What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-05-16 · 270 added, 214 removed, 287 unchanged (63% of the section changed)

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“we,” “us,” or “our”) is a Nevada corporation.

We have developed four fundamental disruptive proprietary

technologies which we believe solve the most fundamental problems plaguing the internet of things (“IoT”) industry through:

(1) increasing overall chip integration by shifting it to the device level;

(2) creating a faster 5G cellular technology by using Ultra-narrowband

(3) leveraging ultra-narrowband power line communication (“PLC”) technology;

and (4) User Interface Machine auto

generation technology.

We have developed five proprietary technologies utilizing

our patent portfolio which we believe solve the most fundamental problems plaguing the internet of things (“IoT”) industry

(1) increasing overall chip integration by shifting integration from the component level to the device level;

creating a faster 5G cellular technology by using ultra-narrowband technology;

(3) leveraging ultra-narrowband power line communication

(“PLC”) technology;

(4) proprietary User Interface Machine auto generation technology;

and (5) incorporating all our core

technologies into a single chip.

Our Universal Smart Technology is designed to overcome instrumentation interoperability and interchangeability.

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We also provide sensor devices and are a wholesaler of various air filters and digital, analog, and quantum light meter systems.

For the three months ended March 31, 2021 and

2020, we generated significant amount of our revenue from sales of a broad selection of agricultural sensors and measurement equipment

For the three and six months ended June 30, 2022

and 2021, we generated significant amount of our revenue from sales of a broad selection of agricultural sensors and measurement equipment

which is currently our primary business.

Our Current Products Include:

We are also a wholesaler of various digital, analog,

We are a wholesaler of various digital, analog,

and quantum light meters and filtration products, including fan speed adjusters, carbon filters and HEPA filtration systems.

these products from manufacturers in China and then sell them to a major U.S.

distributor, Hydrofarm, who resells our products directly

to consumers through retail distribution channels and in some cases, places its own branding on our products.

Specifically, we sell the following products:

these products from various manufacturers in China and then sell them to a major U.S.

distributor, Hydrofarm, who resells our products

directly to consumers through retail distribution channels and in some cases, places its own branding on our products.

Specifically, we sell the following products through

Fan speed adjuster device .

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Ubiquitor Wireless Universal Sensor Device

Our USIP technology is an advanced software and

hardware integrated instrumentation platform that uses a large-scale modular design approach.

The large-scale modular design approach

subdivides instruments into a foundation component (a USIP) and architecture-specific components (sensor nodes), which together replaces

the functions of traditional instruments at a fraction of their cost.

The USIP has an open architecture, incorporating a variety of individual

instrument functions, sensors, and probes from different industries and vendors.

The platform features the ability to connect potentially

thousands of different sensors or probes, addressing major limitations present in traditional instrumentation systems.

We believe the

platform represents a technological advancement in the IoT marketplace by integrating large numbers of technologies, including cloud technology,

wired and wireless communication technology, software programming, instrumentation technology, artificial intelligence, PLC, and sensor

networking into a single platform.

The result of such integration is a smaller, cheaper and faster circuit system design than those currently

offered in the instrumentation market.

We are developing a device we call the Ubiquitor,

which replaces the functions of traditional digital measurement and sensing products by integrating many digital sensors and measurement

tools into one single digital device.

We believe the platform represents a technological advancement in the IoT marketplace by integrating

large numbers of technologies, including cloud technology, wired and wireless communication technology, software programming, instrumentation

technology, artificial intelligence, PLC, and sensor networking into a single platform.

The result of such integration is a smaller, cheaper

and faster circuit system design than those currently offered in the instrumentation market.

Our USIP technology that will make the Ubiquitor

possible is an advanced software and hardware integrated instrumentation platform that uses a large-scale modular design approach.

large-scale modular design approach subdivides instruments into a foundation component (a USIP) and architecture-specific components (sensor

nodes), which together replaces the functions of traditional instruments at a fraction of their cost.

The USIP has an open architecture,

incorporating a variety of individual instrument functions, sensors, and probes from different industries and vendors.

The platform features

the ability to connect potentially thousands of different sensors or probes, addressing major limitations present in traditional instrumentation

The USIP, which is compatible with a significant

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We have created and assembled prototype models

of the Ubiquitor in limited quantities and plan to expand our assembly in late 2022.

Our prototype Ubiquitor is compatible with standard

desktop computers running either Windows OS or MacOS and Android- or iOS-based mobile devices and acts as a conduit that communicates

with a group of sensors or probes manufactured by different vendors in a manner that requires the user to have little or no knowledge

of their unique specifications.

The data readout is displayed on the computer or mobile device display in application software we have

created for use with a Windows PC and are creating for use with a Mac.

We are designing the application software (the “App”)

to have a graphical representation of control and indicator elements common in traditional tangible instruments, such as knobs, buttons,

dials, and graphs, etc.

Utilizing the Ubiquitor and the App, users and instrument manufacturers will be free to add, remove or change

a sensor module for their special industrial or educational application without needing to create their own application software and design

their own hardware.

Our developers are designing and implementing a soft control touch screen interface that supports real-time data monitoring

and facilitates instrument control and operation.

of the Ubiquitor in limited quantities and plan to expand our assembly in 2023.

Our prototype Ubiquitor is compatible with standard desktop

computers running either Windows OS or MacOS and Android- or iOS-based mobile devices and acts as a conduit that communicates with a group

of sensors or probes manufactured by different vendors in a manner that requires the user to have little or no knowledge of their unique

specifications.

The data readout is displayed on the computer or mobile device display in application software we have created for use

with a Windows PC and are creating for use with a Mac.

We are designing the application software (the “App”) to have a graphical

representation of control and indicator elements common in traditional tangible instruments, such as knobs, buttons, dials, and graphs,

Utilizing the Ubiquitor and the App, users and instrument manufacturers will be free to add, remove or change a sensor module for

their special industrial or educational application without needing to create their own application software and design their own hardware.

Our developers are designing and implementing a soft control touch screen interface that supports real-time data monitoring and facilitates

instrument control and operation.

Recently, the Company has devoted a substantial

number of resources to research and development to bring the Ubiquitor and its App to full production and distribution.

We anticipate

that the sales and marketing involved with bringing the Ubiquitor to market will require us to hire a number of new employees in order

to gain traction in the market.

We intend to introduce the Ubiquitor in smart home installations to reduce costs and increase functionality,

as well as implement the Ubiquitor device in greenhouses and other agricultural warehouses that require regulation of light, humidity,

moisture, and other measurable scientific units required to create optimal growing conditions.

number of resources to research and development in both the US and China to bring the Ubiquitor and its App to full production and distribution.

We anticipate that the sales and marketing involved with bringing the Ubiquitor to market will require us to hire a number of new sales

and marketing employees in order to gain traction in the market.

We expect to continue this process throughout 2023.

We intend to introduce

the Ubiquitor in smart home installations to reduce costs and increase functionality, as well as implement the Ubiquitor device in greenhouses

and other agricultural warehouses that require regulation of light, humidity, temperature, and other measurable scientific units required

to create optimal growing conditions.

Our universal smart development protocol focuses

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guided by the principles of structure, universality and modularity.

As mentioned, we believe we address the core and fundamental issues

facing the IoT marketplace.

Our Ubiquitor device is a fully modular system

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in a cohesive package that provides a holistic view of the sensor data it is reading.

The physical hardware consists of:

The physical hardware of the Ubiquitor will consist

The sensor nodes, which come in hundreds of different varieties of sensor instruments in the form of a USB stick, with both male and female ports;

The Ubiquitor as the main hardware gateway, which is a small cell phone-sized device with integrated circuits.

The Ubiquitor instrument as the main hardware gateway, which is a small cell phone-sized device with integrated circuits.

We believe the Ubiquitor device can connect up

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on a single screen, with tools that record and keep track of all measurements, and sort and display analytic information in easy-to-read

The Ubiquitor is a general platform that collects

data in real time, up to 100 Hz per second;

The Ubiquitor will be a general platform that

collects data in real time, up to 100 Hz per second;

and thus, is intended to be adapted to many industrial uses.

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be interconnected by transmitting data through the same wires that provide electrical energy.

Wireless networks allow multiple users to access

large amounts of information without the hassle of running wires to and from each IoT device (See “Risk Factors” above).

5G cellular network, for example, promises exciting advances for telecommunication service providers, but the implementation of the 5G

network will be challenging.

The implementation will require building out dense, low-latency edge networks in ways that are affordable,

secure and easily maintainable.

5G antennas will be able to handle more users and to transmit more data, but they will have a shorter

transmission range.

5G networks will also require frequencies of up to 300 GHz.

This requirement means wireless carriers will need to

bid for the costly higher spectrum bands to roll out their respective 5G networks.

Generally speaking, wireless networks are typically

slower and more expensive than existing wired networks and extremely susceptible to interference from radio signals, radiation, walls

and other forms of interference.

Additionally, wireless networks may be accessed by any device within range of the network’s signal,

making the information transmitted on a wireless network susceptible to access by unauthorized recipients.

We are currently developing

a wired alternative to wireless networks that utilizes installed power lines to transmit information.

Our PLC technology uses an ultra-narrow

band spectrum channel of less than 1 KHz to establish a long-distance link between transmitter and receiver.

Thus, we believe that our

proprietary ultra-narrow band PLC technology will offer a promising alternative to wireless networks and provide the backbone communication

infrastructure for IoT devices.

PLC has been around for many years, leading some

to believe that it is a mature technology.

Current leaders in the industry include Siemens (Germany), Netgear (US), ABB (Switzerland),

Ametek (US), Schneider Electric (France), General Electric (US), TP-Link Technologies (China), D-Link (Taiwan), Landis+Gyr (Switzerland),

and Nyx Hemera Technologies (Canada).

The primary design goal of the power line network

is electric power distribution, not data transmission.

Consequently, although PLC is an established technology, the harsh electrical noise

present on power lines and variations in equipment and standards make communications over the power grid difficult and present a number

of fundamental challenges for data transfer.

Signals propagating along the power line are subjected to very large amounts of noise, attenuation,

and distortion that make them erratic, with several attributes varying over time.

PLC is susceptible to noise from devices linked to the

power supply infrastructure, for example, fluorescent tube lights, drills, hair dryers, microwave ovens, computers, switch mode power

supply, cellphone chargers, dimmers, refrigerators, televisions, washing machines, and vacuum cleaners.

All the trials of PLC technology

appear to have resulted in power companies and internet service providers deciding that the technology is not viable as a means of delivering

broadband internet access.

These technological challenges have impeded, or even halted, progression of PLC technology.

We are performing research and development with

the intention of inventing our own ultra-narrow band PLC technology that attempts to tackle two challenges:

1) overcoming interference

caused by electronic noise on the power line system;

and 2) bandwidth.

Preliminary internal testing suggests that we have achieved noise

rejection and interference suppression at five orders of magnitude better than traditional PLC technology.

We believe our ultra-narrow

band PLC technology shows robustness against noise and interference, based on our internal testing where we found no detectable interference

occurring when six industrial blowers, notorious for causing electrical noise, and a large air conditioning unit were connected to an

electrical line passing a control signal.

By comparison, a small air dryer is able to cause interference in legacy PLC systems.

of the art PLC technologies developed by other companies may offer sufficient bandwidth, but they cannot effectively deal with the interference

of electric noise on the system.

However, in our preliminary internal testing, we have been able to increase bandwidth to 4 megabits per

second with the potential for more, while simultaneously effectively dealing with electrical noise and interference.

Furthermore, such

data transfer rates were delivered at a bandwidth of less than 1000 Hz, thereby achieving a bandwidth efficiency (measured as bits per

second per Hz) greater than 4000.

For comparison purposes, 4G cellular networks have a bandwidth efficiency of less than 6 due to their

requirement of larger bandwidth resources.

The demand for bandwidth resources will only grow with the upcoming 5G and proposed 6G networks.

Accordingly, further research of our PLC technology is warranted as it shows promise for increased data transfer rates at a lower cost

than either of the 5G and proposed 6G networks, particularly given such networks’ requirements for costly new infrastructure and

bandwidth resources.

Based on the promising results of our internal testing, we have begun designing a proprietary PLC microchip and have

set an intended launch date for 2023.

Our patented PLC is an innovative communication

technology that enables sending data over existing power cables in the electric grid.

Because PLC uses the existing power lines, it does

not require substantial new investment for a dedicated wiring infrastructure.

Existing power lines already form a distribution network

that penetrates most residential, commercial, and industrial properties.

Given that the power grid is, for the most part, an established

ubiquitous network, we believe that PLC is potentially the most cost-effective, scalable interconnectivity approach for the backbone communication

infrastructure required for the IoT.

PLC allows IoT devices to be plugged into power outlets to establish a connection using the existing

electrical wiring, permitting data sharing without the inconvenience of running dedicated network cables.

Historically, the primary design goal of the power

line network was electric power distribution.

The power line network was not originally designed to function as a communication channel.

Consequently, while PLC has been around for many years, the harsh electrical noise present on power lines and variations in equipment

and standards make communications over the power grid difficult and present several challenges for data transfer.

Signals propagating

along the power line are subjected to substantial amounts of noise, attenuation, and distortion.

PLC is susceptible to noise from devices

linked to the power supply infrastructure.

Because of these factors, previous attempts at implementing PLC technology resulted in power

companies and internet service providers deciding that the technology is not a viable means of delivering data or broadband internet access.

We have successfully developed ultra-narrowband

PLC technology that we believe can transfer readable data through the power grid.

According to our internal testing, our ultra-narrowband

PLC technology can send and receive data without the customary interference that occurs in standard office and residential environments,

achieving speeds of 4 Mbps at a bandwidth of less than 1000 Hz.

To test noise interference and disturbance we utilized six industrial

fans simultaneously, and no significant interference was found.

By comparison, a single hair dryer will render legacy PLC technology completely

We have completed the development of our 4Mbps PLC modules and the printed circuit board layout.

These modules will be used for

IoT systems involving over 1,000 sensors.

Penetrating physical barriers like walls within

a single floor or reaching out to different floors in a single building is a challenge for the wireless technology that current IoT systems

Moreover, wireless networks often face performance issues due to radio-frequency interference caused by microwave ovens, cordless

telephones, or even Bluetooth devices at home.

However, our PLC technology can reach every node connected via the power lines.

Our technology

converts virtually every standard wall socket into an access point, making it a more consistent and reliable system for crucial and sensitive

Our ultra-narrowband PLC technology’s ability to reach long distances via power lines becomes especially useful in commercial

networks that require the ability to avoid physical barriers like walls, underground structures, and hills.

We believe that our PLC technology

can be an integral part of any smart city, community, or campus.

The 5G cellular network, for example, promises

exciting advances for telecommunication service providers, but the implementation of the 5G network will be challenging.

The implementation

will require building out dense, low-latency edge networks in ways that are affordable, secure and easily maintainable.

5G antennas will

be able to handle more users and to transmit more data, but they will have a shorter transmission range.

5G networks will also require

frequencies of up to 300 GHz.

This requirement means wireless carriers will need to bid for the costly higher spectrum bands to roll out

their respective 5G networks.

Generally speaking, wireless networks are typically slower and more expensive than existing wired networks

and extremely susceptible to interference from radio signals, radiation, walls and other forms of interference.

Additionally, wireless

networks may be accessed by any device within range of the network’s signal, making the information transmitted on a wireless network

susceptible to access by unauthorized recipients.

We are currently developing a wired alternative to wireless networks that utilizes installed

power lines to transmit information.

Our PLC technology uses an ultra-narrow band spectrum channel of less than 1 KHz to establish a long-distance

link between transmitter and receiver.

Thus, we believe that our proprietary ultra-narrow band PLC technology will offer a promising alternative

to wireless networks and provide the backbone communication infrastructure for IoT devices.

We believe that because residential and commercial

structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among intelligent

devices, particularly in the smart home installations that we are currently performing through AVX.

Using PLC technology would mean that

the requirement for costly ethernet cable networks to carry network information could be eliminated, as the same signals may be carried

on the existing power lines.

structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among

intelligent devices, particularly in the smart home installations that we are currently performing through AVX.

Using PLC technology

would mean that the requirement for costly ethernet cable networks to carry network information could be eliminated, as the same signals

may be carried on the existing power lines.

We plan to leverage the communications technology

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the same timeframe and extending an existing patent application into Europe and Australia.

In addition, in May 2022, the Company also

engaged Chang & Hale, LLP law firm as suggested by our counsel at Knobbe, Martens, Olsen & Bear, LLP to assist with two new patents,

however Knobbe Martens still remains our main IP counsel.

In all, the company now has 24 total patents and patent applications in various

phases with the US Patent and Trademark Office.

There are several competitors we have identified,

in the wireless sensor node industry, including traditional instruments or devices manufacturers such as Hanna Instruments and Extech

specifically in the wireless sensor node industry, including traditional instruments or devices manufacturers such as Hanna Instruments

and Extech Instruments.

Hach developed and launched the SC1000 Multi-parameter

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Results of Operations

For the three months ended March 31, 2022 compared to the three

months ended March 31, 2021

Products and Services Performance

For the three months ended March 31, 2022

For the three months ended March 31, 2021

Agricultural Product Wholesale (Perfecular):

IoT sales (AVX):

IoT service (AVX):

Total revenue

Agricultural product wholesale (Perfecular):

decrease of agricultural product wholesale was due to inventory levels sector wide existing at high levels.

Distributors across the hydroponic

sector have shown increased inventories in their recent numbers since YE 2021 having inventory numbers 2x or more of YE 2020 levels in

line with our understanding of the sector.

We continue to hold that our inventory levels and price levels for that inventory coupled with

our manufacturing capabilities place us at a relative advantage to continue to capitalize on future product opportunities.

IoT sales (AVX):

Our AVX growth this quarter was

a direct result of the bifurcation of our teams to service different geographies and demographics in the Southern Californian market.

While we kept our footprint in the West Los Angeles market geography, teams were built to service areas like Diamond Bar and Irvine possessing

different high-end demographics suited to home automation as well.

We plan to further increase this strategy in the near-term future.

IoT service (AVX):

Along with the IoT sales growth,

our IoT service revenues increased as well, playing into the same catalysts.

In the future, we do plan for more recurring service revenues

also with or implementation of follow-on maintenance contracts for new and existing clients.

For the three months ended June 30, 2022 compared to the three

months ended June 30, 2021

Our consolidated gross revenue for the three months

ended March 31, 2022 and 2021 was $157,167 and $363,463, respectively, which included revenue from related parties of $31,542 and $10,191,

ended June 30, 2022 and 2021 was $64,642 and $261,680, respectively, which included revenue from related parties of $2,278 and $4,950,

respectively.

Revenue for the three months ended March 31, 2022 decreased $206,296 due to sales decrease from major customer of Perfecular

Revenue for the three months ended June 30, 2022 decreased $197,038 due to sales decrease from major customer of Perfecular

and AVX Design & Integration Inc.

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in Los Angeles area.

Additionally, the company is midstream in shifting toward more higher technology products and revenues, and diversifying

away from more generalized hydroponic equipment of which remain in higher inventory levels within the industry.

Cost and Operating Expenses

The major components of our cost and operating

expenses for the three months ended March 31, 2022 and 2021 are outlined in the table below:

For the three months ended March 31, 2022

For the three months ended March 31, 2021

expenses for the three months ended June 30, 2022 and 2021 are outlined in the table below:

For the three months ended June 30, 2022

For the three months ended June 30, 2021

Cost of revenue, excluding depreciation & amortization

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Cost of revenue, excluding depreciation and amortization

for the three months ended March 31, 2022 was $143,091, compared to $292,263 for the three months ended March 31, 2021.

This decrease

in cost of revenue was related to the decrease in revenues.

Selling expense for the three months ended March

31, 2022 was $38,339, compared to $512 for the three months ended March 31, 2021.

for the three months ended June 30, 2022 was $57,472, compared to $208,583 for the three months ended June 30, 2021.

This decrease in

cost of revenue was related to the decrease in revenues.

Selling expense for the three months ended June

30, 2022 was $17,548, compared to $446 for the three months ended June 30, 2021.

Selling expense incurred was mainly from third party

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Compensation – officers and directors were

$76,040 and $39,100 for the three months ended March 31, 2022 and 2021, respectively.

The increase was due to grant employee compensation.

$34,000 and $34,000 for the three months ended June 30, 2022 and 2021, respectively.

Research and development costs were $167,361 and

$63,150 for the three months ended March 31, 2022 and 2021, respectively.

$47,222 for the three months ended June 30, 2022 and 2021, respectively.

The increase was due to an increase research and development

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Professional fees were $174,341during the three

months ended March 31, 2022 compared to $270,709 during the three months ended March 31, 2021.

The increase in professional fees mainly

resulted from the pending litigation compared to the prior period.

months ended June 30, 2022, compared to $186,765 during the three months ended June 30, 2021.

The decrease in third party consulting fee

compared to the prior period.

General and administrative expenses of $819,268

incurred during the three months ended March 31, 2022 primarily consisted of stock-based compensation of $236,375, employee compensation

of $193,930, insurance expense of $176,915, salaries of $137,162, rent of $75,597 and depreciation expense of $40,163 .

and administrative expenses of $416,922 incurred during the three months ended March 31, 2021 primarily consisted of stock-based compensation

of $118,838, salaries of $136,483, insurance expense of $42,579 and depreciation expense of $40,537.

During the three months ended March 31, 2022 and

incurred during the three months ended June 30, 2022 primarily consisted of stock-based compensation of $228,375, salaries of $178,530,

rent of $161,448, insurance expense of $81,579, and depreciation expense of $41,899.

General and administrative expenses of $448,199 incurred

during the three months ended June 30, 2021 primarily consisted of stock-based compensation of $106,838, salaries of $75,845, insurance

expense of $86,309 and depreciation expense of $39,156.

Other income of $144,051 incurred during the three

months ended June 30, 2022 primarily consisted of SBA PPP forgiveness loan of $158,547, unrealized loss on marketable equity securities

of $74,626 and cancellation of debt of $20,000.

Other income of $183,390 incurred during the three months ended June 30, 2021 primarily

consisted of SBA PPP forgiveness loan of $151,500.

During the three months ended June 30, 2022 and

2021, we incurred net losses of $1,061,297 and $480,145 respectively, due to the factors discussed above.

For the six months ended June 30, 2022 compared to the six months

ended June 30, 2021

Our consolidated gross revenue for the six months

ended June 30, 2022 and 2021 was $221,809 and $625,143, respectively, which included revenue from related parties of $33,820 and $15,141,

respectively.

Revenue for the six months ended June 30, 2022 decreased $403,334 due to sales decrease from Hydrofarm to Perfecular and

AVX Design & Integration Inc.

being unable to generate more service work or develop a big project in the highly competitive environment

of the Los Angeles area.

As mentioned, the company is midstream in shifting toward more higher technology products and revenues and diversifying

away from generalized hydroponic equipment.

Cost and Operating Expenses

The major components of our cost and operating

expenses for the six months ended June 30, 2022 and 2021 are outlined in the table below:

For the six months ended June 30, 2022

For the six months ended June 30, 2021

Cost of revenue, excluding depreciation & amortization

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total costs and operating expenses

Cost of revenue, excluding depreciation &

amortization for the six months ended June 30, 2022 was $200,563, compared to $500,846 for the six months ended June 30, 2021.

This decrease

in cost of revenue was related to the decrease in revenues.

Selling expense for the six months ended June

30, 2022 was $55,887, compared to $958 for the six months ended June 30, 2021.

Selling expense incurred was mainly from third party advertising

The increase of selling expense was due to an increase in advertising fees.

Compensation – officers and directors were

$110,040 and $73,100 for the six months ended June 30, 2022 and 2021, respectively.

The increase was due to granting equity compensation.

Research and development costs were $729,105 and

$110,372 for the six months ended June 30, 2022 and 2021, respectively.

The increase was due to an increase in research and development

employee compensation;

and on research and development costs incurred by our Chinese subsidiary.

Professional fees were $535,207 during the six

months ended June 30, 2022 compared to $457,475 during the six months ended June 30, 2021.

The increase in professional fees mainly resulted

from the pending litigation compared to the prior period.

General and administrative expenses of $1,720,216

incurred during the six months ended June 30, 2022 primarily consisted of stock-based compensation of $456,750, salaries of $469,934,

rent of $237,045, insurance expense of $258,494, and depreciation expense of $82,062.

General and administrative expenses of $865,120

incurred during the six months ended June 30, 2021 primarily consisted of stock-based compensation of $213,675, salaries of $261,751,

insurance expense of $135,144, depreciation expense of $80,872, and rent of $32,590.

During the six months ended June 30, 2022 and

2021, we incurred total other income of $198,982 and $220,067, respectively.

The increase in other income was due to increase investment

income in current period.

During the three months ended March 31, 2022 and

The decrease in other income was due to SBA PPP forgiveness

loan and cancellation of debt in the current period.

The majority of the other income was incurred from lease payments from tenants at

our facility in Ontario, California.

Also of note, the market value of our facility has increased substantially due to the general rise

in Southern California industrial real estate market conditions over the past 5 years.

During the six months ended June 30, 2022 and

2021, we incurred net losses of $2,930,227 and $1,162,661 respectively, due to the factors discussed above.

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selected cash flow information:

For the three months ended March 31, 2022

For the three months ended March 31, 2021

For the six months ended June 30, 2022

For the six months ended June 30, 2021

Net cash used in operating activities

$ (1,749,492 )

Net cash used in investing activities

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Net change in cash

$ (2,018,257 )

Cash Flows from Operating Activities

Our net cash outflows from operating activities

of $902,283 for the three months ended March 31, 2022 was primarily the result of our net loss of $1,868,930 and changes in our operating

of $1,749,492 for the six months ended June 30, 2022 was primarily the result of our net loss of $2,930,227 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses.

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$7,752, a decrease in other receivable of $13,057, a decrease in prepaid expense of $103,083, an increase in deposit of $4,008, a decrease

in operating lease right-of-use asset of $150,623, an increase in accounts payable and accrued liabilities of $38,000, a decrease in other

current liabilities of $17,135, a decrease in lease liabilities of $123,951, an increase in other liabilities of $14,736.

Non-cash expense

included add-backs of $42,080 in bad debt expense, $25,006 in reduction of inventory fair value adjustments, $40,165 in depreciation expense,

$656,370 in stock-based compensation - shares, $8,000 in stock-based compensation - services, and $228,375 in stock option compensation.

in operating lease right-of-use asset of $190,790, an decrease in accounts payable and accrued liabilities of $106,104, a decrease in

other current liabilities of $17,135, an increase in customer deposit of $6,131, a decrease in lease liabilities of $60,576, an increase

in other liabilities of $14,736.

Non-cash expense included add-backs of $57,147 in bad debt expense, $25,617 in reduction of inventory

fair value adjustments, $82,065 in depreciation expense, $74,626 in unrealized loss on marketable equity securities, $10,281 in realized

gain on marketable securities, $158,547 in gain on forgiveness of debt, $692,920 in stock-based compensation - shares, and $456,750 in

stock option compensation.

Our net cash outflows from operating activities

of $438,755 for the three months ended March 31, 2021 was primarily the result of our net loss of $682,516 and changes in our operating

of $964,297 for the six months ended June 30, 2021, was primarily the result of our net loss of $1,162,661 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses.

The change in operating assets and liabilities includes an increase

in accounts receivable of $165,725, decrease in inventory of $20,975, decrease in prepaid expenses of $53,340, decrease in deposits of

$100,000, decrease in operating lease right-of use assets of $11,542, increase in accounts payable and accrued liabilities of $142,464,

decrease in accounts payable – related party of $17,471, decrease in lease liabilities of $12,379 and decrease in customer deposit

Non-cash expense included add-backs of $8,357 in bad debt expense, $3,287 in reduction of inventory reserve, $40,537 in depreciation

expense, $12,000 in stock-based compensation, and $106,838 in stock option compensation.

The change in operating assets and liabilities includes a decrease

in accounts receivable of $40,219, an increase of accounts receivable – related party of $5,016, a decrease in inventory of $32,248,

an increase in other receivables of $2,400, an increase in prepaid expenses of $98,821, a decrease in deposits of $100,000, a decrease

in operating lease right-of-use asset of $23,553, an increase in accounts payable and accrued liabilities of $32,400, a decrease in accounts

payable – related party of $17,471, an increase in other current liabilities of $164, a decrease in customer deposits of $52,751,

and a decrease lease liabilities of $25,228.

Non-cash expense includes add-backs of $5,749 in bad debt expense, $1,329 in inventory reserve

reductions, $80,872 in depreciation expense, $151,500 in gain on forgiveness of debt, $24,000 in stock-based compensation, and $213,675

in stock option compensation.

We expect that cash flows from operating activities

may fluctuate in future periods as a result of a number of factors, including fluctuations in our net revenues and operating results,

utilization of new revenue streams, collection of accounts receivable, and timing of billings and payments.

utilization of new revenue streams, in line with our shifting revenue streams, collection of accounts receivable, and timing of billings

and payments.

Cash Flows from Investing Activities

For the three months ended March 31, 2022 we had

cash outflow from investing activities of $31,470 from the purchase of property and equipment.

There were no investing activities for

the three months ended March 31, 2021

For the six months ended June 30, 2022 we had

cash outflow from investing activities of $267,537.

That was primarily the result from the purchase of property and equipment of $39,702,

purchase of marketable securities of $708,359, and proceeds from sales of marketable securities of $480,524.

There were no investing activities

for the six months ended June 30, 2021

Cash Flows from Financing Activities

There were no financing activities for the three

months ended March 31, 2022.

For the three months ended March 31, 2021 the Company obtained $267,297 in SBA loan, received $1,500,000

in bank loan, and repaid $3,600 in bank loan, resulting in cash inflow of $1,763,697.

There were no financing activities for the six

months ended June 30, 2022.

For the six months ended June 30, 2021, cash inflows of $1,762,407 were due to proceeds of SBA loans of $267,297,

payment of an SBA loan of $227, proceeds from bank loan of $1,500,000, and repayment of the bank loan of $4,663.

Going Concern

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obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations.

For the three months

ended March 31, 2022, the Company had a net loss of $1,868,930 and negative cash flow from operating activities of $902,283.

With the January 1, 2022 beginning cash amount of $8,678,665, the Company will have enough cash to cover its projected annual cash burn

rate of $3,152,618, which is an increase from the previous year.

This is a result of coming off of a year where the company completed

an uplisting transaction causing a greater than normal amount of expenditure, especially within professional service fees.

Company has adequate cash for the Company to continue operation as a going concern throughout 2022 without any additional capital raise.

As a result, the previous factors raising substantial doubt to continue as a going concern have been alleviated for the following year.

For the six months

ended June 30, 2022, the Company had a net loss of $2,930,227 and negative cash flow from operating activities of $1,749,492.

With a January

1, 2022 beginning cash amount of $8,678,665, the Company will have enough cash to cover its projected annual cash burn rate of $3,152,618

which is an increase from the previous year.

This is a result of coming off of a year where the company completed an uplisting transaction

causing a greater than normal amount of expenditure, especially in professional service fees.

Overall, the Company has adequate cash for

the Company to continue operation as a going concern throughout 2022 without any additional capital raise.

As a result, the previous factors

raising substantial doubt to continue as a going concern have been alleviated for the following year.

Off-Balance Sheet Arrangements

As of March 31, 2022, we did not have any off-balance-sheet arrangements,

As of June 30, 2022, we did not have any off-balance-sheet arrangements,

as defined in Item 303(a)(4)(ii) of Regulation SK.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis