This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as "anticipate," "expects," "intends," "plans," "believes," "seeks" and "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company's stock. The following discussion and analysis should be read in conjunction with our financial statements and summary of selected financial data for iWallet Corporation Such discussion represents only the best present assessment from our Management.





Overview

iWallet Corporation (the "Company" or "iWallet") was incorporated on November 18, 2009, in the State of California as "Queensridge Mining Resources, Inc." On or about July 21, 2014, iWallet Corporation, a private California corporation, merged with and into our wholly owned Nevada subsidiary, iWallet Acquisition Corp., and iWallet Acquisition Corp. then immediately merged with and into the Company, with the Company immediately changing its name to "iWallet Corporation."

The Company is currently focused on designing and developing biometric locking wallets and related physical, personal security products, and providing consulting services in connection with protective wallets and other personal security products.

The Company's fiscal year end is December 31, its telephone number is (858) 610-2958, and the address of its principal executive office is 401 Ryland St., Ste. 200A, Reno, Nevada.

The Company was previously a public company required to file reports with the United States Securities and Exchange Commission (the "SEC") as a result of effectiveness of prior registration statements we filed with the SEC in 2010 and 2014, but our reporting obligations were automatically suspended as a result of having less than 300 shareholders of record, and we subsequently filed a Form 15 (a Notice of the suspension of our duty to file reports under the Securities Exchange Act) and discontinued reporting in 2016.





Description of Business

We are a designer and developer of innovative, physical, personal security products that incorporate security and communication technologies to protect against identity, personal and financial information theft. iWallet is a registered trademark in the United States. Our prior designs include a biometric locking luxury storage case, made from carbon fiber or aluminum, that protects cash, credit cards and personal information with a proprietary fingerprint security system from being read by many types of RF devices in public spaces, and a soft leather wallet that incorporates a GPS module allowing the customer to locate the wallet if misplaced. Using a free mobile application, the wallets were designed to allow owners to tether their wallets to a supported mobile smart device. A proximity alarm could then be configured to sound on the mobile device synced with our high-end version of the wallet when the wallet is separated by about five meters.

We are based in San Diego, California, and the iWallet business was originally founded in 2009. The initial version of the iWallet generated sales of over $700,000 in the first eighteen months following its launch. Established sales channels include Neiman Marcus in North America, Harrods in England, Highline Peak Group in Canada, and NeedItWantItGadgets in New Zealand. Our prospective sales channels include Dufry, Touch of Modern, Skymall, Travelsmith, Hammacher Schlemmer, and co-branding for Montblanc, Porsche Design, Ducati, Gucci, and Bugatti. We own the trademark "iWallet" for secure luxury storage cases connected to smartphones in the USA and have patents worldwide. We were previously licensed by Apple Inc. as an official Accessory Developer. That license is currently lapsed due to our current redesign of our product line and incorporation of updated technologies into our product line, but we anticipate being licensed as an official Accessory Developer again within the next 12 months,


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subject to completion of our product redesign during that time period. We also currently provide consulting services to other companies in the industry.

We are currently improving our designs and seeking manufacturers to launch our products back into the market, and we are not currently engaged in any product sales. We are currently redesigning the original iWallet with current technology as follows:

a.Add facial recognition vs. the original fingerprint scanner in the original iWallet design.

b.Add GPS tracking vs. the original alarm going off when the iWallet was separated from the linked mobile device.

c.Use flexible case material vs. the original hard case to house wallet electronics.

d.Add ability to download credit card numbers to its built-in memory vs. the original non capability.

This new technology is currently being designed to be implemented with various portable containers like wallets, passport holders and hand bags. We are in the initial stages of product redesign, and we are currently conducting tests with electronic components from different suppliers to see which ones work more efficiently. Once we know which ones work to our satisfaction, we plan to make 3D prototypes to show to our consulting customers that already have relationships with for their feedback and approval. Due to the revamping of our line of products, we have discontinued manufacturing the original iWallet since we consider the prior iWallet technology outdated.

The Company is currently working with engineers regularly to reach the aforementioned four technology feature milestones described above, and the Company is also meeting regularly with potential clients that show interest in this new technology and might be willing to either purchase product or designs, including gauging interest in potential white (private) labeling for large name brands like Dunhill with which we have relationships.

We have accumulated a database of customers through tradeshows like the Consumer Electronics Show-CES, where iWallet won an innovation award that created a substantial interest in our products throughout many industries like automotive (General Motors, Mercedes Benz, Porsche each approached us previously), which could potentially sell iWallet products in their gift shops situated at their dealerships; duty-free shops situated at national borders, as well as in-flight catalogs, stores in cruise ships, etc. We also plan for our future products to be distributed through luggage retailers and manufacturers like we have in the past with Heys Luggage.

We anticipate that we will be ready to launch our redesigned products with updated technological features within the next 12 months, although the timeline may be delayed due to continuing effects of the COVID-19 pandemic and the current worldwide shortage in electronic components. Accordingly, our projected product launch timeline is subject to normalization of the current computer chip and related component supply situation. We believe that with prototypes in hand, we will be able to secure purchase orders from small and large businesses and go into production, subject to electronic component availability, within the next year.





Products and Technology

We are redesigning our original product, which will be marketed as the "iWallet 2.0," to have the following features:

·Sleek, compact industrial design with carbon fiber case

·Pairs with the owner's cellular phone via bluetooth technology

·Patented, exclusive tamper resistant locking mechanism utilizes innovative fingerprint biometric reader for unlocking

·Unique latch control that only consumes power during latching hence providing extended battery life

·RFID blocking capability for enhanced wireless protection

·Speaker providing audible feedback

·GPS tracking capabilities

We also intend to bring the following additional products to market:

·Leather wallets with a GPS module built-in

·Storage devices with co-branding luxury partners

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·A secure passport case called the iPassport

·A secure mobile personal safe to store pharmaceuticals in

·A smart "padlock" with a biometric reader for gym lockers and other personal areas that require security

We hold over twenty patents and patent applications filed in various countries around the world. Our products are manufactured under contract by a manufacturer based in Zhuhai, China, Apollo Electronics. The suppliers for our raw materials have been Future Electronics, Namiki Motors, Cotech Taiwan, Digital Persona, Avnet Electronics, Avnet Taiwan, and Apollo Electronics. Historically, our largest major customer has been Neiman Marcus, which was the source of approximately 60% of our gross revenues from our most recent product sales several years ago. We have not had any product sales for several years as we have been focused on updating our designs to use more cost-effective technologies and materials, and sourcing and updating our suppliers, tooling, and molds. We have now updated our designs and distribution plan, and we expect to relaunch product sales during 2022, and expand our distribution efforts. As we expand our sales and distribution channels, we expect that our customer base will diversify and that, in the future, our revenues will not be dependent upon one or a few major customers.

We hold both utility and design patents and patent applications. All of our current utility patents will remain in effect until September 14, 2027, in the United States. The duration of our design patents varies by country. The expiration dates of our current design patents, by country, is as follows:

Canada    June 10, 2023
Europe    December 9, 2036
China     December 12, 2021
Japan     May 18, 2032
Russia    December 13, 2036
Singapore December 9, 2026
Taiwan    December 9, 2023




Services Offered

We are currently providing project management services to companies interested in the research, development (such as feasibility study, source codes, gerber files, apps, etc.), manufacturing (molds, PCB boards, etc.), materials (such as carbon fiber, fiber glass, aluminum, leather, polycarbonate, etc.), complex supply chain logistics, complex product cycle, and marketing (sales channels established throughout years of iWallet's worldwide business relationships with high end brands, luxury department stores and duty free shops at worldwide airports, border crossings and cruise ships) of what we call "smart containers," which are high-tech personal portable containers (such as wallets, purses, handbags and passport holders) that utilize the latest technologies in terms of GPS recovery for lost or stolen containers that can be tracked via an app on the owner's smartphone or tablet; facial recognition and other biometrics such as fingerprint readers, voice recognition or remote opening through an app, in order to access its contents; various encrypted credit card numbers downloaded to the container that can be displayed on a LED/LCD screen to choose form of payment (Visa/MasterCard/American Express/Discover) at a touch of a button and pay the retailer with its NFC capability (the advantage of our system is that it is "off-the-grid" meaning that there is no third party carrier-such as the cellular phone carrier-that can be hacked into to steal personal information).

We consider ourselves to be at the forefront of the industry with the expertise, knowledge, resources and commitment to perform beyond our clients' expectations with expertise in the field of portable containers that we dub "Techcessories," and our commitment is to get their products out in the market as soon as possible to manage efficiently their product's life cycles and replace their aging products with updated technology. We also plan to offer all of the aforementioned processes to companies on a partnership basis, whereby we would reduce the prices we charge to our customers (which reduction would reflect a portion of our cost of development, manufacturing, inventory and marketing) in exchange for being paid commissions by the customers in the future from new product sales or potentially receiving partial ownership in their new product offerings in the future, in order to provide a more affordable option to the client. We do not yet have any customers engaged on this basis, nor are we dependent on this structure.


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Market and Competition Overview

Our primary target demographic is consumers who are in the market for high-end luxury storage cases and similar accessories. We do not believe that the $200+ approximate retail price to the customer for many of our planned products will be an obstacle for our initial target demographic.

We have previously competed with luxury brands such as Cartier, Salvatore Ferragamo, Louis Vuitton, and Gucci, all of which are better capitalized than we are, as well as the following smaller niche competitors (and product offerings):

·Ekster: Parliament Wallet - integrated RFID blocking technology. GPS tracking available as an addon.

·Nomad: Slim Wallet - provides GPS tracking in an inconspicuous fashion so thieves are not aware of the tracking capability.

·Zitahli: Mens Wallet with RFID Front for Men - includes RFID security technology.

We believe the security, high technology, slim design, and carbon fiber or leather construction of our anticipated storage device products can position the Company to compete for a share of the luxury secure accessories market.

Sales, Distribution and Growth Strategy

Our current sales strategy is focused on developing and introducing a new flexible wallet made out of leather instead of carbon fiber in order to be more competitive from a pricing standpoint with traditional leather containers and wallets.

We plan to private label our product designs for well-established global brands that we already have a business relationship with (described below) through our first and second generation wallets, unlike our competitors that only promote their brands.

As funds permit, we plan to attend domestic consumer electronics trade shows, personal accessories trade shows, vacation trade shows, and luggage related trade shows to promote our line of unique products that we call "Techcessories." The Company has been working with Global Marketing Strategies in order to explore creative strategies, advertising concepts, consumer opinions, existing distribution and sales channels to determine the best path for sales and distribution of the Company's product and services offerings.

Our established distribution channels for the original iWallet products include the following, which we believe will be available for the Company's future product offerings.

·Neiman Marcus in North America

·Harrods in England

·NeedItWantItGadgets in New Zealand

The following are current prospective sales channels:

·Private branding for well-established global brands: Dunhil of London, Heys Luggage, Montblanc, Porsche Design, Ducatti, Gucci, and Bugatti. We have previously had business relationships or discussions with each of these brands.

·Dufry, a global duty-free company with 1,100 locations in 45 countries.



·Touch of Modern.

·Skymall.

·Travelsmith.

·Hammacher Schlemmer.

·Zero Halliburton.

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Employees

We have no employees except for our CEO, Steven Cabouli, who plans to devote at least 40 hours/week to Company operations.





Environmental Laws

We have not incurred and do not anticipate incurring any expenses associated with environmental laws.





Reports to Security Holders

The Company intends to furnish its stockholders with annual reports containing financial statements audited by its independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. The Company files Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet its timely and continuous disclosure requirements. The Company may also file additional documents with the Commission if those documents become necessary in the course of its operations.

The public may read and copy any materials that the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The site address is www.sec.gov.





Available Information

All reports of the Company filed with the SEC are available free of charge through the SEC's website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.





Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the three and six months ending June 30, 2022 and 2021, which are included herein.

Our financial statements are stated in U.S. Dollars and are prepared in accordance with generally accepted accounting principles of the United States ("GAAP").





Going Concern Qualification

Several conditions and events cast substantial doubt about the Company's ability to continue as a going concern. The Company has incurred cumulative net losses of $5,161,638 since its inception through June 30, 2022, and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern.




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Results of Operations for the six months ended June 30, 2022, compared with the six months ended June 30, 2021





Revenues

We generated revenues of $10,050 during the six months ended June 30, 2022, as compared to $49,100 in revenues during the six months ended June 30, 2021. We began providing consulting services to other companies in our market in 2021. The reduction in revenues during the six months ended June 30, 2022 is due primarily due to the on-going cycle of projects of our clients and waiting on the next round of work that they need.





Cost of Sales

Cost of sales decreased to $0 in the six months ended June 30, 2022, from $24,450 in the six months ended June 30, 2021, primarily as a result of not needing to use outside services on projects for clients during the current fiscal period.

Operating and Administrative Expense

Operating expenses increased to $30,329 in the six months ended June 30, 2022, from $4,735 in the six months ended June 30, 2021, primarily as a result of expenses of bringing and keeping the Company's public filings current.





Other Income (Expense)

We incurred interest expense of $34,163, during the six months ended June 30, 2022, as compared to interest expense of $31,613 during the six months ended June 30, 2021. Interest expense modestly increased year-over-year, due to compounding interest. The Company also incurred a loss on settlement of accounts payable of $78,050 in the six months ended June 30, 2021.





Net Loss

The Company had a net loss of $54,442 for the six months ended June 30, 2022, as compared to a net loss of $109,663, for the six months ended June 30, 2021, primarily as a result of the increase in the operating expenses and modest increase in interest in the six months ended June 30, 2022, as compared to the operating loss in the same period in the prior fiscal year that included the loss on settlement of account payable of $78,050.

Results of Operations for the three months ended June 30, 2022, compared with the three months ended June 30, 2021





Revenues

We generated revenues of $0 during the three months ended June 30, 2022, as compared to $49,100 in revenues during the three months ended June 30, 2021, as we began providing consulting services to other companies in our market in 2021. The reduction in revenues during the three months ended June 30, 2022 is due primarily due to the on-going cycle of projects of our clients and waiting on the next round of work that they need.





Cost of Sales

Cost of sales decreased to $0 in the three months ended June 30, 2022, from $24,450 in the three months ended June 30, 2021, primarily as a result of not needing to use outside services on projects for clients during the current fiscal period.

Operating and Administrative Expense

Operating expenses increased to $16,127 in the three months ended June 30, 2022, from $1,870 in the three months ended June 30, 2021, primarily as a result of expenses of keeping the Company's public filings current.


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Other Income (Expense)

We incurred interest expense of $17,063, during the three months ended June 30, 2022, as compared to interest expense of $16,026 during the three months ended June 30, 2021. Interest expense modestly increased year-over-year, due to compounding interest. The Company also incurred a loss on settlement of accounts payable of $78,050 in the three months ended June 30, 2021.





Net Loss

The Company had a net loss of $33,190 for the three months ended June 30, 2022, as compared to a net loss of $71,296, for the three months ended June 30, 2021, primarily as a result of the increase in the operating expenses and modest increase in interest in the three months ended June 30, 2022, as compared to the operating loss in the same period in the prior fiscal year that included the loss on settlement of account payable of $78,050.

Liquidity and Capital Resources

At June 30, 2022, we had $31,166 of cash on hand and an accumulated deficit of $5,161,638. Our primary source of liquidity has been from funds received for consulting services provided to customers. As of June 30, 2022, the Company owed $1,649 in outstanding related party advances, with $0 in accrued interest on those advances, and $504,500 in outstanding convertible debentures payable to outside parties, with $371,990 in accrued interest on these debentures.

Net cash used in operating activities was $18,492 during the six months ended June 30, 2022 and $4,485 during the six months ended June 30, 2021.

Net cash used in investing activities was $0 during the six months ended June 30, 2022 and 2021.

Net cash provided by financial activities was $0 during the six months ended June 30, 2022 and 2021.

Our expenses to date are largely due to professional fees that include accounting, audit and legal fees. To date, we have had minimal revenues, and we require additional financing in order to finance our business activities on an ongoing basis.





Cash Flow

Our primary source of liquidity has been cash from consulting services provided during 2021 and 2022.





Working Capital

We had current assets of $31,166 and $49,658, and current liabilities of $887,422 and $851,472, resulting in working capital deficits of $856,256 and $801,814 at June 30, 2022 and December 31, 2021, respectively.





Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("GAAP") and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions and estimates that affect the amounts reported in its financial statements and accompanying notes. Note 2, "Significant Accounting Policies," of the Notes to Financial Statements on the unaudited financial statements as of June 30, 2022 and December 31, 2021, and for the three and six months ended June 30, 2022 and 2021 included in this Form 10-Q, describes the significant accounting policies and methods used in the preparation of the Company's financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the


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circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

Management believes the Company's critical accounting policies and estimates are those related to revenue recognition, intangible assets, and income taxes. Management considers these policies critical because they are both important to the portrayal of the Company's financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company's management has reviewed these critical accounting policies and related disclosures.





Revenue Recognition

The Company's business plan is to derive revenue primarily from the sale and engraving of its wallets and consulting services within the smart wallet sector. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under ASC 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.





Intangible Assets

Patents and trademarks are measured at cost. Legal fees associated with patents and trademarks, which are expected to be issued, are recorded as patents and trademarks on the balance sheets. Upon approval by the relevant patent office, the patents and trademarks are amortized over their respective expected lives. Patent and trademark costs associated with patents or trademarks which are not approved or are abandoned, are expensed in the period in which such patents are not approved.

The Company expects to maintain patents for up to 20 years from the effective date and the trademark registrations for as long as the trademarks remain in use and the required filings are made to keep them in use. However, based on the Company's assessment of potential innovation or other competing technological developments a useful life of ten years has been assessed for both the patents and the trademarks.

Software consists of costs relating to the development of the software behind the biometric scanning and the other security programs involved in the wallets. Costs relating to the development of this software are capitalized and amortized over its estimated useful life of ten years.

Website development costs relating to website and mobile application and software development are also capitalized and amortized over its estimated useful life of three years.

ASC 350-20, Goodwill, and 350-30, General Intangibles Other than Goodwill, require intangible assets with a finite life be tested for impairment whenever events or circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated discounted cash flow used in determining the fair value of the asset.





Income Taxes

Income taxes are computed in accordance with the provisions of ASC 740, Income Taxes, which requires, among other things, a liability approach to calculating deferred income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company is required to make certain estimates and judgments about the application of tax law, the expected resolution of uncertain tax positions and other matters. In the event that uncertain tax positions are resolved for amounts different than the Company's

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estimates, or the related statutes of limitations expire without the assessment of additional income taxes, the Company will be required to adjust the amounts of the related assets and liabilities in the period in which such events occur. Such adjustments may have a material impact on the Company's income tax provision and results of operations.

Recently Issued Accounting Pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.





Seasonality

We do not expect our sales to be impacted by seasonal demands for our products and services.

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