Overview

Zero Gravity Solutions, Inc. a Nevada corporation (the Company" or "ZGSI"), is
an agricultural based biotechnology company focused on commercializing
technology derived from, and designed for, long term spaceflight and planetary
colonization with significant applications to agriculture on earth. The
Company's technology is focused on improving world agriculture by providing
valuable solutions to challenges facing humanity, including climate change
stress and soil degradation threats to agricultural production and the
increasing inability to feed the world's rapidly growing population. The
Company's business model is focused on its primary technology, BAM-FX®, which is
a cost effective, ionic delivery platform and stimulant for plants that promotes
the delivery of minerals and micronutrients systemically. ZGSI is headquartered
in Boca Raton, Florida.



Our business activities are conducted in our wholly owned subsidiary, BAM
Agricultural Solutions, Inc. ("BAM.") and our 98% owned subsidiary, Specialty
Agricultural Solutions, Inc. ("SASI"). BAM oversees BAM-FX®'s commercial
introduction and business development through product trials and validation with
crop growers and distributors that have established business networks in
agricultural markets, manufacturing, sales and agronomy support. In addition,
BAM manages the introduction of Gardener's Choice®, a ready to use product for
the home and garden retail markets. SASI, which was incorporated in 2018,
supports introducing a commercial product for sale to hydroponic legal cannabis
and hemp grow operations. Another subsidiary of the Company, Zero Gravity Life
Sciences Inc. ("ZGLS"), was originally formed for space research projects, life
science applications of our technology and conducting research on future BAM
product lines. ZGLS is currently inactive.



The Company is focused on revenue generation through sale of BAM-FX®, in
domestic and international agricultural markets. BAM-FX® is licensed in and
registered for sale as a fertilizer application in all fifty (50) domestic
states and has been approved for import and commercial sales in Chile, Paraguay,
Colombia, Brazil and China. The Company is also pursuing import approval through
proper governmental officials and agencies to begin commercial sales in
Philippines and India. Pursuant to a license and business development agreement
with Agro Space Tech SA de CV de RV, the Company is providing technical
assistance to obtain approval in Mexico. Country specific commercial operations
are only undertaken with a qualified local business partner having existing
in-country business relationships. Our business relationship is either a license
or a distribution agreement.



The Company began domestic product trials on multiple crops in laboratory and
academic settings as well as in field applications on grower/end-user crops
during 2014 and expanded field applications with those and additional trial
participants in subsequent years. These basic trials showed yield, nutritional
value and biomass improvements for crops treated. The Company also noted a early
indications of a curative response to fungal, bacterial and viral plant
diseases. We continue to use trials to increase our understanding of the mode of
action, application rates and protocols for our product and validate product
efficacy. These trials are critical in both market and product development
efforts. During the past five years, the Company increasingly focused on
obtaining third-party validation, through studies with academic institutions and
in accordance with the Company's Reimbursable Space Act Agreement with the
National Aeronautics and Space Administration Ames Research Center.


The agricultural industry is known to adopt new technology slowly. The Company
believes that slow adoption and sales results is due to the Company's inability
to sufficiently differentiate its product from other products making similar
claims. Additionally, in a number of row crops, the product combined with
application costs, have not resulted in sufficient grower return, especially
those crops whose ex-farm pricing is low. Therefore, the Company targeted high
value crops including grape, avocado, citrus, berry and hemp and for specific
validation trials during 2019. Based upon BAM-FX®'s performance in these trials,
the Company expects to focus business development efforts in these high value
crops during 2020.

During 2017, we developed a ready to use, home and garden product, Gardener's
Choice® for retail markets. Independent third parties successfully tested
Gardener's Choice®, for plant performance and consumer safety during 2018.
During the fourth quarter of 2017, the Company showcased the product concept at
a home and garden trade show and generated interest from prospective purchasers.
During 2018, through an independent sales team who introduced Gardener's Choice®
directly to Ace Hardware retailers at their annual trade show and expanded
product introduction to a number of big box retailers during 2019. We have
received positive feedback from retailers, however have secured limited purchase
commitments during the first quarter or 2019, the time of the year during which
retailers purchase and display product for the outdoor home and garden season.
Gardener's Choice® has been registered for sale in all domestic states.

To support commercialization and revenue generation efforts, the Company employs certified crop advisors and agronomists for the technical requirements of product introduction domestically and internationally.







                                       26

--------------------------------------------------------------------------------

Table of Contents





The Company continues to develop technical relationships to validate the science
incorporated in BAM-FX® and identify additional commercial markets and licensing
opportunities for the product. The majority of this work was performed during
2019 by Iowa State University on new product formulations, Colusa County Farms
on tomato and Nurture Earth Research and Development Pvt. Ltd., India, to
identify scientific bio-markers showing product efficacy and application timing.
We received these results of third party tests during the first quarter of 2020.



The Company manufactures its product in a manufacturing facility in Okeechobee,
Florida. Manufacturing is conducted on an as-needed batch process. The Company
continually performs regulatory and process efficiency reviews of manufacturing
operations. Our manufacturing plant manager is an experienced biochemical
engineer. We have made process improvements and equipment modifications to
existing equipment to enhance efficiencies and improve quality control and
assurance through March 31, 2019.



We successfully tested a dry product formulation, which maintains the attributes
of our liquid product. Initial trials indicate the dry formulation has the same
efficacy as BAM-FX®, our concentrated liquid product. Introduction of a dry
product will reduce transportation and handling costs and we believe will
increase our addressable markets due those lower transportation related costs We
expect to continue developing new formulations and our dry formulation in
laboratory settings, conclude our efficacy trials with Iowa State University,
and design a production process for the dry formulated product during 2020.



Although we have started and realized nominal product sales, we anticipate that
in the near term, ongoing expenses, including product development, manufacturing
process improvement, corporate administration and technical product support,
will be funded primarily by proceeds from sales of our securities and issuance
of debt.



We have generated nominal revenues from our operations thus far and believe with
the financial ability to promote and market, product sales will increase in 2020
primarily from direct sales to end users and international distributor
purchases.



We cannot, however, guarantee we will be successful in generating significant
revenue in 2019 or 2020 or in the execution of our business strategy. Our
business is subject to risks inherent in the establishment of a new business
enterprise, including the financial risks associated with the limited capital
resources currently available to us for the implementation of our business
strategies. To become profitable and competitive, we must raise additional
capital to execute our 2019 business plan and realize revenues expected.



The ongoing COVID-19 global and national health emergency has caused significant
disruption in the international and United States economies and financial
markets. In March 2020, the World Health Organization declared the COVID-19
outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines,
cancellation of events and travel, business and school shutdowns, reduction in
business activity and financial transactions, labor shortages, supply chain
interruptions and overall economic and financial market instability. The
COVID-19 pandemic has the potential to significantly impact the Company's supply
chain, distribution centers, or logistics and other service providers. During
the first quarter of 2020, the Company furloughed all employees other than three
executive officers due to the COVID-19 impact on its operation capability.
Beginning in the second quarter of 2020 the company began to remove certain
employees from furlough that are key to ongoing operations. The Company is not
able to estimate the duration of the pandemic and potential impact on the
business if disruptions or delays in shipments of product occur. To date, the
Company has experienced product shipment delays due to import restrictions
imposed by countries in which the Company had customer purchase commitments. In
addition, a severe prolonged economic downturn could result in a variety of
risks to the business, including weakened demand for product and a decreased
ability to raise additional capital when needed on acceptable terms, if at all.
As the situation continues to evolve, the Company will continue to closely
monitor market conditions and respond accordingly.



                                       27

--------------------------------------------------------------------------------

Table of Contents

Critical Accounting Policies and Estimates





Our discussion and analysis of our consolidated financial condition and
consolidated results of operations are based on our Consolidated Financial
Statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the amounts reported in our Consolidated Financial Statements and accompanying
notes. Note 1: Organization and Summary of Significant Accounting Policies in
our Consolidated Financial Statements contains a description of the accounting
policies used in the preparation of our consolidated financial statements as
well as the consideration of recently issued accounting standards and the
estimated impact these standards will have on our consolidated financial
statements. We evaluate our estimates on an ongoing basis. We base our estimates
on historical experience and on various other assumptions that we believe are
reasonable under the circumstances. Actual amounts could differ significantly
from these estimates under different assumptions and conditions.



We define a critical accounting policy or estimate as one that is both important
to our consolidated financial condition and consolidated results of operations
and requires us to make difficult, subjective or complex judgments or estimates
about matters that are uncertain. We believe that the following are the critical
accounting policies and estimates used in the preparation of our Consolidated
Financial Statements. In addition, there are other items within our Consolidated
Financial Statements that require estimates but are not deemed critical as
defined in this paragraph.



Revenue Recognition



In accordance with ASC 606 we consider persuasive evidence of an arrangement to
be a signed agreement, a binding contract with the customer or other similar
documentation reflecting the terms and conditions under which products are
sold. We recognize revenue to depict the transfer of goods or services to
customers in amounts that reflect the consideration (that is, payment) to which
the company expects to be entitled in exchange for those goods or services. This
recognition generally occurs when the product is shipped to or received by the
customer.



Going Concern



We adopted FASB ASU No. 2014-15, Presentation of Financial Statements- Going
Concern, during the first quarter of 2016. This standard defines management's
responsibility to evaluate conditions or events as related to uncertainties that
raise substantial doubt about our ability to continue as a going concern and to
provide related footnote disclosures, as applicable. Management's estimates and
assumptions, used in the evaluation of our ability to meet our obligations as
they become due within one year after the date our financial statements are
issued, are based on the facts and circumstances at such date and are subject to
a material and high level of subjectivity and uncertainty due to the matters
themselves being uncertain and subject to modification. The effect of any
individual or aggregate changes in the estimates and assumptions, or the facts
and circumstances, could be material to the financial statements. We have
concluded that there is substantial doubt about our ability to continue as a
going concern. The accompanying consolidated financial statements have been
prepared assuming we will continue as a going concern, but do not include any
adjustments that might result if we were unable to do so.

Employee Stock-Based Compensation and Share-Based payment to non-employees





We measure employee and non-employee compensation expense for all stock-based
awards at fair value on the date of grant and recognize compensation expense
over the service period for awards expected to vest.



We use the Black-Scholes option-pricing model to determine the fair value for
stock option awards and recognize compensation expense on a straight-line basis
over the awards' vesting periods for employees and over the service period for
non-employees. Determining the fair value of stock-based awards at the grant
date requires judgment. The determination of the grant date fair value of
options using an option-pricing model is affected by our estimated common stock
fair value as well as assumptions regarding a number of other complex and
subjective variables. If any of the assumptions used in the Black-Scholes model
changes significantly, stock-based compensation for future awards may differ
materially compared with the awards granted previously. In valuing our options,
we make assumptions about risk-free interest rates, dividend yields, volatility
and weighted-average expected lives, including estimated forfeiture rates, of
the options.



As the Company's common stock is not traded in an active market, the Company
estimates the fair value of its common stock (used in its Black Scholes option
pricing model) pursuant to ASC 820. This estimation process maximizes the use of
observable inputs, including the quoted price of the Company's common stock in
an inactive market, the price of the Company's common stock determined in
connection with transactions in the Company's common stock, and an income
approach to valuation (discounted cash flow).



                                       28

--------------------------------------------------------------------------------

Table of Contents





The Black-Scholes option-pricing model requires the use of highly subjective and
complex assumptions, including the expected term and the price volatility of the
underlying stock, which determine the fair value of stock-based awards. These
assumptions include:

? Risk-free rate. Risk-free interest rates are derived from U.S. Treasury


         securities as of the option grant date.




      ?  Expected dividend yields. Expected dividend yields are based on our
         historical dividend payments, which have been zero to date.




      ?  Volatility. Because we have a limited trading history as a public
         company, we estimate volatility of our share price based on a
         combination of the published historical volatilities of comparable

publicly traded companies in our vertical markets and the historical


         volatility of our common stock.




      ?  Expected term. We estimate the weighted-average expected life of the
         options as 5 years.




      ?  Forfeiture rate. Forfeiture rates are estimated using historical actual
         forfeiture trends as well as our judgment of future forfeitures. These

rates are evaluated at least annually and any change in compensation


         expense is recognized in the period of the change. The estimation of
         stock awards that will ultimately vest requires judgment and, to the
         extent actual results or updated estimates differ from our current

estimates, such amounts will be recorded as a cumulative adjustment in

the period in which the estimates are revised. We consider many factors

when estimating expected forfeitures, including the types of awards and


         employee class. Actual results, and future changes in estimates, may
         differ substantially from management's current estimates.






                                       29

--------------------------------------------------------------------------------


  Table of Contents



Results of Operations



         For the quarter ended              March 31,        March 31,
                                               2019             2018          $ Change      % Change

Revenue                                    $     44,495     $      3,470     $   41,025       1,182.3 %

Cost of Revenue                                  27,313              550         26,763       4,866.0 %

Gross Profit                                     17,182            2,920         14,262         488.4 %
Operating Expenses                              887,783        1,494,513       (606,730 )       (40.6 )%

Loss from Operations                           (870,601 )     (1,491,593 )      620,992         (41.6 )%

Other Income / (Expense)                       (360,487 )        (85,084 )     (275,403 )      (323.7 )%

Net Loss                                   $ (1,231,088 )   $ (1,576,677 )   $  345,589         (21.9 )%

Net Loss per share - Basic and Diluted $ (0.03 ) $ (0.04 )

 $     0.01         (25.0 )%




Revenue for the three months ended March 31, 2019 was $44,495, an increase of
$41,025, or 1,182% over $3,470 for the three months ended March 31, 2018.
Revenue is generated from sales to distributors of agricultural products and to
growers who have completed trials in multiple crop-growing seasons with positive
crop attributes from applying BAM-FX® to their crops. In general, growers are
sensitive to perceived usage risks and any incremental cost associated with new
agricultural products, generally continuing their use of traditional lower cost
but less effective chelated zinc and copper products.



Cost of Revenue for the three months ended March 31, 2019, was $27,313, an
increase of $26,763, or 4.866%, over $550 for the three months ended March 31,
2018. The increase in cost of revenue is directly related to our increase in
revenue for the three months ended March 31, 2019 over the three months ended
March 31, 2018.



Operating Expenses for the three months ended March 31, 2019 was $887,783, a
decrease of $606,730, or 40.6%, over $1,494,513 for the three months ended March
31, 2018. The decrease in operating expenses was primarily due to a decrease in
research and development of $83,670, a decrease in loss on royalty advance of
$123,560 due to the need for an allowance for questionable collectability,
a decrease in impairment costs of $203,208 due to the impairment of intangible
assets, a decrease in insurance of $7,995, a decrease in consulting expense of
$9,062, a decrease in travel, meals and conference fees of $22,240, a decrease
in employee and employee related benefits of $200,958 due a decrease in
headcount, and a decrease of $25,188 in non-cash equity compensation paid to
consultants, board members and employees. These decreases were primarily offset
by an increase in professional fees of $10,448, an increase in advertising and
promotion expense of $34,213, and an increase in shipping and manufacturing
expenses of $15,195.





Other Expense for the three months ended March 31, 2019 was $360,487, an
increase of $275,403 or 323.7%, over $85,084 for the three months ended March
31, 2018. The increase in other expense is primarily due to an increase in
interest expense of $74,053 and an increase in accretion of debt discount of
$173,693 in connection with the Company's promissory notes.



Net Loss for the three months ended March 31, 2019 was $1,231,088, a decrease of
$345,589, or 21.9%, over $1,576,677 for the three month ended March 31, 2018.
The decrease in net loss is primarily due to a decrease in operating expense for
the period ended March 31, 2019 of $606,730 and an increase in gross profit of
$14,262, offset by an increase in other expense of $275,403.



Use of Cash

Net Cash Used in Operating Activities





Net cash used in operating activities for the three months ended March 31, 2019
was approximately $643,000, a decrease of approximately $414,000, or 48.7%, from
$1,057,000 for three months ended March 31, 2018. The decrease in net cash used
in operating activities is primarily due to a decrease in net loss of
$346,000, an increase in amortization of debt acquisition costs of $174,000, an
increase in accounts payable and other payables of $164,000, an increase in
accrued interest related party of $86,000 and an increase in prepaid expenses of
$51,000 due to non-cash equity based compensation expense of which $99,000 was
issued with the expense deferred to future periods offset by a decrease in
impairment loss of $204,000, a decrease in loss on advance on future royalties
to related parties of $124,000, an increase in deferred revenue of $43,000 and a
decrease in equity based compensation of $25,000.





                                       30

--------------------------------------------------------------------------------

Table of Contents

Net Cash Provided by Financing Activities





Net cash provided by financing activities for the three months ended March 31,
2019 was approximately $602,000, a decrease of approximately $485,000, or 57.5%,
over $1,088,000 for the three months ended March 31, 2018. The decrease in net
cash provided by financing activities is due primarily to a decrease in proceeds
from sale of common stock net of payment of offering costs of $164,000 and a
decrease in net proceeds from notes payable related party of $900,000 offset by
a decrease in payment to notes payable to related party of $100,000, an
increase in proceeds from the issuance of convertible notes payable convertible
of $425.000, an increase in proceeds of notes payable of $32,000 and a decrease
in payment of offering cost on related party of $27,000.

Liquidity and Capital Resources





The Company expects to incur significant expenses and operating losses for the
foreseeable future. Specifically, we estimate that the costs associated with the
execution of our 2019 and 2020 business plans may exceed $350,000 per month.
This expense rate is primarily due to: an increase in costs of additional
personnel, personnel-related costs and promotional expenses to develop markets
for domestic and international sales of our product, BAM-FX®, our retail
product, Gardener's Choice®, and our cannabis market product introduction;
improvements to our manufacturing facility and processes; and, research and
product development related expense for expansion of our product line, product
improvement and dry formulation. The Company has evaluated its ability to
continue as a going concern for the next twelve months from the issue date of
the March 31, 2019 consolidated financial statements.  There is substantial
doubt about the Company's ability to continue as a going concern as we do not
currently have the funding necessary to support the projected operating costs we
expect to be needed to operate the business through mid-2020. The Company is
active in its fundraising, and subsequent to March 31, 2019, the Company has
raised approximately $3,600,000.



We filed a registration statement on Form 10 with the SEC that became effective
in February 2015, which requires us to operate as a fully reporting public
company. We expect to continue to incur additional personnel and professional
costs associated with operating as a fully reporting public company.
Accordingly, we have acknowledged the need to obtain additional funding to
operate the Company and have continued to raise funds through a private
offering.



                                       31

--------------------------------------------------------------------------------

Table of Contents





Adequate additional financing may not be realized from our private offering or
otherwise may not be available to us on acceptable terms, or at all. If we are
unable to raise capital when needed or on attractive terms, we would be forced
to delay, reduce or eliminate our research and development programs or any
future commercialization efforts. We will need to generate significant revenues
to achieve profitability, and we may never do so.



Cash on Hand

As of March 31, 2019, the Company had a cash balance of approximately $3,000 compared to a cash balance of approximately $44,000 as of December 31, 2018.





Total assets were approximately $517,000 and $552,000 at March 31, 2019 and
December 31, 2018, respectively. Working capital (deficit) was $(4,364,000) and
$(2,691,000) at March 31, 2019 and December 31, 2018, respectively. The increase
in working capital deficit of $1,673,000 during the period was primarily due to
cash used in operating activities of $640,000 offset by cash provided by
financing activities of $600,000 and reclassification of notes payable to short
term. Total stockholders' deficit increased by $1,135,000 to $(6,131,000) at
March 31, 2019 from $(5,096,000) at December 31, 2018.



Outlook

Required Capital Going Forward





Due to the fact that our product, BAM-FX®, is new in the agricultural markets,
it is difficult to accurately predict revenues and cash flow at this time. We
required additional funding to cover 2019 expenses and we will need additional
funding in 2020.



On or about May 11, 2019, the Company entered into an Exchange and Release
Agreement (each, an "Exchange Agreement"), with certain holders of the
Company's Promissory Notes (each, an "Old Note"), including certain members of
the Board of Directors and/or their respective affiliates, pursuant to which,
among other things, the holders thereof agreed to exchange all or part of the
amounts owed under their Old Notes for new 10% Series A Secured Convertible
Promissory Notes (each, a "Series A Note"). The face value of a Series A Note is
equal to the principal face amount of an Old Note plus all interest due or
accrued under the Old Note through March 31, 2019.



Furthermore, pursuant to each Exchange Agreement, in connection with any such
exchange, the holder of an Old Note may, in their sole discretion, also exchange
any warrant that such note holder received in connection with the issuance of
the Old Notes for a new warrant to purchase shares of common stock (an "Exchange
Warrant").



Such transactions contemplated by the Exchange Agreements are referred to herein
as the "Refinancing". The Company conducted the Refinancing in reliance upon the
exemptions provided in the Securities Act, including Regulation D, Rule 506(b).



Furthermore, each Exchange Agreement provides that the holder of an Old Note
may, in their sole discretion, also subscribe for a 12% Series B Secured
Convertible Promissory Note (a "Series B Note") and be allowed to pay up to
one-half of the subscription price of the Series B Note with amounts owed under
the Old Note.



In accordance with the terms of the Exchange Agreements and in reliance upon the
exemptions provided in the Securities Act, including Regulation D, Rule 506(b),
the Company initiated a new private offering of its securities to certain
prospective accredited investors and holders of Old Notes, and entered into
Subscription Agreements (each, a "Subscription Agreement") with certain of such
noteholders, including certain members of the Board of Directors and/or their
respective affiliates, pursuant to which, among other things, such noteholders
subscribed to purchase Series B Notes and warrants to purchase shares of common
stock (each, a "Purchase Warrant").



The transactions contemplated by the Subscription Agreements are referred to
herein as the "Offering". Aggregate gross proceeds in connections with the
Offering were $3,326,427, and proceeds net of commission were $3,226,782.
Commissions were paid in connection with the Offering equal to 3% of the
principal thereof, totaling $99,645 in the aggregate. The Company intends to use
the proceeds from the Offering to fund working capital requirements.



The Series A Notes and Series B Notes shall collectively be referred to herein
as the "Offering Notes". The Exchange Warrants and Purchase Warrants shall
collectively be referred to herein as the "Offering Warrants". The Offering
Notes were made on substantially the same terms, except as noted. The Offering
Warrants were made on substantially the same terms, except as noted.



                                       32

--------------------------------------------------------------------------------

Table of Contents





The Series A Notes bear interest at the rate of ten percent (10%) per annum and
the Series B Notes bear interest at the rate of twelve percent (12%) per annum,
in each case, with such interest being payable by the Company in cash to the
holders thereof beginning nine (9) months and fifteen (15) days from the
issuance date of such Offering Note with interest payments due on the fifteenth
(15th) day of each month thereafter. The Offering Notes shall be repaid in full
by the Company, plus all unpaid interest thereon, by thirty-six (36) months from
the date of issuance upon the tender of such Offering Note (the "Maturity
Date"). Prepayment of all unpaid principal and interest on each such Offering
Note may be made by the Company prior to the Maturity Date at any time without
penalty or premium upon forty-five (45) days' prior written notice to the holder
of such Offering Note (a "Prepayment Notice"); provided, however, that a holder
of a Series B Note may not receive a Prepayment Notice prior to the repayment of
the principal and interest owing under any Old Note or Series A Note. The
Offering Notes are secured by the assets of the Company and its subsidiaries,
with the priority of the Series A Notes being subordinated to that of the Series
B Notes. Furthermore, in additional to terms customarily included in such
instruments, each holder of an Offering Note is entitled to convert the unpaid
principal and interest due and owing under such Offering Note into common stock
at any time prior to the earlier of (a) October 1, 2021 or (b) thirty (30) days
following a Prepayment Notice. The conversion price under a Series A Note is two
dollars ($2.00) per share and the conversion price under a Series B Note is one
dollar ($1.00) per share.



Each (i) Exchange Warrant may be exercised by the holder thereof within three
(3) years of issuance into shares of the common stock at an exercise price equal
to one dollar ($1.00) per share and (ii) Purchase Warrant may be exercised at
any time after issuance and through ninety (90) days after payment in full of
the Offering Note at an exercise price equal to (A) one dollar ($1.00) per share
if the Purchase Warrant is exercised on or before April 1, 2020, and (B) fifty
cents ($0.50) per share if the Purchase Warrant was exercised after April 1,
2020, in each case, by providing to the Company a notice of exercise, payment
and surrender of such Offering Warrant. In addition, the Offering Warrants are
subject to adjustment upon the occurrence of specified events including, but not
limited to, a payment of certain stock dividends, a subdivision or combination
of the Company's outstanding shares of common stock, a reclassification of the
common stock, a consolidation or merger of the Company, a sale or transfer of
all or substantially all of the assets of the Company, or any compulsory share
exchange affecting the Company. The Company issued fully vested, non-forfeitable
warrants to purchase 9,499,600 common shares at an exercise price of
$1.00 per share as part of the Offering.



Subsequent to March 31, 2019, the Company issued fully vested, non-forfeitable
warrants to purchase 79,500 common shares at an exercise price of $2.00 per
common share to consultants for services. The estimated fair value of the
warrants of approximately $33,879 was based on the following assumptions:
expected dividends of 0, volatility of 148.4%, risk-free interest rate of 1.57%
- 1.66%, and expected life of the warrants of 1 - 3 years.

Subsequent to March 31, 2019, the Company issued 225,000 shares of common stock to consultants for services.





Subsequent to March 31, 2019, certain consultants and former employees exercised
warrants in a cashless exercise resulting in the issuance of 146,248 shares of
the Company's common stock.

Subsequent to March 31, 2019, the Company paid $100,000 of related party notes payable and $230,500 of convertible notes payable.





During October 2019 the Company commenced an offering of up to $5,000,000 of 10%
Convertible Secured Promissory Notes (the "Notes") with an initial closing date
of December 31, 2019, which was extended for an additional ninety day period.
The Notes bear interest at a ten percent (10%) annual rate, payable quarterly in
arrears, with the first interest payment due January 15, 2020 and subsequent
interest payments due on the fifteenth (15th) day after the end of each calendar
quarter thereafter. Interest will be paid in shares of the Company's common
stock at $2.00 per share. The Notes mature 2 years from the closing date. The
Notes are convertible into the Company's common stock at $2.00 per share.


Commencing on the one (1) year anniversary of the issuance of the Notes and
ending eleven (11) months thereafter (i.e. one month prior to the Maturity
Date), the Company may at any time upon thirty (30) days prior written notice
repurchase any or all outstanding Notes without penalty or premium; provided,
that the holder may convert the Note prior to the end of the Notice Period.



The Notes are secured by all assets of the Company and its subsidiaries, and are
subordinate to the security interest granted to holders of the Series A Notes
and Series B Notes previously issued by the Company. The Notes are subject to
certain covenants and other provisions customary for a transaction of this
nature. The Company received $175,000 in proceeds pursuant to the issuance of
Notes through December 31, 2019 and incurred no broker fees.

Without consideration of any revenue or additional fundraising, at the Company's current rate of expenditure, we expect that our current capital will not be sufficient to cover our future operating costs for twelve months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

For a discussion of our accounting policies and related items, please see the Notes to the unaudited consolidated Financial Statements, included in Note 1.

© Edgar Online, source Glimpses