UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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 ~~September~~December 3031, 2022

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

Commission File Number: 000-56006

GALAXY NEXT GENERATION, INC.

(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)

(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[ ]

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 [X ]

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 ~~November~~February 1413, ~~2022~~2023 was 2269,~~648~~872,~~956~~693.

-i-

	FORM 10-Q
	Table of Contents
		Page
	PART I. Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements and Footnotes	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2025
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2430
Item 4.	Controls and Procedures	2430
	PART II. Other Information
Item 1.	Legal Proceedings	2431
Item 1A.	Risk Factors	2431
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2633
Item 3.	Defaults Upon Senior Securities	2634
Item 4.	Mine Safety Disclosures	2634
Item 5.	Other Information	2634
Item 6.	Exhibits	2735
	Signatures	2735

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, 2022 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 September 30, 2022 (unaudited) and June 30, 2022 (audited)	3
Condensed Consolidated Balance Sheets as of December 31, 2022 (unaudited) and June 30, 2022 (audited)	3
Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2022 and 2021 (unaudited)	4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2022 and 2021 (unaudited)	4
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the Three Months Ended September 30, 2022 and 2021(unaudited)	5-6
Condensed Consolidated Statement of Changes in Stockholders' Deficit for the Six Months Ended December 31, 2022 and 2021(unaudited)	5-6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2022 and 2021 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2022 and 2021 (unaudited)	7-8
Notes to the Condensed Consolidated Financial Statements (unaudited)	89-1924

-2-

GALAXY NEXT GENERATION, INC.
Condensed Consolidated Balance Sheets
	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
Assets	(Unaudited)	(Audited)
Current Assets
Cash	$ ~~163~~21,~~126~~360	$ 300,899
Accounts receivable, net	~~797~~891,~~746~~543	452,643
Inventories, net	~~950~~1,~~709~~218,926	1,002,108
Other current assets	3,950	3,950
Total Current Assets	12,~~915~~135,~~531~~779	1,759,600
Property and Equipment, net (Note 2)	~~338~~328,~~676~~685	348,869
Intangibles, net (Notes 1 and 11)	1,388,912	1,443,191
Intangibles, net (Note 1)	1,311,037	1,443,191
Goodwill (Note 1)	834,220	834,220
Operating right of use asset (Note 6)	159,791	179,512
Operating right of use asset (Note 7)	149,891	179,512
Total Assets	$ 4,~~637~~759,~~130~~612	$ 4,565,392
Liabilities and Stockholders' Deficit
Current Liabilities
Line of credit (Note 3)	$ ~~160~~352,~~000~~285	$ -
Current portion long term notes payable (Note 4)	3,078,492	2,815,231
Derivative liability, convertible debt features (Note 5)	73,742	-
Accounts payable	617,770	737,948
Current portion long term notes payable (Note 4)	3,567,891	2,815,231
Accrued expenses	1,133,944	993,371
Accounts payable	985,773	737,948
Deferred revenue	647,433	175,436
Accrued expenses	1,515,841	993,371
Short term portion of related party notes and payables (Note 5)	1,183,755	1,238,755
Deferred revenue	627,560	175,436
Total Current Liabilities	6,821,394	5,960,741
Short term portion of related party notes and payables (Note 6)	1,434,655	1,238,755
Noncurrent Liabilities
Total Current Liabilities	8,557,747	5,960,741
Related party notes payable, less current portion (Note 5)	1,038,457	586,862
Noncurrent Liabilities
Notes payable, less current portion (Note 4)	26,683	248,978
Related party notes payable, less current portion (Note 6)	1,171,990	586,862
Total Liabilities	7,886,534	6,796,581
Notes payable, less current portion (Note 4)	-	248,978
Stockholders' Equity (Deficit)
Total Liabilities	9,729,737	6,796,581
Common stock	321,356	321,134
Stockholders' Deficit
Preferred stock – Series G, non-redeemable	-	-
Common stock	324,939	321,134
Preferred stock - Series F, subject to redemption	11	11
Preferred stock – Series G, non-redeemable	-	-
Additional paid-in-capital	52,164,956	51,629,750
Preferred stock - Series F, subject to redemption	10	11
Accumulated deficit	(55,735,727)	(54,182,084)
Additional paid-in-capital	53,367,077	51,629,750
Total Stockholders' Deficit	(3,249,404)	(2,231,189)
Accumulated deficit	(58,662,151)	(54,182,084)
Total Liabilities and Stockholders' Deficit	$ 4,637,130	$ 4,565,392
Total Stockholders' Deficit	(4,970,125)	(2,231,189)
Total Liabilities and Stockholders' Deficit	$ 4,759,612	$ 4,565,392

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

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GALAXY NEXT GENERATION, INC.

Condensed Consolidated Statements of Operations (Unaudited)

	~~For the Three Months~~	For the Three Months		For the Six Months
	Ended September 30,
		Ended December 31,		Ended December 31,
	~~2022~~	~~2021~~2022	2021	2022	2021
Revenues	~~$ 619,053~~	$ 1429,~~684,771~~031	$ 904,055	$ 1,048,084	$2,588,826
Cost of Sales	~~271,485~~	1330,~~018,763~~016	848,099	601,501	1,866,862
Gross Profit	~~347,568~~	~~666~~99,~~008~~015	55,956	446,583	721,964
General and Administrative Expenses
Stock compensation and stock issued for services	~~188,128~~	3250,~~750~~000	-	238,128	32,750
General and administrative	1,431,979	1,498,124
Impairment expense		-	46,869	-	46,869
Total General and Administrative Expenses	1,620,107	1,530,874
General and administrative		1,511,292	1,049,993	2,943,271	2,548,117
Loss from Operations	(1,272,539)	(864,866)
Total General and Administrative Expenses		1,561,292	1,096,862	3,181,399	2,627,736
Other Income (Expense)
Loss from Operations		(1,462,277)	(1,040,906)	(2,734,816)	(1,905,722)
Other income	2,543	-
Other Income (Expense)
Change in fair value of derivative liability	-	1,008,000
Other income		257	5,878	2,800	5,878
Interest accretion	(121,270)	(8,750)
Expenses related to convertible notes payable:
Interest expense related to Equity Purchase Agreement (Note 10)	-	(252,900)
Change in fair value of derivative liability		(73,742)	834,000	(73,742)	1,842,000
Interest expense	(162,377)	(267,511)
Interest accretion		(114,843)	(15,540)	(236,113)	(24,290)
Total Other Income (Expense)	(281,104)	478,839
Interest expense related to Equity Purchase Agreement (Note 11)		-	(1,890,600)	-	(2,143,500)
Net Loss before Income Taxes	(1,553,643)	(386,027)
Interest expense		(1,275,819)	(354,852)	(1,438,196)	(622,363)
Income taxes (Note 8)	-	-
Total Other Income (Expense)		(1,464,147)	(1,421,114)	(1,745,251)	(942,275)
Net Loss	$ (1,553,643)	$ (386,027)
Net Loss before Income Taxes		(2,926,424)	(2,462,020)	(4,480,067)	(2,848,047)
Net Basic and Fully Diluted Loss Per Share	$ (0.0751)	$ (0.0245)
Income taxes (Note 9)		-	-	-	-
Weighted average common shares outstanding
Net Loss		$ (2,926,424)	$ (2,462,020)	$(4,480,067)	$(2,848,047)
Basic	20,685,938	15,727,493
Net Basic and Fully Diluted Loss Per Share		$ (0.1280)	$ (0.2128)	$ (0.1931)	$ (0.1741)
Fully diluted	21,731,591	19,394,297
Weighted average common shares outstanding
Basic		22,862,319	11,570,425	23,196,125	16,354,781
Fully diluted		25,592,753	13,884,510	25,862,429	16,354,783

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

-4-

GALAXY NEXT GENERATION, INC.
Consolidated Statement of Changes in Stockholders' Deficit
Three Months Ended September 30, 2022
Six Months Ended December 31, 2022
(Unaudited)
										Total		~~Total~~
	Common Stock (1)			Preferred Stock Series G				Preferred Stock Series F		Additional	Accumulated	Stockholders'
	Common Stock		Preferred Stock Series G		Preferred Stock Series F			Additional	Accumulated	Stockholders'
	Shares	Amount	Shares	~~Shares~~Amount	Shares	~~Amount~~	Amount	~~Shares~~Paid-in Capital	~~Amount~~Deficit	~~Paid-in Capital~~Deficit	~~Deficit~~	~~Deficit~~
Balance, July 1, 2022	19,169,128	$ 321,134	51	51$ -	11,414	~~$ -~~	$ 11	11$51,~~414~~629,750	$ 11(54,182,084)	$ 51(2,~~629~~231,~~750~~189)	~~$ (54,182,084)~~	~~$ (2,231,189)~~
Common stock issued for services	13,070,922	~~107~~307	-	-	-	-	-	-237,821	-	~~188~~238,~~021~~128	-	~~188,128~~
Commitment shares issued	1,800,000	80180	-	-	-	-	-	-187,570	-	~~144~~187,~~720~~750	-	~~144,800~~
Common stock issued for charitable donation	350,000	35	-	-	-	-	-	-52,465	-	52,~~465~~500	-	~~52,500~~
Fair value of warrants	-	-		-		-		-	-	150,000	-	150,000
Common stock issued for debt reduction	4,863,038	486	-	-	-		-	209,921	-	210,407
Return of common stock	(36,500)	-		-		-		-	-	-	-	-
Common stock issued to convert Preferred Stock Series F	23,540,539	2,354	-	-	(8,710)		(1)	449,624	-	451,977
Consolidated net loss	-	-		-		-		-	-	-	(1,553,643)	(1,553,643)
Fair value of warrants issued	-	-	-	-	-		-	492,434	-	492,434
Balance, September 30, 2022	21,353,550	$ 321,356		51		$ -		11,414	$ 11	$ 52,164,956	$ (55,735,727)	$ (3,249,404)
Return of common stock	(36,500)	-	-	-	-		-	-	-	-
(1) All share amounts, including those in the accompanying notes, have been adjusted to reflect a 1:200 reverse split effective March 7, 2022.
Common stock issued under Equity Purchase Agreement	4,429,130	443	-	-	-		-	107,492	-	107,935
Consolidated net loss	-	-	-	-	-		-	-	(4,480,067)	(4,480,067)
Balance, December 31, 2022	57,186,257	$ 324,939	51	$ -	2,704		$ 10	$53,367,077	$58,662,151)	$ (4,970,125)

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

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GALAXY NEXT GENERATION, INC.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Consolidated Statement of Changes in Stockholders' Deficit
Three Months Ended September 30, 2021
Six Months Ended December 31, 2021
(Unaudited)
								Total
	Common Stock (1)			Preferred Stock Class E		Preferred Stock Class F		Additional		Total
	Common Stock (1)		Preferred Stock - Class E			Additional	Accumulated	Stockholders'
	Shares	Amount		Shares	Amount	Shares	Amount	Paid-in Capital	Accumulated Deficit	Stockholders' Deficit
	Shares	Amount		Shares	Amount	Paid-in Capital	Deficit	Deficit
Balance, July 1, 2021	15,699,414	$280,744		500,000	$ 50	-	$ -	$ 46,215,049	$ (47,931,128)	$ (1,435,285)
Balance, July 1, 2021	15,699,414	$ 280,744		500,000	$ 50	$ 46,215,049	$ (47,931,128)	$ (1,435,285)
Common stock issued for services	12,500	250		-	-	-	-	32,500	-	32,750
Common stock issued for services	12,500	250		-	-	32,500	-	32,750
Common stock issued under Equity Purchase Agreement	1,125,000	22,500		-	-	-	-	2,121,000	-	2,143,500
Common stock issued under Equity Purchase Agreement	450,000	9,000		-	-	1,082,000	-	1,091,000
Preferred Series F issued in exchange for debt	-	-		-	-	11,414	11	1,824,989	-	1,825,000
Consolidated net loss	-	-		-	-	-	(386,027)	(386,027)
Retirement of Preferred Series E	-	-		(500,000)	(50)	-	-	-	-	(50)
Balance, September 30, 2021	16,161,914	$ 289,994		500,000	$ 50	$ 47,329,549	$ (48,317,155)	$ (697,562)
Common stock cancelled	(250,000)	-		-	-	-	-	-	-	-
Commitment shares issued	312,500	6,250		-	-	-	-	350,000	-	356,250
Consolidated net loss		-		-	-	-		-	(2,848,047)	(2,848,047)
Balance, December 31, 2021	16,899,414	$309,744		-	$ -	11,414	$ 11	$ 50,543,538	$ (50,779,175)	$ 74,118

(1) All share amounts, including those in the accompanying notes, have been adjusted to reflect a 1:200 reverse split effective March 7, 2022.

