December 31, 2021:

During the ~~three~~six months ended ~~March~~December 31, 2021, the Company issued ~~50,000~~2,500,000 shares of common stock for services.

During the six months ended December 31, 2021, the Company cancelled 50,000,000 shares of common stock which were previously held as collateral for a line of credit.

During the six months ended December 31, 2021, the Company entered into exchange agreements to issue 11,414 shares of Preferred Series F stock.

During the six months ended December 31, 2021, the Company cancelled 500,000 shares of Preferred Series E stock.

For six month ended December 31, 2020:

During the six months ended December 31, 2020, the Company issued 105,750,000 shares of common stock for professional consulting services. These shares were valued at ~~$2,350~~$2,776,200 upon issuance during the ~~three~~six months ended ~~March~~December 31, ~~2021.~~2020.

During the ~~three~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issused 1,382,812,744 shares of common stock for debt reduction. These shares were valued at $13,031,235 upon issuance during the six months ended December 31, 2020.

During the six months ended December 31, 2020, the Company issued ~~5,000,000~~249,792,217 shares of common stock to warrant holders in six cashless transactions.

During the six months ended December 31, 2020, the Company issued 52,500,000 shares of common stock for commitment shares under the Equity Purchase Agreement. These shares were valued at $1,050,000 upon issuance during the six months ended December 31, 2020.

During the six months ended December 31, 2020, the Company issued 50,000,000 shares of common stock as collateral for the line of credit. The shares were held in the Company's name and serve as collateral for a ~~one year note payable~~line of credit with a bank.

During the six months ended December 31, 2020, the Company issued ~~on January 13, 2021 to an investor.~~10,000,000 shares of common stock for the acquisition of Classroom Technology Solutions, Inc. These shares were valued at $151,000 upon issuance during the six months ended December 31, 2020.

During the six months ended December 31, 2020, the Company issued 242,000,000 shares of common stock in exchange for proceeds under the Equity Purchase Agreement. These shares were valued at $3,951,900 upon issuance during the six months ended December 31, 2020

See the capital structure section in Note 1 for disclosure of the equity components included in the Company's consolidated financial statements.

-36-

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

~~-39-~~

ITEM 6. EXHIBITS


Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to Amendment No. 1 to the Annual Report on Form 10-K/A, File No. 000-56006, filed with the Securities and Exchange Commission on October 16, 2020 )
3.2		Bylaws (incorporated herein by reference to Exhibit 3.2 to the Registrant's Form 8A-12G, File No. 000-56006, filed with the Securities and Exchange Commission on December 3, 2018)
3.3		Certificate of Designation for Series D Preferred Stock (incorporated herein by reference to Exhibit 3.3 to the Annual Report on Form 10-K, File No. 000-56006, filed with the Securities and Exchange Commission on filed on September 28, 2020)
3.4		Certificate of Designation for Series E Preferred Stock (incorporated herein by reference to Exhibit 3.4 to the Annual Report on Form 10-K, File No. 000-56006, filed with the Securities and Exchange Commission on filed on September 28, 2020)
31.1*3.5		Certificate of Designation of Series F Convertible Preferred Stock (incoporated herein by reference to Exhibit 3.1 to the Current Report on Forn 8-K filed with the Securities and Exchange Commission filed February 14, 2022).
10.1		Exchange Agreement dated December 27, 2021 by and between Galaxy Next Generation, Inc and Watson Properties, LLC (incorporated herein as referenced filed as Exhibit 10.1 on Form 10-Q filed February 14, 2022).
10.2		Exchange Agreement dated December 20, 2021 by and between Galaxy Next Generation, Inc and Mark Fulbright (incorporated herein as referenced filed as Exhibit 10.2 on Form 10-Q filed February 14, 2022).
10.3		Exchange Agreement dated December 28, 2021 by and between Galaxy Next Generation, Inc and Carl Austin (incorporated herein as referenced filed as Exhibit 10.3 on Form 10-Q filed February 14, 2022).
31.1*		Amended Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Amended Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Amended Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Amended Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~101~~101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive ~~Tables~~Data File because its XBRL tags are embedded within the Inline XBRL document.*
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith

-37-

SIGNATURES

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

GALAXY NEXT GENERATION, INC.

Date: ~~May 13, 2021~~February 15, 2022

/s/ Gary LeCroy

Gary LeCroy

Chief Executive Officer (Principal Executive Officer)

Date: ~~May 13, 2021~~February 15, 2022

/s/Magen McGahee

~~Magen McGahee~~

~~Chief Financial Officer~~

~~(Principal Financial Officer and Principal Accounting Officer)~~

~~-40-~~

~~Exhibit 31.1~~

~~CERTIFICATION OF CHIEF EXECUTIVE OFFICER~~

~~I, Gary LeCroy, certify that:~~

~~1. I have reviewed this Quarterly Report on Form 10-Q (this "report") of Galaxy Next Generation, Inc. (the "registrant");~~

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

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

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

~~(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internal control over financial reporting.~~

~~Dated: May 13, 2021~~

~~Galaxy Next Generation, Inc.~~

~~By:/s/ Gary LeCroy~~

~~Gary LeCroy~~

~~Chief Executive Officer~~

~~(Principal Executive Officer)~~

~~-41-~~

~~Exhibit 31.2~~

~~CERTIFICATION OF CHIEF FINANCIAL OFFICER~~

~~I, Magen McGahee, certify that:~~

~~1. I have reviewed this Quarterly Report on Form 10-Q (this "report") of Galaxy Next Generation, Inc. (the "registrant");~~

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

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

~~(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internal control over financial reporting.~~

~~Dated: May 13, 2021~~

~~Galaxy Next Generation, Inc.~~

~~By:~~ ~~/s/ Magen McGahee~~

~~Magen McGahee~~

~~Chief Financial Officer~~

~~(Principal Financial Officer and Principal Accounting Officer)~~

~~-42-~~

~~Exhibit 32.1~~

~~CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350~~

In connection with the accompanying Quarterly Report on Form 10-Q of Galaxy Next Generation, Inc. (the "Company") for the quarter ending March 31, 2021, I, Gary LeCroy, Chief Executive Officer of the Company hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

~~1.Such Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and~~

2. The information contained in such Quarterly Report on Form 10-Q for the quarter ending March 31, 2021, fairly presents, in all material respects, the financial condition and results of operations of the Company.

~~Dated: May 13, 2021~~

~~Galaxy Next Generation, Inc.~~

~~By:/s/ Gary LeCroy~~

~~Gary LeCroy~~

~~Chief Executive Officer~~

~~(Principal Executive Officer)~~

~~-43-~~

~~Exhibit 32.2~~

~~CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350~~

In connection with the accompanying Quarterly Report on Form 10-Q of Galaxy Next Generation, Inc. (the "Company") for the quarter ending March 31, 2021, I, Magen McGahee, Chief Financial Officer of the Company hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

~~1.Such Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and~~

~~Dated: May 13, 2021~~

~~Galaxy Next Generation, Inc.~~

~~By:/s/ Magen McGahee~~

Magen McGahee

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

~~-44-~~-38-


GALAXY NEXT GENERATION, INC.
Condensed Consolidated Balance Sheets

	March 31, 2021	June 30, 2020
Assets	(Unaudited)	(Audited)
Current Assets
Cash	$ 742,382	$ 412,391
Accounts receivable, net	1,302,764	798,162
Inventories, net	2,207,885	738,091
Prepaid and other current assets	3,950	2,800
Total Current Assets	4,256,981	1,951,444

Property and Equipment, net (Note 3)	58,290	52,049

Intangibles, net (Notes 4 and 14)	1,335,928	1,436,315

Goodwill (Notes 4 and 14)	834,220	834,220

Operating right of use asset (Note 9)	176,624	223,982
Total Assets	$ 6,662,043	$ 4,498,010

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Line of credit (Note 5)	$ 991,598	$ 1,236,598
Convertible notes payable, net of discount (Note 6)	-	1,101,900
Derivative liability, convertible debt features and	3,376,000	246,612
warrants (Note 7)
Current portion of long-term notes payable (Note 6)	940,011	512,425
Accrued legal settlement payable (Note 12)	600,000	1,282,000
Accounts payable	906,228	1,804,269
Accrued expenses	434,165	371,912
Deferred revenue	815,214	1,133,992
Short term portion of related party notes and payables (Note 8)	3,984,760	1,272,812
Total Current Liabilities	12,047,976	8,962,520
Noncurrent Liabilities
Long term portion of related party notes payable	-	2,075,000
(Note 8)
Long term portion of accrued legal settlement payable	318,240	718,000
(Note 12)
Notes payable, less current portion (Note 6)	398,853	482,553
Total Liabilities	12,765,069	12,238,073

Stockholders' Equity (Deficit)
Common stock	252,850	59,539
Preferred stock - Series E, non-redeemable	50	50
Additional paid-in-capital	40,934,014	15,697,140
Accumulated deficit	(47,289,940)	(23,496,792)
Total Stockholders' Equity (Deficit)	(6,103,026)	(7,740,063)

Total Liabilities and Stockholders' Equity (Deficit)	$ 6,662,043	$ 4,498,010



		For the Three Months					For the Nine Months
		Ended March 31,					Ended March 31,
		2021		2020		2021			2020
Revenues	$	777,457	$	349,247	$	2,754,463		$	1,850,673
Cost of Sales		356,731		130,614		1,660,971			1,116,398

Gross Profit		420,726		218,633		1,093,492			734,275

General and Administrative Expenses
Stock compensation and stock issued for services		2,350		48,034		2,778,550			2,055,726
Asset impairment expense		-		2,000,287		-			2,000,287
General and administrative		1,697,410		1,662,359		4,347,555			4,263,887
Total General and Administrative Expenses		1,699,760		3,710,680		7,126,105			8,319,900
Loss from Operations		(1,279,034)		(3,492,047)		(6,032,613)			(7,585,625)

Other Income (Expense)
Other income		141,017		-		141,017			3,049
Expenses related to convertible notes payable:
Change in fair value of derivative liability		343,000		695,300		(3,153,583)			2,717,557
Interest accretion		-		(603,852)		(766,603)			(1,412,705)
Interest expense related to Equity Purchase Agreement (Note 13)		(1,805,687)		-		(6,807,587)			-
Interest expense		(289,585)		(1,860,498)		(7,173,779)			(3,822,927)

Total Other Income (Expense)		(1,611,255)		(1,769,050)		(17,760,535)			(2,515,026)

Net Loss before Income Taxes		(2,890,289)		(5,261,097)		(23,793,148)			(10,100,651)

Income Taxes (Note 11)		-		-		-			-

Net Loss	$	(2,890,289)	$	(5,261,097)	$	(23,793,148)		$	(10,100,651)
Net Basic and Fully Diluted Loss Per Share	$	(0.001)	$	(0.150)	$	(0.008)		$	(0.470)

Weighted average common shares outstanding
Basic		2,822,806,425		35,520,434		2,221,202,596			21,547,126
Fully diluted		3,387,367,710		585,972,958		3,433,133,044			339,856,357


GALAXY NEXT GENERATION, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Nine Months Ended March 31, 2021
(Unaudited)
							Total
	Common Stock		Preferred Stock - Class E		Additional	Accumulated	Stockholders'
	Shares	Amount	Shares	Amount	Paid-in Capital	Deficit	Deficit

Balance, July 1, 2020	628,039,242	$ 59,539	500,000	$50	$15,697,140	$(23,496,792)	$ (7,740,063)

Common stock issued for services	105,800,000	10,580	-	-	2,767,970	-	2,778,550

Common stock issued in exchange for debt reduction	1,382,812,744	138,281	-	-	12,892,954	-	13,031,235

Issuance of common stock to warrant holders	249,792,217	-	-	-	-	-	-

Commitment shares issued	57,500,000	5,750	-	-	1,171,250	-	1,177,000

Common stock issued under Equity Purchase Agreement	377,000,000	37,700	-	-	8,254,700	-	8,292,400

Common stock issued as collateral	50,000,000	-	-	-	-	-	-

Common stock issued in acquisition	10,000,000	1,000	-	-	150,000		151,000

Consolidated net loss	-	-	-	-	-	(23,793,148)	(23,793,148)
Balance March 31, 2021	2,860,944,203	$252,850	500,000	$50	$40,934,014	$(47,289,940)	$ (6,103,026)


GALAXY NEXT GENERATION, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Nine Months Ended March 31, 2020
(Unaudited)
							Total
	Common Stock		Preferred Stock - Class E		Additional	Accumulated	Stockholders'
	Shares	Amount	Shares	Amount	Paid-in Capital	Deficit	Deficit

Balance, July 1, 2019	11,318,901	$ 1,072	-	$ -	$ 4,859,731	$ (9,470,685)	$ (4,609,882)

Common stock issued for services	3,119,912	314	-	-	1,995,900	-	1,996,214

Common stock issued for debt reduction	95,988,567	9,598	-	-	4,137,688	-	4,147,286

Settlement of conversion features	-	-	-	-	152,374	-	152,374

Issuance of common stock to warrant holders	23,142,794	-	-	-	-	-	-

Common stock issued as compensation	144,511	14	-	-	59,497	-	59,511

Common stock issued in acquisition of Ehlert Solutions
and Interlock Concepts, Inc.	1,350,000	135	-	-	1,720,216	-	1,720,351

Common stock issued for convertible notes	500,000	50	-	-	219,950	-	220,000

Commitment shares issued	25,000	3	-	-	6,997	-	7,000

Issuance of Preferred Stock- Class E	-	-	500,000	50	499,950	-	500,000

Consolidated net loss	-	-	-	-	-	(10,100,651)	(10,100,651)
Balance March 31, 2020	135,589,685	$ 11,186	500,000	$ 50	$ 13,652,303	$ (19,571,336)	$ (5,907,797)


	Nine Months Ended March 31,
	2021	2020
Cash Flows from Operating Activities
Net loss	$ (23,793,148)	$ (10,100,651)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	278,949	563,855
Goodwill and intangible assets impairment charge	-	2,000,287
Loss on disposal of property and equipment	-	13,236
Amortization of convertible debt discounts	265,953	308,062
Accretion and settlement of financing instruments
and change in fair value of derivative liability	3,827,600	(389,331)
Stock compensation and stock issued for services	2,789,130	-
Stock issued for payment of interest	13,826,684	-

Changes in assets and liabilities:
Accounts receivable	(472,892)	323,444
Inventories	(1,260,363)	(194,699)
Prepaid expenses and other assets	-	18,098
Accounts payable	(1,979,801)	217,307
Accrued expenses	62,253	(365,562)
Deferred revenue	(318,778)	167,404
Net cash used in operating activities	(6,774,413)	(7,438,550)

Cash Flows from Investing Activities
Acquisition of business, net of cash	38,836	2,967,918
Purchased capitalized development costs	(120,404)	-
Purchases of property and equipment	-	(17,636)
Net cash provided by (used in) investing activities	(81,568)	2,950,282

Cash Flows from Financing Activities
Proceeds from notes payable	332,500	-
Principal payments on financing lease obligations	-	(5,721)
Principal payments on notes payable	(1,878)	(48,331)
Payments on advances from stockholder, net	(140,596)	-
Payments on convertible notes payable	(110,000)	(655,076)
Proceeds from convertible notes payable	1,956,000	4,550,684
Proceeds from notes payable related parties	543,613	672,084
Payments on line of credit, net	(245,000)	(100)
Proceeds from sale of common stock under Equity Purchase Agreement	4,851,333	-
Net cash provided by financing activities	7,185,972	4,513,540

Net Increase in Cash and Cash Equivalents	$ 329,991	$ 25,272

Cash, Beginning of Period	412,391	169,430
Cash, End of Period	$ 742,382	$ 194,702


Supplemental and Non Cash Disclosures
Noncash additions related to convertible debt	$ 228,020	$ 268,350
Cash paid for interest	$ 163,314	$ 176,379
Interest on shares issued under Equity Purchase Agreement	$ 6,807,587	$ -
Related party note payable issued for acquisition of business	$ 194,526	$ 1,484,473
Acquisition of goodwill and intangibles	$ 46,869	$ 3,760,287
Stock compensation and stock issued for services	$ 2,778,550	$ 2,055,873
Property leased with financing lease	$ 25,317	$ 37,979
Accretion of discount and change in fair value of derivatives	$ 3,895,991	$ -
Common stock issued in exchange for convertible debt reduction	$ 4,117,650	$ 3,447,912



Period ending March 31,
2022	$ 387,118
2023	387,118
2024	347,598
2025	187,885
2026	26,209
	$ 1,335,928



Period ending March 31,
2022	$ 940,011
2023	149,076
2024	26,305
2025	16,035
2026	14,662
Thereafter	192,775
	$ 1,338,864



At March 31, 2021
		Total	Level 1	Level 2	Level 3
Assets
	Customer list	$653,990	-	-	$653,990
	Vendor relationship	340,583	-	-	340,583
	Development costs	341,355	-	-	341,355

		$1,335,928	-	-	$1,335,928
Liabilities
	Original issue discount, convertible debt	$3,376,000	-	-	$3,376,000

At June 30, 2020
		Total	Level 1	Level 2	Level 3
Assets
	Customer list	$748,853	-	-	$748,853
	Vendor relationship	407,153	-	-	407,153
	Development costs	280,309	-	-	280,309

		$1,436,315	-	-	$1,436,315
Liabilities
	Original issue discount, convertible debt	$213,300	-	-	$213,300
	Derivative liability warrants	33,312	-	-	33,312
Total		$246,612	-	-	$246,612



Three months ended	March 31, 2021	March 31, 2020
Stock compensation and stock issued for services	$ 2,350	$ 48,034
General and administrative	1,697,410	1,662,359
Asset impairment expense	-	2,000,287
Total General and Administrative Expenses	$ 1,699,760	$ 3,710,670


Nine months ended	March 31, 2021	March 31, 2020
Stock compensation and stock issued for services	$ 2,778,550	$ 2,055,726
General and administrative	4,347,555	4,263,887
Asset impairment expense	-	2,000,287
Total General and Administrative Expenses	$ 7,126,105	$ 8,319,900