| Significant Accounting Policies | 2. Significant Accounting Policies Condensed Financial Statements In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s
financial position and the results of its operations and its cash flows for the periods shown. The preparation of financial
statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and
cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year. Basis of Presentation/Principles of Consolidation These consolidated financial
statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated
financial statements include the accounts of the Company and JTM, as well as Spectrum and its subsidiaries, the ADEX Entities, AWS PR,
and Tropical. All subsidiaries are wholly-owned, with the exception of JTM, which is 50% owned. All inter-company balances
and transactions have been eliminated. Reverse Merger On January 27, 2021, Spectrum
Global Solutions, Inc. HW Merger Sub, Inc., HWN, Inc. and the stockholders of HWN, Inc. (the “Stockholders”) entered into
an Agreement and Plan of Merger (the “Agreement”) whereby the Stockholders agreed to sell to the Company all of the capital
stock of HWN, Inc. On June 16, 2021, the transaction contemplated by the Agreement closed, and HWN, Inc. became a wholly-owned subsidiary
of Spectrum Global Solutions, Inc. As previously disclosed, as part of the consideration for the transaction, Spectrum Global Solutions,
Inc. issued shares of a newly established Series D Preferred Stock. The merger has been accounted
for as a reverse merger in accordance with US GAAP. This determination was primarily based on High Wire’s business comprising the
ongoing operations of the Company following the Merger, High Wire’s senior management comprising the senior management of the Company
and High Wire’s stockholders having a majority of the voting power of the Company. For accounting purposes, Spectrum is considered
the “acquired” company and High Wire is considered the “acquirer.” Accordingly, for accounting purposes, the Merger
is treated as the equivalent of High Wire issuing stock for the net assets of Spectrum, accompanied by a recapitalization. The net assets
of Spectrum have been remeasured at fair value and applied against the purchase price resulting in goodwill or other intangible assets
recorded. The consolidated assets, liabilities and results of operations prior to the Closing Date of the merger are those of High Wire,
and Spectrum’s assets, liabilities and results of operations are consolidated with High Wire beginning on the Closing Date. The
shares and corresponding capital amounts and earnings per share available to common stockholders, pre-merger, have been retroactively
restated as shares reflecting the exchange ratio in the merger. The historical financial information and operating results of Spectrum
prior to the merger have not been separately presented in these condensed consolidated financial statements. Impact of the COVID-19 Pandemic The extent to which the coronavirus
(“COVID-19”) outbreak and measures taken in response thereto impact the Company’s business, results of operations and
financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Global health concerns relating
to the COVID-19 outbreak have been weighing on the macroeconomic environment, and the outbreak has significantly increased economic uncertainty.
Risks related to consumers and businesses lowering or changing spending, which impact domestic and international spend. The outbreak
has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines,
shelter in place orders, and business shutdowns. These measures have not only negatively impacted consumer spending and business spending
habits, they have also adversely impacted and may further impact the Company’s workforce and operations and the operations of its
customers, suppliers and business partners. These measures may remain in place for a significant period of time and they are likely to
continue to adversely affect the Company’s business, results of operations and financial condition. The spread of COVID-19 has
caused the Company to modify its business practices (including employee travel, employee work locations, and cancellation of physical
participation in meetings, events and conferences), and the Company may take further actions as may be required by government authorities
or that the Company determines are in the best interests of its employees, customers and business partners. There is no certainty that
such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. The extent to which the COVID-19
outbreak impacts the Company’s business, results of operations and financial condition will depend on future developments, which
are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the
actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.
Even after the COVID-19 outbreak has subsided, the Company may continue to experience materially adverse impacts to its business as a
result of its global economic impact, including any recession that has occurred or may occur in the future. There are no comparable recent
events which may provide guidance as to the effect of the spread of COVID-19 and a global pandemic, and, as a result, the ultimate impact
of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change. The Company does not yet know the full
extent of the impacts on its business, its operations or the global economy as a whole. However, the effects could have a material impact
on the Company’s results of operations, and the Company will continue to monitor the COVID-19 situation closely. As of November
2021, multiple variants of the COVID-19 virus are circulating globally that are highly transmissible, and there is uncertainty around
vaccine effectiveness on the new strains of the virus. Uncertainty around vaccine distribution, supply and effectiveness will impact
when the negative economic effects as a result of COVID-19 will abate or end and the timing of such recovery may affect the Company’s
financial condition. Use of Estimates The preparation of financial
statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and
assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component
of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and
assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and
adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results,
future results of operations will be affected. Cash and Cash Equivalents The Company considers all
highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. Accounts Receivable Trade accounts receivable
are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not
billed. Management reviews a customer’s credit history before extending credit. The Company maintains an allowance for doubtful
accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in
which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of
account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment
activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance
for doubtful accounts at September 30, 2021 and December 31, 2020 was $38,881 and $0, respectively. Property and Equipment Property and equipment are
stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual
rates:
Computers and office equipment 3-7 years straight-line basis
Vehicles 3-5 years straight-line basis
Leasehold improvements 5 years straight-line basis
Software 5 years straight-line basis
Machinery and equipment 5 years straight-line basis Goodwill Goodwill was initially generated
through the acquisition of JTM in 2019, and the reverse merger with Spectrum in 2021, as the total consideration paid exceeded the fair
value of the net assets acquired. The Company tests its goodwill
for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred.
A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include,
among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors
or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant
impact on the recoverability of goodwill and the Company’s consolidated financial results. The Company tests goodwill
by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine
the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts,
terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to
their present value. There were no impairment charges during the three and nine months ended September 30, 2021 and 2020. Intangible Assets At September 30, 2021 and
December 31, 2020, definite-lived intangible assets consist of tradenames and customer relationships which are being amortized over their
estimated useful lives of 15 years. The Company periodically
evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts.
These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may
not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques.
The Company has no intangibles with indefinite lives. For long-lived assets, impairment
losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future
cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value.
When an impairment exists, the related assets are written down to fair value. There were no impairment charges during the three and nine
months ended September 30, 2021 and 2020. Long-lived Assets In accordance with ASC 360,
“Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes
in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but
are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;
current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of
its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally
determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as
well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds
fair value. There were no impairment charges recorded during the three and nine months ended September 30, 2021 and 2020. Foreign Currency Translation Transactions in foreign currencies
are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items
expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting
foreign exchange gains and losses are recognized in income. The Company’s integrated
foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the
accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect
at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated
at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting foreign
exchange gains or losses are recognized in income. Income Taxes The Company accounts for
income taxes using the asset and liability method in accordance with ASC 740, “ Accounting for Income Taxes The Company conducts business,
and files federal and state income, franchise or net worth, tax returns in Canada, the United States, in various states within the United
States and the Commonwealth of Puerto Rico. The Company determines it’s filing obligations in a jurisdiction in accordance with
existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax
authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year.
For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2020. In certain circumstances, the U.S. federal
statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment
vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’,
income tax returns for the open taxation years noted above. Significant management judgment
is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company’s
deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax
assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future
periods. The realization of these assets is dependent on generating future taxable income. The Company follows the guidance
set forth within ASC Topic 740, “ Income Taxes AWS PR received a tax notice
from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of June 30, 2021 was $156,711 plus penalties
and interest of $140,319 for a total obligation due of $297,030. During June 2021, AWS PR was notified that the Puerto Rican government
would settle the outstanding debt for $11,105, which the Company paid during July 2021. Revenue Recognition Adoption of New Accounting Guidance on Revenue
Recognition The Company recognizes revenue
based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance
obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize
revenue as the performance obligations are satisfied. Contract Types The Company’s contracts
fall under three main types: 1) unit-price, 2) fixed-price, and 3) time-and-materials. Unit-price contracts relate to services being
performed and paid on a unit basis, such as per mile of construction completed. Fixed-price contracts are based on purchase order line
items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include
employees working permanently at customer locations and materials costs incurred by those employees. A significant portion of
the Company’s revenues come from customers with whom the Company has a master service agreement (“MSA”). These MSA’s
generally contain customer specific service requirements. Performance Obligations A performance obligation
is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard.
The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance
obligation is satisfied. For the Company’s different revenue service types the performance obligation is satisfied at different
times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases this may be
each day, or each week depending on the customer. For construction services, the performance obligation is met when the work is completed
and the customer has approved the work. Contract assets include unbilled amounts for costs of services incurred on contracts with open
performance obligations. These amounts are included in contract assets on the consolidated balance sheets. Contract liabilities include
costs incurred and are included in contract liabilities on the consolidated balance sheets. Revenue Service Types The following is a description
of the Company’s revenue service types, which include professional services and construction:
● Professional
services are services provided to the clients where the Company delivers distinct contractual deliverables and/or services. Deliverables
may include but are not limited to: engineering drawings, designs, reports and specification. Services may include, but are not limited
to: consulting or professional staffing to support our client’s objectives. Consulting or professional staffing services may be
provided remotely or on client premises and under their direction and supervision.
● Construction
Services are services provided to the client where the Company may self-perform or subcontract services that require the physical construction
of infrastructure or installation of equipment and materials. Disaggregation of Revenues The Company disaggregates
its revenue from contracts with customers by service type, contract type, contract duration, and timing of transfer of goods or services.
See the below tables:
Revenue by service type Three months Three months Nine months Nine months
Professional Services $ 3,992,942 $ - $ 4,762,645 $ -
Construction 7,375,091 3,650,379 19,473,292 12,394,889
Total $ 11,368,033 $ 3,650,379 $ 24,235,937 $ 12,394,889
Revenue by contract duration Three months Three months Nine months Nine months
Short-term $ 65,085 $ 20,615 $ 138,089 $ 49,328
Long-term 11,302,948 3,629,764 24,097,848 12,345,561
Total $ 11,368,033 $ 3,650,379 $ 24,235,937 $ 12,394,889
Revenue by contract type Three months Three months Nine months Nine months
Fixed-price $ 7,375,091 $ 3,650,379 $ 19,473,292 $ 12,394,889
Time-and-materials 3,992,942 - 4,762,645 -
Total $ 11,368,033 $ 3,650,379 $ 24,235,937 $ 12,394,889 The Company also disaggregates
its revenue by operating segment and geographic location (refer to Note 16, Segment Disclosures, for additional information). Accounts Receivable Accounts receivable include
amounts from work completed in which the Company has billed. The amounts due are stated at their net estimated realizable value. The
Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The
allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables
and collateral to the extent applicable. Contract Assets and Liabilities Contract assets include costs
and services incurred on contracts with open performance obligations. These amounts are included in contract assets on the consolidated
balance sheets. At September 30, 2021 and December 31, 2020, contract assets totaled $681,860 and $0, respectively. Contract liabilities include
payment received for incomplete performance obligations and are included in contract liabilities on the consolidated balance sheets.
