IDT: Dialogue and evaluation by administration of the monetary place and working outcomes. (kind 10-Okay)

This Annual Report incorporates forward-looking statements throughout the that means of
Part 27A of the Securities Act of 1933 and Part 21E of the Securities
Trade Act of 1934, together with statements that include the phrases "believes,"
"anticipates," "expects," "plans," "intends" and comparable phrases and phrases.
These forward-looking statements are topic to dangers and uncertainties that
may trigger precise outcomes to vary materially from the outcomes projected in
any forward-looking assertion. Along with the components particularly famous in
the forward-looking statements, different vital components, dangers and uncertainties
that might lead to these variations embrace, however usually are not restricted to, these
mentioned underneath Merchandise 1A to Half I "Threat Elements" on this Annual Report. The
forward-looking statements are made as of the date of this Annual Report, and we
assume no obligation to replace the forward-looking statements, or to replace the
the explanation why precise outcomes may differ from these projected within the
forward-looking statements. Buyers ought to seek the advice of the entire data set
forth on this report and the opposite data set forth infrequently in
our reviews filed with the Securities and Trade Fee pursuant to the
Securities Act of 1933 and the Securities Trade Act of 1934, together with our
reviews on Types 10-Q and 8-Okay.



We adopted the disclosure necessities of Regulation S-Okay relevant to smaller
reporting corporations on this Annual Report on Kind 10-Okay. In accordance with Merchandise
10(f)(2) of Regulation S-Okay, we qualify as a "smaller reporting firm" as a result of
our public float was beneath $200 million as of January 31, 2020, the final
enterprise day of our second quarter in fiscal 2020. Our public float as of
January 29, 2021, the final enterprise day of our second quarter in fiscal 2021,
was $292.2 million. Subsequently, in accordance with Merchandise 10(f)(1) of Regulation
S-Okay, we'll transition from the scaled disclosure out there to smaller
reporting corporations to the disclosure necessities relevant to all different
corporations starting with our Quarterly Report on Kind 10-Q for our first quarter
in fiscal 2022.


The next dialogue ought to be learn along side the consolidated monetary statements and associated notes included in part 8 of this annual report.

CRITICAL ACCOUNTING POLICIES

Our monetary statements and accompanying notes are ready in accordance with
accounting rules usually accepted in the US of America, or
U.S. GAAP. The preparation of monetary statements requires administration to make
estimates and assumptions that have an effect on the reported quantities of belongings,
liabilities, income and bills in addition to the disclosure of contingent belongings
and liabilities. Important accounting insurance policies are those who require software
of administration's most subjective or complicated judgments, usually on account of
issues which might be inherently unsure and will change in subsequent intervals. Our
vital accounting insurance policies embrace these associated to the allowance for uncertain
accounts, goodwill, valuation of long-lived belongings, and earnings taxes, gross sales
taxes, and regulatory company charges. Administration bases its estimates and judgments
on historic expertise and different components which might be believed to be cheap
underneath the circumstances. Precise outcomes could differ from these estimates underneath
totally different assumptions or situations. See Observe 1 to the Consolidated Monetary
Statements on this Annual Report for an entire dialogue of our important
accounting insurance policies.



31





Provision for dangerous money owed



Our allowance for uncertain accounts was $4.4 million at July 31, 2021 and $6.1
million at July 31, 2020. The allowance for uncertain accounts as a proportion of
gross commerce accounts receivable decreased to eight.7% at July 31, 2021 from 12.1% at
July 31, 2020 as a result of the allowance for uncertain accounts decreased 27.1% and
gross commerce accounts receivable elevated 1.7% at July 31, 2021 in comparison with
July
31, 2020.


We estimate the stability of our allowance for uncertain accounts by analyzing
accounts receivable balances by age and making use of historic write-off and
assortment pattern charges. Our estimates embrace individually offering for buyer
receivables primarily based on particular circumstances and credit score situations, and when it
is deemed possible that the stability is uncollectible. Account balances are
written off in opposition to the allowance when it's decided that the receivable will
not be recovered. Our estimates of recoverability of buyer accounts could
change resulting from new developments, adjustments in assumptions or adjustments in our
technique, which can affect our allowance for uncertain accounts stability. We
regularly assess the chance of potential quantities or ranges of
recoverability and modify our allowance accordingly, nonetheless, precise collections
and write-offs of commerce accounts receivables could materially differ from our
estimates.



Goodwill



Our goodwill is attributable to reporting models in our Conventional
Communications phase and to net2phone-UCaaS, which is each a phase and a
reporting unit. Goodwill was $14.9 million and $12.9 million at July 31, 2021
and 2020, respectively.


Goodwill isn't amortized. As an alternative, goodwill is reviewed yearly (or extra
often underneath varied situations) for impairment. We now have the choice to
carry out a qualitative evaluation to find out whether or not it's essential to carry out
the quantitative goodwill impairment take a look at. Nonetheless, we could elect to carry out the
quantitative goodwill impairment take a look at even when no indications of a possible
impairment exist.



When performing our quantitative annual, or interim, goodwill impairment take a look at we
are evaluating the truthful worth of the reporting unit with its carrying quantity. We
would acknowledge an impairment cost for the quantity by which the carrying quantity
exceeds the reporting unit's truthful worth; nonetheless, the loss acknowledged wouldn't
exceed the whole quantity of goodwill allotted to the reporting unit.
Moreover, we take into account earnings tax results from any tax-deductible goodwill on
the carrying quantity of the reporting unit when measuring the goodwill impairment
loss, if relevant. The truthful worth of the reporting unit is estimated utilizing
discounted money stream methodologies, in addition to contemplating third occasion market
worth indicators. Our use of a reduced money stream methodology contains
estimates of future income primarily based upon budgets and projections. We additionally develop
estimates for future ranges of gross and working income and projected capital
expenditures. Our methodology additionally contains the usage of estimated low cost charges
primarily based upon trade and competitor evaluation in addition to different components.



In fiscal 2020, we carried out a quantitative annual impairment take a look at which
resulted in no goodwill impairment for the reason that estimated truthful values of our
reporting models considerably exceeded their carrying worth. In fiscal 2021, we
carried out a qualitative evaluation and decided that it was not essential to
carry out the quantitative goodwill impairment take a look at. As well as, we don't
imagine our reporting models are presently susceptible to goodwill impairment.
Calculating the truthful worth of the reporting models requires important estimates
and assumptions by administration. Ought to the estimates and assumptions relating to
the truthful worth of the reporting models show to be incorrect, we could also be required
to file impairments to our goodwill in future intervals and such impairments
might be materials.


Lengthy-term asset valuation



We take a look at the recoverability of our long-lived belongings each time occasions or adjustments
in circumstances point out that the carrying worth of any such asset will not be
recoverable. Such occasions or adjustments in circumstances embrace:



? a big precise underperformance in comparison with the anticipated efficiency or

projected future working outcomes;

? important adjustments within the method or use of the belongings or technique of our

   general enterprise;




? materials hostile adjustments within the enterprise local weather wherein we function; and

? lack of an vital contract.




There have been no such occasions or adjustments in circumstances in fiscal 2021 or fiscal
2020. If we decide that the carrying worth of sure long-lived belongings could
not be recoverable, we take a look at for impairment primarily based on the projected undiscounted
money flows to be derived from such asset. If the projected undiscounted future
money flows are lower than the carrying worth of the asset, we'll file an
impairment loss primarily based on the distinction between the estimated truthful worth and the
carrying worth of the asset. We usually measure truthful worth by contemplating sale
costs for comparable belongings or by discounting estimated future money flows from the
asset utilizing an applicable low cost charge. Money stream projections and truthful worth
estimates require important estimates and assumptions by administration. Ought to
our estimates and assumptions show to be incorrect, we could also be required to
file impairments in future intervals and such impairments might be materials.



32





Earnings taxes, gross sales taxes and regulatory company charges



Our present and deferred earnings taxes and related valuation allowance,
accruals for gross sales taxes, and telecom regulatory company payment accruals, are
impacted by occasions and transactions arising within the regular course of enterprise as
properly as in reference to particular and non-routine objects. Evaluation of the
applicable quantity of earnings taxes, gross sales taxes, and regulatory company charges is
depending on a number of components, together with estimates of the timing and realization
of deferred earnings tax belongings, the outcomes of audits, adjustments in tax legal guidelines or
regulatory company guidelines and rules, in addition to unanticipated future actions
impacting associated accruals of regulatory company charges.



The valuation allowance on our deferred earnings tax belongings was $11.5 million and
$58.7 million at July 31, 2021 and 2020, respectively. In fiscal 2021, we
launched $46.5 million of our valuation allowance on the portion of the deferred
earnings tax belongings that we're extra possible than not going to make the most of. This
launch was principally associated to home deferred earnings tax belongings. We used the
framework of Accounting Requirements Codification, or ASC, Earnings Taxes (Matter 740)
to find out whether or not the valuation allowance ought to be maintained or reversed.
We thought of the scheduled expiration of our internet working losses included in
our deferred tax belongings, projected future taxable earnings, and tax planning
methods in our evaluation of the valuation allowance. The first components
that resulted within the valuation allowance launch had been the three consecutive
years of profitability in the US and anticipated future profitability in
each the US and the United Kingdom that can make the most of a big
portion of the web working losses. Our tax planning methods weren't a
important issue within the evaluation. In fiscal 2020, resulting from taxable earnings in the
United States, we utilized deferred tax belongings and launched the corresponding
valuation allowance to offset earnings tax expense of $3.5 million. As well as,
in fiscal 2020, we launched an extra $8.4 million of the valuation
allowance on the portion of the deferred tax belongings that we're extra possible than
not going to make the most of as a result of we forecasted future profitability in the United
States.



On June 21, 2018, the United States Supreme Court docket rendered a call in South
Dakota v. Wayfair, Inc., holding {that a} state could require a distant vendor with
no bodily presence within the state to gather and remit gross sales tax on items and
companies supplied to purchasers within the state, overturning sure present courtroom
precedent. We now have evaluated our state tax filings with respect to the Wayfair
resolution and are within the means of reviewing our remittance practices. It's
attainable that a number of jurisdictions could assert that we've legal responsibility for
intervals for which we've not collected gross sales, use or different comparable taxes, and
if such an assertion or assertions had been profitable it may materially and
adversely have an effect on our enterprise, monetary place, and working outcomes. One or
extra jurisdictions could change their legal guidelines or insurance policies to use their gross sales, use
or different comparable taxes to our operations, and if such adjustments had been made it may
materially and adversely have an effect on our enterprise, monetary place, and working
outcomes.



Our 2017 FCC Kind 499-A, which reviews our calendar 12 months 2016 income, is
presently underneath audit by the USAC. The Inner Audit Division of USAC issued
preliminary audit findings and we've, in accordance with audit procedures,
appealed sure of the findings. We're awaiting a ultimate resolution by USAC on
the preliminary audit findings. Relying on the findings contained within the ultimate
resolution, we could additional enchantment to the FCC. Though a ultimate resolution stays
pending, we've been invoiced $2.9 million and $1.8 million on behalf of the
Federal Telecommunications Relay Providers Fund and on behalf of the Common
Service Fund, respectively. We don't intend to remit cost for these charges
until and till a detrimental resolution on our enchantment has been issued. In response
to the aforementioned preliminary audit findings, we made sure adjustments to our
submitting insurance policies and procedures for years that stay probably underneath audit. At
July 31, 2021 and 2020, our accrued bills included $38.3 million and $40.8
million, respectively, for FCC-related regulatory charges for the 12 months lined by
the audit, in addition to prior and subsequent years.



RECENTLY PUBLISHED ACCOUNTING STANDARD NOT YET ADOPTED



In June 2016, the Monetary Accounting Requirements Board issued Accounting
Requirements Replace No. 2016-13, Monetary Devices-Credit score Losses (Matter 326),
Measurement of Credit score Losses on Monetary Devices, that adjustments the
impairment mannequin for many monetary belongings and sure different devices. For
receivables, loans and different devices, entities will probably be required to make use of a brand new
forward-looking present anticipated credit score loss mannequin that usually will lead to
the sooner recognition of allowance for losses. For available-for-sale debt
securities with unrealized losses, entities will measure credit score losses in a
method just like present observe, besides the losses will probably be acknowledged as
allowances as an alternative of reductions within the amortized price of the securities. In
addition, an entity must disclose considerably extra details about
allowances, credit score high quality indicators, and overdue securities. The brand new
provisions will probably be utilized as a cumulative-effect adjustment to retained
earnings. We'll undertake the brand new commonplace on August 1, 2023. We're evaluating
the affect that the brand new commonplace may have on our consolidated monetary
statements.



33






RESULTS OF OPERATIONS



As of August 1, 2020, we revised our reportable enterprise segments to mirror the
progress of our monetary expertise and cloud communications companies and their
elevated contributions to our consolidated outcomes. Our three reportable
enterprise segments, Fintech, net2phone-UCaaS, and Conventional Communications,
mirror administration's method to analyzing outcomes, its useful resource allocation
technique, and its evaluation of enterprise efficiency. Comparative phase
data has been reclassified and restated in all intervals to adapt to the
present interval presentation. We consider the efficiency of our enterprise
segments primarily based totally on earnings (loss) from operations. Accordingly, the
earnings and expense line objects beneath earnings (loss) from operations are solely
included in our dialogue of the consolidated outcomes of operations.



Coronavirus illness (COVID-19)

We proceed to watch and reply to the impacts of the COVID-19 pandemic on all features of our enterprise, together with our clients, workers, suppliers, distributors and enterprise companions.



Operationally, our workers transitioned to work-from-home in the course of the third
quarter of fiscal 2020 and, to a big diploma, proceed to work-from-home.
Starting within the fourth quarter of fiscal 2021, sure of our workers
returned to our places of work on a part-time foundation. Our salespeople, customer support
workers, technicians, and supply workers proceed to serve our impartial
retailers, channel companions, and clients with minimal interruption.



COVID-19 had blended monetary impacts on our companies starting within the third
quarter of fiscal 2020 and persevering with via the fourth quarter of fiscal 2021.
It drove will increase in demand for our shopper choices, principally BOSS
Revolution Cash Switch, BOSS Revolution Calling and Cell Prime-Up, via
our digital channels starting within the latter half of March 2020. Subsequently,
digital transaction ranges have continued to extend relative to retailer
originated transactions. Conversely, gross sales of shopper choices originating
via retailers and channel companions slowed modestly in late March and April
2020 earlier than stabilizing within the fourth quarter of fiscal 2020. NRS was
immaterially impacted by the closure of a few of its retailers within the third
quarter of fiscal 2020, however most re-opened shortly and lots of attracted elevated
foot site visitors following the onset of COVID-19 as native retailers are sometimes
extra accessible to pedestrian site visitors than massive field retailers. The resilience of
native retailers has enabled NRS to proceed to increase gross sales of terminals,
cost processing, and promoting companies. Provider Providers' income, which
had been declining as communications globally transition away from conventional
worldwide long-distance voice, declined extra quickly following the onset of
COVID-19 as enterprise communications shifted from calling to video conferencing
and different collaboration platforms.



