What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-19 compared with 2024-07-12 · 95 added, 74 removed, 174 unchanged (49% of the section changed)

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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 March 31, 2024 and 2023 gives effect to our acquisition of OXYS Corporation (“ OXYS ”)

and Cash Flow for the quarterly periods ended June 30, 2024 and 2023 gives effect to our acquisition of OXYS Corporation (“ OXYS ”)

on July 28, 2017.

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Results of Operations for the Three Months

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 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.

Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023 (Unaudited)

For the three months ended June 30, 2024, we did

not earn any revenues and did not incur related cost of sales.

Our operating expenses were $104,672 which included payroll costs of $50,000,

amortization of intangible assets of $12,341, legal and professional fees of $33,241, and general and administrative expenses of $9,090.

We recorded net other expense of $300,928 consisting of loss of $264,887 due to change in fair market value of derivative liability, loss

on a derivative of $324 on Series C Convertible Preferred Stock, and interest expense of $35,717.

We also recorded $21,163 as preferred

stock dividend on convertible preferred stock for the three months ended June 30, 2024.

As a result, we incurred a net loss of $426,763

for the three months ended June 30, 2024.

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.

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.

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.

Results of Operations for the Six Months

Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023 (Unaudited)

For the six months ended June 30, 2024, we earned

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

Our operating expenses were $171,354 which included payroll costs of

$100,518, amortization of intangible assets of $24,682, legal and professional fees of $45,046, and general and administrative expenses

We recorded net other expense of $436,039 consisting of loss of $346,126 due to change in fair market value of derivative liability,

gain on a derivative of $27,833 on Series C Convertible Preferred Stock, and interest expense of $117,746.

We also recorded $40,363 as

preferred stock dividend on convertible preferred stock for the six months ended June 30, 2024.

As a result, we incurred a net loss of

$647,381 for the six months ended June 30, 2024.

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.

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.

No revenues were earned in Q2 2024 and, thus,

revenues were substantially less than the same period in 2023.

Revenue growth for the rest of 2024 will be challenging given the difficulty

in raising additional capital to fuel sales and drive 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.

Additional prospects with our current DOT state and DOT contacts in two other northeast states continue to be pursued but may not convert to contracts for another 10-12 months.

Projects with local municipalities in our current northeast state also continue to be prospected and may convert to contracts before the end of 2024, as they are based on potential state grants and not dependent on state or municipal budget cycles.

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 provided.

The customer 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.

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

Despite these positive factors, we continue to

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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%).

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,

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

Liquidity and Capital Resources for the

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023 (Unaudited)

At June 30, 2024, we reported a cash balance of

$8,262 as a result of an increase of $7,618 from $644 cash balance at December 31, 2023.

This increase was primarily as a result of net

cash of $17,600 provided by financing activities.

___________________

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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.

Net cash flows provided by operating activities

for the six months ended June 30, 2024 was $9,982, primarily attributed to the net loss of $647,381, amortization of intangible assets

of $24,682, and net increase in operating assets and liabilities of $612,717.

The Company recorded changes in operating assets and liabilities

primarily attributable to decrease in accounts receivable of $5,460, increase in accounts payable of $41,937, increase in accrued liabilities

of $90,084, increase in derivative liabilities of $407,117, increase in shares payable to related parties of $1,148, and increase in salaries

payable to related parties of $66,971.

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 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.

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.

Investing Activities

Net cash used in investing

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

Net cash used in investing activities for the

six months ended June 30, 2024 and 2023 was $0.

Financing Activities

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.

Net cash provided by financing activities for

the six months ended June 30, 2024 was $17,600 due to cash received of $20,000 from equity financing of convertible preferred stock, net

of cash payment of $2,400 in fees paid in connection with the capital raise.

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

As a result of the above activities, the Company

recorded an increase of $7,618 in cash for the six months ended June 30, 2024, and a decrease of $25,440 in cash for the six months ended

June 30, 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 $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.

the Company has suffered continuing operating losses, has a working capital deficit of $2,687,848, net loss incurred for the six months

ended June 30, 2024 of $647,381, and has an accumulated deficit of $11,090,978 as of June 30, 2024.

These factors, among others, raise

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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