At September 30, 2021 and December 31, 2020, contract liabilities totaled $1,348,906 and $464,450, respectively. Cost of Revenues Cost of revenues includes
all direct costs of providing services under the Company’s contracts, including costs for direct labor provided by employees, services
by independent subcontractors, operation of capital equipment (excluding depreciation and amortization), direct materials, insurance
claims and other direct costs. Research and Development Costs Research and development
costs are expensed as incurred. Stock-based
Compensation The Company records stock-based
compensation in accordance with ASC 718, “ Compensation – Stock Compensation The Company accounts for
stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services
rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date
guidelines enumerated in ASU 2018-07. The Company uses the Black-Scholes
option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as
well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s
expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value
of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations
over the requisite service period. Loss per Share The Company computes (loss)
per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted (loss) per
share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased
from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As
of September 30, 2021 and December 31, 2020, respectively, the Company had 81,521,332 and 0 common stock equivalents outstanding. Leases The Company adopted FASB
Accounting Standards Codification, Topic 842, Leases (“ASC 842”) on January 1, 2019. The new leasing standard
requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU
assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s
obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized
based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases
do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement
date in determining the present value of lease payments. A number of the Company’s lease agreements contain options to renew and
options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination
options that are deemed reasonably certain to be exercised. The Company recognized lease
liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer
than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances
of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is
recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative
expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense
in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected
not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities. Going Concern Assessment Management assesses going
concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and
working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited consolidated
financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined
in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider
various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected
cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital,
if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around
implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations
can be achieved and management has the proper authority to execute them within the look-forward period. The Company has
generated losses since its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and
issuance of third-party and related party debt to support cash flow from operations. For the nine months ended September 30, 2021,
the Company had an operating loss of $1,467,635 (before deducting losses attributable to noncontrolling interests, cash flows
used in operations of $3,536,955 and a working capital deficit of $17,345,487. Management has prepared
estimates of operations for the remainder of fiscal year 2021 and for 2022 and believes that sufficient funds will be generated from
operations to fund its operations and to service its debt obligations for one year from the date of the filing of the unaudited
consolidated financial statements in the Company’s Quarterly Report on Form 10-Q, which indicate improved operations and the
Company’s ability to continue operations as a going concern. The impact of COVID-19 on
the Company’s business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or
its timing on a return to more normal operations. Further, the recently enacted CARES Act provides for economic assistance loans through
the SBA. As of September 30, 2021, ADEX had $2,160,000 of PPP loans outstanding from the SBA under the CARES Act. The PPP provides that
the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act.
ADEX used the proceeds from the PPP loans for qualifying expenses and is applying for forgiveness of the PPP loans in accordance with
the terms of the CARES Act. The accompanying unaudited
consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize
its assets and satisfy its liabilities in the normal course of business. Management believes that
based on relevant conditions and events that are known and reasonably knowable that its forecasts for one year from the date of the filing
of the unaudited consolidated financial statements in the Company’s Quarterly Report on Form 10-Q indicate improved operations
and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer
expenses and cash outlays should operations not improve in the look forward period. Recent Accounting Pronouncements ASU 2020-06, Accounting
for Convertible Instruments and Contracts in an Entity’s Own Equity Derivatives
and Hedging: Contracts in Entity’s Own Equity Any other new accounting pronouncements recently issued, but not yet
effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result,
the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial
position or results of operations. Concentrations of Credit Risk Financial instruments that
potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company maintains
its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided
on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. As of September 30, 2021, ADEX and JTM
had cash balances in excess of provided insurance of $727,998 and $799,105, respectively. The Company provides credit
to customers on an uncollateralized basis after evaluating client creditworthiness. For the nine months ended September 30, 2021, three
customers accounted for 20%, 15% and 12%, respectively, of consolidated revenues for the period. In addition, amounts due from these
customers represented 8%, 9% and 7%, respectively, of trade accounts receivable as of September 30, 2021. For the nine months ended September
30, 2020, three customers accounted for 20%, 18% and 17%, respectively, of consolidated revenues for the period. In addition, amounts
due from these customers represented 24%, 19% and 21%, respectively, of trade accounts receivable as of September 30, 2020. The Company’s customers
are primarily located within the domestic United States of America, Puerto Rico, and Canada. Revenues generated within the domestic United
States of America accounted for approximately 97% of consolidated revenues for the nine months ended September 30, 2021. Revenues generated
from customers in Puerto Rico and Canada accounted for approximately 3% of consolidated revenues for the nine months ended September
30, 2021. Revenues generated within the domestic United States of America accounted for 100% of cons |
