{"url_path":"/sec/petv/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-29","source_url":"https://www.sec.gov/Archives/edgar/data/1512922/0001493152-26-031136-index.html","accession_number":"0001493152-26-031136","cik":"0001512922","ticker":"PETV","issuer_name":"PetVivo Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1512922/0001493152-26-031136-index.html","primary_entity_key":"0001512922","primary_entity_name":"PetVivo Holdings, Inc."},"word_count":5630,"has_tables":true,"body_markdown":"**ITEM\n1A. RISK FACTORS**\n\n \n\n*An\ninvestment in our common stock and warrants involves a high degree of risk. You should carefully consider the following described risks\ntogether with all other information included in this prospectus before making an investment decision with regard to this offering. If\none or more of the following risks occurs, our business, financial condition, and results of operations could be materially harmed, which\nmost likely would result in a decline in the trading price of our common stock and warrants and investors losing part or even all of\ntheir investment.*\n\n \n\n**Risks\nRelating to Our Financial Condition**\n\n** **\n\n**The\nCompany’s failure to meet the continued listing requirements of The Nasdaq Capital Market has resulted in a delisting of its securities.**\n\n \n\nOur\ncommon stock and warrants were delisted for trading on Nasdaq and on July 26, 2024, we received approval for trading on the OTC Markets\nGroup, OTCQB Venture Market. On July 30, 2025, we were uplisted to the OTCQX Best Market.\n\n \n\n**We\nhave incurred substantial losses to date and could continue to incur such losses.**\n\n \n\nWe\nhave incurred substantial losses since commencing our current business. For the year ended March 31, 2026, we lost approximately $10\nmillion without obtaining any significant commercial revenues and had an accumulated deficit of approximately $102.0 million. In order\nto achieve and sustain future revenues, we must succeed in our current efforts to commercialize Spryng® for treatment\nof dogs and horses suffering from osteoarthritis. That will require us to produce our products effectively in commercial quantities,\nestablish adequate sales and marketing systems, conduct clinical trials and tests which show the safety and efficacy of Spryng®\nin dogs and horses and gain significant support from veterinarians in the use of our products. We expect to continue to incur losses\nuntil such time, if ever, as we succeed in significantly increasing our revenues and cash flow beyond what is necessary to fund our ongoing\noperations and pay our obligations as they become due. We may never generate revenues sufficient to become profitable or to sustain profitability.\n\n \n\n14\n\n \n\n** **\n\n**If\nwe are unable to obtain sufficient funding, we may have to reduce materially or even discontinue our business.**\n\n \n\nAs\nof March 31, 2026, we have cash or cash equivalents of approximately $201,000. We anticipate that we will be adequate to satisfy operational\nand capital requirements for the next one (1) month. Also, an investor shareholder has a Purchase Option to invest up to $1.5 million\ninto the company by July 15, 2026. If these funds are received by this date, we anticipate that we will be adequate to satisfy operational\nand capital requirements for an additional three (3) months.\n\n \n\nIf\nwe are unable to realize substantial revenues in the near future, we will need to seek additional financing beyond this three-month period\nto continue our operations. We also most likely will require additional financing to develop additional new products or to expand into\nforeign markets. Accordingly, our ability to commercialize Spryng® and other products may be dependent on our receipt\nof the net proceeds from our future financings.\n\n \n\nAlong\nwith establishing effective production, marketing, sales, and distribution of Spryng® and other products, we believe that\nour future capital requirements depend upon the timing and costs of many factors with some of them beyond our control, including our\nability to establish an adequate base of veterinarian clinics using our products, costs in obtaining patents and any required regulatory\napprovals for future products, costs of any future target animal studies, costs related to new product development, costs of finished\nproduct inventory, expenses to attract and retain skilled personnel as needed, increased costs related to being a listed public company,\nand the costs of any future acquisitions of existing companies or IP technologies. There is no assurance that future additional capital\nwill be available to us as needed, or if available upon terms acceptable to us.\n\n \n\n**Risks\nRelating to Our Business and Industry**\n\n \n\n**We\nhave a limited operating history upon which to base an evaluation of our business prospects.**\n\n \n\nWe\nwere incorporated in March 2009 and have a limited operating history upon which to base an evaluation of our business prospects. We did\nnot begin generating notable revenues from the sale of Spryng® until the second quarter of fiscal 2023. Our limited operating\nhistory makes an evaluation of our business and prospects very difficult. Our prospects must be considered speculative, especially considering\nthe risks, expenses, and difficulties frequently encountered in the establishment of an early-stage company. Our ability to operate our\nbusiness successfully remains unknown and untested. If we cannot commercialize our products effectively, or are significantly delayed\nor limited in doing so, our business and operations will be harmed substantially, and we may even need to cease operations.\n\n** **\n\n**We\nare substantially dependent upon the success of Spryng® and any failure of Spryng® to achieve market acceptance would harm us\nsignificantly.**\n\n \n\nWe\nhave one lead product, Spryng®, which is in commercial production. Our future prospects rely heavily on the successful\nmarketing of this product. In addition to establishing effective production, marketing, sales, distribution and training for the use\nof Spryng®, we believe its successful commercialization will depend on other material factors including our ability to\neducate and convince veterinarians and pet owners about the benefits, safety and effectiveness of Spryng®, the occurrence\nand severity of any side effects to pets from use of our products, maintaining regulatory compliance and effective quality control for\nour products, our ability to maintain and enforce our patents and other intellectual property rights, any increased manufacturing costs\nfrom third-party contractors or suppliers, and the availability, cost and effectiveness of treatments offered by competitors.\n\n \n\n**Our\nlead product, Spryng®, will face significant competition in our industry, and our failure to compete effectively may prevent\nus from achieving any significant market penetration.**\n\n \n\nThe\ndevelopment and commercialization of animal care products is highly competitive, including significant competition from major pharmaceutical,\nbiotechnology, and specialty animal health medical companies. Our competitors include Zoetis, Inc.; Merck Animal Health, the animal health\ndivision of Merck & Co., Inc.; Merial, the animal health division of Sanofi, S.A.; Elanco, the animal health division of Eli Lilly\nand Company; Bayer Animal Health, the animal health division of Bayer AG; Novartis Animal Health, the animal health division of Novartis\nAG; Boehringer Ingelheim Animal Health; Virbac Group; Ceva Animal Health; Vetaquinol; and Dechra Pharmaceuticals PLC. There also are\nseveral smaller stage animal health companies that have recently emerged in our industry and are developing therapeutics products that\nmay compete with Spryng®, including Kindred Bio, Aratana Therapeutics, Next Vet, and VetDC.\n\n \n\n15\n\n \n\n \n\nSince\nwe are an early-stage company with limited operations and financing, virtually all our competitors have substantially more financial,\ntechnical and personnel resources than us. Most of them also have established brands and substantial experience in the development, production,\nregulation, and commercialization of animal health care products. Regarding our development of any new products or technology, we also\ncompete with academic institutions, governmental agencies and private organizations that conduct research in the field of animal health\nmedicines. We expect that competition in our industry is based on several factors including primarily product reliability and effectiveness,\nproduct pricing, product branding, adequate patent and other IP protection, safety of use, and product availability.\n\n \n\nAlthough\nfor the foreseeable future, our efforts and financial resources will continue to focus on successfully commercializing Spryng®, our\nfuture business strategy plan includes the identification of additional animal care products we may license, acquire, or develop, and\nthen commercializing such products into a branded product portfolio along with Spryng®. Even if we successfully license, acquire\nor develop such animal care products from our proprietary technology, or acquire any such new products, we may still fail to commercialize\nthem successfully for various reasons, including competitors offering alternative products which are more effective than ours, our discovery\nof third-party IP rights already covering the products, harmful side effects caused to animals by the products, inability to produce\nproducts in commercial quantities at an acceptable cost, or the products not being accepted by veterinarians and pet owners as being\nsafe or effective. If we fail to successfully obtain and commercialize future new animal care products, our business and prospects may\nbe harmed substantially.\n\n \n\n**We\nwill rely on third parties to conduct studies of our current and new products, and if these third parties do not successfully perform\ntheir contracted commitments effectively or substantially fail to meet expected study deadlines, we could be delayed from effectively\ncommercializing our future products.**\n\n \n\nWe\nhave entered into a clinical trial services agreement with Colorado State University and Ethos Veterinary Health. In the future, we may\nengage other educational institutions with a veterinary medical curriculum to conduct studies of Spryng® and other products to be\nintroduced by us. We expect to have limited control over the timing and resources that such third parties will devote to the studies.\nAlthough we must rely on third parties to conduct our studies, we remain responsible for ensuring any of our studies are conducted in\ncompliance with protocols, regulations, and standards set by industry regulatory authorities and commonly referred to as current good\nclinical practices (“cGCPs”) and good laboratory practices (“GLPs”). These required clinical and laboratory practices\ninclude many items regarding the conducting, monitoring, recording, and reporting the results of target animal studies to ensure that\nthe data and results of these studies are objective and scientifically credible and accurate.\n\n \n\n**Our\nsuccess is highly dependent on the clinical advancement of our products and adverse results in clinical trials and other studies could\nprevent us from effectively commercializing our future products**\n\n \n\nThere\ncan be no assurance that clinical trials or studies of Spryng® and our other products will demonstrate the safety and\nefficacy of such products in a statistically significant manner. Failure to show efficacy or adverse results in clinical trials or studies\ncould significantly harm our business. While some clinical trials and studies of our product candidates may show indications of safety\nand efficacy, there can be no assurance that these results will be confirmed in subsequent clinical trials or studies or provide a sufficient\nbasis for regulatory approval, if required. In addition, side effects observed in clinical trials or studies, or other side effects that\nappear in later clinical trials or studies, may adversely affect our or our distributors’ ability to market and commercialize our\nproducts.\n\n \n\n**Our\noperations rely on third parties to produce our raw materials to produce our products.**\n\n \n\nWe\nrely on independent third parties to produce the raw materials (e.g. collagen, elastin, and heparin) that we use to produce our Spryng®\nproducts. As such, we are dependent upon their services and will not be in a position to control their operations as we might if we directly\nproduced these raw materials. While we believe the raw materials used to manufacture Spryng® products are readily available and can\nbe obtained from multiple reliable sources on a timely basis, circumstances outside our control may impair our ability to have an adequate\nsupply of raw materials to produce our Spryng® products.\n\n \n\n16\n\n \n\n \n\n**If\nwe experience the rapid commercial growth of Spryng®, we may not be able to manage such growth effectively.**\n\n \n\nWe\ncontemplate rapid growth for our business as we bring our Spryng® product to new customers and anticipate that this will\nplace significant demands on our management and our operational and financial resources. Our organizational structure will become more\ncomplex as we add additional personnel, and we would likely require more financial and staff resources to support and continue our growth.\nIf we are unable to manage our growth effectively, our business, financial condition, and results of operations may be materially harmed.\n\n \n\n**Our\nDistribution relationships with Vedco and Clipper Distributing are important to our business and if we were to lose our Distribution\nrelationships it would adversely affect our revenues and profitability.**\n\n** **\n\nIn\nDecember 2024, we entered into distribution partnerships with Vedco and Clipper Distributing. Both distribution partnerships are important\nto our business. We generated 74% of our total revenues from Spryng® products sold under the distribution partnerships\nin the fiscal year ended March 31, 2026.\n\n \n\nWe\nentered into a Distribution Agreement with MWI in June 2022. We generated 0% of our total revenues from Spryng® products\nsold under the Distribution Agreement in the fiscal year ended March 31, 2026. In March 2025, we mutually terminated our non-exclusive\nagreement with MWI.\n\n \n\nWe\nentered into a Distribution Agreement with Covetrus in December 2023. We generated 0% of our total revenues from Spryng®\nproducts sold under the Distribution Agreement in the fiscal year ended March 31, 2026. In February 2025, we mutually terminated our\nnon-exclusive agreement with Covetrus.\n\n \n\n**If\nour current sales and marketing program is insufficient or inadequate to support the current introduction of our Spryng®\nproduct, we may not be able to sell this product in quantities to become commercially successful.**\n\n \n\nWe commenced sales of Spryng® in the second quarter of fiscal\n2022 and plan to increase our commercialization efforts for Spryng® in the United States through our direct sales to veterinarians\nand our distributorship relationships with Vedco and Clipper. There are significant risks involved in our building and managing an effective\nsales and marketing program, including our ability to manage and support our distribution relationship with Vedco and Clipper, our ability\nto hire, adequately train, maintain, and motivate qualified sales representatives for direct sales and to support our sales to Vedco and\nClipper, to generate sufficient sales leads and other contacts, and establish effective product distribution channels. Any failure or\nsubstantial delay in the development of our internal sales and marketing program and distribution capabilities would adversely impact\nour business and financial condition.\n\n \n\n**Our\nbusiness will depend significantly on the sufficiency and effectiveness of our marketing and product promotional programs and incentives.**\n\n \n\nDue\nto the highly competitive nature of our industry, we must effectively and efficiently promote and market our products through the Internet,\ntelevision and print advertising, social media, and through trade promotions and other incentives to sustain and improve our competitive\nposition in our market. Moreover, from time to time we may have to change our marketing strategies and spending allocations based on\nresponses from our veterinarian customers and pet owners. If our marketing, advertising, and trade promotions are not successful to create\nand sustain consistent revenue growth or fail to respond to marketing strategy changes in our industry, our business, financial condition,\nand results of operations may be adversely affected.\n\n \n\n**Any\ndamage to our reputation or our brand may materially harm our business.**\n\n \n\nDeveloping,\nmaintaining, and expanding our reputation and brand with veterinarians, pet owners, and others will be critical to our success. Our brand\nmay suffer if our marketing plans or product initiatives are unsuccessful. The importance of our brand and demand for our products may\ndecrease if competitors offer products with benefits similar to or as effective as our products and at lower costs to consumers. Although\nwe maintain procedures to ensure the quality, safety and integrity of our products and their production processes, we may be unable to\ndetect or prevent product and/or ingredient quality issues such as contamination or deviations from our established procedures. If any\nof our products cause injury to animals, we may incur material expenses for product recalls, and may be subject to product liability\nclaims, which could damage our reputation and brand substantially.\n\n \n\n17\n\n \n\n \n\n**If\nwe fail to attract and retain qualified management and key scientific personnel, we may be unable to successfully commercialize our current\nproducts or develop new products effectively.**\n\n \n\nOur\nsuccess will significantly be dependent upon our current management and key scientific technicians, and also on our ability to attract,\nretain and motivate future management and employees. We are highly dependent upon our current management and technology personnel, and\nthe loss of the services of any of them could delay or prevent the successful commercialization or development of current or future products.\nCompetition to obtain qualified personnel in the animal health field is intense due to the limited number of individuals possessing the\nskills and experience required by our industry. We may not be able to attract or retain qualified personnel as needed on acceptable terms,\nor at all, which would harm our business and operations.\n\n \n\n**Natural\ndisasters and other events beyond our control could materially adversely affect us.**\n\n \n\nNatural\ndisasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy,\nand thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power\nshortages, pandemics (including the ongoing Coronavirus (COVID-19) epidemic) and other events beyond our control. Although we maintain\ncrisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our\ncustomers, and could decrease demand for our services.\n\n \n\n**Risks\nrelating to Manufacturing**\n\n \n\n**We\nmay not be able to manage our manufacturing and supply chain effectively, which would harm our results of operations.**\n\n \n\nWe\nmust accurately forecast demand for our products in order to have adequate product inventory available to fill customer orders timely.\nOur forecasts will be based on multiple assumptions that may cause our estimates to be inaccurate, and thus affect our ability to ensure\nadequate manufacturing capability to satisfy product demand. Any material delay in our ability to obtain timely product inventories from\nour manufacturing facility and our ingredient suppliers could prevent us from satisfying increased consumer demand for our products,\nresulting in material harm to our brand and business. In addition, we will need to continuously monitor our inventory and product mix\nagainst forecasted demand to avoid having inadequate product inventory or having too much product inventory on hand. If we are unable\nto manage our supply chain effectively, our operating costs may increase materially.\n\n \n\n**Risks\nrelating to our Intellectual Property**\n\n \n\n**Failure\nto protect our intellectual property could harm our competitive position or cause us to incur significant expenses and personnel resources\nto enforce our rights.**\n\n \n\nOur\nsuccess will depend significantly upon our ability to protect our intellectual property (“IP”) rights, including patents,\ntrademarks, trade secrets, and process know-how, which valuable assets support our brand and the perception of our products. We rely\non patent, trademark, trade secret, and other intellectual property laws, as well as non-disclosure and confidentiality agreements to\nprotect our intellectual property. Our non-disclosure and confidentiality agreements may not always effectively prevent disclosure of\nour proprietary IP rights and may not provide an adequate remedy in the event of an unauthorized disclosure of such information, which\ncould harm our competitive position. We also may need to engage in costly litigation to enforce or protect our patent or other proprietary\nIP rights, or to determine the validity and scope of proprietary rights of others. Any such litigation could require us to expend significant\nfinancial resources and also divert the efforts and attention of our management and other personnel from our ongoing business operations.\nIf we fail to protect our intellectual property, our business, brand, financial condition, and results of operations may be materially\nharmed.\n\n \n\n18\n\n \n\n \n\n**We\nmay be subject to intellectual property infringement claims, which could result in substantial damages and diversion of the efforts and\nattention of our management.**\n\n \n\nWe\nmust respect prevailing third-party intellectual property, and the procedures and steps we take to prevent our misappropriation, infringement,\nor other violation of the intellectual property of others may not be successful. If third parties assert infringement claims against\nus, our suppliers, or veterinarians using our products and technology, we could be required to expend substantial financial and personnel\nresources to respond to and litigate or settle any such third-party claims. Although we believe our patents, manufacturing processes\nand products do not infringe in any material respect on the intellectual property rights of other parties, we could be found to infringe\non such proprietary rights of others. Any claims that our products, processes, or technology infringe on third-party rights, regardless\nof their merit or resolution could be very costly to us and also materially divert the efforts and attention of our management and technical\npersonnel. Any adverse outcome to us from one or more such claims against us could, among other things, require us to pay substantial\ndamages, to cease the sale of our products, to discontinue our use of any infringing processes or technology, to expend substantial resources\nto develop non-infringing products or technology, or to license technology from the infringed party. If one or more such adverse outcomes\noccur, our ability to compete could be affected significantly and our business, financial condition and results of operations could be\nharmed substantially.\n\n \n\n**Risks\nrelated to Regulation**\n\n \n\n**We\nmay be unable to obtain required regulatory approvals for future products timely or at all, and the denial or substantial delay of any\nsuch approval could delay materially or even prevent our efforts to commercialize new products, which could adversely impact our ability\nto generate future revenues.**\n\n \n\nBased\non our determination that our Spryng® products is a device for the treatment of animals rather than being a pharmaceutical\nproduct, we believe we are not required to obtain regulatory approval to produce and market them for their current intended uses. However,\nwe have not received confirmation from any regulatory authority that our determination is correct. The production, marketing, and sale\nof any future products for the treatment of animals based on our proprietary technology may require us to obtain regulatory approval\nfrom the Center for Veterinarian Medicine (“CVM”), a branch of the FDA, and/or the USDA, and also certain state regulatory\nauthorities. Any substantial delay or inability to obtain required regulatory approvals for any new products developed by us could substantially\ndelay or even prevent their commercialization, which would materially adversely impact our business and prospects.\n\n \n\nMoreover,\nat such future time that we commence business internationally, our products will need to obtain regulatory approval for labeling, marketing,\nand sale in foreign countries from authorities such as the European Commission (“EU”) or the European Medicine Agency (“EMA”).\nAny substantial delay or inability to obtain any necessary foreign regulatory approvals for our products could harm our business and\nprospects materially.\n\n \n\n**Risks\nrelating to our Information Technology**\n\n \n\n**A\nfailure of one or more key information technology systems, networks, or processes may harm our ability to conduct our business effectively.**\n\n \n\nThe\neffective operation of our business and operations will depend significantly on our information technology and computer systems. We will\nrely on these systems to effectively manage our sales and marketing, accounting and financial, and legal and compliance functions, new\nproduct development efforts, research and development data, communications, supply chain and product distribution, order entry and fulfillment,\nand other business processes. Any material failure of our information technology systems to perform satisfactorily, or their damage or\ninterruption from circumstances beyond our control such as power outages or natural disasters, could disrupt our business materially\nand result in transaction errors, processing inefficiencies, and even the loss of sales and customers., causing our business and results\nof operations to suffer materially.\n\n \n\n**Risks\nRelated to our Company**\n\n \n\n**Ownership\nand control of our Company is concentrated in our management.**\n\n \n\nAs\nof June 29, 2026, our officers and directors beneficially own or control approximately 15% of our outstanding shares of common stock.\nThis concentrated ownership and control by our management could adversely affect the status and perception of our common stock and/or\nwarrants. In addition, any material sales of common stock of our management, or even the perception that such sales will occur, could\ncause a material decline in the trading price of our common stock and/or warrants.\n\n \n\n19\n\n \n\n \n\nDue\nto this ownership concentration, our management has the ability to control all matters requiring stockholder approval including the election\nof all directors, the approval of mergers or acquisitions, and other significant corporate transactions. Any person acquiring our common\nstock most likely will have no effective voice in the management of our company. This ownership concentration also could delay or prevent\na change of control of the Company, which could deprive our stockholders from receiving a premium for their common shares.\n\n \n\n**The\nmarket price of our common stock is highly volatile because of several factors, including a limited public float.**\n\n \n\nThe\nmarket price of our common stock has been volatile in the past and the market price of our common stock and our warrants is likely to\nbe highly volatile in the future. You may not be able to resell shares of our common stock following periods of volatility because of\nthe market’s adverse reaction to volatility.\n\n \n\nOther\nfactors that could cause such volatility may include, among other things:\n\n \n\n \n●\nactual\nor anticipated fluctuations in our operating results;\n\n \n●\nthe\nabsence of securities analysts covering us and distributing research and recommendations about us;\n\n \n●\nwe\nmay have a low trading volume for a number of reasons, including that a large portion of our stock is closely held;\n\n \n●\noverall\nstock market fluctuations;\n\n \n●\nannouncements\nconcerning our business or those of our competitors;\n\n \n●\nactual\nor perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms;\n\n \n●\nconditions\nor trends in the industry;\n\n \n●\nlitigation;\n\n \n●\nchanges\nin market valuations of other similar companies;\n\n \n●\nfuture\nsales of common stock;\n\n \n●\ndeparture\nof key personnel or failure to hire key personnel; and\n\n \n●\ngeneral\nmarket conditions.\n\n \n\nAny\nof these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in\ngeneral has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating\nperformance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock and/or\nwarrants, regardless of our actual operating performance.\n\n \n\n**Our\ncommon stock has in the past been a “penny stock” under SEC rules, and if our common stock is deemed to be a “penny\nstock,” it will be more difficult to resell our securities.**\n\n \n\nIn\nthe past, our common stock was a “penny stock” under applicable Securities and Exchange Commission (“SEC”) rules\n(generally defined as non-exchange traded stock with a per-share price below $5.00). While our common stock is currently not considered\na “penny stock,” if we do not continue to satisfy the requirements to be exempt from the “penny stock” rules,\nit will be more difficult to resell our securities. “Penny stock” rules impose additional sales practice requirements on\nbroker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers”\nor “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments\nin penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized\nrisk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also\nmust provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and\nits salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s\naccount, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s\nwritten agreement to the transaction.\n\n \n\n20\n\n \n\n \n\nLegal\nremedies available to an investor in “penny stocks” may include the following:\n\n \n\n \n●\nIf\na “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or state securities\nlaws, the investor may be able to cancel the purchase and receive a refund of the investment.\n\n \n●\nIf\na “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms\nthat committed the fraud for damages.\n\n \n\nThese\nrequirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes\nsubject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers\nfrom effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements\nmay restrict the ability of broker-dealers to sell our common stock or our warrants and may affect your ability to resell our common\nstock and our warrants.\n\n \n\nMany\nbrokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest\nin penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial\nrisk generally associated with these investments. For these reasons, penny stocks may have a limited market and, consequently, limited\nliquidity. We can give no assurance that our common stock will not be classified as a “penny stock” in the future.\n\n \n\n**We\nare required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley\nAct”) and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.**\n\n \n\nRules\nadopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal controls over financial\nreporting, and for certain issuers, an attestation of this assessment by the issuer’s independent registered public accounting\nfirm. The standards that must be met for management to assess the internal controls over financial reporting as effective are evolving\nand complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur\nsignificant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long\nit will take or costly it will be to complete the assessment of the effectiveness of our internal controls over financial reporting for\neach year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete\nthe assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or Chief Financial Officer determines\nthat our internal controls over financial reporting are not effective as defined under Section 404, we cannot predict how regulators\nwill react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence\nand the market value of our securities may be negatively affected.\n\n \n\n**We\ndo not anticipate paying any dividends on our common stock for the foreseeable future.**\n\n \n\nWe\nhave not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future.\nWe anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and\nexpected future growth.\n\n \n\n**The\nelimination of monetary liability against our directors and executive officers under Nevada law and the existence of indemnification\nrights held by them granted by our bylaws could result in substantial expenditures by us.**\n\n \n\nOur\nArticles of Incorporation eliminate the personal liability of our directors and officers to the Company and its stockholders for damages\nfor breach of fiduciary duty to the maximum extent permissible under Nevada law. In addition, our Bylaws provide that we are obligated\nto indemnify our directors or officers to the fullest extent authorized by Nevada law for costs or damages incurred by them involving\nlegal proceedings brought against them relating to their positions with the Company. These indemnification obligations could result in\nour incurring substantial expenditures to cover the cost of settlement or damage awards against our directors or officers.\n\n \n\n21\n\n \n\n \n\n**Our\nArticles of Incorporation, Bylaws, and Nevada law may have anti-takeover effects that could discourage, delay or prevent a change in\ncontrol, which may cause our stock price to decline.**\n\n \n\nOur\nArticles of Incorporation, Bylaws, and Nevada law could make it more difficult for a third party to acquire us, even if closing such\na transaction would be beneficial to our stockholders. We are authorized to issue up to 20,000,000 shares of preferred stock. This preferred\nstock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without\nfurther action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as\na series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights, and sinking fund provisions.\nNone of our preferred stock will be outstanding at the closing of this offering. The issuance of any preferred stock could materially\nadversely affect the rights of the holders of our common stock and therefore reduce the value of our common stock. In particular, specific\nrights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third\nparty and thereby preserve control by the present management.\n\n \n\nProvisions\nof our Articles of Incorporation, Bylaws, and Nevada law also could have the effect of discouraging potential acquisition proposals or\nmaking a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions\nmay also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our certificate of incorporation\nand by-laws and Delaware law, as applicable, among other things:\n\n \n\n \n●\nprovide\nthe board of directors with the ability to alter the by-laws without stockholder approval;\n\n \n●\nestablishing\nadvance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon\nat stockholder meetings; and\n\n \n●\nprovide\nthat vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum."}