The following discussion and analysis of our consolidated financial condition and results of operations for years ended December 31,2022, and 2021 should be read in conjunction with the consolidated financial statements and notes related thereto included elsewhere in this report and with the unaudited pro forma condensed combined financial information included in Item 8.





General Overview

US Lighting Group, Inc. is a parent company comprised of four subsidiaries - Cortes Campers, LLC, a brand of high-end molded fiberglass campers, Futuro Houses, LLC, focused on design and sales of molded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and MIGMarine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our other business lines.

On January 11, 2021, we formed Cortes Campers to operate our new brand of innovative travel trailers. During the second part of 2021, we invested heavily in research and development as well as production planning for the 17-foot camper and began selling campers in early 2022. As of December 31, 2022, our revenue was driven by shipments of fiberglass campers marketed under Cortes Campers brand and financial results for 2022 reflect revenue of $1,083,114 generated by Cortes Campers.





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On January 12, 2022, we formed Futuro Houses, LLC to design, marketing and distribute molded fiberglass homes. Throughout 2022, Futuro Houses engaged in engineering and development of our first "UFO" themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen. As of December 31, 2022 , the division had not generated revenue.

We plan to expand our manufacturing footprint, enhance production techniques, and develop more products in the RV, marine, and composite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under Cortes Campers brand as well as prefabricated housing segment.

On August 5, 2022, we acquired Mig Marine from Paul Spivak, our former president and a significant shareholder. The Mig Marine acquisition has been determined to be a combination of entities under common control that resulted in a change in the reporting entity. Accordingly, our financial results have been recast to include the financial results of Mig Marine in the current and prior periods as if Mig Marine had always been consolidated with USLG. The assets and liabilities of Mig Marine have been recorded in our consolidated statements of financial condition at the seller's historical carrying value.

On May 14, 2021, we sold select assets of Intellitronix Corporation to Ohio INTX Cooperative, an Ohio cooperative association. In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities, revenue and expenses related to Intellitronnix as discontinued operations.





Results of Operations

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





Sales

Total sales from continuing operations for the year ended December 31, 2022 were $1,083,114, compared to $67,000 for the year ended December 31, 2021, an increase of $1,016,000 or more than 1,500%. The increase in sales is attributed to new sales through our Cortes Campers subsidiary. During the current period all sales revenue was from Cortes Campers subsidiary.





Cost of Goods Sold

Cost of goods sold from continuing operations for the year ended the December 31, 2022 were $1,217,196 compared to $0 for the year ended the December 31, 2021. The December 2022 cost of goods sold relates to camper sales from the Company's Cortes Campers subsidiary.





Operating Expenses

Selling, general and administrative expenses ("SG&A") from continuing operations were $1,603,565 for the year ended December 31, 2022, compared to $1,109,000 for the year ended December 31, 2021, an increase of $494,566. The increase over the prior year can be primarily attributed to additional administrative staffing, auditing and professional fees relating to our expanded operations.

Product development costs for the year ended the December 31, 2022, was $0 compared to $40,000 for the year ended the December 31, 2021. The decrease is due to the Company changing its focus to the full production of RV, marine, composite housing, products rather than on development of these product lines which was the focus in prior years. Cost related to product development for the year 2022, were capitalized into work in process and finished goods inventories.





Other Income / Expense

During the year ended December 31, 2022, we had total other expenses of $374,673, including: unrealized loss of $306,281, interest income of $4,232 and $23,422 gain on disposal of fixed assets. During the year ended December 31, 2021, we had total other income of $396,000. We had other income of $70,000, extinguishment of debt of $52,000, an unrealized gain of $52,000, realized gain from investments of $121,000, interest income of $15,000, interest expense of $9,000 and related party interest expense of $104,000.





Net Income (Loss)

We had a net loss from continuing operations of $2,112,320 for the year ended December 31, 2022, compared to $686,000 for the year ended December 31, 2021. Our net loss from continuing operations decreased in the current year was mainly due to our other income items as discussed above.





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Liquidity and Capital Resources





Changes in Cash Flows

Net cash provided by operating activities for the year ended December 31, 2022, was $(1,537,657), compared to $2,983,000, which included net cash from discontinued operation of $4,002,000, for the year ended December 31, 2021. The negative in net cash provided by operating activities for the year ended December 31,2022, was primarily due to the notes payable to related party for the acquisition of Mig Marine.

Net cash used in investing activities was approximately $816,089 for the year ended December 31, 2022, compared to $1,034,000 for the year ended December 31, 2021. During the year ended December31, 2022, the Company purchased property and equipment for $644,630. We also received $120,000 from the sale of fixed assets, and $1,340,719 of proceeds from the sale of trading securities. Net cash used in investing activities was approximately $1,034,000 for the year ended December 31, 2021, and relates mostly to investments activities.

Net cash provided by financing activities for the year ended December 31, 2022, was $557,097 and included proceeds of $140,209 received in the private placement of common stock, $1,150 from common stock compensations, $629,857 from the issuance of notes payable related party, $192,918 from the repayment of loans payable offset by $407,037 of repayment of related party loans. Net cash used by financing activities for year ended December 31, 2021, was $1,771,000 and included $301,000 of proceeds from the private placement of common stock, and $143,000 in proceeds from loans payable. These proceeds were offset by the repayment of $103,000 of loans payable, and repayment of $2,112,000 of notes payable to a related party.

We have the following outstanding loan as of December 31, 2022:

On August 5, 2022, the Company acquired MigMarine Corporation ("Mig Marine"), from the Company's former President and majority shareholder. The Company agreed to pay $6,833,333 in exchange for all the shares of Mig Marine. A ten percent (10%) deposit of $638,333 will be payable on or before August 5, 2023. The balance is represented by a promissory note in the amount of $6,195,000, sixty-month note matures on August 5, 2027, requires monthly payments of $120,488, carries an interest rate of 6.25%, and is secured by the assets of Mig Marine. The loan balance on December 31, 2022, including accrued interest, was $7,004,629. During the year ended December 31, 2022, the Company accrued interest of $126,296 and did not make any principal and interest payments, leaving a balance outstanding of accrued interest only of $126,296 at December 31, 2022.





                                         December 31,       December 31,
                                             2022               2021
Equipment loan (a)                      $      259,450     $      260,000
Vehicle loans (b)                               59,671             63,000
Working capital (c)                            122,135             25,000
Convertible note                                     0             58,000
Total loans payable                            441,256            426,000
Loans payable, current portion                (140,905 )         (344,000 )

Loans payable, net of current portion $ 280,000 $ 82,000

a. On August 26, 2020, the Company entered into a loan agreement with Apex

Commercial Capital Corp. in the principal amount of $265,339 with interest at
   9.49% per annum and due on September 10, 2030. The loan requires one hundred
   nineteen (119) monthly payments of $2,322, with a final balloon payment on the
   one hundred twentieth (120) month, or September 10, 2030, of $224,835. The
   loan is guaranteed by the Company, the Company's former Chief Executive
   Officer, and secured by the Company's real estate. The loan balance on
   December 31, 2022, was $259,450. During the year ended December 31, 2022, the
   Company made principal payments of $3,084 leaving a total of $259,450 owed at
   December 31, 2022.

b. The Company purchases vehicles for employees and research and development


   activities. Generally, vehicles are sold or traded in at the end of the
   vehicle loan period. The aggregate vehicle loan balance on two vehicles was
   $59,671 at December 31, 2022, with an original loan period of 72 to 144
   months, and interest rates of zero percent to 10.99%.

c. On November 7, 2022, the Company entered into a $150,000 term loan with Fresh


   Funding related to the working capital for the production of campers. The loan
   requires monthly payments over the term of 12 months, has an interest rate of
   38% per annum, and is secured by the majority shareholder. The loan balance on
   December 31, 2022, was $122,135. During the year ended December 31, 2022, the
   Company made principal payments of $23,369, and interest payments of $61,497.




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Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived intangible assets, accrued liabilities, fair value of warrant derivatives and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully described in Note 2 to our financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions. We believe that the following critical accounting policies are subject to estimates and judgments used in the preparation of our consolidated financial statements:

Recent Accounting Pronouncements

See Note 2 of the financial statements for a discussion of recent accounting pronouncements.

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 is material to investors.

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