US LIGHTING GROUP, INC.

INDEX

EXPLANATORY NOTE

As used in this Quarterly Report on Form 10-Q (the “Form 10-Q”), unless the context requires otherwise, “we,” “our,” “us” or “the Company” refers to The Luxurious Travel Corp. Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”), we have elected to comply with the scaled disclosure requirements applicable to “smaller reporting companies” throughout this Form 10-Q. Except as specifically included in this Form 10-Q, items not required by the scaled disclosure requirements have been omitted.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Form 10-Q, other than statements that relate to present or historical conditions, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions and analyses made by us in light of our assessment of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, or whether such performance or results will be achieved at all. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause our actual performance or results to differ materially from those expressed in the statements. Important factors that could cause such differences include, but are not limited to: (i) our ability to continue as a going concern; (ii) our ability to raise additional financing on acceptable terms, or at all; (iii) industry competition, conditions, performance and consolidation; (iv) the effects of adverse general economic conditions, both within the United States and globally and the availability of debt and equity financing in view of the current economy; (v) any adverse economic or operational repercussions from terrorist activities, war or other armed conflicts; (vi) new product development and introduction in light of our lack of adequate financing; (vii) changes in business strategy or development plans; (viii) the ability to attract and retain qualified personnel; and (ix) the ability to protect our technology, among others.

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking statements.

PART I –- FINANCIAL INFORMATION

ITEMItem 1. FINANCIAL STATEMENTSFinancial Statements.

THE LUXURIOUS TRAVEL CORP.US LIGHTING GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

US LIGHTING GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

US LIGHTING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(UNAUDITED)

BALANCE SHEETS

(Unaudited)Three months ended March 31, 2021

Three months ended March 31, 2020

SeeThe accompanying notes toare an integral part of these condensed consolidated financial statementsstatements.

THE LUXURIOUS TRAVEL CORP.US LIGHTING GROUP, INC. AND SUBSIDIARY

STATEMENT OF OPERATIONS

 See notes to financial statements

THE LUXURIOUS TRAVEL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)(UNAUDITED)

See notes to financial statements

THE LUXURIOUS TRAVEL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2016

The Luxurious Travel Corporation (theaccompanying notes are integral part of these condensed consolidated financial statements.

“CompanyUS LIGHTING GROUP, INC.”) was formed in 2003 and was inactive until 2008. Until July 2016, the Company created and developed proprietary software that allows users to sell and market travel for groups and individuals, including special event, conference, executive meeting and other travel.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

Recent developments

On July 13, 2016 (“Closing”), pursuant to a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired all of the issued and outstanding capital stock of US Lighting Group, Inc. (“US Lighting Group”), an Eastlake, Ohio based independent designer and manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing, the Company issued 24,500,000 shares of its common stock to the shareholders of US Lighting Group and Todd Delmay, our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by him to the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.

Prior to Closing, the Company declared and paid a cash dividend of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waived the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividend to the Company’s shareholders was $105,512 (the “Dividend”).

Contemporaneously with Closing, the Company consummated a private offering pursuant to the exemptions from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilities of the Company, expenses related to the Change in Control Transaction and the Offering and for working capital and other general corporate purposes.NOTE 1 – BASIS OF PRESENTATION AND LIQUIDITY

The Company intends to focus its ongoing business efforts on the expansionaccompanying interim condensed financial statements of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company granted Todd Delmay an exclusive, perpetual, royalty-free licenseare unaudited, but in the opinion of management contain all adjustments, including normal recurring adjustments, necessary to present fairly our “travel shopper” hotelfinancial position at March 31, 2021, the results of operations for the three months ended March 31, 2021 and travel booking software, which2020, and cash flows for the Company had sought to commercialize in its prior operations.three months ended March 31, 2021 and 2020. The Company also plans to take the necessary corporate and regulatory action to changebalance sheet as of December 31, 2020 is derived from the Company’s name to “US Lighting Group, Inc.” and secure a new trading symbol to better reflect its new corporate name and business focus.audited financial statements.

FoundedCertain information and footnote disclosures normally included in 2011, US Lighting Group is an independent designer and manufacturer of high quality patent-pending, transformer less, “green” LED lighting tubes for sale and distribution into the commercial and industrial 4’ tube lighting sectorsfinancial statements that have been prepared in accordance with accounting principles generally accepted in the United States and abroad. Every US Lighting Group LED bulb is made in the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributedthroughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, including The Home Depot.

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statementsof America have been prepared by the Companycondensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included inCommission regarding interim financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believesreporting. We believe that the disclosures and information presentedcontained in these condensed financial statements are adequate to make the information presented herein not misleading, it is suggested that these interim consolidated financial statements be read in conjunction withmisleading. For further information, refer to the Company’s most recent audited consolidated financial statements and the notes hereto as ofthereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  Operating2020, as filed with the Securities and Exchange Commission on March 24, 2021.

The results of operations for the sixthree months ended June 30, 2016March 31, 2021 are not necessarily indicative of the results that mayof operations to be expected for the full fiscal year ending December 31, 2016.2021.

UsesCOVID-19 Considerations

Through the date these financial statements were issued, the COVID-19 pandemic did not have a net material impact on our operating results. In the future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment, which negatively effects the consumers who purchase our products.

Our ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and our supply chain. The Company has endeavored to follow the recommended actions of estimatesgovernment and health authorities to protect our employees. Through the date that these financial statements were issued, we maintained the consistency of our operations during the onset of the COVID-19 pandemic. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations.

Through the date that these financial statements were issued, the COVID-19 pandemic has not negatively impacted the Company’s liquidity position as of such date, and the Company continues to generate cash flows to meet its short-term liquidity needs, and it expects to maintain access to the capital markets. The Company has not observed any material impairments of its assets or a significant change in the preparationfair value of its assets due to the COVID-19 pandemic.

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

During the three months ended March 31, 2021, the Company realized a net loss of $148,000, and cash provided by operating activities was $277,000, compared to cash used in operating activities of $57,000 in the prior year period. Based on current projections, we believe our available cash on-hand, our current efforts to market and sell our products, and our ability to significantly reduce expenses, will provide sufficient cash resources to satisfy our operational needs, for at least one year from the date these financial statements are issued.

At March 31, 2021, the Company had cash on hand in the amount of $109,000. Management estimates that the current funds on hand will be sufficient to continue operations through June 30, 2021. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations in the case of debt financing, or cause substantial dilution for our stockholders, in the case or equity financing.

In conjunction with the Company’s capital raising efforts, management is working to improve its cash flows by increasing its private label manufacturing opportunities for high volume and low overhead production orders, and managing its operating expenses to support planned revenue growth. However, no assurance can be given that these efforts will be successful.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Intellitronix Corp. On January 11, 2021, the Company created a new subsidiary called Cortes Campers, LLC, domiciled in Wyoming. Cortes Campers, LLC was created to market tow behind travel trailers for the recreational vehicle market and has had no sales as of the date of this report. Cortes Campers, LLC is 99% owned by the Company and 1% owned by Paul Spivak, the Company’s CEO. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted accounting principlesin the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the financial statement date, of the financial statements and the reported amounts of net revenue and expenses during eachthe reporting period. Significant estimates are used in valuing our allowances for doubtful accounts, reserves for inventory obsolescence, valuing derivative liabilities, valuing equity instruments issued for services, and valuation allowance for deferred tax assets, among others. Actual results could differ from thosethese estimates.

CashSegment Reporting

The Company maintains cash balances atoperates in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial institution where accountsinformation required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

Loss per Share Calculations

Basic earnings per share are insuredcomputed by dividing net income (loss) available to common shareholders by the Federal Deposit Insurance Corporation upweighted-average number of common shares available. Diluted earnings per share is computed by dividing the net income applicable to $250,000.common shareholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The Company's accountsdilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

Warrants to acquire 20,000 shares of common stock, and 226,356 shares of common stock issuable under convertible note agreements, have been excluded from the calculation of weighted average common shares outstanding at this institution may,March 31, 2021, as their effect would have been anti-dilutive. Warrants to acquire 4,104,000 shares of common stock have been excluded from the calculation of weighted average common shares outstanding at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.March 31, 2020, as their effect would have been anti-dilutive.

Revenue recognitionRecognition

The Company recognizes revenue when itin accordance with Accounting Standard Update (“ASU”) No. 2014-09. This standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is earnedthat an entity should recognize revenue to depict the transfer of promised goods and realizable, when persuasive evidence ofservices to customers in an arrangement exists, services have been rendered,amount that reflects the price is fixedconsideration to which the entity expects to be entitled in the exchange for those goods or determinable, and collectability is reasonably assured.services.

The Company recognizes net revenue when it has no further obligation to the customer. For air transactions,Under this is at the time of booking due to non-cancellation of the reservation. For hotel and car transactions, netguidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied.

In the following table, revenue is disaggregated by major product line for the three months ended March 31, 2021:

In the following table, revenue is disaggregated by major product line for the three months ended March 31, 2020:

Products sold by the Company are distinct individual products. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Most of the Company’s sales are received through several eBay web-commerce websites, which requires customer payment at the time of check-in or customer pick up, respectively. The timing of revenue recognition is different for air travel becauseorder placement. Customer advanced payments were $84,000 and $29,000 at March 31, 2021 and December 31, 2020, respectively, and are recorded as a liability on the Company’s primary service to the customer is fulfilled at the time of booking. For cruise transactions, revenue is recognized at the time payment is made to the supplier.consolidated balance sheets.

The Company passes reservations booked bydoes offer a 30-day return policy from the date of shipment. The Company also provides a limited lifetime warranty on its customerproducts. Due to the travel supplier for a commission. In addition,limited history of returns, the Company does not take on credit risk with the customer, it is not the primary obligor with the customer, it has no latitude in determining pricing, it takes no inventory risk, it has no ability to determine or change the product or services delivered,maintain a warranty reserve.

Cash and the customer chooses the supplier.Cash Equivalents

Recent accounting pronouncementsCash and cash equivalents include all highly liquid investments with remaining maturities of three months or less at the date of purchase. Cash equivalents include funds held in a PayPal account.

From timeAccounts Receivable

The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to time, new accounting pronouncementsmeet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impactrecorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The allowance for doubtful accounts and returns is established through a provision reducing the carrying value of receivables. At March 31, 2021 and December 31, 2020, the Company determined that no allowance for doubtful accounts was necessary.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is computed on a first-in, first-out basis. The Company’s inventories consist almost entirely of finished goods as of March 31, 2021 and December 31, 2020.

The Company provides inventory reserves based on excess and obsolete inventories determined primarily by future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. At March 31, 2021 and December 31, 2020, the Company determined that no reserve for excess and obsolete inventory was necessary.

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations.

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The Company did not record an impairment loss for the three months ended March 31, 2021 and 2020.

Product Development Costs

Product development costs are expensed in the period incurred. The costs primarily consist of prototype and testing costs. Product development costs for the three months ended March 31, 2021 and 2020, were $84,000 and $95,000, respectively.

Shipping and Handling Costs

The Company’s shipping and handling costs relating to inbound and outbound freight are reported as cost of goods sold in the consolidated Statements of Operations. The Company classifies amounts billed to customers for shipping fees as revenues.

Income Taxes

Income tax expense is based on pretax financial accounting income. Deferred tax assets and reporting.liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company has recorded a valuation allowance against its deferred tax assets as of March 31, 2021 and December 31, 2020.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.

Advertising Costs

Advertising costs are expensed as incurred and are included in selling, general and administrative expenses. Advertising costs were $4,000 and $2,000 for the three months ended March 31, 2021 and 2020, respectively.

Concentrations

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. Periodically, the Company had cash deposits that exceeded the federally insured limit of $250,000. The Company believes that such recently issued accounting pronouncementsno significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the financial institution.

Sales. During the three months ended March 31, 2021, the Company’s three largest customers accounted for 24%, 22% and 15% of sales. During the three months ended March 31, 2020, three customers accounted for 39%, 15% and 12% of sales. No other authoritative guidancecustomers exceeded 10% of sales in either period.

Accounts receivable. As of March 31, 2021, the Company had accounts receivable from three customers which comprised 27%, 25% and 21% of its gross accounts receivable. As of December 31, 2020, the Company had accounts receivable from two customers which comprised 30%, and 26% of its gross accounts receivable, respectively.

Purchases from vendors. During the three months ended March 31, 2021, the Company’s two largest vendors accounted for approximately 19% and 15% of all purchases. The Company sourced 59% of its raw materials from its vendors in China. During the three months ended March 31, 2020, the Company’s three largest vendors accounted for approximately 16%, 12% and 11% of all purchases. The Company sourced 29% of its raw materials from its vendors in China. No other vendor exceeded 10% of all purchases in either periods.

Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the effective date isfirst two are considered observable and the last unobservable, to measure fair value:

The carrying amounts of financial instruments such as cash, accounts receivable, inventories, accounts payable and accrued liabilities, accrued payroll liabilities, and advanced customer deposits, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of the line of credit and notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

Recently Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the future eitherearlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.flows.

Income taxesOther recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following at March 31, 2021 and December 31, 2020:

Depreciation expense for the three months ended March 31, 2021 and 2020 was $46,000 and $13,000, respectively.

NOTE 4 – ACCRUED PAYROLL TO OFFICER

Beginning in January 2018, the Company’s President voluntarily elected to defer payment of his employment compensation. The balance of the compensation owed to the Company’s President was $481,000 and $442,000 as of March 31, 2021 and December 31, 2020, respectively.

NOTE 5 – LINE OF CREDIT

On April 28, 2020, the Company obtained a $50,000 unsecured line of credit from KeyBank. The line of credit carries an interest rate of 3.25% per annum. The balance outstanding on the line of credit was $35,000 and $49,000 at March 31, 2021 and December 31, 2020, respectively.

NOTE 6 – LOANS PAYABLE TO RELATED PARTIES

Loans payable to related parties consists of the following at March 31, 2021 and December 31, 2020:

NOTE 7 – LOANS PAYABLE

Loan payable consisted of the following as of March 31, 2021 and December 31, 2020:

The aggregate amount of the loan fees recorded in 2019, related to PayPal Working Capital Loans, was $32,000 and was recorded as a valuation discount to be amortized over the life of the PayPal Working Capital Loans. The unamortized valuation discount was $8,000 at December 31, 2020. During the three months ended March 31, 2021, amortization of valuation discount of $5,000 was recorded as an interest cost, leaving a $3,000 remaining unamortized balance of the valuation discount at March 31, 2021.

NOTE 8 – CONVERTIBLE SECURED NOTES PAYABLE

The Company uses the assetissued convertible secured debentures (“Convertible Notes”) to accredited investors with interest at 10% per annum, a term of eighteen months, and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion orsecured by all of the deferred tax assets will notof the Company and its subsidiaries. The Convertible Notes provide a conversion right, in which the principal amount of the Convertible Notes, together with any accrued but unpaid interest, could be realized.converted into the Company’s common stock at a conversion price at $0.25 per share. The Convertible Notes balance on December 31, 2020, including accrued interest of $5,000, was $55,000. During the three months ended March 31, 2021, the Company accrued additional interest of $2,000, leaving a total of $57,000 owed at March 31, 2021. As of March 31, 2021, the Convertible Notes were convertible into 226,356 shares of common stock.

ASC Topic 740.10.30 clarifiesNOTE 9 – SHAREHOLDERS’ EQUITY

Common shares issued for cash

During the accounting for uncertainty in income taxes recognized inthree months ended March 31, 2021 and 2020, the Company received proceeds of $150,000 and $50,000 on the private placement of 1,005,000 and 200,000 shares of common stock, at an enterprise’s financial statementsaverage price of $0.15 and prescribes a recognition threshold and measurement attribute$0.25 per share, respectively.

Summary of Warrants

A summary of warrants for the financial statement recognition and measurementperiod ended March 31, 2021, is as follows:

Information relating to outstanding warrants at March 31, 2021, summarized by exercise price, is as follows:

In conjunction with the sale of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for anyportion of the reporting periods presented.

Earnings per Share

Basic earnings per common share are computed usingshares issued as part of its private offering discussed above, the weighted-average numberCompany issued eighteen-month warrants to purchase shares of common shares outstanding during the year. Diluted earnings per common share are computed using the weighted-average numberstock at an exercise price of common shares outstanding during the year plus the incremental shares outstanding assuming the exercise of dilutive stock options, restricted stock and convertible instruments. The Company had no dilutive instruments outstanding at June 30, 2016 or 2015.$0.25.

The weighted-average remaining contractual life of warrants outstanding and exercisable at March 31, 2021 was 0.44 years. The outstanding and exercisable warrants at an intrinsic value of $1,000 at March 31, 2021.

NOTE 10 – LEGAL PROCEEDINGS

Intellitronix Corporation is a defendant in a lawsuit filed by Michael A. Kunzman & Associates, Inc. for alleged nonpayment of manufacturer’s representation commissions. The lawsuit was filed on August 24, 2020 and is currently pending in the Circuit Court for Oakland County, Michigan. Intellitronix Corporation denies the allegations and intends to assert, upon leave of Court, a counterclaim to recover its damages.

NOTE 11 – SUBSEQUENT EVENTS

US Lighting Group, Inc created a new subsidiary called Fusion X Marine, LLC on April 12, 2021, domiciled in Wyoming, to sell boats and other related products to the recreational marine market. Fusion X Marine is 99% owned by the Company and 1% owned by Paul Spivak, the Company’s financial statements are preparedCEO.

Subsequent to March 31, 2021, the Company received proceeds of $89,000 on the private placement of 592,000 shares of common stock, at a going concern basis, which contemplates the realizationprice of assets$0.15 per share, and the satisfactionCompany issued 50,000 shares of obligations in the normal course of business. As of June 30, 2016 the Company has an accumulated deficit of $81,750 and current cash flow will not fund 12 months of expenses. The Company believes it will not have enough cash to meet its various cash needs unless it is able to obtain additional cashcommon stock for services received from the issuance of debt or equity securities. The Company intends to raise funds from the issuance of equity and/or debt securities, but there is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.vendor.

As a result of the transactions described in “Recent Developments” in Footnote 1 above, the Company’s operations as of June 30, 2016 have been reclassified as discontinued.

One customer represented 97% of revenue in the six months ended June 30, 2016. Which is included in net loss from discontinued operations.

The Company has evaluated subsequent events through the date that these financial statements were issued. See “Recent Developments” in Footnote 1 above for information with respect to the Change in Control Transaction. the Dividend, the Offering and related matters.

ITEMItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussionThis Management’s Discussion and analysisAnalysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our financial conditionmanagement team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results of operations should be read in conjunction with our consolidated financial statementsmay differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and related notes that appear elsewhereconsider the various disclosures made by us in this report and in our Annual Report on Form 10-Kother reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.

General Overview

We are engaged in the business of manufacturing and distributing LED digital gauges, automotive electronics, and accessories for commercial and industrial customers, as well as LED lighting tubes and bulbs.

Principal Products

US Lighting Group designs, manufactures, and distributes 4’ LED tube lights that are superior in power usage, lifespan, warranty, and cost savings, because of the exclusive minimalistic design and proprietary manufacturing processes. Channels to market include The Home Depot drop ship program, and earlier in the company history, a chain of reginal distributors. US Lighting Group, Inc. has research and development, testing, and production facilities based in Euclid, Ohio, USA where all products are engineered and manufactured from domestic and imported components.

The US Lighting Group currently produces a series of bulbs, each with their own unique specifications and applications:

Distribution and Current Market

LED lighting is a commodity product, which has become very competitive due to overseas imports with low pricing, making it a difficult climate for US Lighting Group, Inc. to operate in. We are looking into other LED lighting product lines that would leverage our electronics innovativeness to provide more specialty-type LED lighting. US Lighting Group has a supplier contractual relationship with The Home Depot. Customers can order product online at HomeDepot.com and it ships to the customer directly from our warehouse, however the sales have been minimal in the last two years.

US Lighting Group is looking at other industries such as robotics and fiberglass, but they are still in the early development stage.

Intellitronix Corporation

In recent years, the Company’s primary activity has been centered around Intellitronix. Intellitronix is engaged in automotive electronics manufacturing, serving a niche market of aftermarket electronics for customer installations as well as several emerging OEM applications.

Products

Our capabilities include a broad range of design and manufacturing services, such as various microprocessor-controlled products for the year ended December 31, 2015.automotive, electronic, marine, and recreational vehicle markets and the Company has been leveraging its competitive advantage as an efficient low-cost manufacturing partner to other OEM providers. We are focusing on growing the OEM and private label segments that provide high-volume and low-overhead manufacturing opportunities.

Special Note Regarding Forward-Looking StatementsThe vast majority of our products are manufactured at our facility in Euclid, Ohio.

Distribution

We currently have three sales channels, including Intellitronix branded automotive product lines sold through business-to-consumer (B2C) and retail channels, business-to-business (B2B) and private labeled product lines, and original equipment manufacturers (OEM). For OEM customers, we provide design and manufacturing services to meet original equipment manufacturer’s specifications, and these products are incorporated in the new vehicles. The most recent projects have been completed in the growing RV industry, meeting all applicable safety standards. Our customers include O’Reilly Auto Parts, Summit Racing Equipment, JEGS, Kawasaki Motors, Coachman RV, US Auto Parts, CJ Pony Parts, Corvette Central, Mid America Motorworks, Eckler’s, and others. We also sell our products through eBay, Amazon, and other e-commerce platforms.

COVID-19 Considerations

Through the date these financial statements were issued, the COVID-19 pandemic did not have a net material impact on our operating results. In the future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment, which negatively effects the consumers who purchase our products.

Our ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Through the date that these financial statements were issued, we maintained the consistency of our operations during the onset of the COVID-19 pandemic. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example, an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations.

Through the date that these financial statements were issued, the COVID-19 pandemic has not negatively impacted the Company’s liquidity position as of such date, and the Company continues to generate cash flows to meet its short-term liquidity needs, and it expects to maintain access to the capital markets. The Company has not observed any material impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic.

Critical Accounting Policies

This Quarterly Report on Form 10-Q“Management’s Discussion and other reports filed by our Company from time to time with the U.S. SecuritiesAnalysis of Financial Condition and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that areResults of Operations” section is based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. Readers are cautioned not to place undue reliance on these forward-lookingconsolidated financial statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including those set forth in “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements arehave been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”U.S. GAAP”). TheseThe preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to inventories, income taxes, accounts receivable allowance, fair value derivatives, and reserve for warranty claims. We base our estimates on historical experience, performance metrics 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 will differ from these estimates under different assumptions or conditions. We apply the following critical accounting policies in the preparation of our consolidated financial statements:

Use of Estimates

Financial statements prepared in accordance with accounting principles generally accepted in the United States require usmanagement to make certain estimates judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as ofat the date of the financial statements as well asand the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affectedreporting period. Among other things, management estimates include the estimated collectability of its accounts receivable, the valuation of long lived assets, warranty reserves, the assumptions used to calculate derivative liabilities, assumptions used to value equity instruments issued for financing and compensation, and the extent there are material differences between these estimates and actual results. In many cases, the accounting treatmentvaluation of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.deferred tax assets. Actual results could differ from those estimates.

Recent Developments Revenue recognition

On July 13, 2016We recognize revenue in accordance with Accounting Standard Update (“Closing”ASU”), pursuant to No. 2014-09. This standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired allcommon revenue standard for U.S. generally accepted accounting principles. The core principle of the issuedguidance is that an entity should recognize revenue to depict the transfer of promised goods and outstanding capital stock of US Lighting Group, Inc. (“US LightingGroup”),services to customers in an Eastlake, Ohio based independent designer and manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing,amount that reflects the Company issued 24,500,000 shares of its common stockconsideration to which the shareholders of US Lighting Group and Todd Delmay, our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by himentity expects to be entitled in the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.exchange for those goods or services.

Prior to Closing, the Company declared and paid a cash dividendUnder this guidance, revenue is recognized when control of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waived the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividendpromised goods or services is transferred to the Company’s shareholders was $105,512.50 (the “Dividend”).customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied.

Contemporaneously with Closing,Products sold by the Company consummated a private offering pursuantare distinct individual products. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the exemptionsexpected value from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilitiesthem. Most of the Company, expenses related to the Change in Control Transaction and the Offering and for working capital and other general corporate purposes.Company’s sales are received through several eBay web-commerce websites, which requires customer payment at time of order placement.

The Company intends to focus its ongoing business efforts ondoes offer a 30-day return policy from the expansiondate of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company we granted Todd Delmay an exclusive, perpetual, royalty-free license of our “travel shopper” hotel and travel booking software, which the Company had sought to commercialize in its prior operations.shipment. The Company also plansprovides a limited lifetime warranty on its products. Due to takea limited history of returns, the necessary corporate and regulatory action to change the Company’s name to “US Lighting Group, Inc.” and secureCompany does not maintain a new trading symbol to better reflect its new corporate name and business focus.warranty reserve.

Founded in 2011, US Lighting Group is an independent designer and manufacturer of high quality patent-pending, transformer less, “green” LED lighting tubes for sale and distribution into the commercial and industrial 4’ tube lighting sectors in the United States and abroad. Every US Lighting Group LED bulb is made in the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributed throughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, includingThe Home Depot.Recent Accounting Pronouncements

As a resultSee Note 2 of Notes to the Change in Control Transaction, the Dividend, the Offering and the related developments set forth above, the Company’s operations asCondensed Consolidated Financial Statements for management’s discussion of June 30, 2016 have been reclassified as discontinued and the discussion contained herein relates solely to those discontinued operations.recent accounting pronouncements.

Results of Operations for the Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020

ThreeOur revenue, operating expenses, and net loss from operations for the three months ended June 30, 2016March 31, 2021 as compared to the three months ended June 30, 2015March 31, 2020, were as follows:

Sales

Sales increased by $188,000 (25%) to $944,000 for the three months ended March 31, 2021, compared to $756,000 for the three months ended March 31, 2020. The increase in revenue is attributed to the successful completion of several R&D projects that resulted in increased purchasing activity by OEM and private label customers as well as organic growth of the market share of Intellitronix branded products.

Cost of Goods Sold

Cost of goods sold increased by $180,000 (80%) to $406,000 for the three months ended March 31, 2021, compared to $226,000 for the three months ended March 31, 2020. The increase in costs of goods sold was primarily attributable to increased sales. Gross profit as a percentage of sales decreased to 57% for three months ended March 31, 2021 from 70% for the three months ended March 31, 2020, or 13%, a decrease of 19%. The decline in gross margin is attributed to significant increases in direct material pricing, higher direct labor expense due a very tight labor market and a change in our sales mix from less direct to consumer sales at higher margins to more business to business sales at lower margins.

Operating Expenses

Operating expenses include selling, general and administrative expenses, and product development costs.

Selling, general and administrative expenses increased by 41,000 (8%) to $562,000 for the three months ended March 31, 2021, compared to $521,000 for the three months ended March 31, 2020. The increase in selling, general and administrative expenses is primarily attributable to additional financial and customer support personnel.

Product development costs decreased by 11,000 (12%) to $84,000 for the three months ended March 31, 2021, compared to $95,000 for the three months ended March 31, 2020. The decrease in product development costs is primarily attributable a focus on fewer new products with higher margins.

Loss from Operations

Loss from operations increased to approximately $108,000 during the three months ended March 31, 2021, compared to a loss from operations of $86,000 during the three months ended March 31, 2020. The increase in loss from operations was due to increased gross profit, offset by increased operating expenses, as discussed above.

Other Expense

Other expense for the three months ended March 31, 2021 was $40,000, as compared to other expense of $43,000 for the three months ended March 31, 2020. During the three months ended June 30, 2016March 31, 2021, we generated $ 0 in revenue,recorded a gain on extinguishment of debt of $9,000 and sublease income from a related party of $15,000, both of which did not exist during the prior year period. Interest expense for the three months ended March 31, 2021 was $64,000, as compared to $39,431$43,000 for the three months ended March 31, 2020.

Net Loss

Net loss was $148,000 during the three months ended June 30, 2015. Our costs and expenses during the quarter ended June 30, 2016 were $21,869, asMarch 31, 2020, compared to $28,310 in the prior year’s period. The decreases in revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completion of the Change in Control Transaction, which closed in July 2016. For the quarter ended June 30, 2016, we incurred a net loss of $21,869,$129,000 for the three months ended March 31, 2020. The increase in net loss was due to increased gross profit, decreased other expenses, offset by increased operating expenses, as discussed above.

Liquidity and Capital Resources

Our working capital deficiency as of March 31, 2020 and December 31, 2020 was as follows:

The following summarizes our cash flow activity for the three months ended March 31, 2021 and 2020:

Cash Flows

At March 31, 2021, we had a working capital deficit of approximately $2.9 million compared to a working capital deficit of $2.9 million at December 31, 2020.

Net cash provided by operating activities for the three months ended March 31, 2021 totaled $277,000, compared to net income of $11,121cash used in operating activities for the quarterthree months ended June 30, 2015.March 31, 2020 of $57,000. The improvement in net cash provided by operating activities for the three months ended March 31, 2021 was primarily due to the decrease in our accounts receivable balance of $381,000, and routine changes in our working capital accounts of $36,000.

SixNet cash used in investing activities was approximately $141,000 for the three months ended June 30, 2016 asMarch 31, 2021, compared to six$2,000 for the three months ended June 30, 2015March 31, 2020. During the three months ended March 31, 2021, the Company purchased production equipment for $86,000, a vehicle for $40,000, and other property and equipment for $15,000. Net cash used in investing activities was approximately $2,000 for three months ended March 31, 2020 and relates to the purchase of office equipment.

Net cash used in financing activities for the three months ended March 31, 2021 was $135,000 and included proceeds of $150,000 received in the private placement of common stock, and $125,000 from proceeds from the issuance of notes payable. These proceeds were offset by the repayment of $45,000 of notes payable, repayment of $14,000 on the line of credit, and repayment of $351,000 of notes payable to a related party. Net cash provided by financing activities for the three months ended March 31, 2020 was $159,000 and included $50,000 of proceeds from the private placement of common stock, $88,000 from the issuance of secured convertible promissory notes, $150,000 in proceeds from loans payable, and $40,000 in proceeds from notes payable to a related party. These proceeds were offset by the payment of $4,000 on a finance lease, repayment of $71,000 of notes payable, and repayment of $94,000 of notes payable to a related party.

Since inception, our principal sources of liquidity have been cash provided by financing, including through the private placement of convertible notes and equity securities, loans, and gross profit from the sales of our products. Our principal uses of cash have been primarily for labor and outside services, expansion of our operations, development of new products and improvement of existing products, expansion of marketing efforts to promote our products and brand, and capital expenditures. We anticipate that additional expenditures will be necessary to develop and expand our assets before sufficient and consistent positive operating cash flows will be achieved, including sufficient cash flows to service existing liabilities and related interest. Additional funds may be needed in order to continue production and operations, maintain profitability and to achieve our objectives. As such, our cash resources may not be sufficient to meet our current operating expense and production requirements, and planned business objectives beyond the date of this Form 10-K filing without additional financing.

Loans Payable to Related Parties

On December 1, 2016, the Company acquired Intellitronix Corporation from the Company’s President and shareholder. The Company agreed to pay $4,000,000 in exchange for all the shares of Intellitronix Corporation. The sixty-month loan matures in December 2021, requires monthly payments of $74,000, carries an interest rate of 6.25%, and is secured by the assets of Intellitronix Corporation. The loan balance on March 31, 2021 and December 31, 2020, including accrued interest, was $1,805,000 and $2,130,000.

During the sixyear ended December 31, 2017, the Company’s President and shareholder, contributed $125,000 of working capital to the Company. The contributed working capital balance were converted into a loan with no interest rate, and due on demand. The loan balance was $125,000 on both March 31, 2021 and December 31, 2020.

On April 24, 2020, the Company entered into a loan agreement (the “Loan Agreement”) with the Company’s President and shareholder, Paul Spivak (the “Lender”), pursuant to which the Company borrowed $408,000 from the Lender. The Loan has a term of twelve months and carries an interest rate of 6.00%. The loan balance on March 31, 2021 and December 31, 2020, including accrued interest, was $335,000 and $330,000.

Loans Payable

On August 12, 2019, the Company entered into a PayPal Working Capital loan. The principal amount of the loan was for $216,000. The Company received net proceeds of $200,000, net of loan fees of $16,000. The loan has a 20-month term and requires monthly payments equal to 20% of monthly PayPal sales proceeds, but no less than $11,000 every 90-day period. The loan balance on March 31, 2021 and December 31, 2020, was $32,000 and $38,000, respectively.

On November 25, 2019, the Company entered into a PayPal Working Capital loan. The principal amount of the loan was for $66,000. The Company received net proceeds of $50,000, net of loan fees of $16,000. The loan has a 20-month term and requires monthly payments equal to 20% of monthly PayPal sales proceeds, but no less than $3,300 every 90-day period. The loan balance on March 31, 2021 and December 31, 2020, was $10,000 and $14,000, respectively.

On March 12, 2020, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 32.09% per annum and due on September 12, 2021. The loan requires minimum monthly principal and interest payments of $11,000 and is secured by the Company’s assets and future sales and is personally guaranteed by the Company’s CEO. The loan balance on March 31, 2021 and December 31, 2020, was $58,000 and $86,000, respectively.

On August 26, 2020, the Company entered into a loan agreement with Apex Commercial Capital Corp. in the principal amount of $266,000 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 and the Company’s Chief Executive Officer and secured by the Company’s real estate. The loan balance on March 31, 2021 and December 31, 2020, was $265,000 and $265,000, respectively.

The Company purchases vehicles for its Chief Executive Officer and for 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 three vehicles was $131,000 at December 31, 2020, with an original loan period of 72 to 144 months, and interest rates of zero percent to 10.99%. During the three months ended June 30, 2016 we generated $22,695 in revenue, as comparedMarch 31, 2021, the Company purchased a vehicle for $40,000, with a 72 month loan term, and an interest rate of 4.15%, and made total principal payments of $4,000 on its vehicle loans. The aggregate loan balance on March 31, 2021 and December 31, 2020, was $167,000 and $131,000, respectively.

On August 3, 2020, the Company entered into a $18,000 term loan with Leaf Capital related to $43,654 during the sixpurchase of production equipment. The loan requires monthly payments over the term of 36 months, has an interest rate of 8.48% per annum, and is secured by the production equipment. The loan balance on March 31, 2021 and December 31, 2020, was $15,000 and $16,000, respectively.

On November 29, 2020, the Company entered into a $17,000 term loan with CIT Bank related to the purchase of software for its production equipment. The loan requires monthly payments over the term of 36 months, has an interest rate of 13.18% per annum, and is personally guaranteed by the Company’s CEO. The loan balance on March 31, 2021 and December 31, 2020, was $15,000 and $17,000, respectively.

On February 22, 2021, the Company entered into a $86,000 term loan with CIT Bank related to the purchase of production equipment. The loan requires monthly payments over the term of 36 months, has an interest rate of 9.96% per annum, and is personally guaranteed by the Company’s CEO. During the three months ended June 30, 2015. Our costsMarch 31, 2021, the Company made principal payments of $1,000, leaving a total of $85,000 owed at March 31, 2021.

Convertible Secured Notes Payable

The Company issued convertible secured debentures (“Convertible Notes”) to accredited investors with interest at 10% per annum, a term of eighteen months, and expenses during the six months ended June 30, 2016 were $36,339, as compared to $43,065 for the prior year’s period. The decrease of revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completionsecured by all of the Changeassets of the Company and its subsidiaries. The Convertible Notes provide a conversion right, in Control Transaction, which closed in July 2016. For the six months ended June 30, 2016 we incurredprincipal amount of the Convertible Notes, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a net lossconversion price at $0.25 per share. The Convertible Notes balance on March 31, 2021 and December 31, 2020, was $57,000 and $55,000, respectively. As of $13,644, as compared to net incomeMarch 31, 2021, the Convertible Notes were convertible into 226,356 shares of $589 in the six months ended June 30, 2015.common stock.

LiquidityCritical Accounting Policies and Capital ResourcesEstimates

At June 30, 2016, there wasThe Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a cash balanceresult of $ 0.the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. However, the following policies could be deemed to be critical within the SEC definition.

In addition to the proceeds from the Offering, as described under “Recent Developments” and revenues from the operations of US Lighting, we believe that we will require additional financing to fund our new business over the next twelve months. We anticipate that such financing will be secured through additional private offerings of our equity and/or debt securities, which may, if successfully completed result in additional dilution to existing securities. There can be no assurance that we will be successful in securing needed additional financing on commercially reasonable terms or otherwise. The absence of such financing, when needed, could significantly harm our business and results of operations.

Off Balance Sheet ArrangementsRevenue recognition

We recognize revenue in accordance with Accounting Standard Update (“ASU”) No. 2014-09. This standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services.

Under this guidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied.

Products sold by the Company are distinct individual products. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Most of the Company’s sales are received through several eBay web-commerce websites, which requires customer payment at time of order placement.

The Company does offer a 30-day return policy from the date of shipment. The Company also provides a limited lifetime warranty on its products. Due to a limited history of returns, the Company does not maintain a warranty reserve.

Recent Accounting Pronouncements

See Note 2 of the condensed consolidated financial statements for management’s discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We do not have no off-balanceany off balance sheet arrangements including arrangements that would affectare reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital resources, market risk support and credit risk support or other benefits. expenditures.

ITEMItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKSQuantitative and Qualitative Disclosures about Market Risk..

As a “smaller reporting companyPursuant to Item 305(e) of Regulation S-K (§ 229.305(e)),” we are the Company is not required to provide the information required by this Item.Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEMItem 4. CONTROLS AND PROCEDURESControls and Procedures.

In connectionEvaluation of disclosure controls and procedures.

Our management, with the preparationparticipation of this quarterly report on Form 10-Q, an evaluation was carried out by our Chief Executive Officer and Chief Financial Officer, ofevaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) as of June 30, 2016. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, our management concluded, as of the end of the period covered by this report, that ourQuarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, we concluded that, as of the date of this report, our remediation efforts continue related to each of the material weaknesses that we have identified in our internal control over financial reporting, and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below as our resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following material weaknesses in our internal control over financial reporting were identified by management as of March 31, 2021:

Ineffective Control Environment. The Company did not maintain an effective control environment, which is the foundation necessary for effective internal control over financial reporting. Specifically, the Company (i) did not maintain a functioning independent audit committee; (ii) did not have its Board of Directors review and approve significant transactions; (iii) had an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (iv) had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in recording, processing, summarizing,the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements; (v) had inadequate segregation of duties consistent with control objectives; and (vi) lack of written documentation of the Company’s key internal control policies and procedures over financial reporting. The Company is required under Section 404 of the Sarbanes-Oxley Act to have written documentation of key internal controls over financial reporting. The Company did not formally document policies and controls to enable management and other personnel to understand and carry out their internal control responsibilities including the lack of budget-to-actual analyses, balance sheet variation analysis, and pro-forma financial statements. Additionally, the Company did not have an adequate process in place to complete its testing and assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner;

Ineffective controls over financial statement close and reporting information requiredprocess. The Company did not maintain effective controls over its financial statement close and reporting process. Specifically, the Company: (i) had insufficient preparation and review procedures for disclosures accompanying the Company’s financial statements; and (ii) did not provide reasonable assurance that accounts were complete and accurate and agreed to be disclosed, within the time periods specifieddetailed support and that reconciliations of accounts were properly performed, reviewed and approved; and

Insufficient segregation of duties in the SEC's rulesour finance and form,accounting functions due to among other matters,limited personnel. We do not have sufficient segregation of duties within accounting functions. During the quarter ended March 31, 2021, we had limited personnel that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, this creates a lack of segregation of duties.review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

Changes in Internal Controlinternal control over Financial Reportingfinancial reporting.

There have beenwere no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f))that occurred during the quarter ended June 30, 2016March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. - OTHER INFORMATIONII

ITEMItem 1. LEGAL PROCEEDINGSLegal Proceedings.

We are not awareIntellitronix Corporation is a defendant in a lawsuit filed by Michael A. Kunzman & Associates, Inc. for alleged nonpayment of anymanufacturer’s representation commissions. The lawsuit was filed on August 24, 2020 and is currently pending or threatened litigation against us that we expect will, individually or in the aggregate, haveCircuit Court for Oakland County, Michigan. Intellitronix Corporation denies the allegations and intends to assert, upon leave of Court, a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.counterclaim to recover its damages.

ITEMItem 1A. RISK FACTORSRisk Factors.

As a “smaller reporting company,” we areThe Company is not required to provide the information required by this Item.Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEMItem 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUnregistered Sales of Equity Securities and Use of Proceeds.

None.During the three months ended March 31, 2021, the Company received proceeds of $150,000 on the private placement of 1,005,000 shares of common stock, at an average price of $0.15 per share.

ITEMItem 3. DEFAULTS UPON SENIOR SECURITIESDefaults Upon Senior Securities.

None.

ITEMItem 4. MINE SAFETY DISCLOSURESMine Safety Disclosures

Not applicable.

ITEMItem 5. OTHER INFORMATIONOther Information.

None.

ITEMItem 6. EXHIBITSExhibits.