What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-12 compared with 2023-11-13 · 103 added, 161 removed, 145 unchanged (65% 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

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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, 2022.

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

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

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

and Cash Flow for the quarterly periods ended March 31, 2024 and 2023 gives effect to our acquisition of OXYS Corporation (“ OXYS ”)

on July 28, 2017.

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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;

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

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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

The global COVID-19 pandemic continues to present

uncertainty and unforeseeable risks to the Company’s operations and business plan.

The Company has closely monitored recent developments,

including the lifting of COVID-19 safety measures, the spread of new strains or variants of the coronavirus (such as the Delta and Omicron

variants), and supply chain and labor shortages.

Thus, the full impact of the COVID-19 pandemic on the business and operations remains

uncertain and will vary depending on the pandemic’s future impact on the third parties with whom the Company does business, as well

as any legal or regulatory consequences resulting therefrom.

The Company has been following the recommendations of health authorities

to minimize exposure risk for its team members and may take further actions that alter our operations, including any required by federal,

state or local authorities, or that it determines are in the best interests of its employees and other third parties with whom the Company

does business.

Historical Background

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of our Common Stock and changed our management to Mr.

DiBiase who also served in management of OXYS.

DiBiase who also served in the management of OXYS.

Also, one of our principal shareholders

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Results of Operations for the Three Months

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 $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, 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 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 $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.

Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023 (Unaudited)

For the three months ended March 31, 2024, we

earned revenues of $2,500 and incurred related cost of sales of $2,125.

Our operating expenses were $66,682 which included payroll costs

of $50,518, amortization of intangible assets of $12,341, and general and administrative expenses of $3,823.

We recorded net other expense

of $135,111 consisting of loss of $81,239 due to change in fair market value of derivative liability, gain on a derivative of $28,157

on Series C Convertible Preferred Stock, and interest expense of $82,029.

We also recorded $19,200 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.

preferred stock for the three months ended March 31, 2024.

As a result, we incurred a net loss of $220,618 for the three months ended

March 31, 2024.

three months ended March 31, 2023, we earned revenues of $43,283 and incurred related cost of sales of $16,964.

Our operating expenses

were $178,405 which included professional fees of $62,662, payroll costs of $86,107, amortization of intangible assets of $12,205, and

general and administrative expenses of $17,431.

We recorded net other expenses of $9,964 consisting of interest expense of $14,528 and

a loss due to change in fair market value of derivative liability of $1,292, offset by interest income on note receivable of $5,856.

also recorded $16,120 as preferred stock dividend on convertible preferred stock for the three months ended March 31, 2023.

we incurred a net loss of $178,170 for the three months ended March 31, 2023.

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 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.

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 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 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 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

of intangible assets of $37,023.

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

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.

Revenues earned in Q1 2024 were substantially less than the same period in 2023 (a decrease of 87%).

growth for the rest of 2024 will be challenging given the difficulty in raising additional capital to fuel sales & marketing efforts.

Potential future revenue growth depends on our ability to raise said capital and the following factors:

· Our DOT Bridge Monitoring Contract

ended in December 2023 but our Structural Health Monitoring (“SHM”) vertical is the foundation of our future revenue stream.

Discussions continue with our main contractor to the DOT for extension and expansion contracts.

Additional prospects with our current

DOT state, and DOT contacts in two other northeast states continue to be pursued.

Projects with local municipalities in our current northeast

state also continue to be prospected.

· Our Smart Manufacturing vertical is another potential source of future

revenue based on the strong use case developed from our CNC POC and SaaS contracts over the past year.

Although the SaaS contract ended

in May 2024, the tool cost savings exceeded our projections, and we believe the customer will continue to benefit from the insights we

The customer cited conflicting projects and resources as reasons for ending the contract, but will continue to endorse our capabilities

and services, including promotional video material previously released and pending.

We believe their endorsement and promotional videos

are valuable collateral to prospect future Smart Manufacturing CNC business.

Additional POCs for other discrete manufacturing processes,

including metal stamping, plastic injection molding, plastic extrusion, and automated assembly and test are also potential avenues of

future revenue streams.

· Our strategic partnership continues to be our greatest asset.

The strength of our Aingura IIoT, S.L.

provides supplemental expertise, equipment and software, which ensures our ability to bring value to our prospective customers.

Despite these positive factors, 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 and have accrued all compensation since mid-April 2023 and the lack of

funds has severely limited sales and marketing efforts.

Our management has secured limited funding from our lead investor to pay for ongoing

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

Given the current challenges in raising

adequate funds, management is pursuing options including vetting suitable companies to merge with or acquire us.

We believe we’ve created valuable assets

from our business development in these industries, which are strong in both their size and growth.

The global smart manufacturing (also

known as Industry 4.0) was $108.9 billion in 2023 and will reach $241 billion by 2028 (CAGR 17.2%), [1]

and the worldwide SHM industry is $2.5 billion in 2024 and will reach $4.1 billion by 2029 (CAGR of 10.4%).

Given the valuable real-world data we have collected,

our Artificial Intelligence (“AI”) Machine Learning algorithms we have developed, strong use cases and marketing collateral

developed from our data and algorithms, combined with our prudent operational execution, we believe our company’s assets have potential

future revenue growth, that will be attractive to prospective partners interested in an acquisition or merger.

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

Liquidity and Capital Resources for the

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023 (Unaudited)

At March 31, 2024, we reported a cash balance

of $1,405 as a result of an increase of $761 from $644 cash balance at December 31, 2023.

This increase was primarily as a result of net

cash used in operating activities of $761.

Operating Activities

Net cash flows provided

by operating activities for the three months ended March 31, 2024 was $761, primarily attributed to the net loss of $220,618, amortization

of intangible assets of $12,341, and net increase in operating assets and liabilities of $209,038.

The Company recorded changes in operating

assets and liabilities primarily attributable to decrease in accounts receivable of $2,960, increase in accounts payable of $1,247, increase

in accrued liabilities of $42,805, increase in derivative liabilities of $121,906, increase in shares payable to related parties of $520,

and increase in salaries payable to related parties of $39,600.

Net cash flows used in

operating activities for the three months ended March 31, 2023 was $61,289, primarily attributed to the net loss of $178,170, stock compensation

expense of $825, discount received on note receivable of $925, and amortization of intangible assets of $12,206.

The Company recorded

changes in operating assets and liabilities of $104,775 primarily attributable to decrease in accounts receivable of $19,048, increase

in accounts payable of $38,984, increase in accrued liabilities of $46,648, increase in derivative liabilities of $1,292, increase in

shares payable to related parties of $1,735 offset by decrease in unearned interest of $2,932.

Investing Activities

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.

activities for the three months ended March 31, 2024 and 2023 was $0.

Financing Activities

Net cash provided by financing activities for

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 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.

Net cash provided by

financing activities for the three months ended March 31, 2024 was $0.

Net cash provided by financing activities for the three months

ended March 31, 2023 was $53,111 primarily due to sale of our common stock of $54,195 and paying $1,084 in costs for raising capital.

As a result of the above

activities, the Company recorded an increase of $761 in cash for the three months ended March 31, 2024, and a decrease of $8,178 in cash

for the three months ended March 31, 2023, respectively.

The accompanying condensed consolidated financial

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As shown in the accompanying financial statements,

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

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.

the Company has suffered continuing operating losses, has a working capital deficit of $2,281,084, net loss incurred for the three months

ended March 31, 2024 of $220,618, and has an accumulated deficit of $10,664,215 as of March 31, 2024.

These factors, among others, raise

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.

The accompanying condensed financial statements do not include any adjustments to reflect the

recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company

be unable to continue as a going concern.

Off-Balance Sheet Arrangements

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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