The following management's discussion and analysis should be read in conjunction with our historical financial statements and the related notes. The management's discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report.

As the result of the transactions of which PeerLogix Technologies, Inc. became a wholly-owned subsidiary of the Company and the change in business and operations of the Company from a shell company to a technology company, a discussion of our financial results prior to the Share Exchange is not pertinent, and the financial results of PeerLogix Technologies, Inc., the accounting acquirer, are considered the financial results of the Company on a historical and going-forward basis.











  11





The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these 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 revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on 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.

Results of Operations for the Years ended December 31, 2018 and 2017

The following table sets forth the summary income statement for the years ended December 31, 2018 and 2017:





                           For the Year Ended
                     December 31,      December 31,
                         2018              2017
Revenues             $      57,973     $       1,096
Operating Expenses   $  (4,823,936 )   $  (1,981,944 )
Other Expense, net   $  (4,745,439 )   $  (3,015,249 )
Net Loss             $  (9,511,402 )   $  (4,996,097 )

Revenues: From inception, the Company has generated minimum revenues due to being in the development stage with regard to its technology and channel partner relationships.

Operating Expenses:Operating expenses consist primarily of compensation and related costs for personnel and facilities, and include costs related to our facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing, investor relations and outsourcing services.

Operating expenses increased by 143% during the year ended December 31, 2018, as compared to the year ended December 31, 2017. The overall $2,841,988 increase in operating expenses is primarily attributable to the following approximate net increases (decreases) in operating expenses:





    ·   An increase in stock based compensation to directors of approximately $2.2
        million.




    ·   An increase in stock based compensation to consultants of approximately
        0.8 million.




    ·   An accumulation of minor decreases across other operating expenses
        categories of approximately 0.2 million.



Other expenses, net: Other expense, net consists primarily of interest expense primarily related to the Company's convertible promissory notes and notes payable and includes non-cash amortization of debt discounts of $703,544 and $1,766,925 and non-cash interest of $111,606 and $1,442,654 for the years ended December 31, 2018 and 2017, respectively.











  12





In addition, the Company incurred an aggregate of $140,022 loss on extinguishment of debt in fiscal 2018, primarily from settlement of an outstanding convertible note as compared to a loss on settlement of debt of $913,562 in fiscal 2017 primarily from note extensions.

During 2018, the Company reduced previously issued warrants exercisable at $0.10 per share to $0.06 per share as an inducement to exercise. In addition, as part of the exercise of the warrant, the holder would receive one Series B warrant (exercisable at $0.25 per share, expiring four years from issuance -see above) for every four warrants exercised. The Company accounted for the transaction under inducement accounting and accounted for the price reduction of $0.04 per share and the fair value of the Series B warrants as inducement expense in the amount of $734,273.

In 2018, the Company issued convertible notes payable with variable conversion features which included embedded derivatives. As such, the Company is required to bifurcate the fair value of the derivative and mark-to-market each reporting period. During the year ended December 31, 2018, the Company recorded a $1,547,402 loss on change in fair value of derivative liabilities as compared to a $1,741,441 gain for 2017.

Overall, other expense, net - increased by $1,730,190 to $4,745,439 during the year ended December 31, 2018 as compared to $3,015,249 during the year ended December 31, 2017.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at December 31, 2018 compared to December 31, 2017:





                                    Year ended
                          December 31,      December 31,       Increase/
                              2018              2017          (Decrease)
Current Assets            $      45,447     $      33,156     $    12,291

Current Liabilities $ 6,371,092 $ 3,525,534 $ 2,845,558 Working Capital Deficit $ (6,325,645 ) $ (3,492,378 ) $ 2,833,267

As of December 31, 2018, we had a working capital deficit of $6,325,645, as compared to a working capital deficit of $3,492,378 as of December 31, 2017, an increase of $2,833,267. During the year ended December 31, 2018 we received net proceeds of $362,887 from the issuance of convertible notes and warrants and $670,270 from exercise of warrants, net with repayments of $39,941 of convertible notes and officer loans. The Company used the proceeds to fund operations during the year. The increase in our working capital deficit is primarily attributable to our negative cash flow from operations resulting in our growing accounts payable, accrued liabilities and outstanding debt.

We have incurred net operating losses and operating cash flow deficits since inception. We have been funded primarily by debt, to execute on our business plan and for working capital. Our principal source of liquidity is our cash. At December 31, 2018, we had cash totaling approximately $26,000. We believe our existing available cash is insufficient to enable the Company to meet the working capital requirements for the near future. Consequently, we will be required to raise additional capital to complete the development and commercialization of our current product. However, there can be no assurance that we will be able to raise additional capital on terms acceptable to us, or at all. In order to boost sales, we continue to explore potential expansion opportunities in the industry through mergers and acquisitions, enhancement of our existing products, development of new products and expansion into other international markets. We will incur increased costs as a result of being a public company, which could affect our profitability and operating results.











  13





We are obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. We expect to spend between $200,000 and $250,000 in legal and accounting expenses annually to comply with our reporting obligations and Sarbanes-Oxley. These costs could affect profitability and our results of operations.

Management has determined that additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Going Concern and Management's Liquidity Plans

As reflected in the consolidated financial statements, the Company had an accumulated deficit at December 31, 2018, a net loss and net cash used in operating activities for the year then ended and has generated only minimal revenues since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year from the issuance date of the consolidated financial statements.

The ability of the Company to continue its operations is dependent on management's plans, which include the raising of capital through debt and/or equity markets, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company's existence. There can be no assurance that the Company will be able to raise any additional capital.

The Company may also require additional funding to finance the growth of our anticipated future operations as well as to achieve its strategic objectives. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. In that event, the Company would be required to change its growth strategy and seek funding on that basis, if at all.

The Company's plan regarding these matters is to raise additional debt and/or equity financing to allow the Company the ability to cover its current cash flow requirements and meet its obligations as they become due. There can be no assurances that financing will be available or if available, that such financing will be available under favorable terms. In the event that the Company is unable to generate adequate revenues to cover expenses and cannot obtain additional financing in the near future, the Company may seek protection under bankruptcy laws. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

The spread of a novel strain of coronavirus (COVID-19) around the world in the first half of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. The outbreak and any preventative or protective actions that governments or we may take in respect of this COVID-19 may result in a period of business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may materially affect our business, financial condition, and results of operations. The extent to which the COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 and the actions to contain the COVID-19 or treat its impact, among others.











  14






Financing Transactions



During the year ended December 31, 2018, we sold $425,900 Units to investors. Each Unit was sold at a price of $10,000 per Unit and consisted of one (1) six (6) month, 18% convertible promissory note (36% on an annual basis) with a face value of $10,000 and four year warrants exercisable for an aggregate number of shares of common stock equal to 50% of the shares of common stock into which the Note is initially convertible, exercisable at a price of $0.10 per share. The Offerings Notes are due six months after the issuance of each note, as amended.

Each of the Notes is convertible at an initial price equal to $0.06 per share. In addition, during the two month period commencing on each issuance of the Offering 3 Notes, as amended, the Notes will contain a look-back provision pursuant to which the Notes will be convertible at the lower of $0.06 per share or the lowest volume weighted average price of the Company's common stock (the "VWAP") during any 10 day period during such two (2) month period, provided however, in the event that the VWAP during any such ten (10) day period is less than $0.06 per share, then the reset conversion price of the Notes shall be no lower than $0.03. The Notes also contain a reset provision to the same price as any future offering over the lifetime of the Notes in the event that the conversion or offering price of securities offered in such subsequent offering is less the Conversion Price of the Notes in this Offering. Notwithstanding the foregoing, in no event shall the Conversion Price be lower than $0.03 per share.

Summary Cash flows for the years ended December 31, 2018 and 2017:





                                                       Year Ended
                                             December 31,       December 31,
                                                 2018               2017

Net cash used in operating activities $ (980,925 ) $ (725,243 ) Net cash used in investing activities $

            -     $      (37,500 )

Net cash provided by financing activities $ 993,216 $ 720,807

Cash Used in Operating Activities

Our primary uses of cash from operating activities include payments to consultants for research and development, compensation and related costs, legal and professional fees, computer and internet expenses and other general corporate expenditures.

Cash used in operating activities in 2018 consisted of net loss adjusted for certain non-cash items such as equity-based compensation expense of $2,606,982, fair value of warrants issued in connection with note extensions, inducement expense of $734,273, fair value of warrants for services, amortization of debt discounts of $703,544, non-cash interest of $111,606, loss on extinguishment of debt of $140,022, loss on change in fair value of derivative liabilities of $1,547,402, as well as the effect of changes in working capital and other activities.

Cash Used in Investing Activities

No cash used in investing activities for the year ended December 31, 2018 as compared to $37,500 for 2017.

Cash Provided by Financing Activities

Cash provided by financing activities consists primarily of net proceeds from issuance or repayments of notes payable, convertible promissory notes and warrant exercises for the year ended December 31, 2018.











  15





Cash provided by financing activities increased from the year ended December 31, 2017 to the year ended December 31, 2018, primarily driven by an increase in proceeds from the issuance of convertible notes and warrants exercises offset by the repayment of notes payable and related party loans.

Recent Accounting Pronouncements

See Note 3 to the consolidated financial statements included elsewhere in this Filing.

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("U.S. GAAP"). U.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to U.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 3 of our consolidated financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:





Use of Estimates


The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. The Company's significant estimates and assumptions include the fair value of the Company's equity instruments, convertible debt, stock-based compensation, and the valuation allowance relating to the Company's deferred tax assets.





Accounting for Warrants



The Company accounts for the issuance of common stock purchase warrants issued in connection with debt and equity offerings in accordance with the provisions of ASC 815, Derivative Instruments and Hedging Activities ("ASC 815"). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).











  16





The Company assessed the classification of its common stock purchase warrants as of the date of each equity offering and determined that such instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entity's underlying stock.

Derivative Instrument Liability

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At December 31, 2018 and 2017, the Company did not have any derivative instruments that were designated as hedges.

Off Balance Sheet Arrangements:

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).

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