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 2019, 2022

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, of principal executive offices)including area code)

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

Securities registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ 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 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”,filer,” “smaller reporting company”,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. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

On June 28, 2019,30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value (based on the closing per share sales price of its common stock on that date) of the voting stockand non-voting common equity held by non-affiliates of the registrant was approximately $20.8 million.$9.2 million based upon the closing price of the registrant’s common stock of $7.25 on The Nasdaq Capital Market as of that date.

As of March 27, 2020,28, 2023, there were 85,264,962 1,267,340 shares of the registrant’s common stock, par value $0.001 per share, issued and outstanding.

Documents Incorporated by Reference:

Portions of the registrant’s definitive proxy statement relating to its 2023 annual meeting of stockholders (the “2023 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2023 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K for the fiscal year ended December 31, 20192022 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.“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 reportAnnual 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 report.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

PART I

ITEM 1. BUSINESS

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., a Delaware corporation and its consolidated subsidiaries.

Overview

The Company is a specialty health sciences company (1) that has developedWe develop and distribute clinically supported nutritional medical foods and medical devicesdietary supplements. These products are designed to support retail consumers, healthcare professionals and providers, and their patients by supporting bone health, eye health, cardiovascular health, and brain health through nutrients such as Calcium, Vitamin D, Vitamin K, Carotenoids, and Omega-3s.

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 and other applications. As a result of the Activ acquisition, our commercial efforts changed to its current focus on the development and marketing of science-based clinical nutrition products and supplements.

The acquisition and integration of the Viactiv line of products has changed our financial position, market profile and brand and operating focus. In order to leverage the Viactiv platform, the Company has searched for additional complementary business opportunities. Additionally, the Company is focusing on new product development that it can launch under the Viactiv brand and in the ocular health space and (2) that is developing nutraceuticals thatyear ended December 31, 2022, the Company believes will provide supportive health benefits to consumers.launched its new Omega Boost Gel Bites product.

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 and supply networks and relationships; (4) product development potential; and (5) a consistent track record of financial performance.

Medical Foods:

Medical Devices:

Nutraceuticals:Acquisition of Activ Nutritional, LLC

Transcranial Doppler Ultrasound Services: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.

BackgroundActiv owns the Viactiv® line of supplement chews for bone 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 brand acquisitions.

Recent Developments

Reverse Stock Split

The Company held a special meeting of stockholders on January 5, 2023 (the “Meeting”). At the Meeting, the Company’s stockholders approved a proposal to amend the Company’s Certificate of Incorporation to effect a reverse split of the Company’s outstanding shares of common stock, par value $0.001, at a specific ratio, up to a maximum of a 1-for-100 split, with the exact ratio to be determined by the Company’s board of directors in its sole discretion.

On January 5, 2023, the board of directors approved a one-for-fifty (1-for-50) reverse split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). On January 6, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the Reverse Stock Split. The Reverse Stock Split became effective as of 4:01 p.m. Eastern Time on January 6, 2023, and the Company’s common stock began trading on a split-adjusted basis when the Nasdaq Stock Market opened on January 9, 2023.

When the Reverse Stock Split became effective, every 50 shares of the Company’s issued and outstanding common stock were automatically combined, converted and changed into 1 share of the Company’s common stock, without any change in the number of authorized shares or the par value per share. In addition, a proportionate adjustment will be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of common stock and the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans. Any fraction of a share of common stock created as a result of the Reverse Stock Split was rounded up to the next whole share. As a result, we issued an additional 35,281 shares of common stock for such rounding.

November 2022 Securities Offering

On November 29, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement (the “November 2022 Offering”), 495,000 shares of the Company’s Series C Convertible Redeemable Preferred Stock, par value $0.001 per share and stated value of $10.00 per share (the “Series C Preferred Stock”), and 5,000 shares of the Company’s Series D Redeemable Preferred Stock, par value $0.001 per share and stated value of $10.00 per share (the “Series D Preferred Stock”), which are collectively referred to herein as the “Preferred Stock”, at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross proceeds of $4,750,000 in the aggregate for the Offering, before the deduction of discounts, fees and offering expenses. The shares of Series C Preferred Stock were convertible, at a conversion price of $0.15768 ($7.884 as adjusted for the Reverse Stock Split) per share (subject in certain circumstances to adjustments), into shares of the Company’s common stock, par value $0.001 per share at the option of the holders and, in certain circumstances, mandatorily by the Company. The Purchase Agreement contained customary representations, warranties and agreements by the Company and customary conditions to closing. The November 2022 Offering closed on November 30, 2022.

Medical Foods

Medical foods

Each Investor in the November 2022 Offering separately agreed, pursuant to a side letter (the “Side Letter”), to vote their respective shares of Preferred Stock on the Reverse Stock Split proposal at the special meeting of stockholders and to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock, unless and until the Reverse Stock Split has been approved by the Company’s stockholders. Pursuant to the certificate of designation of the Series C Preferred Stock, the shares of Series C Preferred Stock had the right to vote on the Certificate of Amendment on an as-converted to Common Stock basis. In addition, pursuant to the Side Letter, the shares of Series D Preferred Stock were automatically voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not consideredvoted) and Series C Preferred Stock are voted on the Certificate of Amendment. The Certificate of Amendment required the approval of the majority of the votes associated with the Company’s outstanding classes of stock entitled to be either dietaryvote on the proposal. Because the Series D Preferred Stock was automatically, and without further action of the purchaser, voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series C Preferred Stock are voted on the Reverse Stock Split, abstentions by common stockholders did not have any effect on the votes cast by the holders of the Series D Preferred Stock.

Pursuant to the Purchase Agreement, on November 29, 2022, the Company filed separate certificates of designation (each, a “Certificate of Designation”) with the Secretary of State of the State of Delaware designating the rights, preferences and limitations of the shares of Series C Preferred Stock and Series D Preferred Stock, which provided, in particular, that the Preferred Stock would have no voting rights other than the right to vote on the Certificate of Amendment and as a class on certain other specified matters, and, with respect to the Series D Certificate of Designation, the right to cast 1,000,000 votes per share of Series D Preferred Stock on the Reverse Stock Split proposal, provided that the Series D preferred stock contains a provision that limits the total voting power of a holder of Series D Preferred Stock to a maximum of 9.99% of the total voting power of the Company.

The holders of shares of Series C Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock. The Series C Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of Common Stock at a conversion price of $0.15768 ($7.884 as adjusted for the Reverse Stock Split) per share. The conversion price was subject to adjustment pursuant to the Series C Preferred Stock Certificate of Designation for stock dividends and stock splits, subsequent rights offering, pro rata distributions of dividends or nutritional supplements.the occurrence of a fundamental transaction (as defined in the applicable Certificate of Designation). The holders of the Preferred Stock had the right to require the Company to redeem their shares of Preferred Stock for cash at 105% of the stated value of such shares commencing after the earlier of the receipt of stockholder approval of the Reverse Stock Split and 60 days after the closing of the issuances of the Preferred Stock, and until 90 days after such closing. The Company believeshad the option to redeem the Preferred Stock for cash at 105% of the stated value commencing after receipt of stockholder approval of the Reverse Stock Split, subject to the rights of the holders of Series C Preferred Stock to convert their shares of Series C Preferred Stock into common stock prior to such redemption.

The proceeds of the Offering were held in a third-party escrow account, along with the additional amount that therewould be necessary to fund the 105% redemption price, until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment to redeeming holders. Upon expiration of the redemption period, any proceeds remaining in the escrow account will be disbursed to the Company.

In connection with the Offering, the Company agreed to pay Roth Capital Partners, LLC, the Company’s placement agent for the Offering (the “Placement Agent”), a financial advisory fee of $200,000 and to reimburse the Placement Agent for certain of its expenses, including legal costs, in an amount not to exceed $50,000. In addition, the Company agreed to pay the Placement Agent a cash fee equal to 5% of the gross proceeds received from any shares of Series C Preferred Stock that are ultimately converted into Common Stock.

All shares of Preferred Stock were fully redeemed as of February 8, 2023. The escrow account was closed upon payment of the last redemption on February 8, 2023. There was no balance remaining in the escrow account and therefore no money was returned to the Company.

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 were able to 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 1, 2023, 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 were restricted from utilizing the at-the-market offering for a period of 120 days, or through June 18, 2022.

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 (the “February Offering”), (i) 651,000 units, priced at an offering price of $15.00 per unit, with each unit consisting of one share of common stock, one warrant to purchase one share of our common stock at an exercise price of $7.57 per share that expires on the fifth anniversary of the date of issuance (“Series A Warrant”) and one warrant to purchase one share of common stock at an exercise price of $7.57 per share that expires on the eighteen month anniversary of the date of issuance (“Series B Warrant”), and (ii) 89,000 pre-funded units, priced at an offering price of $14.9995 per unit, with each unit consisting of one pre-funded warrant to purchase one share of 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 Placement Agency Agreement (the “Placement Agency Agreement”) with the Agents pursuant to which we paid the Agents an increasing levelaggregate fee equal to 7.0% of acceptancethe 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 warrants to the Agents (the “Placement Agent Warrants”) to purchase up to 37,000 shares of medical foodscommon stock exercisable at an exercise price of $7.57 per share. The Placement Agent Warrants were 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) 651,000 shares of common stock, (ii) Series A Warrants to purchase 740,000 shares of common stock, (iii) Series B Warrants to purchase 740,000 shares of common stock, and (iv) Pre-Funded Warrants to purchase 89,000 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. During the term of the Warrant, each warrant holder is entitled to certain rights as described in the Warrants, including the right to “cash out” the Warrant in the event of a fundamental transaction involving the Company, such as a primary therapychange-in-control transaction or sale of substantially all of the Company’s assets. Furthermore, in the event that the Company fails to deliver shares by patientsthe 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 would be required to cover the cost of any buy-ins and, healthcare providersat 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 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 manage pain syndromes, sleeputilize 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 agreed to act as our warrant agent, setting forth the terms and cognitive disorders, obesity, hypertension,conditions of the Series A Warrants and viral infection. InSeries B Warrants sold in the February Offering.

As a result of the November 2022 Offering and pursuant to the terms of the Warrant, on November 30, 2022 the exercise price for all of the Warrants was reduced to $7.884. Thereafter, as a result of the Reverse Stock Split and pursuant to the terms of the Warrants, the exercise price for all Warrants was reduced to $7.57 on January , 2023.

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 and other applications. For the year ended December 31, 2022, sales of the Viactiv line of supplements represented approximately 96% of our consolidated net sales versus 90% for the year ended December 31, 2021. 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 the market over 20 years ago as a calcium-fortified soft chew intended to deliver clinical practice, medical foodsnutrition to women in a way that is enjoyable to taste and easy to consume. The chews are being prescribedavailable in chocolate and caramel flavors, each delivering nutrition to help consumers maintain health goals, such as strong bones and immune support. The calcium chews contain 650mg of Calcium that deliver benefits of hard-to swallow pills with the great taste you expect from a gummy. Compared to the leading gummies, our calcium chews are one of the only ones with both Vitamin D and K1 to boost calcium absorption and help bone mineral density. Viactiv calcium chews are regulated in the U.S. as 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.dietary supplement.

Lumega-Z^®

In February 2022, we began the marketing of our Viactiv® Omega Boost Gel Bites product. The 1,200 mg Omega-3 gel bites are designed to provide total body support, including cardiovascular, brain, joint and eye health. The new dosage form is able to provide the potency of large, hard-to-swallow soft gels, in a great tasting chewable format that has ten times more Omega-3 than the leading fish oil gummies. The gel bite dosage form has been shown to have better absorption and fewer digestive issues than regular soft gel formulas, as well as no unpleasant fishy aftertaste and no sugar, which is associated with many other Omega-3 products. Viactiv Omega Boost Gel Bites are regulated in the U.S. as a dietary supplement.

GlaucoCetin, currently considered a dietary supplement, is a clinically supported, targeted nutrition. GlaucoCetin is designed specifically to provide nutrients to support mitochondrial function with additional antioxidants to reduce oxidative stress and increasing blood flow throughout the body, especially for enhanced eye support and ocular health. We market GlaucoCetin through direct-to-consumer strategies such as social media and paid search advertising.

We also sell Lumega-Z, our legacy medical food product that has a patent-pending formula that is designed to replenish and restore the macular protective pigment, simultaneously delivering critical and essential nutrients to the eye. Management believes, based on review of products on the market and knowledge of the industry, that Lumega-Z is the first liquid ocular health formula to be classified as

As 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.

Lumega-Z is must be administered under the supervision of a physician or professional healthcare provider. In orderWe use a variety of marketing strategies to reach the large, expanding AMD patient population, the Company primarily marketsincrease awareness of Lumega-Z to patients throughamong ophthalmologists and optometrists. We also market Lumega-Z through direct-to-consumer strategies.

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 patients come from a combinationfirst published study assessed the level of absorption of the three initial testing sites, healthcare provider sites where the MapcatSF^® has been demonstrated, patients that have foundcarotenoids in Lumega-Z online and through other patient referrals, healthcare provider sites administering Lumega-Zcompared to their patients without useabsorption of the MapcatSF, and MapcatSF devices recently placed in additional healthcare facilities. Patients take Lumega-Z under the supervision of their physician.

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 to provide the Company anonymized data on the MPOD readings. Anecdotal reports from physicians indicate improvements in their patients such as increased visual function, a noticeable haltcarotenoids in the progressionindustry leading eye vitamin, PreserVision^TM (AREDS 2 formula sold by Bausch and Lomb) and determined whether an elevated level of the patient’s AMD, improvement in glare and contrast sensitivity, and stabilization and improvement of vision. No adverse effects of taking Lumega-Z have been reported by any of the physicians administering Lumega-Zcarotenoid absorption leads to their patients.

Lumega-Z^®has been used in Institutional Review Boardincreased macular pigment optical density (“IRB”MPOD”)-approved patient studies to examine its effectiveness.. The study was conducted by research scientists at the Western University Collegefound that despite only a 2.3-fold higher carotenoid concentration than PreserVision^TM, Lumega-Z supplementation provides approximately 3–4-fold higher absorption, which leads to a significant elevation of Optometry to evaluateMPOD levels. The second study evaluated the visual benefits in three groups; two treatment groups consisting of individuals with fine retinal drusen and a control group consisting of ocular normal individuals. The treatment groups were randomly assigned to either Lumega-Z in one group of patients as compared to a group of patients takingor AREDS 2 (PreserVision^TM) soft gel supplements ,the control group ocular normal individuals took no supplements. Each patient hastreatment participant had retinal drusen, delayed dark adaptation recovery time and was at risk of developing AMD.vision loss from age-related macular degeneration (“AMD”). The results of the study were presented at the Association for Research in Vision and Ophthalmology (“ARVO”) 2019 annual meeting and showed significant improvements in visual function, (“CSF”)as measured by contrast sensitivity, in the group of patients taking Lumega-Z that were statistically significant.Lumega-Z. The patients taking AREDS 2PreserVision^TM showed a trend toward an improvement, but no statistical change, while the control group showed no statistical change. Data

We distribute Lumega-Z and GlaucoCetin through E-commerce, in an online store that is operated at www.viactiv.com.

Prior Product Offerings

Nutriguard: We 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: In September 2017, we acquired VectorVision, Inc. (“VectorVision”), a company that specialized in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment diabetic retinopathy study visual acuity testing. VectorVision’s standardization system is 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 developed, manufactured and sold 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 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, both domestically and internationally. 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 Omega Boost, and other products in development, that it hopes to bring to market in 2023.

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 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.

The Viactiv calcium-fortified soft chews are formulated to deliver nutrition in a way that is enjoyable to taste and easy to consume. The calcium chews contain 650mg of Calcium that deliver benefits of hard-to swallow pills with the great taste you expect from a gummy. Compared to the leading gummies, our calcium chews contain 30% more calcium and are one of the only ones with both Vitamin D3 and K1 to boost calcium absorption and help bone mineral density.

The Viactiv Omega Boost Gel Bites were launched in 2022. The 1,200 mg Omega-3 gel bites are designed to provide total body support, including cardiovascular, brain, joint and eye health. The new dosage form is able to provide the potency of large, hard-to-swallow soft gels, in a great tasting chewable format that has ten times more Omega-3 than the leading fish oil gummies. The gel bite dosage form has been shown to have better absorption and fewer digestive issues than regular soft gel formulas. We believe the Viactiv brand and established distribution will make our Omega Boost Gel Bites sales and marketing functions more successful. Introducing this new product in 2022 expanded our portfolio beyond calcium chews which is an important aspect of our growth strategy. We believe the target audience for calcium will also be interested in purchasing our omega-3 supplements that we believe provide a preferred alternative to existing omega-3 soft gels and gummy products.

GlaucoCetin is clinically supported, targeted nutrition. GlaucoCetin is designed specifically to provide nutrients to support mitochondrial function with additional antioxidants to reduce oxidative stress and increasing blood flow throughout the body, especially for enhanced eye support and ocular health.

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 formulation using a proprietary molecular micronization process (“MMP”) to maximize efficiency of absorption and to minimize compatibility issues. The MMP is a proprietary homogenization process whereby the particle 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 presented at ARVO on a separate study that showedfound to provide significantly better vision benefit than the AREDS-based formula in patients with drusen and at risk of vision loss from macular degeneration who were treated with Lumega-Z for 6 months showed improvements in vision,AMD, as measured by contrast sensitivity. Similar patients treatedWe believe we have an advantage with standard over-the-counter AREDS2 gel caps showed no change.

The numberLumega-Z because of patients regularly ordering Lumega-Z continuesthese 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 increase as new healthcare providers have begun working with the Company, with a concurrent riseoffset further vision loss in patients set on an auto-ship program for delivery every four weeks. The Company’s operations,with early macular degeneration. Lumega-Z has demonstrated in studies to date, indicate that each MapcatSF^®deployed in a clinic can generate an averagehave higher absorption 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. The Company has determined that the value of the MapcatSF is through this utilization. The Company intendscarotenoids, which we believe may lead to continue to deploy the MapcatSF in this fashion, with a focus of assigning the MapcatSF to clinics to build and maintain relationships with the clinics rather than selling the MapcatSF devices. 

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 forand a superiority over the long term.competitive formulas.

The Company believesGrowth Strategy

We believe that there is an increasing level of acceptance of medical foods as a primary therapy by patientsdeveloping new products, growing our established distribution and healthcare providerscost effectively marketing our products are the keys to manage pain syndromes, sleep and cognitive disorders, obesity, hypertension, and viral infection. In clinical practice, medical foodsgrowing our business. We have several innovation initiatives underway that 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 category under the Orphan Drug Act. The term “medical food” 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) 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 therebyaimed 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. For example, we launched a new product named Viactiv® Omega Boost Gel Bites product earlier in 2022. The introduction of the Omega Boost Gel Bites product greatly expanded the total addressable market for Viactiv by expanding the brand into the established sizeable omega-3 market. We hope that our omega-3 product will distinguish itself from the competition over time.

Our current network includes many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. We expanded our sales channels for Viactiv during the year by launching a direct-to-consumer website. This new channel offers Viactiv customers an additional channel to purchase our products as well as offering customers with more customized offers and information. 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.

Sales

Viactiv has traditionally sold the majority of its products through traditional retailers via the use of 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 formulatedmeaningful and commercialized.play an important role in our eCommerce strategy over time. In addition, we sell a limited amount of Viactiv products directly to consumers via our website, and plan to continue 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.

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 eliminated our direct sales approach that involved our sales representatives in favor of a more cost-effective approach to increase the awareness of 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 acquisition of Activ 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 key 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 our existing products, intellectual property rights primarily associated with our VectorVision line of business and unique nutritional formulations in Asian markets.

Intellectual Property

Our goal is to obtain, maintain and enforce patent and trademark protection for our products, formulations, processes and methods, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the U.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, trademark registrations 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, one Chinese patent, one Hong Kong patent application, two Japanese patents, and one Korean patent 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.

(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) Chinese Patent No. ZL 2017800672763, titled “Method and Apparatus for Vision Acuity Testing,” granted on June 7, 2022.*

(7) 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.

(8) Japanese Patent No. 7039602, titled “Method and Apparatus for Vision Acuity Testing,” granted on March 11, 2022.*

(9) Japanese Patent No. 7157070, titled “Method and Apparatus for Vision Acuity Testing,” granted on October 11, 2022.*

(10) Korean Patent No. 10-2422480, titled “Method and Apparatus for Vision Acuity Testing,” granted on July 14, 2022.*

* 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 twelve trademarks registered with the United States Patent and Trademark Office (“USPTO”), all of which are used in association with the Guardion line of products. In addition, we have five 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 Viactiv trademark in a broad range of geographies. We are evaluating whether additional foreign trademark protection may be appropriate. The domestic and foreign trademark registrations referred to herein are set forth in the table below:

Trademark Registrations/Applications

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. Information about NutriGuard Formulations products can be found atwww.nutriguard.com.

