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Item 2. Management’s Discussion and Analysis

2024-05-15 compared with 2023-11-14 · 190 added, 255 removed, 36 unchanged (93% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion

and analysis is intended to help you understand our results of operations and financial condition as

of March 31, 2024 and for the three months ended March 31, 2024 and 2023 .

This discussion and analysis is provided as a supplement

to and should be read in conjunction with our condensed consolidated financial statements and the

notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q .

This discussion may contain

forward-looking statements based upon current expectations that involve risks and uncertainties.

Our actual results may differ materially

from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part

Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Cautionary Statement

The following discussion

and analysis should be read in conjunction with our condensed consolidated financial statements and the notes to those financial statements

that are included elsewhere in this Quarterly Report on Form 10-Q.

Our actual results may differ materially from those anticipated in

the following discussion, as a result of a variety of risks and uncertainties, including those described under Part I, Item 1A.

in our Annual Report on Form 10-K for the year ended December 31, 2023.

Forward-Looking

statements contained herein constitute “forward-looking statements.” Except for the historical information contained herein,

this report contains forward-looking statements (identified by the words “estimate,” “project,” “anticipate,”

“plan,” “expect,” “intend,” “believe,” “hope,” “strategy” and

similar expressions), which are based on our current expectations and speak only as of the date made.

These forward-looking statements

are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated

in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in

the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission

on April 21, 2023, and those described herein that could cause actual results to differ materially from the results anticipated in the

forward-looking statements, and the following:

limited operating history with our business model;

limited financing currently available to us.

We may in the near future have a number of obligations that we will be unable to meet without

generating additional income or raising additional capital;

cost reductions or curtailment in future operations due to our low cash balance and negative cash flow;

ability to effect a financing transaction to fund our operations which could adversely affect the value of our stock;

limited cash resources may not be sufficient to fund continuing losses from operations;

failure of our products and services to achieve market acceptance;

inability to compete in our market, especially against established industry competitors with greater market presence and financial resources;

failure to close the proposed Merger Agreement with SGII, as described below, or the failure to successfully integrate our business

with SGII upon a closing of the proposed Merger Agreement.

objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

is to provide users of our financial statements with the following:

narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity

and certain other factors that may affect future results;

context to the financial statements;

that allows assessment of the likelihood that past performance is indicative of future performance.

is a supplement to, and should be read together with, our financial statements, including notes, referenced elsewhere in this Quarterly

Report, and is provided to enhance your understanding of our operations and financial condition.

statements contained herein constitute “forward-looking statements”.

Except for the historical information contained

herein, this Quarterly Report on Form 10-Q contains forward-looking statements (identified by the words “estimate,”

“project,” “anticipate,” “plan,” “expect,” “intend,”

“believe,” “hope,” “strategy” and similar expressions), which are based on our current

expectations and speak only as of the date made.

These forward-looking statements are subject to various risks, uncertainties and

factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements,

including, without limitation, those discussed under Part I, Item 1A.

Risk Factors in our Annual Report on Form 10-K for the year

ended December 31, 2023, as filed with the Securities and Exchange Commission on April 1, 2024 and those described herein that could

cause actual results to differ materially from the results anticipated in the forward-looking statements.

Factors That May Adversely

Affect our Results of Operations

Our results of operations may be adversely affected

by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control.

Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil

prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, any ongoing effects

of the Covid-19 pandemic, including resurgences and the emergence of new variants and geopolitical instability, such as the military conflict

in Ukraine and the Middle East.

We cannot at this time fully predict the likelihood of one or more of the above events, their duration

or magnitude, or the extent to which they may negatively impact our business.

The objective of our Management’s

Discussion and Analysis of Financial Condition and Results of Operations is to provide users of our financial statements with the following:

a narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;

useful context to the financial statements;

information that allows assessment of the relationship between our past performance and future performance.

This Management’s Discussion

and Analysis is a supplement to, and should be read together with, our financial statements, including notes, referenced elsewhere in

this report, and is provided to enhance your understanding of our operations and financial condition.

Due to rounding, some parts of this

discussion may not sum or calculate precisely to the totals and percentages provided in the tables.

following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of

following discussion and analysis provide information that our management believes is relevant to an assessment and understanding of

our results of operations and financial condition and should be read in conjunction with the consolidated financial statements and footnotes

that appear elsewhere in this Quarterly Report.

Battery Materials, Inc.

(the “Company”) is a US based renewable energy company focused on the extraction, refinement and

distribution of technical minerals in an environmentally responsible manner.

The Company formerly developed, marketed and distributed

various self-serve electronic kiosks and mall/airport co-branded islands throughout North America.

Due to the nationwide shutdown

related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations,

and focusing on implementing a new operational direction.

the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management

team and acquire mining claims that historically reported high levels of Lithium and other tech minerals.

The Company hired and affiliated

itself with industry veterans that bring decades of experience, credibility and relationships.

November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $100,000.

acquisition was driven by historical mineral data from seven (7) existing wells with brine aquifer access.

We have not yet commenced

any mining operations, and we are an Exploration Stage Company, as defined in Regulation S-K, Subpart 1300 (“Regulation S-K 1300”).

An independent third-party technical report indicated that further investment and development in the claims was warranted, although no

determination has been made whether we have any reserves of minerals.

Similarly, no determined has been made whether mineralization could

be economically and legally produced or extracted.

We have no reserves as defined by Regulation S-K 1300.

October 20, 2022 the Company, following receipt of written approval from stockholders acting without a meeting and holding at least the

minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to its Certificate

of Incorporation to (i) change the name of the Company to “AMERICAN BATTERY MATERIALS, INC.” (the “Name Change”);

and, (ii) increase the total number of authorized shares of the Company’s common stock, par value $0.001 per share, from 600,000,000

to 4,500,000,000 (the “Authorized Share Increase”).

The Name Change was processed by FINRA and was effective on May 1, 2023,

at which time the Company’s trading symbol was also changed to BLTH.

The Authorized Share Increase was effective as of October

October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the issued and outstanding

shares of stock of the Company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate

Law Section 228, and adopted and approved the following actions:

amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s

Common Stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share

Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion

to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized

Share Reduction within the above range.

amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock

by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary

Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the

exact ratio for the Reverse Split within the above range.

April 25, 2023, the Company formed Mountain Sage Minerals LLC, a Utah limited liability company, of which it is the 100% owner.

The Company will look to expand its holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture

opportunities through this new LLC.

June 1, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition

II Corp., a Delaware corporation (“SGII”), and Lithium Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary

of SGII (“Merger Sub”).

SGII is a blank check company, also referred to as a special purpose acquisition company, formed

for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar

business combination with one or more businesses.

SGII is an early stage and emerging growth company.

Pursuant to the Merger

Agreement, Merger Sub will merge with and into the Company, with the Company surviving the merger.

As a result of the transactions under

the Merger Agreement, ABM will become a wholly-owned subsidiary of SGII.

The stockholders of ABM will become stockholders of SGII under

an exchange ratio in the Merger Agreement.

The closing of the transactions under the Merger Agreement is expected to be consummated in

2023, after the required approval by the stockholders of SGII and the fulfillment of certain other conditions.

The Merger Agreement was

amended on July 14, 2023 (the “Amendment”).

Pursuant to the Amendment, the parties agreed to (i) reduce the value of the

shares of SGII common stock to be paid as consideration to ABM’s stockholders from $160 million to $120 million;

(ii) extend the

Merger Agreement’s termination date from August 19, 2023 to February 19, 2024;

and, (iii) amend the Merger Agreement to obligate

the Company to fund one-half of the additional payment into trust (i.e., $0.015 per share by the Company) that SGII intends to make in

connection with an extension to the date by which SGII must complete a business combination.

If the Company fails to make any such contribution

that is subsequently funded by SGII (each, a “Contribution Shortfall”), then the Company shall issue to SGII’s sponsor

a number of shares with value equal to two times the amount of all Contribution Shortfalls either (a) if the transactions under the Merger

Agreement close, of the post-business combination company;

or, (b) if the transactions under the Merger Agreement do not close, of the

Company has been moving forward with its strategy of employing advanced brine extractive technology methodologies and has been in talks

with numerous extraction providers.

Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently

Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines

back down into the aquafer.

The prospective partners have been provided the analytical results from the technical reports, but will soon

provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth.

We will need funding to support

continuing operations and support our growth strategy, and we will need to finance operations by offering any combination of equity offerings,

debt financing, collaborations, strategic alliances, or other licensing arrangements.

There is no assurance we will be able to raise

sufficient capital to finance our operations.

There is also a risk that the proposed Merger Agreement with SGII, as described below,

will not close, or that we will fail to successfully integrate our business with SGII upon a closing of the proposed Merger Agreement.

that appear elsewhere in this Quarterly Report on Form 10-Q.

Overview and Outlook

based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally

responsible manner.

We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded

islands throughout North America.

Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring

and retiring certain corporate debt and obligations and focusing on implementing a new operational direction.

the corporate reorganization and repositioning process, we found ourselves with the unique opportunity to acquire mining claims that

historically reported high levels of lithium and other technical minerals crucial to produce batteries used in many technology products and markets.

We hired and affiliated ourselves with industry veterans

that bring decades of experience, credibility and relationships.

November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the

future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining

The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access.

We are defined

as an exploration stage issuer, under SEC Regulation S-K Item 1300.

An independent third-party technical report indicated that

further investment and development in the claims was warranted, although no determination has been made whether we have any reserves

Similarly, no determination has been made whether mineralization could be economically and legally produced or

We have no mineral reserves as defined by Regulation S-K Item 1300 and have had no mining revenue to date.

In July 2023, we acquired

and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah.

The new claims have been registered with the

We now own a total of 743 placer claims over 14,320 acres (approximately 22 square miles), comprised of the 102 original mining claims

and 641 new claims.

On April 25, 2023, we formed

Mountain Sage Minerals, LLC, a Utah limited liability company.

We plan to expand our holdings in the Lisbon Valley area with the acquisition

of additional mineral claims and joint venture opportunities through this entity.

On June 1, 2023, we entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition II Corp.

and Lithium Merger Sub, Inc., a wholly owned subsidiary of SGII.

SGII is a blank check company, also referred to as a special purpose

acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization

or other similar business combination with one or more businesses.

As a result of the Merger Agreement, we would have become a wholly

owned subsidiary of SGII.

Following material changes to the transaction proposed by SGII making the transaction untenable to us, on November

20, 2023, SGII notified us that it had elected to terminate the Merger Agreement.

have been moving forward with our strategy of employing advanced brine extractive technology methodologies and have been in talks with

numerous extraction providers.

Selective mineral extraction is the most cost-effective and ESG friendly approach currently available.

Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down

into the aquifer.

The prospective partners have been provided the analytical results from the technical reports, but will soon provide

current results, analytical, geotech modeling, aquifer modeling, recharge, flows and depth.

We will need funding to support continuing

operations and support our growth strategy and we will need to finance operations by offering any combination of equity offerings, debt

financing, collaborations, strategic alliances or other licensing arrangements.

There is no assurance we will be able to raise sufficient

capital to finance our operations.

of Operations

Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

the three months ended September 30, 2023 and 2022, the Company had no revenue.

and administrative expenses for the three months ended September 30, 2023 were $624,952, an increase of $293,217 or 36%, compared to

$331,735 for the three months ended September 30, 2022.

The increase in operating expenses was mainly due to an increase in professional

fees, mining maintenance fees and stock compensation expenses.

In the second quarter of 2022, the Company activated consulting teams

to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.

addition, the Company initiated construction strategies based on reports from RESPEC, the Company’s engineering partner, for geological

modeling and drill entry design and related planning.

value of stock issued for note modification

months ended March 31, 2024, Compared to Three months ended March 31, 2023

the three months ended March 31, 2024, and 2023, our company had no revenue.

and administrative expenses for the three months ended March 31, 2024, were $264,035, a decrease of $182,411 or 41%, compared to

$446,476 for the three months ended March 31, 2023.

The decrease in operating expenses was mainly due to a decrease in professional

In addition, we initiated construction strategies based on reports from

RESPEC Company LLC, the Company’s geotech, engineering and resource management partner, for geological modeling and drill entry

design and related planning.

(Loss) on Settlement of Liabilities

the three months ended March 31, 2024, our company recorded a loss on settlement of liabilities of $516,083.

During the three months

ended September 30, 2023, the Company recorded a fair value of stock issued for note modification of $168,856.

No such transactions were

noted during the three months ended September 30, 2022.

fees due to SPAC Sponsor

the three months ended September 30, 2023, the Company recorded $101,662 of extension fees due to SPAC Sponsor.

No such transactions

were noted during the three months ended September 30, 2022.

expense for the three months ended September 30, 2023, was $47,554, as compared to $175,133 during the three months ended September 30,

2022 due to the conversion of convertible notes payable during the fourth quarter of 2022.

As a result of the foregoing,

the net loss for the three months ended September 30, 2023 was $943,024 as compared to the net loss of $506,868 during the three months

ended September 30, 2022.

months Ended September 30, 2023 Compared to Nine months Ended September 30, 2022

the nine months ended September 30, 2023 and 2022, the Company had no revenue.

and administrative expenses for the nine months ended September 30, 2023 were $2,165,494, an increase of $1,343,499 or 163%, compared

to $821,995 for the nine months ended September 30, 2022.

The increase in operating expenses was mainly due to an increase in professional

fees, mining maintenance fees and stock compensation expenses.

In the second quarter of 2022, the Company activated consulting teams

to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.

addition, the Company initiated construction strategies based on reports from RESPEC, the Company’s engineering partner, for geological

modeling and drill entry design and related planning.

in Fair Value of Derivative Liabilities

the nine months ended September 30, 2022, the Company recorded a gain on the change in fair value of derivative liabilities of $211,345.

The underlying convertible notes were converted during the fourth quarter of 2022, resulting in no derivative liabilities during the

nine months ended September 30, 2023.

on Settlement of Liabilities

the nine months ended September 30, 2023, the Company recorded a gain on settlement of liabilities of $67,984, consisting of $7,008 in

principal and $60,976 in interest forgiven by noteholders.

No such transactions were noted during the nine months ended September 30,

ended March 31, 2023, our company recorded a gain on settlement of liabilities of $67,984, consisting of $7,008 in principal and $60,976

in interest forgiven by creditors.

Value of Stock Issued for Note Modification

During the nine months

ended September 30, 2023, the Company recorded a fair value of stock issued for note modification of $168,856.

No such transactions were

noted during the nine months ended September 30, 2022.

fees due to SPAC Sponsor

the nine months ended September 30, 2023, the Company recorded $101,662 of extension fees due to SPAC Sponsor.

No such transactions were

noted during the nine months ended September 30, 2022.

expense for the nine months ended September 30, 2023 was $94,771, as compared to $537,938 during the nine months ended September 30,

2022 due to the conversion of convertible notes payable during the fourth quarter of 2022.

As a result of the foregoing,

the net loss for the nine months ended September 30, 2023, was $2,462,799 as compared to the net loss of $1,148,558 during the nine months

ended September 30, 2022.

the three months ended March 31, 2024, our company recorded a fair value of stock issued for note modification of $5,382.

No such transactions

were noted during the three months ended March 31, 2023.

expense for the three months ended March 31, 2024, was $78,383, as compared to $10,154 during the three months ended March 31, 2023.

a result of the foregoing, the net loss for the three months ended March 31, 2024, was $863,883 as compared to the net loss of $388,646

during the three months ended March 31, 2023.

and Capital Resources

We require cash to fund

our operating expenses and working capital requirements, including outlays for capital expenditures.

The accompanying consolidated financial

statements have been prepared on a going concern basis.

The Company had net loss of $2,462,799 during the nine months ended September

30, 2023, has accumulated losses totaling $20,317,636, and has a working capital deficit of $3,165,242 as of September 30, 2023.

factors, among others, indicate that the Company may be unable to continue as a going concern.

The consolidated financial statements do

not include any adjustments that might result from the outcome of these uncertainties.

require cash to fund our operating expenses and working capital requirements, including outlays for capital expenditures.

The accompanying

consolidated financial statements have been prepared on a going concern basis.

Our company had a net loss of $863,883 during the three

months ended March 31, 2024, had accumulated losses totaling $21,103,522, and a working capital deficit of $4,079,828 as of March 31,

These factors, among others, indicate that our company may be unable to continue as a going concern.

The consolidated financial

statements do not include any adjustments that might result from the outcome of these uncertainties.

we acquired our first mining claims in November 2021, we have faced an increasingly challenging liquidity situation that has limited

our ability to execute on our operating plan.

The Company will need to raise additional financing in order to fund its operations for

the next 12 months, and to allow the Company to continue the development of its business plans and satisfy its obligations on a timely

Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates

our ability to execute our operating plan.

Our company will need to raise additional financing in order to fund its operations for

the next 12 months and to allow us to continue the development of its business plans and satisfy its obligations on a timely

Should additional financing not be available, we will have to negotiate with its lenders to extend the repayment dates

of its indebtedness.

There can be no assurance that the Company will be able to successfully restructure its debt obligations in the

There can be no assurance that our company will be able to successfully restructure its debt obligations in the

event it fails to obtain additional financing.

10 unchanged sentences

Flows from Operating Activities

During the nine months

ended September 30, 2023, the Company used $1,911,600 of cash in operating activities as a result of the Company’s net loss of $2,462,799,

increased by gain on debt settlement of $67,984 and amortization of debt discount of $89,876, and offset by fair value of options issued

the three months ended March 31, 2024, our company used $85,886 of cash in operating activities as a result of our net

loss of $863,883, offset by loss on debt settlement of $516,083 and amortization of debt discount of $20,235, fair value of stock issued

for note modification of $5,382, share-based compensation of $1,566, and net changes in operating assets and liabilities of $110,814.

the nine months ended September 30, 2022, the Company used $720,338 of cash in operating activities as a result of the Company’s

net loss of $1,148,588, offset by share-based compensation of $11,080, change in fair market value of derivative liability of $211,345,

and net changes in operating assets and liabilities of $628,515.

the three months ended March 31, 2023, our company used $317,613 of cash in operating activities as a result of our net

loss of $388,646, increased by gain on debt settlement of $67,984 and offset by net changes in operating assets and liabilities of $139,017.

Flows from Investing Activities

the nine months ended September 30, 2023, the Company expended $106,000 for staking activities related to new federal mining claims located

in the Lisbon Valley of Utah.

the nine months ended September 30, 2022, the Company had no investing activities.

the three months ended March 31, 2024 and 2023, our company had no investing activities.

Flows from Financing Activities

the nine months ended September 30, 2023, financing activities provided $2,314,000, resulting from $2,025,000 in proceeds from convertible

notes, $100,000 in proceeds from promissory notes, and $189,000 in proceeds from the exercise of warrants.

the nine months ended September 30, 2022, financing activities provided $765,000, resulting from $590,000 in proceeds from convertible

notes, $200,000 in proceeds from promissory notes, and $50,000 in proceeds from issuance of preferred stock, offset by $75,000 in repayments

of convertible notes.

Sheet Arrangements

Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on its financial condition,

financial statements, revenues or expenses.

continues to evaluate the impact of the existence of inflationary trends on the U.S.

economy and the recent increase in interest

Although the Company’s operations are influenced by general economic conditions, it does not believe that inflation or rising

interest rates had a material effect on its results of operations during the last two years.

While it is reasonably possible that such

uncertainties, and governmental and societal actions to manage them, could have a negative effect on the Company’s financial position

in the future, the specific impact is currently not readily determinable.

Accounting Policies

preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United

States requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial

statements and accompanying notes.

The consolidated financial statements as of September 30, 2023 describe the significant accounting

policies and methods used in the preparation of the consolidated financial statements.

Actual results could differ from those estimates

and be based on events different from those assumptions.

Future events and their effects cannot be predicted with certainty;

therefore, requires the exercise of judgment.

Thus, accounting estimates change as new events occur, as more experience is acquired or

as additional information is obtained.

The following critical accounting policies are impacted significantly by judgments, assumptions

and estimates used in the preparation of our consolidated financial statements:

the three months ended March 31, 2024, financing activities provided $105,000 in proceeds from convertible notes.

the three months ended March 31, 2023, financing activities provided $1,314,000, resulting from $1,125,000 in proceeds from convertible

notes, and $189,000 in proceeds from the exercise of warrants.

to Outstanding Promissory Notes

various dates from April 1 to April 8, 2024, with an effective date as of March 29, 2024, we entered into the following transactions

regarding our outstanding promissory notes:

to a Convertible Note Amendment Agreement with each of five investors holding convertible

notes in the aggregate principal amount of $ 1,750,000

with accrued interest of $125,646, each of these investors agreed to (a) extend the maturity

date of their note to the earlier of (i) September 30, 2024 or (ii) the closing of an “uplisting”

transaction in which our common stock is traded on a national securities exchange and (b)

impose a limitation on their conversions so that the investor will not effect a conversion

under its note until the earlier of (i) the uplisting transaction closing or (ii) July 1,

to a Convertible Note Amendment Agreement with one investor holding a convertible note in

the principal amount of $50,000 with accrued interest of $3,583, the investor agreed to:

(a) extend the maturity date of its note to the earlier of (i) March 31, 2025 or (ii) the

closing of an uplisting transaction in which our common stock is traded on a national securities

exchange and (b) impose a limitation on its conversions so that the investor will not effect

a conversion under its note until the earlier of (i) the uplisting transaction closing or

(ii) the maturity date.

to a Promissory Note Amendment Agreement with one investor holding

a promissory note in the principal amount of $25,000 with accrued interest of $2,971, the

investor agreed to:

(a) extend the maturity date of its note to the earlier of (i) March

31, 2025 or (ii) the closing of an uplisting transaction in which our common stock is traded

on a national securities exchange and (b) impose a limitation on conversions so that the

investor will not effect a conversion under its note until the earlier of (i) the uplisting

transaction closing or (ii) the maturity date.

consideration for the extensions of the maturity date and agreement not to convert their notes,

the principal amount due under each note was increased by 30% and the interest rate of each note was increased to 10% beginning on the

effective date of March 29, 2024.

We negotiated the note amendments with the investors, all of whom are unaffiliated with our company,

on an arm’s-length basis.

As additional consideration for each note amendment, we also issued to the investors a total of 237,250

shares of our common stock on a pro rata basis.

Value of Financial Instruments

certain of the Company’s financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued

liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, “Fair

Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company.

825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair

value measurement that enhances disclosure requirements for fair value measures.

The three levels of valuation hierarchy are defined

certain of our financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued liabilities and

short-term debt, the carrying amounts approximate their fair values due to our short maturities.

ASC Topic 820, “Fair Value Measurements

and Disclosures,” requires disclosure of the fair value of financial instruments held by us.

ASC Topic 825, “Financial Instruments,”

defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure

requirements for fair value measures.

The three levels of valuation hierarchy are defined as follows:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and

volume to provide pricing information on an ongoing basis

We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume

to provide pricing information on an ongoing basis.

Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially

the full term of the asset or liability.

This category includes those derivative instruments that the Company values using observable

Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments,

can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

This category includes those derivative instruments that we value using observable market

Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can

be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less

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supported by little or no market activity).

Level 3 instruments include derivative warrant

The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level

1 or Level 2.

Financial Instruments

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

Certain warrants issued by the Company contain terms that result in the warrants being classified as derivative liabilities

for accounting purposes.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially

recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated

statement of operations.

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency

That May Adversely Affect Our Results of Operations

results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial

markets, many of which are beyond our control.

Our business could be impacted by, among other things, downturns in the financial markets

or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer

confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants,

and geopolitical instability, such as the military conflict in the Ukraine.

We cannot at this time fully predict the likelihood of one

or more of the above events, their duration, or magnitude, or the extent to which they may negatively impact our business.

evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

Certain warrants issued by us contain terms that result in the warrants being classified as derivative liabilities for accounting purposes.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair

market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations.

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

Quantitative and Qualitative Disclosures about Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis