HIGH WIRE NETWORKS, INC. HIGH WIRE NETWORKS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

This quarterly report contains forward-looking statements. These statementsrelate to future events or our future financial performance. In some cases, youcan identify forward-looking statements by terminology such as "may", "should","expects", "plan", "anticipates", "believes", "estimates", "predicts","potential" or "continue" or the negative of these terms or other comparableterminology. These statements are only predictions and involve known and unknownrisks, uncertainties and other factors that may cause our or our industry'sactual results, levels of activity, performance or achievements to be materiallydifferent from any future results, levels of activity, performance orachievements expressed or implied by these forward-looking statements. Althoughwe believe that the expectations reflected in the forward-looking statements arereasonable, we cannot guarantee future results, levels of activity, performanceor achievements. Except as required by applicable law, including the securitieslaws of the United States, we do not intend to update any of the forward-lookingstatements to conform these statements to actual results.Our unaudited consolidated financial statements are stated in United Statesdollars ($) and are prepared in accordance with United States generally acceptedaccounting principles. The following discussion should be read in conjunctionwith our financial statements and the related notes that appear elsewhere inthis quarterly report. The following discussion contains forward-lookingstatements that reflect our plans, estimates and beliefs. Our actual resultscould differ materially from those discussed in the forward looking statements.Factors that could cause or contribute to such differences include, but are notlimited to, those discussed below and elsewhere in this quarterly report.

All references to "common stock" refer to the common shares in our capitalstock.

Unless specifically set forth to the contrary, when used in this report theterms "we", "our", the "Company" and similar terms refer to High Wire Networks,Inc., a Nevada corporation, and its consolidated subsidiaries.

The information that appears on our websites at www.HighWireNetworks.com andwww.SpectrumGlobalSolutions.com is not part of this report.

Description of BusinessBusiness OverviewTelecommunications
Telecommunications providers, technology and enterprise customers continue toseek and outsource solutions in order to reduce their investment in capitalequipment, provide flexibility in workforce sizing and expand product offeringswithout large increases in incremental hiring. As a result, we believe there issignificant opportunity to expand both our United States and internationaltelecommunications solutions services and staffing services capabilities. As wecontinue to expand our presence in the marketplace, we will target thosecustomers going through new network deployments and wireless service upgrades.We expect to continue to increase our gross margins by leveraging oursingle-source end-to-end network to efficiently provide a full spectrum ofend-to-end next-generation network solutions and staffing services to ourcustomers. We believe our solutions and services offerings can alleviate some ofthe inefficiencies typically present in our industry, which result, in part,from the highly fragmented nature of the telecommunications industry, limitedaccess to skilled labor and the difficulty industry participants have inmanaging multiple specialty-service providers to address their needs. As aresult, we believe we can provide superior service to our customers andeliminate certain redundancies and costs for them. We believe our ability toaddress a wide range of end-to-end solutions, network infrastructure andproject-staffing service needs of our telecommunications industry clients is akey competitive advantage. Our ability to offer diverse technical capabilities(including design, engineering, construction, deployment, and installation andintegration services) allows customers to turn to a single source for thosespecific specialty services, as well as to entrust us with the execution ofentire turn-key solutions.We have become a multi-faceted company with an international presence. Webelieve this platform will allow us to leverage our corporate and other fixedcosts and capture gross margin benefits. Our platform is highly scalable. Wetypically hire workers to staff projects on a project-by-project basis and ourother operating expenses are primarily fixed. Accordingly, we are generally ableto deploy personnel to infrastructure projects in the United States and beyondwithout incremental increases in operating costs, allowing us to achieve greatermargins. We believe this business model enables us to staff our businessefficiently to meet changes in demand. 36

Finally, given the worldwide popularity of telecommunications and wirelessproducts and services, we will selectively pursue international expansion, whichwe believe represents a compelling opportunity for additional long-term growth.