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.

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 claims for which there is scientific evidence that nutrient deficiencies cannot be corrected by normal diet. 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 and GlaucoCetin are properly categorized as medical foods. While the Company believes it is unlikely the FDA would conclude otherwise, if the FDA determines Lumega-Z or GlaucoCetin 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 or GlaucoCetin, although there is a chance that certain physicians may choose not to recommend Lumega-Z or GlaucoCetin to their patients or that certain consumers may choose not to buy Lumega-Z or GlaucoCetin if they are not classified as medical foods.

Medical Devices - 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 device offers 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. The Company’s research has revealed there are no competing products that offer 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 uses self-calibrated test lighting. The self-calibrated test lighting is proprietary. The self-calibrated test lighting technology is a proprietary and patented technology known as AcQviz, which tests the faces of the CSV-1000 and CSV-2000 and automatically and constantly measures and adjusts screen luminance to a fixed standard light level for vision testing. The test faces of the CSV-1000 are proprietary and their intellectual property is protected under copyright and trade secret law. CSV-1000 is currently sold worldwide, and the Company expects this global distribution to continue. There is a training requirement in incorporating the CSV-1000 and the CSV-2000 device into clinical practice, which the Company plans to provide as part of its commercialization strategy.

Nutraceutical Industry Overview

Products Manufacturing and Sources and Availability of Raw Materials

A

We outsource the manufacturing of our medical food products and dietary supplement is a definedproduct 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 our products in the event of a termination or a disagreement with any current vendor.

Government Regulation

Dietary Supplement HealthRegulation

The US Food and EducationDrug 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 enacted in 1994 (“DSHEA”FDCA”), as a distinct, sub-category of “food.” Dietary supplements must meet the requirements of applicable food laws and regulations. A “dietary supplement” is defined under the FDCA as “a product (other than tobacco) intended to supplement the diet that bears or contains one or more of the following dietary ingredients: vitamins, minerals, amino acids, herbs or other botanicals; a concentrate, metabolite, constituent, extract or combination of the ingredients listed above.” Dietary supplements are intended to enhance the diet and may not be taken orallyrepresented 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 pre-market review for safety data and are labeledother information is required by law, a firm is not required to provide the FDA with the evidence it relies on to substantiate safety or effectiveness before marketing a supplement product.

A manufacturer or distributor must notify the front panel as beingFDA if it intends to market a dietary supplement in the U.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.”

DSHEA placesOwners or responsible parties of any facilities at which dietary supplements in a special category underare manufactured, packaged, labeled, or held for distribution must register the general umbrellafacility or facilities with FDA pursuant to the Bioterrorism Preparedness and Response Act of “foods,” not drugs,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 requires the productcomposition of dietary supplements. We engage with contract manufacturers to be labeled as a “dietary supplement.” The terms “dietary supplement” and “nutraceutical”manufacture our dietary supplements.

Companies are often used interchangeably.

Under DSHEA, a company is responsible for determining that the dietary supplements it manufacturesthey manufacture or distributesdistribute are safe, and that any representations or claims made about them are substantiated by adequate evidence to show that theythe claims are not false or misleading. Dietary supplements do not need approval from FDA before they are marketed, although “newThe Federal Trade Commission (“FTC”) has the primary responsibility to regulate the advertising of foods, including dietary ingredients” do require premarket review by FDA. This allows companies to bring products to market in less timesupplements. Under the FTC Act, all advertising claims, both express and with less cost than is required for drug approval fromimplied, must be truthful, non-misleading, and substantiated. Claims about the FDA.

Competitive Advantagehealth benefits of a product must meet the basic substantiation standard of “competent and Strategy

Medical Foods

There are no research-validated pharmaceutical solutions for slowing the progression of adult dry 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.

Lumega-Z is a medical food designed to enhance the bioavailability of “difficult to absorb” ingredients like carotenoids.reliable scientific evidence,” generally randomize, controlled, human clinical trials. 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 MMP is a proprietary homogenization process whereby the particle size of the ingredients is reduced to facilitate more efficient absorption into the body. In clinical studies, Lumega-Z has been shown to deliver nearly four times times more carotenoid into the bloodstream compared to standard supplements (See Richard Bone, Pinakin G Davey, David Evans.Serum, macular pigment and visual function response to commercially available supplements: IOVS (Investigative Ophthalmology and Vision Science)ARVO).

Medical 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. The Company’s focus is to deploy the MapcatSF in clinics accompanied by trained technicians to conduct the MPOD measurements and collaborate with the physicians treating their patients.

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 causedpractice, the FDA and other agenciesFTC 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 require standardized test lighting for vision tests. Contrast sensitivity testing measures how people seethe 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 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 calibrationstructure or function of the display screens used for vision testing. The Company owns this patent, and its VectorVision CSV-1000 device embodies this invention. On July 17, 2018,human body. If the USPTO issued US Patent No. 10,022,045, also titled Method and Apparatus for Visual Acuity Testing, which describeslabel of a methodology to continuously calibrate display monitors to automatically hold display luminance constant for vision testing. This second patent also coversdietary supplement contains such structure/function claims, the manufacturer must submit 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. The Company’s new AcQviz device embodies this invention, which is now used in conjunctionnotification with the VectorVision CSV-1000 device.

The Company believes the CSV-1000 is the current standard of care for clinical practice. The Company recently announced it is preparing to launch the new CSV-2000, which is an enhanced, electronic versiontext of the CSV-1000. There is a training requirement in incorporating the CSV-1000 and CSV-2000 device into clinical practice, which the Company plansclaim to provide as part of its commercialization strategy.

The CSV-1000 and CSV-2000 use self-calibrated test lighting. The self-calibrated test lighting technology is a proprietary and patented technology known as AcQviz, which tests the faces of the CSV-1000 and CSV-2000 and automatically and constantly measures and adjusts screen luminance to a fixed standard light level for vision testing. Although the CSV-1000 will continue to be sold, the Company plans to put a greater focus on sales andFDA no later than 30 days after marketing efforts of the new CSV-2000 in the first quarter of 2020. There can be no assurances that the marketing efforts will be successful and sales of the CSV-2000 will be comparable or exceed sales of the CSV-1000.

Nutraceuticals

The Company intends to build a portfolio of nutraceutical products under the NutriGuard brand by developing new condition-specific formulations and marketing the NutriGuard products to patients directly through direct to consumer (“DTC”) channels and make the NutriGuard products available to patients through recommendations by their physicians.

NutriGuard intends to formulate high quality scientifically credible nutraceuticals with a goal to become a globally respected and physician-preferred nutraceuticals brand. The Company believes its nutraceuticals can play an important role in optimizing, preserving and restoring health.

