Forward-looking Statements





This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
other Federal securities laws, and is subject to the safe-harbor created by such
Act and laws. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "intend," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of such terms, or other variations thereon or comparable terminology.
The statements herein and their implications are merely predictions and
therefore inherently subject to known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results, performance levels
of activity, or our achievements, or industry results to be materially different
from those contemplated by the forward-looking statements. Except as required by
law, we undertake no obligation to release publicly the result of any revision
to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Further information on potential factors that could affect
our business is described under the heading "Risk Factors" in our registration
statement on Form S-1 as filed with the Securities and Exchange Commission, or
the SEC, on October 28, 2021As used in this quarterly report, the terms "we",
"us", "our", the "Company" and "AppYea" mean AppYea, Inc. and our wholly-owned
subsidiaries Sleepx LTD and Ta-Nooma LTD unless otherwise indicated or as
otherwise required by the context.



Overview



AppYea, Inc. is a digital health company, focused on the development of accurate
wearable monitoring solutions to treat sleep apnea and snoring and fundamentally
improve quality of life.

Our solutions are based on our proprietary intellectual property portfolio comprised of Artificial Intelligence (AI) and sensing technologies for the tracking, analysis, and diagnosis of vital signs and other physical parameters during sleep time, offering extreme accuracy at affordable cost.





AI is a broad term generally used to describe conditions where a machine mimics
"cognitive" functions associated with human intelligence, such as "learning" and
"problem solving. Basic AI includes machine learning, where a machine uses
algorithms to parse data, learn from it, and then make a determination or
prediction about a given phenomenon. The machine is "trained" using large
amounts of data and algorithms that provide it with the ability to learn how to
perform the task.



General Background



Snoring is a general disorder caused due to repetitive collapsing and narrowing
of the upper airway. Individuals with snoring problems are at increased risk of
accidental injury, depression and anxiety, heart disease and stroke. Currently
available treatments include surgical and non-surgical devices.



According to Fior Markets, a market intelligence company, the Global
Anti-Snoring Treatment Market is expected to grow from USD 4.3 billion in 2020
to USD 8.6 billion by 2028, with a 9.07% CAGR between 2021 and 2028. While North
America had the largest market share of 28.12% in 2020, Asia-Pacific region is
witnessing significant growth due to the increasing prevalence of obesity and
sedentary lifestyles in emerging economies.



Currently available anti-snoring devices consist mainly of oral appliances that
are recommended for use by patients suffering of snoring or obstructive sleep
apnea. These appliances are put before sleep and have a simple function of
pushing either the lower jaw or the tongue forward. This keeps the epiglottis
parted from the uvula and prevents the snoring sound created by the vibration of
soft tissues of palate.



Sleep apnea is a severe sleep condition in which individuals frequently stop
breathing in their sleeping, this leads to insufficient oxygen supply to the
brain and the rest of the body which, in turn may lead to critical problems.
There are three main types of apnea: (i) Obstructive Sleep Apnea ("OSA"), the
most common form caused by the throat muscles relaxing during sleep; (ii)
Central sleep apnea, which occurs when the brain doesn't send the proper signals
to the muscles that control the breathing; and (iii) complex sleep apnea
syndrome, which occurs when an individual suffers from both OSA and central
sleep apnea. While OSA is a common disorder in the elderly population, affecting
approximately 13 to 32% of people aged over 65, sleep apnea can occur at any age
and affects approximately 25% of men and nearly 10% of women.



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In 2020, North America dominated the sleep apnea device market, as it accounted
for 49% of the revenue, the global market size was valued at USD 3.7 billion and
is expected to expand by 6.2% CAGR, according to a report by Grand View Research
Inc., reaching USD 6.1 billion by 2028.



The global sleep apnea and snoring market is driven in large part by solutions
that can be applied in at home-settings or healthcare settings, as these tools
will drive decisions regarding specific treatments and the associated outlays.
However, despite advances in medical imaging and other diagnostic tools,
misdiagnosis remains a common occurrence. We believe that improved diagnoses and
outcomes are achievable through the adoption of AI-based decision support tools.

Our Products and Product Candidates





Our initial focus is on the development of supporting solutions utilizing our
proprietary platform. Our current business plan focuses on two principal devices
and an App currently in development:

DreamIT - Biofeedback snoring treatment wristband, combined with the SleepX App.





This wristband uses unique algorithms designed by SleepX combined with sensors
to monitor physiological parameters during sleep. Based on real time reactions,
the wristband will vibrate, when necessary, in order to decrease the snoring and
regulate breathing by gently bringing the user to a lighter sleep and thus
ceasing the snoring event.

The DreamIT product is currently in testing and calibration stage in preparation for serial manufacturing.





DreamIT PRO - is a wristband for the treatment of sleep apnea using biofeedback
in combination with SleepX PRO app. The unique algorithms of SleepX PRO,
combined with the wristband sensors, monitor sleep apnea events and additional
physiological parameters during sleep, and when necessary, the wristband
vibrates according to real time events, in order to decrease and cease sleep
apnea events.



The DreamIT PRO product is currently in advanced development stages, following
which it would be ready to begin the testing stage in preparation for filing for
FDA approval.

SleepX PRO - Is a medical application, available for downloading on a smartphone, and used to monitor breathing patterns in the sleep and identify sleep apnea episodes without direct contact to the user.

The SleepX PRO product is currently awaiting approval from the Helsinki committee to begin clinical trials in Soroka hospital in Israel for final calibration, following which we will file for FDA approval.





Recent Corporate History



Reverse Merger



On August 2, 2021, AppYea entered into a stock exchange agreement with SleepX
Ltd., a company formed under the laws of the State of Israel ("SleepX") and
controlled by the majority shareholder of AppYea, our chief executive officer
Barry Molchadsky. Pursuant to the agreement, the outstanding equity capital
consisting of 1,724 common shares of SleepX was exchanged for 174,595,634 shares
of common stock of the Company, based on the agreement that determined that to
SleepX shareholders will be issued common shares in the amount that will result
in them holding 80% of the common shares issued of AppYea. The agreement was
subject to certain terms before the agreement could be closed. On December 31,
2021, the agreement was consummated as the terms of the agreement were
fulfilled; As a result, SleepX became a wholly owned subsidiary of the Company.
The issuance of the shares to SleepX shareholders, due to administrative matters
was completed in March 2022 after the Company completed a reverse stock split.



In anticipation of the reverse merger described below, on July 2, 2021, Boris
Molchadsky a majority shareholder of the Company, acquired in a private
transaction from the former majority shareholder two hundred and twenty-five
thousand (225,000) Shares of Series A Preferred Stock of the Company. The Series
A Preferred Shares have the right to vote 1,000 to 1 as shares of common stock
and are convertible into 1,500 to 1 of the shares of common stock of the
Company. The acquisition of the Preferred Shares provides Boris Molchadsky
control of a majority of the Company's voting equity capital.



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Funding arrangements



(i) On November 24, 2021, the Company and Leonite Capital LLC ("Leonite")
entered into a securities purchase agreement ("SPA") pursuant to which Leonite
purchased a 8% secured convertible promissory note (the "Note") in the aggregate
principal amount of amount of $588,235.29 (the "Principal Amount"). The Note
carries an original issue discount of $88,235.29 (the "OID"), which is included
in the principal balance of the Note. Thus, the purchase price of the Note is
$500,000 computed as follows: the Principal Amount minus the OID. Leonite
remitted to us on November 24, 2021 $110,000, less $10,000 to cover Leonite's
expenses, and remitted the balance of $390,000 on May 9, 2022, advanced upon the
filing of the Registration Statement on Form S-1.



Under the terms of the SPA, we issued, as a commitment fee, to Leonite 200,000
shares of our common stock on November 24, 2021 and 300,000 warrants to purchase
additional shares of our common stock at a post-split per share exercise price
of $0.6. Upon receipt of the balance of the committed amount, we issued to
Leonite an additional 200,000 shares of our common stock and 300,000 warrants to
purchase additional shares of our common stock at a per share exercise price of
$0.6.




The maturity date of the Note is the earlier of 12 months from the date of each
advance or the date the Company closes on a registered public offering (the
"Maturity Date"). The Note bears interest at the greater of (i) the Prime Rate
plus two percent (2%) per annum, or (ii) eight percent (8%) (the "Interest
Rate"), which reset daily and shall accrue on a monthly basis and is payable on
the first of each month following the date on which the Note was issued. The
final payment of the Principal Amount and interest shall be paid by us to the
Leonite on the Maturity Date. Leonite is entitled to, from time to time convert
all or any amount of the Principal Amount and any accrued but unpaid interest of
the Note into Common Stock, at a conversion price (the "Conversion Price")

equal
to $0.50 (post-split).



Following an event of default, the Note bears interest rate of 24% per annum
with a Conversion Price equal to the lesser of (i) the $0.50; (ii) sixty percent
(60%) of the lowest trading price during the twenty one (21) consecutive trading
day period immediately preceding the Trading Day that the Company receives a
Notice of Conversion, but in any case not lower than $0.04 (on a post split
basis).

The outstanding principal amount of the Note is secured by substantially all of the assets of the Company.





Under the terms of the Note, the occurrence of any of the following constitute
events of default (each an "Event of Default"): (i) the Company's failure to pay
the principal, principal or other sum when due and such failure continues for
three business days after the due date, (ii) the Company's failure to reserve a
sufficient number of shares or issue shares as required under the SPA, (iii)
breach of any material covenant or other term or condition of the SPA or any
other transaction document in any material respect, (iv) ) the assignment by the
Company for the benefit of creditors or application for or consent to the
appointment of a receiver or trustee, or such receiver or trustee shall
otherwise be appointed, (v) the entry of a monetary judgment or similar process
in excess of $100,000 if such judgment remains unvacated for 45 day, (vi) if we
are delisted from our current trading market, (vii) cessation of operations or
failure to maintain assets to operate our business, (viii) a restatement of our
financial statements, (ix) cross defaults or entering into a variable rate
transaction, (x) DTC "chill", (xi) absence of a bid price for three trading days
and (xii) the failure of this Registration Statement to be declared effective by
September 24, 2022
Under the SPA we agreed that Leonite, while the Note is outstanding, has a right
of first refusal on any financing that we may undertake as well as Leonite's
right, through May 24, 2023, to participate in any future financing.



(ii) On August 22, 2021 Evergreen Venture partners LLC, owned by Douglas O.
McKinnon, former CEO of the company, agreed to advance to the Company up to
$265,000 in tranches under the terms of an 18 month unsecured promissory note.
Under the terms of the note, which bears interest at a rate of 8% per annum, the
investor can convert the note into shares of common stock at 35% discount to the
highest daily trading price over the 10 days' preceding conversion but in any
event not less than $0.1 per share. The note contains standard events of
default. As of the December 31, 2021, we were advanced $25,000 under the Note
and there are no assurances that can be provided that additional funds will

be
forthcoming.



(iii) In November 2021, we entered into a convertible loan agreement with for
$250,000 with a maturity date of May 2023. The loan is convertible at a price
equal to the offering price of the company registration statement.



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Key Financial Terms and Metrics

The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.





Revenues

We have not generated any revenues from product sales to date.

Research and Development Expenses





The process of researching and developing our product candidates is lengthy,
unpredictable, and subject to many risks. We expect to continue incurring
substantial expenses for the next several years as we continue to develop our
product candidates. We are unable, with any certainty, to estimate either the
costs or the timelines in which those expenses will be incurred. The design and
development of our devices will consume a large proportion of our current,

as
well as projected, resources.

Our research and development costs include costs are comprised of:

? internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions; and


? fees paid to external parties who provide us with contract services, such as
programming, preclinical testing, manufacturing and related testing and clinical
trial activities.

General and Administrative Expenses


General and administrative expenses consist primarily of salaries, employee
benefits, equity compensation, and other personnel-related costs associated with
executive, administrative and other support staff. Other significant general and
administrative expenses include the costs associated with professional fees for
accounting, auditing, insurance costs, consulting and legal services, along with
facility and maintenance costs attributable to general and administrative
functions.



Financial Expenses



Financial expenses consist primarily impact of exchange rate derived from
re-measurement of monetary balance sheet items denominated in non-dollar
currencies. Other financial expenses include bank's fees and interest on long
term loans. Financial income derives mainly from change in derivative value

of
convertible loans.



Results of Operations

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





                                 For the three- months period ended           For the nine- months period ended
                                            September 30                                September 30
                                         2022                     2021               2022                     2021
                                                           U.S dollars (in thousands)
Research and development
expenses                                   31                        4                 73                       70
General and administrative
expenses                                  513                      156              1,592                      186

Financing expenses, net                   (19 )                     (1 )              (65 )                     (2 )

Loss for the period                      (683 )                   (161 )             (738 )                   (258 )




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Revenues. We have not recorded any revenues to date.





Research and Development Expenses, Research and development expenses increased
from $4,000 and $70,000 during the three and nine months ended September 30,
2021 to $31,000 and $73,000, respectively, for the corresponding periods in
2022. The increase in each of the three and nine month periods is primarily
attributable to investment in intellectual property and development of our
products.

General and Administrative Expenses. General and administrative expenses increased from $156,000 and $186,000 for the three and nine months ended September 30, 2021. to $513,000 and $1,592,000, respectively, for the corresponding periods in 2022. The increase is primarily due to salary and professional services expenses, of which $774,800 were non-cash stock based non-cash compensation expenses resulting from options awards to our Chief Financial Officer and advisors.





Loss. Loss for the three months and nine months ended September 30, 2022 was
$683,000 and $738,000, and is primarily attributable to non-cash stock based
compensation expenses referred to above.

Liquidity and Capital Resources

From inception and through the date of the Acquisition, we have funded our operations from a combination of loans and sales of equity instruments.

As of September 30, 2022, we had a total of $82,000 in cash resources and approximately $2,514,000 of liabilities, consisting of $2,269,000of current liabilities from financing.

AppYea has experienced operating losses since its inception and had a total
accumulated deficit of $3,943,000 as of September 30, 2022. We expect to incur
additional costs and require additional capital. We have incurred losses in
nearly every year since inception. These losses have resulted in significant
cash used in operations. During the fiscal quarters ended September 30, 2022 and
2021, our cash used in operations was approximately $108,000 and $26,000,
respectively. We need to continue and amplify our research and development
efforts for our product candidates (which are in various stages of development),
strengthen our patent portfolio, establish operations processes and pursue FDA
clearance and international regulatory approvals as we continue to conduct these
activities, we expect the cash needed to fund operations to increase
significantly over the next several years.



We need to raise additional operating capital in order to maintain operations
and realize our business plan. Management believes that funds on hand, will
enable us to fund our operations and capital expenditure requirements through
December 2022. Our requirements for additional capital during this period will
depend on many factors, including the following:

? the scope, rate of progress, results and cost of our development and

engineering efforts to develop our devices, clinical studies (to the extent

necessary), preliminary testing activities and other related activities;

? the cost, timing and outcomes of regulatory related efforts for commercial

sales approvals;

? the cost and timing of establishing sales, marketing and distribution

capabilities;

? the terms and timing of any collaborative, licensing and other arrangements

that we may establish;

? the timing, receipt and amount of sales, profit sharing or royalties, if any,

from our potential products;

? the cost of preparing, filing, prosecuting, defending and enforcing any patent

claims and other intellectual property rights; and

? the extent to which we acquire or invest in businesses, products or

technologies, although we currently have no commitments or agreements relating


    to any of these types of transactions.




Our accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern, which contemplates realization of
assets and the satisfaction of liabilities in the normal course of business for
the twelve-month period following the date of these consolidated financial
statements. However, the Company has incurred substantial losses. Our current
liabilities exceed our current assets and available cash is not sufficient to
fund the expected future operations. The Company is raising additional capital
through debt and equity securities in order to continue the funding of its
operations. However, there is no assurance that the Company can raise enough
funds or generate sufficient revenues to pay its obligations as they become due,
which raises substantial doubt about our ability to continue as a going concern.
No adjustments have been made to the carrying value of assets or liabilities as
a result of this uncertainty.

We cannot be sure that future funding will be available to us on acceptable terms, or at all. Due to often volatile nature of the financial markets, equity and debt financing may be difficult to obtain.





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We may seek to raise any necessary additional capital through a combination of
private or public equity offerings, debt financings, collaborations, strategic
alliances, licensing arrangements and other marketing and distribution
arrangements. To the extent that we raise additional capital through marketing
and distribution arrangements or other collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights, future revenue streams, or product candidates or to grant licenses on
terms that may not be favourable to us. If we raise additional capital through
private or public equity offerings, the ownership interest of our existing
stockholders will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect our stockholders' rights.
If we raise additional capital through debt financing, we may be subject to
covenants limiting or restricting our ability to take specific actions, such as
incurring additional debt, making capital expenditures or declaring dividends.



Going Concern



The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern. We have a stockholders' deficit of
$2,264,000 and a working capital of ($2,410,000) at September 30, 2022 as well
as negative operating cash flows. These conditions raise substantial doubt about
our ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might be necessary if we are
unable to continue as a going concern.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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