Item 1. Business
ITEM 1. BUSINESS
Summary
Jupiter
Wellness, Inc. is a cutting-edge developer of cannabidiol (CBD) based medical therapeutics and wellness products. The
Company’s clinical pipeline of prescription CBD-enhanced skin care therapeutics address indications including eczema, burns,
herpes cold sores, and skin cancer. We are in the early stage of manufacturing, distributing, and marketing a diverse line of
consumer products infused with CBD. We have a proprietary, line of products: CaniSun, CaniSkin and CaniDermRX. Under the CaniSun
brand, we are marketing patent pending CBD-infused sun care lotion formulas containing various sun protection factors, or
SPFs. In addition, we are exploring the use of CBD with other prescription
and/or over-the-counter, or OTC, consumer products that have potentially therapeutic and medical applications. Specifically, we are exploring
the use of such topical solutions for the treatment of eczema, dermatitis (JW-100), and actinic keratosis (JW-_100), a non-prescription
lotion/lip balm (JW-200) for the treatment of symptoms of cold sores, and a prescription product for the treatment of burns (JW-101).
The CaniDermRX (JW-100) topical solution for the treatment of eczema dermatitis is the lead product candidate and will be further tested
in humans as an investigational cosmetic ingredient followed by clinical trials subject to the regulations of the United States Food and
Drug Administration (“FDA”) under an investigational new drug, or IND, application.
In February 2021, we
announced the results of our novel Cannabidiol-Aspartame combination treatment JW-100 clinical trial which has shown it significantly
Reduces ISGA Score in Eczema patients. A double blinded placebo controlled interventional study was conducted. Subjects were assigned
to apply, at home, one of three treatments: JW-100 (a CBD and aspartame combination topical formulation), a CBD only topical formulation,
or a placebo topical formulation. After 14 days, the average reduction in the Investigators Static Global Assessment (ISGA) score was
calculated for each group. Additionally, the proportion of subjects achieving (ISGA) score 0 (clear) or 1 (almost clear) with at least
2 grade improvement from baseline was recorded for each arm of the study. 50% of subjects in the JW-100 arm achieved ISGA clear or almost
clear (1 or 2) with at least a 2-grade improvement from baseline after treatment versus 20% and 15% in the CBD-only and placebo arms,
respectively. The percentage of subjects achieving clear or almost clear with at least a 2-grade improvement from baseline was found to
be statistically significant (p=0.028). JW-100, a novel topical formulation containing CBD and aspartame, was shown to significantly reduce
ISGA score in atopic dermatitis patients after two weeks of use. The combination of CBD and aspartame was more effective at reducing ISGA
scores than CBD alone . In
parallel, we plan to initiate the development of other products. We originally anticipated developmental studies to be completed in 2020,
however, these studies were delayed due to COVID-19. We are also actively seeking to acquire or license products in the OTC skin care
market that can be infused with CBD and marketed under our CaniSkin and CaniDermRX brand names. There can be no assurances that we will
acquire or enter into such partnership or licensing agreements .
The endocannabinoid
system, which is a body system affected by CBD, plays a pivotal role in maintaining a healthy skin through modulating pain sensation,
cell proliferation and inflammation. Our strategy for treatment of skin indications is, therefore, to focus on the use of CBD containing
topical formulations and to explore potential combinations of CBD and other agents that may augment and act synergistically with CBD.
We will explore this strategy by conducting controlled clinical trials to try to ultimately gain FDA approval for specific indications.
On November30, 2020
the Company acquired SRM Entertainment, Limited, a Hong Kong Special Administrative Region of the People's Republic of China limited
company (“SRM”). SRM has relationships with and supplies the amusement park industry with exclusive products that are often
only available to consumers inside the relevant amusement park, entertainment venues and theme hotels in Orlando Florida, Beijing China,
Japan and other places throughout the worldwide theme park industry.
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Organizational History
Jupiter Wellness, Inc. was originally
incorporated in the State of Delaware on October 24, 2018. Our principal business address is 725 N. Hwy A1A, Suite C-106, Jupiter, FL
33477.
Description of Business
Company Overview
Jupiter Wellness,
Inc. is a cutting-edge developer of cannabidiol (CBD) based medical therapeutics and wellness products. The Company’s clinical
pipeline of prescription CBD-enhanced skin care therapeutics address indications including eczema, burns, herpes cold sores, and skin
cancer. We are in the early stage of manufacturing, distributing, and marketing a diverse line of consumer products infused with CBD.
We have a proprietary, line of products: CaniSun, CaniSkin and CaniDermRX. Under the CaniSun brand, we are marketing patent pending CBD-infused
sun care lotion formulas containing various sun protection factors, or SPFs. In addition, we are exploring the use of CBD with other
prescritption and/or over-the-counter, or OTC, consumer products that have potentially therapeutic and medical applications. Specifically,
we are exploring the use of such topical solutions for the treatment of eczema, dermatitis (JW-100), and actinic keratosis (JW-100),
a non-prescription lotion/lip balm (JW-200) for the treatment of symptoms of cold sores, and a prescription product for the treatment
of burns (JW-101). The CaniDermRX (JW-100) topical solution for the treatment of eczema dermatitis is the lead product candidate and
will be further tested in humans as an investigational cosmetic ingredient followed by clinical trials subject to the regulations of
the United States Food and Drug Administration (“FDA”) under an investigational new drug, or IND, application.In February
2021, we announced the results of our novel Cannabidiol-Aspartame combination treatment JW-100 clinical trial which has shown it significantly
Reduces ISGA Score in Eczema patients. A double blinded placebo controlled interventional study was conducted. Subjects were assigned
to apply, at home, one of three treatments: JW-100 (a CBD and aspartame combination topical formulation), a CBD only topical formulation,
or a placebo topical formulation. After 14 days, the average reduction in the Investigators Static Global Assessment (ISGA) score was
calculated for each group. Additionally, the proportion of subjects achieving (ISGA) score 0 (clear) or 1 (almost clear) with at least
2 grade improvement from baseline was recorded for each arm of the study. 50% of subjects in the JW-100 arm achieved ISGA clear or almost
clear (1 or 2) with at least a 2-grade improvement from baseline after treatment versus 20% and 15% in the CBD-only and placebo arms,
respectively. The percentage of subjects achieving clear or almost clear with at least a 2-grade improvement from baseline was found
to be statistically significant (p=0.028). JW-100, a novel topical formulation containing CBD and aspartame, was shown to significantly
reduce ISGA score in atopic dermatitis patients after two weeks of use. The combination of CBD and aspartame was more effective at reducing
ISGA scores than CBD alone.
In parallel,
we plan to initiate the development of other products. We originally anticipated developmental studies to be completed in 2020, however,
these studies were delayed due to COVID-19. We are also actively seeking to acquire or license products in the OTC skin care market that
can be infused with CBD and marketed under our CaniSkin and CaniDermRX brand names. There can be no assurances that we will acquire or
enter into such partnership or licensing agreements.
The endocannabinoid
system, which is a body system affected by CBD, plays a pivotal role in maintaining a healthy skin through modulating pain sensation,
cell proliferation and inflammation. Our strategy for treatment of skin indications is, therefore, to focus on the use of CBD containing
topical formulations and to explore potential combinations of CBD and other agents that may augment and act synergistically with CBD.
We will explore this strategy by conducting controlled clinical trials to try to ultimately gain FDA approval for specific indications.
On November
30, 2020, the Company acquired SRM Entertainment, Limited, a Hong Kong Special Administrative Region of the People's Republic of China
limited company (“SRM”). SRM has relationships with and supplies the amusement park industry with exclusive products that
are often only available to consumers inside the relevant amusement park, entertainment venues and theme hotels in Orlando Florida, Beijing
China, Japan and other places throughout the worldwide theme park industry.
CaniSun
Brand
Under our CaniSun Brand, we
developed a patent pending CBD-infused sunscreen with broad-spectrum SPF protection. We have completed lab testing for CBD
solubility–infusing clear, colorless, odorless, and 99.5% pure CBD isolate with three different sun care active ingredients,
homosalate, octisalate and octocrylene, which have already been approved by the FDA. The CBD-infused sun care market is fairly
nascent in the United States; we believe that there are currently no major competitors in the category. We see an opportunity to
become the leading manufacturer of CBD-infused sun care products, marketing the CaniSun brand through an extensive digital and
social media awareness campaign. We announced the launch of our CaniSun sun care line of SPF 30, SPF 55 and SPF 50 face lotion on
June 6, 2019. We also sell our CBD-infused lip balm and CBD-infused SPF 30 sunscreen spray on our website Canisun.com.
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We currently
have additional CaniSun products in various stages of development as follows:
i)
CBD-infused SPF 30 Lip Balm, Peppermint and Acai Fragrance
ii)
CBD-infused
SPF 15 sunscreen daily lotion; and
iii)
Mineral-based
sunscreen lotions (SPF 30 and 50).
All of the
products listed above are in the developmental stage, whereby we are finalizing the formula to be used in each product, respectively.
For CBD-infused product candidates in development, such as our CBD-infused SPF 30 Lip Balm and CBD-infused SPF 15 sunscreen lotion, we
have already identified the sun care active ingredient formula (which has already been FDA approved) to be infused with CBD. Once the
respective formulas for each of our product candidates are created, the product candidates will undergo three months of stability testing.
Provided that the product candidates pass the stability testing, we intend to sell the products on our CaniSun website. The formula for
our mineral-based sunscreen lotion (SPF 30 and 50) (product iii) above) includes certain minerals instead of chemicals typically used
in sunscreen lotions.
Overall, we
believe that our currently offered sunscreen products comply with the FDA Final Rule for sunscreen products under 21 CFR 352 Sunscreen
products for Over-the-Counter Human Use. Therefore, we believe that our sunscreen products fall within the FDA monograph and that FDA
premarket approval and testing is not required. Our products have been tested for SPF Evaluation (SPF rating), Critical Wave Length (Broad
Spectrum claim) and Water Resistance, each of which is defined within the monograph and labeled accordingly.
All of the
testing on these products is standard testing for suncare products. Such testing protocols are not intended to test for any effects of
adding CBD. In addition to these tests that were conducted to support the claims on the package, each batch is also tested for appearance,
color, odor, pH, viscosity, specific gravity, analytical for the sunscreen active ingredients, and microbial content testing.
Our products
are tested each time they are manufactured. DCR Labs manufactures our products and has represented to us that it is compliant with the
FDA’s Current Good Manufacturing Practice, or CGMP, regulations in accordance with 21 CFR 210/211 required for Over-the-Counter
drug products. DCR Labs has self-imposed health and safety standards to ensure compliance with the FDA’s CGMPs.
We expect
to continually update and expand upon our corporate website and further refine our online retail strategies on an ongoing basis. JupiterWellness.com
is our primary corporate website, which will serve as the primary source of information about us for investors and contain press releases,
clinical trial pipeline, lab reports, blog posts, and additional information about each of our brands. We anticipate that each brand will
have its own front-facing website dedicated to retail sales and brand specific information. For example, our line of sun care products,
CaniSun, has its own website at CaniSun.com and allows for online retail purchase of the entire product line. As we expand our brands
(CaniSkin and CaniDermRX), we anticipate utilizing the same strategy and dedicating a new e-commerce website to each brand moving forward.
We are also building a website dedicated to servicing our wholesale and larger distributor clients. This website will have more information
about each product and provide a central location for larger retailers to find more in-depth information about all of our brands in one
place.
We plan to
leverage our websites with a social media presence across multiple platforms designed to utilize product reviews to increase brand loyalty,
brand recognition and sales. The references to our website in this prospectus are inactive textual references only. The information on
our website is neither incorporated by reference into this prospectus nor intended to be used in connection with this offering. We also
see growth potential in developing retail locations. We intend to utilize cross-promotion marketing campaigns with our products and product
category expansion that leverages our existing distribution channels. We have built an e-commerce platform designed to connect us directly
to consumers. We use the platform to sell products, educate customers and build brand loyalty.
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CaniSkin
Brand and CaniDermRX Brand
We are currently
developing other products such as CBD-infused skin care lotion under the CaniSkin brand. Specifically, a CBD-infused moisturizing face
serum is under development. We must first finalize the formula to be used in the face serum, and, once approved, the product candidate
will undergo stability testing. We intend to sell the product, provided it first passes stability testing, on our website for CaniSkin
products. Additionally, we are developing innovative dermatological treatments under the CaniDermRX brand that are specialized to treat
atopic dermatitis and other dermatological conditions such as burns, skin cancer and herpes cold sores, respectively. Subject to obtaining
FDA approval, we intend for our experimental-stage product for the treatment of atopic dermatitis to compete with Dupixent, an FDA-approved
product for treating atopic dermatitis, and for our experimental-stage product for the treatment of herpes cold sores to compete with
Silvadene and Abreva, FDA-approved products for treating herpes cold sores. These products require more extensive testing to show both
safety and efficacy.
In addition,
we plan to seek acquisition opportunities in the branded consumer products space, including but not limited to other OTC therapeutic brands
and skin care brands that can be developed, manufactured, marketed and distributed under our CaniSkin and CaniDermRX brand names.
We filed a provisional patent number 62/884,955 on 08/09/2019 on an Aspartame/CBD
combination and intend to develop products containing a combination of CBD and Aspartame under the CaniDermRX name for the treatment of
pain and inflammation. On February 11, 2021, the US Patent Published our US Patent Application 20210038513 and on April 5, 2021 we filed
the International filing through PCT Application PCT/US 2020/045408. We believe that our CaniDermRX product candidates have the potential
to treat many skin indications such as atopic dermatitis, pruritis-itch, non-atopic dermatitis/eczema, psoriasis, dermatomyositis, scleroderma,
seborrheic dermatitis, actinic keratosis, epidermolysis bullosa and cutaneous neoplasias. Aspartame is a rigorously tested food ingredient.
Reviews by major governmental regulatory bodies have previously found the ingredient safe for consumption at higher levels than we contemplate
using in our CaniDermRX product candidates. We believe that our formulations that include Aspartame, such as topical crème, lip
balm, powder and dog treats, are well-tolerated by, and safe for, users. We believe that infusing CBD in our products may help alleviate
irritation that may be caused by applying sun care products and may lead to reduced inflammation. In human skin, receptors of the endocannabinoid
system are found in differentiated keratinocytes, hair follicle cells, sebaceous glands, immune cells, and sensory neurons. Activation
of cannabinoid receptor type 2, or CB2, for which CBD is a ligand receptor in these cells has been shown to reduce pain and itch sensation,
regulate keratinocyte differentiation and proliferation, decrease hair follicle growth, and modulate the release of damage-induced keratins
and inflammatory mediators to control the homeostasis of the skin environment.
Market Opportunity
The market
for hemp, and for products based on extracts of hemp, is expected to grow substantially over the coming years. It is estimated by BDS
Analytics and Arcview Market Research that the collective market for CBD sales in the U.S. will surpass $20 billion by 2024 and that there
will be a compound annual growth rate of 49 percent by 2024 across all distribution channels. We see great potential to grow and generate
revenues in this expanding market.
According to Grand View Research,
the U.S. sun care market size was estimated at $1.95 billion in 2016. The growing consumer awareness regarding the ill-effects of over
exposure to ultraviolet, or UV, rays on the undefended skin is expected to propel growth. The sun care market is a highly competitive
market and product differentiation in the sun care market is low. Given the relatively low amount of product differentiation, we see an
opportunity to carve out a unique market share with our CBD-infused sun care products. We cannot make any claims as to such benefits prior
to performing certain testing. We see an opportunity, although there can be no assurance that we will be successful, to become the leading
manufacturer of CBD-infused sun care products, marketing the CaniSun brand through an extensive digital and social media awareness campaign.
We announced the launch of our CaniSun sun care line of SPF 30, SPF 50 and SPF 55 face lotion on June 6, 2019. We also sell our CBD-infused
lip balm and CBD-infused SPF 30 sunscreen spray on our website Canisun.com.
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Market Strategy
We plan
to seek acquisition opportunities in the branded consumer products space, including but not limited to other non-CBD OTC therapeutic brands
and skin care brands that can be manufactured, marketed and distributed under our CaniSkin and CaniDermRX brand names. We may market such
products as they are currently comprised or may seek to add CBD to the product. In the event we decide to add CBD to such products, we
intend to first conduct FDA regulated clinical trials for safety and efficacy testing. We have no definitive agreements in place to acquire
any other entities.
We also
intend to sell the product online directly through our own website, and other third-party marketplaces as these sites permit.
Nidaria
Distribution Agreement
On November
5, 2020, we entered into the Nidaria Distribution Agreement with Nidaria, Pursuant to which we purchase, market, promote, distribute and
sell Nidaria’s Safe Sea® sunscreen that provides protection against jellyfish stings. Pursuant to the Nidaria Distribution Agreement,
the Company shall serve as Nidaria’s exclusive distributor of Safe Sea in the state of Florida. The Nidaria Distribution Agreement
shall have a term of two (2) years, commencing December 1, 2020, and may be renewed for one (1) additional year upon the mutual consent
of us and Nidaria.
Website
We expect to continually update
and expand upon our corporate website and further refine our online retail strategies on an ongoing basis. Jupiterwellness.com is our
primary corporate website, which will serve as the primary source of information about us for investors and contain press releases, clinical
trial pipeline, lab reports, blog posts, and additional information about each of our brands. We anticipate that each brand will have
its own front-facing website dedicated to retail sales and brand specific information. For example, our line of sun care products, CaniSun,
has its own website at CaniSun.com and allows for online retail purchase of the entire product line. As we expand our brands (CaniSkin
and CaniDermRX), we anticipate utilizing the same strategy and dedicating a new e-commerce website to each brand moving forward. We are
also building a website dedicated to servicing our wholesale and larger distributor clients. This website will have more information about
each product and provide a central location for larger retailers to find more in-depth information about all of our brands in one place.
SRM
Acquisition
On November
30, 2020, we entered into and closed the Exchange Agreement with SRM, a Hong Kong Special Administrative Region of the People's Republic
of China limited company and wholly owned subsidiary of Vinco, and SRM Shareholders, pursuant to which we acquired 100% of the SRM Common
Stock from the SRM Shareholders in exchange for 200,000 shares of the Company’s common stock, the resale of which is subject to
a leak out provision and escrow of 50,000 shares of the Company’s common stock. Upon closing, and pursuant to the Exchange Agreement,
the Company delivered the 150,000 shares of its common stock to SRM and placed 50,000 shares in escrow (“Escrow Shares”).
Pursuant to the Exchange Agreement, the Company shall release the Escrow Shares upon SRM generating $200,000 in cash receipts and revenue
prior to January 15, 2021. The Escrow shares have not been released as of the date hereof. Pursuant to the Exchange Agreement, the Company
assumed all of the financial obligations of SRM, as well as its employees and offices. As a result of the Exchange Agreement, SRM became
a wholly-owned subsidiary of the Company.
SRM has relationships
with and supplies the amusement park industry with exclusive products such as toys, lights, fans and other items that are sold in amusement
parks. SRM has developed, manufactured and supplied the amusement park industry with exclusive products that are often only available
to consumers inside the relevant amusement park, entertainment venues and theme hotels in Orlando Florida, Beijing China, Japan and other
places throughout the worldwide theme park industry. . SRM has developed unique products in conjunction with suppliers of products for
core licensed items for major well-known brands, themes, characters and movies.
Products developed by
SRM are generally shipped directly to the theme park without warehousing at the Company’s facilities. SRM does not have long-term
agreements with its customers, and instead develops products on an item-by-item basis subject to purchase orders from its customers.
Through SRM, we additionally
intend to seek to sell our sun care products in the amusement parks. We are currently developing a line of non-CBD infused sun care products
for sale in the amusement parks.
SRM has four full time employees.
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Competition
There are several companies developing
cannabinoid therapeutics for a range of medical indications. The cannabinoid therapeutic area currently includes formulated extracts of
the Cannabis plant and synthetic formulations. These formulations include CBD and THC, or a combination of CBD/THC as the active pharmaceutical
ingredient. Certain companies such as GW Pharmaceuticals, PLC have focused on hemp-based CBD formulations; while other companies such
as Zynerba Pharmaceuticals Inc. and Insys Therapeutics Inc. have focused on synthetic CBD formulations.
The CBD-based consumer product
industry is highly fragmented with numerous companies, consisting of publicly- and privately-owned companies. There are also large, well-funded
companies that have indicated their intention to compete in the hemp-based product category in the U.S. We routinely evaluate internal
and external opportunities to optimize value for stockholders through new product development or by asset acquisitions or sales, and believe
we are well-positioned to capitalize in the growing CBD product category. We face competition from larger companies that are, or may be,
in the process of offering similar products to ours. Many of our current and potential competitors have longer operating histories, significantly
greater financial, marketing and other resources than we have or may be expected to have.
Competitors may include major
pharmaceutical and biotechnology companies and public and private research institutions. Our management cannot be certain that we will
be able to compete against current or future competitors or that competitive pressure will not seriously harm our business prospects.
These competitors may be able to react to market changes, respond more rapidly to new regulations or allocate greater resources to the
development and promotion of their products than we can.
Furthermore, some of these competitors
may make acquisitions or establish collaborative relationships among themselves to increase their ability to rapidly gain market share.
Large pharmaceutical companies may eventually enter the market.
Given the rapid changes affecting
the global, national, and regional economies in general and cannabis-related medical research and development in particular, we may not
be able to create and maintain a competitive advantage in the marketplace. Time-to-market is an important factor in our industry and our
success will depend on our ability to develop innovative products that will be accepted by patients as efficient and helpful to use.
Our success will also depend on our ability to respond
quickly to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure to anticipate or respond
adequately to such changes could have a material effect on our financial condition, operating results, liquidity, cash flow and our operational
performance.
Intellectual Property
We filed
Provisional Patent (CBD Formulations and Uses Thereof: USAN: 62/884,995) on a combination of CBD and Aspartame on August 8, 2019. The
patent is to cover any products that contain a combination of CBD and Aspartame. This initially will cover the products under the CaniDermRX
Brand. The provisional patent application was converted into a full US patent application (No.: 16/987,941) and PCT application (PCT/US2020/045408I)
on August 9, 2020. If issued, the patent will give patent protection until 2040.
We filed
Provisional Patent (CBD Sunscreen Formulations and Uses Thereof: USAN: 63/005,854) on our CBD-infused sunscreen products on August 6,
2020. The patent is to cover any products under our CaniSun product line that contains CBD. The priority date starts at the time the provisional
is converted into a full patent application, which will occur on April 6, 2021. If issued, the patent will give patent protection until
2041.
We filed Provisional Patent (Oroanasal
CBD formulations and uses thereof (No.: 63/042,458) on June 22, 2020. This covers the use of CBD products for the treatment of respiratory
viruses.
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Research and Development
Our research and development programs
are generally pursued by engineers and scientists employed by us in on a full-time basis or hired as per diem consultants or through partnerships
with industry leaders in manufacturing and design and researchers and academia. We are also working with subcontractors in developing
specific components of our technologies.
The primary objective of our research
and development program is to advance the development of our existing and proposed products, to enhance the commercial value of such products.
The
Company incurred research and development expenses of $308,367 and $108,957 for the years ended December 31, 2020 and 2019, respectively.
Government Regulation
Since 1937, Cannabis sativa L.
has been a federally regulated Schedule I drug under the Controlled Substances Act, 21 U.S.C. § 811 (the “CSA”), regulated
by the Drug Enforcement Agency (the “DEA”).
It was not
until 2014 when a distinction between the use of Cannabis sativa L. for medical, recreational, and industrial purposes was made via Section
7606 of the Agricultural Act of 2014, which cleared a legal path for industrial hemp to be grown in three limited circumstances, 1) by
researchers at an institute of higher education, 2) by state departments of agriculture, or 3) by farmers participating in a research
program permitted and overseen by a state department of agriculture.
In 2016,
the DEA, U.S. Department of Agriculture, and the FDA issued a joint statement detailing the guidelines for growth of industrial hemp as
part of state-sanctioned research programs. Those guidelines state that hemp can only be sold in states with pilot programs, plants and
seeds can only cross state lines as part of permitted state research programs, and seeds can only be imported by individuals registered
with the DEA.
We believe
the recent passage of the Farm Bill will allow us to expand our marketplace opportunities. On December 20, 2018, President Donald J. Trump
signed into law the Agriculture Improvement Act of 2018, otherwise known as the “Farm Bill”. Prior to its passage, hemp, a
member of the cannabis family, and hemp-derived CBD were classified as a Schedule I controlled substances, and so were deemed to be illegal
under the CSA. With the passage of the Farm Bill, hemp cultivation is broadly permitted. The Farm Bill explicitly allows the transfer
of hemp-derived products across state lines for commercial or other purposes. It also puts no restrictions on the sale, transport, or
possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.
Under Section
10113 of the Farm Bill, hemp cannot contain more than 0.3 percent THC. THC refers to the chemical compound found in cannabis that produces
the psychoactive “high” associated with cannabis. Any cannabis plant that contains more than 0.3 percent THC would be considered
non-hemp cannabis—or marijuana—under federal law and would thus face no legal protection under this new legislation and would
be an illegal Schedule 1 drug under the CSA.
Additionally,
there will be significant, shared state-federal regulatory power over hemp cultivation and production. Under Section 10113 of the Farm
Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan
that must be submitted to the Secretary of the United States Department of Agriculture or USDA. A state’s plan to license and regulate
hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program,
USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally
run program. This system of shared regulatory programming is similar to options states had in other policy areas such as health insurance
marketplaces under the Affordable Care Act, or workplace safety plans under Occupational Health and Safety Act—both of which had
federally-run systems for states opting not to set up their own systems.
The Farm
Bill outlines actions that are considered violations of federal hemp law (including such activities as cultivating without a license or
producing cannabis with more than 0.3% THC). The Farm Bill details possible punishments for such violations, pathways for violators to
become compliant, and even which activities qualify as felonies under the law, such as repeated offenses.
One of the
goals of the Agricultural Act of 2014 was to generate and protect research into hemp. The Farm Bill continues this effort. Section 7605
re-extends the protections for hemp research and the conditions under which such research can and should be conducted. Further, section
7501 of the Farm Bill extends hemp research by including hemp under the Critical Agricultural Materials Act. This provision recognizes
the importance, diversity, and opportunity of the plant and the products that can be derived from it, but also recognizes that there is
still a lot to learn about hemp and its products from commercial and market perspectives.
Overall,
we believe that our sunscreen products comply with the FDA Final Rule for sunscreen products under 21 CFR 352 Sunscreen products for Over-the-Counter
Human Use. Therefore, we believe that our sunscreen products fall within the FDA monograph and that FDA premarket approval and testing
is not required. Our products have been tested for SPF Evaluation (SPF rating), Critical Wave Length (Broad Spectrum claim) and Water
Resistance, each of which is defined within the monograph and labeled accordingly.
Our products
are tested each time they are manufactured. DCR Labs manufactures our products and is compliant with the FDA’s Current Good Manufacturing
Practice (“CGMP”) regulations in accordance with 21 CFR 210/211 (required for Over-the-Counter drug products). DCR Labs has
self-imposed health and safety standards to ensure compliance with the FDA’s CGMPs.
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FDA Regulation of Hemp Extracts
The FDA is generally responsible
for protecting the public health by ensuring the safety, efficacy, and security of (1) prescription and over the counter drugs; (2) biologics
including vaccines, blood & blood products, and cellular and gene therapies; (3) foodstuffs including dietary supplements, bottled
water, and baby formula; and, (4) medical devices including heart pacemakers, surgical implants, prosthetics, and dental devices.
Regarding its regulation of drugs,
the FDA process requires a review that begins with the filing of an investigational new drug (IND) application, with follow-on clinical
studies and clinical trials that the FDA uses to determine whether a drug is safe and effective, and therefore subject to approval for
human use by the FDA.
Aside from the FDA’s mandate
to regulate drugs, the FDA also regulates dietary supplement products and dietary ingredients under the Dietary Supplement Health and
Education Act of 1994. This law prohibits manufacturers and distributors of dietary supplements and dietary ingredients from marketing
products that are adulterated or misbranded. This means that these firms are responsible for evaluating the safety and labeling of their
products before marketing to ensure that they meet all the requirements of the law and FDA regulations, including, but not limited to
the following labeling requirements: (1) identifying the supplement; (2) nutrition labeling; (3) ingredient labeling; (4) claims; and,
(5) daily use information.
The FDA has not approved cannabis,
marijuana, hemp or derivatives as a safe and effective drug for any indication. We intend to file an IND with the FDA for our CaniDermRX
products in the event the pending provisional patent on an Aspartame/CBD combination is approved. As of the date hereof, our products
containing CBD derived from industrial hemp are not marketed or sold using claims that their use is a safe and effective treatment
for any medical condition subject to the FDA’s jurisdiction.
The FDA has concluded that products
containing cannabis or industrial hemp derived CBD are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i)
and (ii) of the U.S. Food, Drug & Cosmetic Act, respectively. The FDA’s position is that products containing cannabis, CBD or
derivatives are Schedule 1 drugs under the Controlled Substances Act, and so are illegal. Our products containing CBD derived from industrial
hemp are not marketed or sold as dietary supplements. However, at some indeterminate future time, the FDA may choose to generally change
its position concerning products containing hemp derived CBD, and may choose to enact regulations that are applicable to such products.
In this event, our industrial hemp based products containing CBD may be subject to regulation.
Our products contain controlled
substances as defined in the Controlled Substances Act (CSA). Controlled substances that are pharmaceutical products are subject to a
high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security,
recordkeeping, reporting, import, export and other requirements administered by the DEA.
Despite recent approvals by the
FDA and DEA for a newly approved medication which contains cannabidiol (CBD), the scheduling of these substances, many of which are beyond
our control, could jeopardize our ability to obtain regulatory approval for and successfully market our products. Any
such setback in our pursuit of regulatory approval would have a material adverse effect on our business and prospects.
Employees
As of December 31, 2020, we had five full-time employees, including Chief
Executive Officer Brian S. John, Chief Financial Officer, Douglas McKinnon, and Chief Operating Officer, Richard Miller, and Rob White,
manager of shipping and receiving. We believe our relations with our employees to be good.
Properties
Currently, we do not own any real
property. We rent an office space at 725 N. Hwy A1A, Suite C-106, Jupiter, FL 33477 for $2,140 per month. This office space is rented
on a month-to- month lease.
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Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.