What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-31 compared with 2021-04-12 · 827 added, 961 removed, 28 unchanged (98% of the section changed)

Risks Related to Our Business

If we are unable to keep up with rapid technological

changes, our products may become obsolete.

The market for our products is

characterized by significant and rapid change.

Although we will continue to expand our product line capabilities in order to remain competitive,

research and discoveries by others may make our processes, products or brands less attractive or even obsolete.

Competition could adversely affect our business.

Our industry in general is competitive.

It is possible that future competitors could enter our market, thereby causing us to lose market share and revenues.

In addition, some

of our current or future competitors may have significantly greater financial, technical, marketing and other resources than we do or

may have more experience or advantages in the markets in which we will compete that will allow them to offer lower prices or higher quality

If we do not successfully compete with these competitors, we could fail to develop market share and our future business prospects

could be adversely affected.

If we are unable to develop and maintain our

brand and reputation for our product offerings, our business and prospects could be materially harmed.

Our business and prospects depend,

in part, on developing and then maintaining and strengthening our brand and reputation in the markets we serve.

If problems with our

products cause our customers to have a negative experience or failure or delay in the delivery of our products to our customers, our

brand and reputation could be diminished.

If we fail to develop, promote and maintain our brand and reputation successfully, our business

and prospects could be materially harmed.

We are subject to government regulation, and

unfavorable changes could substantially harm our business and results of operations .

We are subject to general business

regulations and laws as well as regulations and laws specifically governing our industries in the U.S.

and other countries in which we

Uncertainty surrounding existing and future laws and regulations may impede our services and increase the cost of providing such

These regulations and laws may cover taxation, tariffs, user pricing, distribution, consumer protection and the characteristics

and quality of services.

Existing or probable governmental regulations

relating to CBD products may harm or prevent our ability to sell our product offering.

A majority of state governments

in the United States have legalized the growing, production, and use of CBD.

However, cannabis remains illegal under federal law.

in July 2017, the United States Drug Enforcement Agency issued a statement that certain CBD extractions fall within the definition of

marijuana, and are therefore a Schedule I controlled substance under the Controlled Substances Act of 1970, as amended.

Thus, the cannabis

industry, including companies which sell products containing CBD, faces very uncertain regulation by the federal government.

federal government has for several years chosen to not intervene in the cannabis business conducted legally within the states that have

legislated such activities, there is, nonetheless, potential that the federal government may at any time choose to begin enforcing its

laws against the manufacture, possession, or use of cannabis-based products such as CBD.

Similarly, there is the possibility that the

federal government may enact legislation or rules that authorize the manufacturing, possession or use of those products under specific

Local, state and federal cannabis laws and regulations are broad in scope and subject to evolving interpretations.

event the federal government was to tighten its regulation of the industry, we would likely suffer a material adverse effect on our business,

including substantial losses.

Laws and regulations affecting our industry

are evolving under the Farm Bill, FDA and other regulatory authorities and changes to any regulation may materially affect our CBD products

In conjunction with the enactment

of the Agriculture Improvement Act of 2018 (the “

Farm Bill ”), the FDA released a statement about the status of CBD

as a nutritional supplement, and the agency’s actions in the short term with regards to CBD will guide the industry.

While our sun

care products are not nutritional supplements, the statement noted that the Farm Bill explicitly preserved the FDA’s authority to

regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act and Section 351 of

the Public Health Service Act.

As a company whose sun care products contain infused CBD, we will strive to meet all FDA guidelines as

the regulations evolve.

Any difficulties in compliance with future government regulation could increase our operating costs and adversely

impact our results of operations in future periods.

In addition, as a result of the

Farm Bill’s recent passage, we expect that there will be a constant evolution of laws and regulations affecting the CBD industry

which could affect our operations.

Local, state and federal hemp laws and regulations may be broad in scope and subject to changing interpretations.

These changes may require us to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our

business plan.

Furthermore, violations of these laws, or alleged violations, could disrupt our business and result in a material adverse

effect on our operations.

In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications,

and it is possible that regulations may be enacted in the future that will be directly applicable to our business.

We do not currently believe that

we are required to seek FDA approval for our sun care products, and as such we do not plan to seek FDA approval.

If regulation evolves

such that we are required to seek approval, we will endeavor to do so.

This may require us to incur substantial costs associated with

legal and compliance fees and adversely affect our results of operations.

We depend heavily on key personnel, and turnover

of key senior management could harm our business.

Our future business and results

of operations depend in significant part upon the continued contributions of our senior management personnel.

If we lose their services

or if they fail to perform in their current positions, or if we are not able to attract and retain skilled personnel as needed, our business

could suffer.

Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing

senior management team.

We depend on the skills and abilities of these key personnel in managing the product acquisition, marketing and

sales aspects of our business, any part of which could be harmed by turnover in the future.

We may not have written employment agreements

with all of our senior management.

Related to Our Business

we are unable to keep up with rapid technological changes, our products may become obsolete.

market for our products is characterized by significant and rapid change.

Although we will continue to expand our product line capabilities

in order to remain competitive, research and discoveries by others may make our processes, products or brands less attractive or even

could adversely affect our business.

industry in general is competitive.

It is possible that future competitors could enter our market, thereby causing us to lose market

share and revenues.

In addition, some of our current or future competitors may have significantly greater financial, technical, marketing

and other resources than we do or may have more experience or advantages in the markets in which we will compete that will allow them

to offer lower prices or higher quality products.

If we do not successfully compete with these competitors, we could fail to develop

market share and our future business prospects could be adversely affected.

we are unable to develop and maintain our brand and reputation for our product offerings, our business and prospects could be materially

business and prospects depend, in part, on developing and then maintaining and strengthening our brand and reputation in the markets

If problems with our products cause our customers to have a negative experience or failure or delay in the delivery of our

products to our customers, our brand and reputation could be diminished.

If we fail to develop, promote and maintain our brand and reputation

successfully, our business and prospects could be materially harmed.

are subject to government regulation, and unfavorable changes could substantially harm our business and results of operations .

are subject to general business regulations and laws as well as regulations and laws specifically governing our industries in the U.S.

and other countries in which we operate.

Uncertainty surrounding existing and future laws and regulations may impede our services and

increase the cost of providing such services.

These regulations and laws may cover taxation, tariffs, user pricing, distribution, consumer

protection and the characteristics and quality of services.

or probable governmental regulations relating to CBD products may harm or prevent our ability to sell our product offering.

majority of state governments in the United States have legalized the growing, production, and use of CBD.

However, cannabis remains

illegal under federal law.

In addition, in July 2017, the United States Drug Enforcement Agency issued a statement that certain CBD extractions

fall within the definition of marijuana, and are therefore a Schedule I controlled substance under the Controlled Substances Act of 1970,

Thus, the cannabis industry, including companies which sell products containing CBD, faces very uncertain regulation by the

federal government.

While the federal government has for several years chosen to not intervene in the cannabis business conducted legally

within the states that have legislated such activities, there is, nonetheless, potential that the federal government may at any time

choose to begin enforcing its laws against the manufacture, possession, or use of cannabis-based products such as CBD.

Similarly, there

is the possibility that the federal government may enact legislation or rules that authorize the manufacturing, possession or use of

those products under specific guidelines.

Local, state and federal cannabis laws and regulations are broad in scope and subject to evolving

interpretations.

In the event the federal government was to tighten its regulation of the industry, we would likely suffer a material

adverse effect on our business, including substantial losses.

and regulations affecting our industry are evolving under the Farm Bill, FDA and other regulatory authorities and changes to any regulation

may materially affect our CBD products

conjunction with the enactment of the Agriculture Improvement Act of 2018 (the “ Farm Bill ”), the FDA released a statement

about the status of CBD as a nutritional supplement, and the agency’s actions in the short term with regards to CBD will guide

the industry.

While our sun care products are not nutritional supplements, the statement noted that the Farm Bill explicitly preserved

the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic

Act and Section 351 of the Public Health Service Act.

As a company whose sun care products contain infused CBD, we will strive to meet

all FDA guidelines as the regulations evolve.

Any difficulties in compliance with future government regulation could increase our operating

costs and adversely impact our results of operations in future periods.

addition, as a result of the Farm Bill’s recent passage, we expect that there will be a constant evolution of laws and regulations

affecting the CBD industry which could affect our operations.

Local, state and federal hemp laws and regulations may be broad in scope

and subject to changing interpretations.

These changes may require us to incur substantial costs associated with legal and compliance

fees and ultimately require us to alter our business plan.

Furthermore, violations of these laws, or alleged violations, could disrupt

our business and result in a material adverse effect on our operations.

In addition, we cannot predict the nature of any future laws,

regulations, interpretations or applications, and it is possible that regulations may be enacted in the future that will be directly

applicable to our business.

do not currently believe that we are required to seek FDA approval for our sun care products, and as such we do not plan to seek FDA

If regulation evolves such that we are required to seek approval, we will endeavor to do so.

This may require us to incur substantial

costs associated with legal and compliance fees and adversely affect our results of operations.

depend heavily on key personnel, and turnover of key senior management could harm our business.

future business and results of operations depend in significant part upon the continued contributions of our senior management personnel.

If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled

personnel as needed, our business could suffer.

Significant turnover in our senior management could significantly deplete our institutional

knowledge held by our existing senior management team.

We depend on the skills and abilities of these key personnel in managing the product

acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.

We may not have

written employment agreements with all of our senior management.

We do not have any key person insurance.

Our products may not meet health and safety

standards or could become contaminated.

We do not have control over all

of the third parties involved in the manufacturing of our products and their compliance with government health and safety standards.

products may not meet health and safety standards or could become contaminated.

do not have control over all of the third parties involved in the manufacturing of our products and their compliance with government

health and safety standards.

Even if our products meet these standards, they could otherwise become contaminated.

A failure to meet these standards or contamination

could occur in our operations or those of our manufacturers, distributors or suppliers.

This could result in expensive production interruptions,

recalls and liability claims.

Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited

Any of these failures or occurrences could negatively affect our business and financial performance.

The sale of our products involves product liability

and related risks that could expose us to significant insurance and loss expenses.

We face an inherent risk of exposure

to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury.

contain combinations of ingredients, and there is little long-term experience with the effect of these combinations.

In addition, interactions

of these products with other products, prescription medicines and over-the-counter treatments have not been fully explored or understood

and may have unintended consequences.

Any product liability claim may increase

our costs and adversely affect our revenue and operating income.

Moreover, liability claims arising from a serious adverse event may increase

our costs through higher insurance premiums and deductibles and may make it more difficult to secure adequate insurance coverage

in the future.

In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely

determined, could subject us to substantial monetary damages.

The success of our business will depend upon

our ability to create and expand our brand awareness.

The sun care and CBD markets

we compete in, and the skin care market we intend to compete in, are highly competitive, with many well-known brands leading the industry.

Our ability to compete effectively and generate revenue will be based upon our ability to create and expand awareness of our products

distinct from those of our competitors.

It is imperative that we are able to convey to consumers the benefits of our products.

advertising and packaging and labeling of such products will be limited by various regulations.

Our success will be dependent upon

our ability to convey to consumers that our products are superior to those of our competitors.

We must develop and introduce new products to

Our industry is subject to rapid

A failure to meet these

standards or contamination could occur in our operations or those of our manufacturers, distributors or suppliers.

This could result

in expensive production interruptions, recalls and liability claims.

Moreover, negative publicity could be generated from false, unfounded

or nominal liability claims or limited recalls.

Any of these failures or occurrences could negatively affect our business and financial

sale of our products involves product liability and related risks that could expose us to significant insurance and loss expenses.

face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted

in, illness or injury.

Our products contain combinations of ingredients, and there is little long-term experience with the effect of

these combinations.

In addition, interactions of these products with other products, prescription medicines and over-the-counter treatments

have not been fully explored or understood and may have unintended consequences.

product liability claim may increase our costs and adversely affect our revenue and operating income.

Moreover, liability claims arising

from a serious adverse event may increase our costs through higher insurance premiums and deductibles and may make it more difficult

to secure adequate insurance coverage in the future.

In addition, our product liability insurance may fail to cover future product liability

claims, which, if adversely determined, could subject us to substantial monetary damages.

success of our business will depend upon our ability to create and expand our brand awareness.

sun care and CBD markets we compete in, and the skin care market we intend to compete in, are highly competitive, with many well-known

brands leading the industry.

Our ability to compete effectively and generate revenue will be based upon our ability to create and expand

awareness of our products distinct from those of our competitors.

It is imperative that we are able to convey to consumers the benefits

of our products.

However, advertising and packaging and labeling of such products will be limited by various regulations.

will be dependent upon our ability to convey to consumers that our products are superior to those of our competitors.

must develop and introduce new products to succeed.

industry is subject to rapid change.

New products are constantly introduced to the market.

Our ability to remain competitive depends in part on our ability to enhance

existing products, to develop and manufacture new products in a timely and cost-effective manner, to accurately predict market transitions,

and to effectively market our products.

Our future financial results will depend to a great extent on the successful introduction of several

new products.

We cannot be certain that we will be successful in selecting, developing, manufacturing and marketing new products or in

enhancing existing products.

The success of new product introductions

depends on various factors, including, without limitation, the following:

Successful sales and marketing efforts;

Timely delivery of new products;

Availability of raw materials;

Pricing of raw materials;

Regulatory allowance of the products;

Customer acceptance of new products

Possible yet unanticipated changes in federal

and state law could cause any of our current products, as well as products that we intend to launch, containing hemp-derived CBD

oil to be illegal, or could otherwise prohibit, limit or restrict any of our products containing CBD.

We recently launched and commenced

distribution of certain products containing hemp-derived CBD, and we currently intend to develop and launch additional products containing

hemp-derived CBD in the future.

Our ability to remain competitive depends

in part on our ability to enhance existing products, to develop and manufacture new products in a timely and cost-effective manner, to

accurately predict market transitions, and to effectively market our products.

Our future financial results will depend to a great extent

on the successful introduction of several new products.

We cannot be certain that we will be successful in selecting, developing, manufacturing

and marketing new products or in enhancing existing products.

success of new product introductions depends on various factors, including, without limitation, the following:

sales and marketing efforts;

delivery of new products;

of raw materials;

allowance of the products;

acceptance of new products

yet unanticipated changes in federal and state law could cause any of our current products, as well as products that we intend to launch,

containing hemp-derived CBD oil to be illegal, or could otherwise prohibit, limit or restrict any of our products containing CBD.

recently launched and commenced distribution of certain products containing hemp-derived CBD, and we currently intend to develop and

launch additional products containing hemp-derived CBD in the future.

Until 2014, when 7 U.S.

Code §5940 became federal law as part of the Agricultural Act of 2014 (the

2014 Farm Act ”), products containing oils derived from hemp, notwithstanding a minimal or non-existing THC content,

were classified as Schedule I illegal drugs.

The 2014 Farm Act expired on September 30, 2018, and was thereafter replaced by the Farm

Bill, which amended various sections of the U.S.

Code, thereby removing hemp, defined as cannabis with less than 0.3% THC, from Schedule

1 status under the Controlled Substances Act, and legalizing the cultivation and sale of industrial-hemp at the federal level, subject

to compliance with certain federal requirements and state law, amongst other things.

THC is the psychoactive component of plants in the

cannabis family generally identified as marihuana or marijuana.

There is no assurance that the Farm Bill will not be repealed or amended

such that our products containing hemp-derived CBD would once again be deemed illegal under federal law.

The Farm Bill delegates the authority

to the states to regulate and limit the production of hemp and hemp-derived products within their territories.

Although many states have

adopted laws and regulations that allow for the production and sale of hemp and hemp-derived products under certain circumstances, no

assurance can be given that such state laws may not be repealed or amended such that our intended products containing hemp-derived CBD

would once again be deemed illegal under the laws of one or more states now permitting such products, which in turn would render such

intended products illegal in those states under federal law even if the federal law is unchanged.

In the event of either repeal of federal

or of state laws and regulations, or of amendments thereto that are adverse to our intended products, we may be restricted or limited

with respect to those products that we may sell or distribute, which could adversely impact our intended business plan with respect to

such intended products.

Additionally, the FDA has indicated

its view that certain types of products containing CBD may not be permissible under the Food, Drug and Cosmetic Act, or FDCA.

The FDA’s

position is related to its approval of Epidiolex, a marijuana-derived prescription medicine to be available in the United States.

active ingredient in Epidiolex is CBD.

On December 20, 2018, after the passage of the Farm Bill, FDA Commissioner Scott Gottlieb

issued a statement in which he reiterated the FDA’s position that, among other things, the FDA requires a cannabis product (hemp-derived or

otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended

use before it may be introduced into interstate commerce and that the FDCA prohibits introducing into interstate commerce food products

containing added CBD, and marketing products containing CBD as a dietary supplement, regardless of whether the substances are hemp-derived.

Our CBD product offerings must comply with applicable federal and state laws and regulations, and legal proceedings alleging violations

of such laws could have a material adverse effect on our business, financial condition and results of operations.

Sources of hemp-derived CBD depend upon

legality of cultivation, processing, marketing and sales of products derived from those plants under state law.

Hemp-derived CBD can only be legally

produced in states that have laws and regulations that allow for such production and that comply with the Farm Bill, apart from state

laws legalizing and regulating medical and recreational cannabis or marijuana, which remains illegal under federal law and regulations.

We purchase all of our hemp-derived CBD from licensed growers and processors in states where such production is legal.

As described in

the risk factor, possible yet unanticipated changes in federal and state law could cause any of our current products, as well as products

that we intend to launch, containing hemp-derived CBD oil to be illegal, or could otherwise prohibit, limit or restrict any of our products

containing CBD in the event of repeal or amendment of laws and regulations which are now favorable to the cannabis/hemp industry in such

states, we would be required to locate new suppliers in states with laws and regulations that qualify under the Farm Bill.

to be unsuccessful in arranging new sources of supply of our raw ingredients, or if our raw ingredients were to become legally unavailable,

our intended business plan with respect to such products could be adversely impacted.

Because our distributors may only sell and ship

our products containing hemp-derived CBD in states that have adopted laws and regulations qualifying under the Farm Bill, a

reduction in the number of states having such qualifying laws and regulations could limit, restrict or otherwise preclude the sale of

intended products containing hemp-derived CBD.

The interstate shipment of hemp-derived

CBD from one state to another is legal only where both states have laws and regulations that allow for the production and sale of

such products and that qualify under the Farm Bill.

Therefore, the marketing and sale of our intended products containing hemp-derived

CBD is limited by such factors and is restricted to such states.

Although we believe we may lawfully sell any of our finished products,

including those containing CBD, in a majority of states, a repeal or adverse amendment of laws and regulations that are now favorable

to the distribution, marketing and sale of finished products we intend to sell could significantly limit, restrict or prevent us from

generating revenue related to our products that contain hemp-derived CBD.

Any such repeal or adverse amendment of now favorable laws and

regulations could have an adverse impact on our business plan with respect to such products.

Due to recent expansion into the CBD industry,

we may have a difficult time obtaining the various insurances that are desired to operate our business, which may expose us to additional

risk and financial liability.

Insurance that is otherwise readily

available, such as general liability, and directors and officer’s insurance, may become more difficult for us to find, and more

expensive, due to our launch of products containing hemp-derived CBD.

There are no guarantees that we will be able to find such insurances

in the future, or that the cost will be affordable to us.

If we are forced to go without such insurances, it may prevent us from entering

into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

Adverse publicity associated with our products

or ingredients, or those of similar companies, could adversely affect our sales and revenue.

Adverse publicity concerning any

actual or purported failure by us to comply with applicable laws and regulations regarding any aspect of our business could have an adverse

effect on the public perception of us.

This, in turn, could negatively affect our ability to obtain financing, endorsers and attract distributors

or retailers for our products, which would have a material adverse effect on our ability to generate sales and revenue.

Our distributors’

and customers’

perception of the safety and quality of our products or even similar products distributed by others can be significantly influenced by

national media attention, publicized scientific research or findings, product liability claims and other publicity concerning our products

or similar products distributed by others.

Adverse publicity, whether or not accurate, that associates consumption of our products or

any similar products with illness or other adverse effects, will likely diminish the public’s perception of our products.

that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse

effect on the market demand for our products, including reducing our sales and revenue.

We do not have and may never have any products on the market that

have been approved for the treatment of disease.

Our business is highly dependent upon receiving approvals from various U.S.

and international

governmental agencies and will be severely harmed if we are not granted approval to manufacture and sell our product candidates.

In order for us to commercialize

a product for the treatment of any disease, we must obtain regulatory approvals of such treatment for that indication.

Satisfying regulatory

requirements is an expensive process that typically takes many years and involves compliance with requirements covering research and development,

testing, manufacturing, quality control, labeling, and promotion of drugs for human use.

To obtain necessary regulatory approvals, we

must, among other requirements, complete clinical trials demonstrating that our products are safe and effective for a particular indication.

There can be no assurance that our products will prove to be safe and effective, that our clinical trials will demonstrate the necessary

safety and effectiveness of our product candidates, or that we will succeed in obtaining regulatory approval for any treatment we develop

even if such safety and effectiveness are demonstrated.

Any delays or difficulties we

encounter in our clinical trials may delay or preclude regulatory approval from the FDA or from international regulatory organizations.

Any delay or preclusion of regulatory approval would be expected to delay or preclude the commercialization of our products.

of delays or difficulties that we may encounter in our clinical trials include without limitation the following:

Clinical trials may not yield sufficiently conclusive results for regulatory agencies to approve the use of our products;

Our products may fail to be more effective than current therapies, or to be effective at all;

We may discover that our products have adverse side effects, which could cause our products to be delayed or precluded from receiving regulatory approval or otherwise expose us to significant commercial and legal risks;

It may take longer than expected to determine whether or not a treatment is effective;

Patients involved in our clinical trials may suffer severe adverse side effects even up to death, whether as a result of treatment with our products, the withholding of such treatment, or other reasons (whether within or outside of our control);

We may fail to be able to enroll a sufficient number of patients in our clinical trials;

Patients enrolled in our clinical trials may not have the characteristics necessary to obtain regulatory approval for a particular indication or patient population;

We may be unable to produce sufficient quantities of product to complete the clinical trials;

Even if we are successful in our clinical trials, any required governmental approvals may still not be obtained or, if obtained, may not be maintained;

If approval for commercialization is granted, it is possible the authorized use will be more limited than is necessary for commercial success, or that approval may be conditioned on completion of further clinical trials or other activities, which will cause a substantial increase in costs and which we might not succeed in performing or completing;

If granted, approval may be withdrawn or limited if problems with our products emerge or are suggested by the data arising from their use or if there is a change in law or regulation.

Any success we may achieve at

a given stage of our clinical trials does not guarantee that we will achieve success at any subsequent stage, including without limitation

final FDA approval.

We may encounter delays or rejections

in the regulatory approval process because of additional government regulation resulting from future legislation or administrative action,

or from changes in the policies of the FDA or other regulatory bodies during the period of product development, clinical trials, or regulatory

Failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure

of products, total or partial suspension of production, or an injunction preventing certain activity, as well as other regulatory action

against our product candidates or us.

We have no experience in successfully obtaining regulatory approval for a product and thus may be

poorly equipped to gauge, and may prove unable to manage, risks relating to obtaining such approval.

Outside the U.S., our ability

to market a product is contingent upon receiving clearances from appropriate non-U.S.

Code §5940 became federal law as part

of the Agricultural Act of 2014 (the “ 2014 Farm Act ”), products containing oils derived from hemp, notwithstanding

a minimal or non-existing THC content, were classified as Schedule I illegal drugs.

The 2014 Farm Act expired on September 30, 2018,

and was thereafter replaced by the Farm Bill, which amended various sections of the U.S.

Code, thereby removing hemp, defined as cannabis

with less than 0.3% THC, from Schedule 1 status under the Controlled Substances Act, and legalizing the cultivation and sale of industrial-hemp

at the federal level, subject to compliance with certain federal requirements and state law, amongst other things.

THC is the psychoactive

component of plants in the cannabis family generally identified as marihuana or marijuana.

There is no assurance that the Farm Bill will

not be repealed or amended such that our products containing hemp-derived CBD would once again be deemed illegal under federal law.

Farm Bill delegates the authority to the states to regulate and limit the production of hemp and hemp-derived products within their territories.

Although many states have adopted laws and regulations that allow for the production and sale of hemp and hemp-derived products under

certain circumstances, no assurance can be given that such state laws may not be repealed or amended such that our intended products

containing hemp-derived CBD would once again be deemed illegal under the laws of one or more states now permitting such products, which

in turn would render such intended products illegal in those states under federal law even if the federal law is unchanged.

of either repeal of federal or of state laws and regulations, or of amendments thereto that are adverse to our intended products, we

may be restricted or limited with respect to those products that we may sell or distribute, which could adversely impact our intended

business plan with respect to such intended products.

Additionally,

the FDA has indicated its view that certain types of products containing CBD may not be permissible under the Food, Drug and Cosmetic

Act, or FDCA.

The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription medicine to be available

in the United States.

The active ingredient in Epidiolex is CBD.

On December 20, 2018, after the passage of the Farm Bill, FDA Commissioner

Scott Gottlieb issued a statement in which he reiterated the FDA’s position that, among other things, the FDA requires a cannabis

product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved

by the FDA for its intended use before it may be introduced into interstate commerce and that the FDCA prohibits introducing into interstate

commerce food products containing added CBD, and marketing products containing CBD as a dietary supplement, regardless of whether the

substances are hemp-derived.

Our CBD product offerings must comply with applicable federal and state laws and regulations, and legal

proceedings alleging violations of such laws could have a material adverse effect on our business, financial condition and results of

of hemp-derived CBD depend upon legality of cultivation, processing, marketing and sales of products derived from those plants under

CBD can only be legally produced in states that have laws and regulations that allow for such production and that comply with the Farm

Bill, apart from state laws legalizing and regulating medical and recreational cannabis or marijuana, which remains illegal under federal

law and regulations.

We purchase all of our hemp-derived CBD from licensed growers and processors in states where such production is

As described in the risk factor, possible yet unanticipated changes in federal and state law could cause any of our current products,

as well as products that we intend to launch, containing hemp-derived CBD oil to be illegal, or could otherwise prohibit, limit or restrict

any of our products containing CBD in the event of repeal or amendment of laws and regulations which are now favorable to the cannabis/hemp

industry in such states, we would be required to locate new suppliers in states with laws and regulations that qualify under the Farm

If we were to be unsuccessful in arranging new sources of supply of our raw ingredients, or if our raw ingredients were to become

legally unavailable, our intended business plan with respect to such products could be adversely impacted.

our distributors may only sell and ship our products containing hemp-derived CBD in states that have adopted laws and regulations qualifying

under the Farm Bill, a reduction in the number of states having such qualifying laws and regulations could limit, restrict or otherwise

preclude the sale of intended products containing hemp-derived CBD.

interstate shipment of hemp-derived CBD from one state to another is legal only where both states have laws and regulations that allow

for the production and sale of such products and that qualify under the Farm Bill.

Therefore, the marketing and sale of our intended

products containing hemp-derived CBD is limited by such factors and is restricted to such states.

Although we believe we may lawfully

sell any of our finished products, including those containing CBD, in a majority of states, a repeal or adverse amendment of laws and

regulations that are now favorable to the distribution, marketing and sale of finished products we intend to sell could significantly

limit, restrict or prevent us from generating revenue related to our products that contain hemp-derived CBD.

Any such repeal or adverse

amendment of now favorable laws and regulations could have an adverse impact on our business plan with respect to such products.

to recent expansion into the CBD industry, we may have a difficult time obtaining the various insurances that are desired to operate

our business, which may expose us to additional risk and financial liability.

that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult

for us to find, and more expensive, due to our launch of products containing hemp-derived CBD.

There are no guarantees that we will be

able to find such insurances in the future, or that the cost will be affordable to us.

If we are forced to go without such insurances,

it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial

publicity associated with our products or ingredients, or those of similar companies, could adversely affect our sales and revenue.

publicity concerning any actual or purported failure by us to comply with applicable laws and regulations regarding any aspect of our

business could have an adverse effect on the public perception of us.

This, in turn, could negatively affect our ability to obtain financing,

endorsers and attract distributors or retailers for our products, which would have a material adverse effect on our ability to generate

sales and revenue.

distributors’ and customers’ perception of the safety and quality of our products or even similar products distributed by

others can be significantly influenced by national media attention, publicized scientific research or findings, product liability claims

and other publicity concerning our products or similar products distributed by others.

Adverse publicity, whether or not accurate, that

associates consumption of our products or any similar products with illness or other adverse effects, will likely diminish the public’s

perception of our products.

Claims that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their

use, could have a material adverse effect on the market demand for our products, including reducing our sales and revenue.

do not have and may never have any products on the market that have been approved for the treatment of disease.

Our business is highly

dependent upon receiving approvals from various U.S.

and international governmental agencies and will be severely harmed if we are not

granted approval to manufacture and sell our product candidates.

order for us to commercialize a product for the treatment of any disease, we must obtain regulatory approvals of such treatment for that

Satisfying regulatory requirements is an expensive process that typically takes many years and involves compliance with requirements

covering research and development, testing, manufacturing, quality control, labeling, and promotion of drugs for human use.

necessary regulatory approvals, we must, among other requirements, complete clinical trials demonstrating that our products are safe

and effective for a particular indication.

There can be no assurance that our products will prove to be safe and effective, that our

clinical trials will demonstrate the necessary safety and effectiveness of our product candidates, or that we will succeed in obtaining

regulatory approval for any treatment we develop even if such safety and effectiveness are demonstrated.

delays or difficulties we encounter in our clinical trials may delay or preclude regulatory approval from the FDA or from international

regulatory organizations.

Any delay or preclusion of regulatory approval would be expected to delay or preclude the commercialization

of our products.

Examples of delays or difficulties that we may encounter in our clinical trials include without limitation the following:

trials may not yield sufficiently conclusive results for regulatory agencies to approve the use of our products;

products may fail to be more effective than current therapies, or to be effective at all;

may discover that our products have adverse side effects, which could cause our products to be delayed or precluded from receiving

regulatory approval or otherwise expose us to significant commercial and legal risks;

may take longer than expected to determine whether or not a treatment is effective;

involved in our clinical trials may suffer severe adverse side effects even up to death, whether as a result of treatment with our

products, the withholding of such treatment, or other reasons (whether within or outside of our control);

may fail to be able to enroll a sufficient number of patients in our clinical trials;

enrolled in our clinical trials may not have the characteristics necessary to obtain regulatory approval for a particular indication

or patient population;

may be unable to produce sufficient quantities of product to complete the clinical trials;

if we are successful in our clinical trials, any required governmental approvals may still not be obtained or, if obtained, may not

be maintained;

approval for commercialization is granted, it is possible the authorized use will be more limited than is necessary for commercial

success, or that approval may be conditioned on completion of further clinical trials or other activities, which will cause a substantial

increase in costs and which we might not succeed in performing or completing;

granted, approval may be withdrawn or limited if problems with our products emerge or are suggested by the data arising from their

use or if there is a change in law or regulation.

success we may achieve at a given stage of our clinical trials does not guarantee that we will achieve success at any subsequent stage,

including without limitation final FDA approval.

may encounter delays or rejections in the regulatory approval process because of additional government regulation resulting from future

legislation or administrative action, or from changes in the policies of the FDA or other regulatory bodies during the period of product

development, clinical trials, or regulatory review.

Failure to comply with applicable regulatory requirements may result in criminal

prosecution, civil penalties, recall or seizure of products, total or partial suspension of production, or an injunction preventing certain

activity, as well as other regulatory action against our product candidates or us.

We have no experience in successfully obtaining regulatory

approval for a product and thus may be poorly equipped to gauge, and may prove unable to manage, risks relating to obtaining such approval.

the U.S., our ability to market a product is contingent upon receiving clearances from appropriate non-U.S.

regulatory authorities.

regulatory approval

typically includes all of the risks associated with FDA clearance discussed above as well as geopolitical uncertainties and the additional

uncertainties and potential prejudices faced by U.S.

regulatory approval typically includes all of the risks associated with FDA clearance discussed above as well as geopolitical uncertainties

and the additional uncertainties and potential prejudices faced by U.S.

pharmaceutical companies conducting business abroad.

In certain cases, pricing restrictions

and practices can make achieving even limited profitability very difficult.

We have limited experience in completing regulatory

filings and any delays in regulatory filings could materially affect our financial condition.

We are currently initiating clinical

trials of our CaniDermRX product candidates.

We have not, however, demonstrated the ability to obtain marketing approvals, manufacture

product candidates at a commercial scale, or conduct sales and marketing activities necessary for the successful commercialization of

Consequently, we have no historical basis as a company by which one can evaluate or predict reliably our future success or

Additionally, while our team has

experience at prior companies with regulatory filings, we have limited experience with regulatory filings with agencies such as the FDA

or the European Medicines Agency, or EMA, and will rely on third-party expertise for this.

Any delay in our regulatory filings for our

product candidates, and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s

review of such filings, including, without limitation, the FDA’s issuance of a “refuse to file”

letter or a request

for additional information, could materially affect our financial condition.

If serious adverse or undesirable side effects

are identified during the development of our product candidates, we may abandon or limit our development or commercialization of such

product candidates.

If our product candidates are

associated with undesirable side effects or have unexpected characteristics, we may need to abandon their development or limit development

to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more

acceptable from a risk-benefit perspective.

If we elect or are forced to suspend

or terminate any clinical trial with one of our product candidates, the commercial prospects of such product candidate will be harmed,

and our ability to generate revenue from such product candidate will be delayed or eliminated.

Any of these occurrences may harm our business,

financial condition and prospects significantly.

With regard to our lead product

candidate, CaniDermRX, unforeseen side effects from CaniDermRX could arise either during clinical development or, if approved, after CaniDermRX

has been marketed.

This could cause regulatory approvals for, or market acceptance of, CaniDermRX harder and costlier to obtain.

The results of our planned or

any future clinical trials may show that the side effects of CaniDermRX are unacceptable or intolerable, which could interrupt, delay

or halt clinical trials, and result in delay of, or failure to obtain, marketing approval from the FDA or EMA and other regulatory authorities,

or result in marketing approval from the FDA or EMA and other regulatory authorities with restrictive label warnings.

If CaniDermRX receives marketing

approval and we or others later identify undesirable or unacceptable side effects caused by the use of CaniDermRX:

regulatory authorities may withdraw their approval of the product, which would force us to remove CaniDermRX from the market;

regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication, or field alerts to physicians and pharmacies;

we may be required to change instructions regarding the way the product is administered, conduct additional clinical trials or change the labeling of the product;

we may be subject to limitations on how we may promote the product;

sales of the product may decrease significantly;

we may be subject to litigation or product liability claims;

our reputation may suffer.

Any of these events could prevent

us or our potential future collaborators from achieving or maintaining market acceptance of CaniDermRX and/or could substantially increase

commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from the sale of CaniDermRX.

If we experience delays or difficulties in the

enrollment of subjects to our clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented, which could

materially affect our financial condition.

Identifying, screening and enrolling

patients to participate in clinical trials of our product candidates is critical to our success, and we may not be able to identify, recruit,

enroll and dose a sufficient number of patients with the required or desired characteristics to complete our clinical trials in a timely

The timing of our clinical trials depends on our ability to recruit patients to participate as well as to subsequently dose these

patients and complete required follow-up periods.

In particular, because our planned clinical trials of CaniDermRX are focused on indications

with relatively small patient populations, our ability to enroll eligible patients may be limited or may result in slower enrollment than

we anticipate.

In addition, we may experience

enrollment delays related to increased or unforeseen regulatory, legal and logistical requirements at certain clinical trial sites.

delays could be caused by reviews by regulatory authorities and contractual discussions with individual clinical trial sites.

in enrolling and/or dosing patients in our planned clinical trials could result in increased costs, delays in advancing our product candidates,

delays in testing the effectiveness of our product candidates or in termination of the clinical trials altogether.

Patient enrollment may be affected

if our competitors have ongoing clinical trials with products for the same indications as our product candidates, and patients who would

otherwise be eligible for our clinical trials instead enroll in our competitors’

clinical trials.

Patient enrollment may also be

affected by other factors, including:

coordination with clinical research organizations to enroll and administer the clinical trials;

coordination and recruitment of collaborators and investigators at individual sites;

size of the patient population and process for identifying patients;

design of the clinical trial protocol;

eligibility and exclusion criteria;

perceived risks and benefits of the product candidates under study;

availability of competing commercially available therapies and other competing products’

clinical trials;

time of year in which the trials are initiated or conducted;

severity of the diseases under investigation;

ability to obtain and maintain subject consents;

ability to enroll and treat patients in a timely manner;

risk that enrolled subjects will drop out before completion of the trials;

proximity and availability of clinical trial sites for prospective patients;

ability to monitor subjects adequately during and after treatment;

patient referral practices of physicians.

Our inability to enroll a sufficient

number of patients for clinical trials would result in significant delays and could require us to abandon one or more clinical trials

Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which could

materially affect our financial condition.

If we or our licensees, development collaborators,

or suppliers are unable to manufacture our products in sufficient quantities or at defined quality specifications, or are unable to obtain

regulatory approvals for the manufacturing facility, we may be unable to develop or meet demand for our products and lose time to market

and potential revenues.

Completion of our clinical trials

and commercialization of our product candidates require access to, or development of, facilities to manufacture a sufficient supply of

our product candidates.

cases, pricing restrictions and practices can make achieving even limited profitability very difficult.

have limited experience in completing regulatory filings and any delays in regulatory filings could materially affect our financial condition.

are currently initiating clinical trials of our CaniDermRX product candidates.

We have not, however, demonstrated the ability to obtain

marketing approvals, manufacture product candidates at a commercial scale, or conduct sales and marketing activities necessary for the

successful commercialization of a product.

Consequently, we have no historical basis as a company by which one can evaluate or predict

reliably our future success or viability.

Additionally,

while our team has experience at prior companies with regulatory filings, we have limited experience with regulatory filings with agencies

such as the FDA or the European Medicines Agency, or EMA, and will rely on third-party expertise for this.

Any delay in our regulatory

filings for our product candidates, and any adverse development or perceived adverse development with respect to the applicable regulatory

authority’s review of such filings, including, without limitation, the FDA’s issuance of a “refuse to file” letter

or a request for additional information, could materially affect our financial condition.

serious adverse or undesirable side effects are identified during the development of our product candidates, we may abandon or limit

our development or commercialization of such product candidates.

our product candidates are associated with undesirable side effects or have unexpected characteristics, we may need to abandon their

development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are

less prevalent, less severe or more acceptable from a risk-benefit perspective.

we elect or are forced to suspend or terminate any clinical trial with one of our product candidates, the commercial prospects of such

product candidate will be harmed, and our ability to generate revenue from such product candidate will be delayed or eliminated.

of these occurrences may harm our business, financial condition and prospects significantly.

regard to our lead product candidate, CaniDermRX, unforeseen side effects from CaniDermRX could arise either during clinical development

or, if approved, after CaniDermRX has been marketed.

This could cause regulatory approvals for, or market acceptance of, CaniDermRX harder

and costlier to obtain.

results of our planned or any future clinical trials may show that the side effects of CaniDermRX are unacceptable or intolerable, which

could interrupt, delay or halt clinical trials, and result in delay of, or failure to obtain, marketing approval from the FDA or EMA

and other regulatory authorities, or result in marketing approval from the FDA or EMA and other regulatory authorities with restrictive

label warnings.

CaniDermRX receives marketing approval and we or others later identify undesirable or unacceptable side effects caused by the use of

authorities may withdraw their approval of the product, which would force us to remove CaniDermRX from the market;

authorities may require the addition of labeling statements, specific warnings, a contraindication, or field alerts to physicians

and pharmacies;

may be required to change instructions regarding the way the product is administered, conduct additional clinical trials or change

the labeling of the product;

may be subject to limitations on how we may promote the product;

of the product may decrease significantly;

may be subject to litigation or product liability claims;

reputation may suffer.

of these events could prevent us or our potential future collaborators from achieving or maintaining market acceptance of CaniDermRX

and/or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant

revenues from the sale of CaniDermRX.

we experience delays or difficulties in the enrollment of subjects to our clinical trials, our receipt of necessary regulatory approvals

could be delayed or prevented, which could materially affect our financial condition.

screening and enrolling patients to participate in clinical trials of our product candidates is critical to our success, and we may not

be able to identify, recruit, enroll and dose a sufficient number of patients with the required or desired characteristics to complete

our clinical trials in a timely manner.

The timing of our clinical trials depends on our ability to recruit patients to participate as

well as to subsequently dose these patients and complete required follow-up periods.

In particular, because our planned clinical trials

of CaniDermRX are focused on indications with relatively small patient populations, our ability to enroll eligible patients may be limited

or may result in slower enrollment than we anticipate.

addition, we may experience enrollment delays related to increased or unforeseen regulatory, legal and logistical requirements at certain

clinical trial sites.

These delays could be caused by reviews by regulatory authorities and contractual discussions with individual clinical

Any delays in enrolling and/or dosing patients in our planned clinical trials could result in increased costs, delays in

advancing our product candidates, delays in testing the effectiveness of our product candidates or in termination of the clinical trials

enrollment may be affected if our competitors have ongoing clinical trials with products for the same indications as our product candidates,

and patients who would otherwise be eligible for our clinical trials instead enroll in our competitors’ clinical trials.

enrollment may also be affected by other factors, including:

with clinical research organizations to enroll and administer the clinical trials;

and recruitment of collaborators and investigators at individual sites;

of the patient population and process for identifying patients;

of the clinical trial protocol;

and exclusion criteria;

risks and benefits of the product candidates under study;

of competing commercially available therapies and other competing products’ clinical trials;

of year in which the trials are initiated or conducted;

of the diseases under investigation;

to obtain and maintain subject consents;

to enroll and treat patients in a timely manner;

that enrolled subjects will drop out before completion of the trials;

and availability of clinical trial sites for prospective patients;

to monitor subjects adequately during and after treatment;

referral practices of physicians.

inability to enroll a sufficient number of patients for clinical trials would result in significant delays and could require us to abandon

one or more clinical trials altogether.

Enrollment delays in these clinical trials may result in increased development costs for our

product candidates, which could materially affect our financial condition.

we or our licensees, development collaborators, or suppliers are unable to manufacture our products in sufficient quantities or at defined

quality specifications, or are unable to obtain regulatory approvals for the manufacturing facility, we may be unable to develop or meet

demand for our products and lose time to market and potential revenues.

of our clinical trials and commercialization of our product candidates require access to, or development of, facilities to manufacture

a sufficient supply of our product candidates.

We intend to utilize third parties to manufacture CaniSun, CaniSkin and CaniDermRX.

In the future we may become unable,

for various reasons, to rely on our sources for the manufacture of our product candidates, either for clinical trials or, at some future

date, for commercial distribution.

We may not be successful in identifying additional or replacement third-party manufacturers, or in

negotiating acceptable terms with any we do identify.

We may face competition for access to these manufacturers’

facilities and

may be subject to manufacturing delays if the manufacturers give other clients higher priority than they give to us.

Even if we are able

to identify an additional or replacement third-party manufacturer, the delays and costs associated with establishing and maintaining a

relationship with such manufacturer may have a material adverse effect on us.

Before we can begin to commercially

manufacture CaniDermRX or any other product candidate, we must obtain regulatory approval of the manufacturing facility and process.

Manufacturing

of drugs for clinical and commercial purposes must comply with current Good Manufacturing Practices requirements, commonly known as “cGMP.”

The cGMP requirements govern quality control and documentation policies and procedures.

the future we may become unable, for various reasons, to rely on our sources for the manufacture of our product candidates, either for

clinical trials or, at some future date, for commercial distribution.

We may not be successful in identifying additional or replacement

third-party manufacturers, or in negotiating acceptable terms with any we do identify.

We may face competition for access to these manufacturers’

facilities and may be subject to manufacturing delays if the manufacturers give other clients higher priority than they give to us.

if we are able to identify an additional or replacement third-party manufacturer, the delays and costs associated with establishing and

maintaining a relationship with such manufacturer may have a material adverse effect on us.

we can begin to commercially manufacture CaniDermRX or any other product candidate, we must obtain regulatory approval of the manufacturing

facility and process.

Manufacturing of drugs for clinical and commercial purposes must comply with current Good Manufacturing Practices

requirements, commonly known as “cGMP.” The cGMP requirements govern quality control and documentation policies and procedures.

Complying with cGMP and non-U.S.

regulatory requirements

will require that we expend time, money, and effort in production, recordkeeping, and quality control to ensure that the product meets

applicable specifications and other requirements.

We, or our contracted manufacturing facility, must also pass a pre-approval inspection

prior to FDA approval.

Failure to pass a pre-approval inspection may significantly delay or prevent FDA approval of our products.

fail to comply with these requirements, we would be subject to possible regulatory action and may be limited in the jurisdictions in which

we are permitted to sell our products and will lose time to market and potential revenues.

It is uncertain whether product liability insurance will be adequate

to address product liability claims, or that insurance against such claims will be affordable or available on acceptable terms in the

Clinical research involves the

testing of new drugs on human volunteers pursuant to a clinical trial protocol.

Such testing involves a risk of liability for personal

injury to or death of patients due to, among other causes, adverse side effects, improper administration of the new drug, or improper

volunteer behavior.

Claims may arise from patients, clinical trial volunteers, consumers, physicians, hospitals, companies, institutions,

researchers, or others using, selling, or buying our products, as well as from governmental bodies.

In addition, product liability and

related risks are likely to increase over time, in particular upon the commercialization or marketing of any products by us or parties

with which we enter into development, marketing, or distribution collaborations.

Although we are contracting for general liability insurance

in connection with our ongoing business, there can be no assurance that the amount and scope of such insurance coverage will be appropriate

and sufficient in the event any claims arise, that we will be able to secure additional coverage should we attempt to do so, or that our

insurers would not contest or refuse any attempt by us to collect on such insurance policies.

Furthermore, there can be no assurance that

suitable product liability insurance (at the clinical stage and/or commercial stage) will continue to be available on terms acceptable

to us or at all, or that, if obtained, the insurance coverage will be appropriate and sufficient to cover any potential claims or liabilities.

If the market opportunities for our

current and potential future drug candidate s are

smaller than we believe they are, our ability to generate product revenues may be adversely affected and our business may suffer.

Our understanding of the number

of people who suffer from dermatitis or eczema, whom CaniDermRX may have the potential to treat, is based upon estimates.

These estimates

may prove to be incorrect, and new studies may demonstrate or suggest a lower estimated incidence or prevalence of this condition.

number of patients in the U.S.

or elsewhere may turn out to be lower than expected, may not be otherwise amenable to CaniDermRX treatment,

or treatment-amenable patients may become increasingly difficult to identify and access, all of which would adversely affect our business

prospects and financial condition.

In particular, the treatable population for CaniDermRX may further be reduced if our estimates of

addressable populations are erroneous or sub-populations of patients do not derive benefit from CaniDermRX.

If we are unable to establish relationships

with licensees or collaborators to carry out sales, marketing, and distribution functions or to create effective marketing, sales, and

distribution capabilities, we will be unable to market our products successfully.

Our business strategy may include

out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling pharmaceutical products.

There can be no assurance that we will successfully be able to establish marketing, sales, or distribution relationships with any third-party,

that such relationships, if established, will be successful, or that we will be successful in gaining market acceptance for any products

we might develop.

To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our product

revenues per unit sold are expected to be lower than if we marketed, sold, and distributed our products directly, and any revenues we

receive will depend upon the efforts of such third parties.

If we are unable to establish

such third-party marketing and sales relationships, or choose not to do so, we would have to establish in-house marketing and sales capabilities.

To market any products directly, we would have to establish a marketing, sales, and distribution force that has technical expertise and

could support a distribution capability.

Competition in the biopharmaceutical industry for technically proficient marketing, sales, and

distribution personnel is intense and attracting and retaining such personnel may significantly increase our costs.

There can be no assurance

that we will be able to establish internal marketing, sales, or distribution capabilities or that these capabilities will be sufficient

to meet our needs.

Commercial success of our non-OTC product candidates

will depend on the acceptance of these products by physicians, payers, and patients.

Any non-OTC product candidate

that we may develop, such as our current CaniSkin and CaniSun product lines, may not gain market acceptance among physicians and patients.

Market acceptance of and demand for any non-OTC product that we may develop will depend on many factors, including without limitation:

Comparative superiority of the effectiveness and safety in the treatment of the disease indication compared to alternative treatments;

Less prevalence and severity of adverse side effects;

Potential advantages over alternative treatments;

Cost effectiveness;

Convenience and ease of administration;

Sufficient third-party coverage and/or reimbursement;

Strength of sales, marketing and distribution support;

Our ability to provide acceptable evidence of safety and efficacy.

If any non-OTC product candidate

developed by us receives regulatory approval but does not achieve an adequate level of market acceptance by physicians, payers, and patients,

we may generate insufficient, little, or no product revenue and may not become profitable.

In addition, pandemics, including the novel

coronavirus, COVID-19, could decrease consumer spending and adversely affect demand for our products.

Our non-OTC products may not be accepted for

reimbursement or properly reimbursed by third-party payers.

The successful commercialization

of any non-OTC products we might develop will depend substantially on whether the costs of our non-OTC products and related treatments

are reimbursed at acceptable levels by government authorities, private healthcare insurers, and other third-party payers, such as health

maintenance organizations.

Reimbursement rates may vary, depending upon the third-party payer, the type of insurance plan, and other similar

or dissimilar factors.

If our non-OTC products do not achieve adequate reimbursement, then the number of physician prescriptions of our

products may not be sufficient to make our non-OTC products profitable.

Comparative effectiveness research

demonstrating benefits of a competitor’s non-OTC product could adversely affect the sales of our non-OTC product candidates.

third-party payers do not consider our products to be cost-effective compared to other available therapies, they may not cover our products

as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our non-OTC products on

a profitable basis.

Adequate third-party reimbursement

may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in the product

development of that non-OTC product.

regulatory requirements will require that we expend time, money, and effort in production, recordkeeping,

and quality control to ensure that the product meets applicable specifications and other requirements.

We, or our contracted manufacturing

facility, must also pass a pre-approval inspection prior to FDA approval.

Failure to pass a pre-approval inspection may significantly

delay or prevent FDA approval of our products.

If we fail to comply with these requirements, we would be subject to possible regulatory

action and may be limited in the jurisdictions in which we are permitted to sell our products and will lose time to market and potential

is uncertain whether product liability insurance will be adequate to address product liability claims, or that insurance against such

claims will be affordable or available on acceptable terms in the future.

research involves the testing of new drugs on human volunteers pursuant to a clinical trial protocol.

Such testing involves a risk of

liability for personal injury to or death of patients due to, among other causes, adverse side effects, improper administration of the

new drug, or improper volunteer behavior.

Claims may arise from patients, clinical trial volunteers, consumers, physicians, hospitals,

companies, institutions, researchers, or others using, selling, or buying our products, as well as from governmental bodies.

product liability and related risks are likely to increase over time, in particular upon the commercialization or marketing of any products

by us or parties with which we enter into development, marketing, or distribution collaborations.

Although we are contracting for general

liability insurance in connection with our ongoing business, there can be no assurance that the amount and scope of such insurance coverage

will be appropriate and sufficient in the event any claims arise, that we will be able to secure additional coverage should we attempt

to do so, or that our insurers would not contest or refuse any attempt by us to collect on such insurance policies.

Furthermore, there

can be no assurance that suitable product liability insurance (at the clinical stage and/or commercial stage) will continue to be available

on terms acceptable to us or at all, or that, if obtained, the insurance coverage will be appropriate and sufficient to cover any potential

claims or liabilities.

the market opportunities for our current and potential future drug candidate s are smaller than we believe they are, our

ability to generate product revenues may be adversely affected and our business may suffer.

understanding of the number of people who suffer from dermatitis or eczema, whom CaniDermRX may have the potential to treat, is based

upon estimates.

These estimates may prove to be incorrect, and new studies may demonstrate or suggest a lower estimated incidence or

prevalence of this condition.

The number of patients in the U.S.

or elsewhere may turn out to be lower than expected, may not be otherwise

amenable to CaniDermRX treatment, or treatment-amenable patients may become increasingly difficult to identify and access, all of which

would adversely affect our business prospects and financial condition.

In particular, the treatable population for CaniDermRX may further

be reduced if our estimates of addressable populations are erroneous or sub-populations of patients do not derive benefit from CaniDermRX.

we are unable to establish relationships with licensees or collaborators to carry out sales, marketing, and distribution functions or

to create effective marketing, sales, and distribution capabilities, we will be unable to market our products successfully.

business strategy may include out-licensing product candidates to or collaborating with larger firms with experience in marketing and

selling pharmaceutical products.

There can be no assurance that we will successfully be able to establish marketing, sales, or distribution

relationships with any third-party, that such relationships, if established, will be successful, or that we will be successful in gaining

market acceptance for any products we might develop.

To the extent that we enter into any marketing, sales, or distribution arrangements

with third parties, our product revenues per unit sold are expected to be lower than if we marketed, sold, and distributed our products

directly, and any revenues we receive will depend upon the efforts of such third parties.

we are unable to establish such third-party marketing and sales relationships, or choose not to do so, we would have to establish in-house

marketing and sales capabilities.

To market any products directly, we would have to establish a marketing, sales, and distribution force

that has technical expertise and could support a distribution capability.

Competition in the biopharmaceutical industry for technically

proficient marketing, sales, and distribution personnel is intense and attracting and retaining such personnel may significantly increase

There can be no assurance that we will be able to establish internal marketing, sales, or distribution capabilities or that

these capabilities will be sufficient to meet our needs.

success of our non-OTC product candidates will depend on the acceptance of these products by physicians, payers, and patients.

non-OTC product candidate that we may develop, such as our current CaniSkin and CaniSun product lines, may not gain market acceptance

among physicians and patients.

Market acceptance of and demand for any non-OTC product that we may develop will depend on many factors,

including without limitation:

superiority of the effectiveness and safety in the treatment of the disease indication compared to alternative treatments;

prevalence and severity of adverse side effects;

advantages over alternative treatments;

effectiveness;

and ease of administration;

third-party coverage and/or reimbursement;

of sales, marketing and distribution support;

ability to provide acceptable evidence of safety and efficacy.

any non-OTC product candidate developed by us receives regulatory approval but does not achieve an adequate level of market acceptance

by physicians, payers, and patients, we may generate insufficient, little, or no product revenue and may not become profitable.

addition, pandemics, including the novel coronavirus, COVID-19, could decrease consumer spending and adversely affect demand for our

non-OTC products may not be accepted for reimbursement or properly reimbursed by third-party payers.

successful commercialization of any non-OTC products we might develop will depend substantially on whether the costs of our non-OTC products

and related treatments are reimbursed at acceptable levels by government authorities, private healthcare insurers, and other third-party

payers, such as health maintenance organizations.

Reimbursement rates may vary, depending upon the third-party payer, the type of insurance

plan, and other similar or dissimilar factors.

If our non-OTC products do not achieve adequate reimbursement, then the number of physician

prescriptions of our products may not be sufficient to make our non-OTC products profitable.

effectiveness research demonstrating benefits of a competitor’s non-OTC product could adversely affect the sales of our non-OTC

product candidates.

If third-party payers do not consider our products to be cost-effective compared to other available therapies, they

may not cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell

our non-OTC products on a profitable basis.

third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our

investment in the product development of that non-OTC product.

In addition, in the U.S.

there is a growing emphasis on comparative effectiveness research, both

by private payers and by government agencies.

To the extent other drugs or therapies are found to be more effective than our non-OTC products,

payers may elect to cover such therapies in lieu of our products or reimburse our non-OTC products at a lower rate.

The effects of economic and political pressure

to lower pharmaceutical prices are a major threat to the economic viability of new research-based pharmaceutical products, and any development

along these lines could materially and adversely affect our prospects.

Emphasis on managed care in the

there is a growing emphasis on comparative effectiveness

research, both by private payers and by government agencies.

To the extent other drugs or therapies are found to be more effective than

our non-OTC products, payers may elect to cover such therapies in lieu of our products or reimburse our non-OTC products at a lower rate.

effects of economic and political pressure to lower pharmaceutical prices are a major threat to the economic viability of new research-based

pharmaceutical products, and any development along these lines could materially and adversely affect our prospects.

on managed care in the U.S.

has increased and we expect this will continue to increase the pressure on pharmaceutical pricing.

Coverage policies and third-party

reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for one or more products for

which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Any development along these lines

could materially and adversely affect our prospects.

We are unable to predict what legislative or regulatory changes relating to the healthcare

industry, including without limitation any changes affecting governmental and/or private or third-party coverage and reimbursement, may

be enacted in the future, or what effect such legislative or regulatory changes would have on our business.

If we obtain FDA approval for any of our product

candidates, we will be subject to various federal and state fraud and abuse laws;

these laws may impact, among other things, our proposed

sales, marketing and education programs.

Fraud and abuse laws are expected to increase in breadth and in detail, which will likely increase

our operating costs and the complexity of our programs to insure compliance with such enhanced laws.

If we obtain FDA approval for

any of our product candidates and begin commercializing those products in the U.S., our operations may be directly, or indirectly through

our customers, distributors, or other business partners, subject to various federal and state fraud and abuse laws, including, without

limitation, anti-kickback statutes and false claims statutes which may increase our operating costs.

These laws may impact, among other

things, our proposed sales, marketing and education programs.

If our operations are found to be in violation of any of the federal

and state fraud and abuse laws or any other governmental regulations that apply to us, we may be subject to criminal actions and significant

civil monetary penalties, which would adversely affect our ability to operate our business and our results of operations.

If our operations are found to

be in violation of any of the federal and state fraud and abuse laws, including, without limitation, anti-kickback statutes and false

claims statutes or any other governmental regulations that apply to us, we may be subject to penalties, including criminal and significant

civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government healthcare programs, and the curtailment

or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

To the extent that any of our product candidates are ultimately sold in a foreign country, we may be subject to similar foreign laws

and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and

abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.

We face business disruption and related risks resulting from the

recent pandemic of COVID-19, which could have, and has had, a material adverse effect on our business plan .

Our supply chain and the development of our product

candidates, including that of our subsidiaries, could be, and have been, disrupted and materially adversely affected by the recent outbreak

As a result of measures imposed by the governments in affected regions, businesses and schools have been suspended due to

quarantines intended to contain this outbreak.

We are still assessing our business plans and the impact COVID-19 may have on our supply

chain and ability to conduct our clinical trials, but there can be no assurance that this analysis will enable us to avoid part or all

of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally.

The extent to which

the COVID-19 pandemic and global efforts to contain its spread will impact our operations will depend on future developments, which are

highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken

to contain or treat the COVID-19 pandemic.

Our subsidiary SRM, was materially adversely affected by COVID-19 and its impact on the amusement

park industry.

SRM’s sales to amusement parks materially decreased during 2020.

SRM’s revenue for the fiscal year ended December

31, 2019 was $7,046,073 and were reduced to $ 2,958,199 for the fiscal year ended December 31, 2020 which was primarily a result of the

closing of amusement and theme parks in 2020 as a result of the COVID-19 pandemic.

We may be unable to successfully integrate the

operations of SRM and may not achieve the benefits anticipated as a result of the SRM acquisition .

On November 30, 2020, we acquired

Achieving the anticipated benefits of the SRM acquisition will depend in part upon our ability to integrate SRM in an

efficient and effective manner.

The integration of a company that has previously operated independently may result in significant

challenges, and we may be unable to accomplish the integration smoothly or successfully.

The integration of

an acquired business may also require the dedication of significant management resources, which may temporarily distract management’s

attention from the day-to-day operations of the Company.

In addition, the process of integrating operations may cause an interruption

of, or loss of momentum in, the activities of one or more of our other subsidiaries’

businesses and the loss of key personnel from

us or the acquired businesses.

Natural disasters and other events beyond our

control could materially adversely affect us.

Natural disasters or other catastrophic

events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative

effect on us.

Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events

beyond our control.

Such events could make it difficult or impossible for us to deliver our services to our customers and could decrease

demand for our services.

policies and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained

for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented

in the future.

development along these lines could materially and adversely affect our prospects.

We are unable to predict what legislative or regulatory

changes relating to the healthcare industry, including without limitation any changes affecting governmental and/or private or third-party

coverage and reimbursement, may be enacted in the future, or what effect such legislative or regulatory changes would have on our business.

we obtain FDA approval for any of our product candidates, we will be subject to various federal and state fraud and abuse laws;

laws may impact, among other things, our proposed sales, marketing and education programs.

Fraud and abuse laws are expected to increase

in breadth and in detail, which will likely increase our operating costs and the complexity of our programs to insure compliance with

such enhanced laws.

we obtain FDA approval for any of our product candidates and begin commercializing those products in the U.S., our operations may be

directly, or indirectly through our customers, distributors, or other business partners, subject to various federal and state fraud and

abuse laws, including, without limitation, anti-kickback statutes and false claims statutes which may increase our operating costs.

laws may impact, among other things, our proposed sales, marketing and education programs.

our operations are found to be in violation of any of the federal and state fraud and abuse laws or any other governmental regulations

that apply to us, we may be subject to criminal actions and significant civil monetary penalties, which would adversely affect our ability

to operate our business and our results of operations.

our operations are found to be in violation of any of the federal and state fraud and abuse laws, including, without limitation, anti-kickback

statutes and false claims statutes or any other governmental regulations that apply to us, we may be subject to penalties, including

criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government healthcare

programs, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business

and our results of operations.

To the extent that any of our product candidates are ultimately sold in a foreign country, we may be subject

to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance,

anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare

professionals.

face business disruption and related risks resulting from the recent pandemic of COVID-19, which could have, and has had, a material

adverse effect on our business plan .

supply chain and the development of our product candidates, including that of our subsidiaries, could be, and have been, disrupted and

materially adversely affected by the recent outbreak of COVID-19.

As a result of measures imposed by the governments in affected regions,

businesses and schools have been suspended due to quarantines intended to contain this outbreak.

We are still assessing our business

plans and the impact COVID-19 may have on our supply chain and ability to conduct our clinical trials, but there can be no assurance

that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns

in business sentiment generally.

The extent to which the COVID-19 pandemic and global efforts to contain its spread will impact our operations

will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity

and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.

Our subsidiary SRM, was materially adversely

affected by COVID-19 and its impact on the amusement park industry.

SRM’s sales to amusement parks materially decreased during

SRM’s revenue for the fiscal year ended December 31, 2019 was $7,046,073 and were reduced to $ 2,958,199 for the fiscal year

ended December 31, 2020 and further reduced to $2,693,131 for the year ended December 31, 2021, which was a result of the closing

of amusement and theme parks in 2020 as a result of the COVID-19 pandemic..

During the first quarter of 2021, SRM had no revenues due

to the closure of our customers theme parks.

may be unable to successfully integrate the operations of SRM and may not achieve the benefits anticipated as a result of the SRM acquisition .

November 30, 2020, we acquired SRM.

Achieving the anticipated benefits of the SRM acquisition will depend in part upon our ability to

integrate SRM in an efficient and effective manner.

The integration of a company that has previously operated independently may result

in significant challenges, and we may be unable to accomplish the integration smoothly or successfully.

The integration of an acquired

business may also require the dedication of significant management resources, which may temporarily distract management’s attention

from the day-to-day operations of the Company.

In addition, the process of integrating operations may cause an interruption of, or loss

of momentum in, the activities of one or more of our other subsidiaries’ businesses and the loss of key personnel from us or the

acquired businesses.

disasters and other events beyond our control could materially adversely affect us.

disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy,

and thus could have a strong negative effect on us.

Our business operations are subject to interruption by natural disasters, fire, power

shortages, pandemics and other events beyond our control.

Such events could make it difficult or impossible for us to deliver our services

to our customers and could decrease demand for our services.

The World Health Organization declared the COVID-19 outbreak a pandemic.

The extent of the impact of COVID-19

on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the

impact on our customers and employees, all of which are uncertain and cannot be predicted.

At this point, the overall extent to which

COVID-19 may impact our financial condition or results of operations is uncertain.

We have a limited operating history upon which

investors can evaluate our future prospects.

We have a limited operating history

upon which an evaluation of its business plan or performance and prospects can be made.

The business and prospects of the Company must

be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established

business and new industry.

The risks include, but are not limited to, the possibility that we will not be able to develop functional and

scalable products and services, or that although functional and scalable, our products and services will not be economical to market;

The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the

duration and spread of the outbreak, the impact on our customers and employees, all of which are uncertain and cannot be predicted.

this point, the overall extent to which COVID-19 may impact our financial condition or results of operations is uncertain.

have a limited operating history upon which investors can evaluate our future prospects.

have a limited operating history upon which an evaluation of its business plan or performance and prospects can be made.

and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered

in connection with a newly established business and new industry.

The risks include, but are not limited to, the possibility that we

will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and

services will not be economical to market;

that our competitors hold proprietary rights that preclude us from marketing such products;

that our competitors market a superior or

equivalent product;

that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded

service offerings;

that our competitors market a superior or equivalent product;

that we are not able to upgrade and enhance our technologies and products

to accommodate new features and expanded service offerings;

or the failure to receive necessary regulatory clearances for our products.

To successfully introduce and market our

products at a profit, we must establish brand name recognition and competitive advantages for our products.

There are no assurances that

we can successfully address these challenges.

If it is unsuccessful, we and our business, financial condition and operating results could

be materially and adversely affected.

The current and future expense levels are based largely

on estimates of planned operations and future revenues rather than experience.

It is difficult to accurately forecast future revenues

because our business is new and our market has not been developed.

If our forecasts prove incorrect, the business, operating results

and financial condition of the Company may be materially and adversely affected.

Moreover, we may be unable to adjust our spending in

a timely manner to compensate for any unanticipated reduction in revenues.

As a result, any significant reduction in revenues may immediately

and adversely affect our business, financial condition and operating results.

We may not meet our product development and

commercialization milestones.

We have established milestones,

based upon our expectations regarding our technologies at that time, which we use to assess our progress toward developing our products.

These milestones relate to technology and design improvements as well as dates for achieving development goals.

If our products exhibit

technical defects or are unable to meet cost or performance goals, our commercialization schedule could be delayed and potential purchasers

of our initial commercial products may decline to purchase such products or may opt to pursue alternative products.

We may also experience shortages

equipment due to manufacturing difficulties.

Multiple suppliers provide the components used in manufacturing our products.

Our manufacturing

operations could be disrupted by fire, earthquake or other natural disaster, a labor-related disruption, failure in supply or other logistical

channels, electrical outages or other reasons.

If there were a disruption to manufacturing facilities, we would be unable to manufacture

until we have restored and re-qualified our manufacturing capability or developed alternative manufacturing facilities.

Interruptions or delays in telecommunications

systems or in the data services provided to us by cellular communication providers or the loss of our wireless or data services could

impair the delivery of our products.

As we expand our commercial

activities, an increased burden is expected to be placed upon our data processing systems and the equipment upon which they rely.

Interruptions

of our data networks, or the data networks of our wireless carrier, for any extended length of time, loss of stored data or other computer

problems could have a material adverse effect on our business and operating results.

Such interruptions could result in liability, claims

and litigation against us for damages or injuries resulting from the disruption in service.

Our systems are also expected

to be vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks,

computer viruses, break-ins, sabotage, and acts of vandalism.

Despite any precautions that we may take, the occurrence of a natural disaster

or other unanticipated problems could result in lengthy interruptions in these services.

We do not carry business interruption insurance

to protect against losses that may result from interruptions in service as a result of system failures.

Moreover, the communications and

information technology industries are subject to rapid and significant changes, and our ability to operate and compete is dependent on

our ability to update and enhance the communication technologies used in our systems and services.

Our operations in international markets

involve inherent risks that we may not be able to control.

Our business plan includes the

marketing and sale of our proposed products in international markets.

Accordingly, our results could be materially and adversely affected

by a variety of uncontrollable and changing factors relating to international business operations, including:

Macroeconomic conditions adversely affecting geographies where we intend to do business;

Foreign currency exchange rates;

Political or social unrest or economic instability in a specific country or region;

Higher costs of doing business in foreign countries;

Infringement claims on foreign patents, copyrights or trademark rights;

Difficulties in staffing and managing operations across disparate geographic areas;

Difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems;

Trade protection measures and other regulatory requirements, which affect our ability to import or export our products from or to various countries;

Adverse tax consequences;

Unexpected changes in legal and regulatory requirements;

Military conflict, terrorist activities, natural disasters and medical epidemics;

Our ability to recruit and retain channel partners in foreign jurisdictions.

Risks Related to our Financial Position and Capital

Our accountant has indicated doubt about

our ability to continue as a going concern.

As of December 31, 2020, the

Company had $4,262,168 in cash, accumulated deficit of $7,274,401 and cashflow used in operations of $2,732,736.

The Company has incurred

and expects to continue to incur significant costs in pursuit of its expansion and development plans.

These conditions raise doubt about

the Company’s ability to continue as a going concern.

Management has taken certain action and continues to implement changes designed

to improve the Company’s financial results and operating cash flows.

The actions involve certain cost-saving initiatives

and growing strategies, including (a) engage in very limited activities without incurring any liabilities that must be satisfied in cash;

and (b) offer noncash consideration and seek for equity lines as a means of financing its operations.

Additionally, the Company’s

plan includes certain scheduled research and development activities and related clinical trials which may be deferred as needed.

Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to

cover any operating losses it may incur, it may substantially curtail its operations or seek other business opportunities through strategic

alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

Raising additional capital may cause dilution to our existing

stockholders, restrict our operations or require us to relinquish rights to our technologies or other assets.

We may seek additional capital

through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests

will be diluted and the terms of such financings may include liquidation or other preferences that adversely affect the rights of existing

stockholders.

Debt financings may be coupled with an equity component, such as warrants to purchase shares, which could also result in

dilution of our existing stockholders’

The incurrence of indebtedness would result in increased fixed payment obligations

and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our

ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to

conduct our business and may result in liens being placed on our assets and intellectual property.

If we were to default on such indebtedness,

we could lose such assets and intellectual property.

Our potential for rapid growth and our entry

into new markets make it difficult for us to evaluate our current and future business prospects, and we may be unable to effectively manage

any growth associated with these new markets, which may increase the risk of your investment and could harm our business, financial condition,

results of operations and cash flow.

Our proliferation into new markets

may place a significant strain on our resources and increase demands on our executive management, personnel and systems, and our operational,

administrative and financial resources may be inadequate.

We may also not be able to effectively manage any expanded operations, or achieve

planned growth on a timely or profitable basis, particularly if the number of customers using our technology significantly increases or

their demands and needs change as our business expands.

If we are unable to manage expanded operations effectively, we may experience

operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations could

be materially adversely affected.

Changes in tax laws and unanticipated tax liabilities

could adversely affect our effective income tax rate and ability to achieve profitability.

Our effective income tax rate

in the future could be adversely affected by a number of factors including changes in the mix of earnings in countries with differing

statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws.

We regularly assess all

of these matters to determine the adequacy of our tax provision which is subject to discretion.

If our assessments are incorrect, it could

have an adverse effect on our business and financial condition.

There can be no assurance that income tax laws and administrative policies

with respect to the income tax consequences generally applicable to us or to our subsidiaries will not be changed in a manner which adversely

affects our shareholders.

Risks Related to our Intellectual Property

We may incur substantial costs as a result of

litigation or other proceedings relating to patent and other intellectual property rights.

A third party may sue us or one

of our strategic collaborators for infringing its intellectual property rights.

Likewise, we may need to resort to litigation to enforce

licensed rights or to determine the scope and validity of third-party intellectual property rights.

The cost to us of any litigation

or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation

would divert our efforts.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than

we can because they have substantially greater resources.

If we do not prevail in this type of litigation, we or our strategic collaborators

may be required to pay monetary damages;

To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for

our products.

There are no assurances that we can successfully address these challenges.

If it is unsuccessful, we and our business,

financial condition and operating results could be materially and adversely affected.

current and future expense levels are based largely on estimates of planned operations and future revenues rather than experience.

is difficult to accurately forecast future revenues because our business is new and our market has not been developed.

If our forecasts

prove incorrect, the business, operating results and financial condition of the Company may be materially and adversely affected.

we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in revenues.

As a result, any

significant reduction in revenues may immediately and adversely affect our business, financial condition and operating results.

may not meet our product development and commercialization milestones.

have established milestones, based upon our expectations regarding our technologies at that time, which we use to assess our progress

toward developing our products.

These milestones relate to technology and design improvements as well as dates for achieving development

If our products exhibit technical defects or are unable to meet cost or performance goals, our commercialization schedule could

be delayed and potential purchasers of our initial commercial products may decline to purchase such products or may opt to pursue alternative

may also experience shortages equipment due to manufacturing difficulties.

Multiple suppliers provide the components used in manufacturing

our products.

Our manufacturing operations could be disrupted by fire, earthquake or other natural disaster, a labor-related disruption,

failure in supply or other logistical channels, electrical outages or other reasons.

If there were a disruption to manufacturing facilities,

we would be unable to manufacture until we have restored and re-qualified our manufacturing capability or developed alternative manufacturing

operations in international markets involve inherent risks that we may not be able to control.

business plan includes the marketing and sale of our proposed products in international markets.

Accordingly, our results could be materially

and adversely affected by a variety of uncontrollable and changing factors relating to international business operations, including:

Macroeconomic

conditions adversely affecting geographies where we intend to do business;

currency exchange rates;

or social unrest or economic instability in a specific country or region;

costs of doing business in foreign countries;

claims on foreign patents, copyrights or trademark rights;

in staffing and managing operations across disparate geographic areas;

associated with enforcing agreements and intellectual property rights through foreign legal systems;

protection measures and other regulatory requirements, which affect our ability to import or export our products from or to various

tax consequences;

changes in legal and regulatory requirements;

conflict, terrorist activities, natural disasters and medical epidemics;

ability to recruit and retain channel partners in foreign jurisdictions.

Related to our Financial Position and Capital Needs

accountant has indicated doubt about our ability to continue as a going concern.

of March 31, 2021, the Company had $3,007,792 in cash, accumulated deficit of $9,470,164 and cash flow used in operations of $1,254,376.

The Company has incurred and expects to continue to incur significant costs in pursuit of its expansion and development plans.

conditions raise doubt about the Company’s ability to continue as a going concern and accordingly our auditors have included a

going concern opinion in our annual report.

Management has taken certain action and continues to implement changes designed to improve

the Company’s financial results and operating cash flows.

The actions involve certain cost-saving initiatives and growing strategies,

including (a) engage in very limited activities without incurring any liabilities that must be satisfied in cash;

and (b) offer noncash

consideration and seek for equity lines as a means of financing its operations.

Additionally, the Company’s plan includes certain

scheduled research and development activities and related clinical trials which may be deferred as needed.

If the Company is unable to

obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating

losses it may incur, it may substantially curtail its operations or seek other business opportunities through strategic alliances, acquisitions

or other arrangements that may dilute the interests of existing stockholders.

additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our

technologies or other assets.

may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and

alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities,

existing ownership interests will be diluted and the terms of such financings may include liquidation or other preferences that adversely

affect the rights of existing stockholders.

Debt financings may be coupled with an equity component, such as warrants to purchase shares,

which could also result in dilution of our existing stockholders’ ownership.

The incurrence of indebtedness would result in increased

fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional

debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely

impact our ability to conduct our business and may result in liens being placed on our assets and intellectual property.

If we were to

default on such indebtedness, we could lose such assets and intellectual property.

potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business prospects,

and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk of your investment

and could harm our business, financial condition, results of operations and cash flow.

proliferation into new markets may place a significant strain on our resources and increase demands on our executive management, personnel

and systems, and our operational, administrative and financial resources may be inadequate.

We may also not be able to effectively manage

any expanded operations, or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our

technology significantly increases or their demands and needs change as our business expands.

If we are unable to manage expanded operations

effectively, we may experience operating inefficiencies, the quality of our products and services could deteriorate, and our business

and results of operations could be materially adversely affected.

in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate and ability to achieve profitability.

effective income tax rate in the future could be adversely affected by a number of factors including changes in the mix of earnings in

countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws.

We regularly assess all of these matters to determine the adequacy of our tax provision which is subject to discretion.

If our assessments

are incorrect, it could have an adverse effect on our business and financial condition.

There can be no assurance that income tax laws

and administrative policies with respect to the income tax consequences generally applicable to us or to our subsidiaries will not be

changed in a manner which adversely affects our shareholders.

Related to our Intellectual Property

may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

third party may sue us or one of our strategic collaborators for infringing its intellectual property rights.

Likewise, we may need to

resort to litigation to enforce licensed rights or to determine the scope and validity of third-party intellectual property rights.

cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial,

and the litigation would divert our efforts.

Some of our competitors may be able to sustain the costs of complex patent litigation more

effectively than we can because they have substantially greater resources.

If we do not prevail in this type of litigation, we or our

strategic collaborators may be required to pay monetary damages;

stop commercial activities relating to the affected products or services;

obtain a license in

order to continue manufacturing or marketing the affected products or services;

or attempt to compete in the market with a substantially

What changed 10-K

Item 1A. Risk Factors