Item 1A. Risk Factors.
A description of the risks and uncertainties associated with our business and industry is set forth below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report, including our audited consolidated financial statements and notes thereto and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Annual Report, before deciding whether to purchase shares of our Common Stock. This description reflects our beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impact our business operations. If any of the following risks are realized, our business, financial condition, operating results, and prospects could be materially and adversely affected. In that event, the price of our Common Stock could decline, perhaps significantly. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Summary of Risk Factors
The following is a summary of principal risks to which our business, operations, and financial performance are subject. Each of these risks is more fully described in the individual risk factors immediately following this summary.
We have limited experience as a commercial company, and the marketing and sale of our cosmetic products may be unsuccessful, and we may be unable to generate meaningful product revenue.
Our commercial success depends upon attaining and maintaining significant market acceptance of our current products among consumers, physicians, patients, and others buying or selling our products.
Certain of the products we process are derived from human tissue and, therefore, have the potential for disease transmission.
If we cannot successfully address quality issues that may arise with our products, our brand reputation could suffer, and our business, financial condition, and results of operations could be adversely impacted.
Product liability lawsuits against us could cause us to incur substantial liabilities and limit the commercialization of any products that we may develop.
Our success depends largely upon consumer satisfaction with the aesthetic results of our products.
We may engage in strategic transactions that could impact our liquidity, increase our expenses, and present significant distractions to our management.
If we fail to protect or enforce our intellectual property or confidential proprietary information relating to cosmetic products, we may not be able to compete effectively, which may negatively affect our business as well as limit our partnership or acquisition appeal.
We may not be able to protect our proprietary technology, which could harm our ability to operate profitably.
We cannot be certain we will be able to obtain patent protection to protect our products and technology.
If we fail to comply with our obligations in the agreements under which we may license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose rights that are important to our business.
Our intellectual property may not be sufficient to protect our products from competition, which may negatively affect our business as well as limit our partnership or acquisition appeal.
Our future success is dependent, in part, on the performance and continued service of our officers and directors.
We will need substantial additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.
Management has concluded that there is substantial doubt about our ability to continue as a going concern.
We may become involved in litigation that may materially adversely affect us.
We face substantial competition, which may result in others discovering, developing, or commercializing products before or more successfully than we do.
The current economic downturn may harm our business and results of operations.
We will need to grow the size of our organization in the future, and we may experience difficulties in managing this growth.
We expect the price of our Common Stock may be volatile and may fluctuate substantially.
Risks Related to Our Business and Operations
We have limited experience as a commercial company, and the marketing and sale of our cosmetic products may be unsuccessful.
Due to our limited history and experience as a commercial company, we face significant risks and uncertainties relating to the commercialization of our cosmetic products. In order to successfully commercialize our products, we must continue to build on our marketing, sales, distribution, managerial, and other capabilities or make arrangements with third parties to perform these services. We may face challenges that will inhibit our efforts, including:
our inability to recruit, train, and retain adequate numbers of effective sales and marketing personnel;
our inability to supply the market with our products, including manufacturing or distribution challenges; and
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we are unable to accomplish our commercialization objectives and manage these challenges, we will not be able to generate operating revenue from our cosmetic products.
The cosmetics industry is highly competitive, and if we are unable to compete effectively, our results will suffer.
We face vigorous competition from companies throughout the world, including large multinational consumer products companies that have many cosmetics brands under ownership and standalone beauty and skincare brands, including those that may target the latest trends or specific distribution channels. Competition in the cosmetics industry is based on the introduction of new products, pricing of products, quality of products and packaging, brand awareness, perceived value and quality, innovation, in-store presence and visibility, promotional activities, advertising, editorials, e-commerce and mobile-commerce initiatives, and other activities. We must compete with a high volume of new product introductions as well as existing products by diverse companies across several different distribution channels. Many of the multinational consumer companies with which we compete have greater financial, technical, or marketing resources, longer operating histories, greater brand recognition, or larger customer bases than we do and may be able to respond more effectively to changing business and economic conditions than we can. We also expect to encounter increased competition as we enter new markets and as we attempt to penetrate existing markets with new products. Our competitors may attempt to gain market share by offering products at prices at or below the prices at which our products are typically offered, including through the use of large percentage discounts. Competitive pricing may require us to reduce our prices, which would decrease our profitability or result in lost sales. Our competitors may be better able to withstand these price reductions and lost sales. In addition, our competitors may develop products that are safer, more effective, and more widely used, and may be more successful than us in manufacturing and marketing their products.
It is difficult to predict the timing and scale of our competitors’ activities or whether new competitors will emerge in the cosmetics industry. Technological breakthroughs, including new and enhanced technologies that increase competition in the online retail market, new product offerings by competitors, and the strength and success of our competitors’ marketing programs, may further impede our growth and the implementation of our business strategy. Our ability to compete depends on the continued strength of our brands and products, the success of marketing, innovation and execution strategies, the continued diversity of product offerings, the successful management of new product introductions and innovations, strong operational execution, including in order fulfillment, and success in entering new markets and expanding our business in existing geographies. If we are unable to continue to compete effectively, it could have a material adverse effect on our business, financial condition, and results of operations.
Our new product introductions may not be as successful as we anticipate.
The cosmetics industry is driven in part by skincare and haircare trends, which may shift quickly. Our continued success depends on our ability to anticipate, gauge, and react in a timely and cost-effective manner to changes in consumer preferences for skincare and haircare products, consumer attitudes toward our industry and brands, and where and how consumers shop for and use these products. With the launch of our first seven skincare products in 2024 and our acquisition of the Elevai Exosomes TM products in January 2025, we must continually establish and enhance the recognition of our brands, maintain a favorable mix of products that are acceptable to the market, continue to develop our approach as to how and where we market and sell our products and work to develop, produce and market new products. We have an established process for the development, evaluation, and validation of our new product concepts. Nonetheless, each new product launch involves risks, as well as the possibility of unexpected results. For example, the acceptance of new product launches and sales to our consumers may not be as high as we anticipate, due to a lack of acceptance of the products themselves or their price, or the limited effectiveness of our marketing strategies. In addition, our ability to launch new products may be limited by our ability to timely manufacture, distribute, and ship new products. In the future, we may also experience a decrease in sales of our existing products as a result of newly launched products. Any of these occurrences could delay or impede our ability to achieve our sales objectives, which could have a material adverse effect on our business, financial condition, and results of operations.
Acceptance of our formulations or products in the marketplace is uncertain, and failure to achieve market acceptance will prevent or delay our ability to generate revenue.
Our future financial performance will depend, at least in part, upon the introduction and consumer acceptance of our products. Even if approved for marketing by the necessary regulatory authorities, our formulations or products may not achieve market acceptance. The degree of market acceptance will depend upon a number of factors, including:
receipt of any necessary regulatory approval of marketing claims for the uses that we are developing;
establishment and demonstration of the advantages, safety, and efficacy of our formulations, products, and technologies;
our ability to attract corporate partners to assist in commercializing our proposed products; and
our ability to market our products.
Further, any loss of confidence on the part of consumers in our products or in the ingredients used in or with such products could materially harm the image of our brands and cause consumers to choose other products. Allegations regarding any of the above, even if untrue, may require us to expend significant time and resources investigating and responding to such allegations and could, from time to time, result in a recall or market withdrawal of a product from any or all of the markets in which the affected product was distributed. See “Our products may cause or contribute to undesirable side effects that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition, and results of operations” below.
Consumers or those within the medical community in general may be unwilling to accept, utilize, or recommend any of our products or proposed formulations. If we are unable to obtain or maintain the confidence of consumers or those who may otherwise utilize or recommend our products, or if required, obtain regulatory approval for, or commercialize and market, our proposed formulations or products when planned, we may not achieve market acceptance or generate any revenue.
Certain of the products we process are derived from human tissue and therefore have the potential for disease transmission.
The utilization of human tissue creates the potential for transmission of communicable disease, including, without limitation, human immunodeficiency virus, viral hepatitis, syphilis, and other viral, fungal, or bacterial pathogens. We are required to comply with federal and state regulations intended to prevent communicable disease transmission.
We maintain strict quality controls designed in accordance with GMP to ensure the safe procurement and processing of our tissue, including terminal sterilization of our products. These controls are intended to prevent the transmission of communicable diseases. However, risks exist with any human tissue implantation. In addition, negative publicity concerning disease transmission from other companies’ improperly processed donated tissue could have a negative impact on the demand for our products and adversely affect our business, financial condition, and results of operations.
If we cannot successfully address quality issues that may arise with our products, our brand reputation could suffer, and our business, financial condition, and results of operations could be adversely impacted.
In the course of conducting our business, we must adequately address quality issues that may arise with our products, as well as defects in third-party components included in our products, as any quality issues or defects may negatively impact consumer use of our products. Although we have established internal procedures to minimize risks that may arise from quality issues, we may not be able to eliminate or mitigate occurrences of these issues and associated liabilities. If the quality of our products does not meet the expectations of our consumers or the cosmetics market generally, then our brand reputation could suffer, and our business could be adversely impacted. We must also ensure that any promotional claims made for our products conform with government regulations.
Our success depends largely upon consumer satisfaction with the aesthetic results of our products.
In order to generate repeat business from consumers, our consumers must be satisfied with the aesthetic results of our cosmetic products. Our products are cosmetic in nature, and the success of the results is highly subjective. Accordingly, cosmetics consumers’ perception of their aesthetic results may greatly vary even if our products and systems associated therewith are shown to be objectively successful. If cosmetics consumers are not satisfied with the aesthetic benefits of our products or feel that they are too expensive for the aesthetic results obtained, our reputation and future sales could suffer.
We may fail to retain or recruit necessary personnel, and we may be unable to secure the services of consultants.
As of March 27, 2026, we have ten full-time employees. Losing key personnel or failing to recruit necessary additional personnel would impede our ability to attain our development objectives. There is intense competition for qualified personnel in the aesthetics and biomedical field, and we may not be able to attract and retain the qualified personnel we need to develop our business. We rely on independent organizations, advisors, and consultants to perform certain services for us, including handling substantially all aspects of regulatory compliance and conducting our clinical validation and testing, and we expect to rely on organizations and individuals for the marketing and sales of our products. We expect that this will continue to be the case. Such services may not always be available to us on a timely basis, which may limit or delay our ability to develop or commercialize our products.
Certain of our directors serve as officers, directors, scientific advisors, or consultants of other healthcare and life science companies, or institutes that might be developing competitive products. None of our directors are obligated under any agreement or understanding with us to make any additional products or technologies available to us. Similarly, we can give no assurances, and we do not expect, and investors should not expect, that any biomedical or pharmaceutical product or technology identified by any of our directors or affiliates in the future would be made available to us other than corporate opportunities. We can give no assurances that any such other companies will not have interests that are in conflict with their interests.
We rely on third parties to supply certain raw materials and packaging components and to manufacture and package certain of our products, and if our third-party vendors do not timely supply these products or perform these services, it may delay or impair our ability to develop, manufacture, market, and deliver our products.
We purchase the raw materials and packaging components that are designed to our specifications for all our cosmetic products from various third parties. In addition, we rely on a third-party manufacturer to formulate and package certain of our products. We collaborate with these vendors to meet our stringent design and creative criteria. While we believe that we currently have adequate sources of supply and services for all our products, we and our vendors may, in the future, not be able to (i) perform under any definitive manufacturing, supply or service agreements or (ii) remain in business for a sufficient time to successfully produce and market our cosmetic products.
If we do not maintain important vendor relationships, we may fail to find a replacement vendor, which could delay or impair our ability to commercialize, produce, and distribute our cosmetic products and substantially increase our costs or deplete profit margins, if any. If we do find replacement vendors, we may not be able to enter into agreements with vendors on favorable terms and conditions.
In addition, we do not have complete control over the ability of our third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. Although we require our third-party manufacturers to supply us with components and products that meet our specifications and comply with applicable legal and regulatory requirements in our agreements, and we perform incoming inspection, testing or other acceptance activities to ensure the components and products meet our requirements, there is a risk that our manufacturers will not always act consistent with our best interests, and may not always supply components and products that meet our requirements or supply components and products in a timely manner. If any of our manufacturers fails to meet our expectations or to comply with applicable legal or regulatory requirements, we may need to find an alternative manufacturer, which could significantly impact our ability to develop and market our products. Any failure on the part of our manufacturers to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, recalls, criminal prosecutions or damage to our reputation, any of which could significantly and adversely harm our business and results of operations.
To be commercially successful, we must educate physicians, where appropriate, on how and when our products are proper alternatives to existing treatments and that our products should be used in their procedures.
