Qualis Innovations : 3rd Quarter

QUALIS INNOVATIONS, INC. CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

2021

December 31, 2020

ASSETS
Current assets:
Cash	$	703,921	$	72,915
Inventory	72,000	-
Deposits	54,000	90,000
Other current assets	156,196	5,000
Total current assets	986,117	167,915
Property and equipment, net	60,636	71,526
Intangible assets, net	250,645	572,903
Total assets	$	1,297,398	$	812,344
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	23,757	$	-
Other current liabilities	99,688	-
Total current liabilities	123,445	-
Total liabilities	123,445	-
Stockholders' equity
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	-	-
Common stock, $0.001 par value, 75,000,000 shares authorized; 8,239,950 and 4,058,300 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	8,240	4,058
Additional paid-in-capital	3,503,298	1,780,942
Accumulated deficit	(2,337,585)	(972,656)
Total stockholders' equity	1,173,953	812,344
Total liabilities and stockholders' equity	$	1,297,398	$	812,344

See accompanying notes to the unaudited consolidated financial statements

F-18

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three
For the Nine Months	Months Ended
Ended September 30,	September 30,
2021	2020	2021

2020

Net revenues	$	-	$	-	$	-	$	-
Gross Profit	-	-	-	-
Operating expenses:
Research and development	356,608	322,258	107,419	107,419
Stock based compensation - related party	215,378	-	-	-
General and administrative	792,943	66,357	380,702	20,557
Total operating expenses	1,364,929	388,615	488,121	127,976
Loss from operations	(1,364,929)	(388,615)	(488,121)	(127,976)
Loss before income taxes	(1,364,929)	(388,615)	(488,121)	(127,976)
Income taxes	-	-	-	-
Net loss	$	(1,364,929)	$	(388,615)	$	(488,121)	$	(127,976)
Net loss per share, basic and diluted	$	(0.21)	$	(0.10)	$	(0.06)	$	(0.03)
Weighted average number of shares outstanding
Basic and diluted	6,496,835	3,920,709	8,176,200	4,058,300

See accompanying notes to the unaudited consolidated financial statements

F-19

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYCommon StockShares

AmountAdditional Paid in Capital

AccumulatedTotal Stockholders'

Deficit

Equity

Balance as of January 1, 2020	3,708,300 $	3,708 $	1,606,292 $	(455,479) $	1,154,521
Net loss	-	-	-	(126,046)	(126,046)
Balance as of March 31, 2020	3,708,300 $	3,708 $	1,606,292 $	(581,525) $	1,028,475

Issuance of common stock for cash

Net loss

Balance as of June 30, 2020

350,000

-350

-174,650

-- (134,593)

175,000 (134,593)

4,058,300 $

4,058 $

1,780,942 $

(716,118) $

1,068,882

Net loss

-

-

-

(127,976)

(127,976)

Balance as of September 30, 2020	4,058,300 $	4,058 $	1,780,942 $	(844,094) $	940,906
Balance as of January 1, 2021	4,058,300 $	4,058 $	1,780,942 $	(972,656) $	812,344

Issuance of common stock for cash	2,000,000	2,000	998,000	-	1,000,000
Issuance of common shares for services - related parties	30,000	30	14,970	-	15,000
Net loss	-	-	-	(204,031)	(204,031)

Balance as of March 31, 2021

6,088,300 $

6,088 $

2,793,912 $

(1,176,687) $

1,623,313

Recapitalization of Qualis in conjunction with reverse acquisition	496,650	497	49,503	-	50,000
Warrants issued to third parties in conjunction with services	-	-	110,239	-	110,239
Warrants issued in conjunction with employment agreement	-	-	165,378	-	165,378
Common stock issued in conjunction with share agreement	900,000	900	(900)	-	-
Issuance of common stock for cash	300,000	300	149,700	-	150,000
Issuance of common stock for cash - related parties	200,000	200	99,800	-	100,000

Net loss	-	-	-	(672,777)	(672,777)
Balance as of June 30, 2021	7,984,950	$	7,985	$	3,367,632	$	(1,849,464)	$	1,526,153
Issuance of common stock for services - related parties	250,000	250	124,750	-	125,000
Issuance of common stock for services	5,000	5	2,495	-	2,500
Warrants issued to third parties in conjunction with services	-	-	8,421	-	8,421
Net loss	-	-	-	(488,121)	(488,121)
Balance as of September 30, 2021	8,239,950	$	8,240	$	3,503,298	$	(2,337,585)	$	1,173,953

See accompanying notes to the unaudited consolidated financial statements

F-20

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,2021

2020

Cash flows from operating activities:
Net loss $	(1,364,929) $	(388,615)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	12,677	6,877
Amortization expense	322,258	322,258
Warrants issued for services	118,660	-
Stock based compensation - related parties	215,378	-
Issuance of common stock for services - related parties	140,000	-
Issuance of common stock for services	2,500	-
Changes in operating assets and liabilities:
Inventory	(72,000)	-
Deposits	36,000	(90,000)
Other current assets	(151,196)	-
Accounts payable and accrued expenses	23,757	(10,000)
Other current liabilities	99,688	-
Net cash used in operating activities	(617,207)	(159,480)
Cash flows from investing activities:
Purchase of property and equipment	(1,787)	(82,530)
Net cash used in investing activities	(1,787)	(82,530)
Cash flows from financing activities:
Proceeds from short-term convertible notes
Issuance of common stock for cash	1,150,000	175,000
Issuance of common stock for cash - related party	100,000	-
Net cash provided by financing activities	1,250,000	175,000
Net increase (decrease) in cash	631,006	(67,010)
Cash at beginning of period	72,915	161,940
Cash at end of period $	703,921 $	94,930
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $	-$	-
Income taxes $	-$	-
Non-cash investing and financing activities:
Common stock issued in conjunction with share agreement $	1,397 $	-

See accompanying notes to the unaudited consolidated financial statements

F-21