On the onset of COVID-19, the transition from places of work to a extra versatile
workforce elevated the demand for net2phone-UCaaS' choices. Prospects
transitioned from their on-premises cellphone system to net2phone-UCaaS' cloud
resolution, ported their cellphone numbers, and shortly set-up their workers to work
remotely. In April 2020, the discharge of Huddle, net2phone-UCaaS' built-in
video conferencing resolution, considerably improved net2phone-UCaaS'
performance for distant work, which additionally elevated the demand for its companies.
COVID-19 had blended monetary impacts on net2phone-UCaaS' enterprise starting in
the third quarter of fiscal 2020. Its buyer base progress slowed considerably in
the second half of fiscal 2020 in sure Latin American markets. Nonetheless, Latin
American gross sales rebounded within the first quarter of fiscal 2021 and gross sales have
remained robust in its United States and Canadian markets. Within the second half of
fiscal 2021, COVID-19 instances elevated in Latin America, particularly Brazil,
and in Spain. This prompted companies to downsize or shutdown, which diminished its
buyer base and revenues. Within the fourth quarter of fiscal 2021, the demand for
versatile communications options for a hybrid workforce has resulted in an
improve in new net2phone-UCaaS clients.



As of the date of this Annual Report, together with the affect of COVID-19, we
count on that our money from operations and the stability of money, money equivalents,
debt securities, and present fairness investments that we held on July 31, 2021
will probably be ample to fulfill our presently anticipated working capital and capital
expenditure necessities throughout fiscal 2022. Nonetheless, the scenario stays
fluid and we can not predict with certainty the potential affect of COVID-19 on
our enterprise, outcomes of operations, monetary situation, and money flows.



Focus of Prospects


Our most important clients sometimes embrace telecom operators to whom we
present wholesale companies and distributors of our retail calling merchandise.
Whereas they might differ from quarter to quarter, our 5 largest clients
collectively accounted for 14.5% and 12.7% of our consolidated revenues in
fiscal 2021 and monetary 2020, respectively. Our clients with the 5 largest
receivables stability collectively accounted for 9.7% and 13.8% of the
consolidated gross commerce accounts receivable at July 31, 2021 and 2020,
respectively. This focus of shoppers will increase our threat related to
nonpayment by these clients. In an effort to scale back our threat, we carry out
ongoing credit score evaluations of our important clients, and in some instances, do
not supply credit score phrases to clients, selecting as an alternative to require prepayment.
Traditionally, when we've issued credit score, we've not required collateral to
assist commerce accounts receivables from our clients. Nonetheless, when needed,
we've imposed stricter credit score restrictions on our clients. In some instances,
this has resulted in our sharply curbing, or ceasing fully, gross sales to
sure clients. We try to mitigate our credit score threat associated to particular
Provider Providers clients by additionally shopping for companies from the shopper, so as
to create a chance to offset our payables and receivables with the
buyer. On this approach, we will proceed to promote companies to those clients whereas
decreasing our receivable publicity threat. When it's sensible to take action, we'll
improve our purchases from Provider Providers clients with receivable balances
that exceed our relevant payables with a purpose to maximize the offset and scale back
our credit score threat.



34





Clarification of efficiency measures



Our outcomes of operations dialogue embrace the next efficiency metrics:
energetic POS terminals, cost processing accounts, direct price of revenues as a
proportion of revenues, seats, subscription income, and minutes of use.



NRS makes use of two metrics, amongst others, to measure the scale of its buyer base:
energetic POS terminals and cost processing accounts. Energetic POS terminals are
the variety of POS terminals which have accomplished no less than one transaction within the
calendar month. It excludes POS terminals which might be being put in. Cost
processing accounts are NRS PAY accounts that may generate income. It excludes
accounts which were authorised however not activated. NRS makes use of these two metrics
in its evaluation of income developments and comparisons between intervals.



Direct price of revenues as a proportion of revenues is a monetary metric that
measures adjustments in our direct price of revenues relative to adjustments in revenues
throughout the identical interval. Direct price of revenues is the numerator and revenues
are the denominator on this ratio. Direct price of revenues as a proportion of
revenues is a helpful metric for monitoring and evaluating developments within the internet
contribution of our revenues.



net2phone-UCaaS' cloud communications providing is priced on a per-seat foundation,
with every buyer worker identification constituting a seat, and its subscription
income is a month-to-month base payment per seat. The variety of seats served and
subscription income developments and comparisons between intervals are used within the
evaluation of net2phone-UCaaS' revenues and direct price of revenues.



Minutes of use is a nonfinancial metric that measures mixture buyer utilization
throughout a reporting interval. Minutes of use is a vital think about BOSS
Revolution Calling's and Provider Providers' income recognition since
satisfaction of our efficiency obligation happens when the shopper makes use of our
service. Minutes of use developments and comparisons between intervals are used within the
evaluation of revenues and direct price of revenues.



12 months ended July 31, 2021 in comparison with the closed monetary 12 months July 31, 2020

The next desk presents sure components of our earnings statements as a proportion of our whole revenues:


12 months ended July 31                                        2021              2020
REVENUES:
Fintech                                                         5.2 %             4.4 %
net2phone-UCaaS                                                 3.0               2.4
Conventional Communications                                     91.8              93.2
TOTAL REVENUES                                                100.0             100.0

COSTS AND EXPENSES: Direct price of earnings (excluding depreciation and amortization)

                                              79.8         

80.5

Promoting, normal and administrative                            15.1        
     16.0
Depreciation and amortization                                   1.2               1.5
Severance                                                         -               0.3
TOTAL COSTS AND EXPENSES                                       96.1              98.3
Different working acquire (expense), internet                             0.1        
     (0.4 )
INCOME FROM OPERATIONS                                          4.0               1.3
Curiosity earnings, internet                                              -               0.1
Different earnings (expense), internet                                     0.5              (0.1 )
INCOME BEFORE INCOME TAXES                                      4.5 %             1.3 %




35






Fintech Phase



Fintech, which represented 5.2% and 4.4% of our whole revenues in fiscal 2021
and monetary 2020, respectively, contains BOSS Revolution Cash Switch, a
supplier of worldwide cash remittance and associated worth/cost switch
companies, and NRS, operator of a nationwide POS community offering cost
processing, digital promoting, transaction knowledge, and ancillary companies. BOSS
Revolution Cash Switch and NRS had been beforehand included in our Telecom &
Cost Providers phase.



(in hundreds of thousands)                                                     Change
12 months ended July 31                     2021       2020        $           %
Revenues:
BOSS Revolution Cash Switch        $ 49.6     $ 47.9     $  1.7          3.4 %
Nationwide Retail Options               24.7       12.0       12.7        106.6
Whole revenues                          74.3       59.9       14.4         24.1
Direct price of revenues                 26.2       19.2        7.0         36.1
Promoting, normal and administrative     47.9       35.8       12.1         33.9
Depreciation and amortization            1.7        1.5        0.2         14.9
(Loss) earnings from operations         $ (1.5 )   $  3.4     $ (4.9 )     (143.2 )%



Revenues. Revenues from BOSS Revolution Cash Switch elevated in fiscal 2021
in comparison with fiscal 2020 pushed primarily by elevated transaction quantity in its
digital channel, and a big however diminished profit from transient international
change market situations that ceased by the tip of the second quarter of
fiscal 2021.



Revenues from NRS elevated in fiscal 2021 in comparison with fiscal 2020 pushed
primarily by the enlargement of its POS community, and income progress from its
cost processing companies and digital out-of-home promoting. Service provider
companies and different income, which incorporates cost processing companies,
elevated 295% to $7.8 million in fiscal 2021 from $2.0 million in fiscal 2020.
Promoting and knowledge income elevated 95% to $8.7 million in fiscal 2021 from
$4.5 million in fiscal 2020. Energetic POS terminals elevated 40% to 14,000 at
July 31, 2021 from 10,000 at July 31, 2020. Cost processing accounts
elevated 124% to five,600 at July 31, 2021 from 2,500 at July 31, 2020.



Direct Price of Revenues. Direct price of revenues elevated in fiscal 2021
in comparison with fiscal 2020 primarily as a result of improve in revenues. BOSS
Revolution Cash Switch's direct price of revenues elevated in fiscal 2021
in comparison with fiscal 2020 resulting from elevated direct price of revenues in its digital
channel.



12 months ended July 31                                     2021       2020       Change

Direct price of gross sales as a proportion of gross sales 35.2% 32.1%

     3.1 %




Direct price of revenues as a proportion of revenues elevated 310 foundation factors
in fiscal 2021 in comparison with fiscal 2020 primarily resulting from a rise in direct
price of revenues as a proportion of revenues in BOSS Revolution Cash Switch's
digital channel, partially offset by a lower in direct price of revenues as a
proportion of revenues in NRS.



Promoting, Normal and Administrative. Promoting, normal and administrative expense
elevated in fiscal 2021 in comparison with fiscal 2020 primarily resulting from will increase in
worker compensation, debit and bank card processing prices, gross sales
commissions, and advertising and marketing expense. The rise in card processing prices was
the results of elevated credit score and debit card transactions via our BOSS
Revolution Cash app and different digital channels. As a proportion of Fintech's
income, Fintech's promoting, normal and administrative expense elevated to
64.5% from 59.7% in fiscal 2021 and monetary 2020, respectively.



Depreciation and Amortization. Depreciation and amortization expense elevated
in fiscal 2021 in comparison with fiscal 2020 primarily resulting from elevated depreciation
of capitalized prices of consultants and workers creating inner use
software program and elevated depreciation of NRS' POS gear.



net2phone-UCaaS Phase



The net2phone-UCaaS phase, which represented 3.0% and a couple of.4% of our whole
revenues in fiscal 2021 and monetary 2020, respectively, contains net2phone's
cloud communications choices, which had been beforehand included in our net2phone
phase.



(in hundreds of thousands)                                                       Change
12 months ended July 31                     2021        2020         $          %
Revenues                              $  43.9     $  31.8     $ 12.1       38.1 %
Direct price of revenues                   8.1         6.4        1.7       26.9
Promoting, normal and administrative      45.0        36.3        8.7       23.7
Depreciation and amortization             5.0         4.1        0.9       22.9
Different working expense, internet              0.1         0.1          -       58.7
Loss from operations                  $ (14.3 )   $ (15.1 )   $  0.8        5.4 %




36






Revenues. net2phone-UCaaS' revenues elevated in fiscal 2021 in comparison with fiscal
2020 pushed by progress in the US, though income elevated in all
net2phone-UCaaS areas. Seats served elevated 47% to 226,000 at July 31, 2021
from 154,000 at July 31, 2020. Subscription income elevated 39% to $41.5
million in fiscal 2021 from $29.9 million in fiscal 2020, led by progress within the
U.S. market. net2phone-UCaaS launched its integration with Slack within the third
quarter of fiscal 2021, constructing on its prior integrations with Zoho and
Microsoft Groups. Additionally in fiscal 2021, net2phone-UCaaS launched an integration
with Salesforce. In November 2020, net2phone-UCaaS introduced it had launched its
service in Peru and in December 2020, it expanded protection to 6 extra
cities in Brazil.


Direct price of earnings. The direct price of revenues elevated in FY2021 in comparison with FY2020 primarily as a result of improve in income with the most important will increase being United States and Latin America.

12 months ended July 31                                     2021       2020     

Change

Direct price of income as a proportion of income 18.5% 20.2%

   (1.7 )%




Direct price of revenues as a proportion of revenues decreased 170 foundation factors
in fiscal 2021 in comparison with fiscal 2020 primarily due to a lower in direct
price of revenues as a proportion of revenues in the US.
net2phone-UCaaS' deal with mid-sized companies, multi-channel methods, and
localized choices generated income progress that exceeded the rise in
direct price of revenues.



Promoting, Normal and Administrative. Promoting, normal and administrative expense
elevated in fiscal 2021 in comparison with fiscal 2020 primarily resulting from will increase in
worker compensation and gross sales commissions. As a proportion of net2phone-UCaaS'
revenues, net2phone-UCaaS' promoting, normal and administrative bills
decreased to 102.4% from 114.3% in fiscal 2021 and monetary 2020, respectively.



Depreciation and Amortization. The rise in depreciation and amortization
expense in fiscal 2021 in comparison with fiscal 2020 was resulting from elevated depreciation
of net2phone-UCaaS' phone gear leased to clients and elevated
depreciation of capitalized prices of consultants and workers creating
inner use software program.



Different Working Expense, internet. Different working expense, internet in fiscal 2021 was
as a result of settlement of a authorized matter. Different working expense, internet in fiscal
2020 was as a result of write-off of sure capitalized belongings associated to a
cancelled mission.



Conventional communications phase



The Conventional Communications phase, which represented 91.8% and 93.2% of our
whole revenues in fiscal 2021 and monetary 2020, respectively, contains Cell
Prime-Up, which permits clients to switch airtime and bundles of airtime,
messaging, and knowledge to worldwide and home cell accounts, BOSS
Revolution Calling, a global long-distance calling service marketed
primarily to immigrant communities in the US and Canada, and Provider
Providers, a wholesale supplier of worldwide voice and SMS termination and
outsourced site visitors administration options to telecoms worldwide. Conventional
Communications additionally contains net2phone-Platform Providers, which offers
telephony companies to cable operators and different choices that leverage a typical
expertise platform, in addition to smaller communications and funds choices,
many in harvest mode. Many of the Conventional Communications phase was
beforehand included in our Telecom & Cost Providers phase apart from
net2phone-Platform Providers, which was beforehand included in our net2phone
phase.



Conventional Communications' most important income streams are from Cell
Prime-Up, BOSS Revolution Calling, and Provider Providers. Cell Prime-Up and BOSS
Revolution Calling are bought direct-to-consumers and thru distributors and
retailers. We obtain funds for BOSS Revolution Calling, conventional calling
playing cards, and Cell Prime-Up previous to offering the companies. We acknowledge the
income when companies are supplied to the shopper. Conventional Communications'
revenues are typically considerably seasonal, with the second fiscal quarter (which
incorporates Christmas and New 12 months's Day) and the fourth fiscal quarter (which
incorporates Mom's Day and Father's Day) sometimes displaying greater minute volumes.



37






(in hundreds of thousands)                                                                     Change
12 months ended July 31                       2021           2020          $/#           %
Revenues:
Cell Prime-Up                         $    461.6     $    334.4     $  127.2        38.0 %
BOSS Revolution Calling                    455.2          468.3        (13.1 )      (2.8 )
Provider Providers                           361.0          394.3        (33.3 )      (8.5 )
Different                                       50.9           57.1         (6.2 )     (10.8 )
Whole revenues                           1,328.7        1,254.1         74.6         6.0
Direct price of revenues                 (1,119.8 )     (1,058.4 )      (61.4 )      (5.8 )
Promoting, normal and administrative       (118.1 )       (134.1 )       16.0        11.9
Depreciation and amortization              (11.0 )        (14.7 )        3.7        25.6
Severance                                   (0.4 )         (3.5 )        3.1        87.0
Different working acquire (expense), internet          0.6           (4.5 )        5.1       112.6
Earnings from operations                $     80.0     $     38.9     $   41.1       105.4 %

Minutes of use:
BOSS Revolution Calling                    3,554          3,913         (359 )      (9.2 )%
Provider Providers                          10,511         14,398       (3,887 )     (27.0 )



Revenues. Revenues from Cell Prime-Up elevated in fiscal 2021 in comparison with
fiscal 2020 primarily from product enlargement and continued progress throughout all of
our distribution channels, together with the addition of a business-to-business
channel in fiscal 2021. The business-to-business channel was the principle driver for
Cell Prime-Up's income improve within the fourth quarter of fiscal 2021. In
addition, our acquisition of a cell top-up firm in December 2020
contributed to our elevated penetration into the market in Africa.



Revenues and minutes of use from BOSS Revolution Calling decreased in fiscal
2021 in comparison with fiscal 2020 though COVID-19 associated demand in fiscal 2021
slowed the speed of decline in BOSS Revolution Calling income that we've
skilled in latest intervals. BOSS Revolution Calling continues to be impacted
by persistent, market-wide developments, together with the proliferation of limitless
calling plans supplied by wi-fi carriers and cell digital community operators,
and the growing penetration of free and paid over-the-top voice, video
conferencing, and messaging companies.



Revenues and minutes of use from Provider Providers decreased in fiscal 2021
in comparison with fiscal 2020 as communications globally continued to transition away
from worldwide voice calling. This pattern was accelerated by the affect of
COVID-19 as enterprise communications shifted from calling to video conferencing
and different collaboration platforms. We count on that Provider Providers will proceed
to be adversely impacted by these developments, and minutes of use and revenues will
possible proceed to say no from quarter-to-quarter, as we search to maximise
economics slightly than essentially maintain minutes of use or revenues.



Direct Price of Revenues. Direct price of revenues elevated in fiscal 2021
in comparison with fiscal 2020 primarily resulting from will increase in Cell Prime-Up's direct
price of revenues in fiscal 2021 in comparison with fiscal 2020 on account of the
improve in its revenues, partially offset by decreases in Provider Providers' and
BOSS Revolution Calling's direct price of revenues in fiscal 2021 in comparison with
fiscal 2020.



12 months ended July 31                                     2021       2020      Change

Direct price of gross sales as a proportion of gross sales 84.3% 84.4%

   (0.1 )%




Direct price of revenues as a proportion of revenues decreased 10 foundation factors in
fiscal 2021 in comparison with fiscal 2020 due to decreases in direct price of
revenues as a proportion of revenues in Cell Prime-Up and BOSS Revolution
Calling in fiscal 2021 in comparison with fiscal 2020, principally offset by a rise in
direct price of revenues as a proportion of revenues in Provider Providers in
fiscal 2021 in comparison with fiscal 2020. The decreases in direct price of revenues as
a proportion of revenues in Cell Prime-Up and BOSS Revolution Calling had been
primarily as a result of continued migration of shoppers to our digital platforms.
The elevated adoption of our digital, direct-to-consumer channels is predicted
to proceed, which is predicted to contribute to future reductions in direct price
of revenues as a proportion of revenues.



Promoting, Normal and Administrative. Promoting, normal and administrative expense
decreased in fiscal 2021 in comparison with fiscal 2020 primarily resulting from decreases in
worker compensation, stock-based compensation, advertising and marketing expense, and dangerous debt
expense, partially offset by a rise in debit and bank card processing
prices. The will increase in card processing prices had been the results of the shift
within the gross sales of our shopper choices from money transactions at retailers to
credit score and debit card transactions via our BOSS Revolution Calling app and
different digital channels. As a proportion of Conventional Communications' income,
Conventional Communications' promoting, normal and administrative expense
decreased to eight.9% from 10.7% in fiscal 2021 and monetary 2020, respectively.

38





Depreciation and amortization. Depreciation expense decreased in fiscal 2021 in comparison with fiscal 2020 as extra of our property, plant and gear was totally amortized, partially offset by amortization of apparatus added to our community. telecommunications and the capitalized prices of consultants and workers creating software program for inner use.

Termination prices. We now have dedicated severance pay of $ 0.4 million and $ 3.5 million in fiscal 2021 and monetary 2020, respectively.

Different Working Acquire (Expense), internet. Different working acquire (expense), internet in
fiscal 2021 included a acquire of $2.0 million acquired from the sale to a 3rd
occasion of all our rights underneath the Cost Card Interchange Payment and Service provider
Low cost Antitrust Litigation. The lawsuit is about claims that retailers paid
extreme charges to just accept Visa and Mastercard playing cards between January 1, 2004 and
January 25, 2019 as a result of Visa and Mastercard, individually, and along with
their respective member banks, violated the antitrust legal guidelines. Different working acquire
(expense), internet additionally included expense for the indemnification of a net2phone
cable telephony buyer associated to patent infringement claims introduced in opposition to
the shopper of $0.5 million and $1.2 million in fiscal 2021 and monetary 2020,
respectively. Different working acquire (expense), internet in fiscal 2021 additionally included
expense for a settlement of a Provider Providers' declare for $0.6 million and different
expense of $0.3 million. As well as, different working acquire (expense), internet in
fiscal 2020 included an accrual for non-income associated taxes associated to one in every of
our international subsidiaries of $2.2 million, a write-off of $0.6 million for
sure belongings primarily in Latin America, and expense of $0.5 million for
a
authorized matter.



Company



(in hundreds of thousands)                                                          Change
12 months ended July 31                      2021       2020         $           %

Normal and administrative bills $ (7.5) $ (9.1) $ 1.6 16.6% Depreciation and amortization

           (0.1 )     (0.1 )       -       (64.4 )
Different working acquire (expense), internet      0.2       (0.5 )     0.7       142.4
Loss from operations                  $ (7.4 )   $ (9.7 )   $ 2.3        23.5 %




Company prices embrace compensation, consulting charges, treasury, tax and
accounting companies, human assets, company buying, company governance
together with Board of Administrators' charges, inner and exterior audit, investor
relations, company insurance coverage, company authorized, charitable contributions,
journey, and different corporate-related normal and administrative bills.
Company doesn't generate any revenues, nor does it incur any direct price
of
revenues.



Normal and Administrative. Company normal and administrative expense
decreased in fiscal 2021 in comparison with fiscal 2020 primarily due to a lower
in stock-based compensation resulting from reductions in expense of deferred inventory models
granted in June 2019 and inventory choices, in addition to a lower in worker
compensation. As a proportion of our consolidated revenues, Company normal
and administrative expense was 0.5% and 0.7% in fiscal 2021 and monetary 2020,
respectively.



Different Working Acquire (Expense), internet. As mentioned in Observe 22 to the Consolidated
Monetary Statements included in Merchandise 8 to Half II of this Annual Report, we (as
properly as different defendants) have been named in a pending putative class motion on
behalf of Straight Path's stockholders and a by-product criticism. We incurred
authorized charges of $2.9 million and $3.6 million in fiscal 2021 and monetary 2020,
respectively, associated to this motion. Additionally, we recorded offsetting features from
insurance coverage claims for this matter of $3.1 million and $3.1 million in fiscal 2021
and monetary 2020, respectively.



Consolidated


The next is a dialogue of a few of our consolidated bills and our consolidated earnings and expense objects underneath working earnings.



Associated Celebration Lease Prices. We lease workplace and parking house in Rafael Holdings'
constructing and parking storage situated at 520 Broad St, Newark, New Jersey. We additionally
lease workplace house in Israel from Rafael Holdings. The Newark lease expires in
April 2025 and the Israel lease expires in July 2025. In each fiscal 2021 and
fiscal 2020, we incurred lease prices of $1.9 million in reference to the
Rafael Holdings' leases, which is included in consolidated promoting, normal
and
administrative bills.



39





Inventory-Primarily based Compensation Expense. Inventory-based compensation expense included in
consolidated promoting, normal and administrative bills was $1.5 million and
$3.9 million in fiscal 2021 and monetary 2020, respectively. The lower in
stock-based compensation expense in fiscal 2021 in comparison with fiscal 2020 was
primarily resulting from reductions in expense of deferred inventory models granted in June
2019 and inventory choices. At July 31, 2021, unrecognized compensation price associated
to non-vested stock-based compensation was an mixture of $0.6 million. The
unrecognized compensation price is predicted to be acknowledged over the remaining
vesting interval that ends in fiscal 2024.



(in hundreds of thousands)                                                                       Change
12 months ended July 31                       2021           2020              $              %
Earnings from operations             $     57.0     $     17.9     $     39.1          217.6 %
Curiosity earnings, internet                      0.3            1.1           (0.8 )        (69.5 )
Different earnings (expense), internet               7.9           (1.3 )          9.2          724.8
Profit from earnings taxes                31.7            3.7           28.0          755.9
Web earnings                               96.9           21.4           75.5          352.4
Web (earnings) loss attributable
to noncontrolling pursuits              (0.4 )            -           (0.4 )           nm
Web earnings attributable to IDT
Company                        $     96.5     $     21.4     $     75.1          350.2 %




nm-not significant



Different Earnings (Expense), internet. Different earnings (expense), internet consists of the
following:



(in hundreds of thousands)
12 months ended July 31                                   2021       2020
International foreign money transaction features                 $  1.0     $  0.4
Fairness within the internet lack of investee                   (1.1 )        -
Write-off of tax belongings associated to prior intervals        -       (1.3 )
Acquire (loss) on investments                            8.8       (0.3 )
Different                                                (0.8 )     (0.1 )
TOTAL                                              $  7.9     $ (1.3 )




On February 2, 2021, we paid $4.0 million to buy shares of sequence B
convertible most popular inventory of a communications firm (the fairness methodology
investee, or EMI). The shares bought symbolize 23.95% of the excellent
shares of the EMI on an as transformed foundation. We account for this funding utilizing
the fairness methodology for the reason that sequence B convertible most popular inventory is in-substance
frequent inventory, and we will train important affect over the working and
monetary insurance policies of the EMI. We decided that on the date of the
acquisition, there was a distinction of $3.4 million between our funding in
the EMI and our proportional curiosity within the fairness of the EMI, which
represented our share of the EMI's buyer checklist on the date of acquisition.
This foundation distinction is being amortized over the 6-year estimated lifetime of
the
buyer checklist.



The acquire on investments in fiscal 2021 is primarily from appreciation of shares
of Rafael Holdings Class B frequent inventory, partially offset by unrealized losses
on hedge funds.



Earnings Taxes. In fiscal 2021, we launched $46.5 million of our valuation
allowance on the portion of our deferred earnings tax belongings that we're extra
possible than not going to make the most of. This launch was principally associated to home
deferred earnings tax belongings. We used the framework of ASC Earnings Taxes (Matter
740) to find out whether or not the valuation allowance ought to be maintained or
reversed. We thought of the scheduled expiration of our internet working losses
included in our deferred tax belongings, projected future taxable earnings, and tax
planning methods in our evaluation of the valuation allowance. The first
components that resulted within the valuation allowance launch had been the three
consecutive years of profitability in the US and anticipated future
profitability in each the US and the United Kingdom that can make the most of
a good portion of the web working losses. Our tax planning methods
weren't a big issue within the evaluation. In fiscal 2020, resulting from taxable
earnings in the US, we utilized deferred tax belongings and launched the
corresponding valuation allowance to offset earnings tax expense of $3.5 million.
As well as, in fiscal 2020, we launched an extra $8.4 million of the
valuation allowance on the portion of the deferred tax belongings that we're extra
possible than not going to make the most of as a result of we forecasted future profitability in
the US. The rise in earnings tax expense in fiscal 2021 in comparison with
fiscal 2020, excluding the advantages from the valuation allowance launched in
fiscal 2021 and monetary 2020, was primarily resulting from variations within the quantity of
taxable earnings earned within the varied taxing jurisdictions.



40






Web (Earnings) Loss Attributable to Noncontrolling Pursuits. The change within the
internet (earnings) loss attributable to noncontrolling pursuits in fiscal 2021
in comparison with fiscal 2020 was as a result of discount within the internet lack of NRS, as properly
as new noncontrolling pursuits in fiscal 2021. In fiscal 2021, we acquired an
mixture of 75% of the issued shares of an organization that gives a digital
platform facilitating provide and distribution of cell airtime and knowledge top-ups
and different companies throughout borders. As of Might 31, 2021, we entered right into a Warrant
Buy Settlement with the shareholders of a variable curiosity entity, or VIE,
that operates cash switch companies. We now have varied administration rights and
protecting provisions pursuant to the Warrant Buy Settlement. Primarily as a
results of the Warrant Buy Settlement, we will get hold of 90% of the possession
pursuits within the VIE. We consolidated the VIE as of Might 31, 2021 as a result of we
decided that we're the first beneficiary of the VIE since we've the
energy to direct the actions of the VIE that almost all considerably affect its
financial efficiency, and we've the duty to soak up losses of and the
proper to obtain advantages from the VIE that might probably be important to
it. We don't presently personal any curiosity within the VIE and thus the web earnings
incurred by the VIE was attributed to noncontrolling pursuits. Lastly, on
December 31, 2020, the beforehand authorised compensatory association with every of
Howard S. Jonas, the Chairman of our Board of Administrators, and Shmuel Jonas, our
Chief Government Officer, was finalized. Howard S. Jonas and Shmuel Jonas every
acquired fifty restricted shares of net2phone 2.0, Inc., or net2phone 2.0, Class
B frequent inventory, which represents 5% of the excellent frequent inventory of net2phone
2.0. net2phone 2.0 owns and operates our net2phone-UCaaS phase.



LIQUIDITY AND CAPITAL RESOURCES

As of the date of this Annual Report, together with the affect of COVID-19, we presently forecast our money stream from operations and the stability of present money, money equivalents, debt securities and fairness investments. that we had been holding on
July 31, 2021 will probably be ample to fulfill our present forecasted working capital and capital expenditure wants in fiscal 12 months 2022.

TO July 31, 2021, we had unallocated money, money equivalents, debt securities and short-term fairness investments of $ 161.4 million and dealing capital (present belongings in extra of present liabilities) of $ 48.8 million.



We deal with unrestricted money and money equivalents held by IDT Cost Providers as
considerably restricted and unavailable for different functions. At July 31, 2021,
"Money and money equivalents" in our consolidated stability sheet included an
mixture of $15.3 million held by IDT Cost Providers that was unavailable for
different functions.



(in hundreds of thousands)
12 months ended July 31                                        2021              2020
Money flows supplied by (utilized in):
Working actions                                  $        66.6     $       (29.6 )
Investing actions                                          (44.1 )           (32.5 )
Financing actions                                           (4.5 )            (5.6 )
Impact of change charge adjustments on money, money
equivalents, and restricted money and money
equivalents                                                     7.7        

11.7

Improve (lower) in money, money equivalents and restricted money and money equivalents

                  $        25.7     $       (56.0 )




Working Actions



Our money flows from operations differ considerably from quarter to quarter and
from 12 months to 12 months, relying on our working outcomes and the timing of
working money receipts and funds, particularly commerce accounts receivable and
commerce accounts payable.


Gross commerce accounts receivable elevated to $51.1 million at July 31, 2021 from
$50.3 million at July 31, 2020 primarily resulting from quantities billed throughout fiscal
2021 that had been better than collections in fiscal 2021.



Deferred income arises from gross sales of pay as you go merchandise and varies from interval to
interval relying on the combo and the timing of revenues. Deferred income
elevated to $42.3 million at July 31, 2021 from $40.1 million at July 31, 2020
primarily resulting from a rise within the BOSS Revolution Calling deferred income
stability.



Buyer deposit liabilities at IDT Monetary Providers Restricted, our
Gibraltar-based financial institution, decreased to $115.5 million at July 31, 2021 from $116.0
million at July 31, 2020. Our restricted money and money equivalents included
$115.8 million and $116.3 million at July 31, 2021 and 2020, respectively,
held
by the financial institution.



On December 21, 2020, we acquired $2.0 million from the sale to a 3rd occasion of
all our rights underneath the Cost Card Interchange Payment and Service provider Low cost
Antitrust Litigation. The lawsuit is about claims that retailers paid extreme
charges to just accept Visa and Mastercard playing cards between January 1, 2004 and January 25,
2019 as a result of Visa and Mastercard, individually, and along with their
respective member banks, violated the antitrust legal guidelines.



On June 21, 2018, the United States Supreme Court docket rendered a call in South
Dakota v. Wayfair, Inc., holding {that a} state could require a distant vendor with
no bodily presence within the state to gather and remit gross sales tax on items and
companies supplied to purchasers within the state, overturning sure present courtroom
precedent. We now have evaluated our state tax filings with respect to the Wayfair
resolution and are within the means of reviewing our remittance practices. It's
attainable that a number of jurisdictions could assert that we've legal responsibility for
intervals for which we've not collected gross sales, use or different comparable taxes, and
if such an assertion or assertions had been profitable it may materially and
adversely have an effect on our enterprise, monetary place, and working outcomes. One or
extra jurisdictions could change their legal guidelines or insurance policies to use their gross sales, use
or different comparable taxes to our operations, and if such adjustments had been made it may
materially and adversely have an effect on our enterprise, monetary place, and working
outcomes.



41






Investing Actions



Our capital expenditures had been $16.8 million in fiscal 2021 in comparison with $16.0
million in fiscal 2020. We presently anticipate that whole capital expenditures
in fiscal 2022 will probably be $18 million to $20 million. We count on to fund our capital
expenditures with our internet money supplied by working actions and money, money
equivalents, debt securities, and present fairness investments readily available.



On December 3, 2020, our subsidiary IDT Worldwide Telecom, Inc., or IDTIT,
acquired 51% of the issued shares of an organization for $2.4 million, internet of money
acquired. We additionally recorded $0.4 million for the estimated truthful worth of
contingent consideration. The contingent consideration of $0.5 million will probably be
paid (a) no later than November 30, 2021 if the acquired firm generates
EBITDA (as outlined within the buy settlement) of at least $1.0 million
between October 1, 2020 and September 30, 2021; or (b) no later than November
30, 2022 if the acquired firm generates EBITDA of at least $1.0 million
between October 1, 2021 and September 30, 2022. Additionally, pursuant to a Put/Name
Possibility Settlement associated to the 5% of the issued shares of the acquired firm
that the vendor didn't initially promote to IDTIT, or the Possibility Shares, the
vendor exercised its possibility and on March 22, 2021, IDTIT bought the Possibility
Shares for $0.3 million. On June 15, 2021, IDTIT bought 19% of the issued
shares of the acquired firm from the remaining noncontrolling curiosity holder
for $1.0 million. We additionally recorded $0.2 million for the estimated truthful worth of
contingent consideration. The contingent consideration of as much as $0.3 million
will probably be paid if the acquired firm meets sure Adjusted EBITDA targets (as
outlined within the buy settlement) no later than April 1, 2023.



On December 11, 2019, our subsidiary, net2phone, Inc. acquired 100% of the
excellent shares of Ringsouth Europa, S.L., a regional supplier of cloud
communications companies to companies in Spain. The money paid for the
acquisition was $0.5 million. We additionally recorded $0.4 million for the estimated
truthful worth of contingent consideration. The contingent consideration contains
two potential funds to the vendor of $0.4 million every, primarily based on month-to-month
recurring income targets to be achieved over a 36-month interval and 48-month
interval. The second potential cost isn't contingent upon assembly the goal
for the primary cost.


On September 29, 2021, NRS bought 862,442 shares of its Class B frequent inventory,
which represents 2.5% of its excellent capital inventory on a completely diluted foundation,
to Alta Fox Alternatives Fund LP, or Alta Fox, for money of $10 million. Alta
Fox has the correct to request redemption of all or any portion of the NRS frequent
shares that it bought on the per share buy worth throughout a interval of 182
days following the fifth anniversary of this transaction. The redemption proper
shall terminate upon the consummation of (i) a sale of NRS or its belongings for
money or securities which might be listed on a nationwide securities change, (ii) a
public providing of NRS' securities, or (iii) a distribution of NRS' capital
inventory following which NRS' frequent shares are listed on a nationwide securities
change.



As of Might 31, 2021, we bought a warrant from the shareholders of a VIE for
money of $0.8 million, which is included in financing actions, and a
contingent cost of $0.1 million. We acquired money of $3.3 million from the
preliminary consolidation of the VIE, which is included in investing actions.



On December 7, 2020, we bought from Rafael Holdings 218,245 newly issued
shares of Rafael Holding's Class B frequent inventory and a warrant to buy as much as
43,649 shares of Rafael Holding's Class B frequent inventory at an train worth of
$22.91 at any time on or after December 7, 2020 and on or previous to June 6, 2022.
The mixture buy worth was $5.0 million. The acquisition worth was primarily based on a
per share worth of $22.91, which was the closing worth of Rafael Holding's Class
B frequent inventory on the New York Inventory Trade on the buying and selling day instantly
previous the acquisition date. On March 15, 2021, we exercised the warrant in full
and bought 43,649 shares of Rafael Holding's Class B frequent inventory for money of
$1.0 million.



On February 2, 2021, we paid $4.0 million to buy shares of the EMI's sequence
B convertible most popular inventory representing 23.95% of the excellent shares of
the EMI on an as transformed foundation. On August 10, 2021, we paid $1.1 million to
buy shares of the EMI's sequence C convertible most popular inventory and extra
shares of the EMI's sequence B convertible most popular inventory. These purchases
elevated our possession of the EMI's excellent shares to 26.57% on an as
transformed foundation.



Purchases of debt securities and fairness investments had been $43.2 million and $22.4
million in fiscal 2021 and monetary 2020, respectively. Proceeds from maturities
and gross sales of debt securities and redemptions of fairness investments had been $26.2
million and $6.5 million in fiscal 2021 and monetary 2020, respectively.



42






Financing Actions


We distributed cash from $ 0.9 million and $ 0.9 million throughout fiscal years 2021 and 2020, respectively, to non-controlling pursuits in a few of our subsidiaries.

Throughout fiscal years 2021 and 2020, we acquired the proceeds of different liabilities associated to the financing of $ 0.7 million and null, respectively.

Throughout fiscal years 2021 and 2020, we repaid different liabilities associated to the financing of
$ 0.1 million and $ 0.5 million, respectively.



On April 20, 2020, our subsidiary, IDT Home Telecom, Inc., or IDT DT,
acquired mortgage proceeds of $10.0 million from TD Financial institution, N.A., pursuant to the
Paycheck Safety Program, or the PPP Mortgage, underneath the Coronavirus Support, Aid,
and Financial Safety Act, or CARES Act, administered by the U.S. Small Enterprise
Administration. On April 29, 2020, IDT DT returned all $10.0 million in proceeds
from the PPP Mortgage.


Throughout fiscal years 2021 and 2020, we acquired the proceeds from the train of inventory choices from $ 0.7 million and $ 0.3 million, respectively, for which we issued 81,041 and 32,551 shares of our Class B frequent shares, respectively.



Our subsidiary, IDT Telecom, Inc., or IDT Telecom, entered right into a credit score
settlement, dated as of Might 17, 2021, with TD Financial institution, N.A. for a revolving credit score
facility for as much as a most principal quantity of $25.0 million. IDT Telecom could
use the proceeds to finance working capital necessities and for sure closing
prices of the power. At July 31, 2021, IDT Telecom had not borrowed any
quantities underneath this facility. The revolving credit score facility is secured by
primarily all of IDT Telecom's belongings. The principal excellent bears curiosity
every year on the Intercontinental Trade Benchmark Administration Ltd. LIBOR
multiplied by the Regulation D most reserve requirement plus 125 to 175 foundation
factors, relying upon IDT Telecom's leverage ratio as computed for probably the most
latest fiscal quarter. Curiosity is payable month-to-month, and all excellent
principal and any accrued and unpaid curiosity is due in Might 2024. IDT Telecom
pays a quarterly unused dedication payment on the typical every day stability of the
unused portion of the $25.0 million dedication of 30 to 85 foundation factors,
relying upon IDT Telecom's leverage ratio as computed for the newest
fiscal quarter. IDT Telecom is required to adjust to varied affirmative and
detrimental covenants in addition to preserve sure targets primarily based on monetary ratios
in the course of the time period of the revolving credit score facility. As of July 31, 2021, IDT
Telecom was in compliance with the entire covenants.



IDT Telecom had a credit score settlement, dated as of October 31, 2019, with TD Financial institution,
N.A. for a revolving credit score facility for as much as a most principal quantity of
$25.0 million till its maturity on July 15, 2020. The principal excellent
incurred curiosity every year on the LIBOR charge adjusted by the Regulation D
most reserve requirement plus 125 foundation factors. In fiscal 2020, we borrowed
and repaid an mixture of $1.4 million underneath the power. IDT Telecom paid a
quarterly unused dedication payment of 0.3% every year on the typical every day stability
of the unused portion of the $25.0 million dedication.



We now have an present inventory repurchase program approved by our Board of
Administrators for the repurchase of shares of our Class B frequent inventory. The Board of
Administrators approved the repurchase of as much as 8.0 million shares within the
mixture. In fiscal 2021, we repurchased 463,792 shares of Class B frequent inventory
for an mixture buy worth of $2.8 million. In fiscal 2020, we repurchased
671,117 shares of our Class B frequent inventory for an mixture buy worth of
$4.2 million. At July 31, 2021, 5.8 million shares remained out there for
repurchase underneath the inventory repurchase program.



Throughout fiscal years 2021 and 2020, we paid $ 1.3 million and $ 0.3 million, respectively, to repurchase 109,381 and 37,348 shares, respectively, of our Class B frequent shares which had been contributed by our workers to fulfill worker withholding tax obligations in reference to the expiration of the restrictions on grants of deferred share models and restricted shares. These shares are redeemed by us primarily based on their truthful market worth on the buying and selling day instantly previous the vesting date.

Different sources and makes use of of assets



We're contemplating spin-offs, gross sales of fairness, and different potential tendencies
of sure of our subsidiaries. A number of the transactions into consideration are
in early phases and others are extra superior. A spin-off could embrace the
contribution of a big amount of money, money equivalents, debt securities,
and/or fairness securities to the subsidiary previous to the spin-off, which might
scale back our capital assets. The sale of a subsidiary's fairness in an preliminary
public providing or different transaction would as an alternative be a supply of money. In
fiscal 2021, we introduced that our Board of Administrators had directed us to arrange
for the potential spin-off of our net2phone cloud communications enterprise.
Administration subsequently has said that it expects the preparations will probably be
full by the tip of calendar 12 months 2021 or shortly thereafter. There is no such thing as a
assurance right now that any of those transactions will probably be accomplished.



We intend to, the place applicable, make different strategic investments and
acquisitions to enrich, increase, and/or enter into new companies. In
contemplating acquisitions and investments, we seek for alternatives to
profitably develop our present companies and/or so as to add qualitatively to the vary
and diversification of companies in our portfolio. Presently, we can not
assure that we are going to be introduced with acquisition alternatives that meet our
return-on-investment standards, or that our efforts to make acquisitions that
meet our standards will probably be profitable.



43





CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

The next desk quantifies our future contractual obligations and different business commitments to July 31, 2021:



Funds Due by Interval



                                       Lower than
(in hundreds of thousands)            Whole           1 12 months         1-3 years        4-5 years        After 5 years
Buy commitments   $      3.7     $        3.7     $          -     $          -     $              -
Connectivity
obligations underneath
service agreements            0.8              0.7              0.1                -                    -
Working leases
together with short-term
leases                        8.9              3.2              4.3              1.4                    -
TOTAL CONTRACTUAL
OBLIGATIONS(1)         $     13.4     $        7.6     $        4.4     $        1.4     $              -



(1) The above desk doesn’t embrace an mixture of $ 19.6 million in efficiency

obligations and $ 1.7 million as a possible contingent consideration linked to

enterprise acquisitions as a result of uncertainty of the quantity and / or timing of

     any such funds.



OFF-BALANCE SHEET ARRANGEMENTS

We do not need any "off-balance sheet preparations," as outlined in related SEC
rules which might be moderately prone to have a present or future impact on our
monetary situation, outcomes of operations, liquidity, capital expenditures or
capital assets, apart from the next.



In reference to our spin-off of Straight Path in July 2013, we and Straight
Path entered into varied agreements previous to the spin-off together with a
Separation and Distribution Settlement to impact the separation and supply a
framework for our relationship with Straight Path after the spin-off, and a Tax
Separation Settlement, which units forth the tasks of us and Straight
Path with respect to, amongst different issues, liabilities for federal, state, native,
and international taxes for intervals earlier than and together with the spin-off, the preparation
and submitting of tax returns for such intervals and disputes with taxing authorities
relating to taxes for such intervals. Pursuant to the Separation and Distribution
Settlement, we indemnify Straight Path and Straight Path indemnifies us for
losses associated to the failure of the opposite to pay, carry out or in any other case
discharge, any of the liabilities and obligations set forth within the settlement.
Pursuant to the Tax Separation Settlement, we indemnify Straight Path from all
legal responsibility for taxes of Straight Path or any of its subsidiaries or referring to
the Straight Path enterprise with respect to taxable intervals ending on or earlier than
the spin-off, from all legal responsibility for taxes of ours, apart from Straight Path and
its subsidiaries, for any taxable interval, and from all legal responsibility for taxes due
to the spin-off. (see Observe 22 to the Consolidated Monetary Statements included
in Merchandise 8 to Half II of this Annual Report).



We now have efficiency bonds issued via third events for the advantage of
varied states with a purpose to adjust to the states' monetary necessities for
cash remittance licenses and telecommunications resellers. At July 31, 2021, we
had mixture efficiency bonds of $19.6 million excellent.

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