FORWARD LOOKING STATEMENTS


This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.

As used in this quarterly report and unless otherwise indicated, the terms "we", "us", "our", "JUPW" and the "Company" mean Jupiter Wellness, Inc.

General Overview

Jupiter Wellness, Inc. ("Company," "Jupiter Wellness" "we," "us," and "our") was originally incorporated in the State of Delaware on October 24, 2018. Our principal business address is 1061 E. Indiantown Rd #110, Jupiter, FL 33477.

Jupiter Wellness, Inc. researches, develops, licenses, and sells various
products in the wellness field focused on hair, skin, and sexual health. Its
PhotocilTM and Minoxidil Booster, are currently licensed to sell in over 30
countries worldwide. Its product NoStingz is sold in the US. The Company's
clinical pipeline of -enhanced skin care therapeutics address indications
including eczema, burns, herpes cold sores... In February 2021, we announced the
results of our novel Cannabidiol-Aspartame combination treatment JW-100 clinical
trial which has shown it significantly Reduces ISGA Score in Eczema patients. A
double blinded placebo controlled interventional study was conducted. Subjects
were assigned to apply, at home, one of three treatments: JW-100 (a cannabidiol
and aspartame combination topical formulation), a cannabidiol only topical
formulation, or a placebo topical formulation. After 14 days, the average
reduction in the Investigators Static Global Assessment (ISGA) score was
calculated for each group. Additionally, the proportion of subjects achieving
(ISGA) score 0 (clear) or 1 (almost clear) with at least 2 grade improvement
from baseline was recorded for each arm of the study. 50% of subjects in the
JW-100 arm achieved ISGA clear or almost clear (1 or 2) with at least a 2-grade
improvement from baseline after treatment versus 20% and 15% in the
CANNABIDIOL-only and placebo arms, respectively. The percentage of subjects
achieving clear or almost clear with at least a 2-grade improvement from
baseline was found to be statistically significant (p=0.028). JW-100, a novel
topical formulation containing cannabidiol and aspartame, was shown to
significantly reduce ISGA score in atopic dermatitis patients after two weeks of
use. The combination of cannabidiol and aspartame was more effective at reducing
ISGA scores than cannabidiol alone. A Phase 3 study, a head-to-head comparison
with marketed product Eucrisa, is in progress. An OTC system for the treatment
of Eczema based on this approach is planned for launch in 2023.

Photocil will be launched in Q4 2022. The minoxidil booster product is scheduled
to be launched in Japan by Taisho Pharmaceuticals in 2023. The sexual wellness
product is completing clinical studies and formulation development and will be
ready for product launch in 2023,

2


  Table of Contents

In parallel, we plan to initiate the development of other products. We originally anticipated developmental studies to be completed in 2020, however, these studies were delayed due to COVID-19.



In November 2021, Jupiter Wellness received an official written response from a
Type B pre-Investigational New Drug (IND) meeting with the U.S. Food and Drug
Administration (FDA) for JW-100, a topical drug the treatment of eczema. The
main purpose of the pre-IND meeting was to evaluate the drug development plan
for JW-100. Jupiter Wellness believes that the written response from the FDA
supports the Company's approach and its overall drug development strategy to
enable the filing of an IND for its clinical studies on JW-100.

On November 16, 2021, Jupiter Wellness announced the results of a double-blinded
placebo controlled clinical trial on JW-300 showing efficacy for the treatment
of developing burns (sunburn).

The endocannabinoid system, which is a body system affected by cannabidiol,
plays a pivotal role in maintaining a healthy skin through modulating pain
sensation, cell proliferation and inflammation. Our strategy for treatment of
skin indications is, therefore, to focus on the use of cannabidiol containing
topical formulations and to explore potential combinations of cannabidiol and
other agents that may augment and act synergistically with cannabidiol. We will
explore this strategy by conducting controlled clinical trials to try to
ultimately gain FDA approval for specific indications.

On November 30, 2020, the Company acquired SRM Entertainment, Limited, a Hong
Kong Special Administrative Region of the People's Republic of China limited
company ("SRM"). SRM has relationships with and supplies the amusement park
industry with exclusive products that are often only available to consumers
inside the relevant amusement park, entertainment venues and theme hotels in
Orlando Florida, Beijing China, Japan and other places throughout the worldwide
theme park industry.

All of the testing on these products is standard testing for suncare products.
Such testing protocols are not intended to test for any effects of adding
cannabidiol. In addition to these tests that were conducted to support the
claims on the package, each batch is also tested for appearance, color, odor,
pH, viscosity, specific gravity, analytical for the sunscreen active
ingredients, and microbial content testing.

Our products are tested each time they are manufactured. DCR Labs manufactures
our products and has represented to us that it is compliant with the FDA's
Current Good Manufacturing Practice, or CGMP, regulations in accordance with 21
CFR 210/211 required for Over-the-Counter drug products. DCR Labs has
self-imposed health and safety standards to ensure compliance with the FDA's
CGMPs.

3


  Table of Contents



We expect to continually update and expand upon our corporate website and
further refine our online retail strategies on an ongoing basis.
JupiterWellness.com is our primary corporate website, which will serve as the
primary source of information about us for investors and contain press releases,
clinical trial pipeline, lab reports, blog posts, and additional information
about each of our brands. We anticipate that each brand will have its own
front-facing website dedicated to retail sales and brand specific information.
For example, our line of sun care products, CaniSun, has its own website at
CaniSun.com and allows for online retail purchase of the entire product line. As
we expand our brands (CaniSkin and CaniDermRX), we anticipate utilizing the same
strategy and dedicating a new e-commerce website to each brand moving forward.
We are also building a website dedicated to servicing our wholesale and larger
distributor clients. This website will have more information about each product
and provide a central location for larger retailers to find more in-depth
information about all of our brands in one place.

We plan to leverage our websites with a social media presence across multiple
platforms designed to utilize product reviews to increase brand loyalty, brand
recognition and sales. The references to our website in this prospectus are
inactive textual references only. The information on our website is neither
incorporated by reference into this prospectus nor intended to be used in
connection with this offering. We also see growth potential in developing retail
locations. We intend to utilize cross-promotion marketing campaigns with our
products and product category expansion that leverages our existing distribution
channels. We have built an e-commerce platform designed to connect us directly
to consumers. We use the platform to sell products, educate customers and build
brand loyalty.

CaniSkin Brand and CaniDermRX Brand



We are currently developing other products such as cannabidiol -infused skin
care lotion under the CaniSkin brand. Specifically, a cannabidiol -infused
moisturizing face serum is under development. We must first finalize the formula
to be used in the face serum, and, once approved, the product candidate will
undergo stability testing. We intend to sell the product, provided it first
passes stability testing, on our website for CaniSkin products. Additionally, we
are developing innovative dermatological treatments under the CaniDermRX brand
that are specialized to treat atopic dermatitis and other dermatological
conditions such as burns, skin cancer and herpes cold sores, respectively.
Subject to obtaining FDA approval, we intend for our experimental-stage product
for the treatment of atopic dermatitis to compete with Dupixent, an FDA-approved
product for treating atopic dermatitis, and for our experimental-stage product
for the treatment of herpes cold sores to compete with Silvadene and Abreva,
FDA-approved products for treating herpes cold sores. These products require
more extensive testing to show both safety and efficacy.

In addition, we plan to seek acquisition opportunities in the branded consumer
products space, including but not limited to other OTC therapeutic brands and
skin care brands that can be developed, manufactured, marketed and distributed
under our CaniSkin and CaniDermRX brand names.

We filed a provisional patent number 62/884,955 on 08/09/2019 on an Aspartame/
cannabidiol combination and intend to develop products containing a combination
of cannabidiol and Aspartame under the CaniDermRX name for the treatment of pain
and inflammation. On February 11, 2021, the US Patent Published our US Patent
Application 20210038513 and on April 5, 2021 we filed the International filing
through PCT Application PCT/US 2020/045408. We believe that our CaniDermRX
product candidates have the potential to treat many skin indications such as
atopic dermatitis, pruritis-itch, non-atopic dermatitis/eczema, psoriasis,
dermatomyositis, scleroderma, seborrheic dermatitis, actinic keratosis,
epidermolysis bullosa and cutaneous neoplasias. Aspartame is a rigorously tested
food ingredient. Reviews by major governmental regulatory bodies have previously
found the ingredient safe for consumption at higher levels than we contemplate
using in our CaniDermRX product candidates. We believe that our formulations
that include Aspartame, such as topical crème, lip balm, powder and dog treats,
are well-tolerated by, and safe for, users. We believe that infusing cannabidiol
in our products may help alleviate irritation that may be caused by applying sun
care products and may lead to reduced inflammation. In human skin, receptors of
the endocannabinoid system are found in differentiated keratinocytes, hair
follicle cells, sebaceous glands, immune cells, and sensory neurons. Activation
of cannabinoid receptor type 2, or CB2, for which cannabidiol is a ligand
receptor in these cells has been shown to reduce pain and itch sensation,
regulate keratinocyte differentiation and proliferation, decrease hair follicle
growth, and modulate the release of damage-induced keratins and inflammatory
mediators to control the homeostasis of the skin environment.

SRM Acquisition



On November 30, 2020, we entered into and closed the Exchange Agreement with
SRM, a Hong Kong Special Administrative Region of the People's Republic of China
limited company and wholly owned subsidiary of Vinco, and SRM Shareholders,
pursuant to which we acquired 100% of the SRM Common Stock from the SRM
Shareholders in exchange for 200,000 shares of the Company's common stock, the
resale of which is subject to a leak out provision and escrow of 50,000 shares
of the Company's common stock. Upon closing, and pursuant to the Exchange
Agreement, the Company delivered the 150,000 shares of its common stock to SRM
and placed 50,000 shares in escrow ("Escrow Shares"). Pursuant to the Exchange
Agreement, the Company shall release the Escrow Shares upon SRM generating
$200,000 in cash receipts and revenue prior to January 15, 2021. The Escrow
shares have not been released as of the date hereof. Pursuant to the Exchange
Agreement, the Company assumed all of the financial obligations of SRM, as well
as its employees and offices. As a result of the Exchange Agreement, SRM became
a wholly-owned subsidiary of the Company.

SRM has relationships with and supplies the amusement park industry with
exclusive products such as toys, lights, fans and other items that are sold in
amusement parks. SRM has developed, manufactured and supplied the amusement park
industry with exclusive products that are often only available to consumers
inside the relevant amusement park, entertainment venues and theme hotels in
Orlando Florida, Beijing China, Japan and other places throughout the worldwide
theme park industry. . SRM has developed unique products in conjunction with
suppliers of products for core licensed items for major well-known brands,
themes, characters and movies.

Products developed by SRM are generally shipped directly to the theme park
without warehousing at the Company's facilities. SRM does not have long-term
agreements with its customers, and instead develops products on an item-by-item
basis subject to purchase orders from its customers.

Through SRM, we additionally intend to seek to sell our sun care products in the
amusement parks. We recently developed a line of non- cannabidiol infused sun
care products for sale in the amusement parks.

4


  Table of Contents



Recent Developments

In July 2021, the Company closed an underwritten public offering (the
"Offering") of 11,066,258 shares (the "Company Offering Shares") of common
stock, par value $0.001 per share and warrants (the "Company Warrants") to
purchase up to 11,607,142 shares of Common Stock. The Warrants will be
exercisable immediately upon issuance with an exercise price of $2.79 per share
and will expire on the fifth anniversary of the original issuance date. The net
proceeds from the Offering, after deducting underwriting discounts and
commissions and Offering expenses, were $28,318,314, which includes net proceeds
from partial exercise of the underwriter's option to purchase 1,741,071 Company
Warrants, representing 15% of the Company Warrants sold in the base offering.

On November 3, 2021, the Company filed a registration statement with the
Securities and Exchange Commission to sponsor Jupiter Wellness Acquisition
Corporation ("JWAC") a SPAC, dedicated to investing in AI based therapeutics and
diagnostics. On December 9, 2021, JWAC consummated the initial public offering
("IPO") of 13,800,000 at a price of $10.00 per unit, generating gross proceeds
of $138,000,000. Simultaneously with the closing of the IPO, JWAC consummated
the sale of 629,000 placement units at a price of $10.00 per placement unit in a
private placement generating gross proceeds of $6,290,000. As of June 30, 2022,
the Company had invested $2,908,300 in Jupiter Wellness Sponsor LLC ("JWSL"), an
affiliate, which in turn invested the funds to JWAC

On January 20, 2022 the Company received a letter from Nasdaq stating that,
because the Company made the Share Grants not pursuant to the 2021 Equity Plan
despite them considered to be S-8 eligible, Nasdaq had determined that the
Company did not comply with Listing Rule 5635(c). It was brought to our
attention that 180,000 shares of common stock, out of the total 1,020,000 shares
of common stock to consultants (the "Consulting Share Awards") that were issued
to three consultants, Greentree Financial (100,000 shares), Inc., L&H Inc.
(20,000 shares), and Tee 2 Green Enterprises, Ltd. (60,000 shares), during the
relevant period (the "Share Grants"), should have been issued pursuant to the
2021 Equity Plan because the Share Grants were considered to be S-8 eligible. As
a result, the inadvertent issuance of the Share Grants to the mentioned-above
three consultants was not made in compliance with Listing Rule 5635(c). The
Company subsequently notified Nasdaq that the Board has approved the
reallocation of the Share Grants to be accounted for as if they were originally
issued under the 2021 Equity Plan, and has made the corresponding change to the
Company's books and records. However, since the 2021 Equity Plan has previously
been exercised in full, to allow for the reallocation of the Share Grants under
the 2021 Equity Plan, on January 17, 2022, the Board determined that 100,000
options that have previously been issued under the 2021 Equity Plan to Brian
John, and 100,000 options issued to Dr. Glynn Wilson be cancelled, a revocation
to which Messrs. John and Wilson have agreed. Following the remedial measures
the Company was informed that the Company has regained compliance with the Rule
and that this matter is now closed.

On June 28, 2022 the Company received a letter from Nasdaq stating that, because
the Company made certain share issuances outside of a shareholder approved
equity compensation plan, Nasdaq had determined that the Company did not comply
with Listing Rule 5635(c). On July 26, 2022, the Company submitted a final
compliance plan to Nasdaq consisting of the following corrective actions: (1) on
July 20, 2022, the Company's four executive officers (Messrs. John, Miller, and
McKinnon and Dr. Wilson), all of whom are on the Company's Board of Directors
except for Mr. McKinnon, each cancelled 2,750 options issued to them in August
2021 pursuant to an Incentive Stock Option Forfeiture Agreement. The
cancellation of the 11,000 options in total enabled the issuance of 11,000
shares to a non-executive employee that took place in 2021 to be reallocated to
be accounted for as if it was originally issued under the 2020 Equity Incentive
Plan. The Company's Board of Directors passed a resolution on July 25, 2022,
making the corresponding change to the Company's books and records with regard
to the 11,000 shares; and (2) on July 26, 2022, the same four executive
officers, returned, and the Company cancelled, a total of 56,496 shares of
common stock issued to them in 2021 outside of a shareholder approved equity
compensation plan. Following the remedial measures, the Company was informed
that the Company has regained compliance with the Rule and that this matter

is
now closed.

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity
with accounting principles generally accepted in the United States of America
("GAAP") and pursuant to the rules and regulations of US Securities and Exchange
Commission ("SEC"). The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries, Jupiter Wellness, Inc., a
Florida corporation, Magical Beasts, LLC, a Nevada limited liability company,
SRM Entertainment, Limited, a Hong Kong private limited company, and Jupiter
Wellness Investments, Inc., a Florida corporation. All intercompany accounts and
transactions have been eliminated.

Significant Accounting Policies and Estimates



Our management's discussion and analysis of our financial condition and results
of operations is based on our unaudited financial statements for the six months
ended June 30, 2022 and 2021 audited financial statements, which have been
prepared in accordance with United States generally accepted accounting
principles, or U.S. GAAP, and the rules and regulations of the Securities and
Exchange Commission. The preparation of the financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements as well as the reported revenue generated, and
expenses incurred during the reporting periods. Our estimates are based on our
historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions and any such differences may
be material. We believe that the accounting policies discussed below are
critical to understanding our historical and future performance, as these
policies relate to the more significant areas involving management's judgments
and estimates.

5


  Table of Contents

Emerging Growth Company Status



We are an "emerging growth company," as defined in Section 2(a) of the
Securities Act of 1933, as amended, (the "Securities Act"), as modified by the
Jumpstart our Business Startups Act of 2012, (the "JOBS Act"), and we may take
advantage of certain exemptions from various reporting requirements that are
applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election
to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it
has different application dates for public or private companies, we, as an
emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of
our financial statements with another public company which is neither an
emerging growth company nor an emerging growth company which has opted out of
using the extended transition period difficult or impossible because of the
potential differences in accounting standards used.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and are expressed in United States Dollars. Significant accounting policies are summarized below:

Cash and Cash Equivalents



The Company considers all short-term investments with a maturity of three months
or less when purchased to be cash and equivalents for purposes of the statement
of cash flows. There were no cash equivalents as of June 30, 2022 or December
31, 2021.

Net Loss per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of
the FASB Accounting Standards Codification. Basic net income (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the period. If applicable, diluted earnings
per share assume the conversion, exercise or issuance of all common stock
instruments such as options, warrants, convertible securities and preferred
stock, unless the effect is to reduce a loss or increase earnings per share. As
such, options, warrants, convertible securities and preferred stock are not
considered in the calculations, as the impact of the potential common shares
would be to decrease the loss per share.

                                        For the Six Months                    For the Year
                                          Ended June 30,                   Ended December 31,
                                       2022             2021             2021              2020
Numerator:
Net (loss)                         $ (4,360,531 )   $ (6,346,837 )   $

(28,100,245 ) $ (6,289,205 )

Denominator:


Denominator for basic earnings
per share - Weighted- average
common shares issued and
outstanding during the period        22,527,989       11,265,828        16,603,788        7,325,708
Denominator for diluted earnings
per share                            22,527,989       11,265,828        16,603,788        7,325,708
Basic (loss) per share             $      (0.19 )   $      (0.56 )   $       (1.69 )   $      (0.86 )
Diluted (loss) per share           $      (0.19 )   $      (0.56 )   $       (1.69 )   $      (0.86 )



6


  Table of Contents



Revenue Recognition

The Company generates its revenue from the sale of its products directly to the end user or distributor (collectively the "customer").



The Company recognizes revenues by applying the following steps in accordance
with FASB Accounting Standards Codification 606 "Revenue from Contracts with
Customers" ("ASC 606"). Under ASC 606, revenues are recognized when control of
the promised goods or services are transferred to a customer, in an amount that
reflects the consideration that the Company expects to receive in exchange for
those goods or services. The Company applies the following five steps in order
to determine the appropriate amount of revenue to be recognized as it fulfills
its obligations under each of its agreements:

  ? identify the contract with a customer;

  ? identify the performance obligations in the contract;

  ? determine the transaction price;

? allocate the transaction price to performance obligations in the contract; and

? recognize revenue as the performance obligation is satisfied.


The Company's performance obligations are satisfied when goods or products are
shipped on an FOB shipping point basis as title passes when shipped. Our product
is generally paid in advance of shipment or standard net 30 days and we offer no
specific right of return, refund or warranty related to our products except for
cases of defective products of which there have been none to date.

Accounts Receivable and Credit Risk


Accounts receivable are generated from sales of the Company's products. The
Company provides an allowance for doubtful collections, which is based upon a
review of outstanding receivables, historical collection information, and
existing economic conditions. As of December 31, 2021, the Company recorded an
allowance of $104,851 against accounts receivable acquired in connection with
the acquisition of SRM Entertainment and as of June 30, 2022, the Company had
recognized no additional allowance for doubtful collections.

Foreign Currency Translation



Assets and liabilities in foreign currencies are translated using the exchange
rate at the balance sheet date, while revenue and expense accounts are
translated at the average exchange rates prevailing during the period. Equity
accounts are translated at historical exchange rates. Gains and losses from
foreign currency transactions and translation for the six-months ended June 30,
2022 and year ended December 31, 2021 and the cumulative translation gains and
losses as of June 30, 2022 and December 31, 2021 were not material.

Inventory



Inventories are stated at the lower of cost or market. The Company periodically
reviews the value of items in inventory and provides write-downs or write-offs
of inventory based on its assessment of market conditions. Write-downs and
write-offs are charged to cost of goods sold. Inventory is based upon the
average cost method of accounting.

Fair Value of Financial Instruments

The fair value of our assets and liabilities, which qualify as financial instruments under ASC Topic 820, "Fair Value Measurements and Disclosures," approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.



7


  Table of Contents



Income Taxes


We account for income taxes under ASC 740 Income Taxes ("ASC 740"). ASC 740
requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statement and tax basis of
assets and liabilities and for the expected future tax benefit to be derived
from tax loss and tax credit carry forwards. ASC 740 additionally requires a
valuation allowance to be established when it is more likely than not that all
or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements and prescribes a recognition threshold
and measurement process for financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. ASC 740 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition. Based on our evaluation, it has been
concluded that there are no significant uncertain tax positions requiring
recognition in our financial statements. Since we were incorporated on October
24, 2018, the evaluation was performed for 2018 tax year, which would be the
only period subject to examination. We believe that our income tax positions and
deductions would be sustained on audit and does not anticipate any adjustments
that would result in a material changes to our financial position. Our policy
for recording interest and penalties associated with audits is to record such
items as a component of income tax expense.

The Company's deferred tax asset at December 31, 2021 consists of net operating
loss carry forwards calculated using federal and state effective tax rates
equating to approximately $4,865,890 less a valuation allowance in the amount of
approximately $4,865,890. Because of the Company's lack of earnings history, the
deferred tax asset has been fully offset by a valuation allowance in the years
ended December 31, 2021 and 2020.

Research and Development


The Company accounts for research and development costs in accordance with the
Accounting Standards Codification subtopic 730-10, Research and Development
("ASC 730-10"). Under ASC 730-10, all research and development costs must be
charged to expense as incurred. Accordingly, internal research and development
costs are expensed as incurred. Third-party research and developments costs are
expensed when the contracted work has been performed or as milestone results
have been achieved. Company-sponsored research and development costs related to
both present and future products are expensed in the period incurred. The
Company incurred research and development expenses of $128,241 and $195,716 for
the six months ended June 30, 2022 and 2021, respectively.

Stock Based Compensation



We recognize compensation costs to employees under FASB Accounting Standards
Codification 718 "Compensation - Stock Compensation" ("ASC 718"). Under ASC 718,
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees are
required to provide services. Share based compensation arrangements include
stock options and warrants. As such, compensation cost is measured on the date
of grant at their fair value. Such compensation amounts, if any, are amortized
over the respective vesting periods of the option grant.

On October 24, 2018, the inception date ("Inception"), we adopted ASU No.
2018-07 "Compensation - Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting." These amendments expand the scope
of Topic 718, Compensation - Stock Compensation (which currently only includes
share-based payments to employees) to include share-based payments issued to
nonemployees for goods or services. Consequently, the accounting for share-based
payments to nonemployees and employees will be substantially aligned.

8


  Table of Contents



Related parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.


Pursuant to Section 850-10-20 the related parties include a. affiliates of the
Company; b. Entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d. principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. Other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.

The consolidated financial statements shall include disclosures of material
related party transactions, other than compensation arrangements, expense
allowances, and other similar items in the ordinary course of business. However,
disclosure of transactions that are eliminated in the preparation of
consolidated or combined financial statements is not required in those
statements. The disclosures shall include: a. the nature of the relationship(s)
involved; b. a description of the transactions, including transactions to which
no amounts or nominal amounts were ascribed, for each of the periods for which
income statements are presented, and such other information deemed necessary to
an understanding of the effects of the transactions on the financial statements;
c. the dollar amounts of transactions for each of the periods for which income
statements are presented and the effects of any change in the method of
establishing the terms from that used in the preceding period; and d. amounts
due from or to related parties as of the date of each balance sheet presented
and, if not otherwise apparent, the terms and manner of settlement.

Recent Accounting Pronouncements


In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for
nonemployee share-based payment transactions. The amendments specify that Topic
718 applies to all share-based payment transactions in which a grantor acquires
goods or services to be used or consumed in a grantor's own operations by
issuing share-based payment awards. The Company has adopted this standard
beginning January 1, 2019. The adoption of this standard did not have a
significant impact on our results of operations, financial condition, cash
flows, and financial statement disclosures.

In February 2016, Topic 842, "Leases" was issued to replace the leases
requirements in Topic 840, "Leases". The main difference between previous GAAP
and Topic 842 is the recognition of lease assets and lease liabilities by
lessees for those leases classified as operating leases under previous GAAP. A
lessee should recognize in the balance sheet a liability to make lease payments
(the lease liability) and a right-of-use asset representing its right to use the
underlying asset for the lease term. For leases with a term of 12 months or
less, a lessee is permitted to make an accounting policy election by class of
underlying asset not to recognize lease assets and lease liabilities. If a
lessee makes this election, it should recognize lease expense for such leases
generally on a straight-line basis over the lease term. The accounting applied
by a lessor is largely unchanged from that applied under previous GAAP. Topic
842 will be effective for annual reporting periods beginning after December 15,
2018, including interim periods within those annual periods and is to be
retrospectively applied. The Company has adopted this standard beginning January
1, 2019. The adoption of this standard did not have a significant impact on our
results of operations, financial condition, cash flows, and financial statement
disclosures.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.



Results of Operations

For the three months ended June 30, 2022 and 2021

The following table provides selected financial data about us for the three months ended June 30, 2022 and 2021, respectively.



                       June 30, 2022       June 30, 2021
Sales                 $     3,000,582     $       595,088
Cost of Sales               2,495,339             413,913
Gross Profit (Loss)           505,243             181,175
Total expenses             (1,945,999 )        (4,332,249 )
Net Loss              $    (1,440,756 )   $    (4,151,074 )



9


  Table of Contents



Revenues

We generated $3,000,582 in revenues for the three months ended June 30, 2022
compared to $595,088 revenues in the three months ended June 30, 2021. As a
result of the Covid-19 pandemic, revenues were depressed in 2021 and we are now
experiencing a greater demand for our products.

Operating Expenses and Other Income (Expense)


We had total operating expenses and other income and expense of $1,945,999 for
the three months ended June 30, 2022 compared to $4,332,249 for the three months
ended June 30, 2021.

Operating expenses for the three months ended June 30, 2022 were in connection
with our daily operations as follows: (i) marketing expenses of $29,759; (ii)
research and development of $103,025; (iii) legal and professional expenses of
$296,531, consisting of corporate advisory services, annual report preparation
fees and general corporate governance fees; (iv) rent and utilities of $41,659;
(v) depreciation and amortization of $24,636; (vi) general and administrative
expenses of $837,940, consisting of payroll and related taxes, travel, meals and
entertainment, office supplies and expense, compensation related to management
transition agreements and other normal office and administration expenses; (vii)
stock based compensation of $142,169; (viii) And net interest expense of
$548,554.

Operating expenses for the three months ended June 30, 2021 were in connection
with our daily operations as follows: (i) marketing expenses of $354,336; (ii)
research and development of $135,187; (iii) legal and professional expenses of
$486,256, consisting of corporate advisory services, annual report preparation
fees and general corporate governance fees; (iv) rent and utilities of $37,117;
(v) depreciation and amortization of $21,603; (vi) general and administrative
expenses of $824,381, consisting of payroll and related taxes, travel, meals and
entertainment, office supplies and expense and other normal office and
administration expenses; (vii) stock based compensation of $1,980,436; and
(viii) net interest expense of $492,933 (which includes $458,849 of amortization
of original issue discount and Warrant discount on convertible promissory
notes).

Income/Losses

Net losses were $1,440,856and $4,151,074for the three months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022 and 2021

The following table provides selected financial data about us for the six months ended June 30, 2021 and 2020, respectively.



                               Six Months Ended
                       June 30, 2022       June 30, 2021
Sales                 $     3,722,211     $       643,934
Cost of Sales               3,099,757             437,365
Gross Profit (Loss)           622,454             206,569
Total expenses             (4,982,985 )        (6,553,406 )
Net Loss              $    (4,360,531 )   $    (6,346,837 )



Revenues

We generated $3,722,211 in revenues for the six months ended June 30, 2022 compared to $643,934 revenues in the six months ended June 30, 2021. As a result of the Covid-19 pandemic, revenues were depressed in 2021 and we are now experiencing a greater demand for our products.

Operating Expenses

We had total operating expenses of $4,982,985 for the six months ended June 30, 2022 compared to $6,553,406 for the six months ended June 30, 2021.



Operating expenses for the six months ended June 30, 2022 were in connection
with our daily operations as follows: (i) marketing expenses of $ 69,144; (ii)
research and development of $ 128,241; (iii) legal and professional expenses of
$ 811,022, consisting of corporate advisory services, annual report preparation
fees and general corporate governance fees; (iv) rent and utilities of $81,952;
(v) depreciation and amortization of $47,249; (vi) general and administrative
expenses of $2,027,124, consisting of payroll and related taxes, travel, meals
and entertainment, office supplies and expense and other normal office and
administration expenses; (vii) stock based compensation of $247,169; (viii) net
interest expense of $573,715 (which includes $501,927 of amortization of
original issue discount and Warrant discount on convertible promissory notes)
and (ix) a $1,000,000 impairment of a promissory note.

Operating expenses for the six months ended June 30, 2021 were in connection
with our daily operations as follows: (i) marketing expenses of $372,232; (ii)
research and development of $195,716; (iii) legal and professional expenses of
$1,012,469, consisting of corporate advisory services, annual report preparation
fees and general corporate governance fees; (iv) rent and utilities of $52,753;
(v) depreciation and amortization of $43,206; (vi) general and administrative
expenses of $1,387,885, consisting of payroll and related taxes, travel, meals
and entertainment, office supplies and expense and other normal office and
administration expenses; (vii) stock based compensation of $3,663,349; (viii)
net interest expense of $494,996 (which includes $361,974 of amortization of
original issue discount and Warrant discount on convertible promissory notes)
and (ix) a gain of $669,200 on settlement of note payable in connection with the
Magical Beast Omnibus Agreement.

Income/Losses

Net losses were $4,360,531 and $6,346,837 for the six months ended June 30, 2022 and 2021, respectively.



10

Table of Contents

© Edgar Online, source Glimpses