UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31 2018, 2021

OR

¨☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number: 000-55723001-38861

GUARDION HEALTH SCIENCES, INC.

(Exact name of Registrantregistrant as specified in its charter)

15150 Avenue of Science, Suite 200800-873-5141

San Diego, California 92128

Telephone: 858-605-9055

Telecopier: (858) 630-5543

(Address andRegistrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of principal executive offices)the Act:

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:Securities registered pursuant to Section 12(g) of the Act: None

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.¨Act ☐ Yes x☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.¨ ☐ Yes x☒ No

Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.x ☒ Yes¨ ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).¨ ☐ Yes x☒ No

Registrants’On June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $41.8 million based upon the closing price of the registrant’s common stock is not yet publicly traded.of $1.76 on The Nasdaq Capital Market as of that date.

As of February 8, 2019,March 25, 2022, there were issued and outstanding 20,564,32861,426,993 shares of the registrant’s common stock, par value $0.001 par value. On January 30, 2019,per share, issued and outstanding.

Documents Incorporated by Reference:

Portions of the Company filed a Certificate of Amendmentregistrant’s definitive proxy statement relating to its Certificate2022 annual meeting of Incorporation, as amended,stockholders (the “2022 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2022 Proxy Statement will be filed with the Secretary of StateU.S. Securities and Exchange Commission within 120 days after the end of the State of Delawarefiscal year to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of its common stock without any change to its par value. Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding common stock, stock options, and warrants as if the split occurred at the beginning of the earliest period presented inwhich this Annual Report.report relates.

DOCUMENTS INCORPORATED BY REFERENCE: None. 

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K for the fiscal year ended December 31, 2021 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be identified by words such as, “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning.

Actual results could differ materially from those contained in forward-looking statements. Many factors could cause actual results to differ materially from those in forward-looking statements, including those matters discussed below, as well as those listed in Item 1A. “Risk Factors”.

Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, the forward-looking statements discussed in this Annual Report on Form 10-K may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law. We qualify all of the information presented in this Annual Report on Form 10-K, and particularly our forward-looking statements, by these cautionary statements.

RISK FACTOR SUMMARY 

Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors, but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors”, together with the other information in this Annual Report on Form 10-K. If any of the following risks actually occurs (or if any of those listed elsewhere in this Annual Report on Form 10-K occur), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

Risks Related to the Company’s Business

Risks Related to the Company’s Acquisition of Activ Nutritional, LLC (“Activ”)

Risks Related to Government Regulations

Risks Related to the Company’s Common Stock

Introductory Comment

Throughout this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “our company,” “Guardion” the “Company” and the “Registrant” refer to Guardion Health Sciences, Inc. and its subsidiaries.

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (the “Annual Report”) contains forward-looking statements.  These statements relate to future events or future predictions, including events or predictions relating to the Company’s future financial performance, and are based on current expectations, estimates, forecasts and projections about the Company, its future performance, its beliefs and management’s assumptions.  They are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “feel,” “confident,” “estimate,” “intend,” “predict,” “forecast,” “project,” “potential” or “continue” or the negative of such terms or other variations on these words or comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks described under “Risk Factors” that may cause the Company’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.  In addition to the risks described in Risk Factors, important factors to consider and evaluate in such forward-looking statements include: (i) general economic conditions and changes in the external competitive market factors which might impact the Company’s results of operations; (ii) unanticipated working capital or other cash requirements including those created by the failure of the Company to adequately anticipate the costs associated with acquisitions and other critical activities; (iii) changes in the Company’s corporate strategy or an inability to execute its strategy due to unanticipated changes; and (iv) the failure of the Company to complete any transaction described herein on the terms currently contemplated.  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 forward-looking statements contained in this Annual Report will in fact transpire.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements.  The Company will update or revise the forward-looking statements to the extent required by applicable law.

PART I

ITEM 1. BUSINESS

OverviewThroughout this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “our company,” “Guardion” the “Company” and the “Registrant” refer to Guardion Health Sciences, Inc. and its consolidated subsidiaries.

Overview

We are a clinical nutrition company that develops and distributes clinically supported nutrition, including foods and dietary supplements. We offer a portfolio of science-based, clinically supported products designed to support consumers in achieving their health goals.

Our profile and focus fundamentally changed with the acquisition of Activ Nutritional, LLC (“Activ” or “Viactiv” as the context requires) in June 2021, the owner and distributor of the Viactiv® line of supplements for bone health, immune health and other applications.

The acquisition and integration of the Viactiv line of products has changed our financial position, market profile and brand focus, and has also expanded our search for additional business opportunities in the short-term, both internal and external.

We believe the Activ acquisition added valuable attributes, including (1) Viactiv’s brand awareness and acceptance from the consumer; (2) experienced management; (3) established distribution networks and relationships; (4) product development potential; and (5) a long track record of revenue growth and profitability.

Acquisition of Activ Nutritional, LLC

On June 1, 2021, we completed our acquisition of Activ. The acquisition was made pursuant to an Equity Purchase Agreement, dated May 18, 2021, between us, Adare and Activ. We acquired all of the issued and outstanding equity of Activ from Adare for $26 million in cash, subject to certain adjustments as provided in the Equity Purchase Agreement.

Activ owns the Viactiv® line of supplement chews for bone health, immune health and other applications which are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Viactiv product lines will be our most prominent product lines for the foreseeable future absent any additional significant acquisitions.

Recent Developments

Equity Distribution Agreement

On January 28, 2022, we entered into an Equity Distribution Agreement (the “Sales Agreement”) with Maxim Group LLC, and Roth Capital Partners LLC as co-agents (collectively, the “Agents”), pursuant to which we may offer and sell, from time to time through the Agents, shares of our common stock having an aggregate offering price of up to $25,000,000 in one or more at-the-market offerings. As of March 25, 2022, we have not sold any shares of our common stock pursuant to the Sales Agreement. As a result of the February Offering (described below), we are restricted from utilizing the at-the-market offering for a period of time.

February 2022 Securities Offering

On February 18, 2022, we entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which we issued and sold, in a best-efforts offering by the Company (the “February Offering”), (i) 32,550,000 units, priced at an offering price of $0.30 per unit, with each unit consisting of one share of our common stock, one warrant to purchase one share of our common stock at an exercise price of $0.37 per share that expires on the fifth anniversary of the date of issuance (“Series A Warrant”) and one warrant to purchase one share of our common stock at an exercise price of $0.37 per share that expires on the eighteen month anniversary of the date of issuance ( “Series B Warrant”), and (ii) 4,450,000 pre-funded units, priced at an offering price of $0.2999 per unit, with each unit consisting of one pre-funded warrant to purchase one share of our common stock at an exercise price of $0.0001 per share that is exercisable at any time after issuance until exercised in full (a “Pre-Funded Warrant” and together with the Series A Warrants and Series B Warrants, the “Warrants”), one Series A Warrant and one Series B Warrant.

On February 18, 2022, we entered into a specialtyPlacement Agency Agreement (the “Placement Agency Agreement”) with the Agents pursuant to which we paid the Agents an aggregate fee equal to 7.0% of the gross proceeds from the units sold in the February Offering and reimbursed the Agents $100,000 for expenses incurred in connection with the February Offering. In addition, we issued Roth warrants (the “Placement Agent Warrants”) to purchase up to 1,850,000 shares of our common stock exercisable at an exercise price of $0.37 per share. The Placement Agent Warrants will be exercisable immediately and expire on the fifth anniversary of the date of the issuance.

On February 23, 2022, we closed the February Offering, and issued (i) 32,550,000 shares of common stock, (ii) Series A Warrants to purchase 37,000,000 shares of common stock, (iii) Series B Warrants to purchase 37,000,000 shares of common stock, and (iv) Pre-Funded Warrants to purchase 4,450,000 shares of common stock. The net proceeds from the February Offering, after deducting the placement agent fees and estimated offering expenses payable by us were approximately $10.0 million. In the event that the Company fails to deliver shares by the required delivery date upon exercise of the warrants, the Company may be subject to cash penalties in an amount up to $20 per trading day for each $1,000 of warrant shares until such shares are delivered. In addition, if the warrant holder purchases shares in the market following the Company’s failure to deliver shares upon exercise of the warrants, the Company will be required to cover the cost of any buy-ins and, at the option of the warrant holder, either reinstate the portion of the warrant for the shares that were not delivered or deliver the number of shares that should have been issued.

In connection with the February Offering, we and our executive officers and directors entered into lock-up agreements providing that we and each of our executive officers and directors, subject to limited exceptions, may not offer, sell, transfer or otherwise dispose of our Company’s securities for a period of (i) 90 days for executive officers and directors and (ii) 120 days for our Company following the February Offering, without the prior written approval of Roth (and in the case of our Company lockup, Roth and the investors party to the Securities Purchase Agreement).

In addition, until the 18 month anniversary of the February Offering, we are prohibited from entering into a variable rate transaction (as defined in the Securities Purchase Agreement), provided, however, we will be permitted to utilize the at-the-market offering facility, described above, commencing 120 days following the closing of the February Offering.

On February 18, 2022, we entered into a warrant agency agreement with our transfer agent, VStock Transfer, LLC, who will also act as our warrant agent, setting forth the terms and conditions of the Series A Warrants and Series B Warrants sold in the February Offering.

Product Offerings

Our product profile and focus fundamentally changed with the acquisition of Activ in June 2021, the owner and distributor of the Viactiv® line of supplements for bone health, sciences company formedimmune health and other applications. In 2021, sales of the Viactiv line of supplements represented approximately 90% of our consolidated net sales. The Viactiv line of supplements contains several flavored nutritional supplement products, but the milk chocolate and caramel flavored calcium chews constitute the main product category.

Viactiv was first introduced to develop, formulatethe market over 20 years ago as a calcium-fortified soft chew intended to deliver clinical nutrition to women in a way that is enjoyable to taste and distribute condition-specific medical foods with an initialeasy to consume. Since the original chocolatey-chew, multiple chews have been introduced, each delivering nutrition to help consumers maintain health goals, such as strong bones and immune support. Viactiv is regulated in the U.S. as a dietary supplement.

We also sell Lumega-Z, our medical food product on the market under the brand name Lumega-Z^®that replenisheshas a formula designed to replenish and restoresrestore the macular protective pigment. A depletedpigment, simultaneously delivering critical and essential nutrients to the eye. The current formulation has been delivered to patients and used in clinics since 2019.

As a medical food, Lumega-Z must be administered under the supervision of a physician or professional healthcare provider. We also use a variety of marketing strategies to increase awareness of Lumega-Z among ophthalmologists and optometrists. We also market Lumega-Z through direct-to-consumer strategies such as social media and paid search advertising.

In 2020, two peer-review scientific articles were published demonstrating the beneficial efficacy of Lumega-Z^®. Both articles were published in the journal Nutrients. The first published study assessed the level of absorption of the carotenoids in Lumega-Z compared to absorption of the carotenoids in the industry leading eye vitamin, PreserVision^TM (AREDS 2 formula sold by Bausch and Lomb), and determined whether an elevated level of carotenoid absorption leads to increased macular protective pigment isoptical density (“MPOD”). The study found that despite only a modifiable2.3-fold higher carotenoid concentration than PreserVision^TM, Lumega-Z supplementation provides approximately 3–4-fold higher absorption, which leads to a significant elevation of MPOD levels. The second study evaluated the visual benefits in a group of patients taking Lumega-Z compared to a group of patients taking AREDS 2 (PreserVision^TM) soft gel supplements, as well as a third control group that were ocular normals taking no supplements. Each study participant had retinal drusen, delayed dark adaptation recovery time and was at risk factor for retina-based diseases such asof developing vision loss from age-related macular degeneration (“AMD”), computer vision syndrome (“CVS”) and diabetic retinopathy.. The Company believes this risk may be modifiedresults showed significant improvements in visual function, as measured by contrast sensitivity, in the group of patients taking Lumega-ZLumega-Z. The patients taking PreserVision^TM showed a trend toward an improvement, but no statistical change, while the control group showed no change.

GlaucoCetin, also currently considered a medical food, offers a formula that is designed to maintain a healthy macular protective pigment. Additional research has also shown a depleted macular protective pigmentsupport proper mitochondrial function in the optic nerve cells in glaucoma patients. Loss of optic nerve cells is thought to be a biomarker for neurodegenerative diseasesthe primary cause of vision loss in glaucoma patients. Like Lumega-Z, we market GlaucoCetin through direct-to-consumer strategies such as Alzheimer’s diseasesocial media and dementia.paid search advertising. We also use a variety of marketing strategies to increase awareness of GlaucoCetin among ophthalmologists and optometrists.

We distribute Lumega-Z and GlaucoCetin through E-commerce, in an online store that is operated at www.guardionhealth.com, and we intend to expand our E-commerce capabilities in 2022.

Prior Product Offerings

Nutriguard: We had marketed a brand of dietary supplement products under the NutriGuard brand, which we acquired in 2019, but decided to stop marketing the brand after acquiring the Viactiv line of supplements in June of 2021. ImmuneSF, a unique proprietary nutraceutical formulation designed to support and maintain an effective immune system was the first product developed after the acquisition of NutriGuard. This formulation contained a synergistic blend of antioxidant and anti-inflammatory nutrients. While we still intend to build a portfolio of nutraceutical products, we plan to launch such products under the Viactiv brand rather than the NutriGuard brand.

VectorVision, CSV-1000 and CSV-2000:In September 2017, the Company,we, through its wholly-ownedour wholly owned subsidiary VectorVision Ocular Health, Inc., acquired substantially all of the assets and certain liabilities of VectorVision, Inc. (“VectorVision”), a company that specializesspecialized in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment diabetic retinopathy study (“ETDRS”) visual acuity testing. VectorVision’s standardization systemis designed to provide the practitioner or researcher with the ability to delineate very small changes in visual capability, either as compared to the population or from visit to visit. VectorVision develops, manufacturesdeveloped, manufactured and sellssold equipment and supplies for standardized vision testing for use by eye doctors in clinics, for researchers to use in clinical trials, for real-world vision evaluation, and industrial vision testing.

During December 2021, as part of management’s comprehensive evaluation of our Company’s business and in order to focus on those brands and lines of business that management believes provide the greatest growth opportunities, we determined to restructure the operations of our VectorVision business. We are completing the process of substantially winding down the day-to-day operations of VectorVision, which is expected to significantly reduce costs, and we intend to explore various alternative ways to preserve, manage and exploit our intellectual property rights, including our U.S. patents, associated with the VectorVision technology. We are exploring both domestic and international business opportunities, such as licensing and distribution arrangements, with experienced parties, which could assist us in the economic exploitation of these intellectual property rights. As a result of this change to the VectorVision business strategy, management believes that it will be able to better focus its efforts and deploy capital resources to more growth-oriented brands and product lines, like Viactiv, and other products in development, that it hopes to bring to market in 2022.

Competitive Advantage and Strategy

Dietary Supplements

We intend to formulate high quality scientifically credible dietary supplements with a goal to become a globally respected clinical nutrition company. We believe our dietary supplements can play an important role in optimizing, preserving and restoring health.

Our products compete primarily in the consumer product category of dietary supplements. Successfully competing in this category requires a continuous flow of new products and line extensions, and significant sales and marketing expenses. We will also invest in research and development that will help guide our new product development process. We will compete in this category primarily on the basis of product innovation and performance, brand recognition, price, value and other consumer benefits. Consumer products, particularly dietary supplements, are subject to significant price competition. As a result, we, from time to time, may need to reduce the prices for some of our products to respond to competitive and customer pressures and to maintain market share. Product introductions typically involve heavy marketing and trade spending in the year of launch, and we usually are not able to determine whether the new products and line extensions will be successful until a period of time has elapsed following the introduction of the new products or the extension of the product line.

Our products are marketed primarily through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, and other discount and other specialty stores, and websites and other e-commerce channels, all of which sell our products to consumers. We also utilize the services of independent brokers, who represent our products in the food, mass, club, and numerous other classes of trade. Our products are stored in third-party owned warehouses and are delivered by independent trucking companies.

Medical Foods

Lumega-Z is a medical food designed to enhance the bioavailability of “difficult to absorb” ingredients like carotenoids. In contrast to other formulations, Lumega-Z is a liquid formulated using a proprietary molecular micronization process (“MMP”) to maximize efficiency of absorption and to minimize compatibility issues. The acquisition expandsMMP is a proprietary homogenization process whereby the Company’s technical portfolio. The Company believesparticle size of the ingredients is reduced to facilitate more efficient absorption into the body. As noted earlier, clinical studies have shown Lumega-Z offers significantly higher absorption of carotenoids, than the leading AREDS-based formula PreserVision^TM. In a subsequent study, Lumega-Z was also found to provide significantly better vision benefit than the AREDS-based formula in patients with drusen and at risk of vision loss from AMD, as measured by contrast sensitivity. We believe we have an advantage with Lumega-Z because of these two published studies showing superiority over the leading formula, PreserVision^TM, and because a growing body of evidence, particularly the results from the AREDS studies, has demonstrated the importance of supplementation with carotenoids to offset vision loss in patients with macular degeneration. Lumega-Z has demonstrated in studies to have higher absorption of carotenoids, which we believe may lead to better visual outcomes and a superiority over the competitive formulas.

GlaucoCetin is a medical food designed to support mitochondrial function in the optic nerve cells of glaucoma patients. For glaucoma, the primary risk factor for disease progression has been thought to be elevated intraocular pressure which in turn damages the optic nerve cells leading to vision loss. As such, the primary means for treating the disease, to slow or stop vision loss, is to lower the intraocular pressure through pharmaceutical or surgical means. We believe that we have an advantage with GlaucoCetin because it is designed to offset the mitochondrial dysfunction of cells in glaucoma patients.

Growth Strategy

We believe that developing new products, growing our established distribution and cost effectively marketing our products are the keys to growing our business. We have several innovation initiatives underway that are aimed at increasing the number of new products in our product portfolio and expanding our total addressable market, and we plan to grow our established distribution network. Our current network includes many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target, CVS and Amazon. We are also focused on our direct-to-consumer website. We are working to add additional retailers that sell our products and adding new sales channels. We are also focused on marketing initiatives that strengthen our brand and target consumers who would benefit most from our specific products. We also intend to explore the acquisition of VectorVision, addingother companies, product lines and intellectual property rights that may be complementary or supplementary as part of our efforts to expand our business.

Sales

Viactiv has traditionally sold the CSV-1000majority of its products through traditional retailers via third party brokers. We have continued to utilize these brokers to sell the Viactiv products to retailers rather than employing an internal sales force. Online retailers have represented a smaller portion of sales, but we believe these sales can be meaningful and ESV-3000play an important role in our eCommerce strategy. In addition, we sell a limited amount of Viactiv products directly to consumers via our website, and plan to invest in this channel to grow sales. While the footprint for our direct-to-consumer channel is currently small, we expect this channel to play an important role in our new product launches and growth. Furthermore, the Company is evaluating its medical food product portfolio further establishes its position atin order to determine whether it would be advantageous to fold those products into the forefrontViactiv brand of early detection, interventionsupplements and monitoringutilize those distribution channels.

Marketing – Digital

We are focused on marketing initiatives that strengthen our brand and target consumers who would benefit most from our products. We utilize digital marketing for the majority of our marketing expenditures, and we believe that such methods have been among the most cost-effective way to market our products.

Marketing – Practitioners

Healthcare practitioners are important stakeholders for our products, especially Lumega-Z and GlaucoCetin. We have deemphasized our direct sales approach that involved our sales representatives in favor of a rangemore cost-effective approach to increase the awareness of eye diseases.our products with health care practitioners. This approach is designed to increase marketing reach through a combination of collaboration with industry-specific publishers, peer-to-peer promotion using key opinion leader clinicians, organic and paid search engine optimization and marketing, and other content-driven and educational approaches.

Domestic and International Expansion Strategy

We are primarily focused on expanding our business domestically rather than internationally. The Company has had limited commercial operations to date. Until recently with the acquisition of VectorVisionActiv in 2021 shifted our strategic focus towards the Viactiv line of supplements, which has historically focused on domestic markets. As a result, the domestic markets allow us to leverage Viactiv’s strong consumer brand awareness, distribution networks and developmentkey third party vendors relationships.

Although we have decreased our focus on international expansion, we maintain relationships that we hope will lead to increased distribution of the Company’s sales force, the Company has primarily been engagedour existing products and unique nutritional formulations in research, development, commercialization,Asian markets. In March 2020, we received our first order for a novel immune support product from a Malaysian company, which order was valued at $890,000 and capital raising.

The Company invented a proprietary technology, embodiedwe believe that we could have similar opportunities in the Company’s medical device,future.

Intellectual Property

Our goal is to obtain, maintain and enforce patent protection for our products, formulations, processes and methods, preserve our trade secrets, and operate without infringing on the MapcatSF,^®that accurately measuresproprietary rights of other parties, both in the macular pigment optical density (“MPOD”). OnU.S. and in other countries. Our policy is to actively seek the broadest intellectual property protection possible for our products and proprietary information through a combination of contractual arrangements and patents, both in the U.S. and elsewhere in the world.

Patents

We currently own and have exclusive rights to four U.S. patents, one Canadian patent, and one Hong Kong patent application with respect to various products and product candidates, as follows:

(1) U.S. Patent No. 9,486,136 entitled “Apparatus for Use in the Measurement of Macular Pigment Optical Density and/or Lens Optical Density of an Eye,” issued on November 8, 2016,2016.

(2) U.S. Patent No. 10,016,128 entitled “Method and Apparatus for Vision Acuity Testing,” issued on July 10, 2018.*

(3) U.S. Patent No. 10,022,045 entitled “Method and Apparatus for Vision Acuity Testing,” issued on July 17, 2018.*

(4) U.S. Patent No. 10,456,028 entitled “Apparatus for Use in the Measurement of Macular Pigment Optical Density and/or Lens Optical Density of an Eye,” issued on October 29, 2019.

(5) Canadian Patent No. 2864154, titled “Apparatus for Use in the Measurement of Macular Pigment Optical Density and/or Lens Optical Density of an Eye,” granted on May 18, 2021.

(6) Hong Kong Patent Appl. No. HK15105364.0A, titled “Apparatus for Use in the Measurement of Macular Pigment Optical Density and/or Lens Optical Density of an Eye,” filed June 5, 2015 and published Dec. 4, 2015 as HK1204758A1.

* The patents marked with an asterisk are assigned to VectorVision Ocular Health, Inc.

Trademarks

We prominently display our trademarks on all Guardion and Viactiv products and believe that having distinctive trademarks is an important factor in the promotion and marketing our product offerings. We have acquired or are in the process of acquiring registered protection for the trademarks most critical to our business. We currently have ten trademarks registered with the United States Patent and Trademark Office (“USPTO”) issued patent number 9,486,136and three applications pending before the USPTO, all of which are used in association with the Guardion line of products. In addition, we have six trademarks registered with the USPTO which are used in association with the Viactiv line of products.

Furthermore, we have 11 trademarks currently registered in foreign jurisdictions for use with our Guardion line of products, and we have 15 registrations for the MapcatSF invention. Using the MapcatSFViactiv trademark in a broad range of geographies. We are evaluating whether additional foreign trademark protection may be appropriate. The domestic and foreign trademark registrations/applications referred to measure the MPOD allows one to monitor the increaseherein are set forth in the density of the macular protective pigment after taking Lumega-Z. The MapcatSF is a non-mydriatic, non-invasive device that accurately measures the MPOD, the lens optical density and lens equivalent age, thereby creating an evidence-based protocol that is shared with the patient. A non-mydriatic device is one that does not require dilation of the pupil for it to function. The MapcatSF is the first medical device using a patented “single fixation” process and “automatic lens density correction” that produces accurate serialized data.table below:

ForTrademark Registrations/Applications

Products Manufacturing and Sources and Availability of Raw Materials

We outsource the past three years, the clinical prototypesmanufacturing of the MapcatSF have been tested on patients, allowingour medical food products and dietary supplement product line to contract manufacturers. We process orders through purchase orders and invoices with each manufacturer. We believe that there are alternative sources, suppliers and manufacturers available for frequent modifications of the device’s algorithms and retesting for accuracy, as well as to provide the inclusion of additional features not previously foundour products in the initial prototype. event of a termination or a disagreement with any current vendor.

Government Regulation

Dietary Supplement Regulation

The alpha prototype, which is the pre-commercial production version, was unveiled for the first time in July 2013 in Cambridge, United Kingdom, to researchers and scientists from around the world. The MapcatSF is manufactured and assembled in Irvine, California, and will be distributed from the Company’s national headquarters in San Diego. The marketing of the device will be implemented through continuing education presentations conducted by key opinion leaders in the industry. The MapcatSF device is a Class I medical device under the U.S.US Food and Drug Administration (FDA) has primary jurisdiction for the regulation of dietary supplements. The FDA regulates dietary supplements, such as Viactiv chews, as “dietary supplements” under the Federal Food, Drug, and Cosmetic Act (“FDA”FDCA”) classification scheme for medical devices, whichas a distinct, sub-category of “food.” Dietary supplements must meet the Company has determined does not require pre-market approval.

Lumega-Zrequirements of applicable food laws and regulations. A “dietary supplement” is a medical fooddefined under the FDCA as “a product (other than tobacco) intended to supplement the diet that has a patent-pending formula that replenishes and restores the macular protective pigment simultaneously delivering critical and essential nutrients to the eye. Management believes, based on review of products on the market and knowledgebears or contains one or more of the industry, that Lumega-Z is the first liquid ocular health formula to be classified asfollowing dietary ingredients: vitamins, minerals, amino acids, herbs or other botanicals; a medical food (as defined in Section 5(b) of the “Orphan Drug Act”). However, the FDA has not monitored nor approved Lumega-Z as a medical food. Formulated by Dr. Sheldon Hendler in 2010, modifications were made over a two-year period to improve the taste and method of delivery. The current formulation has been delivered to patients and used in clinics since 2014.

Medical foods are not considered to be either dietaryconcentrate, metabolite, constituent, extract or nutritional supplements. The Company believes that there is an increasing level of acceptance of medical foods as a primary therapy by patients and healthcare providers to treat pain syndromes, sleep and cognitive disorders, obesity, hypertension, and viral infection. In clinical practice, medical foods are being prescribed as both a standalone therapy and as an adjunct therapy to low doses of commonly prescribed drugs. The Company believes that medical foods will continue to grow in importance over the coming years.

Lumega-Z is a regulated medical food and therefore must be administered under the supervision of a physician or professional healthcare provider. In order to reach the large, expanding AMD patient population, the Company primarily markets Lumega-Z to patients through ophthalmologists and optometrists.

Over 1,900 patients have been treated with Lumega-Z since the Company began selling the formulation in October 2011. The patients come from a combination of the three initial testing sites, healthcare provider sitesingredients listed above.” Dietary supplements are intended to enhance the diet and may not be represented as a conventional food or as the sole item of a meal or diet.

Dietary supplements do not require approval from the FDA before they are marketed. Except in the case of a “new dietary ingredient,” where the MapcatSF has been demonstrated, patients that have found Lumega-Z onlinepre-market review for safety data and through other patient referrals, healthcare provider sites administering Lumega-Z to their patients without use of the MapcatSF, and MapcatSF devices recently placed in additional healthcare facilities. Patients take Lumega-Z under the supervision of their physician. Lumega-Zinformation is typically ingestedrequired by the patient onlaw, a daily basis. Patients are typically between 50 and 80 years old. Patients are mixed ethnically and socioeconomically. Patients typically have insurance, whether private insurance or Medicare. Physicians have determined that the patientfirm is experiencing or is at a high risk of developing retinal disease and decide based on their medical determination that the patient is a candidate for Lumega-Z.

Nearly half of Americans have low MPOD, a risk factor for AMD. As the MapcatSF is specifically designed to measure the MPOD, the Company and the physicians that utilize the MapcatSF are able to observe changes in that macular protective pigment density in patients who are taking Lumega-Z. The Company encourages sites using the MapcatSF^®not required to provide the Company anonymized dataFDA with the evidence it relies on to substantiate safety or effectiveness before marketing a supplement product.

A manufacturer or distributor must notify the MPOD readings. Anecdotal reports from physicians indicate improvements in their patients such as increased visual function,FDA if it intends to market a noticeable haltdietary supplement in the progressionU.S. that contains a “new dietary ingredient.” A new dietary ingredient is an ingredient first marketed as or in a dietary supplement after October 15, 1994. The manufacturer must demonstrate to the FDA that the new ingredient is reasonably expected to be safe for use in a dietary supplement. There is no authoritative list of dietary ingredients that were marketed before October 15, 1994. Therefore, manufacturers are responsible for determining if a dietary ingredient is “new.”

Owners or responsible parties of any facilities at which dietary supplements are manufactured, packaged, labeled, or held for distribution must register the facility or facilities with FDA pursuant to the Bioterrorism Preparedness and Response Act of 2002 (“Bioterrorism Act”) before producing supplements. Manufacturers of dietary supplements also must follow current good manufacturing practice (“cGMP”) regulations. Entities that manufacture, package, label or hold dietary supplement products must follow applicable cGMP regulations. These regulations focus on practices that ensure the identity, purity, quality, strength and composition of dietary supplements. We engage with contract manufacturers to manufacture our dietary supplements.

Companies are responsible for determining that the dietary supplements they manufacture or distribute are safe, and that any representations or claims made about them are substantiated by adequate evidence to show that the claims are not false or misleading. The Federal Trade Commission (“FTC”) has the primary responsibility to regulate the advertising of foods, including dietary supplements. Under the FTC Act, all advertising claims, both express and implied, must be truthful, non-misleading, and substantiated. In practice, the FDA and FTC share jurisdiction over promotional practices and monitor the promotion and advertising of dietary supplements in multiple media forms, including TV, radio, social media (e.g., Facebook, Twitter), and the internet.

Dietary supplements also are subject to the Nutrition, Labeling and Education Act, which regulates health claims, ingredient labeling, and nutrient content claims characterizing the level of a nutrient in a product. Dietary supplements may be intended to affect the structure or function of the patient’s AMD, improvement in glare and contrast sensitivity, and stabilization and improvementhuman body. If the label of vision. No adverse effects of taking Lumega-Z havea dietary supplement contains such structure/function claims, the label must bear the disclaimer: “This statement has not been reportedevaluated by any of the physicians administering Lumega-Z to their patients.

The number of patients regularly ordering Lumega-Z has increased as new healthcare providers have begun working with the Company, with a concurrent rise in patients set on an auto-ship program for delivery every four weeks. Automatic shipment has an added benefit in that it aids physicians because it increases patient compliance in using Lumega-Z on a regular basis. The Company’s operations, to date, indicate that each MapcatSF deployed in a clinic can generate an average of 75 new customers for its Lumega-Z product over a period of approximately 90 days when a MapcatSF is deployed in a small, low volume clinic. A larger, higher volume clinic is expected to generate a larger number of patients in a shorter period of time. All of the Company’s medical food revenue is derived from a limited number of individual customers.

The National Academics of Sciences, Engineering, and Medicine projects that “every four minutes, one American will experience partial or complete loss of sight.” According to The Lancet, AMD cases in the US are projected to pass 18 million in 2017, and 20 million by 2022. AMD is the third leading cause of blindness in the world. More than 10 million people in the United States suffer from various forms of this incurable disease, according to the American Macular Degeneration Foundation. As the population ages, that number is expected to triple by 2025. Cataract patients are operated on earlier and younger. After surgery, the long-term damage from oxidative stress & high energy light exposure to the retina becomes more important to address. Protecting the retina after surgery maintains better visual outcomes for the long term. GHS is targeting this unattended market opportunity. Congress, the Food and Drug Administration,Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.” We are responsible for ensuring the Centeraccuracy and truthfulness of all product claims.

Medical Foods Regulation

The FDA is primarily responsible for Medicare & Medicaid Services and private insurance companies are focusing increased efforts on pharmacovigilance (the branch of the pharmaceutical industry which assesses and monitors the safety of drugs either in the development pipeline or which have already been approved for marketing) to measure and reduce these adverse health consequences.

The Company believes that thereregulating medical foods. A medical food is an increasing level of acceptance of medical foods as a primary therapy by patients and healthcare providers to treat pain syndromes, sleep and cognitive disorders, obesity, hypertension, and viral infection. In clinical practice, medical foods are being prescribed as both a standalone therapy and as an adjunct therapy to low doses of commonly prescribed drugs. From a regulatory standpoint, the FDA took steps in 1988 to encourage the development of medical foods by regulating this product categorydefined under the Orphan Drug Act. The term “medical food”FDCA as defined in Section 5(b) of the Orphan Drug Act is a “food which is formulated to be consumed or administered internally (by mouth)enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.” This definition was incorporated by reference into the Nutrition Labeling and Education Act of 1990.

These regulatory changes have reduced the costs and time associated with bringing medical foods to market. Until 1972, medical foods were categorized as drugs and then until 1988 as “foods for special dietary purposes.” The field of candidates for development into medical foods is expanding due to continuing advances in the understanding of the science of nutrition and disease, coupled with advances in food technology thereby increasing the number of products that can be formulated and commercialized.

The Company distributes its medical food products through E-commerce in an online store that is operated atwww.guardionhealth.com. Information about VectorVision products can be found atwww.vectorvision.com.

Medical Foods Products Industry Overview

The Company believes that the science of nutrition was long overlooked and underdeveloped. The Company believes that the sick and elderly have special nutritional needs that cannot be met by traditional adult diets. Medical nutrition has emerged as a large and attractive segment in the food industry today.

A number of diseases are associated with metabolic imbalances, and patients in treatment for such diseases have specific nutritional requirements. Some examples are ocular health, pain syndromes, insomnia, cognitive disorders, IBS, and heart disease. Many older Americans have or will develop chronic diseases that are amenable to the dietary management benefits of medical foods. Medical foods help address these diseases and conditions in a drug-free way with food-based ingredients yet are still considered a medical product that should be taken under supervision by a physician. The term “medical foods” does not pertain to all foods fed to sick patients. Medical foods are foods that are specially formulated and processed (as opposed to a naturally occurring foodstuff used in a natural state) for patients who are seriously ill or who require the product as a major treatment modality according to FDA regulations.

Medical foods consist of food-based ingredients that are part of the normal human diet and are Generally Recognized as Safe (“GRAS”) under FDA standards. Medical foods must make disease claims for which there is scientific evidence that nutrient deficiencies cannot be corrected by normal diet. Medical foods are intended for a vulnerable population suffering from a particular chronic disease and therefor have special, extra-rigorous guarantees of safety. All ingredients must be designated GRAS and used in therapeutic concentrations to address the particular nutritional needs of the patient. Medical foods are taken under the supervision of a physician or professional healthcare provider who monitors and adjusts the food ‘dosage.’ In addition, under FDA guidelines and congressionally approved laws, medical foods do not require FDA preapproval but undergo continuous FDA monitoring and approval of label claims. Even though pre-market FDA approval is not required for a medical food, the official requirements and responsibilities for the manufacturer, in terms of safety, are greater than for dietary supplements, including solid scientific support for the formula as a whole. For these reasons, medical foods have greater guarantees of efficacy. In contradistinction, dietary supplements, such as vitamins, minerals and botanicals, do not require FDA preapproval, cannot make disease claims, are intended for normal people without disease and cannot claim that they prevent, mitigate or treat a given disease. Dietary supplements do not require physician supervision and can be administered to a person that can self-administer the supplement without supervision.

Based on the advice of intellectual property counsel and regulatory affairs consultants, the Company believes that Lumega-Z is properly categorized as a medical food. While the Company believes it is unlikely the FDA would conclude otherwise, if the FDA determines Lumega-Z should not be defined as a medical food, the Company would need to relabel and rebrand that product. The Company believes there would be minimal impact on its operations and financial condition if it were required to change labeling and packaging back to that of a dietary supplement. While reclassification and the subsequent relabeling and rebranding would be an added cost to operations, it would not change the use or effectiveness of Lumega-Z, although there is a chance that certain physicians may choose not to recommend Lumega-Z to their patients or that certain consumers may choose not to buy Lumega-Z if it is not classified as a medical food.

Vision Testing Industry Overview

The Company believes that consistent, repeatable and accurate results for visual acuity testing are of paramount importance for effective eye health care and for accurately establishing and enforcing the vision performance criteria for certain professions. Variance in test lighting is a major cause of inconsistency in vision testing results. Standards for testing luminance, have been in place for more than three decades. However, recently, vision testing has evolved from the use of projection systems and charts to the use of digital displays. The Company believes that the variance in luminance provided by digital displays is large, and clinicians are now obtaining highly inconsistent results from practice to practice. Conservatively, the Company believes more than 250,000 eye care examination rooms are in use in the United States today.

