The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with its unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the transitional period ended April 30, 2020.





FORWARD-LOOKING STATEMENTS

The discussion contained herein contains "forward-looking statements" that involve risk and uncertainties. These statements may be identified by the use of terminology such as "believes," "expects," "may," "should" or anticipates" or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. The Company's actual results could differ materially from those discussed in this report.

BUSINESS AND PLAN OF OPERATION

Lux Amber, Corp., based in Frisco, Texas, is an international specialty chemical company with many products that are friendly to the environment. The common description is "green chemicals." The Company has degreed chemists on staff with years of successful experience in the specialty chemical industry. The term "specialty chemicals" is best defined by those chemicals whose formulas allow the chemical compounds to perform a specific function for a class of customers. The Company's products have been used successfully in a diverse array of applications, including:





  · Chemicals to protect surfaces in asphalt handling equipment




  · Chemicals to control the reproduction of pests




          ·   Military Chemical, Biological, Radiological, Nuclear, and Explosives
              (CBRNE) sites




  · Commercial nuclear power plants and nuclear-powered ships




  · Hazardous toxic industrial chemical and toxic industrial material clean-up

The Company currently operates from a 12,000 square foot chemical production and distribution facility in Frisco, TX. Most of the chemical formulas are protected by patents or trade secrets. For certain specific markets, the Company provides customized applications systems that assure safe and proportioned product delivery. The Company may elect to apply for patents on one or more of the application systems.

The Company's principal executive offices are located at 145 Rose Lane, Suite 102, Frisco, TX 75036. The Company's corporate telephone number is 214-729-4003. The Company's stock symbol is LXAM.

The Company has three wholly owned subsidiaries: Worldwide Specialty Chemicals, Inc. ("WSCI"), Industrial Chem Solutions, Inc. ("ICS"), and Safeway Pest Elimination, LLC ("SPE"); a fourth entity, PCNM, LLC ("PCNM"), is 49% owned. Each of ICS and SPE serves as both a producer and distributor of environmentally safe, specialty chemicals. PCNM is a Service-Disabled Veteran owned small business that sells to government agencies. The Company and its subsidiaries are located at 145 Rose Lane, Suite 102, Frisco, TX 75036.











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ICS' products utilize all-natural and renewable resources, contain no dangerous chemicals or additives, and offer "green" solutions to its customers. ICS' product line includes asphalt release agents, industrial cleaners, environmental remediation gels, odor control agents, and consumer friendly cleaners for a wide range of uses, including construction, environmental remediation, hazardous materials clean-up, nuclear decommissioning, industrial cleaning, and odor control.

SPE refines, packages and markets compound derived from natural sources that are formulated to eliminate and/or control pests.

LIQUIDITY AND CAPITAL RESOURCES

During the three-month period ended July 31, 2020, the primary sources of liquidity were cash flows from financing activities, and in particular, promissory notes from a related party.

As of July 31, 2020, the Company had total assets of $3,716,486 consisting of current assets of $55,993 in cash, $169,095 in receivables, $153,006 in inventory, $18,501 in other current assets, and long term assets of $2,309,952 in goodwill and other intangibles, $611,375 in fixed assets, $17,700 on other long term assets, and $380,864 in right of use assets. As of April 30, 2020, the Company had total assets of $3,612,474, consisting of current assets of $49,185 in cash, $106,876 in receivables, $131,205 in inventory, $9,481 in prepaid expenses and other current assets. The increase in total assets of $104,012, was primarily due to the increase in its account receivable of $62,219 and inventory of $21,801 as a result of slower customer pay times due to cash flow issues industry wide as a result of COVID-19 and a buildup of inventory to accommodate the increase in sales.

As of July 31, 2020, the Company had total liabilities totaling $2,299,802 including $1,232,402 in current payables and accrued expenses, $83,948 in related party payables, $563,389 in notes payable, and $200,056 in right of use liabilities. Long term liabilities total $220,007 and included both notes payable and right of use liabilities. As of April 30, 2020, the Company had total liabilities totaling $2,397,838 including $1,094,717 in accounts payable and accrued expenses, $85,603 in related party payables, $762,889 in notes payable and $190,262 in right of use liabilities. Long term liabilities totaled $264,367 and included both notes payable and right of use liabilities. The decrease in liabilities of $105,395, was largely the result of a decrease in notes payable of $199,500 and right of use liabilities of $30,131, with the remainder being offset by an increase in operating expenses.

At July 31, 2020, the Company had an accumulated stockholders' equity of $1,416,684 and $1,214,636 at April 30,2020. The decrease is result of the items discussed above.





RESULTS OF OPERATIONS

Comparison of the three-month period ended July 31, 2020 and July 31, 2019.





Revenues

For the three-month period ended July 31, 2020, the Company had revenues of $290,260, and $381,503 for the same period in 2019. The decrease in sales is primarily the result of the decrease in SPE's sales by $103,000. SPE was selling a proprietary product to a single customer. Due to a change in the marketing strategy of the single customer, that customer's requirement for the product was discontinued. From time-to-time there will be other opportunities for the Company to produce custom products for specific customers, which may not have continuing revenues from one financial period to another.











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Operating Expenses

For the three-month period ended July 31, 2020, the Company's operating expenses totaled $691,085, and $509,826 for the same period in 2019. The increase of $181,259 is primarily related to 1) increased officer salary expense; 2) professional fees relating to consulting, audit and legal; and 3) increased product delivery costs.





GOING CONCERN

The accompanying consolidated financial statements are presented on a going concern basis. The Company's financial condition raises substantial doubt about the Company's ability to continue as a going concern. The Company has limited cash, its current liabilities exceed its current assets as of July 31, 2020 and has incurred reoccurring losses from operations during the three months ended July 31, 2020. The Company is relying on capital from investors to meet the majority of its operating expenses.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.

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