SEC Info - Dais Corp. - ‘10-Q’ for 6/30/22

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		Alternative Formats (Word, et al.) Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021 Condensed Statement of Stockholders' Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited) Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited) Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited) Controls and Procedures Defaults Upon Senior Securities Exhibits Financial Statements Item 1 Item 1A Item 2 Item 3 Item 4 Item 5 Item 6 Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Mine Safety Disclosures Notes to Condensed Financial Statements (unaudited) Other Information Part I. Financial Information Part Ii. Other Information Quantitative and Qualitative Disclosures About Market Risk Risk Factors Signatures Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Part I. Financial Information
"	Item 1
"	Financial Statements
"	Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021
"	Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)
"	Condensed Statement of Stockholders' Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited)
"	Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)
"	Notes to Condensed Financial Statements (unaudited)
"	Item 2
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Item 3
"	Quantitative and Qualitative Disclosures About Market Risk
"	Item 4
"	Controls and Procedures
"	Part Ii. Other Information
"	Legal Proceedings
"	Item 1A
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Defaults Upon Senior Securities
"	Mine Safety Disclosures
"	Item 5
"	Other Information
"	Item 6
"	Exhibits
"	Signatures

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

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

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an 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.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒

In certain instances, the Company’s ConsERV system product may carry a limited warranty of up to one year for all parts contained therein except for the energy recovery ventilator core produced and sold by the Company. The distributor of the ConsERV system may carry a limited warranty of up to ten years. The limited warranty includes replacement of defective parts for the ConsERV system and includes workmanship and material failure for the ConsERV core. The Company recorded an accrual of $ i 91,531 for future warranty expenses at June 30, 2022, and December 31, 2021, which is included in accrued expenses, other.

Royalty revenue is recognized as earned. The Company recognized royalty revenue of $ i 0 for the three months ended June 30, 2022 and 2021, respectively. Revenue derived from the sale of licenses is deferred and recognized as license fee revenue on a straight-line basis over the life of the license, or until the license arrangement is terminated. The Company recognized license fee revenue of $ i 12,500 and $ i 12,500 for the three months ended June 30, 2022 and 2021, respectively and $ i 25,000 and $ i 25,000 for the six months ended June 30, 2022 and 2021, respectively.

The Company accounts for revenue arrangements with multiple elements under the provisions of ASC Topic 605-25, “Revenue Recognition-Multiple-Element Arrangements.” To account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the licensee. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units.

In December 2017, the Company and Zhejiang MENRED Environmental Tech Co, Ltd., Zhejiang Province, China (“Menred”), entered into a License and Supply Agreement (the “Agreement”), effective December 21, 2017. Pursuant to the Agreement, the Company licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of energy recovery ventilators (“ERV”) and certain other HVAC systems for installation in commercial, residential, or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from the Company for Menred’s use, pursuant to the terms and conditions of the Agreement. Menred will also pay royalties, as defined, to the Company on a quarterly basis, based on price and production volume as provided by Menred. No royalties are due within the first year of the Agreement. Also pursuant to the Agreement, i the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions. Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with freight are generally included in cost of revenue.

Reconciliation of diluted loss per share for the three and six month periods ended June 30, 2021 is as follows:

The Company had no derivative liabilities so measured for the three and six months ended June 30, 2022 and accordingly no diluted loss per share over those periods.

On October 12, 2019, the Company entered a promissory note with an entity controlled by our Chief Executive Officer in the amount of $ i 10,000. The note bears interest at i 10% per year and matured on i October 12, 2021. Interest expense on the note was $ i 150 for each of the three month periods ended June 30, 2022 and 2021, respectively, and was $ i 300 for each of the three month periods ended June 30, 2022 and 2021, respectively. Accrued interest was $ i 1,650 and $ i 1,350 at June 30, 2022 and December 31, 2021, respectively. The Holder has not declared the Note in Default or extended the Maturity Date.

On February 27, 2015, the Company, and Tim N. Tangredi, the Company’s Chief Executive Officer entered an amendment (the “Tangredi Employment Agreement Amendment”) to Mr. Tangredi’s Amended and Restated Employment Agreement. Currently, the Company has non-interest-bearing accrued compensation due to the Chief Executive Officer for deferred salaries earned and unpaid as described above. The Tangredi Employment Agreement Amendment provides that, if at any time during a calendar year, the unpaid compensation is greater than $ i 500,000, Mr. Tangredi must convert $ i 100,000 of unpaid compensation into the Company’s common stock during such calendar year. The conversion rate shall be equal to i 75% of the average closing price for the Company’s common stock for the 30 trading days prior to the date of conversion. The Company shall also pay to Mr. Tangredi a cash payment equal to i 20% of the compensation income incurred because of the conversion. The Company has waived the conversion requirement from 2015 to the present. See Note 13 Commitments and Contingencies for further disclosure of the terms of Mr. Tangredi’s employment agreement.

Further, at any time any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) of i greater of 40% of the then-outstanding voting power of the voting equity interests of the Company or a person or group initiate a tender offer for the Company’s common stock, Mr. Tangredi may convert unpaid compensation into Class A Convertible Preferred Stock (“Class A Preferred Stock”) of the Company at a conversion price of $ i 1.50 per share. The Board of Directors waived the requirement to convert $ i 100,000 of unpaid compensation into common stock during 2016. No amounts have been converted under the terms of the Tangredi Employment Agreement Amendment to date.

The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.

To implement the authorization of the four New Series of Preferred Stock, the Certificate of Amendment was submitted to the Department of State on March 17, 2022 and was accepted for filing on March 22, 2022. The recently authorized New Series of Preferred Stock included: (i) Series C Convertible Preferred Stock, consisting of i 100,000 shares, all of which were to be issued following acceptance of the Certificate of Amendment by the Department of State, to two (2) third-party accredited investors who had provided bona fide financial consulting services to the Company; (ii) Series D Convertible Preferred Stock, consisting of i 10,000 shares, which shares may be issued, at the sole discretion of the Board of Directors, from time to time, to consultants and other third parties for, among other purposes, new services to the Company and for other good and valuable consideration, none of which shares have been issued; (iii) Series E Convertible Preferred Stock, consisting of i 250,000 shares, all of which were to be issued following final acceptance of the Certificate of Amendment by the Department of State, being issued to three (3) “accredited investors” including the Company’s financial advisors in consideration for their capital contributions to the Company; and (iv) Series F Convertible Preferred Stock consisting of i 1,500,000 shares, i 1,000,000 shares of which are intended to be issued to several long-tenured key employees and the Company’s Board of Directors in consideration for previously rendered services to the Company as well as to certain noteholders and others under agreements and arrangements that have been authorized by the Board of Directors. Equity issuances within these various classes will take place during the third quarter of 2022.

As of June 30, 2022 and December 31, 2021, the Company has i 1,100,000,000 authorized shares of common stock with a par value of $ i 0.01 to be issued in series with terms and conditions to be determined by the Board of Directors.

During May 2022, the Company issued i 457,500 shares of common stock upon the conversion of $ i 45,000 of notes payable, plus $ i 750 of costs.

The company issued i 396,637 shares of common stock upon the cashless exercise of i 500,000 common stock warrants.

The Company cancelled i 1,000,000 shares of common stock, which are to be reissued in the future.

During the six months ended June 30, 2021, the Company issued i 7,036,668 shares of common stock and i 3,576,733 common stock purchase warrants in settlement of convertible notes payable and related accrued interest. The shares were valued at $ i 1,829,534 and the warrants were valued at $ i 857,600.

During the six months ended June 30, 2021, the Company issued i 2,100,000 shares of common stock, valued at $ i 567,000, for services.

On September 20, 2021, the Company entered a convertible promissory note with GS Capital Partners, LLC. The note matures on September 20, 2022 and bears interest at i 8% per year. The Company received proceeds of $ i 197,000, after deduction of $ i 20,000 of original issue discount and $ i 3,000 of costs. In connection with this note, the Company has issued a warrant to purchase i 1,466,666 shares of common stock to the lender. The warrant has an exercise price of $ i 0.15 per share and expires on i September 21, 2026. The relative fair value of the warrant was $ i 110,000, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of i 0.84%; (2) dividend yield of i 0%; (3) volatility factor of the expected market price of the Company’s common stock of i 389%; and (4) an expected life of i 5 years. The note is convertible into shares of common stock at a fixed conversion price of $ i 0.10 per share. The company has recorded a beneficial conversion feature of $ i 90,000. Amortization of discount and costs was $ i 55,597 and $ i 110,584 for the three and six months ended June 30, 2022, respectively.

During the fourth quarter of 2021, the Company entered into twenty convertible promissory notes with various holders aggregating $ i 1,412,000. The notes mature one year from issuance and bear interest at i 8% per year. The Company received proceeds of $ i 1,287,000, after deduction of $ i 117,000 of original issue discount and $ i 8,000 of costs. In connection with the notes, the Company has issued warrants to purchase i 10,463,332 shares of common stock to the lenders. The warrants have an exercise price of $ i 0.15 per share and expire five years from the date of issuance. The relative fair value of the warrants was $ i 1,366,127, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of i 0.84% - i 1.33%; (2) dividend yield of i 0%; (3) volatility factor of the expected market price of the Company’s common stock of i 386% - i 389%; and (4) an expected life of i 5 years. The notes are convertible into shares of common stock at a fixed conversion price of $0.10 per share. A total of $1,412,000 has been recorded as debt discount, and 8,000 has been recorded as deferred debt costs. The discount and costs will be amortized to interest expense over the term of the notes Amortization of discount and costs was $ i 349,355 and $ i 699,492 for the three and six months ended June 30, 2022, respectively.

During May 2022, the Company issued i 457,500 shares of common stock upon the conversion of $ i 45,000 of notes payable, plus $ i 750 of costs. Unamortized discount and debt costs related to the principal converted were $ i 21,206 and $ i 514, respectively, which were charged against interest expense upon conversion.

During the second quarter of 2021 the Company issued i 7,036,668 shares of common stock, valued at $ i 1,829,534 and i 3,576,733 warrants, valued at $ i 857,600, in settlement of $ i 1,453,960 of notes payable and $ i 653,454 of accrued interest. Derivative liability of $ i 1,728,274 was extinguished because of the settlement. The Company recorded a gain on extinguishment of $ i 1,148,554.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

Unless otherwise indicated or the context requires otherwise, the words “we”, “us”, “our”, the “Company” or “our Company” refer to Dais Corporation, a New York corporation, and its subsidiaries.

The Company is dependent on third parties to manufacture the key components needed for its nanostructured materials and some parts of the value-added products made with these materials. Accordingly, a suppliers’ failure to supply components in a timely manner, or to supply components that meet the Company’s quality, quantity and cost requirements or technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of the Company’s products and/or increase its unit costs of production. Certain of the components or the processes of the Company’s suppliers are proprietary. If the Company was ever required to replace any of its suppliers, it should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production and may briefly affect the Company’s operations.

Effects from the pandemic are still impacting economies, and routine life, across the globe, however, improvements are being made and economies are opening. The Company is uniquely positioned as its’ current products are designed to provide a solution to these issues especially with increased ventilation. The awareness of the benefits of increased ventilation in homes and workplaces are being cited as a major factor by customers as a solution to battle future outbreaks and other pandemics. The ConsERV products are specifically designed to increase new, fresh, ventilated, air in our homes and workplaces. Management is developing and executing on plans to increase product awareness through existing and prospective sales channels.

Countries and corporations around the world are adopting aggressive plans to achieve newly established Carbon Neutral goals by 2030 and 2050. This world-wide effort is attracting attention to innovative technologies which reduce carbon emissions. Management is confident the successful track record of current products, with a history of increasing the efficiency of HVAC systems and reducing CO₂ emissions should drive increased business activity.

Beginning in mid-October of 2021 the Company’s share price on the OTCM has risen from a low of $.05 per share to a high price of $3.15 per share, and places in between. We believe the market for the Company’s products and planned products is broadening worldwide, spawning increased interest in Dais. This coupled with Management executing against its business plan working to grow revenues increasing shareholder value are what we believe may be the reason for a potential jagged up and down nature of the Company’s share price.

Dais Corporation (“Dais”, “us,” “we,”, the “Company”) is a nanomaterial technology company developing and commercializing products using the nanomaterial called Aqualyte. The first commercial product is the Aqualyte nanomaterial itself. It is useful in managing moisture and key gases in a variety of cross-industry products, and is effective in the destruction of pathogens that come in contact with the material, (As verified by 3^rd part analysis).

The second commercial product is called ConsERV, a fixed plate energy recovery ventilator which is useful in meeting building indoor fresh air requirements while saving energy and lowering emissions for most forms of heating, ventilation, and air conditioning (HVAC) equipment. We continue to develop other Aqualyte uses in cross-industry applications, HVAC/Refrigeration, energy, etc. One area of focused attention has been development work on a variant of Aqualyte targeting surface treatments to potentially create a protective layer designed to inactivate human coronaviruses.

We were incorporated as a New York corporation on April 8, 1993 as Dais Corporation. The Company was formed to develop new, cost-effective polymer materials for various applications, including providing a lower cost membrane material for Polymer Electrolyte Membrane fuel cells. We believe our research on materials science has yielded technological advances in the field of selective ion transport polymer materials.

In December 1999, the Company purchased the assets of Analytic Power Corporation, a corporation founded in 1984 to provide design, analysis, and systems integration services in the field of fuel cells, fuel processors, and integrated fuel cell power systems. Subsequently, on December 13, 1999, the Company changed its name to Dais Analytic Corporation. In the ensuing years the Company has purchased and/or sold assets for cash and/or assumption of certain company’s obligations seeking a path to solid, continuing growth, or monetize non-performing Company assets.

In November of 2018 the board of directors unanimously voted to change the name of the Company from Dais Analytic Corporation to Dais Corporation (the “Name Change”). The Name Change took effect with FINRA on February 27, 2019.

We use proprietary nanotechnology to reformulate thermoplastic materials called polymers, creating a material which water and a select group of similar substances can permeate through at a molecular level as opposed to flowing in bulk as liquid water through a pore. At the same time, the permeability of oxygen, nitrogen, and most other substances is severely limited, making the material extremely selective. We call this specialized material Aqualyte^TM and we have been granted a series of patents relating to its manufacture and use.

Aqualyte^TM is the foundation of the Dais product line, using the unique material’s properties to enable differentiated air, energy, and water products. Products generally are highly efficient, have fewer or no moving parts, and notably are kinder and gentler to our planet Earth. The nanomaterial-based products market is growing worldwide as more eyes are on the accelerating push for highly efficient products like those Dais features.

Sales channels for our ConsERV product continues to expand. This is our HVAC energy conservation product which should save an average of 30% on HVAC ventilation air operating costs while providing increased amounts of ventilated air. The economic savings typically allow the remainder of the system to be smaller and less expensive, reducing carbon dioxide (CO₂) emissions from electrical power generation. ConsERV generally attaches onto existing HVAC systems and is useful in both commercial and residential structures, to provide improved ventilation air within the structure. In turn, this yields health benefits (reduced COVID-19 exposure, fewer allergy, and asthma ‘trigger’ contaminants) and productivity improvements (improvement in cognitive abilities).

ConsERV separates incoming fresh ventilation air from outgoing exhaust air with our Aqualyte nanotechnology polymer in an enthalpy heat exchanger referred to as a “core”. While Aqualyte physically isolates the air streams so they don’t mix, heat and moisture are freely exchanged through the material. For summer air conditioning, the core removes some of the heat and humidity from the incoming air and transfers it to the exhaust air stream, thereby saving energy under many conditions. For winter heating, the core typically recovers a portion of the heat and humidity in the exhaust air and transfers it into the incoming air to reduce heating requirements.

When compared to similar competitive products, we believe, based on test results conducted by the Air-Conditioning, Heating and Refrigeration Institute (AHRI), a leading industry association, ConsERV maintains an industry-leading position in the management of latent heat.

The market, as near as management can tell, for energy recovery ventilation equipment is changing to become broader and better understood. Management believes this change is linked to the industry’s specification-setting body (ASHRAE) and the US Centers for Disease Control stating that pathogens can and do travel via HVAC systems and duct work as reported by the White House Science Advisory Panel, the US EPA, NIH/Harvard, Trane Corporation, and more. This potential change in the market for ERVs coupled with the seemingly proven value proposition Dais’s ConsERV product provides optimism to the Management team and the Board of Directors for the future of the ConsERV product.

The Company began engineering for an updated line of ConsERV products in the year 2020 (known as the “N Series”) with new cores and packaged systems that incorporate the Company’s past experience with the ERV market. The line was certified by the needed outside agencies and initial market introduction began in the 4^th quarter of 2021. We have seen positive market reception to date, and believe based on the N Series performance, price-point, and end-user feedback, the product will continue to be well received in the market. Sales of existing cores and customer systems are expected to continue generating revenue during 2022 and beyond as we increase the number of sales channels for ConsERV. The newer N Series has begun contributing to increasing revenues in the second quarter of 2022 and beyond.

Dais’s advanced material has many demonstrated uses in the described products. Management is positioning most of the Company’s resources behind the two most mature products in two major revenue generating paths: (1) ConsERV cores and systems, and (2) the sale of Aqualyte nanomaterials and engineering support in areas where Aqualyte has shown proven results and Dais has partners well-placed to bring products to market. Management projects this narrower focus will increase revenues allowing profitability to occur faster. This strategy leverages the Company’s experience and depth in marketing, building, and selling ConsERV cores and systems and in manufacturing and selling high performance Aqualyte nanomaterial.

Sales activities for advanced materials are continuing with select, successful companies located in the European Union and Southeast Asia (including China) which take full advantage of Dais’s past and continuing market penetration efforts. The uses include energy recovery ventilation and other known HVAC and select cross-industry uses.

To help us support our capabilities to deliver ConsERV cores and systems, and Aqualyte advanced nanomaterials, we have qualified manufacturing companies to join our supply chain to produce materials and components. Guided by Dais-qualified manufacturing practices these efforts target the growing demand for product in North America, European Union, and Southeast Asia (including China). We project this expansion of the supply chain will result in lower costs and quicker order fulfillment, generating revenues faster.

Orders are already being generated from these agreements, and we expect them to increase as we expand and add new strategic partnerships along the way. The new orders include sales of Aqualyte nanomaterials, components for energy recovery ventilation, and other known HVAC and select cross industry products.

The following table sets forth, for the periods indicated, certain data derived from our Statements of Operations:

We generate our revenues primarily from the sale of our ConsERV cores and systems and Aqualyte membrane. Product sales were $117,699 and $109,181 for the three months ended June 30, 2022 and 2021, respectively, an increase of $8,518 or 8%. The increase in revenue was driven by a decrease in Aqualyte sales, offset by an increase in ConsERV sales. We are focusing on creating sustainable revenues with Aqualyte and ConsERV core and system sales with the expectation that this will allow for growth in 2022 and beyond.

Revenues from royalty and license fees were $12,500 and $12,500 for the three months ended June 30, 2022 and 2021, respectively.

Our cost of sales consists primarily of materials (including freight), direct labor, and outsourced manufacturing expenses incurred to produce our ConsERV cores and systems and Aqualyte nanomaterial. Cost of goods sold were $177,205 and $45,030 for the three months ended June 30, 2022 and 2021 respectively, an increase of $132,175 or 294%. This reflects price increases throughout our supply chain, general increases in labor costs, and labor costs recognized in the second quarter of 2022 for products and services to be delivered in the third quarter.

We are dependent on third parties to manufacture the key components needed for our nano-structured based materials and some portion of the value-added products made with these materials. Accordingly, a supplier’s failure to supply components in a timely manner, or to supply components that meet our quality, quantity and cost requirements or technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of our products and/or increase the unit costs of production. Certain of the components or the processes of our suppliers are proprietary. If we were ever required to replace any of our suppliers, we should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production.

Gross loss from the sales of products was $47,006 for the three months ended June 30, 2022 and gross margin was $76,651 for the three months ended June 30, 2021 representing negative 6% and 63% for the three months ended June 30, 2022 and 2021.

As we are actively monitoring our increases in production cost, we have raised the prices for our ConsERV product line while continuing to work within our supply chain to reduce these costs. Although our gross margin for the three months ended June 30, 2022 is negative, we anticipate the revenues received from products delivered in the third quarter will increase our gross margin, bringing it positive again.

Expenditures for research and development are expensed as incurred. We incurred research and development costs of $61,748 and $56,215 for the three months ended June 30, 2022 and 2021, an increase of $5,533 or 10%. We account for proceeds received from government funding for research and development as a reduction in research and development costs. We recorded proceeds against research and development expenses on the Statements of Operations of $0 and $29,886 for the three months ended June 30, 2022 and 2021, a decrease of $29,886 or 100%. Variances in grant expenditures and reimbursements are due to an emphasis on completing an existing Small Business Innovation Research (SBIR) Phase II grant. This grant was completed in August 2021.

Our selling, general and administrative expenses consist primarily of payroll and related benefits, professional fees, marketing and channel support costs, and other infrastructure costs such as insurance, information technology and occupancy expenses. Selling, general and administrative expenses were $403,349 and $1,023,687 for the three months ended June 30, 2022 and 2021, a decrease of $620,338 or 61%. This decrease is primarily due to stock based compensation issued in the second quarter of 2021.

Our selling, general and administrative expenses may fluctuate due to a variety of factors, including, but not limited to:

We continue to focus on decreasing selling, general and administrative expenses for all our product efforts.

Other expense for the three months ended June 30, 2022 was $686,176 compared to income of $1,048,909 for the three months ended June 30, 2021, a decrease of $1,735,085 or 165%. The increased net other expense is primarily due to the lack of income relating to the change in fair value of derivative liabilities and an increased interest expense.

Net loss for the three months ending June 30, 2022 was $1,198,279 compared to an income of $75,544 for the three months ended June 30, 2021. The increased loss in the three months ended June 30, 2022 was primarily due to the increase in other expense described above and negative gross margin.

The following table sets forth, for the periods indicated, certain data derived from our Statements of Operations:

We generate our revenues primarily from the sale of our ConsERV cores and systems and Aqualyte membrane. Product sales were $160,894 and $171,990 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $11,096 or 6%. The decrease in revenue was driven by a decrease in Aqualyte sales, offset by an increase in ConsERV sales. We are focusing on creating sustainable revenues with Aqualyte and ConsERV core and system sales with the expectation that this will allow for growth in 2022 and beyond.

Revenues from royalty and license fees were $25,000 and $25,000 for the six months ended June 30, 2022 and 2021, respectively.

Our cost of sales consists primarily of materials (including freight), direct labor, and outsourced manufacturing expenses incurred to produce our ConsERV cores and systems and Aqualyte nanomaterial. Cost of goods sold were $229,645 and $82,890 for the six months ended June 30, 2022 and 2021 respectively, an increase of $146,755 or 177%. This reflects price increases throughout our supply chain, general increases in labor costs, and labor costs recognized in the second quarter of 2022 for products and services to be delivered in the third quarter.

Gross loss from the sales of products was $43,751 for the six months ended June 30, 2022 and gross margin was $114,100 for the six months ended June 30, 2021 representing negative 23% and 58% for the six months ended June 30, 2022 and 2021.

As we are actively monitoring our increases in production cost, we have raised the prices for our ConsERV product line while continuing to work within our supply chain to reduce these costs. Although our gross margin for the six months ended June 30, 2022 is negative, we anticipate the revenues received from products delivered in the third quarter will increase our gross margin, bringing it positive again.

Expenditures for research and development are expensed as incurred. We incurred research and development costs of $126,620 and $100,812 for the six months ended June 30, 2022 and 2021, an increase of $25,808 or 26%. We account for proceeds received from government funding for research and development as a reduction in research and development costs. We recorded proceeds against research and development expenses on the Statements of Operations of $0 and $60,966 for the six months ended June 30, 2022 and 2021, a decrease of $60,966 or 100%. Variances in grant expenditures and reimbursements are due to an emphasis on completing an existing Small Business Innovation Research (SBIR) Phase II grant. This grant was completed in August 2021.

Our selling, general and administrative expenses consist primarily of payroll and related benefits, professional fees, marketing and channel support costs, and other infrastructure costs such as insurance, information technology and occupancy expenses. Selling, general and administrative expenses were $828,625 and $1,285,074 for the six months ended June 30, 2022 and 2021, a decrease of $456,449 or 36%. This decrease is primarily due to stock based compensation issued in the second quarter of 2021.

Our selling, general and administrative expenses may fluctuate due to a variety of factors, including, but not limited to:

We continue to focus on decreasing selling, general and administrative expenses for all our product efforts.

Other expense for the six months ended June 30, 2022 was $1,281,812 compared to income of $3,029,424 for the six months ended June 30, 2021, a decrease of $4,311,236 or 142%. The increased net other expense is primarily due to the lack of income relating to the change in fair value of derivative liabilities and an increased interest expense.

Net loss for the six months ending June 30, 2022 was $2,280,809 compared to an income of $1,818,604 for the six months ended June 30, 2021. The increased loss in the six months ended June 30, 2022 was primarily due to the increase in other expense described above and negative gross margin.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred significant losses since inception, incurred a loss of $2,280,809 for the six months ended June 30, 2022 and, as of June 30, 2022, the Company has an accumulated deficit of $60,103,911, total stockholders’ deficit of $10,428,954, negative working capital of $10,351,150 and cash of $44,150. The Company used $991,845 and $393,957 of cash in operations during the six months ended June 30, 2022 and 2021, respectively, which was funded primarily by proceeds from loans from related parties and others. There is no assurance that any such financing will be available in the future. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently pursuing the following sources of short and long-term working capital:

Any failure by us to timely procure additional financing or investment adequate to fund the ongoing operations, including planned product development initiatives and commercialization efforts, or experience a major supply chain disruption will have material adverse consequences on our financial condition, results of operations and cash flows as could any unfavorable terms. While we believe the Company’s prospects have improved for funding, there are no assurances we will be able to obtain the financing and planned product development commercialization, and the sales channel challenges continue to mount. The Company may fail to reach an accord with the Senior Secured Note Holder who has deep rights with the assets of the Company pledged as security for repayment of the Note. Accordingly, we may not have the ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern.

Cash as of June 30, 2022 was $44,150 compared to $773,423 as of December 31, 2021. Cash is primarily used to fund our working capital requirements.

Net cash used in operating activities was $991,845 for the six months ended June 30, 2022 compared to $393,957 for the same period in 2021. The increase in net cash used was primarily due to an increase in net loss (after adjusting for non-cash items) partially offset by an increase in cash from net working capital accounts. For the six months ended June 30, 2022, net loss (after adjusting for non-cash items) was $1,438,548. Accounts receivable, inventory and other assets together increased by $197,495. Accounts payable, accrued liabilities, customer deposits and deferred revenue increased in total by $644,198. For the six months ended June 30, 2021, net loss (after adjusting for non-cash items) was $685,276. Accounts receivable, inventory and other assets together increased by $64,756. Accounts payable, accrued liabilities, customer deposits and deferred revenue increased in total by $356,075.

Net cash used in investing activities was $37,428 for the six months ended June 30, 2022 compared to $12,064 for the same period in 2021, driven by an increase in purchases of equipment.

Net cash provided by financing activities was $300,000 for the six months ended June 30, 2022 compared to $458,437 for the same period in 2021. The decrease resulted from a decrease in proceeds from notes payable and notes payable due to related parties.

On January 25, 2021, the Company received $122,340 in a loan borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the Small Business Administration (“SBA”), which we expect to be forgiven in part or in full, subject to our compliance with the conditions of the Paycheck Protection Program. If not forgiven, the terms on the note provide for interest at 1% per year and the note mature in 24 months, with 18 monthly payments of $8,146 beginning after the initial 6-month deferral period for payments. This loan was subsequently forgiven in full on July 12, 2022.

On April 29, 2020, the Company received $144,750 in a loan borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the Small Business Administration (“SBA”). This loan was subsequently forgiven in full on August 29, 2021.

On June 12, 2020, the Company received $150,000 in a loan borrowed from the SBA. Installment payments, including principal and interest, of $731 monthly, will begin 12 months from the date of the note. The balance of principal and interest will mature 30 years from the date of the note. Interest will accrue at the rate of 3.75% per year. On March 15, 2022, the U.S. Small Business Administration announced that the deferment period for the repayment would be extended to 30 months from the date of the note.

On June 24, 2016, the Company entered into a Loan and Security Agreement (“Security Agreement”) with the entity known as PKT Strategic Assets, LLC (the “Holder”) pursuant to which the Company issued a Senior Secured Promissory Note for $150,000 (the “Note”). The Note has an interest rate is 12% per annum compounded daily with a minimum interest payment of $2,000. The Note grants the Holder a secured interest in all the assets of the Company. During 2016 to the period ended June 30, 2022, the Holder extended the Note pursuant to various amendments. Pursuant to the amendments, the principal amount and interest totaled $4,532,333 (including fees and other expenses). The Holder’s corporation is controlled by Ms. Tangredi, related to Tim Tangredi: the Company’s CEO and stockholder, and therefore, is a Related Party of the Company. The Company is to pay the Holder the principal, plus all interest and fees due in accordance with terms and conditions of the Security Agreement on the earlier of: (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii.) November 1, 2021 which has expired. The Holder has not declared the Note in Default as the Parties have reached a tentative agreement to several issues including the extension of the Maturity Date (the “Maturity Date”). The Parties are working to complete this agreement during the third quarter of 2022. The Company has recorded interest expense of $220,395 and $66,370 for the three-month periods ended June 30, 2022 and 2021, respectively and $369,461 and $130,353 for the six-month periods ended June 30, 2022 and 2021, respectively. We made a payment of fees and accrued interest totaling $154,398 during the six months ended June 30, 2022. Accrued interest was $2,367,436 and $2,152,373 at June 30, 2022 and December 31, 2021, respectively.

Between April of 2021 and September 30, 2021, JMS Investments of Staten Island, NY, USA invested $376,000 in seven separate transactions. The sums are repayable in the form of one-year demand notes having an interest rate of 8.5%.

On August 30, 2021, the Company entered a promissory note with GEX Management, Inc. The note matured on February 28, 2022 and bears interest at 10% per year. The note was repaid in December 2021. In connection with this note, the Company has agreed to issue 1,000,000 shares of common stock to the lender. These shares have not been issued at June 30, 2022. The shares to be issued have been valued at $120,990, which has been recorded as debt discount. The discount has been fully amortized in 2021. The value of the shares has been included in accrued expenses at December 31, 2021.

On June 15, 2022, the Company entered into two convertible promissory notes aggregating $300,000. The notes mature on the earlier of December 15, 2022 or 10 days after demand and bear interest at 8% per year. The Company received proceeds of $300,000. The notes are convertible into shares of common stock at a fixed conversion price of $0.30 per share. The Company has recorded debt discount of $200,000, related to the beneficial conversion feature of the notes. The discount will be amortized to interest expense over the six-month term of the notes, and $17,486 was amortized during the three and six months ended June 30, 2022.

On September 20, 2021, the Company entered a convertible promissory note with GS Capital Partners, LLC. The note matures on September 20, 2022 and bears interest at 8% per year. The Company received proceeds of $197,000, after deduction of $20,000 of original issue discount and $3,000 of costs. In connection with this note, the Company has issued a warrant to purchase 1,466,666 shares of common stock to the lender. The warrant has an exercise price of $0.15 per share and expires on September 21, 2026. The relative fair value of the warrant was $110,000, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.84%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 389%; and (4) an expected life of 5 years. The note is convertible into shares of common stock at a fixed conversion price of $0.10 per share. The company has recorded a beneficial conversion feature of $90,000. Amortization of discount and costs was $55,597 and $110,584 for the three and six months ended June 30, 2022, respectively.

During the fourth quarter of 2021, the Company entered into twenty convertible promissory notes with various holders aggregating $1,412,000. The notes mature one year from issuance and bear interest at 8% per year. The Company received proceeds of $1,287,000, after deduction of $117,000 of original issue discount and $8,000 of costs. In connection with the notes, the Company has issued warrants to purchase 10,463,332 shares of common stock to the lenders. The warrants have an exercise price of $0.15 per share and expire five years from the date of issuance. The relative fair value of the warrants was $1,366,127, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.84% - 1.33%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 386% - 389%; and (4) an expected life of 5 years. The notes are convertible into shares of common stock at a fixed conversion price of $0.10 per share. A total of $1,412,000 has been recorded as debt discount, and 8,000 has been recorded as deferred debt costs. The discount and costs will be amortized to interest expense over the term of the notes Amortization of discount and costs was $349,355 and $699,492 for the three and six months ended June 30, 2022, respectively.

During May 2022, the Company issued 457,500 shares of common stock upon the conversion of $45,000 of notes payable, plus $750 of costs. Unamortized discount and debt costs related to the principal converted were $21,206 and $514, respectively, which were charged against paid in capital upon conversion.

The sums advanced by GS Capital Partners and JMS Investments together form a “bridge loan” for use by the Company to, among other actions, bring all filings current to return to fully reporting status with the SEC and OTC, and allow the Company to obtain the critical resources which allow Dais to grow as management and the bridge investors believe is possible using the company’s proven nanotechnology in sustainable product in a worldwide market. Currently, JMS Investments, the Company, and the Senior Secured Note Holder are negotiating the definitive investment plan along with terms and uses of proceeds. It is expected the full investment plan will be ready for announcement in the third quarter of 2022.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and outside legal and accounting resources of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC as a result of limited resources, and a lack of segregation of duties.

During our most recent quarter, there has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be engaged in various lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any pending legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial condition or results of operations. The information required by this Item is incorporated herein by reference to Notes to Financial Statements––Note 10. Litigation in Part I, Item 1, of this Quarterly Report on Form 10-Q.

There were no unregistered sales of the Company’s equity securities during the quarter ended June 30, 2022 , that were not previously reported in a Current Report on Form 8-K.

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

i New York		i 14-1760865
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

i 11552 Prosperous Drive, i Odessa, i Florida		i 33556
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Large, accelerated filer	☐	Accelerated filer	☐
i Non-accelerated Filer	☒	Smaller reporting company	i ☒
Emerging Growth Company	i ☐

	June 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	i 44,150		$	i 773,423
Accounts receivable, net		i 52,295			i 51,917
Inventory		i 212,155			i 72,067
Prepaid expenses		i 89,666			i 32,637
Total Current Assets		i 398,266			i 930,044
Property and equipment, net		i 35,621			i 13,353
OTHER ASSETS:
Deposits		i 4,780			i 4,780
Patents, net		i 154,135			i 152,924
Total Other Assets		i 158,915			i 157,704
TOTAL ASSETS	$	i 592,802		$	i 1,101,101

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable, including related party payables of $ i 263,292 and $ i 282,729 at June 30, 2022 and December 31, 2021, respectively	$	i 951,003		$	i 922,305
Accrued expenses, other, including interest due to related party of $ i 2,369,086 and $ i 2,153,723 at June 30, 2022 and December 31, 2021, respectively		i 3,248,184			i 2,945,918
Accrued compensation and related benefits		i 2,221,779			i 2,208,692
Customer deposits		i 360,454			i 35,306
Advance payment received for convertible note		i 15,000			i 15,000
Advance payment received for purchase of common stock		i 30,000			i 30,000
Notes payable to related parties		i 2,174,897			i 2,174,897
Current portion of deferred revenue		i 273,656			i 298,656
Note payable – due within one year		i 376,000			i 376,000
Convertible notes payable, net of unamortized discount and debt costs of $ i 788,557 and $ i 1,437,838, respectively		i 1,098,443			i 194,162
Total Current Liabilities		i 10,749,416			i 9,200,936
Notes payable – due after one year		i 272,340			i 272,340
Total Liabilities		i 11,021,756			i 9,473,276
STOCKHOLDERS’ DEFICIT
Preferred stock, undesignated; $ i 0.01 par value; i 7,990,000 shares authorized; no shares issued and outstanding		i -			i -
Preferred stock, Series A; $ i 0.01 par value; i 2,000,000 shares authorized; no shares issued and outstanding		i -			i -
Preferred stock, Series B; $ i 0.01 par value; i 10,000 shares authorized; i 10 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		i -			i -
Common stock; $ i 0.01 par value; i 1,100,000,000 shares authorized; i 9,269,562 and i 9,415,425 shares issued and i 9,268,933 and i 9,414,796 shares outstanding at June 30, 2022 and December 31, 2021, respectively		i 92,695			i 94,154
Common stock to be issued, i 1,000,000 and no shares, respectively		i 10,000			-
Capital in excess of par value		i 51,056,094			i 50,818,885
Accumulated deficit		( i 60,125,631	)		( i 57,823,102	)
		( i 8,966,842	)		( i 6,910,063	)
Treasury stock at cost, i 629 shares at June 30, 2022 and December 31, 2021, respectively		( i 1,462,112	)		( i 1,462,112	)
Total Stockholders’ Deficit		( i 10,428,954	)		( i 8,372,175	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	i 592,802		$	i 1,101,101

Dais Corp. – ‘10-Q’ for 6/30/22

On: Thursday, 8/18/22, at 4:43pm ET · For: 6/30/22 · Accession #: 1477932-22-6267 · File #: 0-53554

Previous ‘10-Q’: ‘10-Q’ on 5/23/22 for 3/31/22 · Next: ‘10-Q’ on 11/21/22 for 9/30/22 · Latest: ‘10-Q’ on 11/14/23 for 9/30/23

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021	3
	Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	4
	Condensed Statement of Stockholders’ Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited)	5
	Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

SIGNATURES		32

	For the Six Months Ended June 30,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	( i 2,302,529	)	$	i 1,818,604
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		i 13,949			i 10,605
Stock based compensation		i -			i 751,457
Change in fair value of derivative liability		i -			( i 2,241,678	)
Gain on extinguishment of debt		i -			( i 1,148,554	)
Non-cash interest expenses		i 750			i 124,290
Amortization of debt discount and debt costs		i 849,282			i -
(Increase) decrease in:
Accounts receivable		( i 378	)		( i 16,482	)
Inventory		( i 140,088	)		( i 610	)
Other receivables		i -			( i 16,664	)
Prepaid expenses/Other assets		( i 57,029	)		( i 31,000	)
Increase (decrease) in:
Accounts payable		i 28,698			i 8,033
Accrued expenses		i 315,352			i 323,006
Customer deposits		i 325,148			i 50,036
Deferred revenue		( i 25,000	)		( i 25,000	)
Net cash used in operating activities		( i 991,845	)		( i 393,957	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in property and equipment		( i 26,435	)		i -
Increase in patent costs		( i 10,993	)		( i 12,064	)
Net cash used in investing activities		( i 37,428	)		( i 12,064	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - related parties		i -			i 49,297
Proceeds from note payable		i 300,000			i 435,340
Repayment of note payable		i -			( i 26,200	)
Net cash provided by financing activities		i 300,000			i 458,437

Net decrease in cash		( i 729,273	)		i 52,416
Cash, beginning of period		i 773,423			i 36,516
Cash, end of period	$	i 44,150		$	i 88,932
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	i 154,398		$	i -

NON-CASH FINANCING AND FINANCING ACTIVITIES
Issuance of common stock and warrants upon settlement of notes and accrued interest	$	i -		$	i 2,687,134
Issuance of common stock upon conversion of notes	$	i 45,750			i -
Notes and accrued interest settled with common stock and warrants	$	i -		$	i 2,107,414
Beneficial conversion feature of convertible debt	$	i 200,000			i -
Derivative liability extinguished	$	i -		$	i 1,728,274

	·	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
	·	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
	·	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

	June 30,
	2021
Balance, beginning of period	$	i 3,845,662
Additions		i 124,290
Extinguished derivative liability		( i 1,728,274	)
Change in fair value of derivative liabilities		( i 2,241,678	)
Balance, end of period	$	i -

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Net income attributable to common shareholders	$	i 75,544		$	i 1,818,604
Income attributable to note derivatives
Change in fair value of derivatives		( i 60,311	)		( i 2,241,678	)
Gain on extinguishment of debt		( i 1,148,554	)		( i 1,148,554	)
Expense attributable to note derivatives
Interest expense		i 88,756			i 216,378
Diluted loss attributable to common shareholders	$	( i 1,044,565	)	$	( i 1,355,250	)

Basic shares outstanding		i 3,691,248			i 1,994,429
Derivative notes and interest shares		i 4,639,561			i 5,831,493
Diluted shares outstanding		i 8,330,809			i 7,825,922

Diluted loss per share	$	( i 0.13	)	$	( i 0.17	)

	June 30,		December 31,
	2022		2021
Accrued expenses, other	$	i 659,970	$	i 656,810
Accrued interest		i 2,496,683		i 2,197,577
Accrued warranty costs		i 91,531		i 91,531
	$	i 3,248,184	$	i 2,945,918

	June 30, 2022			December 31, 2021
Convertible notes payable, bearing interest at 8- 10%	$	i 1,887,000		$	i 1,453,960
Unamortized debt discount		( i 785,303	)		( i 1,428,726	)
Unamortized deferred debt issuance cost		( i 3,254	)		( i 9,112	)
Total		i 1,098,443			i 194,162
Current portion	$	i 1,098,443		$	i 194,162

Company	Sum Owned		Payment Plan	Legal Action
Old Dominion Freight Line	$	i 13,576.95	i No	i Yes
Power Plant Services	$	i 85,199.11	i No	i Yes
SoftinWay	$	i 4,850.00	i Yes	i Yes
The O-Ring Store	$	i 10,334.00	i No	i Yes
Total	$	i 113,960.06

	For the Three Months Ended
	June 30,
	2022			2021

REVENUE
Sales	$	117,699		$	109,181
Royalty and license fees		12,500			12,500
		130,199			121,681

COST OF GOODS SOLD		177,205			45,030

GROSS MARGIN		(47,006	)		76,651

OPERATING EXPENSES
Research and development, net of government grant proceeds of $0 and $29,886, respectively		61,748			26,329
Selling, general and administrative		403,349			1,023,687
TOTAL OPERATING EXPENSES		465,097			1,050,016

LOSS FROM OPERATIONS		(512,103	)		(973,365	)

OTHER INCOME (EXPENSE)
Interest expense		(686,176	)		(159,956	)
Change in fair value of derivative liabilities		-			60,311
Gain on extinguishment of debt		-			1,148,554

TOTAL OTHER INCOME (EXPENSE), NET		(686,176	)		1,048,909

NET INCOME (LOSS)	$	(1,198,279	)	$	75,544

NET INCOME (LOSS) PER COMMON SHARE, BASIC	$	(0.12	)	$	0.02

NET LOSS PER COMMON SHARE, DILUTED	$	(0.12	)	$	(0.13	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,717,827			3,691,248
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,717,827			16,964,471

	·	Additional infrastructure needed to support the expanded commercialization of our ConsERV and Aqualyte products and/or new product applications of our polymer technology for, among other things, administrative personnel, physical space, marketing and channel support and information technology;

	·	The issuance and recognition of expenses related to fair value of new share-based awards, which is based on various assumptions including, among other things, the volatility of our stock price; and

	·	Additional expenses because of being an SEC reporting company, including, but not limited to, director and officer insurance, director fees, SEC compliance expenses, transfer agent fees, additional staffing, professional fees, and similar expenses.

	For the Six Months Ended
	June 30,
	2022			2021

REVENUE
Sales	$	160,894		$	171,990
Royalty and license fees		25,000			25,000
		185,894			196,990

COST OF GOODS SOLD		229,645			82,890

GROSS MARGIN		(43,751	)		114,100

OPERATING EXPENSES
Research and development, net of government grant proceeds of $0 and $60,966, respectively		126,621			39,846
Selling, general and administrative		828,625			1,285,074
TOTAL OPERATING EXPENSES		955,246			1,324,920

LOSS FROM OPERATIONS		(998,997	)		(1,210,820	)

OTHER INCOME (EXPENSE)
Interest expense		(1,281,812	)		(360,808	)
Change in fair value of derivative liabilities		-			2,241,678
Gain on extinguishment of debt		-			1,148,554

TOTAL OTHER INCOME (EXPENSE), NET		(1,281,812	)		3,029,424

NET INCOME (LOSS)	$	(2,280,809	)	$	1,818,604

NET INCOME (LOSS) PER COMMON SHARE, BASIC	$	(0.24	)	$	1.29

NET LOSS PER COMMON SHARE, DILUTED	$	(0.24	)	$	(0.17	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		9,567,149			1,994,429
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, DILUTED		9,567,149			278,128

	1.	The Company is actively working with selected targeted parties who are interested in licensing, purchasing the rights to, or establishing a joint venture to commercialize applications of the Company’s technology;

	2.	The Company continues to seek capital from certain strategic and/or government grant opportunities and related sources. These sources may, pursuant to any agreements that may be developed in conjunction with such funding, assist in the product definition and design, roll-out and channel penetration of products; and

	3.	The Company increased its value and potential to attract new investors when it completed the exchange program of ‘debt to equity’ in the 2^nd quarter of 2021 clearing out all convertible debt in exchange for equity at a fixed price at the end of the second quarter of 2021. This has helped the Company attract growth capital it could not prior to this ‘debt to equity’ exchange.

	1.	In the face of current world events (financial market see-sawing, war, China slow-down, supply chain challenges, etc.) our products remain in demand.

	2.	The Company’s ability to raise new funds while improved by the solution of the Company’s previous convertible note matter and the uptick in new orders for product, remains challenged. World events find varying degrees of effect on the Company’s going forward ability to raise reasonably priced growth capital in the amount(s) required. This is a challenging time to raise growth capital and become profitable.

	3.	We believe our current cash position, and our projected ability to attract additional growth capital accelerating sustainable revenue generation (cash flow) from operations and investments, is adequate through the end of the third quarter 2022. At which time the combination of our progress in the market, greater and stronger market validation of our industry changing benefits, and cautiously optimistic optimism that the recent downturn of the public markets worldwide will have turned, finding additional growth capital will be in place.

	4.	The Company entered into a Loan and Security Agreement in June 2016 pursuant to which the Company issued a Senior Secured Promissory Note that granting the Holder a secured interest in all the assets of the Company. All Parties are working to resolve open issues in the late 3^rd quarter or early 4^th quarter of 2022.

	5.	The supply chain impact of recent world events is affecting the Company’s ability to produce product for its customers. Inability to timely acquire specified components may find the Company needing to redesign and recertify its products, or to stop production until the supply chain matter is resolved. In either event this will cause loss of sales revenue, potentially key Dais team members, and customers. The Company has successfully implemented several workarounds including sourcing ‘similar but when installed equal’ components with new vendors to supply needed components. Additionally, the Company is collaborating with its highest profile suppliers to accelerate improved paths to minimize the impact of this situation. We believe the recurring Supply chain shortages, and the impact of the inflationary spiral has and is impacting the Company’s growth plans, operations, revenues, and relationships with its customers. We have experienced low staffing levels at vendors’ companies, sudden cancellation of long lead time, high value engineered components with no future delivery times provided, rapid price increases in key commodity-like components, and a significant hourly labor increase. We believe this upward spiral of the costs, and uncertainty for costs and delivery will continue to have an impact on the Company, and its customers until at least the end of 2022. Management has and continues to work to diversify existing, and new partners, to identify multiple sources of materials and components, and to create alternative solutions for customers. Increase crude oil prices continue to influence the cost of resins, plastics, and fuel. Shipping and trucking costs have increased, capacity has contracted, and shipping times have increased. These issues are increasing costs across industries. Management has adjusted prices and lead times and will continue to monitor the situation.

Exhibit		Incorporated by Reference			Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))				☒
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))				☒
32.1	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*				☒
32.2	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*				☒
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).				☒
101.SCH	Inline XBRL Taxonomy Extension Schema Document.				☒
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.				☒
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				☒
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.				☒
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				☒
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).				☒

	DAIS CORPORATION

Date: August 18, 2022	By:	/s/ *Tim N. Tangredi*
		Tim N. Tangredi
		President and Chief Executive Officer
		(Principal Executive Officer)
		(Principal Financial and Accounting Officer)

This ‘10-Q’ Filing	Date	Other Filings

	9/21/26
	12/31/22
	12/15/22
	9/20/22
Filed on:	8/18/22
	7/28/22
	7/12/22
For Period end:	6/30/22	NT 10-Q
	6/15/22
	5/17/22	NT 10-Q
	5/15/22
	4/29/22
	4/15/22	10-K
	3/31/22	10-Q, 8-K, NT 10-K, NT 10-Q
	3/22/22
	3/17/22
	3/15/22
	2/28/22
	12/31/21	10-K, NT 10-K
	11/1/21
	10/12/21	10-Q
	10/8/21
	9/30/21	10-Q, 8-K
	9/20/21
	8/30/21
	8/29/21
	7/31/21
	6/30/21	10-Q
	5/31/21
	3/31/21	10-Q, NT 10-K, NT 10-Q
	1/25/21
	12/31/20	10-K, 10-K/A, NT 10-K
	6/30/20	10-Q, NT 10-Q
	6/12/20
	4/29/20
	10/12/19
	2/27/19
	10/24/18
	12/21/17
	6/24/16
	6/16/16
	2/27/15	8-K, 8-K/A
	12/13/99
	4/8/93
		List all Filings