The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the Condensed Consolidated
Financial Statements and Notes thereto included elsewhere in this Quarterly
Report on Form 10-Q, and Items 7 and 8 of our Annual Report on Form 10-K for the
year ended December 31, 2018.  Our discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and
the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors.



General Overview



Victory Oilfield Tech, Inc. ("Victory", the "Company", "we"), a Nevada
corporation, is an Austin, Texas based publicly held oilfield energy technology
products company focused on improving well performance and extending the
lifespan of the industry's most sophisticated and expensive equipment. America's
resurgence in oil and gas production is largely driven by new innovative
technologies and processes as most dramatically and recently demonstrated by
fracking. We provide and apply wear-resistant alloys for use in the global
oilfield services industry which are mechanically stronger, harder and more
corrosion resistant than typical alloys found in the market today. This
combination of characteristics creates opportunities for drillers to
dramatically improve lateral drilling lengths, well completion time and total
well costs.]



Our wear-resistant alloys reduce drill-string torque, friction, wear and
corrosion in a cost-effective manner, while protecting the integrity of the base
metal. We apply our coatings using advanced welding techniques and thermal spray
methods. We also utilize common materials, such as tungsten carbide to chromium
carbide, to deliver the optimal solution to the customers. Some of our
hardbanding processes protect wear in tubulars using materials that achieve a
low coefficient of friction to protect the drillstring and casing from abrasion.



We plan to continue our U.S. oilfield services company acquisition initiative,
aimed at companies which are already recognized as a high-quality service
providers to strategic customers in the major North American oil and gas basins.
When completed, we expect that each of these oilfield services company
acquisitions will provide immediate revenue from their current regional customer
base, while also providing us with a foundation for channel distribution and
product development of our existing products. We intend to grow each of these
established oilfield services companies by providing better access to capital,
more disciplined sales and marketing development, integrated supply chain
logistics and infrastructure build out that emphasizes outstanding customer
service and customer collaboration, future product development and planning.



We believe that a well-capitalized technology-enabled oilfield services business
will provide the basis for more accessible financing to grow the Company and
execute our oilfield services company acquisitions strategy. We anticipate new
innovative products will come to market as we collaborate with drillers to solve
their other down-hole needs..



Recent Developments

Impact of Coronavirus Pandemic





In December 2019, a novel strain of coronavirus was reported to have surfaced in
Wuhan, China. The virus has since spread to over 150 countries and every state
in the United States. On March 11, 2020, the World Health Organization declared
the outbreak a pandemic, and on March 13, 2020, the United States declared a
national emergency. Most states and cities have reacted by instituting
quarantines, restrictions on travel, "stay-at-home" rules and restrictions on
the types of businesses that may continue to operate, as well as guidance in
response to the pandemic and the need to contain it.



Although stay at home orders and lock downs on businesses in the areas where we
operate have caused our staff to conduct business operations from their homes,
this change has not resulted in a significant impact to our ability to operate.
However, the spread of the coronavirus outbreak across the world has driven
sharp demand destruction for crude oil as whole economies ordered curtailed
activity. As a result, companies across the industry have responded with severe
capital spending budget cuts, personnel layoffs, facility closures and
bankruptcy filings. We expect industry activity levels and spending by customers
to remain depressed throughout the remainder of 2020 and into 2021 as
destruction of demand for oil and gas continues.



As the coronavirus continues to spread throughout areas in which we operate, we
believe the outbreak has the potential to have a material negative impact on our
operating results and financial condition. The extent of the impact of the
coronavirus on our operational and financial performance will depend on certain
developments, including the duration and spread of the outbreak, impact on our
operators, employees and vendors, all of which are uncertain and cannot be
predicted. The extent of the pandemic's continued effect on our operational and
financial performance will depend on future developments, including the
duration, spread and intensity of the outbreak, the pace at which jurisdictions
across the country re-open and restrictions begin to lift, the availability of
government financial support to our business and our customers, and whether a
resurgence of the outbreak occurs. Given these uncertainties, we cannot
reasonably estimate the related impact to our business, operating results and
financial condition, but it could be material.



                                       14





Key Events



On July 31, 2018, we entered into a stock purchase agreement to purchase 100% of
the issued and outstanding common stock of Pro-Tech Hardbanding Services, Inc.,
an Oklahoma corporation ("Pro-Tech"), which provides various hardbanding
solutions to oilfield operators for drill pipe, weight pipe, tubing and drill
collars and servicing Oklahoma, Texas, Kansas, Arkansas, Louisiana, and New
Mexico. We believe that the acquisition of Pro-Tech will create opportunities to
leverage its existing portfolio of intellectual property to fulfill its mission
of operating as a technology-focused oilfield services company. The stock
purchase agreement was included as Exhibit 10.1 on the Form 8-K filed by us

on
August 2, 2018.




On July 31, 2018, we entered into a loan agreement to fund the acquisition of
Pro-Tech with Kodak Brothers Real Estate Cash Flow Fund, LLC, a Texas limited
liability company ("Kodak"), pursuant to which the Company borrowed $375,000
from Kodak under a 10% secured convertible promissory note maturing March 31,
2019, with an option to extend maturity to June 30, 2019 (the "Kodak Note").
Under the loan agreement with Kodak, we issued to an affiliate of Kodak a
five-year warrant to purchase 375,000 shares of our common stock with an
exercise price of $0.75 per share. The loan agreement with Kodak was included as
Exhibit 10-3 on the Form 8-K filed by us on August 2, 2018.



Subsequent Events

During the period of April 1, 2019 through October 31, 2020, we received additional loan proceeds of $1,216,500 from VPEG pursuant to the New VPEG Note.


On October 21, 2019, we, Kodak and Pro-Tech entered into a Second Extension and
Modification Agreement, effective September 30, 2019, pursuant to which the
maturity date of the Kodak Note was extended from September 30, 2019 to December
20, 2019, and the interest rate was increased from 15% to 17.5%. Upon the
execution of the Second Extension and Modification Agreement, we paid to Kodak
interest on the Loan for the fourth quarter of 2019 in the amount of $11,059.03,
and an extension fee in the amount of $14,062.50. We agreed to: (i) pay a total
of $12,500.00 to Kodak and its manager, which represents due diligence fees;
(ii) pay to Kodak and its manager a total of $27,500, which represents $25,000
of loan monitoring fees and $2,500 of loan extension fees; (iii) on or before
October 31, 2019, pay to Kodak the sum of $125,000, as a payment of principal,
and we will incur a late of $5,000 for every seven (7) days (or portion thereof)
that the balance remains unpaid after October 31, 2019; (iv) on or before
November 29, 2019, pay to Kodak the sum of $125,000, as a payment of principal,
and we will incur a late fees of $5,000 for every seven (7) days (or portion
thereof) that the balance remains unpaid after November 29, 2019; and (v) on or
before December 30, 2019, we will pay to Kodak any unpaid and/or outstanding
balances owed on the Note. If the Note and any late fees, other fees, interest,
or principal is not paid in full by December 30, 2019, we will pay to Kodak
$25,000 as liquidated damages. As of January 10, 2020, VPEG, on our behalf, has
paid in full all amounts due in connection with the Kodak Note. The November 29,
2019 payment was not paid timely and therefore Victory incurred a $5,000
penalty. The December 30, 2019 payment was not paid timely and accordingly
Victory incurred penalties of $45,000 and interest of $9,076.



Effective September 1, 2020, we and AVV have mutually agreed to terminate the
AVV Sublicense Agreement and Trademark License. Since the date of the
Transaction Agreement, we have not realized any revenue from products or
services related to the AVV Sublicense Agreement or Trademark License. Also
effective September 1, 2020, we and LMCE have agreed to terminate the supply and
services agreement dated September 6, 2019 although we continue to purchase and
utilize the products of LMCE. We are evaluating our business strategy in light
of the current conditions of the national and global oil and gas markets.



On October 30, 2020, we and VPEG entered into an amendment to the New Debt
Agreement (the "Amendment"), pursuant to which the parties agreed to increase
the loan amount to up to $3,000,000 to cover advances from VPEG through October
30, 2020 and our working capital needs.



                                       15





Results of Operations

Three Months Ended March 31, 2019 compared to the Three Months Ended March 31, 2018





The condensed consolidated statements of operations for the three months ended
March 31, 2019 as compared to the three months ended March 31, 2018 were as
follows:





                                              Three Months Ended
                                                   March 31,                            Percentage
                                              2019           2018         Change          Change
Total revenue                              $  545,104     $        -     $ 545,104              100 %
Total cost of revenue                         262,645              -       262,645              100 %
Gross profit                                  282,459              -       282,459              100 %
Operating expenses

Selling, general and administrative           350,847        427,387      

(76,540 )            -17 %
Depreciation and amortization                  66,394            193        66,201              100 %
Total operating expenses                      417,241        427,580       (10,339 )             -2 %
Loss from operations                         (134,782 )     (427,580 )     292,798              -68 %
Other expense
Interest expense                              (44,918 )      (58,316 )      13,398              -23 %
Total other income/(expense)                  (44,918 )      (58,316 )      13,398              -23 %
Loss from continuing operations before
tax benefit                                  (179,700 )     (485,896 )     306,196              -63 %
Tax benefit                                         -              -             -              100 %
Loss from continuing operations              (179,700 )     (485,896 )     306,196              -63 %
Income from discontinued operations            59,958         49,086        10,872              -22 %

Loss applicable to common stockholders $ (119,742 ) $ (436,810 ) $ 317,068

              -73 %

Total revenue: Total revenue increased by $545,104, or 100%, for the three months ended March 31, 2019 from $0 for the three months ended March 31, 2018. The increase is primarily due to revenue from the provision of hardbanding services by our subsidiary Pro-Tech.





Total cost of revenue: Total cost of revenue increased by $262,645, or 100%, for
the three months ended March 31, 2019 from $0 for the three months ended March
31, 2018, as a result costs associated with the revenue producing activities of
our subsidiary Pro-Tech.



Selling, general and administrative:Selling, general and administrative expenses
decreased by $76,540, or 17%, to $350,847 for the three months ended March 31,
2019 from $427,387 for the three months ended March 31, 2018. $81,290 of this
decrease is due to accounting fees. The remaining decrease is due to decreases
of $37,600, $59,000, $32,666, and $15,979 in legal fees, consulting fees,
uncategorized expense, and software, respectively. These decreases are partially
offset by a $169,334 increase in Pro-Tech operating expenses, including salary
and related costs of $99,093, and $36,211 of insurance costs.



Depreciation and amortization: Depreciation and amortization increased by
$66,201, or approximately 100%, to $66,394 for the three months ended March 31,
2019 from $193 for the three months ended March 31, 2018 as a result of Victory
beginning to amortize its intangible assets in 2019.



Interest expense: Interest expense decreased by $13,398, or 23%, to $44,918 for
the three months ended March 31, 2019 from $58,316 for the three months ended
March 31, 2018. Interest expense was lower during the three months ended March
31, 2019 primarily due to converting the VPEG note to Series C Preferred Stock.



Tax benefit: There is no tax benefit recorded for either the three months ended
March 31, 2019 or 2018 due to the net operating losses ("NOL") of both periods.
The realization of future tax benefits is dependent on our ability to generate
taxable income within the NOL carry forward period. Given our history of net
operating losses, management has determined that it is more-likely-than-not we
will not be able to realize the tax benefit of the carry forwards. Current
standards require that a valuation allowance be established when it is more
likely than not that all or a portion of deferred tax assets will not be
realized.



Income from discontinued operations:Income from discontinued
operations increased by $10,872 or 22%, to $59,958 for the three months ended
March 31, 2019 from $49,086 for the three months ended March 31, 2018. Income
from discontinued operations in the 2019 and 2018 periods was due to trailing
activity managed by the Company on behalf of Aurora Energy Partners ("Aurora").



                                       16

Liquidity and Capital Resources





Going Concern



Historically we have experienced, and we continue to experience, net losses, net
losses from operations, negative cash flow from operating activities, and
working capital deficits. These conditions raise substantial doubt about our
ability to continue as a going concern within one year after the date of
issuance of the condensed consolidated financial statements. The condensed
consolidated financial statements do not reflect any adjustments that might
result if we are unable to continue as a going concern.



Management anticipates that operating losses will continue in the near term as
we continue efforts to leverage our intellectual property through the platform
provided by the acquisition of Pro-Tech and, potentially, other acquisitions. In
the near term, we are relying on financing obtained from VPEG through the New
VPEG Note to fund operations as we seek to generate positive cash flow from
operations. See Note 8 "Notes Payable," and Note 13 "Related Party
Transactions," to the accompanying condensed consolidated financial statements
for additional information regarding the New VPEG Note. In addition to
increasing cash flow from operations, we will be required to obtain other
liquidity resources in order to support ongoing operations. We are addressing
this need by developing additional capital sources which we believe will enable
us to execute our recapitalization and growth plan. This plan includes the
expansion of Pro-Tech's core hardbanding business through additional drilling
services and the development of additional products and services including
wholesale materials, RFID enclosures and mid-pipe coating solutions.



Based upon capital formation activities as well as the ongoing near-term funding
provided through the New VPEG Note, we believe we will have enough capital to
cover expenses through at least the next twelve months. We will continue to
monitor liquidity carefully, and in the event we do not have enough capital to
cover expenses, we will make the necessary and appropriate reductions in
spending to remain cash flow positive.



Capital Resources




During the three months ended March 31, 2019, we received loan proceeds of
$232,000 from VPEG through the New VPEG Note to provide funding for operations.
As of October 31, 2020 and for the foreseeable future we expect to cover
operating shortfalls, if any, with funding through the New VPEG Note we enact
our strategy to become a technology-focused oilfield services company and seek
additional sources of capital. As of October 31, 2020 the remaining amount
available to us for additional borrowings on the New VPEG Note was approximately
$515,000.




In addition, during 2019, we extended the maturity date of the Kodak Note. See
Note 8, Notes Payable and Note 13, Subsequent Events, to the condensed
consolidated financial statements for additional information regarding the

Kodak
Note.




During 2018, we converted several related party debt instruments to equity. See
Note 4, Related Party Transactions, to the accompanying condensed consolidated
financial statements for further information on these agreements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current of future effect on our financial condition.





                                       17





Cash Flow

The following table provides detailed information about our net cash flow for the three months ended March 31, 2019 and 2018:





                                                          Three Months Ended
                                                              March 31,
                                                         2019           2018
Net cash used in operating activities                  $ (50,677 )   $ (449,788 )
Net cash provided by (used in) investing activities            -

-


Net cash provided by financing activities                120,869

445,729


Net increase (decrease) in cash and cash equivalents      70,192         (4,059 )
Cash and cash equivalents at beginning of period          76,746         24,383
Cash and cash equivalents at end of period             $ 146,938     $   20,324
Net cash used in operating activities for the three months ended March 31, 2019
was $50,677 after the net loss of ($119,742) was decreased by $106,192 of
depreciation and amortization and $25,000 in share-based compensation as offset
by aggregate changes in operating assets and liabilities of ($62,127). This
compares to cash used in operating activities for the three months ended March
31, 2018 of $449,788 after the net loss for that period of ($436,810) was
increased by aggregate changes in operating assets and liabilities of ($38,171)
as offset by $25,000 in share based compensation expense.

Net cash provided by (used in) investing activities for the three months ended March 31, 2019 and 2018 was $0 in each of the respective periods.


Net cash provided by financing activities for the three months ended March 31,
2019 was $120,869 compared to $445,729 in net cash provided by financing
activities during the three months ended March 31, 2018. In each of 2019 and
2018 three month periods net cash provided by financing activities was primarily
due to debt financing proceeds from an affiliate

We believe it will be necessary to obtain additional liquidity resources in order to support our operations. We are addressing our liquidity needs by developing additional backup capital sources.

Summary of Critical Accounting Policies





The preparation of financial statements in conformity with U.S. generally
accepted accounting principles, or GAAP, requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including
the notes thereto, and related disclosures of commitments and contingencies, if
any. We have identified certain accounting policies that are significant to the
preparation of our financial statements. These accounting policies are important
for an understanding of our financial condition and results of operation.
Critical accounting policies are those that are most important to the portrayal
of our financial condition and results of operations and require management's
difficult, subjective, or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are particularly
sensitive because of their significance to financial statements and because of
the possibility that future events affecting the estimate may differ
significantly from management's current judgments. We believe the following
critical accounting policies involve the most significant estimates and
judgments used in the preparation of our financial statements:



Revenue Recognition



Effective January 1, 2018, we adopted Accounting Standards Codification ("ASC")
606, Revenue from Contracts with Customers, on a modified retrospective basis.
We recognize revenue as we satisfy contractual performance obligations by
transferring promised goods or services to the customers. The amount of revenue
recognized reflects the consideration we expect to be entitled to in exchange
for those promised goods or services. A good or service is transferred to a
customer when, or as, the customer obtains control of that good or service.



We have one revenue stream, which relates to the provision of hardbanding
services by its subsidiary Pro-Tech. All performance obligations of our
contracts with customers are satisfied over the duration of the contract as
customer-owned equipment is serviced and then made available for immediate use
as completed during the service period. We have reviewed its contracts with
Pro-Tech customers and determined that due to their short-term nature, with
durations of several days of service at the customer's location, it is only
those contracts that occur near the end of a financial reporting period that
will potentially require allocation to ensure revenue is recognized in the
proper period. We have reviewed all such transactions and recorded revenue
accordingly.

For the three months ended March 31, 2019 and 2018, all of our revenue was recognized from contracts with oilfield operators, and we did not recognize impairment losses on any receivables or contract assets.

Because the our contracts have an expected duration of one year or less, we have elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.





                                       18

Concentration of Credit Risk, Accounts Receivable and Allowance for Doubtful Accounts





Financial instruments that potentially subject us to concentrations of credit
risk primarily consist of cash and cash equivalents placed with high credit
quality institutions and accounts receivable due from Pro-Tech's customers.
Management evaluates the collectability of accounts receivable based on a
combination of factors. If management becomes aware of a customer's inability to
meet its financial obligations after a sale has occurred, we record an allowance
to reduce the net receivable to the amount that it reasonably believes to be
collectable from the customer. Accounts receivable are written off at the point
they are considered uncollectible. Due to historically very low uncollectible
balances and no specific indications of current uncollectibility, we have not
recorded an allowance for doubtful accounts at March 31, 2019. If the financial
conditions of Pro-Tech's customers were to deteriorate or if general economic
conditions were to worsen, additional allowances may be required in the future.

As of March 31, 2019, three customers comprised 37% of our gross accounts receivables.

Property, Plant and Equipment





Property, Plant and Equipment is stated at cost. Maintenance and repairs are
charged to expense as incurred and the costs of additions and betterments that
increase the useful lives of the assets are capitalized. When property, plant
and equipment is disposed of, the cost and related accumulated depreciation are
removed from the condensed consolidated balance sheets and any gain or loss is
included in Other income/(expense) in the condensed consolidated statement

of
operations.

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, as follows:





Asset category                                         Useful Life

Welding equipment, Trucks, Machinery and equipment 5 years Office equipment

                                       5 - 7 years
Computer hardware and software                           7 years

Goodwill and Other Intangible Assets





Finite-lived intangible assets are recorded at cost, net of accumulated
amortization and, if applicable, impairment charges. Amortization of
finite-lived intangible assets is provided over their estimated useful lives on
a straight-line basis or the pattern in which economic benefits are consumed, if
reliably determinable. We review our finite-lived intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

We perform an impairment test of goodwill annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To date, an impairment of goodwill has not been recorded.





Our Goodwill balance consists of the amount recognized in connection with the
acquisition of Pro-Tech. See Note 3, Pro-Tech Acquisition, for further
information. Our other intangible assets are comprised of contract-based and
marketing-related intangible assets, as well as acquisition-related intangibles.
Acquisition-related intangibles include the value of Pro-Tech's trademark and
customer relationships, both of which are being amortized over their expected
useful lives of 10 years beginning August 2018.



Our contract-based intangible assets include an agreement to sublicense certain
patents belonging to Armacor Victory Ventures, LLC (the "AVV Sublicense") and a
license (the "Trademark License") to the trademark of a proprietary coating
technology. The contract-based intangible assets have useful lives
of approximately 11 years for the AVV Sublicense and 15 years for the Trademark
License. With the initiation of a multi-year strategy plan involving synergies
between the acquisition of Pro-Tech and Victory's existing intellectual
property, we have begun to use the economic benefits of its intangible assets,
and therefore began amortization of its intangible assets on a straight-line
basis over the useful lives indicated above beginning July 31, 2018, the
effective date of the Pro-Tech acquisition.



See Note 7, Goodwill and Other Intangible Assets, for further information.




Business Combinations



Business combinations are accounted for using the acquisition method of
accounting. Under the acquisition method, assets acquired and liabilities
assumed are recorded at their respective fair values as of the acquisition date
in our condensed consolidated financial statements. The excess of the fair value
of consideration transferred over the fair value of the net assets acquired

is
recorded as goodwill.



Share-Based Compensation




From time to time we may issue stock options, warrants and restricted stock as
compensation to employees, directors, officers and affiliates, as well as to
acquire goods or services from third parties. In all cases, the we calculate
share-based compensation using the Black-Scholes option pricing model and
expenses awards based on fair value at the grant date on a straight-line basis
over the requisite service period, which in the case of third party suppliers is
the shorter of the period over which services are to be received or the vesting
period, and for employees, directors, officers and affiliates is typically the
vesting period. Share-based compensation is included in general and
administrative expenses in the condensed consolidated statements of operations.
See Note 9, Stock Options, for further information.



                                       19





Income Taxes




We account for income taxes in accordance with ASC 740, Income Taxes, which
requires an asset and liability approach for financial accounting and reporting
of income taxes. Deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities for financial reporting
purposes and such amounts as measured by tax laws and regulations. Deferred tax
assets include tax loss and credit carry forwards and are reduced by a valuation
allowance if, based on available evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.



Earnings per Share




Basic earnings per share are computed using the weighted average number of
common shares outstanding at March 31, 2019 and 2018, respectively. The weighted
average number of common shares outstanding was 28,037,713 and 5,903,454,
respectively, at March 31, 2019 and March 31, 2018. Diluted earnings per share
reflect the potential dilutive effects of common stock equivalents such as
options, warrants and convertible securities. Given the historical and projected
future losses, all potentially dilutive common stock equivalents are considered
anti-dilutive.

Recent Accounting Pronouncements


In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for
Income Taxes" as part of its initiative to reduce complexity in accounting
standards. The ASU simplifies the accounting for income taxes by removing
certain exceptions to the general principles in Topic 740. The new standard is
effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years. Early adoption is permitted. We are currently
evaluating the impact of ASU 2019-12 on our financial statements.

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