Guardion Health Sciences (GHSI) Risk Analysis

As a participant in the healthcare industry, the Company's operations and relationships, and those of the Company's customers, are regulated by a number of federal, state, local, and foreign governmental entities with oversight of various aspects of product manufacture, distribution, sale, and use. The regulations are very complex, have become more stringent over time, and are subject to changing and varying interpretations. Regulatory restrictions or changes could limit the Company's ability to carry on or expand its operations or result in higher than anticipated costs or lower than anticipated sales. The FDA and other federal and state governmental agencies regulate numerous elements of the Company's business, including: - product formulation and development;   - pre-clinical and clinical testing;   - product labels and labeling;   - establishment registration and product listing;   - product safety, including product recalls or other field-safety actions;   - manufacturing, testing, packaging, storage, distribution;   - premarket approval or authorization (as applicable);   - record keeping procedures;   - marketing, sales, advertising and promotion;   - post-market surveillance, including reporting of adverse events; and   - product import and export. The Company may be subject to similar foreign laws that govern all of the above elements of the Company's business, including pre-market and post marketing obligations for our products. The time required to obtain authorization to sell the Company's products in foreign countries may be longer or shorter than that required by the FDA, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements. In the European Union ("EU"), member states are responsible for enforcing the EU's rules and for ensuring that only compliant products are placed on the market in their jurisdictions. Member states have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant medical products. They also have the power to bring enforcement action against companies or individuals for breaches of the rules governing certain medical products. The FDA, FTC, states, and other regulatory authorities have broad enforcement powers. Failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, FTC, state, or regulatory authorities, which may include the following: - untitled letters or warning letters;   - fines, disgorgement, restitution, or civil penalties;   - injunctions (e.g., total or partial suspension of production) or consent decrees;   - product recalls, administrative detention, or seizure;   - customer notifications or product replacement, or refunds;   - operating restrictions or partial suspension or total shutdown of production;   - delays in or refusal to grant requests for future product approvals, new intended uses, or modifications to existing products; and   - criminal prosecution. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on the Company's reputation, business, financial condition, and results of operations. Dietary supplements, such as Viactiv and GlaucoCetin, and medical foods do not require premarket approval by FDA before they may be distributed in the United States (with limited exceptions). The company currently considers Lumega-Z to be a medical food, as that term is defined under the FDCA. While the Company believes Lumega-Z is a medical food, if the FDA determines Lumega-Z to be a "drug" under the FDCA, the Company and the products would be subject to considerable additional FDA regulation. FDA defines a "drug" as an article that is intended for use in the cure, treatment, prevention or mitigation of a disease. A medical food is defined as "a food which is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation."

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