We believe physicians will only use our products if they determine, based on their independent medical judgment and experience, clinical data, and published peer-reviewed journal articles, that the use of our products in a particular procedure is a favorable alternative to other treatments. Physicians may be hesitant to change their existing medical treatment practices for the following reasons, among others:
their lack of experience with advanced therapeutics, such as our products;
lack of evidence supporting additional patient benefits of advanced therapeutics, such as our products, over conventional methods in certain therapeutic applications;
perceived liability risks generally associated with the use of new products and procedures; and
limited availability of reimbursement from third-party payers.
If we do not manage inventory in an effective and efficient manner, it could adversely affect our results of operations.
Many factors affect the efficient use and planning of inventory of certain components and other materials used in our manufacturing processes to manufacture our marketed products, such as the effectiveness of predicting demand, the effectiveness of preparing manufacturing to meet demand, efficiently meeting product demand requirements, and the expiration of materials in inventory. We may be unable to manage our inventory efficiently, keep inventory within expected budget goals, keep inventory on hand or manage it efficiently, control expired inventory, or keep sufficient inventory of materials to meet product demand due to our dependence on third-party suppliers. Finally, we cannot provide assurances that we can keep inventory costs within our target levels. Failure to do so may harm our long-term growth prospects.
We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.
We expect to devote substantial financial resources to our ongoing and planned activities, particularly in order to continue developing and commercializing our cosmetic products going forward. We expect our expenses to increase in connection with our ongoing activities, particularly as we launch our additional skincare products in 2026. We also expect to incur additional commercialization expenses related to product manufacturing, sales, marketing, and distribution. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. To obtain such funding, we may need to engage in equity, equity-linked, or debt financings, including for possible use in acquisitions. If we raise additional funds through future issuances of equity, equity-linked, or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Common Stock. Given current uncertainty in the capital markets and other factors, such funding may not be available on terms favorable to us or at all.
Any additional debt financing that we secure in the future could involve offering additional security interests and undertaking restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if we seek to access additional capital or increase our borrowing, there can be no assurance that debt or equity financing may be available to us on favorable terms, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business, results of operations, and financial condition may be harmed.
In addition, disputes may also arise between us and our investors or lenders. For example, the Holders (as defined in Note 11 to the accompanying consolidated financial statements) have alleged that, among other claims, we owe additional payment of principal and interest on the Convertible Notes (as defined in Note 11 to the accompanying consolidated financial statements) and that, under the terms of the Convertible Note Warrants (as defined in Note 11 to the accompanying consolidated financial statements), we are required to repurchase such Convertible Note Warrants at a purchase price equal to the Black-Scholes Value of the unexercised portion of such Convertible Note Warrants as of the closing of the Business Combination. One of the Holders has filed suit seeking to recover such amounts allegedly owed. See Note 11 to the accompanying consolidated financial statements for additional details. There can be no assurance that these or similar matters will not result in expensive arbitration, litigation, or other dispute resolution, including, but not limited to, the litigation filed by Puritan (as defined in Note 11 to the accompanying consolidated financial statements), which may not be resolved in our favor and may adversely impact our financial condition.
We may engage in strategic transactions that could impact our liquidity, increase our expenses, and present significant distractions to our management.
From time to time, we may consider strategic transactions, such as acquisitions of companies, divestitures or sales of assets or business lines, business combinations, asset purchases, and out-licensing or in-licensing of products, product candidates, or technologies. Additional potential transactions that we may consider include a variety of different business arrangements, including strategic partnerships, joint ventures, restructurings, divestitures, business combinations, and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near- and long-term expenditures, and may pose significant integration challenges or disrupt our management or business, which could adversely affect our business, financial condition, and results of operations. Furthermore, separating a business or subsidiary may involve challenges related to disentangling operations, personnel, intellectual property, contractual arrangements, financial reporting systems and other infrastructure and may result in the loss of operational or strategic benefits previously realized from the combined organization.
These transactions may entail numerous operational and financial risks, including:
exposure to unknown liabilities;
disruption of our business and diversion of our management’s time and attention;
incurrence of substantial debt or dilutive issuances of equity securities to pay for such transactions;
higher-than-expected transaction and integration costs;
write-downs of assets or goodwill or impairment charges;
increased amortization expenses;
difficulty and cost in combining the operations and personnel of any acquired businesses or product lines with our operations and personnel;
impairment of relationships with key suppliers or customers of any acquired businesses or product lines due to changes in management and ownership;
inability to retain key employees of any acquired businesses;
post-closing disputes or litigation;
indemnification obligations related to divested businesses; and
risk that such transactions may fail to qualify for the intended tax treatment for U.S. Federal income tax purposes, and the possibility that the full tax benefits anticipated to result from such transactions may not be realized.
Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and could have a material adverse effect on our business, financial condition, and results of operations.
Our financial condition, results of operations, and cash flow may be adversely affected by changing economic conditions, including interest rates and inflation.
In recent years, the U.S. market has experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain and volatile, as a result of current geopolitical conditions including the Iran conflict, the Israel-Hamas war, the ongoing Russia-Ukraine war and conflict geopolitical tensions between the United States and China, the imposition and threat of tariffs and other trade restrictions by the U.S. government and foreign governments, instability in the U.S. and global banking systems, high levels of inflation, high interest rates, the downgrading of the U.S.’s credit rating and the possibility of a recession. A decline in economic conditions, such as recession, economic downturn, and/or inflationary conditions in the U.S., could adversely and negatively impact our financial condition, results of operations, and cash flow.
Risks Related to Legal and Regulatory Matters
New laws, regulations, enforcement trends, or changes in existing regulations governing the introduction, marketing, and sale of our products to consumers could harm our business.
There has been an increase in regulatory activity in the United States related to cosmetic products and consumer protections, and the regulatory landscape is becoming more complex with increasingly strict requirements. If this trend continues, we may find it necessary to alter some of the ways we have traditionally manufactured and marketed our products in order to stay in compliance with a changing regulatory landscape, and this could add to the costs of our operations and have an adverse impact on our business. To the extent federal, state, and local regulatory changes regarding consumer protection, or the ingredients, claims or safety of our products occur in the future, they could require us to reformulate or discontinue certain of our products, revise the product packaging or labeling, or adjust operations and systems, any of which could result in, among other things, increased costs, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on our business, financial condition and results of operations. Noncompliance with applicable regulations could result in enforcement action by the FDA or other regulatory authorities within or outside the United States, including but not limited to product seizures, injunctions, product recalls and criminal or civil monetary penalties, all of which could have a material adverse effect on our business, financial condition and results of operations.
In the United States, with the exception of color additives, the FDA does not currently require pre-market approval for products intended to be sold as cosmetics. However, the FDA may in the future require pre-market authorization for certain cosmetic products, establishments, or manufacturing facilities. Moreover, such products could also be regulated as both drugs and cosmetics simultaneously, as the categories are not mutually exclusive. The statutory and regulatory requirements applicable to drugs are extensive and require significant resources and time to ensure compliance. For example, if any of our products intended to be sold as cosmetics were to be regulated as drugs, we might be required to conduct, among other things, clinical trials to demonstrate the safety and efficacy of these products. We may not have sufficient resources to conduct any required clinical trials or to ensure compliance with the manufacturing requirements applicable to drugs. If the FDA determines that any of our products intended to be sold as cosmetics should be classified and regulated as drug products, and we are unable to comply with applicable drug requirements, we may be unable to continue to market those products. Any inquiry into the regulatory status of our cosmetics and any related interruption in the marketing and sale of these products could damage our reputation and image in the marketplace.
In recent years, the FDA has issued warning letters to several cosmetic companies alleging improper claims regarding their cosmetic products. If the FDA determines that we have disseminated inappropriate drug claims for our products intended to be sold as cosmetics, we could receive a warning or untitled letter, be required to modify our product claims, or take other actions to satisfy the FDA. In addition, plaintiffs’ lawyers have filed class action lawsuits against cosmetic companies after receipt of these types of FDA warning letters. There can be no assurance that we will not be subject to state and federal government actions or class action lawsuits, which could harm our business, financial condition, and results of operations.
Additional state and federal requirements may be imposed on consumer products as well as cosmetics, cosmetic ingredients, or the labeling and packaging of products intended for use as cosmetics. For example, on December 29, 2022, Congress enacted the MoCRA. MoCRA created new compliance requirements for manufacturers of cosmetic products in the United States and also significantly expanded the FDA ’ s authority to oversee and regulate cosmetics. Under MoCRA, companies must comply with new requirements for cosmetics, such as new labeling requirements for certain products, safety substantiation, facility registration, product listing, adverse event reporting, good manufacturing practice requirements, and mandatory recalls. In addition, MoCRA provided the FDA with new enforcement authorities over cosmetics, such as the ability to initiate mandatory recalls and to obtain access to certain product records. Many of the requirements become applicable on December 29, 2023, with some of the requirements, such as those relating to labeling, scheduled to become applicable later in 2024 and 2025.
The FDA was required under MoCRA to propose mandatory GMPs for cosmetics by December 29, 2025, a deadline that has been delayed multiple times, and the regulations are still forthcoming. In addition, as of July 1, 2024, parties that operate facilities engaged in the manufacturing or processing of cosmetic products for distribution in the United States are required to register such facilities with the FDA every two years, submit product listing information to the FDA and provide annual updates to such information. While we have met the registration requirements and expect to meet the GMP requirements, we are unable to ascertain at this time the full impact that complying with any new MoCRA requirements will have on our business. Compliance with the new requirements may further increase the cost of manufacturing certain of our products and could have a material adverse effect on our business, financial condition, and results of operations.
Our products are also subject to state laws and regulations, such as the California Safe Drinking Water and Toxic Enforcement Act, also known as “Prop 65,” and various state PFAS regulations, and failure to comply with such laws may also result in lawsuits and regulatory enforcement that could have a material adverse effect on our business, financial condition and results of operations. We are, and may in the future be, involved in litigation related to such state laws and regulations.
Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition, and results of operations.
Government authorities regulate advertising and product claims regarding the performance and benefits of our products. These regulatory authorities typically require a reasonable basis to support any marketing claims. What constitutes a reasonable basis for substantiation can vary widely from market to market, and there is no assurance that the efforts that we undertake to support our claims will be deemed adequate for any particular product or claim. A significant area of risk for such activities relates to improper or unsubstantiated claims about our products and their use or safety. If we are unable to show adequate substantiation for our product claims, or our promotional materials make claims that exceed the scope of allowed claims for the classification of the specific product, whether cosmetics, over-the-counter drug products, or other consumer products that we offer, the FDA, the FTC or other regulatory authorities could take enforcement action or impose penalties, such as monetary consumer redress, requiring us to revise our marketing materials, amend our claims or stop selling certain products, all of which could harm our business, financial condition and results of operations. Any regulatory action or penalty could lead to private party actions, or private parties could seek to challenge our claims even in the absence of formal regulatory actions, which could harm our business, financial condition, and results of operations.
Our products may cause or contribute to undesirable side effects that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition, and results of operations.
The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us. The FDA regulates our cosmetic products. In the United States, FDA regulations govern, among other things, the activities that we perform, including product development, product testing, product labeling, product storage, manufacturing, advertising, promotion, product sales, reporting of certain product adverse events and failures, and distribution. The FDA has the authority to require the recall or recommend the market withdrawal, as applicable, of commercialized products in the event that a product has a reasonable probability of causing a serious adverse health risk due to adulteration or misbranding. Companies may also choose to voluntarily recall a product if any material deficiency or regulatory violation is discovered. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects, or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future. Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals, clearances, or certifications for the product before we may market or distribute the corrected product. Seeking such approvals, clearances, or certifications may delay our ability to replace the recalled products in a timely manner. Moreover, if we do not adequately address problems associated with our products, we may face additional regulatory enforcement action, including warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and criminal prosecution. Companies are required to maintain certain records of recalls and corrective actions, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification to the FDA. If the FDA disagrees with our determinations, it could require that we report those actions as recalls, and we may be subject to enforcement action. A future recall announcement could harm our reputation, potentially lead to product liability claims against us, and negatively affect our sales .
Product liability lawsuits could divert our resources, result in substantial liabilities, and reduce the commercial potential of our products.
Our business exposes us to the risk of product liability claims that are inherent to the development, clinical validation studies, and testing to demonstrate aesthetic improvement and marketing of aesthetic, skincare, and haircare products. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial costs and may be forced to limit or forgo further commercialization of those products. Although we maintain general liability insurance in an amount that we believe is reasonably adequate to insulate us from potential claims, this insurance may not fully cover potential liabilities. In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercial production and sale of our products, which could adversely affect our business.
In addition, our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing, and marketing of human tissue products. We may be subject to such claims if our products cause, or appear to have caused, an injury. Claims may be made by consumers, healthcare providers, patients, or others buying or selling our products. Product liability claims can be expensive to defend (regardless of merit), divert our management’s attention, result in substantial damage awards against us, harm our reputation, and generate adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.
We may employ individuals who were previously employed at universities or pharmaceutical or cosmetics companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, and we are not currently subject to any claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties, we may in the future be subject to such claims. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Business interruptions could adversely affect future operations and financial conditions and may increase our costs and expenses.
Our operations, and those of our directors, employees, advisors, contractors, consultants, and collaborators, could be adversely affected by earthquakes, floods, hurricanes, typhoons, other extreme weather conditions, fires, water shortages, power failures, business systems failures, medical epidemics or pandemics, such as the COVID-19 pandemic, and other natural and man-made disaster or business interruptions, many of which are beyond our and such third parties’ control. Our phones, electronic devices, and computer systems, and those of our directors, employees, advisors, contractors, consultants, and collaborators, are vulnerable to damage, theft and accidental loss, negligence, unauthorized access, terrorism, war, electronic and telecommunications failures, and other natural and man-made disasters. These locations may be subject to additional security and other risk factors due to the limited control of our employees. If such an event as described above were to occur in the future, it may cause interruptions in our operations, delay research and development programs, clinical validation, regulatory compliance activities, manufacturing and quality assurance activities, sales and marketing activities, hiring, training of employees and persons within associated third parties, and other business activities.
Likewise, we rely and will continue to rely on third parties to conduct clinical trials, and similar events as those described in the prior paragraph relating to their business systems, equipment, and facilities could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, and the further development, commercialization, marketing, and sales of our products could be delayed or altogether terminated.
Our employees or others acting on our behalf may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.
We may be exposed to the risk that our employees, independent contractors, consultants, distributors and vendors, and other individuals or entities with whom we have arrangements to act on our behalf may engage in unethical, fraudulent, or illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) the laws and regulations of the FDA, including those laws requiring the reporting of true, complete and accurate information to the FDA; (ii) manufacturing standards; or (iii) laws that require the true, complete and accurate reporting of financial information or data. Misconduct by employees or others acting on our behalf could also involve the improper use of information obtained in the course of clinical validation studies or other testing of our cosmetic products, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions or investigations are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions or investigations could result in government investigations, legal proceedings, the imposition of significant fines or other sanctions, including the imposition of monetary penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings and curtailment of operations, any of which could adversely affect our ability to operate our business and our results of operations. Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations, which could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Our Intellectual Property
We may not be able to protect our proprietary technology, which could harm our ability to operate profitably.
The patent positions of biologics and cosmetics companies are uncertain and involve complex legal and factual questions. These industries place considerable importance on obtaining patent and trade secret protection for new technologies, cosmetic products, and processes. We may incur significant expenses in protecting our intellectual property and defending or assessing claims with respect to intellectual property owned by others. Any patent or other infringement litigation by or against us could cause us to incur significant expenses and divert the attention of our management.
Others may file patent applications or obtain patents on similar technologies that compete with our products. We cannot predict how broad the claims in any such patents or applications will be and whether they will be allowed. Once claims have been issued, we cannot
predict how they will be construed or enforced. We may infringe upon the intellectual property rights of others without being aware of it. If another party claims we are infringing their technology, we could have to defend an expensive and time-consuming lawsuit, pay a large sum if we are found to be infringing, or be prohibited from selling or licensing our products unless we obtain a license or redesign our products, which may not be possible.
We also rely on trade secrets and proprietary know-how to develop and maintain our competitive position. Some of our current or former employees, consultants, scientific advisors, contractors, current or prospective corporate collaborators may unintentionally or willfully disclose our confidential information to competitors or use our proprietary technology for their own benefit. Furthermore, enforcing a claim alleging the infringement of our trade secrets would be expensive and difficult to prove, making the outcome uncertain. Our competitors may also independently develop similar knowledge, methods, and know-how or gain access to our proprietary information through some other means.
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, as well as costs associated with lawsuits.
If any other person filed patent applications, or is issued patents, claiming technology also claimed by us, we may be required to participate in interference or derivation proceedings in the U.S. Patent and Trademark Office to determine priority and/or ownership of the invention. Our licensors or we may also need to participate in interference proceedings involving issued patents and pending applications of another entity.
The intellectual property environment in our industry is particularly complex, constantly evolving, and highly fragmented. Other companies and institutions have issued patents and have filed or will file patent applications that may issue into patents that cover or attempt to cover products, processes, or technologies similar to ours. We have not conducted freedom-to-use patent searches on all aspects of our cosmetic products, and may be unaware of relevant patents and patent applications of third parties. In addition, the freedom-to-use patent searches that have been conducted may not have identified all relevant issued patents or pending patent applications. We cannot provide assurance that our cosmetic products or proposed products will not ultimately be held to infringe one or more valid claims owned by third parties, which may exist or come to exist in the future, or that, in such case, we will be able to obtain a license from such parties on acceptable terms.
We cannot guarantee that our technologies will not conflict with the rights of others. We may also face frivolous litigation or lawsuits from various competitors or from litigious securities attorneys. The cost of any litigation or other proceeding relating to these areas, even if deemed frivolous or resolved in our favor, could be substantial and could distract management from its business. Uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to continue our operations.
If we infringe the rights of others, we could be prevented from selling products or forced to pay damages.
Our research, development, and commercialization activities may infringe or otherwise violate or be alleged to infringe or otherwise violate patents owned or controlled by other parties. Competitors in the field of aesthetics and cosmetics have developed large portfolios of patents and patent applications in fields relating to our business. Additionally, there may also be patent applications that have been filed but not published that, when issued as patents, could be asserted against us. These third parties could bring claims against us that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages and/or we could be forced to stop or delay research, development, manufacturing, or sales of the product that is the subject of the suit. Further, if a patent infringement suit were brought against us, during the pendency of the litigation, we could be forced to stop or delay research, development, manufacturing, or sales of the product that is the subject of the suit. If our products, methods, processes, and other technologies are found to infringe the rights of other parties, we could be required to pay damages or may be required to cease using the technology or to license rights from the prevailing party. Any prevailing party may be unwilling to offer us a license on commercially acceptable terms.
We cannot be certain we will be able to obtain and maintain patent protection to protect our products and technology.
We cannot be certain that all patents applied for will be issued or that our existing patents can be maintained. If a third party has also filed a patent application relating to an invention claimed by us or one or more of our licensors, we may be required to participate in an interference or derivation proceeding declared or instituted by the U.S. Patent and Trademark Office, which could result in substantial uncertainties and costs for us, even if the eventual outcome is favorable to us. The degree of future patent protection for our cosmetic products and technology is uncertain. For example:
we or our licensors might not have been the first to make the inventions covered by our issued patents, or pending or future patent applications;
we or our licensors might not have been the first to file patent applications for the inventions;
others may independently develop duplicative, similar, or alternative technologies;
it is possible that our patent applications will not result in an issued patent or patents, or that the scope of protection granted by any patents arising from our patent applications will be significantly narrower than expected;
any patents under which we hold ultimate rights may not provide us with a basis for commercially-viable products, may not provide us with any competitive advantages, or may be challenged by third parties as not infringed, invalid, or unenforceable under U.S. or foreign laws;
any patent issued to us in the future or under which we hold rights may not be valid or enforceable; or
we may develop additional technologies that are not patentable and which may not be adequately protected through trade secrets; for example, if a competitor independently develops duplicative, similar, or alternative technologies.
We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our cosmetic products.
Our success will depend in part on our ability to operate without infringing, misappropriating, or otherwise violating the trademarks, patents, copyrights, trade secrets, and other proprietary rights of others. We cannot guarantee that our cosmetic products, or the manufacture or use of our cosmetic products, will not infringe, misappropriate, or otherwise violate such third-party rights. From time to time, we may receive allegations of trademark or patent infringement, and third parties have filed claims against us with allegations of intellectual property infringement. In addition, third parties may involve us in intellectual property disputes as part of a business model or strategy to gain competitive advantage.
Defending against such allegations and litigation could be costly, affect our results of operations, divert the attention of managerial and scientific personnel, and have an adverse impact on our ability to bring products to market. Some of these third parties may be better capitalized and have more resources than us. In that event, we are to infringe or violate a third party’s intellectual property rights, we may need to halt commercialization of the relevant cosmetic product(s), obtain a license, which may not be available to us on commercially reasonable terms, and redesign or rebrand our marketing strategy or cosmetic products, which may not be possible or may be costly. In addition, there is a risk that a court will order us to pay the other party damages for having violated or infringed upon the other party’s intellectual property rights.
Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any such litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
If we fail to protect or enforce our intellectual property or confidential proprietary information relating to cosmetic products, we may not be able to compete effectively, which may negatively affect our business as well as limit our partnership or acquisition appeal.
Our success depends in part on our ability to protect our intellectual property rights. We rely on a combination of trademarks, trade secrets, confidential proprietary information, domains, licensed patent rights, and other intellectual property rights to protect our intellectual property. We may be subject to competition despite the existence of intellectual property we license or own. We can give no assurance that our intellectual property will be sufficient to prevent third parties from designing around the patents we own or license and developing and commercializing competitive products. The existence of competitive products that avoid our intellectual property could materially adversely affect our operating results and financial condition. Furthermore, limitations, or perceived limitations, in our intellectual property may limit the interest of third parties to partner, collaborate, or otherwise transact with us if third parties perceive a higher than acceptable risk to the commercialization of our products or future products.
We may elect to sue a third party, or otherwise make a claim, alleging infringement or other violation of patents, trademarks, trade dress, copyrights, trade secrets, domain names, or other intellectual property rights that we either own or license. If we do not prevail in enforcing our intellectual property rights in this type of litigation, we may be subject to:
paying monetary damages related to the legal expenses of the third party;
facing additional competition that may have a significant adverse effect on our product pricing, market share, business operations, financial condition, and the commercial viability of our products; and
restructuring our company or delaying or terminating select business opportunities, including, but not limited to, research and development, clinical validation, and commercialization activities, due to a potential deterioration of our financial condition or market competitiveness.
A third party may also challenge the validity, enforceability, or scope of the intellectual property rights that we license or own, and the result of these challenges may narrow the claim scope of or invalidate intellectual property rights that are integral to our cosmetic products in the future. There can be no assurance that we will be able to successfully defend our intellectual property rights in an action
against third parties due to the unpredictability of litigation and the high costs associated with intellectual property litigation, among other factors.
Changes to patent law, for example, the Leahy-Smith America Invests Act, AIA or Leahy-Smith Act, of 2011 and the Patent Reform Act of 2009 and other future articles of legislation in the U.S., may substantially change the regulations and procedures surrounding patent applications, issuance of patents, prosecution of patents, challenges to patent validity, and patent enforcement. We can give no assurances that our patents and those of our licensor(s) can be defended or will protect us against future intellectual property challenges, particularly as they pertain to changes in patent law and future patent law interpretations.
In addition, enforcing and maintaining our intellectual property protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by the U.S. Patent and Trademark Office and courts, and protection of our intellectual property rights could be reduced or eliminated for non-compliance with these requirements.
If we are not able to protect and control our unpatented trade secrets, know-how, and other proprietary technology, we may suffer competitive harm.
We also rely on proprietary trade secrets and unpatented know-how to protect our research and development activities, particularly when we do not believe that patent protection is appropriate or available. However, trade secrets are difficult to protect. We will attempt to protect our trade secrets and unpatented know-how by requiring our employees, consultants, collaborators, and advisors to execute a confidentiality and non-use agreement. We cannot guarantee that these agreements will provide meaningful protection, that these agreements will not be breached, that we will have an adequate remedy for any such breach, or that our trade secrets will not otherwise become known or independently developed by a third party. Our trade secrets, and those of our present or future collaborators with which we have agreements authorizing our use or access to such trade secrets, may become known or may be independently discovered by others, which could adversely affect the competitive position of our products.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our target markets, and our business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic, or determined to be infringing on other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with potential partners or consumers in our target markets. If we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected.
Risks Related to Our Financial Condition
Our future success is dependent, in part, on the performance and continued service of our officers and directors.
We are presently dependent largely upon the experience, abilities, and continued services of our senior management, including our Chief Executive Officer, Janakiram Ajjarapu. The loss of services of Mr. Ajjarapu could have a material adverse effect on our business, financial condition, or results of operation. Other key executives are important to our ongoing capability to develop, commercialize, and, if necessary, obtain regulatory approval for our cosmetic products. The competition for executive talent may make it difficult to replace any of these key positions in a timely manner. We do not maintain “key employee” insurance policies on any of our executive officers that would compensate us for the loss of their services. The time and cost required to replace a key employee may have a material adverse effect on our results of operations and financial condition.