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.

Sales Force

The Company has made a number of recent changes to its sales force and sales efforts. The Company now has new sales leadership with extensive industry experience. The Company currently has a sales force of account managers who are trained healthcare providers including NDs and physician assistants. The last of the new sales staff was put in place mid-March 2020.

While the Company has been developing the NutriGuard website, the Company is currently promoting the NutriGuard line.

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. The Company is also looking to expand the NutriGuard line to international markets.

Ocular Care

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 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.

The MapcatSF^® has demonstrated itself to be an effective tool to promote Lumega-Z. The Company has determined that the value of the MapcatSF is through this utilization. The Company intends to continue to deploy the MapcatSF in this fashion, with a focus of assigning the MapcatSF to clinics to build and maintain relationships with the clinics and assist the physicians in making a determination to recommend Lumega-Z to their patients. The Company believes that continued deployment of MapcatSF devices in this fashion will build effective relationships with physicians and their clinics, expand the awareness of the Company’s products and increase sales of Lumega-Z.

Marketing the CSV-1000 and CSV-2000 to Practitioners

Contrast sensitivity is currently one of the standard tests for clinical trials relating to ocular surgeries and treatments,claim and the CSV-1000 is consideredlabel must bear the benchmark for these applications. In addition, there is an increasing need for functional vision assessment in everyday clinical practice, as a means of measuringdisclaimer: “This statement has not been evaluated by the effect of disorders such as cataractFood 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.

The Company expects to continue to sell the CSV-1000 for the foreseeable future. The CSV-2000Drug Administration. This product is not yet approved byintended to diagnose, treat, cure, or prevent any disease.” We are responsible for ensuring the local organizations equivalent to the FDA in many countries,accuracy and this process can take up to one or more years. The CSV-1000 will continue to be sold exclusively in those countries during that time period. The first unittruthfulness of the CSV-2000 was shipped in the first quarter of 2020.all product claims.

Proprietary Technology and Intellectual Property

Patents

The Company currently owns and has exclusive rights to 4 U.S. patents and 2 U.S. patent applications and 5 foreign patents and 3 foreign patent applications covering its products and product candidates.

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 six U.S. registered trademarks on the principal register at the USPTO. These marks are listed below. The Company has two foreign registered trademarks for its products and product candidates at this time and is evaluating whether additional foreign trademark protection is appropriate. U.S. trademark registrations are generally for fixed, but renewable, terms. The Company also has common law trademark rights for the use of its marks, including common law trademark rights to the NUTRIGUARD mark.

Copyrights

In addition to patent and trademark protection, VectorVision has three copyrights registered with the U.S. Copyright Office relating to the CSV-1000 and CSV-2000 medical devices. VectorVision also has common law copyright protection on the testing charts contained in the CSV-1000 and CSV-2000 medical devices, which includes Vision Testing Chart #1, Vision Testing Chart #2 and Vision Testing Chart #3.

Medical Foods Medical Device and Nutraceuticals Manufacturing and Sources and Availability of Raw MaterialsRegulation

The Company outsources the manufacturing of itsFDA is primarily responsible for regulating medical foods. A medical food products, nutraceutical product line 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 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 existdefined 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 or professional healthcare provider 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 notWe currently consider our Lumega-Z product to 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 meet 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 FDA 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.food. 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 such as Lumega-Z.

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 randomlysocial media accounts.

Healthcare Laws and at the request of the FDA or of a competitor.Regulations

Nutraceutical Regulation

The FDA regulates foods, food additives, drugs and cosmetics. Unlike pharmaceutical drugs and conventional foods, nutraceuticals are regulated as “dietary supplements” under the Dietary Supplement, Health and Education Act of 1994 (“DSHEA”) as a separate regulatory category of food. Before the DSHEA, dietary supplements were subject to the same regulatory requirements as were other foods. DSHEA amended the FDCA to create a new regulatory framework for the safety and labeling of dietary supplements. Under DSHEA, a company is responsible for determining that the dietary supplements it manufactures or distributes are safe and that any representations or claims made about them are substantiated by adequate evidence to show that they are not false or misleading. Dietary supplements do not need approval from FDA before they are marketed. Except in the case of a “new dietary ingredient,” where pre-market review for safety data and other information is required by law, a firm does not have to provide FDA with the evidence it relies on to substantiate safety or effectiveness before or after marketing a product. In addition, there is a requirement for manufacturers to register pursuant to the Bioterrorism Act with FDA before producing or selling supplements. In June 2007, FDA published regulations for Current Good Manufacturing Practices (“cGMP”) for those who manufacture, package, label or hold dietary supplement products. These regulations focus on practices that ensure the identity, purity, quality, strength and composition of dietary supplements.

Congress defined the term “dietary supplement” in DSHEA as “a product (other than tobacco) intended to supplement the diet that bears or contains one or more of the following dietary ingredients: vitamins, minerals, amino acids, herbs or other botanicals; a concentrate, metabolite, constituent, extract or combination of the ingredients listed above.” A dietary supplement is a product taken by mouth that contains a “dietary ingredient” intended to supplement the diet. The “dietary ingredients” in these products may include vitamins, minerals, herbs or other botanicals, amino acids, and substances such as enzymes, organ tissues, glandulars, and metabolites and can also be extracts or concentrates. Dietary supplements are produced in the form of tablets, capsules, softgels, gelcaps, liquids, or powders. Dietary supplements can also be in other forms, such as a nutrition bar, but if they are in another form, information on their label must not represent the product as a conventional food or a sole item of a meal or diet. Regardless of form, DSHEA places dietary supplements in a special category under the general umbrella of “foods,” not drugs, and requires the product to be labeled as a “dietary supplement.”

According to the FDA, a drug is an article intended to diagnose, cure, mitigate, treat or prevent disease. While nutraceuticals are not intended to cure or treat disease, both dietary supplements and drugs are intended to affect the structure or function of the body. Dietary supplements that contain structure/function claims on their labels must bear the disclaimer: “This statement has not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease.” The manufacturer is responsible for ensuring the accuracy and truthfulness of these claims; they are not approved by FDA. Moreover, dietary supplements are supposed to enhance the diet, not be used as a conventional food or as the sole item of a meal or diet, and not supposed to be taken alone as a substitute for any food or medicine.

The DSHEA requires that a manufacturer or distributor notify FDA if it intends to market a dietary supplement in the U.S. that contains a “new dietary ingredient.” The manufacturer and distributor must demonstrate to FDA why the ingredient is reasonably expected to be safe for use in a dietary supplement, unless it has been recognized as a food substance and is present in the food supply. A new dietary ingredient is an ingredient marketed after October 15, 1994. There is no authoritative list of dietary ingredients that were marketed before October 15, 1994. Therefore, manufacturers and distributors are responsible for determining if a dietary ingredient is “new,” and if it is not, for documenting that the dietary supplements its sells, containing the dietary ingredient, were marketed before October 15, 1994. The DSHEA states that the manufacturer is responsible for the safety evaluation of the product. If the dietary supplement contains a new ingredient, the manufacturer must inform FDA that the new ingredient “can reasonably be expected to be safe” within 75 days of going to market. This notice must provide information that supports the manufacturer’s conclusion that the ingredient is safe. It is up to the FDA to prove that a dietary supplement is unsafe after it is marketed.

A dietary supplement is adulterated if, among other things, it or an ingredient in it presents a “significant or unreasonable risk of illness or injury” when used as directed or contains a new ingredient for which there is insufficient information to provide assurance that the ingredient does not present any significant or unreasonable risk of illness or injury. The DSHEA also has labeling requirements for dietary supplements including requiring information on the label such as: (1) name of each ingredient; (2) quantity of each ingredient; (3) total weight of all ingredients, if a blend; (4) identity of the plant part used; (5) the term “Dietary Supplement;” (6) nutritional labelling information (calories, fat, sodium, etc.).

Medical Device Regulatory Requirements

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.

The Company is registered with the FDA as a medical device manufacturer under registration number 3010367547. The MapcatSF is listed with the FDA as a Class I medical device. 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. As a Class I medical device, the MapcatSF is a safe medical device with a very low potential risk of injury to a patient. This device does not require any premarket approval.

VectorVision is registered with the FDA as a medical device manufacturer under registration number 1527853. The CSV-1000 and the ESV-3000 medical devices are listed with the FDA as Class I medical devices. The applicable product code for these devices is HOX and the applicable Code of Federal Regulation is 886.1150. 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.

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 Foods, and Medical Devices. 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, purchase the CSV-1000, CSV-2000 or ESV-3000, or recommend its medical foods,food, 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 has no assurance that the physicians are in material compliance with Stark II. If it were determined 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.

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. In conducting TCD tests, the Company will be providing the tests to the ordering physician, who will be paying TCD as a vendor to perform the test on behalf of the physician; and the physician will then be billing for the test to third party payers, including potentially Medicare and Medicaid. As a result, the tests will be considered to be an in-office ancillary service covered under Stark. The Stark Law, however, includes an exception for the provision of such in-office ancillary services, provided that the physician meets specified requirements. The Company believes that the physicians who engage the Company as a vendor to perform the TCD tests are aware of these requirements. However, the Company does not monitor the physicians’ compliance and has no assurance that the physicians are in material compliance with the Stark Law.Law or State Self-Referral Prohibitions. If it were determined that the physicians who prescribe medical foods purchased from us were not in compliance with the Stark suchLaw or State Self-Referral Prohibitions, it could potentially have an adverse effect on the Company’sour business, financial condition and results of operations.

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 Foods, and Medical Devices. 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 (1) not set at a fair market value amount unrelated to the volume or value of TCD tests being ordered; or (2) were found to be a circumvention of the AKS through the creation of a suspect contractual joint venture. 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 1, 2023, we, including our subsidiaries, had a total of 12 full-time employees. and the time may be longer or shorter thanno part-time employees. We are not a party to any collective bargaining agreements. We believe that required for FDA approval.we maintain good relations with our employees.

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, the CompanyMarch 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 of our common stock without any change to our par value.

On January 6, 2023, we filed a Certificate of Amendment to our Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effectuate a one-for-six (1:50) 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.

Employees

As of March 27, 2020, the Company, including its subsidiaries, had a total of 22 employees, including 21 full-time employees and one part-time employee.

Advisory Boards

The Company’s research and development efforts are shaped by a Science Advisory Board with advice from a Medical Advisory Board consisting of practicing physicians. Both teams are committed to revealing and validating the connections between health and nutrition and then developing products basedReport on these findings. Their joint goal is the integration of a medical model incorporating nutritional therapy into clinical practice.Form 10-K.

Science Advisory Board

The Company’s Science Advisory Board is a product development and research team of esteemed experts in the fields of biochemistry, biophysics, and clinical nutrition. In addition to developing products based on scientific studies in the public domain, members of the Science Advisory Board conduct and publish their own evidence. Their expertise and the evidence they develop guide the formulation of all of the Company’s products. As an elite team of scientists and researchers, members of the Science Advisory Board contribute a high level of experience and judgment to the field of retinal health and nutrition. The Science Advisory Board currently consists of:

Medical Advisory Board

The Company’s Medical Advisory Board is composed of clinicians who are active medical practitioners. Members of the Medical Advisory Board consult with the Scientific Advisory Board on the current standards of care in relevant medical practices. Members of the Medical Advisory Board objectively advise on trends, needs, and issues of concern within their specialties. Their input helps shape the direction of the Company’s research and product development efforts. The Medical Advisory Board currently consists of:

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 cannot be certain if or when the Company will produce sufficient revenue from operations to support costs. The Company had a net loss available to common shareholders of $10,878,308$15,863,812 for the year ended December 31, 20192022 and a net loss of $7,767,407$24,745,009 for the year ended December 31, 2018.2021. The Company had an accumulated deficit of $45,511,671$93,724,300 as of December 31, 2019. The2022. At December 31, 2022, the Company expectshad cash and cash equivalents on hand of $10,655,490 and working capital of $14,307,051. Notwithstanding the net loss for 2022, management believes that its current cash balance is sufficient to continue to incur net losses and negative operating cash flows infund operations for at least one year from the near-term.date the Company’s 2022 financial statements are issued.

The Company will continue to incur significant expenses for commercialization activities related to the commercialization of its medical foods Lumega-Z^®and Glauco-Cetin^TM, its nutraceuticals product line, the MapcatSF^® medical device and the CSV-1000 and CSV-2000 medical devices,products and with respect to its efforts to build its infrastructure, and expand its operations.operations, and execute on its 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, 2022 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, 2019. 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, would increase expenses and may require that Company assets secure such debt. Moreover, any debt the Company incurs 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 is 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^® and GlaucoCetin^TMmedical foods, its line of nutraceuticals, the MapcatSF^® medical device, and the CSV-1000 and CSV-2000 medical devices.

The future success of the Company’s business is largely dependent upon the successful commercialization of its medical foods, nutraceuticals and medical devices.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. 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 from sales. If this occurs, it will have an adverse impact on the Company’s operations and the Company’sits ability to fund future development and commercialization efforts.

The COVID-19 global pandemic has adversely impacted, and may continue to adversely impact, the Company’s business, including the commercialization of the Company’s products, supply chain challenges, 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 market and sell its products, cause disruptions to its supply chain and impair its ability to execute its business development strategy. These and other 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 impacted 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 operations 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 had been experiencing supply chain constraints due to the COVID-19 pandemic. These constraints began in December 2021 and continued into the third quarter of 2022. These constraints impacted the Company’s ability to obtain inventory to fulfill customer orders for its Viactiv branded products and may 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. 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. We are subject to, and paid in 2022, out-of-stock fees to certain retailers in the event that we are 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, material costs and transportation challenges. The Company expects input cost inflation to continue at least throughout 2023.

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 may be negatively affected by the rate of inflation and its impact on the global economy.

Current inflation within the economy has resulted in increased interest rates and capital costs, contributed to supply shortages, increased the cost of living and labor, and other related items. As a result of inflation, which may continue, the Company expects to incur higher costs relating to the production of its products. Although the Company may take actions to counteract the impacts of inflation, if these actions are not effective it could have a material adverse effect on the Company’s business, results of operations and financial condition. Additionally, higher future inflation or concerns of a recession could impact the demand for the Company’s products.

The Company may fail to realize all of the anticipated benefits of the VectorVision acquisition and NutriGuard Acquisition or those benefits may take longer to realize than expected. The Company may also encounter significant difficulties in integrating VectorVision and NutriGuard into the existing business and VectorVision and NutriGuard may underperform relative to the Company’s expectations.

The Company may not fully realize the anticipated benefits of the VectorVision acquisition and NutriGuard Acquisition. The Company has integrated the business of VectorVision and begun to integrate NutriGuard with its legacy businesses, and the Company may continue to devote significant management attention and resources to operate and grow these businesses. The failure to realize the anticipated benefits of the VectorVision acquisition and the NutriGuard Acquisition could cause an interruption of,A prolonged recession or a lossperiod of momentumsignificant turmoil in the Company’s operationsU.S. and international financial markets, could adversely affect the Company’s business, liquidity and financial condition and its share price.

U.S. and international financial market disruptions such as the ones experienced in the last global financial crisis and the volatility experienced as a result of the COVID-19 pandemic, along with the possibility of a prolonged recession, may potentially affect various aspects of the Company’s business, including the demand for its products, its counterparty credit risk and the ability of its customers, counterparties and others to establish or maintain their relationships with the Company. Volatility in the U.S. and other securities markets may also adversely affect the Company’s share price.

Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and resultsstock price.

The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflationary pressure and interest rate changes, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of operations.military conflict, including the conflict between Russia and Ukraine, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. More recently, the closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance Corporation (FDIC) created bank-specific and broader financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at Silicon Valley Bank and Signature Bank would have access to their funds, even those in excess of the standard FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions. If the equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, continued operationthere is a risk that one or more of VectorVision and NutriGuard may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customersour current service providers, financial institutions, manufacturers and other business relationships, and diversion of management’s attention. Additional challenges may include, among other things, difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects and the impact of potential liabilities the Companypartners may be assuming from VectorVision or NutriGuard.adversely affected by the foregoing risks, which could directly affect our ability to attain our operating goals on schedule and on budget.

During the fourth quarter of 2019, the Company conducted its annual impairment analysis, considering multiple qualitative observations and indicators, including our customer relationships, the regulatory environment as it impacts medical devices, market penetration expectations and barriers, and our anticipated competitive environment. In addition, we assessed the operating results of our VectorVision reporting unit against the quantitative assumptions we used when determining the initial fair values associated with the 2017 business combination. Accordingly, the Company has recorded a goodwill impairment charge of $1,563,520 and has accelerated the remaining amortization expense of $191,468 on its identifiable intangible assets as of December 31, 2019.

The Company has limited experience in developing dietary supplements and medical foods medical devices and nutraceuticals and it may be unable to commercialize some of the products and services it 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 twoa few commercialized medical food products on the market, Lumega-Z and GlaucoCetin. 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. The Company is preparing to launch the CSV-2000, but there is no assurance the introduction of the instrument will be successful.market. Furthermore, there is no guarantee that the NutriGuard nutraceuticalsany newly developed products will be marketable or that the Company will achieve commercial success with theany new products or product line.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 business is 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. 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 and GlaucoCetin are medical foods, if the FDA determines Lumega-Z or GlaucoCetin to be a drug, the Company and the product would be subject to considerable additional FDA regulation. Similarly, the Company believes the MapcatSF is correctly classified as a Class I medical device, which does not require any premarket approval. The Company also believes the CSV-2000 is a Class I medical device. If, however, the FDA were to determine that the MapcatSF or CSV-2000 is a Class II medical device, the Company and the particular product or products would be subject to considerable additional regulatory requirements.

The NutriGuard line of products are nutraceuticals and are regulated as dietary supplements under the Dietary Supplement, Health and Education Act of 1994 (“DSHEA”). Although dietary supplements are considered a separate regulatory category of food from consumer food products and medical foods, the FDA requires facilities that manufacture nutraceuticals to comply with regulations for current good manufacturing practices (“cGMP”). The Company does not manufacture any of the medical foods or nutraceuticals internally. The Company relies on contract manufacturers to manufacture the products. The FDA cGMP regulations largely are applicable to the site where the product is manufactured. Thus, the Company depends on the contract manufacturers to maintain cGMP compliance.

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.

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, GlaucoCetin or the NutriGuard line of products, 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.products.

While the Company believes that these collaborative relationships help further validate ourits 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.

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 its current products.

The Company’s long-term viability and growth may depend upon the successful development and commercialization of products other than 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.

We could be negatively impacted by the recent outbreak of coronavirus (COVID-19).

In light of the uncertain and rapidly evolving situation relating to the spread of the coronavirus (COVID-19), this public health concern could pose a risk to our customers, our employees, our vendors and the communities in which we operate, which could negatively impact our business. Additionally, the State of California issued a Statewide Executive Order on March 19, 2020, which could impact our operations materially in the short term. The extent to which the coronavirus (COVID-19) may impact our business will depend on future developments, which are highly uncertain and cannot be predicted at this time. We could experience customer or widespread shutdowns to prevent spread of the virus, employee impacts from illness, school closures and other community response measures, all of which could negatively impact our business. We intend to continue to monitor the situation and may adjust our current policies and practices as more information and guidance become available.

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 the Company’s medical foods, medical devices and nutraceuticals,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 ourthe 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, distribution and marketing experience and resources as well as greater brand recognition than we dothe Company does and represent substantial long-term competition for us.the Company. Such companies may develop products that are safer, more effective or less costly than any that wethe Company may develop. Such companies also may be more successful than we arethe 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.goals which may have a material adverse effect on the Company.

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

The Company currently has a sales force consisting of a sales manager and four salespeople. 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.

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, GlaucoCetin andits products. If the NutriGuard product line of nutraceuticals. If weCompany 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, our

The Company has experienced supply chain may be jeopardized for a period of timeconstraints due to the COVID-19 outbreak.pandemic. These constraints began in approximately December 2021 and have continued into the first quarter of 2022. These constraints 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 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 input cost inflation to continue at least throughout 2023.

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 the Company’s third-party e-commerce vendor. The Company strives to comply with all applicable laws, internal policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our third-party E-commerce vendor. Despite ourpractices. In addition, despite the 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 three third-party manufacturers. 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.”

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, 20192022 and 2018,2021, the Company’s billings were derived from a limited number of individual customers and distributors. During the yearyears ended December 31, 2019,2022 and 2021, the Medical Devices segmentCompany had one customer who accounted for approximately 22%57% and 49% of the Company’s sales; and during the year ended December 31, 2018, the Medical Devices segment had one customer who accounted for approximately 47% of the Company’s sales.sales respectively 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.

In addition, introduction of a new product that has similar or advances features over a current product may reduce interest and sales in the current product. There is no assurance that a new product will achieve the same or greater sales levels of a current product or that sales of a new product will replace or exceed the sales of a current product.

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 and GlaucoCetin and nutraceuticals in order to recommend them to their patients, and to understand the benefits of visual acuity testing using the CSV-2000 device. 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.

The Company is highly dependent upon consumers’ perception of the safety and quality of its products 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 business.

Decisions about purchasing made by consumers of the Company’s products may be affected 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 well 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, regardless of whether these reports are scientifically supported. Publicity related to nutritional supplements may also result in increased regulatory scrutiny of the Company’s industry and/or the healthy foods channel. Adverse publicity may have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

If the Company’s principal suppliers fail or are unable to perform their contracts with the Company, it may be unable to meet 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. All of the ingredients for the nutraceutical products are sourced by the contract manufacturer that produces the NutriGuard products. 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, we may be unable to meet our commitments to our customers. Additionally, if our suppliers are impacted by the recent outbreak of coronavirus (COVID-19), we may be unable to meet our commitments to our customers. If this were to happen, our reputation as well as our relationships with our customers may suffer and our business and results of operations may be adversely affected. We are evaluating several additional manufacturers for selection as second source or back-up providers.

If the Company incurs costs exceeding its insurance coverage in lawsuits that are brought against it in the future, such incident may adversely affect the Company’s business, financial condition and results of operations.

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.

OurThe Company’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 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 and 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 of ourfor its board of directors may be impacted due to new state laws, including recently enacted gender quotas.potential rules of national securities exchanges.

In September 2018, California enacted SB 826 requiring publicNasdaq 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 headquartered in Californialisted on Nasdaq’s U.S. exchanges to maintain minimum female representation onpublicly disclose consistent, transparent diversity statistics regarding their boardsboard of directors as follows: bydirectors. Additionally, the end of 2019, at least one woman on its board, by the end of 2020, public company boards with five members will be requiredrules 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 directors, and public company boards with sixone who self-identifies as either an underrepresented minority or more members will be required to have at least three female directors. 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 gender quotas as a result of the California law,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.

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

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 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 an 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.

The Company has made certain assumptions relating to the Activ acquisition that may prove to be inaccurate, including as the result of the failure to realize the expected benefits of the Activ acquisition, failure to realize expected revenue growth rates, higher than expected operating and transaction costs, as well as general economic and business conditions that adversely affect the Company.

Risks Related to Government Regulations

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 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 market in their jurisdictions. Member states have powers to suspend the marketing and use, or demand the recall, of unsafe 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 regulatory 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 have a material adverse effect on the Company’s reputation, business, financial condition, and results of operations.

Dietary supplements, such as Viactiv and GlaucoCetin, 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 to be a medical food, as that term is defined under the FDCA. While the Company believes Lumega-Z is a medical food, if the FDA determines Lumega-Z 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 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 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 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 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.

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 conduct 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 imposed, 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 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 will likely face significant fines and penalties and would likely be successfulrequired 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 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 believethe Company believes Lumega-Z^® and Glauco-Cetin^TM to be medical foodsfood and not drugs,a drug, they are only available under the supervision of a physician. While 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, particularly as we expand ourthe 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.

The Company’s Second Amended and Restated Bylaws designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of state law actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Article XI of our Second Amended and Restated Bylaws, or our Bylaws, dictates that the Delaware Court of Chancery is the sole and exclusive forum for certain state law based actions including certain derivative actions or proceedings brought on behalf of the Company; an action asserting a breach of fiduciary duty owed by an officer, a director, employee or to the shareholders of the Company; any claim arising under Delaware corporate law; and any action asserting a claim governed by the internal affairs doctrine.

This exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction.

This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively, if a court were to find this provision of our Bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.

The Company has no experience in conducting transcranial doppler ultrasound studies or selling nutraceuticals.

The Company’s ability to realize the anticipated benefits of the new Transcranial Doppler Solutions, Inc. business or NutriGuard line of products will depend on its ability to attract qualified personnel and to successfully launch, market and advance a new service in an area where the Company has limited experience, which may be a complex, costly and time-consuming process. The Company may be required to devote significant management attention and resources to develop these businesses. The initiation process may disrupt its business and, if implemented ineffectively, could restrict the realization of the full expected benefits of the new business service. The failure to meet the challenges involved in the initiation process 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 IndustryCommon Stock

Any failureWe have identified a material weakness in our internal control over financial reporting. If we are unable to comply with all applicable federalremediate the material weakness and state privacy and security requirements for the protectionotherwise maintain an effective system of patient information mayinternal control over financial reporting, it could result in fines and other liabilities, which may adversely affectus not preventing or detecting on a timely basis a material misstatement of the Company’s resultsfinancial statements.

A material weakness is a deficiency, or combination 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 XIIIdeficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the American Recoverycompany’s annual or interim financial statements will not be prevented or detected on a timely basis. As further disclosed in “Item 9A. Controls and Reinvestment ActProcedures” of 2009 (the “HITECH Act”), andthis Annual Report on Form 10-K, management had identified a material weakness specifically relating to deficiencies in its internal controls over the review process relating to third-party valuations. Outside of this subjective review process relating to valuations, no other deficiencies in internal controls were identified. The Company has taken actions to remediate the material weakness related regulations promulgated byto our internal control process of review contributing to financial reporting. We have made improvements to the Secretary (“HIPAA Regulations”) grant a numberdesign 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 withrelated controls, including standardized review procedures over third-party valuations. While these confidentiality requirements maycontrol deficiencies did not 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 relatinga misstatement to the acquisition, storage and transmission of patient medical informationconsolidated financial statements, the material weakness could have resulted in a misstatement impacting account balances or disclosures that would have resulted in a material misstatement to the consolidated financial statements that would not have been proposed at both the federal and state level. These laws (collectively, the “State and Federal Privacy and Security Laws”) present different risks asprevented or detected on a timely basis.

Although we are implementing plans to two lines of businessremediate this material weakness, we cannot be certain of the Company: (1)success of the plans. If our sale of medical foods, and (2) our performance of Trans Cranial Doppler ultrasound (“TCD”) testing.

1. Medical Foods: Lumega-Z and GlaucoCetin. When a physician recommendsremedial measures are insufficient to address the material weakness, or if one or more of the Company’s medical foods to a patient, the Company typically receives an order from the customer, but does not usually receive medical information. As part of the operation of its business, it is possible, however, that during communication with customersadditional material weaknesses or with physicians the Company might receive patient-identifiable medical information. To the extent the Company obtains access to Protected Health Information, it must ensure it complies with the State and Federal Privacy and Security Laws. Any failure to comply may resultsignificant deficiencies in fines and other liabilities, which may adversely affect its results of operations.