You should read the following discussion of our financial condition and results
of operations in conjunction with our condensed consolidated financial
statements and the related notes included elsewhere in this Quarterly Report on
Form 10-Q and with our audited consolidated financial statements included in our
Annual Report on Form 10-K for the year ended June 30, 2021, as filed with the
Securities and Exchange Commission. In addition to our historical condensed
consolidated financial information, 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 these
differences include those discussed below and elsewhere in this Quarterly Report
on Form 10-Q, particularly in Part II, Item 1A, "Risk Factors."

Overview

SmartMetric, Inc. is a company engaged in the biometric technology industry.
SmartMetric has secured a patent covering technology that involves connection to
networks using data cards (smart cards and EMV cards). In addition, SmartMetric
holds the sole license to issued patents covering features of its biometric
fingerprint activated cards. SmartMetric's main product is a fingerprint sensor
activated payments card with a finger sensor and fully functional fingerprint
reader embedded inside the card. The cards have a rechargeable battery allowing
for portable biometric identification and card activation. These cards are
herein sometimes referred to as a biometric card or the SmartMetric Biometric
card.

To date, we have devoted a substantially all of our efforts and financial
resources to the development of our biometric card. Since our inception in 2002,
we have generated no revenue from product sales and have funded our operations
principally through the private sales of our equity securities. We have never
been profitable and, as of March 31, 2021, we had an accumulated deficit of
approximately $28,878,841. We expect to continue to incur significant operating
losses for the foreseeable future as we continue the development of our
technologies and advance them to market.

Our cash and cash equivalents balance at March 31, 2021 was approximately
$10,325 representing 20.5% of total assets. Notwithstanding our recent capital
raises, based on our current expected level of operating expenditures, we expect
to be able to fund our operations into 2023. This period could be shortened if
there are any significant increases in spending that were not anticipated or
other unforeseen events.

We anticipate raising additional cash through the private or public sales of
equity or debt securities to continue to fund our operations and the development
of our technologies. There is no assurance that financing will be available to
us when needed in order to allow us to continue our operations, or if available,
on terms acceptable to us. If we do not raise sufficient funds in a timely
manner, we may be forced to curtail operations, delay or stop our ongoing
clinical trials, cease operations altogether, or file for bankruptcy. We
currently do not have commitments for future funding from any source.

Going Concern



The condensed consolidated financial statements do not include any adjustments
relating to the carrying amounts of recorded assets or the carrying amounts and
classification of recorded liabilities that may be required should the Company
be unable to continue as a going concern.


As shown in the accompanying consolidated financial statements the Company has
incurred recurring losses of $1,399,499 for the nine month period ending March
31, 2022 and has incurred a cumulative loss of $30,269,453 since our inception
in December 18, 2022. The Company is currently in the development stage and has
spent a substantial portion of its time in the development of its technology.



                                       17




There is no guarantee that the Company will be able to raise enough capital or
generate revenues to sustain its operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern beyond calendar
year 2023. The Company maintains sufficient cash to continue as a going concern
throughout all of calendar year 2022.

Management believes that the Company's capital requirements will depend on many factors. These factors include the final phase of development and mass production being successful as well as product implementation and distribution.



The consolidated financial statements do not include any adjustments relating to
the carrying amounts of recorded assets or the carrying amounts and
classification of recorded liabilities that may be required should the Company
be unable to continue as a going concern.

Effect of Covid-19



In December 2019, an outbreak of a novel strain of coronavirus originated in
Wuhan, China ("COVID-19") and has since spread worldwide, including to the
Unites States, posing public health risks that have reached pandemic proportions
(the "COVID-19 Pandemic"). COVID-19 poses a threat to the health and economic
wellbeing of our employees, customers and vendors. Like most businesses
world-wide, the COVID-19 Pandemic has impacted the Company financially. Further,
the COVID-19 Pandemic, has had an impact on SmartMetric's final card production.
While the delays are due to supply line disruption, the Company is confident
that these delays will be short-lived based on advice from our manufacturing
partners, manufacturing alternatives and alternative supply lines that are being
put into place by the Company. However, management cannot presently predict the
scope and severity with which COVID-19 will impact our business, financial
condition, results of operations and cash flows.

SmartMetric's commitment to the health and safety of its employees remains our
first priority. Our rigorous precautionary measures include the formation of
global and regional response teams that maintain contact with authorities and
experts to actively manage the situation, restrictions on company travel,
quarantine protocols for employees who may have had exposure or have symptoms,
frequent disinfecting of our locations and other measures designed to help
protect employees, customers and suppliers. We expect to continue these measures
until the COVID-19 pandemic is adequately contained for our business.

In the near-term, our operating results are going to be challenged due to this
crisis. We continue to manage our cost structure to meet the uncertain demand,
while making additional cost reductions as needed. Our customers' businesses are
subject to the fluctuations in global economic cycles and conditions and other
business risk factors which may impact their ability to operate their
businesses. The performance and financial condition of our customers may cause
us to alter our business terms or to cease doing business with a particular
customer. Further, the potential impact of the COVID-19 Pandemic on their
businesses could adversely impact our customers' ability to pay us for work
performed, increasing our future estimate of credit losses.

Recent Developments

Issuance of Commitment Shares, Notes and Warrants to Three Investors





On January 27, 2022, we entered into separate securities purchase agreements
with three investors, for the sale and issuance to each investor of: (i) a
promissory note in the aggregate principal amount of $250,000, (ii) a common
stock purchase warrant to purchase 12,500,000 shares of the Company's common
stock, and (iii) a commitment fee in the form of 12,500,000 shares of the
Company's common stock.



                                       18




Mast Hill Equity Purchase Agreement and Registration Rights Agreement to Mast Hill Fund, L.P.





On March 8, 2022, we entered into an equity purchase agreement with Mast Hill
Fund, L.P. ("Mast Hill"), pursuant to which, upon the terms and subject to the
conditions thereof, Mast Hill is committed to purchase, shares of our common
stock at an aggregate price of up to $5,000,000 over the course of its term.



Additionally, in connection with the execution of the equity purchase agreement,
the Company issued Mast Hill five (5) common stock purchase warrants,
respectively, for the purchase of (i) 500,000 shares of common stock, (ii)
1,000,000 shares of common stock, (iii) 1,000,000 shares of common stock, (iv)
2,500,000 shares of common stock, and (v) 62,500,000 shares of the Company's
common stock at the Exercise Price (as such term is defined in each warrant) per
share then in effect.



The Company also entered into a registration rights agreement whereby the
Company shall (i) file with the United States Securities and Exchange Commission
(the "SEC") a registration statement within forty-five (45) days of the date of
such agreement; and (ii) have the registration statement declared effective by
the Commission within ninety (90) days after the date the registration statement
is filed with the SEC (or at the earliest possible date if prior to ninety (90)
calendar days from the date hereof), and any amendment declared effective by the
SEC at the earliest possible date.



Issuance of Commitment Shares, Note, and Warrant to Mast Hill Fund, L.P.





On March 15, 2022, we entered into a securities purchase agreement with Mast
Hill Fund, L.P. (the "Mast Hill") with respect to the sale and issuance to the
Mast Hill of: (i) a promissory note in the aggregate principal amount of
$250,000, (ii) a common stock purchase warrant to purchase up to an aggregate of
12,500,000 shares of the Company's common stock, and (iii) 12,500,000 shares of
common stock.



Critical Accounting Policies

We have prepared our financial statements in conformity with accounting
principles generally accepted in the United States, which requires management to
make significant judgments and estimates that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during
the reporting period. We base these significant judgments and estimates on
historical experience and other applicable assumptions we believe to be
reasonable based upon information presently available. These estimates may
change as new events occur, as additional information is obtained and as our
operating environment changes. These changes have historically been minor and
have been included in the financial statements as soon as they became known.
Actual results could materially differ from our estimates under different
assumptions, judgments or conditions.

All of the Company's significant accounting policies are discussed in Note 2,
Summary of Significant Accounting Policies, to our financial statements,
included above in this Quarterly Report. We have identified the following as our
significant accounting policies and estimates, which are defined as those that
are reflective of significant judgments and uncertainties, are the most
pervasive and important to the presentation of our financial condition and
results of operations and could potentially result in materially different
results under different assumptions, judgments or conditions.

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:



Development Costs

Research and development costs are charged to expense as incurred. Our research
and development expenses consist primarily of expenditures for electronics
design and engineering, software design and engineering, component sourcing,
component engineering, manufacturing, product trials, compensation and
consulting costs. Due to the small size of the Company's research & development
staff as well as the lack of any long term research and development-related
contracts, we do not believe that the use of this critical accounting estimate
will have a material impact on the results of financial operations.


                                       19




Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021



Our results of operations have varied significantly from year to year and
quarter to quarter and may vary significantly in the future. We did not have
revenue for the three months ending March 31, 2022 and 2021. Net loss for the
three months ended March 31, 2022 and 2021 were $304,826 and $213,122,
respectively, resulting from the operational activities described below.

Operating Expenses



Operating expense totaled $284,202 and $199,225 during the three months ended
March 31, 2022 and 2021, respectively. The increase in operating expenses is the
result of higher consulting expenses and legal expenses.

                                  Quarter Ended             Change in 2022
                                    March 31,                Versus 2021
                               2022          2021           $            %
Operating expense
Officer salary               $  47,500     $  47,500     $    -0-         -0- %
Research and development        44,551        16,822       27,729       164.8 %
General and administrative     192,151       134,903       57,248        42.4 %
Total operating expense      $ 284,202     $ 199,225     $ 84,977        42.7 %



Research and Development


Research and development expenses totaled $44,551 and $16,822 for the three
months ended March 31, 2022 and 2021, respectively. The increase of $27,729, or
164.8%, in 2022 compared to 2021 was primarily attributable to increased
engineering expenses. Our research and development expenses consist primarily of
expenditures related to engineering.

General and Administrative




General and administrative expenses totaled $192,151 and $134,903 for the three
months ended March 31, 2022 and 2021, respectively. The increase of $57,248, or
42.4%, in 2022 compared to 2021 was primarily the result of an increase in
consulting and legal expenses. Our general and administrative expenses consist
primarily of expenditures related to employee compensation, legal, accounting
and tax, other professional services, and general operating expenses.


Other Expense

Other income (expense) totaled $304,246 and ($13,897) for the three months ended March 31, 2022 and 2021, respectively.



                                            Quarter Ended              Change in 2022
                                              March 31,                  Versus 2021
                                         2022          2021            $             %
Gain (loss) on change in derivatives     326,919           -0-       326,919         100.0 %
Gain on PPP loan forgiveness                 -0-           -0-           -0-           -0-
Interest Expense                         (22,673 )     (13,897 )      (8,776 )       (63.2 )%
Total other (income) expense           $ 304,246     $ (13,897 )   $ 318,143       2,289.3 %




                                       20




Interest income (expense)


We had net interest expense of $22,673 in the three months ended March 31, 2022
compared to ($13,897) net interest expense for the three months ended March 31,
2021. The increase of ($8,776) was attributable to higher deferred officer
salary.


Gain (loss) on change in derivatives




We had a gain (loss) on change in derivatives of $326,919 in the three months
ended March 31, 2022 compared to a $0 gain (loss) on change in derivatives for
the three months ended March 31, 2021.



Gain on PPP loan forgiveness

We recognized $0 on the forgiveness of a PPP loan during the three months ended March 31, 2022.

Liquidity and Capital Resources



We have incurred losses since our inception in 2002 as a result of significant
expenditures for operations and research and development and the lack of any
revenue. We have an accumulated deficit of $30,269,453 as of March 31, 2022 and
anticipate that we will continue to incur additional losses for the foreseeable
future. Through March 31, 2022, we have funded our operations through the
private sale of our equity securities and exercises of options and warrants,
resulting in gross proceeds of approximately $27.5 million from inception
through March 31, 2022.

                                                Nine Months Ended               Change in 2022
                                                    March 31,                    Versus 2021
                                               2022            2021            $              %
Cash at beginning of period                 $    10,325     $   71,377     $  (61,052 )       (85.6 )%

Net cash used in operating activities          (812,852 )     (425,620 )     (387,232 )       (91.0 )%
Net cash used in investing activities                 -              -              -             -
Net cash provided by financing activities     1,109,257        375,837     

  733,420         195.1 %
Cash at end of period                       $   306,730     $   21,594     $  285,136        1320.4 %


Net Cash Used in Operating Activities




Net cash used in operating activities was $812,852 and $425,620 for the nine
months ended March 31, 2022 and 2021, respectively. The increase of $387,232 in
cash used during 2022 compared to 2021 was primarily attributable to an increase
in consultant costs and legal expenses.


Net Cash Used in Investing Activities

Cash used in investing activities was $0 and $0 for the nine months ended March 31, 2022 and 2021, respectively.




                                       21



Net Cash Provided by Financing Activities


During the nine months ended March 31, 2022, net cash provided by financing
activities was $1,109,257, compared to $375,837 for the nine months ended
March 31, 2021. The increase of $733,420 was due to higher sales of the
Company's securities in private placements. We continue to seek funding through
private placement sales of equity to fund our continued operations, sales and
marketing and ongoing research and development programs.


Equity Financing Agreement

Issuance of Commitment Shares, Notes and Warrants to Three Investors





On January 27, 2022, we entered into separate securities purchase agreements
with three investors, for the sale and issuance to each investor of: (i) a
promissory note in the aggregate principal amount of $250,000, (ii) a common
stock purchase warrant to purchase 12,500,000 shares of the Company's common
stock, and (iii) a commitment fee in the form of 12,500,000 shares of the
Company's common stock.



Mast Hill Equity Purchase Agreement and Registration Rights Agreement to Mast Hill Fund, L.P.





On March 8, 2022, we entered into an equity purchase agreement with Mast Hill
Fund, L.P. ("Mast Hill"), pursuant to which, upon the terms and subject to the
conditions thereof, Mast Hill is committed to purchase, shares of our common
stock at an aggregate price of up to $5,000,000 over the course of its term.



Additionally, in connection with the execution of the equity purchase agreement,
the Company issued Mast Hill five (5) common stock purchase warrants,
respectively, for the purchase of (i) 500,000 shares of common stock, (ii)
1,000,000 shares of common stock, (iii) 1,000,000 shares of common stock, (iv)
2,500,000 shares of common stock, and (v) 62,500,000 shares of the Company's
common stock at the Exercise Price (as such term is defined in each warrant) per
share then in effect.



The Company also entered into a registration rights agreement whereby the
Company shall (i) file with the United States Securities and Exchange Commission
(the "SEC") a registration statement within forty-five (45) days of the date of
such agreement; and (ii) have the registration statement declared effective by
the Commission within ninety (90) days after the date the registration statement
is filed with the SEC (or at the earliest possible date if prior to ninety (90)
calendar days from the date hereof), and any amendment declared effective by the
SEC at the earliest possible date.



Issuance of Commitment Shares, Note, and Warrant to Mast Hill Fund, L.P.





On March 15, 2022, we entered into a securities purchase agreement with Mast
Hill Fund, L.P. (the "Mast Hill") with respect to the sale and issuance to the
Mast Hill of: (i) a promissory note in the aggregate principal amount of
$250,000, (ii) a common stock purchase warrant to purchase up to an aggregate of
12,500,000 shares of the Company's common stock, and (iii) 12,500,000 shares of
common stock.



                                       22




Comparison of the Nine Months Ended March 31, 2022 and 2021



Our results of operations have varied significantly from year to year and
quarter to quarter and may vary significantly in the future. We did not have
revenue for the nine months ending March 31, 2022 and 2021. Net loss for the
nine months ended March 31, 2022 and 2021 were $1,766,124 and $896,786,
respectively, resulting from the operational activities described below.

Operating Expenses



Operating expense totaled $1,207,582 and $624,867 during the nine months ended
March 31, 2022 and 2021, respectively. The increase in operating expenses is the
result of higher consulting expenses and legal expenses.

                                 Nine Months Ended            Change in 2022
                                     March 31,                  Versus 2021
                                2022           2021            $            %
Operating expense
Officer salary               $   142,500     $ 142,500     $     -0-         -0- %
Research and development         113,446        60,761        52,685        86.7 %

General and administrative       951,636       421,606       530,030       125.7 %
Total operating expense      $ 1,207,582     $ 624,867     $ 582,715        93.3 %



Research and Development


Research and development expenses totaled $113,446 and $60,761 for the nine
months ended March 31, 2022 and 2021, respectively. The increase of $52,685, or
86.7%, in 2022 compared to 2021 was primarily attributable to increased
engineering expenses. Our research and development expenses consist primarily of
expenditures related to engineering.

General and Administrative




General and administrative expenses totaled $951,636 and $421,606 for the nine
months ended March 31, 2022 and 2021, respectively. The increase of $530,030 or
125.7%, in 2022 compared to 2021 was primarily the result of an increase in
consulting and legal expenses. Our general and administrative expenses consist
primarily of expenditures related to employee compensation, legal, accounting
and tax, other professional services, and general operating expenses.


Other Expense

Other income (expense) totaled $191,917 and $108,344 for the nine months ended March 31, 2022 and 2021, respectively.



                                           Nine Months Ended            Change in 2022
                                               March 31,                  Versus 2021
                                          2022           2021            $            %
Gain (loss) on change in derivatives     (110,449 )      (62,465 )     (47,984 )     (76.8 )%
Gain on PPP loan forgiveness               20,832              -        20,832           -
Interest Expense                         (102,300 )      (45,879 )     (56,421 )     (24.6 )%
Total other (income) expense           $ (191,917 )   $ (108,344 )   $ (83,573 )     (77.1 )%




                                       23




Interest income (expense)


We had net interest expense of $102,300 in the nine months ended March 31, 2022
compared to $45,879 net interest expense for the nine months ended March 31,
2021. The increase of $56,421 was attributable to higher deferred officer
salary.


Gain (loss) on change in derivatives

We had a loss on change in derivatives of $110,449 in the nine months ended March 31, 2022 compared to $62,465 loss on change in derivatives for the nine months ended March 31, 2021. The increase of $47,984 was attributable to an increase in convertible debt and Series C Preferred Stock.

Gain on PPP loan forgiveness

We recognized $20,832 on the forgiveness of a PPP loan during the nine months ended March 31, 2022.

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