UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~March~~June 3130, 2022

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ~~_______~~__________ to ~~_______~~__________

Commission File No. 000-53554

DAIS CORPORATION

(Exact name of Registrant as specified in its charter)

New York		14-1760865
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

11552 Prosperous Drive, Odessa, Florida		33556
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (727) 375-8484

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an emerging growth company. See the definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large, accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 910,~~415~~126,~~425~~228 shares of the Registrant’s $0.01 par value common stock outstanding as of ~~May~~August 2318, 2022.

DAIS CORPORATION

TABLE OF CONTENTS

		Page No.	~~Page No.~~
PART I. FINANCIAL INFORMATION	~~PART I. FINANCIAL INFORMATION~~
Item 1.	Financial Statements	3	3
	Condensed Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021		3
	Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021	3
	Condensed Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)		4
	Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	4
	Condensed Statement of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021 (unaudited)		5
	Condensed Statement of Stockholders’ Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited)	5
	Condensed Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)		6
	Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29	25
Item 4.	Controls and Procedures	29	25
PART II. OTHER INFORMATION	~~PART II. OTHER INFORMATION~~
Item 1.	Legal Proceedings	30	26
Item 1A.	Risk Factors	30	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30	26
Item 3.	Defaults Upon Senior Securities	30	26
Item 4.	Mine Safety Disclosures	30	26
Item 5.	Other Information	30	26
Item 6.	Exhibits	31	27
SIGNATURES		32	28

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DAIS CORPORATION

CONDENSED BALANCE SHEETS

	March 31,2022			December 31,2021
	June 30,2022			December 31,2021
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	8044,~~632~~150		$	773,423
Accounts receivable, net		2252,~~837~~295			51,917
Inventory		~~115~~212,~~274~~155			72,067
Prepaid expenses		8789,~~335~~666			32,637
Total Current Assets		~~306~~398,~~078~~266			930,044
Property and equipment, net		3735,~~937~~621			13,353
OTHER ASSETS:
Deposits		4,780			4,780
Patents, net		~~156~~154,~~142~~135			152,924
Total Other Assets		~~160~~158,~~922~~915			157,704
TOTAL ASSETS	$	~~504~~592,~~937~~802		$	1,101,101
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable, including related party payables of $259,226 and $282,729 at March 31, 2022 and December 31, 2021, respectively	$	926,705		$	922,305
Accounts payable, including related party payables of $263,292 and $282,729 at June 30, 2022 and December 31, 2021, respectively	$	951,003		$	922,305
Accrued expenses, other, including interest due to related party of $2,148,541 and $2,153,723 at March 31, 2022 and December 31, 2021, respectively		2,980,342			2,945,918
Accrued expenses, other, including interest due to related party of $2,369,086 and $2,153,723 at June 30, 2022 and December 31, 2021, respectively		3,248,184			2,945,918
Accrued compensation and related benefits		2,~~217~~221,~~610~~779			2,208,692
Customer deposits		81360,~~307~~454			35,306
Advance payment received for convertible note		15,000			15,000
Advance payment received for purchase of common stock		30,000			30,000
Notes payable to related parties		2,174,897			2,174,897
Current portion of deferred revenue		~~286~~273,~~156~~656			298,656
Note payable – due within one year		376,000			376,000
Convertible notes payable, net of unamortized discount and debt costs of $1,032,715 and $1,437,838, respectively		599,285			194,162
Convertible notes payable, net of unamortized discount and debt costs of $788,557 and $1,437,838, respectively		1,098,443			194,162
Total Current Liabilities		910,~~687~~749,~~302~~416			9,200,936
Notes payable – due after one year		272,340			272,340
Total Liabilities		911,~~959~~021,~~642~~756			9,473,276
STOCKHOLDERS’ DEFICIT
Preferred stock, undesignated; $0.01 par value; 7,990,000 shares authorized; no shares issued and outstanding		-			-
Preferred stock, Series A; $0.01 par value; 2,000,000 shares authorized; no shares issued and outstanding		-			-
Preferred stock, Series B; $0.01 par value; 10,000 shares authorized; 10 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		-			-
Preferred stock, Series B; $0.01 par value; 10,000 shares authorized; 10 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		-			-
Common stock; $0.01 par value; 1,100,000,000 shares authorized; 9,415,425 and 9,415,425 shares issued and 9,414,796 and 9,414,796 shares outstanding on March 31, 2022 and December 31, 2021, respectively		94,154			94,154
Common stock; $0.01 par value; 1,100,000,000 shares authorized; 9,269,562 and 9,415,425 shares issued and 9,268,933 and 9,414,796 shares outstanding at June 30, 2022 and December 31, 2021, respectively		92,695			94,154
Capital in excess of par value		50,818,885			50,818,885
Common stock to be issued, 1,000,000 and no shares, respectively		10,000			-
Accumulated deficit		(58,905,632	)		(57,823,102	)
Capital in excess of par value		51,056,094			50,818,885
		(7,992,593	)		(6,910,063	)
Accumulated deficit		(60,125,631	)		(57,823,102	)
Treasury stock at cost, 629 shares at March 31, 2022 and December 31, 2021, respectively		(1,462,112	)		(1,462,112	)
		(8,966,842	)		(6,910,063	)
Total Stockholders’ Deficit		(9,454,705	)		(8,372,175	)
Treasury stock at cost, 629 shares at June 30, 2022 and December 31, 2021, respectively		(1,462,112	)		(1,462,112	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	504,937		$	1,101,101
Total Stockholders’ Deficit		(10,428,954	)		(8,372,175	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	592,802		$	1,101,101

See accompanying Notes to Unaudited Condensed Financial Statements

Table of Contents

DAIS CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months EndedMarch 31,
	For the Three Months Ended						For the Six Months Ended
	2022			2021
	June 30,						June 30,
REVENUE
	2022			2021			2022			2021
Sales	$	43,195		$	62,809
REVENUE
Royalty and license fees		12,500			12,500
Sales	$	117,699		$	109,181		$	160,894		$	171,990
		55,695			75,309
Royalty and license fees		12,500			12,500			25,000			25,000
COST OF GOODS SOLD		52,440			37,860
		130,199			121,681			185,894			196,990
GROSS MARGIN		3,255			37,449
COST OF GOODS SOLD		177,205			45,030			229,645			82,890
OPERATING EXPENSES
GROSS MARGIN		(47,006	)		76,651			(43,751	)		114,100
Research and development, net of government grant proceeds of $0 and $31,080 for the three months ended March 31, 2022 and 2021, respectively		64,873			13,517
OPERATING EXPENSES
Selling, general and administrative		425,276			261,387
Research and development, net of government grant proceeds of $0, $29,886, $0 and $60,966, respectively		61,748			26,329			126,621			39,846
TOTAL OPERATING EXPENSES		490,149			274,904
Selling, general and administrative		403,349			1,023,687			828,625			1,285,074
LOSS FROM OPERATIONS		(486,894	)		(237,455	)
TOTAL OPERATING EXPENSES		465,097			1,050,016			955,246			1,324,920
OTHER INCOME (EXPENSE)
LOSS FROM OPERATIONS		(512,103	)		(973,365	)		(998,997	)		(1,210,820	)
Interest expense		(595,636	)		(200,852	)
OTHER INCOME (EXPENSE)
Change in fair value of derivative		-			2,181,367
Interest expense		(707,896	)		(159,956	)		(1,303,532	)		(360,808	)
TOTAL OTHER INCOME (EXPENSE), NET		(595,636	)		1,980,515
Change in fair value of derivative liabilities		-			60,311			-			2,241,678
NET INCOME (LOSS)	$	(1,082,530	)	$	1,743,060
Gain on extinguishment of debt		-			1,148,554			-			1,148,554
NET LOSS PER COMMON SHARE, BASIC	$	(0.12	)	$	6.27
TOTAL OTHER INCOME (EXPENSE), NET		(707,896	)		1,048,909			(1,303,532	)		3,029,424
NET LOSS PER COMMON SHARE, DILUTED		(0.12	)		(0.02	)
NET INCOME (LOSS)	$	(1,219,999	)	$	75,544		$	(2,302,529	)	$	1,818,604
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,414,796			278,128
NET INCOME (LOSS) PER COMMON SHARE, BASIC	$	(0.13	)	$	0.02		$	(0.24	)	$	1.29
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,414,796			15,392,916
NET LOSS PER COMMON SHARE, DILUTED	$	(0.13	)	$	(0.13	)	$	(0.24	)	$	(0.17	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,717,827			3,691,248			9,567,149			1,994,429
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,717,827			16,964,471			9,567,149			278,128

See accompanying Notes to Unaudited Condensed Financial Statements

Table of Contents

DAIS CORPORATION

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE ~~THREE~~SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022 AND 2021

(Unaudited)

	Preferred Stock				Common Stock					~~Capital~~Common inStock ~~Excess of Par~~to		~~Accumulated~~Capital in Excess of Par			~~Treasury~~Accumulated			~~Total Stockholders’~~Treasury			Total Stockholders’
	Shares		Amount		Shares		Amount			~~Value~~be issued		~~Deficit~~Value			~~Stock~~Deficit			~~Deficit~~Stock			Deficit
Balance at December 31, 2021		10	$	-		9,415,425	$	94,154		$	~~50,818,885~~	$	~~(57~~50,~~823~~818,~~102~~885	)	$	(157,~~462~~823,~~112~~102	)	$	(81,~~372~~462,~~175~~112	)	$	(8,372,175	)
Net income		-		-		-		-			-		(1,082,530	)		-			(1,082,530	)
Net loss for the three months ended March 31, 2022		-		-		-		-					-			(1,082,530	)		-			(1,082,530	)
Balance at March 31, 2022		10	$	-		9,415,425	$	94,154		$	~~50,818,885~~	$	~~(58~~50,~~905~~818,~~632~~885	)		(158,~~462~~905,~~112~~632	)	$	(91,~~454~~462,~~705~~112	)		(9,454,705	)
Balance at December 31, 2020		10	$	-		278,757	$	2,788		$	45,976,600	$	(56,974,063	)	$	(1,462,112	)	$	(12,456,727	)
Shares issued for conversion of debt and finance cost		-		-		457,500		4,575					41,175			-			-			45,750
Net income		-		-		-		-			-		1,743,060			-			1,743,060
Cashless exercise of warrants		-		-		396,637		3,966					(3,966	)		-			-			-
Balance at March 31, 2021		10	$	-		278,757	$	2,788		$	45,976,660	$	(55,231,003	)	$	(1,462,112	)	$	(10,713,667	)
Shares Cancelled – to be reissued						(1,000,000		(10,000	)		10,000
Beneficial conversion feature of debt													200,000									200,000
Net loss for the three months ended June 30, 2022		-		-		-		-					-			(1,219,999	)		-			(1,219,999	)
Balance at June 30, 2022		10	$	-		9,269,562	$	92,695		$	10,000	$	51,034,374		$	(60,125,631	)	$	(1,462,112	)	$	(10,428,954	)
Balance at December 31, 2020		10	$	-		278,757	$	2,788				$	45,976,660		$	(56,974,063	)	$	(1,462,112	)	$	(12,456,727	)
Net income for the three months ended March 31, 2021		-		-		-		-					-			1,743,060			-			1,743,060
Balance at March 31, 2021		10		-		278,757		2,788					45,976,660			(55,231,003	)		(1,462,112	)		(10,713,667	)
Shares and warrants issued for services						2,100,000		21,000					730,457									751,457
Shares and warrants issued for settlement of debt						7,036,668		70,366					2,616,768									2,687,134
Net income for the three months ended June 30, 2021		-		-		-		-					-			75,544			-			75,544
Balance at June 30, 2021		10	$	-		9,415,425	$	94,154				$	49,323,885		$	(55,155,459	)	$	(1,462,112	)	$	(7,199,532	)

See accompanying Notes to Unaudited Condensed Financial Statements

Table of Contents

DAIS CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months EndedMarch 31,
	For the Six Months EndedJune 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(12,~~082~~302,~~530~~529	)	$	1,~~743~~818,~~060~~604
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		613,~~682~~949			510,~~550~~605
Change in fair value of derivative liability		-			(2,181,367	)
Stock based compensation		-			751,457
Non-cash interest expenses		-			75,133
Change in fair value of derivative liability		-			(2,241,678	)
Amortization of debt discount and debt costs		405,123			-
Gain on extinguishment of debt		-			(1,148,554	)
Non-cash interest expenses		750			124,290
Amortization of debt discount and debt costs		849,282			-
(Increase) decrease in:
Accounts receivable		~~29,080~~(378	)		~~502~~(16,482	)
Inventory		(43140,~~207~~088	)		(~~5,302~~610	)
Other receivables		-			(1816,~~494~~664	)
Prepaid expenses/Other assets		(5457,~~698~~029	)		(631,~~710~~000	)
Increase (decrease) in:
Accounts payable		428,~~400~~698			438,~~253~~033
Accrued expenses		43315,~~342~~352			~~169~~323,~~264~~006
Customer deposits		46325,~~001~~148			1650,~~261~~036
Deferred revenue		(1225,~~500~~000	)		(1225,~~500~~000	)
Net cash used in operating activities		(~~658~~991,~~307~~845	)		(~~171~~393,~~350~~957	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in property and equipment		(26,435	)		-
Increase in patent costs		(810,~~049~~993	)		(612,~~812~~064	)
Net cash used in investing activities		(3437,~~484~~428	)		(612,~~812~~064	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - related parties		-			49,297
Proceeds from note payable		-300,000			~~122~~435,340
Repayment of note payable		-			(26,200	)
Net cash provided by financing activities		-300,000			~~145~~458,437
Net decrease in cash		(~~692~~729,~~791~~273	)		~~(32~~52,~~725~~416	)
Cash, beginning of period		773,423			36,516
Cash, end of period	$	8044,~~632~~150		$	388,~~791~~932
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	154,398		$	-
NON-CASH FINANCING AND FINANCING ACTIVITIES
Issuance of common stock and warrants upon settlement of notes and accrued interest	$	-		$	2,687,134
Issuance of common stock upon conversion of notes	$	45,750			-
Notes and accrued interest settled with common stock and warrants	$	-		$	2,107,414
Beneficial conversion feature of convertible debt	$	200,000			-
Derivative liability extinguished	$	-		$	1,728,274

See accompanying Notes to Unaudited Condensed Financial Statements

Table of Contents

Dais Corporation

Notes to Condensed Financial Statements

~~March~~June 3130, 2022 and 2021

(Unaudited)

Note 1. Background Information

Dais Corporation (“Dais”, “us,” “we,”, the “Company”), a New York corporation, is a nano-structured polymer technology materials company having developed and now commercializing products using its family of nanomaterial called Aqualyte. Aqualyte itself is the first product being commercialized. The second commercial product is called ConsERV, a fixed plate energy recovery ventilator which we believe is useful in meeting building indoor fresh air requirements while saving energy and lowering emissions for most forms of heating, ventilation, and air conditioning (HVAC) equipment. The Company was incorporated in April 1993 and its corporate headquarters is in Odessa, Florida.

The Company is dependent on third parties to manufacture the key components needed for its nanostructured materials and some portion of the value-added products made with these materials. Accordingly, a suppliers’ failure to supply components in a timely manner, or to supply components that meet the Company’s quality, quantity and cost requirements or technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of the Company’s products and/or increase its unit costs of production. Certain of the components or the processes of the Company’s suppliers are proprietary. If the Company was ever required to replace any of its suppliers, it should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production and may briefly affect the Company’s operations.

Basis of Presentation

The Company’s accompanying condensed financial statements are unaudited, but in the opinion of management reflect all adjustments necessary to fairly state the Company’s financial position, results of operations, stockholders’ deficit and cash flows as of and for the dates and periods presented. The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.

The unaudited financial statements and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted although the Company generally believes that the disclosures are adequate to ensure that the information presented is not misleading. The accompanying financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2022. The results of operations for the three- and six month ~~period~~periods ended ~~March~~June 3130, 2022 are not necessarily indicative of the results that may be expected for any future quarters or for the entire year ending December 31, 2022.

~~Note~~7 2.Table ~~Going~~of ~~Concern and Management’s Plans~~Contents

~~The~~Note ~~accompanying financial statements have been prepared assuming the Company will continue as a going concern~~2. ~~The~~Going ~~Company~~Concern ~~has incurred significant losses since inception, incurred a loss of $1,082,530 for the three months ended March 31, 2022~~ and, ~~as of March 31, 2022, the Company has an accumulated deficit of $58,905,632, total stockholders~~Management’ deficit of $9,454,705, negative working capital of $9,381,224 and cash of $80,632. The Company used $658,307 and $171,350 of cash in operations during the three months ended March 31, 2022 and 2021, respectively, which was funded primarily by proceeds from loans from related parties and equity financings. There is no assurance that any such financing will be available in the future. These factors raise substantial doubt about the Company’s ~~ability to continue as a going concern. The Company is currently pursuing the following sources of short and long-term working capital:~~Plans

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has ~~selected~~incurred ~~targeted~~significant ~~parties~~losses ~~that~~since itinception, isincurred ~~actively~~a ~~working~~loss ~~with~~of ~~who~~$2,302,529 ~~are~~for ~~interested~~the insix ~~licensing~~months ended June 30, ~~purchasing~~2022 and, as of June 30, 2022, the ~~rights~~Company tohas an accumulated deficit of $60,125,631, ortotal ~~establishing~~stockholders’ adeficit ~~joint~~of ~~venture~~$10,428,954, tonegative ~~commercialize~~working ~~applications~~capital of $10,351,150 and cash of $44,150. The Company used $991,845 and $393,957 of cash in operations during the six months ended June 30, 2022 and 2021, respectively, which was funded primarily by proceeds from loans from related parties and others. There is no assurance that any such financing will be available in the future. These factors raise substantial doubt about the Company’s ~~technology;~~ ability to continue as a going concern. The Company is currently pursuing the following sources of short and long-term working capital:

The Company ~~continues~~has toselected ~~seek~~targeted ~~capital~~parties ~~from~~that ~~certain~~it ~~strategic~~is ~~and/or~~actively ~~government~~working ~~grant~~with ~~opportunities~~who ~~and~~are ~~related~~interested ~~sources.~~in ~~These~~licensing, ~~sources~~purchasing ~~may,~~the ~~pursuant~~rights to, ~~any~~or ~~agreements~~establishing ~~that~~a ~~may~~joint beventure ~~developed~~to incommercialize ~~conjunction~~applications ~~with~~of ~~such funding, assist in~~ the ~~product~~Company’s ~~definition and design, roll-out and channel penetration of products~~technology; ~~and~~

The Company iscontinues ~~actively~~to ~~working~~seek ~~with~~capital ~~newer~~from ~~investors,~~certain ~~private~~strategic ~~equity~~and/or ~~companies,~~government ~~purchase~~grant ~~order~~opportunities ~~financing parties,~~ and ~~seemingly~~related ~~increased~~sources. ~~its~~These ~~value~~sources ~~and~~may, ~~potential~~pursuant to ~~attract~~any ~~new~~agreements ~~investors~~that inmay ~~the~~be ~~eyes~~developed ofin ~~the~~conjunction ~~Management~~with ~~team~~such ~~when~~funding, ~~the~~assist ~~Company completed the exchange program of ‘debt to equity’~~ in the ~~2nd~~product ~~quarter~~definition ofand ~~2021~~design, ~~clearing~~ roll-out ~~all~~and ~~convertible~~channel ~~debt~~penetration ~~in exchange for equity at a fixed price at the end~~ of ~~the~~products; ~~second quarter of 2021.~~and

7The ~~Table~~Company is actively working with newer investors, private equity companies, purchase order financing parties, and seemingly increased its value and potential to attract new investors in the eyes of ~~Contents~~the Management team when the Company completed the exchange program of ‘debt to equity’ in the 2nd quarter of 2021 clearing out all convertible debt in exchange for equity at a fixed price at the end of the second quarter of 2021.

Failure by us to timely procure additional financing or investment adequate to fund the ongoing operations, including planned product development initiatives and commercialization efforts, or experience a major supply chain disruption will have material adverse consequences on our financial condition, results of operations and cash flows as could any unfavorable terms. While we believe the Company’s prospects have improved for funding, there are no assurances we will be able to obtain the financing and planned product development commercialization. The Company may fail to reach an accord with the Senior Secured Note Holder who has deep rights with the assets of the Company pledged as security for repayment of the Note. Accordingly, we may not have the ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern.

Note 3. Significant Accounting Policies

The significant accounting policies followed are:

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates underlying the Company’s reported financial position and results of operations include the allowance for doubtful accounts, fair value of stock-based compensation, fair value of derivative liabilities, valuation allowance on deferred taxes and the warranty reserve.

Revenue recognition - The Company has adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions. Generally, the Company recognizes revenue for its products upon shipment to customers, provided no significant obligations remain and collection is probable.

In8 ~~certain~~Table ~~instances, the Company’s ConsERV system product may carry a limited warranty~~ of up to one year for all parts contained therein except for the energy recovery ventilator core produced and sold by the Company. The distributor of the ConsERV system may carry a limited warranty of up to ten years. The limited warranty includes replacement of defective parts for the ConsERV system and includes workmanship and material failure for the ConsERV core. The Company recorded an accrual of $91,531 for future warranty expenses at March 31, 2022, and December 31, 2021, which is included in accrued expenses, other.Contents

~~Royalty~~In ~~revenue~~certain isinstances, ~~recognized~~the asCompany’s ~~earned.~~ConsERV ~~The~~system ~~Company~~product ~~recognized~~may ~~royalty~~carry ~~revenue~~a limited warranty of $0up to one year for ~~the~~all ~~three~~parts ~~months~~contained ~~ended~~therein ~~March~~except ~~31,~~for ~~2022~~the ~~and~~energy ~~2021,~~recovery ~~respectively.~~ventilator ~~Revenue~~core ~~derived~~produced ~~from~~and sold by the ~~sale~~Company. The distributor of ~~licenses~~the isConsERV ~~deferred~~system ~~and~~may ~~recognized~~carry asa ~~license~~limited ~~fee~~warranty ~~revenue~~of onup ato ~~straight-line~~ten ~~basis~~years. ~~over~~The ~~the~~limited ~~life~~warranty includes replacement of defective parts for the ~~license,~~ConsERV orsystem ~~until~~and ~~the~~includes ~~license~~workmanship ~~arrangement~~and ismaterial ~~terminated~~failure for the ConsERV core. The Company ~~recognized~~recorded ~~license~~an ~~fee~~accrual ~~revenue~~ of $1291,~~500~~531 ~~and $12,500~~ for ~~the~~future ~~three~~warranty ~~months~~expenses ~~ended~~at ~~March~~June 3130, 2022, and December 31, 2021, ~~respectively~~which is included in accrued expenses, other.

~~The~~Royalty ~~Company~~revenue ~~accounts~~is ~~for~~recognized ~~revenue~~as ~~arrangements~~earned. ~~with~~The ~~multiple~~Company ~~elements~~recognized ~~under~~royalty ~~the~~revenue ~~provisions~~ of ~~ASC~~$0 ~~Topic~~for ~~605-25,~~the ~~“Revenue~~three ~~Recognition-Multiple-Element~~months ~~Arrangements.”~~ended ToJune ~~account~~30, ~~for~~2022 ~~these~~and ~~agreements~~2021, ~~the~~respectively. ~~Company~~Revenue ~~must~~derived ~~identify~~from the ~~deliverables~~sale ~~included~~of ~~within~~licenses ~~the~~is ~~agreement~~deferred and ~~evaluate~~recognized ~~which~~as ~~deliverables~~license ~~represent~~fee ~~separate~~revenue ~~units~~on ofa ~~accounting~~straight-line ~~based~~basis onover ifthe ~~certain~~life ~~criteria~~of ~~are~~the ~~met~~license, ~~including~~or ~~whether~~until the ~~delivered~~license ~~element~~arrangement ~~has~~is ~~stand-alone~~terminated. ~~value~~The toCompany ~~the~~recognized ~~licensee.~~license ~~The~~fee ~~consideration~~revenue ~~received~~of is$12,500 ~~allocated~~and ~~among~~$12,500 for the ~~separate~~three ~~units~~months ofended ~~accounting~~June 30, 2022 and ~~the~~2021, ~~applicable~~respectively ~~revenue~~and ~~recognition~~$25,000 ~~criteria~~and ~~are~~$25,000 ~~applied~~for tothe ~~each~~six ofmonths ~~the~~ended ~~separate~~June ~~units~~30, 2022 and 2021, respectively.

InThe ~~December 2017, the~~ Company ~~and~~accounts ~~Zhejiang~~for ~~MENRED~~revenue ~~Environmental~~arrangements ~~Tech~~with ~~Co,~~multiple ~~Ltd.,~~elements ~~Zhejiang~~under ~~Province, China (“Menred”), entered into a License and Supply Agreement (~~the ~~“Agreement”),~~provisions ~~effective~~of ~~December~~ASC ~~21,~~Topic ~~2017. Pursuant to the Agreement~~605-25, ~~the~~“Revenue ~~Company~~Recognition-Multiple-Element ~~licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of energy recovery ventilators (“ERV~~Arrangements.”) ~~and~~To ~~certain~~account ~~other HVAC systems~~ for ~~installation~~these ~~in commercial~~agreements, ~~residential, or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from~~ the Company ~~for~~must ~~Menred’s~~identify ~~use, pursuant to~~ the ~~terms~~deliverables ~~and~~included ~~conditions~~within of the ~~Agreement.~~agreement ~~Menred~~and ~~will~~evaluate ~~also~~which ~~pay~~deliverables ~~royalties,~~represent asseparate ~~defined,~~units toof ~~the~~accounting ~~Company on a quarterly basis,~~ based on ~~price~~if ~~and~~certain ~~production~~criteria ~~volume as provided by Menred. No royalties~~ are ~~due~~met, ~~within~~including whether the ~~first~~delivered ~~year~~element ofhas ~~the~~stand-alone ~~Agreement.~~value ~~Also pursuant~~ to the ~~Agreement,~~licensee. ~~the~~The ~~Company~~consideration received is ~~required~~allocated toamong ~~purchase~~the ~~50,000~~separate ~~square~~units ~~meters~~ of ~~Product from Menred for delivery as an annual minimum with a 10~~accounting,~~000~~ ~~square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions. Shipping~~ and ~~handling~~the ~~fees~~applicable ~~billed to customers are included in~~ revenue. ~~Shipping~~recognition ~~and~~criteria ~~handling fees associated with freight~~ are ~~generally~~applied ~~included~~to ineach ~~cost~~ of ~~revenue~~the separate units.

8In ~~Table~~December 2017, the Company and Zhejiang MENRED Environmental Tech Co, Ltd., Zhejiang Province, China (“Menred”), entered into a License and Supply Agreement (the “Agreement”), effective December 21, 2017. Pursuant to the Agreement, the Company licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of ~~Contents~~energy recovery ventilators (“ERV”) and certain other HVAC systems for installation in commercial, residential, or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from the Company for Menred’s use, pursuant to the terms and conditions of the Agreement. Menred will also pay royalties, as defined, to the Company on a quarterly basis, based on price and production volume as provided by Menred. No royalties are due within the first year of the Agreement. Also pursuant to the Agreement, the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions. Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with freight are generally included in cost of revenue.

Cash and cash equivalents - For purposes of the Statements of Cash Flows, the Company considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions, and, at times, balances may exceed federally insured limits. The Company had uninsured balances of approximately $0 and $483,000 at ~~March~~June 3130, 2022 and December 31, 2021, respectively. The Company has never experienced any losses related to these balances. The company does not have any cash equivalents at ~~March~~June 3130, 2022 and December 31, 2021.

Concentrations – At ~~March~~June 3130, 2022, ~~one~~two ~~customer~~customers accounted for 100% of accounts receivable. At December 31, 2021, two customers accounted for 100% of accounts receivable. For the ~~three~~six months ended ~~March~~June 3130, 2022, four customers accounted for 8390% of total revenue. For the ~~three~~six months ended ~~March~~June 3130, 2021, three customers accounted for 8574% of total revenue.

Fair Value of Financial Instruments - The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue, customer deposits and notes payable are carried at historical cost. At ~~March~~June 3130, 2022 and December 31, 2021 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

Inventory - Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost, determined by first-in, first-out method, or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors. At ~~March~~June 3130, 2022 and December 31, 2021, the Company had $9282,~~529~~040 and $59,631 of raw materials, $2106,~~095~~541 and $1,844 of in-process inventory and $2023,~~650~~574 and $10,592 of finished goods inventory, respectively. A reserve is recorded for any inventory deemed excessive or obsolete. No reserve is recorded at ~~March~~June 3130, 2022 and December 31, 2021, respectively.

Property and equipment - Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 7 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Depreciation expense was $12,~~851~~317 and $~~988~~367 for the three months ended ~~March~~June 3130, 2022 and 2021, respectively, and $4,167 and $1,355 for the six months ended June 30, 2022 and 2021, respectively. Gains and losses upon disposition are reflected in the Statement of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. There were no dispositions of property and equipment in 2022 or 2021.

~~Intangible~~9 ~~assets~~Table - Identified intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company’s existing intangible assets consist solely of patents. Patents are amortized over their estimated useful or economic lives of 17 years. Patent amortization expense was $4,831 and $4,562 for the three months ended March 31, 2022 and 2021, respectively. Based on current capitalized costs, total patent amortization expense is estimated to be approximately $19,400 per year for the next five years and thereafter.Contents

~~Research~~Intangible ~~and~~assets ~~development~~- ~~expenses~~Identified ~~and~~intangible ~~funding~~assets ~~proceeds~~are -reviewed ~~Expenditures~~ for ~~research~~impairment ~~and~~whenever ~~development~~events ~~are~~or ~~expensed~~changes asin ~~incurred~~circumstances indicate that the carrying amount may not be recoverable. The Company’s ~~incurred~~existing ~~research~~intangible ~~and~~assets ~~development~~consist ~~costs~~solely of patents. Patents are amortized over their estimated useful or economic lives of 17 years. Patent amortization expense was $644,~~873~~951 and $444,~~597~~688 for the three months ended ~~March~~June 3130, 2022 and 2021, respectively. ~~The~~and ~~Company~~$9,782 ~~accounts~~and ~~for~~$9,250 ~~proceeds received from government funding~~ for ~~research~~the assix amonths ~~reduction~~ended inJune ~~research~~30, 2022 and ~~development~~2021, ~~costs~~respectively. ~~The~~Based ~~Company~~on ~~recorded~~current ~~proceeds~~capitalized ~~against~~costs, ~~research~~total ~~and~~patent ~~development~~amortization ~~expenses~~expense onis ~~the~~estimated ~~Statements~~to ofbe ~~Operations~~approximately of $019,400 ~~and~~per ~~$31,080~~year for the ~~three~~next ~~months~~five ~~ended~~years ~~March 31, 2022~~ and ~~2021, respectively~~thereafter.

~~Derivative~~Research ~~Liability~~and development expenses and funding proceeds - Expenditures for research and development are expensed as incurred. The Company incurred research and development costs of $61,748 upand ~~until~~$56,215 for the three months ended June 30, 2022 and 2021, ~~had~~respectively ~~financial~~and ~~instruments~~$126,621 ~~that~~and ~~are~~$100,812 ~~considered~~for ~~derivatives~~the orsix ~~contain~~months ~~embedded~~ended ~~features~~June ~~subject~~30, to2022 ~~derivative~~and ~~accounting~~2021, respectively. The ~~Embedded~~Company ~~derivatives~~accounts ~~are~~for ~~valued~~proceeds ~~separately~~received from ~~the~~government ~~host~~funding ~~instrument~~for ~~and~~research ~~are recognized~~ as ~~derivative~~a ~~liabilities~~reduction in ~~the~~research ~~Company’s~~and ~~balance~~development ~~sheet~~costs. The Company ~~measures~~recorded ~~these~~proceeds ~~instruments~~against atresearch ~~their~~and ~~estimated~~development ~~fair~~expenses ~~value~~on the Statements of Operations of $0 and ~~recognizes~~$29,886 ~~changes~~for inthe ~~their~~three ~~estimated~~months ~~fair~~ended ~~value~~June in30, ~~results~~2022 ofand ~~operations~~2021, ~~during~~respectively and $0 and $60,966 for the ~~period~~six ofmonths ~~change~~ended June 30, 2022 and 2021, respectively.

~~Fair~~Derivative ~~Value~~Liability ~~Measurements~~ - The Company, ~~accounts~~up ~~for~~until ~~financial~~June ~~instruments~~30, ~~in accordance with ASC 820 “Fair value Measurement and Disclosures”. ASC 820 defines fair value~~2021, ~~establishes~~had afinancial ~~framework~~instruments ~~for~~that ~~measuring~~are ~~fair~~considered ~~value~~derivatives ~~and~~or ~~expands~~contain ~~disclosures~~embedded ~~about~~features ~~fair~~subject ~~value~~to ~~measurements~~derivative accounting. ~~ASC~~Embedded ~~820~~derivatives ~~defines~~are ~~fair~~valued ~~value~~separately asfrom the ~~exchange~~host ~~price~~instrument ~~that~~and ~~would~~are berecognized ~~received~~as ~~for~~derivative anliabilities ~~asset or paid to transfer a liability (an exit price)~~ in the ~~principal~~Company’s orbalance ~~most~~sheet. ~~advantageous~~The ~~market~~Company ~~for~~measures ~~the~~these ~~asset~~instruments orat ~~liability~~their inestimated ~~an orderly transaction between market participants on the measurement date. ASC 820 also establishes a~~ fair value ~~hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs)~~ and ~~(2)~~recognizes anchanges ~~entity’s~~in ~~own~~their ~~assumptions~~estimated ~~about~~fair ~~market~~value ~~participant~~in ~~assumptions~~results ~~developed~~of ~~based~~operations onduring the ~~best~~period ~~information~~of ~~available in the circumstances (unobservable inputs)~~change.

9Fair ~~Table~~Value ofMeasurements ~~Contents~~- The Company accounts for financial instruments in accordance with ASC 820 “Fair value Measurement and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

•· Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. •· Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. •· Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the ~~three~~six months ended ~~March~~June 3130, 2021:

	March 31,
	June 30,
	2021
Balance, beginning of period	$	3,845,662
Additions		75124,~~133~~290
Change in fair value of derivative liabilities		(2,181,367	)
Extinguished derivative liability		(1,728,274	)
Balance, end of period	$	1,739,428
Change in fair value of derivative liabilities		(2,241,678	)
Balance, end of period	$	-

Earnings (loss) per share - Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and are excluded from the calculation. Common share equivalents of 32,~~526~~576,731 ~~and 250,834~~ were excluded from the computation of diluted earnings per share for the three and six months ended ~~March~~June 3130, 2022 ~~and 2021, respectively,~~ because their effect is anti-dilutive.

~~Diluted~~10 ~~loss~~Table ~~per~~of ~~share for the three months ended March 31, 2021 is computed as follows:~~Contents

	Three Months Ended
	March 31,
	2021
Net income attributable to common shareholders	$	1,743,060
Income attributable to note derivatives
Change in fair value of derivatives		(2,181,367	)
Expense attributable to note derivatives
Interest expense		127,622
Diluted loss attributable to common shareholders	$	(310,685	)
Basic shares outstanding		278,128
Derivative notes and interest shares		15,114,788
Diluted shares outstanding		15,392,916
Diluted loss per share	$	(0.02	)

Reconciliation of diluted loss per share for the three and six month periods ended June 30, 2021 is as follows:

The Company had no derivative liabilities so measured for the three months ended March 31, 2022 and accordingly no diluted loss per share over that three-month period.

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Net income attributable to common shareholders	$	75,544		$	1,818,604
Income attributable to note derivatives
Change in fair value of derivatives		(60,311	)		(2,241,678	)
Gain on extinguishment of debt		(1,148,554	)		(1,148,554	)
Expense attributable to note derivatives
Interest expense		88,756			216,378
Diluted loss attributable to common shareholders	$	(1,044,565	)	$	(1,355,250	)

Basic shares outstanding		3,691,248			1,994,429
Derivative notes and interest shares		4,639,561			5,831,493
Diluted shares outstanding		8,330,809			7,825,922

Diluted loss per share	$	(0.13	)	$	(0.17	)

~~Recent~~The ~~Accounting~~Company ~~Pronouncements~~had -no ~~Recent~~derivative ~~accounting~~liabilities ~~pronouncements~~so ~~issued~~measured byfor the ~~FASB~~three and ~~the~~six ~~SEC~~months ~~did~~ended ~~not~~June or30, ~~are~~2022 ~~not~~and ~~believed~~accordingly byno ~~management~~diluted toloss ~~have~~per ashare ~~material~~over ~~impact~~those ~~on the Company’s present or future consolidated financial statements~~periods.

10Recent ~~Table~~Accounting ofPronouncements ~~Contents~~- Recent accounting pronouncements issued by the FASB and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Note 4. Accrued Expenses, Other

Accrued expenses, other consists of the following:

	March 31,		December 31,
	June 30,		December 31,
	2022		2021
Accrued expenses, other	$	~~655~~659,~~118~~970	$	656,810
Accrued interest		2,~~233~~496,~~693~~683		2,197,577
Accrued warranty costs		91,531		91,531
	$	23,~~980~~248,~~342~~184	$	2,945,918

Note 5. Related Party Transactions

The Company rents a building that is owned by two stockholders of the Company, one of which is the Chief Executive Officer. Rent expense for this building is $4,066 per month, including sales tax. The Company recognized rent expense ~~(including property tax charges)~~ related to this lease of $12,198 and $12,198 for the three months ended ~~March~~June 3130, 2022 and 2021, respectively and $24,396 and $24,396 for the six months ended June 30, 2022 and 2021, respectively. The lease term will terminate upon 30 days’ written notice from landlord or 90 days written termination from us. The lease is considered to be short term or month to month.

The Company has accrued compensation due to the Chief Executive Officer as of ~~March~~June 3130, 2022 and December 31, 2021 of $2,~~080~~089,~~298~~467 and $2,071,380, respectively, included in accrued compensation and related benefits in the accompanying balance sheets.

On June 24, 2016, the Company entered into a Loan and Security Agreement (“Security Agreement”) with the entity known as PKT Strategic Assets, LLC (the “Holder”) pursuant to which the Company issued a Senior Secured Promissory Note for $150,000 (the “Note”). The Note has an interest rate is 12% per annum compounded daily with a minimum interest payment of $2,000. The Note grants the Holder a secured interest in all the assets of the Company. During 2016 to the period ended ~~March~~June 3130, 2022, the Holder extended the Note pursuant to various amendments. Pursuant to the amendments, the principal amount and interest totaled $4,~~311~~532,~~938~~333 (including fees and other expenses). The Holder’s corporation is controlled by Ms. Tangredi, related to Tim Tangredi: the Company’s CEO and stockholder, and therefore, is a Related Party of the Company. The Company is to pay the Holder the principal, plus all interest and fees due in accordance with terms and conditions of the Security Agreement on the earlier of: (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii.) November 1, 2021 which has expired. The Holder has not declared the Note in Default as the Parties have reached a tentative agreement to several issues ~~with~~including ~~one being~~ the extension of the Maturity Date (the “Maturity Date”). The Parties are working to complete this agreement during the ~~second~~third quarter of 2022. The Company has recorded interest expense of $~~149~~220,~~066~~395 and $6366,~~983~~370 for the three-month ~~months~~periods ended ~~March~~June 3130, 2022 and 2021, respectively. and $369,461 and $130,353 for the six-month periods ended June 30, 2022 and 2021, respectively. We made a payment of fees and accrued interest totaling $154,398 during the ~~three~~six months ended ~~March~~June 3130, 2022. Accrued interest was $2,~~147~~367,~~041~~436 and $2,152,373 at ~~March~~June 3130, 2022 and December 31, 2021, respectively.

On11 ~~October~~Table ~~12, 2019, the Company entered a promissory note with an entity controlled by our Chief Executive Officer in the amount~~ of $10,000. The note bears interest at 10% per year and matured on October 12, 2021. Interest expense on the note was $150 for each of the three months ended March 31, 2022 and 2021. Accrued interest was $1,500 and $1,350 at March 31, 2022 and December 31, 2021, respectively. The Holder has not declared the Note in Default or extended the Maturity Date.Contents

On ~~February~~October 2712, ~~2015~~2019, the Company, ~~and~~entered ~~Tim~~a N.promissory ~~Tangredi,~~note ~~the~~with ~~Company’s Chief Executive Officer entered~~ an ~~amendment~~entity ~~(the~~controlled ~~“Tangredi~~by ~~Employment~~our ~~Agreement Amendment”) to Mr. Tangredi’s Amended and Restated Employment Agreement. Currently, the Company has non-interest-bearing accrued compensation due to the~~ Chief Executive Officer ~~for~~in ~~deferred~~the ~~salaries~~amount ~~earned~~of ~~and unpaid as described above~~$10,000. The ~~Tangredi~~note ~~Employment~~bears ~~Agreement~~interest ~~Amendment provides that, if~~ at ~~any~~10% ~~time~~per ~~during a calendar~~ year, ~~the~~and ~~unpaid~~matured ~~compensation~~on isOctober ~~greater than $500~~12,~~000,~~ Mr2021. ~~Tangredi~~Interest ~~must~~expense ~~convert~~on ~~$100,000 of unpaid compensation into~~ the ~~Company’s~~note ~~common~~was ~~stock~~$150 ~~during~~for ~~such~~each ~~calendar~~of ~~year.~~the ~~The~~three ~~conversion~~month ~~rate~~periods ~~shall~~ended beJune ~~equal~~30, to2022 ~~75%~~and of2021, ~~the~~respectively, ~~average~~and ~~closing~~was ~~price~~$300 for ~~the~~each ~~Company’s~~of ~~common stock for~~ the 30three ~~trading~~month ~~days~~periods ~~prior~~ended toJune ~~the~~30, ~~date~~2022 ofand ~~conversion.~~2021, ~~The Company shall also pay to Mr~~respectively. ~~Tangredi~~Accrued ainterest ~~cash~~was ~~payment~~$1,650 ~~equal~~and to$1,350 ~~20%~~at ofJune ~~the~~30, ~~compensation~~2022 ~~income~~and ~~incurred~~December ~~because~~31, of2021, ~~the conversion~~respectively. The ~~Company~~Holder has ~~waived~~not ~~the~~declared ~~conversion requirement from 2015 to~~ the ~~present. See~~ Note 13in ~~Commitments~~Default ~~and~~or ~~Contingencies~~extended ~~for further disclosure of~~ the ~~terms~~Maturity ~~of Mr~~Date. ~~Tangredi’s employment agreement.~~

~~Further,~~On atApril ~~any~~29, time any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) of greater of 40% of the then-outstanding voting power of the voting equity interests of the Company or a person or group initiate a tender offer for the Company’s common stock2022, ~~Mr. Tangredi may convert unpaid compensation into Class A Convertible Preferred Stock (“Class A Preferred Stock”) of~~ the Company atreceived a ~~conversion~~loan ~~price~~ of $~~1.50 per share. The Board of Directors waived the requirement to convert $~~100,000 offrom ~~unpaid~~its ~~compensation~~Chief ~~into~~Executive ~~common stock during 2016~~Officer. NoThis ~~amounts~~was ~~have~~repaid ~~been~~in ~~converted~~full ~~under~~on ~~the~~May ~~terms~~17, ~~of the Tangredi Employment Agreement Amendment to date~~2022.

11On ~~Table~~February 27, 2015, the Company, and Tim N. Tangredi, the Company’s Chief Executive Officer entered an amendment (the “Tangredi Employment Agreement Amendment”) to Mr. Tangredi’s Amended and Restated Employment Agreement. Currently, the Company has non-interest-bearing accrued compensation due to the Chief Executive Officer for deferred salaries earned and unpaid as described above. The Tangredi Employment Agreement Amendment provides that, if at any time during a calendar year, the unpaid compensation is greater than $500,000, Mr. Tangredi must convert $100,000 of ~~Contents~~unpaid compensation into the Company’s common stock during such calendar year. The conversion rate shall be equal to 75% of the average closing price for the Company’s common stock for the 30 trading days prior to the date of conversion. The Company shall also pay to Mr. Tangredi a cash payment equal to 20% of the compensation income incurred because of the conversion. The Company has waived the conversion requirement from 2015 to the present. See Note 13 Commitments and Contingencies for further disclosure of the terms of Mr. Tangredi’s employment agreement.

~~The~~Further, ~~above~~at any time any “person” or “group” (as such terms are used in Sections 13(d) and ~~amounts~~14(d) ~~are~~of ~~not~~the ~~necessarily~~Securities ~~indicative~~Exchange Act of 1934) becomes the ~~terms~~“beneficial owner” (as defined in Rules 13(d)-3 and ~~amounts~~13(d)-5 ~~that~~under ~~would~~such Act) of greater of 40% of the then-outstanding voting power of the voting equity interests of the Company or a person or group initiate a tender offer for the Company’s common stock, Mr. Tangredi may convert unpaid compensation into Class A Convertible Preferred Stock (“Class A Preferred Stock”) of the Company at a conversion price of $1.50 per share. The Board of Directors waived the requirement to convert $100,000 of unpaid compensation into common stock during 2016. No amounts have been ~~incurred~~converted ~~had~~under ~~comparable~~the ~~transactions~~terms ~~been~~of ~~entered~~the ~~into~~Tangredi ~~with~~Employment ~~independent~~Agreement ~~parties~~Amendment to date.

~~Note~~The 6.above ~~Equity~~terms ~~Transactions~~and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.

~~Preferred~~Note ~~Stock~~6. Equity Transactions

AtPreferred March 31, 2022 and December 31, 2021, the Company’s Board of Directors has authorized 10,000,000 shares of preferred stock with a par value of $0.01 to be issued in series with terms and conditions to be determined by the Board of Directors.Stock

~~2,000,000~~At ofJune ~~the~~30, ~~shares~~2022 ofand ~~preferred~~December ~~stock~~31, ~~had~~2021, ~~been~~the ~~designated~~Company’s asBoard ~~Class~~of ADirectors ~~Preferred~~has ~~Stock.~~authorized ~~The~~10,000,000 ~~Class~~shares Aof ~~Preferred~~preferred ~~Stock~~stock ~~shall~~with ~~entitle~~a ~~the~~par ~~holder~~value ~~thereof~~of $0.01 to ~~150~~be ~~votes~~issued onin ~~all~~series ~~matters~~with ~~submitted~~terms and conditions to abe ~~vote~~determined ofby the ~~stockholders~~Board of ~~the Company~~Directors.

102,000,000 of the shares of preferred stock had been designated as Class BA Preferred Stock. The Class BA Preferred Stock ~~includes~~shall entitle the ~~right~~holder tothereof ~~vote in an amount equal~~ to ~~51%~~150 ~~of the~~ votes toon ~~approve~~all ~~certain~~matters ~~corporate~~submitted ~~actions,~~to ~~including,~~a ~~without~~vote ~~limitation, changing the name~~ of the ~~Company~~stockholders ~~and increasing the number~~ of ~~authorized shares. During January and February 2022, after~~ the Company’s fiscal year ended December 31, 2021, the Company’s Board of Directors, with input from the Company’s financial advisors, completed its reevaluation of the Company’s capital structure, including the advisability of authorizing addition series of preferred stock, par value $0.01 (“Preferred Stock”). The Board of Directors determined that it was in the best interests of the Company and its stockholders to authorize four new series of Preferred Stock (sometimes referred to as “New Series of Preferred Stock”).

~~As a result~~10,000 ~~the Board~~ of ~~Directors and management with~~ the ~~assistance~~shares of ~~its~~preferred ~~outside~~stock ~~financial~~had ~~advisors~~been ~~prepared~~designated aas ~~Certificate~~Class ofB ~~Amendment~~Preferred toStock. ~~its~~The ~~Certificate~~Class ofB ~~Incorporation~~Stock ~~for~~includes the ~~purpose~~right ~~authorizing~~to ~~the~~vote ~~four~~in ~~New~~an ~~Series~~amount ofequal ~~Preferred~~to ~~Stock,~~51% ~~which~~of ~~was~~the ~~subject~~votes to ~~the~~approve ~~filing~~certain bycorporate ~~the~~actions, ~~Company~~including, ofwithout alimitation, ~~Certificate~~changing ~~of Amendment with~~ the ~~Department~~name of ~~State of~~ the ~~State~~Company ofand ~~New~~increasing ~~York~~the ~~(“Certificate~~number of ~~Amendment”)~~authorized shares.

ToDuring ~~implement~~January ~~the authorization of the four New Series of Preferred Stock, the Certificate of Amendment was submitted to the Department of State on March 17, 2022~~ and ~~was~~February ~~accepted for filing on March 22,~~ 2022~~. The recently authorized New Series of Preferred Stock included: (i) Series C Convertible Preferred Stock~~, ~~consisting~~after ~~of 100,000 shares, all of which were to be issued following acceptance of~~ the ~~Certificate of Amendment by the Department of State, to two (2) third-party accredited investors who had provided bona fide financial consulting services to the~~ Company;’s ~~(ii)~~fiscal ~~Series~~year Dended ~~Convertible~~December ~~Preferred Stock~~31, ~~consisting of 10~~2021,~~000~~ ~~shares, which shares may be issued, at~~ the ~~sole~~Company’s ~~discretion of the~~ Board of Directors, ~~from~~with ~~time~~input tofrom ~~time,~~the toCompany’s ~~consultants~~financial ~~and other third parties for~~advisors, ~~among~~completed ~~other~~its ~~purposes,~~reevaluation ~~new~~of ~~services to~~ the Company’s ~~and~~capital ~~for other good and valuable consideration~~structure, ~~none~~including ~~of which shares have been issued; (iii) Series E Convertible Preferred Stock, consisting of 250,000 shares, all of which were to be issued following final acceptance of~~ the ~~Certificate~~advisability of ~~Amendment~~authorizing byaddition ~~the~~series ~~Department~~ of ~~State~~preferred stock, ~~being~~par ~~issued~~value to$0.01 ~~three~~ (3) “~~accredited~~Preferred ~~investors~~Stock” ~~including the Company’s financial advisors in consideration for their capital contributions to the Company; and (iv~~). ~~Series~~The FBoard ~~Convertible Preferred Stock consisting~~ of ~~1,500,000~~Directors ~~shares,~~determined ~~1,000,000~~that ~~shares~~it ofwas ~~which~~in ~~are intended to be issued to several long-tenured key employees and~~ the ~~Company’s~~best ~~Board~~interests of ~~Directors in consideration for previously rendered services to~~ the Company asand ~~well~~its asstockholders to ~~certain~~authorize ~~noteholders~~four ~~and~~new ~~others~~series ~~under agreements and arrangements that have been authorized by the Board~~ of ~~Directors.~~Preferred ~~Share~~Stock ~~issuance~~(sometimes ~~within~~referred ~~various~~to ~~classes~~as ~~will~~“New ~~take~~Series ~~place during the second quarter~~ of ~~2022.~~Preferred Stock”).

AAs ~~copy~~a result, the Board of Directors and management with the assistance of its outside financial advisors prepared a Certificate of Amendment to ~~the~~its Certificate of Incorporation, ~~which~~for ~~included~~ the ~~respective~~purpose ~~Certificates~~authorizing ofthe ~~Designation~~four ~~for~~New ~~the~~ Series Cof ~~Convertible~~ Preferred Stock, ~~Series~~which Dwas ~~Convertible~~subject ~~Preferred~~to ~~Stock,~~the ~~Series~~filing Eby ~~Convertible~~the ~~Preferred~~Company ~~Stock~~of ~~and~~a ~~Series~~Certificate Fof ~~Convertible~~Amendment ~~Preferred~~with ~~Stock,~~the isDepartment ~~attached~~of asState ~~Exhibit~~of ~~3.11~~the toState ~~this~~of ~~Annual~~New ~~Report~~York on(“Certificate ~~Form~~of ~~10-K~~Amendment”).

~~Reference~~12 isTable ~~made to the complete disclosure contained in Exhibit 3.11~~ of ~~this Annual Report for the preferences, rights, limitations qualifications and restrictions, including conversion rights, of each of the above-referenced New Series of Preferred Stock.~~Contents

~~Common~~To implement the authorization of the four New Series of Preferred Stock, the Certificate of Amendment was submitted to the Department of State on March 17, 2022 and was accepted for filing on March 22, 2022. The recently authorized New Series of Preferred Stock included: (i) Series C Convertible Preferred Stock, consisting of 100,000 shares, all of which were to be issued following acceptance of the Certificate of Amendment by the Department of State, to two (2) third-party accredited investors who had provided bona fide financial consulting services to the Company; (ii) Series D Convertible Preferred Stock, consisting of 10,000 shares, which shares may be issued, at the sole discretion of the Board of Directors, from time to time, to consultants and other third parties for, among other purposes, new services to the Company and for other good and valuable consideration, none of which shares have been issued; (iii) Series E Convertible Preferred Stock, consisting of 250,000 shares, all of which were to be issued following final acceptance of the Certificate of Amendment by the Department of State, being issued to three (3) “accredited investors” including the Company’s financial advisors in consideration for their capital contributions to the Company; and (iv) Series F Convertible Preferred Stock consisting of 1,500,000 shares, 1,000,000 shares of which are intended to be issued to several long-tenured key employees and the Company’s Board of Directors in consideration for previously rendered services to the Company as well as to certain noteholders and others under agreements and arrangements that have been authorized by the Board of Directors. Equity issuances within these various classes will take place during the third quarter of 2022.

AsCommon of March 31, 2022 and December 31, 2021, the Company has 1,100,000,000 authorized shares of common stock with a par value of $0.01 to be issued in series with terms and conditions to be determined by the Board of Directors.Stock

~~There~~As ~~were~~of noJune 30, 2022 and December 31, 2021, the Company has 1,100,000,000 authorized shares of common stock ~~transactions~~with ~~for~~a ~~the~~par ~~three~~value ~~months~~of ~~ended~~$0.01 ~~March~~to ~~31,~~be ~~2022~~issued in series with terms and ~~2021~~conditions to be determined by the Board of Directors.

122022 ~~Table~~Common ofStock ~~Contents~~Transactions

~~Note~~During 7.May ~~Convertible~~2022, ~~Notes~~the ~~Payable~~Company ~~and~~issued ~~Exchange~~457,500 ~~Program~~shares of common stock upon the conversion of $45,000 of notes payable, plus $750 of costs.

~~Debt~~The tocompany ~~Equity~~issued ~~Exchange~~396,637 ~~Program~~shares of common stock upon the cashless exercise of 500,000 common stock warrants.

InThe ~~the period from June 2017 through the end of December 2019, the~~ Company ~~entered~~cancelled ~~eight Convertible Note Holder agreements with eight Note Holders totaling~~1, ~~with all fees~~000,000 ~~interest,~~shares ~~and principal, $2,008,812 as~~ of ~~December~~common 31stock, ~~2020.~~which ~~The~~are ~~notes were not considered~~ to be inreissued ~~default and were being renegotiated at March 31, 2021. Subsequently, as of May 31, 2021, each Convertible Noteholder received their fees, interest, and principal totaling $2,107,414~~ in ~~shares of Common stock of~~ the ~~Company (at $0~~future.030 per share) with 50% warrant coverage (1 year cash warrant with a strike price of 0.30). All documents were executed by June 30, 2021, with all equity/warrants issued by July 31, 2021. The Company issued 7,036,668 Common shares, and 3,576,733 Warrant shares in this transaction.

2021 ~~Convertible~~Common ~~Notes~~Stock Transactions

OnDuring ~~September 20, 2021,~~ the ~~Company~~six ~~entered~~months aended ~~convertible~~June ~~promissory note with GS Capital Partners~~30, ~~LLC. The note matures on September 20~~2021, ~~2022~~the ~~and bears interest at 8% per year. The~~ Company ~~received~~issued ~~proceeds of $197~~7,~~000~~036,668 ~~after~~shares ~~deduction~~ of ~~$20,000~~common ofstock ~~original issue discount~~ and $3,~~000 of costs. In connection with this note~~576,733 ~~the Company has issued a warrant to purchase 1,466,666 shares of~~ common stock topurchase ~~the~~warrants ~~lender.~~in ~~The~~settlement ~~warrant has an exercise price~~ of ~~$0.15~~convertible ~~per~~notes ~~share~~payable and ~~expires~~related onaccrued ~~September 21, 2026~~interest. The ~~relative~~shares ~~fair~~were ~~value~~valued ofat ~~the warrant was~~ $~~110~~1,~~000~~829,534 ~~determined~~and ~~using~~ the ~~Black~~warrants ~~Scholes~~were ~~Model~~valued with the following assumptions: (1) risk free interest rate of 0.84%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 389%; and (4) an expected life of 5 years. The note is convertible into shares of common stock at ~~a fixed conversion price of~~ $~~0.10 per share. The company has recorded a beneficial conversion feature of $90~~857,~~000~~600.

During the ~~fourth~~six ~~quarter~~months ofended ~~2021,~~June ~~the Company entered twenty convertible promissory notes with various holders aggregating $1~~30,~~412,000.~~ ~~The notes mature one year from issuance and bear interest at 8% per year. The Company received proceeds of $1~~2021,~~287,000,~~ ~~after deduction of $117,000 of original issue discount and $8,000 of costs. In connection with~~ the ~~notes, the~~ Company ~~has~~ issued ~~warrants to purchase 10~~2,~~463~~100,~~332~~000 shares of common stock, tovalued ~~the~~at ~~lenders. The warrants have an exercise price of~~ $~~0.15 per share and expire five years from the date of issuance. The relative fair value of the warrants was $1~~567,~~366~~000,~~127,~~ ~~determined~~for ~~using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0~~services.84% - 1.33%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 386% - 389%; and (4) an expected life of 5 years. The notes are convertible into shares of common stock at a fixed conversion price of $0.10 per share.

ANote ~~total of $1,295,000 has been recorded as debt discount, and 8,000 has been recorded as deferred debt costs~~7. ~~The~~Convertible ~~discount~~Notes ~~and~~Payable ~~costs will be amortized to interest expense over the term of the notes,~~ and ~~$405,123~~Exchange ~~was amortized during the three months ended March 31, 2022.~~Program

~~The~~Debt ~~Company’s~~to ~~convertible~~Equity ~~promissory~~Exchange ~~notes at March 31, 2022 and December 31, 2021 are as follows:~~Program

	March 31,2022			December 31,2021
Convertible notes payable, bearing interest at 8- 10%	$	1,632,000		$	1,453,960
Unamortized debt discount		(1,026,315	)		(1,428,726	)
Unamortized deferred debt issuance cost		(6,400	)		(9,112	)
Total		599,285			194,162
Current portion	$	599,285		$	194,162

In the period from June 2017 through the end of December 2019, the Company entered eight Convertible Note Holder agreements with eight Note Holders totaling, with all fees, interest, and principal, $2,008,812 as of December 31, 2020. The notes were not considered to be in default and were being renegotiated at March 31, 2021. Subsequently, as of May 31, 2021, each Convertible Noteholder received their fees, interest, and principal totaling $2,107,414 in shares of Common stock of the Company (at $0.030 per share) with 50% warrant coverage (1 year cash warrant with a strike price of 0.30). All documents were executed by June 30, 2021, with all equity/warrants issued by July 31, 2021. The Company issued 7,036,668 Common shares, and 3,576,733 Warrant shares in this transaction. Please note all Warrant Shares expired as of May 15, 2022 per the terms and conditions of the Warrant document.

~~Note~~2022 8.Convertible ~~Derivative Liabilities~~Notes

~~The~~On ~~Company~~June ~~had~~15, ~~identified~~2022, ~~certain~~the ~~embedded~~Company ~~derivatives~~entered ~~related~~into totwo ~~its~~ convertible promissory notes. ~~Since~~aggregating ~~the~~$300,000. The notes ~~were~~mature ~~convertible~~on ~~into~~the aearlier ~~variable~~of ~~number~~December of15, ~~shares~~2022 or ~~have~~10 adays ~~price~~after ~~reset~~demand ~~feature,~~and ~~the~~bear ~~conversion~~interest ~~features~~at of8% ~~those~~per ~~notes~~year. ~~were~~The ~~recorded~~Company asreceived ~~derivative~~proceeds ~~liabilities~~of $300,000. The ~~accounting~~notes ~~treatment~~are convertible into shares of ~~derivative~~common ~~financial~~stock ~~instruments~~at ~~requires~~a ~~that~~fixed ~~the~~conversion price of $0.30 per share. The Company ~~record~~has ~~fair~~recorded ~~value~~debt discount of $200,000, related to the ~~derivatives~~beneficial asconversion feature of the ~~inception~~notes. ~~date~~The ~~and~~discount towill ~~adjust~~be amortized to ~~fair~~interest ~~value~~expense asover the six-month term of ~~each~~the ~~subsequent~~notes, ~~balance~~and ~~sheet~~$17,486 ~~date~~was amortized during the three and six months ended June 30, 2022.

Table of Contents

The Company has recorded additions to the derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions totaled $75,133 for the three months ended March 31, 2021 ~~and~~Convertible ~~were charged to interest expense.~~Notes

~~During~~On September 20, 2021, the ~~three~~Company ~~months~~entered ~~ended~~a ~~March~~convertible 31promissory note with GS Capital Partners, ~~2021~~LLC. The note matures on September 20, ~~the~~2022 and bears interest at 8% per year. The Company ~~recorded~~received ~~gain~~proceeds of $2197,~~181~~000,~~367~~ ~~related~~after todeduction ~~the~~of ~~change~~$20,000 inof original issue discount and $3,000 of costs. In connection with this note, the ~~fair~~Company ~~value~~has issued a warrant to purchase 1,466,666 shares of common stock to the ~~derivatives~~lender. The warrant has an exercise price of $0.15 per share and expires on September 21, 2026. The relative fair value of the ~~embedded~~warrant ~~derivatives~~ was $1110,~~739~~000,~~428~~ ~~at March 31, 2021,~~ determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.0384%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of ~~324~~389%; and (4) an expected life of 35 years. The note is convertible into shares of common stock at a fixed conversion price of $0.10 per share. The company has recorded a beneficial conversion feature of $90,000. Amortization of discount and costs was $55,597 and $110,584 for the three and six months ended June 30, 2022, respectively.

~~Note~~During 9the fourth quarter of 2021, the Company entered into twenty convertible promissory notes with various holders aggregating $1,412,000. ~~Commitments~~The notes mature one year from issuance and ~~Contingencies~~bear interest at 8% per year. The Company received proceeds of $1,287,000, after deduction of $117,000 of original issue discount and $8,000 of costs. In connection with the notes, the Company has issued warrants to purchase 10,463,332 shares of common stock to the lenders. The warrants have an exercise price of $0.15 per share and expire five years from the date of issuance. The relative fair value of the warrants was $1,366,127, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.84% - 1.33%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 386% - 389%; and (4) an expected life of 5 years. The notes are convertible into shares of common stock at a fixed conversion price of $0.10 per share. A total of $1,412,000 has been recorded as debt discount, and 8,000 has been recorded as deferred debt costs. The discount and costs will be amortized to interest expense over the term of the notes Amortization of discount and costs was $349,355 and $699,492 for the three and six months ended June 30, 2022, respectively.

~~Litigation~~During May 2022, the Company issued 457,500 shares of common stock upon the conversion of $45,000 of notes payable, plus $750 of costs. Unamortized discount and debt costs related to the principal converted were $21,206 and $514, respectively, which were charged against interest expense upon conversion.

~~From~~The ~~time to time, claims are made against the~~ Company’s inconvertible ~~the~~promissory ~~ordinary~~notes ~~course~~at ofJune ~~its business~~30, ~~which~~2022 ~~could result in litigation. Claims~~ and ~~associated~~December ~~litigation are subject to inherent uncertainties and unfavorable outcomes could occur~~31, ~~such~~2021 are as monetary damages, fines, penalties, or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods. follows:

In 2015, the Company commenced an action for the cancellation of shares issued to Soex (the “Shares”) in connection with a breached Securities Purchase Agreement and Distribution Agreement entered 2014.

	June 30, 2022			December 31, 2021
Convertible notes payable, bearing interest at 8- 10%	$	1,887,000		$	1,453,960
Unamortized debt discount		(785,303	)		(1,428,726	)
Unamortized deferred debt issuance cost		(3,254	)		(9,112	)
Total		1,098,443			194,162
Current portion	$	1,098,443		$	194,162

~~The~~Note ~~Soex Litigation was tried in U~~8.S. ~~District~~Derivative ~~Court for the Middle District of Florida in October of 2018. The jury at the conclusion of the trial did not award monetary damages to either party for claims or counterclaims.~~Liabilities

OnThe ~~October~~Company ~~24,~~had ~~2018,~~identified ~~the~~certain ~~Company~~embedded ~~initiated~~derivatives arelated ~~third~~to ~~lawsuit~~its ~~against~~convertible annotes. ~~affiliate~~Since ofthe ~~Soex,~~notes ~~Zhongshan~~were ~~Trans-Tech~~convertible ~~New~~into ~~Material~~a ~~Technology~~variable ~~Co.~~number ~~Ltd.~~of ~~Zhongshan,~~shares ~~China,~~or ~~(“Transtech”),~~have ~~and~~a ~~the~~price ~~Chairperson~~reset offeature, the ~~affiliate~~conversion ~~and~~features ~~Soex,~~of ~~based~~those onnotes ~~new~~were ~~information~~recorded ~~learned~~as byderivative ~~the Company~~liabilities. The ~~Company~~accounting ~~will~~treatment ~~seek~~of ~~maximum~~derivative ~~relief~~financial ~~and~~instruments ~~damages~~requires ~~for~~that ~~this~~the ~~on-going~~Company ~~and~~record ~~growing~~fair ~~illegal~~value ~~misuse~~of the ~~Company’s~~derivatives ~~Intellectual~~as ~~Property.~~of ~~The~~the ~~Company~~inception ~~feels~~date ~~this~~and ~~third~~to ~~action~~adjust ~~will~~to ~~lead~~fair invalue aas ~~judgment~~of ineach ~~favor~~subsequent ofbalance ~~the~~sheet ~~Company~~date.

OnThe ~~October 8, 2021 the~~ Company ~~was~~has ~~notified~~recorded ofadditions ato ~~unusual order by~~ the ~~Federal~~derivative ~~District~~conversion ~~Court~~liabilities ~~judge~~related ~~who~~to ~~oversaw~~ the ~~initial~~conversion ~~2018~~feature ~~proceedings.~~attributable ~~This~~to ~~activity~~interest ~~was~~accrued ~~initiated~~during at the ~~request of Soex’s counsel~~period. ~~The~~These ~~Order~~additions ~~awards~~totaled ~~the defendant (Soex)~~ $~~300~~49,~~568~~157 ~~in attorney’s fees~~ and $8297,~~096~~254 ~~in costs~~ for athe ~~total~~three ~~award~~months ofended ~~$382~~June 30,~~664~~ to2021 beand ~~paid~~2020, byrespectively, ~~Dais.~~and ~~The~~$124,290 ~~Order~~and ~~doesn’t~~$261,946 ~~specify~~for the ~~date~~six bymonths ~~which~~ended ~~the~~June ~~award~~30, ~~needs~~2021 toand be2020, ~~paid.~~respectively ~~The~~and ~~sum~~were ischarged ~~recorded~~to ininterest ~~accrued liabilities~~expense.

~~The~~During ~~Company~~the ~~will~~three ~~vigorously~~and ~~defend~~six ~~itself~~months ~~against~~ended ~~this~~June ~~Order~~30, as2021, ~~well~~through asthe ~~move~~date onof ~~all~~settlement ~~possible~~of ~~avenues~~the ~~open~~debt, tothe itCompany torecorded ~~stop,~~income ~~what~~of ~~Management~~$60,311 ~~believes~~and $2,241,678 isrelated anto ~~on-going~~the ~~misuse~~change ofin the ~~Company’s~~fair ~~core~~value ~~Intellectual~~of ~~Property~~the derivatives. The ~~Company~~fair ~~believes~~value –of ~~based~~the onembedded derivatives was $1,728,274 at the ~~content~~date of ~~the~~settlement, ~~Order~~determined ~~and~~using ~~other~~the ~~admissions~~Black ~~and~~Scholes ~~actions~~Model onwith the ~~part~~following ofassumptions: ~~others~~(1) –risk itfree ~~has~~interest arate ~~chance~~of to0.01%; ~~prevail~~(2) individend anyield ~~appeal~~of to0%; (3) volatility factor of the ~~benefit~~expected market price of the Company’s common stock of 315%; and ~~its~~(4) ~~shareholders.~~an expected life of 3 months.

~~Accounts~~14 ~~Payable~~Table of Contents

~~The~~During ~~firms~~the ~~below~~second ~~have~~quarter ~~pursued~~of ~~legal~~2021 ~~action against~~ the Company toissued ~~collect~~7,036,668 ~~overdue~~shares ~~accounts~~of ~~payable~~common ~~sums.~~stock, ~~The~~valued ~~Company~~at is$1,829,534 ~~working~~and ~~with~~3,576,733 ~~each~~warrants, tovalued ~~enter~~at ~~into~~$857,600, ain settlement ~~plan~~of $1,453,960 orof ~~“pay~~notes ~~over~~payable ~~time”~~and ~~payment~~$653,454 ~~plan~~of accrued interest. ToDerivative ~~date~~liability of $1,728,274 was extinguished because of the settlement. The Company ~~has~~recorded ana ~~agreement~~gain inon ~~place~~extinguishment ~~with~~of ~~SoftinWay~~$1,148,554.

Company	Sum Owned		Payment Plan	Legal Action
Old Dominion Freight Line	$	13,576.95	No	Yes
Power Plant Services	$	85,199.11	No	Yes
SoftinWay	$	7,850.00	Yes	Yes
The O-Ring Store	$	10,334.00	No	Yes
Total	$	116,960.06

Note 9. Commitments and Contingencies

~~Note 10. Subsequent Events~~Litigation

1.From Ontime ~~April~~to 29time, ~~2022,~~claims ~~the~~are ~~Company~~made ~~received~~against ~~a loan of $100,000 from~~ the Company’s ~~Chief Executive Officer. This was repaid~~ in ~~full~~the onordinary ~~May~~course ~~17,~~of ~~2022.~~its ~~2. On May 4~~business, ~~2022,~~which ~~the~~could ~~Company~~result ~~received~~in ~~$50,000 from Carriage House Capital, Inc~~litigation. asClaims aand ~~short-term~~associated ~~loan~~litigation ~~(less~~are ~~than~~subject ~~six~~to ~~months)~~inherent ~~with~~uncertainties ~~10%~~and ~~interest~~unfavorable ~~being~~outcomes ~~paid~~could ~~when~~occur, ~~note~~such ~~sum~~as ~~repaid.~~monetary 3.damages, Onfines, ~~May 6~~penalties, ~~2022~~or injunctions prohibiting the Company ~~received $35,000~~ from ~~Carriage~~selling ~~House~~one ~~Capital~~or asmore aproducts ~~short~~or ~~term~~engaging ~~loan~~in ~~(less~~other ~~than~~activities. ~~six~~The ~~months)~~occurrence ~~with~~of ~~10%~~an ~~interest~~unfavorable ~~being~~outcome ~~paid~~in ~~when~~any ~~the~~specific ~~note~~period ~~sum~~could ~~repaid.~~have 4.a Onmaterial ~~May~~adverse ~~17,~~effect ~~2022~~on the Company’s ~~received~~results ~~$30,000~~of ~~from~~operations ~~Draper,~~for ~~Inc.,~~that asperiod aor ~~short~~future ~~term loan (less than six months) with 10% interest being paid when the note sum repaid~~periods.

NoIn ~~other~~2015, ~~material~~the ~~events~~Company ~~have~~commenced ~~occurred~~an ~~after~~action ~~March~~for ~~31,~~the ~~2022~~cancellation ~~requiring~~of ~~recognition~~shares orissued ~~disclosure~~to inSoex (the ~~financials.~~“Shares”) in connection with a breached Securities Purchase Agreement and Distribution Agreement entered 2014.

14The ~~Table~~Soex Litigation was tried in U.S. District Court for the Middle District of ~~Contents~~Florida in October of 2018. The jury at the conclusion of the trial did not award monetary damages to either party for claims or counterclaims.

On October 24, 2018, the Company initiated a third lawsuit against an affiliate of Soex, Zhongshan Trans-Tech New Material Technology Co. Ltd. Zhongshan, China, (“Transtech”), and the Chairperson of the affiliate and Soex, based on new information learned by the Company. The Company will seek maximum relief and damages for this on-going and growing illegal misuse the Company’s Intellectual Property. The Company feels this third action will lead in a judgment in favor of the Company.

On October 8, 2021 the Company was notified of a unusual order by the Federal District Court judge who oversaw the initial 2018 proceedings. This activity was initiated at the request of Soex’s counsel. The Order awards the defendant (Soex) $300,568 in attorney’s fees and $82,096 in costs for a total award of $382,664 to be paid by Dais. The Order doesn’t specify the date by which the award needs to be paid. The sum is recorded in accrued liabilities.

The Company will vigorously defend itself against this Order, as well as move on all possible avenues open to it to stop, what Management believes, is an on-going misuse of the Company’s core Intellectual Property. The Company believes – based on the content of the Order and other admissions and actions on the part of others – it has a chance to prevail in an appeal to the benefit of the Company and its shareholders.

Accounts Payable

The firms below have pursued legal action against the Company to collect overdue accounts payable sums. The Company is working with each to enter into a settlement plan, or “pay over time” payment plan. To date the Company has an agreement in place with SoftinWay.

Company	Sum Owned		Payment Plan	Legal Action
Old Dominion Freight Line	$	13,576.95	No	Yes
Power Plant Services	$	85,199.11	No	Yes
SoftinWay	$	4,850.00	Yes	Yes
The O-Ring Store	$	10,334.00	No	Yes
Total	$	113,960.06

Table of Contents

Note 10. Subsequent Events

On July 12, 2022 the Company was informed its loan forgiveness application had been accepted for its second and final Payroll Protection Plan loan. The SBA has forgiven the loan amount in full.

On July 28, 2022 the Company accepted the following sums for general operation expenses:

$30,000 and $62,800 (total $92,800) from the PKT Strategic Technologies, LLC, the Senior Note Holder under the same terms and conditions as the existing sums of money which have been loaned to the Company since June 16, 2016.

$5,000 and $2,000 (total of $25,000) from Draper Capital Partners (under the same terms and conditions as the previous sums of money which have been loaned to the Company).

No other material events have occurred after June 30, 2022 requiring recognition or disclosure in the financials.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to current and future events and financial performance. You can identify these statements by forward-looking words such as “may”, “will”, “expect”, “anticipate”, “believe”, “estimate” and “continue”, or similar words. Those statements include statements regarding the intent, belief or current expectations of the management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, expected market demand for the Company’s services, fluctuations in pricing for materials, and competition.

Unless otherwise indicated or the context requires otherwise, the words “we”, “us”, “our”, the “Company” or “our Company” refer to Dais Corporation, a New York corporation, and its subsidiaries.

~~Supply~~The ~~Chain~~Company ~~(Availability~~is dependent on third parties to manufacture the key components needed for its nanostructured materials and ~~Increased~~some ~~prices)~~parts of the value-added products made with these materials. Accordingly, a suppliers’ failure to supply components in a timely manner, or to supply components that meet the Company’s quality, quantity and ~~Tightening~~cost ~~labor~~requirements ~~market~~or ~~(money~~technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of the Company’s products and/or ~~people)~~increase its unit costs of production. Certain of the components or the processes of the Company’s suppliers are proprietary. If the Company was ever required to replace any of its suppliers, it should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production and may briefly affect the Company’s operations.

Current world-wide supply chain issues are impacting many industries, including those of the Company. The lead time for materials and components is increasing, resulting in longer delivery dates. Management is working with existing partners to identify multiple sources of materials and components so as not to rely heavily on one or two suppliers. Increasing crude oil prices is influencing the cost of resins, plastics and fuel. Shipping and trucking costs have increased while capacity has contracted. These issues are creating increased costs across industries and Management is evaluating its’ pricing and lead times regularly. The labor market is having an impact across industries as competition for workers is increasing. Management is working to anticipate workforce needs and planning accordingly.

15 Table of Contents

Covid-19 World-wide Pandemic

~~Management~~Effects isfrom ~~keenly aware of~~ the ~~effects the~~ pandemic isare ~~having~~still onimpacting economies, and ~~everyday~~routine life, across the globe~~. Governments~~, ~~industry experts~~however, ~~and~~improvements ~~private business~~ are ~~working~~being tomade ~~create solutions to defeat the current pandemic~~ and ~~protect~~economies usare ~~from future infections~~opening. The Company is uniquely positioned as its’ current products are designed to provide a solution to these issues especially inwith increased ventilation. The awareness of the benefits of increased ventilation in homes and workplaces isare being cited as a major factor inby ~~the~~customers as a solution to battle ~~the~~future ~~current,~~outbreaks and ~~future,~~other pandemics. The ConsERV products are specifically designed to increase new, fresh, ventilated, air in our homes and workplaces. Management is developing and executing on plans to increase product awareness through existing and prospective sales channels.

Table of Contents

Climate Change and Carbon Reduction

Countries and corporations around the world are adopting aggressive plans to achieve newly established Carbon Neutral goals by 2030 and 2050. This world-wide effort is attracting attention to innovative technologies which reduce carbon emissions. Management is confident the successful track record of current products, with a history of increasing the efficiency of HVAC systems and reducing CO₂ emissions should drive increased business activity.

Volatile Share Price

Beginning in mid-October of 2021 the Company’s share price on the OTCM has risen from a low of $.05 per share to a high price of $3.15 per share, and places in between. We believe the market for the Company’s products and planned products is broadening worldwide, spawning increased interest in Dais. This coupled with Management executing against its business plan working to grow revenues increasing shareholder value are what we believe may be the reason for a potential jagged up and down nature of the Company’s share price.

Overview

Dais Corporation (“Dais”, “us,” “we,”, the “Company”) is a nanomaterial technology company developing and commercializing products using the nanomaterial called Aqualyte. The first commercial product is the Aqualyte nanomaterial itself. It is useful in managing moisture and key gases in a variety of cross-industry products, and is effective in the destruction of pathogens that come in contact with the material, (As verified by 3rd part analysis).

The second commercial product is called ConsERV, a fixed plate energy recovery ventilator which is useful in meeting building indoor fresh air requirements while saving energy and lowering emissions for most forms of heating, ventilation, and air conditioning (HVAC) equipment. We continue to develop other Aqualyte uses in cross-industry applications, HVAC/Refrigeration, energy, etc. One area of focused attention has been development work on a variant of Aqualyte targeting surface treatments to potentially create a protective layer designed to inactivate human coronaviruses.

Corporate History

We were incorporated as a New York corporation on April 8, 1993 as Dais Corporation. The Company was formed to develop new, cost-effective polymer materials for various applications, including providing a lower cost membrane material for Polymer Electrolyte Membrane fuel cells. We believe our research on materials science has yielded technological advances in the field of selective ion transport polymer materials.

16 Table of Contents

In December 1999, the Company purchased the assets of Analytic Power Corporation, a corporation founded in 1984 to provide design, analysis, and systems integration services in the field of fuel cells, fuel processors, and integrated fuel cell power systems. Subsequently, on December 13, 1999, the Company changed its name to Dais Analytic Corporation. In the ensuing years the Company has purchased and/or sold assets for cash and/or assumption of certain company’s obligations seeking a path to solid, continuing growth, or monetize non-performing Company assets.

Table of Contents

In November of 2018 the board of directors unanimously voted to change the name of the Company from Dais Analytic Corporation to Dais Corporation (the “Name Change”). The Name Change took effect with FINRA on February 27, 2019.

Our Technology

Aqualyte^TM

We use proprietary nanotechnology to reformulate thermoplastic materials called polymers, creating a material which water and a select group of similar substances can permeate through at a molecular level as opposed to flowing in bulk as liquid water through a pore. At the same time, the permeability of oxygen, nitrogen, and most other substances is severely limited, making the material extremely selective. We call this specialized material Aqualyte^TM and we have been granted a series of patents relating to its manufacture and use.

Aqualyte^TM is the foundation of the Dais product line, using the unique material’s properties to enable differentiated air, energy, and water products. Products generally are highly efficient, have fewer or no moving parts, and notably are kinder and gentler to our planet Earth. The nanomaterial-based products market is growing worldwide as more eyes are on the accelerating push for highly efficient products like those Dais features.

17 Table of Contents

ConsERV^TM

Sales channels for our ConsERV product continues to expand. This is our HVAC energy conservation product which should save an average of 30% on HVAC ventilation air operating costs while providing increased amounts of ventilated air. The economic savings typically allow the remainder of the system to be smaller and less expensive, reducing carbon dioxide (CO₂) emissions from electrical power generation. ConsERV generally attaches onto existing HVAC systems and is useful in both commercial and residential structures, to provide improved ventilation air within the structure. In turn, this yields health benefits (reduced COVID-19 exposure, fewer allergy, and asthma ‘trigger’ contaminants) and productivity improvements (improvement in cognitive abilities).

ConsERV separates incoming fresh ventilation air from outgoing exhaust air with our Aqualyte nanotechnology polymer in an enthalpy heat exchanger referred to as a “core”. While Aqualyte physically isolates the air streams, so they don’t mix, heat and moisture are freely exchanged through the material. For summer air conditioning, the core removes some of the heat and humidity from the incoming air and transfers it to the exhaust air stream, thereby saving energy under many conditions. For winter heating, the core typically recovers a portion of the heat and humidity in the exhaust air and transfers it into the incoming air to reduce heating requirements.

When compared to similar competitive products, we believe, based on test results conducted by the Air-~~conditioning~~Conditioning, Heating and Refrigeration Institute (AHRI), a leading industry association, ConsERV maintains an industry-leading position in the management of latent heat. ~~The Company continues to make and sell ConsERV cores, and customer ERV systems.~~

~~Having~~The ~~identified~~market, ~~the~~as ~~Energy~~near ~~Recovery~~as ~~Ventilator~~management ~~(“ERV”)~~can ~~application~~tell, asfor ~~being~~energy ~~able~~recovery ventilation equipment is changing to ~~benefit~~become ~~from~~broader ~~ConsERV’s~~and ~~features/options~~better ~~proven~~understood. toManagement bebelieves ~~achieved~~this bychange ~~using~~is linked to the ~~Company~~industry’s ~~nanotechnology.~~specification-setting ~~The~~body ~~market,~~(ASHRAE) asand ~~near~~the asUS ~~management~~Centers for Disease Control stating that pathogens can ~~tell~~and do travel via HVAC systems and duct work as reported by the White House Science Advisory Panel, ~~for~~the ~~ventilation~~US ~~equipment~~EPA, isNIH/Harvard, ~~changing~~Trane Corporation, and more. ~~Management~~This ~~feels~~potential change in the market for ~~energy~~ERVs ~~recovery~~coupled ~~ventilation~~with isthe ~~changing~~seemingly proven value proposition Dais’s ConsERV product provides optimism to bethe ~~broader~~Management team and ~~better~~the ~~understood.~~Board of Directors for the future of the ConsERV product.

~~This~~19 ~~change~~Table isof believed linked to the industry specification setting body (ASHRAE) and the US Center for Disease Control stating pathogens can and do travel via HVAC systems and duct work as reported by the White House Science Advisory Panel, the US EPA, NIH/Harvard, Trane Corporation, and more. Contents

~~This~~The ~~potential~~Company ~~change~~began engineering for an updated line of ConsERV products in the ~~market~~year ~~for~~2020 ~~ERVs~~(known ~~coupled~~as the “N Series”) with ~~the~~new ~~seemingly~~cores ~~proven~~and ~~value~~packaged ~~proposition~~systems ~~Dais~~that incorporate the Company’s ~~ConsERV~~past experience with the ERV market. The line was certified by the needed outside agencies and initial market introduction began in the 4th quarter of 2021. We have seen positive market reception to date, and believe based on the N Series performance, price-point, and end-user feedback, the product ~~provides~~will ~~optimism~~continue to be well received in the ~~Management~~market. ~~team~~Sales of existing cores and customer systems are expected to continue generating revenue during 2022 and beyond as we increase the ~~Board~~number of ~~Directors~~sales channels for ConsERV. The newer N Series has begun contributing to increasing revenues in the ~~future~~second quarter of ~~the~~2022 ~~ConsERV~~and ~~product~~beyond.

The Company began engineering for an updated line of ConsERV products in the year 2020 (known as the “N Series” – new cores and packaged systems). The experiences of the Company’s past ERV products modified by market needs are incorporated into this newer packaged ERV product line. The line was certified by the needed outside agencies and initial market introduction began in the 4th quarter of 2021. We have seen positive market reception to date, and believe based on the N Series performance, price-point, and end-user feedback, the product will continue to be well received in the market. Sales of existing cores and customer systems are expected to continue generating revenue during 2022 and beyond as we increase the number of sales channels for ConsERV. The newer N Series will begin contributing to increasing revenues in the second quarter of 2022 and beyond.

18 Table of Contents

Product Summary

Dais’s advanced material has many demonstrated uses in the described products. Management is positioning most of the Company’s resources behind the two most mature products in two major revenue generating paths: (1) ConsERV cores and systems, and (2) the sale of Aqualyte nanomaterials and engineering support in areas where Aqualyte has shown proven results and Dais has partners well-placed to bring products to market. Management projects this narrower focus will increase revenues allowing profitability to occur faster. This strategy leverages the Company’s experience and depth in marketing, building, and selling ConsERV cores and systems and in manufacturing and selling high performance Aqualyte nanomaterial.

Sales activities for advanced materials are continuing with select, successful companies located in the European Union and Southeast Asia (including China) which take full advantage of Dais’s past and continuing market penetration efforts. The uses include energy recovery ventilation and other known HVAC and select cross-industry uses.

To help us support our capabilities to deliver ConsERV cores and systems, and Aqualyte advanced nanomaterials, we have qualified manufacturing companies to join our supply chain to produce materials and components. Guided by Dais-qualified manufacturing practices these efforts target the growing demand for product in North America, European Union, and Southeast Asia (including China). We project this expansion of the supply chain will result in lower costs and quicker order fulfillment, generating revenues faster.

Orders are already being generated from these agreements, and we expect them to increase as we expand and add new strategic partnerships along the way. The new orders include sales of Aqualyte nanomaterials, components for energy recovery ventilation, and other known HVAC and select cross industry products.

Table of Contents

Results of Operations

Three Months Ended ~~March~~June 3130, 2022 Compared to ~~March~~June 3130, 2021

The following table sets forth, for the periods indicated, certain data derived from our Statements of Operations:

	For the Three Months EndedMarch 31,
	For the Three Months Ended
	June 30,
	2022			2021
REVENUE
Sales	$	43117,~~195~~699		$	62109,~~809~~181
Royalty and license fees		12,500			12,500
		55,695			75,309
		130,199			121,681
COST OF GOODS SOLD		52177,~~440~~205			3745,~~860~~030
GROSS MARGIN		3(47,~~255~~006	)		3776,~~449~~651
OPERATING EXPENSES
Research and development, net of government grant proceeds of $0 and $31,080 for the three months ended March 31, 2022 and 2021, respectively		64,873			13,517
Research and development, net of government grant proceeds of $0 and $29,886, respectively		61,748			26,329
Selling, general and administrative		~~425~~403,~~276~~349			~~261~~1,~~387~~023,687
TOTAL OPERATING EXPENSES		~~490~~465,~~149~~097			~~274~~1,~~904~~050,016
LOSS FROM OPERATIONS		(~~486~~512,~~894~~103	)		(~~237~~973,~~455~~365	)
OTHER INCOME (EXPENSE)
Interest expense		(~~595~~686,~~636~~176	)		(~~200~~159,~~852~~956	)
Change in fair value of derivative		-			2,181,367
Change in fair value of derivative liabilities		-			60,311
TOTAL OTHER INCOME (EXPENSE), NET		(595,636	)		1,980,515
Gain on extinguishment of debt		-			1,148,554
NET INCOME (LOSS)	$	(1,082,530	)	$	1,743,060
TOTAL OTHER INCOME (EXPENSE), NET		(686,176	)		1,048,909
NET LOSS PER COMMON SHARE, BASIC	$	(0.12	)	$	6.27
NET INCOME (LOSS)	$	(1,198,279	)	$	75,544
NET LOSS PER COMMON SHARE, DILUTED		(0.12	)		(0.02	)
NET INCOME (LOSS) PER COMMON SHARE, BASIC	$	(0.12	)	$	0.02
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,414,796			278,128
NET LOSS PER COMMON SHARE, DILUTED	$	(0.12	)	$	(0.13	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,414,796			15,392,916
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,717,827			3,691,248
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,717,827			16,964,471

19 Table of Contents

Revenue

We generate our revenues primarily from the sale of our ConsERV cores and systems and Aqualyte membrane. Product sales were $43117,~~195~~699 and $62109,~~809~~181 for the three months ended ~~March~~June 3130, 2022 and 2021, respectively, aan ~~decrease~~increase of $198,~~614~~518 or 318%. The ~~decrease~~increase in revenue was driven by a decrease in Aqualyte sales, offset by an increase in ConsERV sales. We are focusing on creating sustainable revenues with Aqualyte and ConsERV core and system sales with the expectation that this will allow for growth in 2022 and beyond.

Revenues from royalty and license fees were $12,500 and $12,500 for the three months ended ~~March~~June 3130, 2022 and 2021, respectively.

Table of Contents

Cost of sales

Our cost of sales consists primarily of materials (including freight), direct labor, and outsourced manufacturing expenses incurred to produce our ConsERV cores and systems and Aqualyte nanomaterial. Cost of goods sold were $52177,~~440~~205 and $3745,~~860~~030 for the three months ended ~~March~~June 3130, 2022 and 2021 respectively, an increase of $14132,~~580~~175 or 38294%. This reflects price increases throughout our ~~normal~~supply ~~differences~~chain, general increases in ~~manufacturing~~labor costs, ~~between~~and ~~our~~labor ~~product~~costs ~~lines~~recognized in the second quarter of 2022 for products and ~~general~~services ~~cost~~to ~~increases~~be ~~within~~delivered ~~our~~in ~~supply~~the ~~chain~~third quarter.

We are dependent on third parties to manufacture the key components needed for our nano-structured based materials and some portion of the value-added products made with these materials. Accordingly, a supplier’s failure to supply components in a timely manner, or to supply components that meet our quality, quantity and cost requirements or technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of our products and/or increase the unit costs of production. Certain of the components or the processes of our suppliers are proprietary. If we were ever required to replace any of our suppliers, we should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production.

Gross margin

Gross ~~margin~~loss from the sales of products was $347,~~255~~006 for the three months ended June 30, 2022 and gross margin was $3776,~~449~~651 for the three months ended June 30, 2021 representing negative 6% and 5063% for the three months ended ~~March~~June 3130, 2022 and 2021.

As we are actively monitoring our increases in production cost, we have raised the prices for our ConsERV product line while continuing to work within our supply chain to reduce these costs. Although our gross margin for the three months ended June 30, 2022 is negative, we anticipate the revenues received from products delivered in the third quarter will increase our gross margin, bringing it positive again.

Research and development costs

Expenditures for research and development are expensed as incurred. We incurred research and development costs of $6461,~~873~~748 and $4456,~~597~~215 for the three months ended ~~March~~June 3130, 2022 and 2021, an increase of $205,~~276~~533 or 4610%. We account for proceeds received from government funding for research and development as a reduction in research and development costs. We recorded proceeds against research and development expenses on the Statements of Operations of $0 and $3129,~~080~~886 for the three months ended ~~March~~June 3130, 2022 and 2021, a decrease of $3129,~~080~~886 or 100%. Variances in grant expenditures and reimbursements are due to an emphasis on completing an existing Small Business Innovation Research (SBIR) Phase II grant. This grant was completed in August 2021.

20 Table of Contents

Selling, general and administrative expenses

Our selling, general and administrative expenses consist primarily of payroll and related benefits, professional fees, marketing and channel support costs, and other infrastructure costs such as insurance, information technology and occupancy expenses. Selling, general and administrative expenses were $~~425~~403,~~276~~349 and $~~261~~1,~~387~~023,687 for the three months ended ~~March~~June 3130, 2022 and 2021, ana ~~increase~~decrease of $~~163~~620,~~888~~338 or 6361%. This ~~increase~~decrease is primarily due to ~~increased~~stock ~~staffing~~based ~~costs~~compensation issued in the second quarter of 2021.

Our selling, general and administrative expenses may fluctuate due to a variety of factors, including, but not limited to:

•· Additional infrastructure needed to support the expanded commercialization of our ConsERV and Aqualyte products and/or new product applications of our polymer technology for, among other things, administrative personnel, physical space, marketing and channel support and information technology; •· The issuance and recognition of expenses related to fair value of new share-based awards, which is based on various assumptions including, among other things, the volatility of our stock price; and •· Additional expenses because of being an SEC reporting company, including, but not limited to, director and officer insurance, director fees, SEC compliance expenses, transfer agent fees, additional staffing, professional fees, and similar expenses.

Table of Contents

We continue to focus on decreasing selling, general and administrative expenses for all our product efforts.

Other Income (Expense)

Other expense for the three months ended ~~March~~June 3130, 2022 was $~~595~~686,~~636~~176 compared to income of $1,~~980~~048,~~515~~909 for the three months ended ~~March~~June 3130, 2021, a decrease of $21,~~576~~735,~~151~~085 or ~~130~~165%. The increased net other expense is primarily due to the lack of income relating to the change in fair value of derivative liabilities and an increased interest expense.

Net Income (Loss)

Net loss for the three months ending ~~March~~June 3130, 2022 was $1,~~082~~198,~~530~~279 compared to an income of $175,~~980,515~~544 for the three months ended ~~March~~June 3130, 2021. The increased loss in the three months ended ~~March~~June 3130, 2022 was primarily due to the increase in other expense described above and ~~the~~negative ~~increased~~gross ~~loss from operations~~margin.

21Six ~~Table~~Months ofEnded ~~Contents~~June 30, 2022 Compared to June 30, 2021

The following table sets forth, for the periods indicated, certain data derived from our Statements of Operations:

	For the Six Months Ended
	June 30,
	2022			2021

REVENUE
Sales	$	160,894		$	171,990
Royalty and license fees		25,000			25,000
		185,894			196,990

COST OF GOODS SOLD		229,645			82,890

GROSS MARGIN		(43,751	)		114,100

OPERATING EXPENSES
Research and development, net of government grant proceeds of $0 and $60,966, respectively		126,621			39,846
Selling, general and administrative		828,625			1,285,074
TOTAL OPERATING EXPENSES		955,246			1,324,920

LOSS FROM OPERATIONS		(998,997	)		(1,210,820	)

OTHER INCOME (EXPENSE)
Interest expense		(1,281,812	)		(360,808	)
Change in fair value of derivative liabilities		-			2,241,678
Gain on extinguishment of debt		-			1,148,554

TOTAL OTHER INCOME (EXPENSE), NET		(1,281,812	)		3,029,424

NET INCOME (LOSS)	$	(2,280,809	)	$	1,818,604

NET INCOME (LOSS) PER COMMON SHARE, BASIC	$	(0.24	)	$	1.29

NET LOSS PER COMMON SHARE, DILUTED	$	(0.24	)	$	(0.17	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,567,149			1,994,429
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,567,149			278,128

Table of Contents

Revenue

We generate our revenues primarily from the sale of our ConsERV cores and systems and Aqualyte membrane. Product sales were $160,894 and $171,990 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $11,096 or 6%. The decrease in revenue was driven by a decrease in Aqualyte sales, offset by an increase in ConsERV sales. We are focusing on creating sustainable revenues with Aqualyte and ConsERV core and system sales with the expectation that this will allow for growth in 2022 and beyond.

Revenues from royalty and license fees were $25,000 and $25,000 for the six months ended June 30, 2022 and 2021, respectively.

Cost of sales

Our cost of sales consists primarily of materials (including freight), direct labor, and outsourced manufacturing expenses incurred to produce our ConsERV cores and systems and Aqualyte nanomaterial. Cost of goods sold were $229,645 and $82,890 for the six months ended June 30, 2022 and 2021 respectively, an increase of $146,755 or 177%. This reflects price increases throughout our supply chain, general increases in labor costs, and labor costs recognized in the second quarter of 2022 for products and services to be delivered in the third quarter.

Gross margin

Gross loss from the sales of products was $43,751 for the six months ended June 30, 2022 and gross margin was $114,100 for the six months ended June 30, 2021 representing negative 23% and 58% for the six months ended June 30, 2022 and 2021.

As we are actively monitoring our increases in production cost, we have raised the prices for our ConsERV product line while continuing to work within our supply chain to reduce these costs. Although our gross margin for the six months ended June 30, 2022 is negative, we anticipate the revenues received from products delivered in the third quarter will increase our gross margin, bringing it positive again.

Research and development costs

Expenditures for research and development are expensed as incurred. We incurred research and development costs of $126,620 and $100,812 for the six months ended June 30, 2022 and 2021, an increase of $25,808 or 26%. We account for proceeds received from government funding for research and development as a reduction in research and development costs. We recorded proceeds against research and development expenses on the Statements of Operations of $0 and $60,966 for the six months ended June 30, 2022 and 2021, a decrease of $60,966 or 100%. Variances in grant expenditures and reimbursements are due to an emphasis on completing an existing Small Business Innovation Research (SBIR) Phase II grant. This grant was completed in August 2021.

Table of Contents

Selling, general and administrative expenses

Our selling, general and administrative expenses consist primarily of payroll and related benefits, professional fees, marketing and channel support costs, and other infrastructure costs such as insurance, information technology and occupancy expenses. Selling, general and administrative expenses were $828,625 and $1,285,074 for the six months ended June 30, 2022 and 2021, a decrease of $456,449 or 36%. This decrease is primarily due to stock based compensation issued in the second quarter of 2021.

Our selling, general and administrative expenses may fluctuate due to a variety of factors, including, but not limited to:

	·	Additional infrastructure needed to support the expanded commercialization of our ConsERV and Aqualyte products and/or new product applications of our polymer technology for, among other things, administrative personnel, physical space, marketing and channel support and information technology;

	·	The issuance and recognition of expenses related to fair value of new share-based awards, which is based on various assumptions including, among other things, the volatility of our stock price; and

	·	Additional expenses because of being an SEC reporting company, including, but not limited to, director and officer insurance, director fees, SEC compliance expenses, transfer agent fees, additional staffing, professional fees, and similar expenses.

We continue to focus on decreasing selling, general and administrative expenses for all our product efforts.

Other Income (Expense)

Other expense for the six months ended June 30, 2022 was $1,281,812 compared to income of $3,029,424 for the six months ended June 30, 2021, a decrease of $4,311,236 or 142%. The increased net other expense is primarily due to the lack of income relating to the change in fair value of derivative liabilities and an increased interest expense.

Net Income (Loss)

Net loss for the six months ending June 30, 2022 was $2,280,809 compared to an income of $1,818,604 for the six months ended June 30, 2021. The increased loss in the six months ended June 30, 2022 was primarily due to the increase in other expense described above and negative gross margin.

Table of Contents

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred significant losses since inception, incurred a loss of $12,~~082~~280,~~530~~809 for the ~~three~~six months ended ~~March~~June 3130, 2022 and, as of ~~March~~June 3130, 2022, the Company has an accumulated deficit of $5860,~~905~~103,~~632~~911, total stockholders’ deficit of $910,~~454~~428,~~705~~954, negative working capital of $910,~~381~~351,~~224~~150 and cash of $8044,~~632~~150. The Company used $~~658~~991,~~307~~845 and $~~171~~393,~~350~~957 of cash in operations during the ~~three~~six months ended ~~March~~June 3130, 2022 and 2021, respectively, which was funded primarily by proceeds from loans from related parties and ~~equity financings~~others. There is no assurance that any such financing will be available in the future. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently pursuing the following sources of short and long-term working capital:

	1.	The Company is actively working with selected targeted parties who are interested in licensing, purchasing the rights to, or establishing a joint venture to commercialize applications of the Company’s technology;

	2.	The Company continues to seek capital from certain strategic and/or government grant opportunities and related sources. These sources may, pursuant to any agreements that may be developed in conjunction with such funding, assist in the product definition and design, roll-out and channel penetration of products; and

	3.	The Company increased its value and potential to attract new investors when it completed the exchange program of ‘debt to equity’ in the 2^nd quarter of 2021 clearing out all convertible debt in exchange for equity at a fixed price at the end of the second quarter of 2021. This has helped the Company attract growth capital it could not prior to this ‘debt to equity’ exchange.

Management and the Board believe:

1. In the face of current world events (financial market see-sawing, war, China slow-down, supply chain challenges, etc.) our products remain in demand. 2. The Company’s ability to raise new funds while improved by the solution of the Company’s previous convertible note matter and the uptick in new orders for product, remains challenged. World events find varying degrees of effect on the Company’s going forward ability to raise reasonably priced growth capital in the amount(s) required. This is a challenging time to raise growth capital and become profitable. 3. We believe our current cash position, and our projected ability to ~~obtain~~attract additional ~~sources of~~ growth capital, ~~and~~accelerating tosustainable ~~generate~~revenue ~~sustainable~~generation (cash flow) from operations and investments, is ~~sufficient~~adequate through the end of the ~~second~~third quarter of 2022. byAt which time wethe combination of our progress in the market, greater and stronger market validation of our industry changing benefits, and cautiously optimistic optimism that the recent downturn of the public markets worldwide will have ~~confidence~~turned, finding additional growth capital will be in place. 4. The Company entered into a Loan and Security Agreement in June 2016 pursuant to which the Company issued a Senior Secured Promissory Note that granting the Holder a secured interest in all the assets of the Company. All Parties are working to resolve open issues in the ~~second~~late 3rd quarter or early 4th quarter of 2022. 5. The supply chain impact of recent world events is affecting the Company’s ability to produce product for its customers. Inability to timely acquire specified components may find the Company needing to redesign and recertify its products, or to stop production until the supply chain matter is resolved. In either event this will cause loss of sales revenue, potentially key Dais team members, and customers. The Company has successfully implemented several workarounds including sourcing ‘similar but when installed equal’ components with new vendors to supply needed components. Additionally, the Company is ~~working~~collaborating awith ~~number~~its ofhighest profile suppliers to accelerate improved paths to minimize the impact of this situation. We believe the recurring Supply chain shortages, and the impact of the inflationary spiral has and is impacting the Company’s growth plans, operations, revenues, and relationships with its customers. We have experienced low staffing levels at vendors’ companies, sudden cancellation of long lead time, high value engineered components with no future delivery times provided, rapid price increases in key commodity-like components, and a significant hourly labor increase. We believe this upward spiral of the costs, and uncertainty for costs and delivery will continue to have an impact on the Company, and its customers until at least the end of 2022. Management has and continues to work to diversify existing, and new partners, to identify multiple sources of materials and components, and to create alternative solutions for customers. Increase crude oil prices continue to influence the cost of resins, plastics, and fuel. Shipping and trucking costs have increased, capacity has contracted, and shipping times have increased. These issues are increasing costs across industries. Management has adjusted prices and lead times and will continue to monitor the situation.

2226 Table of Contents

Any failure by us to timely procure additional financing or investment adequate to fund the ongoing operations, including planned product development initiatives and commercialization efforts, or experience a major supply chain disruption will have material adverse consequences on our financial condition, results of operations and cash flows as could any unfavorable terms. While we believe the Company’s prospects have improved for funding, there are no assurances we will be able to obtain the financing and planned product development commercialization, and the sales channel challenges continue to mount. The Company may fail to reach an accord with the Senior Secured Note Holder who has deep rights with the assets of the Company pledged as security for repayment of the Note. Accordingly, we may not have the ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern.

Statement of Cash Flows

Cash as of ~~March~~June 3130, 2022 was $8044,~~632~~150 compared to $773,423 as of December 31, 2021. Cash is primarily used to fund our working capital requirements.

Net cash used in operating activities was $~~658~~991,~~307~~845 for the ~~three~~six months ended ~~March~~June 3130, 2022 compared to $~~171~~393,~~350~~957 for the same period in 2021. The increase in net cash used was primarily due to an increase in net loss (after adjusting for non-cash items) ~~and~~partially aoffset ~~decrease~~by an increase in cash from net working capital accounts. For the ~~three~~six months ended ~~March~~June 3130, 2022, net loss (after adjusting for non-cash items) was $~~670~~1,~~725~~438,548. Accounts receivable, inventory and other assets together increased by $68197,~~825~~495. Accounts payable, accrued liabilities, customer deposits and deferred revenue increased in total by $81644,~~243~~198. For the ~~three~~six months ended ~~March~~June 3130, 2021, net loss (after adjusting for non-cash items) was $~~357~~685,~~624~~276. Accounts receivable, inventory and other assets together increased by $3064,~~004~~756. Accounts payable, accrued liabilities, customer deposits and deferred revenue increased in total by $~~216~~356,~~278~~075.

Net cash used in investing activities was $3437,~~484~~428 for the ~~three~~six months ended ~~March~~June 3130, 2022 compared to $612,~~812~~064 for the same period in 2021, driven by an increase in ~~patent costs and~~ purchases of equipment.

Net cash provided by financing activities was $0300,000 for the ~~three~~six months ended ~~March~~June 3130, 2022 compared to $~~145~~458,437 for the same period in 2021. The decrease resulted from a decrease in proceeds from notes payable and notes payable due to related parties.

Financing and Capital Transactions

Paycheck Protection Program Loan

On January 25, 2021, the Company received $122,340 in a loan borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the Small Business Administration (“SBA”), which we expect to be forgiven in part or in full, subject to our compliance with the conditions of the Paycheck Protection Program. If not forgiven, the terms on the note provide for interest at 1% per year and the note mature in 24 months, with 18 monthly payments of $8,146 beginning after the initial 6-month deferral period for payments. This loan was subsequently forgiven in full on July 12, 2022.

On April 29, 2020, the Company received $144,750 in a loan borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the Small Business Administration (“SBA”). This loan was subsequently forgiven in full on August 29, 2021.

2327 Table of Contents

Small Business Administration Loan

On June 12, 2020, the Company received $150,000 in a loan borrowed from the SBA. Installment payments, including principal and interest, of $731 monthly, will begin 12 months from the date of the note. The balance of principal and interest will mature 30 years from the date of the note. Interest will accrue at the rate of 3.75% per year. On March 15, 2022, the U.S. Small Business Administration announced that the deferment period for the repayment would be extended to 30 months from the date of the note.

Related Party Note

JMS Investments

Between April of 2021 and September 30, 2021, JMS Investments of Staten Island, NY, USA invested $376,000 in seven separate transactions. The sums are repayable in the form of one-year demand notes having an interest rate of 8.5%.

On August 30, 2021, the Company entered a promissory note with GEX Management, Inc. The note matured on February 28, 2022 and bears interest at 10% per year. The note was repaid in December 2021. In connection with this note, the Company has agreed to issue 1,000,000 shares of common stock to the lender. These shares have not been issued at ~~March~~June 3130, 2022. The shares to be issued have been valued at $120,990, which has been recorded as debt discount. The discount has been fully amortized in 2021. The value of the shares has been included in accrued expenses at December 31, 2021.

2022 Convertible Notes

On June 15, 2022, the Company entered into two convertible promissory notes aggregating $300,000. The notes mature on the earlier of December 15, 2022 or 10 days after demand and bear interest at 8% per year. The Company received proceeds of $300,000. The notes are convertible into shares of common stock at a fixed conversion price of $0.30 per share. The Company has recorded debt discount of $200,000, related to the beneficial conversion feature of the notes. The discount will be amortized to interest expense over the six-month term of the notes, and $17,486 was amortized during the three and six months ended June 30, 2022.

Table of Contents

2021 Convertible Notes

On September 20, 2021, the Company entered a convertible promissory note with GS Capital Partners, LLC. The note matures on September 20, 2022 and bears interest at 8% per year. The Company received proceeds of $197,000, after deduction of $20,000 of original issue discount and $3,000 of costs. In connection with this note, the Company has issued a warrant to purchase 1,466,666 shares of common stock to the lender. The warrant has an exercise price of $0.15 per share and expires on September 21, 2026. The relative fair value of the warrant was $110,000, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.84%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 389%; and (4) an expected life of 5 years. The note is convertible into shares of common stock at a fixed conversion price of $0.10 per share. The company has recorded a beneficial conversion feature of $90,000. Amortization of discount and costs was $55,597 and $110,584 for the three and six months ended June 30, 2022, respectively.

During the fourth quarter of 2021, the Company entered into twenty convertible promissory notes with various holders aggregating $1,412,000. The notes mature one year from issuance and bear interest at 8% per year. The Company received proceeds of $1,287,000, after deduction of $117,000 of original issue discount and $8,000 of costs. In connection with the notes, the Company has issued warrants to purchase 10,463,332 shares of common stock to the lenders. The warrants have an exercise price of $0.15 per share and expire five years from the date of issuance. The relative fair value of the warrants was $1,366,127, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.84% - 1.33%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 386% - 389%; and (4) an expected life of 5 years. The notes are convertible into shares of common stock at a fixed conversion price of $0.10 per share. A total of $1,412,000 has been recorded as debt discount, and 8,000 has been recorded as deferred debt costs. The discount and costs will be amortized to interest expense over the term of the notes Amortization of discount and costs was $349,355 and $699,492 for the three and six months ended June 30, 2022, respectively.

ADuring ~~total~~May of2022, $1the Company issued 457,~~295,000~~500 ~~has~~shares ~~been~~of ~~recorded~~common asstock ~~debt~~upon ~~discount,~~the ~~and~~conversion of $845,000 ~~has~~of ~~been~~notes ~~recorded~~payable, asplus ~~deferred~~$750 ~~debt~~of costs. ~~The~~Unamortized discount and debt costs ~~will~~related ~~be amortized~~ to ~~interest expense over~~ the ~~term~~principal ofconverted ~~the~~were ~~notes~~$21,206 and $~~405~~514,~~123~~ ~~was~~respectively, ~~amortized~~which ~~during~~were ~~the~~charged ~~three~~against ~~months~~paid ~~ended~~in ~~March~~capital ~~31,~~upon ~~2022~~conversion.

The sums advanced by GS Capital Partners and JMS Investments together form a “bridge loan” for use by the Company to, among other actions, bring all filings current to return to fully reporting status with the SEC and OTC, and allow the Company to obtain the critical resources which allow Dais to grow as management and the bridge investors believe is possible using the company’s proven nanotechnology in sustainable product in a worldwide market. Currently, JMS Investments, the Company, and the Senior Secured Note Holder are negotiating the definitive investment plan along with terms and uses of proceeds. It is expected the full investment plan will be ready for announcement in the ~~second~~third quarter of 2022.

24 Table of Contents

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for “smaller reporting companies”.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and outside legal and accounting resources of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC as a result of limited resources, and a lack of segregation of duties.

During our most recent quarter, there has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2529 Table of Contents

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be engaged in various lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any pending legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial condition or results of operations. The information required by this Item is incorporated herein by reference to Notes to Financial Statements––Note 10. Litigation in Part I, Item 1, of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

Not required under Regulation S-K for “smaller reporting companies”.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of the Company’s equity securities during the quarter ended ~~March~~June 3130, 2022 , that were not previously reported in a Current Report on Form 8-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

2630 Table of Contents

ITEM 6. EXHIBITS

Exhibit		Incorporated by Reference			Filed orFurnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))				☒
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))				☒
32.1	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*				☒
32.2	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*				☒
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).				☒
101.SCH	Inline XBRL Taxonomy Extension Schema Document.				☒
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.				☒
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				☒
101.LAB	Inline XBRL Taxonomy Extension ~~Label~~Labels Linkbase Document.				☒
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				☒
104	Cover Page Interactive Data File (~~embedded~~formatted ~~within~~as ~~the~~inline ~~Inline~~ XBRL ~~document~~and contained in Exhibit 101).				☒

~~___________~~ _________________

*	In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

2731 Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DAIS CORPORATION
Date: May 23, 2022	By:	/s/ Tim N. Tangredi
Date: August 18, 2022	By:	/s/ Tim N. Tangredi
		Tim N. Tangredi
		President and Chief Executive Officer
		(Principal Executive Officer)
		(Principal Financial and Accounting Officer)

2832

Filing Compare · DAIS Corp