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

-6-

GALAXY NEXT GENERATION, INC.
Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended September 30,
	Six Months Ended December 31,
	2022	2021
Cash Flows from Operating Activities
Net loss	$ (14,~~553~~480,~~643~~067)	$ (~~386~~2,~~027~~848,047)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	~~177~~360,~~376~~583	~~130~~241,~~145~~785
Amortization of convertible debt discounts and warrants	121,270	8,750
Amortization of debt discounts	236,112	24,290
Change in fair value of derivative liability	-	(1,008,000)
Impairment expense	-	46,869
Stock issued for services and donated	385,428	32,750
Change in fair value of derivative liability	73,742	(3,273,253)
Stock issued under Equity Purchase Agreement	-	252,900
Fair value of warrants	492,434	-
Fair value of warrants issued	150,000	-
Stock issued under Equity Purchase Agreement	107,935	2,166,000
Changes in assets and liabilities:
Stock issued for services and donated	478,378	32,961
Accounts receivable	(345,103)	(61,683)
Preferred Series F stock exchanged for common stock	(1)	-
Inventories	51,399	(109,402)
Stock issued to reduce debt and interest	143,664	-
Right of use assets	19,721	16,321
Changes in assets and liabilities:
Accounts payable	(120,178)	7,847
Accounts receivable	(438,900)	560,281
Accrued expenses	140,573	382,863
Inventories	(216,818)	1,887,814
Deferred revenue	471,997	(139,273)
Right of use assets	29,621	(14,285)
Net cash used in operating activities	(501,160)	(872,809)
Accounts payable	247,825	(196,376)
Cash Flows from Investing Activities
Accrued expenses	522,470	376,126
Purchases of capitalized development costs	(420,559)	(4,160)
Deferred revenue	452,124	(316,511)
Purchases of property and equipment	-	-
Net cash used in operating activities	(1,990,898)	(1,312,346)
Net cash used in investing activities	(420,559)	(4,160)
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Purchases of capitalized development costs	(208,245)	(221,430)
Principal payments on financing lease obligations	-	(1,392)
Purchases of property and equipment	-	(194,326)
Proceeds from notes payable	477,500	-
Net cash used in investing activities	(208,245)	(415,756)
Principal payments on notes payable	(245,986)	(128,042)
Cash Flows from Financing Activities
Proceeds (payments) on notes and advances from stockholders, net	396,595	(13,998)
Proceeds from notes payable	804,180	1,075,000
Proceeds (payments) on line of credit, net	155,837	(4,999)
Principal payments on notes payable	(268,226)	(157,364)
Proceeds from sale of common stock under Equity Purchase Agreement	-	838,100
Proceeds (payments) on notes and advances from stockholders, net	781,028	(18,500)
Net cash provided by financing activities	783,946	689,669
Proceeds (payments) on lines of credit, net	352,622	(991,598)
Net Decrease in Cash	(137,773)	(187,300)
Proceeds from sale of common stock under Equity Purchase Agreement	250,000	1,633,700
Cash, Beginning of Period	300,899	541,591
Net cash provided by financing activities	1,919,604	1,541,238
Cash, End of Period	$ 163,126	$ 354,291
Net Decrease in Cash	(279,539)	(186,864)
Supplemental and Non Cash Disclosures
Cash, Beginning of Period	300,899	541,591
Legal fees netted from loan proceeds	$ 50,413	$ -
Cash, End of Period	$ 21,360	$ 354,727
Cash paid for interest	$ 109,725	$ 37,079
Settlement of note payable	$ 400,000	$ -
Interest on shares issued under Equity Purchase Agreement	$ -	$ 252,900
Stock issued for services	$ 188,128	$ 32,750
Accretion of discount and change in fair value of derivatives	$ 121,270	$ 999,250

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

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Supplemental and Non Cash Disclosures
Legal fees netted from loan proceeds	$ 56,233	$ 25,000

Cash paid for interest	$ 110,578	$ 51,401

Stock issued to reduce notes payable	$ 210,407	$ -

Interest on shares issued under Equity Purchase Agreement	$ -	$ 2,143,500

Stock issued for services	$ 238,128	$ -

Stock issued for commitment fees	$ 187,750	$ 32,750

Property leased with financing lease	$ -	$ 97,253

Change in fair value of derivatives	$ 73,742	$ 1,842,000

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

Stock issued to convert Preferred Series F	$ 451,977	$ -

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

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Note 1 – Summary of Significant Accounting Policies

Corporate History, Nature of Business, Mergers and Acquisitions

Galaxy Next Generation LTD CO. ("Galaxy CO") was organized in the state of Georgia in February 2017 while R&G Sales, Inc. ("R&G") was organized in the state of Georgia in August 2004. Galaxy CO merged with R&G ("common controlled merger") on March 16, 2018, with R&G becoming the surviving company. R&G subsequently changed its name to Galaxy Next Generation, Inc. ("Private Galaxy").

FullCircle Registry, Inc., ("FLCR") is a holding company created for the purpose of acquiring small profitable businesses to provide exit plans for those company's owners. FLCR's subsidiary, FullCircle Entertainment, Inc. ("Entertainment" or "FLCE"), owned and operated Georgetown 14 Cinemas, a fourteen-theater movie complex located in Indianapolis, Indiana.

On June 22, 2018, Private Galaxy consummated a reverse triangular merger whereby Private Galaxy merged with and into FLCR by the stockholders of Private Galaxy transferring all of the shares of stock of Private Galaxy into a newly formed subsidiary which was formed specifically for the transaction ("Private Galaxy MS") and the stockholders receiving shares of stock of FLCR. The merger resulted in Private Galaxy MS becoming a wholly-owned subsidiary of FLCR. For accounting purposes, the acquisition of Private Galaxy by FLCR is considered a reverse acquisition, an acquisition transaction where the acquired company, Private Galaxy, is considered the acquirer for accounting purposes, notwithstanding the form of the transaction. The primary reason the transaction is being treated as a purchase by Private Galaxy rather than a purchase by FLCR is that FLCR is a public reporting company, and Private Galaxy's stockholders gained majority control of the outstanding voting power of FLCR's equity securities. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements of the Company prior to the merger are those of Private Galaxy. The financial statements after the completion of the merger ~~include~~included the combined assets and liabilities of the combined company (collectively Private Galaxy, FLCR and FLCE).

In recognition of Private Galaxy's merger with FLCR, several things occurred: (1) FLCR amended its articles of incorporation to change its name from FullCircle Registry, Inc. to Galaxy Next Generation, Inc.; (2) the ~~Company~~Companychanged ~~changed~~ its fiscal year end to June 30, effective June 2018; (3) the Company's authorized shares of preferred stock were increased to 200,000,000 and authorized shares of common stock were increased to 4,000,000,000, (prior to the Reverse Stock Split) both with a par value of $0.0001; and (4) the Board of Directors and Executive Officers ~~approved~~appointed Gary LeCroy, President and Director; Magen McGahee, Secretary and Director; and Carl Austin, Director; and (5) the primary business operated by the combined company became the business that was operated by Private Galaxy.

On September 3, 2019, Galaxy acquired 100% of the stock of Interlock Concepts, Inc. ("Concepts") and Ehlert Solutions Group, Inc. ("Solutions"). The purchase price for the acquisition was 1,350,000 (6,750 post March 7, 2022 reverse stock split) shares of common stock and a two year note payable to the seller for $3,000,000. The note payable to the seller is subject to adjustment based on the achievement of certain future gross revenues and successful completion of certain pre-acquisition withholding tax issues of Concepts and Solutions.

Solutions and Concepts are Utah-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. 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, 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 (50,000 post March 7, 2022 reverse stock split) 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 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.

Galaxy is a manufacturer and U.S. distributor of interactive learning ~~technology~~technologies and enhanced audio solutions. Galaxy is engaged in a full range of activities: marketing and sales, engineering and product design and development, manufacturing, and distributing. Galaxy develops both hardware and software that allows the presenter and participant to engage in a fully collaborative instructional environment. Galaxy's also develops award winning classroom audio solutions, school public address (“PA”) and intercom products, and emergency communication applications creating a full line card offering for classrooms to its channel partners. Its product offerings include ~~Galaxy's~~its own private-label interactive touch screen panel, asits ~~well~~own asintercom, ~~numerous~~bell, ~~other~~and ~~national~~paging ~~and~~solution, ~~international~~as ~~branded~~well ~~peripheral~~as ~~and~~an ~~communication~~audio ~~devices.~~amplification ~~New~~line ~~technologies~~of ~~like~~products ~~Galaxy's~~that ~~own~~is ~~touchscreen~~currently ~~panels~~supported ~~are~~by ~~sold~~both ~~along~~direct ~~with~~sales ~~renowned~~and ~~brands~~through ~~such~~original asequipment ~~Google~~manufacturer ~~Chromebooks,~~(“OEM”) ~~Microsoft~~relationships. ~~Surface~~Its ~~Tablets,~~distribution ~~Lenovo~~channel &consists ~~Acer~~of ~~computers,~~a ~~Verizon~~direct ~~WiFi~~sales ~~and~~model, ~~more.~~as ~~Galaxy's~~well ~~distribution~~as ~~channel~~in ~~consists~~excess of ~~approximately~~40 44 resellers across the U.S. ~~who~~that primarily sell ~~its~~the products offered by us within the commercial and educational market. Galaxy does not control where the resellers focus their ~~resell~~reselling efforts; however, the K-12 education market is the largest customer base for ~~Galaxy~~its products comprising nearly 90% of ~~Galaxy's~~our sales. In addition, ~~Galaxy also possesses~~ its ~~own~~OEM ~~reseller~~division ~~channel~~manufactures ~~where~~products itfor ~~sells~~other ~~directly~~vendors toin ~~the~~our ~~K-12~~industry ~~market,~~and ~~primarily~~white ~~throughout~~labels the ~~Southeast~~products ~~region~~under ofother ~~the United States~~brands.

~~The Entertainment segment was sold on February 6, 2019 in exchange for 193 Galaxy common shares.~~-9-

The Entertainment segment was sold on February 6, 2019 in exchange for 193 (post March 7, 2022 reverse stock split) Galaxy common shares.

Impact COVID-19 Aid, Relief and Economic Security Act

The Cares Act allowed employers to defer the deposit and payment of the employer’s share of Social Security taxes from March 27, 2020 through ~~September~~December 3031, 2021. The deferred deposits of the employer’s share of Social Security tax must be deposited 50% by December 31, 2021, and 50% by December 31, 2022. The Company’s remaining deferred deposits and current payments due amounted to approximately $~~491~~868,~~000~~482 and $~~458~~490,~~000~~790 at ~~September~~December 3031, 2022 and June 30, 2022, respectively.

~~-8-~~During the three and six months ended December 31, 2022 and 2021, the Company applied for Employee Retention Credits and has recognized approximately $0 and $40,000 as a reduction to operating expenses in the consolidated statements of operations.

InThe ~~the~~Covid-19 ~~three~~pandemic ~~months~~that ~~ended~~began ~~September~~in 30early 2020 caused shelter-in-place policies, ~~2022~~unexpected ~~and~~factory ~~2021~~closures, supply chain disruptions, and market volatilities across the ~~Company~~globe. ~~applied~~As ~~for~~a ~~Employee~~result ~~Retention~~of ~~Credits~~the economic disruptions and ~~has~~unprecedented ~~recognized~~market ~~approximately~~volatilities $0 and ~~$40~~uncertainties driven by the Covid-19 outbreak,~~000~~ asthe aCompany ~~reduction~~experienced some supply chain disruptions. The Company continues to ~~operating~~experience ~~expenses~~supply chain disruption resulting in ~~the~~a ~~consolidated~~decrease ~~statements~~in ofrevenue ~~operations~~and increases in deferred revenue.

The Covid-19 pandemic that began in early 2020 caused shelter-in-place policies, unexpected factory closures, supply chain disruptions, and 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 full impact of the Covid-19 outbreak continues to evolve as of the date of this report. The depth and duration of the pandemic remains unknown. Despite the availability of vaccines, recent surges in the infection rate and the detection of new variants of the virus have reinforced the general consensus that the containment of Covid-19 remains a challenge. Management is actively monitoring the global situation and its effect on its financial condition, liquidity, operations, suppliers, industry, and workforce.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Any reference in these footnotes to applicable guidance is meant to refer to the authoritative U.S. generally accepted accounting principles ("GAAP") as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB").

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

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

The Company is an over-the-counter public company traded under the stock symbol listing GAXY (formerly FLCR).

Use of Estimates

The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates used in preparing the consolidated financial statements include those assumed in computing valuation of goodwill and intangible assets, valuation of convertible notes payable and warrants, and the valuation of deferred tax assets. It is reasonably possible that the significant estimates used will change within the next year.

Reverse Stock Split

Unless otherwise noted, all share and per share data referenced in the consolidated financial statements and the notes thereto have been retroactively adjusted to reflect the one-for-two hundred reverse stock split effective March 7, 2022 of our authorized and outstanding shares of common stock. As a result of the reverse stock split, certain amounts in the consolidated financial statements and the notes thereto may be slightly different than previously reported due to rounding of fractional shares, and adjustment for the reverse split.

-10-

Capital Structure

The Company's capital structure is as follows:

September 30, 2022

December 31, 2022

Authorized

Issued

Outstanding

Common stock

200,000,000

2157,~~353~~186,~~550~~257

2157,~~353~~186,~~357~~064

$.0001 par value, one vote per share

~~$.0001 par value, one vote per share~~

Preferred stock – All Series

200,000,000

$.0001 par value

Preferred stock-All Series

200,000,000

$.0001 par value

Preferred stock - Series A

750,000

$.0001 par value; no voting rights

~~$.0001 par value; no voting rights~~

Preferred stock - Series B

1,000,000

$.0001 par value, voting rights of 10 votes for 1 Series B share; 2% preferred dividend payable annually

~~$.0001 par value; voting rights of 10 votes for 1 Series B share; 2% preferred dividend payable annually~~

Preferred stock - Series C

9,000,000

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

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

Preferred stock - Series F

15,000

112,~~414~~704

$.0001 par value; no voting right, convertible to common at a fixed price of $0.37 per share, stated value is $1,000 per share

~~$.0001 par value; no voting right, convertible to common at a fixed price per share~~

Preferred stock - Series G

$.0001 par value; no dividend rights, voting rights with common stock as a single series, one share equals 1% of the total voting rights, not subject to splits

~~$.0001 par value; no dividend rights, voting rights with common stock as a single series, one share equals 1% of the total voting rights, not subject to splits~~

-911-

	June 30, 2022
	Authorized	Issued	Outstanding
Common stock	20,000,000	19,169,128	19,168,935	$.0001 par value, one vote per share
Preferred stock – All Series	200,000,000	-	-	$.0001 par value
Preferred stock - All Series	200,000,000	-	-	$.0001 par value
Preferred stock - Series A	750,000	-	-	$.0001 par value; no voting rights
Preferred stock - Series B	1,000,000	-	-	$.0001 par value;, voting rights of 10 votes for 1 Series B share; 2% preferred dividend payable annually
Preferred stock - Series C	9,000,000	-	-	$.0001 par value; 500 votes per share, convertible to common stock
Preferred stock - Series F	15,000	11,414	11,414	$.0001 par value; no voting ~~rights~~right, convertible to common at a fixed price of $0.~~37per~~37 per share;, stated value is $1,000 per share
Preferred stock - Series G	51	51	51	$.0001 par value; no dividend rights, voting rights with common stock as a single series, one share equals 1% of the total voting rights, not subject to splits

Authorized common stock increased from 20,000,000 to 200,000,000 on August 31, 2022. There was a 1:200 reverse split of the authorized and outstanding shares of common stock that was effective on March 7, 2022.

There is no publicly traded market for the preferred shares. The Preferred Series D and E were retired in December 2021. Preferred Series G were issued in June 2022, pursuant to Employment Agreements (Note 1011).

There are 85139,~~556~~786,~~140common~~708 common shares reserved at ~~September~~December 3031, 2022 under terms of notes payable agreements, and the Stock Plan (see Notes 54, 6 and 12).

There are 428,~~048~~804,~~590~~235 issued common shares that are restricted as of ~~September~~December 3031, 2022. The shares will become free-trading upon satisfaction of certain terms within the debt agreements or within free trading rules related to SEC Rule 144 six month hold.

Authorized common stock increased from 200,000,000 to 3,000,000,000 on January 31, 2023 following approval of the holders of a majority of the Company’s voting power.

Supplier Agreement

Contract assets and contract liabilities are as follows:

	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
Contract assets	$ 55,125	$ 55,125
Contract liabilities	-	-

For the three months ended ~~September~~December 3031, 2022 and 2021, the Company recognized $0 and $~~433~~219,~~609~~309 of revenues related to supplier agreements. For the six months ended December 31, 2022 and 2021 the Company recognized $0 and $637,746 of revenues related to supplier agreements.

-12-

Accounts Receivable

Management deemed no allowance for doubtful accounts was necessary at ~~September~~December 3031, 2022 and June 30, 2022. At ~~September~~December 3031, 2022 and June 30, 2022, $~~647~~627,~~433~~560 and $175,436 of total accounts receivable were considered unbilled and recorded as deferred revenue.

Inventories

Management estimates $116,362 and $116,362 of inventory reserves at ~~September~~December 3031, 2022 and June 30, 2022, respectively.

Goodwill, Intangible Assets and Product Development Costs

Goodwill, intangible assets, and product development costs are comprised of the following at ~~September~~December 3031, 2022:

	Cost	Accumulated Amortization	Net Book Value	Total
Goodwill	$ 834,220	-	$834,220	$ 834,220
Finite-lived assets:
Customer list	$ 888,869	$ (~~516~~560,~~370~~420)	$ ~~372~~328,499	$ ~~372~~328,~~499~~449
Vendor relationships	480,115	(~~288~~321,~~515~~465)	~~191~~167,~~600~~650	~~191~~167,~~600~~650
Capitalized product development cost	1,~~392~~487,~~590~~931	(~~567~~672,~~777~~993)	~~824~~814,~~813~~938	~~824~~814,~~813~~938
	$ 2,761,574	$ (1,372,662)	$ 1,388,912	$1,388,912
	$ 2,856,915	$(1,545,878)	$ 1,311,037	$1,311,037

-10-

Goodwill, intangible assets, and product development costs are comprised of the following at June 30, 2022:


	Cost	Accumulated Amortization	Net Book Value	Impairment	Total
Goodwill	$ 834,220	$ -	$ 834,220	$ -	$ 834,220
Finite-lived assets:
Customer list	$ 922,053	$ (472,320)	$ 449,733	$ (33,184)	$ 416,549
Vendor relationships	484,816	(264,565)	220,251	(4,701)	215,550
Product development costs	1,279,686	(468,594)	811,092	-	811,092
	$ 2,686,555	$ (1,205,479)	$ 1,481,076	$ (37,885)	$ 1,443,191

Intangible assets such as customer lists and vendor relationships are stated at the lower of cost or fair value. They are amortized on a straight-line basis over periods ranging from three to six years, representing the period over which the Company expects to receive future economic benefits from these assets. The Company acquired certain intangible assets. During the year ended June 30, 2022, the Company impaired $37,885 of the intangible assets related to the acquisition of Classroom Tech. Amortization of these intangible assets amounted to $68,000 and $7044,~~343~~700 for the three months ended ~~September~~December 3031, 2022 and 2021. Amortization of these intangible assets amounted to $136,000 and $118,243 for the six months ended December 31, 2022 and 2021.

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 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 $99105,~~183~~216 and $5444,~~534~~761 for the three months ended ~~September~~December 3031, 2022 and 2021. Amortization of product development cost of $204,399 and $115,134 for the six months ended December 31, 2022 and 2021, is included in cost of revenues in the Company's unaudited condensed consolidated statements of operations.

Estimated amortization expense related to finite-lived intangible assets for the next five years is: $~~641~~607,~~886~~641 for fiscal year 2023, $~~455~~411,~~322~~454 for fiscal year 2024, $~~138~~140,~~633~~115 for fiscal year 2025, $87100,~~624~~158 for fiscal year 2026, and $4639,~~515~~045 for fiscal year 2027 and $1812,~~932~~624 thereafter.

-13-

Recent Accounting Pronouncements

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.

In December 2019, the FASB issued ASU No. 2019-12 "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, 2021. 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 adopted the new guidance on July 1, 2022 in its consolidated financial statements.

Note 2 - Property and Equipment

Property and equipment are comprised of the following at:

	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
Vehicles	$ 212,658	$ 212,658
Building	201,823	201,823
Equipment	16,192	16,192
Leasehold improvements	31,000	31,000
Furniture and fixtures	28,321	28,321
	489,994	489.,994
Accumulated depreciation	(~~151~~161,~~318~~309)	(141,125)
Property and equipment, net	$ ~~338~~328,~~676~~685	$ 348,869

Note 3 - Lines of Credit

The Company had up to $1,000,000 available ~~under~~credit a line ofunder ~~credit~~an ~~bearing~~accounts ~~interest~~receivable atfactoring ~~prime~~agreement ~~plus~~through ~~0.5%~~July ~~(3.75% at September~~ 30, ~~2021)~~2022. ~~which~~This ~~expired~~agreement ~~October~~automatically ~~29,~~renews ~~2021.~~for ~~The bank provided~~ a ~~30-day~~two ~~grace~~year period tounless ~~repay~~notice ~~the~~is ~~line to November 29, 2021~~given. ~~The~~Total ~~line~~available of credit ~~was~~under ~~collateralized by certain real estate owned by stockholders and a family member of a stockholder, 7,026,894 shares of~~ the ~~Company's~~factoring ~~common~~agreement ~~stock~~was ~~owned by two stockholders~~$775,593 ~~personal guarantees of two stockholders,~~ and ~~a key man life insurance policy. In addition~~$989,680 aas ~~20% curtailment~~ of ~~the~~December ~~outstanding balance may occur any time prior to maturity. The outstanding balance was $0 and $0 at September 30~~31, 2022 and June 30, 2022, respectively. See Note 11.

~~-11-~~On August 31, 2022, the Company received proceeds of $155,837 under an equity line of credit with a bank. The $160,000 line of credit bears interest at prime plus 1% and matures August 25, 2027. Collateral on the line of credit includes certain fixed asset of the Company. The outstanding balance was $155,500 and $0 at December 31, 2022 and June 30, 2022, respectively.

~~The~~On ~~Company~~November ~~has up to $~~1,~~000~~ 2022,~~000~~ ~~available~~the ~~credit~~Company ~~line~~entered ~~under~~into anfinancing ~~accounts~~and ~~receivable~~security ~~factoring~~ agreement ~~through~~with ~~July~~a ~~30,~~financial ~~2022~~technology company. ~~This~~Collateral ~~agreement~~on ~~automatically~~the ~~renews~~line ~~for~~includes ainventory ~~two~~and ~~year~~certain ~~period~~fixed ~~unless~~assests ~~notice~~of isthe ~~given~~Company. ~~Total~~Each ~~available~~draw on the line of credit ~~under~~bears ~~the~~interest ~~factoring~~at ~~agreement~~a ~~was~~variable ~~$873,375~~rate ~~and~~based ~~$989,680~~on asthe date of ~~September 30~~draw, ~~2022~~plus a fee and ~~June~~matures ~~30,~~in ~~2022,~~six ~~respectively~~months. ~~See~~The ~~Note~~outstanding 10balance was $196,785 at December 31, 2022.

~~On August 31, 2022, the Company received proceeds of $155,837 under an equity line of credit with a bank~~ - First Citizens Bank. The $160,000 line of credit bears interest at prime plus 1% and matures August 25, 2027. Collateral on the line of credit includes a certain fixed asset of the Company. The outstanding balance was $160,000 and $0 at September 30, 2022 and June 30, 2022, respectively. 14-

Note 4 - Notes Payable

Long Term Notes Payable

	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
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 $4,405 monthly payments of principal and interest through maturity. The note is collateralized by a certificate of deposit owned by a related party.
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 to 3%. In July 2021, the note was renewed by the lender with a revised maturity date of July 7, 2026. The renewal provides for $4,405 monthly payments of principal and interest through maturity. The note is collateralized by a certificate of deposit owned by a related party.
	$ 196,552	$ 207,058
	$ 179,305	$ 207,058
Note payable to an investor of $360,000 bearing interest at12% and maturing February 28, 2023. Monthly installments of $30,000 beginning May 2022. The loan was issued at a discount of $60,000 and has a convertible default provision in the event the Company does not make the monthly payments. In July 2022, payments for June, July, and August 2022 were deferred to September 30, 2022 by the lender in exchange for $30,000 increase in the principal and a change in terms of certain default provisions.	314,432	269,432
Note payable to an investor of $360,000 bearing interest at 12% and maturing February 28, 2023. Monthly installments of $30,000 beginning May 2022. The loan was issued at a discount of $60,000 and has a convertible default provision in the event the Company does not make the monthly payments. In July 2022, payments for June, July, and August 2022 were deferred to September 30, 2022 by the lender in exchange for $30,000 increase in the principal and a change in terms of certain default provisions. On November 7, 2022, the note was amended whereby deferred and future payments on the note will be paid from future equity purchase agreement proceeds, and lowered the conversion price in the event of a default to $0.03 per share, subject to adjustment. The Company issued 883,333 shares of common stock to the investor as additional commitment fees. The note is convertible as of December 31, 2022.	320,000	269,432
Note payable to an investor bearing interest at 12% andmaturing March 18, 2023. Monthly installments of $22,558 begin on May 2022. The loan was issued at a discount of $24,450 and has a convertible default provision in the event the Company does not make the monthly payments.	92,126	158,745
Note payable to an investor bearing interest at 12% and maturing March 18, 2023. Monthly installments of $22,558 begin on May 2022. The loan was issued at a discount of $24,450 and has a convertible default provision in the event the Company does not make the monthly payments. The note was repaid in full by conversion to stock.	-	158,745
Note payable to an investor bearing interest at 12% andmaturing on May 26, 2023 with monthly installments ofprincipal and interest of $120,185 beginning in May 2022. On May 25, 2022, the June, July, and August 2022 payments were deferred in exchange for 750,000 shares of common stock and a $146,667 increase to the principal balance. The October and November 2022 installments have been deferred by the lender.	1,030,376	1,294,198
Note payable to an investor in the principal amount of 1,350,000, bearing interest at 12% and maturing on May 26, 2023 with monthly installments of principal and interest of $120,185 beginning in May 2022. On May 25, 2022, the June, July, and August 2022 payments were deferred in exchange for 750,000 shares of common stock and a $146,667 increase to the principal balance. The October and November 2022 payments were deferred by the lender. On November 15, 2022, the Company issued a $150,000 forebearance note to the investor and extending the maturity date to June 30, 2023. The note is convertible as of December 31, 2022.	1,188,271	1,294,198
Note payable of $600,000 due December 21, 2022, issued at a discount of $60,000, bearing 12% annual interest. A warrant for the purchase of 600,000 common shares at an exercise price of $0.50 per share was issued as a commitment fee. Principal and interest on the loan are due at maturity.	170,000	540,000
Note payable to an investor in the principal amount of $600,000 due December 21, 2022, issued at a discount of $60,000, bearing 12% annual interest. A warrant for the purchase of 600,000 common shares at an exercise price of $0.50 per share was issued as a commitment fee. Principal and interest on the note are due at maturity. An additional warrant for the purchase of 400,000 shares and a amended exercise price of $0.01 for all warrants was issued effective June 21, 2022.	200,000	540,000
Note payable of $450,000 with payments of $62,438 due each month starting on September 22, 2022. The loan was issued at a discount of $49,500, bears 11% interest and has a convertible default provision in the event the Company does not make the monthly payments.	425,250	400,500
Note payable to an investor in the principal amount of $450,000 with payments of $62,438 due each month starting on September 22, 2022. The loan was issued at a discount of $49,500, bears 11% interest and has a convertible default provision in the event the Company does not make the monthly payments. The note is convertible as of December 31, 2022.	450,000	400,500
Note payable of $144,200 with equal installment payments of $16,150 due each month starting September 17, 2022. The loan was issued at a discount of $15,450, bears interest at 12% and has a convertible default provision.	115,555	-
Note payable to an investor in the principal amount of $144,200 with equal installment payments of $16,150 due each month starting September 17, 2022. The loan was issued at a discount of $15,450, bears interest at 12% and has a convertible default provision. This note is convertible as of December 31, 2022.	74,406	-

-1215-

Note payable to an investor bearing interest at 12%, due August 31, 2023. A warrant for the purchase of 1,000,000 common shares at an exercise price of $.01 per share was issued as a commitment fee to the investor. The note has a convertible default provision.	776,250	-
Note payable to an investor of $88,760 with ten installment payments of $9,941 due each month starting in January 15, 2023. The loan was issued at a discount of $9,510, bears 12% interest and has a convertible default provision in the event the company does not make the scheduled monthly payments. Interest for twelve months of 10,651 is immediately due on the issue date and payable at maturity.	80,835	-
Note payable to an investor in the principal amount of $810,000 bearing interest at 12%, due August 31, 2023. A warrant for the purchase of 1,000,000 common shares at an exercise price of $.01 per share was issued as a commitment fee to the investor. The note has a convertible default provision.	810,000	-
Note payable to an investor in the principal amount of $310,000 issued at a discount of $31,000, due November 8, 2023, bearing 12% interest. Principal and interest is payable on 4 dates over the term of the note. A payment of $46,500 plus accrued interest is due on February 3, 2023 and May 4, 2023. A payment of $93,000 plus accrued interest is due on August 4, 2023, with the remaining principal and interest due on November 4, 2023. The note is convertible to stock if there is a default on the note, including payments and reserving shares in accordance with the note payable. The Company received a waiver for reserving shares from the investor. The note is convertible due to an uncured violation of debt covenants to reserve shares in an amount equal to five times what is necessary to convert the loan and interest.	284,167	-
Investor advance on Equity Purchase Agreement.	142,066	-
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 November 21, 2022.	150,000	150,000
Financing lease liabilities for offices and warehouses with monthly installments of $22,810 (ranging from $245 to $9,664) over terms expiring through December 2024.	~~159~~149,~~791~~891	179,512
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.	2220,~~241~~849	25,771
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.	4846,~~137~~225	51,826
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.	2624,~~174~~486	29,696
Total Notes Payable	34,~~526~~120,~~884~~501	3,306,738
Less: Unamortized original issue discount	~~284~~187,~~209~~519	242,529
Less: Fair value of warrants	~~137~~365,~~500~~091	-
Current Portion of Notes Payable	3,~~078~~567,~~492~~891	2,815,231
Long-term Portion of Notes Payable	$ ~~26,683~~-	$ 248,978

-16-

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

Period ending September 30,
Period ending December 31,
2023	$ 3,~~078~~567,~~492~~891
2024	~~143~~278,~~871~~885
2025	9181,~~375~~646
2026	6346,~~342~~295
2027	1310,~~627~~224
Thereafter	~~136~~135,~~177~~560
	$ 3,526,884
	$ 4,120,501

~~-13-~~Note 5 – Fair Value Measurements

~~Note~~The 5following -table ~~Related~~presents ~~Party~~information ~~Transactions~~about the assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022 and June 30, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.


At December 31, 2022:		Total	Level 1	Level 2	Level 3
	Convertible debt features	$ 73,742	$ -	$ -	$ 73,742

At June 30, 2022:		Total	Level 1	Level 2	Level 3
	Convertible debt features	$ -	$ -	$ -	$ -

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.

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


At December 31, 2022
	Risk-free interest rate:	3.26% to 4.77%
	Expected dividend yield:	0.00%
	Expected stock price volatility:	175.00%
	Expected option life in years:	1 year


At June 30, 2022
	Risk-free interest rate:	0.00%
	Expected dividend yield:	0.00%
	Expected stock price volatility:	0.00%
	Expected option life in years:	0 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 December 31, 2022 and June 30, 2022:


Balance at June 30, 2021	$	-
Realized		-
Unrealized		73,342
Balance at December 31, 2022	$	73,342

Balance at July 1, 2021	$	1,842,000
Realized		(1,842,000)
Unrealized		-
Balance at June 30, 2022	$	-

As of December 31, 2022 and June 30, 2022, 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 6 - Related Party Transactions

Notes Payable

	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
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-acquistion withholding tax issues of Concepts and Solutions.	$ 1,030,079	$ 1,030,079
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 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 beginning in June 2022. The note is collateralized by a security interest in a certain customer purchase order. Monthly payments were deferred by the lender.	385,000	385,000
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.	-	55,000
Long term note bearing interest at 6% and maturing December 31, 2024 and other short-term payables due to stockholders and related parties	807,133	355,538
Notes payable to two stockholders, bearing interest at 12% and payable from future equity advances where 20% of each advance will be used to pay the notes down until paid in full and to pay back within six month of an active equity purchase agreement.	225,000	-
Total Related Party Notes Payable	2,222,212	1,825,617
Long term note bearing interest at 6% and maturing December 31, 2024 and other short-term payables due to stockholders and related parties	966,566	355,538
Current Portion of Related Party Notes Payable	1,183,755	1,238,755
Total Related Party Notes Payable	2,606,645	1,825,617
Long-term Portion of Related Party Notes Payable	$ 1,038,457	$ 586,862
Current Portion of Related Party Notes Payable	1,434,655	1,238,755
Long-term Portion of Related Party Notes Payable	$ 1,171,990	$ 586,862

As of ~~September~~December 3031, 2022, related party notes payable maturities are as follows:

Period ending September 30,
Period ending December 31,
2023	$1,~~183~~434,~~755~~655
2024	~~105~~998,~~876~~742
2025	~~932~~173,~~581~~248
	$2,222,212
	$2,606,645

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 expired on December 31, 2021 and is continuing on a month to month basis. The monthly lease payment is $9,664 plus maintenance and property taxes, as defined in the amended lease agreement. Rent expense for this lease was $28,992 and $28,992 for the three months ended ~~September~~December 3031, 2022 and 2021, respectively. Rent expense for this lease was $57,984 and $57,984 for the six months ended December 31, 2022 and 2021, respectively

-18-

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 4).

Note 7 -~~14-~~ Lease Agreements

Note 6 - Lease Agreements

Financing Lease Agreements

The Company leases offices, warehouses and equipment under financing lease agreements with monthly installments of $22,723 (ranging from $245 to $9,664), expiring through December 2024.

		September 30, 2022	June 30, 2022
		December 31, 2022	June 30, 2022
Right-of-use assets:
	Operating right-of-use assets	$~~159~~149,~~791~~891	$179,512
Operating lease liabilities:
	Current portion of long term payable	8081,~~867~~605	80,096
	Financing leases payable, less current portion	7868,~~924~~286	99,416
	Total operating lease liabilities	$~~159~~149,~~791~~891	$179,512

As of ~~September~~December 3031, 2022, financing lease maturities are as follows:

Period ending September 30,
Period ending December 31,
2023	$ 8081,~~867~~605
2024	6662,~~544~~366
2025	125,~~380~~920
	$159,791
	$149,891

As of ~~September~~December 3031, 2022, the weighted average remaining lease term was 1.5038 years.

Note 78 – Equity

All share amounts have been adjusted to reflect a 1:200 reverse stock split of the authorized and outstanding shares of common stock that was effective March 7, 2022.

For the ~~three~~six months ended ~~September~~December 3031, 2022:

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued 1 4,~~070~~863,~~922~~ 038 shares of common stock ~~for~~in ~~professional~~exchange ~~consulting~~for ~~services.~~debt ~~The shares were valued at $188,128 upon issuance~~reduction.

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued ~~800~~ 4,~~000~~ 429,130 shares of common stock ~~for~~in ~~commitment~~exchange ~~fees~~for proceeds under athe ~~note~~Equity ~~payable~~Purchase Agreement. These shares were valued at $~~144~~107,~~800~~ 935 upon issuance.

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued ~~350~~ 1,800,000 shares of common stock asfor acommitment ~~charitable~~fees ~~donation.~~under ~~The~~notes ~~shares were valued at $52,500 upon issuance~~payable.

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company ~~received~~issued 363,~~500~~ 070,922 shares of common stock ~~from~~for aprofessional ~~former~~consulting ~~investor~~services. The shares ~~can~~were bevalued ~~re-issued~~at $238,128 upon issuance.

~~For~~During the ~~three~~six months ended ~~September~~December 3031, ~~2021:~~2022, the Company issued 23,540,539 shares of common stock in exchange for Preferred Series F stock.

