This Annual Report includes
forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements
are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking
statements include the information concerning possible or assumed future results of operations of the Company set forth under the
heading “Management’s Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements
also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements
are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company’s future results
and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not
to put undue reliance on any forward-looking statements.
ITEM 1 – BUSINESS
Corporate History
We were incorporated on
December 19, 2014 in the State of Nevada. Historically, we provided cloud based software to detect advertising fraud on the internet.
We abandoned this business in early 2018.
On October 17, 2017, we
acquired Eqova Life Sciences, a Nevada corporation (“Eqova”). Eqova is a wholly-owned subsidiary through which we conduct
our hemp oil product business.
On February 4, 2019, we
acquired BergaMet NA, LLC, a Delaware limited liability company (“BergaMet”). BergaMet is a wholly-owned subsidiary
through which we conduct our nutraceuticals business.
Overview
Beginning with the acquisition
of Eqova, we began to transition away from our software services business and shifted our focus to new lines of business. Eqova
is focused on the production and sale of hemp oil products through the medical practitioner market.
The addition of BergaMet,
an established company that was already generating revenues when we acquired it, has added unique products that will fit nicely
with our existing business. We now plan on expanding our product line to other nutraceuticals.
Eqova Life Sciences
On October 17, 2017, we
acquired Eqova through an exchange of shares of our Series A Convertible Preferred Stock for all of the outstanding equity interest
of Eqova.
Eqova is a medically-focused
CBD company that develops clinical grade full spectrum hemp oil products, sold exclusively via partnerships with licensed medical
practitioners to use with their patients.
BergaMet NA, LLC
On February 4, 2019, we
issued and exchanged shares of our common stock for all of the outstanding equity securities of BergaMet.
Through the exchange, we
were able to secure funds in BergaMet to pay off debt and provide capital for operations. We paid an aggregate of $353,908 and
will pay another $164,578 in approximately one (1) year to retire convertible debt. Prior to the exchange, we also entered into
agreements with other holders of convertible debt to convert their notes for an aggregate of 806,015 shares of common stock. We
also entered into conversion agreements with the holders of our Series A Convertible Preferred Stock whereby all of the outstanding
preferred stock was converted for an aggregate of 15,592,986 shares of common stock. The conversion and repayment of the preferred
stock and convertible debt have greatly improved our capitalization structure.
The acquisition of BergaMet
has been extremely beneficial to us. In addition to paying off our convertible debt, we are now able to better position ourselves
in the market. BergaMet is an established company that was already generating revenues when we acquired it. BergaMet also has unique
products that will fit nicely with our existing business. We now plan on expanding our product line to other nutraceuticals.
Discontinued Software Enterprise Platform
Services
Our prior business, until
discontinued, was providing software enterprise platform services. During the year ended December 31, 2017, we sold and marketed
a cloud based software to detect advertising fraud on the internet. We had revenues of approximately $128,105 in the year ended
December 31, 2017, 100% of which was for these software services and came from a single customer, Take5. In March 2018, we received
the last payment from this customer, and discontinued this business to shift our focus solely to sales of our hemp oil and nutraceutical
products.
The Market
Bergamot
BergaMet, LLC holds the
rights to distribute BergaMet products in the United States and Mexico.
Bergamot,
or citrus bergamia, is a rare citrus fruit native to the Calabrian region of Southern Italy. Due to sensitivity to the weather
and soil conditions, this region accounts for 80 percent of the worldwide production of bergamot. This superfruit has been used
for decades in the Calabrian regions for its beneficial effects in promoting overall health - particularly, in support of cholesterol,
cardiovascular, and metabolic health[2].
Citrus bergamot contains five unique antioxidant polyphenols in unusually concentrated amounts, which help protect your body’s
trillions of cells from free radical damage. The juice and albedo of bergamot has a unique profile of flavanoid and glycosides,
such as neoeriocitrin, neohesperidin, naringin, rutin, neodesmin, rhoifolin, and poncirin. Naringin has been shown to be beneficial
in animal models of atherosclerosis, while neoeriocitrin and rutin have been found to exhibit a strong capacity to prevent LDL
from oxidation. Importantly, bergamot juice is rich in brutieridine and melitidine with an ability to inhibit HMG-CoA reductase,
which inhibits the liver’s ability to produce LDL, resulting in reduced cholesterol levels in liver cells.
[2]
These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat,
cure, or prevent any disease.
BergaMet sells its
bergamot products in capsule form on its website and on distribution sites such as Amazon.
Hemp Oil and CBD Market
Eqova and our hemp oil
products are tailored primarily to the medical practitioner market. We believe this market is underserved and that other companies
are unable to provide products that match the quality and consistent servings/dosage of our products.
Bergamot Products
Our bergamot products are
sold in capsule form under the following product labels:
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BergaMet Cholesterol Command
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BergaMet Ultimate Femme
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BergaMet Ultimate Sport
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BergaMet Ultimate Memory
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Hemp Oil Products
Eqova develops clinical
grade hemp oil products, sold primarily to licensed medical practitioners for use with their patients.
We produce and offer the
following products:
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CannaBio Salve – most often used to provide relief to tight or sore muscles and minor skin
irritations, this product contains full spectrum hemp oil, menthol and essential oils.
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CannaBio x25 (gel cap and liquid) – provides a daily serving of full spectrum hemp oil and
often used to target patients’ GI tract.
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CannaBio MuscleCalm – a topical rub with soothing amounts of menthol, most often used to
provide relief to tight or sore muscles.
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CannaBio Optimized – a liquid liposomal full spectrum hemp oil product designed to be fat
soluble for a high degree of bioavailability.
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CannaBio Pets – designed and marketed to provide relief to anxious, aging or inflamed pets.[3]
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Eqova’s products
are created using full spectrum hemp oil and other ingredients to achieve standardized dosing. These formulations combine the powerful
benefits of cannabinoids in standardized products, which are intended to be distributed to patients under the care of licensed
health practitioners. All Eqova products are carefully researched. We require our manufacturers to make our products in cGMP-compliant
labs located in the United States.
[3]
These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat,
cure, or prevent any disease.
Patents and Intellectual Property Rights
We have not filed for any
intellectual property protection. However, we rely on intellectual property law that may include a combination of copyright, trade
secret and confidentiality agreements to protect our intellectual property. Our employees and independent contractors will be required
to sign agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated
by them on our behalf are our property, and assigning to us any ownership that they may claim in those works. Despite our precautions,
it may be possible for third parties to obtain and use without consent intellectual property that we own. Unauthorized use of our
intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely
affect our business.
From
time to time, we may encounter disputes over rights and obligations concerning intellectual property. While we believe that our
product and service offerings do not infringe the intellectual property rights of any third party, we cannot assure you that we
will prevail in any intellectual property dispute. If we do not prevail in such disputes, we may lose some or all of our intellectual
property protection, be enjoined from further sales of the applications determined to infringe the rights of others, and/or be
forced to pay substantial royalties to a third party.
Governmental Controls, Approval and Licensing Requirements
Federal laws related to the advertising,
distribution and sale of health supplements.
We expect that the formulation,
manufacturing, packaging, labeling, advertising, distribution and sale (hereafter, “sale” or “sold” may
be used to signify all of these activities) of our vitamin and nutritional supplement products will be subject to regulation by
one or more federal agencies, primarily the Food and Drug Administration (“FDA”) and the Federal Trade Commission (“FTC”),
and to a lesser extent the Consumer Product Safety Commission (“CPSC”), the United States Department of Agriculture,
and the Environmental Protection Agency. Our activities are also regulated by various governmental agencies for the states and
localities in which our products are sold, as well as by governmental agencies in certain countries outside the United States in
which our products are sold. Among other matters, regulation by the FDA and the FTC is concerned with product safety and claims
made with respect to a product’s ability to provide health-related benefits. Specifically, the FDA, under the Federal Food,
Drug, and Cosmetic Act (“FDCA”), regulates the formulation, manufacturing, packaging, labeling, distribution, and sale
of food, including dietary supplements and over-the-counter (“OTC”) drugs. The FTC regulates the advertising of these
products. The National Advertising Division (“NAD”) of the Council of Better Business Bureaus oversees an industry-sponsored,
self-regulatory system that permits competitors to resolve disputes over advertising claims. The NAD has no enforcement authority
of its own, but may refer matters that appear to violate the FTC Act or the FDCA to the FTC or the FDA for further action, as appropriate.
Most of the nutritional
supplement products that we plan to sell are classified as dietary supplements. The FDA’s revision of nutrition labeling
requirements also affects the nutrition labeling of certain dietary supplements. Our affected manufacturers may have to revise
labels on some of their dietary supplements in the next two years. Moreover, these manufacturers may need to reformulate their
products to maintain eligibility for certain marketing claims.
The Dietary Supplement
Health and Education Act (“DSHEA”) was enacted in 1994, amending the FDCA. Among other things, DSHEA prevents the FDA
from regulating dietary ingredients in dietary supplements as “food additives” and allows the use of statements of
nutritional support on product labels and in labeling. DSHEA establishes a statutory class of “dietary supplements,”
which includes vitamins, minerals, herbs, amino acids and other dietary ingredients for human use to supplement the diet. Dietary
ingredients marketed in the United States before October 15, 1994 may be marketed without the submission of a “new dietary
ingredient” (“NDI”) premarket notification to the FDA. Dietary ingredients not marketed in the United States
before October 15, 1994 may require the submission, at least 75 days before marketing, of an NDI notification containing
information establishing that the ingredient is reasonably expected to be safe for its intended use. The FDA has issued final regulations
under DSHEA.
As required by Section 113(b)
of the Food Safety Modernization Act, the FDA published in July 2011 a draft guidance document clarifying when the FDA believes
a dietary ingredient is an NDI, when a manufacturer or distributor must submit an NDI premarket notification to the FDA, the evidence
necessary to document the safety of an NDI and the methods for establishing the identity of an NDI. Industry strongly objected
to several aspects of the draft guidance. In 2016, the FDA issued revised draft guidance on what constitutes an NDI and NDI notification
requirements. Regardless of whether the FDA finalizes this draft guidance, the FDA has recently acted more aggressively to remove
ingredients from the market that the FDA views as unlawful dietary ingredients. This trend, if it continues, may limit the dietary
supplement market. Several bills to amend DSHEA in ways that would make this law less favorable to consumers and industry have
been proposed in Congress.
The FDA issued a Final
Rule on GMPs for dietary supplements on June 22, 2007. The GMPs cover manufacturers and holders of finished dietary supplement
products, including dietary supplement products manufactured outside the United States that are imported for sale into the United
States. Among other things, the new GMPs: (a) require identity testing on all incoming dietary ingredients, (b) call
for a “scientifically valid system” for ensuring finished products meet all specifications, (c) include requirements
related to process controls, including statistical sampling of finished batches for testing and requirements for written procedures
and (d) require extensive recordkeeping. We have reviewed the GMPs and have taken steps to ensure compliance. While we believe
we are in compliance, there can be no assurance that our operations or those of our suppliers will be in compliance in all respects
at all times. Additionally, there is a potential risk of increased audits as the FDA and other regulators seek to ensure compliance
with the GMPs.
On December 22, 2006, Congress
passed the Dietary Supplement and Nonprescription Drug Consumer Protection Act, which went into effect on December 22, 2007.
The law requires, among other things, that companies that manufacture or distribute nonprescription drugs or dietary supplements
report serious adverse events allegedly associated with their products to the FDA and institute recordkeeping requirements for
all adverse events (serious and non-serious). There is a risk that consumers, the press and government regulators could misinterpret
reported serious adverse events as evidence of causation by the ingredient or product complained of, which could lead to additional
regulations, banned ingredients or products, increased insurance costs and a potential increase in product liability litigation,
among other things.
All states regulate foods
and drugs under laws that generally parallel federal statutes. We are also subject to state consumer health and safety regulations,
such as the California Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”). Violation of Proposition
65 may result in substantial monetary penalties and compliance with Proposition 65 is a major focus. Contemplated changes in the
Proposition 65 labeling requirements could potentially lead to substantial costs. Current legislation in Massachusetts regarding
restrictions on weight loss and sports nutrition products could also impact the marketing of dietary supplements generally. Further,
state attorneys general have pressured industry to adopt DNA testing for herbal-based products to assure plant identity, and have
taken other actions relating to dietary ingredient status. It is uncertain whether these efforts will have a material impact on
the dietary supplement market.
Hemp Oil Products
A major obstacle to our
growth is the public perception that hemp and marijuana are the same thing. This perception drives much of the regulation of hemp
products. Although hemp and marijuana are both part of the cannabis family, they differ in cultivation, function, and application.
Despite the use of marijuana becoming more widely legalized, it is viewed by many regulators and many others as an illegal product.
Hemp, on the other hand, is used in a variety of other ways that include clothing, skin products, pet products, dietary supplements
(the use of CBD oil), and thousands of other applications. Hemp may be legally sold, however the inability of many to understand
the difference between hemp and marijuana often causes burdensome regulation and confusion among potential customers. Therefore,
we are affected by laws related to cannabis and marijuana, even though our products are not the direct targets of these laws.
Cannabis is currently
a Schedule I controlled substance under the Controlled Substance Act (“CSA”) and is, therefore, illegal under federal
law. Even in those states in which the use of cannabis has been legalized pursuant to state law, its use, possession
and/or cultivation remains a violation of federal law. A Schedule I controlled substance is defined as one that has no currently
accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The
U.S. Department of Justice (the “DOJ”) describes Schedule I controlled substances as “the most dangerous drugs
of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides
to enforce the CSA in Colorado with respect to state-regulated cannabis activities in Colorado and other states, persons
that are charged with distributing, possessing with intent to distribute or growing cannabis could be subject to fines
and/or terms of imprisonment, the maximum being life imprisonment and a $50 million fine.
Notwithstanding the CSA,
thirty-three (33) U.S. states, the District of Columbia and the U.S. territories of Guam and Puerto Rico allow their residents
to use medical cannabis. Ten (10) of these states and the District of Columbia have legalized cannabis/marijuana for adult
recreational use. Such state and territorial laws are in conflict with the federal CSA, which makes cannabis use and
possession illegal at the federal level.
Local, state, federal,
and international hemp and cannabis/marijuana laws and regulations are broad in scope and subject to evolving interpretations,
which could require us to incur substantial costs associated with compliance requirements. In addition, violations of these laws,
or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. In addition,
it is possible that cannabinoid-related regulations may be enacted in the future that will be directly applicable to our business.
It is also possible that the federal government will begin strictly enforcing existing laws, which may limit the legal uses of
the hemp plant and its derivatives and extracts, such as cannabinoids. However, our work in hemp would continue since hemp research,
development, and commercialization activities are permitted under applicable federal and state laws, rules, and regulations. Until
Congress amends the CSA or the executive branch deschedules or reschedules cannabis under it, there is a risk that federal authorities
may enforce current federal law. Enforcement of the CSA by federal authorities could impair our revenue and profit, and it could
even force us to cease manufacturing our products. The risk of strict federal enforcement of the CSA in light of congressional
activity, judicial holdings, and stated federal policy, including enforcement priorities, remains uncertain.
Until such time as the
federal government reclassifies marijuana from a Schedule 1 narcotic, we do not intend to pursue any involvement in the marijuana
business. At this time, we intend to continue only in the federally legal hemp product business. When Congress approved the 2018
Farm Bill, it defined hemp as an agricultural product and differentiated it from marijuana. This means hemp is not a controlled
substance, and may be more broadly cultivated. Hemp-derived products may now be transferred across state lines for commercial purposes.
The new law also allows for the sale, transport, or possession of hemp-derived products, so long as those items are produced in
a manner consistent with the law. There are several restrictions that apply to those who cultivate hemp and produce hemp-derived
products. Key among these restrictions is that hemp cannot contain more than 0.3 percent THC.
While the 2018 Farm Bill
legalized the cultivation of hemp and removed hemp-derived substances from Schedule 1 of the CSA, it does not legalize CBD generally.
The FDA and DOJ continue to exercise control over CBD and there is still some lack of clarity as to exactly how CBD will be regulated
going forward.
CBD has been deemed relatively
safe and, from now on, should not be subject to international illicit drug scheduling according to a World Health Organization
(“WHO”) comprehensive review published in July 2018. The WHO has formally submitted its conclusion to United Nations
Secretary-General António Guterres, a prelude to this officially becoming the case.
On June 25, 2018, the U.S.
Food and Drug Administration (“FDA”) approved CBD-based Epidiolex to treat severe forms of epilepsy. This marked the
groundbreaking admission by the FDA that cannabis has medical value. On October 1, 2018, the DOJ placed “FDA-approved drugs
that contain CBD derived from cannabis and no more than 0.1 percent THC” to Schedule 5 of the CSA. This action is narrowly
tailored to reschedule Epidiolex off of Schedule 1 because the DOJ’s ability to remove all restrictions from cannabis extracts,
including CDB, is restricted by the Single Convention on Narcotic Drugs, 1961.
Competition
Nutritional Supplements
We
compete with other manufacturers, distributors and marketers of vitamins, minerals, herbs, and other nutritional supplements both
within and outside the U.S. The nutritional supplement industry is highly fragmented and competition for the sale of nutritional
supplements comes from many sources. These products are sold primarily through retailers (drug store chains, supermarkets, and
mass market discount retailers), health and natural food stores, and direct sales channels (network marketing and internet sales).
The
nutritional supplement industry is highly competitive and we expect the level of competition to remain high over the near term.
We do not believe it is possible to accurately estimate the total number or size of our competitors. The nutritional supplement
industry has undergone consolidation in the recent past and we expect that trend may continue in the near term.
Hemp Oil Products
Currently, we face
competition from a number of other companies providing hemp-based products. We expect that many other companies will recognize
the market potential of hemp products and enter into the marketplace as competitors. As states continue to legalize marijuana and
the public gains a better understanding of hemp products, we expect many new companies will enter into the hemp business in the
near future.
There are many wholesalers
and retailers of CBD oil. However, we believe we can continue to distinguish ourselves by targeting the medical practitioner market
and providing high-quality products with consistently reliable dosage.
Employees
As of the date hereof,
we do not have any employees other than our officers and directors. Our officers and directors will continue to work for us for
the foreseeable future. We anticipate hiring appropriate personnel on an as-needed basis, and utilizing the services of independent
contractors as needed.
ITEM 1A. – RISK FACTORS.
As a smaller reporting
company we are not required to provide a statement of risk factors. Nonetheless, we are voluntarily providing risk factors herein.
Any investment in our common
stock involves a high degree of risk. You should consider carefully the following information, together with the other information
contained in this Annual Report, before you decide to buy our common stock. If one or more of the following events actually occurs,
our business will suffer, and as a result our financial condition or results of operations will be adversely affected. In this
case, the market price, if any, of our common stock could decline, and you could lose all or part of your investment in our common
stock.
We are providing services
to an industry that is heavily regulated and, in some respects, illegal under federal law and the laws of most states. We face
risks in developing our product candidates and services and eventually bringing them to market. We also face risks that our business
model may become obsolete. The following risks are material risks that we face. If any of these risks occur, our business, our
ability to achieve revenues, our operating results and our financial condition could be seriously harmed.
Risk Factors Related to the Business of the
Company
We have a limited operating history,
we are not profitable, and we do not expect to be profitable in the near future. There is no assurance our future operations will
result in revenues sufficient to obtain or sustain profitability. If we cannot generate sufficient revenues to operate profitably,
we may suspend or cease operations.
We were incorporated on
December 19, 2014 and we have not fully developed our proposed business operations and have not yet experienced significant revenue.
We have a limited operating history upon which an evaluation of our future success or failure can be made, and we recently shifted
focus to a new line of business with the acquisition of Eqova and again with the acquisition of BergaMet. Our ability to continue
as a going concern is dependent upon our ability to obtain adequate financing and to reach profitable levels of operations. In
that regard we have no proven history of performance, earnings or success.
Our net loss from inception
to December 31, 2018, was $10,170,917, of which most is due to interest expense, change in value of derivative instruments and
professional fees in connection with our formation and initial stock offering. Based on our cash position of $485 as of December
31, 2018, we will need to raise additional capital from the sale of our stock or debt. Such funding may not be available, or may
be available only on terms which are not beneficial and/or acceptable to us.
Our ability to maintain
profitability and positive cash flow is dependent upon our ability to attract new customers who will buy our products and services,
and our ability to generate sufficient revenue through the sale of those products and services.
Based upon current plans,
we expect to incur operating losses in future periods because we will be incurring expenses that may exceed revenues. We cannot
guarantee that we will be successful in generating sufficient revenues in the future. In the event we cannot generate sufficient
revenues and/or secure additional financing, we may be forced to cease operations.
Negative press from being in the hemp/cannabis
space could have a material adverse effect on our business, financial condition, and results of operations.
The hemp plant and the
cannabis/marijuana plant are both part of the same cannabis sativagenus/species of plant, except that hemp, by definition,
has less than 0.3% tetrahydrocannabinol (“THC”) content and is legal under federal and state laws, but the same plant
with a higher THC content is cannabis/marijuana, which is legal under certain state laws, but which is not legal under federal
law. The similarities between these plants can cause confusion, and our activities with legal hemp may be incorrectly
perceived as us being involved in federally illegal cannabis/marijuana. Also, despite growing support for the cannabis/marijuana
industry and legalization of cannabis/marijuana in certain U.S. states, many individuals and businesses remain opposed to the cannabis/marijuana
industry. Any negative press resulting from any incorrect perception that we have entered into the cannabis/marijuana space could
result in a loss of current or future business. It could also adversely affect the public’s perception of us and lead to
reluctance by new parties to do business with us or to own our common stock. We cannot assure you that additional business partners,
including but not limited to financial institutions and customers, will not attempt to end or curtail their relationships with
us. Any such negative press or cessation of business could have a material adverse effect on our business, financial condition,
and results of operations.
Any business-related cannabinoid production
is dependent on laws pertaining to the hemp/cannabis industry.
Currently, there are (i)
46 states in the United States and the District of Columbia that have legalized hemp, (ii) 33 states and the District of Columbia
that allow their citizens to use medical cannabis/marijuana and, (iii) 10 states and the District of Columbia that have legalized
cannabis/marijuana for adult recreational use. Many other states are considering similar legislation. Conversely, under the federal
Controlled Substance Act (the “CSA”), the policies and regulations of the federal government and its agencies are that
cannabis/marijuana has no medical benefit and a range of activities are prohibited, including cultivation, possession, personal
use, and interstate distribution of cannabis/marijuana. In the event the U.S. Department of Justice (the “DOJ”) begins
strict enforcement of the CSA in states that have laws legalizing medical and/or adult recreational cannabis/marijuana, there may
be a direct and adverse impact to any future business or prospects that we may have in the cannabis/marijuana business. Even in
those jurisdictions in which the manufacture and use of medical cannabis/marijuana has been legalized at the state level, the possession,
use, and cultivation of cannabis/marijuana all remain violations of federal law that are punishable by imprisonment and substantial
fines. Moreover, individuals and entities may violate federal law if they intentionally aid and abet another in violating these
federal controlled substance laws, or conspire with another to violate them.
For example, the California
Bureau of Cannabis Control sent 900 warning letters to marijuana shops suspected of operating without a state license. The Bureau
also issued a cease-and-desist letter to the operator of an online directory of marijuana dispensaries, products and delivery services.
The letter threatened fines and criminal penalties if the company did not remove the listings for unlicensed marijuana businesses.
Likewise, if we unknowingly do business with unlicensed entities or list them on our website, we may be subject to similar regulatory
action that would halt our operations and affect our financial performance.
Local, state, federal,
and international hemp and cannabis/marijuana laws and regulations are broad in scope and subject to evolving interpretations,
which could require us to incur substantial costs associated with compliance requirements. In addition, violations of these laws,
or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. In addition,
it is possible that cannabinoid-related regulations may be enacted in the future that will be directly applicable to our business.
It is also possible that the federal government will begin strictly enforcing existing laws, which may limit the legal uses of
the hemp plant and its derivatives and extracts, such as cannabinoids. However, our work in hemp would continue
since hemp research, development, and commercialization activities are permitted under applicable federal and state laws,
rules, and regulations. We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can
we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated,
could have on our activities in the legal hemp industry.
Our competitors may
develop products that are less expensive, safer or otherwise more appealing, which may diminish or eliminate the commercial success
of any potential product that we may commercialize.
If our competitors market
products that are less expensive, safer or otherwise more appealing than our potential products, or that reach the market before
our potential products, we may not achieve commercial success. The market may choose to continue utilizing existing products for
any number of reasons, including familiarity with or pricing of these existing products. The failure of any of our products to
compete with products marketed by our competitors would impair our ability to generate revenue, which would have a material adverse
effect on our future business, financial condition, results of operations, and cash flows. Our competitors may:
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develop and market products that are less expensive, safer, or otherwise more appealing than our
products;
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commercialize competing products before we or our partners can launch our products; and
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initiate or withstand substantial price competition more successfully than we can.
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In addition, several websites
compete with our CBD.co website. Many of these other websites have been around longer than CBD.co and have much higher traffic
than CBD.co. Developing a website is relatively inexpensive compared to other business ventures and we may face substantial competition
from established websites and other nascent online CBD market platforms. If we are unable to develop CBD.co to rank higher in search
results, to be more user friendly and to provide better information and products than our competitors, we may not be able to attract
sufficient traffic to achieve significant revenue through product sales or advertising on CBD.co.
Our CBD products have high costs and
could hurt our profitability.
The production of CBD products
is expensive. The uncertain regulatory environment and lack of established producers and manufacturers of CBD and CBD products
can make it difficult to find CBD at reasonable prices. This industry differs from our software services that we have provided
in the past, and the margins are not comparable. If we are not able to manage the costs and find affordable sources of CBD, our
results of operations will be adversely affected.
Because our officers and directors have
other outside business activities and will have limited time to spend on our business, our operations may be sporadic, which may
result in periodic interruptions or suspensions of operations.
Because our officers and
directors have other outside business activities and will only be devoting between 20-75% of their time, or 8-30 hours per week
each, to our operations, our operations may be sporadic and occur at times which are convenient for them. These outside interests
may deter from our development. In the event they are unable to fulfill any aspect of their duties, we may experience a shortfall
or complete lack of sales resulting in little or no profits and eventual closure of the business.
Our auditors have substantial doubt about
our ability to continue as a going concern.
Our financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. Our auditor’s report reflects that our ability to continue as a going concern is dependent
upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating
revenues. If we are unable to continue as a going concern, our stockholders will lose their investment. We will be required to
seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or,
if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to our stockholders.
Our controlling stockholders have significant influence over
the Company.
Our officers and directors
own stock representing approximately 34% of shareholder votes. As a result they will possess a significant influence over our affairs
and may have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other
business combination or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control
of the company, which in turn could materially and adversely affect the market price of our common stock. Our minority shareholders
will be unable to affect the outcome of stockholder voting as long as our officers and directors retain a controlling interest.
Our current officers and directors may
set salaries and perquisites in the future which we are unable to support with our current assets.
Although our officers and
directors have written employment or services agreements, our officers and directors may decide to award themselves higher salaries
and other benefits. We do not have significant revenues, and there is no guarantee that we will have significant revenue in the
near future. If we do not increase our revenues, we will be unable to support any higher salaries or other benefits for management,
which may cause us to cease operations.
We may engage in strategic transactions
that fail to enhance stockholder value.
From time to time, we may
consider possible strategic transactions, including the potential acquisitions or licensing of products or technologies or acquisition
of companies, and other alternatives with the goal of maximizing stockholder value. We may never complete a strategic transaction,
and in the event that we do complete a strategic transaction, such as the acquisition of ShareRails, implementation of such transactions
may impair stockholder value or otherwise adversely affect our business. Any such transaction may require us to incur non-recurring
or other charges and may pose significant integration challenges and/or management and business disruptions, any of which could
harm our results of operation and business prospects.
We may not be able to gain or sustain
market acceptance for our products and services.
Failure to establish a
brand and presence in the marketplace on a timely basis could adversely affect our financial condition and results of operations.
Moreover, there can be no assurance that we will successfully complete our development and introduction of new products and services
or that any such products and services will achieve acceptance in the marketplace. We may also fail to develop and deploy new products
and services on a timely basis.
The market for products and services
in the hemp oil business is highly competitive, and we may not be able to compete successfully.
The market for our hemp
oil products is competitive and evolving. There is no material aspect of our business that is protected by patents, copyrights,
trademarks, or trade names, and we face strong competition from larger companies that may offer similar products and services to
ours. Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing
and other resources and larger client bases than us, and there can be no assurance that we will be able to successfully compete
against these or other competitors.
Some of our competitors
are vertically integrated with their supply chain and can grow, process and market their own products. This may give them more
control over pricing and their final products. Some of them also have been mentioned in the national news, have doctor endorsements
and a brand presence that we cannot match at this time.
Given the rapid changes
affecting the global, national, and regional economies generally and the medical marijuana and recreational marijuana industries,
in particular, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on
our ability to keep pace with any changes in our markets, particularly, legal and regulatory changes. Our success will also depend
on our ability to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure
by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition and results
of operations.
We have incurred costs in completing
the transactions with Eqova Life Sciences and BergaMet, and failure to successfully integrate those businesses into each other
and with our own will have an adverse impact on our financial position and prevent us from obtaining the benefits that the transaction
would have given us.
We have recently completed
our acquisitions of Eqova and BergaMet. Our executives have spent considerable time and incurred legal and accounting costs in
the acquisitions. If we are unable to fully integrate those businesses into our business or maintain their existing customer base,
we will not be able to acquire the technologies, partnerships and potential customers that the transaction was intended given us.
The increase in acquisition and integration costs without the corresponding benefit will have an adverse impact on our financial
statements and foreclose potential revenue-producing opportunities in the near future.
Our success is highly dependent on our
ability to penetrate the market for hemp oil products as well as the growth and expansion of that market.
The market for hemp oil
products and related services like ours is relatively new, rapidly evolving and unproven. It is difficult to predict customer adoption
and renewal rates, customer demand for our products, the size, growth rate and expansion of these markets, the entry of competitive
products or the success of existing competitive products. Our ability to penetrate the existing market and any expansion of the
emerging market depends on a number of factors, including the cost, performance and perceived value associated with our product,
as well as customers’ willingness to adopt new products. Furthermore, many potential customers have made significant investments
in other products and may be unwilling to invest in our products. If we are unable to compete and sell our products, our business,
results of operations and financial condition would be adversely affected.
Our success depends on our ability to
sell our products and establish relationships with medical practitioners.
We need to establish sales
partners with medical practitioners and resellers. To the extent we do identify such partners, we will need to negotiate the terms
of a commercial agreement with them under which the partner would distribute our products. We cannot be certain that we will be
able to negotiate commercially-attractive terms with any partner, if at all, or convince them of the benefits our products provide.
There can be no assurance that our sales partners will comply with the terms of our commercial agreements with them or will continue
to work with us when our commercial agreements with them expire or are up for renewal. If we are unable to maintain our relationships
with these partners, or these partners fail to live up to their contractual obligations, our business, results of operations and
financial condition could be harmed.
Economic uncertainties or downturns could
materially adversely affect our business.
Current or future economic
uncertainties or downturns could adversely affect our business and results of operations. Negative conditions in the general economy
including conditions resulting from changes in gross domestic product growth, the continued sovereign debt crisis, financial and
credit market fluctuations, political deadlock, natural catastrophes, warfare and terrorist attacks on the United States, Europe,
the Asia Pacific region or elsewhere, could cause a decrease in business investments.
General worldwide economic
conditions have experienced a significant downturn and continue to remain unstable. These conditions make it extremely difficult
for us to forecast and plan future business activities accurately, and they could cause our potential customers to reevaluate their
decisions to purchase our product, which could delay and lengthen our sales cycles or result in cancellations of planned purchases.
Furthermore, during challenging economic times our potential customers may tighten their advertising budgets which may impact their
spend on local inventory based digital marketing products. To the extent purchases of our products are perceived by potential customers
to be discretionary, sales of our products may never occur. Also, customers may choose to seek other methods to achieve the benefits
our products provide.
We cannot predict the timing,
strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic
conditions of the general economy or industries in which we operate do not improve, or worsen from present levels, our business,
results of operations, financial condition and cash flows could be adversely affected.
We are dependent on the services of key
personnel and failure to attract qualified management could limit our growth and negatively impact our results of operations.
We are highly dependent
on the principal members of our management team, including our President, Kevin “Duke” Pitts, and our Chief Financial
Officer, William Bossung. At this time, we do not know of the availability of such experienced management personnel or how much
it may cost to attract and retain such personnel. The loss of the services of any member of senior management or the inability
to hire experienced technical or programing personnel could have a material adverse effect on our financial condition and results
of operations.
Other companies may claim that we have
infringed upon their intellectual property or proprietary rights.
We do not believe that
our products and services violate third-party intellectual property rights; however, we have not had an independent party conduct
a study of possible patent infringements. Nevertheless, we cannot guarantee that claims relating to violation of such rights will
not be asserted by third parties. If any of our products or services are found to violate third-party intellectual property rights,
we may be required to expend significant funds to re-engineer or cause to be re-engineered one or more of those products or services
to avoid infringement, or seek to obtain licenses from third parties to continue offering our products and services without substantial
re-engineering, and such efforts may not be successful.
In addition, future patents
may be issued to third parties upon which our products and services may infringe. We may incur substantial costs in defending against
claims under any such patents. Furthermore, parties making such claims may be able to obtain injunctive or other equitable relief,
which effectively could block our ability to further develop or commercialize some or all of our products or services in the United
States or abroad, and could result in the award of substantial damages against us. In the event of a claim of infringement, we
may be required to obtain one or more licenses from third parties. There can be no assurance that we will be able to obtain such
licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any such license could be costly and have
a material adverse effect on our business.
Our success depends on our ability to
protect our proprietary technology.
Our success depends, to
a significant degree, upon the protection of our proprietary technology, and that of any licensors. Legal fees and other expenses
necessary to obtain and maintain appropriate patent protection could be material. Currently, no material aspect of our business
is protected by registered patents, copyrights or trademarks. Insufficient funding may inhibit our ability to obtain and maintain
such protection. Additionally, if we must resort to legal proceedings to enforce our intellectual property rights, the proceedings
could be burdensome and expensive, and could involve a high degree of risk to our proprietary rights if we are unsuccessful in,
or cannot afford to pursue, such proceedings.
We may also rely on trademarks,
trade secrets and contract law to protect certain of our proprietary technology. There can be no assurance that any trademarks
will be approved, that such contract will not be breached, or that if breached, we will have adequate remedies. Furthermore, there
can be no assurance that any of our trade secrets will not become known or independently discovered by third parties.
Our future growth may be inhibited by
the failure to implement new technologies.
Our future growth is partially
tied to our ability to improve our knowledge and implementation of mobile, AI, machine learning, and other advanced technologies
in a retail environment, which is a rapidly changing market. The inability to successfully implement commercially technologies
in response to market conditions in a manner that is responsive to our customers’ requirements could have a material adverse
effect on our business.
Our payment processing merchant is located
abroad and this may cause problems in receiving payments for our products.
We currently use a payment
processing merchant who is located outside of the United States. This merchant often holds our money for weeks before sending it
to us. If we are delayed in receiving our funds or the merchant refuses to forward our sales proceeds, our financial condition
could be adversely affected. Because the merchant is located abroad, we may not have any way to enforce our arrangement and force
the merchant to provide give us our money.
Due to recent events regarding COVID-19
The COVID-19 outbreak in early 2020 has adversely affected, and may continue to adversely affect economic activity globally, nationally and locally. These economic and market conditions and other effects of the COVID-19 outbreak may adversely affect the Company. At this point, the extent to which COVID-19 may impact the Company's business is uncertain.
Risks Related To Our Common Stock
The market price of our common stock
may be volatile and may be affected by market conditions beyond our control.
The market price of our
common stock is subject to significant fluctuations in response to, among other factors:
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variations in our operating results and market conditions specific to technology companies;
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changes in financial estimates or recommendations by securities analysts;
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announcements of innovations or new products or services by us or our competitors;
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the emergence of new competitors;
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operating and market price performance of other companies that investors deem comparable;
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changes in our board or management;
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sales or purchases of our common stock by insiders;
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commencement of, or involvement in, litigation;
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changes in governmental regulations; and
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general economic conditions and slow or negative growth of related markets.
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In addition, if the market
for stocks in our industry or the stock market in general, experiences a loss of investor confidence, the market price of our common
stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing
occurs, it could cause the price of our common stock to fall and may expose us to lawsuits that, even if unsuccessful, could be
costly to defend and a distraction to the board of directors and management.
If we are unable to pay the costs associated
with being a public, reporting company, we may be forced to discontinue operations.
Our common stock is quoted
on the OTC Pink tier of the marketplace maintained by OTC Markets Group, Inc. We expect to have significant costs associated with
being a public, reporting company, which may raise substantial doubt about our ability to sell our equity securities and/or continue
as a going concern. Our ability to continue as a going concern will depend on positive cash flow, if any, from future operations
and on our ability to raise additional funds through equity or debt financing. If we are unable to achieve the necessary product
sales or raise or obtain needed funding to cover the costs of operating as a public, reporting company, we may be forced to discontinue
operations.
Our common stock is listed for quotation
on the OTC Pink tier of the marketplace maintained by OTC Markets Group, Inc., which may make it more difficult for investors to
resell their shares due to suitability requirements.
Our common stock is currently
quoted on the OTC Pink tier of the marketplace maintained by OTC Markets Group, Inc. Broker-dealers often decline to trade in over-the-counter
stocks given the market for such securities are often limited, the stocks are more volatile, and the risk to investors is greater.
These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make
it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This
could cause our stock price to decline.
We recently moved down
to the OTC Pink tier from the OTCQB tier. We may be unable to restore eligibility for quotation of our common stock on the OTCQB
tier and this will have a negative impact on our market price. The OTC Pink marketplace also does not provide as much liquidity
as the OTCQB. Many broker-dealers will not trade or recommend OTC Pink stocks for their clients. Because the OTCQB generally
increases transparency by maintaining higher reporting standards and requirements and imposing management certification and compliance
requirements, broker-dealers are more likely to trade stocks on the OTCQB marketplace and national exchanges.
Our principal stockholders have the ability
to exert significant control in matters requiring stockholder approval and could delay, deter, or prevent a change in control of
our company.
Jay Decker has beneficial
ownership of our common stock with over 70% of the shareholder votes. As a result, he has the ability to influence matters affecting
our shareholders, including the election of our directors, the acquisition or disposition of our assets, and the future issuance
of our shares. Because he controls such shares, investors may find it difficult to replace our management if they disagree with
the way our business is being operated. Because the influence by these shareholders could result in management making decisions
that are in the best interest of those shareholders and not in the best interest of the investors, you may lose some or all of
the value of your investment in our common stock. Investors who purchase our common stock should be willing to entrust all aspects
of operational control to our current management team.
We do not intend to pay dividends in
the foreseeable future.
We do not intend to pay
any dividends in the foreseeable future. We do not plan on making any cash distributions in the manner of a dividend or otherwise.
Our Board presently intends to follow a policy of retaining earnings, if any.
Future sales and issuances of our capital
stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and
could cause our stock price to decline.
Future sales and issuances
of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders.
We may sell common stock, convertible securities and other equity securities in one or more transactions at prices and in a manner
as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted.
New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our common
stock.
In addition, changing laws,
regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies,
increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards
are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in
practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend
to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance
activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings
against us and our business may be adversely affected.
We also expect that being
a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors
could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve
on our audit committee and compensation committee, and qualified executive officers.
As a result of disclosure
of information in this annual report and in filings required of a public company, our business and financial condition will become
more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties.
If such claims are successful, our business and results of operations could be adversely affected, and even if the claims do not
result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert
the resources of our management and adversely affect our business and results of operations.
The market for penny stocks has suffered in recent years from
patterns of fraud and abuse
Stockholders should be
aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud
and abuse. Such patterns include:
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control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
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boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
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excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and,
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the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.
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Our management is aware of the abuses that
have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of
the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices
could increase the volatility of our share price.
Due to the lack of a developed trading
market for our securities, you may have difficulty selling your shares.
Our stock currently trades
on the OTC Pink tier maintained by OTC Markets Group, Inc. There currently is a very limited public trading market for our common
stock. The lack of a developed public trading market for our shares may have a negative effect on your ability to sell your shares
in the future and it also may have a negative effect on the price, if any, for which you may be able to sell your shares. As a
result an investment in the shares may be illiquid in nature and investors could lose some or all of their investment.
Our status as an “emerging growth
company” under the JOBS Act OF 2012 may make it more difficult to raise capital when we need to do it.
Because of the exemptions
from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended
transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and
it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business
with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in
our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations
may be materially and adversely affected.
Our internal controls may be inadequate,
which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal
financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that
in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the
financial statements. Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable
and lead to misinformation being disseminated to the public.
We will incur ongoing costs and expenses
for SEC reporting and compliance, without increased revenue we may not be able to remain in compliance, making it difficult for
investors to sell their shares, if at all.
Going forward, we will
have ongoing SEC compliance and reporting obligations. Such ongoing obligations will require us to expend additional amounts on
compliance, legal and auditing costs. In order for us to remain in compliance, we will require increased revenues to cover the
cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate
sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all.
We have the right to issue additional
common stock without consent of stockholders. This would have the effect of diluting investors’ ownership and could decrease
the value of their investment.
We are authorized to issue
2,500,000,000 shares of common stock. Of these authorized shares, 121,610,085 shares are issued and outstanding as of December
18, 2019. Therefore, we are authorized to issue up to an additional 2.3 billion unissued shares of our common stock that may be
issued by us for any purpose without the further consent or vote of our stockholders that would dilute stockholders’ percentage
ownership of our company.
Our officers and directors can sell some
of their stock, which may have a negative effect on our stock price and ability to raise additional capital, and may make it difficult
for investors to sell their stock at any price.
Our officers and directors,
as a group, are the beneficial owners of 4,835,966 shares of our common stock, representing approximately 4% of our total issued
shares. Each individual officer and director may be able to sell up to 1% of our outstanding stock (currently approximately 1.2
million shares) every 90 days in the open market pursuant to Rule 144, which may have a negative effect on our stock price and
may prevent us from obtaining additional capital. In addition, if our officers and directors are selling their stock into the open
market, it may make it difficult or impossible for investors to sell their stock at any price.
Our common stock is governed under The
Securities Enforcement and Penny Stock Reform Act of 1990.
The Securities Enforcement
and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades
in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity
security listed on NASDAQ and any equity security issued by an issuer that has (i) net tangible assets of at least $2,000,000,
if such issuer has been in continuous operation for three years, (ii) net tangible assets of at least $5,000,000, if such
issuer has been in continuous operation for less than three years, or (iii) average annual revenue of at least $6,000,000,
if such issuer has been in continuous operation for less than three years. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and
the risks associated therewith.
The forward looking statements contained
in this annual report may prove incorrect.
This Annual Report contains
certain forward-looking statements, including among others: (i) anticipated trends in our financial condition and results of operations;
(ii) our business strategy for expanding distribution; and (iii) our ability to distinguish ourselves from our current and future
competitors. These forward-looking statements are based largely on our current expectations and are subject to a number of risks
and uncertainties. Actual results could differ materially from these forward-looking statements. In addition to the other risks
described elsewhere in this “Risk Factors” discussion, important factors to consider in evaluating such forward-looking
statements include: (i) changes to external competitive market factors or in our internal budgeting process which might impact
trends in our results of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business
strategy or an inability to execute our strategy due to unanticipated changes in the biotechnology industry; and (iv) various competitive
factors that may prevent us from competing successfully in the marketplace. In light of these risks and uncertainties, many of
which are described in greater detail elsewhere in this “Risk Factors” discussion, there can be no assurance that the
events predicted in forward-looking statements contained in this annual report will, in fact, transpire.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have made forward-looking
statements in this Annual Report, including the sections entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Business,” that are based on our management’s beliefs and assumptions
and on information currently available to our management. Forward-looking statements include the information concerning our possible
or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential
growth opportunities, the effects of future regulation, and the effects of competition. Forward-looking statements include all
statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,”
“expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions.
These statements are only predictions and involve known and unknown risks and uncertainties, including the risks outlined under
“Risk Factors” and elsewhere in this annual report.
Although we believe that
the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels
of activity, performance or achievement. We are not under any duty to update any of the forward-looking statements after the date
of this annual report to conform these statements to actual results, unless required by law.