Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



FORM 10-Q



(Mark One)



☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934



For the Quarterly Period Ended September 30, 2022



☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934



For the transition period from ____________ to _____________



Commission File Number: 000-29381



ADVANCED CONTAINER TECHNOLOGIES, INC.

(Exact name of registrant as specified in
its charter)



|Florida                                                            |  | 65-0207200                       
|------------------------------------------------------------------ |  | ---------------------------------
|(State or other jurisdiction of
    incorporation or organization) |  | (IRS Employer
Identification No.)



|1620 Commerce St., Corona, CA            |  | 92878     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Registrant’s telephone number, including area code: (951) 381-2555



Securities registered pursuant to Section 12(b) of the Exchange Act: None



Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐



Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐



Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller and emerging growth company”
in Rule 12b-2 of the Exchange Act.



|Large accelerated filer | ☐ | Accelerated filer         | ☐
|----------------------- | - | ------------------------- | -
|Non-accelerated filer   | ☒ | Smaller reporting company | ☒
|                        |   | Emerging growth company   | ☐



If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial statement standards
provided pursuant to Section 13(a) of the Exchange Act ☐



Indicate by check mark whether the issuer is a shell
company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS



Check whether the registrant filed all documents and
reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐



APPLICABLE ONLY TO CORPORATE ISSUERS:



Indicate the number of shares outstanding of each
of the issuer’s classes of common stock as of the latest practicable date:



As of November 14, 2022, there were 51,901,525 shares of the registrant’s
Common Stock outstanding.















ADVANCED CONTAINER TECHNOLOGIES,
INC.



QUARTERLY REPORT ON FORM 10-Q



for the Quarterly Period Ended September 30, 2022



TABLE OF CONTENTS



|                               |                                                                                       |    | Page
|------------------------------ | ------------------------------------------------------------------------------------- | -- | ----
|PART I - FINANCIAL INFORMATION |                                                                                       |   
|                               |                                                                                       |    |     
|Item 1.                        | Financial Statements                                                                  |    | 1   
|                               |                                                                                       |    |     
|Item 2.                        | Management’s Discussion and Analysis of Financial Condition and Results of Operations |    | 18  
|                               |                                                                                       |    |     
|Item 3.                        | Quantitative and Qualitative Disclosures About Market Risk                            |    | 26  
|                               |                                                                                       |    |     
|Item 4.                        | Controls and Procedures                                                               |    | 26  
|                               |                                                                                       |    |     
|PART II - OTHER INFORMATION    |                                                                                       |   
|                               |                                                                                       |    |     
|Item 1.                        | Legal Proceedings                                                                     |    | 27  
|                               |                                                                                       |    |     
|Item 1A.                       | Risk Factors                                                                          |    | 27  
|                               |                                                                                       |    |     
|Item 2.                        | Unregistered Sales of Equity Securities and Use of Proceeds                           |    | 29  
|                               |                                                                                       |    |     
|Item 3.                        | Defaults upon Senior Securities                                                       |    | 29  
|                               |                                                                                       |    |     
|Item 4.                        | Mine Safety Disclosures                                                               |    | 29  
|                               |                                                                                       |    |     
|Item 5.                        | Other Information                                                                     |    | 30  
|                               |                                                                                       |    |     
|Item 6.                        | Exhibits                                                                              |    | 30  
|                               |                                                                                       |    |     
|SIGNATURES                     |                                                                                       | 31

















FORWARD-LOOKING STATEMENTS



This report contains forward-looking statements that
involve a number of risks and uncertainties. The use of words such as “anticipates,” “expect,” “intend,”
“strive,” “goals,” “plans,” “opportunity,” “future,” “achieve,”
“grow,” “committed,” “believes,” “seeks,” “targets,” “estimated,”
“continues,” “likely,” “possible,” “may,” “might,” “potentially,”
“will,” “would,” “should,” “could,” “on track,” and variations of such words
and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to uncertain
events or assumptions – such as future responses to and effects of COVID-19; projections of our future financial performance; future
business, social, and environmental performance, goals, and measures; our anticipated growth and trends in our business and operations;
projected growth and trends in markets relevant to our businesses and especially, the market for GrowPods and cannabis and related products;
business and investment plans; future products and technology; laws and regulation, and especially those relating to cannabis; projected
cost and yield trends; availability, uses, sufficiency, and cost of capital of capital resources; valuations; the future purchase, use,
and availability of products, components, and services supplied by third parties – are based on management’s expectations
as of the date of this report, unless an earlier date is specified, and involve many risks and uncertainties that could cause our actual
results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those
described throughout this report and particularly in Part II, Item 1A, Risk Factors. Given these risks and uncertainties, you are
cautioned not to place undue reliance on forward-looking statements. You are urged to review and consider carefully the various disclosures
made in this report and in other reports and documents that we file from time to time with the U.S. Securities and Exchange Commission
(the “SEC”).



NOTE REGARDING THIRD-PARTY INFORMATION



This report may include information and estimates
that are based on reports and other publications sources from industry analysts, market research firms and other independent sources that
were generally available to the public and not commissioned by us, in addition to management’s good faith estimates and analyses.
We believe that such reports and publications, if included, are reliable, but have not independently verified them or their underlying
data sources, methodologies or assumptions. They contain information and estimates that are based on estimates, forecasts, projections,
market research, or similar methodologies, and are inherently subject to uncertainties. Actual events or circumstances may differ materially
from events and circumstances reflected in these reports.



NOTE REGARDING DESCRIPTIONS OF CONTRACTS



This report may contain descriptions of contracts
and instruments to which the Company or its officers and directors are parties or by which it is affected. Where such contracts or instruments
are exhibits to this report, either because they are filed herewith or incorporated herein by reference, you are referred thereto and
the descriptions herein are qualified by such reference. These contracts and instruments are identified in Item 6.



NOTE REGARDING TRADEMARK



“Medtainer” is a registered trademark
owned by the Company. Its use in this report without the symbol “®” should not be considered as a disclaimer of such ownership
or permission to any person to use “Medtainer” without such symbol.

















PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.



ADVANCED CONTAINER TECHNOLOGIES, INC.

(formerly named Medtainer, Inc.)



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ | ---------- | - | ----------------------------------------------------------------------------------- | - | ---------- | -
|                                                                                                                                                                                                                                      |  | September 30,
                                                                  2022 |            |   | December 31,
                                                                  2021 |  
|                                                                                                                                                                                                                                      |  | (Unaudited)                                                                          |            |   | (Audited)                                                                           |  
|ASSETS                                                                                                                                                                                                                               
|CURRENT ASSETS:                                                                                                                                                                                                                       |  |                                                                                      |            |   |                                                                                     |   |            |  
|Cash                                                                                                                                                                                                                                  |  | $                                                                                    | 297,166    |   |                                                                                     | $ | 59,367     |  
|Accounts receivable, net                                                                                                                                                                                                              |  |                                                                                      | 169,250    |   |                                                                                     |   | 229,941    |  
|Inventories                                                                                                                                                                                                                           |  |                                                                                      | 454,160    |   |                                                                                     |   | 438,333    |  
|Prepaid expenses                                                                                                                                                                                                                      |  |                                                                                      | 32,000     |   |                                                                                     |   | 17,663     |  
|Prepaid inventories                                                                                                                                                                                                                   |  |                                                                                      | 464,250    |   |                                                                                     |   | 279,625    |  
|TOTAL CURRENT ASSETS                                                                                                                                                                                                                  |  |                                                                                      | 1,416,826  |   |                                                                                     |   | 1,024,929  |  
|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|Property and equipment, net of accumulated depreciation of $712,396 and $162,018, respectively                                                                                                                                        |  |                                                                                      | 36,160     |   |                                                                                     |   | 47,721     |  
|Intangible assets, net of accumulated amortization of $704,476 and $508,870, respectively                                                                                                                                             |  |                                                                                      | 1,727,524  |   |                                                                                     |   | 1,923,130  |  
|Goodwill                                                                                                                                                                                                                              |  |                                                                                      | 1,020,314  |   |                                                                                     |   | 1,020,314  |  
|Right-of-use asset                                                                                                                                                                                                                    |  |                                                                                      | 412,407    |   |                                                                                     |   | –          |  
|Security deposits                                                                                                                                                                                                                     |  |                                                                                      | 11,699     |   |                                                                                     |   | 8,699      |  
|TOTAL ASSETS                                                                                                                                                                                                                          |  | $                                                                                    | 4,624,930  |   |                                                                                     | $ | 4,024,793  |  
|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                  |  |                                                                                      |            |   |                                                                                     |   |            |  
|CURRENT LIABILITIES:                                                                                                                                                                                                                  |  |                                                                                      |            |   |                                                                                     |   |            |  
|Accounts payable and accrued expenses                                                                                                                                                                                                 |  | $                                                                                    | 370,421    |   |                                                                                     | $ | 458,495    |  
|Accrued interest                                                                                                                                                                                                                      |  |                                                                                      | 92,837     |   |                                                                                     |   | 88,461     |  
|Payroll liabilities                                                                                                                                                                                                                   |  |                                                                                      | 643,252    |   |                                                                                     |   | 501,395    |  
|Customer deposits                                                                                                                                                                                                                     |  |                                                                                      | 1,072,212  |   |                                                                                     |   | 361,230    |  
|Convertible notes                                                                                                                                                                                                                     |  |                                                                                      | 81,172     |   |                                                                                     |   | 81,172     |  
|Notes payable                                                                                                                                                                                                                         |  |                                                                                      | 171,800    |   |                                                                                     |   | 287,487    |  
|Loan payable - stockholder                                                                                                                                                                                                            |  |                                                                                      | 486,920    |   |                                                                                     |   | 320,411    |  
|Operating lease liabilities - current                                                                                                                                                                                                 |  |                                                                                      | 84,543     |   |                                                                                     |   | –          |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                                             |  |                                                                                      | 3,003,157  |   |                                                                                     |   | 2,098,651  |  
|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|LONG-TERM LIABILITIES:                                                                                                                                                                                                                |  |                                                                                      |            |   |                                                                                     |   |            |  
|Operating lease liabilities - long-term                                                                                                                                                                                               |  |                                                                                      | 329,137    |   |                                                                                     |   | –          |  
|TOTAL LONG-TERM LIABILITIES                                                                                                                                                                                                           |  |                                                                                      | 329,137    |   |                                                                                     |   | –          |  
|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|Commitments and contingencies (Notes 3, 5, 6, 10 and 12)                                                                                                                                                                              |  |                                                                                      | –          |   |                                                                                     |   | –          |  
|                                                                                                                                                                                                                                      |  |                                                                                      |            |   |                                                                                     |   |            |  
|STOCKHOLDERS' EQUITY                                                                                                                                                                                                                  |  |                                                                                      |            |   |                                                                                     |   |            |  
|Preferred stock, par value $0.00001 per share, issuable in series: 10,000,000 shares authorized; 1,000,000 shares designated Series A Convertible Preferred stock issued and outstanding at September 30, 2022, and December 31, 2021 |  |                                                                                      | 10         |   |                                                                                     |   | 10         |  
|Common Stock, par value $0.00001 per share: 100,000,000 shares authorized; 51,901,525 issued and outstanding at September 30, 2022, and 51,621,524 at December 31, 2021                                                               |  |                                                                                      | 519        |   |                                                                                     |   | 516        |  
|Additional paid-in capital                                                                                                                                                                                                            |  |                                                                                      | 8,495,063  |   |                                                                                     |   | 8,285,066  |  
|Accumulated deficit                                                                                                                                                                                                                   |  |                                                                                      | (7,202,956 | ) |                                                                                     |   | (6,359,450 | )
|TOTAL STOCKHOLDERS' EQUITY                                                                                                                                                                                                            |  |                                                                                      | 1,292,636  |   |                                                                                     |   | 1,926,142  |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                            |  | $                                                                                    | 4,624,930  |   |                                                                                     | $ | 4,024,793  |  



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







1









ADVANCED CONTAINER TECHNOLOGIES, INC.