During the ~~three~~six months ended ~~September~~December 3031, ~~2021~~2022, the Company issued ~~12,500 shares~~warrants ofto ~~common~~investors ~~stock~~to ~~for~~purchase ~~professional~~common ~~consulting services~~stock. The ~~shares~~warrants were valued at $32492,~~750~~434 upon issuance.

During the ~~three~~six months ended ~~September~~December 3031, ~~2021~~2022, the Company issued ~~450~~350,000 shares of common stock inas ~~exchange~~a ~~for~~charitable ~~proceeds under the Equity Purchase Agreement~~donation. ~~These~~The shares were valued at $152,~~091,000~~500 upon issuance.

~~See~~During the ~~capital~~six ~~structure~~months ~~section~~ended inDecember ~~Note~~31, 12022, ~~for~~the ~~disclosure~~Company received 36,500 shares of ~~the~~common ~~equity~~stock ~~components~~from ~~included~~a informer ~~the~~investor. ~~Company's~~The ~~consolidated~~shares ~~financial~~can ~~statements~~be re-issued.

-19-

For the six months ended December 31, 2021:

During the six months ended December 31, 2021, the Company issued 12,500 shares of common stock for services.

During the six months ended December 31, 2021, the Company issued 1,125,000 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 312,500 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 250,000 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.

Warrants

Warrants are granted with an exercise price no less than the fair market value of the warrant on the date of the grant and generally vest immediately. A June 2022 warrant, as amended on November 8, 2022, is entitled to convert into one common share at an exercise price of $0.01. The November 8, 2022 amendment increased the June 2022 warrants by 400,000 and changed the exercise price from $0.50 to $0.01. An August 2022 warrant is entitled to convert into one common share at an exercise price of $0.01. ~~Both~~A November 1, 2022 warrant is entitled to convert into one common share at an exercise price of $0.10. All warrant exercise prices are subject to adjustment. The Company granted investors 600,000 warrants on June 21, 2022; ~~and~~ 1,000,000 warrants on August 31, 2022; toincreased anthe ~~investor~~June 21, 2022 warrants by 400,000 on November 1, 2022; and issued 2,100,000 warrants on November 8, 2022, pursuant to ~~two~~three notes payable (Note 4). The fair value of the ~~August 2022~~ warrants was $~~150~~365,~~000~~091 and $0 at ~~September~~December 31, 2022 and June 30, 2022, respectively. There are no2,100,000 unvested warrants issued on November 1, 2022 to an investor that will go into effect in the event of a default on the related note.

The fair value of each equity-based award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table at ~~September~~December 3031, 2022:

Stock price volatility		175%
Expected term		5 years
Discount rate		3.3038%
Expected dividends		0%

-15-

The fair value of each equity-based award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table at June 30, 2022:


Stock price volatility		190%
Expected term		1 year
Risk-free interest rate		3.21%
Expected dividends		0%

A summary of the warrant status at ~~September~~December 31, 2022 and June 30, 2022 and changes during the ~~three~~six months ended is presented below. There were no warrants outstanding during the ~~three~~six months ended ~~September~~December 3031, 2021.

	Warrants	Weighted Average Exercise Price
Outstanding, June 30, 2022	600,000	$0.5001
Granted	1,~~000~~400,000	0.01
Granted	2,100,00	0.10
Forfeited	-	-
Outstanding, September 30, 2022	1,600,000	$0.048
Outstanding, December 31, 2022	4,100,000	$0.09
Exercisable, end of period	$~~600~~3,100,000	~~$0.50~~-

~~A further summary of warrants outstanding at September 30, 2022 is as follows:~~-20-

	Exercise	Number	Number	Weighted Average	Intrinsic
Warrants	Price	Exercisable	Outstanding	Remaining Life	Value
600,000	$ 0.50	600,000	600,000	4.75 years	$ 0
1,000,000	$ 0.01	-	1,000,000	5 years	$ 150,000

A further summary of warrants outstanding at December 31, 2022 is as follows:

Note 8 - Income Taxes


	Exercise	Number	Number	Weighted Average	Intrinsic
Warrants	Price	Exercisable	Outstanding	Remaining Life	Value
600,000	$ 0.01	600,000	600,000	4.5 years	$ -
1,000,000	$ 0.01	-	1,000,000	4.7 years	$ 150,000
400,000	$ 0.01	400,000	400,000	4.5 years	$ 243,250
2,100,000	$ 0.10	2,100,000	2,100,000	4.9 years	$ 99,184
2,100,000	$ 0.10	-	-	5 years	$ -

~~The~~Note ~~Company's~~9 ~~effective~~- ~~tax~~Income ~~rate differed from the federal statutory income tax rate for the three months ended September 30, 2022 as follows:~~Taxes

The Company's effective tax rate differed from the federal statutory income tax rate for the three and six months ended December 31, 2022 as follows:


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

The Company had no federal or state income tax (benefit) for the three and six months ended ~~September~~December 3031, 2022 or 2021.

The Company's deferred tax assets and liabilities as of ~~September~~December 3031, 2022 and June 30, 2022, are summarized as follows:

		September 30, 2022	June 30, 2022
		December 31, 2022	June 30, 2022
Federal
	Deferred tax assets	$ 8,~~177~~538,~~800~~100	$ 7,781,500
	Less valuation allowance	(8,~~177~~538,~~800~~100)	(7,781,500)
	Deferred tax liabilities	-	-
		-	-
	Deferred tax assets	1,459,400	1,966,600
State
	Less valuation allowance	(1,459,400)	(1,966,600)
	Deferred tax assets	$ 1,539,900	$ 1,966,600
	Less valuation allowance	(1,539,900)	(1,966,600)
	Deferred tax liabilities	-	-
		-	-
	Net Deferred Tax Assets	$ -	$ -

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 ~~September~~December 3031, 2022 and 2021, 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 2023 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.

-1621-

The significant components of deferred tax assets as of ~~September~~December 31, 2022 and June 30, 2022 are as follows:

	September 30, 2022	June 30, 2022
	December 31, 2022	June 30, 2022
Net operating loss carryforwards	$ $9,~~411~~836,~~900~~100	$ 9,539,900
Valuation allowance	(910,~~637~~078,~~200~~000)	(9,748,100)
Goodwill	~~5,800~~600	11,000
Property and equipment	(3028,~~200~~600)	(32,000)
Development costs	54148,~~800~~200	124,600
Intangible assets	~~136~~63,~~400~~200	46,100
Inventory allowance	30,300	30,300
Warranty accrual and other	28,200	28,200
Net Deferred Tax Assets	$ -	$ -

As of ~~September~~December 3031, 2022, 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 ~~September~~December 3031, 2022, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.

Note 910 - 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 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, 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 in the note payable to seller of $1,030,079 at ~~September~~December 3031, 2022 and June 30, 2022 (Note 56).

Concentrations

Galaxy contracts the 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~~two vendor that accounted for approximately 99 91% of purchases for the three months ended ~~September~~December 3031, 2022. Galaxy had ~~two~~one vendors that accounted for approximately 9736% of purchases for the three months ended ~~September~~December 3031, 2021.

Galaxy has two customers that accounted for approximately 79% of accounts receivable at ~~September~~December 3031, 2022 and two customers that accounted for approximately 77% of accounts receivable at June 30, 2022. Galaxy has two customers that accounted for ~~approximately~~ 54% ~~and~~for the three months ended December 31, 2022. Galaxy has three customers that accounted for 59approximately 69% and two customers that accounted for approximately 55% of total revenue for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively.

Note 11 -~~17-~~ Material Agreements

Note 10 - Material Agreements

Manufacturer and Distributorship Agreement

On September 15, 2018, the Company signed an agreement with a company in China for the 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 interactive panels in the United States for a term of two years. The agreement includes a commitment by Galaxy to purchase $2 million of product during the first year beginning September 2018. If the minimum purchase is not met, the manufacturer can require the Company 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 ready to 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. The Company has met the requirements of the agreement.

~~Equity Purchase Agreement~~-22-

~~On May 31, 2020, the Company entered into a 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. During the three months ended September 30, 2022 and 2021, the Company issued 0 and 450,000 shares of common stock to the investor in exchange for proceeds for working capital. Agreements

On May 31, 2020, the Company entered into a 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. During the three months ended December 31, 2022 and 2021, the Company issued 0 and 450,000 shares of common stock to the investor in exchange for proceeds for working capital. During the six months ended December 31, 2022 and 2021, the Company issued 0 and 450,000 shares of common stock to the investor in exchange for proceeds for working capital.

On November 7, 2022, the Company signed a two year purchase agreement (“Equity Purchase Agreement”) with an investor. Pursuant to the terms of the Equity Purchase Agreement, the investor agreed to purchase up to $5 million of the Company’s common stock (subject to certain limitations) from time to time during the term of the Equity Purchase Agreement. The common stock transactions will be “put” to the investor, at the option of the Company, at a discount equal to 80% of the average of the two lowest daily stock prices during a ten day period, in exchange for working capital proceeds. The Company will register the shares before puts are allowed. There is a commitment fee of 500,000 shares that will be issued to the investor. During the three months ended December 31, 2022 and 2021, the Company issued 4,429,130 and 0 shares of common stock to the investor in exchange for proceeds for working capital. During the six months ended December 31, 2022 and 2021, the Company issued 4,429,130 and 0 shares of common stock to the investor in exchange for proceeds for working 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 an amount up to eighty percent (80%) of the purchase price for the purchased accounts. 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 by two of the stockholders individually. The Company paid collection fees of $4969,~~603~~616 and $2213,~~981~~243 during the three months ended ~~September~~December 3031, 2022 and 2021, respectively. The Company paid collection fees of $119,219 and $36,244 during the six months ended December 31, 2022 and 2021, 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, and further amended in 2022 to extend the term for an additional three-years. 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 and preferred stock to maintain, together with the CFO, a minimum 26% of the total voting rights. The agreement includes a non-compete agreement and severance benefits of $90,000. In June 2022, 26 shares of Preferred Series G stock were issued to the CEO under terms of this agreement, which represents 26% of the voting power.

On January 1, 2020, the Company entered into an employment agreement with the Chief Finance Officer/Chief Operations Officer (CFO/COO) of the Company for a two-year term, which was amended on September 1, 2020, and further amended in 2022 to extend the term for an additional three-years. Under the amended employment agreement, the CFO/COO will receive annual compensation of $250,000, and an annual discretionary bonus based on profitability and revenue growth and preferred stock to maintain, together with the CEO, a minimum 25% of the total voting rights. The agreement includes a non-compete agreement and severance benefits of $72,000. In June 2022, 25 shares of Preferred Series G stock were issued to the CFO under terms of this agreement, which represents 25% of the voting power.

-18-

Investor Relations Agreement

The Company signed an agreement with an investment relations firm, commencing on May 1, 2022, requiring $10,000 per month and $20,000 worth of restricted stock issued 4 times in 2022, beginning May 1, 2022, June 1, September 1, and December 1, 2022. The agreement will automatically renew annually unless 60 days’ notice is given by either party. The Company paid $20,000 and issued 70,922 shares for investment relations services during the three months ended ~~September~~December 3031, 2022. The Company paid $20,000 and issued 70,922 shares for investment relations services during the six months ended December 31, 2022. No fees or shares were issued during the three and six months ended ~~September~~December 3031, 2021.

Capital Markets Advisory Agreement

The Company signed an eight month Strategic Services agreement with an investor, commencing on May 1, 2022, requiring fees of 1,000,000 shares of common stock. The Company issued 1,000,000 shares for strategic services on August 1, 2022.

-23-

Advisory Services

In May 2020, a advisor agreed to be a non-exclusive advisor with respect to the identification and evaluation of potential business acquisition opportunities. In consideration for its services, the advisor may receive a cash fee equal to 3.5% of the purchase price if we close on a transaction with a target during the term of the agreement or within 12 months thereafter. In addition, (i) we will pay the advisor a cash fee payable at the closing equal to 1.5% of the gross proceeds we receive at each closing; (ii) ~~(i)~~ for an issuance of debt securities, a cash fee payable at the closing equal to 2.5% of the gross proceeds we receive at each closing; (iii) for an issuance of equity securities, a cash fee payable at the closing equal to 7.0% of the gross proceeds we receive at each closing. We will also reimburse the advisor for certain out of pocket expenses.

Note 1112 - Stock Plan

The Company established a 2022 Equity Stock Purchase Plan to encourage the purchase of shares of common stock by eligible employees and participating companies. No shares have been purchased under the Plan to date.

The Company established a 2022 Equity Incentive Plan to enable the Company to award long term performance-based equity incentives to employees and others. No equity awards have been issued under the Plan to date.

Note 1213 - 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 $46,~~900~~400,000, and cash used in operations of approximately $~~500~~2,000,000 at ~~September~~December 3031, 2022. Accumulated deficit increased from June 30, 2022 to ~~September~~December 3031, 2022 by approximately $14,~~000~~500,000 to a deficit of approximately $5658,~~000~~700,000 at ~~September~~December 3031, 2022.

The Company's operational activities 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 1314 - Subsequent Events

OnAuthorized November 7, 2022, the Company signed a two year purchase agreement (“Equity Purchase Agreement”) with with an investor. Pursuant to the terms of the Equity Purchase Agreement, the investor agreed to purchase up to $5 million of the Company’s common stock ~~(subject~~increased ~~to certain limitations)~~ from ~~time to time during the term of the Equity Purchase Agreement. The common stock transactions will be “put” to the investor~~200, ~~at the option of the Company~~000,000 ~~at a discount equal~~ to ~~80% of the average of the two lowest daily stock prices during a ten day period~~3, ~~in exchange for working capital proceeds. The Company will register the shares before puts are allowed. There is a commitment fee of 500~~000,000,000 shares ~~that~~of ~~will~~common bestock ~~issued~~on toJanuary ~~the~~31, ~~investor~~2023.

On ~~October~~January 1311, ~~2022~~2023, the Company issued ~~a $175~~5,000,000 ~~note~~shares ~~payable~~ to aan ~~preferred~~investor ~~stockholder~~under ~~bearing~~the ~~interest~~Equity atPurchase ~~12%~~Agreement ~~and~~in ~~due~~exchange onfor ~~demand~~working capital.

On ~~October~~January 1327, ~~2022~~2023, the Company issued ~~a $50~~763,~~000~~359 ~~note~~shares ~~payable~~ to reduce a ~~preferred~~note ~~stockholder bearing interest at 12% and due on demand~~payable.

~~-19-~~On February 1, 2023, the Company issued 1,000,000 shares as additional commitment shares for the extension of a maturity date on a note payable.

On February 1, 2023, the Company issued 4,000,000 shares to reduce a note payable.

On February 8, 2023, the Company issued 1,923,077 shares to reduce a note payable.

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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") 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," 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, 2022 (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 conditions, including inflation. 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 conditions which 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 "Risk Factors" section included in Item 1A of Part I of our Annual Report, 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.

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.

Business Overview

~~Galaxy~~We isare a manufacturer and U.S. distributor of interactive learning ~~technology~~technologies and enhanced audio solutions. We are engaged in a full range of activities: marketing and sales, engineering and product design and development, manufacturing, and distributing. We develop both hardware and software that allows the presenter and participant to engage in a fully collaborative instructional environment. ~~Galaxy's~~We also develop award winning classroom audio solutions, school public address (“PA”) and intercom products, and emergency communication applications creating a full line card offering for classrooms to our channel partners. Our product offerings include ~~Galaxy's~~our own private-label interactive touch screen panel, ~~its~~our own ~~Intercom~~intercom, ~~Bell~~bell, and ~~Paging~~paging solution, as well as an audio amplification line of products that is currently supported by both direct sales and through original equipment manufacturer (“OEM”) relationships. ~~Galaxy's~~Our distribution channel consists of a direct sales model, as well as ~~approximately~~in 44excess of 40 resellers across the U.S. ~~who~~that primarily sell the products offered by ~~Galaxy~~us within the commercial and educational market. ~~Galaxy~~We ~~does~~do not control where the resellers focus their reselling efforts; however, the K-12 education market is the largest customer base for ~~Galaxy~~our products comprising nearly 90% of ~~Galaxy's~~our sales. In addition, ~~Galaxy’s~~our OEM division ~~also~~manufactures ~~manufacturers~~ products for other vendors in ~~its~~our 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 effects of the ongoing global 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 goal is to be an early provider of the best and most modern technology available.

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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-20founded by our now executives, Gary LeCroy (CEO) and Magen McGahee (CFO)), merged with and into our newly formed subsidiary, Galaxy MS, Inc. ("Galaxy MS"), 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 ~~June~~September 223, ~~2018~~2019, we ~~consummated~~acquired a100% ~~reverse~~of ~~triangular~~the ~~merger~~outstanding ~~whereby~~capital ~~Galaxy~~stock ~~Next~~of ~~Generation~~both Interlock Concepts, Inc., ~~a private company~~ (~~co-founded~~Concepts) byand ~~our~~Ehlert ~~now~~Solutions ~~executives~~Group, ~~Gary~~Inc. ~~LeCroy~~ (~~CEO~~Solutions) ~~and~~pursuant ~~Magen~~to ~~McGahee~~the ~~(CFO)),~~terms ~~merged~~of ~~with~~a ~~and~~stock ~~into~~purchase ~~our~~agreement ~~newly~~that ~~formed~~we ~~subsidiary,~~entered ~~Galaxy~~into ~~MS,~~with ~~Inc.~~Concepts ~~(Galaxy~~and MSSolutions. orThe ~~Merger~~purchase ~~Sub),~~price ~~which was formed specifically~~ for the ~~transaction.~~acquisition ~~Under~~was ~~the~~1,350,000 ~~terms~~(6,750 ofpost ~~the~~March ~~merger~~7, ~~the~~2022 ~~private~~reverse ~~company~~stock ~~shareholders~~split) ~~transferred all their outstanding~~ shares of common stock toand ~~Galaxy~~a ~~MS,~~two inyear ~~return~~note ~~for~~payable ~~shares of our Series C Preferred Stock. Prior~~ to the ~~merger,~~seller wein ~~operated under~~ the ~~name~~principal ~~Full~~amount ~~Circle~~of ~~Registry~~$3, ~~Inc~~000,000.’s ~~(FLCR)~~The ~~and~~note ~~our~~payable ~~operations~~to ~~were~~the ~~based~~seller ~~upon~~is ~~our~~subject ~~ownership~~to ofadjustment ~~Georgetown~~based ~~14 Cinemas, a fourteen-theater movie complex located~~ on ~~approximately seven acres in Indianapolis, Indiana. Prior to~~ the ~~merger,~~achievement ~~our sole business and source~~ of ~~revenue~~certain ~~was~~future ~~from~~earnings ~~the~~goals ~~operation of the theater,~~ and assuccessful ~~part~~completion of ~~the~~certain ~~merger~~pre-acquisition ~~agreement,~~withholding wetax ~~had~~issues ~~the~~of ~~right~~Concepts toand ~~spinout~~Solutions. ~~the~~The ~~theater~~note tohas ~~the~~been ~~prior~~adjusted ~~shareholders~~and ofis ~~FLCR.~~reflecting ~~Effective~~under ~~February~~related 6,party ~~2019,~~notes wepayable ~~sold our interest~~ in the ~~theater~~consolidated tofinancial ~~focus our resources on our technology operations~~statements.

OnSolutions ~~September~~and 3,Concepts ~~2019,~~are weUtah-based ~~acquired~~audio ~~100%~~design ofand ~~the~~manufacturing ~~outstanding~~companies ~~capital~~creating ~~stock~~innovative ofproducts ~~both~~that ~~Interlock~~provide ~~Concepts,~~fundamental ~~Inc.~~tools ~~(Concepts)~~for ~~and~~building ~~Ehlert~~notification ~~Solutions~~systems ~~Group,~~primarily ~~Inc.~~to ~~(Solutions)~~K-12 ~~pursuant~~education tomarket ~~the~~customers ~~terms~~located ~~of a~~primarily ~~stock~~in ~~purchase~~the ~~agreement~~north ~~that~~and wenorthwest ~~entered~~United ~~into~~States. ~~with~~These ~~Concepts~~products and ~~Solutions.~~services ~~The~~allow ~~purchase~~institutions ~~price~~access ~~for~~to ~~the~~intercom, ~~acquisition~~scheduling, ~~was~~and ~~1,350,000~~notification ~~shares~~systems with improved ease of ~~common~~use. ~~stock~~The ~~and~~products aprovide ~~two~~an ~~year~~open ~~note~~architecture ~~payable~~solution to ~~the~~customers ~~seller~~which inallows the ~~principal~~products ~~amount~~to ofbe ~~$3,000,000.~~used ~~The~~in ~~note~~both ~~payable~~existing toand ~~the~~new ~~seller~~environments. isIntercom, ~~subject~~public toannouncement ~~adjustment~~(PA), ~~based~~bell onand ~~the~~control ~~achievement~~solutions ofare ~~certain~~easily ~~future~~added ~~earnings goals~~ and ~~successful~~integrated ~~completion~~within ofthe ~~certain~~open ~~pre-acquisition~~architecture ~~withholding~~design ~~tax~~and ~~issues~~software ofmodel. ~~Concepts~~These ~~and~~products ~~Solutions.~~combine ~~The~~elements ~~note~~over ~~has~~a ~~been~~common ~~adjusted~~internet ~~and~~protocol is(IP) ~~reflecting~~network, ~~under~~which ~~related~~minimizes ~~party~~infrastructure ~~notes~~requirements ~~payable~~and inreduces ~~the~~costs ~~consolidated~~by ~~financial~~combining ~~statements~~systems.

~~Solutions~~On ~~and~~October ~~Concepts~~15, ~~are~~2020, ~~Arizona-based~~we ~~audio~~acquired ~~design~~the ~~and~~assets ~~manufacturing~~of ~~companies~~Classroom ~~creating~~Technologies ~~innovative~~Solutions, ~~products~~Inc. ~~that~~("Classroom ~~provide~~Tech") ~~fundamental~~for ~~tools~~consideration ~~for~~of ~~building~~(a) ~~notification~~paying ~~systems~~off ~~primarily~~a secured Classroom Tech loan, not to ~~K-12~~exceed ~~education~~the ~~market~~greater ~~customers~~of ~~located~~50% ~~primarily~~of inthe value of the ~~north~~Classroom ~~and~~Tech ~~northwest~~assets ~~United~~acquired ~~States.~~or ~~These~~$120,000; ~~products~~(b) ~~and~~the ~~services~~issuance ~~allow~~of ~~institutions~~a ~~access~~promissory tonote ~~intercom,~~in ~~scheduling~~the amount of $44,526 ~~and~~to ~~notification~~a ~~systems~~Classroom ~~with~~Tech ~~improved~~designee; ~~ease~~and (c) the issuance of ~~use.~~10 ~~The~~million ~~products~~shares ~~provide~~(50,000 anpost ~~open~~March ~~architecture~~7, ~~solution~~2022 toreverse ~~customers~~stock ~~which~~split) of ~~allows~~common stock to the ~~products~~seller toof beClassroom ~~used~~Tech. inClassroom ~~both~~Tech ~~existing~~provides ~~and~~cutting-edge ~~new~~presentation ~~environments.~~products ~~Intercom~~to schools, ~~public~~training ~~announcement~~facilities, ~~(PA)~~churches, ~~bell~~corporations and ~~control~~retail establishments. Their high-quality solutions are ~~easily~~customized ~~added~~to meet a variety of needs and ~~integrated~~budgets ~~within~~in order to provide the ~~open~~best ~~architecture~~in ~~design~~education and ~~software~~presentation ~~model~~technology. ~~These~~Classroom ~~products~~Tech ~~combine~~direct-sources ~~elements~~and ~~over~~imports amany ~~common~~devices ~~internet~~and ~~protocol~~components ~~(IP)~~which ~~network~~allows us to be innovative, ~~which~~nimble, ~~minimizes~~and ~~infrastructure~~capable ~~requirements~~of delivering a broad range of cost-effective solutions. Classroom Tech also offers in-house service and ~~reduces~~repair ~~costs~~facilities byand ~~combining~~carries ~~systems~~many top brands.

On October 15, 2020, we 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 (50,000 shares after reverse split) 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 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 us 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.

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 ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

The 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~~Technologies Solutions, Inc. referred to collectively as the “Company”).

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

Galaxy’s common stock is traded on over-the-counter markets under the stock symbol GAXY.

Reverse Stock Split

Effective March 7, 2022, we effected a one-for-two hundred reverse stock split of our authorized and outstanding shares of common stock. All per share numbers reflect the one-for-two hundred reverse stock split.

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Critical Accounting 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 requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 judgments. We base our estimates and judgments on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting policies and estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in Note 1 to our audited consolidated financial statements contained in our Annual Report.

~~Financial~~ Results ~~and~~of ~~Performance Metrics Overview~~Operations

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

-21-

Revenue

Total revenues recognized were $~~619~~429,~~053~~031 and $904,055 for the three months ended December 31, 2022 and 2021, respectively, a decrease of approximately 53%. Total revenues recognized were $1,~~684~~048,~~771~~084 and $2,588,826 for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively, a decrease of approximately 6360%. Additionally, deferred revenue amounted to $~~647~~627,~~433~~560 and $175,436 as of ~~September~~December 3031, 2022 and June 30, 2022, respectively. Revenues decreased during the three and six months ended ~~September~~December 3031, 2022 due to ~~issues with~~ delays in supply chain ~~issues~~ which resulted in a large increase in deferred revenue at quarter end.

Cost of Sales and Gross Margin

Our cost of sales was $~~271~~330,~~485~~016 and $848,099 for the three months ended December 31, 2022 and 2021, respectively, a decrease of approximately 61%. Our cost of sales was $601,501 and $1,~~018~~866,~~763~~862 for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively, a decrease of approximately 7368%. Cost of sales consists primarily of manufacturing, freight, delivery, amortization of product development costs, and installation costs. There are no significant overhead costs which impact cost of sales. Cost of sales decreased during the three and six months ended ~~September~~December 3031, 2022 due to the decrease in revenue as well as our shift to selling products that are lower cost with higher profit margins.

General and Administrative

Three months ended	~~September~~December 3031, 2022	~~September~~December 3031, 2021
Stock compensation and stock issued for services	$ ~~188~~50,~~128~~000	$ ~~32,750~~-
General and administrative	1,431,979	1,498,124
Impairment	-	46,869
Total General and Administrative Expenses	$ 1,620,107	$ 1,530,874
General and administrative	1,511,292	1,049,993
Total General and Administrative Expenses	$ 1,561,292	$ 1,096,862

Total general and administrative expenses (including stock issued for services expenses) were $1,620,107 and $1,530,874 for the three months ended September 30, 2022 and 2021, respectively.


Six months ended	December 31, 2022	December 31, 2021
Stock compensation and stock issued for services	$ 238,128	$ 32,750
	-	46,869
General and administrative	2,943,271	2,548,117
Total General and Administrative Expenses	$ 3,181,399	$ 2,627,736

Total general and administrative expenses (including stock issued for services expenses) were $1,561,292 and $1,096,862 for the three months ended December 31, 2022 and 2021, respectively. Total general and administrative expenses (including stock issued for services expenses) were $3,181,399 and $2,627,736 for the six months ended December 31, 2022 and 2021, respectively

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Other Income (Expense)

Three months ended	~~September~~December 3031, 2022	~~September~~December 3031, 2021
Other Income	$ ~~2,543~~257	$ -5,878
Expenses related to notes payable:
Change in fair value of derivative liability	-(73,472)	1834,~~008,~~000
Interest accretion	(~~121~~114,~~270~~843)	(815,~~750~~540)
Interest related to equity purchase agreement	-	(~~252~~1,~~900~~890,600)
Interest expense	(~~162~~1,~~377~~275,819)	(~~267~~354,~~511~~852)
Total Other Income (Expense)	$ (~~281~~1,~~104~~464,147)	$ ~~478~~(1,~~839~~421,114)

Interest expense amounted to $162,377 and $520,411 for the three months ended September 30, 2022 and 2021, respectively, a decrease of 69%. Interest expense of $162,377 and $267,511 during the three months ended September 30, 2022 and 2021, was due to interest paid on notes payable. The change in the fair value of the derivative was due to the elimination of the derivative in December 2021, when convertible notes were exchanged for Series F stock.


Six months ended	December 31, 2022	December 31, 2021
Other Income	$ 2,800	$ 5,878
Expenses related to notes payable:
Change in fair value of derivative liability	(73,472)	1,842,000
Interest accretion	(236,113)	(24,290)
Interest related to equity purchase agreement	-	(2,143,500)
Interest expense	(1,438,196)	(622,363)

Total Other Income (Expense)	$ (1,745,251)	$ (942,275)

Interest expense amounted to $1,275,819 and $354,852 for the three months ended December 31, 2022 and 2021, respectively, an increase of 260%. Interest expense of $1,438,196 and $622,363 during the six months ended December 31, 2022 and 2021, was primarily due to common stock issued as commitment fees and to convert preferred stock, warrants issued, and interest paid on notes payable, an increase of 131%. The change in the fair value of the derivative liability was due to convertible features of certain notes payable under recent conditions and the elimination of the derivative in December 2021, when convertible notes were exchanged for Series F stock.

Net Loss for the Period

Net loss incurred for the three months ended ~~September~~December 3031, 2022 and 2021 was $12,~~553~~926,~~643~~424 and $~~386~~2,~~027~~462,020 respectively, an increase of approximately ~~302~~19%. Net loss incurred for the six months ended December 31, 2022 and 2021 was $4,480,067 and $2,848,047 respectively, an increase of approximately 57%. Noncash contributing factors for the net loss incurred for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021 are as follows:

a). $~~188~~238,128 and $32,750 represent noncash consulting fees paid through the issuance of stock for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively.;

b). Noncash interest expenses of $0 and $~~252~~2,~~900~~143,500 related to the Equity Purchase Agreement for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively.; and

c). Depreciation and amortization expenses related to intangibles and capitalized development costs of $~~177~~360,~~376~~583 and $~~130~~241,~~145~~785 for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021, respectively.

-2228-

Liquidity and Capital Resources

~~Although~~To date our revenues generated from operations have ~~become~~been ~~more~~insufficient ~~sufficient~~to support our operational activities and have been supplemented by the proceeds from the issuance of securities, inincluding equity and debt issuances. In order to support our operational activities our revenues still need to be supplemented by the proceeds from the issuance of securities, including equity and debt issuances. At ~~September~~December 3031, 2022, we had a working capital deficit of approximately $46,~~900~~500,000 and an accumulated deficit of approximately $5558,700,000. As stated in Note 1213 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. Subsequent to the end of the quarter ended September 30, 2022, we raised $225,000 through the issuance of notes payable. 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 should 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 accounts receivable factoring agreement and small lines of credit, which requires us to meet certain requirements to utilize. There can be no assurance that we will meet all or any of the requirements pursuant to our line of credit, or accounts receivable factoring agreement, and therefore those financing options may be unavailable to us. The Equity Purchase Agreement that we entered into November 2022 also has several conditions that we must meet before ClearThink Capital Partners, LLC is required to purchase shares of our common stock and there can be no assurance that we will meet those conditions. ~~The~~ 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 $~~163~~21,~~126~~360 at ~~September~~December 3031, 2022, as compared with $300,899 at June 30, 2022, a decrease of $~~137~~279,~~773~~539. Net cash of $~~501~~1,~~160~~990,898 and $~~420~~208,~~559~~245 was used in operations and investing activities, respectively, for the ~~three~~six months ended ~~September~~December 3031, 2022. Net cash of $~~872~~1,~~809~~312,346 and $4415,~~160~~756 was used in operations and investing activities, respectively, for the ~~three~~six months ended ~~September~~December 3031, 2021.

Net cash of $~~783~~1,~~946~~919,604 was provided from financing activities for the ~~three~~six months ended ~~September~~December 3031, 2022, primarily due to proceeds from notes payable agreements. Net cash of $~~689~~1,~~669~~541,238 was provided from financing activities for the ~~three~~six months ended ~~September~~December 3031, 2021, primarily due to proceeds from an equity purchase agreement.

To implement our business plan, we 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.

Off-Balance Sheet Arrangements

The Company did not have off-balance sheet arrangements or transactions as of and for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021.

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 ~~withjAdjusted~~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~~We calculate EBITDA ~~represents~~as ~~EBITDA~~net ~~(earnings~~loss before income taxes, depreciation and amortization) and we calculate Adjusted EBITDA as EBITDA adjusted to exclude stock compensation. 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 September 30, 2022 and 2021:~~29-

Three months ended	September 30, 2022	September 30, 2022
Revenue	$ 619,053	$ 1,684,771
Gross Profit	347,568	666,008
General and Administrative Expenses	1,620,107	1,530,874
Loss from Operations	(1,272,539)	(864,866)
Other Income (Expense)	2,543	478,839
Net Loss	(1,553,643)	(386,027)
Interest, Taxes, Depreciation, Stock Compensation and Amortization	527,881	424,545
Non-GAAP Adjusted EBITDA	$ (1,025,762)	$ 38,518

Non-GAAP Adjusted EBITDA financial results for the three and six months ended December 31, 2022 and 2021:

Non-GAAP Adjusted EBITDA was net loss of $1,025,762 and a net positive of $38,518 for the three months ended September 30, 2022 and 2021, respectively.


Three months ended	December 31, 2022	December 31, 2021
Revenue	$ 429,031	$ 904,055
Gross Profit	99,015	55,956
General and Administrative Expenses	1,561,292	1,096,862
Loss from Operations	(1,462,277)	(1,040,906)
Other Income (Expense)	(1,464,147)	(1,421,114)
Net Loss	(2,926,424)	(2,462,020)
Interest, taxes, depreciation and amortization	1,573,869	2,372,631
EBITDA	(1,352,555)	(89,389)
Stock Compensation	50,000	-
Non-GAAP Adjusted EBITDA	$ (1,302,555)	$ (89,389)

-23-


Six months ended	December 31, 2022	December 31, 2021
Revenue	$ 1,048,084	$ 2,588,826
Gross Profit	446,583	721,964
General and Administrative Expenses	3,181,399	2,627,736
Loss from Operations	(2,734,816)	(1,905,722)
Other Income (Expense)	(1,745,251)	(942,275)
Net Loss	(4,480,067)	(2,848,047)
Interest, taxes, depreciation and amortization	2,034,892	3,031,938
EBITDA	(2,445,175)	183,891
Stock Compensation	238,128	32,750
Non-GAAP Adjusted EBITDA	$ (2,207,047)	$ 216,641

Non-GAAP Adjusted EBITDA was net loss of $1,302,555 and $89,389 for the three months ended December 31, 2022 and 2021, respectively. Non-GAAP Adjusted EBITDA was net loss of $2,207,047 and net gain of $216,641 for the six months ended December 31, 2022 and 2021, respectively.

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 existed at June 30, ~~2021~~2022 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.

-30-

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

Management ~~discontinued~~decreased outsourcing its bookkeeping beginning July 1, 2021. ~~Outsourced~~We ~~bookkeeping was still utilized to a lesser extent during the period up to and including September 30, 2022 and we~~ continue to outsource the preparation of 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.

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.

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, 2022 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 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, 2022. 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, 2022.

We have a history of net losses, and have incurred losses for the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021 and there can be no assurance that we will generate net income

For the ~~three~~six months ended ~~September~~December 3031, 2022 and 2021 we had a net loss of $12,~~553~~926,~~643~~424 and $~~386~~2,~~027~~462,020, respectively. For the year ended June 30, 2022, we had a net loss of $6,250,956. For the year ended June 30, 2021, we had a net loss of $24,424,336. There can be no assurance that our losses will not continue in the future, even if our revenues and expenditures for the products and solutions we sell and distribute increase. In addition, as of ~~September~~December 3031, 2022, we had stockholders' deficit of approximately $35,~~250~~000,000 and cash used in operations of approximately $~~501~~2,000,000. As of June 30, 2022, we had stockholders' deficit of approximately $2,200,000 and cash used in operations of approximately $1,200,000. These factors raise substantial doubt regarding our ability to continue as a going concern.

~~-24-~~Our historical operating results indicate substantial doubt exists related to our ability to operate as a going concern.

We ~~require~~have ~~funds~~incurred net losses and used significant cash in operating activities since inception, and we expect to ~~operate~~continue to generate operating losses for the foreseeable future. As of December 31, 2022, we have an accumulated deficit of approximately $59 million and ~~expand~~our total cash at December 31, 2022 was $21,360. These factors raise substantial doubt about our ~~business~~ability to continue as a going concern and to satisfy our estimated liquidity needs for twelve months following the date on which we issued our consolidated audited financial statements for the fiscal year ended June 30, 2022. Our consolidated audited financial statements as of and for the year ended June 30, 2022 have been prepared under the assumption that we will continue as a going concern for the next twelve months. Our management concluded that our recurring losses from operations and the fact that we have not generated significant revenue or positive cash flows from operations raise substantial doubt about our ability to continue as a going concern for the twelve months following the date on which we issued of our audited financial statements. Our auditors also included an explanatory paragraph in its report on our audited financial statements as of and for the year ended June 30, 2022 with respect to this uncertainty. If we continue to experience operating losses, and we are not able to generate additional liquidity through a capital raise or other cash infusion, we might need to secure additional sources of funds, which may or may not be available to us. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to further scale back or discontinue the development of our product candidates or other research and development initiatives or initiate steps to cease operations.

During the three months ended September 30, 2022, our operating activities used net cash of $501,160 and our total cash was $163,126. During the year ended June 30, 2022, our operating activities used net cash of approximately $1.2 million and our total cash was $300,899. As of September 30, 2022, our accumulated deficit totaled approximately $56 million. We expect to incur additional operating losses in the future and therefore expect our cumulative losses to increase. We will require funds to purchase additional 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 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 all of our stockholders would not be substantially diluted. Any additional sources of financing will likely involve the issuance of our equity or debt securities, which will have a dilutive effect on our stockholders. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. Our ability to raise capital through the sale of securities may be limited by the rules of the SEC and the terms of the agreements that we enter into. We currently do not have any committed sources of financing other than our accounts receivable factoring agreement, which requires us to meet certain conditions to utilize and there can be no assurance that we will meet those conditions. The Equity Purchase Agreement that we entered into into in November 2022 also has several conditions that we must meet before ClearThink Capital Partners, LLC is required to purchase shares of our common stock and there can be no assurance that we will meet those conditions-31-

We ~~have~~require ~~not~~funds ~~be able~~ to ~~access~~operate ~~the~~and ~~operating~~expand ~~capital available under the Equity Purchase Agreement dated November 7, 2022, which could prevent us from accessing the capital we need to continue~~ our ~~operations, which could have an adverse effect on our~~ business.

During the six months ended December 31, 2022, our operating activities used net cash of $1,990,898 and our total cash at December 31, 2022 was $21,360. During the year ended June 30, 2022, our operating activities used net cash of approximately $1.2 million and our total cash was $300,899. During the year ended June 30, 2021, our operating activities used net cash of approximately $6,300,000 and our cash was $541,591. As of December 31, 2022, our accumulated deficit totaled approximately $59 million. As of June 30, 2022, our accumulated deficit totaled approximately $54,000,000. Although we have been able to mitigate our losses in the past, we expect to incur additional operating losses in the future and therefore expect our cumulative losses to increase. We will require funds to purchase additional 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 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 all of our stockholders would not be substantially diluted. Any additional sources of financing will likely involve the issuance of our equity or debt securities, which will have a dilutive effect on our stockholders. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. Our ability to raise capital through the sale of securities may be limited by the rules of the SEC and the terms of the agreements that we enter into. We currently do not have any committed sources of financing other than our accounts receivable factoring agreement, which requires us to meet certain conditions to utilize and there can be no assurance that we will meet those conditions.

Our failure to comply with the terms of our outstanding notes could result in a default under the terms of the notes and, if uncured, it could potentially result in action against our pledged assets.

We currently have outstanding $200,000 in principal amount related to the balance of the note we issued in June 2022; $900,000 in principal amount related to the balance of the note we issued in August 2022 and $310,000 in principal amount related to the balance of the note we issued in November 2022. The notes have negative and affirmative covenants that restrict our ability to declare dividends, repurchase stock, issue new debt without consent, sell assets and are secured by warrants and convertible default provisions in the event the Company does not make the scheduled payments. If we fail to comply with the terms of the notes, the note holders could declare a default under the notes and if the default were to remain uncured the amounts owed under the notes can be accelerated, as they would have the right to proceed against the collateral secured by the loans. Certain of the notes also have prohibitions which prohibit us from taking certain actions. Any failure to comply with the terms of the notes would likely have a serious disruptive effect on our business.

We have not been able to access the operating capital available under the Equity Purchase Agreement dated November 7, 2022, which could prevent us from accessing the capital we need to continue our operations, which could have an adverse effect on our business

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 ClearThink Capital Partners, LLC, to purchase up to $5 million of shares of our common stock over a 24-month period is not available until we register ~~the~~for ~~stock~~resale to be issued to ClearThink Capital Partners, LLC. We may 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 behave a material adverse effect on our business, operating results, financial condition and prospects.

Our inability to access any other financing sources, could have a material adverse effect on our business.

Risks Relating to the COVID-19 Pandemic

Pandemics, including the 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 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 exposure to global regulatory, geopolitical, and societal changes; rapid degradation of global economic conditions, creating an increase in the volatility and the timing and level of orders; supply chain disruptions, material shortages, and increases in the costs of components; changes in labor force availability, which could reduce our ability to operate across our business in development, sales and marketing, production, installation, and ongoing service and support; an increased risk being subjected to contract performance claims if we are unable to 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 pandemic; reduced access to and an increase in the cost of capital; reduced access to surety bonds or bank guarantees to secure customer orders; volatility and changes in foreign currency rates; delayed timing of collections and/or decreased collectability of receivables and contract assets; and a material reduction to the values of our assets including, but not limited to, inventory, deferred tax assets, goodwill, intangibles, and property and equipment.

-32-

Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.

Our operations and performance depend on global, regional and U.S. economic and geopolitical conditions. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for our products and our ability to raise capital when needed on favorable terms, if at all. Recently the rate of inflation has increased throughout the U.S. economy. Inflation may adversely affect us by increasing the costs of labor, consumables and other costs of doing business. In an inflationary environment, such cost increases may outpace our expectations, causing us to use cash faster than forecasted. We have experienced supply chain disruption and a weak or declining economy may further strain our vendors an and suppliers possibly resulting in additional supply chain disruptions or cause delays in payments from customers. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from U.S. and European leaders. These events are currently escalating and creating increasingly volatile global economic conditions. Resulting changes in U.S. trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” Any of the foregoing could cause us to face significant adverse effects to our business and financial condition.

-25-

The above factors, including a number of other economic and geopolitical factors both in the U.S. and abroad, could ultimately have material adverse effects on our business, financial condition, results of operations or cash flows, including the following:


●	effects of significant changes in economic, monetary and fiscal policies in the U.S. and abroad including currency fluctuations, inflationary pressures and significant income tax changes;
●	supply chain disruptions;
●	a global or regional economic slowdown in any of our market segments;
●	changes in government policies and regulations affecting the Company or its significant customers;
●	industrial policies in various countries that favor domestic industries over multinationals or that restrict foreign companies altogether;
●	new or stricter trade policies and tariffs enacted by countries, such as China, in response to changes in U.S. trade policies and tariffs;
●	postponement of spending, in response to tighter credit, financial market volatility and other factors;
●	rapid material escalation of the cost of regulatory compliance and litigation;
●	difficulties protecting intellectual property;
●	longer payment cycles;
●	credit risks and other challenges in collecting accounts receivable; and
●	the impact of each of the foregoing on outsourcing and procurement arrangements.

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

For the ~~three~~six months ended ~~September~~December 3031, 2022:

Except as previously reported in prior filings with the Securities and Exchange Commission and as reported below, there were no sales of unregistered securities for the ~~three~~six ~~month~~months ended ~~September~~December 3031, 2022.

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued 13,070,922 shares of common stock for professional consulting services..

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued 1,800,000 shares of common stock for commitment fees under a note payable.

During the ~~three~~six months ended ~~September~~December 3031, 2022, the Company issued 350,000 shares of common stock as a charitable donation.

~~During the three months ended September 30, 2022, the Company received 36,500 shares of common stock from a former investor.~~ -33-

~~All~~During ~~sales in each of~~ the ~~transactions~~six ~~set~~months ~~forth~~ended ~~above~~December ~~were~~31, issued relying on the exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder for the offer and sale of securities not involving a public offering. The recipients of securities in each of these transactions relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof2022, ~~and appropriate legends were affixed to~~ the ~~securities~~Company issued in these transactions. Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access4, ~~through employment~~863,038 ~~business~~shares orof ~~other~~common ~~relationships,~~stock to ~~information~~reduce ~~about~~notes uspayable.

During the six months ended December 31, 2022, the Company issued 23,540,539 shares of common stock to convert Preferred Series F stock.

During the six months ended December 31, 2022, the Company received 36,500 shares of common stock from a former investor.

During the six months ended December 31, 2022, the Company issued 4,429,130 shares of common stock under the Equity Purchase Agreement in exchange for working capital.

All sales in each of the transactions set forth above were issued relying on the exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder for the offer and sale of securities not involving a public offering except for debt conversions, the exercise of warrants, and Series F Preferred Stock exchanges, which were effected relying on Section 3(a)(9) of the Securities Act as the common stock was exchanged by us with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange. The recipients of securities in each of these transactions relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

~~Not~~On ~~applicable~~January 11, 2023, we issued 5,000,000 shares to an investor under the Equity Purchase Agreement in exchange for working capital.

~~-26-~~On January 27, 2023, we issued 763,359 shares to reduce a note payable.

On February 1, 2023, we issued 1,000,000 shares additional commitment shares for the extension of a maturity date on a note payable.

On February 1, 2023, we issued 4,000,000 shares to reduce a note payable.

On February 8, 2023, we issued 1,923,077 shares to reduce a note payable.

All sales in each of the transactions set forth above were issued relying on the exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder for the offer and sale of securities not involving a public offering except for debt conversions (issuance of common stock to reduce debt) , which were effected relying on Section 3(a)(9) of the Securities Act as the common stock was exchanged by us with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange. The recipients of securities in each of these transactions relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about us.

-34-

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)
3.5	Certificate of Designation of Series F Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed February 14, 2022).
3.6	Certificate of Change (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed March 8, 2022).
3.7	Certificate of ~~Change~~Designation of Series G Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed ~~September~~June 229, 2022).
4.1	Promissory Note dated June 21, 2022 in the principal amount of $600,000 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed July 11, 2022).
3.8	Certificate of Change (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed September 2, 2022).
4.2	Warrant dated June 21, 2022(incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed July 11, 2022).
3.9	Certificate of Change ((incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed February 2, 2023).
4.3	Promissory Note dated August 31, 2022 in the principal amount of $900,000 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed September 9, 2022).
10.1	Purchase Agreement dated November 7, 2022 by and between Galaxy Next Generation, Inc. and ClerThink Capital Partners, LLC (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed November 8, 2022).
4.4	Warrant dated August 31, 2022(incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed September, 9 2022).
10.1	Securities Purchase Agreement dated June 21, 2022(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed July 11, 2022).
10.2	Securities Purchase Agreement dated August 31, 2022 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 000-56006, filed with the Securities and Exchange Commission filed September 9, 2022).
31.1*	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	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*	Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the ~~Sarbanes~~arbanes-Oxley Act of 2002
101*	XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)
101.INS+	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*
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.

+To be filed in Amended filing.

SIGNATURES

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

GALAXY NEXT GENERATION, INC.

Date: ~~November~~February 14, ~~2022~~2023

/s/ Gary LeCroy

Gary LeCroy

Chief Executive Officer (Principal Executive Officer)

Date: ~~November~~February 14, ~~2022~~2023

/s/Magen McGahee

Magen McGahee

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

-2735-

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: ~~November~~February 14, ~~2022~~2023

Galaxy Next Generation, Inc.

By:/s/ Gary LeCroy

Gary LeCroy

Chief Executive Officer

(Principal Executive Officer)

-2836-

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: ~~November~~February 14, ~~2022~~2023

Galaxy Next Generation, Inc.

By: /s/ Magen McGahee

Magen McGahee

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

-2937-

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 ~~September~~December 3031, 2022, 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 ~~September~~December 3031, 2022, 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 ~~September~~December 3031, 2022, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: ~~November~~February 14, ~~2022~~2023

Galaxy Next Generation, Inc.

By:/s/ Gary LeCroy

Gary LeCroy

Chief Executive Officer

(Principal Executive Officer)

-3038-

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 ~~September~~December 3031, 2022, 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:

Dated: ~~November~~February 14, ~~2022~~2023

Galaxy Next Generation, Inc.

By: /s/ Magen McGahee

Magen McGahee

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer.)

-3139-

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Filing Compare · GALAXY NEXT GENERATION, INC.