What changed in this filing

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Item 1A. Risk Factors

2022-04-15 compared with 2021-04-15 · 303 added, 272 removed, 195 unchanged (75% of the section changed)

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we will successfully address these risks or other unknown risks that may affect our business.

As an enterprise engaged in the development of

new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our new

As an enterprise engaged in the commercialization

of new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our

business operations.

Prospective investors should consider carefully the risk factors set out below.

Risks Related to Our Business

Business interruptions, including any interruptions

resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on us if the situation continues .

Further, all employees, including our specialized

technical staff, are working from home or in a virtual environment.

The Company always maintains the ability for team members to work

virtual and we will continue to stay virtual, until the applicable State and or the Federal government indicate the environment is safe

to return to work.

The ongoing coronavirus outbreak which began in

China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown

of certain businesses in impacted geographic regions.

If the coronavirus outbreak situation should worsen, we may experience disruptions

to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third parties.

The ongoing coronavirus outbreak which began

in China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended

shutdown of certain businesses in impacted geographic regions.

If the coronavirus outbreak situation should worsen, we may experience

disruptions to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third

The extent to which the coronavirus impacts our

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adverse effect on our financial results and our ability to conduct business as expected.

If we default on the Convertible Debenture, the secured

holder could take possession of our assets, including our patents and other intellectual property.

The Convertible Debenture (Secured) issued April 24, 2017, is secured

by our assets, which includes our patents and other intellectual property.

In the event that we default on the obligations in the Debenture,

the secured holder could take possession of our assets, including our patents and other intellectual property.

If this were to occur,

investors would likely lose all of their investment.

Escalating global tensions, including the

conflict between Russia and Ukraine, could negatively impact us.

The ongoing conflict between Russia and Ukraine

could lead to disruption, instability and volatility in global markets and industries that could negatively impact our operations.

government and other governments in jurisdictions in which we operate have imposed severe sanctions and export controls against

Russia and Russian interests and threatened additional sanctions and controls.

The impact of these measures, as well as potential responses

to them by Russia, is currently unknown and they could adversely affect our business, partners or customers.

If we default on the Convertible Debenture, the secured holder

could take possession of our assets, including our patents and other intellectual property.

The Convertible Debenture (Secured) issued April

24, 2017, is secured by our assets, which includes our patents and other intellectual property.

In the event that we default on the obligations

in the Debenture, the secured holder could take possession of our assets, including our patents and other intellectual property.

were to occur, investors would likely lose all of their investment.

We need to continue as a going concern if our business is to

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Such factors identified in the report are our accumulated

deficit since inception, no sales recorded to date, our failure to attain profitable operations, the excess of liabilities over assets,

and our dependence upon obtaining adequate additional financing to pay our liabilities.

If we are not able to continue as a going concern,

investors could lose their investments.

Because of the unique difficulties and uncertainties

inherent in technology development, we face a risk of business failure.

deficit since inception, our failure to attain profitable operations, the excess of liabilities over assets, and our dependence upon obtaining

adequate additional financing to pay our liabilities.

If we are not able to continue as a going concern, investors could lose their investments.

We have made and

expect to continue to make acquisitions that could disrupt our operations and harm our operating results.

Our growth depends upon

market growth, our ability to enhance our existing products, and our ability to introduce new products on a timely basis.

continue to address the need to develop new products and enhance existing products through acquisitions of other companies, product lines,

technologies, and personnel.

Acquisitions involve numerous risks, including the following:

· Difficulties

in integrating the operations, systems, technologies, products, and personnel of the acquired

companies, particularly companies with large and widespread operations and/or complex products;

of management’s attention from normal daily operations of the business and the challenges

of managing larger and more widespread operations resulting from acquisitions;

difficulties in completing projects associated with in-process research and development intangibles;

· Difficulties

in entering markets in which we have no or limited direct prior experience and where competitors

in such markets have stronger market positions;

dependence on unfamiliar supply chains;

· Insufficient

revenue to offset increased expenses associated with acquisitions;

potential loss of key employees, customers, distributors, vendors and other business partners

of the companies we acquire following and continuing after announcement of acquisition plans.

Acquisitions may also

common stock that would dilute our current shareholders’ percentage ownership;

a substantial portion of our cash resources or incur debt;

· Significantly

increase our interest expense, leverage and debt service requirements if we incur additional

debt to pay for an acquisition;

goodwill and nonamortizable intangible assets that are subject to impairment testing on a

regular basis and potential periodic impairment charges;

amortization expenses related to certain intangible assets;

tax expenses related to the effect of acquisitions on our intercompany research

and development cost sharing arrangement and legal structure;

large and immediate write-offs and restructuring and other related expenses;

subject to intellectual property or other litigation.

Mergers and acquisitions

are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions

will be successful and will not materially adversely affect our business, operating results, or financial condition.

Failure to manage

and successfully integrate acquisitions could materially harm our business and operating results.

Prior acquisitions could result in

a wide range of outcomes, from successful introduction of new products and technologies to a failure to do so.

Even when an acquired

company has already developed and marketed products, there can be no assurance that product enhancements will be made in a timely fashion

or that pre-acquisition due diligence will have identified all possible issues that might arise with respect to such products.

From time to time, we

have made acquisitions that resulted in charges in an individual quarter.

These charges may occur in any particular quarter, resulting

in variability in our quarterly earnings.

In addition, our effective tax rate for future periods is uncertain and could be impacted by

mergers and acquisitions.

Risks related to new product development also apply to acquisitions.

Because of the unique difficulties and

uncertainties inherent in technology development, we face a risk of business failure.

Potential investors should be aware of the difficulties

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Our current operating funds are less than necessary

to complete the full development and marketing of our DarkPulse Technology-based systems, and we will need to obtain additional financing

in order to complete our business plan.

We currently have minimal operations and we are not currently generating revenue or net

Our business plan calls for significant expenses

in connection with developing our DarkPulse Technology-based systems and paying our current obligations.

The Company will require additional

financing to execute its business plan through raising additional capital and/or beginning to generate revenue.

additional financing is subject to a number of factors, including investor acceptance of our DarkPulse Technology and current financial

condition as well as general market conditions.

These factors affect the timing, amount, terms or conditions of additional financing

unavailable to us.

And if additional financing is not arranged, the Company faces the risk of going out of business.

The Company’s

management is currently engaged in actively pursuing multiple financing options in order to obtain the capital necessary to execute the

Company’s business plan.

to fulfill our operating costs and we will need to obtain additional financing in order to continue our business operations.

we are generating revenues, we are not generating net income.

We will require additional financing to execute

our business plan through raising additional capital and/or generating greater revenues.

Obtaining additional financing is subject to a

number of factors, including acceptance of our DarkPulse Technology and current financial condition as well as general market conditions.

These factors affect the timing, amount, terms

or conditions of additional financing unavailable to us.

If additional financing is not arranged, we will face the risk of going out of

Our management is currently engaged in actively pursuing multiple financing options in order to obtain the capital necessary

to execute our business plan.

The most likely source of future funds presently

available to us is through the additional sale of private equity capital or through a convertible debt instrument.

Any sale of share

capital or conversion of convertible debt will most likely result in dilution to existing shareholders.

There is no history upon which to base any assumption

as to the likelihood we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues

or achieve profitable operations.

available to us is through the additional sales of equity or through convertible debt instruments.

Any sales of share capital or conversion

of convertible debt will most likely result in dilution to existing shareholders.

There is no history upon which to base any assumption as to the likelihood

we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or achieve profitable

If we are unsuccessful in addressing these risks, our business will most likely fail.

Product development is a long, expensive and uncertain process.

The development of DarkPulse Technology-based

systems is a costly, complex and time-consuming process, and the investment in product development often involves a long wait until a

return, if any, is achieved on such investment.

We continue to make significant investments in research and development relating to our

DarkPulse Technology-based systems and our other businesses.

Investments in new technology and processes are inherently speculative.

Successful technical development

of our products does not guarantee successful commercialization.

Successful technical development of our

products does not guarantee successful commercialization.

We may successfully complete the technical development

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including among others the following:

competing products;

ineffective distribution and marketing;

lack of sufficient cooperation from our partners;

demonstrations of the products not aligning with or meeting customer needs.

· Ineffective

distribution and marketing;

of sufficient cooperation from our partners;

· Demonstrations

of the products not aligning with or meeting customer needs.

Our success in the market for the products we

develop will depend largely on our ability to prove our products’

capabilities.

develop will depend largely on our ability to prove our products’ capabilities.

Upon demonstration, our products and/or technology

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Furthermore, even if we do successfully

demonstrate our products’

capabilities, potential customers may be more comfortable doing business with a larger, more established,

demonstrate our products’ capabilities, potential customers may be more comfortable doing business with a larger, more established,

more proven company than us.

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are important to our ability to remain competitive and for the success of our products and our business.

We rely on a combination of patent,

trademark and trade secret laws as well as confidentiality agreements and procedures, non-compete agreements and other contractual provisions

to protect our intellectual property, other proprietary rights and our brand.

We have confidentiality agreements in place with our consultants,

customers and certain business suppliers and plan to require future employees to enter into confidentiality and non-compete agreements.

We rely on a combination of

patent, trademark and trade secret laws as well as confidentiality agreements and procedures, non-compete agreements and other contractual

provisions to protect our intellectual property, other proprietary rights and our brand.

We have confidentiality agreements in place

with our consultants, customers and certain business suppliers and plan to require future employees to enter into confidentiality and

non-compete agreements.

We have little protection when we must rely on trade secrets and nondisclosure agreements.

Our intellectual property rights may be challenged,

invalidated or circumvented by third parties.

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge

or other trade secrets by employees or competitors.

Furthermore, our competitors may independently develop technologies and products that

are substantially equivalent or superior to our technologies and/or products, which could result in decreased revenues.

Moreover, the

laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the U.S.

Litigation may be

necessary to enforce our intellectual property rights which could result in substantial costs to us and substantial diversion of management

If we do not adequately protect our intellectual property, our competitors could use it to enhance their products.

Our inability

to adequately protect our intellectual property rights could adversely affect our business and financial condition, and the value of our

brand and other intangible assets.

Our intellectual property

rights may be challenged, invalidated or circumvented by third parties.

We may not be able to prevent the unauthorized disclosure or

use of our technical knowledge or other trade secrets by employees or competitors.

Furthermore, our competitors may independently develop

technologies and products that are substantially equivalent or superior to our technologies and/or products, which could result in decreased

Moreover, the laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of

Litigation may be necessary to enforce our intellectual property rights which could result in substantial costs to us and substantial

diversion of management attention.

If we do not adequately protect our intellectual property, our competitors could use it to enhance

their products.

Our inability to adequately protect our intellectual property rights could adversely affect our business and financial

condition, and the value of our brand and other intangible assets.

Other companies may claim that we infringe

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result in litigation or may require us to obtain a license for the intellectual property rights of third parties.

If we are required to

obtain licenses to use any third party technology, we would have to pay royalties, which may significantly reduce any profit on our products.

In addition, any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities.

If any of our products were found to infringe other parties’

proprietary rights and we are unable to come to terms regarding a license

with such parties, we may be forced to modify our products to make them non-infringing or to cease production of such products altogether.

If we are required

to obtain licenses to use any third-party technology, we would have to pay royalties, which may significantly reduce any profit on our

In addition, any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market

opportunities.

If any of our products were found to infringe other parties’ proprietary rights and we are unable to come to terms

regarding a license with such parties, we may be forced to modify our products to make them non-infringing or to cease production of

such products altogether.

The nature of our business involves significant

risks and uncertainties that may not be covered by insurance or indemnity.

We develop and sell products where insurance or

indemnification may not be available, including:

designing and developing products using advanced and unproven technologies in intelligence and homeland security applications that are intended to operate in high demand, high risk situations;

designing and developing products to collect, distribute and analyze various types of information.

Failure of certain of our products could result

in loss of life or property damage.

We develop and sell products where insurance

or indemnification may not be available, including:

and developing products using advanced technologies in intelligence and homeland

security applications that are intended to operate in high demand, high risk situations;

and developing products to collect, distribute and analyze various types of information.

Certain products may raise questions with respect to issues of privacy rights, civil liberties, intellectual

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for us to compete effectively.

We are heavily reliant on Dennis O’Leary,

our Chairman and Chief Executive Officer, and the departure or loss of Dennis O’Leary could disrupt our business.

The Company depends heavily on the continued efforts

of Dennis O’Leary, Chairman, Chief Executive Officer and director.

O’Leary is essential to the Company’s strategic

vision and day-to-day operations and would be difficult to replace.

We are heavily reliant on Dennis O’Leary,

our Chairman and Chief Executive Officer, and the departure or loss of Dennis O’Leary could disrupt our business.

We depend heavily on the continued efforts of

Dennis O’Leary, Chairman, Chief Executive Officer and director.

O’Leary is essential to our strategic vision and day-to-day

operations and would be difficult to replace.

We currently do not have an employment agreement with Mr.

O’Leary,

thus we cannot be certain that he will desire to continue with us for the necessary time it will to complete the product development and

initial sales channel development.

O’Leary, thus we cannot

be certain that he will desire to continue with us for the necessary time it will to complete the product development and initial sales

channel development.

The departure or loss of Mr.

O’Leary, or the inability to hire and retain a qualified replacement,

could negatively impact the Company’s ability to manage its business.

If we are unable to recruit and retain key

management, technical and sales personnel, our business would be negatively affected.

O’Leary, or the inability to hire and retain a qualified replacement, could negatively

impact our ability to manage our business.

If we are unable to recruit and retain

key management, technical and sales personnel, our business would be negatively affected.

For our business to be successful, we need to

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labor, recruiting and training costs in order to attract and retain such employees.

We face competition for qualified personnel from other

companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our

business to succeed.

We face competition for qualified personnel from

other companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed

for our business to succeed.

Material weaknesses in our internal control

over financial reporting may, until remedied, cause errors in our financial statements or cause our filings with the SEC to not be timely.

The Company believes that material weaknesses exist

in our internal control over financial reporting as of December 31, 2020, including those related to (i) our

internal audit functions and (ii) a lack of segregation of duties within accounting functions.

If our internal control over financial

reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require

a restatement or our filings may not be timely made with the SEC.

We intend to implement additional corporate governance and control measures

to strengthen our control environment as we are able, but we may not achieve our desired objectives.

Moreover, no control environment,

no matter how well designed and operated, can prevent or detect all errors or fraud.

We may identify material weaknesses and control deficiencies

in our internal control over financial reporting in the future that may require remediation and could lead investors losing confidence

in our reported financial information, which could lead to a decline in our stock price.

We believe that material weaknesses exist

in our internal control over financial reporting as of December 31, 2021, including those related to (i) our internal audit functions

and (ii) a lack of segregation of duties within accounting functions.

If our internal control over financial reporting or disclosure

controls and procedures are not effective, there may be errors in our financial statements that could require a restatement or our filings

may not be timely made with the Securities and Exchange Commission (the “ SEC ”).

We intend to implement additional

corporate governance and control measures to strengthen our control environment as we are able, but we may not achieve our desired objectives.

Moreover, no control environment, no matter how well designed and operated, can prevent or detect all errors or fraud.

We may identify

material weaknesses and control deficiencies in our internal control over financial reporting in the future that may require remediation

and could lead investors losing confidence in our reported financial information, which could lead to a decline in our stock price.

Risks Related to Our Organization and Our Common

Certain shareholders will be able to

exert significant influence over us to the detriment of minority stockholders.

Our largest shareholder beneficially owns approximately

81.29 % of our outstanding common stock as of April 10, 2021, as calculated according to voting power.

This stockholder will be able

to exert significant influence on our management and affairs and all matters requiring stockholder approval, including significant corporate

transactions.

This concentration of ownership may have the effect of delaying or preventing our change in control and might affect the

market price of our common stock.

You may experience dilution of your ownership

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into or exercisable for our common or preferred stock.

On July 1, 2019, the majority stockholders holding

a majority of the issued and outstanding voting shares of the Company approved an amendment to the Company’s Certificate of Incorporation,

to increase the number of authorized shares of Common Stock from 3,000,000,000 to 20,000,000,000.

We are authorized to issue an aggregate

of 20,000,000,000 shares of common stock and 2,000,000 shares of “blank check”

preferred stock.

In the future, we may issue

our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.

We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in

connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for

other business purposes.

The future issuance of any such additional shares of our common stock may create downward pressure on the trading

price of the common stock.

We will need to raise additional capital in the near future to meet our working capital needs, and there can

be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction

We are authorized to issue an aggregate of 20,000,000,000

shares of common stock and 2,000,000 shares of “blank check” preferred stock.

In the future, we may issue our authorized

but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.

additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection

with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business

The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of

the common stock.

We will need to raise additional capital in the near future to meet our working capital needs, and there can be no

assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction

with these capital raising efforts, including at a price (or exercise or conversion prices) below the price an investor paid for stock.

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Our shares qualify as penny stocks and are covered

by Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which imposes additional sales practice

requirements on broker/dealers who sell our securities in this offering or in the aftermarket.

In particular, prior to selling a penny

stock, broker/dealers must give the prospective customer a risk disclosure document that:

contains a description of the nature and level

of risk in the market for penny stocks in both public offerings and secondary trading;

contains a description of the broker/dealers’

duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements

of Federal securities laws;

contains a brief, clear, narrative description of a dealer market, including “bid”

and “ask”

prices for penny stocks and the significance of the spread between the bid and ask prices;

contains the toll free telephone number for

inquiries on disciplinary actions established pursuant to section 15(A)(i);

defines significant terms used in the disclosure document

or in the conduct of trading in penny stocks;

and contains such other information, and is in such form (including language, type size,

and format), as the SEC requires by rule or regulation.

Further, for sales of our securities, the broker/dealer must make a special suitability

determination and receive from you a written agreement before making a sale to you.

Because of the imposition of the foregoing additional

sales practices, it is possible that brokers will not want to make a market in our shares.

This could prevent reselling of shares and

may cause the price of the shares to decline.

We do not expect to declare or pay any dividends.

by Section 15(g) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), which imposes additional

sales practice requirements on broker/dealers who sell our securities in this offering or in the aftermarket.

In particular, prior to

selling a penny stock, broker/dealers must give the prospective customer a risk disclosure document that:

contains a description of the

nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

contains a description of the

broker/dealers’ duties to the customer and of the rights and remedies available to the customer with respect to violations of such

duties or other requirements of Federal securities laws;

contains a brief, clear, narrative description of a dealer market, including

“bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask prices;

the toll free telephone number for inquiries on disciplinary actions established pursuant to section 15(A)(i);

defines significant terms

used in the disclosure document or in the conduct of trading in penny stocks;

and contains such other information, and is in such form

(including language, type size, and format), as the SEC requires by rule or regulation.

Further, for sales of our securities, the broker/dealer

must make a special suitability determination and receive from you a written agreement before making a sale to you.

Because of the imposition

of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares.

This could prevent

reselling of shares and may cause the price of the shares to decline.

We do not expect to declare or pay any

We have not declared or paid any dividends on

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Our common shares are currently publicly traded

on the OTC Markets under the symbol “DPLS.”

In the future, the trading price of our common shares may be subject to wide fluctuations.

Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our control.

the stock market in general, and the market for sensor technology companies in particular, has experienced extreme price and volume fluctuations

that have often been unrelated or disproportionate to the operating performance of such companies.

Market and industry factors may adversely

affect the market price of the common shares, regardless of our operating performance.

Readers should carefully consider the risks and

uncertainties described below before deciding whether to invest in shares of our common stock.

on the OTC Markets under the symbol “DPLS.” In the future, the trading price of our common shares may be subject to wide

fluctuations.

Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our

In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme

price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.

and industry factors may adversely affect the market price of the common shares, regardless of our operating performance.

Readers should

carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks

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we will successfully address these risks or other unknown risks that may affect our business.

As an enterprise engaged in the development

of new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our new

business operations.

As an enterprise engaged in the development of

new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our new business

Prospective investors should consider carefully the risk factors set out herein.

As reported herein in

“Item 5.

Market For Common Equity and Related Stockholder Matters ”, the market price of our common stock has

fluctuated significantly.

The market price of our common stock

has fluctuated significantly.

Being a public company is expensive and administratively burdensome.

As a public reporting company, we are subject

to the information and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange

Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act.

with these laws and regulations requires the time and attention of our Board of Directors and management team, and increases our expenses.

We estimate the Company will incur approximately $200,000 to $300,000 annually in connection with being a public company.

to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules and regulations

related thereto, including compliance with the Sarbanes-Oxley Act.

Complying with these laws and regulations requires the time and attention

of our Board of Directors and management team, and increases our expenses.

We estimate we will incur approximately $200,000 to $300,000

annually in connection with being a public company.

Among other things, we are required to:

maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

prepare and distribute periodic reports in compliance with our obligations under federal securities laws;

institute a more comprehensive compliance function, including with respect to corporate governance;

involve, to a greater degree, our outside legal counsel and accountants in the above activities.

The costs of preparing and filing annual and quarterly

reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders are expensive and much greater

than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional financial reporting,

internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses and the

attention of management.

There can be no assurance that we will be able to comply with the applicable regulations in a timely manner,

In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance.

future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.

and evaluate a system of internal controls over financial reporting in compliance with the

requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations

of the SEC and the Public Company Accounting Oversight Board;

and distribute periodic reports in compliance with our obligations under federal securities

a more comprehensive compliance function, including with respect to corporate governance;

to a greater degree, our outside legal counsel and accountants in the above activities.

The costs of preparing and filing annual and

quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders are expensive and

much greater than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional

financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting

expenses and the attention of management.

There can be no assurance that we will be able to comply with the applicable regulations in

a timely manner, if at all.

In addition, being a public company makes it more expensive for us to obtain director and officer liability

In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.

If we fail to establish and maintain an

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As a public company, we expect these

new rules and regulations to increase our compliance costs in 2021 and beyond and to make certain activities more time consuming and costly.

As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director

and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially

new rules and regulations to increase our compliance costs in 2022 and beyond and to make certain activities more time consuming and

As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain

director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially

higher costs to obtain the same or similar coverage.

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The ability of the Board of Directors to issue such additional shares

of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the Company

by tender offer or other means.

Such issuances could therefore deprive stockholders of benefits that could result from such an attempt,

such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price

that such an attempt could cause.

Moreover, the issuance of such additional shares of preferred stock to persons friendly to the

Board of Directors could make it more difficult to remove incumbent officers and directors from office even if such change were to be

favorable to stockholders generally.

of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the

Company by tender offer or other means.

Such issuances could therefore deprive stockholders of benefits that could result from

such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase

in market price that such an attempt could cause.

Moreover, the issuance of such additional shares of preferred stock to persons

friendly to the Board of Directors could make it more difficult to remove incumbent officers and directors from office even if such change

were to be favorable to stockholders generally.

Our stock may be traded infrequently and

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Until our common stock is listed on a national

securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our common stock to remain eligible for

quotation on the OTC Markets, or on another over-the-counter quotation system.

In those venues, however, the shares of our common stock

may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid

prices at any given time may be relatively small or non-existent.

An investor may find it difficult to obtain accurate quotations as to

the market value of our common stock or to sell his or her shares at or near bid prices or at all.

In addition, if we fail to meet the

criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons

other than established customers and accredited investors.

Consequently, such regulations may deter broker-dealers from recommending or

selling our common stock, which may further affect the liquidity of our common stock.

This would also make it more difficult for us to

raise capital.

securities exchange such as the New York Stock Exchange or the Nasdaq, we expect our common stock to remain eligible for quotation on

the OTC Markets, or on another over-the-counter quotation system.

In those venues, however, the shares of our common stock may trade

infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid prices

at any given time may be relatively small or non-existent.

An investor may find it difficult to obtain accurate quotations as to the

market value of our common stock or to sell his or her shares at or near bid prices or at all.

In addition, if we fail to meet the criteria

set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other

than established customers and accredited investors.

Consequently, such regulations may deter broker-dealers from recommending or selling

our common stock, which may further affect the liquidity of our common stock.

This would also make it more difficult for us to raise

There currently is no active public market

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and liquid market include the following:

our stockholders’

equity may be insufficient;

our stockholders’ equity may be insufficient;

the market value of our outstanding securities

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to increased volatility, making it difficult or impossible to sell shares of our common stock.

Our common stock is subject to the “penny

rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and

Our common stock is subject to the “penny

stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and

may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act establishes

the definition of a “penny stock,”

for the purposes relevant to us, as any equity security that has a market price of less

the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less

than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.

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involving a penny stock, unless exempt, the rules require:

(a) that a broker or dealer approve a person’s account for transactions

in penny stocks;

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and quantity of the penny stock to be purchased.

In order to approve a person’s account for

transactions in penny stocks, the broker or dealer must:

(a) obtain financial information and investment experience objectives of the

person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient

knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

In order to approve a person’s account

for transactions in penny stocks, the broker or dealer must:

(a) obtain financial information and investment experience objectives of

the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person

has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior

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(a) sets forth the basis on which the broker or dealer made the suitability determination;

and (b) confirms that the broker or dealer

received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute

transactions in securities subject to the “penny stock”

This may make it more difficult for investors to dispose of

our common stock and cause a decline in the market value of our common stock.

and (b) confirms that the broker or

dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing

to execute transactions in securities subject to the “penny stock” rules.

This may make it more difficult for investors to

dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks

of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or

dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in

cases of fraud in penny stock transactions.

Finally, monthly statements have to be sent disclosing recent price information for

the penny stock held in the account and information on the limited market in penny stocks.

dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor

in cases of fraud in penny stock transactions.

Finally, monthly statements have to be sent disclosing recent price information

for the penny stock held in the account and information on the limited market in penny stocks.

Our stock price may be volatile.

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the following:

changes in our industry;

competitive pricing pressures;

our ability to obtain working capital financing;

additions or departures of key personnel;

sales of our common stock;

our ability to execute our business plan;

operating results that fall below expectations;

loss of any strategic relationship;

regulatory developments;

economic and other external factors.

· The continued effects of the COVID-19 pandemic and its variants;

· The impact of conflict between the Russian Federation and Ukraine on our operations;

· Geo-political events, such as the crisis in Ukraine, government responses to such events and the related impact on

the economy both nationally and internationally;

in our industry;

· Competitive

pricing pressures;

ability to obtain working capital financing;

or departures of key personnel;

of our common stock;

ability to execute our business plan;

results that fall below expectations;

of any strategic relationship;

developments;

and other external factors.

In addition, the securities markets have from

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number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of

our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144, or issued upon the

conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an "overhang"

If our stockholders sell substantial amounts

of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144, or issued upon

the conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an "overhang"

and in anticipation of which the market price of our common stock could fall.

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securities in the future at a time and price that we deem reasonable or appropriate.

UNRESOLVED STAFF COMMENTS

On February 12, 2021, we entered into a Commercial Lease Agreement

with the lessor for the lease of 2640 West Medtronic Way, Tempe, Arizona 85281.

The term of the lease is for 12 months and the monthly

rent is $2,000 per month for a total of $24,000.

Offers or availability for sale of a substantial

number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts

of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144, or issued upon

the conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an "overhang"

and in anticipation of which the market price of our common stock could fall.

The existence of an overhang, whether or not sales have

occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related

securities in the future at a time and price that we deem reasonable or appropriate.

STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors