Sanara MedTech Inc 10-K for FY2021

Sanara MedTech Inc. (SMTI)

10-K 2022-03-31 For: 2021-12-31

Added on April 11, 2026

About this 10-K

Sanara MedTech Inc filed this 10-K on March 31, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $24.14M; up 54.9% from $15.59M a year earlier
Net loss: $7.99M; compared with a net loss of $4.45M a year earlier

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

	For the fiscal year ended December 31, 2021
	OR

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

	For the transition period from ________ to ________

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		SMTI		The Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

		Page
PART I.

ITEM 1	BUSINESS	4

ITEM 1A	RISK FACTORS	20

ITEM 1B	UNRESOLVED STAFF COMMENTS	45

ITEM 2	PROPERTIES	45

ITEM 3	LEGAL PROCEEDINGS	45

ITEM 4	MINE SAFETY DISCLOSURES	45

PART II.
ITEM 5	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	46

ITEM 6	RESERVED	46

ITEM 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	46

ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	53

ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	54

ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	55

ITEM 9A	CONTROLS AND PROCEDURES	55

ITEM 9B	OTHER INFORMATION	56

PART III.
ITEM 10	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	56

ITEM 11	EXECUTIVE COMPENSATION	56

ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	56

ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	56

ITEM 14	PRINCIPAL ACCOUNTING FEES AND SERVICES	56

PART IV.
ITEM 15	EXHIBIT AND FINANCIAL STATEMENT SCHEDULES	57

ITEM 16	FORM 10-K SUMMARY	58

●	the impact of the COVID-19 pandemic on our business, financial condition and results of operations;

●	shortfalls in forecasted revenue growth;

●	our ability to implement our comprehensive wound and skin care strategy through acquisitions and investments and our ability to realize the anticipated benefits of such acquisitions and investments;

●	our ability to meet our future capital requirements;

●	our ability to retain and recruit key personnel;

●	the intense competition in the markets in which we operate and our ability to compete within our markets;

●	the failure of our products to obtain market acceptance;

●	the effect of security breaches and other disruptions;

●	our ability to maintain effective internal controls over financial reporting;

●	our ability to develop and commercialize new products and products under development, including the manufacturing, distribution, marketing and sale of such products;

●	our ability to maintain and further grow clinical acceptance and adoption of our products;

●	the impact of competitors inventing products that are superior to ours;

●	disruptions of, or changes in, our distribution model, consumer base or the supply of our products;

●	our ability to manage product inventory in an effective and efficient manner;

●	the failure of third-party assessments to demonstrate desired outcomes in proposed endpoints;

●	our ability to successfully expand into wound and skin care virtual consult and other services;

●	our ability and the ability of our research and development partners to protect the proprietary rights to technologies used in certain of our products and the impact of any claim that we have infringed on intellectual property rights of others;

●	our dependence on technologies and products that we license from third parties;

●	the effects of current and future laws, rules, regulations and reimbursement policies relating the labeling, marketing and sale of our products and our planned expansion into wound and skin care virtual consult and other services and our ability to comply with the various laws, rules and regulations applicable to our business; and

●	the effect of defects, failures or quality issues associated with our products.

	●	*Drive additional market penetration as well as geographic expansion for our products.* We intend to leverage our comprehensive product and technology-based services portfolio and relationships with key constituents to deepen our presence in the surgical and chronic wound and skin care markets. We believe the breadth and flexibility of the products we offer allow us to address a wide variety of wound types and sizes and offer significant new opportunities for sales growth. In addition, we believe that as we continue to offer new products and technology-based services, our salesforce’s ability to reach additional customers in new and existing geographic regions while penetrating further in existing customer accounts will be enhanced.

	●	*Expand into new markets for our products and services.* In 2020 and 2021, we made significant investments in virtual consult technologies and services. The COVID-19 pandemic has dramatically increased demand for these services with expanded reimbursements and patients being more comfortable seeing their care provider virtually. We believe that the virtual consult technologies and services that we will offer, when combined with our innovative and highly efficacious products, will offer a differentiated comprehensive wound and skin care solution for patients and care givers.

	●	*Launch new innovative products.* We are internally developing, and actively working with third-party research and development partners to develop additional proprietary products for the surgical and chronic wound and skin care markets. We expect these products and services to deepen our portfolio of technologies to treat chronic wounds as well as improve surgical site outcomes. We are focused on offering additional products and services that are more efficacious than competing products and services and provide a stronger value proposition (lower total cost to heal and less time to heal, leading to reduced costs to the healthcare system).

	●	*Capture patients throughout the entire continuum of care.* We intend to continue expanding our platform to aid in treating wound and skin care patients as they progress through the healing process in all care settings. As discussed above, in June 2020, we formed a subsidiary, UWSS, to hold certain investments in technologies and operations in wound and skin care virtual consult services. We believe our service offerings will allow us to collect and analyze large amounts of data on patient conditions and outcomes that will improve treatment protocols and ultimately lead to more evidence-based healing formularies to improve outcomes in the future. We anticipate that this data will also enable us to participate in the creation of new standards of care that promote patient compliance and enable direct dialogue between patients, clinicians and payors, resulting in greater satisfaction for patients, their caregivers, clinicians and payors.

	●	*Seek and establish partnerships and product, technology, and/or services acquisitions.* We plan to continue to seek and establish partnerships in the United States and internationally to provide innovative products, services, and technologies. We believe that partnerships will be a key driver of our growth in the future. We also intend to selectively pursue acquisitions of businesses and technologies that complement our existing strategy and footprint.

	●	*Comprehensive solution for improved wound care outcomes.* We are dedicated to offering a comprehensive portfolio of products and services to improve wound care treatment outcomes. We are currently developing the capability to provide telehealth services for the diagnosis and treatment of wound and skin care patients. During the fourth quarter of 2021, we conducted a pilot program with a large home health agency. The pilot program realized positive results and will expand to include the service offering to six more agencies in the first quarter of 2022. Our product offerings are able to disinfect wounds and accelerate the body’s healing process for acute and chronic wounds and allow clinicians to provide a consistent plan of care for a patient from diagnosis through treatment.

	●	*Wound care products for all care settings.* Our wound care product portfolio allows clinicians to personalize solutions to meet the needs of individual wound care patients in all care settings including acute (hospitals and LTACHs) and post-acute (wound care clinics, physician offices, SNFs, home health, hospice, and retail).

	●	*Innovative pipeline and proven clinical performance.* We have a robust pipeline of surgical and chronic wound and skin care products that we expect to market in the near term. We believe the efficacy of our offerings, will be proven via statistically significant collected and analyzed clinical and health economic outcomes data, resulting in expanded adoption of our products at a lower overall cost to payors.

	●	*Attractive markets for acute and chronic wound care.* We believe the acute and chronic wound care markets will continue to see accelerated growth given favorable global tailwinds that include an aging population, increasing costs of health care, recognition of difficult-to-treat infection threats such as biofilms, and the increasing prevalence of diabetes and obesity. We believe there will be growing adoption of our products due to their clinical efficacy and cost effectiveness for all key constituents compared to traditional wound care products.

	●	*Proven executive leadership team with a long-term track record of value creation.* We are led by a dedicated and seasoned management team with significant industry experience who have successfully executed our strategic implementation to date by launching new products and technologies through investment in new areas of growth. We believe our management has the vision and experience to implement our future growth strategy.

	●	Diabetic Foot Ulcers. Diabetes can lead to a reduction in blood flow, which can cause patients to lose sensation in their feet and may prevent them from noticing injuries, sometimes leading to the development of DFUs, which are open sores or ulcers on the feet that may take several weeks to heal, if ever. According to the 2020 National Diabetes Statistics Report by the Center for Disease Control and Prevention, in the United States alone, over 34 million people, or approximately 10% of the population, suffer from diabetes, a chronic, life-threatening disease.

	●	Venous Leg Ulcers. VLUs develop as a result of vascular insufficiency, or the inability for the vasculature of the leg to return blood back toward the heart properly and, according to a 2013 report published by the International Journal of Tissue Repair and Regeneration, VLUs affect approximately 600,000 people per year in the United States alone. These ulcers usually form on the sides of the lower leg, above the ankle and below the calf, and are slow to heal and often recur if preventative steps are not taken. The risk of venous ulcers can be increased as a result of a blood clot forming in the deep veins of the legs, obesity, smoking, lack of physical activity or work that requires many hours of standing.

	●	Pressure Ulcers. Pressure ulcers, also known as decubitus ulcers or bed sores, are injuries to skin and underlying tissue resulting from prolonged pressure, or pressure in combination with shear or friction. Constant pressure on an area of skin reduces blood supply to the area and over time can cause the skin to break down and form an open ulcer. These often occur in patients who are hospitalized or confined to a chair or bed and most often form on the skin over bony areas, where there is little cushion between the bone and the skin, such as heels, ankles, hips and the tailbone. Annually, 2.5 million pressure ulcers are treated in the United States in acute care facilities alone, according to a 2006 study published in the Journal of the American Medical Association.

	●	Surgical/traumatic wounds. Surgical wounds form as a result of various types of surgical procedures such as investigative or corrective, minor or major, open (traditional) or minimal access surgery, elective or emergency, and incisions (simple cuts) or excision (removal of tissue), among others. Traumatic wounds form as a result of cuts, lacerations or puncture wounds, which have caused damage to the skin and underlying tissue. Severe traumatic wounds may require surgical intervention to close the wound and stabilize the patient. Surgical/traumatic hard-to-heal wounds develop for various reasons, such as local surgical complications, suboptimal closure techniques, presence of foreign materials, exposed bones or tendons and infection. In the United States, millions of people receive post-surgical wound care annually, and the typical operative patient has comorbidities that create challenges with post-operative wound healing.

	●	We will pay Rochal a royalty of 2-4% of net sales. The minimum annual royalty due to Rochal was $100,000 in 2020 and will increase by 10% each subsequent calendar year up to a maximum amount of $150,000.

	●	We will pay additional royalty annually based on specific net profit targets from sales of the licensed products, subject to a maximum of $1,000,000 during any calendar year.

	●	The Company will pay Rochal a royalty of 2-4% of net sales. The minimum annual royalty due to Rochal will be $50,000 beginning with the first full calendar year following the year in which first commercial sales of the products occur. The annual minimum royalty will increase by 10% each subsequent calendar year up to a maximum amount of $75,000.

	●	We will pay additional royalties annually based on specific net profit targets from sales of the licensed products, subject to a maximum of $500,000 during any calendar year.

	●	At the time Rochal issues a purchase order to its contract manufacturer for the first good manufacturing practice run of the licensed products, we will pay Rochal $600,000 in cash.

	●	Upon FDA clearance of the licensed products, we will pay Rochal $500,000 in cash and $1,000,000, which at our option may be paid in any combination of cash and our common stock.

	●	establishment registration and device listing;

	●	development of a quality management system, including establishing and implementing procedures to design and manufacture devices in compliance with the QSR (unless a device category is exempt from this requirement by the FDA, such as in the case of many Class I devices);

	●	labeling regulations that prohibit the promotion of products for uncleared or unapproved uses (known as off-label uses), as well as requirements to provide accurate and non-misleading information and adequate information on both risks and benefits of the device;

	●	FDA’s unique device identification requirements that call for a unique device identifier (“UDI”) on device labels, packages, and in some cases, on the device itself, and submission of data to the FDA’s Global Unique Device Identification Database (“GUDID”);

	●	medical device reporting regulations that require manufacturers to report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur;

	●	corrections and removal reporting regulations that require manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and

	●	post-market surveillance regulations, which apply to Class II or III devices if the FDA has issued a post-market surveillance order and the failure of the device would be reasonably likely to have serious adverse health consequences, the device is expected to have significant use in the pediatric population, the device is intended to be implanted in the human body for more than one year, or the device is intended to be used to support or sustain life and to be used outside a user facility.

	●	untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

	●	customer notifications or repair, replacement or refunds;

	●	mandatory recalls, withdrawals, or administrative detention or seizure of our products;

	●	operating restrictions or partial suspension or total shutdown of production;

	●	refusing or delaying requests for 510(k) marketing clearance or approval of pre-market approval applications relating to new products or modified products;

	●	reclassifying a 510(k)-cleared device or withdrawing PMA approval;

	●	refusal to grant export approvals for our products; or

	●	pursuing criminal prosecution.

	●	We have had a history of losses, which may continue as we expand our selling efforts.

	●	The COVID-19 pandemic in the United States has and may continue to negatively impact our business, financial condition and results of operations.

	●	Our revenue growth for a particular period is difficult to predict, and a shortfall in forecast revenues may harm our operating results.

	●	Our current comprehensive wound and skin care strategy involves growth through acquisitions and investments, which requires us to incur substantial costs and potential liabilities for which we may never realize the anticipated benefits.

	●	If we cannot meet our future capital requirements, our business will suffer.

	●	Failure to retain and recruit key personnel would harm our ability to meet key objectives.

	●	Failure to manage our growth strategy could harm our business.

	●	We operate in highly competitive markets and face competition from large, well-established medical device manufacturers and telehealth providers as well as new market entrants, and if we are unable to compete within our markets or our products and services do not gain market acceptance, our operating results and financial condition could suffer.

	●	Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

	●	If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud and our business may be harmed and our stock price may be adversely impacted.

	●	We rely heavily on our research and development partners to design, manufacture and supply the products we have licensed for marketing. If we or one of our partners fails to perform adequately or fulfill our needs, we may be required to incur significant costs. We also may face significant delays in our product introductions and commercialization.

	●	Certain of our product candidates are still under development, and there can be no assurance of successful commercialization of any of these product candidates.

	●	Our future success will largely depend on our ability to maintain and further grow clinical acceptance and adoption of our products, and we may be unable to adequately educate healthcare practitioners on the use and benefits of our products.

	●	Competitors could invent products superior to ours and cause our products and technologies to become obsolete.

	●	Disruption of, or changes in, our distribution model or customer base could harm our sales and margins.

	●	If we are unable to manage product inventory in an effective manner, our profitability could be impaired.

	●	Failure of any third-party assessments to demonstrate desired outcomes in proposed endpoints may result in adverse regulatory actions, reduce physician usage or adoption of our products, or reduce the price, coverage and/or reimbursement for our products, which could have a negative impact on our business performance.

	●	We may have exposure to product liability claims.

	●	Interruptions in the supply of our products or inventory loss may adversely affect our business, results of operations and financial condition.

	●	Our planned expansion into wound and skin care virtual consult and other services will require entrance into several markets in which we have little or no experience and is dependent on our relationships with affiliated professional entities to provide physician services.

	●	Recent and frequent state legislative and regulatory changes specific to telemedicine may present us with additional requirements and state compliance costs, with potential operational impacts in certain jurisdictions.

	●	If we are unable to adequately protect our intellectual property rights, we may not be able to compete effectively.

	●	CellerateRX Surgical no longer has patent protection. Accordingly, CellerateRX Surgical may be subject to competition from the sale of substantially equivalent products that could adversely affect our business and operations.

	●	We are heavily dependent on technologies and products we have licensed from third parties, and we may need to license technologies and products in the future, and if we fail to obtain licenses we need, or fail to comply with our payment obligations in the agreements under which we in-license intellectual property and other rights from third parties, we could lose our ability to develop and commercialize our products.

	●	We may be found to infringe on intellectual property rights of others.

	●	Our business is affected by numerous regulations relating to the development, manufacture, distribution, labeling, marketing and sale of our products.

	●	We are subject to various governmental regulations relating to the labeling, marketing and sale of our products.

	●	Delays in or changes to the FDA clearance and approval processes or ongoing regulatory requirements could make it more difficult for us to obtain FDA clearance or approval of new products or comply with ongoing requirements.

	●	Changes in reimbursement policies and regulations by governmental or other third-party payors may have an adverse impact on the use of our products.

	●	We heavily rely on our research and development partners to comply with applicable laws and regulations relating to product classification and when and what types of FDA marketing authorizations are needed to lawfully commercialize a new or updated medical product in the United States.

	●	We and our employees and contractors are subject, directly or indirectly, to federal, state and foreign healthcare fraud and abuse laws, including false claims laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

	●	We and our or our research and development partners’ use and disclosure of personally identifiable information is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and, in turn, a material adverse effect on our client base, business, financial condition and results of operations.

	●	If we fail to comply with extensive healthcare laws and government regulations, we could suffer penalties or be required to make significant changes to our operations.

	●	Our officers, employees, independent contractors, principal investigators and commercial partners may engage in activities that are improper under other laws and regulations, which would create liability for us.

	●	We could be adversely affected if healthcare reform measures substantially change the market for medical care or healthcare coverage in the United States.

	●	Defects, failures or quality issues associated with our products could lead to product recalls or safety alerts, adverse regulatory actions, litigation and negative publicity that could materially adversely affect our reputation, business, results of operations and financial condition.

	●	It is possible that we will require additional capital to meet our financial obligations and support business growth.

	●	economic conditions worldwide, as well as economic conditions specific to the healthcare industry, which could affect the ability of surgical and post-acute facilities to purchase our products and could result in a reduction in elective operative procedures;

	●	governmental regulations, including those adopted in response to the COVID-19 pandemic;

	●	the uncertainty surrounding our ability to attract new customers and retain existing customers;

	●	changes in reimbursement rates for our products by government and private insurers;

	●	the length and variability of our sales cycle, especially gaining approvals for the use of our products in additional hospitals and surgery centers, which makes it difficult to forecast the quarter in which our sales will occur;

	●	issues including delays in the sourcing of our products;

	●	the timing of regulatory approvals;

	●	the timing of operating expense relating to the expansion of our business and operations;

	●	changes in the pricing of our products and those of our competitors;

	●	the development of new wound care products or product enhancements by our competitors; and

	●	actual events, circumstances, outcomes and amounts differing from assumptions and estimates used in preparing our operating plan and how well we execute our strategy and operating plans.

	●	fund operating losses;

	●	increase marketing to address the market for surgical, wound and skin care products and services;

	●	take advantage of opportunities, including more rapid expansion or acquisitions of complementary products or businesses;

	●	hire, train and retain employees;

	●	develop and/or distribute new products; and/or

	●	respond to economic and competitive pressures.

	●	large and established distribution networks in the U.S. and/or in international markets;

	●	greater financial, managerial and other resources for products research and development, sales and marketing efforts and protecting and enforcing intellectual property rights;

	●	greater name recognition;

	●	larger consumer bases;

	●	more expansive portfolios of products and intellectual property rights; and

	●	greater experience in obtaining and maintaining regulatory approvals and/or clearances from the FDA and other regulatory agencies.

	●	be shown to be ineffective or to cause harmful side effects during preclinical testing or clinical trials;

	●	fail to receive regulatory approval on a timely basis or at all;

	●	be difficult to manufacture on a large scale;

	●	not be economically viable;

	●	not be prescribed by doctors or accepted by patients;

	●	fail to receive a sufficient level of reimbursement from government, insurers or other third-party payors; or

	●	infringe on intellectual property rights of any other party.

	●	lack or perceived lack of evidence supporting greater efficacy versus standard of care;

	●	perceived liability risks generally associated with the use of new products and procedures;

	●	limited or lack of availability of coverage and reimbursement within healthcare payment systems;

	●	existing sole-source supply contracts with purchasing entities, such as hospital systems and group purchasing organizations, that do not use our products;

	●	pressure to contain costs and use lower cost alternatives to our products; and

	●	the time commitment that may be required for training to use new products or technologies.

	●	in some instances, we compete with some of our resellers through our direct sales, which may lead these channel partners to use other suppliers that do not compete; and

	●	some of our resellers may have insufficient financial resources and may not be able to withstand changes in business conditions.

	●	establishment registration and device listing requirements;

	●	QSR, which governs the methods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation, and servicing of finished devices;

	●	labeling requirements, which mandate the inclusion of certain content in medical device labels and labeling, and when fully implemented, will generally require the label and package of medical devices to include a unique device identifier, and which also prohibit the promotion of products for uncleared or unapproved, i.e., “off-label,” indications;

	●	the Medical Device Reporting regulation, which requires that manufacturers and importers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and

	●	the Reports of Corrections and Removals regulation, which requires that manufacturers and importers report to the FDA recalls (i.e., corrections or removals) if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health and that manufacturers and importers keep records of recalls that they determine to be not reportable.

	●	imposing fines and penalties on us;

	●	preventing us from manufacturing or selling our products;

	●	delaying or denying pending applications for approval or clearance of our products or of new uses or modifications to our existing products, or withdrawing or suspending current approvals or clearances;

	●	ordering or requesting a recall of our products;

	●	issuing warning letters, untitled letters, or “It has Come to Our Attention” letters;

	●	imposing operating restrictions, including a partial or total shutdown of production or investigation of any or all of our products;

	●	refusing to permit to import or export of our products;

	●	detaining or seizing our products;

	●	obtaining injunctions preventing us from manufacturing or distributing any or all of our products;

	●	commencing criminal prosecutions or seeking civil penalties; and

	●	requiring changes in our advertising and promotion practices.

	●	the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for, the purchase, recommendation, leasing or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

	●	federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other government payors that are false or fraudulent;

	●	Section 242 of HIPAA codified at 18 U.S.C. § 1347, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefit program (i.e., public or private);

	●	federal transparency laws, including the so-called federal “sunshine” law, which requires the tracking and disclosure to the federal government by pharmaceutical and medical device manufacturers of payments and other transfers of value to physicians and teaching hospitals as well as ownership and investment interests that are held by physicians and their immediate family members; and
	●	state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers, state laws that require pharmaceutical and medical device companies to comply with their industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict certain payments that may be made to healthcare providers and other potential referral sources, state laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, state laws that prohibit giving gifts to licensed healthcare professionals and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states.

	●	necessity and adequacy of medical care;

	●	relationships with physicians and other referral sources and referral recipients;

	●	billing and coding for services;

	●	properly handling overpayments;

	●	quality of medical equipment and services;

	●	qualifications of medical and support personnel;

	●	confidentiality, maintenance, data breach, identity theft and security issues associated with health-related and personal information and medical records; and

	●	communications with patients and consumers.

	●	the laws and regulations of the FDA and its foreign counterparts requiring, among other things, compliance with good manufacturing practice and/or quality system requirements, post-market vigilance reporting, product marketing authorization requirements, facility registration requirements, the reporting of true, complete and accurate information to such regulatory bodies, including but not limited to safety problems associated with the use of our products;

	●	laws and regulations of the FDA and its foreign counterparts concerning the conduct of clinical trials and the protection of human research subjects, including but not limited to good clinical practices;

	●	other laws and regulations of the FDA and its foreign counterparts relating to the manufacture, processing, packing, holding, investigating or distributing in commerce of medical devices, biological products and/or HCT/Ps;

	●	manufacturing standards we have established; or

	●	healthcare fraud and abuse laws, including but not limited to, the Anti-Kickback Statute, the Stark Law, the FCA, and state law equivalents.

	●	technological innovations or new products and services by us or by our competitors, including announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships or capital commitments;

	●	additions or departures of key personnel;

	●	changes in expectations as to our future financial performance;

	●	the continued impact of the COVID-19 pandemic on our business operations;

	●	sales of our common stock;

	●	our ability to execute our business plan;

	●	loss of any strategic relationship;

	●	industry developments;

	●	changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

	●	general market conditions, including market volatility;

	●	fluctuations in stock market prices and trading volumes of similar companies;

	●	economic, political and other external factors;

	●	period-to-period fluctuations in our financial results;

	●	applicable regulatory developments in the United States and foreign countries, both generally or specific to us and our products; and

	●	intellectual property, product liability or other litigation against us.

From	Through	Monthly Base Rental
July 1, 2021	June 30, 2022	$	12,489
July 1, 2022	June 30, 2023	$	12,734
July 1, 2023	June 30, 2024	$	12,978

	Year Ended December 31,
	2021		2020
Product sales revenue	$	23,942,919	$	15,385,976
Royalty revenue		201,000		201,000
Total Revenue	$	24,143,919	$	15,586,976

	-	Identification of the contract with a customer

	-	Identification of the performance obligations in the contract

	-	Determination of the transaction price

	-	Allocation of the transaction price to the performance obligations in the contract

	-	Recognition of revenue when, or as, we satisfy a performance obligation

	2021			2020
Deferred tax assets
Net operating loss carry forwards	$	4,352,201			2,827,835
Inventory reserves		70,221			58,087
Bad debt and other reserves		561,944			562,248
Accrued expenses		35,579			16,817
Other temporary differences		1,134			630
Total deferred tax assets		5,021,079			3,465,617
Deferred tax liabilities
Depreciation and amortization		(17,001	)		(32,657	)
Valuation allowance		(5,004,078	)		(3,432,960	)
Net deferred tax asset	$	-		$	-

Reports of Independent Registered Public Accounting Firms ( Weaver PCAOB No. 410; MaloneBailey PCAOB No. 206)	F-1

Consolidated Balance Sheets	F-3

Consolidated Statements of Operations	F-4

Consolidated Statements of Changes in Shareholders’ Equity	F-5

Consolidated Statements of Cash Flows	F-6

Notes to the Consolidated Financial Statements	F-7