Results of Operations

For the year ended December 31, 2021, the Company generated $12,630 in annual revenue compared to $48,044 in 2020. During the year ended December 31, 2020, the Company's revenue was positively impacted due to the sale of our ETP patches to a single customer, which decreased in 2021.

Cost of sales was $12,655 for the year ended December 31, 2021 and $48,090 for the year ended December 31, 2020, reflecting the decrease in sales of ETP patches.

Our operating expenses in the year ended December 31, 2021 amounted to $343,121 as compared to $294,411 for the year ended December 31, 2020. Major operating expenses for the year ended December 31, 2021 of $ 343,121 include officers compensation of $ 151,000, amortization expense of $ 5,000, professional fees of $ 48,699, filings and recording fees of $19,780, research and development cost of $ 75,000 and bad debt expense of $ 6,750.

Other income and (expenses) was $ (259,080) for the year ended December 31, 2021 as compared to $ (656,713) for the year ended December 31, 2020. Derivative liability income decreased by $ 810,719, loss on conversion of notes payable and accrued interest to common stock decreased by $ 912,170, amortization of debt discounts decreased by $ 746,749 and gain from Surrender Agreement was zero as compared to $ 472,170 in year 2020.

Our net loss in the year ended December 31, 2021 was $602,226 as compared to the net loss of $951,170 during the year ended December 31, 2020.

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or our financial position. Amounts shown for costs and expenses reflect historical cost and do not necessarily represent replacement cost. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Liquidity and Capital Resources

We had $377,520 cash on hand at December 31, 2021, compared to $112,953 at December 31, 2020.

At December 31, 2021, we had $467,060 in principal amount of outstanding convertible notes compared to $22,875 at December 31, 2020.

The proceeds from loans, convertible debentures as well as cash on hand is being used to fund the operations of our current operations. During 2021, we entered into the following financing transaction:

On March 15, 2021, the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") with FirstFire Global Opportunities Fund, LLC ("FFG") pursuant to which it issued an initial 6% convertible promissory note (an "FFG Note") to FFG in the principal amount of $272,500, of which $22,500 constituted an original issue discount. On June 28, 2021, the Company issued a second FFG Note to FFG in the principal amount of $272,500, of which $22,500 constituted an original issue discount..

The FFG Notes bear interest at the rate of six percent (6%) per annum, which accrues from the date of funding of and was scheduled to mature on March 11, 2022. The Company is currently seeking to negotiate with FFG an extension of the maturity date of the FFG Notes and a waiver of any default thereunder.

The FFG Notes may be pre-paid in whole or in part by paying FFG the following premiums:





PREPAY DATE    PREPAY AMOUNT
? 30 days      105% * (Principal + Interest ("P+I")
31- 60 days    110% * (P+I)
61-90 days     115% * (P+I)
91-120 days    120% * (P+I)
121-150 days   125% * (P+I)
151-180 days   130% * (P+I)

Any amount of principal or interest on the FFG Notes, which is not paid when due shall bear interest at the rate of twenty-four (24%) per annum from the due date thereof until the same is paid ("Default Interest").

FFG has the right beginning on September 15, 2021 (one hundred eighty (180) days following the issuance of the first FFG Note) to convert all or any part of the outstanding and unpaid principal amount of the FFG Notes and accrued but unpaid interest thereon into shares of our common stock at a conversion price equal to seventy percent (70%) of the average closing price of the Company's common stock for the five prior (5) trading days prior to the date that the registration statement of which this prospectus forms a part is declared effective by the SEC (the "Conversion Price"). The Conversion Price of the FFG Notes is subject to adjustment for stock splits, stock dividends, recapitalizations or other customary events. In the case of an Event of Default (as defined in the FFG Notes), the FFG Notes shall become immediately due and payable in an amount (the "Default Amount") equal to the principal amount then outstanding plus accrued interest (including any Default Interest) through the date of full repayment, multiplied by one hundred twenty-five percent (125%). and interest shall accrue at the rate of Default Interest. Certain events of default will result in further penalties. As of June 30, 2021, the note no longer carries variable conversion features and as such, the derivative was reduced to zero.

Pursuant to the Securities Agreement, on March 15, 2021, the Company also issued three warrants to FFG (the "Warrants") to purchase 25,000,000, 15,000,000 and 10,000,000 shares of our common stock, respectively. The Warrants are exercisable for a period of eighteen (18) months from issuance, at exercise prices of $0.025, $0.05 and $0.075, respectively. The exercise prices are subject to adjustment for stock splits, stock dividends, recapitalizations or other customary events.





7

The following table provides detailed information about our net cash flows for the twelve months ended December 31, 2021 and 2020.

31-Dec-21      31-Dec-20

Net cash (used in) operating activities $ (235,433 ) $ (289,627 ) Net cash (used in) investing activities

              -        (61,750 )

Net cash provided by financing activities 500,000 439,668 Net increase (decrease) in cash

$  264,567     $   88,291




Trends

The factors that will most significantly affect our future operating results, liquidity and capital resources will be:





  ? Government regulation of the marijuana industry;
  ? Revision of Federal banking regulations for the marijuana industry; and
  ? Legalization of the use of marijuana for medical or recreational use in other
    states.

Other than the foregoing, we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on:





  ? revenues or expenses;
  ? any material increase or decrease in liquidity; or
  ? expected sources and uses of cash.

Critical Accounting Policies and Estimates

The SEC issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the SEC has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the following significant policies as critical to the understanding of our financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements. Our management expects to make judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results.

Off-Balance Sheet Arrangements

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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