(formerly named Medtainer, Inc.)



CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|--------------------------------------------------------------- |  | -------------------------------- | ---------- | - | ------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                |  | Three Months Ended September 30, |            |   | Nine Months Ended September 30, |  
|                                                                |  | 2022                             |            |   | 2021                            |   |            | 2022 |  |   | 2021       |  
|Revenues                                                        |  | $                                | 634,433    |   |                                 | $ | 1,451,737  |      |  | $ | 2,299,923  |   |  | $ | 4,083,267  |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Cost of goods sold                                              |  |                                  | 486,892    |   |                                 |   | 1,061,103  |      |  |   | 1,626,992  |   |  |   | 3,102,972  |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                                    |  |                                  | 147,541    |   |                                 |   | 390,634    |      |  |   | 672,931    |   |  |   | 980,295    |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Operating expenses:                                             |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Advertising and marketing                                       |  |                                  | 20,687     |   |                                 |   | 31,578     |      |  |   | 98,678     |   |  |   | 64,009     |  
|Bad debt                                                        |  |                                  | 35,000     |   |                                 |   | –          |      |  |   | 40,750     |   |  |   | –          |  
|Depreciation and amortization                                   |  |                                  | 75,735     |   |                                 |   | 69,232     |      |  |   | 214,274    |   |  |   | 209,056    |  
|Professional fees                                               |  |                                  | 81,026     |   |                                 |   | 20,520     |      |  |   | 233,925    |   |  |   | 148,641    |  
|Share-based compensation                                        |  |                                  | –          |   |                                 |   | –          |      |  |   | –          |   |  |   | 270,000    |  
|Payroll                                                         |  |                                  | 204,584    |   |                                 |   | 230,313    |      |  |   | 613,888    |   |  |   | 694,375    |  
|General and administrative                                      |  |                                  | 129,727    |   |                                 |   | 102,649    |      |  |   | 301,897    |   |  |   | 239,467    |  
|Total operating expenses                                        |  |                                  | 546,759    |   |                                 |   | 454,292    |      |  |   | 1,503,412  |   |  |   | 1,625,548  |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Operating  (loss)                                               |  |                                  | (399,218   | ) |                                 |   | (63,658    | )    |  |   | (830,481   | ) |  |   | (645,253   | )
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Non-operating income (expenses)                                 |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Forgiveness of Payroll Protection Program SBA loan and interest |  |                                  | –          |   |                                 |   | 138,567    |      |  |   | –          |   |  |   | 138,567    |  
|Interest expense                                                |  |                                  | (2,887     | ) |                                 |   | (8,297     | )    |  |   | (13,025    | ) |  |   | (21,087    | )
|Total non-operating income (expense), net                       |  |                                  | (2,887     | ) |                                 |   | 130,270    |      |  |   | (13,025    | ) |  |   | 117,480    |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) before income taxes                               |  |                                  | (402,105   | ) |                                 |   | 66,612     |      |  |   | (843,506   | ) |  |   | (527,773   | )
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Income tax provision                                            |  |                                  | –          |   |                                 |   | –          |      |  |   | –          |   |  |   | –          |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss)                                               |  | $                                | (402,105   | ) |                                 | $ | 66,612     |      |  | $ | (843,506   | ) |  | $ | (527,773   | )
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted income (loss) per common share                |  | $                                | (0.01      | ) |                                 | $ | –          |      |  | $ | (0.02      | ) |  | $ | (0.01      | )
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Basic weighted average common shares outstanding                |  |                                  | 51,901,525 |   |                                 |   | 51,621,524 |      |  |   | 51,879,278 |   |  |   | 51,299,276 |  
|                                                                |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Diluted weighted average common shares outstanding              |  |                                  | 51,901,525 |   |                                 |   | 51,623,089 |      |  |   | 51,879,278 |   |  |   | 51,299,276 |  









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







2









ADVANCED CONTAINER TECHNOLOGIES, INC.

(formerly named Medtainer, Inc.)



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                            |  |                                 |          |   |      |   |          |  
|--------------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                            |  | Nine Months Ended September 30, |         
|                                                                            |  | 2022                            |          |   | 2021 |  
|OPERATING ACTIVITIES:                                                       |  |                                 |          |   |      |   |          |  
|Net loss                                                                    |  | $                               | (843,506 | ) |      | $ | (527,773 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                 |          |   |      |   |          |  
|Depreciation                                                                |  |                                 | 11,561   |   |      |   | 16,622   |  
|Share-based compensation                                                    |  |                                 | –        |   |      |   | 270,000  |  
|Amortization                                                                |  |                                 | 203,526  |   |      |   | 195,606  |  
|Forgiveness of Payroll Protection Program SBA loan                          |  |                                 | –        |   |      |   | (138,567 | )
|Bad debt                                                                    |  |                                 | 40,750   |   |      |   | –        |  
|Increase (decrease) in cash from changes in operating assets:               |  |                                 |          |   |      |   |          |  
|Accounts receivable                                                         |  |                                 | 19,941   |   |      |   | (47,350  | )
|Inventories                                                                 |  |                                 | (15,827  | ) |      |   | (264,912 | )
|Prepaid inventories                                                         |  |                                 | (184,625 | ) |      |   | (31,125  | )
|Prepaid expenses                                                            |  |                                 | (14,337  | ) |      |   | (6,183   | )
|Payment of security deposits                                                |  |                                 | (3,000   | ) |      |   | –        |  
|Accounts payable and accrued expenses                                       |  |                                 | (88,074  | ) |      |   | 81,738   |  
|Accrued interest                                                            |  |                                 | 4,376    |   |      |   | (26,521  | )
|Operating liabilities                                                       |  |                                 | (6,647   | ) |      |   | –        |  
|Payroll liabilities                                                         |  |                                 | 141,857  |   |      |   | 235,396  |  
|Customer deposits                                                           |  |                                 | 710,982  |   |      |   | (254,727 | )
|NET CASH USED IN OPERATING ACTIVITIES                                       |  |                                 | (23,023  | ) |      |   | (497,796 | )
|                                                                            |  |                                 |          |   |      |   |          |  
|INVESTING ACTIVITIES:                                                       |  |                                 |          |   |      |   |          |  
|Acquisition of property and equipment                                       |  |                                 | –        |   |      |   | (16,000  | )
|NET CASH USED IN INVESTING ACTIVITIES                                       |  |                                 | –        |   |      |   | (16,000  | )
|                                                                            |  |                                 |          |   |      |   |          |  
|FINANCING ACTIVITIES:                                                       |  |                                 |          |   |      |   |          |  
|Proceeds from issuance of common stock                                      |  |                                 | 210,000  |   |      |   | 615,000  |  
|Repayment of debt                                                           |  |                                 | (115,687 | ) |      |   | (185,820 | )
|Proceeds from stockholder loans                                             |  |                                 | 346,084  |   |      |   | 26,753   |  
|Repayment of stockholder loans                                              |  |                                 | (179,575 | ) |      |   | (79,942  | )
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                   |  |                                 | 260,822  |   |      |   | 375,991  |  
|                                                                            |  |                                 |          |   |      |   |          |  
|INCREASE (DECREASE) IN CASH                                                 |  |                                 | 237,799  |   |      |   | (137,805 | )
|                                                                            |  |                                 |          |   |      |   |          |  
|CASH - BEGINNING OF PERIOD                                                  |  |                                 | 59,367   |   |      |   | 333,368  |  
|                                                                            |  |                                 |          |   |      |   |          |  
|CASH - END OF PERIOD                                                        |  | $                               | 297,166  |   |      | $ | 195,563  |  
|                                                                            |  |                                 |          |   |      |   |          |  
|Supplemental disclosure of cash flow information                            |  |                                 |          |   |      |   |          |  
|Interest paid                                                               |  | $                               | 51,419   |   |      | $ | 49,063   |  







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







3







ADVANCED CONTAINER TECHNOLOGIES, INC.

(formerly named Medtainer, Inc.)



|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                     
|-------------------------------------------------------------------
|FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (Unaudited):



|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|-------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | --------- |  | ------------ | - | -- | -------------------------------------------------------------------------------------------------- |  |  | ----------- |  |  | ------- | --- |  | ------- | - | --------- | ----- |  | - | ---------- | - |  | - | --------- | -
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|                                             |  | Series A
                                                                                Convertible Preferred Stock |           |  | Common Stock |   |    | Additional
                                                                                Paid-In |  |  | Accumulated |  |  |         |    
|                                             |  | Shares                                                                                                               |           |  | Amount       |   |    | Shares                                                                                             |  |  | Amount      |  |  | Capital |     |  | Deficit |   |           | Total | 
|Balances - December 31, 2021                 |  |                                                                                                                      | 1,000,000 |  |              | $ | 10 |                                                                                                    |  |  | 51,621,524  |  |  | $       | 516 |  |         | $ | 8,285,066 |       |  | $ | (6,359,450 | ) |  | $ | 1,926,142 |  
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|Issuance of common stock - private placement |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | 280,001     |  |  |         | 3   |  |         |   | 209,997   |       |  |   | –          |   |  |   | 210,000   |  
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|Net loss                                     |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | –           |  |  |         | –   |  |         |   | –         |       |  |   | (441,401   | ) |  |   | (441,401  | )
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|Balances - June 30, 2022                     |  |                                                                                                                      | 1,000,000 |  |              |   | 10 |                                                                                                    |  |  | 51,901,525  |  |  |         | 519 |  |         |   | 8,495,063 |       |  |   | (6,800,851 | ) |  |   | 1,694,741 |  
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|Net loss                                     |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | –           |  |  |         | –   |  |         |   | –         |       |  |   | (402,105   | ) |  |   | (402,105  | )
|                                             |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |   |           |       |  |   |            |   |  |   |           |  
|Balances - September 30, 2022                |  |                                                                                                                      | 1,000,000 |  |              | $ | 10 |                                                                                                    |  |  | 51,901,525  |  |  | $       | 519 |  |         | $ | 8,495,063 |       |  | $ | (7,202,956 | ) |  | $ | 1,292,636 |  





|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                     
|-------------------------------------------------------------------
|FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 (Unaudited):



|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|----------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | --------- |  | ------------ | - | -- | -------------------------------------------------------------------------------------------------- |  |  | ----------- |  |  | ------- | --- |  | ------- | -
|                                                      |  | Series A
                                                                                Convertible Preferred Stock |           |  | Common Stock |   |    | Additional
                                                                                Paid-In |  |  | Accumulated |  |  |         |    
|                                                      |  | Shares                                                                                                               |           |  | Amount       |   |    | Shares                                                                                             |  |  | Amount      |  |  | Capital |     |  | Deficit |  
|Balances - December 31, 2020                          |  |                                                                                                                      | 1,000,000 |  |              | $ | 10 |                                                                                                    |  |  | 51,016,524  |  |  | $       | 510 |  |         | $
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Issuance of common stock - private placement          |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | 485,000     |  |  |         | 5   |  |         |  
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Issuance of common stock issued - directors agreement |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | 120,000     |  |  |         | 1   |  |         |  
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Net loss                                              |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | –           |  |  |         | –   |  |         |  
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Balances - June 30, 2021                              |  |                                                                                                                      | 1,000,000 |  |              |   | 10 |                                                                                                    |  |  | 51,621,524  |  |  |         | 516 |  |         |  
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Net income                                            |  |                                                                                                                      | –         |  |              |   | –  |                                                                                                    |  |  | –           |  |  |         | –   |  |         |  
|                                                      |  |                                                                                                                      |           |  |              |   |    |                                                                                                    |  |  |             |  |  |         |     |  |         |  
|Balances - September 30, 2021                         |  |                                                                                                                      | 1,000,000 |  |              | $ | 10 |                                                                                                    |  |  | 51,621,524  |  |  | $       | 516 |  |         | $









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







4







ADVANCED CONTAINER TECHNOLOGIES,
INC.

(formerly named Medtainer, Inc.)

Notes to Unaudited Consolidated Financial Statements

September 30, 2022



Note 1 – Description of Business and Organization



Advanced Container Technologies, Inc. (the “Company”)
markets and sells two principal products: (i) beginning in the first quarter of 2021, GrowPods, which are specially modified insulated
shipping containers manufactured by GP Solutions, Inc. (“GP”), in which plants, herbs and spices may be grown hydroponically
in a controlled environment (“GrowPods”) and (ii) the Medtainer, which may be used to store pharmaceuticals, herbs, teas and
other solids or liquids and can grind solids and shred herbs. The Company also markets and sells products related to GrowPods and the
Medtainer. The Company also provides private labeling and branding for purchasers of Medtainers, lighters and other products. Management
believes they have one reportable segment given the financial information available for review by the chief decision-maker.



The Company was incorporated under the laws of the
state of Florida on September 5, 1997. It changed its corporate name to Acology, Inc. on January 9, 2014; to Medtainer, Inc. on August
28, 2018; and to its present name on October 3, 2020.



On October 9, 2020, the Company acquired all of the
outstanding shares of Advanced Container Technologies, Inc., a California corporation (“ACT”), from its shareholders pursuant
to an Exchange Agreement, dated August 14, 2020, and amended on September 9, 2020 (the “Exchange Agreement”), in exchange
for 50,000,000 shares of the Company’s common stock (“Common Stock”). This exchange resulted in ACT’s becoming
the wholly owned subsidiary of the Company. In connection with this exchange, the Company acquired a Distributorship Agreement, dated
August 6, 2020, by and between ACT and GP (the “Distributorship Agreement”), under which ACT has the exclusive right to purchase
GrowPods and related products from GP at prices to be agreed to from time to time and to sell and distribute them within the United States
and its territories for an initial term that will expire on December 31, 2025. ACT may renew the Distributorship Agreement indefinitely
as long as it purchases in the last calendar year of any term the lesser of (i) 100 GrowPods or (ii) GP’s total output of GrowPods.



On August 27, 2020, the Company incorporated Med X
Technologies Inc. (“Med X”) in the State of California and acquired all of its shares, such that it is the Company’s
wholly owned subsidiary. The Company intends to transfer the assets used in its Medtainer and printing businesses to Med X, after which
it will conduct all of its operations through Med X and ACT.



Note 2 – Summary of Significant Accounting Policies



Accounting Principles



The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange
Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial
statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all
the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September
30, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months
ended September 30, 2022, are not necessarily indicative of the operating results for the full fiscal year or any future period. These
unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission
(the “SEC”) on April 18, 2022.









5







Principles of Consolidation



The unaudited consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been
eliminated.



Use of Estimates



The preparation of financial statements in conformity
with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses
during the reporting periods. Actual results could differ from those estimates. Certain of these estimates could be affected by external
conditions, including those unique to the Company’s industries, and general economic conditions. These external conditions could
affect the Company’s estimates so as to cause actual results to differ materially from its estimates. The Company re-evaluates all
of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.



Significant estimates relied upon in preparing these
consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, valuations
and purchase price allocations related to business combinations, expected future cash flows used to evaluate the recoverability of long-lived
assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization
periods, accrued expenses, share-based compensation, and recoverability of the Company’s net deferred tax assets and any related
valuation allowance.



Cash and Cash Equivalents



The Company considers all short-term highly liquid
investments with an original maturity at the date of purchase of 3 months or less to be cash equivalents. The Company had no cash equivalents
at September 30, 2022, or December 31, 2021.



Accounts Receivable



Included in accounts receivable on the
consolidated balance sheets are amounts primarily related to customers. The Company estimates losses on receivables based on known
troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written off when it is
probable that all contractual payments due will not be collected in accordance with the terms of the related agreement. Based upon
experience and the judgment of management, the provision for doubtful accounts was $40,750
and $0
for the nine months ended September 30, 2022, and December  31, 2021, respectively..



Inventories



Inventories, which consist of products held for
resale, are stated at the lower of cost (determined using the first-in first-out method) and net realizable value. Net realizable
value is the estimated selling price in the ordinary course of business, less estimated costs to complete and dispose of the
product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value
in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product
shipments are recorded in cost of sales in the Company’s consolidated statements of operations. As of September 30, 2022 and
December 21, 2022, no inventory reserves were considered necessary.



Property and Equipment



Property and equipment are stated at cost less accumulated
depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Furniture and fixtures are depreciated
over the useful life of 7 years. Machinery, equipment, and computers are depreciated over the useful life of 3 to 7 years. Leasehold improvements
are depreciated over 2 years and were fully depreciated as of September 30, 2022. Expenditures for additions and improvements are capitalized
and repairs and maintenance are expensed as incurred.









6







Goodwill and Intangible Assets



Goodwill and intangible assets that have indefinite
useful lives are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that
their carrying value may not be recoverable. The Company records intangible assets at fair value when they are acquired and they are tested
for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment
test consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount
of an intangible asset exceeds its fair value, an impairment loss will be recorded in the consolidated statements of operations in an
amount equal to that excess. The Company amortizes its intangible assets that have finite lives using either the straight-line method
or based upon estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization
is recorded over estimated useful lives ranging from 5 to 20 years. The Company records intangible assets at fair value, estimated using
a discounted-cash-flow approach.



The Company reviews intangible assets subject to amortization
at least annually to determine whether any adverse conditions exist or a change in circumstances has occurred that would indicate impairment
or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent than quarterly impairment
assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value
of an asset or an adverse action or assessment by a regulator. If the carrying value of an intangible asset exceeds its undiscounted cash
flows, the Company will write down the carrying value to its fair value in the period identified. The Company generally calculates fair
value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate
of an intangible asset’s remaining useful life is changed, the Company will amortize its remaining carrying value prospectively
over its revised remaining useful life. The Company has conducted its annual impairment test of goodwill during the fourth quarter of
each year. The estimation of fair value requires significant judgment. There was no impairment of intangible assets, long-lived assets
or goodwill during the nine-month periods ended September 30, 2022, and September 30, 2021.



Any loss resulting from an impairment test will be
reflected in operating income in the Company’s consolidated statements of operations. The annual impairment testing process is subjective
and requires judgment at many points. If these estimates or their related assumptions change, the Company may be required to record impairment
charges for these assets.



Revenue Recognition



The Company follows the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers
(Topic 606), as amended. This standard requires a company to recognize revenues when it transfers goods or services to customers in an
amount that reflects the consideration that it expects to receive for them.



Under ASC 606, Company recognizes revenue when a customer
obtains control of promised goods or services or when they are shipped to a customer in an amount that reflects the consideration that
it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASC 606: (a)
it identifies a contract with a customer; (b) it identifies the performance obligations in the contract; (c) it determines the transaction
price; (d) it allocates the transaction price to the performance obligations in the contract; and (e) it recognizes revenues when (or
as) it satisfies its performance obligation.



Revenues from product sales are recognized when a
customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment to the customer. The
Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that
it would have been recognized is one year or less or the amount is immaterial.









7







Revenue from sales of items sold by the Company for
the three months ended September 30, 2022, and September 30, 2021, and the percentage of sales allocable to each item to the Company’s
total revenues were as follows:

|Schedule of revenue from sales of items sold |  |                                  |         |  |      |  |      |          |  |   |           |  |  |  |      | 
|-------------------------------------------- |  | -------------------------------- | ------- |  | ---- |  | ---- | -------- |  | - | --------- |  |  |  | ---- | 
|                                             |  | Three Months Ended September 30, |        
|                                             |  | 2022                             |         |  | 2021 | 
|                                             |  | Revenues                         |         |  | %    |  |      | Revenues |  |   | %         | 
|GrowPods and related products                |  | $                                | 160,000 |  |      |  | 25%  |          |  | $ | 712,000   |  |  |  | 49%  | 
|Lighters                                     |  |                                  | 146,153 |  |      |  | 23%  |          |  |   | 162,946   |  |  |  | 11%  | 
|Medtainers                                   |  |                                  | 140,209 |  |      |  | 22%  |          |  |   | 343,010   |  |  |  | 24%  | 
|Humidity pack inserts                        |  |                                  | 125,404 |  |      |  | 20%  |          |  |   | 125,246   |  |  |  | 9%   | 
|Plastic lighter holders                      |  |                                  | 25,777  |  |      |  | 4%   |          |  |   | 28,670    |  |  |  | 2%   | 
|Shipping charges                             |  |                                  | 17,472  |  |      |  | 3%   |          |  |   | 37,017    |  |  |  | 3%   | 
|Jars                                         |  |                                  | 8,643   |  |      |  | 1%   |          |  |   | 22,626    |  |  |  | 2%   | 
|Printing                                     |  |                                  | 8,084   |  |      |  | 1%   |          |  |   | 12,615    |  |  |  | <1%  | 
|Others                                       |  |                                  | 2,691   |  |      |  | 1%   |          |  |   | 7,607     |  |  |  | <1%  | 
|Total revenues                               |  | $                                | 634,433 |  |      |  | 100% |          |  | $ | 1,451,737 |  |  |  | 100% | 



Revenue from sales of items sold by the Company for
the nine months ended September 30, 2022, and September 30, 2021, and the percentage of sales allocable to each item to the Company’s
total revenues were as follows:



|                              |  | Nine Months Ended September 30, |          
|----------------------------- |  | ------------------------------- | ---------
|                              |  | 2022                            |          
|                              |  | Revenues                        |          
|Lighters                      |  | $                               | 590,500  
|GrowPods and related products |  |                                 | 559,650  
|Medtainers                    |  |                                 | 550,386  
|Humidity pack inserts         |  |                                 | 298,822  
|Plastic lighter holders       |  |                                 | 103,975  
|Printing                      |  |                                 | 63,631   
|Shipping charges              |  |                                 | 60,748   
|Others                        |  |                                 | 51,693   
|Jars                          |  |                                 | 20,518   
|Total revenues                |  | $                               | 2,299,923





The table below presents the customer deposits payable
balance and the significant activity affecting customer deposits during the period ended September 30, 2022:

|Schedule of customer deposits             |  |   |          
|----------------------------------------- |  | - | ---------
|Balance at December 31, 2021              |  | $ | 361,230  
|New customer deposits received            |  |   | 1,350,914
|Revenue recognized from customer deposits |  |   | (639,932 
|Balance at September 30, 2022             |  | $ | 1,072,212









8







Share-Based Payments



ASC 718, Compensation – Stock Compensation,
prescribes accounting and reporting standards for all share-based payment transactions. The Company follows FASB guidance related to equity-based
payments, for both employees and non-employees, which requires that equity-based compensation be accounted for using a fair value method
and recognized as expense in the accompanying consolidated statements of operations. Equity-based compensation expense is recognized as
compensation expense over the applicable service or vesting period (see Note 8).



Fair Value Measurements



The Company has adopted ASC Topic 820, Fair Value
Measurements, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value
and expands disclosure of fair value measurements.



The estimated fair value of certain financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried on a historical cost basis,
which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s
short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual
interest rates taken together with other features, such as concurrent issuances of warrants and/or embedded conversion options, are comparable
to rates of returns for instruments of similar credit risk.



ASC Topic 820 defines fair value as the exchange price
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. ASC Topic 820 also establishes a fair-value
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value:



Level 1 - Quoted prices in active markets for identical assets
or liabilities.



Level 2 - Quoted prices for similar assets and liabilities in
active markets or inputs that are observable.



Level 3 - Inputs that are unobservable (for example, cash flow
modeling inputs based on assumptions).



Advertising



Advertising and marketing expenses are charged to
operations as incurred. These expenses totaled $98,678 and $64,009 for the nine months ended September 30, 2022, and September 30, 2021,
respectively.



Income Taxes



The Company uses the asset 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 (a) taxes payable or refundable for the current year and (b) 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 of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statements 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 that some portion or all the deferred tax assets
will not be realized.



ASC Topic 740-10-30 clarifies accounting for uncertainty
in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company has no material uncertain tax positions.









9







Concentration of Credit Risk



Financial instruments that potentially subject the
Company to concentrations of credit risk consist of cash accounts in financial institutions, which at times may exceed the federal deposit
insurance coverage of $250,000. The Company has not experienced losses on these accounts and believes that it is not exposed to significant
risks on such accounts. The Company has not experienced losses on accounts receivable and the Company believes that it is not exposed
to significant risks with respect to them.



Income (Loss) per Share



Basic income (loss) per share is calculated
by dividing the Company’s net income (loss) attributable to Common Stock by the basic weighted average number of shares of Common
Stock outstanding during the period. The diluted income (loss) per share is calculated by dividing the Company’s net income (loss)
attributable to Common Stock by the diluted weighted average number of shares outstanding during the period.



Recent Accounting Pronouncements



In August 2020, FASB issued ASU 2020-06, “Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” For convertible instruments,
FASB reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting
models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.
Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not
clearly and closely related to the host contract that meet the definition of a derivative, and that do not qualify for a scope exception
from derivative accounting and (2) those issued with substantial premiums for which the premiums are recorded as paid-in capital. FASB
decided to amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based
accounting conclusions. FASB observed that the application of the derivatives scope exception guidance results in accounting for some
contracts as derivatives while accounting for economically similar contracts as equity. FASB also decided to improve and amend the related
earnings per share guidance. The amendments in this update are effective for public business entities that meet the definition of an SEC
filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December
15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years. Management is currently evaluating the potential impact
of this new standard.



In June 2016, FASB issued ASU 2016-13 regarding ASC
Topic 326, “Measurement of Credit Losses on Financial Instruments.” This pronouncement changes the impairment model
for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost.
Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance
to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the
financial asset. Subsequently, FASB issued an amendment to clarify the implementation dates and items that fall within the scope of this
pronouncement. This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal
years. Management is currently evaluating the effect on the Company’s financial statements.



The Company does not believe there are any other recently
issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or
results of operations.









10







Note 3 – Going Concern



The consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. At September 30, 2022, the Company had a working capital deficit of $1,586,331
and an accumulated deficit of $7,202,956.
In addition, the Company has generated operating losses since its inception and has notes payable that are currently in default.
These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on the successful execution of its operating plan, which includes increasing
sales of existing products and services, introducing additional products and services, controlling operating expenses, negotiating
extensions of overdue notes payable and raising either debt or equity financing. There is no assurance that the Company will be able
to implement any of these measures. The consolidated financial statements do not include any adjustments that might be necessary if we are unable
to continue as a going concern.



Note 4 – Intangible Assets and Goodwill



Intangible assets, including patents and patent applications,
a trademark and an internet domain related to Medtainer and distribution rights under a Distributorship Agreement dated August 6, 2020,
are recorded at cost or estimated fair value at the date of acquisition. Goodwill relates to an Asset Purchase Agreement, amended as of
June 8, 2018. The Company tested intellectual property and goodwill for impairment in preparing its financial statements for the year
ended December 31, 2021, and determined that no adjustment was required. At September 30, 2022, and December 31, 2021, there was no impairment
of these assets, which are included in the tables below:

|Schedule of intangible assets and goodwill           |  |                                        |  |                      |           |  |                          |   |          |            |  |   |           | 
|---------------------------------------------------- |  | -------------------------------------- |  | -------------------- | --------- |  | ------------------------ | - | -------- | ---------- |  | - | --------- | 
|Intangible Assets and Goodwill at September 30, 2022
|Description                                          |  | Weighted Average Estimated Useful Life |  | Gross Carrying Value |           |  | Accumulated Amortization |   |          | Net Amount | 
|Distributorship Agreement                            |  | 5 years                                |  | $                    | 900,000   |  |                          | $ | (355,932 | )          |  | $ | 544,068   | 
|U.S. patents                                         |  | 15 years                               |  |                      | 435,000   |  |                          |   | (122,981 | )          |  |   | 312,019   | 
|U.S. patents                                         |  | 16 years                               |  |                      | 435,000   |  |                          |   | (118,364 | )          |  |   | 316,636   | 
|Canadian patents                                     |  | 20 years                               |  |                      | 260,000   |  |                          |   | (55,797  | )          |  |   | 204,203   | 
|European patents                                     |  | 14 years                               |  |                      | 30,000    |  |                          |   | (9,003   | )          |  |   | 20,997    | 
|Molds                                                |  | 15 years                               |  |                      | 150,000   |  |                          |   | (42,399  | )          |  |   | 107,601   | 
|Trademark                                            |  | Indefinite life                        |  |                      | 220,000   |  |                          |   | –        |            |  |   | 220,000   | 
|Domain name                                          |  | Indefinite life                        |  |                      | 2,000     |  |                          |   | –        |            |  |   | 2,000     | 
|Intangible totals                                    |  |                                        |  | $                    | 2,432,000 |  |                          | $ | (704,476 | )          |  | $ | 1,727,524 | 
|Goodwill                                             |  |                                        |  | $                    | 1,020,314 |  |                          | $ | –        |            |  | $ | 1,020,314 | 





|Intangible Assets and Goodwill at December 31, 2021
|---------------------------------------------------
|Description                                        
|GP distribution agreement                          
|U.S. patents                                       
|U.S. patents                                       
|Canadian patents                                   
|European patents                                   
|Molds                                              
|Trademark                                          
|Domain name                                        
|Intangible totals                                  
|Goodwill                                           









11







Note 5 – Convertible Notes Payable and Promissory
Notes Payable



As of September 30, 2022, and December 31, 2021, the
Company had outstanding the following convertible notes payable and notes payable (refer to Note – 10 for details on related-party notes payable):

|Schedule of convertible notes payable and notes payable outstanding                                    |  |                    |         |  |                   |   |        |           |  |   |          | 
|------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- |  | ----------------- | - | ------ | --------- |  | - | -------- | 
|                                                                                                       |  | September 30, 2022 |         |  | December 31, 2021 |  
|                                                                                                       |  |                    |         |  | Accrued           |   |        |           |  |   | Accrued  | 
|                                                                                                       |  | Principal          |         |  | Interest          |   |        | Principal |  |   | Interest | 
|Convertible Notes Payable                                                                              |  |                    |         |  |                   |   |        |           |  |   |          | 
|July 2014 $75,000 note, convertible into common Stock at $5.00 per share, 10% interest, in default (a) |  | $                  | 66,172  |  |                   | $ | 41,909 |           |  | $ | 66,172   | 
|July 2014 $15,000 note, convertible into Common Stock at $5.00 per share, 10% interest, in default (a) |  |                    | 15,000  |  |                   |   | 13,750 |           |  |   | 15,000   | 
|                                                                                                       |  | $                  | 81,172  |  |                   | $ | 55,659 |           |  | $ | 81,172   | 
|Notes Payable                                                                                          |  |                    |         |  |                   |   |        |           |  |   |          | 
|February 2018 $298,959 note, due February 2019, 10% interest, in default (b)                           |  | $                  | 36,099  |  |                   | $ | 198    |           |  | $ | 162,274  | 
|August 2015 $75,000 note, with a one-time interest charge of
    $75,000 (c)                           |  |                    | 117,020 |  |                   |   | 36,980 |           |  |   | 53,020   | 
|Related party obligation (d)                                                                           |  |                    | 18,681  |  |                   |   | –      |           |  |   | 72,193   | 
|                                                                                                       |  | $                  | 171,800 |  |                   | $ | 37,178 |           |  | $ | 287,487  | 
|Total                                                                                                  |  | $                  | 252,972 |  |                   | $ | 92,837 |           |  | $ | 368,659  | 



| | (a) | The Company entered into promissory note conversion agreements in the aggregate amount of $90,000 and made payments of $8,828 on them as of September 30, 2022. These notes are convertible into shares of the Common Stock at a conversion price of $295 per share. The loans under these agreements are non-interest-bearing and have no stated maturity date; however, the Company is accruing interest at a 10% annual rate.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | On February 22, 2018, the Company made a promissory note in the principal amount of $298,959 in favor of an unrelated party, which comprised the unpaid principal amount of $200,000 due on a prior note in favor of that party and $98,959 of accrued interest thereon. The balance of this note was $36,099 and $162,274 at September 30, 2022, and December 31, 2021, respectively, and accrued interest was $198 and $889, respectively. The note was due on February 22, 2019. The Company is negotiating an extension.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | On
    August 15, 2015, the Company made a promissory note in the principal amount of $150,000
    in favor of an unrelated party (the "081515 Note"). The note bears interest at 0.48% per annum, provided that the note was paid on
    or before its maturity date, or 2 percentage points over the Wall Street Journal Prime Rate, if not so repaid. Upon an event of
    default, as defined in the note, interest will be compounded daily. This note matured on August 11, 2016. During the year ended
    December 31, 2017, the holder of this note agreed to exchange $75,000 of principal and accrued and interest $663 for 500,000 shares
    of common stock. This exchange was accounted for as an extinguishment of debt resulting in a loss of $683,337. In connection with
    this exchange, the Company agreed to pay the holder a fee of $75,000 in consideration of his waiving the default under the
    promissory note, as additional consideration for his agreeing to the exchange and as compensation for his forgoing the interest that
    would have accrued on the promissory note at the default rate but for the waiver. During the nine months ended September 30, 2022,
    and the year ended December 31, 2021, the Company made payments of $0
    and $11,227,
    respectively, on the principal and $0
    and $33,775,
    respectively, on the interest accrued on this note. At September 30, 2022, and December 31, 2021, the accrued interest, including
    the $75,000
    fee included therein, was $36,980,
    respectively. On September 14, 2022, the Company entered into an agreement with the holder in which the Company agreed to issue 200,000
    shares of Common Stock and $25,000
    in exchange for the 081515 Note. On that date, there was $115,000 owing, comprising $78,020
    of principal and $36,980
    of accrued interest. At September 30, 2022, the balance of the note was increased to $117,020.
    At December 31, 2021, the balance of the note was $53,020.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | On June 15, 2020, the Company and a related party entered into a Separation Agreement, dated June 15, 2020, under which, commencing on January 1, 2021, the Company agreed to repay $145,844 that the Company owed him in 24 monthly payments of $6,093, including interest at the Applicable Federal Rate. During the nine months ended September 30, 2022, and the year ended December 31, 2021, the Company made payments of $53,513 and $90,000, respectively. At September 30, 2022, and December 31, 2021, the balance of the note was $18,681 and $72,193, respectively.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------









12







Note 6 – Right-of-Use Assets and Operating
Lease Liabilities



On September 1, 2022, the Company entered into an
amended operating lease with an entity owned by a related party, such that its term will expire on August 31, 2024, at a monthly rent
of $10,150 until August 31, 2023, and $10,477 thereafter.



Under ASC 842, the Company is required to determine
whether a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract
conveys the right to control the use of an identified asset for a period in exchange for consideration. A lessee has control of the use
of an identified asset if it has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and
(b) the right to direct the use of the asset. Right-of-use assets and liabilities are recognized based upon the present value of future
minimum lease payments over the expected lease term at the commencement date. The Company has determined that the Corona lease is an operating
lease and the right-of-use asset for this lease is included on the balance sheet for the quarter ended September 30, 2022, with the corresponding
lease liability.



The Company measures and records a right-of-use asset
and lease liability based on the discount rate implicit in the lease, if known, or when not known, using a discount rate equal to its
estimated incremental borrowing rate for loans with similar collateral and duration. For the Corona Lease, the Company  determined
the rate using the incremental borrowing rate of 10% per annum. For all asset classes, we elected to (i) not recognize a right-of-use
asset and lease liability for leases having a term of 12 months or less and (ii) not separate non-lease components from lease components,
and we have accounted for combined lease and non-lease components as a single lease component. Short-term leases with initial terms of
twelve months or less are not capitalized.



Right-of-use asset, net comprise the following:

|Schedule of operating lease expenses |  |                                                                                                    |        
|------------------------------------ |  | -------------------------------------------------------------------------------------------------- | -------
|                                     |  | September 30,
                                                                                2022 |        
|Right-of use asset                   |  | $                                                                                                  | 420,327
|Less: accumulated amortization       |  |                                                                                                    | (7,920 
|Right-of-use asset, net              |  | $                                                                                                  | 412,407



The following table presents a maturity analysis of the Company’s operating lease liabilities:



|                               |  | September 30,

2022 |        
|------------------------------ |  | ------------------- | -------
|                               |  |                     |        
|Lease liabilities – current    |  | $                   | 84,543 
|Lease liabilities – noncurrent |  |                     | 329,137
|Total lease liability          |  | $                   | 413,680
|                               |  |                     |        
|Remainder of 2022              |  | $                   | 30,449 
|2023                           |  |                     | 123,102
|2024                           |  |                     | 127,373
|2025                           |  |                     | 132,405
|2026                           |  |                     | 90,563 
|Total payments                 |  |                     | 503,892
|                               |  |                     |        
|Amount representing interest   |  |                     | (90,212
|Lease obligation, net          |  |                     | 413,681
|Less current portion           |  |                     | (84,543
|Lease obligation - long term   |  | $                   | 329,137









13









Note 7 – Stockholders’ Equity



On October 8, 2020, the Company combined the outstanding
shares of its common stock on the basis of 1 share of common stock for every 59 shares of common stock. The effects of this combination
have been retroactively applied to all periods presented in the unaudited consolidated financial statements.



On July 30, 2020, the Company filed articles of amendment
with the Secretary of State of the State of Florida, pursuant to which, a series of 1,000,000 of its 10,000,000 authorized shares of preferred
stock was designated, which series is named Series A Convertible Preferred Stock (“Series A Preferred”). Each share of Series
A Preferred is convertible into 0.3051 shares of Common Stock, has the dividend and distribution rights and redemption rights of the shares
of Common Stock into which it is convertible, is not redeemable and has voting power equal to the combined voting power of all other of
classes and series of the Company’s capital stock. On June 24, 2020, the Company issued all of the shares of this series to a related
party in exchange for 305,085 shares of Common Stock.



On October 9, 2020, the Company issued 50,000,000
shares of Common Stock to the shareholders of ACT in exchange for their shares in ACT pursuant to the Exchange Agreement. See Note 1.
As a result, ACT became the wholly owned subsidiary of the Company and the Company acquired the Distributorship Agreement, which has been
valued as an intangible asset at $900,000 (see Note 4) and $86,293 in cash. Under the Distributorship Agreement, ACT has the exclusive
right to purchase GrowPods and related products at prices to be agreed to from time to time and to sell and distribute them within the
United States and its territories for an initial term that will expire on December 31, 2025. ACT may renew the Distributorship Agreement
indefinitely as long as it purchases the lesser of (i) 100 GrowPods or (ii) GP’s total output of GrowPods in the last calendar year
of any term.









14







On January 1, 2021, the Company issued 120,000 shares
of Common Stock to one of the Company’s directors as compensation pursuant to a Director Agreement between the Company and him,
dated as of that date.



During the nine months ended September 30, 2022, the
Company issued 280,001 shares of Common Stock to four individuals. The aggregate purchase price of these shares was $210,000. During the
nine months ended September 30, 2021, the Company issued 485,000 shares of Common Stock to eight individuals. The aggregate purchase price of
these shares was $615,000.



Note 8 – Share-Based Compensation



The Company’s 2018 Incentive Award Plan (the
“2018 Plan”) became effective on December 1, 2018, under which the Company may issue up to 33,898 shares of common stock as
incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards,
and other forms of compensation to employees, directors and consultants. In addition, the 2018 Plan provides for the grant of performance
cash awards to employees, directors and consultants.



On December 1, 2018, 22,882 shares of common stock
were awarded to employees in the form of restricted shares and 5,678 shares of common stock were awarded to consultants as compensation.
The fair value of these shares on the grant date was $0.59 per share. As of December 31, 2020, all of these shares had vested. The following
table shows vesting for financial reporting purposes under GAAP of the shares issued under the 2018 Plan:

|Schedule of share based compensation |  |                        |        |  |             | 
|------------------------------------ |  | ---------------------- | ------ |  | ----------- | 
|                                     |  | Shares of Common Stock |       
|Vesting Dates                        |  | Employees              |        |  | Consultants | 
|December 31, 2018                    |  |                        | –      |  |             | 
|January 1, 2019                      |  |                        | 12,712 |  |             | 
|March 31, 2019                       |  |                        | –      |  |             | 
|June 30, 2019                        |  |                        | 5,085  |  |             | 
|June 30, 2020                        |  |                        | 5,085  |  |             | 
|Total vested at September 30, 2022   |  |                        | 22,882 |  |             | 



The Company made no awards in any other form during
the nine months ended September 30, 2022, and September 30, 2021.



The Company expensed $0 for share-based compensation
under the 2018 Plan in the nine months ended September 30, 2022, and September 30, 2021, respectively, for its employees and consultants
in the accompanying consolidated statements of operations.



On January 1, 2021, the Company issued 120,000 shares
of Common Stock to one of its directors as compensation pursuant to a Director Agreement, dated as of that date and, in the nine months
ended September 30, 2021, the Company expensed $270,000 for share-based compensation in respect of these shares (see Note 7), based on
their fair market value of $2.25 per share on their date of issuance.



Note 9 – Income Taxes



As of December 31, 2021, the Company had approximately
$2,351,000 and $1,649,000 of net operating loss carryforwards (“NOLs”) available to reduce future Federal and California,
respectively, taxable income, which will begin to expire in 2031. In assessing the realization of deferred tax assets, management considers
whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred
tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in
making this assessment. Based on this assessment, management has established a full valuation allowance against all the deferred tax assets
for every period because it is more likely than not that the deferred tax assets will not be realized.









15







On December 22, 2017, the Tax Cuts and Jobs Act
of 2017 (the “2017 Tax Act”) was enacted, making significant changes to the Internal Revenue Code. Changes include a
federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S.
international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed
repatriation of foreign earnings. The Company has estimated its provision for income taxes in accordance with the 2017 Tax Act and
the guidance available and, based thereon, has determined that the 2017 Tax Act does not change the determination that it is more
likely than not that the deferred tax assets will not be realized. Accordingly, the Company has kept the full valuation allowance.
As a result, the Company recorded $1,600
and $2,700, respectively,
for minimum state franchise fees in general and administrative expenses on the consolidated statement of operations during the nine
months ended September 30, 2022, and September 30, 2021.



Note 10 – Related-Party Transactions



Loans



The Company has received loans from its officers and
directors from time to time since its inception. During the nine months ended September 30, 2022, the Company received loans of $346,084
from its officers and directors and repaid $179,575. During the nine months ended September 30, 2021, the Company received loans of $26,753
from its officers and directors and repaid $79,942 of these loans. The balance of these loans at September 30, 2022, and December 31,
2021, was $486,920 and $320,411, respectively. All of these loans are non-interest-bearing and have no set maturity date. The Company
expects to repay these loans when cash flows become available.



Contracts



The Company makes building lease payments and purchases
products for resale from entities owned by a related party, who is also one of its executive officers.



Payments made to related parties for the nine months
ended September 30, 2022, and September 30, 2021, were as follows:

|Schedule of related party transactions |  |                                 |         |  |      |  
|-------------------------------------- |  | ------------------------------- | ------- |  | ---- | -
|                                       |  | Nine Months Ended September 30, |        
|                                       |  | 2022                            |         |  | 2021 |  
|Building lease payments                |  | $                               | 85,342  |  |      | $
|Purchase of products for resale        |  |                                 | 358,499 |  |      |  
|Total                                  |  | $                               | 443,841 |  |      | $



Director Compensation



On January 1, 2021, the Company issued 120,000 shares
of Common Stock to one of its directors as compensation pursuant to a Director Agreement, dated as of that date. (See Note 8.)



Note 11 – Concentrations



For the three months ended September 30, 2022,
and September 30, 2021, three of the Company’s customers accounted for approximately 25%, 14% and 10%, and 25%, 16% and 10% % of
total revenues, respectively.



For the nine months ended September 30, 2022,
one of the Company’s customers accounted for approximately 16% of total revenues. For the nine months ended September 30, 2021,
one of the Company’s customers accounted for 33% of total revenues.



For the three months ended September 30, 2022,
and September 30, 2021, the Company purchased approximately 37% and 62%, respectively, of its products for cost of goods sold from one
distributor.









16







For the nine months ended September 30, 2022,
and September 30, 2021, the Company purchased approximately 45% and 70%, respectively, of its products for cost of goods sold from one
distributor.



As of September 30, 2022, three of the Company’s
customers accounted for 47%, 29% and 21%, respectively, of its accounts receivables. As of December 31, 2021, two of the Company’s
customers accounted for 34% and 30%, respectively of its accounts receivable.





Note 12 – Commitments



Refer to Note 6 regarding the Company’s main
operating lease in Corona, CA.



The Company leases premises of 6,000 square feet that
it uses as a showroom, in Tulsa, Oklahoma, for a term that will expire on March 31, 2023, at a monthly rental of $5,500 until July 31,
2022, and $6,000 thereafter.



Under an agreement with the supplier of Medtainers
entered into in 2018, the Company agreed to purchase a minimum of 30,000 units of product per month. Under the terms of this agreement,
the minimum purchase quantity increases by 1% on every anniversary of its effective date and is now 31,218 units per month. The purchase
price for units is subject to periodic adjustment for changes in the consumer price index. This agreement will expire on April 30, 2031;
however, it can be terminated upon payment of $400,000.



Note 13 – Subsequent Events



Management has evaluated all  subsequent events
when the consolidated financial statements were issued and determined that none of them requires additional disclosure herein.























































17









Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.



THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION
WITH THE COMPANY’S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES THERETO AND THE OTHER FINANCIAL INFORMATION APPEARING
IN THIS REPORT.



Introduction



The financial data discussed below are derived from
the unaudited consolidated financial statements of the Company as of September 30, 2022, which were prepared and presented in accordance
with United States generally accepted accounting principles for interim financial statements. These financial data are only a summary
and should be read in conjunction with the unaudited financial statements and related notes contained herein, which more fully present
the Company’s financial condition and operations as at that date, and with its audited financial statements and notes thereto contained
in its Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on April 18, 2022. Further, the Company urges
caution regarding the forward-looking statements which are contained in this report because they involve risks, uncertainties and other
factors affecting its operations, market growth, service, products and licenses that may cause the Company’s actual results and
achievements, whether expressed or implied, to differ materially from the expectations the Company describes in its forward-looking statements.
The occurrence of any of the events described in Part II, Item 1A, Risk Factors, or other events, could have a material adverse
effect on the Company’s business, results of operations and financial position.



General Statement of Business



The Company was incorporated under the laws of the
state of Florida on September 5, 1997, under the corporate name Synthetic Flowers of America, Inc. It changed its corporate name to Acology,
Inc. on January 9, 2014; on August 28, 2018, to Medtainer, Inc.; and on October 3, 2020, to its present name.



The Company is in the businesses of (i) selling and
distributing hydroponic containers called “GrowPods” and related products and (ii) designing, branding and selling proprietary
plastic medical-grade containers that can store pharmaceuticals, herbs, teas and other solids or liquids and can grind solids and shred
herbs, as well as selling other products such as humidity control inserts, smell-proof bags, lighters, and plastic lighter holders, and
providing private labeling and branding for purchasers of the Company’s containers and the other products.



The Company markets its products directly to businesses
through its phone room and to the retail public through internet sales. The Company also markets directly to wholesalers and other businesses
that resell them to other businesses and end users.



On October 9, 2020, the Company acquired all of the
outstanding shares of Advanced Container Technologies, Inc., a California corporation (“Advanced”), from its shareholders
pursuant to an Exchange Agreement, dated August 14, 2020, which was amended on September 9, 2020 (as so amended, the “Exchange Agreement”),
in exchange for 50,000,000 shares of the Company’s Common Stock. This exchange resulted in Advanced’s becoming a wholly owned
subsidiary of the Company.



The acquisition of ACT represented a material change
in the business strategy of the Company and an expansion of its product base. Since the inception of the Company in 2014, its intended
growth strategy was to concentrate on increasing sales of Medtainers while introducing related products and services, such as humidity
control inserts and printing. This approach resulted in relatively flat revenues, increasing expenses and a history of losses. Management
believes that this acquisition offered the prospect of substantially increased revenues, without a comparable increase in expenses an
opportunity to expand its profits significantly. The Company has announced that it is exploring with GP the acquisition of its assets
and the assumption of some or all of its liabilities in exchange for shares of Common Stock (the “GP Acquisition”). Discussions
are in their preliminary stages and none of the terms and conditions of the acquisition has been determined, including the number of shares
of Common Stock to be issued to GP in exchange for its assets or the liabilities of GP that the Company would assume. The Company intends
to structure any transaction such that its board of directors and executive officers would not be changed and that voting control of the
Company would not be affected.









18







The Company’s authorized capital is 100,000,000
shares of Common Stock and 10,000,000 shares of preferred stock, par value $0.00001 per share. On October 3, 2020, the Company combined
the outstanding shares of its Common Stock on the basis of one share for every 59 shares then outstanding; the number of authorized shares
of Common Stock and preferred stock was unaffected. The effect of this combination has been applied to all periods covered by this report.
The Company has also designated 1,000,000 shares of its preferred stock as Series A Convertible Preferred Stock (“Series A Preferred”)
and, on July 31, 2020, issued them to its chief executive officer in exchange for 305,085 shares of his Common Stock; these shares, together
with the shares of Common Stock owned by him, confer voting control of the Company on him. See Item 10, Employment Agreement.



The Company’s principal place of business is
located at 1620 Commerce St., Corona, CA 92878. The Company’s telephone number is (951) 381-2555. The Company has two corporate
websites: www.advancedcontainertechnologies.com for GrowPods and related items and www.medtainer.com for Medtainers and related products
and services. Common Stock is quoted on the OTC Pink tier of OTC Link, a quotation system operated by OTC Markets Group Inc. (“OTC
Link”), under the trading symbol ACTX.



Going Concern



As indicated in Note 3 of the Notes to Consolidated
Financial Statements, there is substantial doubt as to the ability of the Company to continue as a going concern. The Company has generated
material operating losses since inception and its ability to continue as a going concern depends on the successful execution of its operating
plan, which includes increasing sales of existing products – and in particular GrowPods and related products – while introducing
additional products and services, controlling cost of goods sold and operation expenses, negotiating extensions of existing loans, and
raising either debt or equity financing.



Need for Capital



The Company needs a substantial amount of additional
capital to fund its business, including the expansion of its operations, and for repayment of its debts. No assurance can be given that
any additional capital can be obtained or, if obtained, will be adequate to meet its needs. If adequate capital cannot be obtained on
a timely basis and on satisfactory terms, the Company’s operations could be materially negatively impacted and it may need to take
certain measures to remain a going concern, or it could be forced to terminate operating.



Impact of the Covid-19 Pandemic



For more information regarding the impact of the Covid-19
pandemic on the Company, see Part II – Item 1A – Risk Factors.



Critical Accounting Policies and Estimates



Use of Estimates



The preparation of financial statements in conformity
with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses
during the reporting periods. Actual results could differ from those estimates. Certain estimates could be affected by external conditions,
including those unique to its industry and general economic conditions, which could affect the Company s estimates so as to cause actual
results to differ materially from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly, based on
these conditions and records adjustments when necessary.



Significant estimates relied upon in preparing the
consolidated financial statements contained in this report include revenue recognition, accounts receivable reserves, inventory and related
reserves, valuations and purchase price allocations related to business combinations, expected future cash flows used to evaluate the
recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible
assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company s net deferred
tax assets and any related valuation allowances.









19







Fair Value Measurements



The Company has adopted the provisions of ASC Topic
820, Fair Value Measurements, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring
fair value and expands disclosure of fair-value measurements.



The estimated fair value of certain financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried on a historical cost basis,
which approximates their fair value because of the short-term nature of these instruments. The carrying amounts of the Company s short-
and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest
rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to
rates of returns for instruments of similar credit risk.



ASC Topic 820 defines fair value as the exchange price
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. ASC Topic 820 also establishes a fair-value
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value:



Level 1 Quoted prices in active markets for
identical assets or liabilities.



Level 2 Quoted prices for similar assets
and liabilities in active markets or inputs that are observable.



Level 3 Inputs that are unobservable (for
example, cash flow modeling inputs based on assumptions).



Goodwill and Intangible Asset Impairment



Goodwill and intangible assets that have indefinite
useful lives are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that
their carrying value may not be recoverable. The Company records intangible assets at fair value when they are acquired and they are tested
for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment
test consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount
of an intangible asset exceeds its fair value, an impairment loss will be recorded in the consolidated statements of operation in an amount
equal to that excess. The Company amortizes its intangible assets that have finite lives using either the straight-line method or based
upon estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization
is recorded over estimated useful lives ranging from 5 to 20 years.



Significant judgment is required in evaluating whether
an intangible asset has an indefinite useful life and in testing for impairment. This judgment includes developing cash flow projections,
selecting appropriate discount rates, identifying relevant market comparables, and incorporating general economic and market conditions.



The Company reviews intangible assets subject to
amortization quarterly to determine if any adverse conditions exist or if a change in circumstances has occurred that would indicate
impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent
impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could
affect the value of an asset or an adverse action or assessment by a regulator. If the carrying value of an intangible asset exceeds
its undiscounted cash flows, the Company will write down its carrying value to its fair value in the period identified. The Company
generally calculates fair value as the present value of estimated future cash flows to be generated by the asset using a
risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will
amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. The Company also
evaluates intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that
the carrying amount of such assets may not be recoverable. These changes include but are not limited to significant adverse changes
in the business climate, market conditions, or other events, including the Covid-19 pandemic, that indicate an asset’s
carrying amount may not be recoverable. The recoverability of these assets is measured by comparing the carrying amount of each
asset with the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test of
recoverability are less than the carrying amount of these assets, their carrying amount is reduced to fair value.









20







Pursuant to ASU No. 2017-04, Simplifying the Test
for Goodwill Impairment (“ASU No. 2017-04”), the Company evaluates and tests the recoverability of its goodwill for impairment
at least annually during the fourth quarter of each fiscal year or more often if circumstances indicate that goodwill may not be recoverable.
The Company has conducted annual impairment tests of goodwill during the fourth quarter of each year, commencing in the year ended December
31, 2018, in which year it first acquired intangible assets. The annual impairment testing process is subjective and requires judgment
at many points. If these estimates or their related assumptions change, the Company may be required to record impairment charges for these
assets. The Company operates as a single operating unit and consequently evaluates goodwill for impairment based upon an evaluation of
the fair value of the Company as a whole. The estimation of fair value requires significant judgment. The goodwill recorded in the consolidated
balance sheets at December 31, 2021, and December 31, 2020, was $1,020,314. Goodwill was due entirely to the Company s acquisition of
intangible property relating to Medtainers in 2018. Various future events, including changes in demand for the Company s products and
the Covid-19 pandemic, could result in an impairment of goodwill. Any adjustments resulting from an impairment test will be reflected
in operating income in the Company s consolidated financial statements.



The fair value of acquired technology and patents,
as well as acquired technology that the Company may develop, is determined at their acquisition date primarily using the income approach,
which discounts expected future cash flows to present value. The discount rates used in the present value calculations are typically derived
from a weighted-average cost-of-capital analysis and then adjusted to reflect risks inherent in the development life cycle as appropriate.
Any loss resulting from an impairment test will be reflected in operating income in the Company s consolidated statements of income. The
annual impairment testing process is subjective and requires judgment at many points. If these estimates or their related assumptions
change in the future, the Company may be required to record impairment charges for these assets not previously recorded.



There was no impairment of intangible assets,
long-lived assets or goodwill during the nine months ended September 30, 2022, and September 30, 2021.



Revenue Recognition



Accounting Standards Update (ASU) No. 2014-09, Revenue
from Contracts with Customers (Topic 606), as amended by ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal
versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606):
Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements
and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,
requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration
that it expects to receive for them.



Under ASU No. 2014-09, as amended, the Company recognizes
revenues when a customer obtains control of promised goods or services, or when they are shipped to a customer, in an amount that reflects
the consideration that it expects to receive in exchange for them. The Company recognizes revenues following a five-step model: (a) it
identifies contract(s) with a customer; (b) it identifies the performance obligations in the contract; (c) it determines the transaction
price; (d) it allocates the transaction price to the performance obligations in the contract; and (e) it recognizes revenues when (or
as) it satisfies its performance obligation.



Revenues from product sales are recognized when a
customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment to the customer. The Company
expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would
have been recognized is one year or less or the amount is immaterial.



Taxes



The Company accounts for income taxes under FASB ASC
Topic 740, Accounting for Income Taxes, under which the Company is required to recognize a current tax liability or asset for current
taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences and carryforwards to the extent they are realizable.









21







Results of Operations



Comparison of the Three Months Ended September 30, 2022, and September
30, 2021



The following table sets forth information from the statements of operations
for the three months ended September 30, 2022, and September 30, 2021.



|                                |  | Three Months Ended |         
|------------------------------- |  | ------------------ | --------
|                                |  | September 30, 2022 |         
|Revenues                        |  | $                  | 634,433 
|Cost of goods sold              |  |                    | (486,892
|Gross profit                    |  |                    | 147,541 
|                                |  |                    |         
|Operating expenses              |  |                    | 546,759 
|Loss from operations            |  |                    | (399,218
|                                |  |                    |         
|Non-operating income (expense): |  |                    |         
|Non-operating income            |  |                    | –       
|Interest expense                |  |                    | (2,887  
|Net income (loss)               |  | $                  | (402,105



Revenues



Revenues were $634,433 and $1,451,737 for the
three months ended September 30, 2022, and September 30, 2021, respectively. The decrease was primarily due to a$552,000 decrease in revenues
from sales of GrowPods and related products due the Company’s difficulty in marketing and selling GrowPods, a $202,801 decrease
in revenues from sales of Medtainers and a $19,545 decrease in revenues from shipping charges.



Cost of Goods Sold



Cost of goods sold for the three months ended
September 30, 2022, and September 30, 2021, were $486,892 and $1,061,103, respectively. The decrease was primarily due to a $494,500 decrease
in the cost of GrowPods and a $40,427 decrease in the cost of Medtainers. The gross margin decreased from 27% to 23% maily due to lower
GrowPod sales.





Operating Expenses



The following table sets forth operating expenses
for the three months ended September 30, 2022, and September 30, 2021:



|                              |  | Three Months Ended |        
|----------------------------- |  | ------------------ | -------
|                              |  | September 30, 2022 |        
|Advertising and marketing     |  | $                  | 20,687 
|Bad debt                      |  |                    | 35,000 
|Depreciation and amortization |  |                    | 75,735 
|Professional fees             |  |                    | 81,026 
|Payroll                       |  |                    | 204,584
|General and administrative    |  |                    | 129,727
|Total operating expenses      |  | $                  | 546,759



Operating expenses were $546,759 and $454,292
for the three months ended September 30, 2022, and September 30, 2021, respectively. The increase in operating expense was due to a $60,506
increase in professional fees, a $35,000 in bad debt and a $27,078 increase in general and administrative which was partially offset by
a reduction of $25,729 in payroll and a reduction of $10,891 in advertising and marketing.









22







Loss from Operations



Loss from operations increased from a loss of
$63,658 for the three months ended September 30, 2021, to a loss of $399,218 for the three months ended September 30, 2022, primarily
due to a $243,093 decrease in gross profit and a $92,467 increase in operating expense.



Other Income (Expense)



For the three months ended September 30,
2022, and September 30, 2021, interest expense was $2,887 and $8,297, respectively. Interest expense decreased $5,410 as a result of
a repayment of a note payable. The decrease in other income for the three months ended September 30, 2022, was due to the
recognition of gain on debt forgiveness related to the full forgiveness of the Payroll Protection Program SBA loan and interest in
the amount of $138,567.



Net Income (Loss)



The net loss for the three months ended September
30, 2022, was $402,105 ($75,735 of which was non-cash expense for depreciation and amortization), versus a net income of $66,612 ($69,232
of which was non-cash expense for depreciation and amortization), for the three months ended September 30, 2021. As described above, the
principal reason for this difference was a $133,157 decrease in non-operating income, as well as a $243,093 decrease in gross profits.



Comparison of the Nine Months Ended September 30, 2022, and September
30, 2021



The following table sets forth information from the
statements of operations for the nine months ended September 30, 2022, and September 30, 2021.



|                                          |  | Nine Months Ended  |           
|----------------------------------------- |  | ------------------ | ----------
|                                          |  | September 30, 2022 |           
|Revenues                                  |  | $                  | 2,299,923 
|Cost of goods sold                        |  |                    | (1,626,992
|Gross profit                              |  |                    | 672,931   
|                                          |  |                    |           
|Operating expenses                        |  |                    | 1,503,412 
|Loss from operations                      |  |                    | (830,481  
|                                          |  |                    |           
|Non-operating income (expense):           |  |                    |           
|Non-operating income                      |  |                    | –         
|Interest expense                          |  |                    | (13,025   
|Total non-operating income (expense), net |  |                    | (13,025   
|                                          |  |                    |           
|Net loss                                  |  | $                  | (843,506  







Revenues



Revenues were $2,299,923 and $4,083,267 for the
nine months ended September 30, 2022, and September 30, 2021, respectively. The difference was primarily due to a$1,622,350 decrease in
revenues from sales of GrowPods due the Company’s difficulty in marketing and selling GrowPods, a $291,551 decrease in revenues
from Medtainer sales and a $64,087 decrease in revenues from humidity pack sales, partially offset by a $215,695 increase in lighter sales
and a $27,035 increase in printing sales.









23







Cost of Goods Sold



Cost of goods sold for the nine months ended September
30, 2022, and September 30, 2021, were $1,626,922 and $3,102,972, respectively. This decrease was primarily due to a $1,502,380 decrease
in the cost of GrowPods, a $48,898 decrease in cost of Medtainers and a $36,913 decrease in cost of humidity pack inserts. This decrease
was partially offset by a $147,607 increase in cost of lighters. The gross margin increased from 24% to 29% mainly due to higher lighter
sales.



Operating Expenses



Operating expenses for the nine months ended September
30, 2022, and September 30, 2021, consisted of the following:



|                              |  | Nine Months Ended  |          
|----------------------------- |  | ------------------ | ---------
|                              |  | September 30, 2022 |          
|Advertising and marketing     |  | $                  | 98,678   
|Bad debt                      |  |                    | 40,750   
|Depreciation and amortization |  |                    | 214,274  
|Professional fees             |  |                    | 233,925  
|Share-based compensation      |  |                    | –        
|Payroll                       |  |                    | 613,888  
|General and administrative    |  |                    | 301,897  
|Total operating expenses      |  | $                  | 1,503,412



Operating expenses were $1,503,412 and $1,625,548
for the nine months ended September 30, 2022, and September 30, 2021, respectively. The decrease in operating expenses was due to a $270,000
decrease in share-based compensation, a $40,750 increase in bad debt and a $80,487 decrease in payroll expenses. This decrease was partially
offset by an $85,284 increase in professional fees, a $62,430 increase in general and administrative and a $34,669 increase in advertising
and marketing.



Loss from Operations



Loss from operations increased from a loss of $645,253
for the nine months ended September 30, 2021, to $830,481 for the nine months ended September 30, 2022, primarily due to a $307,364 decrease
in gross profit and a $185,228 increase in operating expense.



Other Income (Expense)



For the nine months ended September 30, 2022,
and September 30, 2021, interest expense was $13,025 and $21,087, respectively. Interest expense decreased $8,062 as a result of a repayment
of notes payable. The decrease in other income for the nine months ended September 30, 2021, was due to the recognition of gain on debt
forgiveness related to the full forgiveness of the Payroll Protection Program SBA loan and interest in the amount of $138,567.



Net Loss



Net loss for the nine months ended September 30, 2021,
was $527,773 ($270,000 of which was non-cash expense for share-based compensation and $209,056 of which was non-cash expense for depreciation),
versus a net loss of $843,506 ($214,274 of which was non-cash expense for depreciation and amortization) for the nine months ended September
30, 2022. As more fully described above, the principal reason for this difference was a $307,364 decrease in gross profit and a $130,505
decrease in other non-operating income, which was partially offset by a $270,000 decrease in share-based compensation.









24







Liquidity and Capital Resources



As of September 30, 2022, the Company had $297,166
in cash and accounts receivable of $169,250. As of September 30, 2022, and December 31, 2021, the Company had a working capital deficit
of $1,586,331 and $1,073,722, respectively. As of September 30, 2022, the Company had no commitments for capital expenditures. As of September
30, 2022, the Company had inventory of approximately 133,000 Medtainer products, approximately 100,000 units of other products and two
GrowPod units.



During the nine months ended September 30, 2022, the
Company experienced negative cash flow from operations of $23,023 and added $260,822 of cash flows from financing activities. During the
nine months ended September 30, 2021, the Company experienced negative cash flow from operations of $497,796 and $375,991 of cash flows
from financing activities. Cash used in operating activities was primarily a result of the Company’s net loss, partially offset
by the non-cash item of amortization and the decrease in operating assets and liabilities.



The decrease in cash provided from financing activities
was primarily a result of stockholder loans and proceeds from the issuance of common stock, which was partially offset by a repayment
of debt.



On May 4, 2020, the Company made a note in favor of
Customers Bank in the principal amount of $137,690 pursuant to the terms of the Coronavirus Aid, Relief, and Economic Security Act (the
“CARES Act”) (the “PPP Loan”) and pursuant to all regulations and guidance promulgated or provided by the SBA
and other Federal agencies that are now, or may become, applicable to the loan. On August 5, 2021, the Company was notified that the Paycheck
Protection Note and the interest accrued thereon had been forgiven in full, subject to review by the SBA. The principal and interest forgiven
was recorded as non-operating income in the consolidated statement of operations for the quarter ending September 30, 2021.



In 2020, the Company received $137,690 from the PPP
Loan and $210,000 from the sale of 348,983 shares of Common Stock to two private investors, and in 2021, the Company  received $615,000
from sales of 485,000 Common Stock to private investors. The proceeds from these transactions, which total $962,690, are insufficient
to meet the Company’s capital needs, inasmuch as it believes that it will require approximately $1,000,000 in additional funding
for the next 12 months, including approximately $600,000 to repay loans and interest that are past due, assuming that the Company’s
operating loss remains at the same level and that it does not acquire the assets of GP, as it announced it may on February 28, 2022. If
it does consummate this acquisition, the Company believes that it would require approximately $2,300,000 in additional funding for the
next 12 months, owing to increased expenses associated with operating and integrating the acquired business. The Company is seeking extensions
of its past-due loans, and if it is successful in doing so, the amount of such funding will be reduced, but assurance can be given as
to the extent that it will be successful. The Company plans to fund its activities principally through the sale of debt or equity securities
to private investors and, if attained, its profits. There is no assurance that such funding will be available on acceptable terms or available
at all, or that the Company will attain profitability. If the Company cannot raise sufficient funds when required or on acceptable terms,
it may have to reduce significantly or discontinue its operations. To the extent that funds are raised by issuing equity securities or
securities that are convertible into the Company’s equity securities, its stockholders may experience significant dilution.



The Company had no other material commitments for
capital expenditures as of September 30, 2022, or as of the date of this report.



The Company intends to devote its manpower and capital
resources to increasing revenues, while working to reduce the cost of goods sold and operating expenses. Doing so depends on the successful
execution of its operating plan, which includes increasing sales of existing products, introducing additional products and services, controlling
cost of goods sold and operation expenses, negotiating extensions of existing loans and raising either debt or equity financing.



Off-Balance-Sheet Arrangements



The Company has no off-balance-sheet arrangements.





Recent Accounting Pronouncements



Refer to Note 2 of the accompanying financial statements.









25







Item 3. Quantitative and Qualitative Disclosures
About Market Risk.



The Company is a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide information under this item.



Item 4. Controls and Procedures.



Evaluation of Disclosure Controls and Procedures



The Company’s management has evaluated the effectiveness
of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act) as of September 30, 2022. Based on this evaluation, the principal executive officer and the principal accounting officer concluded
that these disclosure controls and procedures were not effective as of such date, at a reasonable level of assurance, in ensuring that
the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is: (i) accumulated
and communicated to management (including its principal executive officer and principal accounting officer) in a timely manner and (ii)
recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.





Changes in Internal Control Over Financial Reporting



There were no changes in internal control over financial
reporting during the three months ended September 30, 2022, that have materially affected, or are reasonably likely to affect materially,
the Company’s internal control over financial reporting.









26







PART II – OTHER INFORMATION



Item 1. Legal Proceedings.



None.



Item 1A. Risk Factors.



While the Company is a smaller reporting company as
defined by Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and is not required to provide
information under this item, it calls attention to the following risks, which it believes are especially significant:



If the Company cannot raise capital, it may have to curtail its operations
or could fail.



As described in Item 2 — Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,the Company requires
substantial additional capital. In the event that it cannot raise such capital, it may have to curtail its operations or it could cease
to continue as a going concern.



The Company’s business, financial condition, results of operations
and liquidity could be substantially and adversely affected by the Covid-19 pandemic.



Due to the Company’s measures to reduce operating
expenses, principally payroll costs, the COVID-19 pandemic did not have a material impact on its results of operations in 2020, 2021 and
the nine months ended September 30, 2022. Nevertheless, the federal and local governmental restrictions that were implemented to control
the spread of the virus, including quarantines, travel restrictions, business shutdowns and restrictions on the movement and gathering
of people, affected the Company during these periods. During these periods, the cost-saving actions that the Company took to address and
mitigate the effects of COVID-19, among other things, reduced its ability to market its products at trade shows, led to disruptions in
its business, reduced its ability to grow, resulted in the termination of many employees and increased the workload for the employees
that were retained. These measures may have affected the ability of the Company to raise capital and may have created risks to the effectiveness
of the Company’s internal controls. Almost all restrictions affecting the Company have been lifted. Accordingly, the Company has
resumed normal operations and expects to operate normally as long as infections continue to remain at their current level. If, however,
the pandemic were to intensify, the risks to which the Company is subject, including, but not limited to, those arising because of its
inability to raise capital, the ability of its customers to pay the Company on a timely basis or at all and the execution of its strategy,
could increase.



The Company sells products that may be used for cannabis-related
purposes.



Cannabis is a Schedule I controlled substance under
the Controlled Substances Act and accordingly, its cultivation, sale, or possession is unlawful under federal law, as is its advertisement
for sale and the sale of paraphernalia designed or intended primarily for its use, unless such paraphernalia is authorized by federal,
state, or local law. The Controlled Substances Act is enforced by the Drug Enforcement Administration (the “DEA”). The United
States Supreme Court has ruled that the federal government has the right to regulate and criminalize cannabis, even for medical purposes.
The illegality of cannabis under federal law preempts state laws that legalize its use and therefore, federal law and enforcement may
adversely impact the implementation and effect of state laws permitting adult use of cannabis or its use for medical purposes.



Because cannabis is illegal under federal law, certain
of our customers and suppliers involved in the cannabis business (collectively, “Cannabis Industry Participants) and we are subject
to a number of risks. If any of the events described below in connection with these risks were to occur, our business, results of operations
and financial condition could be materially and adversely affected. We do not believe that we are a Cannabis Industry Participant.



While we are not engaged in the cultivation or sale
of cannabis, we sell our products to persons who may be Cannabis Industry Participants. Accordingly, laws and regulations governing the
cultivation, sale and possession of cannabis and related products could affect our business. Such laws and regulations have been enacted
on both the state and federal government levels and are subject to change. New laws and regulations and enforcement actions by state and
federal authorities could indirectly reduce demand for our products and could materially and adversely affect our business, results of
operations and financial condition.









27







State laws permitting the cultivation, possession,
and of cannabis for adult and medical uses conflict with federal laws that prohibit such activities for any purpose. Many states have
legalized or decriminalized the cultivation, use and possession of cannabis for adult use, while others have enacted legislation specifically
permitting the cultivation, use and possession of cannabis for medicinal purposes only. If cannabis were to become legal under federal
law, its cultivation, use and possession could be regulated by the FDA and the DEA (which now licenses cannabis research and drugs containing
active ingredients derived from cannabis) or other federal agencies, either exclusively or in addition to state authorities.



Federal and state laws and regulations affecting the
U.S. cannabis industry, which are broad in scope and subject to evolving interpretations, are continually changing, and these changes
could adversely affect our growth, revenues, results of operations and success generally. As a result, users of our products and certain
of our suppliers could incur substantial costs associated with compliance, which could in turn materially and adversely affect our business,
results of operations and financial condition. In addition, violations of these laws by these users and suppliers, or allegations of such
violations, could have a like effect. Demand for our products may be negatively impacted, depending on how laws, regulations, administrative
practices, enforcement approaches, judicial interpretations and consumer perceptions develop. We cannot predict the nature of such developments
or the effect, if any, that they could have on our business, results of operations and financial condition.



Other laws that could affect us directly, if, contrary
to our belief, we were found to be a Cannabis Industry Participant, or indirectly through Cannabis Industry Participants with whom we
do business, include:



| | · | Under federal law and the laws of some states, it is unlawful to sell or offer for sale, to use the mails or any other facility of interstate commerce to transport or to import or export drug paraphernalia. The term “drug paraphernalia” includes any equipment, product or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance. One of the factors that these authorities may consider in determining whether the Company’s products are drug paraphernalia is its national and local advertising concerning their use. The Company is aware that its products may be used for the above purposes and believes that some of its customers may so use them; however, it does not believe that any of its products were designed or are intended for cannabis-related purposes or that any of its products are drug paraphernalia. The Company and its officers could be subject to prosecution by federal and state authorities if they were to determine otherwise. Such prosecution could have an immediate and materially adverse effect on the Company.                                                                                                                                                                                                                                                                                                                                                                  
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| | · | Businesses trafficking in cannabis may not take federal tax deductions for costs beyond the cost of goods sold. We cannot predict how the federal government may treat the cannabis business from a taxation standpoint in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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| | · | Because the cultivation, sale, possession and use of cannabis is illegal under federal law, cannabis businesses may have restricted intellectual property and proprietary rights, particularly with respect to obtaining and enforcing patents and trademarks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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| | · | Cannabis businesses may face court action by third parties under the Racketeer Influenced and Corrupt Organizations Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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| | · | Some courts have ruled that the federal bankruptcy courts cannot provide relief for parties who engage in the cannabis business. Such rulings have denied bankruptcy to cannabis dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity or that courts cannot ask a bankruptcy trustee to take possession of and distribute cannabis assets as such action would violate the Controlled Substances Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | · | Since cannabis is illegal under federal law, many banks do not accept funds from businesses involved in the cannabis industry. Consequently, because some banks have believed that we are involved in the cannabis industry, we have had, and could continue to have, difficulty finding banks willing to accept or continue our business. Under the Bank Secrecy Act, banks must report to the federal government any suspected illegal activity, which includes any transaction associated with the cannabis business. These reports must be filed even though the business is operating legitimately under state law. On February 14, 2014, the Financial Crimes Enforcement Network of the Treasury Department issued a memorandum (the “FinCEN Memo”) providing guidance respecting Bank-Secrecy-Act-compliant ways for financial institutions to service state-sanctioned cannabis businesses. The FinCEN Memo refers to supplementary guidance that was issued to U.S. federal prosecutors relating to the prosecution of U.S. money laundering offenses predicated on cannabis violations of the Controlled Substances Act and outlines extensive due diligence and reporting requirements, which most banks have viewed as onerous (the “Cole Memorandum”). Although the Cole Memorandum has been rescinded, the FinCEN Memo remains in place, but if it were rescinded, it would be more difficult for Cannabis Industry Participants – and for us, if we were determined to be a Cannabis Industry Participant – to access the U.S. banking systems and conduct financial transactions, which would adversely affect our operations.









28







| | · | Investments in the U.S. cannabis industry are subject to a variety of laws and regulations that involve money laundering, financial recordkeeping and proceeds of crime, including the Bank Secrecy Act, as amended by the Patriot Act, other anti-money laundering laws, and any related or similar rules, regulations or guidelines, issued administered or enforced by governmental authorities in the United States.
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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | · | Insurance that is otherwise readily available, such as general liability and directors and officer’s insurance, may be more difficult to find and more expensive to the extent that a company is deemed to operate in the cannabis industry.                                                                                                                                                                            



We believe that most US. attorneys are not prioritizing
the prosecution of cannabis-related offenses and medical cannabis is currently protected against enforcement by enacted legislation, which,
if true, lowers, but does not eliminate, our cannabis-related risk. However, changes in the federal approach to enforcement could negatively
affect the industry, potentially ending it entirely or causing significant direct or indirect financial damage to us. The legal uncertainty
and possible future changes in law could negatively and substantially affect our business, results of operations and financial condition.



Violations of laws relating to cannabis could result
in significant fines, penalties, administrative sanctions, convictions or settlements, including, but not limited to, disgorgement of
profits, cessation of business activities or divestiture, arising from civil proceedings or criminal charges. This could have a material
and materially adverse effect on our business, including our reputation and ability to conduct business, the listing or quotation of our
securities on stock exchanges and quotation services, the settlement of trades of our securities, our ability to obtain banking services,
our financial position, operating results, profitability or liquidity or the market price of our publicly traded shares. It is difficult
for us to estimate the time, expenditures and resources that would be required in the event of such a proceeding.



We have had and may continue to have difficulty in marketing and
selling GrowPods and related products



The Company began selling GrowPods and related
products in 2021 and has not yet acquired internal and external personnel in the quantity and with the skills and capacity necessary
to market GrowPods, nor has it raised the capital necessary or acquired the staff and to market and sell GrowPods. The extent of the
Company’s difficulty in marketing and selling GrowPods is indicated by the fact that its revenues from sales of GrowPods
diminished from $2,182,000 for the nine months ended September 30, 2021, to $590,500 for the nine months ended September 30, 2022.
If funds are available, the Company intends to hire additional staff, but cannot assure that it will be able to manage and retain
it. Further, if the GP Acquisition is completed, difficulties could arise in integrating GP’s operations with those of the
Company, which  could adversely affect sales of GrowPods. If the Company cannot market and sell GrowPods successfully, it may
have to curtail its operations in this area, which could have a material and adverse impact on the Company, its financial results
and reputation.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



During the nine months ended September 30, 2022, the
Company sold 280,001 shares of Common Stock to eight individuals for an aggregate purchase price of $210,000, without registration under
the Securities Act, in reliance upon the exemptions from registration afforded by Section 4(a)(2) thereof and Rule 506(b) or (c) promulgated
thereunder. During the nine months ended September 30, 2021, the Company sold 485,000 shares of Common Stock to eight individuals for
an aggregate purchase price of $615,000, without registration under the Securities Act, in reliance upon the exemptions from registration
afforded by Section 4(a)(2) thereof and Rule 506(b) or (c) promulgated thereunder.



Item 3. Defaults Upon Senior Securities.



None.



Item 4. Mine Safety Disclosures.



Not applicable.









29







Item 5. Other Information.



None.



Item 6. Exhibits.



|Exhibit Number |  | Title                                                                                                                                                                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                      
|31.1           |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer                                                                                                
|31.2           |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting Officer                                                                                               
|32.1           |  | Section 1350 Certification of Principal Executive Officer                                                                                                            
|32.2           |  | Section 1350 Certification of Principal Accounting Officer                                                                                                           
|101.INS*       |  | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|101.SCH*       |  | Inline XBRL Taxonomy Extension Schema Document                                                                                                                       
|101.CAL*       |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document                                                                                                         
|101.DEF*       |  | Inline XBRL Taxonomy Extension Definition Linkbase Document                                                                                                          
|101.LAB*       |  | Inline XBRL Taxonomy Extension Label Linkbase Document                                                                                                               
|101.PRE*       |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document                                                                                                        
|104*           |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)                                                                                          



* to be filed by amendment









30









SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        | ADVANCED CONTAINER TECHNOLOGIES, INC.
|----------------------- | -------------------------------------
|                        |                                      
|Date: November 14, 2022 | By:                                  
|                        |                                      
|                        |                                      
|                        |                                      
|                        | By:                                  
|                        |                                      
|                        |                                      















31