Management has concluded that there is substantial doubt about our ability to continue as a going concern.
The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2025, we had negative net working capital of $5,966,168 and a net loss from continuing operations of $6,905,282, and negative net cash flow from operations of $3,329,266 for the year ended December 31, 2025. We have historically relied on raising capital to fund our operations. Based on our working capital balance as of December 31, 2025 and projected cash needs for the next twelve months, our management estimates that we will need to raise additional capital to cover operating and capital requirements. Management will need to raise the additional funds through issuing additional shares of Common Stock or other equity securities or obtaining debt financing. There can be no assurance that any required future financing can be successfully completed on a timely basis or on terms acceptable to us. Based on these circumstances, management has determined there is substantial doubt about our ability to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments that may be necessary should we be unable to continue as a going concern.
We may become involved in litigation that may materially adversely affect us.
From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, product liability, employment, class action, whistleblower, stockholder derivative suits, and other litigation and claims, and governmental and other regulatory investigations and proceedings. The Holders of the Convertible Notes have alleged that we owe additional principal and interest thereon and are required to repurchase the Convertible Note Warrants. Puritan has filed suit seeking to recover such amounts allegedly owed. Our management believes that our obligations under the Convertible Notes have been satisfied and that no additional payments are due to the Holders, and we have conveyed our position to the Holders. Nevertheless, we cannot assure you that we will prevail. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business.
We have a history of net losses, and we may not be able to achieve or maintain profitability in the future.
We have incurred net losses each year since our inception, and we may not be able to achieve or maintain profitability in the future. For the years ended December 31, 2025 and 2024, we had a loss from continuing operations of $6,905,282 and $10,650,464, respectively, and negative cash flows from operations of $3,329,266 and $3,893,256, respectively. To date, we have financed our operations primarily through the sale of equity securities and convertible debt. We have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and clinical trials, and we anticipate that our expenses will continue to increase over the next several years as we continue to develop and launch our cosmetic products, expand into new markets and increase our sales and marketing efforts. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Accordingly, we expect to continue to incur substantial operating losses for the foreseeable future, which may fluctuate significantly from quarter to quarter and year to year.
Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow on a consistent basis. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition, results of operations, and prospects could be adversely affected. If we are unable to generate adequate revenue and manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or maintain profitability. In addition, even if we do achieve profitability, we may not be able to sustain or increase profitability. Our failure to become and remain profitable would depress the value of our company and could impair our ability to maintain our research and development efforts, expand our business, diversify our product offerings, or even continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
An economic downturn may harm our business and the results of our operations.
Our overall performance depends, in part, on worldwide economic conditions. The U.S. and global markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain and volatile, as a result of current geopolitical conditions including the Iran conflict, the Israel-Hamas war, the ongoing Russia-Ukraine war and geopolitical tensions between China and the U.S., the imposition and threat of tariffs and other trade restrictions by the U.S. government and foreign governments, instability in the U.S. and global banking systems, high levels of inflation, high interest rates, the downgrading of the U.S.’s credit rating and the possibility of a recession. Impacts of such economic weakness include:
falling overall demand for goods and services, leading to reduced profitability;
reduced credit availability;
higher borrowing costs;
reduced liquidity;
volatility in credit, equity, and foreign exchange markets; and
bankruptcies.
These developments could lead to supply chain disruptions, decreased consumer spending, and uncertainty about business continuity, which may adversely affect our business and our results of operations.
Future increases in interest rates may increase our borrowing costs and may also affect our ability to obtain working capital through borrowings such as bank credit lines and public or private sales of debt securities, which may result in lower liquidity, reduced working capital, and other adverse impacts on our business.
Any continued increases in interest rates in the future will increase the cost of new indebtedness/servicing our outstanding indebtedness/refinancing our outstanding indebtedness, and could materially and adversely affect our results of operations, financial condition, liquidity, and cash flows.
Significant disruptions of information technology systems, computer system failures, or breaches of information security could adversely affect our business.
We rely to a large extent upon information technology systems to operate our business. In the ordinary course of business, we collect, store, and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we may contract, make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we intend to invest in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches.
Our internal computer systems, and those of our business vendors on which we may rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war, and telecommunication and electrical failures. We exercise little or no control over these third parties, which increases our vulnerability to problems with their systems. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs. Any interruption or breach in our systems could adversely affect our business operations or result in the loss of critical or sensitive confidential information or intellectual property and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development of our cosmetic products could be delayed, and our business could be otherwise adversely affected.
We will need to grow the size of our organization in the future, and we may experience difficulties in managing this growth.
As of March 27, 2026, we have ten full-time employees. We will need to grow the size of our organization in order to support our continued development and commercialization of our cosmetic products. As our development and commercialization plans and strategies continue to develop, our need for additional managerial, operational, manufacturing, sales, marketing, financial, and other resources will increase. Our management, personnel, and systems currently in place will not be adequate to support this future growth. Future growth would impose significant added responsibilities on members of management, including:
Managing our clinical validation effectively;
identifying, recruiting, maintaining, motivating, and integrating additional employees;
managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors, and other third parties; and
improving our managerial, development, operational, information technology, and finance systems; and expanding our facilities.
If our operations expand, we will also need to manage additional relationships with various strategic partners, suppliers, and other third parties. Our future financial performance and our ability to commercialize our cosmetic products and to compete effectively will depend, in part, on our ability to manage any future growth effectively, as well as our ability to develop a sales and marketing force when appropriate for our company. To that end, we must be able to manage our development efforts effectively and hire, train, and integrate additional management, research and development, manufacturing, administrative, and sales and marketing personnel. The failure to accomplish any of these tasks could prevent us from successfully growing our company.
Risks Related to Our Common Stock
We expect the price of our Common Stock may be volatile and may fluctuate substantially.
The stock market in general and the market for cosmetics companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our Common Stock may be influenced by many factors, including:
commercialization and sales of our products;
the results of our efforts to discover, develop, acquire, or in-license products, if any;
failure or discontinuation of any of our research programs;
actual or anticipated results from, and any delays in, any future clinical validation;
the level of expenses related to any products that we may choose to develop or clinical development programs we may choose to pursue;
disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, and capital commitments;
additions or departures of key scientific or management personnel;
variations in our financial results or those of companies that are perceived to be similar to us;
new products or new uses for existing products introduced or announced by our competitors, and the timing of these introductions or announcements;
results of clinical validation, testing, or clinical trials of products or product candidates of our competitors;
general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies;
regulatory or legal developments in the U.S. and other countries;
changes in the structure of healthcare payment systems;
conditions or trends in the cosmetics industry;
actual or anticipated changes in earnings estimates, development timelines, or recommendations by securities analysts;
announcement or expectation of additional financing efforts;
sales of Common Stock by us or our stockholders in the future, as well as the overall trading volume of our Common Stock; and
the other factors described in this “Risk Factors” section.
In the past, following periods of volatility in companies’ stock prices, securities class-action litigation has often been instituted against such companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business and financial condition.
Future resales of Common Stock may cause the market price of our securities to drop significantly, even if our business is doing well.
Sales of a substantial number of shares of our Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Common Stock.
As restrictions on resale end and registration statements for the sale of the shares held by parties who have contractual registration rights are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in the market price of our Common Stock or decreasing the market price itself. As a result of any such decreases in the price of our Common Stock, purchasers who acquire shares of our Common Stock may lose some or all of their investment.
Any significant downward pressure on the price of our Common Stock as the selling stockholders sell the shares of our Common Stock, or the prospect of such shares, could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our Common Stock.
Our largest stockholder will have the ability to influence the outcome of director elections and other matters requiring stockholder approval .
Upon the closing of the PIPE, Janakiram Ajjarapu became a beneficial owner of approximately 27.9% of the outstanding shares of our Common Stock immediately following such transaction. As such, Mr. Ajjarapu could exert substantial influence over matters requiring approval by our stockholders. This concentration of ownership may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or any other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may believe are in your best interest as one of our stockholders.
We are required to register the issuance of the shares underlying the warrants issued in the IPO. We may incur substantial costs in connection with such registration statement, and the issuance of such shares may result in dilution to holders of our Common Stock, and the issuance of any such shares upon a cashless exercise of the warrants would not result in the receipt by us of any cash proceeds thereof.
Pursuant to the warrant agreement entered into upon closing of the IPO, we agreed to file a registration statement with the SEC to register the issuance of the shares of Common Stock upon exercise of the warrants issued in the IPO. We prepared and filed such registration statement on August 7, 2023. The registration statement was not declared effective by the 60 th business day following the closing of the Business Combination. On October 15, 2025, we submitted a request to the SEC to withdrawal the registration statement because we had decided not to pursue the offering due to business decisions. As a result, until a subsequent registration statement is filed with, and declared effective by, the SEC, such warrants may be exercised by the holders thereof on a cashless basis.
We may incur substantial costs in connection with the filing of any such registration statement and completion of the SEC review process. In addition, for as long as the warrants remain exercisable on a cashless basis until the effectiveness of the registration statement, we would not be able to receive any cash proceeds from the exercise thereof, preventing such potential proceeds from improving our liquidity position. Any shares issuable upon exercise of the warrants, for cash or on a cashless basis, would also increase the number of shares outstanding and available for sale, which could result in downward pressure on the price of our Common Stock.
We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Common Stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For so long as we remain an emerging growth company, we will be permitted to and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:
not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
reduced disclosure obligations regarding executive compensation; and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We may choose to take advantage of some, but not all, of the available exemptions. We cannot predict whether investors will find our Common Stock less attractive if we rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock, and the price of our Common Stock may be more volatile.
We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future; capital appreciation, if any, will be your sole source of gain as a holder of our Common Stock.
We have never declared or paid cash dividends on shares of our Common Stock. We currently plan to retain all of our future earnings, if any, and any cash received as a result of future financings to finance the growth and development of our business. Accordingly, capital appreciation, if any, of our Common Stock will be the sole source of gain for holders of our Common Stock for the foreseeable future.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Common Stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
It em 1B. Unresolved Staff Comments.
None
Item 1C. Cybersecurity.
Managing cybersecurity risk is a crucial part of our overall strategy for safely operating our business. We incorporate cybersecurity practices into our Enterprise Risk Management (“ERM”) approach.
Consistent with our overall ERM program and practices, our cybersecurity program includes:
Vigilance: We maintain a cybersecurity program that endeavors to identify risks, protect assets, detect threats, respond to incidents, and recover from damaging events in a prompt and effective manner with the goal of minimizing business disruptions through effective governance of people, processes, and technologies.
External Collaboration: We collaborate with a third-party service provider to identify, assess, and mitigate cybersecurity risks.
Systems Safeguards: We deploy technical safeguards that are designed to protect our information systems, products, operations, and sensitive information from cybersecurity threats, including compromises of our information systems and our data’s confidentiality, integrity, and availability. These include firewalls, disaster recovery capabilities, malware and ransomware prevention, access controls, and encryption.
Education: We provide monthly training for all personnel regarding cybersecurity threats, with such training appropriate to the roles, responsibilities, and access of the relevant Company personnel. Our policies require all workers to report any actual or suspected cybersecurity events.
Incident Response Planning: We have established and maintain incident response plans that direct our response to cybersecurity events and incidents. Such plans include the protocol by which a material incident would be communicated to executive management, our Board, external regulators, and stockholders.
Our risk assessment efforts have indicated that we are a potential target for theft of intellectual property, financial resources, personal information, and trade secrets from a wide range of actors, including nation-states, organized criminal groups, malicious insiders, and activists. The impacts of attacks, abuse, and misuse of the Company’s systems and information include, without limitation, loss of assets, operational disruption, and damage to the Company’s reputation.
A key element of managing cybersecurity risk is the ongoing assessment and testing of our processes and practices through assessments and other exercises focused on evaluating the sufficiency and effectiveness of our cybersecurity risk management efforts. If a material weakness in our cybersecurity risk management program is identified, it will be reported to the Audit Committee and the Board , as appropriate, and we will make adjustments to our cybersecurity processes and practices as necessary to eliminate or compensate for that weakness.
Our CFO is principally responsible for overseeing our cybersecurity risk management program in partnership with other Company management. We believe our CFO has the appropriate expertise, background, and depth of experience to manage risks arising from cybersecurity threats. Our CFO’s relevant expertise includes prior oversight of information security and technology controls in senior finance roles, experience implementing and monitoring internal controls over financial reporting that depend on information systems, auditing information system controls and participating in ongoing cybersecurity and data‑protection training. Our CFO collaborates with other Company business leaders and our third-party service provider to maintain a program designed to manage our exposure to cybersecurity risks and to respond to cybersecurity incidents promptly.
As of the date of this Annual Report, we are not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