The variability described above has caused the FDA and other agencies to require standardized test lighting for vision tests. Because VectorVision specializes in the standardization of vision tests, VectorVision is the only company that offers fully standardized vision testing products that ensure consistent, repeatable and highly accurate results. The CSV-1000 and ESV-3000 devices offer auto-calibrated tests to ensure the correct testing luminance and contrast levels for consistent, highly accurate and repeatable results, which is why the VectorVision instruments can detect and quantify subtle changes in vision. Consistency, repeatability and accuracy are also why the VectorVision CSV-1000 instrument is used worldwide by eye doctors in more than 60 countries to accomplish contrast sensitivity testing. For the same reasons, the Company believes that the ESV-3000 ETDRS testing device will become the worldwide standard for ETDRS visual acuity testing. The Company’s research has revealed no competing products that offers auto-calibration of ambient illumination. Competitive devices do not allow for variations in ambient light levels, resulting in variability of test results due to the environment in which the testing is performed. The CSV-1000 and ESV-3000 use self-calibrated test lighting. The self-calibrated test lighting is proprietary, and the test faces of the CSV-1000 are proprietary and the intellectual property is protected under copyright and trade secret law. Both CSV-1000 and ESV-3000 are currently sold worldwide, and the Company expects this global distribution to continue. There is a training requirement in incorporating the CSV-1000 device into clinical practice, which the Company plans to provide as part of its commercialization strategy.

Competitive Advantage and Strategy

There are no research-validated pharmaceutical solutions for slowing the progression of adult macular degeneration (“AMD”). As a result, it is necessary for physicians to recommend Age-Related Eye Disease Study (“AREDS”)-based supplements to AREDS-based AMD patients. However, more than 90% of all AREDS-based nutritional products currently on the market are in tablet, capsule and gel capsule form. As previously discussed, tablets, capsules and gel capsules have a low efficiency of absorption. For this reason, some doctors may hesitate to prescribe tablet, capsule and gel capsule form AREDS-based nutraceuticals despite the fact that these are currently the only options available to them.

The competitive landscape of supplements is crowded and confusing for physicians and patients looking to obtain an appropriate product for eye care. In October 2017, while searching walgreens.com for “AREDS,” the Company found 10 results, all of which are in tablet, capsule or gel capsule form. When searching the same website for “Eye Health Supplements” (a common search term for this category of product), the Company found 204 products, of which 196 (96%) are in tablet, capsule or gel capsule form. The same search term on cvs.com returned over 110 products. These supplement products all have varying ingredients, varying levels of similar ingredients, varying claims regarding their effects, and varying price points.

Lumega-Z is designed to address this concern. In contrast, Lumega-Z is a liquid formulated using a proprietary molecular micronization process (“MMP”) to maximize efficiency of absorption and safety and to minimize compatibility issues. The MMP is a proprietary homogenization process whereby the molecular structure of the ingredients is reduced in size to facilitate more efficient absorption in the body.

By combining the MapcatSF medical device, the newly acquired VectorVision standardized vision testing technology and Lumega-Z medical food, the Company has developed, based on Management’s knowledge of the industry, what it believes to be the only reliable three-pronged, evidence-based protocol for replenishing and restoring the macular protective pigment, increasing overall retinal health and measuring the related improvements in visual function. The MapcatSF is the first medical device to use a patented “single fixation” process and “automatic lens density correction” that produces accurate serialized data. Historically, a number of specialized densometers used by research groups within the medical community have been known to produce unreliable data; due in part to the fact that they are not Troxler-free. The Troxler effect is an optical illusion affecting visual perception where an unchanging stimulus away from a fixation point will fade away and disappear as one stares at a fixation point consistently. A device that is Troxler-free does not have this fading of images that otherwise would occur as a result of the Troxler effect. Being Troxler-free is thought to be an important function in being able to accurately complete the testing using these devices.

The MapcatSF has been installed in several teaching and ocular research facilities, such as the Illinois College of Optometry (“ICO”), the New York Eye and Ear Infirmary, and the Rosenberg School of Optometry at the University of the Immaculate Word. While these collaborative relationships help further validate the MapcatSF and Lumega-Z, these relationships are not material to the Company because none of these relationships is exclusive. There are many potential collaborative partners available. The Company is free to enter into other collaborative relationships as needed. No sales of Lumega-Z are generated directly from Illinois College of Optometry because the MapcatSF is part of its teaching curriculum and not used for direct patient care. However, the other collaborative partners, as a result of using the MapcatSF on patients, periodically put patients on Lumega-Z if a physician determines it appropriate to do so. The majority of sales of Lumega-Z primarily come from clinicians outside of these collaborative relationships.

VectorVision specializes in the standardization of vision tests, specifically, contrast sensitivity, glare testing and early treatment diabetic retinopathy study, or ETDRS, acuity. The variability in test lighting has caused the FDA and other agencies to require standardized test lighting for vision tests. Contrast sensitivity testing measures how people see in the real world. A depleted macular pigment greatly affects contrast sensitivity. Research suggests that contrast sensitivity is a better measure than standard acuity tests for real-world vision applications such as military pilots and highway driving. The Company believes that VectorVision is the only company that offers fully standardized vision testing products that ensure consistent, repeatable and highly accurate results. These qualities are why the VectorVision instruments can detect and quantify subtle changes in vision, and why the VectorVision CSV-1000 instrument is used worldwide by eye doctors in more than 60 countries to accomplish contrast sensitivity testing. On July 10, 2018, the USPTO issued US Patent No. 10,016,128, titled Method and Apparatus for Visual Acuity Testing. This patent describes an invention pertaining to automatic light calibration of the display screens used for vision testing. The Company owns this patent, and its VectorVision CSV-1000 and ESV-3000 devices each embody this invention. On July 17, 2018, the USPTO issued US Patent No. 10,022,045, also titled Method and Apparatus for Visual Acuity Testing, which describes a methodology to continuously calibrate display monitors to automatically hold display luminance constant for vision testing. This second patent also covers a methodology to compensate for other testing factors, such as room illumination and when patients view the vision test through a mirror, which is a common practice in eye doctors’ offices worldwide. The Company also owns this patent, and its VectorVision CSV-1000 and ESV-3000 devices each embody this invention.

The Company believes the CSV-1000 is the standard of care for clinical practice. There is a training requirement in incorporating the CSV-1000 device into clinical practice, which the Company plans to provide as part of its commercialization strategy.

Similarly, the Company believes that its ESV-3000 device will become the worldwide standard for ETDRS visual acuity testing. The CSV-1000 and ESV-3000 use self-calibrated test lighting. The self-calibrated test lighting is proprietary, and the test faces of the CSV-1000 are proprietary and protected intellectual property. Both CSV-1000 and ESV-3000 are currently sold worldwide, and the Company expects this global distribution to continue. The Company believes the acquisition of VectorVision, adding the CSV-1000 and ESV-3000 to its product portfolio, further establishes its position at the forefront of early detection, intervention and monitoring of a range of eye diseases.

An important part of the Company’s competitive strategy lies in combining Lumega-Z with technology to demonstrate its effects.  The Company’s proprietary MapcatSF medical device measures MOPD, thereby showing changes in macular pigment density from the use of Lumega-Z. In addition, the VectorVision CSV-1000 provides a second opportunity to baseline the vision of patients, and monitor changes in vision performance over time while administering Lumega-Z.  The VectorVision CSV-1000 is a highly accurate means of measuring and monitoring contrast sensitivity, a vision performance parameter that can be improved by increasing the level of macular pigment in the eye.

Growth Strategy

The Company believes that marketing its products is critical in ensuring its success. The Company has several marketing initiatives and will implement them according to the success and product feedback that the Company and products create. The Company will also consider acquiring other companies, product lines and intellectual property that may be complementary or supplementary as part of its future efforts to expand the business, which acquisitions could be for cash, stock or a combination thereof.

Management believes that there is a significant unmet need in everyday clinical practice to provide a vision assessment protocol that improves upon the current standard of visual acuity. Contrast sensitivity with the VectorVision CSV-1000 is a highly sensitive and repeatable method of measuring vision performance and can be utilized to monitor the vision performance of patients undergoing treatment with Lumega-Z, as well as for the general patient population. The CSV-1000 is currently the worldwide standard for contrast sensitivity testing in clinical trials, and there is a growing understanding of the importance of contrast sensitivity in general clinical practice. The Company’s intention is to penetrate the market by promotion of the CSV-1000 as the leading contrast sensitivity device available. The Company believes it can grow its business using the following sales and marketing strategies:

Sales and Marketing

Based on management’s knowledge of the industry, the Company believes that Lumega-Z is the only medical food in the ocular health space. The most analogous products on the market are dietary supplements. While the medical food category is well established and growing for certain diseases or disorders (for example, inborn errors of metabolism, metabolic syndrome, gastrointestinal disorders, and neurological disorders), there are currently no medical foods other than Lumega-Z specifically addressing ocular health. Thus, with regard to the ocular health market no such data is available regarding medical foods. The most comparable industry is dietary supplements. In an attempt to effectively illustrate the market potential for Lumega-Z, the Company has examined ocular health products in the dietary supplement market as the closest appropriate data set available. The use of dietary supplements to enhance health and well-being is a longstanding and increasing trend. According to industry sources, up to 52% of adults in the United States have reported taking nutritional supplements. Worldwide sales of supplements surpassed $132 billion in 2016. Supplementation has recently generated much interest among health professionals in a relatively new area, the prevention and slowing of the AMD epidemic.

U.S. Statistics

Worldwide Statistics

Due to an aging population, the AMD, Glaucoma and Cognitive Decline epidemics are global and growing, creating a significant market for the Company’s products.

Marketing Lumega-Z to Practitioners

In order to reach the large, expanding AMD patient population, the Company will primarily market Lumega-Z to the patients through ophthalmologists and optometrists. In the U.S. alone, there are more than 18,515 ophthalmologists and over 34,000 optometrists currently practicing. There are over 213,000 ophthalmologists worldwide. This marketing reach will be achieved through a combination of collaboration with industry-specific publishers, peer-to-peer promotion using key opinion leader clinicians, organic and paid search engine optimization and marketing, and other content-driven & educational approaches.

Marketing the CSV-1000 to Practitioners

Contrast sensitivity is currently one of the standard tests for clinical trials relating to ocular surgeries and treatments, and the CSV-1000 is considered the benchmark for these applications. In addition, there is an increasing need for functional vision assessment in everyday clinical practice, as a means of measuring the effect of disorders such as cataract and macular degeneration on the patient’s functional vision, and the impact of treatment of these conditions on the patient’s vision. The Company will concentrate its efforts on increasing the use of contrast sensitivity in everyday clinical practice, as a means of targeting the optometry and ophthalmology markets, which consists of over 34,000 and over 18,000 doctors, respectively, in the United States.

Sales Channel

Lumega-Z is a regulated medical food and therefore must be administered under the supervision of a physician or professional healthcare provider. Once the healthcare provider has determined that the patient requires Lumega-Z, they follow the following procedures:

The Company will support the clinicians by making available Online Ocular Nutrition courses to train their technicians.

Sales Force

The Company hired and trained a direct sales force in March 2018 consisting of a field-based team of account managers located in key geographical locations based on high population density areas with demographics that match the Company’s target markets. Each account manager is responsible for a defined geographical area and is expected to travel extensively to support the needs of customers. The account managers are tasked with prospecting for new accounts, closing leads generated by the Company’s marketing efforts, and generating revenue through account management activities including physician and staff training, and implementation of patient education resources. The account managers are expected to participate in national and regional trade shows and events, including supporting professional optometric and ophthalmological societies at a state level. Each account manager is assigned a quota that includes units of Lumega-Z sold, as well as sales of the MapcatSF, CSV-1000 and ESV-3000. Commissions are paid based on performance and achievement of quota.

International Expansion Strategy

Retinal diseases that include macular degeneration, glaucoma and diabetic retinopathy are not exclusive to the United States. The Company believes there is great interest internationally to find non-pharmacologic treatments for these diseases. The largest market opportunity is China where some of these diseases are at substantial levels. The Company intends to explore opportunities and channels to enter this expansive market.

Transcranial Doppler Solutions

In August 2018, the Company created a wholly owned subsidiary, Transcranial Doppler Solutions, Inc. (“TDSI”), to further the Company’s position at the forefront of early detection, intervention and monitoring of a range of eye diseases.  TDSI will be dedicated to the pursuit of early predictors resulting in, the Company believes valuable therapeutic intervention for practitioners and their patients, and additional revenues stream generated from the testing and sale of Company products to appropriate customers.  TDSI will provide a service that makes TCD (as defined below) testing convenient by being in various medical facilities. A Transcranial Doppler ultrasound (“TCD”) has been accepted as a safe, non-invasive, and lower-cost technique that uses a low-frequency transducer probe to assess intracerebral blood flow, within the brain and to the eyes. Studies have shown the ability of TCD to predict stroke risks as well as other potential cardiovascular events. TCD also plays an important role in detecting changes in the ophthalmic artery blood flow, which is important to help evaluate the course of common eye disorders. Blood velocities and intensities can be measured using TCD, which provides an effective way to determine more accurately the state of pathology in early stages of common eye disorders such as glaucoma and other eye diseases that cause visual field defects.  Published medical resources indicate a strong relationship between ocular circulation and visual function in patients with glaucoma, diabetes, and macular disease, which are the three leading causes of acquired irreversible blindness throughout the world.  A TCD is also highly repeatable, the results of which provide an effective tool for ophthalmologists to treat their patients. Through the monitoring of blood flow in the intracranial vessels, including the ophthalmic artery, the TCD results will in turn provide an evidence-based protocol for Guardion’s medical foods, including the Company’s soon to be released new GlaucoCetin^TM product. The Company is currently setting up the operations of TDSI and hopes to launch its services in upcoming quarters.

Proprietary Technology and Intellectual Property

Patents

The Company currently owns and has exclusive rights to the following patent and pending patent applications:

DOMESTIC

FOREIGN

The MapcatSF^® patent, Patent 9,486,136, describes an apparatus for use in the measurement of the optical density of the macular protective pigment in the human eye, as well as an apparatus for the use in measuring the lens optical density of a human eye. The apparatus is particularly applicable to flicker photometers, which are used to measure the macular protective pigment in the human eye. The foreign counterpart patent applications describe the same invention.

Prior to the issuance of US Patent No. 9,486,136, the Company filed a continuation application, Patent Application 15/346,010, covering new embodiments around the MapcatSF^® device. These new embodiments contain improvements related to the accuracy of intensity measurements made with the device, as well as updated features around photodiode detector calibrations.

The Lumega-Z^® patent filing, Patent Application 14/028,104, describes a daily liquid supplement for ocular and body health containing at least one of the following: lutein, zeaxanthin, meso-zeaxanthin and astaxanthin for a human subject and for nutritionally supplementing macular pigments in the human eye. The micronized nutrients in a lipid-based emulsion described in the patent application are more efficiently absorbed into the bloodstream than conventional supplement formulations resulting in higher serum levels and increased macular protective pigment.

Patent 10,016,128 describes a methodology to calibrate display monitors to automatically hold display luminance constant for vision testing. The method includes a measurement device that is placed on the peripheral areas of the display monitor and feedback software to communicate with a computer and automatically control display luminance. Manual control of luminance based on the output of the measurement device is also included. This invention is embodied in the CSV-1000 and ESV-3000 devices.

Patent 10,022,045 describes a methodology to continuously calibrate display monitors to automatically hold display luminance constant for vision testing. The method includes a measurement device that is placed on the peripheral areas of the display monitor and feedback software to communicate with a computer and automatically control display luminance. Manual control of luminance based on the output of the measurement device is also included. Calibration of the luminance provided by mirrors, if patients view the display monitors through mirrors, is also embodied in the invention. This invention is also embodied in the CSV-1000 and ESV-3000 devices.

Trade Secrets

The MapcatSF^® device employs a proprietary algorithm for correcting macular pigment optical density measurements with respect to lens density effects.  More particularly, the proprietary algorithm adjusts the photopic luminosity function for the age equivalence of the subject’s lens using a relationship disclosed by Sagawa and Takahashi (J. Opt. Soc. Am. 18, 2659-2667).  The algorithm is embedded in an integrated circuit block designed in such a way as to make it difficult to reverse engineer.

VectorVision’s CSV-1000 has proprietary testing charts that are not only copyright protected but can only be reproduced accurately by using special lithographs. These lithographs are kept secure, with very limited access, and are closely guarded trade secrets.

Trademarks

The Company utilizes trademarks on all current products and believes that having distinguishing marks is an important factor in marketing its products. The Company has three U.S. registered trademarks on the principal register at the USPTO. These marks are listed below. The Company has not sought any foreign trademark protection for its products or product candidates at this time but is evaluating whether foreign trademark protection is appropriate. U.S. trademark registrations are generally for fixed, but renewable, terms.

The Company currently owns and has exclusive rights to the following registered trademarks:

Copyrights

In addition to patent and trademark protection, VectorVision relies on copyright protection and has common law copyright protection on the testing charts contained in the CSV-1000, which includes Vision Testing Chart #1, Vision Testing Chart #2 and Vision Testing Chart #3.

Medical Foods and Medical Device Manufacturing and Sources and Availability of Raw Materials

The Company outsources the manufacturing of its medical food products and medical devices to contract manufacturers. The Company processes orders through purchase orders and invoices with each manufacturer. The Company believes that there are multiple alternative sources, suppliers and manufacturers available for its products and devices in the event of a termination or a disagreement with any current vendor.

Government Regulation

Medical Food Statutory Definition and One FDA Regulation

Under the Federal Food, Drug, and Cosmetic Act of 1938 (“FDCA”), products are regulated on the basis of their intended use. Their intended use is determined by the objective factors surrounding their use. Numerous categories and subcategories of products exist under the FDCA that could relate to the Company’s products, such as food, food additive, dietary supplement, GRAS food component, new drug, GRAS and Effective (“GRAS/E”) drug for over the counter use, and GRAS/E drug for use under the supervision of a physician. The categories overlap and products can fall within more than one category depending on their intended use.

The FDA has provided little guidance on the regulation of medical foods, as it is still a relatively new and evolving category of product under the FDCA.

The Company’s medical food products are defined and regulated by the FDA. The term medical food is a “food which is formulated to be consumed or administered enterally, or by mouth, under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.” The FDA advises that it considers the statutory definition of medical foods to “narrowly” constrain the types of products that fit within the category of food (see May 2007 Guidance, and Food Labeling; Reference Daily Intakes and Daily Reference Values; Mandatory Status of Nutrition Labeling and Nutrition Content Revision proposed rule.) This is a Final Rule and binding regulation on nutrition labeling for conventional foods.

The onlyfood. FDA regulation pertaining toregulations further describe medical foods exempts them from the nutrition labeling requirements that apply to conventional foods, but they are subject to special labeling requirements, as noted in the following excerpt:

(j) The following foods are exempt from this section or are subject to special labeling requirements:

(8) Medical foods as defined in section 5(b) of the Orphan Drug Act. A medical food is a food which is formulated to be consumed or administered enterally, or by mouth, under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation. A food is subject to this exemption only if:product that: (i) It is a specially formulated and processed product (as opposed to a naturally occurring foodstuff used in its natural state) for the partial or exclusive feeding of a patient by means of oral intake or enteral feeding by tube; (ii) It is intended for the dietary management of a patient who, because of therapeutic or chronic medical needs, has limited or impaired capacity to ingest, digest, absorb, or metabolize ordinary foodstuffs or certain nutrients, or who has other special medically determined nutrient requirements, the dietary management of which cannot be achieved by the modification of the normal diet alone; (iii) It provides nutritional support specifically modified for the management of the unique nutrient needs that result from the specific disease or condition, as determined by medical evaluation; (iv) It is intended to be used under medical supervision; and (v) It is intended only for a patient receiving active and ongoing medical supervision wherein the patient requires medical care on a recurring basis for, among other things, instructions on the use of the medical food.

Unlike regulation for drugs and for dietary supplements, there is no overall regulatory scheme for medicalMedical foods do not require approval or even a pending proposed rule, meaning that noreview by the FDA rulemaking is in progress.prior to marketing. However, a very detailed Advanced Notice of Proposed Rulemaking (“ANPR”) entitled “Regulation of Medical Foods,” was published in the Federal Register on Nov. 29, 1996 (“ANPR 1996”). This ANPR never progressedcompany must have data to a proposed rule, or through the Notice and Comment procedure, or to an eventual Final Rule (binding regulation). However, the ANPR, in conjunction with the May 2007 and August 2013 Draft Guidance still represents the FDA’s position and policy on medical foods. This ANPR was in effect withdrawn, because on April 22, 2003, the FDA published a proposal to withdraw numerous long-pending proposed rules, including this ANPR. The FDA cited as its reasons for withdrawal, first, that the subjects are not a regulatory priority, and agency resources are limited; second, the proposed rules have become outdated due to advances in science or changes in the products or the industry regulated, or changes in legal or regulatory contexts; and, third, to eliminate uncertainty, so that the FDA or the private sector may resolve underlying issues in ways other than those in the proposals. In May 2007, the FDA issued its Guidance to Industry relating to medical foods (“2007 Guidance”), presumably because the medical foods sector was growing, but it did not engage in a formal rulemaking procedure, either because it did not have the resources and/or because the medical foods category is still lower priority than drugs and medical devices. A third draft guidance was issued in August 2013 further attempting to clarify the FDA’s position on medical foods (“August 2013 Draft Guidance”). Although the guidance has not been formalized, the Company maintains compliance with this draft guidance.

Medical Food Regulatory Requirements

Overview:  Medical foods are FDA-regulated, but there is no complete set or scheme of regulations. There is no pre-market approval, or even pre-market notification required. Rather, it is the responsibility of the manufacturer and marketer to test for safety and efficacy before marketing and selling. The developer of a medical food must adhere closely to the statutory definition, and to the descriptions of a medical food in the sole FDA regulation regarding exemption from nutrition labeling, and in the 2007 Guidance and the August 2013 Draft Guidance.

Threshold Issue: The manufacturer must demonstrate that the disease or condition to be targeted, scientifically and medically, is a disease with distinctive or unique nutritional requirements. The FDA has stated that this is a “narrow category,” and that whether a product is valid for this category depends on the published medical science of the disease and its origins. The targeted disease or condition may be, or caused by, a metabolic imbalance or deficiency or the accelerated requirements for a certain nutrient caused by a disease state. The Company and its Scientific Advisory Board examineformula, when taken as directed, meets the distinctive nutritional requirements of a disease.the particular disease or condition.

Formulation: A medical food may not be a single ingredient formula. Otherwise, that product would be a dietary supplement for a nutrient deficiency. A medical food formula must go beyond a mere modification of the diet. The formula must meetWe currently consider our Lumega-Z and satisfy the distinctive nutritional requirements, not merely ameliorate the symptoms. For example, Glucosamine or MSM, or an herb’s “active” constituent may indeed help osteoarthritis. One must demonstrate that these nutrients are the distinctive nutritional requirements for osteoarthritis.

Safety: There is no particular or mandated FDA pre-market safety studies required of the formula as a whole. However, all ingredients must be either GRAS or approved food-additives. Since medical foods are typically taken with prescription drugs, the developer must assess whether any medical food/drug interactions pose a risk. Many ingredients have been determined by the FDAGlaucoCetin products to be GRAS and are listed as such by regulation. Other ingredients may achieve self-affirmed GRAS status through a panel of experts on that particular substance that author a GRAS Report. The standard for an ingredient to achieve GRAS status requires not only technical demonstration of non-toxicity and safety, but also general recognition and agreement on that safety by experts in the field. All ingredients used in the Company’s medical foods are either FDA-approved food additives or have GRAS status. The GRAS requirement for ingredients is arguably a higher safety standard than the risk/benefit analysis required for pharmaceuticals.foods. Like any evolving area, especially where no premarket approval is required, the FDA reserves the right to raise questions about the qualification of products within any category as well as the labeling and manufacturing safety of those products.

Efficacy: No particular FDA pre-market efficacy studies are required bycategory. If the FDA or by statute, similarwere to or comparabledisagree and consider our medical foods to Phase 2 & 3 trials for prescription drugs. However, a company must have databe “drugs” under the FDCA, we and our products would be subject to demonstrate that the formula, when taken as directed, meets the distinctive nutritional requirements of the particular disease.considerable additional FDA regulation.

Manufacturing: There are no GMP regulationsThe labeling for medical foods in particular. Drug GMPs are not required, nor are the relatively new dietary supplement GMPs required; onlymust comply with all applicable food GMPs are required. The manufacture of the Company’slabeling requirements, except for those specific requirements from which medical foods is outsourced in its entirety. The Company engages stateare exempt. Medical foods are exempt, for example, from the labeling requirements for nutrient content claims and health claims under the Nutrition Labeling and Education Act of the art facilities that manufacture only nutritional supplements and medical foods.

Labeling: 1990. As forwith all food labels, printing must be legible, and many required elements must be conspicuous, such as a statement of identity, which is the name of the food; the statement: “Must be administered under the supervision of a physician or professional healthcare provider;” the quantity; the ingredients listing; the name and address of the distributor, among other requirements.

Marketing: A medical food is a food product, thusAll ingredients in foods must be either generally recognized as safe (“GRAS”) or approved food-additives. Many ingredients have been determined by the FDA doesto be GRAS and are listed as such by regulation. Other ingredients may achieve self-affirmed GRAS status through a panel of experts on that particular substance that author a GRAS report. The standard for an ingredient to achieve GRAS status requires not regulate advertisementsonly technical demonstration of non-toxicity and promotional activities according tosafety, but also general recognition and agreement on that safety by experts in the pharmaceutical statutes and regulations; there is no side effects disclaimerfield. All ingredients used in our medical foods are either FDA-approved food additives or fair balancing required, as in direct to consumer (“DTC”) advertising of drugs on television. However, the FDA has a very broad definition of “labeling”; thus all promotional materials, including websites, are under the authority, monitoring and enforcement of FDA. The Federal Trade Commission (“FTC”) also has joint jurisdictionhave GRAS status.

Foods manufacturers must register with the FDA overpursuant to the Bioterrorism Act before producing foods. Manufacturers of foods also must follow cGMP regulations applicable to foods. Entities that manufacture, package, label or hold food products per a 1983 Memorandummust follow applicable cGMP regulations. These regulations focus on practices that ensure sanitary and cleanly conditions of Understanding. Thus,manufacturing facilities. We engage contract manufacturers to manufacture Lumega-Z and GlaucoCetin.

The FTC has the primary responsibility to regulate the advertising of foods. Under the FTC Act, all advertising claims, both express and implied, must be true, accurate, well-substantiated,truthful, non-misleading, and not misleading.substantiated.

Enforcement: Enforcement by the regulators is post-market, mostly via annual FDA inspections of food manufacturing facilities, including packaging, distribution facilities, and fulfillment houses, as well as the manufacturer.houses. The FDA and FTC also gathers material at trade shows and conferences and examines websites. The FTC has joint jurisdiction,review company websites and performs sophisticated Internet searches, both randomly and at the request of the FDA or of a competitor.social media accounts.

Medical Device Regulatory RequirementsHealthcare Laws and Regulations

To fall within the purview of the FDA, a product must first meet the definition of a medical device, whereby it is then subject to regulation before and after it is marketed. Section 201(h) of the FDCA defines a device as “an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is ... intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.” If the product in question is not a medical device, then no regulation applies. If it is a medical device, then one must evaluate applicable regulation.

Since 1976, the FDA’s paradigm has categorized medical devices in three distinct classes based on the potential health risks to the public – Class I, Class II, and Class III. Medical devices are assigned a classification based on the level of control needed in order to provide the FDA reasonable assurance of the product’s safety and effectiveness. If a device represents a very low risk of injury, it is considered Class I and does not require any premarket approval. While most Class I devices are exempt from premarket notification requirements and regulations for good manufacturing practices, there are some general controls that companies must conduct such as registering the company with the FDA, listing the device, paying an annual registration fee and tracking device activity.

Devices that present an intermediate level of risk of injury to people are considered Class II. The FDA’s perspective is that for Class II devices “general controls alone are insufficient to assure safety and effectiveness.” In addition to general controls, Class II devices also require special controls such as specified content on labels, adherence to performance standards and surveillance of the product in the marketplace. Some medical devices are also subject to a “Premarket Notification” under Section 510(k) of the FDCA. Most Class I and some Class II devices are exempt from the 510(k) Premarket Notification requirement. If a Class II device is subject to the 510(k) requirement, the manufacturer must file a premarket notification with the FDA to demonstrate that the device is “substantially similar” to another Class II device already on the market. Establishing substantial similarity provides the FDA reasonable assurance that the device is safe and effective.

High risk devices are Class III. These are devices that either sustain human life or present an unreasonable risk of injury to humans. Because of the risks involved, the FDA does not believe that general or special controls are sufficient to assure safety and effectiveness. The FDA requires general controls and premarket approval (“PMA”) for Class III devices.

VectorVision is registered with the FDA and the CSV-1000 and the ESV-3000 medical devices are listed with the FDA as Class I medical devices. As Class I medical devices, the CSV-1000 and the ESV-3000 are safe medical devices each with a very low potential risk of injury to a patient. These devices do not require any premarket approval.

With the assistance of regulatory affairs consultants, the Company has determined the relevant predicate device for the MapcatSF is the MPS II, the applicable product code for the MapcatSF is HJW and the applicable Code of Federal Regulation is 886.1050. The FDA has determined that this particular predicate device, and related product code, is a Class I medical device. Based on this, the Company believes the MapcatSF is correctly classified as a Class I medical device, is a safe medical device with a very low potential risk of injury to a patient and does not require any premarket approval.

Stark Law

Congress enacted significant prohibitions against physician self-referrals in theThe Omnibus Budget Reconciliation Act of 1993.1993 prohibits certain physician self-referrals. This law and its supporting regulations, which have been amended and expanded substantially, are commonly referred to as the “Stark Law,” and prohibit a physician from making any referral of a Stark Designated Health Service (“DHS”) to an entity that furnishes or bills for DHS (a “DHS Entity”) and with which the physician has any kind ofa financial relationship, and prohibits DHS Entities from billing for any DHS that is referred, unless all of the requirements of a statutory or regulatory exception are met. Stark covered DHS include both outpatient prescription drugs and diagnostic testing that are reimbursable by Medicare or Medicaid. Many states have similar laws (“State Self-Referral Prohibitions”), some of which can apply to all payors and not just governmental payors. While the Company believes that its arrangements with its customers

At present, neither Lumega Z nor GlaucoCetin are in compliance with the federal and any state Stark Laws, the Stark Laws present different levels of risks as to the Company’s two lines of business: (1) sale of the Company’s medical food, Lumega-Z, and medical device, the MapcatSF; and (2) the Company’s performance of TCD testing.

1. Medical Food, Lumega-Z, and Medical Device, the MapcatSF. These products are neitheroutpatient prescription drugs nor are they reimbursable under any federal program at present. Theprogram. Further, we do not furnish any DHS to patients, nor bill any DHS to any federal program. We believe that the federal Stark Law is thus inapplicable. Further, the Company’s believeswe believe that these productsState Self-Referral Prohibitions are also not covered under any potentially applicable state Stark Laws. The federal Stark Law, however, includes an exceptionunlikely to apply for the provision of in-office ancillary services, including a physician’s dispensing of outpatient prescription drugs, provided that the physician meets specified requirements.similar reasons. To the extent that the products might become reimbursable under a federal program, or otherwise become covered under the Stark Law, the Company believeswe believe that the physicians who use the Company’srecommend our medical device, the MapcatSF, or recommend its medical food,foods, Lumega-Z and GlaucoCetin, to their patients are aware of theseStark Law and State Self-Referral Prohibition requirements. However, the Company doeswe do not monitor their compliance and hashave no assurance that the physicians are in material compliance with the Stark II.Law or State Self-Referral Prohibitions. If it were determined that the physicians who use the Company’s medical device or prescribe medical foods purchased from the Companyus were not in compliance with the Stark II,Law or State Self-Referral Prohibitions, it could potentially have an adverse effect on the Company’sour business, financial condition and results of operations.

2. The TCD Testing Business. The TCD tests performed by the Company can be reimbursed by Medicare or Medicaid and otherwise constitute a Stark covered DHS, which include diagnostic testing. Moreover, in conducting TCD tests, the Company will be using space provided by the ordering physician. As a result, the Stark Law fully applies to the TCD Testing Business, as the ordering physician has a financial relationship with the Company, through the Company’s use of the physician’s space (for which fair market value rent must be charged), and the physician is referring a DHS – the TCD tests – to the Company. In addition, the Company will be enrolling the ordering physicians in clinical research trials and compensating the physicians for their participation in the trials, thereby creating an additional Stark cognizable financial relationship between the parties.

Anti-Kickback Statute and HIPAA Criminal Laws

The federal anti-kickback statute (the “AKS”) applies to Medicare, Medicaid and other state and federal programs. AKS prohibits the solicitation, offer, payment or receipt of remuneration in return for referrals orof the purchase, or in return for recommending or arranging for the referral or purchase, of goods, including drugs, covered by the federal health care programs. At present, the Company doeswe do not participate in any federal programs and itsour products are not reimbursed by Medicare, Medicaid or any other state or federal program. The AKS is a criminal statute with criminal penalties, as well as potential civil and administrative penalties. The AKS, however, provides a number of statutory exceptions and regulatory “safe harbors” for particular types of transactions. Many states have similar fraud and abuse laws and their own anti-kickback laws, some of which can apply to all payors, and not just governmental payors. While the Company believeswe believe that it iswe are in material compliance with both federal and state AKS laws, the AKS laws present different levels of risks as to the Company’s two lines of business: (1)our sale of the Company’sour medical food,foods, Lumega-Z and medical device, the MapcatSF; and (2) the Company’s performance of TCD testing.GlaucoCetin.

1. Medical Food, Lumega-Z, and Medical Device, the MapcatSF. At present, the Company’sour products are not reimbursable under any federal program. If, however, that changes in the future and it were determinedwe determine that the Company waswe are not in compliance with the AKS, the Companywe could be subject to liability, and itsour operations could be curtailed. Moreover, if the activities of itsour customers or other entity with which the Company haswe have a business relationship were found to constitute a violation of the AKS and the Company,we, as a result of the provision of products or services to such customer or entity, were found to have knowingly participated in such activities, the Company could be subject to sanctions or liability under such laws, including civil and/or criminal penalties, as well as exclusion from government health programs. As a result of exclusion from government health programs, neither products nor services could be provided to any beneficiaries of any federal healthcare program.

2. The TCD Testing Business. The TCD tests performed by the Company can be reimbursed by Medicare or Medicaid. As a result, the federal AKS (and potentially any state anti-kickback law) will be implicated to the extent the financial relationships between the physician customers and the Company are not set at a fair market value amount unrelated to the volume or value of TCD tests being ordered. If the Company’s arrangements with ordering physicians were found to constitute a violation of the federal AKS, or any applicable state anti-kickback law, we could be subject to sanctions or liability under such laws, including civil and/or criminal penalties, as well as exclusion from government health programs. As a result of exclusion from government health programs, neither products nor services could be provided to any beneficiaries of any federal healthcare program.

HIPAA Compliance and Privacy Protection

HIPAA established comprehensive federal protection for the privacy and security of health information. The HIPAA standards apply to three types of organizations, or “Covered Entities”: (1) health plans, (2) health care clearing houses, and (3) health care providers who conduct certain health care transactions electronically. Covered Entities must have in place administrative, physical and technical standards to guard against the misuse of individually identifiable health information. Additionally, some state laws impose privacy protections more stringent than HIPAA’s. There are also international privacy laws, such as the European Data Directive, that impose restrictions on the access, use, and disclosure of health information. All of these laws may impact the Company’s business in the future.

HITECH Act

The Health Information Technology for Economic and Clinical Health (“HITECH”) Act promotes the adoption and meaningful use of health information technology. The HITECH Act addresses the privacy and security concerns associated with the electronic transmission of health information, in part, through several provisions that strengthen the civil and criminal enforcement of the HIPAA rules.

Physician Sunshine Act

Health Care Reform Law provision, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, has imposed new reporting and disclosure requirements for drug and device manufacturers with regard to payments or other transfers of value made to certain practitioners (including physicians, dentists and teaching hospitals), and for such manufacturers and for group purchasing organizations, with regard to certain ownership interests held by physicians in the reporting entity. The Centers for Medicine and Medicaid Services (“CMS”) publishes information from these reports on a publicly available website, including amounts transferred and physician, dentist and teaching hospital identities.

Under the Physician Payment Sunshine Act applicable organizations are required to collect and report detailed information regarding certain financial relationships they have with physicians, dentists and teaching hospitals. The Physician Payment Sunshine Act preempts similar state reporting laws, although some companies may also be required to report under certain state transparency laws that address circumstances not covered by the Physician Payment Sunshine Act, and some of these state laws, as well as the federal law, are ambiguous. Because the Company’s medical devices are Class I, not subject to premarket approval, and not reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program the Company believes it is not currently subject to the Physician Payment Sunshine Act requirements. As the Company pursues commercialization of the MapcatSF^® and considers introducing new products, these requirements will be reevaluated to determine their applicability to the Company’s activities.

The Federal False Claims Act

The Federal False Claims Act provides for the imposition of extensive financial penalties (including treble damages and fines of over $22,000 for every false claim) if a provider submits false claims to any governmental health program either knowingly or in reckless disregard or in deliberate ignorance of the truth or falsity of the claims at issue. Liability under the False Claims Act can arise from patterns of deficient documentation, coding and billing, as well as for billing for services that are deemed not to have been medically necessary for the treatment of the patient. Many states have their own False Claims Acts as well. The Company will be

To the extent we were  billing governmental health care programs, for the TCD testing, and the False Claims Act is thusmay potentially be applicable to the Company’ssuch operations. The Company is putting in placeWe put a fraud and abuse compliance program in place that iswas designed to ensure that the Company’sour documentation, coding and billing for TCD tests arewere accurate and compliant. Any patterns of uncorrected deficiencies in documenting, coding and billing, for TCD tests, however, may result in fines and other liabilities, which may adversely affect the Company’sour results of operations.

State Regulatory Requirements

Each state has its own regulations concerning physician dispensing, restrictions on the Corporate Practice of Medicine (“CPOM”), anti-kickback and false claim regulations. In addition, each state has a board of pharmacy that regulates the sale and distribution of drugs and other therapeutic agents. Some states require that a physician obtain a license to dispense prescription products. When considering the commencement of business in a new state, the Company consultswe consult with healthcare counsel regarding the expansion of operations and utilizesutilize local counsel when necessary.

Many states prohibit or otherwise regulate under CPOM rules the extent to which non-licensed personnel may be involved in the practice of medicine or otherwise employ licensed personnel. Related state rules further limit the extent to which fees for professional services may be shared or “split” between parties. Under the TCD Testing line of business, such rules in some states my impact the Company’s relationship with the radiologists who will be reading and interpreting the results of the TCD tests, and thereby providing the “professional component” of such tests. The Company is structuring its financial and billing relationships with such radiologists to be in compliance with applicable state rules. Failure to comply with state CPOM and fee splitting rules, however, may result in fines and other liabilities, which may adversely affect the Company’s results of operations.

Other United States Regulatory Requirements

In the United States, the research, manufacturing, distribution, sale, and promotion of drugfood and biologicalmedical devices products are subject to regulation by various federal, state, and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition, and other laws. In addition, the Companywe may be subject to federal and state laws requiring the disclosure of financial arrangements with health care professionals.

Foreign Regulatory Requirements

The CompanyWe may eventually be subject to widely varying foreign regulations, which may be quite different from those of the FDA, governing clinical trials, product design, manufacturing, labeling, product registration and approval, and sales. Whether or not FDA approval has been obtained, generally the Companywe must obtain a separate approvalauthorization for a product by the comparable regulatory authorities of foreign countries prior to the commencement of product marketing in those countries. In certain countries, regulatory authorities also establish pricing and reimbursement criteria. The authorization or approval process varies from country to country,country.

Employees

As of March 25, 2022, we, including our subsidiaries, had a total of 13 full-time employees. and no part-time employees. We are not a party to any collective bargaining agreements. We believe that we maintain good relations with our employees.

Science Advisory Board

Our research and development efforts are shaped by our Science Advisory Board, a product development and research team composed of industry experts in clinical nutrition. This team is committed to revealing and validating the connections between health and nutrition and then developing products based on these findings. Their joint goal is the integration of a medical model incorporating nutritional therapy into clinical practice.

In addition to developing products based on scientific studies in the public domain, members of our Science Advisory Board conduct and publish their own evidence. Their expertise and the time may be longer or shorter than that required for FDA approval.evidence they develop guide the formulation of all of our products.

Corporate History

Guardion Health Sciences, Inc. was formed under the name P4L Health Sciences, LLC in December 2009 in California as a limited liability company. The CompanyWe changed itsour name to Guardion Health Sciences, LLC in December 2009. In June 2015, the Companywe converted into a Delaware “C” corporation.

On January 30, 2019,October 29, 2020, our stockholders approved an extension of the Companypreviously granted discretionary authority of the board of directors to amend our certificate of incorporation to effectuate a reverse stock split, at a specific ratio within a range of no split to a maximum of a one-for-thirty (1-for-30) split, with the exact ratio to be determined by our board of directors in its sole discretion. The former authorization, which expired on December 5, 2020, was extended through October 29, 2021.

On March 1, 2021, we filed a Certificate of Amendment to itsour Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effectuate a one-for-twoone-for-six (1:2)6) reverse stock split (the “Reverse Stock Split”) of itsour common stock without any change to itsour par value. Proportional adjustments for the Reverse Stock Split were made to the Company’sour outstanding common stock, stock options, and warrants as if the split occurred at the beginning of the earliest period presented in this Annual Report.Report on Form 10-K.

Employees

As of February 8, 2019, the Company had a total staff of thirteen, consisting of four officers and nine full-time employees. VectorVision had a staff of three, consisting of one officer, one full-time employee and one part-time employee, and Transcranial Doppler Solutions, Inc. had a staff of four, consisting of three officers and one full-time employee.

ITEM 1A. RISK FACTORS

Investing in the Company’s common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other information included or referred to in this Form 10-K, before purchasing shares of the Company’s common stock. There are numerous and varied risks that may prevent the Company from achieving its goals. If any of these risks actually occurs, the business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of the Company’s common stock could decline and investors in the Company’s common stock could lose all or part of their investment.

Risks Related to the Company’s Business

As the Company has incurred recurring losses and negative cash flows since ourits inception, there is no assurance that the Company will be able to continue as a going concern absentreach and sustain profitability. If it cannot reach and sustain profitability, the Company will be required to secure additional financing, which the Company may not be able to obtain on favorable terms or at all.

The Company has incurred net losses since inception in 2009 and the Company cannot be certain if or when the Company will produce sufficient revenue from our operations to support our costs. The Company had a net loss of $7,767,407$24,745,009 for the year ended December 31, 20182021 and a net loss of $5,305,169$8,571,657 for the year ended December 31, 2017 leading to2020. The Company had an accumulated deficit of $34,633,363 and $26,865,956$78,802,072 as of December 31, 2018 and2021. At December 31, 2017, respectively.  The2021, the Company has utilizedhad cash and short term investments on hand of $9,089,550 and working capital of $10,910,139. In addition, the Company completed an offering in operating activitiesFebruary 2022 that generated additional net cash proceeds of $4,173,831 duringapproximately $10 million. Notwithstanding the net loss for 2021, management believes that its current cash balance is sufficient to fund operations for at least one year ended December 31, 2018 and $3,403,696 duringfrom the year ended December 31, 2017, The Company expects to continue to incur net losses and negative operating cash flows indate the near-term.Company’s 2021 financial statements are issued.

The Company will continue to incur significant expenses for commercialization activities related to the commercialization of its lead product Lumega-Z, the MapcatSF medical device, the CSV-1000 and ESV-3000 devices,products and with respect to its efforts to build its infrastructure, and expand its operations. The Company is contemplating a public offering of shares ofoperations, and execute on its common stock and has applied to list its common stock on the Nasdaq Capital Market under the symbol “GHSI” (the “Public Offering”). The Company believes that the net proceeds from the Company’s contemplated Public Offering, together with its existing cash and cash equivalents will allow it to fund its operating plan through at least the next twelve months. The Company has based these estimates, however, on assumptions that may prove to be wrong, and the Company could spend its available financial resources much faster than it currently expects and may need to raise additional funds sooner than it anticipates. There can be no assurances that the Company will complete the Public Offering.business plans.

Even if profitability is achieved in the future, the Company may not be able to sustain profitability on a consistent basis. The Company expects to continue to incur substantial losses and negative cash flow from operations for the foreseeable future. The Company’s financial statements included in this Annual Reportfor the year ended December 31, 2021 have been prepared assuming that the Company will continue as a going concern. The Company’s auditors have made reference to the substantial doubt as to our ability to continue as a going concern in their audit report on its audited financial statements for the year ended December 31, 2018. Because the Company has been issued an opinion by its auditors that substantial doubt exists as to whether the Company can continue as a going concern, it may be more difficult for the Company to attract investors. The Company’s future is dependent upon its ability to obtain financing and upon future profitable operations.

The Company does not have any credit facilities as a source of present or future funds, and there can be no assurance that the Company will be able to raise sufficient additional capital on acceptable terms, or at all. The Company may seek additional capital through a combination of private and public equity offerings and debt financings. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of ourthe Company’s stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting the ability to take specific actions, such as incurring additional debt, couldwould increase expenses and may require that Company assets secure such debt. Moreover, any debt the Company incur must be repaid regardless of our operating results.

The Company’s ability to obtain additional financing in the future will be subject to a number of factors, including but not limited to, market conditions, operating performance and investor sentiment. If the Company areis unable to raise additional capital when required or on acceptable terms, the Company may have to significantly delay, scale back or discontinue ourits operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on its business, stock price and relationships with third parties, at least until additional funding is obtained. If the Company does not have sufficient funds to continue operations, the Company could be required to seek other alternatives that would likely result in ourthe Company’s stockholders losing some or all of their investment.

The Company’s future success is largely dependent on the successful commercialization of Lumega-Z^®, the MapcatSF^® medical device, the CSV-1000 and ESV-3000 testing devices, and the successful integration of VectorVision into the Company’s business.

The future success of the Company’s business is largely dependent upon the successful commercialization of its medical food, Lumega-Z, and its medical device, the MapcatSF and the VectorVision CSV-1000 and ESV-3000 testing devices. The Company is dedicating a substantial amount of its resources to advance Lumega-Z and certain resources to advance MapcatSF as aggressively as possible. If the Company encounters difficulties in the commercialization of Lumega-Z or the MapcatSF, the Company will not have the resources necessary to continue its business in its current form.products. If the Company is unable to establish and maintain adequate sales, marketing and distribution capabilities or enter into or maintain agreements with third parties to do so, it may be unable to successfully commercialize its products. The Company believes it is creating an efficient commercial organization, taking advantage of outsourcing options where prudent to maximize the effectiveness of its commercial expenditures. However, it may not be able to correctly judge the size and experience of the sales and marketing force and the scale of distribution necessary to be successful. Establishing and maintaining sales, marketing, and distribution capabilities areis expensive and time-consuming. Such expenses may be disproportionate compared to the revenues the Company may be able to generate on sales of Lumega-Z or licensing fees or sales of the MapcatSF device or the CSV-1000 and ESV-3000 testing devices.from sales. If this occurs, it will have an adverse impact on the Company’s operations and its ability to fund future development and commercialization efforts.

The COVID-19 global pandemic has and may continue to adversely impact the Company’s business, including the commercialization of the Company’s products, supply chain, clinical trials, liquidity and access to capital markets and business development activities.

In March 2020, the World Health Organization characterized COVID-19 as a pandemic. The President of the United States declared the COVID-19 pandemic a national emergency and many states and municipalities in the Unites States announced aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing “shelter-in-place” orders which direct individuals to shelter at their places of residence (subject to limited exceptions). The effects of government actions and the Company’s policies and those of third parties to reduce the spread of COVID-19 may negatively impact productivity and the Company’s ability to fund any future development. 

The Company may failmarket and sell its products, cause disruptions to realize all of the anticipated benefits of the VectorVision acquisition or those benefits may take longer to realize than expected. The Company may also encounter significant difficulties in integrating VectorVision into the existing businessits supply chain and VectorVision may underperform relative to the Company’s expectations.

The Company’s ability to realize the anticipated benefits of the VectorVision acquisition will depend, to a large extent, onimpair its ability to integrate the business of VectorVision with its legacy business, which may be a complex, costly and time-consuming process. The Company may be required to devote significant management attention and resources to integrate the VectorVision business practices into its existing operations. The integration process may disruptexecute its business development strategy. These and if implemented ineffectively, could restrict the realization of the full expected benefits of the acquisition. The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the VectorVision acquisition could cause an interruption of, or a loss of momentumother disruptions in the Company’s operations and the global economy could negatively impact the Company’s business, operating results and financial condition.

The commercialization of the Company’s products may be adversely affectimpacted by COVID-19 and actions taken to slow its spread. For example, patients may postpone visits to retailers, and healthcare provider facilities, certain healthcare providers may temporarily close their offices or restrict patient visits, healthcare provider employees may become generally unavailable and there could be disruptions in the operations of payors, distributors, logistics providers and other third parties that are necessary for the Company’s products to be recommended and administered to patients.

Quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business financial conditionoperations could occur, related to COVID-19 or other infectious diseases could impact personnel at third-party manufacturing facilities upon which the Company relies, or the availability or cost of materials, which could disrupt the supply chain for the Company’s products.

Moreover, the Company has been experiencing supply chain constraints due to the COVID-19 pandemic. These constraints began in December 2021 and have continued into 2022. These constraints have impacted the Company’s ability to obtain inventory to fulfill customer orders for its Viactiv branded products and may continue to impact the Company’s ability to fulfill customer orders going forward which would have a material adverse effect on the Company’s business and results of operations.

In addition, The Company continues to experience challenges to meet customer demands, largely because of broad-based shortages in suppliers’ labor which impact the integrationavailability of VectorVision may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customers and other business relationships, and diversion of management’s attention. Additional integration challenges may include, among other things:

The spread of COVID-19 and actions taken to reduce its spread may also materially affect the Company economically. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If the equity and credit markets continue to deteriorate, it may make any additional debt or equity financing more difficult, more costly or more dilutive. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity and financial position or the Company’s business development activities.

The extent to which the COVID-19 pandemic may impact the commercialization of the Company’s products, supply chain, access to capital and business development activities, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the pandemic, the duration of the pandemic and the efforts by governments and business to contain it, business closures or business disruptions and the impact on the economy and capital markets.

The Company has limited experience in developing medical foodsdietary supplements and medical devices,foods and it may be unable to commercialize some of the products and services it develops.develops or acquires.

Development and commercialization of medical foodsdietary supplements and medical devicesfoods involves a lengthy and complex process. The Company has limited experience in developing products and has only onea few commercialized medical food productproducts on the market, Lumega-Z. In addition, no one has ever developed or commercialized a medical device like the MapcatSF. The Company cannot assure you that it is possible to further develop or successfully commercialize the MapcatSF or that it will be successful in doing so. While the CSV-1000 and ESV-3000 visual acuity testing devices are commercialized,market. Furthermore, there is no guarantee that theyany newly developed products will continue to be marketable or enjoythat the Company will achieve commercial success.success with any new products or product lines.

Even if the Company develops or acquires products for commercial use, these products may not be accepted by the consumer, or medical and pharmaceutical marketplaces or be capable of being offered at prices that will enable the Company to become profitable. The Company cannot assure you that its products will be approved by regulatory authorities, if required, or ultimately prove to be useful for commercial markets, meet applicable regulatory standards, or be successfully marketed.

The Company’s ongoing investment in new businesses and new products, services, and technologies is inherently risky, and could disrupt its current operations.

The Company has invested and expects to continue to invest in new businesses, products, services, and technologies. The expansion into the transcranial doppler testing businessis a reflection of its ongoing efforts to innovate and provide useful products and services. Such endeavors involve significant risks and uncertainties, including insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with these new investments, inadequate return of capital on the Company’s investments, distraction of management from current operations, and unidentified issues not discovered in its due diligence of such strategies and offerings that could cause the Company to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities. Because these new ventures are inherently risky, no assurance can be given that such strategies and offerings will be successful and will not adversely affect the Company’s reputation, financial condition, and operating results.

The Company and its suppliers and manufacturers are subject to a number of existing laws, regulations and industry initiatives and the regulatory environment of the healthcare industry is continuing to change. If it is determined that the Company or its suppliers or manufacturers are not in compliance with the laws and regulations to which they are respectively subject, the Company’s business, financial condition and results of operations may be adversely affected.

As a participant in the healthcare industry, the Company’s operations and relationships, and those of the Company’s customers, are regulated by a number of federal, state, local, and foreign governmental entities, and the Company’s products must be capable of being used by its customers in a manner that complies with those laws and regulations. Because of its business relationships with physicians and professional healthcare providers, and since its product, Lumega-Z is believed to be a medical food and the MapcatSF and the CSV-1000 and ESV-3000 are medical devices, a number of regulations are implicated. For example, from the FDA’s perspective, a drug cures, treats, or mitigates the effects or symptoms of a specific disease. A medical food manages a specific disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation. While the Company believes Lumega-Z is a medical food, if the FDA determines Lumega-Z to be a drug, the Company and the product would be subject to considerable additional FDA regulation. Similarly, while the Company believes the MapcatSF is a safe medical device, with a very low potential risk of injury to a patient, the Company believes the MapcatSF is correctly classified as a Class I medical device, which does not require any premarket approval. The CSV-1000 and ESV-3000 are currently classified with the FDA as Class I medical devices. If, however, the FDA were to determine that the MapcatSF, the CSV-1000 or ESV-3000 is a Class II medical device, the Company and the particular product or products would be subject to considerable additional regulatory requirements.

In addition, the Company cannot anticipate how changes in regulations or determinations by regulatory agencies may evolve. Thus, application of many foreign, state and federal regulations to the Company’s business operations is uncertain. Further, there are federal and state fraud and abuse laws, including anti-kickback laws and limitations on physician referrals and laws related to off-label promotion of prescription drugs that may or may not be directly or indirectly applicable to the Company’s operations and relationships or the business practices of its customers. It is possible that a review of its business practices or those of its customers by courts or regulatory authorities could result in a determination that may adversely affect the Company. In addition, the healthcare regulatory environment may change in a way that restricts existing operations or growth. The healthcare industry is expected to continue to undergo significant changes for the foreseeable future, which could have an adverse effect on the Company’s business, financial condition and results of operations. The Company cannot predict the effect of possible future legislation and regulation.

The Company may be subject to fines, penalties, injunctions and other sanctions if it is deemed to be promoting the use of its products as a drug.

The Company’s business and future growth depend on the development, use and ultimate sale of products that are subject to FDA regulation, clearance and approval. Under the U.S. Federal Food, Drug, and Cosmetic Act and other laws, the Company is prohibited from promoting its products for treatment of a condition or disease. This means that the Company may not make claims about the usefulness or effectiveness or expected outcome of use of its products for any particular condition or disease and may not proactively discuss or provide information on the use of its products, except as allowed by the FDA.

There is a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of our sales and marketing activities may constitute the promotion of our products for use as a drug in violation of applicable law. The Company also faces the risk that the FDA or other regulatory authorities might pursue enforcement based on past activities that the Company discontinued or changed, including sales activities, arrangements with institutions and doctors, educational and training programs and other activities.

Government investigations are typically expensive, disruptive, burdensome and generate negative publicity. If its promotional activities are found to be in violation of applicable law or if the Company agrees to a settlement in connection with an enforcement action, the Company would likely face significant fines and penalties and would likely be required to substantially change its sales, promotion and educational activities. In addition, were any enforcement actions against the Company or its senior officers to arise, the Company could be excluded from participation in U.S. government healthcare programs such as Medicare and Medicaid.

Lumega-Z may not qualify as a medical food as defined by the FDA.

If the FDA makes a determination that Lumega-Z should not be defined as a medical food (and does not qualify as a drug), the Company would need to relabel and rebrand that product. While reclassification and the subsequent relabeling and rebranding would be an added cost to operations, it would not change the use or effectiveness of Lumega-Z. Although, management believes it is unlikely the FDA would make such a determination, there is a chance that certain physicians may choose not to recommend Lumega-Z to their patients or that certain consumers may choose not to buy Lumega-Z if it is not classified as a medical food. While there is no insurance coverage for Lumega-Z as a medical food, if insurance companies would otherwise pay for Lumega-Z because of it being a medical food, a determination by the FDA that Lumega-Z should not be defined as a medical food could limit or eliminate such potential insurance coverage which might adversely impact the sales of Lumega-Z.

The Company’s products may cause undesirable side effects or have other properties that could delay or prevent any required regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval.

If the Company’s products, including Lumega-Z, are associated with undesirable side effects or have characteristics that are unexpected, the Company may need to abandon its development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Any serious adverse or undesirable side effects identified during the development of its products, could interrupt, delay or halt commercialization and/or could result in the additional regulatory requirements by the FDA or other regulatory authorities, and in turn prevent the Company from commercializing its product candidates and generating revenues from their sale.

A key part of the Company’s business strategy is to establish collaborative relationships to commercialize and develop its product candidates.products. The Company may not succeed in establishing and maintaining collaborative relationships, which may significantly limit its ability to develop and commercialize its products successfully, if at all.

A key part of the Company’s business strategy is to establish collaborative relationships to commercialize and fund development of its product candidates. The Company is currently a party to several collaborative relationships. The Illinois College of Optometry, for example, has included the MapcatSF prototype in its curriculum to instruct students on how to measure the macular pigment. The New York Eye and Ear Infirmary is currently evaluating Lumega-Z on glaucoma patients. The Rosenberg School of Optometry at the University of the Immaculate Word is conducting research on patients with a MapcatSF prototype. Moreover, the Company’s Science Advisory Board, each member of whom is displayed on the Company website, includes world renowned experts in macular carotenoids who are developing the peer review markets by conducting research and furthering the understanding of the relevance of the macular pigment in ocular health. The Company’s Medical Advisors includes thought-leading clinicians in retina, glaucoma and the anterior segment of the eye, providing guidance on understanding the clinical applications of Lumega-Z and the MapcatSF and understanding the market opportunities and assisting in driving our strategic goals. However, there is no guarantee that the Company will be successful in negotiating similar collaborative relationships with regard to the CSV-1000 and ESV-3000.products.

While the Company believes that these collaborative relationships help further validate the MapcatSF and Lumega-Z,its products, these relationships are not material to the Company because none of these relationships isare not exclusive, there are many potential collaborative partners available, and the Company and each collaborator is free to enter into other collaborative relationships as needed. No sales of Lumega-Z are generated directly from Illinois College of Optometry because the MapcatSF is part of its teaching curriculum, not used for direct patient care. However, the other collaborative partners, as a result of using the MapcatSF on patients, periodically put patients on Lumega-Z if a physician determines it appropriate to do so. The majority of sales of Lumega-Z primarily come from clinicians outside of these collaborative relationships.

The Company may not be able to negotiate collaborations on acceptable terms, if at all, and if it does enter into collaborations, these collaborations may not be successful. The Company’s current and future success depends in part on its ability to enter into successful collaboration arrangements. If the Company is unable to establish and maintain collaborative relationships on acceptable terms or to successfully transition terminated collaborative agreements, the Company may have to delay or discontinue further development of one or more of its product candidates, undertake development and commercialization activities at its own expense or find alternative sources of capital. Consequently, if it is unable to enter into, maintain or extend successful collaborations, the Company’s business may be harmed.

The Company’s long-term success may depend upon the successful development and commercialization of products other than Lumega-Z, the MapcatSF medical device and the CSV-1000 and ESV-3000 testing devices.its current products.

The Company’s long-term viability and growth may depend upon the successful development and commercialization of products other than Lumega-Z and the MapcatSF.its current line of products. Product development and commercialization is very expensive and involves a high degree of risk. Only a small number of research and development programs result in the commercialization of a product. Product development is a complex and time-consuming process. If the Company fails to adequately manage the research, development, execution and regulatory aspects of new product development it may fail to launch new products altogether.

Government agencies may establish usage guidelines that directly apply to the Company’s products or proposed products or change legislation or regulations to which the Company is subject.

Government usage guidelines typically address matters such as usage and dose, among other factors. Application of these guidelines could limit the use of the Company’s products and products that the Company may develop. In addition, there can be no assurance that government regulations applicable to the Company’s products or proposed products or the interpretation thereof will not change and thereby prevent the marketing of some or all of its products for a period of time or permanently. The FDA’s policies may change and additional government regulations may be enacted that could modify, prevent, delay or change the regulatory approval required of the Company’s products. The Company cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the U.S. or in other countries.

Patent litigation is common inthe the pharmaceutical and biopharmaceutical industries. Any litigation or claim against the Company may cause it to incur substantial costs and could place a significant strain on its financial resources, divert the attention of management from its business and harm the Company’s reputation.

While the Company is not a pharmaceutical or a biopharmaceutical company, as a health sciences company, the Company’s medical foods or its medical devicesproducts may come into competition with products in the medical foods and related industries, such as pharmaceuticals, biologics or dietary supplements. There has been substantial litigation in the pharmaceutical and biopharmaceutical industries with respect to the manufacture, use and sale of new products that are the subject of conflicting patent rights. For the most part, these lawsuits relate to the validity, enforceability and infringement of patents. The Company currently relies upon and expects it willto continue to rely upon patents, trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain its competitive position. The Company may find it necessary to initiate claims to defend its intellectual property rights as a result. Other parties may have issued patents or be issued patents that may prevent the sale of the Company’s products or know-how or require the Company to license such patents and pay significant fees or royalties to produce its products. In addition, future patents may issuebe issued to third parties which the Company’s technology may infringe.infringe on. Because patent applications can take many years to issue,be issued, there may be applications now pending of which the Company is unaware that may later result in issued patents that the Company’s products may infringe.infringe on.

Intellectual property litigation, regardless of outcome, is expensive and time-consuming, and could divert management’s attention from ourthe Company’s business and have a material negative effect on ourthe Company’s business, operating results or financial condition. If such a dispute were to be resolved against us, the Company, it may be required to pay substantial damages, including treble damages and attorney’s fees to the party claiming infringement if the Company were to be found to have willfully infringed a third party’s patent. The Company may also have to develop non-infringing technology, stop selling any products it develops, cease using technology that contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all. The Company’s failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm its business. Modification of any products the Company develops or development of new products thereafter could require the Company to become subject to other requirements of the FDA and other regulatory bodies, which could be time-consuming and expensive. In addition, parties making infringement claims may be able to obtain an injunction that would prevent the Company from selling any products it develops, which could harm its business.

The Company’s competitorsCompetitors may develop products similar to Lumega-Z,the Company’s products, and the Company may therefore need to modify or alter its business strategy, which may delayhave a material adverse effect on the achievement of its goals.Company.

Competitors may develop products with similar characteristics to Lumega-Z.the Company’s products. Such similar products marketed by larger competitors could hinder the Company’s efforts to penetrate the market.

Many large competitors have substantially greater financial, research and development, manufacturing and marketing experience and resources as well as greater brand recognition than the Company does and represent substantial long-term competition for the Company. Such companies may develop products that are safer, more effective or less costly than any that the Company may develop. Such companies also may be more successful than the Company is in manufacturing, sales and marketing.

As a result, the Company may be forced to modify or alter its business and regulatory strategy and sales and marketing plans, as a response to changes in the market, competition and technology limitations, among others. Such modifications may pose additional delays in achieving the Company’s goals.

The Company’s competitors may develop products similar to the MapcatSF medical device, and the Company may therefore need to modify or alter its business strategy,goals which may delay the achievement of its goals.

While the Company believes the MapcatSF is the only device available that can accurately measure the density of the macular pigment, competitors may develop products with similar characteristics to the Company’s MapcatSF medical device. Such similar products marketed by larger competitors could hinder the Company’s efforts to develop the market. Ashave a result, the Company may be forced to modify or alter its business and regulatory strategy and sales and marketing plans, as a response to changes in the market, competition and technology limitations, among others. Such modifications may pose additional delays in achieving the Company’s goals.

The Company’s competitors may develop products similar to the CSV-1000 and ESV-3000 devices, and the Company may therefore need to modify or alter its business strategy, which may delay the achievement of its goals.

While the Company believes that VectorVision is the only company that offers fully standardized vision testing products that ensure consistent, repeatable and highly accurate results, its competitors may introduce similar products that may compete with the CSV-1000 and ESV-3000 devices. These devices offer auto-calibrated tests to ensure the correct testing luminance and contrast levels for consistent, highly accurate and repeatable results, which is why the VectorVision instruments can detect and quantify subtle changes in vision, and why the VectorVision CSV-1000 instrument is used by eye doctors in more than 60 countries to accomplish contrast sensitivity testing. For the same reasons, the Company believes that the ESV-3000 ETDRS testing device will become the worldwide standard for ETDRS visual acuity testing. The Company’s research has revealed no competing products that offers auto-calibration of ambient illumination. Competitive devices do not allow for variations in ambient light levels, resulting in variability of test results due to the environment in which the testing is performed. The CSV-1000 and ESV-3000 use self-calibrated test lighting. The self-calibrated test lighting is proprietary, and the test faces of the CSV-1000 are proprietary and the intellectual property is protected under copyright and trade secret law. Both CSV-1000 and ESV-3000 are currently sold worldwide, and the Company expects this global distribution to continue. There is a training requirement in incorporating the CSV-1000 device into clinical practice, which the Company plans to provide as part of its commercialization strategy. Competitors currently exist, and while the Company believes its market penetration and intellectual property protection are barriers to entry, competitors may invent around the Company’s intellectual property or otherwise overcome barriers to entry and introduce similar products to compete with either the CSV-1000 or ESV-3000.

The Company’s failure to compete successfully could cause its revenue or market share to decline.

The market for our products and services is competitive and is characterized by rapidly evolving industry standards, technology and user needs and the frequent introduction of new products and services. Some of our competitors, which include major pharmaceutical companies with alternatives to our products, may be more established, benefit from greater name recognition and have substantially greater financial, technical and marketing resources than us. We competematerial adverse effect on the basis of several factors, including distribution of products, reputation, scientific validity, reliability, client service, price, and industry expertise and experience. There can be no assurance that we will be able to compete successfully against current and future competitors or that the competitive pressures that we face will not materially adversely affect our business, financial condition and results of operations.Company.

If the Company is unable to develop its own sales, marketing and distribution capabilities, or if it is not successful in contracting with third parties for these services on favorable terms, or at all, revenues from productsproduct sales could be limited.

The Company currently has limited sales, marketing and distribution capabilities. To commercialize ourthe Company’s products successfully, we have tothe Company must develop more robust capabilities internally or collaborate with third parties that can perform these services for us.services. In the process of commercializing ourthe Company’s products, wethe Company may not be able to hire the necessary experienced personnel and build sales, marketing and distribution operations capable of successfully launching new products and generating sufficient product revenues. In addition, establishing such operations takes time and involves significant expense.

If the Company decides to enter into co-promotion or other licensing arrangements with third parties, weit may be unable to identify acceptable partners because the number of potential partners is limited and because of competition from others for similar alliances with potential partners. Even if we arethe Company is able to identify one or more acceptable partners, weit may not be able to enter into any partnering arrangements on favorable terms, or at all. If we enterthe Company enters into any partnering arrangements, ourits revenues are likely to be lower than if wethe Company marketed and sold ourits products ourselves.itself.

In addition, any revenues the Company receives would depend upon ourits partners’ efforts which may not be adequate due to lack of attention or resource commitments, management turnover, and change of strategic focus, further business combinations or other factors outside of ourits control. Depending upon the terms of ourthe Company’s agreements, the remedies we havethe Company against an under-performing partner may be limited. If wethe Company were to terminate the relationship, it may be difficult or impossible to find a replacement partner on acceptable terms, or at all.

If the Company cannot compete successfully for market share against other companies, it may not achieve sufficient product revenues and its business will suffer.

The market for our products and product candidates is characterized by competition and technological advances. If our products are unable to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.

We will compete for market share against fully integrated medical food and medical device companies or other companies that develop products independently or collaborate with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations. In addition, many of these competitors, either alone or together with their collaborative partners, have substantially greater capital resources, larger research and development staffs and facilities, and greater financial resources than we do, as well as significantly greater experience in:

Our competitors may:

If we are unable to compete successfully against current or future competitors, we may be unable to obtain market acceptance for any product candidates that we create, which could prevent us from generating revenues or achieving profitability and could cause the market price of our common stock to decline.

Product liability lawsuits against the Company could divert its resources and could cause it to incur substantial liabilities and to limit commercialization of Companyits products.

We faceThe Company faces a risk of product liability exposure related to the use of our products, including Lumega-Z.its products. If wethe Company cannot successfully defend ourselvesitself against claims that our product candidates orits products caused injuries, wethe Company will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

OurThe Company’s insurance policies may not fully cover liabilities that weit may incur in the event of a product liability lawsuit. WeThe Company may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

The Company may be unsuccessful in expanding its product distribution outside the United States.distributions.

To the extent we begin to offer our products outside the United States, we expect that we may beThe Company is dependent on third-party sales broker and distribution relationships. DistributorsThese brokers and distributors may not commit the necessary resources to market and sell ourthe Company’s products to the level of ourthe Company’s expectations. If sales brokers and distributors do not perform adequately, or we areif the Company is unable to locate distributors in particular geographic areas, ourthe Company’s ability to realize long-term international revenue growth would be materially adversely affected.

Additionally, ourthe Company’s products may require regulatory clearances and approvals from jurisdictions outside the United States. We expectThe Company expects that weit will be subject to and required to comply with local regulatory requirements before selling ourits products in those jurisdictions. We areThe Company is not certain that weit will be able to obtain these clearances or approvals or compliance requirements on a timely basis, or at all.

The Company has historically sold its products to customers outside the U.S. and may sell products outside of the United States in 2022 and beyond. As a result, the Company’s business is exposed to risks inherent in international operations. These risks, which can vary substantially by location, include the following:

Manufacturing risks and inefficiencies may adversely affect the Company’s ability to produce products.

We engageThe Company engages third parties to manufacture ourits products in sufficient quantities and on a timely basis, while maintaining product quality, acceptable manufacturing costs and complying with regulatory requirements. In determining the required quantities of ourits products and the manufacturing schedule, wethe Company must make significant judgments and estimates based on historical experience, inventory levels, current market trends and other related factors. Because of the inherent nature of estimates, there could be significant differences between ourthe Company’s estimates and the actual amounts of products we require.it requires. If we arethe Company is unable to obtain from one or more of ourits vendors the needed materials or components that meet our specifications on commercially reasonable terms, or at all, wethe Company may not be able to meet the demand for ourits products. While we havethe Company has not arranged for alternate suppliers, and it may be difficult to find alternate suppliers in a timely manner and on terms acceptable to us, we believethe Company, the Company believes that there are multiple alternative sources, suppliers and manufacturers available for ourits products and devices in the event of a termination or a disagreement with any current vendor. Additionally, the Company’s supply chain may be jeopardized for a period of time due to the COVID-19 outbreak or challenges related to supply chain constraints.

The Company has been experiencing supply chain constraints due to the COVID-19 pandemic. These constraints began in approximately December 2021 and have continued into 2022. These constraints have impacted our ability the Company’s ability to obtain inventory to fulfill customer orders for its Viactiv branded products and may continue to impact its ability to fulfill customer orders going forward which would have a material adverse effect on the Company’s business and results of operations. The Company continues to experience challenges to meet customer demands, largely because of broad-based shortages in suppliers’ labor which impact the availability of many critical components in the Company’s supply chain and distribution. The Company is subject to out-of-stock fees to certain retailers in the event that the Company is unable to adequately maintain certain inventory levels of our Viactiv products. Additionally, the Company and its suppliers are experiencing significant broad-based inflation of manufacturing and distribution costs as well as transportation challenges. The Company expects shortages to continue at least through the first half of 2022 and input cost inflation to continue at least throughout 2022.

Security breaches and other disruptions could compromise the Company’s information and expose it to liability, which would cause its business and reputation to suffer.

In the ordinary course of ourthe Company’s business, we collectthe Company collects and storestores sensitive data, including intellectual property, ourits proprietary business information and that of ourits customers and business partners, including potentially personally identifiable information of ourits customers, some of which is stored on ourthe Company’s network and some of which is stored with ourthe Company’s third-party E-commercee-commerce vendor. Despite ourthe Company’s security measures, ourits information technology and infrastructure may be vulnerable to attacks by hackers or breached due to operator error, malfeasance or other disruptions. Any such breach could compromise ourthe Company’s network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt ourthe Company’s operations, and damage ourthe Company’s reputation, which could adversely affect our business.

The Company’s products and facility and the facilities of its manufacturers are subject to federal laws and regulations and certain requirements in the State of California. Failure to comply with any law or regulation could result in penalties and restrictions on the Company’s manufacturers’ ability to manufacture and the Company’s ability to distribute products. If any such action were to be imposed, it could have a material adverse effect on the Company’s business and results of operations.business.

Although medical foods do not require pre-market approval by the FDA, manufacturers of medical foods must be registered with the FDA under a provision promulgated by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the“Bioterrorism Act”).Manufacturers of medical foods are subject to periodic inspection by the FDA. The manufacture of our medical foods is outsourced in its entirety to a third-party manufacturer. We are evaluating additional manufacturers for selection as second source or back-up providers. Our medical foods have not been reviewed by the FDA. There is no certainty that the FDA will favorably review our medical food products or our manufacturers’ facilities. If the outcome of an inspection is negative or if we or our manufacturers fail to comply with any law or regulation, we could be subject to penalties and restrictions on our manufacturers’ ability to manufacture and distribute products. Any such action may result in a material adverse effect on our business and results of operations. For a more complete discussion of the laws and regulations to which we are subject, see the section of this Annual Report titled “Business - Government Regulation.” 

Prior to the acquisition of VectorVision, all of the Company’s billings and revenues have been derived from the sale of a single product.

For the year ended December 31, 2018 as well as the year ended December 31, 2017, the Company derived a portion of its revenues from the sale of Lumega-Z®. While we continue to see an increasing demand for Lumega-Z from our customers, we cannot assure you that the demand will continue. A decline in sales of Lumega-Z to our customers may have an immediate adverse effect on our financial results. The Company expects to continue to realize revenues from sales of the CSV-1000 and ESV-3000 products, however, there is no assurance that such sales will continue at historical levels or that any of our products will otherwise continue to be commercially viable.

The Company’s billings and revenues are derived from a limited number of customers and the loss of any one or more of them may have an immediate adverse effect on its financial results.

InDuring the years ended December 31, 20182021 and 2017,2020, the Company’s billings were derived from a limited number of individual customers and distributors. During the year ended December 31, 2021, the Company’s clinical nutrition business had one customer who accounted for approximately 49% of the Company’s sales; and during the year ended December 31, 2020, the Company’s clinical nutrition business had one customer who accounted for approximately 47% of the Company’s sales. No other customer accounted for more than 10% of sales in either year. Customers may stop purchasing ourthe Company’s products with little or no warning. Loss of customers may have an immediate adverse effect on ourthe Company’s financial results.

If the Company is forced to reduce its prices, its business, financial condition and results of operations may suffer.

The Company may be subject to pricing pressures with respect to its future sales arising from various sources, including practices of health insurance companies, healthcare providers and competition in the marketplace. If the Company’s pricing experiences significant downward pressure, our business could be less profitable and our results of operations may be adversely affected. In addition, because cash from sales funds our working capital requirements, reduced profitability could require us to raise additional capital to support our operations.

If the Company is unable to successfully introduce new products or fails to keep pace with medical advances and developments, its business, financial condition and results of operations may be adversely affected.

The successful implementation of our business model depends on our ability to adapt to evolving technologies and industry standards and introduce new products and services. We cannot assure you that we will be able to introduce new products on schedule, or at all, or that such products will achieve market acceptance. Moreover, competitors may develop competitive products that could adversely affect our results of operations. A failure by us to introduce planned products or other new products or to introduce these products on schedule may have an adverse effect on our business, financial condition and results of operations.

If we cannot adapt to changing technologies, our products and services may become obsolete, and our business could suffer. Because the healthcare industry is characterized by rapid technological change, we may be unable to anticipate changes in our current and potential customers’ requirements that could make our existing technology obsolete. Our success will depend, in part, on our ability to continue to enhance our existing products, develop new technology that addresses the needs of our prospective customers, license leading technologies and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis. The development of our proprietary technology entails significant technical and business risks. We may not be successful in using new technologies effectively or adapting our proprietary technology to evolving customer requirements or emerging industry standards, and, as a result, our business may suffer. 

If customers do not accept the Company’s products or delay in deciding whether to recommend the Company’s products, and services, its business, financial condition and results of operations may be adversely affected.

OurThe Company’s business model depends on ourits ability to sell ourits products. AcceptanceThird party brokers play an important role in the sales of ourthe Viactiv line of supplements since the majority of these sales are made through traditional retailers. The Company utilizes these brokers to sell to it retail customers rather than employing an internal sales force. The Company cannot assure you that these brokers will be successful in selling its products requiresto traditional retail customers. In addition, acceptance of the Company’s products greatly benefits from physicians to use our MapcatSF to measure the macular protective pigment in their patients’ eyes,who understand and appreciate the benefits of Lumega-Z in order toand GlaucoCetin and recommend itthem to their patients, and to understand the benefits of visual acuity testing using the CSV-1000 and ESV-3000 devices. Wepatients. The Company cannot assure you that physicians will integrate ourits products into their treatment plans or patient recommendations. Achieving market acceptance for ourthe Company’s products and services will require substantial sales and marketing efforts and the expenditure of significant financial and other resources to create awareness and demand by participants in the healthcare industry. If we failthe Company fails to achieve broad acceptance of ourits products by physicians, and other healthcare industry participants or if we failthe Company fails to position ourits products as an ocular health remedy, ourthe Company’s business, financial condition and results of operations may be adversely affected.

IfThe Company is highly dependent upon consumers’ perception of the Company’s principal suppliers fail or are unable to perform their contracts with the Company, it may be unable to meetsafety and quality of its commitments to its customers. As a result, the Company’s reputation and its relationships with its customers may be damaged and its business and results of operations may be adversely affected.

We currently purchase all our medical food ingredients and products from three vendors – one for carotenoids, one for Omega 3, and one for all other supplements. These companies are subject to FDA regulation and they are responsible for compliance with current Good Manufacturing Practices (“cGMP” as defined by the FDA). Although our agreements provide that our suppliers will abide by the FDA manufacturing requirements, we cannot control their compliance. If they fail to comply with FDA manufacturing requirements, the FDA could prevent our vendors from manufacturing our ingredients and products. Although we believe that there are a number of other sources of supply of ingredients and manufacturers of medical food products, if these suppliers are unable to perform under our agreements, particularly at certain critical times such as when we add new physician clients that will require a large production of one or more products, we may be unable to meet our commitments to our customers. If this were to happen, our reputation as well as similar products distributed by other companies in its industry, and adverse publicity and negative public perception regarding particular ingredients or products or the Company’s industry in general could limit the Company’s ability to increase revenue and grow our relationships with our customers may suffer and our business and resultsbusiness.

Decisions about purchasing made by consumers of operationsthe Company’s products may be adversely affected. We are evaluating several additional manufacturers for selectionaffected by adverse publicity or negative public perception regarding particular ingredients or products or the Company’s industry in general. This negative public perception may include publicity regarding the legality or quality of particular ingredients or products in general or of other companies or our products or ingredients specifically. Negative public perception may also arise from regulatory investigations, regardless of whether those investigations involve the Company. The Company is highly dependent upon consumers’ perception of the safety and quality of its products as second source or back-up providers.

Ifwell as similar products distributed by other companies. Thus, the mere publication of reports asserting that such products may be harmful could have a material adverse effect on the Company, incurs costs exceeding its insurance coverageregardless of whether these reports are scientifically supported. Publicity related to nutritional supplements may also result in lawsuits that are brought against it inincreased regulatory scrutiny of the future, such incidentCompany’s industry and/or the healthy foods channel. Adverse publicity may adversely affecthave a material adverse effect on the Company’s business, financial condition, and results of operations.operations and cash flows.

If we were to become a defendant in any lawsuits involving the manufacture and sale of our products and if our insurance coverage were inadequate to satisfy these liabilities, it would be expected to have an adverse effect on our business, financial condition and results of operations.

If the Company is deemed to infringe on the proprietary rights of third parties, it could incur unanticipated expense and be prevented from providing its products and services.products.

WeThe Company could be subject to intellectual property infringement claims as the number of ourits competitors grows and if ourits products or the functionality of ourits products overlap with patents of ourthe Company’s competitors. While we dothe Company does not believe that we haveit has infringed or areis infringing on any proprietary rights of third parties, wethe Company cannot assure you that infringement claims will not be asserted against usit or that those claims will be unsuccessful. WeThe Company could incur substantial costs and diversion of management resources defending any infringement claims whether or not such claims are ultimately successful. Furthermore, a party making a claim against usthe Company could secure a judgment awarding substantial damages, as well as injunctive or other equitable relief that could effectively block ourthe Company’s ability to provide products or services.products. In addition, wethe Company cannot assure you that licenses for any intellectual property of third parties that might be required for ourits products or services will be available on commercially reasonable terms, or at all.

The Company’s business depends on its intellectual property rights, and if it is unable to protect them, its competitive position may suffer.

Our business plan is predicated on our proprietary technology. Accordingly, protecting ourProtecting the Company’s intellectual property rights is critical to ourits continued success and ourits ability to maintain ourits competitive position. OurThe Company’s goal is to protect ourits proprietary rights through a combination of patent, trademark, trade secret and copyright law, confidentiality agreements and technical measures. WeThe Company generally enterenters into non-disclosure agreements with ourits employees and consultants and limitlimits access to ourits trade secrets and technology. WeThe Company cannot assure you that the steps we haveit has taken will prevent misappropriation of our technology.its intellectual property. Misappropriation of ourthe Company’s intellectual property would have an adverse effect on ourits competitive position.

The Company has four issued patents and five pending patent applications related to its products. There currently are no issued patents relating to Lumega-Z. OurCompany’s success, competitive position, and future revenues will depend, in part, on ourits ability to obtain and maintain patent protection for ourits products, methods processes, and other technologies;processes; to preserve ourits trade secrets; to obtain trademarks for ourits name, logo and products; to prevent third parties from infringing ourits proprietary rights; and to operate without infringing the proprietary rights of third parties. To counter infringement or unauthorized use by third parties, wethe Company may be required to file infringement claims, which can be expensive and time-consuming.

The patent process is subject to numerous risks and uncertainties, and there can be no assurance that wethe Company will be successful in protecting ourits products by obtaining and defending patents. These risks and uncertainties include the following:

In addition, the USPTO, and patent offices in other jurisdictions have often required that patent applications concerning pharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only the specific innovations exemplified in the patent application, thereby limiting the scope of protection against competitive challenges. Thus, even if wethe Company or any of ourits licensors are able to obtain patents, the patents may be substantially narrower than anticipated.

The Company’s business depends in part on and will continue to depend in part on its ability to establish and maintain additional strategic collaborative relationships. Failure to establish and maintain these relationships could make it more difficult to expand the reach of the Company’s products, which may have a material adverse effect on its business.

To be successful, we must continue to maintain our existing strategic relationships, such as our relationship with our vendors who manufacture our medical food products. We also must continue to establish additional strategic relationships with healthcare leaders. This is critical to our success because we believe that these relationships contribute towards our ability to extend the reach of our products and services to a larger number of physicians, professional healthcare providers and physician groups and to other participants in the healthcare industry; develop and deploy new products and services; and generate additional revenue and cash flows. Entering into strategic relationships is complicated because strategic partners may decide to compete with us in some or all of our markets. In addition, we may not be able to maintain or establish relationships with key participants in the healthcare industry if we conduct business with their competitors. 

The Company must attract and retain quality management and employees in order to manage its growth. Failure to do so may result in slower expansion.

In order to support the growth of ourthe Company’s business and the additional obligations that come with being an exchange-listed company, wethe Company will need to expand ourits senior management team. We plan to recruit additional personnel, including a Chief Financial Officerteam and a Chief Operating Officer in the near future.attract and retain quality employees. There is no assurance that wethe Company will be capable of attracting and retaining quality executives and integrating those individuals into ourthe Company’s management system. Without experienced and talented management and employees, the growth of ourthe Company’s business may be adversely impacted.

The Company’s ability to attract and retain qualified members for its board of directors may be impacted due to new potential rules of national securities exchanges.

Nasdaq has adopted new listing rules to become effective on the later of August 8, 2022 and the date a company files its proxy statement for its 2022 annual meeting of stockholders related to board diversity and disclosure, which requires all companies listed on Nasdaq’s U.S. exchanges to publicly disclose consistent, transparent diversity statistics regarding their board of directors. Additionally, the rules require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+.

Failure to achieve designated minimum gender and diversity levels in a timely manner exposes such companies to financial penalties and reputational harm. We cannot assure that we can recruit, attract and/or retain qualified members of the board and meet Nasdaq rules, which may expose us to penalties and/or reputational harm.

The Company’s acquisition strategy involves a number of risks.

The Company is regularly engaged in acquisition discussions with other companies and anticipate that one or more potential acquisition opportunities, including those that would be material or could involve businesses with operating characteristics that differ from the Company’s existing business operations, may become available in the future. If and when appropriate acquisition opportunities become available, the Company intends to pursue them actively. Acquisitions involve a number of risks, including, but not limited to:

These risks could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company has faced, and expects to continue to face, intense competition for acquisition candidates, which may limit its ability to make acquisitions and may lead to higher acquisition prices. The Company cannot assure you that it will be able to identify, acquire or manage profitably.

CompetitionUnfavorable global economic conditions could adversely affect the Company’s business, financial condition or results of operations.

The Company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including changes in inflation and overall economic conditions and uncertainties. Inflation could also adversely affect the ability of the Company’s customers to purchase its products. An economic downturn, including as a result of COVID-19, could result in a variety of risks to the Company’s business, including weakened demand for qualified employeesthe Company’s products and the Company’s inability to raise additional capital when needed on acceptable terms, if at all. Any of the foregoing could harm the Company’s business and the Company cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact its business.

Risks Related to the Company’s Acquisition of Activ Nutritional, LLC

Integrating Activ’s business with the Company’s business may be more difficult, costly, or time-consuming than expected, and the Company may not realize the expected benefits of its acquisition of Activ, which may adversely affect the Company’s business, financial condition, and results of operations.

If the Company experiences greater than anticipated costs to integrate, or is intense. Thenot able to successfully integrate, Activ’s business into its operations, the Company may not be able to attract and retainachieve the highly skilled employees needed to support its business. Without skilled employees, the qualityanticipated benefits of its product developmentacquisition of Activ, including cost savings and services could diminishother synergies and growth opportunities. Even if the growthintegration of Activ’s business is successful, the Company may not realize all of the anticipated benefits of its businessacquisition of Activ during the anticipated time frame, or at all. For example, events outside of the Company’s control, such as changes in regulations and laws, as well as economic trends, including as a result of the COVID-19 pandemic, could adversely affect the Company’s ability to realize the expected benefits from its acquisition of Activ. An inability to realize the full extent of the anticipated benefits of the Company’s acquisition of Activ could have an adverse effect upon its revenue, level of expenses, and results of operations.

Activ may have liabilities that are not known to the Company.

Activ may have liabilities that the Company failed, or was unable, to discover in the course of performing its due diligence investigations in connection with its acquisition of Activ. The Company may learn additional information about Activ that materially and adversely affects the Company and Activ, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. Moreover, Activ may be slowed,subject to audits, reviews, inquiries, investigations, and claims of non-compliance and litigation by federal and state regulatory agencies which could result in liabilities or other sanctions. Any such liabilities or sanctions, individually or in the aggregate, could have a materialan adverse effect on the Company’s business, financial condition, and results of operations.

The Company has made certain assumptions relating to the Activ acquisition that may prove to be materially inaccurate.

Our abilityThe Company has made certain assumptions relating to provide high-quality products and servicesthe Activ acquisition that may prove to our clients depends, in large part, upon our employees’ experience and expertise. We must attract and retain highly qualified personnel with a deep understandingbe inaccurate, including as the result of the pharmaceuticalfailure to realize the expected benefits of the Activ acquisition, failure to realize expected revenue growth rates, higher than expected operating and healthcare information technology industries. In addition, we will invest significant time and expense in training our employees, increasing their value to clientstransaction costs, as well as general economic and business conditions that adversely affect the Company.

Risks Related to competitors who may seekGovernment Regulations

The Company and its suppliers and manufacturers are subject to recruit them, which will increase the costa number of replacing them. If we fail to retain our employees, the quality of our product developmentexisting laws, regulations and services could diminishindustry initiatives and the growthregulatory environment of our business may be slowed. This may have a material adverse effect on our business, financial condition and results of operations.

the healthcare industry is continuing to change. If it is determined that the Company losesor its suppliers or manufacturers are not in compliance with the services of its Chief Executive Officerlaws and other key personnel, it may be unableregulations to replace them, andwhich they are respectively subject, the Company’s business, financial condition and results of operations may be adversely affected.

Our success largely dependsAs a participant in the healthcare industry, the Company’s operations and relationships, and those of the Company’s customers, are regulated by a number of federal, state, local, and foreign governmental entities with oversight of various aspects of product manufacture, distribution, sale, and use. The regulations are very complex, have become more stringent over time, and are subject to changing and varying interpretations. Regulatory restrictions or changes could limit the Company’s ability to carry on or expand its operations or result in higher than anticipated costs or lower than anticipated sales. The FDA and other federal and state governmental agencies regulate numerous elements of the Company’s business, including:

The Company may be subject to similar foreign laws that govern all of the above elements of the Company’s business, including pre-market and post marketing obligations for our products. The time required to obtain authorization to sell the Company’s products in foreign countries may be longer or shorter than that required by the FDA, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements. In the European Union (“EU”), member states are responsible for enforcing the EU’s rules and for ensuring that only compliant products are placed on the continued skills, experience, effortsmarket in their jurisdictions. Member states have powers to suspend the marketing and policiesuse, or demand the recall, of our management teamunsafe or non-compliant medical products. They also have the power to bring enforcement action against companies or individuals for breaches of the rules governing certain medical products.

The FDA, FTC, states, and other key personnelregulatory authorities have broad enforcement powers. Failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, FTC, state, or regulatory authorities, which may include the following:

Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and our ability to continue to attract, motivate and retain highly qualified employees. In particular,have a material adverse effect on the services of Michael Favish, our founder, President and Chief Executive Officer, and David Evans, director of the Company and a consultant to VectorVision, are integral to the execution of our business strategy. We believe that the loss of the services of Mr. Favish or Dr. Evans could adversely affect ourCompany’s reputation, business, financial condition, and results of operations. We

Dietary supplements, such as Viactiv, and medical foods do not require premarket approval by FDA before they may be distributed in the United States (with limited exceptions). The company currently considers Lumega-Z and GlaucoCetin to be medical foods, as that term is defined under the FDCA. While the Company believes Lumega-Z and GluacoCetin are medical foods, if the FDA determines Lumega-Z or GlaucoCetin to be a “drug” under the FDCA, the Company and the products would be subject to considerable additional FDA regulation. FDA defines a “drug” as an article that is intended for use in the cure, treatment, prevention or mitigation of a disease. A medical food is defined as “a food which is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.”

Our relationships with healthcare providers may subject us to anti-kickback, fraud and abuse and other healthcare laws and regulations, which could change or expose us to potential penalties, reputational harm and diminished profits and future earnings, among other penalties and consequences.

The Company cannot assure you that Mr. Favish, Dr. Evansanticipate how changes in regulations or our other executive officers will continue to provide servicesdeterminations by regulatory agencies may evolve. Thus, application of many foreign, state and federal regulations to the Company. We do not maintain key man insurance for any of our key personnel.

The Company’s future success depends upon its ability to grow. If the Companybusiness operations is unable to manage its growth effectively, ituncertain. Further, there are federal and state fraud and abuse laws, including anti-kickback laws and limitations on physician referrals that may incur unexpected expenses and be unable to meet its customers’ requirements.

We will need to expand our operations if we successfully achieve market acceptance for our products and services. We cannot be certain that our systems, procedures, controls and existing space will be adequate to support expansion of our operations. Our future operating results will depend on the ability of our officers and key employees to manage changing business conditions and to implement and improve our technical, administrative, financial control and reporting systems. Weor may not be abledirectly or indirectly applicable to expandthe Company’s operations and upgrade our systems and infrastructurerelationships or the business practices of its customers. It is possible that a review of the Company’s business practices or those of its customers by courts or regulatory authorities could result in a determination that may adversely affect the Company. In addition, the healthcare regulatory environment may change in a way that restricts existing operations or growth. The healthcare industry is expected to accommodate these increases or we may not havecontinue to undergo significant changes for the qualified personnel to implement them. Difficulties in managing anyforeseeable future, growthwhich could have a significant negative impactan adverse effect on ourthe Company’s business, financial condition and results of operations because weoperations. The Company cannot predict the effect of possible future legislation and regulation.

If the Company or its third-party manufacturers fail to comply with FDA cGMP regulations or fail to adequately, timely, or sufficiently respond to an FDA Form 483 or subsequent Warning Letter, this could impair the Company’s ability to market its products in a cost-effective and timely manner and could result in FDA enforcement action.

The FDA requires facilities that manufacture FDA-regulated products to comply with cGMP regulations, which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of the Company’s products. The Company does not manufacture any of its products internally and instead relies on contract manufacturers to manufacture its products. The Company and its third-party manufacturers are required to comply with cGMP regulations. The FDA audits compliance with cGMP and related regulations through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may incur unexpected expensesconduct these inspections at any time.

The Company’s products and facility, and the facilities of its manufacturers, are subject to federal laws and regulations and certain state laws. Failure to comply with any applicable law or regulation could result in penalties and restrictions on the Company’s manufacturers’ ability to manufacture and the Company’s ability to distribute products. If any such action were to be unableimposed, it could have a material adverse effect on the Company’s business and results of operations.

Although the Company’s supplement and food products do not require pre-market approval by the FDA, manufacturers of the Company’s products must be registered with the FDA. Manufacturers of FDA-regulated products are subject to meet our customers’ requirements. periodic inspection by the FDA and state health authorities. The manufacture of the Company’s FDA-regulated products is outsourced in its entirety to three third-party manufacturers. The Company is evaluating additional manufacturers for selection as second source or back-up providers.

The Company’s products have not been reviewed by the FDA. There is no certainty that the FDA will favorably review the Company’s products or its manufacturers’ facilities. If the outcome of an inspection is negative or if the Company or the Company’s manufacturers fail to comply with any law or regulation, the Company could be subject to penalties and restrictions on the Company’s manufacturers’ ability to manufacture and distribute products. Any such action may result in a material adverse effect on the Company’s business and results of operations. For a more complete discussion of the laws and regulations to which the Company is subject, see “Business - Government Regulation.”

The Company may consider acquiringbe subject to fines, penalties, injunctions or other companiesadministrative actions if it is deemed to be promoting its products outside of their intended use (i.e., as drugs), or product linesif it is using false or misleading claims in an effortits promotional materials.

The Company’s business and future growth depend on the development, use and ultimate sale of products that are subject to expandFDA regulation. Under the FDCA and other laws, the Company is prohibited from promoting its business in exchangenutritional products for cash and/treatment of a condition or stockdisease. The Company’s promotional materials and marketing activities must comply with FDCA, FTCA, and other applicable laws and regulations, including laws and regulations prohibiting marketing claims that promote the use of the Company’s products outside of their intended use as supplements or foods (i.e., as a drug) or that make false or misleading statements. The FDA also could conclude that a performance claim is misleading if it determines that there are inadequate non-clinical and/or clinical data supporting the claim.

There is a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of the Company’s sales and marketing activities may constitute the promotion of the Company’s products for use as a drug in violation of applicable law, or that its promotional materials include false or misleading statements. The Company (oralso faces the risk that the FDA or other regulatory authorities might pursue enforcement based on past activities that the Company discontinued or changed, including sales activities, arrangements with institutions and doctors, educational and training programs and other activities.

Government investigations are typically expensive, disruptive, burdensome and generate negative publicity. If its promotional activities are found to be in violation of applicable law or if the Company agrees to a combination thereof), which may notsettlement in connection with an enforcement action, the Company would likely face significant fines and penalties and would likely be successful,required to substantially change its sales, promotion and educational activities. In addition, were any enforcement actions against the Company or whichits senior officers to arise, the Company could be excluded from participation in U.S. government healthcare programs such as Medicare and Medicaid.

The Company’s products may cause dilution to investors.

The Company will consider acquiringundesirable side effects or have other companiesproperties that could delay or product lines that may be complementaryprevent any required regulatory approval, limit the commercial potential or supplementary as part of our future efforts to expand the business, which acquisitions could be for cash, stockresult in significant negative consequences following any potential marketing approval, or a combination thereof. There is no guarantee that any such acquisition will be successful or that an acquired company’s products, operations or corporate culture will mesh with our Company, integrate well, or that any economies of scale will be realized. In addition, any such transaction that involves the Company’s stock would cause dilution to investors. In addition, any such transaction that involves cash would result in a reallocationproduct recall that could harm the Company’s reputation, business and financial results.

If the Company’s products are associated with undesirable side effects or adverse events, or have characteristics that are unexpected, the Company may need to abandon its development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. The Company also may have to remove a commercialized product from the market as consequence of fundsserious adverse events associated with the product. Any serious adverse or undesirable side effects identified during the development of the Company’s products, could interrupt, delay or halt commercialization and/or could result in the additional regulatory requirements by the FDA or other regulatory authorities, and in turn prevent the Company from commercializing its product candidates and generating revenues from their sale.

Companies may, under their own initiative, recall a product or the government may mandate a recall. A government-mandated or voluntary recall by the Company or one of its distributors could occur as a result of adverse side effects, impurities or other product contamination, manufacturing errors, labeling defects or other deficiencies and issues. Recalls of any of the Company’s products would divert managerial and financial resources and have an adverse effect on handthe Company’s financial condition and results of operations. In addition, the FDA requires companies to maintain certain records of recalls, even if they are not reportable to the FDA. The Company may initiate voluntary recalls involving the Company’s products in the future that would be neededit determines do not require notification of the FDA. If the FDA disagrees with the Company’s determinations, it could require the Company to support an acquired company or acquired product line.report those actions as recalls. A future recall announcement could harm the Company’s reputation with customers and negatively affect the Company’s sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

In order to expand the Company’s business into additional states,jurisdictions, it may need to comply with regulatory requirements specific to such states and there can be no assurance that it will be able to initially meet such requirements or that it will be able to maintain compliance on an on-going basis.

While we believe our product,the Company believes Lumega-Z^®, and GlaucoCetin^TM to be a medical foodfoods and not a drug, it isdrugs, they are only available under the supervision of a physician. While it is not available in pharmacies, we arethe Company is mindful that the act of physicians prescribing, particularly if conducted across state lines, could potentially be subject to certain pharmacy regulations. Each state has its own regulations concerning physician dispensing, restrictions on the corporate practice of medicine, anti-kickback and false claims. In addition, each state has a board of pharmacy that regulates the sale and distribution of drugs and other therapeutic agents. Some states require a physician to obtain a license to dispense prescription products. While we dothe Company does not believe these pharmacy requirements are applicable, should a pharmacy board or medical board determine otherwise, there can be no assurance that wethe Company will be able to comply with the regulations of particular states into which wethe Company currently does business or may expand, or that we will be able to maintain compliance with the states in which we currently distribute our products. We currently have Lumega-Z customers in California, Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Georgia, North Carolina, South Carolina, Florida, Kentucky, Tennessee, Kansas, Indiana, Illinois, Minnesota, Oklahoma, Texas, New Mexico, Mississippi, Idaho, Utah, Nevada, Arizona, Washington, Hawaii and Alberta, Canada. Our inability to maintain compliance with the regulations of California and these other jurisdictions or expand our business into additional states may adversely affect our results of operations.

The Company is subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing ourits operations. If it fails to comply with these laws, it could be subject to civil or criminal penalties, other remedial measures and legal expenses, be precluded from developing manufacturing and selling certain products outside the U.S. or be required to develop and implement costly compliance programs, which could adversely affect its business, results of operations and financial condition.

OurThe Company’s operations are subject to anti-corruption laws, including the U.K. Bribery Act 2010, or Bribery Act, the U.S. Foreign Corrupt Practices Act or FCPA,(“FCPA”) and other anti-corruption laws that apply in countries where we dothe Company does business (including in Malaysia) and may do business in the future.future, particularly as the Company expands its sales and operations to foreign markets. The Bribery Act, FCPA and these other laws generally prohibit us, ourthe Company, its officers, and ourits employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. Compliance with the FCPA, in particular, is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

WeThe Company may in the future operate in jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and wethe Company may participate in collaborations and relationships with third parties whose actions could potentially subject usthe Company to liability under the Bribery Act, FCPA or local anti-corruption laws. In addition, wethe Company cannot predict the nature, scope or effect of future regulatory requirements to which ourits international operations might be subject or the manner in which existing laws might be administered or interpreted. If we expand ourthe Company expands its operations outside of the U.S., wethe Company will need to dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we planit plans to operate.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United Kingdom and the U.S., and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws. In addition, various laws, regulations and executive orders also restrict the use and dissemination outside of the U.S., or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand ourthe Company expands its presence outside of the U.S., itthe Company will require usbe required to dedicate additional resources to comply with these laws, and these laws may preclude usthe Company from developing, manufacturing, or selling certain products and product candidates outside of the U.S., which could limit ourthe Company’s growth potential and increase ourits development costs.

WeThe Company may not be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we arethe Company is not in compliance with the Bribery Act, the FCPA and other anti-corruption laws or Trade Control laws, wethe Company may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on ourthe Company’s business, financial condition, results of operations and liquidity. The Securities and Exchange Commission also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions. Any investigation of any potential violations of the Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by U.K., U.S. or other authorities could also have an adverse impact on ourthe Company’s’ reputation, our business, results of operations and financial condition.

Risks Related to the Company’s Common Stock

The Company’s Bylaws have an exclusive forum for adjudication of disputes provision which limits the forumCompany received a written notice from Nasdaq that it has failed to the Delaware Court of Chancery forcomply with certain actions against the Company.

Article XI of our Bylaws dictates that the Delaware Court of Chancery is the sole and exclusive forum for certain actions including derivative action or proceeding brought on behalflisting requirements of the Company; an action assertingNasdaq Stock Market, which could result in the Company’s being delisted from the Nasdaq Stock Market.

On January 25, 2022, the Company received a breachnotification from Nasdaq related to its failure to maintain a minimum bid price of fiduciary duty owed by an officer,$1 per share. Based upon the closing bid price for the last 30 consecutive business days, the Company no longer meets this requirement. However, the Nasdaq Listing Rules also provide the Company a director, employee or to the shareholderscompliance period of the Company; any claim arising under Delaware corporate law; and any action asserting a claim governed by the internal affairs doctrine. This means a shareholder has a limited forum180 calendar days in which to bring oneregain compliance. Accordingly, if at any time from the date of this notice until July 25, 2022, the above causesclosing bid price the Company’s common stock is at least $1 for a minimum of action, which can be inconvenient for the shareholder.

A Delaware corporation is allowed to mandate in its corporate governance documents a chosen forum for the resolution of state law based shareholder class actions, derivative suits and other intra-corporate disputes. The Company’s management believes limiting state law based claims to Delawareten consecutive business days, Nasdaq will provide the most appropriate outcomes asCompany with written confirmation of compliance and the riskmatter will be closed. If the Company does not regain compliance with the minimum bid price requirement by July 25, 2022, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet all other initial listing standards, except for the minimum bid price requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. If the Company does not regain compliance with the minimum bid price requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting. If the Company is delisted from Nasdaq, its common stock may be eligible for trading on an over-the-counter market. If the Company is not able to obtain a listing on another forum misapplying Delaware law is avoided. Delaware courts have a well-developed bodystock exchange or quotation service for the Company’s common stock, it may be extremely difficult or impossible for stockholders to sell their shares. The Company intends to monitor the closing bid price of case law and limiting the forum will preclude costly and duplicative litigation and avoids the risk of inconsistent outcomes. It also means a shareholder’s ability to bring a claim in a forum it believes is favorable to shareholders in disputes with directors, officers or other employees is limitedCompany’s common stock and may discourage shareholdersbe required to seek approval from bringing such claims. Additionally, Delaware Chancery Courtsits stockholders to effect a reverse stock split of the issued and outstanding shares of the Company’s common stock. However, there can typically resolve disputes on an accelerated schedule when comparedbe no assurance that the reverse stock split would be approved by the Company’s stockholders. Further, there can be no assurance that the market price per new share of the Company’s common stock after the reverse stock split will remain unchanged or increase in proportion to the reduction in the number of old shares of the Company’s common stock outstanding before the reverse stock split. Even if the reverse stock split is approved by the Company’s stockholders, there can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other forums.Nasdaq listing rules.

TheIf the Company has nois delisted from Nasdaq, its common stock may be eligible for trading on an over-the-counter market. If the Company is not able to obtain a listing on another stock exchange or quotation service for its common stock, it may be extremely difficult or impossible for stockholders to sell their shares of common stock. Moreover, if the Company is delisted from Nasdaq, but obtains a substitute listing for its common stock, it will likely be on a market with less liquidity, and therefore experience potentially more price volatility than experienced on Nasdaq. Stockholders may not be able to sell their shares of common stock on any such substitute market in conducting transcranial doppler ultrasound studies.

Thethe quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if the Company’s common stock is delisted from Nasdaq, the value and liquidity of the Company’s common stock, warrants and pre-funded warrants would likely be significantly adversely affected. A delisting of the Company’s common stock from Nasdaq could also adversely affect the Company’s ability to realize the anticipated benefitsobtain financing for its operations and/or result in a loss of the new Transcranial Doppler Solutions, Inc.confidence by investors, employees and/or business will depend on its ability to successfully launch and advance a new service in an area wherepartners.

If the Company has no experience, whichimplements a reverse stock split, liquidity of its common stock may be a complex, costly and time-consuming process. adversely effected.

The Company may be required to devote significant management attention and resourcesseek approval from its stockholders to develop the Transcranial Doppler Solutions, Inc. business. The initiation process may disrupt its business and, if implemented ineffectively, could restrict the realizationeffect a reverse stock split of the full expected benefits of the new business service. The failure to meet the challenges involved in the initiation processissued and to realize the anticipated benefits of the new business could cause an interruption of, or a loss of momentum in, the Company’s operations and could adversely affect its business, financial condition and results of operations.

Risks Related to the Company’s Industry

Any failure to comply with all applicable federal and state privacy and security requirements for the protection of patient information may result in fines and other liabilities, which may adversely affect the Company’s results of operations and reputation.

The Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191 (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act, Title XIII of the American Recovery and Reinvestment Act of 2009 (the “HITECH Act”), and related regulations promulgated by the Secretary (“HIPAA Regulations”) grant a number of rights to individuals as to their identifiable confidential medical information (called “Protected Health Information”) and restrict the use and disclosure of Protected Health Information. Failure to comply with these confidentiality requirements may result in penalties and sanctions. In addition, certain state laws may impose independent obligations upon us with respect to patient-identifiable medical information. Moreover, various new laws relating to the acquisition, storage and transmission of patient medical information have been proposed at both the federal and state level. These laws (collectively, the “State and Federal Privacy and Security Laws”) present different risks as to the Company’s two lines of business: (1) our sale of medical food, Lumega-Z; and (2) our performance of Trans Cranial Doppler (“TCD”) testing.

1. Medical Food, Lumega-Z. When a physician recommends the Company’s medical food, Lumega-Z, to a patient, the Company typically receives an order from the customer, but does not usually receive medical information. As part of the operationoutstanding shares of its business, it is possible, however, that during communication with customers or with physicians the Company might receive patient-identifiable medical information. To the extent the Company obtains accesscommon stock in order to Protected Health Information, it must ensure it complies with the State and Federal Privacy and Security Laws. Any failure to comply may result in fines and other liabilities, which may adversely affect its results of operations.

2. The TCD Testing Business. In the TCD Testing line-of-business, the Company will go into physicians’ offices and performs TCD tests on patients, as ordered by the patients’ treating physicians. The Company is establishing agreements with radiologists to read and report on the results of the tests. These results will be reported back to the ordering/treating physician. Finally, the Company will bill for the TCD tests to third party payors. During this process, the Company directly interacts with patients and has access to, processes and transmits Protected Health Information. As a result, the State and Federal Privacy and Security Laws will fully apply to the TCD Testing business. As required by federal law, the Company has been putting into place a HIPAA compliance program, including providing training to staff, instituting appropriate Business Associate Agreements, implementing required policies and procedures, and conducting regular risk assessments. Any failure to comply with the requirements of the State and Federal Privacy and Security Laws – or any loss of Protected Health Information, whether inadvertent or not – may result in fines and other liabilities, which may adversely affect the Company’s results of operations.

Any failure to comply with all applicable federal and state physician self-referral law (the “Stark Law”) may result in fines and other liabilities, which may adversely affect the Company’s results of operations and reputation.

Congress enacted significant prohibitions against physician self-referrals in the Omnibus Budget Reconciliation Act of 1993. This law and its supporting regulations, which have been amended and expanded substantially, are commonly referred to as the “Stark Law,” and prohibit a physician from making any referral of a Stark Designated Health Service (“DHS”) to an entity with which the physician has any kind of financial relationship, unless all of the requirements of a statutory or regulatory exception are met. Stark covered DHS include both outpatient prescription drugs and diagnostic testing that are reimbursable by Medicare or Medicaid. Many states have similar laws, some of which can apply to all payors and not just governmental payors. While the Company believes that its arrangements with its customers are inregain compliance with the federal and any state Stark Laws, the Stark Laws present different levels of risks as to the Company’s two lines of business: (1) sale of the Company’s medical food, Lumega-Z, and medical device, the MapcatSF; and (2) the Company’s performance of TCD testing.

1. Medical Food, Lumega-Z, and Medical Device, the MapcatSF. These products are neither prescription drugs nor are they reimbursable under any federal program at present. Therefore, the Company believes that the federal Stark Law is not applicable. Further, the Company’s believes that these products are also not covered under any potentially applicable state Stark Laws. The federal Stark Law, however, includes an exception for the provision of in-office ancillary services, including a physician’s dispensing of outpatient prescription drugs, provided that the physician meets specified requirements. To the extent that the products might become reimbursable under a federal program, or otherwise become covered under the Stark Law, the Company believes that the physicians who use the Company’s medical device, the MapcatSF, or recommend its medical food, Lumega-Z, to their patients are aware of these requirements.Nasdaq minimum bid price requirement. However, the Company does not monitor their compliance and hasthere can be no assurance that the physicians are in material compliance with Stark II. If it were determinedreverse stock split would be approved by the Company’s stockholders. Further, there can be no assurance that the physicians who use the Company’s medical device or prescribe medical foods purchased from the Company were not in compliance with Stark II, it could potentially have an adverse effect on the Company’s business, financial condition and results of operations.