What changed in this filing

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Item 1A. Risk Factors

2021-04-06 compared with 2020-06-23 · 281 added, 285 removed, 381 unchanged (60% of the section changed)

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epidemic, or outbreak of an infectious disease including the recent outbreak of respiratory illness caused by a novel coronavirus (COVID-19)

first identified in Wuhan, Hubei Province, China, or other public health crisis were to affect our markets or facilities or those

of our suppliers, our business could be adversely affected.

Consequences of the coronavirus outbreak are resulting in disruptions

in or restrictions on our ability to travel.

If such an infectious disease broke out at our office, facilities or work sites,

our operations may be affected significantly, our productivity may be affected, our ability to complete projects in accordance

with our contractual obligations may be affected, and we may incur increased labor and materials costs.

If the customers with

which we contract are affected by an outbreak of infectious disease, service work may be delayed or cancelled, and we may incur

increased labor and materials costs.

If our subcontractors with whom we work were affected by an outbreak of infectious disease,

our labor supply may be affected and we may incur increased labor costs.

In addition, we may experience difficulties with certain

suppliers or with vendors in their supply chains, and our business could be affected if we become unable to procure essential

equipment, supplies or services in adequate quantities and at acceptable prices.

Further, infectious outbreak may cause disruption

economy, or the local economies of the markets in which we operate, cause shortages of materials, increase costs associated

with obtaining materials, affect job growth and consumer confidence, or cause economic changes that we cannot anticipate.

the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our market or our facilities

is difficult to predict and could adversely impact our business.

In response to the COVID-19 situation, federal, state and local

governments (or other governments or bodies) are considering placing, or have placed, restrictions on travel and conducting or

operating business activities.

At this time those restrictions are very fluid and evolving.

We have been and will continue to

be impacted by those restrictions.

Given that the type, degree and length of such restrictions are not known at this time, we

cannot predict the overall impact of such restrictions on us, our customers, our subcontractors and supply chain, others that

we work with or the overall economic environment.

As such, the impact these restrictions may

have on our financial position, operating results and liquidity cannot be reasonably estimated at this time, but the impact may

be material .

In addition, due to the speed with which the COVID-19 situation is developing

and evolving, there is uncertainty around its ultimate impact on public health, business operations and the overall economy;

the negative impact on our financial position, operating results and liquidity cannot be reasonably estimated at this time, but

the impact may be material.

first identified in Wuhan, Hubei Province, China, or other public health crisis were to affect our markets or facilities, our business

could be adversely affected.

Consequences of the coronavirus outbreak are resulting in disruptions in or restrictions on our ability

If such an infectious disease broke out at our office, facilities or work sites, our operations may be affected significantly,

our productivity may be affected, our ability to complete projects in accordance with our contractual obligations may be affected,

and we may incur increased labor and materials costs.

If the customers with which we contract are affected by an outbreak of infectious

disease, service work may be delayed or cancelled, and we may incur increased labor and materials costs.

If our subcontractors

with whom we work were affected by an outbreak of infectious disease, our labor supply may be affected and we may incur increased

In addition, we may experience difficulties with certain suppliers or with vendors in their supply chains, and our

business could be affected if we become unable to procure essential equipment, supplies or services in adequate quantities and

at acceptable prices.

Further, infectious outbreak may cause disruption to the U.S.

economy, or the local economies of the markets

in which we operate, cause shortages of materials, increase costs associated with obtaining materials, affect job growth and consumer

confidence, or cause economic changes that we cannot anticipate.

Overall, the potential impact of a pandemic, epidemic or outbreak

of an infectious disease with respect to our market or our facilities is difficult to predict and could adversely impact our business.

In response to the COVID-19 situation, federal, state and local governments (or other governments or bodies) are considering placing,

or have placed, restrictions on travel and conducting or operating business activities.

At this time those restrictions are very

fluid and evolving.

We have been and will continue to be impacted by those restrictions.

Given that the type, degree and length

of such restrictions are not known at this time, we cannot predict the overall impact of such restrictions on us, our customers,

our subcontractors and supply chain, others that we work with or the overall economic environment.

As such, the impact

these restrictions may have on our financial position, operating results and liquidity cannot be reasonably estimated at this time,

but the impact may be material .

In addition, due to the speed with which the COVID-19

situation is developing and evolving, there is uncertainty around its ultimate impact on public health, business operations and

the overall economy;

therefore, the negative impact on our financial position, operating results and liquidity cannot be reasonably

estimated at this time, but the impact may be material.

Because of our continued losses,

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losses from operations as of December 31, 2020, raised substantial doubt about our ability to continue as a going concern.

the going-concern assumption were not appropriate for our financial statements, then adjustments would be necessary to the carrying

going-concern assumption were not appropriate for our financial statements, then adjustments would be necessary to the carrying

values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

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At the moment, we have no funding commitments that have not been previously disclosed, and we may not obtain any in the future.

Our future success is dependent

upon the success of partnerships with other similarly-situated entities.

Our future success is dependent upon

the success of partnerships with other similarly-situated entities.

Effective March 18, 2020, we entered into

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our business could fail.

Most of our sales come from a small

number of customers and a reduction in demand or loss of one or more of our significant customers may adversely affect our business.

At the present time, we are dependent

on a small number of direct customers for most of our business, revenue and results of operations.

We at present have customers

in the civil infrastructure sector, and the pharmaceutical sector.

Our customers are a state government and a large pharmaceutical

To date, these customers have generated all our revenue.

We expect to continue to experience significant customer concentration

in future periods.

This customer concentration increases

the risk of quarterly fluctuations in our operating results and sensitivity to any material, adverse developments experienced

by our significant customers.

Although we believe that our relationships with our major customers are good, we generally do not

have long-term contracts with any of them, which is typical of our industry.

In addition, orders can be, and often are, rescheduled,

canceled and modified with little or no notice.

The loss of, or any substantial reduction in sales to, any of our major direct

or end customers could have a material adverse effect on our business, financial condition and results of operations.

Our operating subsidiaries have

limited operating history and have generated very limited revenues thus far.

The limited operating history of OXYS

and HereLab in the IIoT field, makes evaluating our business and future prospects difficult.

Most of our sales have historically

come from a small number of customers and a reduction in demand or loss of one or more of our significant customers would adversely

affect our business.

Historically, we have been dependent on

a small number of direct customers for most of our business, revenue and results of operations.

In the past, we had contracts with

customers in the civil infrastructure sector, and the pharmaceutical sector.

Our prior customers constituted a state government

and a large pharmaceutical company.

Historically, those customers generated all our revenue.

We expect to continue to experience

significant customer concentration in future periods.

This customer concentration increases the

risk of quarterly fluctuations in our operating results and sensitivity to any material, adverse developments experienced by our

significant customers.

In the past, although our relationships with our major customers was good, we generally did not have long-term

contracts with any of them, which is typical of our industry.

In the future, the loss of, or any substantial reduction in sales

to, any of our major direct or end customers could have a material adverse effect on our business, financial condition and results

of operations.

Our operating subsidiaries have limited

operating history and have generated very limited revenues thus far.

The limited operating history of OXYS and

HereLab in the IIoT field, makes evaluating our business and future prospects difficult.

OXYS was incorporated on August 4, 2016

and HereLab was incorporated on February 27, 2017.

We have not yet generated substantial income from OXYS or HereLab’s

operations and we only anticipate doing so if we are able to successfully implement our business plan.

To date we have generated

approximately $439,000_ in sales from business operations, none of which was generated from HereLab in 2019 as we focused solely

on OXYS during 2019.

We have not yet generated substantial income from OXYS or HereLab’s operations

and we only anticipate doing so if we are able to successfully implement our business plan.

To date, we have generated approximately

$448,365in sales from business operations, none of which was generated from HereLab in 2019 or 2020 as we focused solely on OXYS

during those years.

We intend in the longer term to derive further revenues from partnerships, consulting services, product sales,

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of such efforts, we may seek loans from certain of our executive officers, directors and/or current shareholders.

If we are unable to secure additional

financing in the near term, we may be forced to:

If we are unable to secure additional financing

in the near term, we may be forced to:

curtail or abandon our existing business plans;

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cease our operations.

If we are forced to take any of these

steps our Common Stock may be worthless.

Any future financing may result

in ownership dilution to our existing shareholders and may grant rights to investors more favorable than the rights currently

held by our existing shareholders.

If we are forced to take any of these steps

our Common Stock may be worthless.

Any future financing may result in

ownership dilution to our existing shareholders and may grant rights to investors more favorable than the rights currently held

by our existing shareholders.

If we raise additional capital by issuing

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In addition, any such newly issued securities may have rights superior to those of our common stock.

additional capital through collaborative arrangements, we may be required to relinquish greater rights to our technologies or

product candidates than we might otherwise have or become subject to restrictive covenants that may affect our business.

additional capital through collaborative arrangements, we may be required to relinquish greater rights to our technologies or product

candidates than we might otherwise have or become subject to restrictive covenants that may affect our business.

Uncertain global economic conditions

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The ongoing uncertainty created by the COVID-19

pandemic, volatile currency markets, the anticipated weakness in all sectors, alone or in combination, may continue to have a

material adverse effect on our net sales and the financial results of our operations.

In addition, we remain concerned about the

geopolitical and fiscal instability in the Middle East and some emerging markets as well as the continued volatility of the equity

The upcoming U.S.

pandemic, volatile currency markets, the anticipated weakness in all sectors, alone or in combination, may continue to have a material

adverse effect on our net sales and the financial results of our operations.

In addition, we remain concerned about the geopolitical

and fiscal instability in the Middle East and some emerging markets as well as the continued volatility of the equity markets.

The recent U.S.

election may also create additional domestic and global economic uncertainty.

These factors could have

a material adverse effect on the spending patterns of businesses including our current and potential customers which could have

a material adverse effect on our net sales and our results of operations.

Other factors that could adversely influence demand

for our products include unemployment, labor and healthcare costs, access to credit, consumer and business confidence, and other

macroeconomic factors that could have a negative impact on capital investment and spending behavior.

We are subject to various risks

associated with international operations and foreign economies.

These factors could have a material

adverse effect on the spending patterns of businesses including our current and potential customers which could have a material

adverse effect on our net sales and our results of operations.

Other factors that could adversely influence demand for our products

include unemployment, labor and healthcare costs, access to credit, consumer and business confidence, and other macroeconomic factors

that could have a negative impact on capital investment and spending behavior.

We are subject to various risks associated

with international operations and foreign economies.

Our international sales are subject to

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fluctuations in foreign currencies relative to the U.S.

unexpected changes to currency policy or currency restrictions

in foreign jurisdictions;

delays in collecting trade receivable balances from customers

in developing economies;

unexpected changes to currency policy or currency restrictions in foreign jurisdictions;

delays in collecting trade receivable balances from customers in developing economies;

unexpected changes in regulatory requirements;

difficulties and the high tax costs associated with the repatriation

difficulties and the high tax costs associated with the repatriation of earnings;

fluctuations in local economies;

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Although we have policies and procedures designed to ensure compliance with these

laws, there can be no assurance that all of our employees, contractors and agents, including those based in or from countries

where practices which violate such U.S.

laws, there can be no assurance that all of our employees, contractors and agents, including those based in or from countries where

practices which violate such U.S.

laws may be customary, will not take actions in violation of our policies.

Any violation

of foreign or U.S.

laws by our employees, contractors or agents, even if such violation is prohibited by our policies, could have

a material adverse effect on our business.

Any violation of foreign

laws by our employees, contractors or agents, even if such violation is prohibited by our policies, could have a material

adverse effect on our business.

We must also comply with various import and export regulations.

The application of

these various regulations depends on the classification of our products which can change over time as such regulations are modified

or interpreted.

As a result, even if we are currently in compliance with applicable regulations, there can be no assurance that

we will not have to incur additional costs or take additional compliance actions in the future.

Failure to comply with these regulations

could result in fines or termination of import and export privileges, which could have a material adverse effect on our operating

Additionally, the regulatory environment in some countries is very restrictive as their governments try to protect their

local economy and value of their local currency against the U.S.

Any future product revenues are

dependent on certain industries, and contractions in these industries could have a material adverse effect on our results of operations.

The application of these various

regulations depends on the classification of our products which can change over time as such regulations are modified or interpreted.

As a result, even if we are currently in compliance with applicable regulations, there can be no assurance that we will not have

to incur additional costs or take additional compliance actions in the future.

Failure to comply with these regulations could result

in fines or termination of import and export privileges, which could have a material adverse effect on our operating results.

Additionally,

the regulatory environment in some countries is very restrictive as their governments try to protect their local economy and value

of their local currency against the U.S.

Any future product revenues are dependent

on certain industries, and contractions in these industries could have a material adverse effect on our results of operations.

Sales of our products are dependent on

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investments in research, development, and marketing for new and existing products and technologies.

These investments involve

a number of risks as the commercial success of such efforts depend on many factors, including our ability to anticipate and respond

These investments involve a

number of risks as the commercial success of such efforts depend on many factors, including our ability to anticipate and respond

to innovation, achieve the desired technological fit, and be effective with our marketing and distribution efforts.

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The market for our products is characterized

by technological change, evolving industry standards, changes in customer needs and frequent new product introductions, and is

therefore highly dependent upon timely product innovation.

Our success is dependent on our ability to successfully develop and

introduce new and enhanced products on a timely basis to replace declining revenues from older products, and on increasing penetration

in domestic and international markets.

Any significant delay in releasing new products could have a material adverse effect on

the ultimate success of a product and other related products and could impede continued sales of predecessor products, any of

which could have a material adverse effect on our operating results.

There can be no assurance that we will be able to introduce

new products, that our new products will achieve market acceptance or that any such acceptance will be sustained for any significant

by technological change, evolving industry standards, changes in customer needs and new product introductions, and is therefore

highly dependent upon timely product innovation.

Our success is dependent on our ability to successfully develop and introduce

new and enhanced products on a timely basis to replace declining revenues from older products, and on increasing penetration in

domestic and international markets.

Any significant delay in releasing new products could have a material adverse effect on the

ultimate success of a product and other related products and could impede continued sales of predecessor products, any of which

could have a material adverse effect on our operating results.

There can be no assurance that we will be able to introduce new

products, that our new products will achieve market acceptance or that any such acceptance will be sustained for any significant

Failure of our new products to achieve or sustain market acceptance could have a material adverse effect on our operating

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by the Financial Accounting Standards Board (“

FASB ”) and the Securities and Exchange Commission.

these policies or interpretations could have a significant effect on our reported financial results, may retroactively affect

previously reported results, could cause unexpected financial reporting fluctuations, and may require us to make costly changes

to our operational processes and accounting systems.

FASB ”) and the Securities and Exchange Commission (the “

SEC ”).

A change in these policies or interpretations could have a significant effect on our reported financial results, may retroactively

affect previously reported results, could cause unexpected financial reporting fluctuations, and may require us to make costly

changes to our operational processes and accounting systems.

We operate in intensely competitive

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to fluctuations due to various factors that may adversely affect our business and result of operations.

Our operating results have fluctuated

in the past and may fluctuate significantly in the future due to several factors, including:

Our operating results have fluctuated in

the past and may fluctuate significantly in the future due to several factors, including:

global pandemics such as the COVID-19 pandemic;

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changes in the mix of products sold;

the availability and pricing of components from third parties

(especially limited sources);

the difficulty in maintaining margins, including the higher

margins traditionally achieved in international sales;

the availability and pricing of components from third parties (especially limited sources);

the difficulty in maintaining margins, including the higher margins traditionally achieved in international sales;

changes in pricing policies by us, our competitors or suppliers;

the timing, cost or outcome of any future intellectual property

litigation or commercial disputes;

the timing, cost or outcome of any future intellectual property litigation or commercial disputes;

delays in product shipments caused by human error or other factors;

disruptions in transportation channels.

Any future acquisitions made by

us will be subject to several related costs and challenges that could have a material adverse effect on our business and results

of operations.

Any future acquisitions made by us

will be subject to several related costs and challenges that could have a material adverse effect on our business and results of

We plan to make more acquisitions in the

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resources, which may distract attention from our day-to-day business and may disrupt key R&D, marketing or sales efforts.

Our inability to successfully integrate any of our acquisitions could harm our business.

The existing products previously sold

by entities we have acquired may be of a lesser quality than our products or could contain errors that produce incorrect results

on which users rely or cause failure or interruption of systems or processes that could subject us to liability claims that could

have a material adverse effect on our operating results or financial position.

Furthermore, products acquired in connection with

acquisitions may not gain acceptance in our markets, and we may not achieve the anticipated or desired benefits of such transactions.

inability to successfully integrate any of our acquisitions could harm our business.

The existing products previously sold by entities

we have acquired may be of a lesser quality than our products or could contain errors that produce incorrect results on which users

rely or cause failure or interruption of systems or processes that could subject us to liability claims that could have a material

adverse effect on our operating results or financial position.

Furthermore, products acquired in connection with acquisitions may

not gain acceptance in our markets, and we may not achieve the anticipated or desired benefits of such transactions.

We may experience component shortages

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We have experienced difficulty in securing

certain types of high-power connectors for one of our projects and anticipate that supply shortages of components used in our

products, including limited source components, can result in significant additional costs and inefficiencies in manufacturing.

If we are unsuccessful in resolving any such component shortages in a timely manner, we will experience a significant impact on

the timing of revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which would have a material adverse

impact on our operating results.

certain types of high-power connectors for one of our projects and anticipate that supply shortages of components used in our products,

including limited source components, can result in significant additional costs and inefficiencies in manufacturing.

unsuccessful in resolving any such component shortages in a timely manner, we will experience a significant impact on the timing

of revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which would have a material adverse impact

on our operating results.

We rely on management information

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personal data.

Any loss of such information could harm our competitive position, result in a loss of customer confidence, and

cause us to incur significant costs to remedy the damages caused by the disruptions or security breaches.

In addition, changing

laws and regulations governing our responsibility to safeguard private data could result in a significant increase in operating

or capital expenditures needed to comply with these new laws or regulations.

Accordingly, our operating results in such periods

would be adversely impacted.

Any loss of such information could harm our competitive position, result in a loss of customer confidence, and cause

us to incur significant costs to remedy the damages caused by the disruptions or security breaches.

In addition, changing laws

and regulations governing our responsibility to safeguard private data could result in a significant increase in operating or capital

expenditures needed to comply with these new laws or regulations.

Accordingly, our operating results in such periods would be adversely

We are continually working to maintain

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with our website.

We devote significant resources to maintaining

our website, www.oxyscorp.com, as a key marketing, sales and support tool and expect to continue to do so in the future.

to properly maintain our website may interrupt normal operations, including our ability to run and market our business which would

We devote resources to maintaining our

website, www.oxyscorp.com, as a key marketing, sales and support tool and expect to continue to do so in the future.

properly maintain our website may interrupt normal operations, including our ability to run and market our business which would

have a material adverse effect on our results of operations.

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As has occurred in the past and as may

be expected to occur in the future, our new software products or new operating systems of third parties on which our products

are based often contain bugs or errors that can result in reduced sales or cause our support costs to increase, either of which

could have a material adverse impact on our operating results.

be expected to occur in the future, our new software products or new operating systems of third parties on which our products are

based often contain bugs or errors that can result in reduced sales or cause our support costs to increase, either of which could

have a material adverse impact on our operating results.

Compliance with sections 302 and

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of our internal control over financial reporting under Section 404.

While these assessments and reports have not revealed any

material weaknesses in our internal control over financial reporting, compliance with Sections 302 and 404 is required for each

future fiscal year end.

We expect that the ongoing compliance with Sections 302 and 404 will continue to be both very costly and

very challenging and there can be no assurance that material weaknesses will not be identified in future periods.

results from such ongoing compliance efforts could result in a loss of investor confidence in our financial reports and have an

adverse effect on our stock price.

While these assessments and reports have not revealed any material

weaknesses in our internal control over financial reporting, compliance with Sections 302 and 404 is required for each future fiscal

We expect that the ongoing compliance with Sections 302 and 404 will continue to be both very costly and very challenging

and there can be no assurance that material weaknesses will not be identified in future periods.

Any adverse results from such

ongoing compliance efforts could result in a loss of investor confidence in our financial reports and have an adverse effect on

our stock price.

Our business depends on our proprietary

rights and we have been subject to intellectual property litigation.

Our success depends on our ability to

obtain and maintain patents and other proprietary rights relative to the technologies used in our principal products.

our efforts to protect our proprietary rights, unauthorized parties may have in the past infringed or violated certain of our

intellectual property rights.

Our success depends on our ability to obtain

and maintain patents and other proprietary rights relative to the technologies used in our principal products.

Despite our efforts

to protect our proprietary rights, unauthorized parties may have in the past infringed or violated certain of our intellectual

property rights.

We from time to time may engage in litigation to protect our intellectual property rights.

In monitoring

and policing our intellectual property rights, we may be required to spend significant resources.

We from time to time may be

notified that we are infringing certain patent or intellectual property rights of others.

There can be no assurance that any future

intellectual property dispute or litigation will not result in significant expense, liability, injunction against the sale of

some of our products, and a diversion of management’s attention, any of which may have a material adverse effect on our

operating results.

In monitoring and policing

our intellectual property rights, we may be required to spend significant resources.

We from time to time may be notified that

we are infringing certain patent or intellectual property rights of others.

There can be no assurance that any future intellectual

property dispute or litigation will not result in significant expense, liability, injunction against the sale of some of our products,

and a diversion of management’s attention, any of which may have a material adverse effect on our operating results.

We are subject to the risk of product

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license agreements with end-users.

If our products contain errors that produce incorrect results on which users rely or cause

failure or interruption of systems or processes, customer acceptance of our products could be adversely affected.

could be subject to liability claims that could have a material adverse effect on our operating results or financial position.

Although we maintain liability insurance for product liability matters, there can be no assurance that such insurance or the contractual

If our products contain errors that produce incorrect results on which users rely or cause failure

or interruption of systems or processes, customer acceptance of our products could be adversely affected.

Further, we could be

subject to liability claims that could have a material adverse effect on our operating results or financial position.

we maintain liability insurance for product liability matters, there can be no assurance that such insurance or the contractual

limitations used by us to limit our liability will be sufficient to cover or limit any claims which may occur.

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and services is in an early stage of development and we may never succeed in developing and/or commercializing them.

unable to commercialize our services, products, or software, or if we experience significant delays in doing so, our business

unable to commercialize our services, products, or software, or if we experience significant delays in doing so, our business may

We intend to invest a significant portion

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perform their obligations in a timely or competent fashion or if we are forced to change service providers.

Any third parties

that we hire may also provide services to our competitors, which could compromise the performance of their obligations to us.

If these third parties do not successfully carry out their duties or meet expected deadlines, the commercialization of our software

and product candidates may be extended, delayed or terminated or may otherwise prove to be unsuccessful.

Any delays or failures

as a result of the failure to perform by third parties would cause our development costs to increase, and we may not be able to

commercialize our product candidates.

In addition, we may not be able to establish or maintain relationships with these third

parties on favorable terms, if at all.

If we need to enter into replacement arrangements because a third party is not performing

in accordance with our expectations, we may not be able to do so without undue delays or considerable expenditures or at all.

Any third parties that

we hire may also provide services to our competitors, which could compromise the performance of their obligations to us.

third parties do not successfully carry out their duties or meet expected deadlines, the commercialization of our software and

product candidates may be extended, delayed or terminated or may otherwise prove to be unsuccessful.

Any delays or failures as

a result of the failure to perform by third parties would cause our development costs to increase, and we may not be able to commercialize

our product candidates.

In addition, we may not be able to establish or maintain relationships with these third parties on favorable

terms, if at all.

If we need to enter into replacement arrangements because a third party is not performing in accordance with

our expectations, we may not be able to do so without undue delays or considerable expenditures or at all.

The loss of or inability to retain

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Our management includes a select group

of experienced technology professionals, particularly Clifford Emmons, Karen McNemar, and Antony Coufal, who will be instrumental

of experienced technology professionals, particularly Clifford Emmons, Karen McNemar, and Chandran Seshagiri, who will be instrumental

in the development of our software and product candidates.

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then our ability to operate will be negatively impacted.

We do not have any employment agreements with these parties and do not

maintain any “key-man”

Although we have consulting agreements with these individuals, we do not

have any employment agreements with these parties and do not maintain any “key-man”

insurance for them.

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or that we would be able to successfully enforce our patents against infringers, including our competitors.

The issuance of a

patent is not conclusive as to its validity or enforceability, and the validity and enforceability of a patent is susceptible

to challenge on numerous legal grounds.

Challenges raised in patent infringement litigation brought by or against us may result

in determinations that patents that have been issued or licensed to us or any patents that may be issued to us or our licensors

in the future are invalid, unenforceable or otherwise subject to limitations.

In the event of any such determinations, third parties

may be able to use the discoveries or technologies claimed in these patents without paying licensing fees or royalties to us,

which could significantly diminish the value of our intellectual property and our competitive advantage.

Even if our patents are

held to be enforceable, others may be able to design around our patents or develop products similar to our products that are not

within the scope of any of our patents.

The issuance of a patent

is not conclusive as to its validity or enforceability, and the validity and enforceability of a patent is susceptible to challenge

on numerous legal grounds.

Challenges raised in patent infringement litigation brought by or against us may result in determinations

that patents that have been issued or licensed to us or any patents that may be issued to us or our licensors in the future are

invalid, unenforceable or otherwise subject to limitations.

In the event of any such determinations, third parties may be able

to use the discoveries or technologies claimed in these patents without paying licensing fees or royalties to us, which could significantly

diminish the value of our intellectual property and our competitive advantage.

Even if our patents are held to be enforceable,

others may be able to design around our patents or develop products similar to our products that are not within the scope of any

of our patents.

In addition, enforcing any patents that

may be issued to us in the future against third parties may require significant expenditures regardless of the outcome of such

Our inability to enforce our patents against infringers and competitors may impair our ability to be competitive and

could have a material adverse effect on our business.

Our inability to enforce our patents against infringers and competitors may impair our ability to be competitive and could

have a material adverse effect on our business.

If we are not able to protect and

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These broad market fluctuations and other factors, such as our ability to implement

our business plan, as well as economic conditions and quarterly variations in our results of operations, may adversely affect

the market price of our common stock.

In addition, the spreads on stock traded through the over-the-counter market are generally

unregulated and higher than on stock exchanges, which means that the difference between the price at which shares could be purchased

by investors on the over-the-counter market compared to the price at which they could be subsequently sold would be greater than

on these exchanges.

Significant spreads between the bid and asked prices of the stock could continue during any period in which

a sufficient volume of trading is unavailable or if the stock is quoted by an insignificant number of market makers.

ensure that our trading volume will be sufficient to significantly reduce this spread, or that we will have sufficient market

makers to affect this spread.

These higher spreads could adversely affect investors who purchase the shares at the higher price

at which the shares are sold, but subsequently sell the shares at the lower bid prices quoted by the brokers.

Unless the bid price

for the stock increases and exceeds the price paid for the shares by the investor, plus brokerage commissions or charges, shareholders

could lose money on the sale.

For higher spreads such as those on over-the-counter stocks, this is likely a much greater percentage

of the price of the stock than for exchange listed stocks.

There is no assurance that at the time the shareholder wishes to sell

the shares, the bid price will have sufficiently increased to create a profit on the sale.

our business plan, as well as economic conditions and quarterly variations in our results of operations, may adversely affect the

market price of our common stock.

In addition, the spreads on stock traded through the over-the-counter market are generally unregulated

and higher than on stock exchanges, which means that the difference between the price at which shares could be purchased by investors

on the over-the-counter market compared to the price at which they could be subsequently sold would be greater than on these exchanges.

Significant spreads between the bid and asked prices of the stock could continue during any period in which a sufficient volume

of trading is unavailable or if the stock is quoted by an insignificant number of market makers.

We cannot ensure that our trading

volume will be sufficient to significantly reduce this spread, or that we will have sufficient market makers to affect this spread.

These higher spreads could adversely affect investors who purchase the shares at the higher price at which the shares are sold,

but subsequently sell the shares at the lower bid prices quoted by the brokers.

Unless the bid price for the stock increases and

exceeds the price paid for the shares by the investor, plus brokerage commissions or charges, shareholders could lose money on

For higher spreads such as those on over-the-counter stocks, this is likely a much greater percentage of the price of

the stock than for exchange listed stocks.

There is no assurance that at the time the shareholder wishes to sell the shares, the

bid price will have sufficiently increased to create a profit on the sale.

Because our shares are designated

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Penny stocks are defined generally as:

non-Nasdaq equity securities with a price of less than $5.00 per share;

equity securities with a price of less than $5.00 per share;

not traded on a “recognized”

national exchange;

or in issuers with net tangible assets less than $2,000,000, if the issuer has been in continuous operation for at least three

years, or $10,000,000, if in continuous operation for less than three years, or with average revenues of less than $6,000,000

for the last three years.

The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared

by the SEC, to provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer

issuers with net tangible assets less than $2,000,000, if the issuer has been in continuous operation for at least three years,

or $10,000,000, if in continuous operation for less than three years, or with average revenues of less than $6,000,000 for the

last three years.

The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by

the SEC, to provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer

and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer’s

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Under our Articles of Incorporation, our

board of directors is authorized to issue up to 10,000,000 shares of preferred stock, none of which are issued and outstanding

board of directors is authorized to issue up to 10,000,000 shares of preferred stock, of which 26,000 are issued and outstanding

as of the date of this Annual Report.

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preferences, privileges and restrictions, including voting rights, of those shares.

If our board of directors causes any shares

of preferred stock to be issued, the rights of the holders of our common stock could be adversely affected.

Our board of directors’

ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection

with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to

acquire a majority of our outstanding voting stock.

Preferred shares issued by our board of directors could include voting rights,

or even super voting rights, which could shift the ability to control our company to the holders of our preferred stock.

shares could also have conversion rights into shares of our common stock at a discount to the market price of the common stock

which could negatively affect the market for our common stock.

In addition, preferred shares would have preference in the event

of our liquidation, which means that the holders of preferred shares would be entitled to receive the net assets of our company

distributed in liquidation before the common stock holders receive any distribution of the liquidated assets.

If our board of directors causes any additional

shares of preferred stock to be issued, the rights of the holders of our common stock could be adversely affected.

directors’

ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility

in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a

third party to acquire a majority of our outstanding voting stock.

Additional preferred shares issued by our board of directors

could include voting rights, or even additional super voting rights (above those pertaining to the Series A Super Voting Preferred

Stock), which could shift the ability to control our company to the holders of our preferred stock.

Additional preferred shares

could also have conversion rights into shares of our common stock at a discount to the market price of the common stock which could

negatively affect the market for our common stock.

In addition, preferred shares would have preference in the event of our liquidation,

which means that the holders of preferred shares would be entitled to receive the net assets of our company distributed in liquidation

before the common stock holders receive any distribution of the liquidated assets.

We have not paid, and do not intend

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may not benefit from holding our common stock.

We have not paid any cash dividends since

Therefore, any return on the investment made in our shares of common stock will likely be dependent initially upon

the shareholder’s ability to sell our common shares in the open market, at prices in excess of the amount paid for our common

shares and broker commissions on the sales.

We have not paid any cash dividends on

our common stock since inception.

Therefore, any return on the investment made in our shares of common stock will likely be dependent

initially upon the shareholder’s ability to sell our common shares in the open market, at prices in excess of the amount

paid for our common shares and broker commissions on the sales.

Because we became public by means

of a reverse merger, we may not be able to attract the attention of brokerage firms.

Additional risks may exist because we

became public through a “reverse merger.”

Securities analysts of brokerage firms may not provide coverage of our company

since there is little incentive for brokerage firms to recommend the purchase of our common stock.

No assurance can be given that

brokerage firms will want to conduct secondary offerings on our behalf in the future.

Shares of our common stock that

have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those

set forth in Rule 144(i) which apply to a former “shell company.”

Additional risks may exist because we became

public through a “reverse merger.”

Securities analysts of brokerage firms may not provide coverage of our company since

there is little incentive for brokerage firms to recommend the purchase of our common stock.

No assurance can be given that brokerage

firms will want to conduct secondary offerings on our behalf in the future.

Shares of our common stock that have

not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those set forth

in Rule 144(i) which apply to a former “shell company.”

Prior to the closing of the SEA, we were

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Pursuant to Rule 144 promulgated under the Securities Act sales of the securities of a former

shell company, such as us, under that rule are not permitted (i) until at least 12 months have elapsed from the date on which

Form 10-type information reflecting our status as a non-shell company, is filed with the SEC and (ii) unless at the time of a

proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports

and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months,

other than Form 8-K reports.

Without registration under the Securities Act, our shareholders will be forced to hold their shares

of our common stock for at least that 12-month period after the filing of the report on Form 8-K following the closing of the

reverse merger before they are eligible to sell those shares pursuant to Rule 144, and even after that 12-month period, sales

may not be made under Rule 144 unless we are in compliance with other requirements of Rule 144.

Further, it will be more difficult

for us to raise funding to support our operations through the sale of debt or equity securities unless we agree to register such

securities under the Securities Act, which could cause us to expend significant time and cash resources.

The lack of liquidity

of our securities as a result of the inability to sell under Rule 144 for a longer period of time than a non-former shell company

could negatively affect the market price of our securities.

shell company, such as us, under that rule are not permitted (i) until at least 12 months have elapsed from the date on which Form

10-type information reflecting our status as a non-shell company, is filed with the SEC and (ii) unless at the time of a proposed

sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports and other

materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other

than Form 8-K reports.

Without registration under the Securities Act, our shareholders will be forced to hold their shares of our

common stock for at least that 12-month period after the filing of the report on Form 8-K following the closing of the reverse

merger before they are eligible to sell those shares pursuant to Rule 144, and even after that 12-month period, sales may not be

made under Rule 144 unless we are in compliance with other requirements of Rule 144.

Further, it will be more difficult for us

to raise funding to support our operations through the sale of debt or equity securities unless we agree to register such securities

under the Securities Act, which could cause us to expend significant time and cash resources.

The lack of liquidity of our securities

as a result of the inability to sell under Rule 144 for a longer period of time than a non-former shell company could negatively

affect the market price of our securities.

We are an “emerging growth

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vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

an “emerging growth company”

We could be an

“emerging growth company”

for up to five years, or until the earliest of (i) the last day of the first fiscal year

in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer”

defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates

in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates

exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which

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and our stock price may be more volatile.

Staff Comments

Unresolved Staff Comments

Not applicable.

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