Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-KT



[ ]       ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



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



For the transitional period from
January 1, 2020 to April 30, 2020



Lux Amber, Corp.



(Exact name of registrant as specified
in its charter)



|Nevada                                                         | 000-55554             | 98-1414834                       
|-------------------------------------------------------------- | --------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (IRS Employee Identification No.)



145 Rose Lane

Suite 102

Frisco, TX 75036

(Address of Principal Executive Offices)



214-729-4003

(Issuer Telephone number)



Securities registered
pursuant to Section 12(b) of the Act:



|Title of each class | Trading symbol(s) | Name of each exchange on which registered
|------------------- | ----------------- | -----------------------------------------
|Common Stock        | LXAM              | N/A                                      



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [_] No [X]



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [_] No [X]



Indicate by check mark whether the issuer:
(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 [X] 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
such files). Yes [X] No [_]



Indicate by check mark if disclosures of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-KT or any amendment of this Form 10-KT. [  ]



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

(Check One)



|Large accelerated filer    [_]                                               | Accelerated filer    [_]         
|---------------------------------------------------------------------------- | ---------------------------------
|Non-accelerated filer     [_]  (Do not check if a smaller reporting company) | Smaller reporting company     [X]
|                                                                             | 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
accounting standards provided pursuant to Section 13(a) of the Exchange Act.    [_]



Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.    [_]



Indicate by check mark whether the registrant is a shell company
as defined in Rule 12b-2 of the Exchange Act. Yes [_] No [X]



As of October 31, 2019, the aggregate market value of the registrant’s
Common Stock held by non-affiliates of the issuer was $0.00 (based on lack of any trading market or posted price). This amount
excludes the market value of all shares as to which any executive officer, director or person known to the registrant to be the
beneficial owner of at least 5% of the registrant’s Common Stock may be deemed to have sole or shared voting power.



As of August 14, 2020, there were 30,293,049
of the registrant’s common stock, par value $.0001 per share outstanding.



DOCUMENTS INCORPORATED BY REFERENCE



Listed below are documents incorporated
herein by reference and the part of this Report into which each such document is incorporated:



None













Lux Amber, Corp
FORM 10-KT

TABLE OF CONTENTS





|Forward-Looking Statements | -ii-                                                                                                            
|-------------------------- | ----------------------------------------------------------------------------------------------------------------
|Part
    I                
|Item 1.                    | Business.                                                                                                       
|Item 1A.                   | Risk Factors.                                                                                                   
|Item 1B.                   | Unresolved Staff Comments.                                                                                      
|Item 2.                    | Properties.                                                                                                     
|Item 3.                    | Legal Proceedings.                                                                                              
|Item 4.                    | Mine Safety Disclosures.                                                                                        
|                           |                                                                                                                 
|Part
    II               
|Item
    5.                | Market for Registrant’s
    Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|Item
    6.                | Selected Financial
    Data.                                                                                    
|Item
    7.                | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations.                      
|Item
    7A.               | Quantitative and
    Qualitative Disclosures About Market Risk.                                                 
|Item
    8.                | Financial Statements
    and Supplementary Data.                                                                
|Item
    9.                | Changes in and Disagreements
    With Accountants on Accounting and Financial Disclosure.                       
|Item
    9A.               | Controls and Procedures.                                                                                        
|Item
    9B.               | Other Information.                                                                                              
|                           |                                                                                                                 
|Part
    III              
|Item
    10.               | Directors, Executive
    Officers and Corporate Governance.                                                     
|Item
    11.               | Executive Compensation.                                                                                         
|Item
    12.               | Security Ownership
    of Certain Beneficial Owners and Management and Related Stockholder Matters.             
|Item
    13.               | Certain Relationships
    and Related Transactions, and Director Independence.                                  
|Item
    14.               | Principal Accounting
    Fees and Services.                                                                     
|                           |                                                                                                                 
|Part
    IV               
|Item 15.                   | Exhibits, Financial Statement Schedules.                                                                        
|                           | -19-                                                                                                            
|Item 16.                   | Form 10K Summary                                                                                                
|                           |                                                                                                                 
|SIGNATURES                 |                                                                                                                 















i







FORWARD-LOOKING STATEMENTS



Certain statements contained in this Report
that are not statements of historical fact constitute “forward-looking statements.” Words such as “may,”
“seek,” “expect,” “anticipate,” “estimate,” “project,” “budget,”
“goal,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “strategy,” “believes,” “predicts,”
“potential,” “continue,” and similar expressions are intended to identify such forward-looking statements
but are not the exclusive means of identifying such statements. Although the Company believes that the current views and expectations
reflected in these forward-looking statements are reasonable, those views and expectations, and the Company’s future plans,
operations, business strategies, operating results and financial position, are inherently subject to risks, uncertainties, and
other factors, many of which are not under the Company’s control. Those risks, uncertainties, and other factors could cause
the actual results to differ materially from those in the forward-looking statements. Those risks, uncertainties, and factors (including
the risks contained in the section of this report titled “Risk Factors”) that could cause the Company’s actual
results, performance or achievements to differ materially from those described or implied in the forward-looking statements and
its goals and strategies to not be achieved. You are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date of this Report. The Company expressly disclaims any obligation to release publicly any updates or revisions
to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that
such forward-looking statements will prove to be correct.

























ii







PART I



Item 1. BUSINESS.



General



Lux Amber, Corp. (“LAC”), formed
on January 19, 2018, is an international specialty chemical company. Its principal executive offices are located at 145 Rose Lane,
Suite 102, Frisco, TX 75036. LAC’s corporate telephone number is 214-729-4003. LAC has a stock symbol of LXAM.



LAC has three wholly owned subsidiaries
(collectively, the “Company”); Worldwide Specialty Chemicals, Inc. (“WSC”) Industrial Chem Solutions, Inc.
(“ICS”), and Safeway Pest Elimination, LLC, (“SPE”); a fourth subsidiary, PCNM, LLC (“PCNM”),
is 49% owned. LAC, WSC, ICS, and SPE serve as both a producer and distributor of environmentally safe, specialty chemicals. PCNM
is a Service Disabled Veteran owned small business that sells to government agencies. All subsidiaries and the Corporate Offices
are located at 145 Rose Lane, Suite 102, Frisco, TX 75036.



Business Overview



The Company is an international specialty
chemical company with many products that are friendly to the environment. The common description is “green chemicals”.
The Company has degreed chemists and consultants on staff with years of successful experience in the specialty chemical industry.
The term “specialty chemicals,” is best defined by those chemicals whose formulas allow the chemical compounds to perform
a specific function for a class of customers.



The Company and subsidiaries operate from
a 12,000 square foot office, chemical production and distribution facility, from which they produce and market a number of specialty
chemicals. Most of the chemical formulas are protected by trade secrets. For certain specific markets, the company provides customized
applications systems that assure safe and proportioned product delivery.



In addition to the facility in Frisco,
TX, the company uses the services of regional toll-blending facilities. ICS utilizes an additional blending facility near Dallas
which provides the additional benefit of a rail siding, thus allowing ICS to receive certain raw materials at a lower cost for
product and for transportation.



In addition to the two [2] facilities in
Texas, the Company has toll blending facilities in Indiana, North Carolina and Florida.



The regional toll-blending facilities provide
both technical and production services.



There are no leases associated with these
toll blending facilities.



Products and Services



Decontamination Products



The Company has an arrangement whereby
it sells a patented decontamination product worldwide. The product has been used in the United States and internationally to remove
radioactive materials and toxic industrial chemicals, including mercury and lead.











1







Chemical Products



ICS products utilize all natural and renewable
resources, contain no dangerous chemicals or additives, and offer “green” solutions to its customers. Its product line
includes asphalt release agents, industrial cleaners, environmental remediation gels, odor control agents, and consumer friendly
cleaners for a wide range of uses, including construction, environmental remediation, hazardous materials cleanup, nuclear decommissioning,
industrial cleaning, and odor control. ICS takes pride in noting that all of the ingredients in its products are selected from
the EPA’s Design for the Environment (DfE) list. The full range of ICS’s product line is described on its website:
www.industrialcsi.com.



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



LAC is a fulfillment and marketing company which distributes
properly Registered formulas, including disinfectants and related families of products.



Product research and development is an ongoing and continuous
process at LAC, ICS and SPE.



Intellectual Property



The decontamination family of products
currently sold by the Company are protected by a patent held by CBI Polymers, Inc. (“CBI”). Although not explicitly
addressed in the Company’s Exclusive Patent License Agreement with CBI, CBI has historically permitted the Company to use
its trademarks for sales purposes.



Certain formulas of products manufactured
and sold by ICS are protected by trademarks held by ICS.



Competition



The Company competes with a wide variety
of companies in the specialty chemical sales industry. Competition ranges from large multinational companies to local resellers.



The Company considers one or two of its
small-to-medium-sized business competitors to potentially be attractive acquisition targets.



Employees



As of April 30, 2020, the Company had seven
full-time employees and three paid consultants. The employees are not covered by a collective bargaining agreement. The Company
believes that it maintains good relations with its employees.



Legal Proceedings



The Company is not a party to or otherwise
involved in any legal proceedings, claims, or other legal matters.



Government Regulation



The products sold by the Company are extensively
regulated by federal and state authorities in the United States. The Company believes it is in compliance with federal and state
requirements in order that it may continue to sell products to its clients consistent with applicable laws and regulations.











2







Item 1A. RISK FACTORS.



The Company’s limited operating
history may not serve as an adequate basis to judge its future prospects and results of operations. The Company has a relatively
limited operating history. Its limited operating history makes it difficult for investors to evaluate its business. An investor
in its securities must consider the risks, uncertainties and difficulties frequently encountered by companies in rapidly evolving
markets.



The Company will need additional
financing to fully implement its business plan. There are no assurances that additional financing will be available on
favorable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development
programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material
adverse effect on the Company’s business, financial condition and results of operations. Moreover, the sale of additional
equity securities to raise financing will result in additional dilution to the Company’s stockholders and incurring additional
indebtedness could involve the imposition of covenants that restrict the Company’s operations.



The Company may not successfully
manage its growth. The Company’s success will depend upon the expansion of its operations and the effective management
of its growth, which will place a significant strain on its management and on its administrative, operational and financial resources.
To manage this growth, the Company must expand its facilities, augment its operational, financial and management systems, and hire
and train additional qualified personnel. If it is unable to manage its growth effectively, its business would be harmed.



The Company relies on key executive
officers, and their knowledge of its business and technical expertise would be difficult to replace. The Company is highly
dependent on its executive officers: its Chairman and Chief Executive Officer, E. Thomas Layton and its Vice-Chairman, President
and CFO, Paul O. Williams. If one or more of the Company's senior executives or other key personnel are unable or unwilling to
continue in their present positions, the Company has developed a succession plan.



The Company may never pay dividends
to its common stockholders. The Company currently intends to retain its future earnings to support operations and to finance
expansion; accordingly, the Company does not anticipate paying any cash dividends in the foreseeable future. The declaration, payment
and amount of any future dividends on common stock will be at the discretion of the Company’s Board of Directors, and will
depend upon, among other things, earnings, financial condition, capital requirements, level of indebtedness and other considerations
the Board of Directors considers relevant. There is no assurance that future dividends will be paid on common stock or, if dividends
are paid, the amount thereof.



The Company may be unable to successfully
integrate future acquisitions with its operations or realize all of the anticipated benefits of such acquisitions. The
Company hopes to be able to grow in part through acquisitions, though there can be no assurance that it will be able to do so.
Failure to successfully integrate future acquisitions, if any, in a timely manner may have a material adverse effect on its business,
financial condition, results of operations, and cash flows. The difficulties of combining acquired operations include, among other
things:



| | • | operating a significantly larger combined organization;
| | - | -------------------------------------------------------



| | • | consolidating corporate technological and administrative functions;
| | - | -------------------------------------------------------------------



| | • | integrating internal controls and other corporate governance matters; and
| | - | -------------------------------------------------------------------------



| | • | diverting management’s attention from other business concerns.
| | - | --------------------------------------------------------------



In addition, the Company may not realize
all of the anticipated benefits from future acquisitions, if any, such as increased earnings, cost savings, and revenue enhancements,
for various reasons, including difficulties integrating operations and personnel, higher and unexpected acquisition and operating
costs, unknown liabilities, and fluctuations in markets. If benefits from future acquisitions do not meet the expectations of investors
or analysts, the market price of its shares of common stock may decline. However, it must be recognized the Messers Layton and
Williams have extensive experience in assimilating acquisitions into operating companies.











3







The Company depends on its ability
to maintain relationships with industry participants. The Company’s ability to maintain commercial arrangements with
customers and suppliers depends on its ability to maintain close working relationships with industry participants. While there
may be no assurances, but based on the company’s Business Model implementation becoming standardized and expandable, “it
is highly likely,” that it will be able to maintain the strategic relationships developed by its CEO, E. Thomas Layton and
other key executives. It is also highly likely that the company will continue to establish additional necessary strategic relationships,
thus, the company will be able to maintain and grow its business.



The Company’s future business
of its decontamination products is largely dependent upon government spending, which is beyond the Company’s control.
The Company’s DeconGelTM decontamination products have been marketed chiefly to governmental agencies, primarily the
Department of Defense and the Department of Energy. The Company has demonstrated its products at the Idaho, Los Alamos, and Oak
Ridge National Laboratories, and the Hanford Nuclear Site as well as at various US Navy facilities. Budgets for these facilities
and the departments that operate them are set by Congress and are subject to political priorities and decisions and vary from year
to year. A reduction in funding for these departments and/or for decontamination services within these departments could in turn
reduce demand for its products and have a material adverse effect on its financial condition and results of operations.



Changes in technology may render
its products or services obsolete. The decontamination chemical industry may be substantially affected by changes in technology.
New and more active compounds may be discovered that weigh less or require less volume or different manufacturing, application,
or disposal methods, or which have other advantages over the products we sell. As a result, the Company’s products may become
obsolete and be replaced with other products. While it may attempt to adapt and develop or represent new products, there can be
no assurance that it will have sufficient resources to fund these changes or that these changes will ultimately prove successful.



The industries in which the Company
operates are competitive. This competition may affect its market share or prevent it from raising prices at the same
pace as its costs increase, making it difficult for it to maintain existing business and win new business.The Company
operates in competitive markets. Certain of its competitors may have greater financial strength, but the company now having access
to the public market for equity serves to it having greater financial strength that it did one year ago. In addition, the technical
resources providing by its toll blending partners may allow the company to have technical resources competitive with any of its
competition. Additionally, new competitors may enter its markets. The Company may be required to reduce prices if its competitors
reduce prices, or as a result of any other downward pressure on prices for its products, which could have an adverse effect on
the Company. If it is unable to compete successfully, its financial condition and results of operations could be adversely affected.



The Company’s common stock is publicly
traded, providing liquidity.



The Company’s common stock
is classified as a “penny stock.” Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition
of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00
per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available
to us. Once the Company’s common stock commences trading, it is likely that the Company’s common stock will be considered
a penny stock for the immediately foreseeable future.



For any transaction involving a penny stock,
unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny
stocks and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the
broker or dealer must obtain financial information and investment experience and objectives of the investor, make a reasonable
determination that transactions in penny stocks are suitable for that person, and make a reasonable determination that that person
has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.



The broker or dealer must also provide
disclosure to its customers, prior to executing trades, about the risks of investing in penny stocks in both public offerings and
in secondary trading, the commissions payable to both the broker-dealer and the registered representative, and the rights and remedies
available to an investor in cases of fraud in penny stock transactions.











4







Because of these regulations, broker-dealers
may not wish to furnish the necessary paperwork and disclosures and/or may encounter difficulties in their attempt to buy or sell
shares of the Company’s common stock, which may in turn affect the ability of Company stockholders to sell their shares.



Accordingly, the penny stock classification
will adversely affect any market liquidity for the Company’s common stock and subjects the shares to certain risks associated
with trading in penny stocks. These risks include difficulty for investors in purchasing or disposing of shares, difficulty in
obtaining accurate bid and ask quotations, difficulty in establishing the market value of the shares, and a lack of securities
analyst coverage.



During March
2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain
of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the U.S., accelerating
during the first half of March, as federal, state and local governments react to the public health crisis, creating significant
uncertainties in the U.S. economy. In March 2020, we noticed a strong decline in orders from our customers, as businesses
around the country began to cease their operations due to COVID-19. In an attempt to mitigate the ongoing impact of the pandemic
on our cash flows certain actions were taken. The actions include targeted reductions in discretionary operating expenses such
as advertising and payroll expenses, reducing capital expenditures, and reducing travel for business development purposes.



The Paycheck Protection
Program (“PPP”) loan is a loan from the U.S. Small Business Administration (“SBA”) that helps businesses
keep their workforce employed during the Coronavirus (COVID-19) crisis. SBA will forgive loans if all employees are kept on the
payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. On May 8, 2020, the Company received
a PPP loan in the amount of $100,344.



Continued impacts of the pandemic have
had a material adverse impact on our revenues, earnings, liquidity and cash flows, and may require additional actions in response,
including, but not limited to, employee layoffs, reduced production, or further expense reductions, all in an effort to mitigate
such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments,
including the duration of the spread of the outbreak within the U.S., and the related impact on consumer confidence and spending,
all of which are highly uncertain and cannot be predicted. This situation is rapidly changing and additional impacts to the business
may arise that we are not aware of currently. While the disruption is currently expected to be temporary, there is uncertainty
around the duration. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity
or capital resources cannot be reasonably estimated at this time.



Item 1B. UNRESOLVED STAFF COMMENTS.



None



Item 2. PROPERTIES.



The Company leases a facility at 145 Rose
Lane, Suite 102, Frisco, TX 75036.



Item 3. LEGAL PROCEEDINGS.



There is no litigation, pending or threatened, by or against
the Company.



Item 4. MINE SAFETY.



Not applicable.











5







PART II



Item 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.



Market Information



The Company has established a public trading
market for its common stock at present.



Holders



The approximate number of stockholders
of record of the Company’s common stock at December 31, 2019 was 123. As of April 30, 2020, the number of stockholders is
approximately 127, including those held in street name.



Dividends



The Company has never paid any cash dividends
on its uncommon stock, and it is anticipated that none will be paid in the foreseeable future.



Recent Sales of Unregistered Securities



To assist the Company to obtain and preserve
working capital to support its current operations, the Company entered into the following transactions:



On January
3, 2018, 80,000 warrants were exercised at $.50 per share for a total cash amount of $40,000.



On February 28, 2018, the Company sold
33,333 common shares at $1.50 per share for a total cash amount of $50,000.



On March 2, 2018, the Company sold 16,500
common shares at $1.50 per share for a total cash amount of $24,750.



On March 14, 2018, the Company sold 50,000
common shares at $1.50 per share for a total cash amount of $75,000.



On March 16, 2018, the Company sold 10,000
common shares at $1.50 per share for a total cash amount of $15,000.



On March 19, 2018, the Company sold 100,000
common shares at $1.50 per share for a total cash amount of $150,000.



On April 2, 2018, the Company sold 6,667
common shares at $1.50 per share for a total cash amount of $10,000.



On April 10, 2018, 13,332 warrants were
exercised at $.50 per share for a total cash amount of $6,666.



On April 13, 2018, the Company sold 13,400
common shares at $1.50 per share for a total cash amount of $20,100.



On April 27, 2018, 200,000 warrants were
exercised at $.50 per share for a total cash amount of $100,000.



On April 30, 2018, the Company sold 34,000
common shares at $1.50 per share for a total cash amount of $51,000.











6







On May 4, 2018, 25,000 warrants were exercised
at $.50 per share for a total cash amount of $12,500.



On May 18, 2018, the Company sold 13,000
common shares at $1.50 per share for a total cash amount of $19,500.



On May 19, 2018, 39,000 warrants were exercised
at $.50 per share for a total cash amount of $19,500.



On May 21, 2018, 15,000 warrants were exercised
at $.50 per share for a total cash amount of $7,500.



On May 24, 2018, the Company sold 5,000
common shares at $1.50 per share for a total cash amount of $7,500.



On June 7, 2018, the Company sold 6,667
common shares at $1.50 per share for a total cash amount of $10,000.



On June 15, 2018, the Company sold 34,000
common shares at $1.50 per share for a total cash amount of $51,000.



On June 26, 2018, 40,000 warrants were
exercised at $.50 per share for a total cash amount of $20,500.



On June 28, 2018, the Company sold 34,000
common shares at $1.50 per share for a total cash amount of $51,000.



On July 11, 2018, the Company sold 67,334
common shares at $1.50 per share for a total cash amount of $101,001.



On July 27, 2018, the Company sold 33,000
common shares at $1.50 per share for a total cash amount of $49,500.



On August 8, 2018, 100,000 warrants were
exercised at $.50 per share for a total cash amount of $50,000.



On August 9, 2018, the Company sold 20,000
common shares at $1.50 per share for a total cash amount of $30,000.



On August 10, 2018, the Company sold 6,733
common shares at $1.50 per share for a total cash amount of $10,100.



On August 13, 2018, the Company sold 17,000
common shares at $1.50 per share for a total cash amount of $25,001.



On August 15, 2018, the Company sold 26,667
common shares at $1.50 per share for a total cash amount of $40,001.



On August 16, 2018, the Company sold 40,000
common shares at $1.50 per share for a total cash amount of $60,000.



On September 14, 2018, the Company sold
25,000 common shares at $1.50 per share for a total cash amount of $12,500.



On October 30, 2018, 50,000 options were
exercised at $.01 per share for a total cash amount of $500.



On November 21, 2018, 60,000 warrants were
exercised at $.50 per share for a total cash amount of $30,000.



On February 21, 2019, 50,000 options were
exercised at $.01 per share for a total cash amount of $500.



On March 21, 2019, the Company sold 136,000
common shares at $1.50 per share for a total cash amount of $204,000.



On March 27, 2019, the Company sold 252,000
common shares at $1.50 per share for a total cash amount of $378,000.



On June 14, 2019, 70,000 warrants were
exercised at $.50 per share for a total cash amount of $35,000.









7









On July 11, 2019, 140,000 warrants were
exercised at $.50 per share for a total cash amount of $70,000.



On July 14, 2019, 50,000 warrants were exercised at $.50 per share
for a total cash amount of $25,000.



On August 27, 2019, the Company sold 33,332
common shares at $1.50 per share for a total cash amount of $49,998.



On September 26, 2019, the Company sold 100,000 common shares
at $1.50 per share for a total cash amount of $150,000.



On October 15, 2019, the Company sold
70,000 common shares at $1.50 per share for a total cash amount of $105,000.



On October 18, 2019, the Company sold
200,000 common shares at $1.50 per share for a total cash amount of $300,000.



On December 6, 2019, the Company sold 34,000 common
shares at $1.50 per share for a total cash amount of $51,000.



Repurchases and refunds of investment of equity securities



On January 2, 2020, one shareholder was refunded $22,393 and
17,915 shares were retained by the shareholder.



On July 17, 2020 one shareholder was refunded $28,837 and returned
18,162 shares.



On July 17, 2020, one shareholder was refunded $28,732 and returned
18,088 shares.



The investors contacted the Company to
request that their investments be returned. The investors also contacted the State of Hawaii, which initiated an informal inquiry.
The Company opted to return the investments and the informal inquiry has ended. The State of Hawaii also made a usual and customary
notation that the matter was referred on to a legal section for further review and final disposition. At the time of this filing,
there has been no further communication initiated by the State of Hawaii.



Item 6. SELECTED FINANCIAL DATA.



Not applicable.



Item 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



Forward-Looking Statements



The following Management’s Discussion
and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help you understand its historical results
of operations during the periods presented and its financial condition. This MD&A should be read in conjunction with its financial
statements and the accompanying notes and contains forward-looking statements that involve risks and uncertainties and assumptions
that could cause its actual results to differ materially from management’s expectations. See the sections entitled “Forward-Looking
Statements” and “Risk Factors” above.











8









OVERVIEW



Results of operations for the period ended April 30, 2020,
and years ended December 31, 2019 and 2018 were as follows:



Revenues



For the period ended April 30, 2020, its
revenues were $218,963. For the year ended December 31, 2019, its revenues were $976,971 and for the year ended December 31, 2018
the Company had $1,164,304 in revenue.



The decrease in revenue was primarily attributable
to a delay in orders from customers during COVID-19 and seasonality changes.



Cost of Goods Sold



For the period ended April 30, 2020, cost
of goods sold was $329,666. These primarily consisted of cost of goods sold expenses of $41,940, raw materials of $127,044, freight
of $29,205, truck operating expenses of $31,004, direct labor and payroll of $92,106, packaging materials of $1,841, and blending
costs of $6,526.



For the year ended December 31, 2019, cost
of goods sold was $932,032. There primarily consisted of cost of goods sold expenses of $606,596, raw materials of $74,004, freight
of $177,023, and direct labor and payroll of $74,409.



For the year ended December 31, 2018, cost
of goods sold was $772,656. There primarily consisted of cost of goods sold expenses of $511,789, raw materials of $29,292, freight
of $168,633, direct labor and payroll of $59,000, and packaging materials of $3,942.



Operating Expenses



For the period ended April 30, 2020, operating
expenses were $1,010,694. These primarily consisted of general and administrative costs of $838,966, selling expenses of $72,148,
and $99,580 of depreciation/amortization expenses.



For the period ended April 30, 2020 the
general and administrative expenses of $838,966 can be broken down into five major categories: 1) fees related to being a reporting
entity, 2) start-up costs, 3) business development, 4) wages, and 5) other/miscellaneous expenses. The majority of the costs are
fees related to being a reporting entity, which total $630,336. These fees are comprised of audit fees of $43,247, accounting fees
of $8,426, filing and legal fees of $63,332, consulting fees of $223,163, and officer’s compensation paid of $206,292. Non-cash
expenses recorded also included are $79,001 of stock compensation expense and $6,875 of accrued officer’s compensation. Business
development expenses were $66,538, wages were $77,074, and other/miscellaneous expenses of $65,018.



For the year ended December 31, 2019, its
operating expenses totaled $3,681,479. These primarily consisted of general and administrative costs of $3,358,631, selling expenses
of $150,602 and $172,246 of depreciation/amortization expense.



For the year ended December 31, 2019, the
general and administrative costs of $3,358,631 can be broken down into four major categories: 1) fees related to being a reporting
entity, 2) business development, 3) wages, and 4) other/miscellaneous expenses. The majority of the costs are fees related to being
a reporting entity, which total $2,371,816. These fees comprise audit fees of $45,532, accounting fees of $95,334, filing and legal
fees of $36,887, consulting fees of $174,374, and officer’s compensation paid of $177,500. Non-cash expenses recorded also
include $1,650,145 of stock compensation expense and accrued officer’s compensation of $192,044. Business development expenses
were $294,875, wages were $395,733, and other/miscellaneous expenses of $296,207.











9







For the year ended December 31, 2018, its
operating expenses totaled $3,421,806. These consisted of general and administrative costs of $3,031,201; selling expenses of $279,739;
and $110,866 of depreciation/amortization expense. The increase in overall operating expenses is negligible overall when compared
to the total operating expense for 2019.



For the year ended December 31, 2018, the
general and administrative costs of $3,031,201 can be broken down into five major categories: 1) fees related to being a reporting
entity, 2) start-up costs, 3) business development, 4) wages, and 5) other/miscellaneous expenses. The majority of the costs are
fees related to being a reporting entity, which total $1,958,467. These fees comprise audit fees of $153,001, accounting fees of
$93,045, filing and legal fees of $65,197, consulting fees of $154,644, and officer’s compensation paid of $258,427. Non-cash
expenses recorded also included are $1,171,503 of stock compensation expense and $62,650 of accrued officer’s compensation.
Start-up costs were $29,460, business development expenses were $739,432, wages were $110,024, and other/miscellaneous expenses
of $193,818.



General and Administrative Expenses

Period Ended April 30, 2020



|                                   |  | LAC Formerly “WSC” |         |  | ICS |   |        | SPE |  |   | PCNM   |  |  | Total |    
|---------------------------------- |  | ------------------ | ------- |  | --- | - | ------ | --- |  | - | ------ |  |  | ----- | ---
|Reporting Issuer Relating Expenses |  |                    |         |  |     |   |        |     |  |   |        |  |  |       |    
|Audit Fees                         |  | $                  | 35,785  |  |     | $ | 7,462  |     |  | $ | 0      |  |  | $     | 0  
|Accounting Fees                    |  |                    | 8,426   |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Filing Fees                        |  |                    | –       |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Legal Fees                         |  |                    | 63,008  |  |     |   | 324    |     |  |   | –      |  |  |       | –  
|Consulting Fees                    |  |                    | 212,262 |  |     |   | 10,241 |     |  |   | 660    |  |  |       | –  
|Stock Compensation                 |  |                    | 79,001  |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Officer's Compensation Paid        |  |                    | 206,292 |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Officer's Compensation Accrued     |  |                    | 6,875   |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Business Development               |  |                    | 66,538  |  |     |   | –      |     |  |   | –      |  |  |       | –  
|Wages                              |  |                    | 48,883  |  |     |   | 590    |     |  |   | 27,601 |  |  |       | –  
|Other/Misc.                        |  |                    | 11,934  |  |     |   | 47,761 |     |  |   | 5,111  |  |  |       | 212
|                                   |  | $                  | 739,004 |  |     | $ | 66,378 |     |  | $ | 33,372 |  |  | $     | 212





General and Administrative Expenses

Year Ended December 31, 2019



|                                   |  | WSC |           |  | ICS |   |         | SPE |  |   | PCNM    |   |  | Total |      
|---------------------------------- |  | --- | --------- |  | --- | - | ------- | --- |  | - | ------- | - |  | ----- | -----
|Reporting Issuer Relating Expenses |  |     |           |  |     |   |         |     |  |   |         |   |  |       |      
|Audit Fees                         |  | $   | 45,532    |  |     | $ | 0       |     |  | $ | 0       |   |  | $     | 0    
|Accounting Fees                    |  |     | 95,334    |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Filing Fees                        |  |     | 4,197     |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Legal Fees                         |  |     | 32,690    |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Consulting Fees                    |  |     | 120,180   |  |     |   | 54,194  |     |  |   | –       |   |  |       | –    
|Stock Compensation                 |  |     | 1,650,145 |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Officer's Compensation Paid        |  |     | 177,500   |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Officer’s Compensation Accrued     |  |     | 192,044   |  |     |   | –       |     |  |   | –       |   |  |       | –    
|Business Development               |  |     | 216,935   |  |     |   | 45,991  |     |  |   | 31,159  |   |  |       | 790  
|Wages                              |  |     | 116,838   |  |     |   | 204,688 |     |  |   | 74,207  |   |  |       | –    
|Other/Misc.                        |  |     | 98,824    |  |     |   | 195,487 |     |  |   | (6      | ) |  |       | 1,902
|                                   |  | $   | 2,750,219 |  |     | $ | 500,360 |     |  | $ | 105,360 |   |  | $     | 2,692











10







General and Administrative Expenses

Year Ended December 31, 2018



|                                   |  | WSC |           |  | ICS |   |         | SPE |  |   | PCNM   |  |  | Total |       
|---------------------------------- |  | --- | --------- |  | --- | - | ------- | --- |  | - | ------ |  |  | ----- | ------
|Reporting Issuer Relating Expenses |  |     |           |  |     |   |         |     |  |   |        |  |  |       |       
|Audit Fees                         |  | $   | 152,687   |  |     | $ | 314     |     |  | $ | 0      |  |  | $     | 0     
|Accounting Fees                    |  |     | 93,045    |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Filing Fees                        |  |     | 11,720    |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Legal Fees                         |  |     | 32,764    |  |     |   | –       |     |  |   | –      |  |  |       | 20,713
|Consulting Fees                    |  |     | 154,644   |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Stock Compensation                 |  |     | 1,171,503 |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Officer's Compensation Paid        |  |     | 258,427   |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Officer's Compensation Accrued     |  |     | 62,650    |  |     |   | –       |     |  |   | –      |  |  |       | –     
|Start-Up Costs                     |  |     | –         |  |     |   | –       |     |  |   | 27,018 |  |  |       | 2,442 
|Business Development               |  |     | 695,716   |  |     |   | 10,716  |     |  |   | –      |  |  |       | 33,000
|Wages                              |  |     | 24,000    |  |     |   | 86,024  |     |  |   | –      |  |  |       | –     
|Other/Misc.                        |  |     | 114,807   |  |     |   | 72,710  |     |  |   | –      |  |  |       | 6,301 
|                                   |  | $   | 2,771,963 |  |     | $ | 169,764 |     |  | $ | 27,018 |  |  | $     | 62,456



Liquidity and Capital Resources



During the period ended April 30, 2020
the primary sources of liquidity were cash flows from financing activities, and in particular, proceeds from issuance of convertible
notes payable and the sale of common stock.



The Company had total assets of $3,612,474
as of April 30, 2020. Its current assets at April 30, 2020, consisted of $49,185 in cash, $106,876 in receivables, $131,205 in
inventory and $9,481 in prepaid expenses and other current assets and its long-term assets were $3,315,727.



As of December 31, 2019, included $408,338
in cash, $85,359 in receivables, $145,747 in inventory and $92,068 in prepaid expenses and other current assets and its long-term
assets were $3,313,423. Its current assets at December 31, 2018, consisted of $104,812 in cash, $51,997 in receivables, $69,197
in inventory and $30,077 in prepaid expenses and other current assets and its long-term assets were $2,811,947.



As of April 30, 2020, the Company had total
liabilities of $2,390,480, including $288,864 in accounts payable, $798,495 of accrued expenses and $790,474 in notes payable,
and $512,647 in other accrued and lease liabilities. At December 31, 2019, the Company had total liabilities totaling $1,899,935
including $167,539 in accounts payable, $646,410 of accrued expenses, $548,549 in notes payable, $108,058 in related party payables,
and $429,379 in lease liabilities. As of December 31, 2018, the Company had total liabilities totaling $849,482 including $757,813
in accounts payable and other expenses and $91,669 in notes payable.



At April 30, 2020, the Company had stockholders’
equity of $1,221,994. At December 31, 2019, the Company had stockholders’ equity of $2,145,000 and $2,218,548 at December
31, 2018.



The Company has incurred net losses since
inception. Its cash position is insufficient to meet its anticipated continuing operating expenses, and its independent registered
public accounting firm has issued a going concern opinion. This means there is substantial doubt that it can continue as an ongoing
business unless it alters its business model and/or obtain additional capital, so it can pay its ongoing operational costs. The
Company has significantly altered its business model to the point where it believes these changes alone will make the Company self-sustaining,
although there is no assurance that this will happen. In addition, it continues to seek investment capital in the belief that this
will allow more rapid growth and make its ability to continue operations less doubtful.











11







The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need additional financing
to fund additional material capital expenditures and to fully implement its business plan. There are no assurances that additional
financing will be available on favorable terms, or at all. If additional financing is not available, the Company will need to reduce,
defer or cancel development programs, planned initiatives and overhead expenditures as a way to supplement the cash flows generated
by operations. The failure to adequately fund its capital requirements could have a material adverse effect on its business, financial
condition and results of operations. Moreover, the sale of additional equity securities plus derivative securities to raise financing
will result in additional dilution to the Company’s stockholders and incurring additional indebtedness could involve the
imposition of covenants that restrict its operations. Management, in the normal course of business, is trying to raise additional
capital through sales of common stock as well as seeking financing from third parties, via both debt and equity, to balance the
Company’s cash requirements and to finance specific business initiatives.



Critical Accounting Policies



Certain critical accounting policies affect
the more significant judgments and estimates used in the preparation of the Company’s financial statements. These policies
are contained in Note 1 to the consolidated financial statements.



Use of Estimates and Assumptions



The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Fair Value of Financial Instruments



FASB
ASC 825-10 requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash
and cash equivalents, accounts receivable, prepaid expenses, accounts payable, accrued expenses and notes payable. Fair value estimates
discussed herein are based upon certain market assumptions and pertinent information available to management at April 30, 2020,
December 31, 2019 and 2018. The carrying value of the financial instruments included in the Company’s consolidated
financial statements approximated their fair values.



The carrying value of cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried at, or approximate, fair value as of the reporting date
because of their short-term nature.



The carrying value of the notes payable
approximates fair value as they bear market rates of interest.



Revenue Recognition



On January 1, 2018, we adopted Accounting
Standards Committee 606 (“ASC 606”), Revenue from Contracts with Customers, which provides guidance on how revenue
with customers should be recognized.



Revenue is measured as the amount of consideration
expected to be received in exchange for transferring goods or providing service. Revenue from product sold is recognized when obligations
with the customer are satisfied, which generally occurs with the transfer or delivery of the product, signifying the point in time
when the customer obtains control of the promised goods. Our performance obligation is delivering the product to the customer;
and therefore, the transaction price, which is stated on the invoice, is allocated 100% to the sole performance obligation of product
delivery. Revenue from service, if applicable, would be recognized when the services are provided, or the customer receives the
benefit, which is over time.



Our sales policies do not provide for general
rights of return, and payment is due net of 60 days. We do not record estimated reductions to revenue for customer programs and
incentive offerings including pricing arrangements, promotions and other volume-based incentives at the time of the sale. We also
do not record estimated reserves for product returns and credits at the time of sale and anticipated uncollectible accounts.











12







Accounts Receivable and Allowance
for Doubtful Accounts



Accounts receivable are recorded at invoiced
amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience
and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth
and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current
economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future
events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual
customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of
the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company
establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At December 31, 2019
and 2018, the allowance for doubtful accounts was $0. Also, at April 30, 2020, the allowance for doubtful accounts was $0.



Stock-Based Compensation



The Company recognizes the fair value of
the stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting
period based on the Black-Scholes option pricing model based on a risk-free interest rate from 1.60-2.56% in 2019, dividend yield
of 0%, expected life of 3.25 - 5 years and volatility of 71.70%; and 2.55-2.85% in 2018, dividend yield of 0%, expected life of
3.25 – 10 years and volatility of 71.70%. For the period ending April 30, 2020, no stock-based compensation has been issued.



Off Balance Sheet Transactions and Related
Matters



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



Disclosure of Contractual Obligations



Effective December 31, 2016, the Company
entered into an Exclusive Patent Licenses Agreement with CBI Polymers, Inc. ("CBI"), pursuant to which the Company would
sell DeconGelTM and pay 10% of the net selling price to CBI, as a license fee.



As discussed in Note 3 of the consolidated
financial statements, the Company is party to certain debt instruments related to its vehicles and equipment.



Material Events



On March 26, 2020, WSC merged with Lux
Amber, Corp. and WSC is now a wholly owned subsidiary of Lux Amber, Corp. “LAC”. Its principal executive offices are
located at 145 Rose Lane, Suite 102, Frisco, Texas 75036. LAC’s corporate telephone number is 214-729-4003. LAC does have
a stock symbol, which is LXAM.



Effective May 18, 2018, Mr. Paul Williams
was appointed to the Board of Directors of the Company. Contemporaneously with such appointment, the Board of Directors of the
Company appointed Mr. Williams to assume the role of Chief Financial Officer and Vice Chairman. Subsequently, on February
3, 2020 Mr. Williams was also elected as the President of the company.



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.



Not applicable.



Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA











13







Lux Amber, Corp. and Subsidiaries



April 30, 2020, December 31, 2019 And December
31, 2018



TABLE OF CONTENTS





|                                                                         | Page
|------------------------------------------------------------------------ | ----
|                                                                         |     
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
    FIRM              | F-2 
|                                                                         |     
|CONSOLIDATED FINANCIAL STATEMENTS                                        |     
|                                                                         |     
|CONSOLIDATED BALANCE SHEETS                                              | F-3 
|                                                                         |     
|CONSOLIDATED STATEMENTS OF OPERATIONS                                    | F-4 
|                                                                         |     
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
    EQUITY (DEFICIT) | F-5 
|                                                                         |     
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                    | F-6 
|                                                                         |     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               | F-7 



























F-1







REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





To the Board of Directors and Stockholders
of

Lux Amber, Corp.





We have audited the accompanying consolidated
balance sheets of Lux Amber, Corp. and subsidiaries (the “Company”), as of April 30, 2020, December 31, 2019 and December
31, 2018, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the
four month period ended April 30, 2020, and the years ended December 31, 2019 and December 31, 2018. In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020, December
31, 2019 and December 31, 2018, and the results of their operations and their cash flows for the four month period ended April
30, 2020 and the years ended December 31, 2019 and December 31, 2018, in conformity with accounting principles generally accepted
in the United States of America.



Going Concern



The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated
financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note
1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Basis for Opinion



These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.



Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.



We have served as the Company’s auditor
since 2020.



/s/ Whitley Penn LLP



Dallas, Texas

August 14, 2020







F-2







Lux Amber, Corp. and Subsidiaries

Consolidated Balance Sheets

April 30, 2020, December 31, 2019 And December
31, 2018





|                                                                                                                                                                                                                                                     |  | April 30, 2020 |             |   | December 31, 2019 |   |             | December 31, 2018 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------- | - | ----------- | ----------------- | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|ASSETS                                                                                                                                                                                                                                               |  |                |             |   |                   |   |             |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|CURRENT ASSETS                                                                                                                                                                                                                                       |  |                |             |   |                   |   |             |                   | 
|Cash and cash equivalents                                                                                                                                                                                                                            |  | $              | 49,185      |   |                   | $ | 408,338     |                   | 
|Accounts receivable                                                                                                                                                                                                                                  |  |                | 106,876     |   |                   |   | 85,359      |                   | 
|Inventory                                                                                                                                                                                                                                            |  |                | 131,205     |   |                   |   | 145,747     |                   | 
|Prepaid expenses                                                                                                                                                                                                                                     |  |                | 8,711       |   |                   |   | 1,298       |                   | 
|Other current assets                                                                                                                                                                                                                                 |  |                | 770         |   |                   |   | 90,770      |                   | 
|Total current assets                                                                                                                                                                                                                                 |  |                | 296,747     |   |                   |   | 731,512     |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|GOODWILL                                                                                                                                                                                                                                             |  |                | 2,294,953   |   |                   |   | 2,294,953   |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|INTANGIBLES                                                                                                                                                                                                                                          |  |                | 15,000      |   |                   |   | 15,000      |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|OTHER LONG-TERM ASSETS                                                                                                                                                                                                                               |  |                | 12,700      |   |                   |   | 12,700      |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|FIXED ASSETS                                                                                                                                                                                                                                         |  |                |             |   |                   |   |             |                   | 
|Furniture, fixtures, and office equipment                                                                                                                                                                                                            |  |                | 26,191      |   |                   |   | –           |                   | 
|Vehicles and trailers                                                                                                                                                                                                                                |  |                | 194,140     |   |                   |   | 194,140     |                   | 
|Equipment                                                                                                                                                                                                                                            |  |                | 608,274     |   |                   |   | 573,267     |                   | 
|Leasehold improvements                                                                                                                                                                                                                               |  |                | 12,190      |   |                   |   | 12,190      |                   | 
|Assets in process                                                                                                                                                                                                                                    |  |                | 44,551      |   |                   |   | 41,061      |                   | 
|                                                                                                                                                                                                                                                     |  |                | 885,345     |   |                   |   | 820,658     |                   | 
|Accumulated depreciation                                                                                                                                                                                                                             |  |                | (316,086    | ) |                   |   | (269,128    | )                 | 
|Fixed assets, net                                                                                                                                                                                                                                    |  |                | 569,259     |   |                   |   | 551,530     |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|RIGHT OF USE ASSETS                                                                                                                                                                                                                                  |  |                | 423,815     |   |                   |   | 439,240     |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|TOTAL ASSETS                                                                                                                                                                                                                                         |  | $              | 3,612,474   |   |                   | $ | 4,044,935   |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                       |  |                |             |   |                   |   |             |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|CURRENT LIABILITIES                                                                                                                                                                                                                                  |  |                |             |   |                   |   |             |                   | 
|Accounts payable                                                                                                                                                                                                                                     |  | $              | 288,864     |   |                   | $ | 167,539     |                   | 
|Accrued expenses                                                                                                                                                                                                                                     |  |                | 805,853     |   |                   |   | 646,410     |                   | 
|Related party payables                                                                                                                                                                                                                               |  |                | 85,603      |   |                   |   | 108,058     |                   | 
|Notes payable – current portion                                                                                                                                                                                                                      |  |                | 762,889     |   |                   |   | 512,889     |                   | 
|Right of use liabilities – current portion                                                                                                                                                                                                           |  |                | 190,262     |   |                   |   | 186,805     |                   | 
|Total current liabilities                                                                                                                                                                                                                            |  |                | 2,133,471   |   |                   |   | 1,621,701   |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|NON-CURRENT LIABILITIES                                                                                                                                                                                                                              |  |                |             |   |                   |   |             |                   | 
|Notes payable                                                                                                                                                                                                                                        |  |                | 27,585      |   |                   |   | 35,660      |                   | 
|Right of use liabilities                                                                                                                                                                                                                             |  |                | 236,782     |   |                   |   | 242,574     |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                        |  |                |             |   |                   |   |             |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                       |  |                |             |   |                   |   |             |                   | 
|Common stock, $0.0001 par value, 75,000,000 shares authorized; 29,441,708 issued and outstanding as of April 30, 2020, and 28,053,167 issued and outstanding as of December 31, 2019, and 25,531,293 issued and outstanding as of December 31, 2018. |  |                | 2,943       |   |                   |   | 2,806       |                   | 
|Additional paid-in-capital                                                                                                                                                                                                                           |  |                | 14,095,093  |   |                   |   | 13,538,623  |                   | 
|Accumulated deficit                                                                                                                                                                                                                                  |  |                | (12,884,427 | ) |                   |   | (11,390,098 | )                 | 
|Total Lux Amber, Corp. stockholders' equity                                                                                                                                                                                                          |  |                | 1,213,609   |   |                   |   | 2,151,331   |                   | 
|Non-controlling interest                                                                                                                                                                                                                             |  |                | 1,027       |   |                   |   | (6,331      | )                 | 
|Total equity                                                                                                                                                                                                                                         |  |                | 1,214,636   |   |                   |   | 2,145,000   |                   | 
|                                                                                                                                                                                                                                                     |  |                |             |   |                   |   |             |                   | 
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                 |  | $              | 3,612,474   |   |                   | $ | 4,044,935   |                   | 



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













F-3







Lux Amber, Corp. and Subsidiaries

Consolidated Statements of Operations

April 30, 2020, December 31, 2019 And December
31, 2018





|                                                                 |  | For the Four Months Ended April 30, 2020 |            |   | For the Year Ended  December 31, 2019 |   |            | For the Year Ended December 31, 2018 | 
|---------------------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ------------------------------------- | - | ---------- | ------------------------------------ | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|REVENUE                                                          |  | $                                        | 218,963    |   |                                       | $ | 976,671    |                                      | 
|COST OF GOODS SOLD                                               |  |                                          | 329,666    |   |                                       |   | 932,032    |                                      | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|Gross profit (loss)                                              |  |                                          | (110,703   | ) |                                       |   | 44,639     |                                      | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|OPERATING EXPENSES                                               |  |                                          |            |   |                                       |   |            |                                      | 
|General and administrative                                       |  |                                          | 838,966    |   |                                       |   | 3,358,631  |                                      | 
|Selling                                                          |  |                                          | 72,148     |   |                                       |   | 150,602    |                                      | 
|Depreciation and amortization                                    |  |                                          | 99,580     |   |                                       |   | 172,246    |                                      | 
|Total operating expenses                                         |  |                                          | 1,010,694  |   |                                       |   | 3,681,479  |                                      | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|OTHER (INCOME) EXPENSE                                           |  |                                          |            |   |                                       |   |            |                                      | 
|Interest income                                                  |  |                                          | –          |   |                                       |   | (255       | )                                    | 
|Interest expense                                                 |  |                                          | 28,784     |   |                                       |   | 22,596     |                                      | 
|Other (income) expense                                           |  |                                          | 336,790    |   |                                       |   | (66,989    | )                                    | 
|Total other (income) expense                                     |  |                                          | 365,574    |   |                                       |   | (44,648    | )                                    | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|Net loss                                                         |  |                                          | (1,486,971 | ) |                                       |   | (3,592,192 | )                                    | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|Less: net income (loss) attributable to non-controlling interest |  |                                          | 7,358      |   |                                       |   | 19,869     |                                      | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|NET LOSS attributable to Lux Amber, Corp.                        |  | $                                        | (1,494,329 | ) |                                       | $ | (3,612,061 | )                                    | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|Basic and diluted loss per share                                 |  | $                                        | (0.05      | ) |                                       | $ | (0.14      | )                                    | 
|                                                                 |  |                                          |            |   |                                       |   |            |                                      | 
|Weighted average shares - basic and diluted                      |  |                                          | 28,046,859 |   |                                       |   | 26,221,108 |                                      | 



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











F-4







Lux Amber, Corp. and Subsidiaries

Consolidated Statements of Changes in Stockholders'
Equity (Deficit)

April 30, 2020, December 31, 2019 And December
31, 2018





|                                                   |  | Number of Shares
    Issued and Outstanding |            |  | Common Stock Par
    Value Amount |   |       | Additional Paid-in
    Capital |  |   | Accumulated Deficit |   |  | Non-Controlling Interest |             |   | Total |  
|-------------------------------------------------- |  | ------------------------------------------- | ---------- |  | --------------------------------- | - | ----- | ------------------------------ |  | - | ------------------- | - |  | ------------------------ | ----------- | - | ----- | -
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Balance as
    of December 31, 2017                |  |                                             | 24,300,326 |  |                                   | $ | 2,430 |                                |  | $ | 7,661,882           |   |  | $                        | (4,711,007  | ) |       | $
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Warrants exercised                                 |  |                                             | 597,332    |  |                                   |   | 60    |                                |  |   | 298,606             |   |  |                          | –           |   |       |  
|Common stock issued for cash                       |  |                                             | 583,635    |  |                                   |   | 58    |                                |  |   | 875,395             |   |  |                          | –           |   |       |  
|Options exercised                                  |  |                                             | 50,000     |  |                                   |   | 5     |                                |  |   | 495                 |   |  |                          | –           |   |       |  
|Share based compensation                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | 1,171,753   |   |       |  
|Warrant modification                               |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | 12,100      |   |       |  
|Cumulative retained earnings
    of PCNM           |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | 2,746       |   |       |  
|Net loss                                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | (3,069,776  | ) |       |  
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Balance as of December
    31, 2018                |  |                                             | 25,531,293 |  |                                   | $ | 2,553 |                                |  | $ | 10,020,231          |   |  | $                        | (7,778,037  | ) |       | $
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Warrants exercised                                 |  |                                             | 260,000    |  |                                   |   | 26    |                                |  |   | 129,974             |   |  |                          | –           |   |       |  
|Common stock issued for cash                       |  |                                             | 825,332    |  |                                   |   | 83    |                                |  |   | 1,237,917           |   |  |                          | –           |   |       |  
|Options exercised                                  |  |                                             | 50,000     |  |                                   |   | 5     |                                |  |   | 495                 |   |  |                          | –           |   |       |  
|Notes payable converted to
    common stock        |  |                                             | 1,386,542  |  |                                   |   | 139   |                                |  |   | 499,861             |   |  |                          | –           |   |       |  
|Share based compensation                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | 1,650,145           |   |  |                          | –           |   |       |  
|Net loss                                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | (3,612,061  | ) |       |  
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Balance as of December
    31, 2019                |  |                                             | 28,053,167 |  |                                   | $ | 2,806 |                                |  | $ | 13,538,623          |   |  | $                        | (11,390,098 | ) |       | $
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Common stock repurchased                           |  |                                             | –          |  |                                   |   | (2    | )                              |  |   | (22,392             | ) |  |                          | –           |   |       |  
|Existing LXAM shares outstanding
    when acquired |  |                                             | 2,000      |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | –           |   |       |  
|Notes payable converted to
    common stock        |  |                                             | 1,386,541  |  |                                   |   | 139   |                                |  |   | 499,861             |   |  |                          | –           |   |       |  
|Share based compensation                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | 79,001              |   |  |                          | –           |   |       |  
|Net loss                                           |  |                                             | –          |  |                                   |   | –     |                                |  |   | –                   |   |  |                          | (1,494,329  | ) |       |  
|                                                   |  |                                             |            |  |                                   |   |       |                                |  |   |                     |   |  |                          |             |   |       |  
|Balance as of April 30,
    2020                   |  |                                             | 29,441,708 |  |                                   | $ | 2,943 |                                |  | $ | 14,095,093          |   |  | $                        | (12,884,427 | ) |       | $



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











F-5







Lux Amber, Corp. and Subsidiaries



Consolidated Statements of Cash Flows

April 30, 2020, December 31, 2019 And December
31, 2018





|                                                                                     |  | For the Four Months Ended April 30, 2020 |            |   | For the Year Ended December 31, 2019 |   |            | For the Year Ended December 31, 2018 | 
|------------------------------------------------------------------------------------ |  | ---------------------------------------- | ---------- | - | ------------------------------------ | - | ---------- | ------------------------------------ | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|CASH FLOW FROM OPERATING ACTIVITIES                                                  |  |                                          |            |   |                                      |   |            |                                      | 
|Net loss                                                                             |  | $                                        | (1,486,971 | ) |                                      | $ | (3,592,192 | )                                    | 
|Adjustments to reconcile net loss to net cash used in operating activities:          |  |                                          |            |   |                                      |   |            |                                      | 
|Depreciation and amortization                                                        |  |                                          | 99,580     |   |                                      |   | 172,246    |                                      | 
|Bad debt expense                                                                     |  |                                          | –          |   |                                      |   | 5,709      |                                      | 
|Loss on sale of asset                                                                |  |                                          | 1,215      |   |                                      |   | 35,743     |                                      | 
|Share based compensation                                                             |  |                                          | 79,001     |   |                                      |   | 1,650,145  |                                      | 
|Warrant modification                                                                 |  |                                          | –          |   |                                      |   | –          |                                      | 
|Right to use interest                                                                |  |                                          | 4,319      |   |                                      |   | 5,960      |                                      | 
|Changes in operating assets and liabilities:                                         |  |                                          |            |   |                                      |   |            |                                      | 
|Accounts receivable                                                                  |  |                                          | (21,517    | ) |                                      |   | (39,071    | )                                    | 
|Inventory                                                                            |  |                                          | 14,542     |   |                                      |   | (76,550    | )                                    | 
|Prepaid expenses                                                                     |  |                                          | (7,413     | ) |                                      |   | 26,014     |                                      | 
|Other current assets                                                                 |  |                                          | –          |   |                                      |   | 1,995      |                                      | 
|Accounts payable and accrued expenses                                                |  |                                          | 280,268    |   |                                      |   | 518,049    |                                      | 
|Due to related parties                                                               |  |                                          | (22,455    | ) |                                      |   | (353,855   | )                                    | 
|Net cash used in operating activities                                                |  |                                          | (1,058,927 | ) |                                      |   | (1,645,807 | )                                    | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|CASH FLOWS FROM INVESTING ACTIVITIES                                                 |  |                                          |            |   |                                      |   |            |                                      | 
|Purchase of licenses                                                                 |  |                                          | –          |   |                                      |   | (15,000    | )                                    | 
|Expenditures for property and equipment                                              |  |                                          | (65,904    | ) |                                      |   | (218,933   | )                                    | 
|Proceeds from sale of property and equipment                                         |  |                                          | –          |   |                                      |   | –          |                                      | 
|Net cash used in investing activities                                                |  |                                          | (65,904    | ) |                                      |   | (233,933   | )                                    | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                                 |  |                                          |            |   |                                      |   |            |                                      | 
|Borrowing on convertible notes payable                                               |  |                                          | 840,000    |   |                                      |   | 910,000    |                                      | 
|Payments on notes payable                                                            |  |                                          | (8,075     | ) |                                      |   | (17,121    | )                                    | 
|Payments on right of use liabilities                                                 |  |                                          | (43,853    | ) |                                      |   | (78,113    | )                                    | 
|Proceeds from the sale of common stock                                               |  |                                          | –          |   |                                      |   | 1,238,000  |                                      | 
|Payments on the (repurchase) of common stock                                         |  |                                          | (22,394    | ) |                                      |   | –          |                                      | 
|Proceeds from execution of warrants                                                  |  |                                          | –          |   |                                      |   | 130,000    |                                      | 
|Proceeds from stock options exercised                                                |  |                                          | –          |   |                                      |   | 500        |                                      | 
|Net cash provided by financing activities                                            |  |                                          | 765,678    |   |                                      |   | 2,183,266  |                                      | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|TOTAL (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                               |  |                                          | (359,153   | ) |                                      |   | 303,526    |                                      | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     |  |                                          | 408,338    |   |                                      |   | 104,812    |                                      | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           |  | $                                        | 49,185     |   |                                      | $ | 408,338    |                                      | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|NONCASH INVESTING AND FINANCING ACTIVITIES:                                          |  |                                          |            |   |                                      |   |            |                                      | 
|Convertible notes payable converted to common stock                                  |  | $                                        | 500,000    |   |                                      | $ | 500,000    |                                      | 
|Property and equipment purchased under financing agreements                          |  | $                                        | –          |   |                                      | $ | –          |                                      | 
|Non-cash relief of debt for property no longer payable due to departure of executive |  | $                                        | –          |   |                                      | $ | –          |                                      | 
|Cumulative retained earnings impact PCNM                                             |  | $                                        | –          |   |                                      | $ | –          |                                      | 
|Non-cash trade in of vehicle and associated debt                                     |  | $                                        | 30,905     |   |                                      | $ | 26,000     |                                      | 
|Convertible notes payable in other assets                                            |  | $                                        | –          |   |                                      | $ | (90,000    | )                                    | 
|Right of use asset addition                                                          |  | $                                        | 68,104     |   |                                      | $ | –          |                                      | 
|                                                                                     |  |                                          |            |   |                                      |   |            |                                      | 
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                                  |  |                                          |            |   |                                      |   |            |                                      | 
|Cash paid for interest                                                               |  | $                                        | 5,232      |   |                                      | $ | 8,842      |                                      | 



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







F-6







Lux Amber, Corp. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NATURE OF BUSINESS



Worldwide Specialty Chemicals Inc., (“WSC”)
a Delaware Corporation formed on March 26, 2014 is an international specialty chemical company. On March 26, 2020, WSC merged with
Lux Amber, Corp and WSC is now a wholly owned subsidiary of Lux Amber, Corp (“LAC”). Its principal executive offices
are located at 145 Rose Lane, Suite 102, Frisco, Texas 75036.



LAC has three (3) wholly owned subsidiaries,
Worldwide Specialty Chemicals, Inc. (“WSC”), Industrial Chem Solutions, Inc. (“ICS”), and Safeway Pest
Elimination, LLC, (“SPE”); a fourth subsidiary, PCNM, LLC (“PCNM”), is 49% owned. SPE was formed July 16,
2018. LAC, ICS, and SPE serve as both a producer and distributor of environmentally safe, specialty chemicals. PCNM is a Service
Disabled Veteran owned small business that sells to government agents. LAC, ICS, and SPE are located 145 Rose Lane, Suite 102,
Frisco, TX 75036.



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



1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



A summary of the significant accounting
polices consistently applied in the preparation of the accompanying consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America (GAAP) is as follows.



Basis of Consolidation



The consolidated financial statements include
the accounts of LAC, ICS, SPE, and PCNM. All significant intercompany accounts and transactions have been eliminated in consolidation.



Use of Estimates



The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Fair Value of Financial Instruments



FASB
ASC 825-10 requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash
and cash equivalents, accounts receivable, prepaid expenses, accounts payable, accrued expenses, related party payables, and notes
payable. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to
management at April 30, 2020, December 31, 2019 and 2018. The carrying value of the financial instruments included in the Company’sconsolidated financial statements approximated their fair values.











F-7







The carrying value of cash and cash equivalents,
accounts receivable, accounts payable, accrued liabilities, and related party payables are carried at, or approximate, fair value
as of the reporting date because of their short-term nature.



The carrying value of the notes payable
approximates fair value as they bear market rates of interest.



Basic and Diluted Net Loss Per Share



Basic net loss per share is computed using
the weighted average number of common shares outstanding. Diluted loss per share has not been presented because there are no dilutive
items. Diluted earnings loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt
are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during
periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion
price of the items.



For the period ended April 30, 2020, years
ended December 31, 2019 and 2018, approximately 82,668, 82,668 and 342,668 common stock warrants, respectively, and 6,469,750,
7,309,750, and 5,059,750 common stock options, respectively, were not added to the diluted average shares because inclusion of
such warrants and options would be antidilutive.



Cash and Cash Equivalents



The Company considers all highly liquid
investments with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash
balances at several financial institutions located throughout the United States, which at times may exceed insured limits. The
Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and
cash equivalents.



Accounts Receivable and Allowance for
Doubtful Accounts



Accounts receivable are recorded at invoiced
amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience
and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth
and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current
economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future
events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual
customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of
the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company
establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At April 30, 2020,
December 31, 2019, and 2018, the allowance for doubtful accounts was $0.



Revenue Recognition



On January 1, 2018, we adopted Accounting Standards Committee
606 (“ASC 606”), Revenue from Contracts with Customers, which provides guidance on how revenue with customers should
be recognized.











F-8







Revenue is measured as the amount of consideration
expected to be received in exchange for transferring goods or providing service. Revenue from product sold is recognized when obligations
with the customer are satisfied, which generally occurs with the transfer or delivery of the product, signifying the point in time
when the customer obtains control of the promised goods. Our performance obligation is delivering the product to the customer;
and therefore, the transaction price, which is stated on the invoice, is allocated 100% to the sole performance obligation of product
delivery. Revenue from service, if applicable, would be recognized when the services are provided, or the customer receives the
benefit, which is over time. For the period ended April 30, 2020 and the years ended December 31, 2019 and 2018, all revenue was
from products sold.



Our sales policies do not provide for general
rights of return, and payment is due net of 60 days. We do not record estimated reductions to revenue for customer programs and
incentive offerings including pricing arrangements, promotions and other volume-based incentives at the time of the sale. We also
do not record estimated reserves for product returns and credits at the time of sale and anticipated uncollectible accounts.



Inventory



Inventory is stated at the lower of cost
or net realizable value, with cost determined on a first-in first-out basis. The carrying value of inventory is reduced for estimated
obsolescence. The Company evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing
historical and anticipated demand.



The following table sets forth the components
of the Company’s inventory balances as of:



|                   |  | April
30,
                                                                               2020 |         |   | December 31,
                                                                               2019 |   |         | December 31,
                                                                               2018 | 
|------------------ |  | --------------------------------------------------------------------------------------------- | ------- | - | ------------------------------------------------------------------------------------------------ | - | ------- | ------------------------------------------------------------------------------------------------ | 
|Finished goods     |  | $                                                                                             | 92,568  |   |                                                                                                  | $ | 89,033  |                                                                                                  | 
|Raw materials      |  |                                                                                               | 55,927  |   |                                                                                                  |   | 74,004  |                                                                                                  | 
|Packaging supplies |  |                                                                                               | –       |   |                                                                                                  |   | –       |                                                                                                  | 
|Obsolescence       |  |                                                                                               | (17,290 | ) |                                                                                                  |   | (17,290 | )                                                                                                | 
|                   |  | $                                                                                             | 131,205 |   |                                                                                                  | $ | 145,747 |                                                                                                  | 



Fixed Assets



Fixed assets consist of furniture, fixtures
and office equipment, vehicles and trailers, equipment and leasehold improvements that are stated at cost, less accumulated depreciation.
Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings over their estimated service
lives (3 – 10 years) under the straight-line method.



Maintenance and repairs are charged to
earnings as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired,
the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.



Property and equipment operated under material
leases which transfer substantially all benefits and risks associated with the assets to the Company are capitalized. An asset
and liability equal to the present or fair value, if appropriate, of minimum payments over the term of the leases are recorded.
Depreciation of the asset is computed using the straight-line method over the life of the asset. Expenses associated with operating
leases are charged to income as incurred.











F-9







Goodwill



Goodwill represents the excess of the value
of the purchase price and related costs over the identifiable assets from business acquisitions. The Company conducts an annual
impairment assessment, at the reporting unit level, of its recorded goodwill. The Company assesses qualitative factors in order
to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. The qualitative
factors evaluated by the Company include: macro-economic conditions of the local business environment, overall financial performance,
and other entity specific factors as deemed appropriate. If, through this qualitative assessment, the conclusion is made that it
is more likely than not that a reporting unit’s fair value is less than the carrying amount, management determines if the
reporting unit’s carrying value exceeds its fair value and records an impairment for such amounts. Management determined,
by assessing the qualitative factors, that it is more likely than not that the fair value of the reporting unit is greater than
the carrying value. Management does not consider the value of goodwill recorded for ICS in the accompanying consolidated balance
sheet to be impaired as of April 30, 2020.



Share-Based Compensation



The Company recognizes compensation expense
for all share-based payments in accordance with FASB Codification Topic 718, Compensation — Stock Compensation, (ASC
718). Under the fair value recognition provisions of ASC 718, the Company recognizes share-based compensation expense, net of an
estimated forfeiture rate, over the requisite service period of the award. The fair value at the measurement date of stock options
is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight-line basis over the
vesting period based on the estimated number of stock options that are expected to vest. The Company estimates forfeitures to be
50% for options that vest over time.



Income Taxes



The Company accounts for Federal and state
income taxes using the asset and liability approach for financial accounting and reporting for income taxes based on tax effects
of differences between the financial statement and tax basis of assets and liabilities.



The Company accounts for all uncertain
tax positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 740
– Income Taxes (“ASC 740”). ASC 740 provides guidance on de-recognition, classification, interest and penalties
and disclosure related to uncertain income tax positions. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as a component of income tax expense. There were no accrued interest or penalties as of April 30, 2020, December 31,
2019 and 2018.



From time to time, the Company may be audited
by taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax
positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations
by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The
Company’s federal returns since 2016 are still subject to examination by taxing authorities.



Prepaid Expenses



Prepaid expenses consist of expenses the
Company has paid for prior to the service or good being provided. These prepaid expenses will be recorded as expense at the time
the service has been provided.



License Fee



ICS pays 10% of the net selling price to
CBI, as a mutually acceptable license fee. E. Thomas Layton, Chairman and CEO of LAC, is also the Chairman and CEO and controlling
shareholder of CBI Polymers, Inc.











F-10







Advertising Costs



The Company recognizes expenses for advertising
costs as they are incurred. Advertising costs were $12,538, $22,099, and $102,389 for the period ended April 30, 2020 and the years
ended December 31, 2019 and 2018, respectively.



Going Concern



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. The Company has incurred substantial operating losses,
resulting in an accumulated deficit of $12,884,427 at April 30, 2020. These factors raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date the financial statements are being issued. As such, the Company,
as a publicly trading company is arranging for additional financing to fully implement its business plan, including continued growth
and establishment of a stronger brand.



The Company is actively seeking growth
of its service offerings, both organically and via new client relationships. In the ordinary course of the Company’s business,
management is trying to raise additional capital through sales of common stock as well as seeking debt financing from third parties.
There are current indications that additional financing will be available on favorable terms. In addition, the company is working
to establish creditworthiness by establishing a line-of-credit and entering into a sale-leasee back on certain assets. If additional
financing is not available, the Company will need to reduce salaries, defer or cancel development programs, planned initiatives
and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the
Company’s business, financial condition and results of operations, including potential discontinuance of operations. Moreover,
the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders.
Additionally, incurring additional indebtedness could involve an increased debt service cash obligation, as well as the imposition
of covenants that restrict the Company’s operations or the Company’s ability to perform on its current debt service
requirements. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern. While the company recognizes the significant impact of additional financing, the company is an emerging growth
company serving large and growing markets and it will continue to sell securities and enter into financing programs which are deemed
to be prudent.



Recently Issued Accounting Pronouncements



Pronouncements Recently Adopted



In January 2017, the FASB issued ASU No.
2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill impairment(“ASU 2017-04”),
which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be determined by the amount by which a reporting
unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for
annual reporting periods, and interim periods therein, beginning after December 15, 2019, with early adoption permitted. Adoption
of this guidance in the four month period ended April 30, 2020 did not impact the Company’s financial statements.



Pronouncements Not Yet Adopted



In
June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses
for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to
trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The new standard will become
effective for the Company for annual and interim periods beginning after December 15, 2021, with early adoption permitted. The
Company is currently evaluating the impact of the adoption of this accounting guidance will have on the consolidated financial
statements.











F-11







2. ACCOUNTS RECEIVABLE



Accounts receivable relate to trade receivables
from product sales made by the Company. Accounts receivable consist of the following at April 30, 2020, December 31, 2019 And December
31, 2018:



|                  |  | April 30,
                                                                               2020 |         |  | December 31,
                                                                               2019 |   |        | December 31,
                                                                               2018 | 
|----------------- |  | --------------------------------------------------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------------------------ | - | ------ | ------------------------------------------------------------------------------------------------ | 
|Trade receivables |  | $                                                                                             | 106,876 |  |                                                                                                  | $ | 85,359 |                                                                                                  | 
|                  |  |                                                                                               |         |  |                                                                                                  |   |        |                                                                                                  | 

3. NOTES PAYABLE



Convertible Promissory Notes Payable



Throughout August 2019, the Company issued
$500,000 of convertible debentures. The debentures are convertible into shares of the Company's common stock at the maturity date
of November 15, 2019 and pay any unpaid interest at a rate of 8%. On November 15, 2019, the debentures were converted into 1,386,542
shares of common stock at a rate of $0.3606093 per share. Accrued interest paid amounted to $7,310.

Throughout December 2019, the Company issued a second round of $500,000 of convertible debentures. The debentures are convertible
into shares of the Company's common stock at the maturity date of April 15, 2020 and pay any unpaid interest at a rate of 8%. As
of December 31, 2019, $90,000 had not yet been funded and is recorded in other current assets on the balance sheet. The second
round of debentures had not been converted and the accrued interest unpaid amounted to $1,035 as of December 31, 2019. In April
2020, the debentures noted above were converted to 1,386,541 shares of common stock at a price of $0.3606093 per share and all
accrued interest was paid in the amount of $11,566.



During the first four months ended April
30, 2020, the Company issued a third round of convertible debentures worth $750,000. The debentures are convertible into shares
of the Company's common stock at the maturity date of September 15, 2020 and pay any unpaid interest at a rate of 8%. As of April
30, 2020, this third round of debentures had not been converted and the accrued interest unpaid amounted to $14,992.





Vehicles and Equipment Notes Payable



The Company has one note payable relating
to the purchase of a Company vehicle as of April 30, 2020. The balance outstanding under the note payable was $40,474 as of April
30, 2020. The note payable bears interest of 5.99% with principal and interest due monthly. The note matures in September 2023.
The Company had the same note payable relating to the purchase of a Company vehicles as of December 31, 2019. The balance outstanding
under the note payable was $48,549 at December 31, 2019.



The Company’s future minimum principal
payments as of April 30, 2020 are as follows:



|2021 |  | $ | 12,889 | 
|---- |  | - | ------ | 
|2022 |  |   | 12,889 | 
|2023 |  |   | 12,889 | 
|2024 |  |   | 1,807  | 
|     |  | $ | 40,474 | 











F-12







4. ACCRUED EXPENSES



Accrued expenses, consisting of accrued
salaries for officers and executive management, include the following balance at April 30, 2020, December 31, 2019 and 2018:



|                       |  | April 30,
                                                                               2020 |         |  | December 31,
                                                                               2019 |   |         | December 31,
                                                                               2018 | 
|---------------------- |  | --------------------------------------------------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------------------------ | - | ------- | ------------------------------------------------------------------------------------------------ | 
|Accrued Compensation   |  | $                                                                                             | 469,004 |  |                                                                                                  | $ | 237,000 |                                                                                                  | 
|Other Accrued Expenses |  |                                                                                               | 336,849 |  |                                                                                                  |   | 409,410 |                                                                                                  | 
|                       |  | $                                                                                             | 805,853 |  |                                                                                                  | $ | 646,410 |                                                                                                  | 



5. INCOME TAXES



The Company elected C Corporation tax status
upon inception in 2014. Net operating losses (“NOL”) totaled $13,047,319 as of April 30, 2020, and may be carried forward
to offset future taxable income. As future taxable income is uncertain, a full valuation allowance has been recorded and accordingly,
no current provision for income tax has been recorded in the accompanying statements of operations. NOL carry-forward benefits
begin to expire in 2035.



The following table summarizes the difference
between the actual tax provision and the amounts obtained by applying the statutory tax rates to the income or loss before income
taxes for the period ending April 30, 2020 and years ended December 31:



|                                         |  | April 30,
                                               2020 |        |   | December 31,
                                               2019 |  |        | December 31,
                                               2018 | 
|---------------------------------------- |  | ------------------------------------------------------------- | ------ | - | ---------------------------------------------------------------- |  | ------ | ---------------------------------------------------------------- | 
|Tax benefit calculated at statutory rate |  |                                                               | 21.00  | % |                                                                  |  | 21.00  | %                                                                | 
|Expense not deductible                   |  |                                                               | (0.05  | ) |                                                                  |  | (0.06  | )                                                                | 
|Changes to valuation allowance           |  |                                                               | (20.95 | ) |                                                                  |  | (20.94 | )                                                                | 
|Provision for income taxes               |  |                                                               | 0      | % |                                                                  |  | 0      | %                                                                | 



A deferred tax liability or asset is determined
based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when these differences reverse. Deferred tax expense or benefit in the accompanying consolidated
statements of operations are the result of changes in the assets and liabilities for deferred taxes. The measurement of deferred
tax assets is reduced, if necessary, by the amount for any tax benefits that, based on available evidence, are not expected to
be realized. Income tax expense is the current tax payable or refundable for the year plus or minus the net change in the deferred
tax assets and liabilities. Deferred income taxes of the Company arise from the temporary differences between financial statement
and income tax recognition of NOL carry-forwards.



The deferred tax assets and liabilities
in the accompanying consolidated balance sheets include the following components:



|                                          |  | April 30,
                                               2020 |            |   | December 31, 2019 |   |            | December 31, 2018 | 
|----------------------------------------- |  | ------------------------------------------------------------- | ---------- | - | ----------------- | - | ---------- | ----------------- | 
|Net non-current deferred tax assets:      |  |                                                               |            |   |                   |   |            |                   | 
|Net operating loss carry-forward          |  | $                                                             | 2,739,937  |   |                   | $ | 2,418,457  |                   | 
|Fixed assets                              |  |                                                               | 13,929     |   |                   |   | 23,147     |                   | 
|Net non-current deferred tax liabilities: |  |                                                               |            |   |                   |   |            |                   | 
|Intangible assets                         |  |                                                               | (9,293     | ) |                   |   | (10,067    | )                 | 
|Net                                       |  |                                                               | 2,744,573  |   |                   |   | 2,431,537  |                   | 
|Less valuation allowance                  |  |                                                               | (2,744,573 | ) |                   |   | (2,431,537 | )                 | 
|Net deferred taxes                        |  | $                                                             | –          |   |                   | $ | –          |                   | 









F-13







6. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS



Leases



The Company adopted
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) ASU 2016-02,
Leases on January 1, 2019 on a modified retrospective basis. The initial adoption of the standard recognized right-of-use assets
of $493,832 and lease liabilities of $498,361 on the Company’s consolidated balance sheet with no impact on
the Company's results of operations. The Company elected the hindsight practical expedient and the package of practical expedients
to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all
leases.



As of April
30, 2020, the weighted average remaining lease term and weighted average discount rate for financing leases was 2.9 years and 4.29%,
respectively. The Company's future financing lease obligations that have not yet commenced are immaterial. For period ended April
30, 2020, and year ended December 31, 2019, the Company's cash paid for financing leases was $40,757 and $77,618, and short-term
lease costs were $0 and $82,579, respectively.



The Company’s undiscounted annual
future minimum lease payments as of April 30, 2020 consist of:



|2020                               |  | $ | 175,865 |  
|---------------------------------- |  | - | ------- | -
|2021                               |  |   | 161,431 |  
|2022                               |  |   | 85,699  |  
|2023                               |  |   | 11,483  |  
|2024                               |  |   | 10,526  |  
|Total lease payments               |  |   | 445,004 |  
|Interest                           |  |   | (17,960 | )
|Present value of lease liabilities |  | $ | 427,044 |  



Concentrations



For the year ended April 30, 2020, the
Company had one customer that represented 12% of total sales.



For the year ended December 31, 2019, the
Company had two customers that represented 19% and 14% of total sales.



For the year ended December 31, 2018, the
Company had one customer that represented 12% of total sales.



As of April 30, 2020, the Company had two
customers that accounted for 30% and 11%, respectively of accounts receivable. As of December 31, 2019, the Company had three customers
that accounted for 38%, 22%, and 15% of accounts receivable. As of December 31, 2018, the Company had four customers that accounted
for 29%, 18%, 15%, and 12% of accounts receivable.



7. STOCKHOLDERS’ EQUITY



Common and Preferred Stock



As of April 30, 2020, December 31, 2019,
and 2018, the authorized share capital of the Company consisted of 75,000,000 shares of common stock with $0.0001 par value. No
other classes of stock are authorized.











F-14







Warrants



Through June 30, 2017, there were $2,885,000
in notes payable issued. These notes came with one warrant for each dollar borrowed for a total 2,885,000 warrants at an exercise
price of $0.50, all of which expire on December 31, 2017. On February 9, 2018, the expiration date of the warrants was extended
to December 31, 2018. The fair value of these warrants upon issuance was $0. These warrants expired on December 31, 2018.



On March 31, 2017, the Company issued 600,000
warrants at an exercise price of $.50 for services provided to a consultant. The warrants expire on March 31, 2024. The fair value
of these warrants upon issuance was $302.



There were 260,000 warrants exercised during
the year ended December 31, 2019 at $.50 per share for a total cash amount of $130,000. There were 597,332 warrants exercised during
the year ended December 31, 2018 at $.50 per share for a total cash amount of $298,666.



As of April 30, 2020, December 31, 2019,
and 2018, there were 82,668, 82,668 and 342,668 common stock warrants outstanding, respectively, with an exercise price of $0.50.
On December 31, 2018, 170,000 warrants expired.





|Period         |  | Beg. Balance |           |  | Issued |  |           | Exercised |  |  | Expired   |  |  | End. Balance |          
|-------------- |  | ------------ | --------- |  | ------ |  | --------- | --------- |  |  | --------- |  |  | ------------ | ---------
|2014           |  |              | –         |  |        |  | 2,500,000 |           |  |  | –         |  |  |              | –        
|Q4 2016        |  |              | 2,500,000 |  |        |  | 385,000   |           |  |  | –         |  |  |              | –        
|Q1 2017        |  |              | 2,885,000 |  |        |  | 2,500,000 |           |  |  | –         |  |  |              | –        
|Q2 2017        |  |              | 5,385,000 |  |        |  | 600,000   |           |  |  | –         |  |  |              | –        
|Q3 2017        |  |              | 5,985,000 |  |        |  | –         |           |  |  | –         |  |  |              | 2,500,000
|Q4 2017        |  |              | 3,485,000 |  |        |  | –         |           |  |  | 2,375,000 |  |  |              | –        
|Q1 2018        |  |              | 1,110,000 |  |        |  | –         |           |  |  | 80,000    |  |  |              | –        
|Q2 2018        |  |              | 1,030,000 |  |        |  | –         |           |  |  | 332,332   |  |  |              | –        
|Q3 2018        |  |              | 697,668   |  |        |  | –         |           |  |  | 125,000   |  |  |              | –        
|Q4 2018        |  |              | 572,668   |  |        |  | –         |           |  |  | 60,000    |  |  |              | 170,000  
|Q1 2019        |  |              | 342,668   |  |        |  | –         |           |  |  | –         |  |  |              | –        
|Q2 2019        |  |              | 342,668   |  |        |  | –         |           |  |  | 70,000    |  |  |              | –        
|Q3 2019        |  |              | 272,668   |  |        |  | –         |           |  |  | 190,000   |  |  |              | –        
|Q4 2019        |  |              | 82,668    |  |        |  | –         |           |  |  | –         |  |  |              | –        
|April 30, 2020 |  |              | 82,668    |  |        |  | –         |           |  |  | –         |  |  |              | –        



Stock option plan



Effective February 1, 2017, the Company
established the 2016 Stock Option Plan (the “Plan”). The Board of Directors of the Company has the authority and discretion
to grant stock options. The maximum number of shares of stock that may be issued pursuant to the exercise of options under the
Plan is 5,500,000. Eligible individuals include any employee or director of the Company and any consultant providing services to
the Company. The expiration date and exercise price for each stock option grant are as established by the Board of Directors of
the Company. No option may be issued under the Plan after February 1, 2027. On March 18, 2018, the Plan was amended to increase
the maximum number of shares of stock that may be issued to 5,000,000. On July 10, 2018, the Plan was amended to increase the maximum
number of shares of stock that may be issued to 5,500,000. In November of 2019, the Plan was further amended to increase the shares
of stock that may be issued to 10,000,000.











F-15







Stock option activity during the period ended April 30, 2020
is summarized as follows:



|                                |  | Shares Under Option |           |  | Price Per Share |   |             | Weighted Average Exercise Price |  |   | Weighted Average Remaining Contractual Life
|------------------------------- |  | ------------------- | --------- |  | --------------- | - | ----------- | ------------------------------- |  | - | -------------------------------------------
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Outstanding - beginning of year |  |                     | 7,309,750 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 1.18                                       
|Granted                         |  |                     | –         |  |                 | $ | –           |                                 |  | $ | –                                          
|Exercised                       |  |                     | –         |  |                 | $ | –           |                                 |  | $ | –                                          
|Canceled or expired             |  |                     | –         |  |                 |   | –           |                                 |  |   | –                                          
|Outstanding - end of year       |  |                     | 7,309,750 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 1.18                                       
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Exercisable - end of year       |  |                     | 6,469,750 |  |                 |   |             |                                 |  | $ | 0.91                                       



Stock option activity during the year ended December 31, 2019
is summarized as follows:



|                                |  | Shares Under Option |           |  | Price Per Share |   |             | Weighted Average Exercise Price |  |   | Weighted Average Remaining Contractual Life
|------------------------------- |  | ------------------- | --------- |  | --------------- | - | ----------- | ------------------------------- |  | - | -------------------------------------------
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Outstanding - beginning of year |  |                     | 5,059,750 |  |                 | $ | 0.00
- 1.50 |                                 |  | $ | 0.39                                       
|Granted                         |  |                     | 2,300,000 |  |                 | $ | 1.50        |                                 |  | $ | 1.50                                       
|Exercised                       |  |                     | 50,000    |  |                 | $ | 0.01        |                                 |  | $ | 0.01                                       
|Canceled or expired             |  |                     | –         |  |                 |   | –           |                                 |  |   | –                                          
|Outstanding - end of year       |  |                     | 7,309,750 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 1.18                                       
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Exercisable - end of year       |  |                     | 6,366,417 |  |                 |   |             |                                 |  | $ | 0.91                                       



Stock option activity during the year ended December 31, 2018
is summarized as follows:



|                                |  | Shares Under Option |           |  | Price Per Share |   |             | Weighted Average Exercise Price |  |   | Weighted Average Remaining Contractual Life
|------------------------------- |  | ------------------- | --------- |  | --------------- | - | ----------- | ------------------------------- |  | - | -------------------------------------------
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Outstanding - beginning of year |  |                     | 3,439,750 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 0.39                                       
|Granted                         |  |                     | 1,670,000 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 0.39                                       
|Exercised                       |  |                     | 50,000    |  |                 | $ | 0.01        |                                 |  | $ | 0.01                                       
|Canceled or expired             |  |                     | –         |  |                 |   | –           |                                 |  |   | –                                          
|Outstanding - end of year       |  |                     | 5,059,750 |  |                 | $ | 0.00 - 1.50 |                                 |  | $ | 0.39                                       
|                                |  |                     |           |  |                 |   |             |                                 |  |   |                                            
|Exercisable - end of year       |  |                     | 4,099,417 |  |                 |   |             |                                 |  | $ | 0.42                                       











F-16







The fair value of each option grant is
calculated using the following assumptions:



|                      |  | April 30, 2020 |  | 2019 |            |  | 2018 | 
|--------------------- |  | -------------- |  | ---- | ---------- |  | ---- | 
|Expected life – years |  | NA             |  |      | 3.25 – 5   |  |      | 
|Interest rate         |  | NA             |  |      | 1.60-2.56% |  |      | 
|Volatility            |  | NA             |  |      | 71.70%     |  |      | 
|Dividend yield        |  | –%             |  |      | –%         |  |      | 



Aggregate intrinsic value for all options
outstanding as of April 30, 2020, December 31, 2019, and December 31, 2018, respectively, was $2,339,120, $2,339,120, and $5,616,323.
Aggregate intrinsic value for all options exercisable as of April 30, 2020, December 31, 2019, December 31, 2018 respectively,
was $3,817,152, $3,756,186, and $4,427,370. The fair value of all shares that vested during period ended April 30, 2020 and the
years ended December 31, 2019 and 2018 was $1,729,145, $1,569,105 and $1,146,974, respectively.



Total share-based compensation expense
(including stock grants) included in salaries and wages was $79,001 for the period ended April 30, 2020 and the years ended December
31, 2019 and 2018 was $1,650,145 and $1,171,753, respectively. Unamortized share-based compensation expense as of April 30, 2020
amounted to $460,381, which is expected to be recognized over the next 31 months.



8. RELATED PARTY TRANSACTIONS



Throughout the year ending April 30, 2020
and 2019, the Company incurred consulting fees of $217,000 and $299,710, respectively, to three current shareholders. The unpaid
balance due was $176,000 and $80,000 as of April 30, 2020 and December 31, 2019, respectively, is included in accounts payable
in the accompanying consolidated financial statements.



The Company has a consulting agreement
with an entity owned by an officer of the company.



The Company is in effect a sales representative
of CBI pursuant to the Exclusive Patent License Agreement between the Company and CBI. CBI and the Company are companies under
the common control of E. Thomas Layton, the Company’s chairman and chief executive officer. There are no other transactions
or contracts between CBI and the Company other than those discussed in this report. As of April 30, 2020, $590 was due to CBI Polymers.

In fiscal year 2020, the Company received $35,000 from a related party, Maine Consultants, Inc. and in exchange therefor, issued
a promissory note to Maine Consultants. On May 13, 2020 the promissory note was paid in full.



Two separate related parties are allowing
the Company to rent vehicles for a monthly fee of $1,650 and $2,957. For the four month period ended April 30, 2020, the Company
paid a total of $6,600 and $5,628 for those vehicles. For the year ended December 31, 2019, the Company paid a total of $12,391
and $24,195 for those same vehicles.



9. SUBSEQUENT EVENTS



Throughout May 2020, the Company has issued
an additional $1,000,000 of convertible debentures. The debentures are convertible into shares of the Company’s common stock
at the maturity date of September 15, 2020 and pay any unpaid interest at the rate of 8%. As of July 31, 2020, $525,500 has been
funded.











F-17







During March 2020,
a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus
("COVID-19"). The pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first
half of March, as federal, state and local governments react to the public health crisis, creating significant uncertainties in
the U.S. economy. In March 2020, we noticed a strong decline in orders from our customers, as businesses around the country began
to cease their operations due to COVID-19. In an attempt to mitigate the ongoing impact of the pandemic on our cash flows certain
actions were taken. The actions include targeted reductions in discretionary operating expenses such as advertising and payroll
expenses, reducing capital expenditures, and reducing travel for business development purposes.



The Paycheck Protection
Program (“PPP”) loan is a loan from the U.S. Small Business Administration (“SBA”) that helps businesses
keep their workforce employed during the Coronavirus (COVID-19) crisis. SBA will forgive loans if all employees are kept on the
payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. On May 8, 2020, the Company received
a PPP loan in the amount of $100,344.



Continued impacts of the pandemic have
had a material adverse impact on our revenues, earnings, liquidity and cash flows, and may require additional actions in response,
including, but not limited to, employee layoffs, reduced production, or further expense reductions, all in an effort to mitigate
such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments,
including the duration of the spread of the outbreak within the U.S., and the related impact on consumer confidence and spending,
all of which are highly uncertain and cannot be predicted. This situation is rapidly changing and additional impacts to the business
may arise that we are not aware of currently. While the disruption is currently expected to be temporary, there is uncertainty
around the duration. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity
or capital resources cannot be reasonably estimated at this time.













F-18





10. COMPARITIVE CONSOLIDATED FINANCIALS
(UNAUDITED)



Lux Amber, Corp. and Subsidiaries



Comparative Consolidated Statement of Operations

April 30, 2020 And April 30, 2019 (Unaudited)





|                                                        |  | For the Four Months Ended April 30, 2020 |            |   | For the Four Months Ended April 30, 2019 (Unaudited) |  
|------------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ---------------------------------------------------- | -
|                                                        |  |                                          |            |   |                                                      |  
|REVENUE                                                 |  | $                                        | 218,963    |   |                                                      | $
|COST OF GOODS SOLD                                      |  |                                          | 329,666    |   |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|Gross profit                                            |  |                                          | (110,703   | ) |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|OPERATING EXPENSES                                      |  |                                          |            |   |                                                      |  
|General and administrative                              |  |                                          | 838,966    |   |                                                      |  
|Selling                                                 |  |                                          | 72,148     |   |                                                      |  
|Depreciation and amortization                           |  |                                          | 99,580     |   |                                                      |  
|Total operating expenses                                |  |                                          | 1,010,694  |   |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|OTHER (INCOME) EXPENSE                                  |  |                                          |            |   |                                                      |  
|Interest income                                         |  |                                          | –          |   |                                                      |  
|Interest expense                                        |  |                                          | 28,784     |   |                                                      |  
|Other (income) expense                                  |  |                                          | 336,790    |   |                                                      |  
|Total other (income) expense                            |  |                                          | 365,574    |   |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|Net loss                                                |  |                                          | (1,486,971 | ) |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|Less: net loss attributable to non-controlling interest |  |                                          | 7,358      |   |                                                      |  
|                                                        |  |                                          |            |   |                                                      |  
|NET LOSS attributable to Lux Amber, Corp.               |  | $                                        | (1,494,329 | ) |                                                      | $
|                                                        |  |                                          |            |   |                                                      |  
|Basic and diluted loss per share                        |  | $                                        | (0.05      | ) |                                                      | $
|                                                        |  |                                          |            |   |                                                      |  
|Weighted average shares - basic and diluted             |  |                                          | 28,046,859 |   |                                                      |  













F-19







Lux Amber, Corp. and Subsidiaries



Consolidated Statements of Cash Flows

April 30, 2020 And April 30,2019 (Unaudited)





|                                                                            |  | For the Four Months Ended April 30, 2020 |            |   | For the Four Months Ended April 30, 2019 (Unaudited) |  
|--------------------------------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ---------------------------------------------------- | -
|                                                                            |  |                                          |            |   |                                                      |  
|CASH FLOW FROM OPERATING ACTIVITIES                                         |  |                                          |            |   |                                                      |  
|Net loss                                                                    |  | $                                        | (1,486,971 | ) |                                                      | $
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                          |            |   |                                                      |  
|Depreciation and amortization                                               |  |                                          | 99,580     |   |                                                      |  
|Loss on sale of asset                                                       |  |                                          | 1,215      |   |                                                      |  
|Interest expense accrued                                                    |  |                                          | –          |   |                                                      |  
|Share based compensation                                                    |  |                                          | 79,001     |   |                                                      |  
|Right to use interest                                                       |  |                                          | 4,319      |   |                                                      |  
|Changes in operating assets and liabilities:                                |  |                                          |            |   |                                                      |  
|Accounts receivable                                                         |  |                                          | (21,517    | ) |                                                      |  
|Inventory                                                                   |  |                                          | 14,542     |   |                                                      |  
|Prepaid expenses                                                            |  |                                          | (7,413     | ) |                                                      |  
|Other current assets                                                        |  |                                          | –          |   |                                                      |  
|Accounts payable and accrued expenses                                       |  |                                          | 280,268    |   |                                                      |  
|Right of use interest                                                       |  |                                          | –          |   |                                                      |  
|Due to related parties                                                      |  |                                          | (22,455    | ) |                                                      |  
|Net cash used in operating activities                                       |  |                                          | (1,058,927 | ) |                                                      |  
|                                                                            |  |                                          |            |   |                                                      |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                        |  |                                          |            |   |                                                      |  
|Deposits on hand                                                            |  |                                          | –          |   |                                                      |  
|Purchase of licenses                                                        |  |                                          | –          |   |                                                      |  
|Expenditures for property and equipment                                     |  |                                          | (65,904    | ) |                                                      |  
|Net cash used in investing activities                                       |  |                                          | (65,904    | ) |                                                      |  
|                                                                            |  |                                          |            |   |                                                      |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                        |  |                                          |            |   |                                                      |  
|Borrowing on convertible notes payable                                      |  |                                          | 840,000    |   |                                                      |  
|Payments on notes payable                                                   |  |                                          | (8,075     | ) |                                                      |  
|Payments on right of use liabilities                                        |  |                                          | (43,853    | ) |                                                      |  
|Proceeds from sale (repurchase) of common stock                             |  |                                          | (22,394    | ) |                                                      |  
|Proceeds from execution of warrants                                         |  |                                          | –          |   |                                                      |  
|Proceeds from stock options exercised                                       |  |                                          | –          |   |                                                      |  
|Net cash provided by financing activities                                   |  |                                          | 765,678    |   |                                                      |  
|                                                                            |  |                                          |            |   |                                                      |  
|TOTAL (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                      |  |                                          | (359,153   | ) |                                                      |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                            |  |                                          | 408,338    |   |                                                      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  |  | $                                        | 49,185     |   |                                                      | $
|                                                                            |  |                                          |            |   |                                                      |  
|NONCASH INVESTING AND FINANCING ACTIVITIES:                                 |  |                                          |            |   |                                                      |  
|                                                                            |  |                                          |            |   |                                                      |  
|Convertible notes payable converted to common stock                         |  | $                                        | 500,000    |   |                                                      | $
|Non-cash trade in of vehicle and associated debt                            |  | $                                        | 30,905     |   |                                                      | $
|Right of use asset addition                                                 |  | $                                        | 68,104     |   |                                                      | $
|                                                                            |  |                                          |            |   |                                                      |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                         |  |                                          |            |   |                                                      |  
|Cash paid for interest                                                      |  | $                                        | 5,232      |   |                                                      | $





F-20







Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.



None



Item 9A. CONTROLS AND PROCEDURES.



Evaluation of Disclosure Controls and Procedures



The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates, and judgments by
management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control
include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized
use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly
to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
United States. Its chief executive officer assessed the effectiveness of its internal control over financial reporting as of April
30, 2020. In making this assessment, its management used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”) in Internal Control Integrated Framework. Its chief executive officer has concluded
that, its internal control over financial reporting were effective in providing reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted
accounting principles. Its chief executive officer reviewed the results of his assessment with its board of directors. In 2020,
the chief executive officer had determined that the internal control over financial reporting were not effective in providing reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with US generally accepted accounting principles.



Based on its evaluation under this framework
in 2020, management concluded that its internal control over financial reporting was not effective due to the factors stated below.



| | • | Insufficient Resources: The Company has inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting to be able to have appropriately designed and operating entity level controls including risk assessment; information and communication; monitoring; and financial reporting.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Inadequate Segregation of Duties: The Company has inadequate number of personnel to properly segregate duties to implement control procedures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | • | Lack of Audit Committee and Outside Directors on the Company’s Board of Directors: The Company does not have a functioning audit committee or outside directors on its board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This annual report does not include an
attestation report of its Company’s independent registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting
firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report
in this annual report.











14







Inherent Limitations on Effectiveness
of Controls



Internal control over financial reporting
has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation
of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors.
Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in
judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion
or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process
and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Changes in Internal Control over Financial
Reporting



During the period covered by this report,
there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.



Item 9B. OTHER INFORMATION



None.































15







PART III



Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.



Directors and Executive Officers



Set forth below is certain information regarding each person
who served as an officer or director at any time during fiscal period ended April 30, 2020.



|Name               | Age | Positions with the Company                           
|------------------ | --- | -----------------------------------------------------
|E. Thomas Layton   | 84  | Chairman of the Board, Chief Executive Officer       
|Paul O. Williams   | 64  | Vice Chairman, Chief Financial Officer, and President
|Robert E. Moreland | 49  | President of Industrial Chem Solutions, Inc.         
|Jeannine M. Dupuis | 76  | Vice President of Marketing Services                 



E. Thomas Layton, 84, has been Chairman,
CEO and Director of the Company since September 2015. From January 2014 until May 2018 he also served as the Company’s Chief
Financial Officer and Chief Accounting Officer. From January 2014 until September 2015 he was the senior advisor to KT Chemicals,
Inc. From 2013, he was CEO and is currently the Chairman of CBI Polymers, Inc., and for nine months in 2012 he was Acting CEO of
LAXAIOSR, a clinical research organization. From 1998 until 2014 he was also an independent consultant to a variety of companies.
From 1998 until 2009 most of his consulting clients were in the chemical industry, although beginning in 2009 and continuing through
2010, 2011 and 2012 he was consulting primarily to real estate related businesses including hotels and commercial developments,
assisting them with restructuring and refinancing. In the course of this work he also served as a court authorized debtor-in-possession
manager, shepherding real property projects through Chapter 11 Bankruptcy. From 1994 to 1998 he was CEO of Deepwater Iodide (now
Deepwater Chemicals), and from 1976 to 1990 he was CEO of Bishopric, Inc., a construction engineering and manufacturing business
which he grew from sales of $9 million to $122 million. Prior to that he managed the worldwide chemical business of G.D. Searle,
and prior to that he worked in positions of increasing responsibility at Mallinckrodt Chemical, ultimately reporting directly to
the Chairman of the Board. He holds an AB Degree from Central Methodist College with a major in Chemistry. Mr. Layton is CEO and
a Director of the Company because of his long and successful history in sales and management, especially in the chemical industry.



Mr. Layton’s specific experience,
qualifications, attributes or skills that led to the conclusion that he should serve as a director for the Company:



| | • | Has served as CEO and Chairman of the Company since September 2015
| | - | ------------------------------------------------------------------



| | • | A seasoned manager
| | - | ------------------



Executive Officer



Paul O. Williams, 64, has been the
Vice Chairman, President and Chief Financial Officer since May 18, 2018.



Mr. Williams graduated from Austin College
in Sherman, Texas is 1978 and the Institute for Organization Management in Washington, DC in 1982. Since 2007, Mr. Williams has
served as Chief Executive Officer of Bison Financial Group, Inc. in Plano, Texas, a corporate financial advisory and business development
firm serving middle market growth companies. Mr. Williams personally provides corporate financial advisory and business development
consulting services.



In addition, Mr. Williams also serves as
an officer and director of two other public companies. Mr. Williams currently serves as Vice Chairman of the Board, Chief Financial
Officer, and Treasurer of Financial Gravity Companies, Inc. (OTCQB: FGCO) in Austin, Texas since 2015. Mr. Williams also currently
serves as Chairman of the Board & Chief Financial Officer of Light Engine Design Corp. (OTC: TLED) in Frisco, Texas since 2017.











16







Mr. Williams also serves as Vice Chairman
of the Board of Dynamic Chemical Solutions, Inc. in Frisco, Texas since 2016;



Mr. Williams served five years on the Board
of the Texas Economic Development Council in Austin. He is a past Chairman of the Board of the Frisco Chamber of Commerce and recently
completed his 12th year on their Board of Directors. He is also a recipient of the CFO of the Year award for North Texas by the
Dallas Business Journal.



The breadth of Mr. Williams’ entrepreneurial
and financial services experience led the Board of Directors to the conclusion that he is qualified to serve as a director for
the Company. Mr. Williams’ specific experience qualifications, attributes or skills that led to the conclusion that he should
serve as a director for the Company:



| | • | Over 42 years of business experience, primarily in capital markets and mergers & acquisitions.
| | - | ----------------------------------------------------------------------------------------------



| | • | Chief Executive Officer of Bison Financial Group, Inc., a corporate financial advisory and business development firm serving middle market growth companies.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Has served as both an officer and director of other public companies.
| | - | ---------------------------------------------------------------------



Executive Officer, Significant Subsidiary



Robert E. Moreland, 49, has been
the President of ICS (a wholly owned subsidiary of the Company) since February 2019. In this role, Mr. Moreland is responsible
for implementing the strategy for establishing Regional Service Centers and in developing new and improved Asphalt Release application
equipment, both asphalt plant based and the SLIK TRAILERTM mobile system.



Critical to servicing an expanding customer
base is an economical transportation fleet. Mr. Moreland’s experience in fleet management is extensive in that he was the
founder and owner of Robert Moreland Trucking, LLC and Lone Star Logistics, LLC. His trucking companies were all DOT compliant,
as is the ever-expanding ICS fleet.



Jeannine M. Dupuis, 76, has been
the Vice President of Marketing Services for the Company since February 2019. In this role, Ms. Dupuis is responsible for establishing
and maintaining business systems, including communications with all of the Company’s customers and vendors, as well as the
toll blending partners that are the core of ICS’s Regional Service Centers.



Ms. Dupuis’s successful business
career has included owning and operating vocational schools and twenty-five years of service in management roles with JC Penney’s
Financial Division and with the Aegon Insurance Company, which was the successor to the JC Penney’s Insurance business unit.
With JC Penney and Aegon, Ms. Dupuis’s responsibilities included managing teams that were responsible for new product and
business systems development and in auditing of marketing partners’ compliance with the broad range of insurance industry
regulations.



Section 16(a) Beneficial Ownership Reporting
Compliance



Section 16(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), requires officers, directors and persons who beneficially own more than
10% of a class of its equity securities registered under the Exchange Act to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Mr. Layton did not meet his Form 3 filing responsibilities in a timely manner but
did file his Form 3 on April 14, 2017. The Company has notified all known beneficial owners of more than 10% of its common stock
of their requirement to file ownership reports with the Securities and Exchange Commission.











17







Code of Ethics



The Company has adopted a code of ethics
that applies to its principal executive officer, principal financial officer, and persons performing similar functions. The code
of ethics is filed is incorporated by reference.



No Committees of the Board of Directors



The Company does not presently have a separately
constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of its Board
of Directors. At present, its entire Board of Directors acts as its audit committee. The Company believes that the present members
of its Board of Directors, taken as a whole, have sufficient knowledge and experience in financial affairs to effectively perform
their duties.



Item 11. EXECUTIVE COMPENSATION.



Summary Compensation Table



The particulars of compensation paid to
the following persons during the period ended April 30, 2020 and the years ended December 31, 2019 and 2018 are set out in the
summary compensation table below:



| | • | The Company’s Chairman, Chief Executive
        Officer, Vice Chairman, President and Chief Financial Officer,
| | - | --------------------------------------------------------------------------------------------------------------



SUMMARY COMPENSATION TABLE



|Name and Principal Position         |  | Year |  | Salary ($) |         |  | Bonus ($) |      | Stock Awards ($) |      | Option Awards ($) |      | All Other Compensation ($) |              | Total ($) |  
|----------------------------------- |  | ---- |  | ---------- | ------- |  | --------- | ---- | ---------------- | ---- | ----------------- | ---- | -------------------------- | ------------ | --------- | -
|E. Thomas Layton, CEO               |  | 2020 |  | $          | 58,336  |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $-0-         |           | $
|                                    |  | 2019 |  | $          | 96,250  |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $16,000 (1)  |           | $
|                                    |  | 2018 |  | $          | 165,000 |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $16,000  (1) |           | $
|                                    |  |      |  |            |         |  |           |      |                  |      |                   |      |                            |              |           |  
|Paul O. Williams, CFO and President |  | 2020 |  | $          | 52,750  |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $-0-         |           | $
|                                    |  | 2019 |  | $          | 81,250  |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $-0-         |           | $
|                                    |  | 2018 |  | $          | 111,250 |  |           | $-0- |                  | $-0- |                   | $-0- |                            | $-0-         |           | $

____________________

(1) Other compensation consisted of $16,000
and $16,000 of medical reimbursements paid to Mr. Layton during 2019 and 2018, respectively.



Effective January 1, 2020 Mr. Layton entered
into an employment agreement with the Company, providing for monthly compensation of $29,167 ($350,000 per year) plus a discretionary
bonus premised upon Company performance, in consideration of his services as Chairman and Chief Executive Officer. The agreement
has a three-year term and renews automatically unless otherwise terminated.



Effective January 1, 2020 Mr. Williams
entered into an employment agreement with the Company, providing for monthly compensation of $25,000 ($300,000 per year) plus a
discretionary bonus premised upon Company performance, in consideration of his services as Director, the Company’s Vice-Chairman,
President, and the Chief Financial Officer. The agreement has a three-year term and renews automatically unless otherwise terminated.











18







There are no other agreements in place
or contemplated to provide additional compensation to any officer or director. The Company does not have retirement, pension, profit
sharing, or insurance programs or other similar programs for the benefit of its officers and directors.



Summary Compensation



Except as described above, the Company
has no employment agreements with any director or executive officer.



For the period ended April 30, 2020 and
the years ended December 31, 2019 and 2018, no outstanding stock options or other equity-based awards were repriced or otherwise
materially modified. No stock appreciation rights have been granted to any director or executive officer and no director or executive
officer exercised any stock options or stock appreciation rights. With the exception of the discretionary bonus contained in Mr.
Layton’s agreement, there are no nonequity incentive plan agreements with any director or Named Executive Officer.



Outstanding Equity Awards at Fiscal Year-end



For the period ended April 30, 2020 and
the years ended December 31, 2019 and 2018, no outstanding stock options or other equity-based awards were repriced or otherwise
materially modified. No stock appreciation rights have been granted to any director or executive officer and no director or executive
officer exercised any stock options or stock appreciation rights. With the exception of the discretionary bonus contained in Mr.
Layton’s and Mr. Williams’ employment agreements, there are no nonequity incentive plan agreements with any director
or Named Executive Officer.



Director Compensation Table



During the period ended April 30, 2020,
Mr. Layton was the Company’s Chairman and CEO. Paul O. Williams is a Director and the Company’s Vice-Chairman, President
and Chief Financial Officer. Emerson Gardner is the Company’s Executive Vice President.



Employment Contracts, Termination of Employment, Change-in-Control
Arrangements



Except as described above, there are no
employment or other contracts or arrangements with officers or Directors. There are no compensation plans or arrangements, including
payments to be made by us, with respect to its officers, Directors or consultants that would result from the resignation, retirement
or any other termination of service in respect of such Directors, officers or consultants. There are no arrangements for Directors,
officers, employees or consultants that would result from a change-in-control.



Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



Security Ownership of Certain Beneficial Owners and Management



The following table sets forth certain
information with respect to the beneficial ownership of the Company’s common stock, as of April 30, 2020. The Company’s
common stock is the only outstanding class of voting securities, and the following table sets forth the voting power resulting
from such beneficial ownership, by



| | · | each stockholder known by the Company to be the beneficial owner of more than 5% of the Company’s outstanding common stock;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | · | each director of the Company;
| | - | -----------------------------



| | · | each executive officer of the Company; and
| | - | ------------------------------------------



| | · | all directors and executive officers of the Company as a group.
| | - | ---------------------------------------------------------------









19







|Amount of Beneficial Ownership                           
|---------------------------------------------------------
|Beneficial Owner(1)                                      
|E. Thomas Layton, CEO, director (2)                      
|                                                         
|Paul O. Williams, CFO, director (2)                      
|                                                         
|Ernest K. F. Lum
        Honolulu, Hawaii                
|                                                         
|Karl M. Taft III
        Dallas, Texas                   
|                                                         
|Directors and executive
officers as a group (two persons)

____________________



|(1) | Except as noted below, each beneficial owner has sole voting and investment power with respect to all shares attributable to that owner.                                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The address for each such beneficial owner is 145 Rose Lane, Suite 102, Frisco, Texas 75036.                                                                                                                                                                                                                                                      
|(3) | Includes 1,300,000 shares of Common
Stock issuable upon the exercise of stock options which are exercisable within 60 days. Also includes 100,000 shares of Common
Stock issuable upon the exercise of stock options owned by Mr. Layton’s spouse and which are exercisable within 60 days.
Ownership of such shares is attributed to Mr. Layton. 
|(4) | Includes 400,000 shares of Common
Stock issuable upon the exercise of stock options which are exercisable within 60 days. Also includes 100,000 shares of Common
Stock issuable upon the exercise of stock options owned by Mr. Williams’ spouse and which are exercisable within 60 days.
Ownership of such shares is attributed to Mr. Williams.
|(5) | Includes 300,000 shares of Common
Stock issuable upon the exercise of stock options which are exercisable within 60 days.                                                                                                                                                                                                                         
|(6) | Includes 1,020,000 shares of Common Stock owned by Mr. Taft’s spouse. Ownership of such shares is attributed to Mr. Taft. Also includes 400,000 shares of Common Stock issuable upon the exercise of stock options which are exercisable within 60 days.                                                                                          



Changes in Control



The Company is unaware of any contract
or other arrangement the operation of which may at a subsequent date result in a change of control of the Company.



Securities authorized for issuance under equity compensation
plans



As of the end of the most recently completed
fiscal year, the Company has not adopted a compensation plan (including individual compensation arrangements) under which equity
securities of the Company are authorized for issuance.











20







Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE.



Transactions with Related Persons, Promoters and Certain
Control Persons



Except as set forth below, none of the
Company’s directors or officers, nor any person who beneficially owns, directly or indirectly, shares carrying more than
10% of the voting rights attached to the Company’s shares, nor any relative or spouse of any of the foregoing persons, has
had any material interest, direct or indirect, in any transaction to which the Company was a party, and in which the amount involved
exceeds the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year-end for the last
two completed fiscal years.



Throughout 2020, the Company incurred consulting
fees of $223,163 to four current shareholders. The unpaid balance due was $32,641 as of April 30, 2020 and is included in accounts
payable in the accompanying consolidated financial statements.



The Company is in effect a sales representative
of CBI pursuant to the Exclusive Patent License Agreement between the Company and CBI. CBI and the Company are companies under
the common control of E. Thomas Layton, the Company’s chairman and chief executive officer. There are no other transactions
or contracts between CBI and the Company other than those discussed in this report.



Director Independence; Board Leadership Structure



For purposes of determining whether members
of the Company’s Board of Directors are “independent,” the Company’s Board utilizes the standards
set forth in the NASDAQ Stock Market Marketplace Rules. At present, the Company’s entire Board serves as its Audit, Compensation
and Nominating Committees. E. Thomas Layton is not an “independent director” since he currently serves as
Chief Executive Officer of the Company.



The Company’s Board of Directors
is of the view that the current leadership structure is suitable for the Company at its present stage of development, and that
the interests of the Company are best served by the combination of the roles of Chairman of the Board and Chief Executive Officer.



As a matter of regular practice, and as
part of its oversight function, the Company’s Board of Directors undertakes a review of the significant risks in respect
of the Company’s business. Such review is conducted in concert with outside professionals (including legal counsel) with
expertise in substantive areas germane to the Company’s business. With the Company’s current governance structure,
the Company’s Board of Directors and senior executives are, by and large, the same individuals, and consequently, there is
not a significant division of oversight and operational responsibilities in managing the material risks facing the Company.



Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.



Fiscal Year 2020



The following information summarizes the
fees billed by Whitley Penn LLP for professional services rendered for the fiscal year ended April 30, 2020.



Audit Fees.  $35,400

Audit-Related Fees. None

Tax Fees. None

All Other Fees. None











21







Fiscal Year 2019



The following information summarizes the
fees billed by Whitley Penn LLP for professional services rendered for the fiscal year ended December 31, 2019.



Audit Fees.  $45,532

Audit-Related Fees. None

Tax Fees. None

All Other Fees. None



Fiscal Year 2018



The following information summarizes the
fees billed by Whitley Penn LLP for professional services rendered for the fiscal year ended December 31, 2018.



Audit Fees.  $140,687

Audit-Related Fees. None

Tax Fees. None

All Other Fees. None























22







PART IV



Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES



(a)   Financial Statements and financial statement
schedules



(1) and (2) The financial statements and financial
statement schedules required to be filed as part of this report are set forth in Item 8 of Part II of this report.



(3) Exhibits. See Item 15(b) below.



(b)  Exhibits required by Item 601 of Regulation S-K



|Exhibit Number | Description                                                                    | Form | File Number | Exhibit Number | Filing Date | Filed with this 10-K
|-------------- | ------------------------------------------------------------------------------ | ---- | ----------- | -------------- | ----------- | --------------------
|31.1           | Sarbanes-Oxley Section 302(a) Certification of E. Thomas Layton                |      |             |                |             | X                   
|31.2           | Sarbanes-Oxley Section 302(a) Certification of Paul O. Williams                |      |             |                |             | X                   
|32.1           | Sarbanes-Oxley Section 906 Certification of E. Thomas Layton                   |      |             |                |             | X                   
|32.2           | Sarbanes-Oxley Section 906 Certification of Paul O. Williams                   |      |             |                |            
|101            | Interactive Data
    Files for Form 10-KT for the period ended April 30, 2020. |      |             |                |             | X                   
|101.INS*       | XBRL Instances Document                                                        |      |             |                |             |                     
|101.SCH*       | XBRL Taxonomy Extension
    Schema Document                                    |      |             |                |             |                     
|101.CAL*       | XBRL Taxonomy Extension
    Calculation Linkbase Document                      |      |             |                |             |                     
|101.DEF*       | XBRL Taxonomy Extension
    Definition Linkbase Document                       |      |             |                |             |                     
|101.LAB*       | BRL Taxonomy Extension
    Label Linkbase Document                             |      |             |                |             |                     
|101.PRE*       | XBRL Taxonomy Extension
    Presentation Linkbase Document                     |      |             |                |             |                     



* To be filed by amendment.



Item 16. FORM 10K SUMMARY



None













23







SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.



|Date: August 14, 2020 | By: /s/ E. Thomas Layton                  
|--------------------- | ------------------------------------------
|                      | E. Thomas Layton                          
|                      | Chairman, CEO, Director                   
|                      | (Principal Executive Officer)             
|                      |                                           
|                      | By: /s/ Paul O. Williams                  
|                      | Paul O. Williams                          
|                      | Vice Chairman, President, CFO and Director
|                      | (Principal Financial Officer)             



Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.



|                     |                                            |                
|-------------------- | ------------------------------------------ | ---------------
|Signature            | Capacity                                   | Date           
|                     |                                            |                
|/s/ E. Thomas Layton | Chairman, CEO, and Director                | August 14, 2020
|E. Thomas Layton     | (Principal Executive Officer)              |                
|                     |                                            |                
|/s/ Paul O. Williams | Vice Chairman, President, CFO and Director | August 14, 2020
|Paul O. Williams     | (Principal Financial Officer)              |                





















24