What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-13 compared with 2021-05-17 · 434 added, 666 removed, 659 unchanged (63% of the section changed)

Financial Statements

IIOT-OXYS, Inc.

and Subsidiaries

Consolidated Balance Sheets

March 31, 2021

Condensed Consolidated Balance Sheets

June 30, 2021

December 31, 2020

9 unchanged sentences

Deferred revenue

Notes payable, current portion, net of debt discounts of

$375,060 and $111,781 at March 31, 2021 and December 31, 2020

Notes payable, current portion, net of debt discounts of $ 284,376 and $ 111,781 at June 30, 2021 and December 31, 2020, respectively

Shares payable to related parties

2 unchanged sentences

Total Current Liabilities

PPP liability

Due to stockholders

2 unchanged sentences

Series B Convertible Preferred Stock, 600 shares designated, $0.001 par value, $ 1,200 stated value;

155 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.

Liquidation preference $186,000 as of March 31, 2021 and December 31, 2020

155 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

Liquidation preference $ 186,000 as of June 30, 2021 and December 31, 2020, respectively

Stockholders' Equity (Deficit)

Preferred Stock Series A, $ 0.001 par value, 10,000,000 Shares authorized;

25,845 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Common Stock $0.001 par value, 1,000,000,000 and 190,000,000

shares authorized at March 31, 2021 and December 31, 2020, respectively;

178,361,108 shares and 145,110,130 shares issued and outstanding at

March 31, 2021 and December 31, 2020, respectively

25,845 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Common Stock $ 0.001 par value, 1,000,000,000 shares authorized;

197,654,396 shares and 145,110,130 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid in capital

Accumulated deficit

( 7,967,456 )

( 7,480,678 )

Total Stockholders' Equity (Deficit)

( 1,340,942 )

( 2,541,280 )

Total Liabilities and Stockholders' Equity (Deficit)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

IIOT-OXYS, Inc.

and Subsidiaries

Consolidated Statements of Operations

For The Three Months Ended March 31,

Condensed Consolidated Statements of Operations

For The Three Months Ended

For The Six Months Ended

Cost of sales

14 unchanged sentences

Net Loss Before Income Taxes

( 1,174,138 )

Provision for income tax

$ ( 286,203 )

$ ( 384,668 )

$ ( 475,710 )

$ ( 1,174,138 )

Convertible Preferred Stock Dividend

Net Loss Attributable to Common Stockholders

$ ( 291,767 )

$ ( 384,668 )

$ ( 486,778 )

$ ( 1,174,138 )

Net Loss Per Share Attributable to Common Stockholders - Basic and Diluted

4 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity (Deficit)

For the Three Months Ended March 31, 2021 and 2020

For the Three Months

Ended June 30, 2021

Preferred Stock

Additional Paid-In

Total Stockholders’ Equity

Balance - December

Balance - March 31, 2021

$ ( 7,675,689 )

$ ( 1,966,691 )

Common stock issued for conversion

of convertible note payables

Relief of derivative liabilities

Warrants issued for default of

convertible note payables

Changes in FMV of warrants related

to convertible note payables

- March 31, 2020

Common stock issued for accrued compensation

Common stock sold for cash

Commission paid for raising capital

Common stock issued for conversion of convertible note payables

Common stock issued for services

Balance - June 30, 2021

$ ( 7,967,456 )

$ ( 1,340,942 )

For the Six Months Ended June 30, 2021

Preferred Stock

Additional Paid-In

Total Stockholders’ Equity

Balance - December 31, 2020

1 unchanged sentence

$ ( 2,541,280 )

Common stock issued for conversion

of convertible note payables

Common stock issued for conversion of convertible note payables

Common stock sold for cash

Beneficial conversion feature discount

on notes payable

Beneficial conversion feature discount on notes payable

Commission paid for raising capital

- March 31, 2021

Common stock issued for accrued compensation

Common stock issued for services

Balance - June 30, 2021

$ ( 7,967,456 )

$ ( 1,340,942 )

IIOT-OXYS, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity (Deficit)

(Unaudited) (Continued)

For the Three Months Ended June 30, 2020

Preferred Stock

Additional Paid-In

Total Stockholders’ Equity

Balance - March 31, 2020

$ ( 6,033,374 )

$ ( 2,439,984 )

Common stock issued for conversion of convertible note payable

Common stock issued for conversion of detachable warrants

Relief of derivative liabilities

Beneficial conversion feature discount on note payable

Balance - June 30, 2020

$ ( 6,418,042 )

$ ( 2,614,864 )

For the Six Months Ended June 30, 2020

Preferred Stock

Additional Paid-In

Total Stockholders’ Equity

Balance December 31, 2019

$ ( 5,040,307 )

$ ( 1,919,021 )

Common stock issued for conversion of convertible note payables

Common stock issued for conversion of detachable warrants

Relief of derivative liabilities

Warrants issued for default of convertible note payables

Changes in FMV of warrants related to convertible note payables

Beneficial conversion feature discount on note payable

( 1,174,138 )

Balance June 30, 2020

$ ( 6,418,042 )

$ ( 2,614,864 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

For The Three Months Ended March 31,

For The Six Months Ended June 30,

Cash Flows From Operating Activities

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

$ ( 486,778 )

$ ( 1,174,138 )

Adjustments to reconcile net loss to net cash used in operating activities

Gain on extinguishment of debt

17 unchanged sentences

Cash Flows From Financing Activities

Proceeds from sale of common stock

Cash received from PPP loan

Cash received from Convertible Note Payable

Proceeds from sale of common stock, net of commissions

Payment for offering costs

7 unchanged sentences

Supplemental Disclosures of Non-Cash Investing and Financing Activities

Discount on notes payable

Conversion of convertible notes payable and derivative liabilities

Warrant anti-dilution issuance

Beneficial conversion feature discount on notes payable

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

March 31, 2021 and 2020

June 30, 2021 and 2020

NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION

AND GOING CONCERN

Unless otherwise indicated, any reference to “the

Company”, “our company”, “we”, “us”, or “our”

refers to IIOT-OXYS, Inc., a Nevada

Unless otherwise indicated, any reference to “the

Company”, “our company”, “we”, “us”, or “our” refers to IIOT-OXYS, Inc., a Nevada

corporation, and as applicable to its wholly-owned subsidiaries, OXYS Corporation, a Nevada corporation, and HereLab, Inc., a Delaware

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

Company ”)

IIOT-OXYS, Inc., a Nevada corporation (the “ Company ”)

was established for the purpose of designing, building, testing, and selling Edge Computing Systems for the Industrial Internet.

10 unchanged sentences

On March 16, 2017, our Board of Directors

approved a name change to “IIOT-OXYS, Inc.”

and authorized a change of domicile from New Jersey to Nevada.

approved a name change to “IIOT-OXYS, Inc.” and authorized a change of domicile from New Jersey to Nevada.

Impact of COVID-19

During the period ended March 31, 2021, 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 quarter ended March 31, 2021 was limited, in all material respects, due to the

During the period ended June 30, 2021, 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 quarter ended June 30, 2021 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

9 unchanged sentences

The accompanying financial statements have been

prepared in accordance with accounting principles generally accepted in the United States of America (“

GAAP ”) and include

prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”) and include

the accounts of the Company.

The financial statements and accompanying notes are the representations of the Company’s management,

who is responsible for their integrity and objectivity.

In the opinion of the Company’s management, the financial statements reflect

all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

4 unchanged sentences

the Company has suffered continuing operating losses, used cash flows in operating activities of $ 394,722 , and has an accumulated deficit

of $7,675,689 as of March 31, 2021.

These factors, among others, raise a substantial doubt about the Company’s ability to continue

of $7,967,456 as of June 30, 2021.

These factors, among others, raise a substantial doubt about the Company’s ability to continue

as a going concern.

4 unchanged sentences

Management believes that the Company will be able

to achieve a satisfactory level of liquidity to meet the Company’s obligations for the next 12 months by generating cash through

additional borrowings and/or sale of equity securities, as needed.

5 unchanged sentences

The following summary of significant accounting

policies of the Company is presented to assist in the understanding of the Company’s financial statements.

