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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 Annual
 report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 For
the fiscal year ended December 31, 2023

 Transition
 report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 For
the transition period from _____________ to _____________

 COMMISSION
FILE NO. 1-11602

 Nano
Magic Inc.

 (Exact
name of registrant as specified in its charter)

 Delaware

 47-1598792

 (State
 of Incorporation)

 (IRS
 Employer Identification Number)

 31601
Research Park Drive, Madison Heights, MI 48071

 (Address
of principal executive office, including Zip Code)

 Registrant's
telephone number, including area code: (844) 273-6462

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

 Title
 of each class

 Trading
 Symbol

 Name
 of Each Exchange on Which Registered

 Common
 Stock, $0.0001 par value

 NMGX

 OTC
 Markets

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

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

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

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes No

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

 Large
 Accelerated Filer

 Accelerated
 Filer

 Non-accelerated
 Filer

 Smaller
 Reporting Company

 Emerging
 Growth Company

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

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

 If
securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received b any of the registrant's executive officers during the relevant recovery period pursuant to Section 240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the Common Stock held by non-affiliates of the Registrant, based upon the closing price of the Common Stock
on the OTCQB system on June 30, 2023 of $1.00, was approximately $ 1,003,520.

 As
of April 3, 2024, the registrant had 13,498,676
shares of common stock issued and outstanding.

 Documents
Incorporated by Reference: No documents are incorporated by reference into this annual report on Form 10-K.

 NANO

 FORM

 TABLE
OF CONTENTS

 Page

 PART
 I

 Item
 1.

 Business.

 Item
 1A.

 Risk
 Factors.

 Item
 1B.

 Unresolved Staff Comments.

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties.

 Item
 3.

 Legal
 Proceedings.

 Item
 4.

 Mine
 Safety Disclosures.

 PART
 II

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Item
 6.

 [Reserved]

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations.

 Item
 7A.

 Quantitative
 and Qualitative Disclosures About Market Risk.

 Item
 8.

 Financial
 Statements and Supplementary Data.

 Item
 9.

 in and Disagreements with Accountants on Accounting and Financial Disclosure.

 Item
 9A.

 Controls
 and Procedures.

 Item
 9B.

 Other
 Information.

 Item
 9C.

 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10.

 Directors,
 Executive Officers and Corporate Governance.

 Item
 11.

 Executive
 Compensation.

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 Item
 13.

 Certain
 Relationships and Related Transactions, and Director Independence.

 Item
 14.

 Principal
 Accounting Fees and Services.

 PART
 IV

 Item
 15.

 Exhibits,
 Financial Statement Schedules.

 SIGNATURES

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This
Annual Report on Form 10-K (this "Report") contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which includes information about us and our
industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this
Report regarding our strategy, future operations, future financial position, future net sales, projected expenses, prospects and plans
and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance or achievement to be materially different from those expressed
or implied by the forward-looking statements.

 In
some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "estimate,"
"expect," "intend," "may," "might," "plan," "project," "will,"
"would," "should," "could," "can," "potential," "continue," or
the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking
statements contain these identifying words. These forward-looking statements reflect our current views about future events and are based
on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. Actual events or results could differ materially from those expressed or implied by these forward-looking statements as a
result of various factors. There may be other factors that cause our actual results to differ materially from the forward-looking statements.

 These
forward-looking statements represent our estimates and assumptions only as of the date of this report. Unless required by U.S. federal
securities laws, we do not intend to update any of these forward-looking statements to reflect circumstances or events that occur after
the statement is made or to conform these statements to actual results.

 PART
I

 Item
1. Business

 Nano
Magic Inc., a Delaware corporation ("we", "us", "our", "Nano Magic" or the "Company"),
formerly Nano Magic Holdings Inc., develops, commercializes and markets nanotechnology powered consumer and industrial cleaners and coatings
to clean, protect, and enhance products for peak performance. Consumer products include lens and screen cleaners and coatings, anti-fog
solutions, and household and automotive cleaners and protective coatings sold direct-to-consumer and in big box retail. Nano Magic also
sells branded and private label cleaners and coatings into the optical, safety, and industrial channels. Our focus is to expand our direct-to-consumer
sales through e-commerce and to grow sales to big box retailers. We continue to sell our consumer products directly to opticians and
ophthalmologists and small optical retailers.

May 31, 2022, we sold a 70% interest in our subsidiary, Applied Nanotech, Inc. ("ANI"). The contract research services performed
by ANI for governmental and private customers was previously reported as our Contract research segment. As a result of this sale, the
Company has deconsolidated ANI from its financial reporting, and we will report as only one segment. We retain a 30% interest in ANI
that is now recorded as an equity investment. On December 31, 2022, our wholly-owned subsidiary Nano Magic LLC was merged into the parent
company and we changed our name to Nano Magic Inc.

 Our
revenue is based on the retail and institutional sale of specialty products utilizing nanotechnology to deliver unique performance attributes.
We work to understand surfaces at the nano scale, and our products for surfaces can be used on a wide variety of substrates. Our consumer
products are sold as liquids and as wet and dry towelettes. Industrial coating products are typically sold in liquid form enabling application
by a variety of common commercial techniques. We rely on intellectual property including trade secret formulations to protect our proprietary
technology.

 We
have multiple product technology platforms that offer solutions to common surface problems such as ease of cleaning, preventing fogging,
preventing accumulation of dirt or grime, improving resistance to scuffing and wear and surface protection. All our products have some
"nano" characteristic about them – whether it is being active at the molecular level, incorporation of submicron-particles,
or creating very thin, self-assembling coatings that are 20 nanometers or less in thickness.

 Our
consumer products are primarily customized cleaning and protection solutions. With respect to our consumer products, we strive to create
segment leading brands for solutions that are sustainable, of high quality, and that are both easy and safe to apply. We emphasize convenience,
such as our product that combines antifog and cleaning into one product for convenience for our users. This, and other products can be
used on eyeglasses, safety goggles and glasses, extreme sport glasses, goggles and visors. Our solutions are also packaged for use on
electronic screens, windows, mirrors, shower doors, and other similar clear surfaces along with the cleaning of everyday household surfaces.
We have also expanded into the auto care sector with Force Field windshield protection. This product creates a non-stick,
super water repellent protective barrier — like a force field — to protect the windshield against rain, bugs, and salt. The
coating solution is easy-to-apply and improves visibility and safety while driving.

 Industrial
surface treatment products include a family of coating liquids that create nano-thin, strongly-bound, invisible, "forcefield"-like
coatings on glass and ceramic surfaces and a series of clear coatings for plastics incorporating submicron sized particles to improve
abrasion resistance and wear resistance without sacrificing transparency. We manufacture our formulations internally to protect our technology
and strive to maintain the highest quality for the products that we and our commercial partners bring to the marketplace.

 Our
surface treating products include:

 Liquid
 and towelette formulations packaged for retail sale to consumers for cleaning and protecting clear surfaces – such as
 eyeglasses and sunglasses lenses, electronic touchscreens such as mobile phones and infotainment screens, windshields, windows,
 mirrors, and shower doors.

 Liquid
 formulation packaged for retail and industrial sale for cleaning surfaces.

 Anti-fogging
 liquid and towelette formulations packaged for retail sale to consumers for sport applications such as scuba masks, ski goggles,
 motorcycle shields, along with football and hockey visors and other extreme sport masks and goggles.

 Anti-fogging
 towelettes for sale to consumers and industrial users, including factory and construction workers and military and first responders
 for safety, anti-fogging and conditioning of lenses, such as protective eyewear, safety glasses masks, face shields and other applications
 such as scopes.

 Mar-resistant
 and stain-resistant coatings for porcelain and ceramic surfaces such as toilets used in restaurants, cruise ships, casinos, and office
 buildings.

 Clear
 protective coatings used on display panels and touch screens to make it easy to remove fingerprints. Applications include automotive
 and hand-held devices.

 Protective
 and water-repelling coatings on interior and exterior glass and ceramic surfaces to make it easy to clean and prevent scale and grime
 encrustation.

 Our
vision is to harness the power of nanotechnology to create a safer, more socially conscious, and higher performing world. We have three
primary areas of focus:

 1.

 Surface
 cleaning for safety, time and cost savings: Treating surfaces at the nano-scale for easy clean performance – to clean better
 and to stay cleaner longer;

 2.

 Preventing
 fogging: Surface treatments at the nano-scale to prevent fogging for safety and improved performance, especially on lenses, sportwear
 and protective eyewear; and

 3.

 Sustainability:
 Creating nano-scale devices and formulas using safe, natural ingredients and manufacturing methods while avoiding the use of harsh
 chemicals whenever possible.

 Marketing
and Distribution

 We
sell our Nano Magic branded consumer products directly to consumers and retailers in the United States and through a distributor in Canada.
Direct-to-consumer sales are through our website, nanomagic.com, on Amazon and other online marketplaces. We also have products in pharmacies,
and big box retailers. Sales to big box retailers also include private label products under the retailers' names. Some of our products
are incorporated into our customer's branded products. We continue direct sales to opticians and ophthalmologists.

 Our
industrial coating products are sold directly to institutional and industrial customers.

 Manufacturing
Operations

 We
manufacture, pack and label liquids and towelettes as well as specialty surface coatings at our 29,220-square foot facility in Madison
Heights, Michigan.

 Intellectual
Property and Proprietary Rights

 Our
nanotechnology expertise and the related intellectual property used in our current products is specialized in the areas of surface science,
molecular self-assembly, transparent composites, and surfactants. The intellectual property developed from this work is protected with
a combination of selective patents and primarily by trade secrets. This intellectual property strategy is like that used by leading companies
in the fragrance and flavors industry. No single patent is significant to any of our commercial products. Please refer to the section
entitled "Intellectual Property Rights" in this Item 1 for a more detailed discussion of these matters.

 Competition

 Products
sold into the optical segment, which has historically been our core sales channel, have a small number of significant competitors. Our
products are known to be the "benchmark" products in the optical segment and generally outperform those of our competitors.
Some of our products in this segment do compete for certain customers or certain applications against lower-priced, traditional materials.
Most of the companies selling products into the optical segment are privately-held U.S. packaging or catalog companies. Examples in the
U.S. include Hilco Accessories, OptiSource and Amcon Laboratories. These companies sell to opticians and optical stores but are not selling
their own branded products direct to consumer or in big box retail and pharmacies. Optical company, Carl Zeiss, sells its branded optical
products in big box retail.

 In
the nano-coating products area or the anti-fog product line we are not aware of any competitive products that we believe match our product
performance or processing characteristics. With the COVID-19 pandemic and fogging caused by increased use of masks, other companies have
made more of an effort to sell anti-fog products and there were new entrants into this market, but no company has a significant portion
of the market.

 Backlog

 Sales
are primarily made under purchase orders for delivery of products. We do not believe that a backlog as of any date is indicative of future
results. Some agreements give customers the right to purchase a specific quantity of products during a specified period, but these agreements
do not obligate the customers to purchase any minimum quantity. Private label customers are required to commit either to minimums or
to repurchase unique inventory items related to their product(s). The quantities purchased by the customer, as well as the shipment schedules,
are frequently revised during the agreement term to reflect changes in the customer's needs. Because of our relatively small size,
a customer's delay of a product shipment can make a difference in the results for an accounting period.

 Geographical
Information

 All
long-lived assets are in the United States.

 Sources
and availability of raw materials and the names of principal suppliers

 We
use third-party suppliers in the United States to obtain substantially all raw materials, components and packaging products. As is customary
in our industry, historically we have not had long-term or exclusive agreements with third-party suppliers and have generally made purchases
through purchase orders.

 Key
Customers

 A
limited number of key customers historically accounted for a majority of our revenue. In 2023, one account represented 41% of revenue.
In 2022, two accounts represented 44% of revenues.

 Intellectual
Property Rights

 An
important part of our overall business and product development strategy is to protect our intellectual property and, when appropriate,
we seek patent protection for our products and proprietary technology. Trade secret protection is most important to our products. Our
patent portfolio consists of approximately four issued patents.

 The
patenting of technology-related products and processes involves uncertain and complex legal and factual questions. The legal standards
change from time to time, and administrative and court interpretations are not always consistent in one jurisdiction, or across different
jurisdictions. Therefore, there is no assurance what scope of protection any issued patents will provide, or whether any such patents
ultimately will be upheld as valid by a court of competent jurisdiction in the event of a legal challenge. The costs of such proceedings
would be significant and an unfavorable outcome could result in the loss of rights to the invention at issue in the proceedings.

 If
we fail to obtain patents or elect not to file for patent protection, there can be no assurance that we can protect our rights in the
technology, or that others will not independently develop substantially equivalent proprietary products and techniques, or otherwise
gain access to our technology.

 Competitors
have filed applications for, or have been issued, patents, and may obtain additional patents and proprietary rights relating to products
or processes used in, necessary to, competitive with, or otherwise related to, our patents. The scope and validity of these patents,
and the extent to which we may be required to obtain licenses under these patents or under other proprietary rights and the cost and
availability of licenses is unknown. This may limit our ability to use and to license our technology. Litigation concerning these or
other patents could be protracted and expensive. If suit were brought against us for patent infringement, we could potentially challenge
the validity of the other patent but would need to overcome a presumption of validity. If we were found to infringe and the patent was
held valid (or was unchallenged), there could be no assurance that the prevailing party would grant us a license. Even if a license were
available, the payments that would be required would be unknown and could materially reduce the value of our interest in the affected
products.

 We
require our employees, directors, consultants, outside scientific collaborators, sponsored researchers, and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all
confidential information developed or made known to the individual through the relationship is to be kept confidential and not disclosed
to third parties except in specific circumstances. In the case of employees and some consultants, the agreements provide that all inventions
conceived by the individual while working for us will be our property. There is no assurance, however, that these agreements will provide
sufficient protection for our trade secrets in the event of unauthorized use or disclosure of such information.

and Development

and development drive our new products and improvement of existing products. Research and development costs incurred in the development
of the Company's products was $47,440 for the year ended December 31, 2023, and $16,777 for the year ended December 31, 2022. This
represented approximately 1.4% and 0.5% of our total operating costs in each of those years. The ability to engineer product performance
using nanotechnology is one of the ways we distinguish our products in marketing and sales of our products. Product research and development
work includes branding and packaging, development and refinement of formulas, engineering of liquid formulas that can be applied both
by hand and by machine, optimization for a variety of performance characteristics, testing and characterization, and work on manufacturing
processes and techniques both for producing the product, and for a customer's use of the product.

 Compliance
with Laws and Regulations

 Our
operations must satisfy governmental safety standards. Applicable safety standards are established by the U.S. Occupational Safety and
Health Administration ("OSHA"), pollution control standards by the U.S. Environmental Protection Agency ("EPA")
and other state and local regulations, including foreign regulation for products manufactured or shipped outside the U.S. We take these
requirements into account in product development. Cost of compliance with these regulations has not been significant in the past and
we do not expect it to be material in the future.

 OSHA,
the EPA, and other governmental agencies, both in the United States, the specific states in which we or our customers sell products,
and foreign countries, may adopt additional rules and regulations that may affect us and products using our technology. The cost of compliance
with these regulations has not been significant to us in the past and is not expected to be material in the future. Changing regulations,
including those regulating polyfluoroalkyl substances (PFASs), can affect us and our customers, and we have in the past, and may be required
in the future, to reformulate or change formulas and packaging to address regulatory issues. This can affect timing of sales which may
be significant in an accounting period.

 Our
commercial products do not require any government approvals.

 Employees
and Human Capital

 As
of December 31, 2023, we had 13 full-time employees. Our employees are valued team members and are important to our growth and
success. This is especially true given our relatively small size. By cross-training so that individuals can master a number of
different tasks, we try to create a more challenging work environment and minimize disruption in the case of absence or employee
departures. We strive to provide a positive work environment emphasizing a positive attitude, team work and ethical behavior. In the
first quarter of 2023, some of our key personnel agreed to take half their salary in stock options to help us conserve cash. We are
not subject to any collective bargaining agreements, and we consider our relations with our employees to be good.

 Item
1A. Risk Factors

 The
COVID-19 pandemic disrupted the global economy and the economic disruption continues to affect Nano Magic, its customers and suppliers
and resulting problems in forecasts and supply chain make operations challenging.

 The
COVID-19 pandemic coupled with government orders and regulations designed to address the effects of the pandemic disrupted the U.S. and
global economies. Inflation and changes in consumer buying patterns along with various challenges to the supply chain continue to challenge
manufacturing and retail operations including Nano Magic and its customers. The duration of the disruption and the short and long-term
effects of new and changing consumer and business behaviors are impossible to predict.

 Labor
shortages, inflation, and a variety of government regulations continue to affect Nano Magic customers – both consumer and retail
stores – and the continuing impact on customers, the supply chain, raw materials supply and pricing, and the distribution of Nano
Magic products, cannot be foreseen.

 Supply
chain disruption and sales growth can put additional strain on our need for working capital.

 Disruption
in the supply chain has caused some higher prices and longer lead times. To assure supply, Nano Magic must order materials further in
advance, increasing the time between its payments to vendors and the time when Nano Magic can realize a sale. Increased order volume
and increased sales will also require that Nano Magic buy larger quantities of raw material inventory and packaging materials. Sales
growth will increase our working capital needs, as Nano Magic must pay for the materials before it can see the increased revenue from
customers. Similarly, labor must be paid for before the revenue is realized. This can create a greater need for growth capital when funds
are already curtailed by Nano Magic's operating losses.

 Nano
Magic has limited resources which can hamper its ability to execute its business plan.

 Nano
Magic is a small company with limited human and financial resources. This limits the resources Nano Magic can devote to the sale and
promotion of its products, and may limit its ability to tackle issues that arise in manufacturing and distribution. Nano Magic's
size curtails the resources Nano Magic can devote to promoting its existing products and developing brand recognition. Nano Magic's
limited resources can constrain its ability to take advantage of opportunities, may limit its growth and may give competitors time to
challenge its products in the marketplace. These factors will make it harder for Nano Magic to be successful.

 Nano
Magic is dependent on key executives and the loss of its President and CEO or other key personnel could adversely affect its results
of operations and financial condition.

 Nano
Magic's President and CEO, Tom Berman, is under contract through the end of 2024. His vision and leadership are very important
to the execution of the Nano Magic business plan, and loss of his services would adversely affect Nano Magic's results of operations
and the value of its stock. Other executives and employees are at-will employees, so they may terminate their employment relationship
at any time. Loss of experienced personnel and their knowledge of Nano Magic's business and industry would be extremely difficult
to replace. Moreover, because of Nano Magic's small size, it would be very difficult for remaining personnel to perform the duties
fulfilled by the loss of personnel.

 Increased
sales under the Nano Magic brand name and building a strong brand with consumer brand loyalty will take time.

 Nano
Magic has placed a number of Nano Magic branded products in regional and national retailers. Developing customer loyalty and brand awareness
takes time. The time frame could be shortened if Nano Magic had greater resources for marketing and advertising.

 Consumer
confidence and spending habits have been affected by the COVID-19 pandemic and its after effects, but what that means and how this will
affect sales of Nano Magic products remains unknown.

 Nano
Magic is a small company and the marketplace for consumer cleaning products is competitive.

 Nano
Magic has a limited line of products; retail chains and big-box stores may only want suppliers that offer a more extensive product line.
Nano Magic has fewer resources than many of its competitors to devote to extending product lines, and to new products and packaging.
Its inability to devote the required resources to adapt to the demands of consumers or to meet competitive product offerings may limit
Nano Magic's ability to execute on its business plan and hurt its revenue.

 If
we or our third-party service providers experience a security breach, data loss or other compromise, including if unauthorized access
to our data, our business operations may be interrupted, our reputation and business relationships may be harmed, and we may incur other
costs.

 We
use cloud-based computer systems for our communications (e-mail, voice, data exchange, etc.), for other aspects of our operations and
for our business and financial records. Any security breach, data loss, or other compromise, including those resulting from a cybersecurity
attack, phishing attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss
or destruction of or unauthorized access to, or use, alteration, disclosure, or acquisition of, data, business disruptions and delays
as well as damage to our reputation, litigation, regulatory investigations, or other liabilities. Our website and technology infrastructure
also may experience performance issues due to a variety of factors, including infrastructure changes, human or software errors, hosting
disruptions, capacity constraints, technical failures, natural disasters, or fraud.

 We
also rely on cloud technologies from third parties in order to operate critical functions of our business, including financial management
services, relationship management services, and aspects of our manufacturing and sales functions. If our service agreements are terminated,
or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity
or damage to our providers' facilities, we could experience business interruptions as well as significant delays and additional
expense in arranging or creating new facilities and services and/or re-architecting our cloud-based offerings for deployment on a different
cloud infrastructure service provider, which could adversely affect our business, financial condition and results of operations. Our
vendors and service providers may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud. Any of the foregoing
could have a material adverse effect on our business, including our financial condition, results of operations and reputation.

 Our
facilities, as well as the facilities of third-parties that provide or maintain, or have access to our data or network infrastructure,
are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power
losses, telecommunications failures and similar events. In the event that our or any third-party provider's systems or service
abilities are hindered by any of the events discussed above, our ability to operate may be impaired. A third party's decision to
close facilities or terminate services without adequate notice, or other unanticipated problems, could adversely impact our operations.
If business continuity and disaster recovery plans of ours or of a third-party provider prove to be inadequate in preventing the loss
of data or service interruptions, this could cause further disruptions to our operations or damages to important systems or facilities
or damage to our computer hardware or systems or those of our employees, or customers. Our systems have been the target of cyber-attacks.
Although we have taken and continue to take steps to enhance our cybersecurity posture, we cannot assure that future cyber incidents
will not occur or that our systems will not be targeted or breached in the future.

 Drug
stores and big-box retail chains that Nano Magic has targeted as a distribution channel to increase its sales volume have their own challenges
in the marketplace and demand a high level of support from vendors which will be challenging for Nano Magic, due to its size and limited
resources.

 The
after effects of the pandemic continue to pose challenges for retail stores and this can make them cautious about ordering product or
trying new products. In addition, to supply a large number of stores and maintain brand quality, drug stores and big-box retail chains
often require, among other things, that their vendors comply with scheduling and packaging requirements, maintain back-up inventory in
reserves and impose other standards and restrictions on their vendors. Retail customers may delay or defer orders that can slow sales
for Nano Magic. And, if Nano Magic, because of its limited resources, cannot meet customer requirements, then it will not be able to
service these distribution channels, and Nano Magic's potential for revenue growth will be harmed. Moreover, losing a customer
may leave Nano Magic with significant obsolete inventory.

 Sales
of specialized coatings to industrial customers that incorporate Nano Magic products into their own product offerings make us dependent
on Nano Magic's industrial customers' commitment to the product and dependent on the success of Nano Magic's customers.

 Some
of Nano Magic's existing products are sold to industrial customers that incorporate Nano Magic's product into their own product
or service offering to their customers. This means the success of Nano Magic's product is dependent on the level of support, marketing
and customer assistance provided by the industrial customers. Also, Nano Magic cannot control timing, marketing or introduction of its
products or improved products, the timing or methods used to address customer concerns, and Nano Magic cannot affect directly marketing
or distribution of the products or services that incorporate its products. If Nano Magic's industrial customer has other priorities
or is unsuccessful in its marketing or provides poor customer service, then the sales of Nano Magic's products and Nano Magic's
results of operations will be adversely affected. To the extent that Nano Magic's customers feel the effects of an economic downturn
from the COVID-19 pandemic, that may lessen their interest in introducing products or services incorporating Nano Magic products.

 Risks
Relating to Nano Magic's Technology and Commercialization

 Third-parties
may claim that Nano Magic's products may infringe their intellectual property rights, which may subject it to claims, or prevent
or delay its product development efforts and stop it from selling or increase the costs of its products.

 Nano
Magic's commercial success depends in part on its ability to operate without infringing the patents and other intellectual property
rights of third parties. If claims are made that Nano Magic is using third party technology without authorization or that any third-party
patents cover Nano Magic's products or their use, then the holders of any of these patents or other intellectual property may be
able to block the sale of Nano Magic's products unless Nano Magic obtains a license or changes the products so as not to use the
third-party's intellectual property. Nano Magic could incur significant costs defending against any claim; and, if Nano Magic is
liable, then Nano Magic may not be able to enter licensing arrangements or to redesign the products at a reasonable cost or on reasonable
terms.

 Nano
Magic may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

 Nano
Magic relies on trade secrets to protect its proprietary know-how and technology, especially where Nano Magic does not believe patent
protection is appropriate or obtainable. Others independently may develop the same or similar technology, or otherwise obtain access
to Nano Magic's proprietary technology. Nano Magic relies in part on confidentiality agreements with its employees and consultants
to protect its trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential
information and may not provide an adequate remedy in the event of unauthorized disclosure. Costly and time-consuming litigation could
be necessary to enforce and determine the scope of Nano Magic's proprietary rights. Failure to obtain or maintain trade secret
protection could enable competitors to use Nano Magic's proprietary information and to develop products that better compete with
its products.

 Any
lawsuits relating to infringement of intellectual property rights necessary to defend Nano Magic or enforce its rights will be costly
and time consuming.

 Nano
Magic's ability to defend its intellectual property may require litigation to enforce its rights or to defend litigation brought
by a third-party. Any of these lawsuits, regardless of their success, could be time consuming and expensive to defend and resolve and
may require delay or suspension of commercial sales while they are pending. The cost could cause Nano Magic to forego litigation or to
settle on terms that are disadvantageous. If litigation is undertaken or defended, that attendant cost or delay could have a material,
adverse impact on Nano Magic's results of operations.

 Some
health effects of nanotechnology are unknown.

 There
has been scientific debate on the health effects of nanomaterials. The science of nanotechnology is engineering at the molecular level
to modify or build materials. Many nano-materials are found in nature; others are not naturally occurring. Some scientists believe that
certain nanomaterials may be hazardous to human health or the environment. The health effect of new materials is unknown, and can be
affected by how they are incorporated and bonded to other materials. Nano Magic focuses on materials larger than 100 nanometers so that
they are not regulated as nanoparticles, and Nano Magic carefully evaluates potential health effects of its products on its customers
and the effects of handling materials on Nano Magic's employees. Changing regulations, including those regulating polyfluoroalkyl
substances (PFASs) can affect us and our customers. Nano Magic is very mindful of the risks of materials Nano Magic uses and focuses
on health and safety. However, debate about the health effects of PFASs, nanoparticles and nanotechnology may adversely affect market
acceptance of Nano Magic's products and adversely affect its financial performance.

 Risks
Related to Ownership of Nano Magic's Common Stock

 Nano
Magic's common stock is thinly traded, and the number of free trading shares is small, thereby contributing to price volatility.

 There
is little trading of Nano Magic common stock. As a result, an investor may not be able to sell Nano Magic common stock at the time that
the investor would like to sell. Furthermore, if a stock is thinly traded, then any sale may depress the market price.

 The
limited number of Nano Magic's free trading shares may limit its ability to raise capital through private placements forcing Nano
Magic to offer its stock using more costly qualification or registration procedures.

 To
remain eligible for the OTCQB, Nano Magic must have a minimum float of 10% of the outstanding stock. Shares sold in a private placement
are restricted, and issuing too many restricted shares will take Nano Magic below the float required to remain on the OTCQB. This may
force Nano Magic to use available qualification and registration procedures for any capital raise. This in turn would require additional
time and resources before Nano Magic would have additional funds for operations or other purposes.

 The
market price of Nano Magic's common stock is subject to potential significant price fluctuation because the common stock is thinly
traded, and that could result in substantial losses for investors and subject Nano Magic to securities class action litigation.

 Among
the factors that may cause the market price of Nano Magic's common stock to fluctuate are the risks described in this "Risk
Factors" section and other factors, including:

 The
 trading volume of Nano Magic's common stock;

 in Nano Magic's capital structure, such as future issuances of securities or the incurrence of debt;

 Actual
 or expected sales of Nano Magic's common stock by its stockholders;

 Failure
 of Nano Magic's products to achieve or maintain market acceptance or commercial success;

 in the estimation of the future size and growth rate of Nano Magic's markets;

 Fluctuation
 in Nano Magic's quarterly operating results;

 Recruitment
 or departure of key personnel;

 The
 commencement or outcome of litigation involving Nano Magic, its industry segments, or some combination; and

 in legislation or regulatory policies, practices, or actions.

 In
addition, the stock market in general, the OTCQB and the market for nanotechnology companies in particular, may experience a loss of
investor confidence. Such loss of investor confidence may result in extreme price and volume fluctuations in Nano Magic common stock
that are unrelated or disproportionate to the operating performance of Nano Magic's business, financial condition or results of
operations. These broad market and industry factors may materially harm the market price of Nano Magic's common stock and expose
Nano Magic to securities class action litigation. Such litigation, even if unsuccessful, could be costly to defend and divert management's
attention and resources, which could further materially harm Nano Magic's financial condition and results of operations.

 Concentration
of stock ownership with affiliates could make a management change or an acquisition of Nano Magic more difficult.

 Approximately
72% of the common stock on a fully-diluted basis is owned or controlled by Nano Magic's present officers and directors. Certain
provisions of Nano Magic's organizational documents could discourage potential acquisition proposals, delay or prevent a change
in control of us or limit the price that investors may be willing to pay in the future for shares of Nano Magic's common stock.
For example, the amended and restated certificate of incorporation and amended and restated by-laws will:

 authorize
 the issuance of preferred stock that can be created and issued by Nano Magic's board of directors without prior stockholder
 approval, commonly referred to as "blank check" preferred stock, with rights senior to those of its common stock;

 limit
 the persons who can call special stockholder meetings;

 permit
 written action by voting stockholders, permitting affiliates acting alone to accomplish most stockholder actions;

 establish
 advance notice requirements to nominate persons for election to Nano Magic's board of directors or to propose matters that
 can be acted on by stockholders at stockholder meetings;

 not
 provide for cumulative voting in the election of directors; and

 provide
 for the filling of vacancies on Nano Magic's Board of Directors by action of a majority of the directors and not by the stockholders.

 These
provisions could also limit the price that investors would be willing to pay in the future for shares of Nano Magic common stock.

 Nano
Magic does not intend to pay dividends for the foreseeable future.

 Nano
Magic intends to retain earnings for the foreseeable future to finance the operation and expansion of its business, and Nano Magic does
not anticipate paying cash dividends. Stockholders can expect to receive a return on common stock only if the market price of the stock
increases.

 Nano
Magic's common stock is a "penny stock" under SEC rules, and it may be more difficult to resell securities classified
as "penny stock."

 Nano
Magic's common stock is a "penny stock" under applicable SEC rules (generally defined as non-exchange traded stock
with a per-share price below $5.00). Unless Nano Magic maintains a per-share price above $5.00, these rules impose additional sales practice
and disclosure requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify
as "established customers" or "accredited investors." The additional burdens imposed upon broker-dealers by such
requirements may discourage broker-dealers from effecting transactions in Nano Magic's securities, which could severely limit the
market price and liquidity of Nano Magic's securities. These requirements may also affect your ability to resell Nano Magic's
common stock.

 Nano
Magic has reported material weaknesses in its internal controls over financial reporting.

 In
order to remedy the identified deficiencies in its internal controls over financial reporting, Nano Magic may be required to add additional
staff. Nano Magic may not be able to remediate any future material weaknesses, or to complete its evaluation, testing and any required
remediation in a timely fashion. During the annual evaluation process, if Nano Magic identifies one or more material weaknesses in its
internal controls over financial reporting, then Nano Magic may be unable to assert that its internal controls are effective. If Nano
Magic is unable to assert that its internal controls over financial reporting are effective, investors then could lose confidence in
the accuracy and completeness of its financial reports, which could harm Nano Magic's stock price.

 Nano
Magic's obligations associated with being a public company require significant resources and management attention, and carry significant
cost.

 As
a public company, Nano Magic has legal, accounting, administrative and other costs and expenses that burden its profit. As a reporting
company under the Exchange Act, Nano Magic is required to file annual, quarterly and current reports with respect to its business and
financial condition, and proxy and other information statements, and is subject to the rules and regulations implemented by the Commission,
the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and accounting pronouncements and
standards of the Public Company Accounting Oversight Board, each of which imposes additional reporting and other obligations on public
companies.

 Moreover,
Nano Magic must monitor changes and comply with any changes to these rules and regulations, and with any future changes in laws, regulations
and standards relating to corporate governance and public disclosure. Nano Magic's need to comply with existing and evolving regulatory
requirements imposes administrative expense and also diverts management's time and attention from revenue-generating activities
to compliance activities, which could have a material adverse effect on its business, financial condition and results of operations.

 Item
1. Business

 Available
Information

 General
information about the Company can be found on our website, www.nanomagic.com.

 Item
1A. Risk Factors

 Item
1B. Unresolved Staff Comments

 Not
applicable.

 Item
1C. Cybersecurity

 We rely on information technology systems and networks managed and maintained
by independent third-parties. Our internal team responsible for cyber security monitors daily and weekly back-ups of our information to
protect against data loss and minimize disruption to our operations in the event of a cybersecurity incident. Our systems are accessible
by our employees and third parties as necessary and appropriate to perform services or otherwise do business with us, and we have implemented
two-factor identification for access to our systems. As part of our risk management, we provide regular training and reminders to our
associates and third parties using our systems to avoid cybersecurity incidents. Our Board receives regular updates on cybersecurity systems
as part of each management report.

 Item
2. Properties.

 We
lease our headquarters and the office, warehouse, manufacturing and laboratory space in Madison Heights, Michigan. These facilities are
adequate for our current needs.

 Item
3. Legal Proceedings.

 None.

 Item
4. Mine Safety Disclosures.

 Not
applicable.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Our
common stock, $0.0001 par value, trades on the OTC system under the symbol "NMGX". The following table sets forth, on a per
share basis for the periods indicated, the high and low sale prices for the common stock as reported by that system. These quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 High

 Low

 2022

 First

 $
 0.20

 $
 0.16

 Second

 $
 0.25

 $
 0.20

 Third

 $
 0.48

 $
 0.05

 Fourth

 $
 0.26

 $
 0.05

 2023

 First

 $
 0.25

 $
 0.25

 Second

 $
 1.06

 $
 0.25

 Third

 $
 1.15

 $
 0.66

 Fourth

 $
 0.89

 $
 0.57

 As
of March 29, 2024, the closing sale price for our common stock as reported on the OTCQB system was $0.40 per share. As of that date,
there were approximately 436 shareholders of record for our common stock. This does not include beneficial owners holding common
stock in street name in brokerage accounts. As of our last record of total shareholders, including those holding stock in street
name, there were approximately 3,460 shareholders.

 Cash
Dividends

 We
have never paid cash dividends on our common stock, have no plans to pay any dividends, and it is unlikely that we will pay any dividends
in the foreseeable future. We currently intend to invest future earnings, if any, to finance expansion of our business. Any payment of
cash dividends in the future will be dependent upon our earnings, financial condition, capital requirements, and other factors determined
by our board of directors.

 Recent
Issuance of Unregistered Securities

 Sales
of Stock, Warrants and Convertible Notes

 On
January 7, 2022, and again on February 14, 2022, the Company sold to several investors an aggregate of $200,000 convertible promissory
notes due March 31, 2026. Issued at face value, the notes bear interest at 8% per annum, payable semi-annually in cash. The notes are
convertible at any time at the option of the holder into shares of common stock at a conversion price of $1.75 per share.

 On
January 11, 2022, the Company sold to Magic Growth 3 LLC 222,223 shares of common stock for proceeds of $388,887 and warrants to purchase
up to 222,195 shares of common stock for proceeds of $11,114. The warrants are exercisable at any time during the four years after date
of issue at a warrant exercise price of $1.75.

 On
February 22, 2022, the Company sold to Magic Growth 3 LLC 152,778 shares of common stock for proceeds of $267,362 and warrants to purchase
up to 152,770 shares of common stock for proceeds of $7,638. The warrants are exercisable at any time during the four years after date
of issue at a warrant exercise price of $1.75.

 On
April 14, 2022, the Company sold to Magic Growth 3 LLC 69,445 shares of common stock for proceeds of $121,529 and warrants to purchase
up to 69,425 shares of common stock for proceeds of $3,471. The warrants are exercisable at any time during the four years after date
of issue at a warrant exercise price of $2.25.

 On
May 27, 2022, the Company sold to Magic Growth 3 LLC 213,889 shares of common stock for proceeds of $374,305 and warrants to purchase
up to 213,885 shares of common stock for proceeds of $10,694. The warrants are exercisable at any time during the four years after date
of issue at a warrant exercise price of $2.25.

 On
July 27, 2022, and again on August 22, 2022, the Company sold to several investors an aggregate of $100,000 convertible promissory notes
due March 31, 2026. Issued at face value, the notes bear interest at 8% per annum, payable semi-annually in cash. The notes are convertible
at any time at the option of the holder into shares of common stock at a conversion price of $1.75 per share.

 On
August 29, 2022, the Company sold to Magic Growth 3 LLC 69,445 shares of common stock for proceeds of $121,529 and warrants to purchase
up to 69,425 shares of common stock for proceeds of $3,471. The warrants are exercisable at any time during the four years after date
of issue at a warrant exercise price of $2.25.

 On
October 26, 2022, the Company sold to an investor a $25,000 convertible promissory note due October 31, 2023. On October 18, 2023,
the maturity date of this note was extended to October 31, 2024. Issued at face value, the note bears interest at 8% per annum,
payable semi-annually in cash. The notes are convertible at any time at the option of the holder into shares of common stock at a
conversion price of $1.75 per share.

 On
October 31, 2022, the Company sold to Magic Growth 3 LLC 13,889 shares of common stock for proceeds of $24,306 and warrants to purchase
up to 13,885 shares of common stock for proceeds of $694. The warrants are exercisable at any time during the four years after date of
issue at a warrant exercise price of $2.25.

 Between
December 19, 2022 and December 22, 2022, the Company sold 102,082 shares of common stock to accredited investors for aggregate
proceeds of $127,603 and sold to those investors warrants to purchase up to 101,875 shares of common stock for proceeds of $2,037.
The warrants are exercisable at any time during the four years after date of issue at a warrant exercise price of $1.75.

 On
December 6, 2022, we issued an aggregate of 176,000 shares of common stock to our directors as compensation to them for service on our
Board. These shares were valued on that date at $0.75 per share for a total value of $132,000.

 On
December 18, 2022, the Company sold to an investor a $50,000 convertible, secured promissory note due June 17, 2024. Issued at face value,
the note bears interest at 8% per annum accrued during the term of the loan, payable on maturity. The note is convertible at any time
at the option of the holder into shares of common stock at a conversion price of $1.75 per share.

 In
January 2023, the Company sold 15,749 shares of common stock to an individual, accredited investor for proceeds of $19,686 and sold to
that investor warrants to purchase up to 15,688 shares of common stock for proceeds of $314. The warrants are exercisable at any time
during the four years after date of issue at a warrant exercise price of $1.75.

 On
March 27, 2023, the Company sold 19,686 shares of common stock to an accredited investor for proceeds of $24,607 and sold to that
investor warrants to purchase up to 19,625 shares of common stock for proceeds of $393. On March 23, 2023, the Company sold 39,371
shares of common stock to an individual, accredited investor for proceeds of $49,214 and sold to that investor warrants to purchase
up to 39,313 shares of common stock for proceeds of $786. All these warrants are exercisable at any time during the four years after
date of issue at a warrant exercise price of $1.75.

 On
the dates indicated below the Company sold common stock to accredited investors for the cash proceeds indicated in the chart. The sale of these securities did not include warrants.

 Date of sale

 Shares sold

 Cash proceeds

 April 8, 2023

 333,333

 $
 250,000

 April 27, 2023

 57,143

 $

 July 25, 2023

 133,333

 $

 August 23, 2023

 266,666

 $
 200,000

 August 24, 2023

 66,666

 $

 August 31, 2023

 33,333

 $

 September 19, 2023

 33,333

 $

 October 16, 2023

 13,333

 $
 10,000

 October 26, 2023

 13,333

 $
 10,000

 November 6, 2023

 133,333

 $

 November 7, 2023

 39,999

 $
 30,000

 November 16, 2023

 133,333

 $

 November 21, 2023

 485,000

 $
 363,751

 November 24, 2023

 266,667

 $
 200,000

 March 7, 2024

 6,667

 $
 5,000

 March 14, 2024

 66,667

 $

 On June 16, 2023, the Company issued a note at
face value of $50,000 and sold that investor, for a price of $0.02 per warrant, warrants to purchase up to 10,000 shares of common stock
at an exercise price of $1.75.

 On
July 24, 2023 and on November 2, 2023, the Company sold at face amount convertible notes in the amount $50,000 each. The notes bear
interest at 8% per year, and are convertible into common stock at a conversion price of $1.25 per share at the option of the
holder.

 The
issuances of all shares described in this section were exempt from registration under the Securities Act of 1933, as amended, in reliance
on Section 4(a)(2).

 Common
Stock Issued for Services

 On
December 6, 2022, we issued an aggregate of 176,000 shares of common stock to our directors as compensation to them for service on our
Board. These shares were valued on that date at $0.75 per share for a total value of $132,000.

 In
February 2023, we reached an agreement with the landlord of our Michigan facility to accept 52,800 shares of our common stock at a price
of $1.25 per share as partial payment of rent for the six-month period from October 2022 through March 2023. Those shares were issued
in March, 2023.

 In
May 2023, we reached a further agreement with the landlord that calls for us to pay cash each month to cover the cost of the mortgage
and the lease for the lighting fixtures, but that will allow us to pay the balance of the rent by issuing shares of our stock valued
at $0.75 per share. We have the option to continue to use stock to pay a portion of the rent through 2024. On October 16, 2023, the Company
issued 52,800 shares of common stock to its landlord in Michigan in partial payment of rent. In December 2023, the Company issued an
additional 81,392 shares in partial payment of rent.

 On
May 30, 2023, the Company issued 76,922 shares of restricted common stock to a consultant as compensation for services. The shares are
subject to forfeiture until vested. So long as the consulting services agreement remains in effect 4,273 shares vested in May for prior
service, and another 4,273 shares vest at the end of May and each calendar month thereafter, with 4,277 shares vesting in December 2023.
During 2024, 3,205 shares will vest at the end of each month, with 3,206 shares vesting at the end of December 2024.

 In
August 2023, the Company issued to each of three individuals who are serving on its advisory committee a total of 38,460 shares of
restricted stock for their services during 2023, for an aggregate of 115,380 shares of restricted stock. All shares vest ratably by
December 31, 2023.

 On
December 5, 2023, the Board determined to pay accrued fees due to the directors in shares of common stock and we issued an aggregate
of 240,006 shares to present and former directors for service during 2023. All these shares were issued based on a value of $0.65
for a total value of $156,000.

 The
issuances of all shares described in this section were exempt from registration under the Securities Act of 1933, as amended, in reliance
on Section 4(a)(2).

 Stock
Options

 In
May 2023, the Board granted options with a four-year term at an exercise price of $0.65, to purchase up to 100,000 shares to our
CFO, Leandro Vera, for prior services rendered, and to Ronald J. Berman options to purchase up to 50,000 shares. Options with those
terms were also granted as compensation for services to be rendered in 2023, vesting in monthly increments, an aggregate of 60,000
each to Mr. Vera and to Jeanne Rickert, our General Counsel, and 45,000 to Ronald J. Berman. Tom J. Berman, our President and CEO,
was also granted an option to purchase up to an aggregate of 69,228 shares, vesting in monthly increments, in lieu of cash for a
portion of his salary.

 In
addition to the options described above that were not under the 2021 Equity Incentive Plan, additional options were granted to employees
and consultants during 2023 that are reflected in the table below.

 Issuer
Purchases of Equity Securities

 Neither
we nor any of our affiliates have engaged in any purchases of our equity securities during the periods discussed in this Report.

Compensation Plan Information

 The
table below sets out as of December 31, 2023 the number of securities to be issued upon the exercise of outstanding options, warrants
and rights (column (a)), the weighted average exercise price of those options, warrants and rights (column (b)), and the number of securities
remaining available for future issuance under the plan (other than the securities to be issued upon the exercise of the outstanding options,
warrants and rights) (column (c)). The options to officers and directors were not granted under any equity plan.

 Plan (none of which have been
 approved by security holders)

 Number of securities to be issued upon exercise of outstanding options, warrants and rights

 Weighted-average exercise price of outstanding options, warrants and rights ($)

 Number of securities remaining available for future issuance under equity compensation plans

 (a)

 (b)

 (c)

 2015 Equity Incentive Plan (1)

 $
 0.65

 -

 2021 Equity Incentive Plan

 369,185

 0.70

 226,625

 Options granted to Tom J. Berman (2)

 1,449,228

 0.68

 -

 Options granted to Ronald J. Berman (3)

 132,500

 0.68

 -

 Options granted to law firm (3)

 49,570

 0.01

 Option granted to Leandro Vera (3)

 160,000

 0.65

 -

 Option granted to Jeanne Rickert (3-2)

 60,000

 0.65

 Total

 2,270,483

 $
 0.67

 226,625

 (1)

 The 2015 Equity Incentive Plan was adopted by the Board on November 30, 2015. During 2020, 50,000 options were granted under the Plan. In 2021, the Board terminated the 2015 Equity Plan and no new grants can be made under this Plan.

 (2)

 Of this total, 450,000 were awarded as part of his 2019 contract, 900,000 as part of his 2021 contract, and the balance were awarded as part of his salary, in lieu of cash.

 (3)

 Options were awarded in lieu of cash for services rendered.

 Item
6. [Reserved]

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operation.

 The
following is management's discussion and analysis of certain significant factors that have affected our financial position and
operating results during the periods included in the accompanying financial statements.

 OVERVIEW

 Nano
Magic develops, commercializes and markets nanotechnology powered consumer and industrial cleaners and coatings to clean, protect, and
enhance products for peak performance. Consumer products include lens and screen cleaners and coatings, anti-fog solutions, and household
and automobile cleaners and protective coatings sold direct-to-consumer and in big box retail. Nano Magic also sells branded and private
label cleaners and coatings into the optical, safety, and industrial channels. Our focus is to expand our direct-to-consumer sales through
e-commerce and to grow sales to big box retailers. We continue to sell our consumer products directly to opticians and ophthalmologists
and small optical retailers.

May 31, 2022, we sold a 70% interest in our subsidiary, Applied Nanotech, Inc. ("ANI"). The contract research services performed
by ANI for governmental and private customers was previously reported as our Contract research segment. As a result of this sale, the
Company has deconsolidated ANI from its financial reporting, and we will report as only one segment. We retain a 30% interest in ANI
that is now recorded as an equity investment.

 RESULTS
OF OPERATIONS

 The
following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes
and related information for the periods identified below and should be read in conjunction with the financial statements
and the notes to those statements that are included elsewhere in this report. The results discussed below are for the years ended December
31, 2023 and 2022.

 Comparison
of Results of Operations for the Year Ended December 31, 2023 and 2022

 Revenues

 For
the years ended December 31, 2023 and 2022, revenues were $2,782,390 and $2,577,332, respectively. For the year ended December 31,
2023, sales increased by $205,058, or 8%, as compared to the year ended December 31, 2022. This increase is primarily driven by
increases in optical sales, e-commerce, and sales to retail customers. Sales of private label and co-branded products to optical and industrial customers remain significant. We continue to focus
to increase sales of our Nano Magic branded solutions by direct sales to consumers using e-commerce, and are expanding by placing
products with pharmacies, big box stores and other retailer outlets. Revenue opportunities from those solutions has been delayed by
the logistics and other supply chain issues those customers have been facing in their business.

 Cost
of sales

 Cost
of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation,
overhead and shipping and handling costs.

 For the year ended December 31, 2023, cost of sales
was $2,418,521 as compared to $2,481,110 for 2022, a decrease of $62,589 or 3%. Costs containment efforts and reduced headcount resulted
in improvement despite fixed costs, increased energy costs and inflation.

 Gross
profit and gross margin

 For the year ended December 31, 2023, gross profit
amounted to $363,869 as compared to $96,222 for the year ended December 31, 2022, an increase of $267,647, or 278%. The increase was due
primarily to cost containment and reduced headcount. For the years ended December 31, 2023 and 2022, gross margins were 13.1% and 3.7%,
respectively.

 Other
operating income

 For
the year ended December 31, 2023, other operating income totaled $11,420 as compared to $95,701 for the year ended December 31, 2022,
a decrease of $84,281, or 88%. The decrease was due primarily due to settlement income received in 2022.

 Operating
expenses

 For
the year ended December 31, 2023, operating expenses decreased by $329,399, or 9% as compared to the year ended December 31, 2022. For
the years ended December 31, 2023 and 2022, respectively, operating expenses consisted of the following:

 Year
 Ended December 31,

 2023

 2022

 Selling and marketing expenses

 $
 319,370

 $
 389,391

 Salaries, wages and related benefits

 864,719

 1,314,376

 Stock compensation expense

 Research and development

 47,440

 16,777

 Professional fees

 602,581

 788,641

 General and administrative
 expenses

 977,385

 829,841

 Total

 $
 3,216,221

 $
 3,545,620

 For
 the year ended December 31, 2023, selling and marketing expenses decreased by $70,021, or 18%, as compared to the year ended
 December 31, 2022. The decrease was primarily attributable to reduced direct to consumer brand marketing and more cost-effective trade
show exhibits.

 For
 the year ended December 31, 2023, salaries, wages and related benefits decreased by $449,657 or 34%, as compared to the year ended
 December 31, 2022. This was due to reduced headcount and use of options in lieu of cash for some employees.

 For
 the year ended December 31, 2023, stock compensation expense increased by $198,132, or 96%,
 as compared to the year ended December 31, 2022 due primarily to options granted to employees and consultants.

 For
 the year ended December 31, 2023, research and development costs increased by $30,663, or 183%, as compared to the year ended December
 31, 2022, due primarily to consultant expense and product development expenses.

 For
 the year ended December 31, 2023, professional fees decreased by $186,060, or 24%, as compared to the year ended December 31, 2022,
 primarily driven by reduced legal fees.

 For
 the year ended December 31, 2023, general and administrative expenses increased by $147,544, or 18%, as compared to the year ended
 December 31, 2022 primarily due to increased reserve for credit losses based on aging of receivables.

 Loss
from operations

 As a result of the factors described above, for the
year ended December 31, 2023, loss from operations amounted to $2,840,932 as compared to a loss from operations of $3,353,697 for the
year ended December 31, 2022, a decrease of $512,765 or 15%.

 Other
expense (income)

 For
the year ended December 31, 2023, total other expense amounted to $14,787 as compared to other income of $102,583 for the year ended
December 31, 2022, a decrease of $117,370 or 114%. The change is primarily due to a government grant for employee-retention tax credits
recognized in 2022 as well as reduced income from investment in subsidiary.

 Loss
from continuing operations

 For the year ended December 31, 2023, loss from continuing
operations amounted to $2,855,719 as compared to a loss from continuing operations of $3,251,114 for the year ended December 31, 2022,
a decrease of $395,395 or 12%.

 Income
(loss) from discontinued operations

 For
the year ended December 31, 2023, income from discontinued operations was $0, as compared to a gain from discontinued operations of
$1,149,525 for the year ended December 31, 2022, comprised of $1,300 income plus a gain on sale of discontinued operations of
$1,148,225.

 Net
loss

 As a result of the foregoing, for the year ended December
31, 2023 our net loss amounted to $2,855,719 as compared to a net loss of $2,101,589 for the year ended December 31, 2022, an increase
in losses of $754,130 or 36%.

 For
the years ended December 31, 2023 and 2022, net losses from continuing operations amounted to $0.25 and $0.32 per common share (basic
and diluted), respectively. For the years ended December 31, 2023 and 2022, net income from discontinued operations amounted
to $0 and $0.11 per common share (basic and diluted), respectively.

 LIQUIDITY
AND CAPITAL RESOURCES

 Liquidity is the ability of an enterprise to generate
adequate amounts of cash to meet its needs for cash requirements. We had a working capital balance of $454,969 and unrestricted cash of
$527,462 as of December 31, 2023.

 The
following table sets forth a summary of changes in our working capital from continuing operations for the period from December 31, 2023
to December 31, 2022:

 December 31, 2023

 December 31, 2022

 Dollar Change

 Percentage Change

 Working capital:

 Total current assets

 $

 1,699,821

 $

 1,900,858

 $

 (201,037

)

 (10.58

)%

 Total current liabilities

 1,244,852

 1,376,469

 (131,617

)

 (9.56

)%

 Working capital:

 $

 454,969

 $

 524,389

 $

 (69,420

)

 (13.24

)%

 The
decrease in current assets reflects decreases in accounts receivable, prepaids, and inventory balances, offset by an increase in cash.
The increase in current liabilities is primarily due to increases in accounts payable and accrued expenses.

 Net cash used by operating activities was $1,537,468
for the year ended December 31, 2023 as compared to net cash used by operating activities of $1,708,365 for the year ended December 31,
2022, a decrease of $170,897, or 10%. Net cash used by operating activities reflects a net loss of $2,855,719, partially offset by the
add-back of non-cash items totaling $1,286,581 and changes in operating assets and liabilities of $31,670. Net cash used by continuing
operations for the years ended December 31, 2023 and 2022 totaled $1,537,468 and $1,636,120, respectively. Net cash used by discontinued
operations for the years ended December 31, 2023 and 2022 totaled $0 and $72,245, respectively.

 We
have worked over the last several quarters to reduce our costs and conserve cash. Our common stock suffered an extended period with no
market makers and the caveat emptor designation on the OTC market, that made it difficult to raise additional capital. Since early March
2023, we have had market makers for our stock, and later that year the OTC removed the caveat emptor warning on our shares. In September
2023, we resumed quotation on the OTCQB.

 Net
cash provided by investing activities was $35,648 for the year ended December 31, 2023 as compared to net cash used in investing activities
of $20,090 for the year ended December 31, 2022.

 Net
cash provided by financing activities was $1,770,059 for the year ended December 31, 2023 as compared to $1,705,024 for the year ended
December 31, 2022.

 CRITICAL
ACCOUNTING POLICIES

 Our
critical accounting policies are included in Note 2 - Significant Accounting Policies of our financial statements included
within this Report.

 RECENT
ACCOUNTING PRONOUNCEMENTS

 Recently
issued accounting standards are included in Note 2 - Significant Accounting Policies of our financial statements included
within this Report.

 Item
7A. Quantitative and Qualitative Disclosures About Market Risk.

 Not
Applicable.

 Item
8. Financial Statements and Supplementary Data.

 NANO

TO FINANCIAL STATEMENTS

31, 2023 and 2022

 TABLE
OF CONTENTS

 Report
 of Independent Registered Public Accounting Firm PCAOB ID NO: 1195

 Financial Statements:

 Balance Sheets as of December 31, 2023 and 2022

 Statements of Operations for the Years Ended December 31, 2023 and 2022

 Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2023 and 2022

 Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

 Notes
 to Financial Statements

 Report
of Independent Registered Public Accounting Firm

 To
the Shareholders and Board of Directors of

 Nano
Magic Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying balance sheets of Nano Magic Inc. (the "Company") as of December 31, 2023 and 2022, and the
related statements of operations, stockholders' equity and cash flows for the years then ended, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in the United States of America.

 Substantial
Doubt about the Company's Ability to Continue as a Going Concern

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has recurring losses from operations, negative cash flow from operations, and an accumulated
deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustment that might result
from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 Basis
for Opinion

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

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

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

 To
the Shareholders and Board of Directors of

 Nano
Magic Inc.

 Page
Two

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does
not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they related.

 Critical
Audit Matter – Going Concern Assessment

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company suffered recurring losses from operations and negative cash flows from operations and expects
to continue to incur losses for at least the next twelve months. This matter is also described in the "Emphasis of Matter –
Substantial Doubt about the Company's Ability to Continue as a Going Concern" section of our report.

 We
identified management's judgements and assumptions used to assess the Company's ability to continue as a going concern as
a critical audit matter due to inherent complexities and uncertainties related to the Company's projections of operations. Auditing
these judgements and assumptions involved especially challenging auditor judgement due to the nature and extent of audit evidence and
effort required to address these matters.

 How
the Critical Audit Matter Was Addressed in the Audit

 The
primary procedures we performed to address this critical audit matter included the following: (1) evaluating management's assessment
and assessing the reasonableness of key assumptions underlying management's conclusion, (2) evaluating the probability that the
Company will be able to reduce operating expenditures or raise additional capital if required, (3) assessing management's plans
in the context of other audit evidence obtained during the audit to determine whether it supported or contradicted the conclusions reached
by management.

 Critical
Audit Matter – Going Concern Assessment - Reserve for Slow Moving, Excess and Obsolete Inventory

 As
described in Note 2 to the financial statements, management periodically performs obsolescence reviews on slow-moving and excess inventories,
and reserves are established based on current assessments about future demands and market conditions. Management determines the reserve
percentages based on an analysis of annual inventory movement, historical sales levels and future sales forecasts anticipated for inventory
items by product type. The Company's inventory balance was $1,181,273 as of December 31, 2023, which was reduced by a reserve for
slow moving, excess and obsolete inventory of $331,505.

 The
principal considerations for our determination that performing procedures relating to the reserve for slow moving, excess, and obsolete
inventory is a critical audit matter are (i) the significant judgment by management when developing the reserve and (ii) a high degree
of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions related
to stocking levels, historical sales levels, and future sales forecasts impacting the determination of the reserve percentages.

 How
the Critical Audit Matter Was Addressed in the Audit

 Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
financial statements. These procedures included, among others (i) testing management's process for developing the reserve;
(ii) evaluating the appropriateness of the analysis performed by management; (iii) testing the completeness and accuracy of
the underlying data used in the analysis; and (iv) evaluating the reasonableness of the significant assumptions used by management
related to annual inventory movement, historical sales levels, and future sales forecasts. Evaluating management's assumptions
related to annual inventory movement, historical sales levels, and future sales forecasts involved considering (i) the consumption
and use of inventory in previous periods; (ii) changes in market conditions; and (iii) whether the assumptions were consistent with
evidence obtained in other areas of the audit.

 /s/ UHY LLP

 We
have served as the Company's auditor since 2019.

 UHY
LLP

 Sterling
Heights, Michigan

 April 2, 2024

 NANO

 BALANCE SHEETS

 2023

 2022

 ASSETS

 CURRENT ASSETS:

 Cash

 $
 527,462

 $
 259,223

 Accounts receivable, net
 of allowance for credit losses of $ 150,300 and $ 29,375 at December 31, 2023 and December 31, 2022, respectively

 209,057

 348,565

 Inventory, net

 849,764

 1,120,073

 Prepaid expenses

 63,538

 132,997

 Current portion of note
 receivable

 40,000

 Total Current Assets

 1,699,821

 1,900,858

 Operating lease right-of-use assets

 845,563

 1,037,749

 Property, plant and equipment, net

 424,103

 525,809

 Note receivable, net of current position

 291,782

 375,983

 Non-marketable equity investment in subsidiary

 253,835

 250,146

 Total Assets

 $
 3,515,104

 $
 4,090,545

 LIABILITIES AND STOCKHOLDERS'
 EQUITY

 CURRENT LIABILITIES:

 Accounts payable

 $
 593,338

 $
 762,524

 Accounts payable - related
 parties

 55,520

 87,119

 Accounts payable

 55,520

 87,119

 Accrued expenses and other
 current liabilities

 245,398

 276,132

 Current portion of notes
 payable

 121,610

 26,629

 Current portion of finance
 leases

 24,194

 39,005

 Advances from related parties

 42,887

 42,887

 Current portion of operating
 lease liabilities

 161,905

 142,173

 Total Current Liabilities

 1,244,852

 1,376,469

 Notes payable, net of current portion

 375,000

 325,000

 Notes payable - related parties, net of current
 portion

 Notes payable, net of current
 portion

 Finance leases, net of current portion

 -

 24,194

 Operating lease liabilities, net of current
 portion

 560,514

 722,420

 Total Liabilities

 2,205,366

 2,473,083

 Commitments and Contingencies (See Note 14)

 -

 -

 STOCKHOLDERS' EQUITY:

 Preferred stock, $ 0.0001
 par value, 100,000 shares authorized; no shares issued and outstanding

 -

 -

 Common stock: $ 0.0001 par
 value, 30,000,000 shares authorized; 13,425,342 and 10,722,431 issued and outstanding at December 31, 2023 and 2022,
 respectively

 1,342

 1,072

 Additional paid-in capital

 16,310,868

 13,763,143

 Accumulated deficit

 ( 15,002,472
)

 ( 12,146,753
)

 Total Stockholders'

 1,309,738

 1,617,462

 Total Liabilities and Stockholders'

 $
 3,515,104

 $
 4,090,545

 See
accompanying notes to financial statements.

 NANO

 STATEMENTS OF OPERATIONS

 2023

 2022

 For
 the Years Ended

 31,

 2023

 2022

 NET
 REVENUES

 $
 2,782,390

 $
 2,577,332

 COST
 OF SALES

 2,418,521

 2,481,110

 GROSS
 PROFIT

 363,869

 96,222

 OTHER
 OPERATING INCOME

 11,420

 95,701

 OPERATING
 EXPENSES:

 Selling
 and marketing expenses

 319,370

 389,391

 Salaries,
 wages and related benefits

 864,719

 1,314,376

 Stock
 compensation expense

 and development

 47,440

 16,777

 Professional
 fees

 602,581

 788,641

 General
 and administrative expenses

 977,385

 829,841

 Total
 Operating Expense

 3,216,221

 3,545,620

 LOSS
 FROM OPERATIONS

 ( 2,840,932
)

 ( 3,353,697
)

 OTHER
(EXPENSE) INCOME

 Income
 from investment in subsidiary

 3,689

 57,289

 Interest
 expense

 ( 44,461
)

 ( 33,767
)

 Government
 grant

 -

 61,448

 Other
 income

 25,985

 17,613

 Total
Other (Expense) Income

 ( 14,787
)

 102,583

 LOSS
 FROM CONTINUING OPERATIONS

)

 ( 3,251,114
)

 INCOME
 FROM DISCONTINUED OPERATIONS

 Income
 from discontinued operations

 -

 1,300

 Gain
 on sale of discontinued operations

 -

 1,148,225

 NET
 INCOME FROM DISCONTINUED OPERATIONS

 -

 1,149,525

 NET
 LOSS

 $
)

 $
 ( 2,101,589
)

 NET
 (LOSS) INCOME PER SHARE - BASIC:

 Continuing

 $
)

 $
 ( 0.32
)

 Discontinued

 $
 -

 $
 0.11

 NET
 LOSS PER SHARE - BASIC:

 $
)

 $
 ( 0.21
)

 NET
 (LOSS) INCOME PER SHARE - DILUTED:

 Continuing

 $
)

 $
 ( 0.32
)

 Discontinued

 $
 -

 $
 0.11

 NET
 LOSS PER SHARE - DILUTED:

 $
)

 $
 ( 0.21
)

 WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING:

 Basic

 11,481,547

 10,264,381

 Diluted

 11,481,547

 10,264,381

 See
accompanying notes to financial statements.

 NANO

 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 Shares

 Amount

 Capital

 Deficit

 Class
 A Common Stock

 Additional

 Paid-in

 Accumulated

 Total

 Stockholders'

 Shares

 Amount

 Capital

 Deficit

 Balance, December 31, 2021

 9,702,680

 $

 $
 11,960,011

 $
 ( 10,045,164
)

 1,915,817

 Common stock issued for cash, net of issuance
 costs

 843,751

 1,425,436

 -

 1,425,521

 Common stock issued for services

 176,000

 131,983

 -

 132,000

 Stock-based compensation

 -

 -

 -

 Warrants and options on private placement

 -

 -

 39,119

 -

 39,119

 Net loss

 -

 -

 -

 ( 2,101,589
)

 ( 2,101,589
)

 Balance, December 31,
 2022

 10,722,431

 1,072

 13,763,143

 ( 12,146,753
)

 1,617,462

 Balance

 10,722,431

 1,072

 13,763,143

 ( 12,146,753
)

 1,617,462

 Common stock issued for cash, net of issuance
 costs

 2,083,611

 1,657,050

 -

 1,657,258

 Common stock issued for services

 426,998

 322,605

 -

 322,648

 Restricted stock issued for services

 192,302

 126,589

 -

 126,608

 Stock-based compensation

 -

 -

 -

 Stock options issued for legal services

 -

 -

 29,930

 -

 29,930

 Warrants and options on private placement

 -

 -

 6,825

 -

 6,825

 Net loss

 -

 -

 -

)

)

 Balance, December 31,
 2023

 13,425,342

 1,342

 16,310,868

 ( 15,002,472
)

 1,309,738

 Balance

 13,425,342

 1,342

 16,310,868

 ( 15,002,472
)

 1,309,738

 See
accompanying notes to financial statements.

 NANO

 STATEMENTS OF CASH FLOWS

 The
following table provides a reconciliation of cash and restricted cash reported within the balance sheets that sum to the
total of the same such amounts shown in the statements of cash flows:

 2023

 2022

 For the Years
 Ended

 31,

 2023

 2022

 CASH FLOWS FROM OPERATING ACTIVITIES

 Net loss used
 in continuing operations

 $
)

 $
 ( 3,251,114
)

 Net income from discontinued

 -

 1,149,525

 Adjustments to reconcile
 net loss to net cash used by operating activities:

 Change in inventory obsolescence
 reserve

 146,627

 119,136

 Depreciation and amortization
 expense

 111,058

 112,288

 Bad debt expense

 148,672

 43,098

 Stock-based compensation

 Stock issued for services

 479,186

 132,000

 Income from investment
 in subsidiary

 ( 3,689
)

 ( 57,289
)

 Change in operating assets
 and liabilities:

 Accounts receivable

 ( 9,164
)

 ( 46,006
)

 ERTC Receivable

 -

 ( 43,413
)

 Inventory

 123,678

 139,796

 Prepaid expenses and contract
 assets

 69,459

 79,130

 Accounts payable

 ( 138,810
)

 588,366

 Accounts payable - related
 party

 ( 31,598
)

 66,053

 Operating lease liabilities

 50,012

 57,321

 Accrued expenses

 ( 31,906
)

 217,920

 Total adjustments

 1,318,251

 1,614,994

 Net cash used by continuing
 operating activities

 ( 1,537,468
)

 ( 1,636,120
)

 Net cash used by discontinued
 operating activities

 -

 ( 72,245
)

 NET CASH USED BY OPERATING ACTIVITIES

 ( 1,537,468
)

 ( 1,708,365
)

 CASH FLOWS FROM INVESTING ACTIVITIES

 Proceeds from note receivable

 45,000

 Purchases of property and
 equipment

 ( 9,352
)

 ( 4,910
)

 NET CASH PROVIDED BY INVESTING ACTIVITIES

 35,648

 20,090

 CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from sale of common stock and warrants

 1,664,083

 1,464,641

 Proceeds from issuance of convertible debt

 147,857

 375,000

 Repayment of bank loans

 ( 1,629
)

 ( 37,452
)

 Repayment of finance leases

 ( 40,252
)

 ( 46,100
)

 Repayment of advances from related parties

 -

 ( 71,065
)

 Net cash provided by continuing financing activities

 1,770,059

 1,685,024

 Net cash provided by discontinued financing
 activities

 -

 20,000

 NET CASH PROVIDED BY FINANCING ACTIVITIES

 1,770,059

 1,705,024

 NET INCREASE IN CASH

 268,239

 16,749

 CASH in continuing operations, beginning of
 year

 259,223

 197,932

 CASH in discontinued operations, beginning
 of year

 -

 44,542

 CASH, end of period

 $
 527,462

 $
 259,223

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 Cash paid during the period for interest

 $
 44,461

 $
 33,767

 See
accompanying notes to financial statements.

 NANO

 NOTES
TO FINANCIAL STATEMENTS

 DECEMBER
31, 2023 AND 2022

 NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION

 Organization

 Nano
Magic Inc. ("we", "us", "our", "Nano Magic" or the "Company"), a Delaware
corporation, develops and sells a portfolio of nano-layer coatings, nano-based cleaners, and nano-composite products based on its proprietary
technology. On December 31, 2022, our wholly-owned subsidiary Nano Magic LLC was merged into the parent company and we changed our name
to Nano Magic Inc.

 We
develop, manufacture and sell consumer and institutional products using nanotechnology to deliver unique performance attributes at the
surfaces of a wide variety of substrates. These products are marketed internationally primarily to customers in the optical industry.

May 31, 2022, we sold a 70 % interest in our subsidiary, Applied Nanotech, Inc. ("ANI"). The contract research services performed
by ANI for governmental and private customers was previously reported as our Contract research segment. As a result of this sale, the
Company has deconsolidated ANI from its financial reporting, and we will report as only one segment. We retain a 30 % interest in ANI
that is now recorded as an equity investment.

 Going
Concern

 These
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. As reflected in the financial statements, the Company had net losses
and net cash used by operations of $ 2,855,719
and $ 1,537,468,
respectively, for the year ended December 31, 2023. As indicated in the accompanying financial statements, the Company had positive
working capital of $ 454,969,
including $ 527,462 of cash at December 31, 2023.
These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the
date that these financial statements are issued. Management cannot provide assurance that the Company will ultimately
achieve profitable operations, become cash flow positive or raise additional capital. The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. They do not include any adjustments related to the recoverability
and/or classification of the recorded asset amounts and/or the classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.

 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Use
of Estimates

 The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates
for the years ended December 31, 2023 and 2022 include estimates for allowance for doubtful accounts on accounts receivable, the estimates
for obsolete inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, estimates
of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, and the fair
value of equity incentives.

 Cash,
Cash Equivalents and Restricted Cash

 For
purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months
or less at the purchase date and money market accounts to be cash equivalents.

 Accounts
Receivable

 The
Company recognizes an allowance for credit losses on accounts receivable in an amount equal to the estimated probable losses net of
recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future
write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense
associated with the allowance for credit losses is recognized as general and administrative expense.

 Inventory

 Inventory
is stated at the lower of cost or net realizable value. Cost is determined using the average cost method based on prices paid for inventory
items. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition,
such as sales to individual customers and expected recoverable values.

 Property
and Equipment

 Property
and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from
three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal
terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation
are removed from the accounts, and any resulting gains or losses are included in other income or expense in the year of disposition.
The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact
that their recorded value may not be recoverable.

 Impairment
of Long-Lived Assets

 In
accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss
when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured
as the difference between the asset's estimated fair value and its book value. The Company did not record any impairment charge
for the year ended December 31, 2023 and 2022.

 Leases

 Operating
leases are reflected on our balance sheet within operating lease Right-of-use (ROU) assets and the related current and non-current operating
lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the
obligation to make lease payments arising from lease agreement. Operating lease ROU assets and liabilities are recognized at the commencement
date, the date on which the lessor began making the underlying asset customizable for our use, based upon the present value of the lease
payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes
in the lease or expectation regarding the terms. Variable lease costs such as common area maintenance, property taxes and insurance are
expensed as incurred.

 Lease
Term

 The
Company calculates the term for each lease agreement to include the noncancelable period specified in the agreement together with (1)
the periods covered by options to extend the lease if the Company is reasonably certain to exercise that option, (2) periods covered
by an option to terminate if the Company is reasonably certain not to exercise that option and (3) period covered by an option to extend
(or not terminate) if controlled by the lessor.

 The
assessment of whether the Company is reasonably certain to exercise an option to extend a lease requires significant judgement surrounding
contract-based factors, asset-based factors, entity-based factors and market-based factors.

 Lease
Payments

 Lease
payments consist of fixed payments, less any lease incentives paid or payable to the lessee related to the use of the underlying asset
during the lease term.

 Incremental
Borrowing Rate

 The
ROU asset and related lease liabilities recorded based on the present value of the lease payments using (1) the rate implicit in the
lease or (2) the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal
to the lease payments in a similar economic environment.

 Revenue
Recognition

 We
adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), effective January 1, 2018 using the
modified retrospective method. ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when
control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect
to receive. The application of ASC Topic 606 requires us to use significant judgment and estimates. Application of ASC Topic 606 requires
a five-step model applicable to all revenue streams as follows:

 Identification
of the contract, or contracts, with a customer

 A
contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party's rights
regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract
has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred
is probable based on the customer's intent and ability to pay the promised consideration. We apply judgment in determining the
customer's ability and intention to pay, which is based on a variety of factors including the customer's historical payment
experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 Identification
of the performance obligations in the contract

 Performance
obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both
capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources
that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the
goods or services is separately identifiable from other promises in the contract.

 When
a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable
of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services
are accounted for as a combined performance obligation.

 Determination
of the transaction price

 The
transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods
or services to our customer. The Company generally ships products to customers and does not have multiple performance obligations in
its revenue stream and therefore does not allocate transaction prices to multiple performance obligations. We estimate any variable consideration
included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation
periods, refunds and returns. Sales discounts applied on orders are treated as a reduction of revenues, as are any rebates provided under
customer contracts.

 Disaggregation
of Revenue

 A
limited number of key customers historically accounted for a majority of our revenue. In 2023, one customer accounted for 41 % of revenues.
In 2022, two customers represented 44 % of revenue.

 Principal
versus Agent Considerations

 When
another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606
to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are
transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred
to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the
goods or services within ASC Topic 606 includes the following indicators:

 We
are primarily responsible for fulfilling the promise to provide the specified good or service.

 When
we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication
that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without
penalty or without permission from our customer.

 We
have inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer.

 We
may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we
have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer.

 The
entity has discretion in establishing the price for the specified good or service.

 We
have discretion in establishing the price our customer pays for the specified goods or services.

 Cost
of Sales

 Cost
of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation,
overhead and shipping and handling costs incurred.

 Government
Loan Forgiveness and Grants

 During the year ended December 31, 2022, the Company applied for $ 61,448 in Employee Retention Tax Credits (ERTC),
which were recognized in other income on the accompanying statements of operations in 2022.

 Shipping
and Handling Costs

 Shipping
and handling costs incurred relating to the purchase of inventory are included in inventory which is charged to cost of sales as products
are sold. Shipping and handling costs incurred for product shipped to customers are included in cost of sales. For the years ended December
31, 2023 and 2022, shipping and handling costs amounted to $ 153,919 and $ 180,369, respectively.

and Development

and development costs incurred in the development of the Company's products and under other Company sponsored research and development
projects are expensed as incurred. Research and development costs incurred in the development of the Company's products for the
years ended December 31, 2023 and 2022 were $ 47,440 and $ 16,777, respectively, and are included in operating expenses on the accompanying statements of operations.

 Advertising
Costs

 The
Company participates in various advertising programs. All costs related to advertising of the Company's products are expensed in
the period incurred. Advertising costs charged to operations for the years ended December 31, 2023 and 2022 were $ 289,981 and $ 247,073, respectively,
and are included in selling and marketing on the accompanying statements of operations. These advertising expenses do not
include cooperative advertising and sales incentives which have been deducted from sales.

 Federal
and State Income Taxes

 The
Company accounts for income tax using the liability method prescribed by ASC 740, "Income Taxes". Under this method, deferred
tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities
using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation
allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or
all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or
loss in the period that includes the enactment date.

 The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 "Income Taxes ".
Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of December 31, 2023, the Company had no uncertain tax positions that qualify
for either recognition or disclosure in the financial statements. Tax years that remain subject to examination are the years ending on
and after December 31, 2019. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months
of the reporting date. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. However,
no such interest and penalties were recorded as of December 31, 2023 or 2022.

 Stock-Based
Compensation

 Stock-based
compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the
financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period
the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also
requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value
of the award. The Company adopted ASU No. 2017-09 in 2018; its adoption did not have a material impact on its financial
statements.

 Pursuant
to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the "measurement
date." The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount
of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at
the reporting date.

 Earnings
(Loss) Per Share of Common Stock

 ASC
260 "Earnings Per Share", requires dual presentation of basic and diluted earnings per share ("EPS") with a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic
EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the
entity. Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number
of shares of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted
average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Additionally, potentially dilutive common shares consist of common stock options and warrants (using the treasury stock method).

 These
common stock equivalents may be dilutive in the future. Potentially dilutive common shares were excluded from the computation
of diluted shares outstanding as they would have an anti-dilutive impact on the Company's net loss and consisted of the
following:

 SCHEDULE OF ANTI-DILUTIVE PER SHARE INFORMATION

 31,

 2023

 31,
 2022

 Stock options

 2,270,483

 2,760,991

 Stock warrants

 7,525,265

 7,440,639

 Total

 9,795,748

 10,201,630

 Net losses per share of common stock is as follows:

 SCHEDULE OF RECONCILIATION OF BASIC AND DILUTED NET INCOME LOSS

 Year
 Ended
 December 31,
 2023

 Year
 Ended
 December 31,
 2022

 Net loss per common shares outstanding

 $
)

 $
 ( 0.21
)

 Weighted average common shares
 outstanding:

 11,481,547

 10,264,381

 Recently
Adopted Accounting Pronouncements

 The
Company does not believe there are any other recently issued and effective, or not yet effective pronouncements that would have or are
expected to have any significant effect on the Company's financial position, results of operations or cash flows.

 There
have been no changes to our significant accounting policies described in Note 2 to our Annual Report on Form 10-K for the year ended
December 31, 2023, that have had a material impact on our financial statements and related notes.

 Reclassifications

 Certain
accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.
None of the reclassifications had any impact on the net loss reported in 2022.

 NOTE
3 – DISCONTINUED OPERATIONS

May 31, 2022, we sold a 70 %
interest in our subsidiary ANI to two of its officers and long-term employees in exchange for a promissory note in the face amount
of $ 450,000.
The note bears interest at 7 %
and has semi-annual payments of principal initially in the amount of $ 20,000,
increasing to $ 25,000
in May 2024 and to $ 30,000
in May 2026, with a final balloon payment of $ 80,000
due on December 31, 2029. As of December 31, 2023, $ 341,782
remained outstanding on the note, with $ 50,000
as the current portion of the note receivable and $ 291,782
as the non-current portion. The note is secured by a stock pledge, described below. On March 15, 2024, an investor paid the Company $ 100,000 to purchase $ 115,000 in principal amount of the note payable
to us from ANI. The original note from ANI was cancelled, and we now hold a note on the same terms in the principal amount of $ 225,777
as of March 15, 2024.

 In
conjunction with the sale, we recognized a one-time gain of $ 1,148,225.
Financial information (related to periods before May 2022) included in this 10-K reflect ANI as a discontinued operation. During the
year ended December 31, 2022, income from discontinued operations amounted to $ 1,300.

 In
connection with the sale, the capital structure of Applied Nanotech was changed to give the Company, as the holder of Class B common
stock of Applied Nanotech, a 30% economic interest, certain information rights, special consent rights, and tag-along rights, as well
as the obligation to sell our stock under certain circumstances if other stockholders are selling. The Class A stock acquired by the
buyers was pledged to secure the promissory note given in payment of the purchase price. The Company plans to hold its remaining shares
in ANI for an indefinite period and treats its investment in ANI as an equity investment.

 The
following is the detail of major line items that constitute income from discontinued operations:

 SCHEDULE OF INCOME FROM DISCONTINUED OPERATIONS

 2022

 For the Year
 Ended

 31, 2022

 Net Revenues

 $
 258,444

 Cost of Sales

 211,029

 Gross Profit

 47,415

 Salaries, wages and related benefits

 23,573

 General and administrative expenses

 21,961

 Interest and other expense

 Income from discontinued operations

 1,300

 Gain on sale of discontinued

 1,148,225

 Net income from
 discontinued operations

 $
 1,149,525

 In
the second quarter of 2022, the gain on the sale of 70 % of the company's ownership interest in ANI was calculated as follows:

 SCHEDULE OF SALE OF STOCK BY SUBSIDIARY

 Fair value of consideration
 received

 $
 450,000

 Fair value of retained interest

 192,857

 Plus negative
 carrying value of subsidiary sold

 505,368

 Gain on sale of subsidiary

 $
 1,148,225

 NOTE
4 – INVESTMENT IN SUBSIDIARY

 The
Company is accounting for its 30 % ownership interest in ANI by the equity method of accounting under which the Company's share
of the net income (loss) of ANI is recognized as income (loss) in the Company's statement of operations classified as income from
investment in subsidiary. Any dividends received from ANI as well as periodic losses for the Company's 30 % share will be treated
as a reduction of the investment account. Any income from ANI for the Company's 30 % share will be treated as an increase in the
investment account. For the years ended December 31, 2023 and 2022, the Company recorded income from the investment in subsidiary of
$ 3,689 and $ 57,289, respectively.

 At
December 31, 2023 and at December 31, 2022, a balance of $ 253,835
and $ 250,146, respectively, was recognized as a non-marketable equity investment in subsidiary on the balance sheet in non-current
assets as follows:

 SCHEDULE OF EQUITY EQUITY INVESTMENT IN SUBSIDIARY

 December 31, 2023.

 December 31, 2022

 Investment in ANI

 $
 192,857

 $

 192,857

 Income from investment
 in subsidiary

 60,978

 57,289

 Non-marketable equity
 investment in subsidiary

 $
 253,835

 $

 250,146

 NOTE
5 – ACCOUNTS RECEIVABLE

 At
December 31, 2023 and 2022, accounts receivable consisted of the following:

 SCHEDULE OF ACCOUNTS RECEIVABLE

 31, 2023

 31, 2022

 Accounts receivable

 $
 359,357

 $
 377,940

 Less: allowance for
 credit losses

 ( 150,300
)

 ( 29,375
)

 Accounts receivable, net

 $
 209,057

 $
 348,565

 Allowance
for credit losses was $ 42,326 at December 31, 2021. Bad debt expense was $ 57,064 for the year ended December 31, 2022, with an increase in the allowance
of $ 44,113, leaving an ending balance in the allowance for credit losses of $ 29,375 at December 31, 2022. Bad debt expense was $ 27,747
 for the year ended December 31, 2023, with an increase in the allowance of $ 148,672, leaving an ending balance in the allowance for credit losses of $ 150,300 at December
31, 2023.

 NOTE
6 – INVENTORY

 At
December 31, 2023 and 2022, inventory consisted of the following:

OF INVENTORY

 31, 2023

 31, 2022

 Raw materials

 $
 648,537

 $
 695,774

 Work in progress

 235,811

 256,095

 Finished goods

 296,921

 353,082

 Inventory, gross

 1,181,269

 1,304,951

 Less: reserve for obsolescence

 ( 331,505
)

 ( 184,878
)

 Inventory, net

 $
 849,764

 $
 1,120,073

 NOTE
7 – OPERATING LEASE

May 31, 2020, we entered into a lease with a related party for a 29,220
square foot building in Madison Heights, Michigan. The occupancy and rent commencement date was October 1, 2020. The
lease has an initial term of seven years with a renewal option at the end of the initial term for an additional 3-year term, and a
second renewal option thereafter for an additional 5-year term. The renewal term is not included in the calculation of the operating
lease liability. As the sole tenant, we are responsible for all taxes, ordinary maintenance, snow removal and other ordinary
operating expenses. Rent is $6.50 per square foot, increasing by $0.25 per year. During the first three years we had the right to
buy up to a 49% interest in Magic Research LLC for a price equal to 49% of the contributions received from other members.
This right has now expired as we did not exercise the option. See Note 12 Stockholders' Equity, for a description of warrants
issued to the owners of Magic Research LLC in connection with this lease. The fair value of these warrants totaling $ 311,718
were recorded as initial direct costs of obtaining the lease and are included in right-of-use assets on the accompanying balance
sheet. See Note 11, Related Party Transactions, for information about roles in management and economic participation by our CEO and
several other directors in the landlord.

 In
February 2023, we reached an agreement with the landlord of our Michigan facility to accept $ 66,000 worth of our common stock at a price
of $ 1.25 per share as partial payment of rent for the six-month period from October 2022 through March 2023. During that period, we will
pay cash of $ 8,056 per month, effectively a cash rent reduction of $ 10,983 per month. In May 2023, we reached a further agreement with
the landlord under which we pay cash each month to cover the cost of the mortgage and the lease for the lighting fixtures, but that will
allow us to pay the balance of the rent by issuing shares of our stock valued at $ 0.75 per share. We have the option to continue to use
stock to pay a portion of the rent through 2024. On October 16, 2023, the Company issued 52,800 shares of common stock to its landlord
in Michigan in partial payment of rent. In December 2023, the Company issued an additional 81,392 shares in partial payment of rent.

 For
operating leases, we calculated ROU assets and lease liabilities based on the present value of the remaining lease payments as of the
date of adoption using the IBR as of that date.

 SCHEDULE OF REMAINING LEASE PAYMENTS

 31, 2023

 31, 2022

 Operating
 lease liabilities

 $
 722,419

 $
 864,593

 Right-of-use assets

 $
 845,563

 $
 1,037,749

 Future
payments on the operating lease are:

 SCHEDULE OF FUTURE PAYMENTS ON OPERATING LEASE

 Operating
 Leases

 2024

 $
 213,681

 2025

 220,989

 2026

 228,297

 2027

 175,334

 Less: impact of discounting

 ( 115,882
)

 Present value of lease liabilities

 722,419

 NOTE
8 – PROPERTY AND EQUIPMENT

 At
December 31, 2023 and 2022, property and equipment consisted of the following:

OF PROPERTY AND EQUIPMENT

 Useful
 Life

 31,

 2023

 December 31,

 2022

 Machinery and equipment

 – 10 Years

 $
 2,616,629

 $
 2,613,387

 Furniture and office equipment

 – 7 Years

 486,894

 480,784

 Leasehold improvements

 – 15 Years

 140,678

 140,678

 Property and equipment, gross

 Less: accumulated depreciation

 ( 2,820,098
)

 ( 2,709,040
)

 Property and equipment,
 net

 $
 424,103

 $
 525,809

 For
the years ended December 31, 2023 and 2022, depreciation and amortization expense amounted to $ 111,058 and $ 112,288, respectively.

 NOTE
9 – NOTES PAYABLE AND FINANCE LEASES

 Notes
Payable

 On
January 7, 2022, the Company sold to one investor a $ 100,000 convertible note due March 31, 2025. On January 26, 2022, January 31, 2022,
and again on February 14, 2022, the Company sold three $ 50,000 convertible notes to three different investors. The three $ 50,000 notes
are due March 31, 2026. All four notes were issued at face value, and bear interest at 8 % per annum, payable semi-annually in cash. The
notes are convertible at any time at the option of the holder into shares of common stock at a conversion price of $ 1.75 per share.

 On
July 27, 2022, the Company sold two convertible notes, one for $ 50,000
and one for $ 25,000,
both due on March 31, 2025. The $ 25,000 note is to Mr. Ron Berman, a Related Party. On August 22, 2022, the Company sold a $ 25,000
convertible promissory note due March
31, 2026. All three notes were issued at face value, and bear interest at 8 %
per annum, payable semi-annually in cash. The notes are convertible at any time at the option of the holder into shares of common
stock at a conversion price of $ 1.75
per share.

 On
October 26, 2022, the Company sold to an investor a $ 25,000 convertible promissory note due October 31, 2023. Issued at face value, the
note bears interest at 8 % per annum, payable semi-annually in cash. The notes are convertible at any time at the option of the holder
into shares of common stock at a conversion price of $ 1.75 per share. On October 18, 2024, the Company and the holder extended the maturity
date of the note to October 31, 2024.

 On
December 18, 2022, the Company issued a convertible promissory note for $ 50,000 that is secured by certain payroll tax credits the Company
is entitled to receive under the Employee Retention Tax Credit program. The note bears interest at 8 % per annum, payable at maturity
which is eighteen months from date of issue. The note can be converted to common stock at any time at the option of the holders at a
conversion price of $ 1.75 per share at which point accrued interest will be paid in cash.

 On
June 14, 2023, the Company issued a convertible, secured note and warrants to purchase 10,000
shares of the Company's common stock for $ 50,000
with the same terms as the one issued on December 18, 2022. The warrants were recorded as a debt discount on the date of issuance
for a total value of $ 5,333. The balance at December 31, 2023 of the debt discount was $ 3,390.

 On
July 24, 2023, the Company issued at face value a convertible note in the original principal amount of $ 50,000. The note is due two years
from date of issue, bears interest at 8 % per annum and is convertible at $ 1.25 per share.

 On
November 2, 2023, the Company issued at face value a convertible note in the original principal amount of $ 50,000. The note is due two
years from date of issue, bears interest at 8 % per annum and is convertible at $ 1.25 per share.

 The
convertible promissory notes have not been included in diluted earnings per share as they would be anti-dilutive.

 On
February 10, 2015, Nano Magic entered into a $ 373,000 promissory note (the "Equipment Note") with KeyBank, N.A. (the "Bank").
The unpaid principal balance of this Equipment Note was payable in 60 equal monthly instalments payments of principal and interest through
 June 10, 2020. The Equipment Note was secured by certain equipment, as defined in the Equipment Note, and bore interest computed at a
rate of interest of 4.35 % per annum based on a year of 360 days. On June 18, 2019, Nano Magic entered into an Amendment to the Equipment
Note with the Bank. By the amendment, the maturity date of the note was extended until April 10, 2022, the interest rate was raised to
 6.29 % per year, and the monthly payments were reduced to $ 4,053 per month, including interest. On May 2, 2022, we amended the Equipment
Note with Key Bank to extend the due date on the note until December 10, 2022. The interest rate remained the same at 6.29 % per year
and the monthly payments remained at $ 4,053 per month. At December 31, 2022, the balance due on the Equipment Note was $ 1,629 and the
balance was paid in full in 2023.

 Finance
leases

 On
August 11, 2020, we entered into a finance lease for furniture used in the Michigan facility. We financed $ 60,684 over a period of 36
months and were required to make monthly payments of $ 1,972 during that time. At December 31, 2022, the balance due was $ 13,335 and
was included in current liabilities. $ 2,091 was also included in Accounts Payable for
this lease as of December 31, 2022. As of December 31, 2023 the lease was completely paid off.

 On
September 24, 2020, we entered into a finance lease with Raymond Leasing Corporation for a forklift. We financed $ 14,250.
The lease term was 36
months with monthly payments of $ 425. At
December 31, 2022, the balance due was $ 3,755 and was included in current
liabilities. As of December 31, 2023, the lease was completely paid off.

 In
December 2020, we entered into a finance lease for production equipment. We financed $ 85,000
over a period of 48
months and were required to make monthly payments of $ 2,135
during that time. At December 31, 2022, the balance due was $ 46,109 of
which $ 21,915 was included in current liabilities and $ 24,194 was
included in long term liabilities. As of December 31, 2023, the balance due was $ 24,194,
all of which was included in current liabilities.

 For
finance leases, we calculate ROU assets and lease liabilities based on the present value of the remaining lease payments as of the date
of lease commencement. The ROU assets for finance leases are depreciated in accordance with the Company's depreciation policies
for those asset groupings. Finance lease liabilities were $ 24,194 at December 31, 2023 and totaled $ 63,199 at December 31, 2022. Finance
lease interest expense was $ 4,250 and $ 12,594 for the years ended December 31, 2023 and 2022, respectively.

 Maturities

 Future
minimum lease payments under leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 31,
2023, are as follows:

 SCHEDULE OF FUTURE
MINIMUM FINANCE LEASE PAYMENTS

 Finance
 Leases

 2024

 25,620

 Less: impact of discounting

 ( 1,426
)

 Present value of lease
 liabilities

 24,194

 NOTE
10 – ACCOUNTS RECEIVABLE FACTORING

 On September 1, 2020,
Nano Magic LLC entered an agreement with a company to sell its receivables with a retailer at a discount. This agreement expired on September
1, 2022. Costs associated with this program were $ 47 for the year ended December
31, 2022.

 In August 2023, we began shipments under an agreement with a customer for the sale of products that included accounts receivable financing
with a large international bank. Subject to certain limits, we receive payments as soon as 15 days from shipment to
a discounted value of approximately 7% The discount depends on the payment date selected with the bank. Costs
associated with this program for the year ended December 31, 2023 were $ 12,497.

 NOTE
11 – RELATED PARTY TRANSACTIONS

 Accounts
Payable to related parties totaled $ 55,520 and $ 87,119 on December 31, 2023 and December 31, 2022, respectively. These balances
include payroll and reimbursements due to officers and directors plus account payable due to the landlord at December 31, 2023.
Advances from related parties aggregating $ 42,887 on
both December 31, 2023 and December 31, 2022 is comprised of amounts due to the Rickerts for working capital advances made in 2018.

 In
October, 2023, the Rickerts purchased 13,333 shares of common stock for $ 10,000.

 We paid legal and consulting fees to director Mr. Ron Berman of $ 0 in
2023, and $ 124,150 in
2022. In July, 2022, Mr. Ron Berman bought a convertible note for $ 25,000 which
matures on March 31, 2025 and bears interest of 8 % per annum.

 Mr.
Ron Berman and Mr. Tom Berman are the managers of the limited liability company that is the manager of PEN Comeback, LLC, PEN Comeback
2, LLC, Magic Growth, LLP, Magic Growth 2 LLC and Magic Growth 3 LLC. These five limited liability companies purchased shares of common
stock and derivative securities from us in 2018, 2019, 2020, 2021, and 2022. See the subsection on Sales of Stock under Issuances of
Common Stock in Note 12 and in Note 16 Subsequent Events.

 In
addition, Mr. Tom Berman and Mr. Ron Berman are two of three individuals who share voting power of the sole manager of the limited liability
company that is our landlord in Michigan. Together, Tom and Ron Berman hold, in the aggregate, a 5 % economic interest in the landlord
entity.

 NOTE
12 – STOCKHOLDERS' EQUITY

 Description
of Preferred and Common Stock

 Preferred
Stock

 The
preferred stock may be issued in one or more series. The Company's board of directors are authorized to issue the shares of preferred
stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and
the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions
thereof, of such series.

 Common
Stock

 The
rights of each share of common are the same with respect to dividends, distributions and rights upon liquidation. Holders of common stock
each have one vote per share in the election of directors and other matters submitted to a vote of the stockholders.

 Issuances
of Common Stock

 Common
Stock Issued for Services

 On
December 6, 2022, we issued an aggregate of 176,000 shares of common stock to our directors as compensation to them for service on our
Board. These shares were valued on that date at $ 0.75 per share for a total value of $ 132,000.

 In
February 2023, we reached an agreement with the landlord of our Michigan facility to accept 52,800 shares of our common stock at a price
of $ 1.25 per share as partial payment of rent for the six-month period from October 2022 through March 2023. Those shares were issued
in March, 2023. The landlord is a related party.

 In
May 2023, we reached a further agreement with the landlord that calls for us to pay cash each month to cover the cost of the
mortgage and the lease for the lighting fixtures, but that will allow us to pay the balance of the rent by issuing shares of our
stock valued at $ 0.75
per share. We have the option to continue to use stock to pay a portion of the rent through 2024. On October 16, 2023, the Company
issued 52,800
shares of common stock to its landlord in Michigan in partial payment of rent. In December 2023, the Company issued an additional 81,392
shares in partial payment of rent. The landlord is a related party.

 On
May 30, 2023, the Company issued 76,922 shares of restricted common stock to a consultant as compensation for services. The shares are
subject to forfeiture until vested. So long as the consulting services agreement remains in effect 4,273 shares vested in May for prior
service, and another 4,273 shares vest at the end of May and each calendar month thereafter, with 4,277 shares vesting in December 2023.
During 2024, 3,205 shares will vest at the end of each month, with 3,206 shares vesting at the end of December 2024.

 In
August 2023, the Company issued to each of three individuals who are serving on its advisory committee a total of 38,460
shares of restricted stock for their services during 2023. All shares vest ratably by December 31, 2023.

 On December 5, 2023, the Board determined to pay accrued
fees due to the directors in shares of common stock and we issued an aggregate of 240,006 shares to present and former directors for service
during 2023.

 Sales
of Common Stock

 During the quarter ended
March 31, 2022, the Company sold 375,001 shares of common stock for proceeds of $ 656,249 and warrants to purchase up to 374,965 shares
of common stock for proceeds of $ 18,752. The warrants are exercisable at any time during the four years after date of issue at a warrant
exercise price of $ 2.25.

 During the quarter ended
June 30, 2022, the Company sold 283,334
 shares of common stock for proceeds of $ 495,834
 and warrants to purchase up to 283,310
 shares of common stock for proceeds of $ 14,165.
The warrants are exercisable at any time during the four years after date of issue at a warrant exercise price of $ 2.25.

 During the quarter ended
September 30, 2022, the Company sold 69,445
 shares of common stock for proceeds of $ 121,529
 and warrants to purchase up to 69,425
 shares of common stock for proceeds of $ 3,471.
The warrants are exercisable at any time during the four years after date of issue at a warrant exercise price of $ 2.25.

 During the quarter ended December 31, 2022, the Company sold 115,971 shares of common stock for proceeds of
$ 151,909 and
warrants to purchase up to 115,760 shares
of common stock for proceeds of $ 2,731. The
warrants are exercisable at any time during the four
years after date of issue at a warrant exercise price of $ 1.75.

 For the three months ended
March 31, 2023, the Company sold 74,806 shares of common stock for proceeds of $ 93,507. Additionally, 74,626 warrants were sold for $ 1,492.
The warrants are exercisable at any time during the four years after date of issue at a warrant exercise price of $ 2.25.

 During the quarter ended
June 30, 2023, the Company sold 253,994 shares of common stock for proceeds of $ 346,064 and warrants to purchase up to 196,813 shares
of common stock for proceeds of $ 4,136. The warrants are exercisable at any time during the four years after date of issue at a warrant
exercise price of $ 1.75. Also, during the quarter ended June 30, 2023, the Company
sold 10,000 warrants in connection with the issuance of a convertible note payable of $ 50,000 as disclosed in Note 9. In accordance with
ASC 470, 11% of the value of the total convertible note payable was allocated to the warrants.

 During the quarter
ended September 30, 2023, the Company sold an additional 533,331
shares of common stock for proceeds of $ 400,000.
In addition, during the three-month period, an investment made in April was cancelled and the $ 250,000
investment was reissued at $ 0.75
per share, resulting in a net increase in the outstanding stock of 136,482
shares. In connection with this sale, the company canceled the 196,813 warrants previously issued in April.

 During the quarter ended December 31, 2023, the Company
sold 1,084,998 shares of common stock for proceeds of $ 813,750.

 All
of these sales of stock and warrants were sold in private placements exempt from registration under Section 4(a)(2) of the Securities
Act of 1933, as amended.

 Stock
Options

 Stock
options outstanding are to purchase common stock. Stock option activities for the years ended December 31, 2023 and 2022 are summarized
as follows:

OF STOCK OPTION PLAN ACTIVITY

 Number
 of Options

 Weighted
 Average Exercise Price

 Weighted
 Average Remaining Contractual Term (Years)

 Aggregate
 Intrinsic Value

 Balance Outstanding, December 31, 2021

 3,133,702

 $
 0.77

 4.93

 $
 -

 Exercised

 -

 Forfeited or expired

 ( 518,411
)

 $
 1.03

 -

 -

 Granted

 145,700

 $
 0.80

 Balance Outstanding, December 31, 2022

 2,760,991

 $
 0.72

 4.09

 $
 -

 Exercised

 -

 Forfeited or expired

 ( 1,176,987
)

 $
 0.75

 -

 -

 Granted

 686,479

 $

 0.60

 Balance Outstanding, December 31, 2023

 2,270,483

 $
 0.67

 2.73

 $
 76,725

 Exercisable, December 31, 2023

 2,244,090

 $
 0.67

 2.72

 $
 76,725

 A
summary of unvested options and the related average fair-value per share follows:

 SCHEDULE OF UNVESTED OPTIONS AND RELATED AVERAGE FAIR-VALUE

 Number of Options

 Weighted- average Grant Date Fair Value

 Nonvested as of December 31, 2022

 1,491,605

 $
 0.83

 Granted

 686,479

 0.50

 Vested

 ( 974,704
)

 0.62

 Cancelled

 ( 1,176,987
)

 0.83

 Nonvested as of December 31, 2023

 26,393

 $
 0.57

 Options
Issued Outside of a Plan

 In
2023 our President and CEO Tom Berman was paid part of his salary in options. In April, he was granted an option to purchase up to 30,000
 shares, fully vested for salary not paid from
January to March, and, in May, a second option was granted for up to 69,228
 shares that vested over the course of the calendar
year for salary not paid in April and subsequent months of 2023. Also in May, we granted our Chief Financial Officer an option for up
to 100,000
 shares in recognition of his services from 2019
through 2022. Both our CFO and our General Counsel were granted options in May for up to 60,000
 shares, which vested over the course of the calendar
year. In May, 2023, we also granted director Ronald Berman an option to purchase up to 50,000
 shares for services previously rendered and granted
him an option for 45,000
 shares that vested over the course of the calendar
year. All options have an exercise price of $ 0.65
 per share and a four-year term.

 In December 2023, the Company awarded 49,570 fully vested options to a law firm for legal services at an exercise
price of $ 0.01. The options expire four years from the award date.

 The
fair value of the options awarded outside of any plan was calculated using the Black-Scholes method. The assumptions used in the calculations
are shown below. The expected term represents the period of time that the options are expected to be outstanding. Below is a summary
of terms for options issued during 2023 outside of the plan.

 SCHEDULE OF FAIR VALUE OF OPTION AWARD VALUATION ASSUMPTIONS

 Exercise price per option

$ 0.01 - $ 0.65

 Fair value per option at grant date

 $ 0.25 -
 $ 0.61

 Expected term

years

 Expected volatility

 215 %
 - 245
 %

 Expected dividend yield

 %

 Risk-free interest rate

 3.57 %
 - 3.96
 %

 2015 Equity Incentive Plan

 On November 30, 2015, the Board of Directors authorized
the 2015 Equity Incentive Plan. On January 31, 2020 we granted an option to purchase 100,000 shares to a senior member of the sales team
with vesting tied directly to 2020 sales goals. On April 8, 2021, the Board terminated the 2015 Equity Incentive Plan. One option for
 50,000 shares is vested and outstanding under this Plan.

 2021
Equity Incentive Plan

 The
Nano Magic 2021 Equity Incentive Plan (the "Plan") was adopted to allow equity compensation for those who provide services
to the Company and to encourage ownership in the Company by personnel whose service to the Company is important to its continued progress,
to encourage recipients to act as owners and thereby in the stockholders' interest and to enable recipients to share in the Company's
success. Initially, 85,000 shares were available for issuance under the Plan and that number of options were also granted to employees
on March 2, 2021. On April 8, 2021 the number of shares under the Plan was increased by 2,500, and an additional 2,500 options were granted.
On June 21, 2021 an additional 200,000 shares were made available for issuance under the Plan and options for 100,000 shares were granted,
but subsequently forfeited. On August 10, 2021 we issued the option to purchase up to 100,000 shares that had been approved by the Board
in May, 2021 in connection with a consulting agreement.

 On
February 16, 2022, the Board increased the number of options available for issuance under the 2021 Equity Plan and issued 110,700 options
under that Plan. On August 17, 2022, the Board issued an aggregate of 15,000 options under the 2021 Equity Plan to two employees. On
August 17, 2022, the Board also acted to suspend operation of the provision of the 2021 Equity Plan that causes forfeiture of vested
options if the service provider leaves the Company.

 On April 12, 2023, the Company granted 47,610 options
under the 2021 Equity Plan. The options were granted to individuals in lieu of cash for a portion of their salary for the period from
December 31, 2022 through March 31, 2023. All options are at an exercise price of $ 0.65 per share for a four-year term and were fully
vested on date of grant.

 On May 30, 2023, the Company granted 175,071 options under the 2021 Equity
Plan. The options were granted to employees and consultants at an exercise price of $ 0.65 per share.

 The
fair value of the options awarded to employees and service providers under the 2021 Equity Plan were calculated using the Black-Scholes
method and were tied to service conditions for purposes of vesting. The assumptions used in the calculations are shown below. The expected
term represents the period of time that the options are expected to be outstanding. During the year ended December 31, 2022, 100,163
options vested and compensation expense related to them for the year-ending 2023 was $ 54,616 with unearned expense of $ 22,627. During
the year ended December 31, 2023, 205,792
 options vested and compensation expense related
to them for the year-ending 2022 was $ 110,930
 with unearned expense of $ 12,143.
Below is a summary of terms for options issued in 2023 under the plan.

 SCHEDULE OF FAIR VALUE OF OPTION AWARD VALUATION ASSUMPTIONS

 Exercise price per option

 $ 0.65

 Fair value per option at grant date

 $ 0.25 -$ 0.57

 Expected term

 years

 Expected volatility

 215 %
 - 245
 %

 Expected dividend yield

 %

 Risk-free interest rate

 3.57 %
 -
 3.96
 %

 Warrants

 As
of December 31, 2023, there were outstanding and exercisable warrants to purchase 7,525,265 shares
of common stock with a weighted average exercise price of $ 1.72 per
share and a weighted average remaining contractual term of 40.72 months. As
of December 31, 2022, there were outstanding and exercisable warrants to purchase 7,440,639 shares
of common stock with a weighted average exercise price of $ 1.72 per
share and a weighted average remaining contractual term of 61.12 months.
The weighted average contractual terms reflect the extension of two years for warrants issued between 2018 and 2022 that were
effected in May 2022 and December 2023.

 NOTE
13 – INCOME TAXES

 The
Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax
asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income.

 The
items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years
ended December 31, 2023 and 2022 were as follows:

OF EFFECTIVE STATUTORY RATE OF INCOME TAXES

 2023

 2022

 Years
 Ended December 31,

 2023

 2022

 Income tax provision (benefit)
 at U.S. statutory rate of 21 %

 $
 600,000

 $
 441,000

 Government grant

 -

 13,000

 Change in valuation allowance

 ( 768,000
)

 ( 454,000
)

 Revaluation of deferred tax asset

 168,000

 ( 327,000
)

 Revaluation of valuation allowance due to return
 to provision

 -

 85,000

 Revaluation of valuation
 allowance due to ANI sale

 -

 242,000

 Total provision for
 income tax

 $
 -

 $
 -

 The
Company's approximate net deferred tax assets as of December 31, 2023 and 2022 were as follows:

OF COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES

 31,
 2023

 31,
 2022

 Deferred Tax Assets:

 Net operating loss carryforward

 $
 3,869,000

 $
 3,392,000

 Stock-based compensation

 295,000

 109,000

 Allowance for inventory obsolescence

 63,000

 39,000

 Accrued compensation

 6,000

 6,000

 Other

 137,000

 56,000

 Total deferred tax assets

 4,370,000

 3,602,000

 Valuation allowance

 ( 4,370,000
)

 ( 3,602,000
)

 Net deferred tax assets

 $
 -

 -

 The
gross estimated net operating loss carryforward was approximately $ 18,422,000 at December 31, 2023, which is an estimate of the Company's
net operating loss carryforward acquired in the Combination after giving effect to the limitation on the usage of such net operating
loss carryforwards due to a change in ownership in accordance with Section 382 of the Internal Revenue Code plus net operating loss carryforwards
since the Combination. The Company provided a valuation allowance equal to the net deferred income tax asset for the year ended December
31, 2023 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. The potential tax
benefit arising from tax loss carryforwards prior to 2017 will expire between 2022 and 2038, while the potential tax benefits arising
after 2017 currently have no expiration date.

 In
accordance with Section 382 of the Internal Revenue Code, the usage of the Company's net operating loss carry forwards are subject
to annual limitations due to greater than 50 % ownership changes. Additionally, the future utilization of the net operating loss carryforwards
to offset future taxable income may be subject to special tax rules which may limit their usage under the Separate Return Limitation
Year ("SRLY") rules. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization
as a result of such limitations, with a corresponding reduction of the valuation allowance.

 The
Company's 2020, 2021, 2022 and 2023 Corporate Income Tax Returns are subject to Internal Revenue Service examination.

 NOTE
14 - COMMITMENTS AND CONTINGENCIES

 Litigation

 The
Company may be, from time to time, subject to various administrative, regulatory, and other legal proceedings arising in the ordinary
course of business. We are not currently a defendant in any proceedings. Our policy is to accrue costs for contingent liabilities, including
legal proceedings or unasserted claims that may result in legal proceedings, when a liability is probable and the amount can be reasonably
estimated. As of December 31, 2023, the Company has no t accrued any amount for litigation contingencies.

 NOTE
15 – CONCENTRATIONS

 Concentrations
of Credit Risk

 Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and
cash deposits and investments in cash equivalent instruments.

 Customer
Concentrations

 Customer
concentrations for the years ended December 31, 2023 and 2022 are as follows:

 SCHEDULE OF CONCENTRATION RISK, CUSTOMER

 For
 the Years Ended December 31,

 2023

 2022

 Customer A

 %

 %

 Customer B

 - *
 %

 %

 Total

 %

 %

 *

 Less
 than 10%

 Accounts
receivable balances for these customers at December 31, 2023 and 2022 were $ 4,942 and $ 104,315 respectively. A reduction in sales from or
loss of such customers would have a material adverse effect on our results of operations and financial condition.

 Geographic
Concentrations of Sales

 For
the years ended December 31, 2023 and 2022, total sales in the United States represent approximately 94 % and 95 % of total revenues, respectively.

 Vendor
Concentrations

 Vendor
concentrations for inventory purchases for the years ended December 31, 2023 and 2022 are:

OF CONCENTRATION RISK, CUSTOMER

 For
 the Years Ended December 31,

 2023

 2022

 Vendor A

 %

 *
 %

 Vendor B

 Vendor C

 - *

 Vendor D

 - *

 Total

 %

 %

 *

 Less
 than 10%

 The
vendors above are used for raw material purchases used primarily in the production of lens care and anti-fog products.

 NOTE
16 - SUBSEQUENT EVENTS

 On
March 7, 2024, the Company sold 6,667
 shares of common stock to an individual, accredited
investor for proceeds of $ 5,000.

 On
March 14, 2024, the Company sold 66,667
 shares of common stock to an individual, accredited
investor for proceeds of $ 50,000.

 On March 15, 2024, an investor paid the Company $ 100,000 to purchase $ 115,000
in principal amount of the note payable to us from ANI. The original note from ANI was cancelled, and we now hold a note on the
same terms in the principal amount of $ 225,777 as of March 15, 2024.

 Item
9. Changes and Disagreements with Accountants on Accounting and Financial Disclosures.

 Not
applicable.

 Item
9A. Controls and Procedures

 Evaluation
of Disclosure Controls and Procedures

 We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed
under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief
Financial Officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this report
under Rule 13a-15(b) under the Exchange Act. The review for the period ended December 31, 2023 and for the year ended December 31, 2022,
concluded that there were material weaknesses in our disclosure procedures and controls. In 2022 and 2023 our small staff size restricts
our ability to adequately segregate duties. The sale of our subsidiary ANI in May 2022 and the merger of our subsidiary limited liability
company into the parent at the end of 2022 has simplified our corporate structure so that will, after a transition period, simplify our
financial reporting.

 Management's
Annual Report on Internal Control Over Financial Reporting.

 The
management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly,
that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent
limitations in the effectiveness of any system of internal controls, including the possibility of human error; consequently, internal
control over financial reporting may not prevent or detect misstatements. Also, effectiveness as it relates to future periods is subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.

 The
Company's internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that,
in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded
as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts
and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable
assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a
material effect on our financial statements.

 Under
the supervision of management, including the Company's Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission published in 2013 and subsequent guidance prepared by
the Commission specifically for smaller public companies. Management has identified the following material weaknesses which have caused
management to conclude that as of December 31, 2023 the Company's internal controls over financial reporting were not effective
at the reasonable assurance level: We have not had sufficient resources in our accounting function to have segregation of duties so that
the initiation of transactions, the custody of assets and the recording of transactions are performed by separate individuals. However,
to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions are performed by separate
individuals. Management evaluated our limited resources and our failure to have segregation of duties on our assessment of our disclosure
controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 Notwithstanding
the assessment that our internal controls over financial reporting was not effective, we believe that our financial statements
contained in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered thereby
in all material respects.

 Our
management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures
or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to
the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within our company have been detected.

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

in Internal Control Over Financial Reporting

 Our
internal control over financial reporting has not changed during the fourth quarter covered by this Annual Report on Form 10-K, except
as discussed above.

 Item
9B. Other Information.

 Not
Applicable.

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Not
Applicable.

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance

 The
following sets forth the names of our directors and executive officers, their ages, positions they hold and the time they have served
us and our predecessors. The narrative below sets out their principal occupations at present and for at least the past five years.

 Name

 Age

 Position(s)

 Serving
 Since

 Ronald
 J. Berman

 May
 1996

 Tom
 J. Berman

 Director,
 President & CEO

 October
 2018

 Miles
 Gatland

 February
 2022

 Raymond
 Gunn

 2022

 Jeanne
 M. Rickert

 and Chief Legal Officer

 August
 2014

 Scott
 E. Rickert

 Chairman
 of the Board

 August
 2014

 Leandro
 Vera

 Chief
 Financial Officer

 February
 2020

 Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed
from office in accordance with our bylaws. All directors listed above will remain in office until the next annual meeting of our stockholders,
and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. Our
Board of Directors appoints officers annually and each Executive Officer serves at the discretion of our Board of Directors.

 Ronald
J. Berman was in the private practice of law from 1980-1987. Mr. Berman co-founded Rock Financial (now Rocket Mortgage) in 1985
and was a member of its Board of Directors. Mr. Berman co-founded BEG Enterprises and served as its President from 1989 to 1998. Mr.
Berman is currently practicing law as a sole practitioner. Mr. Berman is a licensed attorney in both Michigan and Florida. He is the
father of director and officer Tom Berman.

 With
his experience in legal matters and founding businesses, Mr. Berman provides our board with professional and strategic expertise as well
as the benefit of his significant knowledge of business operations.

 Tom
J. Berman joined us on October 15, 2018, as our President and as a director and he serves as President and CEO of Nano Magic, Inc. Prior to joining us, Mr. Berman was most recently Chief Administrative Officer and General Counsel for Ascion, LLC d/b/a
Reverie, a Michigan based Sleep Technology company. At Ascion he was responsible to help to develop that company's overall business
strategy along with leading its business development, HR and IT and Legal departments as well as its real estate management. He was with
Ascion from 2012 until 2018. Prior to joining Ascion Mr. Berman founded Berman Law, PLLC. He is a graduate of Michigan State University
and of the University of Detroit Mercy School of law. Tom Berman is the son of director Ronald J. Berman.

 With
his operations experience and experience guiding the growth at Ascion, Mr. Berman will provide operational and strategic guidance as well as bringing his viewpoint as a legal professional.

 Miles
Gatland is a real estate entrepreneur. He founded Miles Gatland and Associates, Inc. in 1994 and continues to be active in commercial
brokerage and redevelopment. He is also an active private investor and served on the board of Surgical Safety Scanner, Inc. from November
2019 to December 2020. He attended Oakland University in Rochester, Michigan for several years.

 His
experience as an entrepreneur and investor in real estate and other opportunities will provide value to the Company and the Board.

 Raymond
Gunn is an experienced chief executive officer, chief financial officer and board member. In 2006, Ray co-founded Wingspan Capital
Partners, a private equity and consulting firm. That became Wingspan Group in 2017, and Ray became, and continues as, its CEO. Since
January 2018 he has also been the CEO and CFO of Blakes Family of Companies and in 2022 he became the Chairman and CEO of FSB Holdings,
In., a bank holding company. Additionally, he currently serves on the boards of TrillaMed, LLC., Cadillac Products Packaging Company,
Blake's Family of Companies, Central Michigan University Research Corp., the Eastern Division of The Salvation Army and he is vice
chairman of the Board of Visitors for the School of Business at Oakland University. He is a graduate of Oakland University and pursued
a Masters in Taxation from Walsh College. He is a CPA.

 Mr.
Gunn's accounting expertise and his experience as a senior executive and CEO of operating companies is valuable to management and
the Board.

 Jeanne
M. Rickert has served as our General Counsel and a Director since August 2014 and as the General Counsel of Nanofilm (now our
subsidiary, Nano Magic LLC) since January, 2014. Before that she was a lawyer with the Cleveland office of the international law firm
of Jones Day, as a partner of the firm for 25 years and as Of Counsel in 2013. Her practice focused on mergers and acquisitions, joint
ventures and general corporate and commercial matters. Her undergraduate degree is from Cornell University and her law degree from Case
Western Reserve University. She is married to Scott Rickert.

 With
her prior experience in the practice of law and as our General Counsel, Ms. Rickert provides our board with legal expertise as well as
the benefit of her significant knowledge of business law and transactions.

 Scott
E. Rickert has served as Chairman of our Board of Directors since August 2014. He served as our President and Chief Executive
Officer from August, 2014 until Mr. Tom Berman was elected President in April, 2019. Mr. Rickert had been the Chief Executive Officer
of Nanofilm since 2002, after serving Nanofilm as President from its founding in 1985. Prior to starting Nanofilm, Mr. Rickert was a
tenured professor of Macromolecular Science at Case Western Reserve University. He has a B.S. in Chemical Engineering from Cornell University
and an M.S. and Ph. D. from Case Western Reserve University. He did post-doctoral work at the University of Pennsylvania. He is married
to Jeanne Rickert.

 Combining
his technical background and expertise with his prior experience in developing, commercializing and marketing enhanced-performance products
powered by nanotechnology, Mr. Rickert provides our board with technical and operational expertise as well providing guidance to the
companies based on his significant knowledge of all aspects of the production and sale of nanotechnology enhanced-performance products.

 Leandro
Vera was appointed as our Chief Financial Officer on February 12, 2020. Leo has worked with us in a consulting role since December
1, 2018, as the acting CFO for our operations. Leo is a co-founder of Swiftmile, Inc. and has served as its Chief Financial Officer since
January of 2015. Between January 2015 and December 2017, Leo also served as Chief Operating Officer of Reverie, one of the leading manufacturers
of innovative mattresses, adjustable beds, and pillows. Leo also previously worked at Ergomotion, a $100 million annual revenue supplier
of power beds, with roles ranging from COO/CFO to COO, to President and CEO from October 2011 to September 2014, leading it to a successful
acquisition by a strategic investor. Prior to Ergomotion, he was Managing Director of Pyrotek, a leading international supplier to aluminum,
foundry, glass, zinc, and steel customers with performance improving technical products, integrated processing systems and consulting
services worldwide. Leo began his career in public accounting with Coopers & Lybrand LLP in its Audit Assurance division between
1995 and 1997.

 With
his broad business experience and financial training, Leo brings important expertise to our financial function.

 Delinquent
Section 16(a) Reports

 Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934
during the fiscal year ended December 31, 2022 and Forms 5 and amendments thereto furnished to us with respect to the fiscal year ended
December 31, 2022, as well as any written representation from a reporting person that no Form 5 is required, we are not aware that any
officer, director or 10% or greater shareholder failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required
by Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year ended December 31, 2023.

 Code
of Ethics

 We
have adopted a code of ethics (as such term is defined in Item 406 of Regulation S-K) (the " Code of Ethics ") that
applies to our executive officers and other employees. A copy of the Code of Ethics will be sent, free of charge, to any person who sends
a written request for a copy to Jeanne Rickert, Secretary, Nano Magic Inc., 31601 Research Park Drive, Madison Heights, MI 48071

 Board
Leadership Structure and Board's Role in Risk Oversight

 The
Chairman of our Board is now a separate position from that of our Chief Executive Officer. The two roles were separated after our present
Chief Executive Officer was elected to that position in February 2020 and the then-existing Chief Executive Officer was named Chairman.
We believe having a separate Chairman who has previously been in the Chief Executive Officer role provides greater assurance of a continuity
in the vision for our business.

 Risk
is inherent within every business, and how well a business manages risk can ultimately determine its success. We face a variety of risks.
As a manufacturing company with nanotechnology products, operational risks relating to production, sources of supply and quality control
are significant. Given our history of operating losses and our small size, liquidity risk is also significant. Management is responsible
for the day-to-day management of the risks we face, while the Board has responsibility for the oversight of risk management. Taking its
risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed. To do this, our directors discuss with management our strategy and
risks we face.

 Board
Committees and Director Independence

 Our
securities are not quoted on an exchange that requires a majority of the members of our Board of Directors ("the Board" or
the "Board of Directors") to be independent and we are not currently otherwise subject to any law, rule or regulation requiring
that all or any portion of our Board of Directors include "independent" directors. Similarly, we are not required to establish
or maintain an Audit Committee or other committee of our Board of Directors. Nonetheless, as a matter of corporate governance best practice,
we have established an Audit Committee (as described below) and our board has determined that Messrs. Gatland and Gunn are "independent"
as defined by the NASDAQ Marketplace rules.

 The
Board does not have standing compensation or nominating committees. The Board does not believe these committees are necessary based on
the size of our company and the current levels of compensation to corporate officers. The entire Board participates in the consideration
of compensation issues relating to the Chief Executive Officer. We plan to consider establishing compensation and nominating committees
at the appropriate time.

 Candidates
for director nominees are reviewed in the context of the current composition of the Board and the operating and strategic challenges
that we face in the next few years. In conducting this assessment, we consider skills, diversity, age, and such other factors as it deems
appropriate given the current needs of the Board and our company, to maintain a balance of knowledge, experience and capability. We will
seek out individuals with relevant experience to provide strategic guidance and to advise management as we operate our business and introduce
new products.

 Audit
Committee

 In
February 2016, the Board created an audit committee. It is charged with overseeing (1) the integrity of our financial statements and
accounting and financial reporting processes; (2) our compliance with legal and regulatory requirements; (3) the performance of our independent
auditor and the qualifications and independence of that firm; (4) our system of disclosure, internal controls and compliance with our
Code of Ethics. Messrs. Gatland and Gunn serve on the committee, Mr. Gunn as Chair of the committee. Mr. Gunn is an audit committee financial
expert.

 Report
of the Audit Committee

 The
audit committee (the "Committee") oversees the Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and the reporting process, including internal control systems.
The Company's independent registered public accounting firm is responsible for expressing an opinion on the conformity of the company's
audited financial statements with U.S. generally accepted accounting principles.

 The
Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the
applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered accounting firm's
communications with the Committee concerning independence and has discussed with the independent registered accounting firm the independence
of that firm.

 In
reliance on the reviews conducted, the Committee recommends to the Board of the Directors (and the Board has approved) the inclusion
of the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC.

 Stockholder
Nominations

 To
nominate candidates for service as a director on our board a stockholder must hold at least $2,000 in value of shares entitled to vote
in the election of directors. Notice must be given not less than 60 or more than 90 days before the meeting. If less than 75-days'
notice is given of the date of the meeting, the stockholder's notice is due not more than 10 days after notice of the meeting is
given or after public disclosure of the date of the meeting, whichever is first. The notice must include information about a proposed
candidate: the class and number of shares of stock held of record, owned beneficially and represented by proxy by the nominating shareholder
or any person directly or indirectly controlling, controlled by, under common control with or acting in concert with the nominating shareholder
(which we refer to as a "shareholder associated person"), and by each person to be nominated such information to be as of
the record date for the meeting and as of the date of such notice; a description of all contracts, arrangements, understandings or relationships
between (a) the shareholder making the nomination and any shareholder associated person that relate to the nomination, (b) the shareholder
making the nomination and the proposed nominee and (c) the shareholder making the nomination, the proposed nominee or any shareholder
associated person and any other person or persons that relate to the nomination.

 Item
11. Executive Compensation

 SUMMARY
COMPENSATION TABLE

 The
table below sets forth certain compensation information for: (i) our principal executive officer or other individual serving in a similar
capacity during our fiscal year ended December 31, 2023; (ii) our two most highly compensated executive officers other than our principal
executive officers who were serving as executive officers at December 31, 2023 whose compensation exceed $100,000; and (iii) up to two
additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive
officer at December 31, 2023. Compensation information is shown for the fiscal years ended December 31, 2023 and December 31, 2022.

 We
sometimes refer to these individuals to as the "named executive officers" as that term is defined under Rule 3b-7 of the
Securities Exchange Act of 1934. The value attributable to any stock or option awards is computed in accordance with ASC Topic 718. None
of our named executive officers received compensation in the form of Non-Equity Incentive Plan Compensation or Nonqualified Deferred
Compensation Earnings in fiscal 2023 and fiscal 2022. The value of stock awards represents the grant date fair value of awards granted
with respect to fiscal 2023 and fiscal 2022 in accordance with ASC Topic 718. Pursuant to Securities and Exchange Commission rules, the
amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our methodology, including its
underlying estimates and assumptions used in calculating these values, is set forth in Note 2 to our audited financial statements for
the fiscal year ended December 31, 2023.

 For
stock awards, these shares were valued on the grant date based on the quoted trading price of the stock on such date.

 Name &
 Principal position

 Year

 Salary

 ($)

 Bonus

 ($)

 Stock

 ($)(1)

 ($)

 All
 Other
 Compensation
 ($)

 Total

 ($)

 (a)

 (b)

 (c)

 (d)

 (e)

 (f)

 (i)

 (j)

 President & CEO

 2023

 158,000

 -

 122,457

 -

 304,457

 President
 & CEO

 2022

 195,000
 (2)

 -

 146,889

 1,000

 366,889

 (1)

 All
 directors are compensated for service on our Board. The compensation in this column for Mr. Berman, reflects awards for service as
 a director.

 (2)

 $40,000
 of this amount was earned and accrued in 2022, but not paid until 2023.

 Mr.
Berman's contract expired at the end of 2023, but was renewed for an additional year in January, 2024. Under the terms of the
extension, effective January 1, 2024, Mr. Berman will earn an annual salary of $225,000 and will be entitled to a profit bonus tied
to 2024 revenue as well as a bonus if the EBITDA of the corporation is 20% or more.

 Outstanding
Equity Awards at Fiscal Year End Table

 The
following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards outstanding
at December 31, 2023.

 Stock

 Name

 No.of Securities Underlying Unexercised options - exercisable

 No.of Securities Underlying Unexercised Options - unexercisable

 Plan Awards: No.of Securities Underlying Unexercised Unearned Options

 Exercise Price ($)

 Expiration Date

 No. of Unvested Shares

 Market Value of Unvested Shares ($)

 Plan
 Awards: No.of Unearned Shares or Other Unvested Rights

 Plan
 Awards: Market Value of Unearned Shares or other Unvested Rights ($)

 (a)

 (b)

 (c)

 (d)

 (e)

 (f)

 (g)

 (h)

 (i)

 (j)

 450,000

 -

 -

 0.55

 (1
)

 -

 -

 -

 -

 900,000

 -

 -

 0.75

 (2
)

 -

 -

 -

 -

 (1)

 The
 option to purchase:

 Expires
 on:

 April
 3, 2024

 75,000

 31, 2024

 June
 30, 2025

 125,000

 31, 2025

 31,2025

 (2)

 The
 option to purchase

 Expires
 on:

 June
 30, 2025

 31, 2025

 June
 30, 2026

 31, 2026

 June
 30, 2027

 31, 2027

Compensation

 We
paid our directors the amounts shown below during the fiscal year ended December 31, 2023. Amounts paid to Mr. Tom Berman are shown in
the summary Compensation Table for named executive officers. All directors were compensated for 2023 with a fee of $2,000 per meeting
paid in shares of commons stock. David Sherbin resigned
in May, 2023.

 Name

 Fees
 earned or
 paid in
 cash

 Stock

 Awards(1)

 All Other
 Compensation

 Total

 Ronald J. Berman

 $
 -

 $

 $
 54,495

 $
 -

 $
 78,495

 Miles Gatland

 $
 -

 $

 $
 -

 $
 -

 $

 Raymond Gunn

 $
 -

 $

 $
 -

 $
 -

 $

 Scott E. Rickert

 $
 -

 $

 $
 -

 $
 -

 $

 Jeanne M. Rickert

 $
 -

 $

 $
 34,418

 $
 -

 $
 58,418

 David Sherbin

 $
 -

 $
 12,000

 $
 -

 $
 -

 $
 12,000

 (1)

 In
 connection with consulting services, Mr. Ronald Berman was awarded options totaling 95,000 in 2023 valued at $54,495,. Ms. Rickert
 was also awarded 60,000 options for legal services in 2023 valued at $34,418.

 We
have entered into agreements to provide contractual indemnification and advancement of expenses to the directors.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Compensation Plans

 See
table and related explanations under item 5 above regarding Equity Compensation Plans.

 Security
Ownership of Certain Beneficial Owners and Management

 Set
forth in the following table is the indicated information as of March 29, 2024 with respect to each person who is known to us to be
the beneficial owner of more than five percent of our common stock.

 Name and
 address of beneficial owner

 Amount
 and nature of beneficial ownership(1)

 Percent
 of Class(2)

 PEN Comeback, LLC
31601 Research
 Park Drive

 3,349,467

 %

 PEN Comeback 2, LLC
31601 Research Park
 Drive

 2,842,670

 %

 Magic Growth LLC
31601 Research Park Drive

 1,961,496

 %

 Magic Growth 2 LLC
31601 Research Park
 Drive

 2,308,912

 %

 Magic Growth 3 LLC
31601 Research Park
 Drive

 1,484,254

 %

 Rickert Family, Limited Partnership
9 Diamond
 Drive
Key West, FL 33040

 1,577,832

 %

 Ronald J. Berman
31601 Research Park Drive

 2,222,361
 (3)

 %(4)

31601 Research Park Drive

 2,200,609
 (5)

 %(4)

 (1)

 warrants and options that are presently exercisable.

 (2)

 Percentages
 assume that all options and warrants presently exercisable or exercisable in the next 60 days have been exercised.

 (3)

 Mr.
 Ron Berman owns directly 583,867 shares and options and warrants presently exercisable for 140,000 shares. The balance of his economic
 interest is held indirectly through investment in PEN Comeback, LLC and PEN Comeback 2, LLC.

 (4)

 Mr.
 Ron Berman and Mr. Tom Berman share equally the voting and dispositive power over the holdings of PEN Comeback, LLC; PEN Comeback
 2, LLC; Magic Growth, LLC; Magic Growth 2 LLC and Magic Growth 3 LLC (these five entities, the "Investors"). As a result,
 their voting control on a fully diluted basis is 55% for Mr. Ron Berman and 58% for Mr. Tom Berman.

 (5)

 Mr.
 Tom Berman owns directly 153,335 shares and options and warrants for 1,472,112 shares exercisable now or in the next 60 days. The balance
 of his economic interest is held indirectly through investment in PEN Comeback, LLC and PEN Comeback 2, LLC.

 Set
forth in the table below is information as of March 29, 2024 with respect to the beneficial ownership of common stock by our
directors and Executive Officers.

 Name of
 Beneficial Owner

 Amount
 and Nature of Beneficial Ownership

 Economic
 Percentage Ownership

 Voting
 and Dispositive Power (6)

 Ronald J. Berman (1) (2)

 2,222,361

 %

 %

 Tom J. Berman (1) (2)

 2,500,609

 %

 %

 Miles Gatland (1) (3)

 1,311,502

 %

 -

 (5)

 Raymond Gunn (5)

 36,924

 -

 -

 Jeanne M. Rickert (1) (4)

 722,098

 %

 -

 (5)

 Scott E. Rickert (4)

 670,438

 %

 %

 Leandro Vera (1) (5)

 160,000

 -

 -

 All directors and officers as a group

 %

 %

 (1)

 options and warrants held directly by the following individuals that are presently exercisable or exercisable in the next 60 days:

 Ron Berman

 1 40,000

 Tom Berman

 1,449,228

 Miles Gatland

 70,000

 Jeanne Rickert

 60,000

 Leandro Vera

 160,000

 (2)

 economic interest in stock and warrants that are presently exercisable held indirectly in PEN Comeback LLC, PEN Comeback 2 LLC or
 both.

 (3)

 economic interest in stock and warrants that are presently exercisable held indirectly in Magic Growth LLC, Magic Growth 2 LLC and
 Magic Growth 3 LLC. Last column only includes securities held directly, as Messrs. Ron and Tom Berman hold voting and dispositive
 power of securities held indirectly.

 (4)

 economic interest in stock and warrants that are presently exercisable held indirectly in Rickert Family, Limited Partnership. Mr.
 Rickert has sole voting and dispositive power over all securities held by Rickert Family, Limited Partnership.

 (5)

 Less
 than 1%.

 (6)

 Ronald
 Berman and Tom Berman share voting and dispositive power over all securities held by PEN
 Comeback LLC, PEN Comeback 2 LLC, Magic Growth LLC, Magic Growth 2 LLC and Magic Growth 3
 LLC.

 Item
13. Certain Relationships and Related Transaction, and Director Independence.

 Our
board has determined that Messrs. Gatland and Gunn are "independent" as defined by the NASDAQ Marketplace
rules.

 Please
refer to Note 11 – "Related Party Transactions" to our Financial Statements included in this Report. The
information described therein is hereby incorporated by reference under this Item 13.

 Item
14. Principal Accountant Fees and Services

 The
following table sets forth the fees billed by our principal independent accountants, UHY for categories of services indicated.

 Years
 Ended December 31,

 Category

 2023

 2022

 Audit Fees

 $
 145,000

 $
 127,500

 Tax Fees

 $
 -

 $
 9,000

 Audit
fees. Consists of fees billed for the audit of our annual financial statements, review of our Form 10-K, review of our interim financial
statements included in our Form 10-Q and services that are normally provided by the accountant in connection with year-end statutory
and regulatory filings or engagements.

 Tax
fees. Consists of professional services rendered by a company aligned with our principal accountant for tax compliance, tax advice
and tax planning.

 PART
IV

 Item
15. Exhibits and Financial Statement Schedules

 Exhibit
 No.

 Description

 3.1

 Amended
 and Restated Certificate of Incorporation of Nano Magic Inc., dated July 2, 2020. (i incorporated herein by reference to Exhibit
 3.1 of the Company's Form 8-K filed with the SEC on July 2, 2020.

 3.2

 Certificate
 of Amendment to the Amended and Restated Certificate of Incorporation dated March 2, 2021 (incorporated herein by reference to Exhibit
 3.2 of the Company's Form 10K filed with the SEC on May 28,2021).

 3.3*

 Certificate of Merger of Domestic Corporation and Foreign Limited Liability Company effective December 31, 2022 (incorporated herein by reference to Exhibit 3.3 of the Company's Form 10K filed with the SEC on April 11, 2023).

 3.4

 Bylaws
 of PEN Inc. (incorporated herein by reference to Annex C, Exhibit B-2 of the Company's Proxy Statement filed with the SEC on
 July 3, 2014).

 4.1

 Piggyback
 Registration Rights Agreement, dated March 10, 2014, between Douglas P. Baker and the Company (incorporated herein by reference to
 the Company's Form 8-K filed with the Commission on March 11, 2014).

 4.2

 Registration
 Rights Agreement, dated October 16, 2018, by and between PEN Inc., and PEN Comeback, LLC (incorporated herein by reference to Exhibit
 4.1 of the Company's Form 10Q filed with the SEC on May 29, 2019).

 4.3

 Form
 of Warrant issued to PEN Comeback, LLC (incorporated herein by reference to Exhibit 4.2 of the Company's Form 10Q filed with
 the SEC on May 29, 2019).

 4.4+

 dated April 4, 2019 issued to Tom J. Berman (incorporated herein by reference to Exhibit 4.8 of the Company's Form 10K filed
 with the SEC on November 13, 2019).

 4.5

 Registration Rights Agreement, dated September 6, 2019, by and between PEN Inc., and PEN Comeback 2, LLC (incorporated herein by reference to Exhibit 4.9 of the Company's Form 10K filed with the SEC on November 13, 2019).

 4.6

 Form of Warrant issued to PEN Comeback 2, LLC (incorporated herein by reference to Exhibit 4.10 of the Company's Form 10K filed with the SEC on November 13, 2019).

 4.7

 Form
 of Warrant issued to Magic Growth LLC and Magic Growth 2 LLC (incorporated herein by reference to Exhibit 4.7 of the Company's
 Form 10K filed with the SEC on May 28,2021).

 4.8+

 dated March 2, 2020 issued to Tom J. Berman (incorporated herein by reference to Exhibit 4.8 of the Company's Form 10K filed
 with the SEC on May 28,2021).

 4.9

 dated March 2, 2020 issued to Ronald J. Berman (incorporated herein by reference to Exhibit 4.9 of the Company's Form 10K filed
 with the SEC on May 28,2021).

 4.10

 Form
 of Warrant issued to Magic Growth 3 LLC (incorporated herein by reference to Exhibit 4.10 of the Company's Form 10K filed with
 the SEC on March 30, 2022).

 4.11

 Form
 of Convertible Promissory Note (incorporated herein by reference to Exhibit 4.11 of the Company's Form 10K filed with the SEC
 on March 30, 2022).

 4.12

 Form of amendment to extend term of Warrant(s) (incorporated herein by reference to Exhibit 4.12 of the Company's Form 10K filed with the SEC on April 11, 2023).

 4.13

 Form of Amendment to Option(s) to permit personal representative to exercise vested options (incorporated herein by reference to Exhibit 4.13 of the Company's Form 10K filed with the SEC on April 11, 2023).

 4.14

 Form of Secured, Convertible Promissory Note (incorporated herein by reference to Exhibit 4.14 of the Company's Form 10K filed with the SEC on April 11, 2023).

 10.1+

 PEN Inc. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.14 of the Company's form 10-K filed with the Commission on March 30, 2016).

 10.2+

 Nano
 Magic Holdings Inc. 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 of the Company's Form 10K
 filed with the SEC on May 28, 2021).

 10.3+

 Employment
 Agreement, dated April 3, 2019, between PEN Inc. and Tom Berman (incorporated herein by reference to Exhibit 10.14 of the Company's
 form 10-K filed with the Commission on, 2020).

 10.4

 U.S
 Small Business Administration Note, dated May 8, 2020, from Nano Magic LLC to Fifth Third Bank (incorporated herein by reference
 to Exhibit 10.9 of the Company's Form 10K filed with the SEC on May 28,2021).

 10.5

 Exhibit
 B executed March 2, 2020 to Employment Agreement dated April 3, 2019, between Nano Magic Inc. and Tom Berman (incorporated herein
 by reference to Exhibit 10.10 of the Company's Form 10K filed with the SEC on May 28,2021).

 10.6+

 Exhibit B effective January 1, 2024 to Employment Agreement dated April 3, 2019, between Nano Magic Inc. and Tom Berman (incorporated herein by reference to Exhibit 10.1 of the Company's Form 8K filed with the SEC on February 7, 2024)

 10.7

 Form
 of Indemnification and Advancement Agreement between individual directors and Nano Magic Holdings Inc. (incorporated herein by reference
 to Exhibit 10.1 of the Company's Form 10Q filed with the SEC on October 28,2021).

 21.1*

 Subsidiaries
 of the Registrant

 31.1*

 Rule
 13a-14(a)/15d-14(a) Certificate of Principal Executive Officer

 31.2*

 Rule
 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

 32.1*

 Section
 1350 Certificate of Principal Executive Officer and Chief Financial Officer

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 Cover

 +

 Management
 contract or compensatory plan or arrangement.

 *

 Filed
 herewith.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 Nano
 Magic Inc.

 (Registrant)

 By:

 /s/

 Tom
 J. Berman, President & CEO

 Date:

 April
 3, 2024

 POWER
OF ATTORNEY

 KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeanne M. Rickert as his true
and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to the annual report, which amendments may make such changes in the annual
report as the attorney-in-fact deems appropriate and to file the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.

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

 Signature

 Title

 Date

 /s/

 Director,
 President & CEO

 Tom
 J. Berman

 (principal
 executive officer)

 /s/
 Leandro Vera

 Chief
 Financial Officer

 Leandro
 Vera

 (principal
 financial and accounting officer)

 /s/
 Ronald J. Berman

 Ronald
 J. Berman

 /s/
 Miles Gatland

 Miles
 Gatland

 /s/
 Raymond Gunn

 Raymond
 Gunn

 /s/
 Jeanne Rickert

 Jeanne
 M. Rickert

 /s/
 Scott E. Rickert

 April
 3, 2024

 Scott
 E. Rickert