Our planned expansion will place increased demands on our operational,managerial, administrative and other resources. Managing our growth effectivelywill require us to continue to enhance our operations management systems,financial and management controls and information systems and to hire, train andretain skilled telecommunications personnel. The timing and amount ofinvestments in our expansion could affect the comparability of our results ofoperations in future periods.Our planned acquisitions will be timed with additions to our management team ofskilled professionals with deep industry knowledge and a strong track record ofexecution. Our senior management team brings an average of over 30 years ofindividual experience across a broad range of disciplines. We believe our seniormanagement team is a key driver of our success and is well-positioned to executeour strategy.

High Wire was incorporated in 2007 and functioned as a development stage companywith limited activities through 2017.

HWN, Inc. incorporated in Delaware on January 20, 2017. Our principal officesare located at 980 N. Federal Highway, Suite 304, Boca Raton, Florida 33432. Ourtelephone number is (407) 512-9102. We are a global provider of managedsecurity, professional services and commercial/industrial electrical solutionsdelivered exclusively through a channel sales model. Our Overwatch managedsecurity platform-as-a-service offers organizations end-to-end protection fornetworks, data, endpoints and users via multiyear recurring revenue contracts inthis fast-growing technology segment.On February 7, 2019, High Wire and JTM Electrical Contractors, Inc. ("JTM"), anIllinois Corporation, entered into an operating agreement through which HighWire owned 50% of JTM.On June 16, 2021, HWN completed a merger with High Wire. The merger wasaccounted for as a reverse merger. At the time of the reverse merger, HighWire's subsidiaries included ADEX Corporation, ADEX Puerto Rico LLC, and ADEXTelecom, Inc., (collectively "ADEX"), AW Solutions Puerto Rico, LLC ("AWS PR"),and Tropical Communications, Inc. ("Tropical").

On November 4, 2021, we closed on our acquisition of Secure Voice Corp ("SVC").

On February 15, 2022, High Wire sold its 50% interest in JTM.

We provide the following categories of offerings to our customers:

? Technology Solutions: We provide a comprehensive technology platform and array

of professional services and solutions to our clients that are applicable

across multiple platforms and technologies to include but not limited to:

Wi-Fi, Wi-Max and wide-area networks, fiber networks (ISP/OSP), DAS networks

(iDAS/oDAS), small cell distributed networks, public safety networks and

enterprise networks for incumbent local exchange carriers (ILECs),

telecommunications original equipment manufacturers (OEMs), cable broadband

multiple system operators (MSOs), tower and network aggregators, utility

entities, government and enterprise customers. Our services teams support the

deployment of new networks and technologies, as well as expand, maintain and

decommission existing networks.

? Construction Solutions: We are also a global provider of managed security,

professional services and commercial/industrial electrical solutions delivered

exclusively through a channel sales model.

? Security: High Wire's Overwatch managed security platform-as-a-service offers

organizations end-to-end protection for networks, data, endpoints and users via

multiyear recurring revenue contracts in this fast-growing technology segment.

The Technology Solutions division offers carriers, service providers andenterprise customers professional contracting services, to include:infrastructure audits; site acquisition; architectural, structural and civildesign and analysis; construction management; construction; installation;warehousing and logistics; maintenance services, that support the build-out andupgrade and operation of some of the most advanced networks, small cell, Wi-Fi,fiber and distributed antenna system (DAS) networks. We believe the expansionand migration of these next-generation networks, our long-term relationshipssupported by multiyear Master Service Agreements (MSA) and multi-year servicecontracts with major wireless, commercial wireline and wireless operators, DASoperators, tower companies, original equipment manufacturers (OEM's) and primecontractor/project management organization provides us a significant opportunityas a long term leading and well respected industry leader in this marketplace. 37Our Technology Solutions division is supported by our subsidiaries: AW SolutionsPuerto Rico, LLC and Tropical Communications, Inc. (collectively known as "AWS"or the "AWS Entities"), ADEX CORP, ADEX Puerto Rico LLC, and ADEX Canada(collectively known as "ADEX" or the "ADEX Entities"), and SVC. The AWS Entitiesprovide a broad range of professional services and solutions to top tiercommunication carriers and Fortune 1000 enterprise customers.Our Operating Units

Our company is comprised of the following:

HIGH WIRE NETWORKS, INC. HIGH WIRE NETWORKS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

? Technology Solutions: The Technology Solutions group is composed of the

following: High Wire is a global provider of managed security, professional

services delivered exclusively through a channel sales model. ADEX is a leading

outsource provider of engineering and installation services, staffing solutions

and other services which include consulting to the telecommunications and

technology industry, service providers and enterprise customers domestically

 and internationally.

? High Wire's Overwatch managed security platform-as-a-service offers

organizations end-to-end protection for networks, data, endpoints and users via

multiyear recurring revenue contracts in this fast-growing technology segment.

? Construction Solutions: Tropical provides fiber and DAS deployments for

facilities and outdoor environments.

? The High Wire Entities: ADEX is a leading outsource provider of engineering and

installation services, staffing solutions and other services which include

consulting to the telecommunications and technology industry, service providers

and enterprise customers domestically and internationally. ADEX seeks to assist

its customers throughout the entire life cycle of a network deployment via its

comprehensive suite of managed solutions that include consulting and

professional staffing services to service providers as well as enterprise

customers, network implementation, network installation, network upgrades,

rebuilds, design, engineering and integration wireless network support,

wireless network integration, wireless and wireline equipment installation and

commissioning, wireless site development and construction management, network

engineering, project management, disaster recovery design engineering and

integration. The AWS Entities are professional, multi-service line,

telecommunications infrastructure company that provide outsourced services to

the wireless and wireline industry. The AWS Entities services include network

systems design, site acquisition services, asset audits, architectural and

engineering services, program management, construction management and

inspection, construction, installation, maintenance and other technical

services. The AWS Entities provide in-field design, computer aided design and

drawing services (CADD), fiber and DAS deployments for facilities and outdoor

environments. SVC is a wholesale network services provider with network

footprint and licenses in the Northeast and Southeast United States as well as

Texas. This network carries VoIP and other traffic for other service providers.

Impact of the COVID-19 Pandemic

The extent to which the coronavirus ("COVID-19") outbreak and measures taken inresponse thereto impact our business, results of operations and financialcondition will depend on future developments, which are highly uncertain andcannot be predicted.
Global health concerns relating to the COVID-19 outbreak have been weighing onthe macroeconomic environment, and the outbreak has significantly increasedeconomic uncertainty. Risks related to consumers and businesses lowering orchanging spending, which impact domestic and international spend. The outbreakhas resulted in authorities implementing numerous measures to try to contain thevirus, such as travel bans and restrictions, quarantines, shelter in placeorders, and business shutdowns. These measures have not only negatively impactedconsumer spending and business spending habits, they have also adverselyimpacted and may further impact our workforce and operations and the operationsof its customers, suppliers and business partners. These measures may remain inplace for a significant period of time and they are likely to continue toadversely affect our business, results of operations and financial condition. 38The spread of COVID-19 has caused us to modify our company's business practices(including employee travel, employee work locations, and cancellation ofphysical participation in meetings, events and conferences), and we may takefurther actions as may be required by government authorities or that wedetermine are in the best interests of our employees, customers and businesspartners. There is no certainty that such measures will be sufficient tomitigate the risks posed by the virus or otherwise be satisfactory to governmentauthorities.
The extent to which the COVID-19 outbreak impacts our business, results ofoperations and financial condition will depend on future developments, which arehighly uncertain and cannot be predicted, including, but not limited to, theduration and spread of the outbreak, its severity, the actions to contain thevirus or treat its impact, and how quickly and to what extent normal economicand operating conditions can resume. Even after the COVID-19 outbreak hassubsided, we may continue to experience materially adverse impacts to ourbusiness as a result of its global economic impact, including any recession thathas occurred or may occur in the future.There are no comparable recent events which may provide guidance as to theeffect of the spread of COVID-19 and a global pandemic, and, as a result, theultimate impact of the COVID-19 outbreak or a similar health epidemic is highlyuncertain and subject to change. We do not yet know the full extent of theimpacts on our business, our operations or the global economy as a whole.However, the effects could have a material impact on our results of operations,and we will continue to monitor the COVID-19 situation closely. As of November2021, multiple variants of the COVID-19 virus are circulating globally that arehighly transmissible, and there is uncertainty around vaccine effectiveness onthe new strains of the virus. Uncertainty around vaccine distribution, supplyand effectiveness will impact when the negative economic effects as a result ofCOVID-19 will abate or end and the timing of such recovery may affect ourfinancial condition.

Results of Operations for the Three-Month Periods Ended March 31, 2022 and 2021

Our operating results for the three-month periods ended March 31, 2022 and 2021are summarized as follows: Three Months EndedMarch 31, 2022 March 31, 2021 DifferenceRevenues $ 12,673,508 $2,461,946 $ 10,211,562
Operating expenses 13,840,2123,047,284 10,792,928Other expense(1,166,704 ) (585,338 ) (581,366 )Total other income (expense)5,332,855(44,095 )5,376,950Net income from discontinued operations, net oftaxes 662,899998,339 (206,953 )Net income from discontinued operationsattributable to noncontrolling interest 128,487 (499,170 )499,170Net income (loss) attributable to commonstockholders4,957,537 (130,264 )5,087,801 39Revenues
Our revenue increased from $2,461,946 for the three months ended March 31, 2022to $12,673,508 for the three months ended March 31, 2022. The increase isprimarily related to the addition of the Spectrum entities and SVC, whichaccounted for $7,967,439 and $1,624,855, respectively, in revenue for the threemonths ended March 31, 2022. The Spectrum entities and SVC were both acquiredafter the first quarter of 2021.A significant portion of our services are performed under master serviceagreements and other arrangements with customers that extend for periods of oneor more years. We are currently party to numerous master service agreements, andtypically have multiple agreements with each of our customers. Master ServiceAgreements (MSAs) generally contain customer-specified service requirements,such as discreet pricing for individual tasks. To the extent that such contractsspecify exclusivity, there are often a number of exceptions, including theability of the customer to issue work orders valued above a specified dollaramount to other service providers, perform work with the customer's ownemployees and use other service providers when jointly placing facilities withanother utility. In most cases, a customer may terminate an agreement forconvenience with written notice. The remainder of our services are providedpursuant to contracts for specific projects. Long-term contracts relate tospecific projects with terms in excess of one year from the contract date.Short-term contracts for specific projects are generally three to four months induration. The percentage of revenue from long-term contracts varies betweenperiods depending on the mix of work performed under our contracts.Operating ExpensesDuring the three months ended March 31, 2022, our operating expenses were$13,840,212, compared to operating expenses of $3,047,284 for the same period of2021. The increase of $10,792,928 is primarily related to a $7,852,268 increasein cost of revenues as a result of the increase in sales discussed above,combined with $1,122,233 and $1,640,894 increases in salaries and wages andgeneral and administrative expenses, respectively.Other Income (Expense)During the three months ended March 31, 2022, we had other income of $5,332,855,compared to other expense of $44,095 for the same period of 2021. The change of$5,376,950 is primarily related to a gain on change in fair value of derivativesand gain on PPP loan forgiveness of $3,872,339 and $2,000,000, respectively,during the three months ended March 31, 2022. These gains were partially offsetby amortization of discounts on convertible debentures and loans payable andinterest expense of $672,616 and $254,699, respectively, during the three monthsended March 31, 2022.Net Income (Loss)For the three months ended March 31, 2022, we had net income attributable toHigh Wire Networks, Inc. common shareholders of $4,957,537, compared to a netloss of $130,264 in the same period of 2021.Cash FlowsThree months ended March 31, 20222021Net cash provided by (used in) operating activities $453,338 $ (28,756 )Net cash provided by (used in) investing activities $240,000 $ (11,000 )Net cash used in financing activities $ (102,396 ) $ (16,658 )Change in cash$590,942 $ (56,414 )For the three months ended March 31, 2022, cash increased $590,942, compared toa decrease in cash of $56,414 for the same period of 2021. The net income of$4,957,537 was partially offset by the gain in change in fair value ofderivative liabilities of $3,872,339, gain on PPP loan forgiveness of$2,000,000, and gain on disposal of subsidiary of $919,873.

As of March 31, 2022, we had cash of $1,099,337 compared to $508,395 as ofDecember 31, 2021.


Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.


The effect of inflation on our revenue and operating results has not beensignificant.

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