These accounting policies

14 unchanged sentences

The condensed consolidated financial statements

for the three months ended March 31, 2021 and 2020, respectively, include the accounts of Company, and its wholly-owned subsidiaries OXYS

Corporation and HereLab, Inc.

for June 30, 2021 and 2020, respectively, include the accounts of Company, and its wholly-owned subsidiaries OXYS Corporation and HereLab,

All significant intercompany balances and transactions have been eliminated.

9 unchanged sentences

about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

To the extent there

3 unchanged sentences

with maturity of three months or less at the time of issuance to be cash equivalents.

The Company reported a cash balance of $218,613

and $103,074 as of March 31, 2021 and December 31, 2020, respectively.

The Company reported a cash balance of $ 80,262 and

$ 103,074 as of June 30, 2021 and December 31, 2020, respectively.

Accounts Receivable and Allowance for Doubtful

7 unchanged sentences

when received.

There was no allowance for doubtful accounts as of March 31, 2021 and December 31, 2020, respectively.

There was no allowance for doubtful accounts as of June 30, 2021 and December 31, 2020, respectively.

Long-Lived Assets

2 unchanged sentences

value or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability

to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets

to the Company’s business objectives.

Definite-lived intangible assets are amortized

2 unchanged sentences

The Company computes earnings (loss) per share

in accordance with Financial Accounting Standards Board Accounting Standards Codification (“

ASC ”), ASC 260, “

per Share”

ASC 260 requires presentation of both basic and diluted earnings per share (“

EPS ”) on the face

in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ ASC ”), ASC 260, “ Earnings

ASC 260 requires presentation of both basic and diluted earnings per share (“ EPS ”) on the face

of the income statement.

7 unchanged sentences

Revenue Recognition

The Company’s revenue is derived primarily

from providing services under contractual agreements.

The Company recognizes revenue in accordance with ASC Topic No.

from Contracts with Customers (“ASC 606”) which was adopted on January 1, 2018.

According to ASC 606, the Company recognizes revenue

15 unchanged sentences

the Company to concentrations of risk consist primarily of cash and cash equivalents which are generally not collateralized.

The Company’s

policy is to place its cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“

FDIC ”), up to $250,000.

March 31, 2021 and December 31, 2020, the Company had no amounts in excess of the FDIC insurance limit.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“ FDIC ”), up to $ 250,000 .

June 30, 2021 and December 31, 2020, the Company had no amounts in excess of the FDIC insurance limit.

Fair Value of Financial Instruments and Fair

Value Measurements

ASC 820, “

Fair Value Measurements and

Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

ASC 820, “ Fair Value Measurements and

Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used

to measure fair value.

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of

input that is significant to the fair value measurement.

13 unchanged sentences

there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or

The Company’s consolidated financial instruments

consist principally of cash and cash equivalents, prepaid expenses, accounts payable, accrued liabilities, notes payable and related parties

The Company’s condensed consolidated financial

instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued liabilities, notes payable and related parties

The Company believes that the recorded values of all the financial instruments approximate their current fair values because

1 unchanged sentence

The Company accounts for income taxes using the

asset and liability method in accordance with ASC 740, “

Income Taxes”

asset and liability method in accordance with ASC 740, “ Income Taxes” .

The asset and liability method provide that

6 unchanged sentences

The Company follows the provisions of ASC 740-10,

Accounting for Uncertain Income Tax Positions .”

When tax returns are filed, it is highly certain that some positions

“ Accounting for Uncertain Income Tax Positions .” When tax returns are filed, it is highly certain that some positions

taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position

17 unchanged sentences

or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if

the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative”

in ASC 815, Derivatives

the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives

and Hedging .

Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not

indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is

readily convertible to cash.

3 unchanged sentences

If a conversion feature does not meet the conditions

to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”.

A conversion feature would be considered beneficial if the conversion feature is “in the money”

when the host instrument is

to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”.

A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is

issued or, under certain circumstances, later.

If convertible debt contains a beneficial conversion feature (“

BCF ”),

If convertible debt contains a beneficial conversion feature (“ BCF ”),

the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible debt, creating a discount which is

amortized over the debt’s term to interest expense in the consolidated statements of operations.

When a convertible preferred stock contains a

4 unchanged sentences

Convertible debt is accounted for under the ASC

470-20, Debt –

Debt with Conversion and Other Options.

470-20, Debt – Debt with Conversion and Other Options.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards

Board issued Accounting Standards Update (“

ASU ”) ASU No.

Board issued Accounting Standards Update (“ ASU ”) ASU No.

2019-12, Income Taxes (Topic 740) , Simplifying the

6 unchanged sentences

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

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

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

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.

11 unchanged sentences

NOTE 3 - INTANGIBLE ASSETS

The Company’s intangible assets comprise

of intellectual property revolving around their field tests, sensor integrations, and board designs.

Intangible assets, net of amortization

at March 31, 2021 and December 31, 2020 amounted to $335,379 and $347,856, respectively.

March 31, 2021

at June 30, 2021 and December 31, 2020 amounted to $ 323,038 and $ 347,856 , respectively.

Intangible Assets Net of Amortization

June 30, 2021

December 31, 2020

2 unchanged sentences

Intangible Assets, net

At March 31, 2021 and December 31, 2020, respectively,

the Company determined that none of its intangible assets were impaired.

Amortizable intangible assets are amortized using the straight-line

method over their estimated useful lives of ten years.

Amortization expense of finite-lived intangibles was $12,477 and $12,341 for the

three months ended March 31, 2021 and 2020, respectively.

The following table summarizes the Company’s

At June 30, 2021 and December 31, 2020,

respectively, the Company determined that none of its intangible assets were impaired.

Amortizable intangible assets are amortized

using the straight-line method over their estimated useful lives of 10 ten years.

Amortization expense of finite-lived intangibles

for the three months ended June 30, 2021 and 2020, and $ 24,818 and $ 24,682 for the six months ended June 30, 2021 and 2020,

respectively.

The following table summarizes the Company’s

estimated future amortization expense of intangible assets with finite lives as of December 31:

Amortization expense

Schedule of future amortization

NOTE 4 - COMMITMENTS AND CONTINGENCIES

In prior years, the Company entered into consulting

agreements with one director, three executive officers, and one engineer of the Company, which include commitments to issue shares of

the Company’s common stock from the Company’s Stock Incentive Plans.

Two agreements have been terminated and shares have been

issued in conjunction with the related separation agreements, but the vested shares related to the remaining consulting agreements with

the three executive officers have not yet been issued in full, and therefore, remain a liability.

According to the remaining three agreements,

1,319,000 shares vested in 2019, 2,400,000 shares vested in 2020, and 3,600,000 shares of common stock shall vest in 2021.

vest annually on the anniversary date of the agreements.

prior years, the Company entered into consulting agreements with one director, three executive officers, and one engineer of the Company,

which include commitments to issue shares of the Company’s common stock from the Company’s Stock Incentive Plans.

Two agreements

have been terminated and shares have been issued in conjunction with the related separation agreements, but the vested shares related

to the remaining consulting agreements with the three executive

officers have not yet been issued in full, and therefore, remain a liability.

According to the remaining three agreements, 1,319,000 shares

vested in 2019, 2,400,000 shares vested in 2020, 2,400,000 shares of common stock have vested as of June 30, 2021, and $ 1,200,000 remain

unvested as of June 30, 2021.

The shares vest annually on the anniversary date of the agreements.

In the event that the agreement is terminated

4 unchanged sentences

reporting period.

The Company has accrued $910,072 and $730,836 in shares payable in conjunction with these agreements as of March 31,

The Company has accrued $ 301,740 and $ 730,836 in shares payable in conjunction with these agreements as of June 30,

2021 and December 31, 2020, respectively.

A summary of these agreements is as follows.

On March 11, 2019, the Company’s Board of

Directors approved the Consulting Agreement dated effective June 1, 2018 with its CEO.

4 unchanged sentences

the CEO is serving.

As of the effective date, the Company shall issue to the CEO an aggregate of 3,060,000 shares of the Company’s

common stock which vest as follows:

4 unchanged sentences

Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as

defined in the agreement) or the listing of the Company’s common stock on a senior exchange.

As of March 31, 2021 and December

defined in the agreement) or the listing of the Company’s common stock on a senior exchange.

As of June 30, 2021 and December 31,

2020, 3,060,000 shares and 1,560,000 shares had vested, respectively.

13 unchanged sentences

price (representing a discount rate of 10%).

As of March 31, 2021 and December 31, 2020, the Company recorded $138,130 and $138,602 in

As of June 30, 2021 and December 31, 2020, the Company recorded $ 141,415 and $ 138,602 in

salaries payable to the CEO.

On March 11, 2019, the Company’s Board of

Directors approved the Consulting Agreement dated effective October 1, 2018 with its COO.

4 unchanged sentences

in which the COO is serving.

As of the effective date, the Company shall issue to the COO an aggregate of 2,409,000 shares of the Company’s

common stock which vest as follows:

4 unchanged sentences

Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as

defined in the agreement) or the listing of the Company’s common stock on a senior exchange.

As of March 31, 2021 and December 31,

defined in the agreement) or the listing of the Company’s common stock on a senior exchange.

As of June 30, 2021 and December 31,

2020, 1,209,000 shares and 1,209,000 shares had vested respectively.

13 unchanged sentences

price (representing a discount rate of 10%).

As of March 31, 2021 and December 31, 2020, the Company recorded $143,492 and $139,078 in

As of June 30, 2021 and December 31, 2020, the Company recorded $ 126,337 and $ 139,078 in

salaries payable to the COO.

On March 11, 2019, the Company’s Board of

Directors approved the Amended and Restated Consulting Agreement dated effective April 1, 2018 with its CTO.

5 unchanged sentences

As of the effective date, the Company shall issue to the CTO an aggregate of 1,800,000 shares

of the Company’s common stock which vest as follows:

300,000 shares on the first-year anniversary of the effective date;

1 unchanged sentence

900,000 shares on the third-year anniversary of the effective date.

As of March 31, 2021 and December 31, 2020, 900,000

shares and 900,000 shares had vested, respectively.

On April 1, 2021, the Company and CTO mutually

agreed to terminate the Amended and Restated Consulting Agreement.

The Company and CTO agreed to settle for 843,288 shares of common stock

for past services which were valued at the fair value of $ 270,493 .

As of June 30, 2021 and December 31, 2020, 0 shares and 900,000 shares

had vested, respectively.

On June 11, 2020, the Company entered into a Debt

12 unchanged sentences

price (representing a discount rate of 10%).

As of March 31, 2021 and December 31, 2020, the Company recorded $141,596 and $129,590 in

salaries payable to the CTO.

As of June 30, 2021 and December 31, 2020, the Company recorded $ 0 and $ 129,590 in salaries

payable to the CTO.

NOTE 5 - CONVERTIBLE NOTES PAYABLE

The following table summarizes the outstanding

balance of convertible notes payable, interest and conversion rates as of March 31, 2021 and December 31, 2020, respectively.

March 31, 2021

December 31, 2020

balance of convertible notes payable, interest and conversion rates as of June 30, 2021 and December 31, 2020, respectively.

Schedule of convertible note payable

Convertible note payable to an investor with interest at 12% per annum, convertible at any time into shares of common stock at $0.01 per share.

5 unchanged sentences

Convertible note payable to an investor with interest at 12% per annum.

3, 2021, the investor settled the note and accrued interest, in exchange of common stock of the Company.

On February 3, 2021, the investor settled the note and accrued interest, in exchange of common stock of the Company.

Convertible note payable to an investor with interest at 12% per annum.

2 unchanged sentences

The note is secured by substantially all the assets of the Company.

Convertible note payable to a related party with interest at 12% per annum, convertible at any time into shares of common stock at $0.00084 per share.

Interest is payable quarterly with the balance of principal and interest due on maturity on August 2, 2021.

The note is secured by substantially all the assets of the Company.

Convertible note payable

to a related party with interest at 12% per annum, convertible at any time into shares of common stock at $0.00084 per share.

is payable quarterly with the balance of principal and interest due on maturity on August 2, 2022.

The note is secured by substantially

all the assets of the Company.

Convertible note payable to an investor with interest at 10% per annum, convertible at any time into shares of common stock at $0.01 per share.

5 unchanged sentences

Less current portion

January 18, 2018 Convertible Note and Warrants (“Note A”)

January 18, 2018 Convertible Note and Warrants (“Note

On January 28, 2021, the noteholder of Note A

agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022 , in exchange for the reduction of

the conversion price to $0.01 per share, and all prior Events of Default (as defined in the Note) including penalties of $100,000 were

waived, and all future Events of Default (as defined in the Note) pertaining to the future payment of interest were waived through maturity.

The Company recorded $100,000 as extinguishment of debt in its statements of operations for the three months ended March 31, 2021.

Company recorded $300,000 as the beneficial conversion feature discount on note payable of $500,000 on January 28, 2021.

The Company amortized

the discount to interest expense of $48,828 and $2,999 for the three months ended March 31, 2021 and 2020, respectively.

The unamortized

discount was $253,149 and $1,978 at March 31, 2021 and December 31, 2020, respectively.

In addition, the Company recorded interest expense

of $15,041 and $16,455 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest payable on Note A was $100,865

and $85,824 as of March 31, 2021 and December 31, 2020, respectively.

the conversion price to $ 0.01 per share, and all prior Events of Default (as defined in the Note A) including penalties of $100,000 were

waived, and all future Events of Default (as defined in the Note A) pertaining to the future payment of interest were waived through maturity.

The Company recorded $ 100,000 as extinguishment of debt in its statements of operations for the six months ended June 30, 2021.

recorded $ 300,000 as the beneficial conversion feature discount on note payable of $ 500,000 on January 28, 2021.

On February 4, 2021, the noteholder A converted

the principal balance of $ 50,000 of its convertible promissory note into 5,000,000 shares of common stock of the Company (Note 9).

principal balance payable on Note A amounted to $450,000 and $600,000 on March 31, 2021 and December 31, 2020, respectively.

January 2019 Convertible Note and Warrants (“Note B”)

April 15, 2021, the noteholder A converted the principal balance of $ 75,000 of its convertible promissory note into 7,500,000 shares of

common stock of the Company (Note 9).

The Company amortized the beneficial conversion

feature discount to interest expense of $ 70,743 and $ 2,999 for the three months ended June 30, 2021 and 2020, and $ 117,594 and $ 5,998

for the six months ended June 30, 2021 and 2020, respectively.

The unamortized discount totaled $ 184,383 and $ 1,978 at June 30, 2021 and

December 31, 2020, respectively.

In addition, the Company recorded interest expense of $ 11,589 and $ 17,951 for the three months ended

June 30, 2021 and 2020, and $ 26,630 and $ 34,406 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest payable

on Note A was $ 112,455 and $ 85,824 as of June 30, 2021 and December 31, 2020, respectively.

The principal balance payable on Note A amounted

to $ 375,000 and $ 600,000 on June 30, 2021 and December 31, 2020, respectively.

January 2019 Convertible Note and Warrants (“Note

The Company recorded interest expense of $ 686

and $686 on Note B for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest payable on Note B was $6,020 and

$5,342 as of March 31, 2021 and December 31, 2020, respectively.

The principal balance payable on Note B amounted to $55,000 and $55,000

on March 31, 2021 and December 31, 2020, respectively.

The Note B matures on March 1, 2022.

and $ 686 on Note B for the three months ended June 30, 2021 and 2020, and $ 1,364 and $ 1,372 for the six months ended June 30, 2021 and

2020, respectively.

Accrued interest payable on Note B was $ 6,705 and $ 5,342 as of June 30, 2021 and December 31, 2020, respectively.

The principal balance payable on Note B amounted to $ 55,000 and $ 55,000 on June 30, 2021 and December 31, 2020, respectively.

B matures on March 1, 2022 .

March 2019 Convertible Note and Warrants

(Note C”)

On January 28, 2021, the noteholder of Note C

agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022 in exchange for the reduction of

the conversion price to $0.01 per share, and all prior Events of Default (as defined in the Note) including penalties of $10,000 were

waived, and all future Events of Default (as defined in the Note) pertaining to the future payment of interest were waived through maturity.

The Company recorded $10,000 as extinguishment of debt in its statements of operations for the three months ended March 31, 2021.

Company recorded $30,000 as debt discount on note payable and amortized it to interest expense since the Note was converted into common

stock of the Company immediately.

The Company amortized the discount to interest expense of $30,000 and $704 for the three months ended

March 31, 2021 and 2020, respectively.

The unamortized discount was $0 and $0 at March 31, 2021 and December 31, 2020, respectively.

In addition, the Company recorded interest expense of $460 and $1,645 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest payable on Note C was $0 and $6,050 at March 31, 2021 and December 31, 2020, respectively.

On January 28, 2021, the noteholder of Note C

converted the principal balance of $40,000 of its convertible promissory note and $6,510 of accrued interest, into 4,650,978 shares of

common stock of the Company (Note 9).

The principal balance payable on Note C amounted to $0 and $50,000 on March 31, 2021 and December

31, 2020, respectively.

the conversion price to $ 0.01 per share, and all prior Events of Default (as defined in the Note C) including penalties of $10,000 were

waived, and all future Events of Default (as defined in the Note C) pertaining to the future payment of interest were waived through maturity.

The Company recorded $ 10,000 as extinguishment of debt in its statements of operations for the six months ended June 30, 2021.

recorded $ 30,000 as debt discount on note payable and amortized it to interest expense since the Note was converted into common stock

of the Company immediately.

The Company amortized the discount to interest expense of $ 0 and $ 315 for the three months ended June 30,

2021 and 2020, and $ 30,000 and $ 1,019 for the six months ended June 30, 2021 and 2020, respectively.

The unamortized discount was $ 0 and

$ 0 at June 30, 2021 and December 31, 2020, respectively.

In addition, the Company recorded interest expense of $ 0 and $ 1,795 for the three

months ended June 30, 2021 and 2020, and $ 460 and $ 3,440 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest

payable on Note C was $ 0 and $ 6,050 at June 30, 2021 and December 31, 2020, respectively.

January 28, 2021, the noteholder of Note C converted the principal balance of $ 40,000 of its convertible promissory note and $ 6,510 of

accrued interest, into 4,650,978 shares of common stock of the Company (Note 9).

The principal balance payable on Note C amounted to $ 0

and $ 50,000 on June 30, 2021 and December 31, 2020, respectively.

March 2019 Convertible Note and Warrants

(“Note D”)

On January 28, 2021, the noteholder of Note D

agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022 in exchange for the reduction of

the conversion price to $0.01 per share, and all prior Events of Default (as defined in the Note) including penalties of $10,000 were

waived, and all future Events of Default (as defined in the Note) pertaining to the future payment of interest were waived through maturity.

The Company recorded $10,000 as extinguishment of debt in its statements of operations for the three months ended March 31, 2021.

Company recorded $30,000 as the beneficial conversion feature discount on note payable of $50,000 on January 28, 2021.

The Company amortized

the discount to interest expense of $4,685 and $704 for the three months ended March 31, 2021 and 2020, respectively.

The unamortized

discount was $25,315 at March 31, 2021 and December 31, 2020, respectively.

In addition, the Company recorded interest expense of $1,595

and $1,645 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest payable on Note A was $10,177 and $8,582

as of March 31, 2021 and December 31, 2020, respectively.

The principal balance payable on Note D amounted to $50,000 and $60,000 on March

the conversion price to $ 0.01 per share, and all prior Events of Default (as defined in the Note D) including penalties of $10,000 were

waived, and all future Events of Default (as defined in the Note D) pertaining to the future payment of interest were waived through maturity.

The Company recorded $ 10,000 as extinguishment of debt in its statements of operations for the six months ended June 30, 2021.

recorded $ 30,000 as the beneficial conversion feature discount on note payable of $ 50,000 on January 28, 2021.

The Company amortized the

beneficial conversion feature discount to interest expense of $ 6,877 and $ 315 for the three months ended June 30, 2021 and 2020, and $ 11,562

and $ 1,019 for the six months ended June 30, 2021 and 2020, respectively.

The unamortized discount was $ 18,438 and $ 0 at June 30, 2021

and December 31, 2020, respectively.

August 2019 Convertible Note and Warrants (“Note E”)

The Company amortized the debt discount on Note

E to interest expense of $13,207 and $13,064 for the three months ended March 31, 2021 and 2020, respectively.

The unamortized discount

was $20,896 and $34,104 at March 31, 2021 and December 31, 2020, respectively.

The Company recorded interest expense of $3,699 and $3,740

on Note E for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest payable on Note E was $22,389 and $18,690

as of March 31, 2021 and December 31, 2020, respectively.

The principal balance payable on Note E amounted to $125,000 and $125,000 on

March 31, 2021 and December 31, 2020, respectively.

The maturity date of the Note E is August 2, 2021.

2020 Equity Financing Arrangement (“Note F”)

In addition, the Company recorded interest expense of $ 1,496 and $ 1,795 for the three months ended

June 30, 2021 and 2020, and $ 3,091 and $ 3,440 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest payable

on Note D was $ 11,673 and $ 8,582 as of June 30, 2021 and December 31, 2020, respectively.

The principal balance payable on Note D amounted

to $ 50,000 and $ 60,000 on June 30, 2021 and December 31, 2020, respectively.

August 2019 Convertible Note and Warrants (“Note

August 2, 2021, the noteholder of Note E agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to August

All other terms and conditions of the Note E remain the same.

The Company amortized the debt discount on Note E to interest

expense of $ 13,064

for the three months ended June 30, 2021 and 2020, and $ 28,249

for the six months ended June 30, 2021 and 2020, respectively.

The unamortized discount was $ 20,896

at June 30, 2021 and December 31, 2020, respectively.

recorded interest expense of $ 3,740

on Note E for the three months ended June 30, 2021 and 2020, and

for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest payable on Note E was $ 26,128

as of June 30, 2021 and December 31, 2020, respectively.

The principal

balance payable on Note E amounted to $ 125,000

and $ 125,000

on June 30, 2021 and December 31, 2020, respectively.

date of the Note E is August

July 2020 Equity Financing Arrangement

On February 1, 2021, the noteholder of Note F

1 unchanged sentence

common stock of the Company (Note 9).

The Company recorded interest expense of $1,404 and $0 for the three months ended March 31, 2021

and 2020, respectively.

Accrued interest payable on Note G was $0 and $2,986 as of March 31, 2021 and December 31, 2020, respectively.

The principal balance payable on Note F amounted to $33,167 and $100,000 on March 31, 2021 and December 31, 2020, respectively.

The noteholder

of Note F agreed to extend the maturity date of the note from April 29, 2021 to October 29, 2021.

2020 Equity Financing Arrangement (“Note G”)

The Company recorded interest expense of $ 827 and $ 0 for the three months ended June 30, 2021 and

2020, and $ 2,231 and $ 0 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest payable on Note G was $ 40 and

$ 2,986 as of June 30, 2021 and December 31, 2020, respectively.

The principal balance payable on Note F amounted to $ 33,167 and $ 100,000

on June 30, 2021 and December 31, 2020, respectively.

The noteholder of Note F agreed to extend the maturity date of the note from April

29, 2021 to October 29, 2021 .

July 2020 Equity Financing Arrangement

In connection with entering into the Equity Financing

Agreement, on July 29, 2020, the Company issued to the investor a Convertible Promissory Note in the principal amount of $75,000 (“

Agreement, on July 29, 2020, the Company issued to the investor a Convertible Promissory Note in the principal amount of $ 75,000 (“ Note

No proceeds were received for this note as it was issued to offset future transaction costs related to any future issuances

3 unchanged sentences

The Company recorded interest expense of $ 1,870

and $0 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest amounted to $4,089 and $2,240 at March 31, 2021

and December 31, 2020, respectively.

The principal balance payable of Note G amounted to $75,000 at March 31, 2021 and December 31, 2020,

respectively.

The noteholder of Note G agreed to extend the maturity date of the note from April 29, 2021 to October 29, 2021.

and $ 0 for the three months ended June 30, 2021 and 2020, and $ 3,719 and $ 0 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest amounted to $ 5,959 and $ 2,240 at June 30, 2021 and December 31, 2020, respectively.

The principal balance payable of

Note G amounted to $ 75,000 at June 30, 2021 and December 31, 2020, respectively.

The noteholder of Note G agreed to extend the maturity

date of the note from April 29, 2021 to October 29, 2021 .

NOTE 6 - EARNINGS (LOSS) PER SHARE

The following table sets forth the computation

of basic and diluted net loss per share of common stock for the three months ended March 31, 2021 and 2020:

of basic and diluted net loss per share of common stock for the three months and six months ended June 30, 2021 and 2020:

Earnings per share

Three Months ended

Net loss attributable to common stockholders (basic)

$ ( 291,767 )

$ ( 384,668 )

Shares used to compute net loss per common share, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Six Months ended

Net loss attributable to common stockholders (basic)

$ ( 486,778 )

$ ( 1,174,138 )

Shares used to compute net loss per common share, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Basic net loss per share is calculated by dividing

4 unchanged sentences

are only included when their effect is dilutive.

The Company’s potentially dilutive securities which include stock options, convertible

debt, convertible preferred stock and common stock warrants have been excluded from the computation of diluted net loss per share as they

1 unchanged sentence

For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares

outstanding due to the Company’s net loss position.

The following outstanding common stock equivalents

have been excluded from diluted net loss per common share for the three months ended March 31, 2021 and 2020, respectively, because their

have been excluded from diluted net loss per common share for the six months ended June 30, 2021 and 2020, respectively, because their

inclusion would be anti-dilutive:

As of March 31,

Antidilutive shares

As of June 30,

Warrants to purchase common stock

2 unchanged sentences

Potentially issuable unvested shares to officers

Potentially issuable vested shares to a consultant

Potentially issuance unvested shares to a consultant

Total anti-dilutive common stock equivalents

NOTE 7 - PAYCHECK PROTECTION PROGRAM LOAN

The Company applied for and received funding from

the Payroll Protection Program (the “

PPP Loan ”) in the amount of $36,700 under the Coronavirus Aid, Relief and Economic

Security Act (the “

CARES Act ”).

The PPP Loan matures on April 23, 2022 and bears interest at a rate of 1.0% per

Monthly amortized principal and interest payments are deferred for six months after the date of disbursement ( subject

to further deferral pursuant to the terms of the Paycheck Protection Flexibility Act of 2020).

The Promissory Note contains events of

default and other provisions customary for a loan of this type.

The Paycheck Protection Program provides that the use of PPP Loan amount

shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth

in the CARES Act.

The Company applied for and received funding

from the Payroll Protection Program (the “ PPP Loan ”) in the amount of $ 36,700

under the Coronavirus Aid, Relief and Economic Security Act (the “ CARES Act ”).

The PPP Loan matures on April

23, 2022 and bears interest at a rate of 1.0 %

Monthly amortized principal and interest payments are deferred for six months after the date of

disbursement (subject to further deferral pursuant to the terms of the Paycheck Protection Flexibility Act of 2020).

Promissory Note contains events of default and other provisions customary for a loan of this type.

The Paycheck Protection Program

provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in

accordance with the requirements set forth in the CARES Act.

The Company recorded the PPP Loan of $ 36,700

as a current liability on its Balance Sheet at June 30, 2021 and December 31, 2020, respectively.

NOTE 8 - RELATED PARTIES

At March 31, 2021 and December 31, 2020, respectively,

At June 30, 2021 and December 31, 2020, respectively,

the amount due to two stockholders was $ 1,000 relating to depositing funds for opening bank accounts for the Company.

1 unchanged sentence

its current office facility from a stockholder on a month-to-month basis at a monthly rent of $250 starting January 1, 2020.

recorded rent expense of $750 for the three months ended March 31, 2021 and 2020, respectively.

The Company has recorded $250 and $18,000

of rent payable to the stockholder in accounts payable as of March 31, 2021 and December 31, 2020, respectively.

recorded rent expense of $ 750 and $ 750 for the three months ended June 30, 2021 and 2020, and $ 1,500 and $ 1,500 for the six months ended

June 30, 2021 and 2020, respectively.

The Company has recorded $ 1,000 and $ 18,000 of rent payable to the stockholder in accounts payable

as of June 30, 2021 and December 31, 2020, respectively.

The Company awarded shares payable to officers

and a director valued at $179,236 and $181,227 for the three months ended March 31, 2021 and 2020, respectively, pursuant to the terms

of an exchange agreement (Note 4).

Shares payable as compensation to officers and a director amounted to $910,072 and $730,836 at March

31, 2021 and December 31, 2020, respectively.

No shares payable compensation was converted into shares of common stock or preferred stock

during the quarter ended March 31, 2021.

and a director valued at $ 110,361 and $ 181,227 for the three months ended June 30, 2021 and 2020, and $ 289,597 and $ 362,454 for the six

months ended June 30, 2021 and 2020, respectively, pursuant to the terms of an exchange agreement (Note 4).

Shares payable as compensation

to officers and a director amounted to $ 299,940 and $ 730,836 at June 30, 2021 and December 31, 2020, respectively.

Shares payable compensation

of $ 702,986 was converted into 2,343,288 shares of common stock for the six months ended June 30, 2021 (Note 9).

NOTE 9 - STOCKHOLDERS' EQUITY

4, 2021, pursuant to the authorization and approval previously provided by the stockholders, the Company filed a Certificate of Amendment

to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $0.001 par value

per share, from 190,000,000 shares to 1,000,000,000 shares, which filing became effective on January 18, 2021.

The Company has authorized

10,000,000 shares of $0.001 par value preferred stock.

The Company had 178,361,108 shares and 145,110,130 shares of common stock,

and 25,845 shares and 25,845 shares of preferred stock, issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

On January 4, 2021, pursuant to the authorization

and approval previously provided by the stockholders, the Company filed a Certificate of Amendment to its Articles of Incorporation with

the Secretary of State of Nevada to increase its authorized shares of common stock, $ 0.001 par value per share, from 190,000,000 shares

to 1,000,000,000 shares, which filing became effective on January 18, 2021.

The Company has authorized 10,000,000 shares of $ 0.001 par

value preferred stock.

Holders of shares of common stock are entitled

7 unchanged sentences

shares of common stock are fully paid and non-assessable.

Holders of common stock have no preemptive rights to purchase the Company’s

common stock.

There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.

On January 28, 2021, the noteholder of Note C

converted the principal balance of $40,000 of its convertible promissory note and $6,510 of accrued interest, into 4,650,978 shares of

common stock of the Company (Note 5).

January 28, 2021, the noteholder of Note C converted the principal balance of $ 40,000 of its convertible promissory note and $ 6,510 of

accrued interest, into 4,650,978 shares of common stock of the Company (Note 5).

On February 1, 2021, the noteholder of Note F

4 unchanged sentences

On February 24, 2021, the Company entered into

a Common Stock Purchase Agreement with an investor pursuant to which the investor agreed to purchase up to $5,000,000 of the Company’s

a Common Stock Purchase Agreement with an investor pursuant to which the investor agreed to purchase up to $ 5,000,000 of the Company’s

registered common stock at $ 0.015 per share.

2 unchanged sentences

No purchase notice can be made in an amount less than $10,000 or greater than $500,000 or greater than two times the average

of the daily trading dollar volume for the Company’s common stock during the ten business days preceding the purchase date.

purchase notice is limited to the investor beneficially owning no more than 4.99% of the total outstanding common stock of the Company

1 unchanged sentence

There are certain conditions precedent to each purchase including, among others, an effective registration statement

in place and the VWAP of the closing price of the Company’s common stock greater than $0.0175 for the Company's common stock during

the five business days prior to the closing.

On February 26, 2021 and March 16, 2021, the investor purchased 8,000,000 shares and 8,400,000

shares of common stock for a cash consideration of $120,000 and $126,000, respectively.

On February 26, 2021, March 16, 2021 and April 14, 2021, the investor purchased 8,000,000

shares, 8,400,000 shares and 8,900,000 shares of common stock for a cash consideration of $ 120,000 , $ 126,000 and $ 133,500 , respectively.

On April 1, 2021, the Company’s Chief Technology

Officer resigned from his employment with the Company.

In settlement of the Company’s total obligations with the officer upon separation,

the Company issued 843,288 shares of its common stock valued at $ 252,986 as award shares payable pursuant to the Stock Incentive Plan

for services performed (Note 8).

On April 15, 2021, the noteholder of Note A converted

the principal balance of $ 75,000 of its convertible promissory note into 7,500,000 shares of common stock of the Company (Note 5).

May 20, 2021, the Company issued to a consultant for services rendered, pursuant to a consulting agreement, 500,000 shares of common stock

valued at the fair market price on the date of issuance of $ 7,800 .

On May 20, 2021, the Company issued to a consultant

for services, pursuant to a consulting agreement, 50,000 shares of common stock valued at the fair market price on the date of issuance

June 15, 2021, the Company issued 1,500,000 shares of common stock valued at $ 450,000 to Company’s Chief Executive Officer in satisfaction

of accrued shares payable compensation (Note 8).

As a result of all common stock issuances,

the Company recorded 197,654,396 shares and 145,110,130 shares of common stock issued and outstanding at June 30, 2021 and December 31,

2020, respectively.

Stock Incentive Plans

On December 14, 2017, the Board of Directors of

the Company approved the 2017 Stock Incentive Plan (the “

2017 Plan ”).

the Company approved the 2017 Stock Incentive Plan (the “ 2017 Plan ”).

Awards may be made under the 2017 Plan for up

to 4,500,000 shares of common stock of the Company.

All of the Company’s employees, officers and directors, as well as consultants

and advisors to the Company are eligible to be granted awards under the 2017 Plan.

4 unchanged sentences

On March 11, 2019, the Board of Directors of the

Company approved the 2019 Stock Incentive Plan (the “

Plan ”).

Company approved the 2019 Stock Incentive Plan (the “ Plan ”).

Awards may be made under the Plan for up to 5,000,000

shares of common stock of the Company.

All of the Company’s employees, officers and directors, as well as consultants and advisors

to the Company are eligible to be granted awards under the Plan.

7 unchanged sentences

to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing

of the Company’s common stock on a senior exchange.

A summary of the status of the Company’s

non-vested shares as of March 31, 2021 and 2020, and changes during the three months period then ended, is presented below:

of the Company’s common stock on a senior exchange.

A summary of the status of the Company’s

non-vested shares as of June 30, 2021 and 2020, and changes during the six months period then ended, is presented below:

Summary of non-vested shares

Non-vested Shares of Common Stock

1 unchanged sentence

Balance at December 31, 2019

Balance at March 31, 2020

( 1,600,000 )

Balance at June 30, 2020

Balance at December 31, 2020

Balance at March 31, 2021

( 2,400,000 )

Balance at June 30, 2021

Preferred Stock

6 unchanged sentences

Any future terms with respect to dividends shall be determined by

the Board consistent with the Company’s Articles of Incorporation.

Liquidation and Redemption Rights:

6 unchanged sentences

corporation of the shares of any class of stock or the merger or consolidation of the corporation with or into any other corporation or

corporations, or (iii) the sale, license or lease of all or substantially all, or any material part of, the Company’s assets.

Each holder of Series A Supervoting

2 unchanged sentences

All shares of the Series A Supervoting

Preferred Stock shall rank senior to the Company’s (A) common stock, par value $0.001 per share, and any other class or series of

capital stock of the Company hereafter created.

4 unchanged sentences

twenty times the sum of:

of Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued

and outstanding at the time of voting}

the number of shares of Series

A Super Voting Preferred Stock issued and outstanding at the time of voting

With respect to all

matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent ,

the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock

without regard to class, except as to those matters on which separate class voting is required by applicable law or the Articles of Incorporation

{all shares of Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued and outstanding at the time of voting}

the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting

With respect to all matters upon which stockholders

are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting

Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate

class voting is required by applicable law or the Articles of Incorporation or Bylaws.

The Company did not issue any Series A Supervoting

Convertible Preferred Stock during the three months ended March 31, 2021.

Convertible Preferred Stock during the six months ended June 30, 2021.

The Company had 25,845 shares of Series A Supervoting Convertible

Preferred Stock issued and outstanding at March 31, 2021 and December 31, 2020, respectively.

Preferred Stock issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

Series B Convertible Preferred Stock Equity

2 unchanged sentences

Preferred Stock.

Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $1,200, subject to increase

set forth in the Certificate of Designation.

Each share of Preferred Stock has a par value of $0.001 per share and a stated value of $ 1,200 , subject to increase set

forth in the Certificate of Designation.

Each share of Series B Convertible

1 unchanged sentence

on the Original Issuance Date (as defined in the Certificate of Designation) and ending on the date that such share of Series B Convertible

Preferred Share has been converted or redeemed (the “

Dividend End Date ”).

Preferred Share has been converted or redeemed (the “ Dividend End Date ”).

Dividends may be paid in cash or in shares

20 unchanged sentences

Upon any liquidation, dissolution

or winding-up of the Corporation, whether voluntary or involuntary (a “

Liquidation ”), the Holders shall be entitled

or winding-up of the Corporation, whether voluntary or involuntary (a “ Liquidation ”), the Holders shall be entitled

to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value (as defined in the Certificate

9 unchanged sentences

The Conversion Price for the

Series B Convertible Preferred Stock shall be the amount equal to the lowest traded price for the Company’s common stock for the

fifteen (15) Trading Days immediately preceding the date of such conversion.

4 unchanged sentences

then applicable Conversion Price;

or (b) a price per share equaling 80% of the lowest traded price for the Company’s common stock

during the ten (10) trading days preceding the relevant Conversion.

6 unchanged sentences

On November 19, 2020, pursuant to the terms of

a Securities Purchase Agreement dated November 16, 2020 (the “

SPA ”), the Company entered into a new preferred equity

financing agreement with GHS Investments, LLC (“

GHS ”) in the amount of up to $600,000.

The SPA provides for GHS’s

a Securities Purchase Agreement dated November 16, 2020 (the “ SPA ”), the Company entered into a new preferred equity

financing agreement with GHS Investments, LLC (“ GHS ”) in the amount of up to $600,000.

The SPA provides for GHS’s

purchase, from time to time, of up to 600 shares of the newly-designated Series B Convertible Preferred Stock.

2 unchanged sentences

price of $45,000, or $1,000 per share.

At the Company’s option, and subject to the terms of the SPA and the Certificate of Designation

for the Series B Convertible Preferred Stock (the “

COD ”), additional closings in the amount of 40 shares of Series

At the Company’s option, and subject to the terms of the SPA and the Certificate of Designation

for the Series B Convertible Preferred Stock (the “ COD ”), additional closings in the amount of 40 shares of Series

B Convertible Preferred Stock for a total purchase price of $40,000 may take place at a rate of up to once every 30 days.

2 unchanged sentences

of Series B Convertible Preferred Stock to GHS as a service fee.

The Company’s ability to conduct additional

closings under the SPA is subject to certain conditions, including the following:

The Company’s continued compliance with all covenants and agreements under the SPA and the COD, with no uncured defaults under the Company’s agreements with GHS;

The continued quotation of the Company’s common stock on the over-the-counter market or another trading market or exchange;

The average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding each additional closing must be at least $10,000 per day;

The closing market price for the Company’s common stock must be at least $0.01 for each of the 30 trading days preceding each additional closing.

The Company’s continued compliance with all covenants and agreements under the SPA and the COD, with no uncured defaults under the Company’s agreements with GHS;

The continued quotation of the Company’s common stock on the over-the-counter market or another trading market or exchange;

The average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding each additional closing must be at least $10,000 per day;

The closing market price for the Company’s common stock must be at least $0.01 for each of the 30 trading days preceding each additional closing.

No additional closings may take place after the

1 unchanged sentence

If the average daily dollar trading volume for the

Company’s common stock for the 30 trading days preceding a particular additional closing is at least $50,000 per day, the Company

may, at its option, increase the amount of that additional closing to 75 shares of Series B Convertible Preferred Stock ($75,000).

The Series B Convertible Preferred Stock is classified as temporary

equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the

fifteen trading days immediately preceding the date of conversion.

The Series B Convertible Preferred Stock is classified

as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock

for the fifteen trading days immediately preceding the date of conversion.

Based on the requirements of ASC 815, Derivatives

8 unchanged sentences

mezzanine liability, and $ 84,000 as amortization.

At March 31, 2021, the Company recalculated the value of the derivative liability associated

with the convertible note recording a gain of $39,465 in connection with the change in fair market value of the derivative liability.

In addition, the Company recorded $2,495 as preferred stock dividend for the three months ended March 31, 2021.

On November 19, 2020, at December 31, 2020 and

March 31, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions:

conversion exercise prices ranging from $0.0051 to $0.014, the closing stock price of the Company's common stock on the date of valuation

ranging from $0.0083 to $0.0184, an expected dividend yield of 0%, expected volatility ranging from 337.26% to 440.99%, risk-free interest

rates ranging from 0.38% to 0.39%, and an expected term of 1.13 years to 1.38 years.

The Company recalculated the value of the derivative liability associated with the convertible

note and recorded a gain of $ 47,491 and $ 86,956 for the three months and six months ended June 30, 2021 in connection with the change

in fair market value of the derivative liability.

In addition, the Company recorded $ 2,513 and $ 4,999 as preferred stock dividend for

the three months and six months ended June 30, 2021 payable to GHS.

On November 19, 2020, at December 31, 2020, March

31, 2021 and June 30, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following

conversion exercise prices ranging from $ 0.0051 to $ 0.0141 , the closing stock price of the Company's common stock on the

date of valuation ranging from $ 0.0083 to $ 0.0184 , an expected dividend yield of 0 %, expected volatility ranging from 200.59 % to 440.99 %,

risk-free interest rates ranging from 0.07 % to 0.39 %, and an expected term of 0.88 years to 1.38 years.

On December 16, 2020, pursuant to the terms of

5 unchanged sentences

of $ 106,241 , $ 1,700 as interest expense, $102,000 as Series B Convertible Preferred Stock a mezzanine liability, and $102,000 as amortization.

At March 31, 2021, the Company recalculated the value of the derivative liability associated with the convertible note recording a gain

of $45,235 in connection with the change in fair market value of the derivative liability.

In addition, the Company recorded $3,018 as

preferred stock dividend for the three months ended March 31, 2021 payable to GHS.

On December 16, 2020, December 31, 2020 and March

31, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions:

exercise prices ranging from $0.0060 to $0.014, the closing stock price of the Company's common stock on the date of valuation ranging

from $0.0063 to $0.0184, an expected dividend yield of 0%, expected volatility ranging from 359.57% to 437.59%, risk-free interest rates

ranging from 0.38% to 0.39% , and an expected term of 1.21 years to 1.50 years.

The Company recalculated the value of the derivative liability associated with the convertible note and recorded a gain of $58,471 and

$103,706 in connection with the change in fair market value of the derivative liability.

In addition, the Company recorded $3,052 and

$6,070 as preferred stock dividend for the three months and six months ended June 30, 2021 payable to GHS.

On December 16, 2020, December 31, 2020, March

31, 2021 and June 30, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following

conversion exercise prices ranging from $ 0.0060 to $ 0.0141 , the closing stock price of the Company's common stock on the

date of valuation ranging from $ 0.0063 to $ 0.0184 , an expected dividend yield of 0 %, expected volatility ranging from 200.59 % to 437.59 %,

risk-free interest rates ranging from 0.07 % to 0.39 % , and an expected term of 0.96 years to 1.50 years.

As a result of receipt of cash proceeds relating

to Series B Convertible Preferred Stock, the Company recorded derivative liability of $231,082 and $315,782 at March 31, 2021 and December

to Series B Convertible Preferred Stock, the Company recorded derivative liability of $ 125,121 and $ 315,782 at June 30, 2021 and December

31, 2020, respectively.

In addition, preferred stock dividend payable was $7,166 and $1,653 at March 31, 2021 and December 31, 2020, respectively.

A summary of the status of the Company’s

warrants as of March 31, 2021 and December 31, 2020, and changes during the three months then ended, is presented below:

In addition, preferred stock dividend payable was $ 12,731 and $ 1,653 at June 30, 2021 and December 31, 2020, respectively.

summary of the status of the Company’s warrants as of June 30, 2021 and

December 31, 2020, and changes during the three months then ended, is presented below:

Summary of warrant activity

Shares Under Warrants

3 unchanged sentences

Expired/Forfeited

Outstanding at March 31, 2020

( 41,666,667 )

Outstanding at June 30, 2020

Outstanding at December 31, 2020

Expired/Forfeited

Outstanding at March 31, 2021

NOTE 10 - SUBSEQUENT EVENTS

On April 1, 2021, the Company’s Chief Technology

Officer resigned from his employment with the Company.

In settlement of the Company’s total obligations with the officer upon separation,

the Company issued 843,288 shares of its common stock valued at $252,986 as award shares payable pursuant to the Stock Incentive Plans

for services performed.

In addition, the Company paid $11,142 in reimbursable expenses ;

$121,365 in accrued and unpaid consulting fees

in cash, and $9,086 in gross wages less payroll tax deductions and withholdings required by law.

On April 14, 2021, an investor purchased 8,900,000

shares of the Company’s common stock pursuant to the Common Stock Purchase Agreement entered on February 24, 2021.

Outstanding at June 30, 2021

10 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through

the date of this Report, the date the financial statements were available to be issued, noting the following items that would impact the

accounting for events or transactions in the current period or require additional disclosure.

On July 28, 2021, the noteholder of Note A converted

the principal balance of $80,000 of its convertible promissory note into 8,000,000 shares of common stock of the Company (Note 5).

On August 2, 2021, an investor purchased 10,200,000

shares of the Company’s common stock pursuant to the Common Stock Purchase Agreement entered on February 24, 2021.

Pursuant to the

terms of the agreement, the investor agreed to purchase up to $5,000,000 of the Company’s registered Common Stock at $0.015 per

share, subject to certain conditions.

The Company received $133,500 of cash consideration upon the sale of common stock.

On April 15, 2021, the noteholder of Note A converted

the principal balance of $75,000 of its convertible promissory note into 7,500,000 shares of common stock of the Company.

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

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

are based on assumptions and are subject to

known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.

Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited

to, those discussed in the “Risk Factors”

section of our Annual Report on Form 10-K for the year ended December 31, 2020.

We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any

facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.

Furthermore, we cannot guarantee

future results, events, levels of activity, performance, or achievements

Basis of Presentation

The unaudited condensed consolidated financial

information presented below and the following Management Discussion and Analysis of the Consolidated Financial Condition, Results of Operations,

Stockholders’

Equity and Cash Flow for the quarterly periods ended March 31, 2021 and 2020 gives effect to our acquisition of OXYS

Corporation (“

OXYS ”) on July 28, 2017.

In accordance with the accounting reporting requirements for the recapitalization

related to the “reverse merger”

of OXYS, the financial statements for OXYS have been adjusted to reflect the change in the

shares outstanding and the par value of the common stock of OXYS.

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.

Factors that may cause differences between actual

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

and 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;

general market and economic conditions;

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;

success in developing new products;

timing of our new product introductions;

new product introductions by competitors;

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 materials;

strategic relationships with our suppliers;

product quality and performance;

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;

government actions throughout the world;

our ability to service secured debt, when due.

You should not rely on forward-looking statements

in this document.

This management’s discussion contains forward looking statements that involve risks and uncertainties.

words such as “anticipates,”

“believes,”

“plans,”

“expects,”

“future,”

“intends,”

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.

Our actual results could differ materially from those anticipated in these forward-looking

Critical Accounting Policies

The following discussions are based upon our financial

statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

These financial

statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements

requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues 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.

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

Trends and Uncertainties

On July 28, 2017, we closed the reverse acquisition

transaction under the Securities Exchange Agreement dated March 16, 2017, as reported in our Current Report on Form 8-K filed with the

Commission on August 3, 2017.

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

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 three months ended March 31, 2021 limited our ability to obtain new business, 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

We were incorporated in the State of New Jersey

on October 1, 2003 under the name of Creative Beauty Supply of New Jersey Corporation, and subsequently changed our name to Gotham Capital

Holdings, Inc.

on May 18, 2015.

We commenced operations in the beauty supply industry as of January 1, 2004.

On November 30, 2007, our

Board of Directors approved a plan to dispose of our wholesale and retail beauty supply business.

From January 1, 2009 until July 28,

2017, we had no operations and were a shell company.

On March 16, 2017, our Board of Directors adopted

resolutions, which were approved by shareholders holding a majority of our outstanding shares, to change our name to “IIOT-OXYS,

Inc.”, to authorize a change of domicile from New Jersey to Nevada, to authorize a 2017 Stock Awards Plan, and to approve the Securities

Exchange Agreement (the “

OXYS SEA ”) between the Company and OXYS Corporation (“

OXYS ”), a Nevada

corporation incorporated on August 4, 2016.

Under the terms of the OXYS SEA we acquired 100%

of the issued voting shares of OXYS in exchange for 34,687,244 shares of our Common Stock.

We also cancelled 1,500,000 outstanding shares

of our Common Stock and changed our management to Mr.

DiBiase who also served in management of OXYS.

Also, one of our principal shareholders

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

The OXYS SEA was effective on July

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

at that time.

Effective October 26, 2017, our domicile was changed

from New Jersey to Nevada.

On December 14, 2017, we entered into a Share

Exchange Agreement (the “

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

HereLab ”), and

HereLab’s two shareholders pursuant to which we would acquire all the issued and outstanding shares of HereLab in exchange for the

issuance of 1,650,000 shares of our Common Stock, on a pro rata basis, to HereLab’s two shareholders.

The closing of the transaction

occurred on January 11, 2018 and HereLab became our wholly-owned subsidiary.

A new management team was put into place in 2018,

which constitutes our current management team.

Furthermore, on April 1, 2021, we appointed Mr.

Chandran Seshagiri as our new Interim Chief

Technology Officer.

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

subsidiaries which are OXYS Corporation and HereLab, Inc., through which our operations are conducted.

General Overview

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

Both companies were, and presently are, early-stage technology startups that are largely pre-revenue in their development

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 didn’t realize revenue growth in 2021 once the pandemic hit.

We develop hardware,

software and algorithms that monitor, measure and predict conditions for energy, structural, agricultural and medical applications.

use domain-specific Artificial Intelligence to solve industrial and environmental challenges.

Our engineered solutions focus on common

sense approaches to machine learning, algorithm development and hardware and software products.

Our customers have issues

and they need improvements.

We design a system of hardware and software, assemble, install, monitor data and apply our algorithms

to help provide the customer insights.

We use off 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.

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.

Results of Operations for the Three Months

Ended March 31, 2021 compared to the Three Months Ended March 31, 2020

For the three months ended March 31, 2021, the

Company did not earn any revenues.

The Company incurred professional fees of $211,155, payroll costs of $41,681, interest expense of $121,477,

amortization of intangible assets of $12,477, and other general and administrative expenses of $7,447.

In addition, the Company recorded

a gain of $84,700 due to the change in the fair market value of derivative liability, and $120,000 gain on the extinguishment of debt

upon agreeing with the note holders to a reduction in the debt conversion price.

The Company recorded an expense of $5,504 as convertible

preferred stock dividend.

As a result, the Company recorded a net loss of $195,011 for the three months ended March 31, 2021.

For the three months ended March 31, 2020, the

Company earned revenues of $15,600 and incurred related cost of sales of $8,634.

The Company incurred professional fees of $187,121, interest

expense of $518,289, a loss on change in the fair market value of derivative liability of 63,908, and other general and administrative

expenses of $27,527.

The Company generated $409 in miscellaneous income.

As a result, the Company incurred a net loss of $789,470 for

the three months ended March 31, 2020.

Year over Year (YoY) revenue for the three months

ended March 31, 2021 was less than in same period of 2020.

This was due to longer than anticipated customer acquisition times.

resulted in a challenging quarter relative to generating revenue.

Our Annual Report on Form 10-K for the year ended December 31, 2020

disclosed risks of ongoing concerns, and those concerns still exist.

A counterbalance to the revenue headwinds are

the achievements we have made.

Year to Date, in 2021

We have entered into NDAs with two New England Biotech companies.

Our customer engagement process consists

of several steps, the first being the execution of an NDA, which then allows us to quickly define a problem statement of interest to the

client, which then leads to a definition of scope of work for the first contract.

We expect these agreements to lead to new business in

We have entered into NDAs with two major New England Universities to pursue an NSF grant associated with

our Structural Health Monitoring expertise.

We have secured significant and supportive funding.

We named a new CTO, emphasizing our focus on the Artificial Intelligence (AI) and Machine Learning (ML)

aspects of our business.

We have rebuilt our Advisory Board with two new members, one who will serve as a technical advisor and

overall leader of the Advisory Board, and the second with a strong legal and business background.

We believe the underlying strengths of the Company

are still in place:

an experienced leadership team;

contributions of our CTO leading our technology team, an MIT PhD level Machine Learning

Algorithm Engineer;

and strong execution on contracts to date.

Those completed contracts to date have produced two successful pilot programs:

one on manufacturing operations for our Fortune 500 Pharma customer, and a pilot with a full year of data collection and analysis on our

structural health monitoring program for a New England state’s DOT.

Our continued focus on high potential growth markets (specifically

Biotech, Pharma, and Medical Device Operations, as well as Structural Health Monitoring), 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 2020 was $77.3 billion USD and is projected to be $110.6 billion USD by 2025 (7.4% CAGR).

It is anticipated that revenue will be generated

in the second half of 2021, yielding YoY revenue growth that will exceed that for the same period of 2020.

This is due to the hard work

of the past year that has resulted in two successful pilots, in two of our key target industry verticals.

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 complimentary industry segment experience.

Furthermore, the continued

liquidity of our stock has attracted funding opportunities, and access to additional capital has and will enable funding of business

development, staff augmentation, and inorganic growth opportunities.

Combined with our underlying strengths:

experienced leadership;

savvy technological talent, and operational execution excellence;

we believe these revenue goals are achievable.

https://www.marketsandmarkets.com/pdfdownloadNew.asp?id=129733727

Liquidity and Capital Resources

At March 31, 2021, the Company had a cash balance

of $218,613, which represents an increase of $115,539 from the $103,074 balance at December 31, 2020.

This increase was primarily the

result of cash provided by the sale of common stock, net of commissions, in the aggregate amount of $241,080 offset by net cash used by

operating activities of $125,541 and due to acceleration in product development activities.

The Company’s working capital at March

31, 2021 was a deficit of $2,078,370, as compared to a December 31, 2020 working capital deficit of $2,665,436.

The Company incurred a net loss of $195,011 and

$789,470 for the three months ended March 31, 2021 and 2020, respectively.

The accompanying unaudited condensed consolidated

financial statements have been prepared assuming the Company will continue as a going concern.

As shown in the accompanying financial

statements, the Company has incurred losses from operations of $195,011 and $789,470 for the three months ended March 31, 2021 and 2020,

respectively, and has an accumulated deficiency which raises substantial doubt about the Company’s ability to continue as a going

Management believes the Company will continue

to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing

to sustain its operations until it can achieve profitability and positive cash flows.

Management plans to seek additional debt and/or

equity financing for the Company but cannot assure that such financing will be available on acceptable terms.

At the Company’s current

rate of expenditure, the Company anticipates that it not be able to maintain its current operations for the next twelve months;

management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of

equity securities.

There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable

The Company’s continuation as a going concern

is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain

additional financing as may be required.

Our auditors have included a going concern qualification in their auditors’

April 6, 2021.

Such a going concern qualification may make it more difficult for us to raise funds when needed.

The outcome of this uncertainty

cannot be assured.

The accompanying unaudited condensed consolidated

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

There can be no assurance

that management will be successful in implementing its business plan or that the successful implementation of such business plan will

actually improve the Company’s operating results.

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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements

that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.

Emerging Growth Company

We are an “emerging growth company,”

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.

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;

reduced disclosure about our executive compensation arrangements.

We have elected to take advantage of the exemption

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

As a result of this election,

our financial statements may not be comparable to public companies required to adopt these new requirements.

Quantitative and Qualitative Disclosures

About Market Risk

As a smaller reporting company, the Company has

elected not to provide the disclosure required by this item.

The Company received cash proceeds of $149,940, net of selling commission of $3,060, upon the sale

of common stock.

On August 2, 2021, the noteholder of Note E agreed to extend the maturity

date of the Senior Secured Convertible Promissory Note to August 2, 2022 (Note 5).

All other terms and conditions of the Note E remain

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 1. Financial Statements