What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-04-06 compared with 2020-06-23 · 254 added, 271 removed, 215 unchanged (71% of the section changed)

for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Registrant’s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is quoted on the OTC

Pink under the symbol “ITOX.”

The table below sets forth for the periods indicated the quarterly high and low bid

prices as reported by OTC Markets.

Our common stock is quoted on the OTC Pink

under the symbol “ITOX.”

The table below sets forth for the periods indicated the quarterly high and low bid prices

as reported by OTC Markets.

Limited trading volume has occurred during these periods.

These quotations reflect inter-dealer

prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

These quotations reflect inter-dealer prices,

without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

FISCAL YEAR ENDING DECEMBER 31, 2021

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Our common stock is considered to be penny

stock under rules promulgated by the Securities and Exchange Commission (the “

SEC ”).

Under these rules, broker-dealers

participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated

with these stocks, broker-dealers’

stock under rules promulgated by the SEC.

Under these rules, broker-dealers participating in transactions in these securities must

first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’

duties, customers’

rights and remedies, market and other information, and make

suitability determinations approving the customers for these stock transactions based on financial situation, investment experience

and objectives.

Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers,

and obtain specific written consent of each customer.

With these restrictions, the likely effect of designation as a penny stock

is to decrease the willingness of broker-dealers to make a market for the stock, to decrease the liquidity of the stock and increase

the transaction cost of sales and purchases of these stocks compared to other securities.

As of the close of business on June 19,

rights and remedies, market and other information, and make suitability determinations approving the customers for these stock

transactions based on financial situation, investment experience and objectives.

Broker-dealers must also disclose these restrictions

in writing, provide monthly account statements to customers, and obtain specific written consent of each customer.

With these restrictions,

the likely effect of designation as a penny stock is to decrease the willingness of broker-dealers to make a market for the stock,

to decrease the liquidity of the stock and increase the transaction cost of sales and purchases of these stocks compared to other

As of the close of business on March 31,

2021, we had approximately 131 holders of our common stock.

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84117, to act as transfer agent for the common stock.

We have not declared or paid any cash

dividends on our common stock during the fiscal years ended December 31, 2019 and 2018, or in any subsequent period.

anticipate or contemplate paying dividends on our common stock at the present time.

The only restrictions that limit the ability

to pay dividends on common equity, or that are likely to do so in the future, are those restrictions imposed by law.

Securities Authorized for Issuance

under Equity Compensation Plans

We have never declared a cash dividend

on our common stock and our Board of Directors does not anticipate that we will pay cash dividends in the foreseeable future.

future determination to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial

condition, operating results, capital requirements, restrictions contained in our agreements and other factors which our Board

of Directors deems relevant.

We are obligated to pay dividends to certain

holders of our preferred stock which we pay out of legally available funds from time to time or reach arrangements with our holders

of preferred stock to convert limited quantities of preferred stock at favorable conversion prices in lieu of dividend payments.

Securities Authorized for Issuance under Equity Compensation

Compensation Plan Information

Plan category

Number of securities

to be issued upon exercise of outstanding options, warrants and rights

Weighted-average

exercise price of outstanding options, warrants and rights

Number of securities

remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Effective July 1, 2018, the Company issued to Sam Burke 200,000

unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2019, 50,000

shares were vested and the remaining 150,000 unvested shares were cancelled.

Effective April 23, 2018, the Company issued to Antony Coufal

1,800,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2019,

300,000 shares were vested.

Effective October 1, 2018, the Company issued to Karen McNemar

2,409,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2019,

409,000 shares were vested.

Effective June 4, 2018, the Company issued to Clifford Emmons

3,060,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2019,

560,000 shares were vested.

2,031,000 (1)(2)(3)(4)

Effective July 1, 2018, the Company issued to Sam Burke 200,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2020, 50,000 shares were vested and the remaining 150,000 unvested shares were cancelled.

Effective April 23, 2018, the Company issued to Antony Coufal 1,800,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2020, 900,000 shares were vested.

Effective October 1, 2018, the Company issued to Karen McNemar 2,409,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2020, 1,209,000 shares were vested.

Effective June 4, 2018, the Company issued to Clifford Emmons 3,060,000 unvested shares of the Company’s Common Stock under the 2017 Plan, as defined below.

As of December 31, 2020, 1,560,000 shares were vested.

2017 Stock Incentive Plan

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No awards were made under this plan.

On December 14, 2017, the Board of Directors terminated this plan and adopted a new 2017 Stock Incentive Plan (the “

December 14, 2017, the Board of Directors terminated this plan and adopted a new 2017 Stock Incentive Plan (the “

Plan ”).

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employees, officers, directors, consultants, and other service providers upon whose judgment, initiative and efforts the successful

conduct and development of our business largely depends, and (b) to provide additional incentives to such persons or entities

to devote their utmost effort and skill to the advancement and betterment of our company, by providing them an opportunity to

participate in the ownership of our Company and thereby have an interest in the success and increased value of our Company.

conduct and development of our business largely depends, and (b) to provide additional incentives to such persons or entities to

devote their utmost effort and skill to the advancement and betterment of our company, by providing them an opportunity to participate

in the ownership of our Company and thereby have an interest in the success and increased value of our Company.

There are 4,500,000 shares of common stock

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receive incentive stock options under the Plan.

Employees of our Company or of an Affiliated Company, members of the board of

directors (whether or not employed by our company or an Affiliated Company), and “Service Providers”, as defined in

the 2017 Plan, are eligible to receive non-qualified options, restricted stock units, and stock appreciation rights under the

Employees of our Company or of an Affiliated Company, members of the board of directors

(whether or not employed by our company or an Affiliated Company), and “Service Providers”, as defined in the 2017

Plan, are eligible to receive non-qualified options, restricted stock units, and stock appreciation rights under the 2017 Plan.

All awards are subject to Section 162(m) of the Internal Revenue Code.

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In the event of termination of employment for disability or death, the optionee or administrator

of optionee’s estate or transferee has six months following the date of termination to exercise options received at the

time of disability or death.

of optionee’s estate or transferee has six months following the date of termination to exercise options received at the time

of disability or death.

In the event of termination for any other reason other than for cause, disability or death, the optionee

has 30 days to exercise his or her options.

The 2017 Plan will continue in effect

until all the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until

ten years after its adoption, whichever is earlier.

Awards under the 2017 Plan may also be accelerated in the event of certain

corporate transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all

The 2017 Plan will continue in effect until

all the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until ten years

after its adoption, whichever is earlier.

Awards under the 2017 Plan may also be accelerated in the event of certain corporate

transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all our assets.

As of December 31, 2020, the Board had

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In the event of termination of employment for disability or death, the optionee or administrator

of optionee’s estate or transferee has six months following the date of termination to exercise options received at the

time of disability or death.

of optionee’s estate or transferee has six months following the date of termination to exercise options received at the time

of disability or death.

In the event of termination for any other reason other than for cause, disability or death, the optionee

has 30 days to exercise his or her options.

The 2019 Plan will continue in effect

until all the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until

ten years after its adoption, whichever is earlier.

Awards under the 2019 Plan may also be accelerated in the event of certain

corporate transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all

The 2019 Plan will continue in effect until

all the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until ten years

after its adoption, whichever is earlier.

Awards under the 2019 Plan may also be accelerated in the event of certain corporate

transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all our assets.

As of December 31, 2020, the Board had

granted 3,060,000 shares Common Stock under the 2019 Plan.

Stock Options

We currently have no outstanding stock

Recent Sales of Unregistered Securities

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unregistered securities in the fourth quarter of 2020.

Financial Data

Selected Financial Data

As a Smaller Reporting Company, we are

not required to furnish information under this Item 6.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion

and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements.

Historical results may

not indicate future performance.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and

Analysis of Financial Condition and Results of Operations contain certain forward-looking statements.

Historical results may not

indicate future performance.

Our forward-looking statements reflect our current views about future events;

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after the date hereof that may bear upon forward-looking statements.

Furthermore, we cannot guarantee future results, events,

levels of activity, performance, or achievements

Furthermore, we cannot guarantee future results, events, levels

of activity, performance, or achievements

Basis of Presentation

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the par value of the common stock of OXYS.

Additionally, all intercompany transactions between the Company and OXYS have been

Additionally, all intercompany transactions between the Company and OXYS have been eliminated.

Forward-Looking Statements

Statements in this management’s

discussion and analysis of financial condition and results of operations contain certain forward-looking statements.

To the extent

that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition

involve risks and uncertainties.

Where in any forward-looking statements, if we express an expectation or belief as to future

results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can

be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

Statements in this management’s discussion

and analysis of financial condition and results of operations contain certain forward-looking statements.

To the extent that such

statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve

risks and uncertainties.

Where in any forward-looking statements, if we express an expectation or belief as to future results or

events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance

that the statement of expectation or belief will result or be achieved or accomplished.

Factors that may cause differences between

actual results and those contemplated by forward-looking statements include those discussed in “Risk Factors”

are not limited to the following:

the unprecedented impact of COVID-19 pandemic on our business,

customers, employees, subcontractors and supply chain, consultants, service providers, stockholders, investors and other stakeholders;

not limited to the following:

the unprecedented impact of COVID-19 pandemic on our business, customers, employees, subcontractors and supply chain, consultants, service providers, stockholders, investors and other stakeholders;

general market and economic conditions;

our ability to maintain and grow our business with our current

our ability to meet the volume and service requirements of our

industry consolidation, including acquisitions by us or our

our ability to maintain and grow our business with our current customers;

our ability to meet the volume and service requirements of our customers;

industry consolidation, including acquisitions by us or our competitors;

capacity utilization and the efficiency of manufacturing operations;

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new product introductions by competitors;

the ability of competitors to more fully leverage low cost geographies

for manufacturing or distribution;

the ability of competitors to more fully leverage low-cost geographies for manufacturing or distribution;

product pricing, including the impact of currency exchange rates;

effectiveness of sales and marketing resources and strategies;

adequate manufacturing capacity and supply of components and

adequate manufacturing capacity and supply of components and materials;

strategic relationships with our suppliers;

product quality and performance;

protection of our products and brand by effective use of intellectual

property laws;

protection of our products and brand by effective use of intellectual property laws;

the financial strength of our competitors;

the outcome of any future litigation or commercial dispute;

barriers to entry imposed by competitors with significant market

power in new markets;

barriers to entry imposed by competitors with significant market power in new markets;

government actions throughout the world;

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and similar expressions to identify these forward-looking statements.

Prospective investors should not

place undue reliance on these statements, which apply only as of the date of this document.

Prospective investors should not place

undue reliance on these statements, which apply only as of the date of this document.

Our actual results could differ materially

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and expenses, and related disclosures of contingencies.

We continually evaluate the accounting policies and estimates used to

prepare the financial statements.

We base our estimates on historical experiences and assumptions believed to be reasonable under

current facts and circumstances.

We continually evaluate the accounting policies and estimates used to prepare

the financial statements.

We base our estimates on historical experiences and assumptions believed to be reasonable under current

facts and circumstances.

Actual amounts and results could differ from these estimates made by management.

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Following the closing, our business has been that of OXYS, Inc.

Inc., our wholly owned subsidiaries.

Our operations have varied significantly following the closing since, prior to that time,

we were an inactive shell company.

and HereLab, Inc.,

our wholly owned subsidiaries.

Our operations have varied significantly following the closing since, prior to that time, we were

an inactive shell company.

Impact of COVID-19

During the year 2020, the effects of a

new coronavirus (“

COVID-19 ”) and related actions to attempt to control its spread began to impact our business.

The impact of COVID-19 on our operating results for the year ended December 31, 2020 was limited, in all material respects, due

to the government mandated numerous measures, including closures of businesses, limitations on movements of individuals and goods,

and the imposition of other restrictive measures, in its efforts to mitigate the spread of COVID-19 within the country.

On March 11, 2020, the World Health Organization

designated COVID-19 as a global pandemic.

Governments around the world have mandated, and continue to introduce, orders to slow

the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel,

as well as work restrictions that prohibit many employees from going to work.

Uncertainty with respect to the economic effects

of the pandemic has introduced significant volatility in the financial markets.

Historical Background

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shareholders entered into a consulting agreement with OXYS to provide consulting services during the transition.

was effective on July 28, 2017, and our name was changed to “IIOT-OXYS, Inc.”

The OXYS SEA was

effective on July 28, 2017, and our name was changed to “IIOT-OXYS, Inc.”

at that time.

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our domicile was changed from New Jersey to Nevada.

On December 14, 2017, we entered into

a Share Exchange Agreement (the “

On December 14, 2017, we entered into a

Share Exchange Agreement (the “

HereLab SEA ”) with HereLab, Inc., a Delaware corporation (“

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A new management team was put into place

in 2018, which constitutes our current management team.

in 2018, which constitutes our current management team sans Mr.

Coufal who resigned effective March 31, 2021.

On April 1, 2021,

we appointed Chandran Seshagiri as our Interim CTO to replace Mr.

At the present time, we have two, wholly-owned

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General Overview

IIOT-OXYS, Inc., a Nevada corporation

Company ”), and OXYS, were originally established for the purposes of designing, building, testing, and

selling Edge Computing systems for the Industrial Internet.

Both companies were, and presently are, early stage technology

startups that are largely pre-revenue in their development phase.

HereLab is also an early-stage technology development

The Company received its first revenues in the last quarter of 2017, continued to realize revenues during 2018 and 2019,

and expects to realize revenue growth in 2020 due to its business development pipeline.

IIOT-OXYS, Inc., a Nevada corporation (the

Company ”), and OXYS, were originally established for the purposes of designing, building, testing, and selling

Edge Computing systems for the Industrial Internet.

Both companies were, and presently are, early-stage technology startups

that are largely pre-revenue in their development phase.

HereLab is also an early-stage technology development company.

The Company received its first revenues in the last quarter of 2017, has continued to realize revenues in 2020, and expects to

realize revenue growth in 2021 due to its business development pipeline.

We develop hardware,

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apply our algorithms to help provide the customer insights.

the shelf components, with reconfigurable hardware architecture that adapts to a wide range of customer needs and

applications.

We use open source software tools, while still creating proprietary content for customers, thereby

reducing software development time and cost.

The software works with the hardware to collect data from the equipment or

structure that is being monitored.

We use off the

shelf components, with reconfigurable hardware architecture that adapts to a wide range of customer needs and applications.

use open source software tools, while still creating proprietary content for customers, thereby reducing software development time

The software works with the hardware to collect data from the equipment or structure that is being monitored.

We focus on developing

We develop algorithms that help our customers create insights from vast data streams.

The data collected

is analyzed and reports are created for the customer.

From these insights, the customer can act to improve their process,

product or structure.

OUR SOLUTIONS ACHIEVE TWO OBJECTIVES

We show clear path to improved asset reliability, machine uptime,

machine utilization, energy consumption, and quality.

We provide advanced algorithms and insights as a service.

RISK MINIMIZATION

We use simple measurements requiring almost zero integration

minimally invasive.

We do not interfere with command and control of critical equipment.

We do not physically touch machine control networks –

total isolation of networks.

Our location in Cambridge, Massachusetts

is ideal since market-leading Biotech, Medtech, and Pharma multinational firms have offices or R&D centers in Cambridge or

the Greater Boston area, which gives us easier access to potential sales which, in turn, lowers our cost of sales.

Additionally,

we continue to add value to structural health monitoring and smart manufacturing customers as well.

We, therefore, have a range

of opportunities as we continue to expand our customer base.

Our goal is to help Biotech, Pharma, and

Medical Device companies realize the next wave of performance, productivity, and quality gains for their organizations, and become

Industry 4.0 compliant.

We have a unique value proposition in

a fast-growing worldwide multi-billion USD market, and have positioned our business with strategic partners for accelerated growth.

We are therefore well-poised for growth in 2020 and beyond, as we execute our plans and acquire additional customers.

WHAT MARKETS WE SERVE

SMART MANUFACTURING

We help our customers maintain machine

uptime and maximize operational efficiency.

We also enable then to do energy monitoring, predictive maintenance that anticipates

problems before they happen, and improve part and process quality.

BIOTECH, PHARMACEUTICAL, AND MEDICAL

We are on the operations side, not the

patient-facing side.

In this market vertical, our customers must provide high-quality products that must also pass rigorous review

by governing bodies such as the FDA.

Here again, we focus on machine uptime, operational efficiency, and predictive maintenance

to avoid unplanned downtime.

SMART INFRASTRUCTURE

For bridges and other civil infrastructure,

local, state and federal agencies have limited resources.

We help our clients prioritize how to spend limited funds by addressing

those fixes which need to be made first.

OUR UNIQUE VALUE PROPOSITION

EDGE COMPUTING AS A COMPLIMENT TO CLOUD

Within the Internet of Things (“

and Industrial Internet of Things (“

IIoT ”), most companies right now are adopting an approach which sends all

sensor data to the cloud for processing.

We specialize in edge computing, where the data processing is done locally right where

the data is collected.

We also have advanced cloud-based algorithms that implement various machine learning and artificial intelligence

ADVANCED ALGORITHMS

We have sought to differentiate from our

competitors by developing advanced algorithms on our own and in collaboration with strategic partners These algorithms are an

essential part of the edge computing strategy that convert raw data into actionable knowledge right where the data is collected

without having to send the data to the cloud first.

RECONFIGURABLE HARDWARE AND SOFTWARE

Instead of focusing on creating tools,

we use open source tools to create proprietary content.

Liquidity and Capital Resources

for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018

At December 31, 2019, we had a cash balance

of $24,212, which represents a $15,014 decrease from the $39,226 balance at December 31, 2018.

This decrease was primarily the

result of cash used to satisfy the requirements of a reporting company and due to acceleration in product development activities.

Our working capital at December 31, 2019 was negative $1,609,005, as compared to a December 31, 2018 working capital of negative

For the year ended December 31, 2019,

we incurred a net loss of $1,887,287.

Net cash used in operating activities was $325,014 for the year ended December 31, 2019.

For the year ended December 31, 2018,

we incurred a net loss of $1,613,299.

Net cash used in operating activities was $521,637 for the year ended December 31, 2018.

For the year ended December 31, 2019,

financing activities consisted of $310,000 of cash received from the issuance of Convertible Notes.

For the year ended December 31, 2018,

financing activities consisted of $500,000 of cash received from the issuance of a convertible note.

The accompanying financial statements

have been prepared assuming we will continue as a going concern.

As shown in the accompanying financial statements, we have incurred

losses from operations of $1,887,287 for the year ended December 31, 2019, and $1,613,299 for the year ended December 31, 2018

and has an accumulated deficiency which raises substantial doubt about our ability to continue as a going concern.

The data collected is analyzed

and reports are created for the customer.

From these insights, the customer can act to improve their process, product or structure.

Liquidity and Capital Resources for

the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

At December 31, 2020, we had a cash balance of

$103,074, which represents a $78,862 increase from the $24,212 cash balance at December 31, 2019.

This increase was primarily as a result

of cash received from the sale of Series B Preferred Stock, cash received from convertible notes payable, and cash received from the

Payroll Protection Program loans (“

PPP ”) received by the Company during 2020.

Our working capital at December 31,

2020 was negative $2,665,436, as compared to a December 31, 2019 working capital of negative $1,609,005.

For the year ended December 31, 2020, we incurred

a net loss of $2,236,774.

Net cash flows used in operating activities was $117,138 for the year ended December 31, 2020.

For the year ended December 31, 2019, we incurred

a net loss of $1,887,287.

Net cash flows used in operating activities was $325,014 for the year ended December 31, 2019.

For the year ended December 31, 2020, net cash

flows provided by financing activities were $196,000, consisting of cash received from the issuance of Convertible Notes payable of $129,300,

cash proceeds from sale of Series B Preferred Stock of $130,000, cash payments on notes payable of $100,000, and cash received from the

PPP of $36,700.

For the year ended December 31, 2019, financing

activities consisted of $310,000 of cash received from the issuance of Convertible Notes payable.

The accompanying consolidated financial

statements have been prepared assuming we will continue as a going concern.

As shown in the accompanying financial statements,

we have incurred losses from operations of $2,236,774 for the year ended December 31, 2020, and $1,887,287 for the year ended December

31, 2019, and has an accumulated deficit of $7,480,678 as of December 31, 2020, which raises substantial doubt about our ability

to continue as a going concern.

Results of Operations for the Year

Ended December 31, 2020 compared to the year ended December 31, 2019

For the year ended December 31, 2019,

we earned revenues of $147,151 and incurred related cost of sales of $38,960.

We incurred professional fees of $1,807,286 and

other general and administrative expenses of $164,501.

We incurred other expenses net of income of $23,690.

As a result, we incurred

a net loss of $1,887,287 for the year ended December 31, 2019.

For the year ended December 31, 2020, we

earned revenues of $36,771 and incurred related cost of sales of $15,044.

We incurred professional fees of $802,135, payroll costs

of $137,220, and other general and administrative expenses of $109,016.

We incurred other expenses of $1,208,467, net of other

income of $5,000, primarily due to the loss on change in the fair market value of derivative liability of $220,325, interest expense

of $737,541 on notes payable due to amortization of debt discount and interest payable on notes payable, loss on the derivatives

and loss on extinguishment of debt for the year ended December 31, 2020.

We also recorded $1,663 as preferred stock dividend on

convertible preferred stock for the year ended December 31, 2020.

As a result, we incurred a net loss of $2,236,774 for the year

ended December 31, 2020.

Comparatively, for the year ended December

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We incurred other expenses net of income of $23,690.

we incurred a net loss of $1,613,299 for the year ended December 31, 2018.

As a result, we

incurred a net loss of $1,887,287 for the year ended December 31, 2019.

During the current and prior period, we

did not record an income tax benefit due to the uncertainty associated with the Company’s ability to utilize the deferred

Year over Year (YoY) revenue was less

in 2019 than 2018.

Year over Year (YoY) revenue was less in

2020 than 2019.

This was due to several reasons, including:

challenges raising substantial capital and longer than anticipated

customer acquisition times.

These two factors led to cash flow issues, which in turn led to additional and aging AP.

resulted in a difficult fourth quarter 2019, and thus the negative YoY revenue growth.

Our Quarterly Report on Form 10-Q for the

period ended September 30, 2019 disclosed risks of ongoing concerns, and those concerns still exist.

A counter balance to these

headwinds are the achievements in 2019:

We won additional work with a Fortune 500 Pharma company and delivered solid results and

we installed and initiated monitoring of pilot bridge structural health systems for a New England state’s DOT.

flow issues, cost cutting allowed us to weather a difficult fourth quarter 2019.

The underlying strengths of the Company are still

an experienced leadership team;

recruitment of a PhD level Machine Learning Algorithm engineer for our technology team;

and strong execution of contracts secured.

Our continued focus on high potential growth markets (specifically Biotech, Pharma,

and Medical Device Operations), have yielded numerous prospects for future growth.

Furthermore, the strength of our target market,

the Industrial Internet of Things (IIoT), continues:

Market research shows the worldwide IIoT market in 2017 was $92 billion and

is projected to be $227 billion by 2021 (25% CAGR).

the negative business impacts of the Coronavirus pandemic and longer

than anticipated customer acquisition times.

These two factors led to cash flow issues, which in turn led to additional and aging

All this resulted in a difficult fourth quarter 2020, and thus the negative YoY revenue growth.

Our Quarterly Report on Form

10-Q for the period ended September 30, 2020 disclosed risks of ongoing concerns, and those concerns still exist.

flow issues, cost cutting and capital infusions allowed us to weather a difficult year in 2020.

Despite these headwinds, our achievements

in 2020 were significant:

We completed a successful pilot program for our Fortune 500 Pharma customer in first quarter, and also

successfully completed a full year of data collection and analysis on our pilot structural health monitoring program for a New

England state’s DOT in the second quarter.

The result of these two successful pilots, in two of our key target industry verticals

is the following:

We now have data and algorithms to build strong use cases and marketing collateral that can be leveraged to extend

contracts with current customers and win additional contracts with new customers in all targeted industry segments.

Also, the strength

of the Aingura IIoT, S.G.

collaboration agreement has bolstered financial stability, added talent breadth and depth, and provides

complimentary industry segment experience.

Furthermore, recent liquidity of our stock has attracted funding that gives us access

to additional capital.

This capital will enable the funding of business development, staff augmentation, and inorganic growth opportunities.

It is anticipated that 2021 YoY revenue

growth will meet or exceed that of 2020.

This is due to the following reasons:

This is due to these aforementioned reasons:

the strength of the Aingura IIoT, S.G.

collaboration,

agreement, which brings financial stability, added talent breadth and depth, and complimentary industry segment experience.

anticipate the collaboration will yield breakthroughs in new contracts with current customers, as well as new customers in all

targeted industry segments.

Furthermore, recent liquidity of our stock has attracted funding opportunities, and access to additional

capital would enable funding of business development and staff augmentation.

Combined with our underlying strengths:

savvy technological talent, and operational execution excellence;

we believe these revenue goals are achievable.

two successful pilots in our key target industries, use cases and marketing collateral from the pilots’

data and algorithms,

experienced leadership, savvy technological talent, and operational execution excellence.

Our continued focus on high potential

growth markets (specifically Biotech, Pharma, and Medical Device Operations), have yielded numerous prospects for future growth.

Furthermore, the strength of our target market, the Industrial Internet of Things (IIoT), continues:

Market research shows the

worldwide IIoT market in 2017 was $92 billion and is projected to be $227 billion by 2021 (25% CAGR).

Our strengths in these markets

will yield breakthroughs in new contracts with current customers, as well as new customers in all targeted industry segments.

combining the resulting organic growth with inorganic growth, we believe these revenue goals are achievable.

Recently Issued Accounting Standards

Management does not believe that any other

recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying

financial statements.

In December 2019, the Financial Accounting

Standards Board issued Accounting Standards Update (“

ASU ”) ASU No.

2019-12, Income Taxes (Topic 740) ,

Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to

improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06,

Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies

accounting for convertible instruments by removing major separation models required under current GAAP.

The ASU also removes certain

settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted

earnings per share calculation in certain areas.

The amendments in this ASU are effective for annual and interim periods beginning

after December 15, 2023, although early adoption is permitted.

The Company is in the process of evaluating the impact of this new

guidance on its financial statements.

Other accounting standards that have been

issued or proposed by FASB and do not require adoption until a future date are not expected to have a material impact on the consolidated

financial statements upon adoption.

Management does not believe that any other recently issued, but not yet effective, accounting

standard if currently adopted would have a material effect on the accompanying financial statements.

Off-Balance Sheet Arrangements

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as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

Certain specified reduced reporting and other

regulatory requirements that are available to public companies that are emerging growth companies.

Certain specified reduced reporting and other regulatory

requirements that are available to public companies that are emerging growth companies.

These provisions include:

an exemption from the auditor attestation requirement in the

assessment of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002;

an exemption from the adoption of new or revised financial accounting

standards until they would apply to private companies;

an exemption from compliance with any new requirements adopted

by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to

the auditor’s report in which the auditor would be required to provide additional information about our audit and our

financial statements;

an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002;

an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;

an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about our audit and our financial statements;

reduced disclosure about our executive compensation arrangements.

2 unchanged sentences

result of this election, our financial statements may not be comparable to public companies required to adopt these new requirements.

_______________________

https://www.ptc.com/-/media/Files/PDFs/IoT/State-of-IIoT-Whitepaper.pdf

And Qualitative Disclosures About Market Risk

Quantitative And Qualitative

Disclosures About Market Risk

As a Smaller Reporting Company, we are

not required to furnish information under this Item 7A.

Financial Statements

The financial statements and supplementary

data required by this item are included following the signature page of this report.

in and Disagreements with Accountants on Accounting and Financial Disclosures

data required by this item are included following the signature page of this Annual Report.

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosures

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-K

Item 5. Market for Registrant’s Common Equity