C-BOND SYSTEMS, INC MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

Caution Regarding Forward-Looking Information and Factors That May Affect Future Results



You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed consolidated
financial statements and the related notes and other financial information
included in this Report on Form 10-Q. Some of the information contained in this
discussion and analysis or set forth elsewhere in this Report on Form 10-Q,
including information with respect to our plans and strategy for our business,
includes forward-looking statements that involve risks and uncertainties as
described under the heading "Forward-Looking Statements" elsewhere in this
Report on Form 10-Q. Forward-looking statements include those preceded by,
followed by or including the words "will," "expect," "intended," "anticipated,"
"believe," "project," "forecast," "propose," "plan," "estimate," "enable," and
similar expressions, including, for example, statements about our business
strategy, our industry, our future profitability, growth in the industry sectors
we serve, our expectations, beliefs, plans, strategies, objectives, prospects
and assumptions, and estimates and projections of future activity and trends in
our industry. These forward-looking statements are not a guarantee of future
performance. These statements are based on management's expectations that
involve a number of business risks and uncertainties, any of which could cause
actual results to differ materially from those expressed in or implied by the
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors, most of which are difficult to predict and many
of which are beyond our control, which include, but are not limited to: the risk
that we continue to sustain prolonged losses and never achieve profitability,
our ability to continue as a going concern, and risks related to protection and
maintenance of our intellectual property. You should review the disclosure under
the heading "Risk Factors" in our Annual Report on Form 10-K as filed on April
15, 2022, for a discussion of important factors and risks that could cause
actual results to differ materially from the results described in or implied by
the forward-looking statements contained in the following discussion and
analysis.



Overview


We are a nanotechnology company and sole owner, developer, and manufacturer of
the patented C-Bond technology. We are engaged in the implementation of
proprietary nanotechnology applications and processes to enhance properties of
strength, functionality, and sustainability of brittle material systems. Our
present primary focus is in the multi-billion-dollar glass and window film
industry with target markets in the United States and internationally. We
operate in two divisions: C-Bond Transportation Solutions and Patriot Glass
Solutions. C-Bond Transportation Solutions sells a windshield strengthening,
water repellent solution called C-Bond nanoShield™ as well as disinfection
products. Patriot Glass Solutions sells multi-purpose glass strengthening primer
and window film mounting solutions, including C-Bond BRS, a ballistic-resistant
film system, and C-Bond Secure, a forced entry system.



To date, we have filed, licensed and/or acquired a total of 23 individual
patents and patent applications spanning core and strategic nano-technology
applications and processes. Our intellectual property portfolio was recently
valued at $33.7 million by a leading, independent, global intellectual property
valuation firm. The IP valuation firm's review covered the valuation of our
intangible assets including our developed technology, trade name, customer
relationships, and assembled workforce, and the Company's determination of the
fair value or other amounts of any assets and liabilities including current
assets, real property, personal property, and current liabilities. Our developed
technology includes C-Bond nanoShield, C-Bond Secure, and C-Bond BRS. The
valuation firm also reviewed historical and projected financial information for
the Company giving consideration to general economic and industry trends.



                                      36





On May 20, 2020, we entered into a two-year Distributor Agreement with an entity
where we were appointed as a distributor to exclusively sell MB-10 Disinfectant
Tablets for use in certain markets. In February 2022, we and the entity amended
the Distributor Agreement to include the sale of Vimoba Tablets in those same
markets and extended the term of the Distributor Agreement for another year.
MB-10 Disinfectant Tablets are the most convenient way yet to deliver the
benefits of chlorine dioxide to hygiene or biosafety programs. MB-10
disinfectant tablets have one of the broadest, most complete EPA registration
labels on the market. It is a safe, easy and effective way to disinfect a
vehicle's interior using an EPA registered disinfectant (Reg No.70060-19-46269)
included on List N for use against human coronavirus SARS-CoV-2. It is proven
effective against emerging viral pathogens, including enveloped and large and
small non-enveloped viruses. MB-10 Tablets provide fast-acting virus and
bacteria protection that is safe for all vehicle surfaces including LED screens
and electronics without leaving a residue or odor. Vimoba Tablets are 100%
non-corrosive, chlorine dioxide producing tablets that maintain the exact same
efficacy, EPA Label claims, dilution rates and contact times as MB-10 Tablets,
while including a buffering agent that makes the Vimoba solution completely
non-corrosive on stainless steel - even after prolonged use or exposure - and
even when the solution dries on the surface. We were appointed as a distributor
to exclusively sell MB-10 Disinfectant Tablets and Vimoba Tablets for use in the
following markets:


? Automotive, trucking, RV, rental agencies (car and truck), service vehicles

(taxi, Uber, Lyft), public transport (train, bus), golf carts, aviation, train,

    marine (potential future growth)

  ? Dealerships

  ? Global Distribution

  ? Service Providers

  ? Transportation Detailing.




On June 30, 2021, we entered into a Share Exchange Agreement and Plan of
Reorganization (the "Exchange Agreement") with (i) Mobile Tint LLC, a Texas
limited liability company doing business as A1 Glass Coating ("Mobile"), (ii)
the sole member of Mobile (the "Mobile Member"), and (iii) Michael Wanke as the
Representative of the Mobile Member. Pursuant to the Exchange Agreement, we
agreed to acquire 80% of Mobile's member units, representing 80% of Mobile's
issued and outstanding capital stock (the "Mobile Member Units"). On July 22,
2021, we closed the Exchange Agreement and acquired 80% of the Mobile Shares.
The Mobile Member Units were exchanged for restricted shares of the Company's
common stock, in an amount equal to $800,000, divided by the average of the
closing prices of the Company's common stock during the 30-day period
immediately prior to the closing as defined in the Exchange Agreement. In
connection with the Exchange Agreement, we issued 28,021,016 shares of its
common stock. Two years after closing, we have the option to acquire the
remaining 20% of Mobile's issued and outstanding membership interests in
exchange for a number of shares of the Company's common stock equal to 300% of
Mobile's average EBIT value, divided by the price of the Company's common stock
as defined in the Exchange Agreement (the "Additional Closing"). Mobile provides
quality window tint solutions for auto, home, and business owners across Texas,
specializing in automotive window tinting, residential window film, and
commercial window film that stop harmful UV rays from passing through its window
films for reduced glare, comfortable temperatures, and lower energy bills.
Mobile also carry products that offer forced-entry protection and films that
protect glass from scratches, graffiti, other types of vandalism, and even
bullets, including our C-Bond BRS and C-Bond Secure products. As part of the
transaction, Mobile's owner-operator, Michael Wanke, joined the Company as
President of its Safety Patriot Glass Solutions Group. Mobile has been in
business for more than 30 years and produced annual revenue of approximately $2
million in both 2019 and 2020. As part of the transaction, Mobile's
owner-operator, Michael Wanke, has agreed to join us as President of our Patriot
Glass Solutions group.



Our recent acquisition of Mobile will be the springboard to provide glass
security solutions across the United States. We recently launched Patriot Glass
Solutions to protect personal and business property across the United States
using C-Bond's proprietary glass strengthening technology to protects property
from looting, rioting, break-ins, and gunfire. With our recent acquisition of
Mobile, we are re-branding our Safety Solutions Group as "Patriot Glass
Solutions." Patriot Glass Solutions' primary products include C-Bond BRS, a
ballistic-resistant film system; and C-Bond Secure, a multi-purpose glass
strengthening primer and window film mounting solution that deters forced entry.



The following discussion highlights our results of operations and the principal
factors that have affected our financial condition as well as our liquidity and
capital resources for the periods described and provides information that
management believes is relevant for an assessment and understanding of the
statements of financial condition and results of operations presented herein.
The following discussion and analysis are based on our consolidated financial
statements contained in this Report, which have been prepared in accordance with
United States generally accepted accounting principles ("GAAP"). You should read
the discussion and analysis together with such financial statements and the
related notes thereto.



                                      37





Operating Overview


We are a nanotechnology company and sole owner, developer, and manufacturer of
the patented C-Bond technology. We are engaged in the implementation of
proprietary nanotechnology applications and processes to enhance properties of
strength, functionality, and sustainability of brittle material systems. Our
present primary focus is in the multi-billion-dollar glass and window film
industry with target markets in the United States and internationally. We
operate in two divisions: C-Bond Transportation Solutions and Patriot Glass
Solutions. C-Bond Transportation Solutions, which sells a windshield
strengthening, water repellent solution called C-Bond nanoShield™ as well as
disinfection products, and Patriot Glass Solutions, which sells multi-purpose
glass strengthening primer and window film mounting solutions, including C-Bond
BRS, a ballistic-resistant film systems, and C-Bond Secure, a forced entry
system. The C-Bond technology enables ordinary glass to dissipate energy by
permeating the glass surface and detecting microscopic flaws and defects that
are randomly distributed all over the glass surface. C-Bond's unique qualities
then work to locate and repair the identified surface imperfections that weaken
the glass composite structure and ultimately act as failure initiators. The
C-Bond formula is engineered to maintain original glass design integrity while
increasing the mechanical performance properties of the glass unit. As a result
of the COVID-19 pandemic we created partnerships to distribute disinfection
related products, which we began to sell in the second quarter of 2020. The
Company currently sells MB-10 Tablets® and Vimoba® Tablets.



Revenue is generated by the sale of products through distributors and directly
to dealers. C-Bond nanoShield and disinfection sales are generated through
distribution channels. Sales of C-Bond Secure are made primarily to window film
dealers who offer the product as an upsell during installation. Revenue is
generated from the sale of C-Bond BRS on a project basis. C-Bond BRS is
specified into project plans providing authorized installers a competitive
advantage.



Additionally, through the acquisition of 80% of Mobile Tint, LLC, we now provide
quality window tint solutions for auto, home, and business owners across Texas,
specializing in automotive window tinting, residential window film, and
commercial window film that stop harmful UV rays from passing through its window
films for reduced glare, comfortable temperatures, and lower energy bills.
Mobile also carries products that offer forced-entry protection and films that
protect glass from scratches, graffiti, other types of vandalism, and even
bullets, including our C-Bond BRS and C-Bond Secure products.



Going Concern



The unaudited condensed consolidated financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. As
reflected in the accompanying unaudited condensed consolidated financial
statements, the Company had a net loss of $2,928,771 and $5,422,998 for the six
months ended June 30, 2022 and 2021, respectively, which included stock-based
compensation of $1,021,126 and $3,953,672 for the six months ended June 30, 2022
and 2021, respectively. The net cash used in operations was $799,374 and
$791,963 for the six months ended June 30, 2022 and 2021, respectively.
Additionally, the Company had an accumulated deficit, shareholders' deficit, and
working capital deficit of $60,452,441, $5,016,047 and $2,794,660, respectively,
on June 30, 2022. These factors raise substantial doubt about the Company's
ability to continue as a going concern for a period of twelve months from the
issuance date of this report. Management cannot provide assurance that the
Company will ultimately achieve profitable operations or become cash flow
positive or raise additional debt and/or equity capital. The Company is seeking
to raise capital through additional debt and/or equity financings to fund its
operations in the future. Although the Company has historically raised capital
from sales of common shares, preferred shares and from the issuance of
convertible and other promissory notes, there is no assurance that it will be
able to continue to do so. If the Company is unable to raise additional capital
or secure additional lending in the near future, management expects that the
Company will need to curtail its operations. These unaudited condensed
consolidated financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.



                                      38





COVID-19



The COVID-19 pandemic has created significant volatility in the global economy.
Global trade conditions and consumer trends that have originated during the
pandemic continue to persist and may have a long-lasting adverse impact on us
and our industry. For example, the pandemic has resulted in government
authorities implementing numerous measures to try to contain the COVID-19 virus,
such as travel bans and restrictions, quarantines, stay-at-home or
shelter-in-place orders and business shutdowns. While these measures may be
relaxed or revised in some areas, there is no guarantee these measures will not
be reinstated or resumed due to additional variants of COVID-19 or the inability
or ineffectiveness of public health measures to limit the further spread of
COVID-19. These measures may adversely impact our employees and operations and
the operations of our customers, suppliers, vendors and business partners. These
measures by government authorities, or the risks that the measures may be
reinstated or resumed, may remain in place for a significant period of time and
may adversely affect building plans, sales and marketing activities, business
and results of operations. As a result, our customers may delay the ordering of
products, and delayed entering into contracts for the delivery and installation
of window film, and had delayed or defaulted on payment of balances due to the
Company. In 2020 and 2021, the lack of collection of accounts receivable
balances, which the Company believes was attributable to COVID-19, had a
material impact on the cash flows of the Company. We cannot estimate the
duration of the pandemic and the future impact on our business. A severe or
prolonged economic downturn could result in a variety of risks to our business,
including weakened demand for its products and a decreased ability to raise
additional capital when needed on acceptable terms, if at all. Currently, we are
unable to estimate the impact of this event on our operations.



Critical accounting policies



The following discussion and analysis of our consolidated financial condition
and consolidated results of operations are based upon our condensed consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of our
condensed consolidated financial statements requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. Management continually evaluates such estimates, including those
related to estimates for allowance for doubtful accounts on accounts receivable,
the estimates for obsolete inventory, estimated used in the calculation of
percentage of completion on uncompleted jobs, purchase price allocation of
acquired businesses, the useful life of property and equipment, assumptions used
in assessing impairment of long-term assets, the estimate of the fair value of
the right of use asset and lease liability, the valuation of redeemable and
mandatorily redeemable preferred stock, the fair value of derivative
liabilities, the value of beneficial conversion features, and the fair value of
non-cash equity transactions. Management bases its estimates on historical
experience and on various other assumptions that it believes to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Any future changes to these estimates and
assumptions could cause a material change to our reported amounts of revenues,
expenses, assets and liabilities. Actual results may differ from these estimates
under different assumptions or conditions. Management believes the following
critical accounting policies affect our more significant judgments and estimates
used in the preparation of the condensed consolidated financial statements.

Segment reporting



During the six months ended June 30, 2021, we operated in one reportable
business segment, which consisted of the manufacture and sale of a windshield
strengthening water repellent solution as well as a disinfection product, and
the sale of multi-purpose glass strengthening primer and window film mounting
solutions, including ballistic-resistant film systems and a forced entry system.
During the six months ended June 30, 2022, we operated in two reportable
business segments - (1) the manufacture and sale of a windshield strengthening
water repellent solution as well as a disinfection product, and the sale of
multi-purpose glass strengthening primer and window film mounting solutions,
including ballistic-resistant film systems and a forced entry system, and (2)
the sale and installation of window film solutions. The Company's reportable
segments were strategic business units that offered different products. They
were managed separately based on the fundamental differences in their operations
and locations.



                                      39





Accounts receivable


The Company recognizes an allowance for losses on accounts receivable in an
amount equal to the estimated probable losses net of recoveries. The allowance
is based on an analysis of historical bad debt experience, current receivables
aging, and expected future write-offs, as well as an assessment of specific
identifiable customer accounts considered at risk or uncollectible. The expense
associated with the allowance for doubtful accounts is recognized as general and
administrative expense.



Inventory


Inventory, consisting of raw materials and finished goods, is stated at the
lower of cost and net realizable value utilizing the first-in, first-out (FIFO)
method. A reserve is established when management determines that certain
inventories may not be saleable. If inventory costs exceed expected net
realizable value due to obsolescence or quantities in excess of expected demand,
the Company will record reserves for the difference between the cost and the net
realizable value. These reserves are recorded based on estimates and included in
cost of sales.



Revenue recognition



We follow the Financial Accounting Standards Board's (the "FASB") Accounting
Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers
("ASC 606"). This standard establishes a single comprehensive model for entities
to use in accounting for revenue arising from contracts with customers and
supersedes most of the existing revenue recognition guidance. ASC 606 requires
an entity to recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services and
requires certain additional disclosures.



We sell our products which include standard warranties primarily to distributors
and authorized dealers. Product sales are recognized at a point in time when the
product is shipped to the customer and title is transferred and are recorded net
of any discounts or allowances. The warranty does not represent a separate
performance obligation.



Revenues from contracts for the distribution and installation of window film
solutions are recognized over time on the basis of the Company's estimates of
the progress towards completion of contracts using various output or input
methods depending on the type of contract terms including (1) the ratio of
number of labor hours spent compared to the number of estimated labor hours to
complete a job, (2) using the milestone method, or (3) using a units completed
method. These methods are used because management considers these to be the best
available measure of progress on these contracts. We use the same method for
similar types of contracts. The asset, "contract assets" represents revenues
recognized in excess of amounts billed. The liability, "contract liabilities,"
represents billings in excess of revenues recognized.



Stock-based compensation


Stock-based compensation is accounted for based on the requirements of ASC 718 -
"Compensation -Stock Compensation", which requires recognition in the financial
statements of the cost of employee, director, and non-employee services received
in exchange for an award of equity instruments over the period the employee,
director, or non-employee is required to perform the services in exchange for
the award (presumptively, the vesting period). The ASC also requires measurement
of the cost of employee, director, and non-employee services received in
exchange for an award based on the grant-date fair value of the award. The
Company has elected to recognize forfeitures as they occur as permitted under
the FASB's Accounting Standards Update ("ASU") 2016-09 Improvements to Employee
Share-Based Payment.


See Note 2 to our unaudited condensed consolidated financial statements for a summary of significant accounting policies and recent accounting pronouncements.


                                      40





Results of Operations



The following comparative analysis on results of operations was based primarily
on the comparative condensed consolidated financial statements, footnotes and
related information for the periods identified below and should be read in
conjunction with the audited consolidated financial statements and the notes to
those statements for the years ended December 31, 2021 and 2020 as filed in our
annual report on Form 10-K with the SEC on April 15, 2022. The results discussed
below are for the six months ended June 30, 2022 and 2021.



Comparison of operating results for the three and six months ended June 30, 2022 and 2021


Sales



For the three months ended June 30, 2022, sales amounted to $540,367 as compared
to $133,670 for the three months ended June 30, 2021, an increase of $406,697,
or 304.2%. The increase was primarily attributable to the acquisition of 80% of
Mobile on July 22, 2021 which generated sales of $423,599 for the three months
ended June 30, 2022, an increase in C-Bond nanoShield solution sales of $21,270,
and an increase in freight and delivery revenue of $703, offset by a decrease in
sales of C-Bond ballistic resistant glass protection systems and C-Bond Secure
window film application solution of $26,342, a decrease in disinfectant product
of $430, and a decrease in sale of installation and other services of $12,103.



For the six months ended June 30, 2022, sales amounted to $1,051,076 as compared
to $289,320 for the six months ended June 30, 2021, an increase of $761,756, or
263.3%. The increase was primarily attributable to the acquisition of 80% of
Mobile on July 22, 2021 which generated sales of $835,139 for the six months
ended June 30, 2022, an increase in C-Bond nanoShield solution sales of $38,864,
and an increase in disinfectant product of $3,750, offset by a decrease in sales
of C-Bond ballistic resistant glass protection systems and C-Bond Secure window
film application solution of $102,622, a decrease in freight and delivery
revenue of $1,272, and a decrease in sale of installation and other services of
$12,103.



Cost of Goods Sold



In connection with our C-Bond Solutions segment, cost of goods sold is comprised
primarily of cost of raw materials and finished inventory sold, packaging costs,
and warranty costs. In connection with our Mobile segment, cost of goods sold is
comprised primarily of cost of raw materials such as film, labor, subcontractor
costs, equipment rental, and supplies.



For the three months ended June 30, 2022, cost of sales amounted to $209,704 as
compared to $24,167 for the three months ended June 30, 2021, an increase of
$185,537, or 767.7%. The increase in cost of sales was primarily attributable to
the acquisition of 80% of Mobile on July 22, 2021 which generated cost of sales
of $228,630 for the three months ended June 30, 2022. This increase was offset
by a decrease in cost of sales of C-Bond nanoShield solution, C-Bond ballistic
resistant glass protection systems and C-Bond Secure window film application
solution and disinfectant products of $43,093 due to a decrease in sales.



For the six months ended June 30, 2022, cost of sales amounted to $459,334 as
compared to $55,551 for the six months ended June 30, 2021, an increase of
$403,783, or 726.9%. The increase in cost of sales was primarily attributable to
the acquisition of 80% of Mobile on July 22, 2021 which generated cost of sales
of $471,200 for the six months ended June 30, 2022. This increase was offset by
a decrease in cost of sales of C-Bond nanoShield solution, C-Bond ballistic
resistant glass protection systems and C-Bond Secure window film application
solution and disinfectant products of $67,417 due to a decrease in sales.



                                      41





Gross Profit



For the three months ended June 30, 2022, gross profit amounted to $330,663, or
61.1% of sales, as compared to $109,503, or 81.9% of sales, for the three months
ended June 30, 2021, an increase of $221,160, or 202.0%. This increase in gross
profits is primarily attributable to the acquisition of 80% of Mobile Tint, LLC
on July 22, 2021, which generated gross profit of $232,932, or 54.9% for the
three months ended June 30, 2022, and a decrease in gross profits related to an
increase in sales of C-Bond nanoShield solution offset by a decrease in sales of
C-Bond ballistic resistant glass protection systems and C-Bond Secure window
film application solution. Generally, we recognize a higher gross profit
percentage on the sale of C-bond nanoShield and C-bond ballistic resistant glass
protections systems than we do on the sale of disinfection products and from
Mobile Tint installations and services.



For the six months ended June 30, 2022, gross profit amounted to $591,742, or
56.3% of sales, as compared to $233,769, or 80.8% of sales, for the six months
ended June 30, 2021, an increase of $357,973, or 53.1%. This increase in gross
profits is primarily attributable to the acquisition of 80% of Mobile Tint, LLC
on July 22, 2021, which generated gross profit of $401,902, or 46.0% for the six
months ended June 30, 2022, offset by a decrease in gross profits of $43,929
related to an increase in sales of C-Bond nanoShield solution which were offset
by a decrease in sales of C-Bond ballistic resistant glass protection systems
and C-Bond Secure window film application solution products. Generally, we
recognize a higher gross profit percentage on the sale of C-bond nanoShield and
C-bond ballistic resistant glass protections systems than we do on the sale
of
disinfection products.



Operating Expenses



For the three months ended June 30, 2022, operating expenses amounted to
$742,157 as compared to $731,132 for the three months ended June 30, 2021, an
increase of $11,025, or 1.5%. For the six months ended June 30, 2022, operating
expenses amounted to $2,677,000 as compared to $5,700,996 for the six months
ended June 30, 2021, a decrease of $3,023,996, or 53.0%. For the three and six
months ended June 30, 2022 and 2021, operating expenses consisted of the
following:



                                             Three Months ended             Six Months ended
                                                  June 30,                      June 30,
                                             2022          2021           2022            2021
Compensation and related benefits,
including stock-based compensation
charges                                    $ 424,714     $ 355,818     $ 1,840,732     $ 4,930,931
Research and development                           -        (3,246 )             -          (2,404 )
Professional fees                            132,052       292,193         446,264         516,946
General and administrative expenses          185,391        86,367         390,004         255,523

Total                                      $ 742,157     $ 731,132     $ 2,677,000     $ 5,700,996



Compensation and related benefits

For the three months ended June 30, 2022, compensation and related benefits
increased by $68,896, or 19.4%, as compared to the three months ended June 30,
2021. This increase was primarily due to an increase in compensation and related
benefits of $151,552 from the acquisition of Mobile Tint, offset by a decrease
in stock-based compensation of $44,574, and a decrease in compensation and
related benefits of $38,082 to C-Bond employees during the three months ended
June 30, 2022.



                                      42





For the six months ended June 30, 2022, compensation and related benefits
decreased by $3,090,199, or 62.7%, as compared to the six months ended June 30,
2021. This decrease was primarily due to a decrease in stock-based compensation
of $2,932,546, and a decrease in compensation and related benefits to C-Bond
employees of $455,278 primarily attributable to a decrease in bonuses, offset by
an increase in compensation and related benefits of $297,625 from the
acquisition of Mobile Tint.



On January 6, 2022, the Board of Directors of the Company agreed to satisfy
$278,654 of accrued compensation owed to its executive officers (collectively,
the "Management") as of December 31, 2021 and included in accrued compensation
on the accompanying condensed consolidated balance sheet. Management agreed to
accept 278 shares of the Company's Series B convertible preferred stock in
settlement of this accrued compensation. The conversion feature of the Series B
Preferred Stock at the time of issuance was determined to be beneficial on the
commitment date. Because the Series B Preferred Stock was perpetual with no
stated maturity date, and the conversions could occur any time from the date of
issuance, the Company immediately recorded non-cash stock-based compensation of
$957,556 related to the beneficial conversion feature arising from the issuance
of Series B Preferred Stock.



On January 18, 2021, the Board of Directors of the Company agreed to satisfy
$295,000 of accrued compensation owed to its executive officers and former
executive officer (collectively, the "Management") through a Liability Reduction
Plan (the "Plan"). Under this Plan, Management agreed to accept 295 shares of
the Company's Series B convertible preferred stock in settlement of accrued
compensation. The conversion feature of the Series B Preferred Stock at the time
of issuance was determined to be beneficial on the commitment date. Because the
Series B Preferred Stock was perpetual with no stated maturity date, and the
conversions could occur any time from the date of issuance, the Company
immediately recorded non-cash stock-based compensation of $3,778,810 related to
the beneficial conversion feature arising from the issuance of Series B
Preferred Stock.



Research and development



Research and development expenses consist primarily of materials used and
allocated overhead expenses. During the three and six months ended June 30,
2022, we did not incur any research and development fees. During the three and
six months ended June 30, 2021, we recorded a research and development recovery
of $3,246 and $2,404, IN the 2021 period, we received a refund of previous
research and development costs of $3,250,



Professional fees



For the three months ended June 30, 2022, professional fees decreased by
$160,141, or 54.8%, as compared to the three months ended June 30, 2021. This
decrease was primarily related to a decrease in legal fees of $34,848, a
decrease in consulting fee of $149,400 and a decrease in investor relations fees
of $10,706, offset by an increase in accounting fees of $34,117 attributable to
the acquisition audits ongoing accounting of Mobile Tint, and other professional
fees of $696.



For the six months ended June 30, 2022, professional fees decreased by $70,682,
or 13.7%, as compared to the six months ended June 30, 2021. This decrease was
primarily related to a decrease in legal fees of $37,701, a decrease in
consulting fee of $118,271 and a decrease in investor relations fees of $31,347,
offset by an increase in accounting fees of $116,441 attributable to the
acquisition audits ongoing accounting of Mobile Tint, and other professional
fees of $196.



General and administrative



For the three months ended June 30, 2022, general and administrative expenses
increased by $99,024, or 114.6%, as compared to the three months ended June 30,
2021. This increase was primarily attributable to the acquisition of 80% of
Mobile that incurred general and administrative expenses of $111,529 and an
increase in other general and administrative expenses of $23,100, offset by a
decreased in bad debt expense of $35,605.



For the six months ended June 30, 2022, general and administrative expenses
increased by $134,481, or 52.6%, as compared to the six months ended June 30,
2021. This increase was primarily attributable to the acquisition of 80% of
Mobile that incurred general and administrative expenses of $191,168 and an
increase in advertising expense of $26,192, offset by a decreased in bad debt
expense of $31,250 and a decrease in other general and administrative expenses
of $51,629.



Loss from Operations


For the three months ended June 30, 2022, loss from operations decreased by
$210,135, or 33.8%, as compared to the three months ended June 30, 2021. For the
six months ended June 30, 2022, loss from operations decreased by $3,381,969, or
61.9%, as compared to the six months ended June 30, 2021 resulting from changes
discussed above.



Other Expenses, net



For the three months ended June 30, 2022, other expense, net amounted to
$597,858 as compared to other income, net of $42,604 for the three months ended
June 30, 2021, a negative change of $640,462, or 1,503.3%. This change was due
to an increase in interest expense of $338,364 related to an increase in the
amortization of debt discount and an increase in interest-bearing debt, an
increase in loss on debt extinguishment of $234,320 related to the modification
of the Mercer debt, and a decrease in other income of $67,778.



                                      43





For the six months ended June 30, 2022, other expense, net amounted to $843,513
as compared other income, net of $24,229 for the six months ended June 30, 2021,
a change of $867,742, or 3,581.4%. This change was due to an increase in
interest expense of $568,569 related to an increase in the amortization of debt
discount and an increase in interest-bearing debt, an increase in loss on debt
extinguishment of $231,395 related to the modification of the Mercer debt, and a
decrease in other income of $67,778.



Net Loss



Due to factors discussed above, for the three months ended June 30, 2022 and
2021, net loss amounted to $1,009,352 and $579,025, respectively. For the three
months ended June 30, 2022, net loss attributable to common shareholders, which
included dividends accrued on Series B and C preferred stock and a deemed
dividend related to price protection provisions in our convertible debt
instruments of $17,622, and the deduction of net loss attributable to
noncontrolling interests of $10,066, amounted to $1,016,908, or $(0.00) per
basic and diluted common share. For the three months ended June 30, 2021, net
loss attributable to common shareholders, which included a deemed dividend
related to price protection, beneficial conversion features on preferred stock,
and the dividends accrued on Series B and C preferred stock of $11,478 amounted
to $590,503, or $(0.00) per basic and diluted common share.



For the six months ended June 30, 2022 and 2021, net loss amounted to $2,928,771
and $5,442,998, respectively. For the six months ended June 30, 2022 and 2021,
net loss attributable to common shareholders, which included a deemed dividend
related to price protection, beneficial conversion features on preferred stock,
and the dividends accrued on Series B and C preferred stock of $31,627 and
$2,867,054, and the deduction of net loss attributable to noncontrolling
interests of $23,086 and $0, amounted to $2,937,312, or $(0.01) per basic and
diluted common share, and $8,310,052, or $(0.04) per basic and diluted common
share, respectively.


Cash and capital resources



Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. We had cash of $244,548 and $519,898 as
of June 30, 2022 and December 31, 2021, respectively.



Our primary uses of cash have been for compensation and related benefits, fees
paid to third parties for professional services, and general and administrative
expenses. We have received funds from the sales of products and from various
financing activities such as from the sale of preferred shares and from debt
financings. The following trends are reasonably likely to result in changes in
our liquidity over the near to long term:



? An increase in the need for working capital to finance our current activity,

? Research and development costs;

? Addition of administrative and sales staff necessary for the growth of the company;

? The cost of being a public company;

? Marketing expenses for brand building;

? Capital requirements for production capacity.

? Need for working capital to support acquired companies.

Since our inception, we have raised proceeds from the sale of common stock and preferred stock, as well as debt to fund our research and development activities and initiatives.



On February 24, 2021, we entered into a subscription agreement with an
accredited investor whereby the investor agreed to purchase 2,500 shares of the
Company's Series C Convertible Preferred Stock for $250,000, or $100.00 per
share, the stated value, which were used from working capital purposes. The
conversion feature of the Series C Preferred Stock at the time of issuance was
determined to be beneficial on the commitment date. Because the Series C
Preferred Stock was perpetual with no stated maturity date, and the conversions
could occur any time from the date of issuance, we immediately recorded a
non-cash deemed dividend of $2,845,238 related to the beneficial conversion
feature arising from the issuance of Series C Preferred Stock.



On May 10, 2021, we entered into a Loan and Security Agreement (the "Loan
Agreement") and a Secured Promissory Note (the "Note") in the amount of $500,000
with a lender. The Note shall accrue interest at 8% per annum, compounded
annually, and all outstanding principal and accrued interest is due and payable
of May 10, 2023. Our obligations under the Loan Agreement and the Note are
secured by a second priority security interest in substantially all of the
Company's assets (the "Collateral"). The Loan Agreement and Note contain
customary representations, warranties and covenants, including certain
restrictions on our ability to incur additional debt or create liens on its
property. The Loan Agreement and the Note also provide for certain events of
default, including, among other things, payment defaults, breaches of
representations and warranties and bankruptcy or insolvency proceedings, the
occurrence of which, after any applicable cure period, would permit Lender,
among other things, to accelerate payment of all amounts outstanding under the
Loan Agreement and the Note, as applicable, and to exercise its remedies with
respect to the Collateral. Upon the occurrence of an Event of Default under the
Loan Agreement and Note, all amounts then outstanding (including principal and
interest) shall bear interest at the rate of 18% per annum, compounded annually
until the Event of Default is cured. On June 30, 2022 and December 31, 2021,
principal amount due under this Note amounted to $500,000.



                                      44





On July 22, 2021, in connection with the acquisition of Mobile Tint, we assumed
vehicle and equipment loans in the amount of $95,013. These loans bear interest
at rates ranging from 6.79% to 8.24% and are payable monthly through April 2025.
On June 30, 2022 and December 31, 2021, notes payable related to these vehicles
amounted to $59,635 and $78,925, respectively.



On August 25, 2021, we entered into a subscription agreement with an accredited
investor whereby the investor agreed to purchase 3,000 shares of the Company's
Series C Convertible Preferred Stock for $300,000, or $100.00 per share, the
stated value, which was used for working capital purposes. The conversion
feature of the Series C Preferred Stock at the time of issuance was determined
to be beneficial on the commitment date. Because the Series C Preferred Stock
was perpetual with no stated maturity date, and the conversions could occur any
time from the date of issuance, the Company immediately recorded a non-cash
deemed dividend of $1,509,523 related to the beneficial conversion feature
arising from the issuance of Series C Preferred Stock. This non-cash deemed
dividend increased the Company's net loss attributable to common stockholders
and net loss per share.



On October 15, 2021, we entered into a Securities Purchase Agreement (the "SPA")
with Mercer Street Global Opportunity Fund, LLC (the "Investor"), pursuant to
which the Company received $750,000 (less $10,000 of Investor's fees) in
exchange for the issuance of a 10% Original Issue Discount Senior Convertible
Promissory Note (the "Initial Note") in the principal amount of $825,000, and a
five-year warrant (the "Initial Warrant") to purchase, in the aggregate, shares
of the Company's common stock at an exercise price of $0.05 per share in an
amount equal to 50% of the conversion shares to be issued. The transactions
contemplated under the SPA closed on October 18, 2021. Pursuant to the SPA, the
Investor has agreed to purchase an additional $825,000 10% Original Issue
Discount Senior Convertible Promissory Note (the "Second Note," and together
with the Initial Note, the "Notes"), and a five-year warrant (the "Second
Warrant," and together with the Initial Warrant, the "Warrants") to purchase, in
the aggregate, shares of the Company's common stock at an exercise price of
$0.05 per share from the Company in an amount equal to 50% of the conversion
shares to be issued upon the same terms as the Initial Note and Initial Warrant
(subject to there being no event of default under the Initial Note or other
customary closing conditions), within three trading days of a registration
statement registering the shares of the Company's common stock issuable under
the Notes (the "Conversion Shares") and upon exercise of the Warrants (the
"Warrant Shares") being declared effective by the SEC. The Notes mature 12
months after issuance, bear interest at a rate of 4% per annum, and are
initially convertible into the Company's common stock at a fixed conversion
price of $0.025 per share, subject to adjustment for stock splits, stock
combinations, dilutive issuances, and similar events, as described in the Notes.
On April 20, 2022, the Company and Mercer Street Global Opportunity Fund, LLC
(the "Investor") entered into an Exchange Agreement (the "Exchange Agreement")
that amended a 10% Original Issue Discount Senior Convertible Promissory Note
(See Note 7). The original SPA remains in effect. Per the terms of the Exchange
Agreement, the Parties agreed to exchange (i) the Initial Note for a new
Convertible Promissory Note (the "New Note") and (ii) the Initial Warrant for a
new five-year warrant to purchase, in the aggregate, 33,000,000 shares of the
Company's common stock at an exercise price of $0.025 per share (the "New
Warrant" and together with the New Note, the "New Securities"), according to the
terms and conditions of the Exchange Agreement. On April 20, 2022, pursuant to
the terms of the Exchange Agreement, the Investor surrendered the Prior
Securities in exchange for the New Securities. Other than the surrender of the
Prior Securities, no consideration of any kind whatsoever was given by the
Investor to the Company in connection with the Exchange Agreement. The terms of
the New Securities are the same as the Prior Securities except for the pricing
of the shares issuable under the New Note and the shares issuable upon exercise
of the New Warrant. The New Securities are composed of the New Note, which is a
10% Original Issue Discount Senior Convertible Promissory Note in the principal
amount of $825,000, and the New Warrant. The New Note matures on October 15,
2022, bears interest at a rate of 4% per annum, and is initially convertible
into the Company's common stock at a fixed conversion price of $0.0125 per
share, subject to adjustment for stock splits, stock combinations, dilutive
issuances, and similar events, as described in the New Note. The Notes may be
prepaid at any time for the first 90 days at face value plus accrued interest.
From day 91 through day 180, the Notes may be prepaid in an amount equal to 110%
of the principal amount plus accrued interest. From day 181 through the day
immediately preceding the maturity date, the Notes may be prepaid in an amount
equal to 120% of the principal amount plus accrued interest. The Notes and
Warrants contain conversion limitations providing that a holder thereof may not
convert the Notes or exercise the Warrants to the extent (but only to the
extent) that, if after giving effect to such conversion, the holder or any of
its affiliates would beneficially own in excess of 4.99% of the outstanding
shares of the Company's common stock immediately after giving effect to such
conversion or exercise. A holder may increase or decrease its beneficial
ownership limitation upon notice to the Company provided that in no event such
limitation exceeds 9.99%, and that any increase shall not be effective until the
61st day after such notice. In connection with the SPA, the Company entered into
a Registration Rights Agreement dated October 15, 2021 (the "Registration Rights
Agreement"), with the Investor pursuant to which it is obligated to file a
registration statement with the SEC within 45 days after the date of the
agreement to register the resale by the Investor of the conversion shares and
warrant shares, and use all commercially reasonable efforts to have the
registration statement declared effective by the SEC within 60 days after the
registration statement is filed. Upon the occurrence of an event of default
under the Notes, the Investor has the right to be prepaid at 125% of the
outstanding principal balance and accrued interest, and interest accrues at 18%
per annum. The Company has also granted the Investor a 12-month (or until the
Notes are no longer outstanding) right to participate in specified future
financings, up to a level of 30%.



                                      45





On March 14, 2022, the Company entered into an Original Issue Discount
Promissory Note and Security Agreement (the "March 2022 Note") in the principal
amount of $197,500 with Mercer Street Global Opportunity Fund, LLC (the
"Investor"). The March 2022 Note was funded on March 14, 2022 and the Company
received net proceeds of $175,000 which is net of an Original Issue Discount and
investor legal fees of $22,500. The March 2022 Note matures 12 months after
issuance and bears interest at a rate of 3% per annum. At any time, the Company
may prepay all or any portion of the principal amount of the March 2022 Note and
any accrued and unpaid interest without penalty. The March 2022 Note also
creates a lien on and grants a priority security interest in all of the
Company's assets.



On May 2, 2022, the Company entered into a Promissory Note (the "May 2022 Note")
in the principal amount of $250,000 with the Company's chief executive officer.
The May 2022 Note was funded in May 2022 and the Company received net proceeds
of $250,000. The May 2022 Note bears interest at a rate of 6% per annum and all
outstanding principal and accrued and unpaid interest is due on May 2, 2024. At
any time, the Company may prepay all or any portion of the principal amount of
the May 2022 Note and any accrued and unpaid interest without penalty.



On June 23, 2022, the Company entered into entered into a Securities Purchase
Agreement ("Agreement") with GS Capital Partners, LLC ("GS Capital"), pursuant
to which a Promissory Note (the "GS Capital Note") was made to GS Capital in the
aggregate principal amount of $195,000. The Note was purchased for $176,000,
reflecting an original issuance discount of $19,000, and was funded on June 24,
2022 (less legal and other administrative fees). The Company further issued GS
Capital a total of 1,750,000 commitment shares ("Commitment Shares") as
additional consideration for the purchase of the Note. Principal and interest
payments shall be made in 10 instalments of $21,060 each beginning on the
90th-day anniversary following the issue date and continuing thereafter each 30
days for nine months. The GS Capital Note matures 12 months after issuance and
bears interest at a rate of 8% per annum. GS Capital shall have the right at any
time following an Event of Default to convert all or any part of the outstanding
and unpaid principal, interest, penalties, and all other amounts under this Note
at a conversion price of $0.011, subject to adjustment as defined in the GS
Capital Note. In the event that following the Issue Date the closing trading
price of the Company's common stock is then being traded is below $0.011 per
share for more than ten consecutive trading days, then the conversion price
shall be equal to $0.004 per share. The GS Capital Note contains conversion
limitations providing that a holder thereof may not convert the Note to the
extent (but only to the extent) that, if after giving effect to such conversion,
the holder or any of its affiliates would beneficially own in excess of 4.99% of
the outstanding shares of the Company's common stock immediately after giving
effect to such conversion or exercise. A holder may increase or decrease its
beneficial ownership limitation upon notice to the Company provided that in no
event such limitation exceeds 9.99%, and that any increase shall not be
effective until the 61st day after such notice. Events of default include,
amongst other items, failure to pay principal or interest, bankruptcy, delisting
of the Company's stock, financial statement restatements, or if the Company
effectuates a reverse split. Upon the occurrence of any event of default, the GS
Capital Note shall become immediately and automatically due and payable and the
Company shall pay to GS Capital, in full satisfaction of its obligations
hereunder, an amount equal to: (a) the then outstanding principal amount of this
note plus (b) accrued and unpaid interest on the unpaid principal amount of this
note to the date of payment (the "mandatory prepayment date") plus (y) default
interest, if any, multiplied by 120%. On June 30, 2022, the principal balance
due on the GS Capital Note amounted to $195,000 and accrued interest payable
amounted to $128.



On July 28, 2022, the Company closed a Securities Purchase Agreement
("Agreement") with GS Capital, pursuant to which a Promissory Note ("Note") was
made to GS Capital in the aggregate principal amount of $195,000. The Note was
purchased for $176,000, reflecting an original issuance discount of $19,000, and
was funded on July 28, 2022 (less legal and other administrative fees). The
Company further issued GS Capital a total of 2,600,000 commitment shares
("Commitment Shares") as additional consideration for the purchase of the Note.
Principal and interest payments shall be made in 10 instalments of $21,060 each
beginning on the 90th-day anniversary following the issue date and continuing
thereafter each 30 days for nine months. The Note matures 12 months after
issuance and bears interest at a rate of 8% per annum. GS Capital shall have the
right at any time following an Event of Default to convert all or any part of
the outstanding and unpaid principal, interest, penalties, and all other amounts
under this Note at a conversion price of $0.011, subject to adjustment as
defined in the Note. In the event that following the Issue Date the closing
trading price of the Company's common stock is then being traded is below
$0.011 per share for more than ten consecutive trading days, then the conversion
price shall be equal to $0.004 per share. The Note contains conversion
limitations providing that a holder thereof may not convert the Note to the
extent (but only to the extent) that, if after giving effect to such conversion,
the holder or any of its affiliates would beneficially own in excess of 4.99% of
the outstanding shares of the Company's common stock immediately after giving
effect to such conversion or exercise. A holder may increase or decrease its
beneficial ownership limitation upon notice to the Company provided that in no
event such limitation exceeds 9.99%, and that any increase shall not be
effective until the 61st day after such notice.



                                      46





Additional cash liquidity is generated from product sales. However, to date, we
are not profitable, and we cannot provide any assurances that we will be
profitable. We believe that our existing cash and cash equivalents will not be
sufficient to fund our current operating plans.



Cash Flows


For the six months ended June 30, 2022 and 2021



The following table shows a summary of our cash flows for the six months ended
June 30, 2022 and 2021.



                                                Six Months Ended
                                                    June 30,
                                               2022           2021

Net cash used in operating activities ($799,374) ($791,963)
Net cash provided by financing activities $524,024 $750,000
Net decrease in cash

                        $ (275,350 )   $  (41,963 )
Cash - beginning of the period              $  519,898     $  323,407
Cash - end of the period                    $  244,548     $  281,444



Net cash used in operational activities:

Net cash flow used in operating activities was $799,374 for the six months ended
June 30, 2022 compared to the net cash flows used in the operating activities of
$791,963 for the six months ended June 30, 2021an augmentation of $7,411.



Net cash flow used in operating activities for the six months ended June 30,
2022 primarily reflected a net loss of $2,928,771, which was then adjusted for
the add-back (deduction) of non-cash items primarily consisting of depreciation
and amortization of $45,665, stock-based compensation expense of $1,021,126,
stock-based professional fees of $124,050, amortization of debt discount of
$527,219, and a non-cash loss on debt extinguishment of $231,395, and changes in
operating assets and liabilities consisting primarily of an increase in accounts
receivable of $80,545, a decrease in inventory of $20,285, a decrease in prepaid
expenses of $20,343, a decrease in contract assets of $82,805, an increase in
accrued expenses of $77,336, an increase in accrued compensation of $34,276, an
increase in contract liabilities of $16,876, and a decrease in accounts payable
of $102.



Net cash flow used in operating activities for the six months ended June 30,
2021 primarily reflected a net loss of $5,442,998, which was then adjusted for
the add-back (deduction) of non-cash items primarily consisting of depreciation
and amortization of $4,944, stock-based compensation expense of $3,953,672,
stock-based professional fees of $261,467, and bad debt expense of $35,000 and
changes in operating assets and liabilities consisting primarily of an increase
in accounts receivable of $23,729, a decrease in inventory of $3,128, an
increase in accounts payable of $70,436, an increase in accrued expenses of
$36,378, an increase in accrued compensation of $309,500, a decrease in prepaid
expense and other assets of $7,724 and an increase in due from related party of
$7,041.


Net cash provided by financing activities:

Net cash provided by financing activities was $524,024 for the six months ended
June 30, 2022 compared to $750,000 for the six months ended June 30, 2021.

During the six months ended June 30, 2022, we received net proceeds from a loan
of $175,000, received proceeds from a related party note payable of $250,000 and
received net proceeds from a convertible note of $148,420. These proceeds were
offset by the repayment of notes payable of $49,396.



During the six months ended June 30, 2021, we received net proceeds from the
sale of Series C preferred stock of $250,000 and net proceeds from a loan of
$500,000.



                                      47





Funding Requirements



We expect the primary use of capital to continue to be salaries, legal,
accounting and regulatory expenses and general overhead costs including sales
and marketing. Additional uses of capital will include additional headcount,
tools and equipment, capacity expansion and operational control software. We
believe current cash and cash equivalents will not be sufficient to meet
anticipated cash requirements. Additional capital will be required to further
research new product verticals and enhancements to current product offerings
based on customer requirements.



As of June 30, 2022, we determined that there was substantial doubt about our
ability to maintain operations as a going concern. Our condensed consolidated
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. Management cannot provide
assurance that we will ultimately achieve profitable operations or become cash
flow positive or raise additional debt and/or equity capital. We will seek to
raise capital through additional debt and/or equity financings to fund
operations in the future. Although we have historically raised capital from
sales of common and preferred shares, from the issuance of notes payable, and
from the issuance of convertible promissory notes, there is no assurance that it
will be able to continue to do so. If we are unable to raise additional capital
or secure additional lending in the near future, management expects that the
Company will need to curtail its operations. Our consolidated financial
statements do not include any adjustments related to the recoverability and
classification of assets or the amounts and classification of liabilities that
might be necessary should the company be unable to continue as a going concern.



Our forecast of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary materially because of a
number of factors. We have based this estimate on assumptions that may prove to
be wrong and could utilize our available capital resources sooner than we
currently expect. Our capital requirements are difficult to forecast. Please see
the section titled "Risk Factors" in our Annual Report on Form 10-K as filed
with the SEC on April 15, 2022 for additional risks associated with our capital
requirements.



Until such time as we generate substantial product revenue to offset operational
expenses, we expect to finance our cash needs through a combination of public
and private equity offerings and debt financings. We may be unable to raise
capital or enter into such other arrangements when needed or on favorable terms
or at all. Our failure to raise capital or enter into such other arrangements as
and when needed would have a negative impact on our financial condition.



Contractual obligations and off-balance sheet arrangements


Contractual Obligations


We have certain fixed contractual obligations and commitments that include
future estimated payments. Changes in our business needs, cancellation
provisions, changing interest rates, and other factors may result in actual
payments differing from the estimates. We cannot provide certainty regarding the
timing and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, to assist in the review of this information within the context of our
consolidated financial position, results of operations, and cash flows.



The following tables summarize our contractual obligations as of June 30, 2022,
and the effect these obligations are expected to have on our liquidity and
cash
flows in future periods.



                                                            Payments Due by Period
                                                  Less than
Contractual obligations:             Total          1 year        1-3 years       3-5 years       5 + years
Notes payable                     $ 1,175,958     $ 1,154,917     $   21,041     $         -     $         -
Note payable - related party          250,000               -        250,000               -               -
Convertible note payable            1,020,000       1,020,000              -               -               -
Interest on notes payable             328,525         328,525              -               -               -
Operating lease gross base rent       510,209         147,275        289,040          73,894               -
Total                             $ 3,284,692     $ 2,650,717     $  560,081     $    73,894     $         -



We enter into agreements in the normal course of business with contract research and testing organizations, product distributors and materials suppliers which are payable or cancellable at any time with 30 days prior written approval.


                                      48




Off-balance sheet arrangements

We have no off-balance sheet arrangements during the period presented as defined in the rules and regulations of the SECOND.

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