What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-04-14 compared with 2021-04-06 · 124 added, 450 removed, 19 unchanged (97% of the section changed)

Market for Registrant’s

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

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

Market Information

Our common stock is quoted on the OTC Pink

under the symbol “ITOX.”

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

as reported by OTC Markets.

Our common stock is quoted on the OTC Pink under

the symbol “ITOX.” The table below sets forth for the periods indicated the quarterly high and low bid prices as reported

by OTC Markets.

Limited trading volume has occurred during these periods.

These quotations reflect inter-dealer prices,

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

These quotations reflect inter-dealer prices, without retail

mark-up, mark-down, or commission and may not necessarily represent actual transactions.

FISCAL YEAR ENDING DECEMBER 31, 2022

1 unchanged sentence

FISCAL YEAR ENDED DECEMBER 31, 2020

Our common stock is considered to be penny

stock under rules promulgated by the SEC.

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

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

duties, customers’

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

transactions based on financial situation, investment experience and objectives.

Broker-dealers must also disclose these restrictions

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

With these restrictions,

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

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

As of the close of business on March 31,

Our common stock is considered to be penny stock

under rules promulgated by the SEC.

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

a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and

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

on financial situation, investment experience and objectives.

Broker-dealers must also disclose these restrictions in writing, provide

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

With these restrictions, the likely effect

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

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

As of the close of business on April 8, 2022,

we had approximately 130 holders of our common stock.

The number of record holders was determined from the records of our

transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers,

dealers, and registered clearing agencies.

We have appointed Issuer Direct, 1981 East 4800 South, Suite 100, Salt Lake City, UT

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

We have never declared a cash dividend

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

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

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

of Directors deems relevant.

We are obligated to pay dividends to certain

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

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

The number of record holders was determined from the records of our transfer agent

and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered

clearing agencies.

We have appointed Issuer Direct, 1981 East 4800 South, Suite 100, Salt Lake City, UT 84117, to act as transfer agent

for the common stock.

We have never declared a cash dividend on our

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

Any future determination

to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial condition, operating results,

capital requirements, restrictions contained in our agreements and other factors which our Board of Directors deems relevant.

We are obligated to pay dividends to certain holders

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

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

Securities Authorized for Issuance under Equity Compensation

1 unchanged sentence

Plan category

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

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

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

securities to be

options, warrants

Weighted-average

exercise price of

options, warrants

available for

future issuance

plans (excluding

Equity compensation plans approved by security holders

1 unchanged sentence

1,587,712 (1)

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

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

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

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

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

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

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

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

(1) Effective February 17, 2021, the Company awarded to Chandran Seshagiri 300,000 unvested shares of the

Company’s Common Stock under the 2019 Plan, as defined below.

As of December 31, 2021, no shares were vested.

2017 Stock Incentive Plan

On March 16, 2017, our board of directors

assumed the 2017 Stock Awards Plan adopted by the Company while domiciled in New Jersey.

On March 16, 2017, our board of directors assumed

the 2017 Stock Awards Plan adopted by the Company while domiciled in New Jersey.

No awards were made under this plan.

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

Plan ”).

The purposes of the 2017 Plan are (a) to enhance our ability to attract and retain the services of qualified

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

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

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

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

There are 4,500,000 shares of common stock

authorized for non-qualified and incentive stock options, restricted stock units, restricted stock grants, and stock appreciation

rights under the 2017 Plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations.

The 2017 Plan is administered by our board

of directors;

however, the board of directors may designate administration of the 2017 Plan to a committee consisting of at least

two independent directors.

Only employees of our Company or of an “Affiliated Company”, as defined in the 2017 Plan,

(including members of the board of directors if they are employees of our Company or of an Affiliated Company) are eligible to

receive incentive stock options under the Plan.

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

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

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

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

No option awards may be exercisable more

than ten years after the date it is granted.

In the event of termination of employment for cause, the options terminate on the

date of employment is terminated.

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

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

of disability or death.

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

has 30 days to exercise his or her options.

The 2017 Plan will continue in effect until

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

after its adoption, whichever is earlier.

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

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

As of December 31, 2020, the Board had

granted 4,409,000 shares of Common Stock under the 2017 Plan.

On December 14,

2017, the Board of Directors terminated this plan and adopted a new 2017 Stock Incentive Plan (the “ 2017 Plan ”).

purposes of the 2017 Plan are (a) to enhance our ability to attract and retain the services of qualified employees, officers, directors,

consultants, and other service providers upon whose judgment, initiative and efforts the successful conduct and development of our business

largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement

and betterment of our company, by providing them an opportunity to participate in the ownership of our Company and thereby have an interest

in the success and increased value of our Company.

There are 4,500,000 shares of common stock authorized

for non-qualified and incentive stock options, restricted stock units, restricted stock grants, and stock appreciation rights under the

2017 Plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations.

The 2017 Plan is administered by our board of

however, the board of directors may designate administration of the 2017 Plan to a committee consisting of at least two independent

Only employees of our Company or of an “Affiliated Company”, as defined in the 2017 Plan, (including members of

the board of directors if they are employees of our Company or of an Affiliated Company) are eligible to receive incentive stock options

under the Plan.

Employees of our Company or of an Affiliated Company, members of the board of directors (whether or not employed by our

company or an Affiliated Company), and “Service Providers”, as defined in the 2017 Plan, are eligible to receive non-qualified

options, restricted stock units, and stock appreciation rights under the 2017 Plan.

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

Revenue Code.

No option awards may be exercisable more than

ten years after the date it is granted.

In the event of termination of employment for cause, the options terminate on the date of employment

is terminated.

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

or transferee has six months following the date of termination to exercise options received at the time of disability or death.

event of termination for any other reason other than for cause, disability or death, the optionee has 30 days to exercise his or her options.

The 2017 Plan will continue in effect until all

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

its adoption, whichever is earlier.

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

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

As of December 31, 2021, the Board had awarded

4,352,288 shares of Common Stock under the 2017 Plan.

2019 Stock Incentive Plan

On March 11, 2019, the Board of Directors

adopted the 2019 Stock Incentive Plan (the “

2019 Plan ”).

The purposes of the 2019 Plan are (a) to enhance our

ability to attract and retain the services of qualified employees, officers, directors, consultants, and other service providers

upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends, and (b) to

provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment

of our company, by providing them an opportunity to participate in the ownership of our Company and thereby have an interest in

the success and increased value of our Company.

The 2019 Plan is administered by our board

of directors;

however, the board of directors may designate administration of the 2019 Plan to a committee consisting of at least

two independent directors.

Only employees of our Company or of an “Affiliated Company”, as defined in the 2019 Plan,

(including members of the board of directors if they are employees of our Company or of an Affiliated Company) are eligible to

receive incentive stock options under the 2019 Plan.

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

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

in the 2019 Plan, are eligible to receive non-qualified options, restricted stock units, and stock appreciation rights under the

On March 11, 2019, the Board of Directors adopted

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

The purposes of the 2019 Plan are (a) to enhance our ability to attract

and retain the services of qualified employees, officers, directors, consultants, and other service providers upon whose judgment, initiative

and efforts the successful conduct and development of our business largely depends, and (b) to provide additional incentives to such persons

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

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

The 2019 Plan is administered by our board of

however, the board of directors may designate administration of the 2019 Plan to a committee consisting of at least two independent

Awards may be made under the Plan for up to 5,000,000 shares of common stock of the Company.

Only employees of our Company

or of an “Affiliated Company”, as defined in the 2019 Plan, (including members of the board of directors if they are employees

of our Company or of an Affiliated Company) are eligible to receive incentive stock options under the 2019 Plan.

Employees of our Company

or of an Affiliated Company, members of the board of directors (whether or not employed by our company or an Affiliated Company), and

“Service Providers”, as defined in the 2019 Plan, are eligible to receive non-qualified options, restricted stock units, and

stock appreciation rights under the 2019 Plan.

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

No option awards may be exercisable more

than ten years after the date it is granted.

In the event of termination of employment for cause, the options terminate on the

date of employment is terminated.

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

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

of disability or death.

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

has 30 days to exercise his or her options.

The 2019 Plan will continue in effect until

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

after its adoption, whichever is earlier.

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

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

As of December 31, 2020, the Board had

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

No option awards may be exercisable more than

ten years after the date it is granted.

In the event of termination of employment for cause, the options terminate on the date of employment

is terminated.

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

or transferee has six months following the date of termination to exercise options received at the time of disability or death.

event of termination for any other reason other than for cause, disability or death, the optionee has 30 days to exercise his or her options.

The 2019 Plan will continue in effect until all

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

its adoption, whichever is earlier.

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

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

As of December 31, 2021, the Board had awarded

3,560,000 shares Common Stock under the 2019 Plan.

Stock Options

We currently have no outstanding stock

We currently have no outstanding stock options.

Recent Sales of Unregistered Securities

The Company had no unreported sales of

unregistered securities in the fourth quarter of 2020.

On November 19, 2020, pursuant to the terms of

a Securities Purchase Agreement dated November 16, 2020, we entered into a preferred equity financing agreement with GHS Investments,

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

The agreement provides for GHS’s purchase, from time to time, of

up to 600 shares of our newly-designated Series B Convertible Preferred Stock (the “ Series B Preferred Stock ”).

December 20, 2021, GHS purchased 51 shares of Series B Preferred Stock for $51,000.

This issuance was exempt under Rule 506(b) under

Regulation D.

GHS was an “accredited investor” as defined in Rule 501 under the Securities Act.

We did not engage in any general

solicitation or advertising in connection with the issuance of the shares of Series B Preferred Stock.

commissions in the amount of $1,000 were paid to J.H.

Selected Financial Data

As a Smaller Reporting Company, we are

not required to furnish information under this Item 6.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and

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

Historical results may not

indicate future performance.

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 above and in “Risk Factors.”

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 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 periods ended December 31, 2019 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”

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.

We use 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 statements.

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 year ended December 31, 2020 was limited, in all material respects, due

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

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

On March 11, 2020, the World Health Organization

designated COVID-19 as a global pandemic.

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

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

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

Uncertainty with respect to the economic effects

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

Historical Background

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.

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.

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 sans Mr.

Coufal who resigned effective March 31, 2021.

On April 1, 2021,

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

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

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 Internet.

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

that are largely pre-revenue in their development phase.

HereLab is also an early-stage technology development company.

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

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

We develop hardware,

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

We 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.

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

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

We focus on developing

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

The data collected is analyzed

and reports are created for the customer.

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

Liquidity and Capital Resources for

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

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

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

This increase was primarily as a result

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

Payroll Protection Program loans (“

PPP ”) received by the Company during 2020.

Our working capital at December 31,

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

For the year ended December 31, 2020, we incurred

a net loss of $2,236,774.

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

For the year ended December 31, 2019, we incurred

a net loss of $1,887,287.

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

For the year ended December 31, 2020, net cash

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

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

PPP of $36,700.

For the year ended December 31, 2019, financing

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

The accompanying consolidated financial

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

As shown in the accompanying financial statements,

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

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

to continue as a going concern.

Results of Operations for the Year

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

For the year ended December 31, 2020, we

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

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

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

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

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

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

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

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

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

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

ended December 31, 2020.

Comparatively, for the year ended December

31, 2019, we earned revenues of $147,151 and incurred related cost of sales of $38,960.

We incurred professional fees of $1,807,286

and other general and administrative expenses of $164,501.

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

As a result, we

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

During the current and prior period, we

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

Year over Year (YoY) revenue was less in

2020 than 2019.

This was due to several reasons, including:

the negative business impacts of the Coronavirus pandemic and longer

than anticipated customer acquisition times.

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

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

Our Quarterly Report on Form

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

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

Despite these headwinds, our achievements

in 2020 were significant:

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

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

England state’s DOT in the second quarter.

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

is the following:

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

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

Also, the strength

of the Aingura IIoT, S.G.

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

complimentary industry segment experience.

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

to additional capital.

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

It is anticipated that 2021 YoY revenue

growth will meet or exceed that of 2020.

This is due to these aforementioned reasons:

the strength of the Aingura IIoT, S.G.

collaboration,

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

data and algorithms,

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

Our continued focus on high potential

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

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

Market research shows the

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

Our strengths in these markets

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

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

Recently Issued Accounting Standards

In December 2019, the Financial Accounting

Standards Board issued Accounting Standards Update (“

ASU ”) ASU No.

2019-12, Income Taxes (Topic 740) ,

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

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

improve consistent application.

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

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

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

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

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

Own Equity (Subtopic 815-40):

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

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

The ASU also removes certain

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

earnings per share calculation in certain areas.

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

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

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

guidance on its financial statements.

Other accounting standards that have been

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

financial statements upon adoption.

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

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

Off-Balance Sheet Arrangements

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.

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, we are

not required to furnish information under this Item 7A.

Financial Statements

The financial statements and supplementary

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

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosures

As a Smaller Reporting Company, we are not required

to furnish information under this Item 6.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity