The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Stemtech's 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 annual report. Stemtech's audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.









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Company Overview

Stemtech Corporation was incorporated under the laws of the State of Nevada, U.S. on September 4, 2009. Our registration statement on Form S-1 was filed with the SEC was declared effective on May 15, 2013. On August 19, 2021, the Company entered into a Merger Agreement with Stemtech Corporation by which the Company acquired one hundred percent of the shares of STEMTECH CORPORATION in exchange for the issuance of 37,060,000 shares of the Company, approximately 85% of the issued and outstanding shares of the Company.

Stemtech has pioneered and patented a whole new category of dietary supplements. Stemtech's advanced Stem Cell Nutrition formulations are one-of-a-kind natural products designed to help support the three most important aspects of stem cell physiology: 1) Releasing more stem cells; 2) their circulation in the blood; and 3) Migration into tissues, where they can perform their daily function of renewal and rejuvenation for optimal health. We actually harness the incredible power of adult stem cells. How does this work? Adult stem cells are released from your bone marrow into the bloodstream, they then Circulate in the bloodstream and flow to the tissues most in need. As they arrive, the adult stem cells migrate into the tissues, reproduce and become new, healthy cells of those tissues. This process takes place every single day, even without tissue damage, as part of the natural renewal system of the body. It is important to understand that Stemtech's products do not contain stem cells. They are composed of natural botanicals and other ingredients that have been clinically documented to support the performance of your own adult stem cells. Stemtech also offers our all-natural OraStem toothpaste, which is a tooth whitener, breath freshener, anti-microbial, stem cell attracting and promotes good gum health. In December 2022, our new Cellect One™ Rapid Renew Stem Cell Peptide Night Cream. Cellect One is a Stemtech proprietary formula containing an FDA patented ingredient, Red Oak Bark, which enables deep penetration to promote good skin health.

While sales of products obviously create the cash flow, our real business model is not just "sales", but lateral penetration. We do this through our IBPs - "Independent Business Partner" Sales Forces, and we invest much energy in growing our IBPs. Post public listing and funding, Stemtech is projecting the addition of 30,000 new independent business partner reps over the next 12 to 24 months, adding to the existing IBPs. With an enhanced compensation plan, IBPs will be even more incentivized to build their network, attracting additional industry leaders. IBPs are a testimonial to our product and business model, lowering our customer acquisition costs.

We are now reinstituting contests, travel incentives, cruises, other trips, Business Academies for Training, regional conferences, our Annual Convention with new product launches. Our IBPs offer highly flexible yet steady income which is most adapted to todays "Laptop & Cellphone Lifestyle", with structured and organized weekly Corporate training calls, a personalized website, back office tracking, oversight and management Tools, Reports, Training Materials and Social Sharing. Stemtech also launched the Stemtech AdvanceOffice Mobile App, based on the Verb Technology platform in September 2022, improving communication, sharing of information, training videos and other content for recruiting, on-boarding, customer retention and measuring key performance indicators for the IBP business.

Stemtech launched a new marketing program in January 2022, with sales continuing to come in from returning consumers who believe in the quality products. Until September 2021, the Company had operated on an extremely tight budget, with inadequate working capital and difficulties fulfilling orders. Since the cash infusions noted in "Financing" infra, the company now has the resources to contact and re-engage the over 200,000 former distributors. With this new cash infusion, the Company has engaged experienced marketing and social media professionals to initiate new marketing strategies which are expected to bring increased activity. Moreover, we are now better positioned to absorb significant new clientele as the company has directed significant cash towards our inventory, and we now have enough inventory on hand to fulfill over $3 million dollars' worth of new orders, an inventory level we have not had since going into bankruptcy in 2017. Management conservatively believes that given the cash on hand and working expenditures as describe above, we can reinvigorate sales to be more consistent with the company's previous revenue historically, as we were recognized 4 times in the Inc 5000 Magazine's list of fastest growing companies.

Below this IBP level, we have our "DTC" (Direct To Consumer) network marketing Distribution model. This integrative model allows us an immediate global presence and ability to operate in multiple countries on any continent. We are uniquely positioned in this post pandemic economy beset by supply chain issues, as this method requires no up-front or required buy-in of inventory, with monthly shipments available for known recurring sales. This platform has us now operating at the intersection of the ecommerce economy, social economy and gig economy.







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The Company has been making great strides the past year, having filed our "Orastem" trademark registration in Mexico as noted in our press release of August 23, 2022. In addition, Stemtech filed our new 'stemceuticals' trademark registration. We also have been fortunate to have Dr. Bankole Johnson join our Life Sciences Advisory Board in September, as well as the introduction of a whole new line of stem cell skin care products. Life Factor Research brings their expertise in research, development and product formulations enabling the Company to now organically develop whole new lines of Stemceuticals. This new arrangement enables Stemtech to offer more new, cutting-edge products to an ever-growing market interested in improved health and quality of life.

Below this IBP level, we have our "DTC" (Direct To Consumer) network marketing Distribution model. This integrative model allows us an immediate global presence and ability to operate in multiple countries on any continent. We are uniquely positioned in this post pandemic economy beset by supply chain issues, as this method requires no up-front or required buy-in of inventory, with monthly shipments available for known recurring sales. This platform has us now operating at the intersection of the ecommerce economy, social economy and gig economy.

Implications of Being an Emerging Growth Company

Emerging Growth Company - We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, or the Securities Act. We will continue to be an emerging growth company until: (i) the last day of our fiscal year during which we had total annual gross revenues of at least $1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30.

As an emerging growth company, we are exempt from:





  · Sections 14A(a) and (b) of the Exchange Act, which require companies to hold
    stockholder advisory votes on executive compensation and golden parachute
    compensation;
  · The requirement to provide, in any registration statement, periodic report
    or other report to be filed with the SEC certain modified executive
    compensation disclosure under Item 402 of Regulation S-K or selected
    financial data under Item 301 of Regulation S-K for any period before the
    earliest audited period presented in our initial registration statement;
  · Compliance with new or revised accounting standards until those standards
    are applicable to private companies;
  · The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002, or
    the Sarbanes-Oxley Act, to provide auditor attestation of our internal
    controls and procedures; and
  · Any Public Company Accounting Oversight Board, or "PCAOB", rules regarding
    mandatory audit firm rotation or an expanded auditor report, and any other
    PCAOB rules subsequently adopted unless the Commission determines the new
    rules are necessary for protecting the public.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act.

We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure under Item 402 of Regulation S-K.









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Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Such consolidated financial statements and accompanying notes are the representations of the Company's management, which is responsible for their integrity and objectivity. All intercompany accounts and transactions have been eliminated in consolidation.





Results of Operations

Our consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021.

During the years ended December 31, 2022 and 2021, net sales were $4,559,399 and $4,321,245, respectively. The increase of $238,154 is primarily due to slight increases in the overall sales of the subsidiaries due to the increase in IBPs in 2022.

During the years ended December 31, 2022 and 2021, our total operating expenses were $8,418,761 and $6,508,356, respectively. The increase of $1,910,405 is primarily attributable to an increase in stock compensation granted to vendors and officers in 2022.

During the years ended December 31, 2022 and 2021, total non-operating expenses were $3,513,830 and $3,900,838, respectively, resulting in an increase of $387,008. The difference is primarily due to the gain on extinguishment of debt of $3,799,356 in 2022, the decrease in interest expense of $4,232,358, partially offset by the changes in fair value of derivative liabilities from a gain of $4,553,372 at December 31, 2021 to a loss of $3,223,271 at December 31, 2022 in connection with the note payable issued in September 2021.

Our net loss for the years ended December 31, 2022 and 2021, was $8,632,828 and $7,111,109, respectively. The increase in net loss was caused by the factors described above.

Liquidity and Capital Resources

In spite of increasing revenues, we are not yet profitable, and we cannot provide any assurance of when we will be profitable. We incurred a net loss of $8,632,828 and $7,111,109 for the years ended December 31, 2022 and 2021, respectively. During the year ended December 31, 2022, we met our short-term liquidity requirements from our existing cash reserves and proceeds from the issuance of notes payable of $611,266, net proceeds from financing arrangements of $214,249 and stock issued for cash of $100,002.

As of December 31, 2022, our current assets were $612,370 compared to $1,600,039 in current assets at December 31, 2021. As of December 31, 2022, our current liabilities were $7,415,791 compared to $9,387,038 at December 31, 2021. Current liabilities at December 31, 2022 were comprised of $3,396,543 of accounts payable and accrued expenses, $2,717,633 of derivative liabilities, $482,885 in convertible notes, $446,246 of nonconvertible notes payable, $214,249 of factoring liability, $119,065 in current operating lease liabilities and $39,170 in deferred revenues.

Stockholders' deficit decreased from $4,005,446 as of December 31, 2021 to $3,171,918 at December 31, 2022. This change was primarily caused by the issuance of common stock for the conversion of debt of $828,000 during the year ended December 31, 2022.













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Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the year ended December 31, 2022, net cash flows used in operating activities were $1,216,948 which is primarily due the change in working capital accounts. The net loss of $8,632,828 and $3,799,356 gain on extinguishment of debt was offset by $3,223,271 loss from the change in fair value of derivative liabilities, $3,996,187 stock based compensation, and $2,428,539 amortization of debt discount. Adjustments for changes in operating assets and liabilities were due to a decrease in inventories of $278,352, an increase in deferred revenues of $39,170, a decrease in prepaid expenses and other current assets of $37,645 and an increase in long term deposits of $15,627 offset by an decrease in accounts payable and accrued expenses of $683,058 and an increase in accounts receivable of $24,047. For the year ended December 31, 2021, net cash flows used in operating activities were $1,914,093.

Cash Flows from Financing Activities

We have financed our operations primarily from either the issuance of our shares of common stock or notes payable. For the year ended December 31, 2022, we generated $338,734 cash from financing activities which consists of $611,266 from the issuance of convertible promissory notes, $214,249 proceeds from factoring arrangement and $100,002 proceeds from issuance of stocks for cash, partially offset by payments on notes payable of $586,783. For the year ended December 31, 2021, net cash flows provided by financing activities were $2,628,739.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of equity securities and debt instruments.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities and director loans. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.

Off-Balance Sheet Arrangements

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.









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Stockholders' Deficit



Authorized Shares

The Company is authorized to issue up to 200,000,000 shares of common stock, par value $0.001 par value. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.





Commitments and Contingencies



None.



Financing

On September 3, 2021, the Company executed a Convertible Promissory Note, Securities Purchase Agreement and ancillary agreements with Leonite. Per the terms of the Agreements with Leonite, the Company was tendered $410,000, which is open with right of redemption for one year. Prior to the maturity date of the note, the Company at its option, has the right to redeem in cash in part or in whole, the amounts outstanding. Should Leonite wish to convert this debt into equity, the conversion price shall be sixty-five percent of the lowest intraday price during the previous 21 days. Pursuant to the Agreements, the Company has earmarked the net proceeds for immediate cash infusion for normative working capital purposes and capital expenditures. Leonite. has agreed that neither it nor any of its affiliates shall engage in any short-selling or hedging of our common stock during any time.

On September 3, 2021, the Company finalized a Promissory Convertible Note, Securities Purchase Agreement and ancillary agreements with MCUS. Per the terms of the Agreements with MCUS., the Company was tendered $500,000, which the Company utilizes for normative working capital purposes and capital expenditures. The note is open with right of redemption for nine months. MCUS has agreed that neither it nor any of its affiliates shall engage in any short-selling or hedging of our common stock during any time during the term of the Agreements. Pursuant to the Agreements, the Company is required to register all shares which Leonite may acquire. The foregoing is a summary description of certain terms of the Agreements. For a full description of all terms, please refer to the original Agreements which were filed as an 8K with the SEC on September 10, 2021.

On September 17, 2021, the Company finalized a $1,400,000 investment into our Company with Sharing Services Global Corporation, a publicly traded company ("SHRG") via a Convertible Promissory Note, a Share Purchase Agreement and Warrant Agreement. Per the terms of the Agreements, the Company was tendered the full $1,400,0000, which is open with right of redemption at 10% interest per annum until September 9, 2024.

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