What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-18 · 127 added, 125 removed, 179 unchanged (58% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

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

This Management’s Discussion and Analysis

13 unchanged sentences

the following Management Discussion and Analysis of the Consolidated Financial Condition, Results of Operations, Stockholders’ Equity

and Cash Flow for the quarterly periods ended June 30, 2023 and 2022 gives effect to our acquisition of OXYS Corporation (“ OXYS ”)

and Cash Flow for the quarterly periods ended September 30, 2023 and 2022 gives effect to our acquisition of OXYS Corporation (“ OXYS ”)

on July 28, 2017.

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

the impact of conflict between the Russian Federation and Ukraine on our operations;

geo-political events, such as the crisis in Ukraine, government responses to such events and the related impact on the economy both nationally and internationally;

the impact of conflicts between the Russian Federation and Ukraine and Israel in on our operations;

geo-political events, such as the crisis in Ukraine and Israel, government responses to such events and the related impact on the economy both nationally and internationally;

general market and economic conditions;

94 unchanged sentences

our first revenues in the last quarter of 2017, continued to realize revenues until 2020 when the pandemic hit, and we realized nominal

revenues through 2021, and have shown increased revenues in 2022, and 2023 year-to-date.

revenues through 2021 to the present.

We develop hardware, software and algorithms that

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Results of Operations for the Three Months

Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

For the three months ended June 30, 2023, we earned

revenues of $35,289 and incurred related cost of sales of $8,495.

Our operating expenses were $130,080 which included professional fees

of $61,505, payroll costs of $54,151, amortization of intangible assets of $12,342, and general and administrative expenses of $2,082.

We recorded net other expenses of $163,473 consisting of interest expense of $13,996, a loss due to change in fair market value of derivative

liability of $155,398, offset by interest income on note receivable of $5,921.

We also recorded $16,299 as preferred stock dividend on

convertible preferred stock for the three months ended June 30, 2023.

As a result, we incurred a net loss of $283,058 for the three months

ended June 30, 2023.

Comparatively, for the three months ended June

Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022 (Unaudited)

For the three months ended September 30, 2023,

we earned revenues of $19,714 and incurred related cost of sales of $4,871.

Our operating expenses were $229,962 which included

professional fees of $68,184, payroll costs of $130,290, amortization of intangible assets of $12,341, and general and administrative

Our operating expenses were $102,272 which included professional

fees of $13,861, payroll costs of $53,825, amortization of intangible assets of $12,477, and general and administrative expenses of $22,109.

We recorded net other income of $42,138 consisting of gain of $122,089 due to change in fair market value of derivative liability, interest

income on note receivable of $8,205, gain on a derivative of $321 and interest expense of $14,077.

We also recorded $17,383 as preferred

stock dividend on convertible preferred stock for the three months ended September 30, 2023.

As a result, we incurred a net loss of $62,674

for the three months ended September 30, 2023.

For the three months ended September 30, 2022,

we earned revenues of $23,003 and related cost of sales of $5,140.

Our operating expenses were $158,818 which included professional fees

paid to consultants of $35,454, payroll costs of $109,595, amortization of intangible assets of $12,477, and general and administrative

expenses of $13,770.

We recorded net other income of $111,137, consisting of interest expense of $14,913 on notes payable due to amortization

of debt discount and interest payable on notes payable, offset by gain on change in the fair market value of derivative liability of $36,057,

and interest income on note receivable of $5,661.

We also recorded $12,280 as preferred stock dividend on convertible preferred stock

for the three months ended June 30, 2022.

As a result, we incurred a net loss of $200,853 for the three months ended June 30, 2022.

of debt discount and interest payable on notes payable, loss on derivates of $5,504, offset by gain on change in the fair market value

of derivative liability of $125,568.

We also recorded $6,909 as preferred stock dividend on convertible preferred stock for the three

months ended September 30, 2022.

As a result, we incurred a net loss of $49,204 for the three months ended September 30, 2022.

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 tax assets.

Results of Operations for the Six Months

Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

For the six months ended June 30, 2023, we earned

revenues of $78,572 and incurred related cost of sales of $25,459.

Our operating expenses were $308,485 which included professional fees

of $124,167, payroll costs of $140,258, amortization of intangible assets of $24,547, and general and administrative expenses of $19,513.

We recorded net other expenses of $173,437 consisting of interest expense of $28,524, and a loss due to change in fair market value of

derivative liability of $156,690, offset by interest income on note receivable of $11,777.

We also recorded $32,419 as preferred stock

dividend on convertible preferred stock for the six months ended June 30, 2023.

As a result, we incurred a net loss of $461,228 for the

six months ended June 30, 2023.

Comparatively, for the six months ended June 30,

2022, we earned revenues of $16,500 and related cost of sales of $510.

Results of Operations for the Nine months

Ended September 30, 2023 Compared to the Nine months Ended September 30, 2022 (Unaudited)

For the nine months ended September 30, 2023,

we earned revenues of $98,286 and incurred related cost of sales of $30,330.

Our operating expenses were $410,757 which included professional

fees of $138,027, payroll costs of $194,083, amortization of intangible assets of $37,023, and general and administrative expenses of

We recorded net other expenses of $308,117, consisting of interest expense of $263,691 on notes payable due to amortization of

debt discount and interest payable on notes payable, loss on derivates of $201,943, offset by gain on change in the fair market value

of derivative liability of $151,856 and interest income on note receivable of $5,661.

We also recorded $24,708 as preferred stock dividend

on convertible preferred stock for the six months ended June 30, 2022.

As a result, we incurred a net loss of $726,012 for the six months

ended June 30, 2022.

We recorded net other expenses of $131,297 consisting of a loss $34,600 due to change in fair market value of derivative liability,

gain on a derivative of $321, interest income on note receivable of $19,983, interest expense of $117,001 on the convertible promissory

We also recorded preferred stock dividend on convertible preferred stock of $49,803 for the nine months ended September 30, 2023.

As a result, we incurred a net loss of $523,901 for the nine months ended September 30, 2023.

For the nine months ended September 30, 2022,

we earned revenues of $39,503 and related cost of sales of $5,650.

Our operating expenses were $580,472 which included professional fees

of $143,193, payroll costs of $350,543, amortization of intangible assets of $37,023, and general and administrative expenses of $49,713.

We recorded net other expenses of $196,981, consisting of interest expense of $278,605 on notes payable due to amortization of debt discount

and interest payable on notes payable, loss on derivates of $207,447, offset by gain on change in the fair market value of derivative

liability of $277,424 and interest income of $11,647 on note receivable.

We also recorded $31,617 as preferred stock dividend on convertible

preferred stock for the nine months ended September 30, 2022.

As a result, we incurred a net loss of $775,217 for the nine months ended

September 30, 2022.

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 tax assets.

The first half year of revenue in 2023 was a significant

improvement over the same period in 2022 (an increase of 376%) and sustained the revenue momentum achieved throughout 2022.

this momentum achieved in the first half of 2023 will continue through the remainder of 2023 – given adequate funding to fuel sales

& marketing efforts.

Our strong six months revenue and our confidence this momentum will continue through 2023, and beyond, are based

on the following factors:

Our current DOT Bridge Monitoring Contract and overall Structural Health Monitoring (“ SHM ”) vertical is the foundation of our revenue momentum.

The current monitoring revenue will continue through the second half of 2023, with the previously approved expansion to continue beyond June.

We believe that discussions with our main contractor to the DOT for extensions and expansions have been favorable.

We also believe that prospects with our current DOT state, and DOT contacts in two other northeast states bode well for future business in mid-2024.

There is still potential for local municipalities in our current northeast state to contribute revenue in the second half of 2023 and into 2024.

Our Smart Manufacturing vertical is benefiting from the progress on our CNC Proof of Concept (“ POC ”), that successfully concluded in May 2023, and has resulted in a signed Software-as-a-Service (“SaaS”) contract in June 2023.

Public endorsements and promotional videos are forthcoming featuring this Smart Manufacturing customer.

We believe these endorsements and promotional videos will lead to other paid CNC POCs and additional SaaS contracts, which would contribute to revenue in the second half of 2023 and beyond.

It is expected these endorsements will also strengthen our position to secure additional POCs for other discrete manufacturing processes, including metal stamping, plastic injection molding, plastic extrusion, and automated assembly and test.

We have re-evaluated our Indoor Air Quality (“ IAQ ”) vertical and our business arrangement with Aretas Sensor Networks (“ Aretas ”).

We have decided to discontinue our efforts in this vertical and re-direct those resources to our better performing verticals of Structural Health Monitoring and Smart Manufacturing.

In addition to discontinuing our business arrangement with Aretas, on October 4, 2022, Aretas failed to make the required $20,000 interest payment under the 10% Unsecured Convertible Promissory Note issued to us by Aretas on April 4, 2022.

A notice of default was sent to Aretas on June 8, 2023 and we are currently pursuant all legal remedies.

The first nine months

of revenue in 2023 was a substantial improvement over the same period in 2022 (an increase of 149%), and we have already met our commitment

for 2023 revenue to exceed that in 2022.

We expect revenue to moderate in the fourth quarter of 2023, as our ability to raise funding

to fuel sales & marketing efforts has been limited.

Potential future revenue growth is possible, pending adequate funding for sales

and marketing efforts and building on the strength of the following factors:

· Our current DOT Bridge Monitoring Contract and overall Structural Health Monitoring (“ SHM ”)

vertical is the foundation of our revenue stream.

The current monitoring revenue will continue through the fourth quarter of 2023.

with our main contractor to the DOT for extensions and expansions continue to be favorable.

We also continue to believe that prospects

with our current DOT state, and DOT contacts in two other northeast states bode well for future business in mid-2024.

There is still potential

for local municipalities in our current northeast state to contribute revenue in 2024.

· Our Smart Manufacturing vertical is benefiting from the progress on our CNC SaaS contract that commenced

in June 2023, and will continue through the fourth quarter of 2023.

Initial public endorsements and promotional videos have been released

and additional videos are planned for release in the fourth quarter of 2023.

These endorsements and promotional videos along with grass-roots

sales & marketing efforts have generated additional sales leads for potential paid CNC POCs and additional SaaS contracts, which may

contribute to revenue in the fourth quarter of 2023 and beyond.

It is also expected these endorsements will also strengthen our position

to secure additional POCs for other discrete manufacturing processes, including metal stamping, plastic injection molding, plastic extrusion,

and automated assembly and test.

· Our strategic partnership development continues to be a “force multiplier” for us.

The strength of our Aingura IIoT, S.L.

partnership provides supplemental expertise, equipment and software, which ensures we continue to bring value to our customers.

We will also continue to develop our other previously announced partnerships, (with the exception of Aretas).

We believe that our business development in these

industries has high potential for success, due to the strength of their size and growth.

The global smart manufacturing (also known as

Industry 4.0) was $97.6 billion in 2022 and will reach $228.3 billion by 2027 (CAGR 18.5%), 1 and the worldwide SHM industry

was $2.0 billion in 2021 and will reach $4.0 billion by 2027 (CAGR of 14.6%).

Among our many tailwinds, we do face a significant

Since February, we have been unable to raise funds for ongoing operations through our existing financing agreements due to market

Our CEO and COO have not received any compensation since mid-April (their salaries have accrued), and the lack of funds have

significantly limited sales and marketing efforts.

Our management is working to secure funding from our lead investor to pay for ongoing

expenses and the leadership team is considering many options for both the short and long term.

These options will depend largely upon

our ability to continue to raise funds and implement a marketing and sales plan.

In the event we are unable to raise adequate funds, management

may need to consider other options such as pursuing suitable companies to merge with or acquire us.

It is anticipated that revenue momentum will continue

through the second quarter of 2023 and that overall total revenue for 2023 will exceed that of 2022.

Revenue in Q3 2023 may be less than

in the same period in 2022 due to reduced available funds for sales and marketing efforts.

However, given the valuable real-world data

we have collected, our Artificial Intelligence (“ AI ”) Machine Learning algorithms we’ve developed, compelling

use cases and marketing collateral developed from our data and algorithms, combined with our experienced leadership, savvy technological

talent, and operational execution excellence, we believe these goals are achievable, if adequate funding for sales and marketing efforts

of our Aingura IIoT, S.L.

partnership provides supplemental expertise, equipment and software, which ensures we continue to bring value

to our customers.

We will also continue to develop our other previously announced partnerships.

Despite these strengths,

we continue to face significant headwinds and we have not been able to raise material funds for ongoing operations through our existing

financing agreements due to market conditions.

Our CEO and COO have not received any compensation since mid-April (their salaries have

accrued), and the lack of funds has severely limited sales and marketing efforts.

Our management is working to secure funding from our

lead investor to pay for ongoing expenses and the leadership team is considering many options for both the short and long term.

options depend largely upon our ability to continue to raise funds and implement a marketing and sales plan.

the event we are unable to raise adequate funds, management may need to consider other options such as pursuing suitable companies to

merge with or acquire us.

We believe that our business

development in these industries has potential for success, due to the strength of their size and growth.

The global smart manufacturing

(also known as Industry 4.0) was $97.6 billion in 2022 and will reach $228.3 billion by 2027 (CAGR 18.5%) 1 ,

and the worldwide SHM industry was $2.0 billion in 2021 and will reach $4.0 billion by 2027 (CAGR of 14.6%).

Given the valuable real-world

data we have collected, our Artificial Intelligence (“AI”) Machine Learning algorithms we have developed, compelling use cases

and marketing collateral developed from our data and algorithms, combined with our experienced leadership, savvy technological talent,

and operational execution excellence, we believe continued annual revenue growth is possible, if adequate funding for sales and marketing

efforts can be secured.

Liquidity and Capital Resources for the

Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

At June 30, 2023, we had a cash balance of $7,896,

which represents a $25,440 reduction from the $33,336 cash balance at December 31, 2022.

This decrease was primarily as a result of net

cash used in operating activities of $78,551, and net cash provided by financing activities of $53,111.

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022 (Unaudited)

At September 30, 2023, we reported a cash balance

of $17,790 as a result of decrease of $15,546 from the $33,336 cash balance at December 31, 2022.

This decrease was primarily as a result

of net cash used in operating activities of $129,417 and net cash provided by financing activities of $113,871.

Operating Activities

Net cash flows used in operating activities for

the six months ended June 30, 2023 was $78,551, primarily attributed to the net loss of $461,228, stock compensation expense of $825,

discount received on note receivable of $1,860, and amortization of intangible assets of $24,547.

The Company recorded changes in operating

assets and liabilities of $359,166 primarily attributable to decrease in accounts receivable of $3,588, increase in prepaid expenses and

other current assets of $4,987, increase in accounts payable of $81,559, increase in accrued liabilities of $80,574, increase in derivative

liabilities of $156,690, decrease in unearned interest of $2,932, increase in shares payable to related parties of $3,006, and increase

in salaries payable to related parties of $41,667.

[1] https://www.marketsandmarkets.com/Market-Reports/industry-4-market-102536746.html

[2] https://www.marketsandmarkets.com/Market-Reports/structural-health-monitoring-market-101431220.html

the nine months ended September 30, 2023 was $129,417, primarily attributed to the net loss of $523,901, stock compensation expense of

$825, discount received on note receivable of $2,805, amortization of debt discount on notes payable and preferred stock of $12,400, and

amortization of intangible assets of $37,023.

The Company recorded changes in operating assets and liabilities of $347,041 primarily attributable

to decrease in accounts receivable of $18,021, increase in prepaid expenses and other current assets of $10,028, decrease in accounts

payable of $38,108, increase in accrued liabilities of $125,434, increase in derivative liabilities of $96,279, decrease in unearned interest

of $5,151, increase in shares payable to related parties of $3,870, and increase in salaries payable to related parties of $156,724.

Net cash flows used in operating activities for

the six months ended June 30, 2022 was $346,823, primarily attributable to net loss of $726,012, stock compensation expense of $900,

the nine months ended September 30, 2022 was $471,561, primarily attributable to net loss of $775,217, stock compensation expense of $900,

discount on note receivable of $5,661, amortization of debt discount on notes payable and preferred stock of $37,400, and amortization

1 unchanged sentence

The Company recorded a net change in operating assets and liabilities of $222,672 attributable to net

increase in accounts receivable of $16,500, net decrease in accounts payable of $4,371, net increase in accrued liabilities of $53,280,

net increase in derivative liabilities of $241,591, increase in unearned interest of $15,233, net increase in shares payable to related

parties of $8,604, and increase in salaries payable to related parties of $11,899.

increase in accounts receivable of $5,100, decrease in accounts payable of $1,588, net increase in accrued liabilities of $80,398, net

increase in derivative liabilities of $116,023, increase in unearned interest of $10,192, and net increase in shares payable to related

parties of $12,221, and a net increase in salaries payable to related parties of $10,526.

_______________________

https://www.marketsandmarkets.com/Market-Reports/industry-4-market-102536746.html

https://www.marketsandmarkets.com/Market-Reports/structural-health-monitoring-market-101431220.html

Investing Activities

Net cash used in investing activities for the

six months ended June 30, 2023 was $0.

Net cash used in investing activities for the six months ended June 30, 2022 resulted due to cash

advanced for a promissory note totaling $200,000.

Net cash used in investing

activities for the nine months ended September 30, 2023 was $0.

Net cash used in investing activities for the nine months ended September

30, 2022 resulted due to cash advanced for a promissory note receivable totaling $200,000.

Financing Activities

Net cash provided by financing activities for

the six months ended June 30, 2023 was $53,111, primarily due to sales of our common stock of $54,195 and paying $1,084 in costs incurred

in raising capital.

Net cash provided by financing activities for the six months ended June 30, 2022 was $573,498 primarily due to cash

received from sale of common stock of $393,365 and paying $7,867 in costs for raising capital, and cash received from sale of Series B

Preferred Stock of $188,000.

the nine months ended September 30, 2023 was $113,871 primarily due to sales of our common stock of $54,195, Series B convertible preferred

stock of $62,000 and paid $2,324 in costs for raising capital.

Cash provided by financing activities for the nine months ended September

30, 2022 was $659,024 primarily due to cash received from sale of common stock of $481,657 and paid $9,633 in costs for raising capital,

and cash received from sale of Series B convertible preferred stock of $187,000.

As a result of the above activities, the Company

recorded a decrease of $25,440 in cash for the six months ended June 30, 2023, and an increase of $26,675 for the six months ended June

30, 2022, respectively.

recorded a decrease in cash of $15,546 for the nine months ended September 30, 2023, and a decrease in cash of $12,537 for the same comparable

period ended September 30, 2022, respectively.

The accompanying condensed consolidated financial

2 unchanged sentences

the Company has suffered continuing operating losses, has a working capital deficit of $1,958,290, used cash flows in operating activities

of $78,551, and has an accumulated deficit of $9,768,365 as of June 30, 2023.

These factors, among others, raise a substantial doubt about

the Company’s ability to continue as a going concern.

If the Company is unable to obtain adequate capital, it could be forced to

cease operations.

of $129,417, and has an accumulated deficit of $9,831,038 as of September 30, 2023.

These factors, among others, raise a substantial doubt

about the Company’s ability to continue as a going concern.

If the Company is unable to obtain adequate capital, it could be forced

to cease operations.

Off-Balance Sheet Arrangements

7 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis