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Item 2. Management’s Discussion and Analysis

2021-03-22 compared with 2020-12-21 · 442 added, 347 removed, 23 unchanged (97% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related

notes and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements

relating to our liquidity, and our plans for our business focusing on (i) selling drones and related components, and (ii) cloud-based

analytics, storage, and services for drones.

MANAGEMENT'S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in

conjunction with our unaudited condensed consolidated financial statements and related notes and other financial data included

elsewhere in this Quarterly Report on Form 10-Q.

The Management's Discussion and Analysis contains

forward-looking statements that involve risks and uncertainties, such as statements relating to our liquidity, and our plans for

our business focusing on (i) selling drones and related components, and (ii) cloud-based analytics, storage, and services for

Any statements that are not historical fact are forward-looking statements.

used, the words “believe,”

When used, the words “believe,”

“plan,”

8 unchanged sentences

“should,”

etc.), or similar expressions, identify certain of these forward-looking

These forward-looking statements are subject to risks and uncertainties that could cause actual results or events

to differ materially from those expressed or implied by the forward-looking statements in this Quarterly Report on Form 10-Q.

The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking

statements as a result of many factors.

Investors should also review the risk factors in the Company’s Annual Report on

Form 10-K filed with the SEC on August 13, 2020.

forward-looking statements speak only as of the date on which they are made.

The Company does not undertake any obligation to

update such forward-looking statements to reflect events that occur or circumstances that exist after the date of this Quarterly

Report on Form 10-Q except as required by federal securities law.

of Red Cat Propware, Inc .

May 15, 2019, we closed a Share Exchange Agreement (the “Exchange Agreement”) with Red Cat Propware, Inc., a Nevada

corporation (“Red Cat Propware”) and its then current shareholders (the “Acquisition”) pursuant to which

we acquired all of the issued and outstanding capital stock of Red Cat Propware in exchange for our issuance of:

(i) an aggregate

of 236,000,000 shares of our common stock, and (ii) 2,169,068.0554 shares of Series A Preferred Stock (“Series A Stock”)

to the Red Cat Propware shareholders which constituted approximately 83.33% of our issued an outstanding share capital on a fully-diluted

basis at such time.

With the exception of shares held by our current Chief Executive Officer, Jeffrey Thompson, the convertibility

of shares of Series A Stock is limited such that a holder of Series A Stock may not convert Series A Stock to our common stock

to the extent that the number of shares of common stock to be issued pursuant to such conversion, when aggregated with all other

shares of common stock owned by the holder at such time, would result in the holder beneficially owning more than 4.99% of all

of our outstanding common stock (the “Beneficial Ownership Limit”).

August 1, 2019, we conducted a 1 for 1,200 reverse split of our common stock which resulted in the automatic conversion of all

Series A Stock to common stock, with exception of certain Series A Stock subject to the Beneficial Ownership Limit.

the reverse split, our remaining shares of Series A Stock are convertible to common stock at a ratio of approximately 8.33 shares

of common stock for each share of Series A Stock.

Agreement with Rotor Riot, LLC

December 31, 2019, the Company entered into an Agreement of Merger (the “Merger Agreement”) with Rotor Riot Acquisition

Corp., a wholly owned Ohio subsidiary of the Company (the “Ohio Acquisition Sub”), Rotor Riot, LLC, an Ohio limited

liability company (“Rotor Riot”), and the three members of Rotor Riot (the “Members”).

Pursuant to the

terms of the Merger Agreement, upon consummation of the merger contemplated by the Merger Agreement (the “Merger”),

the Ohio Acquisition Sub merged with and into Rotor Riot, with Rotor Riot continuing as the surviving entity and a wholly owned

subsidiary of the Company.

At the effective time of the Merger, the issued and outstanding membership interests of Rotor Riot

held by the Members, which represented 100% of Rotor Riot’s issued and outstanding membership interests, were converted

into shares of common stock of the Company.

On January 22, 2020, the parties to the Merger Agreement entered into an amendment

to the Merger Agreement, joined in by Rotor Riot Acquisition Corp., a newly formed, wholly owned Delaware subsidiary of the Company

(the “Delaware Acquisition Sub”), pursuant to which, among other things, the Delaware Acquisition Sub replaced the

Ohio Acquisition Sub as the acquisition subsidiary to merge with and into Rotor Riot in connection with the Merger.

Merger was consummated as of January 23, 2020 (the “Effective Date”).

At the closing of the Merger, the Company entered

into a make whole agreement with Rotor Riot, Brains Riding in Tanks, LLC, an Ohio limited liability company and the majority owner

of Rotor Riot (“BRIT”), and Chad Kapper, the Chief Executive Officer and Manager of Rotor Riot, and the Chief Executive

Officer and beneficial owner of 100% of the membership interests of BRIT (“Kapper”), pursuant to which the Company

agreed to pay certain financial obligations of Rotor Riot as of the Effective Date.

This included the issuance to BRIT of a promissory

note (the “BRIT Promissory Note”), as of the Effective Date, in the principal amount of $175,000 (the “Principal

Amount”), at an interest rate of 4.75% per annum (“Interest”), with $3,500 of the Principal Amount to be paid

monthly, and the remaining Principal Amount and any accrued and unpaid Interest to be paid on the earlier of (A) twelve months

from the date of issuance, and (B) the closing of an equity offering by the Company of no less than $3,000,000.

January 23, 2020, the Effective Date, pursuant to the terms of the Merger Agreement, as amended, the Delaware Acquisition Sub

merged with and into Rotor Riot.

Rotor Riot was the surviving corporation in the Merger and, as a result of the Merger, became

a wholly owned subsidiary of the Company.

Riot sells products and services in the drone marketplace, primarily focused on FPV (First Person View), including unmanned aircraft

systems, components, and accessories.

In accordance with the terms of the Merger Agreement, at the closing of the Merger,

each Member of Rotor Riot received its pro rata portion of the total number of shares of the Company’s common stock issued

(A)(i) the purchase price of $3,700,000, minus, (ii) $915,563 (which included certain debt and other obligations of

Rotor Riot and its Chief Executive Officer that the Company agreed to assume (the “Assumed Obligations”) divided by

(B) the volume weighted average price (“VWAP”) of the Company’s common stock for the twenty trading days prior

to the closing date of the Merger.

Based on a share issuance value of $2,784,437 and a VWAP of $1.25445, the Company issued an

aggregate of 2,219,650 shares of common stock to the members of Rotor Riot.

following the Merger, the Company had 19,148,698 shares of common stock issued and outstanding.

In connection with the Merger,

BRIT, received 1,997,684 shares, which represented approximately 10.4% of the Company following the consummation of the Merger.

Merger was intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.

Shark Acquisition

September 30, 2020, the Company entered into a share purchase agreement (“Share Purchase Agreement”) with Greg French

(“French”), the founder and sole shareholder of Fat Shark Holdings, Ltd., (“Fat Shark”), to acquire all

of the issued and outstanding shares of Fat Shark and its subsidiaries for an aggregate purchase price of $7,000,000.

to the Share Purchase Agreement, at the closing on November 6, 2020, $5,750,000 of the purchase price was paid by the Company

by the issuance of (i) 5,227,223 shares of common stock (784,091 of which will be held in escrow for up to 18 months to satisfy

indemnification obligations of Fat Shark and French and certain working capital adjustments) and (i) a senior secured promissory

note in the original principal amount of $1,000,000, subject to a floating charge under Cayman Island law on all of the assets

of Fat Shark and its subsidiaries, and $250,000 in cash.

The indemnification obligations are subject to certain limitations and

survive for two years following closing and require $25,000 in claims before any claim can be asserted.

Share Purchase Agreement also provides that for two years following closing, neither French nor his affiliates may engage in a

business competing with the Company’s drone or FPV goggle business or solicit any of the Company’s customers or suppliers.

Company agreed to register the shares issuable in the transaction under the Securities Act of 1933, as amended (the “Act”),

under certain circumstances and the shares are subject to various restrictions on disposition for a period of two years following

At any time following a private or public offering of debt or equity securities of at least $6 million prior to the three

year anniversary of closing (“Qualified Financing”) (during which offerings French also has the right to sell up to

$1,000,000 of the shares received), French has the right to a single demand registration under the Act of all or a portion of

the shares, unless the aggregate public offering price (before deducting discounts and commissions) is less than $25,000,000.

to the greater of 20% or $1,000,000 of the shares received by French may be sold prior to the 12 month anniversary of the closing

in privately negotiated transactions (provided the purchaser agrees to be subject to the same restrictions on such shares), thereafter

for twelve months, up to 10% of the average daily volume of the common stock during the prior 10 trading days may be sold.

Share Purchase Agreement also requires French to sell a pro-rata amount of his common stock and provides for mandatory participation

in certain sales by the Company.

addition, on November 2, 2020, Fat Shark issued a senior note in the amount of $1,500,000 to French based upon an estimated positive

working capital adjustment to the note of $500,000 and cancelled approximately $950,000 in indebtedness owed by Fat Shark to French.

The note matures on November 1, 2023, subject to partial acceleration and repayment in certain circumstances including from the

sale of certain securities by the Company for cash.

The note is subject to a floating charge under Cayman law on all of the assets

of Holdings and its subsidiaries.

of Operations

Company’s primary business is to provide products, services and solutions to the drone industry.

It operates in three sectors

of the drone industry.

Rotor Riot designs and sells drones and related components.

Rotor Riot is focused on the consumer market

and sells its products through its e-commerce platform operated at www.rotorriot.com.

The Company is also developing software

solutions to provide secure cloud-based analytics, storage and services for the drone industry.

Its initial product candidate

is Dronebox, a blockchain technology that records, stores and analyzes flight data and information from a drone, much like the

“black box”

utilized by the airline industry.

etc.), or similar expressions, identify certain of these forward-looking statements.

These forward-looking statements are subject

to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the

forward-looking statements in this Quarterly Report on Form 10-Q.

The Company’s actual results and the timing of events

could differ materially from those anticipated in these forward-looking statements as a result of many factors.

Investors should

also review the risk factors in the Company’s Annual Report on Form 10-K filed with the SEC on August 13, 2020.

All forward-looking statements speak only

as of the date on which they are made.

The Company does not undertake any obligation to update such forward-looking statements

to reflect events that occur or circumstances that exist after the date of this Quarterly Report on Form 10-Q except as required

by federal securities law.

Recent Developments

Acquisition of Red Cat Propware, Inc .

Effective May 15, 2019, we closed a share

exchange agreement with Red Cat Propware, Inc., a Nevada corporation (“Red Cat Propware”), and its then current shareholders

(the “Acquisition”), pursuant to which we acquired all of the issued and outstanding capital stock of Red Cat Propware

in exchange for our issuance of:

(i) an aggregate of 236,000,000 shares of our common stock, and (ii) 2,169,068.0554 shares of

our Series A Preferred Stock (“Series A Stock”) to the Red Cat Propware shareholders, which constituted approximately

83.33% of our issued an outstanding share capital on a fully-diluted basis at such time.

With the exception of shares held by

our current Chief Executive Officer, Jeffrey Thompson, the convertibility of shares of Series A Stock is limited such that a holder

of Series A Stock may not convert shares of Series A Stock to shares of our common stock to the extent that the number of shares

of common stock to be issued pursuant to such conversion, when aggregated with all other shares of common stock owned by the holder

at such time, would result in the holder beneficially owning more than 4.99% of all of our outstanding common stock (the “Beneficial

Ownership Limit”).

Reverse Stock Split

Effective August 1, 2019, we conducted a 1

for 1,200 reverse split of our common stock which resulted in the automatic conversion of all Series A Stock to common stock,

with exception of certain Series A Stock subject to the Beneficial Ownership Limit.

Following the reverse split, our remaining

shares of Series A Stock are convertible to common stock at a ratio of approximately 8.33 shares of common stock for each share

of Series A Stock.

Rotor Riot Acquisition

On January 23, 2020, pursuant to the terms

of a merger agreement, we acquired Rotor Riot, LLC, and Ohio limited liability company (“Rotor Riot”), in a merger

(the “Merger”) in which our subsidiary merged with and into Rotor Riot, with Rotor Riot being the surviving corporation

in the Merger.

As a result, Rotor Riot became a wholly owned subsidiary of the Company.

Each limited liability company member of Rotor

Riot received a pro rata portion of the total number of shares of the Company’s common stock issued under the merger agreement

(A)(i) the purchase price of $3,700,000, minus, (ii) the aggregate amount of debt and other payables of Rotor Riot,

including those of Brains Riding in Tanks, LLC, an Ohio limited liability company and the majority owner of Rotor Riot (“BRIT”),

and Chad Kapper the principal of BRIT, divided by (B) the volume weighted average price (“VWAP”) of the Company’s

common stock for the twenty trading days prior to the closing date of the Merger.

The aggregate amount of debt and other payables

of Rotor Riot was approximately $915,563, and the VWAP of the Company’s common stock for the twenty trading days prior to

the effective date was $1.25445 per share.

As a result, the Company issued an aggregate of 2,219,650 shares of its common stock.

Pursuant to the terms of a make whole agreement,

as of the effective date, the Company agreed to pay all obligations of Rotor Riot, in the aggregate amount of approximately $915,563.

This included the issuance or a promissory note, in the principal amount of $175,000 to BRIT.

The note bears interest at a rate

of 4.75% per annum, requires monthly installment payments in the amount of $3,500, and matures on the earlier of twelve months

from the date of issuance, and the closing of an equity offering by the Company in amount of at least $3,000,000.

Fat Shark Acquisition

On September 30, 2020, the Company entered

into a share purchase agreement (“Share Purchase Agreement”) with Greg French (“French”), the founder

and sole shareholder of Fat Shark Holdings (“Fat Shark”), to acquire all of the issued and outstanding shares of Fat

Shark and its subsidiaries.

The transaction closed on November 2, 2020 and was valued at $8,354,076 based on (i) the issuance

of 5,227,273 shares of common stock with a value of $6,351,076 on the date of closing, (ii) a senior secured promissory note in

the original principal amount of $1,753,000 which matures on November 1, 2023, and (iii) a cash payment of $250,000.

Purchase Agreement includes indemnification provisions, a two year non-compete agreement, and registration rights for the shares

issued in the transaction.

We agreed to register the shares issuable

in the transaction under the Securities Act of 1933, as amended (the “Securities Act”) under certain circumstances.

At any time following a “Qualified Financing”, defined as a private placement or public offering of debt, equity,

or convertible securities in one or more transaction whereby on a cumulative basis on or prior to the three-year anniversary of

closing, a minimum of $6,000,000 of gross proceeds has been raised by us for our own account (during which offerings Mr.

also has the right to sell up to $1,000,000 of the shares received).

French has the right to a single demand registration

under the Securities Act of all or a portion of the shares, unless our aggregate public offering price (before deducting discounts

and commissions) is less than $25,000,000.

French has agreed to certain restrictions

on the disposition of the shares received during for a period of two years following closing (the “Lock-Up Agreement”).

Under the Lock-Up Agreement, a limit of up to the greater of 20% or $1,000,000 of the shares received may be sold prior to the

12-month anniversary of the closing in privately negotiated transactions (provided the purchaser enters into a joinder agreement

and agrees to be subject to the same restrictions on such shares).

Following the first year after closing, up to 10% of the average

daily volume of the common stock during the prior 10 trading days may be sold.

The Lock-Up Agreement also requires Mr.

sell a pro-rata amount of his common stock and provides for mandatory participation in certain sales by our large shareholders.

Skypersonic Acquisition

On February 11, 2021, the Company and Red

Cat Skypersonic, Inc., a Nevada corporation (“Acquisition Sub”), entered into Share Purchase and Liquidity Event Agreements

(the “Skypersonic Agreements”) with Giuseppe Santangelo the founder and majority shareholder of Skypersonic, Inc.,

a Michigan corporation (“Skypersonic”) and the holders of common stock and SAFE agreements representing 97.46% of

Skypersonic (the “Sellers”), pursuant to which, subject to the satisfaction of certain closing conditions, Acquisition

Sub will acquire all of the issued and outstanding share capital of Skypersonic in consideration for an aggregate of $3,000,000

in shares (the “Share Consideration”) of Company’s common stock, at an agreed upon value based upon the VWAP

of the Company’s common stock at closing of the transaction (the “Skypersonic Transaction”).

Fifty (50%) percent

of the Share Consideration (the “Escrow Shares”) is required to be deposited in an escrow account pursuant to the

Agreements for a period of twelve (12) months

as security for indemnification obligations and any purchase price adjustments due to working capital deficiencies and any other

claims or expenses arising under the Skypersonic Agreements.

Under the Skypersonic Agreements, closing date working capital deficits

in excess of $300,000 shall result in a reduction of the Share Consideration on a dollar of dollar basis.

The Company agreed that

in the event that within 12 months following closing of the Acquisition, the Company issues common stock for a price per share

less than $2.50 per share in a public offering of equity or convertible securities in which the Company raises a minimum of $2,000,000

(“Qualified Offering”), the Company shall issue Sellers additional shares of common stock equal to the difference

between the number of shares issued and the quotient of the purchase price divided by the price of securities sold in the Qualified

Santangelo and certain principal shareholders have agreed to indemnification obligations, on a pro-rata basis, subject

to certain limitations, which shall survive for a period of eighteen (18) months following closing, and which include a basket

amount of $25,000 before any claim can be asserted and a cap equal to the value of the Escrow Shares or the Share Consideration.

For a period of three (3) years following

Santangelo shall not engage in a business competing with or providing products, services or solutions to the drone

industry, first person view (“FPV”) business, navigation and software solutions that provide analytics, storage or

services for or in conjunction with the drone industry.

The closing of the Skypersonic Transaction

is subject to customary closing conditions and is expected to close on or before May 14, 2021.

The Company does not deem the Skypersonic

financial condition and results of operations to be material to the overall financial condition and results of operations of the

Company on a consolidated basis.

On February 15, 2021.

the Company’s

Fat Shark subsidiary agreed to provide a short-term bridge loan to Skypersonic in the amount of $75,000 under a Senior Secured

Promissory Note, due May 14, 2021 (the “Bridge Loan”).

Advances under the Bridge Loan accrue interest at a rate of

six (6%) percent per annum.

The Bridge Loan is secured by shares of Skypersonic common stock pledged as collateral.

Plan of Operations

The Company’s primary business is to

provide products, services and solutions to the drone industry.

It operates in three sectors of the drone industry.

designs and sells drones and related components.

Rotor Riot is focused on the consumer market and sells its products through its

e-commerce platform operated at www.rotorriot.com.

The Company is also developing software solutions to provide secure cloud-based

analytics, storage and services for the drone industry.

Its initial product candidate is Dronebox, a blockchain technology that

records, stores and analyzes flight data and information from a drone, much like the “black box”

utilized by the airline

The Company plans to offer Dronebox as a Software-as-a-Service platform.

Company closed the acquisition of Fat Shark Holdings (“Fat Shark”) on November 6, 2020.

Fat Shark is a leading

provider of headsets and goggles for professional FPV (First Person View) racers and drone pilots and has an estimated 85%

share of its market.

The Company expects that Fat Shark will generate a majority of its revenue over the next 12 months.

acquisition continues the Company’s efforts to become a fully-integrated drone business with a strong supply chain, as

well as a provider of software solutions for the drone industry.

of Operations

Months Ended October 31, 2020 and October, 2019

the three months ended October 31, 2020 (or the “2020 period”), we generated revenues totaling $427,807 compared to

zero revenues during the three months ended July 31, 2019 (or the “2019 period”).

On January 23, 2020, we completed

a merger with Rotor Riot which sells drone technology on its e*commerce site located at www.rotorriot.com.

The sales reported

in the 2020 period represent those generated on the e*commerce site during the three months ended October 31, 2020.

merger with Rotor Riot, we did not have any revenue generating activities.

the three months ended October 31, 2020, we incurred operations expense of $122,697 compared to zero during the 2019 period.

incurred during the 2020 period related to the core operations of Rotor Riot which began in January 2020 following our merger

with Rotor Riot.

During the three months ended October 31, 2020, we incurred research and development expenses totaling $96,559

compared to $76,724 for the three months ended October 31, 2019 resulting in a increase of $19,835, or 26%.

The increase relates

to payroll associated with employees hired from Rotor Riot who are working on the research and development of new drone technologies.

During the three months ended October 31, 2020, we incurred sales and marketing expenses of $24,679 compared to zero during the

three months ended October 31, 2019.

Costs incurred in the 2020 period related to the Rotor Riot business and included sales commissions

for referrals.

During the three months ended October 31, 2020, we incurred general and administrative expenses totaling $345,007

compared to $139,397 for the three months ended October 31, 2019 resulting in an increase of $205,610, or 148%.

Stock based compensation

costs included in general and administrative expenses totaled $94,629 in the 2020 period compared to zero in the 2019 period.

In addition, professional services costs were significantly higher in the 2020 period because the Company is now a commercial

enterprise with more complex operations compared to the 2019 period when the Company was in a developmental stage.

The Company closed the acquisition of Fat

Shark on November 2, 2020.

Fat Shark is a leading provider of headsets and goggles for professional FPV racers and drone pilots

and has an estimated 85% share of its market.

The Company expects that Fat Shark will generate a majority of its revenue over

the next 12 months.

This acquisition continues the Company’s efforts to become a fully-integrated drone business with a

strong supply chain, as well as a provider of software solutions for the drone industry.

Results of Operations

Operating results for the three months ended

January 31, 2021 are significantly different than the three months ended January 31, 2020.

This directly relates to the acquisition

of Rotor Riot in January 2020 and Fat Shark in November 2020.

Three Months Ended January 31, 2021

During the three months ended January 31,

2021, we generated revenues totaling $2,145,988 compared to $34,538 during the three months ended January 31, 2020 representing

an increase of more than 100 percent.

During calendar 2020, we acquired two drone technology companies, Rotor Riot and Fat Shark.

Prior to these transactions, we did not have any revenue generating activities.

During the three months ended January 31, 2021,

Rotor Riot and Fat Shark generated approximately 28% and 72% of our Revenues, respectively.

We expect that the majority of our

Revenues will continue to be generated by Fat Shark for at least the next 12 months.

Cost of Goods Sold

During the three months ended January 31,

2021, we incurred cost of goods sold of $1,576,265 compared to $16,234 during the three months ended January 31, 2020.

presented are not comparable as the 2020 period included one week of revenues for Rotor Riot as compared to the 2021 period which

included a full quarter of revenues for both Rotor Riot and Fat Shark.

During the three months ended January 31, 2021, gross margin was $569,723 compared to $18,304 during the three months ended January

The periods presented are not comparable as the 2020 period included one week of revenues for Rotor Riot as compared

to the 2021 period which included a full quarter of revenues for both Rotor Riot and Fat Shark.

Operating Expenses

During the three months ended January 31,

2021, we incurred operating expense of $1,716,576 compared to $456,923 during the three months ended January 31, 2020, representing

an increase of $1,259,653, or 276%.

The increase is directly related to the acquisitions of Rotor Riot in January 2020 and Fat

Shark in November 2020.

During the three months ended January 31,

2021, we incurred research and development expenses totaling $167,968 compared to $94,979 for the three months ended January

31, 2020, resulting in an increase of $72,989, or 77%.

The increase relates to payroll associated with employees hired from

Rotor Riot and Fat Shark who are working on the research and development of new drone technologies.

During the three months ended January 31,

2021, we incurred sales and marketing expenses of $48,719 compared to zero during the three months ended January 31, 2020.

incurred in the three months ended January 31, 2021 relate to employees hired from Rotor Riot and Fat Shark, and also include

sales commissions for referrals.

During the three months ended January 31,

2021, we incurred general and administrative expenses totaling $499,155 compared to $212,482 for the three months ended January

31, 2020 resulting in an increase of $286,673, or 135%.

In addition, professional services costs were significantly higher in the

three months ended January 31, 2021, because the Company is now a commercial enterprise with more complex operations compared

to the three months ended January 31, 2020, when the Company was primarily still in a developmental stage.

the three months ended January 31, 2021, we incurred stock based compensation expenses totaling $854,195 compared to $149,462 during

the three months ended January 31, 2020, resulting in an increase of $704,733 or greater than 100%.

Other Expense

Other expense totaled $232,390 during the three

months ended October 31, 2020 compared to zero during the three months ended October 31, 2019.

The expense incurred during the

2020 period related to the Derivative Liability recorded in connection with the Company’s issuance of Convertible debentures

and warrants in October 2020.

There were no such transactions during the 2019 period.

Loss during the three months ended October 31, 2020 totaled $722,281 compared to a Net Loss of $216,121 during the three months

ended October 31, 2019, representing an increase of $506,160, or 234%.

Operating expenses totaled $588,942 during the 2020 period

compared to $216,121 during the 2019 period, representing an increase of $372,821, or 172%.

This increase is attributable to the

merger with Rotor Riot in January 2020 and costs associated with operating that business.

Other expense totaled $232,390 during

the three months ended October 31, 2020 compared to zero during the three months ended October 31, 2019.

The expense incurred

during the 2020 period related to the Derivative Liability recorded in connection with the Company’s issuance of Convertible

debentures and warrants in October 2020.

These increases were partially offset by a positive gross margin of $99,051 from operations

of the Rotor Riot e*commerce site during the 2020 period.

Six Months Ended October 31, 2020 and

October, 2019

During the six months ended October 31, 2020

(or the “2020 period”), we generated revenues totaling $976,089 compared to zero revenues during the six months ended

July 31, 2019 (or the “2019 period”).

On January 23, 2020, we completed a merger with Rotor Riot which sells drone

technology on its e*commerce site located at www.rotorriot.com.

The sales reported in the 2020 period represent those generated

on the e*commerce site during the six months ended October 31, 2020.

Prior to the merger with Rotor Riot, we did not have any revenue

generating activities.

Other expense totaled $7,837,407 during the

three months ended January 31, 2021, compared to $0 during the three months ended January 31, 2020.

The expense incurred during

the three months ended January 31, 2021 related to the Derivative Liability recorded in connection with the Company’s issuance

of convertible debentures and warrants in October 2020 and January 2021.

The significance of the expense is directly correlated

to an increase in the Company’s stock price following the issuance of the convertible debentures and warrants.

no such transactions during the three months ended January 31, 2020.

Net Loss during the three months ended January

31, 2021 totaled $8,984,260 compared to a Net Loss of $438,619 during the three months ended January 31, 2020, representing an

increase of $8,545,641, or more than 100%.

Approximately 92% of the increase in Net Loss is directly related to derivative

expenses incurred in connection with the issuance of convertible debentures in October 2020 and January 2021.

These securities

were not outstanding during the three month period ended January 31, 2020.

The remaining 8% of the increase is related to

the expansion of the Company’s commercial activities including the hiring of personnel formerly employed with Rotor Riot

and Fat Shark.

Nine Months Ended January 31, 2021 and

During the nine months ended January 31, 2021,

we generated revenues totaling $3,122,077 compared to $34,538 revenues during the nine months ended January 31, 2020, representing

an increase of more than 100 percent.

During calendar 2020, we acquired two drone technology companies, Rotor Riot and Fat Shark.

Prior to these transactions, we did not have any revenue generating activities.

During the nine months ended January 31, 2021,

Rotor Riot and Fat Shark generated approximately 51% and 49% of our Revenues, respectively.

Cost of Good Sold

During the nine months ended January 31, 2021,

we incurred cost of goods sold of $2,351,153 compared to $16,234 during the nine months ended January 31, 2020.

During the nine months ended January 31, 2021, gross margin was $770,924 compared to $18,304 during the nine months ended January

Gross margin, as a percentage of revenues, was 25% during the 2021 period as compared to 53% during the 2020 period.

expect gross margins to range between 25% to 30%.

Operating Expenses

During the six months ended October 31, 2020,

we incurred operations expense of $211,730 compared to zero during the 2019 period.

Expenses incurred during the 2020 period related

to the core operations of Rotor Riot which began in January 2020 following our merger with Rotor Riot.

During the six months ended

October 31, 2020, we incurred research and development expenses totaling $193,814 compared to $262,419 for the six months ended

October 31, 2019 resulting in a decrease of $68,605, or 26%.

During the first half of the 2019 period, personnel resources were

substantially dedicated to the research and development of drone technologies and software.

These efforts have decreased, both

in absolute dollars and relative to the Company’s overall allocation of its personnel resources, during the 2020 period as

the Company’s focus has transitioned to operating a commercial enterprise.

During the six months ended October 31, 2020,

we incurred sales and marketing expenses of $48,815 compared to zero during the three months ended October 31, 2019.

During the nine months ended January 31, 2021,

we incurred operating expense of $2,790,912 compared to $994,546 during the nine months ended January 31, 2020.

The increase is

directly related to the acquisitions of Rotor Riot in January 2020 and Fat Shark in November 2020.

During the nine months ended January 31, 2021,

we incurred research and development expenses totaling $341,892 compared to $354,146 for the nine months ended January 31, 2020

resulting in a decrease of $12,254, or 3%.

The increase relates to payroll associated with employees hired from Rotor Riot

and Fat Shark who are working on the research and development of new drone technologies.

During the nine months ended January 31, 2021,

we incurred sales and marketing expenses of $97,534 compared to $0 during the nine months ended January 31, 2020.

Costs incurred

in the 2020 period primarily related to the Rotor Riot business and included sales commissions for referrals.

During the six months

ended October 31, 2020, we incurred general and administrative expenses totaling $619,977 compared to $275,204 for the six months

ended October 31, 2019 resulting in an increase of $344,773, or 125%.

Stock based compensation costs included in general and administrative

expenses totaled $189,258 in the 2020 period compared to zero in the 2019 period.

In addition, professional services costs were

significantly higher in the 2020 period because the Company is now a commercial enterprise with more complex operations compared

to the 2019 period when the Company was in a developmental stage.

in the nine months ended January 31, relate to employees hired from Rotor Riot and Fat Shark, and also include sales commissions

for referrals.

During the nine months ended January 31, 2021,

we incurred general and administrative expenses totaling $929,874 compared to $478,871 for the nine months ended January 31,

2020 resulting in an increase of $451,003, or 94%.

professional services costs were significantly higher in the nine months ended January 31, 2021 because the Company is now a commercial

enterprise with more complex operations compared to the nine months ended January 31, 2020 when the Company was in a developmental

the nine months ended January 31, 2021, we incurred stock compensation expenses of $1,068,317 compared to $161,529 during the nine

months ended January 31, 2020 resulting in an increase of $906,788 or greater than 100%.

Other Expense

Other expense totaled $232,390 during the six

months ended October 31, 2020 compared to zero during the six months ended October 31, 2019.

Other expense totaled $8,069,797 during the

nine months ended January 31, 2021 compared to $0 during the nine months ended January 31, 2020.

The expense incurred during the

period related to the Derivative Liability recorded in connection with the Company’s issuance of Convertible debentures and

warrants in October 2020.

There were no such transactions during the 2019 period.

Net Loss during the six months ended

October 31, 2020 totaled $1,105,525 compared to a Net Loss of $537,623 during the six months ended October 31, 2019, representing

an increase of $567,902, or 106%.

Operating expenses totaled $1,074,336 during the 2020 period compared to $537,623 during the

2019 period, representing an increase of $536,713, or 100%.

This increase is attributable to the merger with Rotor Riot in January

2020 and costs associated with operating that business.

Other expense totaled $232,390 during the six months ended October 31,

2020 compared to zero during the six months ended October 31, 2019.

The expense incurred during the 2020 period related to the

Derivative Liability recorded in connection with the Company’s issuance of Convertible debentures and warrants in October

These increases were partially offset by a positive gross margin of $201,201 from operations of the Rotor Riot e*commerce

site during the 2020 period.

cash used in operating activities was $568,452 during the three months ended October 31, 2020 compared to net cash used in

operating activities of $415,848 during the three months ended October 31, 2019 representing an increase of $152,604, or 37%.

Net cash used in operations, net of non-cash expenses associated with the Derivative Liability and stock based compensation,

totaled $640,612 in the 2020 period compared to $525,556 in the 2019 period, resulting in an increase of 115,056, or 22%.

increase primarily related to higher net costs associated with becoming a commercial enterprise through the merger with Rotor

Riot in January 2020.

Net cash provided through changes in operating assets and liabilities totaled $72,160 during the three

months ended October 31, 2020 compared to $109,708 during the three months ended October 31, 2019, representing a decrease of

nine months ended January 31, 2021 related to the Derivative Liability recorded in connection with the Company’s issuance

of Convertible Debentures and warrants in October 2020 and January 2021.

There were no such transactions during the nine months

ended January 31, 2020.

The significance of the expense is directly correlated to an increase in the Company’s stock price

following the issuance of the convertible debentures and warrants.

There were no such transactions during the three months ended

January 31, 2020

Net Loss during the nine months ended January

31, 2021 totaled $10,089,785 compared to a Net Loss of $976,242 during the nine months ended January 31, 2020, representing an

increase of $9,113,543, or more than 100%.

Approximately 88% of the increase in Net Loss is directly related to derivative expenses

incurred in connection with the issuance of convertible debentures in October 2020 and January 2021.

These securities were

not outstanding during the three month period ended January 31, 2020.

The remaining 12% of the increase is related to the

expansion of the Company’s commercial activities including the hiring of personnel formerly employed with Rotor Riot and

Operating Activities

Net cash used in operating activities was

$917,016 during the nine months ended January 31, 2021 compared to net cash used in operating activities of $704,651 during

the nine months ended January 31, 2020 representing an increase of $212,365, or 30%.

Net cash used in operations, net of

non-cash expenses associated with the Derivative Liability and stock-based compensation, totaled $872,484 in the nine months

ended January 31, 2021 compared to $814,713 in the nine months ended January 31, 2020, resulting an increase of $57,771, or

The increase primarily related to higher net costs associated with becoming a commercial enterprise through the merger

with Rotor Riot in January 2020 and the acquisition of Fat Shark in November 2020.

Net cash used in changes in operating

assets and liabilities totaled $44,532 during the nine months ended January 31, 2021 compared to net cash provided by

operating activities of $110,062 during the nine months ended January 31, 2020, representing a decrease in cash provided of

$154,594, or 140%.

Changes in operating assets and liabilities can fluctuate significantly from period to period depending upon

the timing and level of multiple factors, including inventory purchases and vendor payments.

cash was provided by investing activities during the three months ended October 31, 2020 compared to $24,704 during the three months

ended October 31, 2019.

The Company acquired $24,704 of cash in connection with an acquisition completed in the 2019 period.

Changes in operating assets and liabilities can fluctuate significantly from period to period depending

upon the timing and level of multiple factors, including inventory purchases and vendor payments.

Investing Activities

Net cash used in investing activities was

$48,368 during the nine months ended January 31, 2021 compared to cash provided by investing activities of $46,327 during the

nine months ended January 31, 2020.

The amounts for both periods related to acquisitions which can vary from one transaction to

Financing Activities

Net cash provided by financing activities

totaled $811,849 during the six months ended October 31, 2020 compared to $152,239 during the six months ended October 31,

totaled $1,200,368 during the nine months ended January 31, 2021 compared to $597,749 during the nine months ended January 31,

2020, representing an increase of $602,619, or 101%.

Financing activities can vary, in nature and amount, from period to

During the 2020 period, net cash of $580,000 and $235,756 was provided through the issuance of convertible debentures

and notes payable, respectively.

During the 2019 period, net cash of $152,239 was provided through the exercise of a

and Capital Resources

of October 31, 2020, we had current assets totaling $650,551, including cash of $480,065 and inventory of $170,486.

liabilities as of October 31, 2020 totaled $1,989,456 including derivative liability of $812,390, notes payable totaling

$354,527, accounts payable totaling $355,092 and amounts due to a related party of $329,777.

Our net working capital as of

October 31, 2020 was negative $1,388,905.

have only recently begun generating revenues and have reported net losses since our inception.

To date, we have funded our operations

through private offerings of common stock primarily from individual private investors.

We do not have sufficient cash resources

to meet our working capital needs for the next 12 months and will require additional capital in order to execute our business

Financing activities can vary, in nature and amount, from period to period.

During the nine months ended January 31, 2021, net cash of $1,080,000 and $58,508 was provided through the issuance of convertible

debentures and notes payable, respectively.

During the nine months ended January 31, 2020, net cash of $152,239 and $450,000 was

provided through the exercise of a warrant and sale of convertible debentures, respectively.

Liquidity and Capital Resources

As of January 31, 2021, we had current assets

totaling $1,997,948, including cash of $471,652 and inventory of $708,017.

Current liabilities as of January 31, 2021 totaled

$10,896,745 including derivative liability of $9,144,226, notes payable totaling $177,279, accounts payable totaling $873,312

and amounts due to a related party of $395,544.

Our net working capital as of January 31, 2021 was negative $8,898,797.

We have only recently begun generating revenues

and have reported net losses since our inception.

To date, we have funded our operations through private offerings of common stock

primarily from individual private investors.

We do not have sufficient cash resources to meet our working capital needs for the

next 12 months and will require additional capital in order to execute our business plan.

2019 Convertible Note Offering

November 2019, we issued a convertible note in the principal amount of $300,000 to one accredited investor and in December 2019

we issued a convertible note in the principal amount of $125,000 to a director and a convertible note in the principal amount

of $25,000 to our chief executive officer.

(collectively, the “Notes”).

The Notes have a two-year term and bear interest

at a rate of 12%.

Interest on the Notes may be paid in cash or in shares of common stock of the Company at the Conversion Price

(as defined below).

The Notes are convertible into shares of common stock at the holder’s sole discretion as follows:

prior to consummating an equity financing which generates gross proceeds of not less than $3,000,000 (a “Qualified Offering”),

then at the 30 day volume weighted average of the closing price of a share of our common stock as listed or quoted on the market

in which the shares are then traded or listed, or (B) after we have consummated a Qualified Offering, at 40% of the price per

share of common stock sold in the Qualified Offering (the “Conversion Price”) .

We may, upon 10 business days prior

notice, pre-pay the Notes, including all accrued interest, in whole or in part, provided that any such prepayment prior to the

one-year anniversary of the Note issuance will be at a price equal to 112% of the then outstanding original principal amount.

Upon an event of default, as described in the Notes, the outstanding principal and interest will become immediately due and payable.

Additionally, under the Note, unless waived by the holder, the holder is not be entitled to convert the Note if such conversion

would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of common stock

of the Company on such date.

In November 2019, we issued a convertible

note in the principal amount of $300,000 to one accredited investor and in December 2019 we issued a convertible note in the principal

amount of $125,000 to a director and a convertible note in the principal amount of $25,000 to our chief executive officer (collectively,

the “2019 Notes”).

The 2019 Notes have a two-year term and bear interest at a rate of 12%.

Interest on the 2019 Notes

may be paid in cash or in shares of common stock of the Company at the 2019 Note Conversion Price (as defined below).

Notes are convertible into shares of common stock at the holder’s sole discretion as follows:

(A) prior to consummating

an equity financing which generates gross proceeds of not less than $3,000,000 (in this case, a “Qualified Offering”),

then at the 30-day VWAP of a share of our common stock as listed or quoted on the market in which the shares are then traded or

listed, or (B) after we have consummated a Qualified Offering, at 40% of the price per share of common stock sold in the Qualified

Offering (in this case, the “Conversion Price”).

We may, upon 10 business days prior notice, pre-pay the 2019 Notes,

including all accrued interest, in whole or in part, provided that any such prepayment prior to the one-year anniversary of the

2019 Note issuance will be at a price equal to 112% of the then outstanding original principal amount.

Upon an event of default,

as described in the Notes, the outstanding principal and interest will become immediately due and payable.

Additionally, under

the 2019 Note, unless waived by the holder, the holder is not be entitled to convert the 2019 Note if such conversion would result

in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of common stock of the Company

on such date.

2020 Convertible Note Offering

October 5, 2020, the Company closed a private offering of convertible promissory notes in the aggregate principal amount of $600,000

and issued five-year warrants to purchase an aggregate of 399,996 shares of common stock.

The notes accrue interest at the rate

of 12% per annum and are payable two years from the date of issuance.

The notes are convertible into common stock at a conversion

price of $1.00 per share or, upon the consummation of an offering of common stock resulting in the listing for trading on the

NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange

at a price equal to 75% of the price of the securities sold in such offering (a “Qualified Offering”).

The notes also

contain protection from dilution in the event of a lower priced issuance.

an event of default, as described in the note, the conversion price will equal the lower of (i) the thirty day volume weighted

average of the closing price of the Company’s common stock if the conversion occurs prior to a Qualified Offering, or (ii)

65% multiplied by the lowest closing price of the common stock during the twenty consecutive trading day period immediately prior

to the conversion.

Company may prepay all or any portion of the note, without penalty or premium, upon at least ten business days’

to the noteholder.

Upon issuance by the Company of a security, or amendment to a security, that the noteholder reasonably believes

is more favorable, such term, at noteholder’s option, will become a part of the note, except for certain exempt issuances.

No conversions under the note will be effected that will result in the noteholder, together with any affiliate, beneficially owning

in excess of 9.99% of the Company’s outstanding common stock immediately after giving effect to such conversion.

Warrants are exercisable at a price equal to the lower of (i) $1.50 per share or (ii) if a Qualified Offering occurs, at a 25%

discount to the price per share of the common stock offered in such Qualified Offering.

The number of shares of common stock for

which the Warrant is exercisable is subject to adjustment in the event of a stock split or dividend, and similar event or certain

corporate events such reorganizations and mergers.

In the event of a reorganization or reclassification of capital stock, the

consolidation or merger, or the sale or other disposition of all or substantially all the property, assets, business, and goodwill

of the Company, the warrant holder will be entitled to purchase the kind and amount of shares of capital stock which the Warrant

entitled the warrant holder to purchase immediately prior to such event.

On October 5, 2020, the Company closed a private

offering of convertible promissory notes in the aggregate principal amount of $600,000 (the “2020 Notes”) and issued

five-year warrants to purchase an aggregate of 399,998 shares of common stock (the “2020 Warrants”).

The 2020 Notes

accrue interest at the rate of 12% per annum and are payable two years from the date of issuance.

The 2020 Notes are convertible

into common stock at a conversion price of $1.00 per share or, upon the consummation of an offering of common stock resulting

in the listing for trading on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select

Market or the New York Stock Exchange at a price equal to 75% of the price of the securities sold in such offering (in this case,

a “Qualified Offering”).

The 2020 Notes also contain protection from dilution in the event of a lower priced issuance.

Upon an event of default, as described in

the 2020 Note, the conversion price will equal the lower of (i) the thirty-day volume weighted average of the closing price of

the Company’s common stock if the conversion occurs prior to a Qualified Offering, or (ii) 65% multiplied by the lowest

closing price of the common stock during the twenty consecutive trading day period immediately prior to the conversion.

The Company may prepay all or any portion

of the 2020 Note, without penalty or premium, upon at least ten business days’

prior notice to the noteholder.

Upon issuance

by the Company of a security, or amendment to a security, that the noteholder reasonably believes is more favorable, such term,

at noteholder’s option, will become a part of the 2020 Note, except for certain exempt issuances.

No conversions under the

2020 Note will be effected that will result in the noteholder, together with any affiliate, beneficially owning in excess of 9.99%

of the Company’s outstanding common stock immediately after giving effect to such conversion.

The 2020 Warrants are exercisable at a price

equal to the lower of (i) $1.50 per share or (ii) if a Qualified Offering occurs, at a 25% discount to the price per share of

the common stock offered in such Qualified Offering.

The number of shares of common stock for which the 2020 Warrant is exercisable

is subject to adjustment in the event of a stock split or dividend, and similar event or certain corporate events such reorganizations

In the event of a reorganization or reclassification of capital stock, the consolidation or merger, or the sale or

other disposition of all or substantially all the property, assets, business, and goodwill of the Company, the warrant holder

will be entitled to purchase the kind and amount of shares of capital stock which the 2020 Warrant entitled the warrant holder

to purchase immediately prior to such event.

The 2020 Warrants also include piggyback registration rights.

we are able to sustain operations through the sale of products and services, we will continue to fund operations through equity

and/or debt transactions.

We can provide no assurance that the financing described above will be sufficient to fund our operations

until we are able to sustain operations through the sale of products and services.

In addition, there can be no assurance that

such additional financing, if required, will be available to us on acceptable terms, or at all.

have only recently begun generating revenues and have reported net losses since our inception.

The success of our business plan

during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our operating costs and/or

upon obtaining additional financing.

The report from our independent registered public accounting firm for the fiscal year ended

April 30, 2020 includes an explanatory paragraph stating the Company has recurring net losses from operations, negative operating

cash flows, does not yet generate revenue from operations and will need additional working capital for ongoing operations.

factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.

If we are unable to

obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely

affected and we may be unable to continue as a going concern.

are presently seeking to address these going concerns through efforts to raise capital through the public markets, release our

first commercial product and pursue acquisitions of complementary, revenue generating companies which are accretive to our operating

We can provide no assurance that any of these efforts will be successful or, that even if successful, that they will

alleviate doubts about our ability to continue as a going concern.

Accounting Policies and Estimates

financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis.

The preparation

of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting periods.

regularly evaluate the accounting policies and estimates that we use to prepare our financial statements.

A complete summary of

these policies is included in the notes to our financial statements.

In general, management’s estimates are based on historical

experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable

under the facts and circumstances.

Actual results could differ from those estimates made by management.

Sheet Arrangements

have no off-balance sheet arrangements.

Issued Accounting Pronouncements

Company has implemented all new accounting pronouncements that are in effect.

These pronouncements did not have any material impact

on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting

pronouncements that have been issued that might have a material impact on its financial position or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are a smaller reporting company and are not required to provide this information.

Until we are able to sustain operations through

the sale of products and services, we will continue to fund operations through equity and/or debt transactions.

We can provide

no assurance that the financing described above will be sufficient to fund our operations until we are able to sustain operations

through the sale of products and services.

In addition, there can be no assurance that such additional financing, if required,

will be available to us on acceptable terms, or at all.

2021 Convertible Note Offering

On January 27, 2021, the Company closed of

a private offering of Units consisting of convertible promissory notes in the aggregate principal amount of $500,000 (the “2021

Notes”) and issued five-year warrants to purchase an aggregate of 675,000 shares of common stock (the “2021 Warrants”)

to six accredited investors for total offering proceeds of $500,000.

The 2012 Notes accrue interest at the rate of 12% per annum

and are payable two years from the date of issuance.

The 2021 Notes are convertible into common

stock at a conversion price of $1.00 per share or, upon the consummation of an offering of common stock resulting in the listing

for trading on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the

New York Stock Exchange at a price equal to 75% of the price of the securities sold in such offering (in this case, a “Qualified

Offering”).

The 2021 Notes may be converted at any time

in the discretion of the holder prior to a Qualified Offering and automatically convert upon the consummation of a Qualified Offering,

provided the note may not convert if as a result of such conversion the holder together with its affiliates would beneficially

own in excess of 9.99% of the shares of our common stock outstanding after giving effect to such conversion.

If an event of default occurs, the conversion

price will be reduced to the lower of (i) the thirty-day volume weighted average of the closing price per share of our common

stock, if prior to a Qualified Offering, or (ii) 65% of the lowest closing price of the common stock during the twenty consecutive

trading day period immediately preceding the date of the conversion.

The 2021 Notes also contain protection from

dilution in the event of a lower priced issuance and adjustments if securities are issued with more favorable terms.

The 2021 Warrants are exercisable at a price

equal to the lower of (i) $1.50, or (ii) a 25% discount to the price per share of common stock offered in the Qualified Offering

and, if there is no effective registration statement for the resale the shares subject to the warrant, the warrant may be exercised

on a cashless basis.

Going Concern

We only began generating revenues in January

2020 and have reported net losses since our inception.

We expect to report net losses for at least the next twelve months.

success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover

our operating costs and/or upon obtaining additional financing.

The report from our independent registered public accounting firm

for the fiscal year ended April 30, 2020 includes an explanatory paragraph stating the Company has recurring net losses from operations,

negative operating cash flows, does not yet generate revenue from operations and will need additional working capital for ongoing

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.

we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially

and adversely affected and we may be unable to continue as a going concern.

We are presently seeking to address these

going concerns through efforts to raise capital through the public markets, release our first commercial product and pursue acquisitions

of complementary, revenue generating companies which are accretive to our operating results.

We can provide no assurance that

any of these efforts will be successful or, that even if successful, that they will alleviate doubts about our ability to continue

as a going concern.

Critical Accounting Policies and Estimates

Our financial statements and accompanying

notes have been prepared in accordance with GAAP applied on a consistent basis.

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting periods.

We regularly evaluate the accounting policies

and estimates that we use to prepare our financial statements.

A complete summary of these policies is included in the notes to

our financial statements.

In general, management’s estimates are based on historical experience, on information from third

party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances.

results could differ from those estimates made by management.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting

pronouncements that are in effect.

These pronouncements did not have any material impact on the financial statements unless otherwise

disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that

might have a material impact on its financial position or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

We are a smaller reporting company and are

not required to provide this information.

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