~~For the fiscal year ended December 31, 2017~~FOR THE TRANSITION PERIOD FROM __________________ TO __________________________

~~For the transition period from __________________ to __________________________~~CQENS Technologies Inc.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ~~[ ]~~

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ~~[ ]~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~[ ] Yes [X] No~~

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.4.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~[X] Yes [ ] No~~

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act 915 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ~~[ ]~~ .

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $0$0 on June 30, ~~2017.~~2021.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. ~~75,260,000~~ 26,015,595 shares of common stock are issued and outstanding as of ~~March 29, 2018.~~April 14, 2022.

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Part I. Item 1A. Risk Factors appearing elsewhere in this report. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

Unless specifically set forth to the contrary, when used in this report the terms ~~“VapAria,~~“CQENS,” “we,” “our,” “us,” and similar terms refers to ~~VapAria Corporation,~~CQENS Technologies Inc., a Delaware corporation formerly known as VapAria Corporation and, ~~our wholly-owned subsidiary~~where applicable, VapAria Solutions Inc., a Minnesota corporation ~~formerly~~ (“VapAria Solutions”)., a wholly owned subsidiary of CQENS. In 2019 we dissolved VapAria Solutions which had no separate operations, assets or liabilities. In addition, ~~“2017”~~“2020” refers to the year ended December 31, ~~2017, “2016”~~2020, “2021” refers to the year ended December 31, ~~2016~~2021 and ~~“2018”~~“2022” refers to the year ending December 31, ~~2018. The~~2022.

We maintain a corporate website at www.cqens.com. Unless specifically set forth herein to the contrary, the information which appears on our ~~web site atwww.vaparia.com~~corporate website is not part of this report.

We are a ~~pre-clinical specialty pharmaceutical~~technology company. ~~Our operations are focused on~~We design and develop innovative methods to heat plant-based and/or medicant-infused formulations to produce aerosols for the ~~development~~efficient and commercialization of methods and medicants to address chronic conditions with novel, vapor-centric approaches to pain management, appetite suppression, mood enhancement, smoking cessation and various sleep disorders and doing so as a specialty pharmaceutical company with patented device methods and patented drug approaches.

Prior to forming VapAria Solutions in 2010, our management had more than 25 years’ collective experience in vaporization and vapor delivery of medicants, having been partners in a joint venture with pioneers in the industry and having had undertaken significant work internationally researching and developing products, shepherding them through the patent process and introducing them into the U.S. wholesale and retail supply chain. Our management, through the Chong Corporation, an affiliated entity that is the licensorefficacious inhalation of the ~~intellectual property rights described below, has built~~plant and medicant constituents contained therein. We have two ways of accomplishing this: 1) at high temperatures via induction without combustion or the constituents of combustion; and 2) at low temperatures, where we heat an extensive and robust portfolio of intellectual property that includes patented and patent-pending methods of vaporization and patented and patent-pending medicants and herbal remedies identified for their effectiveness and suitability to address our target markets.

Our initial goal was to leverage rights we acquired in December 2013 from an affiliate which are described below to develop and successfully launch a product in partnership with well-capitalized and experienced industry participants based on our exclusive license and exclusive options to license patented and patent-pending technologies and formulations designed to significantly improve on current electronic nicotine delivery systems and other consumer products ininert carrier, producing inhalable, medicant-infused aerosols while maintaining the marketplace. During 2015, in addition to discussions with third party financing sources, we engaged in substantive discussions with several international companies which have expressed an interest in our licensed technology in pursuit of this strategy.

In late 2015 we adjusted our business focus owing to continuing research, development and design and, as a result, completed a full design of a product embodiment based on our proprietary technology, authorized the production of a fully functional prototype and sought to schedule pre-clinical assessments for the subsequent round of prototypes. The productionintegrity of the first prototype ran behind schedule and we took delivery of it in February 2016. Following a “de-bugging” process, a subsequent order for 20 prototypes was placed and we took delivery of the prototypes in late Spring 2016. Since taking delivery, we have programmed certain of them for specific demonstrations and we have been actively demonstrating them to potential partners and investors since then, including into the first calendar quarter of 2017. In addition, in the third quarter of 2016, we engaged an industry expert with 28 years of relevant experience to design IND-enabling studies that should take us from pre-clinical stage to clinical stage and make the FDA 505(b)(2) pathway to regulatory approval and commercialization available to us.

In 2017 we further developed certain of our device prototypes and engaged with a number of international companies interested in partnering with us to commercialize our patented technology in the area of medically licensed and regulator approved, pharmaceutical Nicotine Replacement Therapy (“NRT”)active ingredient(s). Certain of these discussions and negotiations have continued into the first quarter of 2018 and are expected to continue beyond that, although no assurances can be offered that a transaction will be finalized.

Effective December 31, 2013, VapAria Solutions entered into an Exclusive License and Option to License Agreement (the “December 2013 Agreement”) with the Chong Corporation, a corporation owned and controlled by Alexander Chong, our CEO and a member of our board of directors. The December 2013 Agreement is for the Chong Corporation’s intellectual property portfolio described below and provided a license for the following patent:

~~Under the terms of the December 2013 Agreement we were also granted options to license the following patent applications:~~

In consideration for the December 2013 Agreement, the Chong Corporation was paid a license issue fee and option to license fee (the “License Issue Fee”) of 500,000 shares of VapAria Solutions’ 10% Series A convertible preferred stock (the “VapAria Solutions Preferred”). The VapAria Solutions Preferred was exchange for an identical series of our 10% Series A convertible preferred stock in July 2014 as described later in this report.

In addition to the License Issue Fee, we are obligated to pay a 3% royalty, beginning January 1, 2015, of not less than $50,000 per year, beginning in the calendar year in which the first licensed products or licensed services takes place. No royalty fees were due in 2015 or 2016. We were also required to commercialize a product by December 31, 2015. The license, subject to option, was exercisable at any time during the term of the December 2013 Agreement at an option price not higher than $5 million, which may be payable in cash, equity or note. We exercised this option in January 2016 as described later in this report. The December 2013 Agreement also provides that the Chong Corporation will prosecute and maintain the patent applications and patents under patent rights subject to our reimbursement of out-of-pocket costs.

In addition, and beginning on the date of the December 2013 Agreement, ongoing patent development, patent prosecution, intellectual property portfolio enhancements are being undertaken by Messrs. Chong and Bartkowski under the auspices of Chong Corporation pursuant to Section 13 of the December 2013 Agreement. This activity continued throughout 2015 and 2016. While the terms of the December 2013 Agreement provide that we are responsible for reimbursing Chong Corporation for all past, present and future costs for preparing, filing, prosecuting and maintaining all patent applications and patents which are licensed to us under the terms of the December 2013 Agreement, in January of 2016 Chong Corporation agreed to waive all such reimbursements for all costs incurred through December 31, 2015 and 2016.

On January 28, 2016, and as contemplated under the December 2013 Agreement, we entered into five License Agreements (the “January 2016 License Agreements”) with Chong Corporation pursuant to which we were granted exclusive worldwide licenses for the following patented technology and Chong permanently waived the requirement under the December 2013 Agreement that we were required to commercialize a product by December 31, 2015:

~~The terms of each January 2016 License Agreement~~Our high-temperature non-combusting technology is ~~identical. Under~~supported by 22 U.S. and international patents and pending patents. Among the agreements, we were granted the rights to sublicense and/or produce and market products during the term of the agreement. As consideration for each of these January 2016 License Agreements we issued Chong Corporation 5,000,000 shares of our common stock, for an aggregate issuance of 25,000,000 shares. Under each agreement, we agreed to pay Chong a royalty in the amount of $50,000 per annum in the first calendar year, and for each year thereafter for the remaining life of the patent, in which the patent is issued and is licensed and/or commercialized with an acknowledged embodiment and/or use. We did not incur any royalty fees during 2017 and 2016. Chong is responsible for the payment of all expenses and costs associated with protecting the patents from infringement and/or from claims of infringement from other parties. The term of the license is for the life of the respective patent, subject to earlier termination by either party in the event of a default, which includes a non-payment of any monetary obligations under the terms of the January 2016 License Agreement, or a breach of any representation or warranty.

While we have historically outsourced our licensing and research and development activities to Chong Corporation, it is our intention, subject to our ability to raise sufficient working capital, that we will no longer outsource such activities which require fees to be paid or reimbursement of expenses to the Chong Corporation.

Our management intends that our near-term business focus will be to develop and successfully launch a product in partnership with well-capitalized and experienced industry participants based on our exclusive licensed patented and patent-pending technologies and formulations designed to significantly improve on commercial vaporizing products and certain other drug deliveries methodologies now available.

The following description of business opportunities we may seek to exploit is subject to our ability to raise working capital to fund these initiatives. As described elsewhere herein, we are not a party to any agreements or understanding to provide this capital and, accordingly, we may not be able to pursue these ventures.

Our management is experienced in the design and development of inhalable and breathable technologies and in identifying medicants and remedies that can be made more effective and abuse-deterrent via pulmonary delivery. This approach to device development and medicant discovery has allowed us to identify, advance and patent numerous methods and medicants. Our IP strategy revolves around our patented and patent-pending device, which effectively vaporizes medicants and their excipients at low temperatures. The ability to vaporize at these temperatures then provides us an avenue to patent a wide variety of pharmaceutical preparations and/or OTC medicants, herbal remedies via low temperature vaporization and vapor delivery. Our lead product candidate is an embodiment of our technology, the features and attributes of which are especially well-suited to safe, secure and abuse-deterrent dispensing of opioids for prescriptive pain management therapies.

~~We believe that sophisticated, robust and proprietary product embodiments~~applications of our patented and patent-pending technology are ~~capable of:~~

~~Our technology can be designed, programmed~~those for Heat-not-Burn (“HnB”) devices. In one instance for example, our method of heating a tobacco formulation for inhalation is superior, less toxic and ~~manufactured to provide two distinct~~far more convenient than other methods of delivery- inhalable vapor or breathable vapor. In one method, the vapor produced is made available for inhalation allowing for rapid uptake through the pulmonary system. With the other method, the vapor is produced and then expelled from the device, enabling the user, who holds the device one to four inches in front of his or her face, between the nose and mouth, to breathe the vapor in, allowing it to be absorbed in the soft tissues of the mouth and nasal passages. Both methods of delivery minimize systemic absorption and adverse effectstobacco consumption, especially when compared ~~to formulas that must travel through the gastrointestinal tract.~~

~~Pain Management/Abuse-deterrent Opioid Delivery.~~ According to BCC Market Research the total, annual, global market for therapeutic pain management is expected to reach $45 billion by 2019. However, most of that market is dominated by prescriptive and/or clinical use of opioids. Prescriptive opioid abuse and the addiction that it so often leads to, with the consequences of overdose death and the increase in transition to the use of illegal street drugs such as heroin, now constitute a significant public health crisis in the U.S.

Over prescription and lack of comprehensive patient monitoring throughout a therapeutic pain management regimen are material contributing factors to the crisis. Among the solutions that have been proposed by public health experts are the development of methods designed to limit the use of or access to prescriptive opioids to the intended patient and the increased patient monitoring throughout the prescriptive routine.

On February 4, 2016, the FDA committed to focus on policies aimed at reversing the epidemic, while still providing patients in pain access to effective relief. This commitment was a follow-up to its April 6, 2015 guidance on abuse-deterrent opioid formulations. This guidance spelled out that products that carry abuse-deterrent labels would be considered for an extended period of marketing exclusivity, typically lasting three years. The guidance encourages “novel approaches” to abuse-deterrent opioid formulations.

On February 20, 2016, we completed building a fully functioning prototype of our patented and patent-pending pulmonary drug delivery device. We also received an allowance for our second patent on the device. This patent was issued on July 26, 2016. We believe that these events, coupled with the recent FDA statements referenced above, make it timely and important for us to move the opioid delivery system to one of the lead positions in our commercialization and clinical development.

~~The efficacious pulmonary delivery of opioids has been demonstrated in numerous studies going back almost 20 years (Ward, M.E. et al.~~~~“Morphine pharmacokinetics after pulmonary administration from a novel . . . delivery system,”~~ ~~1997.); and, safety has been demonstrated as well (Otulana, B. et al.~~~~“Safety and pharmacokinetics of inhaled morphine,”~~2004.). However, efforts to deliver prescriptive opioids via the pulmonary system outside of clinical settings have been stymied due to the lack of a simple to use device with sufficient technological sophistication to ensure proper dosage, proper administration and the safety and security of user authentication and prescription verification. We believe that the safety and security of the device could transform pain management therapies and methods and enable us to secure FDA fast-track status due to the compelling public health concerns with opioid abuse.

~~Smoking Cessation.~~The opportunity exists for our vaporizing technology to go down the path as an FDA- approved smoking cessation/nicotine replacement therapy. With nicotine or, in our case, with a patented non-combustible tobacco formulation, as an active ingredient/medicant in our device we believe our technology is superior to what is currently offered consumers in what is often called the “e-cigarette” space and sophisticated and secure enough to garner FDA approval pending the requisite studies and trials.

In Section 918, “Drug Products Used to Treat Tobacco Dependence,” of the Family Smoking Prevention and Tobacco Control Act, the FDA is encouraged to consider designating products as fast track research and approval products at the request of the applicant. This path would require a New Drug Application filed with the FDA’s Center for Drug Education and Research. The Food and Drug Administration Modernization Act of 1997 includes Section 112, “Expediting study and approval of fast track drugs.” This section mandates the Agency to facilitate the development and expedite review of drugs and biologics intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs. Fast track enhances existing programs, such as accelerated approval, the possibility of a “rolling review” for an application. An important feature of fast track is that it emphasizes the critical nature of close early communication between the FDA and sponsor to improve the efficiency of product development.

In early 2017, the United Kingdom’s Medicines and Healthcare products Regulatory Agency (MHRA), the executive agency of the Department of Health in the United Kingdom which is responsible for ensuring that medicines and medical devices work and are acceptably safe based on research and that of UK experts and consultants, announced that it was encouraging companies with Electronic Nicotine Delivery Systems (“ENDS”) to submit them for clinical tests and trials and for licensing as a medical product. Consistent with this encouragement, the agency published a document on February 2017:~~Licensing procedure for electronic cigarettes and other nicotine-containing products (NCPs) as medicines~~, a two-part proportionate assessment of marketing authorization applications (“MAA”) for electronic cigarettes and other nicotine containing products is outlined. Our review of the document convinced us that our technology was well-suited for a licensed product and we identified a number of potential partners in this endeavor. We began discussions and negotiations with certain of these companies in mid-2017 and such discussions and negotiations continue into the first quarter of 2018.

We believe that the U.S. consumer is looking for the most convenient, cost-effective and efficient products available. We are committed to bringing consumers high-tech, consumable wellness products that fit that description and address the most pertinent life-style issues that the contemporary American consumer is dealing with: energy, appetite suppression and sleep. Not coincidentally, these products currently comprise some of the largest OTC wellness consumer markets in the U.S.

We expect to address this market with disposable, personal, portable, hand-held vaporizers that deliver proprietary formulations of herbal remedies based upon our technology. These products and their formulations will provide the desired effect within 30 seconds of ingestion. As a result, these products should effectively deal with the modern ailments of contemporary Americans and do so immediately, responding to the modern consumer’s need for instant gratification and satisfaction.

Delivering OTC herbal remedies via inhalation has a long history in the U.S. and throughout the world. However, especially with respect to established herbal remedies, the method of inhalation has traditionally been limited to the inhalation of the smoke produced by combustible products, i.e., cigarettes, cigars and pipes. Independent tests of our system’s prototypes supported the benefits of rapid heating, confirmed non-combustion, even at high temperatures, and produced better toxicology results, 98% better, when compared to products requiring combustion and compared to other non-combusting technologies currently on the market.

Our low-temperature, aerosolizing technology is supported by 30 U.S. and international patents and pending patents. This portfolio includes intellectual property (“IP”) around device designs and around formulations containing a wide variety of herbal and pharmaceutical preparations. This system features the ability to verify the user, validate the medicant or pharmaceutical preparation and measure, meter and monitor the proper, prescribed dosage.

We define our target market as the “international inhalation market,” a market that includes herbal, pharmaceutical, medical, recreational and lifestyle products and ingredients. Industry experts, like Nielsen, Grand View Research, Fior Markets, have published reports in 2021 that we have consolidated; these consolidated estimates support that this is an $950 billion USD annual market currently and it’s expected to grow to $1.1 trillion USD by 2025. The largest category within this market is the combustible tobacco market, comprising 92% of the total. Our near term focus is on this segment, which represents the greatest opportunity for growth and the greatest opportunity to positively impact public health and wellness.

We believe our HnB technologies have applications to the international tobacco industry and the growing hemp/CBD and cannabis industries. HnBs represent the latest in tobacco and inhalable technologies, and likely to supplant the electronic vapor system (EVS) technologies including e-cigarettes and electronic nicotine delivery systems. We believe HnBs, if properly designed, will avoid many of the issues that have proved troublesome for EVS’ including thermal decomposition, heating irregularities and the formation and presence of high levels of acrolein and formaldehyde. In late 2019 Philip Morris International introduced its HnB product to U.S. markets. This product, which was sold in more than 40 countries before entering U.S. markets, like other HnB technologies, is a device that heats a tobacco stick, rather than burning ~~herbal remedy~~it, and ~~along~~testing supports claims that the product can potentially reduce the number of noxious chemicals found in cigarette smoke by 95%.

Since late 2019 we have focused our efforts on commercializing our HnB technology. This entry began with the ~~beneficial aspects of~~December 31, 2019 transaction pursuant to which we acquired the ~~herb formulations, users would also ingest the hazardous by-products of ignition and burning.~~following assets from Xten Capital Group, Inc., formerly known as Chong Corporation (“Xten”), a related party:

Our prototype devices use safe (FDA- GRAS), established and effective carriers or excipients which vaporize at relatively low temperatures, to deliver the formulation, which attaches to the carrier, to the user who inhales the mist produced or, in some cases, lets the mist be absorbed in the soft tissues of the mouth. Formulas delivered via inhalation minimize systemic absorption and adverse effects compared to formulas that must travel through the gastrointestinal tract.

The three areas that we will address with our first generation products—energy, appetite suppression and sleep aids—have traditionally delivered their OTC formulas through the gastrointestinal tract with certain side effects related to the need to digest the formulas (or their expedients) in order to derive the intended effect.

~~Energy.~~We believe that the broad consumer energy market in the U.S. remains vibrant and growing. The market includes energy drinks, which remain the fastest growing part of the market. According to research aggregator, Report Buyer, total dollar sales of energy drinks increased 440% from 2002 through 2006. And since then, sales have continued to increase at an annual rate of 12% and they are expected to approach $14 billion in annual sales by 2019. It should also be noted that the energy drink market does not include coffee, which, of course, contains caffeine, one of the most effective natural energy ingredients.

The trends in consumer acceptance of energy drinks start with 12 ounce soft drinks, moves through 16- ounce specialty drinks, subsequently moves through to the 8-ounce variety, and now squarely focuses on 2-ounce energy “shots.” The success of these products in their respective market peaks had a great deal to do with their ingredients. The 12-ounce soft drinks provided energy with a combination of sugar and, in many cases, caffeine. The 16-ounce specialty drinks also contained, for the most part, sugar and caffeine, but many added other nutritional enhancements, vitamins, particularly vitamin B complexes, dairy, soy and other ingredients. The leading 8-ounce brand introduced a number of amino acids, including taurine, into the mix. It is especially significant to note the recent trends in the 2-ounce energy “shot.” These products were developed and are marketed to specifically address side effects often experienced with the other kinds of drinks, especially the high caloric content, added sugar and the diuretic effects of caffeine and certain other ingredients.

~~We envision a simple product —a disposable, personal, portable, hand-held vaporizer, capable~~

● exclusive licenses from Xten in the fields and applications of ~~delivering~~tobacco, nicotine, reduced tobacco risk and smoking cessation, for device patents assigned to Xten, U.S. Patent No. 9,770,564 and U.S. Patent No. 9,913,950; and

● exclusive licenses from Xten in the fields and applications of tobacco, nicotine, reduced tobacco risk and smoking cessation, for international device patents and patent applications assigned to Xten, including those issued in the People’s Republic of China, the European Union, Japan and Hong Kong, and those pending in Germany, France, Brazil, Canada and Korea, and divisional patents pending in the European Union and Japan.

During 2020 and into 2021 we have continued our efforts begun in 2019, including:

● On July 24, 2020 we entered into an ~~herb infused vapor. The vapor would be formulated from a proprietary formula~~Amended and Restated Operating Agreement (the “Operating Agreement”) of ~~herbal remedies~~Leap Technology LLC (“Leap Technology”) with Zong Group Holdings LLC (“Zong”) and ~~would produce~~Leap Management LLC (“LM”). Under the ~~feelings of energy and alertness within 30 seconds of use. It would do this without any~~terms of the ~~cumulative side effects so often attributed to energy drinks: the calories, the “jitters,” the heartburn, the facial flush~~Operating Agreement and the ~~bothersome diuretic effects. Additionally, given~~related Contribution Agreement dated July 24, 2020 (the “Contribution Agreement”), we acquired a 55% membership interest in Leap Technology in exchange for the contribution of an exclusive, royalty-free license (the “Leap License Agreement”) for the use in the Asia Pacific countries listed in the Contribution Agreement of certain of our intellectual property, patents pending and patents related to our heated tobacco product technology. It is expected ~~useful life~~that Leap Technology will form additional business entities to commercialize our propriety technology in those Asia Pacific countries which include China, India, Indonesia, Vietnam, the Philippines, Thailand, Malaysia, Singapore and Hong Kong. The goal of the joint venture is the market development of the Company’s intellectual property in the Asia Pacific region together with other initiatives and the formation business relationships with tobacco companies who operate in the Asia Pacific region. As of the date of this ~~product when used according~~report, the joint venture is still in a pre-formative stage expected to be formalized consistent with the ~~labeling,~~Restated Operating Agreement in the second quarter of 2022.

● On August 25, 2020, we were issued U.S. Patent 10,750,787 by the U.S. Patent and Trademark Office for a Heat-not-Burn Device and Method. The patent covers the technology behind the proprietary CQENS System;

● On September 4, 2020, we were informed by our intellectual property counsel that it had received a favorable International Preliminary Report on Patentability that was issued as a result of its filing of a Chapter II Demand and Article 34 Amendments with the International Bureau of the WIPO on September 5, 2019. The report was issued in connection with the PCT patent application filed by on January 3, 2019 for our Heat-Not-Burn Device and Method. The examiner’s conclusion was that 84 of the 91 claims were considered to be “patentable,” and while the PCT does not issue patents, based upon management’s experience we believe that ita preliminary, favorable examination does provide insight as to how individual country examinations would ~~provide~~likely proceed;

● On September 30, 2020, we entered into an Asset Purchase Agreement with Xten pursuant to which we acquired a ~~significant value~~portfolio of 29 U.S. and international patents and patent applications in the areas of devices and technologies for aerosolizing certain remedies and pharmaceutical preparations, as well as the solutions and preparation for inhaled delivery. This transaction effectively terminated all prior licensing agreements and resulting with the portfolio being assigned to the ~~consumer on~~Company;

● On September 30, 2020, we also entered into a ~~per-use basis as compared~~second Asset Purchase Agreement with Xten pursuant to the costs of energy drinks, energy “shots” and energy bars. We believe that the unique delivery system, “coolness” factor of the device—positive attributes when compared to traditional products—and the price value proposition will allow this product to compete effectively against traditional beverages and energy shots.

~~Appetite Suppression.~~ About 34% of all Americans are overweight when measured by the Body Mass Index or BMI and the trend is moving up. According to a December 31, 2017 reports by Marketdata Enterprises, Inc., at any given point in time there are an estimated 72 million dieters in America—with about 70% of this number attempting to lose weight by themselves, i.e. without medical or program supervision. The annual growth for what is defined as the U.S. weight loss market has been 6% and the market is expected to approach $91 billion by year-end 2019. This market includes prescription diet drugs, structured programs like Weight Watchers, meal replacements, OTC diet pills, mail order plans, diet websites and fad diet books. We have herbal formulas that can be vaporized, ingested as a mist and suppress the user’s feeling of hunger and/or craving for snacks at times other than traditionally scheduled meal times. Like the energy formulation, the appetite suppression formulation will provide its desired effect in less than 30 seconds after ingestion, providing relatively instant feelings of fullness, effectively suppressing appetite and the urge to imprudently snack. The method of delivery with respect to this product enjoys similar attributes to the energy product in that it delivers its desired effect withoutwhich we acquired certain ~~and specific side effects,~~assets including, but not limited to, ~~nausea, headaches~~a custom built plume and ~~dizziness.~~inhalation testing machine, oscilloscope with probe, multiple pieces of laboratory and workshop equipment, computers, monitors and accessories; and

● On February 15, 2021, we entered into a non-binding Memorandum of Understanding (the “MOU”) with The Barker Group of Companies and affiliates. The Barker Group is involved in the processing, manufacturing and distribution of tobacco from “seed through shelf,” principally in the US. From planting the seeds, through growing, processing, manufacturing, and finally placing the finished product on the shelf, The Barker Group has ~~finally emerged from~~ the ~~darkness as~~necessary permits and facilities to support fully legal and regulatory compliant tobacco activity in the U.S. The Barker Group’s businesses have recently expanded to include hemp and CBD products. The Barker Group includes Cherokee Tobacco Company (CTC), the exclusive national distributor of Cherokee and Palmetto cigarettes, Cherokee and Arrowhead pipe tobacco, Cherokee and Virginia Heritage filtered cigars, the full line of Pure HempSmokes, Piedmont Blue CBD products, and AHP hemp pre-rolls. The Barker Group distributes its products to over 130,000 US retail locations. The parties have agreed to negotiate in good faith collaborating on certain strategic initiatives, including the following:

● to commercialize CQENS’ patented and patent-pending HnB technology by designing devices and consumables for The Barker Group to manufacture and distribute exclusively in the U.S. for tobacco, hemp/CBD and cannabis products where U.S. laws and regulations permit;

● to prepare and submit a ~~critical American health issue. According~~Premarket Tobacco Authorization (“PMTA”) for submission to the American Sleep Association, every year approximately 40 million Americans are affected by chronic, long-term sleep disorders. Restless nights followed by sluggish, anxious days have led a growing number of consumersFDA to seek relief and physical and emotional rejuvenation from a diverse and fragmented market of mainstream and alternative products that aid sleep or relaxation. As more Americans become aware that sleep is as important as food or exercise, we believe that consumers will look for traditional and alternative sleep aid products. Packaged Facts, a U.S. research firm, estimates that by 2019enable the ~~annual market size~~launch of the CQENS System throughout the U.S. ~~OTC sleep aid market will approach $1 billion. Once again in this market, we have proprietary formulations~~; and

● to expand the scope of ~~herbal remedies that can be vaporized, ingested as~~the HnB marketing opportunities by also submitting a mist and enhance the user’s feelings of calm and sleepiness, quieting anxiety and restlessness. As with the other consumer products we have in development, this formulation will have its desired effect less than 30 seconds after ingestion, providing immediate feelings of calm and restfulness, preparing the user for a complete and restful night’s sleep.

~~Focusing on Chronic Conditions and Vapor Solutions.~~We focus our product development activities on addressing significant unserved and underserved chronic medical and wellness conditions. Our own research demonstrates existing product technologies are incapable of meeting provider and patient preferences, ongoing public health and regulatory scrutiny, and third party payment conditions. At this time, our pipeline and our projects include medicants and therapies to address pain management with abuse-deterrent delivery methods and methodologies, obesity, sleep disorders and smoking cessation. To the extent that these conditions are compelling public health issues or(“MRTP”) application to the ~~extent that current medicants or therapies present public health concerns, we believe there is an opportunity~~FDA in addition to ~~request FDA fast track status~~the PMTA.

Additionally, the MOU provides for CQENS to license its technology to The Barker Group under certain terms and conditions yet to be finalized and for The Barker Group to invest in ~~circumstances that require FDA approval.~~

~~Establishing Strategic Partnerships~~CQENS with terms and ~~Relationships.~~~~Whenever appropriate, we intend~~conditions yet to strategically partner with established pharmaceutical and medical device companies to provide development funding, and/or address markets that may require greater commercialization resources than we are currently able to provide, and/or provide more specific expertise to maximize the value of our technologies and experience.

~~Protecting Our Intellectual Property.~~~~Our experience and expertise encompasses engineering, design and automated manufacturing, allowing us to uniquely oversee all aspects of the manufacturing~~be finalized. The foregoing initiatives, as well as ~~assembly~~other items contained in the non-binding MOU, are subject to the completion and execution of definitive agreements, all of which will be subject to customary closing conditions.

On August 17, 2021, as a result of the MOU, we entered into a Joint Venture Agreement (the “JV Agreement”) with Firebird Manufacturing, LLC (“Firebird”), a Barker Group company. Under the terms of the JV Agreement the parties have agreed to organize, negotiate, and establish a limited liability company joint venture entity (the “Joint Venture Entity”) for the purposes of developing, manufacturing, and distributing Heat-hemp/CBD products in the United States for an initial term of four years, subject to an automatic renewal for successive one-year terms provided certain conditions are met. The Joint Venture Entity will be owned equally by the Company and Firebird. The Company will license its intellectual property to the Joint Venture Entity, receiving a 10% royalty on direct consumable sales and will be responsible for designing and coordinating the manufacture of an HnB device exclusively conformed to heat but not combust hemp/CBD. Firebird will be responsible for manufacturing the hemp/CBD consumable and distributing both the device and consumables to the retail locations where the product can be lawfully sold.

Pursuant to the JV Agreement, the Company and Firebird will each receive on a monthly basis a distribution out of the Joint Venture profits, if any, equal to 30% after payment of expenses. The remaining profits, if any, will be distributed annually. The JV Agreement also provides that the parties will be prohibited from marketing a competing product for two years following the termination of the Joint Venture Entity, subject to penalty in the amount of $5 million. The JV Agreement also sets forth in general terms the respective contributions of the parties, including equipment, manufacturing facilities, intellectual property, and expertise. Under the terms of the JV Agreement, there will be five managers of the Joint Venture Entity, three of whom will be designated by the Company and two of whom will be designated by Firebird. In the event the parties formalize and enter into a Joint Venture Entity Operating Agreement, Jay Barker, an affiliate of Firebird, may be appointed to the Company’s board of directors. The JV Agreement contains customary representations and warranties.

The execution of the Joint Venture Entity Operating Agreement is subject to formalizing the definitive Joint Venture Operating Agreement and the execution of additional agreements, including a license agreement for the use of intellectual property, certain product development agreements, supply agreements and such other agreements as may be necessary to further the purpose of the JV Agreement. As of the date of the filing of this report no other agreements have been entered into by the parties and there are no assurances that the parties will complete and formalize such agreements.

On January 4, 2022, we received notification from the U.S. Patent and Trademark Office that the Company’s amended claims with respect to its U.S. Utility Patent Application for Heat-not-Burn Device and Method, the US National Phase, are allowable and a patent will issue 45 to 60 days following the submission by the Company of the required issuance fees due February 10, 2022.

At April 14, 2022, the Company had five employees, including its three executive officers.

In 2021 we engaged seven consultants who performed product design, product testing and corporate business development on our behalf. We compensate these individuals at various rates.

Employee health and safety in the workplace is one of our ~~future products. This will serve~~core values. The COVID-19 pandemic has underscored for us the importance of keeping our employees safe and healthy. In response to the pandemic, we have taken actions aligned with the World Health Organization and the Centers for Disease Control and Prevention in an effort to protect our ~~intellectual property~~workforce so they can more safely and ~~provide a greater economic return~~effectively perform their work.

Given our current product development opportunities and commercialization efforts, we expect to ~~our strategic partners and our stakeholders.~~

~~While~~expand our executive, ~~officers devote a substantial amount of their time~~management and employee numbers in order to ~~our company without cash~~meet future strategic and operational requirements and commitments. Over the next few years, we would expect to undertake this expansion with strong consideration given to management and employee diversity, to learning and innovation and to establishing and maintaining positive and dynamic workplace environments. This will require greater compensation ~~at March 20, 2018 we did not have any employees.~~and benefit expenditures than the Company has incurred during its development stage.

We were incorporated under the laws of the State of Delaware on December 21, 2009 under the name OICco Acquisition IV, Inc. with the principal business objective of merging with or being acquired by another entity. In March 2010 we filed a registration statement on Form S-1 with the Securities and Exchange Commission pursuant to the provisions of Rule 419 of the Securities Act of 1933, as amended (the “Securities Act”). The registration statement was declared effective by the Securities and Exchange Commission in December 2013. We became what is commonly referred to as a “Rule 419 shell” and we had no business or operations. We subsequently sold 1,000,000 shares of our common stock in a Rule 419 offering pursuant to the registration statement resulting in gross proceeds of $20,000. Pursuant to the provisions of Rule 419, the funds were placed in escrow pending identification of an acquisition target and the reconfirmation of the subscriptions by the investors.

On April 11, 2014, we entered into a Share Exchange Agreement and Plan of Reorganization (the “Share Exchange Agreement”) with VapAria Solutions and its shareholders ~~pursuant to~~ which ~~we agreed to acquire 100%~~is described in greater detail in Note 1 of the ~~outstanding capital stock of VapAria Solutions from the shareholders~~notes to our financial statements appearing later in exchange for certain shares of our capital stock. On July 31, 2014 all conditions precedent to the closing were satisfied, including the reconfirmation by the investors of the prior purchase of 1,000,000 shares of our common stock pursuant to the requirements of Rule 419 of the Securities Act, and the transaction closed. At closing, we issued the VapAria shareholders 36,000,000 shares of our common stock and 500,000 shares of our 10% Series A convertible preferred stock in exchange for the common stock and the VapAria Solutions Preferred Stock owned by the VapAria shareholders. The VapAria shareholders were either accredited or sophisticated investors who had access to information concerning our company. The issuances were exempt from registration under the Securities Act in reliance on an exemption provided by Section 4(a)(2) of that act. As a result of the closing of this ~~transaction, VapAria Solutions is now a wholly owned subsidiary of our company and its business and operations represent those of our company.~~report. Following the closing of this transaction, in August 2014 we changed the name of our company to ~~“VapAria~~VapAria Corporation.” In December 2019 we changed our corporate name to CQENS Technologies Inc.

Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.

We have a history of losses, do not generate any revenues and do not have sufficient working capital to fund our operations and pay our obligations.

We reported a net loss of ~~$156,538~~$8,465,912 and ~~$482,765~~$2,541,532 for ~~2017~~2021 and ~~2016,~~2020, respectively, and we have a working capital ~~deficit~~surplus of ~~$669,674~~$3,532,821 at December 31, ~~2017.~~2021. We do not have any revenue generating operations, do not presently expect to launch our first products until ~~2019~~mid-2023 and will need to raise significant capital to pay our operating expenses and satisfy our obligations as they become due, in addition to continuing to implement our business plan. If we are unable to secure the necessary capital, our ability to continue our operations will be in jeopardy.

Our auditors have raised substantial doubts as to our ability to continue as a going concern.

Our financial statements have been prepared assuming we will continue as a going concern. We have experienced losses from operations, which losses have caused an accumulated deficit of ~~$1,569,087~~$13,309,494 at December 31, ~~2017.~~2021. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, ~~2017~~2021, contains an explanatory paragraph regarding our ability to continue as a going concern based upon our recurring losses, minimal cash and no source of revenues which are sufficient to cover our operating costs. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our ~~consolidated~~ financial statements do not include any adjustments that might result from the outcome of this uncertainty. We do not have any external sources of capital and our working capital is not sufficient to pay our operating expenses and satisfy our obligations as they become due. There are no assurances that we will be able to raise sufficient capital to implement our business plan in order to permit us to begin generating revenues and cash flow to a level which supports profitable operations and provides sufficient funds to pay our obligations. If we are unable to meet those obligations, we could be forced to cease operations in which event investors would lose their entire investment in our company.

We may have difficulty raising capital, which could deprive us of necessary revenues.

We have not generated any revenues to date and, subject to the availability of sufficient capital, do not expect to launch our first products until ~~late in 2019,~~mid 2023, owing to our recent focus on regulatory approved products. We ~~are presently dependent on advances from a related party~~have raised funds through private transactions in 2020 and 2021 that have to ~~provide funds for~~date covered our ~~operations.~~operating expenses. In order to support our initiatives, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements with well capitalized companies. Our ability to raise additional financing depends on many factors beyond our control, including the current volatility in the capital markets, risks associated with investing in a pre-revenue company with no assurances our products can be commercialized, the lack of a public market for our common stock and the development or prospects for development of competitive technology by others. Sufficient additional financing ~~many~~may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may never be able to effectively monetize our intellectual property assets. In that event, we may have to modify our business plan and/or significantly curtail our planned activities and other operations.

We have a limited operating history and have not developed or launched any products.

We are a company with a limited operating history. We have only recently completed the development of prototypes of new products using our proprietary technology, our products are unproven and we have not generated any revenues. We are subject to the substantial risk of failure facing businesses seeking to develop and commercialize new products and technologies. Certain factors that could, alone or in combination, affect our ability to successfully develop and market our products, include:

As disclosed earlier in this report, in July 2020 we agreed to become a member of Leap Technology through the contribution of a license for certain of our intellectual property. Leap Technology is still in a pre-formative stage with no operating history and its operations are subject to all the risks inherent in the establishment of a new business enterprise. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays that are frequently encountered in a newly-formed company. There can be no assurance that at this time that Leap Technology will be able to implement its business plan, generate revenues, operate profitably or will have adequate working capital to meet its obligations as they become due. Prospective investors must consider the risks and difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. We cannot be certain that Leap Technology’s business strategy will be successful or that it will successfully address these risks. In the event that Leap Technology does not successfully address these risks, its business, prospects, financial condition, and results of operations could be materially and adversely affected and it may not have the resources to continue or expand our business operations. In that event, any benefits we expect to receive from Leap Technology would not materialize.

The Barker Group/Firebird Manufacturing joint venture needs to be finalized.

As of the date of this report, the Barker Group/Firebird Joint Venture has not been finalized. We expect to finalize the Joint Venture by June 30, 2022. There can be no assurance that we will be able to finalize the Joint Venture by then or at any point in the future. In either case, delay in or failure to complete and finalize certain details may impair our ability to realize our business prospects and strategic objectives.

Our management does not devote their full time to our company and certain of our officers and directors may have conflicts of interest.

~~We do not have any employees as~~As of the date of this ~~filing.~~report we have five fulltime employees, including our three executive officers, While our executive officers devote such time to us as they deem reasonable and necessary to discharge the business of our company, our officers have professional interests in a variety of activities other than those relevant to us ~~and do not devote their full time and attention to our company.~~ Accordingly, conflicts may arise in the allocation of time between our company and one or more of these activities. While we expect that our ~~Board~~board of directors and management will exercise their fiduciary obligation to our company, there are no assurances any conflicts of interest which may arise will be resolved in our favor.

We will rely exclusively on third parties to formulate and manufacture our products.

We have no experience in the formulation or manufacturing of the products we intend to develop and do not intend to establish our own manufacturing facilities. We will rely on one or more third-party contractors to manufacture our products. Our anticipated future reliance on a limited number of third-party manufacturers exposes us to the following risks:

Each of these risks could delay our product development or result in higher costs or deprive us of potential product revenues.

Our current business strategies call for us to develop certain products that now fall under the regulatory authority of the FDA. Our product candidates could be required to undergo costly and time-consuming rigorous non-clinical and clinical testing and we may be required to obtain regulatory approval prior to the sale and marketing of any of our products. ~~In addition, under the recently proposed budget, the Trump Administration is proposing a significant increase in the fees we would incur for product review by the FDA.~~ While we believe that the features of certain of our products may enable us to secure FDA fast track approval, there are no assurances our beliefs are correct. The results of this testing or issues that develop in the review and approval by any regulatory agency, including the FDA, may subject us to unanticipated delays or prevent us from marketing any proposed products we may develop.

We have no experience selling, marketing or distributing products and have no internal capability to do so.

We currently have no sales, marketing or distribution capabilities. We do not anticipate having the resources in the foreseeable future to allocate to the sales and marketing of our proposed products. Our future success depends, in part, on our ability to enter into and maintain collaborative relationships for such capabilities, the collaborator’s strategic interest in the products under development and such collaborator’s ability to successfully market and sell any such products. We intend to pursue collaborative arrangements regarding the sales and marketing of our products, however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if able to do so, that our collaborators will have effective sales forces. To the extent that we decide not to, or are unable to, enter into collaborative arrangements with respect to the sales and marketing of our proposed products, significant capital expenditures, management resources and time will be required to establish and develop an in-house marketing and sales force with technical expertise. There can also be no assurance that we will be able to establish or maintain relationships with third party collaborators or develop in-house sales and distribution capabilities. To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, and there can be no assurance that such efforts will be successful. In addition, there can also be no assurance that we will be able to market and sell our proposed products in the United States or overseas.

We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize our proposed products.

We intend to enter into strategic partnerships in the future, including alliances with other consumer product companies, to enhance and accelerate the development and commercialization of our proposed products. We face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any future proposed products and programs because our research and development pipeline may be insufficient, our proposed products and programs may be deemed to be at too early of a stage of development for collaborative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to us and we may not be able to maintain such strategic partnerships if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing.

If we ultimately determine that entering into strategic partnerships is in our best interest but either fail to enter into, are delayed in entering into or fail to maintain such strategic partnerships:

To the extent we elect to enter into licensing or collaboration agreements to partner our product candidates, our dependence on such relationships may adversely affect our business.

Our commercialization strategy for certain of our proposed products may depend on our ability to enter into agreements with collaborators to obtain assistance and funding for the development and potential commercialization of these product candidates. Supporting diligence activities conducted by potential collaborators and negotiating the financial and other terms of a collaboration agreement are long and complex processes with uncertain results. Even if we are successful in entering into one or more collaboration agreements, collaborations may involve greater uncertainty for us, as we have less control over certain aspects of our collaborative programs than we do over our proprietary development and commercialization programs. We may determine that continuing a collaboration under the terms provided is not in our best interest, and we may terminate the collaboration. Our collaborators could delay or terminate their agreements, and our proposed products subject to collaborative arrangements may never be successfully commercialized.

~~Chong Corporation may be unable to protect its intellectual property, which is licensed to us.~~RISK RELATED TO OUR COMMON STOCK

We rely on the availability of protection for the proprietary aspects of the Chong Corporation technology and information which we license under the December 2013 Agreement and the January 2016 License Agreements. Our future success depends, in part, on the ability of Chong Corporation to defend and enforce their issued patents and other intellectual property rights, obtain additional patents or other intellectual property protection where warranted, and pursue adequate and meaningful protection of the proprietary aspects of our technology and information. The existing patent applications or any applications filed in the future may not be allowed, and the failure of Chong Corporation to secure these patents may limit their ability to protect the intellectual property rights these applications were intended to cover. Any issued patents may be challenged, invalidated or circumvented to avoid infringement liability. Any of the Chong Corporation patents, issued or pending, may not provide us with any competitive advantage or may be challenged by third parties. The loss of any rights under the December 2013 Agreement and/or the January 2016 License Agreements would be materially adverse to our company and our ability to continue our business would be in jeopardy.

~~The technology we license may be found to infringe third-party intellectual property rights.~~

Third parties may in the future assert claims or initiate litigation related to their patent, copyright, trademark and other intellectual property rights in technology that is important to us. The asserted claims and/or litigation could include claims against us, our licensors or our suppliers alleging infringement of intellectual property rights with respect to our proposed products or components of those products. Regardless of the merit of the claims, they could be time consuming, result in costly litigation and diversion of technical and management personnel, or require us to develop a non-infringing technology or enter into license agreements. We cannot assure you that licenses will be available on acceptable terms, if at all. Furthermore, because of the potential for significant damage awards, which are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims resulting in large settlements. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results and financial condition could be materially adversely affected. If our proposed products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to:

There is no public market for our common stock. In the event we establish a market for our common stock, it is likely that the market for that common stock will be limited.

There is no public market for our common stock. We have delayed seeking a market maker ~~in 2017,~~or undertaking an initial public offering, pending the enhancement of our prototypes, the initiation of certain clinical studies and our progress in discussions with certain third parties. ~~While we expect during 2018~~We continue to ~~seek~~explore securing a market maker to file the appropriate documents with the Financial Industry Regulatory Authority, Inc. (FINRA) to obtain a quotation of our common stock in the over the counter market or engaging an investment banker to assist us in an initial public offering, the timing and success thereof is presently ~~unknown.~~unknown, particularly in light of the current status of the capital markets as a result of the COVID-19 pandemic. Even if we are successful in establishing a public market for our common stock, it is likely that the market will be limited and sporadic and generally at very low volumes until such time, if ever, as we are able to develop a following for our common stock. An active market for our common stock may never develop.

Delaware law contains anti-takeover provisions that could deter takeover attempts that could be beneficial to our stockholders.

Provisions of Delaware law could make it more difficult for a third-party to acquire us, even if doing so would be beneficial to our stockholders. Section 203 of the Delaware General Corporation Law may make the acquisition of our company and the removal of incumbent officers and directors more difficult by prohibiting stockholders holding 15% or more of our outstanding voting stock from acquiring us, without our board of directors’ consent, for at least three years from the date they first hold 15% or more of the voting stock.

~~The conversion of our outstanding 10% Series A convertible preferred stock will be dilutive to our stockholders.~~

In connection with the acquisition of VapAria Solutions in July 2014, we issued Chong Corporation 500,000 shares of our 10% Series A convertible preferred stock. The designations, rights and preferences of the 10% Series A convertible preferred stock provide, in part, each share of 10% Series A convertible preferred stock is automatically convertible into shares of our common stock on a one for one basis on the fifth anniversary of the date of issuance, or earlier in the event of a change of control of our company. The conversion of the shares of 10% Series A convertible preferred stock in shares of our common stock will be dilutive to our stockholders.

~~The payment of dividends on the shares of 10% Series A convertible preferred stock is dilutive to our stockholders.~~

The designations, rights and preferences of our outstanding 10% Series A convertible preferred stock provide that a 10% annual dividend is payable in shares of our common stock at a rate of one share of common stock for each 10 shares of preferred stock. These dividends are payable on December 31 of each year. The payment of dividends on the shares of 10% Series A convertible preferred stock will be dilutive to our existing stockholders and could adversely impact the market price of our common stock, should a market be developed of which there is no assurance.

We maintain our corporate offices at 5550 Nicollet Avenue, Minneapolis, MN 55419. We lease these premises from 5550 Nicollet LLC, an affiliate of Mr. Chong, ~~under the terms of a three year lease initially expiring in December 2017, as previously extended, at an annual rent of $9,000.~~ In December ~~2017,~~2019 we ~~renewed the~~entered into a month-to-month lease for the 2020 calendar year with an ~~additional 12-month term ending December 31, 2018 at the~~ annual rental of $9,300. In December 2020 a new month-to-month lease, commencing January 1, 2021, was entered into with a rental rate of $775/month. We occupied the space for all of the 2021 calendar year for rent totaling $9,300. We continue to rent on this same month-to-month basis with no change to the monthly rental rate of $775. We are not certain whether or not we will continue renting this space for the entire 2022 calendar year.

In December 2020 we entered into a month-to-month lease for our engineering services at 9057 Soquel Drive, Building B, Suite C, Aptos, CA. In 2021 we paid $22,200 in rent for this space. In 2022 we continued to rent this same month-to-month basis with no change to the monthly rental rate of $1,850. Effective April 15, 2022, the Company entered into a Lease Agreement for research and development and product engineering space located at 8035 Soquel Drive, #41, Aptos, California. The term of the Lease will extend five years from the effective date, unless earlier terminated in accordance with the lease. The Company will have the right to extend the term of the Lease for additional 5-year term. The Company will pay an escalating base rent over the life of the Lease of initially $3,000 per month. In addition, the Company will pay its pro rata portion of property expenses and operating expenses for the property. As a result of the 2022 lease, the Company has ended the December 2020 lease and will vacate the facility at 9057 Soquel Drive effective April 30, 2022.

There is no public market for our common stock. As of ~~March 29, 2018,~~April 14, 2022, there were approximately ~~104~~143 record owners of our common stock.

We have never paid cash dividends on our common stock. Under Delaware law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Delaware statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Delaware statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits and dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. Even if permitted under Delaware law, we do not have any present intention of declaring or paying dividends on our common stock in the foreseeable future.

The following discussion of our financial condition and results of operations for ~~2017~~2021 and ~~2016~~2020 and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Cautionary Statement Regarding Forward Looking Information, Item 1A. Business and Item 1A. Risk Factors in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

We are a pre-clinical specialty pharmaceutical company. Prior to forming VapAria Solutions in 2010, our management had more than 25 years’ collective experience in vaporization and vapor delivery of medicants, having been partners in a joint venture with pioneers in the industry and having had undertaken significant work internationally researching and developing products, shepherding them through the patent process and introducing them into the U.S. wholesale and retail supply chain.

Our initial goal was to leverage rights we acquired in December 2013 from an affiliate to develop and successfully launch a product in partnership with well-capitalized and experienced industry participants based on our exclusive license and exclusive options to license patented and patent-pending technologies under the December 2013 Agreement and formulations designed to significantly improve on current electronic nicotine delivery systems and other consumer products in the marketplace. Throughout 2016 and 2017, we have been engaged in substantive discussions with several international companies which have expressed interest in our licensed technology in pursuit of this strategy. During 2017, these discussions involved demonstrations of our fully functional, programmable prototypes and discussions of terms related to licensing and product development agreements that would provide a combination of upfront payments and ongoing royalties. While no definitive agreements have been reached, our discussions continue with certain of these parties under standard non-disclosure agreements into 2018. Subject to the availability of sufficient capital we presently expect to launch our first products late in 2019.

In mid-2015 we adjusted our business focus owing to continuing research, development and design throughout and, thus, we completed a full design of a product embodiment based on our proprietary technology, authorized the production of fully functional prototypes and are scheduling pre-clinical assessments for the prototypes. In the 2017 and 2016 we spent $62,441 and $122,262, respectively, in research and development costs related to these efforts. If we are unable to raise sufficient capital to fund these costs or we are unable to secure licensing and product development agreements that would provide for upfront payments, our ability to continue our commercialization efforts will be adversely impacted.

In 2017 we further developed certain of our device prototypes and engaged with a number of international companies interested in partnering with us to commercialize our patented technology in the area of medically licensed and regulator approved, pharmaceutical Nicotine Replacement Therapy (“NRT”). Certain of these discussions and negotiations have continued into the first quarter of 2018 and are expected to continue beyond that, although no assurances can be offered that a transaction will be finalized.

Our management, through the Chong Corporation, an affiliated entity that is the licensor of the intellectual property rights we acquired in December 2013 and January 2016, has built an extensive and robust portfolio of intellectual property that includes patented and patent-pending methods of vaporization and patented and patent-pending medicants and herbal remedies identified for their effectiveness and suitability to address the markets identified above. Historically we have relied upon related party loans that, as of December 31, 2017, totaled $548,544. Our management has worked without cash compensation. In 2017, the loan increased by $161,000, and these proceeds were used to pay expenses associated with research, development and design, patent protection prosecution activities and ordinary business expenses associated with identifying, meeting with and negotiating with potential business partners and our general operating expenses, including the payment of our obligations. If we are unable to secure licensing and product development agreements that would provide for upfront payments, we estimate that we will need to raise between $1 million and $2 million over the next 12 months to continue to implement our business plan.

In addition, if we are successful in securing licensing and product development agreements we expect that the structure of the possible future agreements would provide upfront payments. We may also seek to raise the necessary capital through future public or private debt or equity offerings of our securities, although we do not have any commitments from any third parties to provide any capital to us. While we believe that the exclusive rights to the proprietary technology on which our business is predicated could provide us with a significant competitive advantage if we can bring one or more products to market, our ability to accomplish that in the near term is dependent on a successful prototype and positive pre-clinical assessments of the prototype. Given the current lack of a public market for our common stock, our status as a pre-clinical stage company and the difficulties small companies experience in accessing the capital markets, we expect to encounter difficulties in pursuing public or private capital raises. Until such time as we are able to raise all or a portion of the necessary capital, our ability to continue to implement our business plan will be in jeopardy.

For ~~2017~~2021 we reported a net loss of ~~$156,538~~$8,465,912 and net cash used in operations of ~~$157,826.~~$1,516,731. At December 31, ~~2017~~2021 we had cash on hand of ~~$7,658~~$3,588,377 and an accumulated deficit of ~~$1,569,087.~~$13,309,494. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, ~~2017~~2021 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our ~~minimal~~ cash balances and no source of revenues which are sufficient to cover our operating costs. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our ~~consolidated~~ financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to raise capital, develop a source of revenues, report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.

We did not generate any revenues from our operations in ~~the 2017~~2020 or ~~2016 periods.~~2021. Our total operating expenses for ~~2017 decreased 68.8%,~~2021 increased 234% over those ~~reported in 2016.~~for 2020. General and administrative expenses, which include amortization, depreciation, compensation, rent, and software subscriptions, website hosting expenses, ~~decreased 90%~~increased by 339% in ~~2017~~2021 compared to ~~2016~~2020 due ~~largely~~ to higher levels of compensation in ~~2016 related to stock options awarded to management. No such awards were granted in 2017.~~

2021, increased rental costs, and software subscriptions. Research and development expenses ~~decreased 49%~~ in ~~2017~~2021 for new prototype designs and development were $668,751 compared to ~~the previous year due the fact that device prototype development was largely completed~~$630,765 in ~~2016 and only required refinements in the year ended December 31, 2017.~~2020. Professional fees ~~declined~~increased by ~~18.5%~~175% in ~~2017~~2021 compared to ~~2016.~~2020, due largely to business development consulting services utilized in 2021 that were not present in 2020.

~~Going forward, we~~We expect that our operating expenses will increase as we continue to develop our business and we devote additional resources ~~towards~~toward our new technologies and business opportunities, promoting that growth, most notably reflected in anticipated increases in general overhead, salaries for personnel and technical resources, as well as increased costs associated with our SEC reporting obligations. However, as set forth elsewhere in this report, our ability to continue to develop our business and achieve our operational goals is dependent upon our ability to raise significant additional working capital. As the availability of this capital is unknown, we are unable to quantify at this time the expected increases in operating expenses in future periods.

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. As of December 31, ~~2017,~~2021, we had ~~$7,658~~$3,588,377 in cash and cash equivalents and a working capital ~~deficit~~surplus of ~~$669,674, as~~$3,532,821 compared to ~~$4,484~~$589,153 in cash and cash equivalents and a working capital ~~deficit~~surplus of ~~$530,620~~$312,132 at December 31, ~~2016.~~2020. Our current liabilities ~~increased $140,632 at December 31, 2017~~decreased $137,492 from December 31, ~~2016,~~2020, reflecting ~~increases~~the retirement of debt despite an increase in ~~interest~~our accounts payable and significant increase in ~~the loan amount from a related party while partially offset by~~ our ~~decrease in accounts payable.~~accrued expenses. Our ~~sole~~ source of operating capital ~~during 2017~~in 2021 came from ~~additional borrowing~~the sale of 555,288 shares of our Common Stock raising $4,910,000 in capital compared to the same period in 2020 where our source of capital came from the sale of 525,470 shares of our common stock raising $2,600,000 in capital.

The ability of the Company to continue as a ~~related party which lent us an additional $161,000.~~

~~We do not have any commitments for~~going concern is dependent upon the Company obtaining adequate capital ~~expenditures. Our working capital~~to fund operating losses until it becomes profitable. As the company is not ~~sufficient~~generating revenues, continued activities and expenditures to ~~fund our~~bring product(s) to market as soon as we are able is important. Management believes the currently available funding will be insufficient to finance the Company’s operations for ~~at least~~a year from the ~~next 12 months~~date of these financial statements and to satisfy our obligations as they become due. ~~We do not expect~~

In 2021 we retired $255,544 of debt, owed to ~~launch our first products until 2019 and will require additional capital to do so. On December 31, 2017~~ , the holder of a $50,000 principal amount note agreed to the extension of the due date of the note from December 31, 2017 to July 31, 2018. The remaining note in the principal amount of $40,000 is convertible into 500,000 shares of our common stock at the option of the holder and was also extended to July 31, 2018. While there are no assurances the holder will elect to convert the note, in that event we granted the holder demand and piggyback registration rights for those shares. If we are unable to repay the notes at July 31, 2018, we anticipate that the holders will extend under the terms and conditions of earlier extensions, but there are no agreements to do so at the time of this filing. We also owe a related party, ~~$548,544 which is due on demand. We do not have~~through repayments. At December 31, 2021 no other debt was owed.

While we raised $4,910,000 from the funds necessary to repay these obligations or to fund the costs associated with filing a registration statement if the noteholder converts the note and exercises its registration rights. As described earlier in this report,sale of our securities during 2021, we still will need to raise ~~between $1,000,000 and $2,000,000~~$3,000,000 to $5,000,000 in additional capital during the next 12 ~~months if we are unable to secure licensing and product development agreements. As we do not have any firm commitments for all or any portion of this necessary capital, there~~months. There are no assurances we will have sufficient funds to fund our operating expenses and continued development of our products and to satisfy our obligations as they become ~~due.~~due over the next 12 months. In that event, our ability to continue as a going concern is in jeopardy.

Our cash used in operating activities increased 42% in 2021 compared to 2020. During these time periods we used the cash primarily to fund our net losses.

~~We used $157,826 of cash in our operating activities in 2017 compared to $215,431 used by our operating activities in 2016, a decrease of 26.7%.~~

~~There was no net cash provided by (used in)~~ investing activities was comprised of $124,193 from capitalization of intellectual property related legal fees and furniture and equipment of $14,308. In 2020 our cash used in ~~2017 or 2016.~~investing activities was comprised of $189,680 from capitalization of intellectual property related to legal fees, $1,689 cash used for trademarks and furniture and equipment of $198,288.

~~Net cash provided by financing activities for 2017 consisted of borrowing of $161,000 from Chong Corporation, a related entity.~~ Net cash provided by financing activities in ~~2016 was $214,000 which represented proceeds~~2021 consisted of $4,910,000 raised from ~~loans from Chong Corporation, a related party.~~

~~Dividends~~the sales of 555,288 shares of our common stock ~~issued on~~with repayment of $255,544 to Xten, a common control entity compared to activities in 2020 which consisted primarily of $2,600,000 raised from the sale of 525,470 shares of ~~outstanding Series A 10%~~our common stock, repayment and satisfaction in full of the convertible ~~preferred stock resulted in $11,500 in non-cash financing.~~note of $40,000, capital contribution from fixed and non-capital asset purchase with related party of $64,519 and repayment of $450,000 with borrowing of $2,500 to and from Xten, a common control entity.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition, accounts receivable allowances and impairment of long-lived assets. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our audited consolidated financial statements for ~~2017~~2020 appearing later in this report.

~~There are no recent accounting standards~~The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have ~~been issued or proposed by~~a material effect on the ~~FASB or other standards setting bodies that require adoption.~~accompanying financial statements.

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Please see our consolidated financial statements beginning on page F-1 of this annual report.

Evaluation of Disclosure Controls and Procedures. We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and ~~Vice President,~~Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2017.~~2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment ~~and having no employees at this time~~ our management has concluded that as of December 31, ~~2017,~~2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of material weaknesses. These material weaknesses in our internal control over financial reporting result from limited segregation of duties and limited multiple levels of review in the financial close process.

The existence of the continuing material weaknesses in our internal control over financial reporting increases the risk that a future restatement of our financials is possible. In order to remediate these material weaknesses, we will need to expand our accounting resources. We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis, however, we do not expect that the deficiencies in our disclosure controls will be remediated until such time as we have remediated the material weaknesses in our internal control over financial reporting. In order to do so, we will need additional capital to permit us to hire employees and put the requisite controls in place. We had expected to expand our accounting resources ~~during 2016~~ in ~~an effort~~2019, which has been delayed into 2022. Given the uncertainties with our ability to raise working capital as discussed earlier in this report, there are no assurances we will be able to remediate the material weaknesses in our internal control over financial reporting ~~however our limited financial resources and delays in our capital formation efforts have caused this planned expansion to move to 2017 and now into 2018.~~during 2022.

Changes in Internal Control over Financial Reporting.There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The following table provides information on our executive officers and directors:

Alexander Chong.Mr. Chong has served as Chairman of the Board and Chief Executive Officer since July 2014. ~~He has also served as Chairman of the Board and Chief Executive Officer of our subsidiary, VapAria Solutions, since its inception in March 2010.~~ Mr. Chong is an experienced entrepreneur and businessman. Since founding the company in 1993, he has also served as the Chairman of Plexus International, a consulting and training organization with 14 international offices and its principal office located in Minneapolis, Minnesota. Mr. Chong has also served as Chief Executive Officer and a member of the board of directors of ~~Chong Corporation,~~Xten, a Minnesota-based company with investment interests in technology and a variety of Asia-based opportunities since 2007. He has broad experience in international business and manufacturing quality. Mr. Chong also has experience serving on boards of directors of privately-held companies in the role of an independent director, as well as identifying key joint venture partners and negotiating and securing international distribution agreements with large multi-national companies. In connection with the developer of the original e-cigarette, Mr. Chong oversaw U.S. patent filings and developed the first disposable e-cigarette offered for distribution and sale in the U.S. Mr. Chong received a B.S. in Chemistry from Boston University. Mr. Chong’s ~~role as a founder of VapAria Solutions and his~~ significant professional experience in our business sector and international business and technology were factors considered by the board of directors in concluding that he should be serving as a director of our company.

William P. Bartkowski.Mr. Bartkowski has served as an executive officer of our company since July 2014. ~~He has also served as President and Chief Operating Officer of our subsidiary, VapAria Solutions, since its inception in March 2010.~~ Mr. Bartkowski has had a ~~three decade~~three-decade career in banking, consulting and marketing. Since 2008 Mr. Bartkowski has been engaged as a business consultant. From 1988 to 1995 he was an executive officer of Metropolitan Financial Corp., a NYSE listed company and from 1996 to 2004 Mr. Bartkowski was a partner in Neuger, Henry, Bartkowski, a public relations firm. He has been involved with the electronic cigarette business since late 2006. In that capacity he has organized, directed and optimized marketing, consumer focus group testing, market analysis and sales testing and he has negotiated and finalized plans and agreements with major U.S. distributors and retailers with respect to electronic cigarettes. Mr. Bartkowski has also been involved extensively in U.S. and international regulatory and legal issues affecting electronic cigarettes and tobacco issues. He previously provided investor relations and capital markets advisory services, including capital formation and M&A counsel for more than a dozen public companies. From April of 2013 until November of 2015 Mr. Bartkowski served on the board of directors and was an officer of the Smoke Free Alternatives Trade Association (SFATA), a leading international advocacy group for keeping e-cigarettes innovative, accessible and unencumbered by burdensome laws and regulations. Mr. Bartkowski received a B.A. in English from the University of Mary, an M.A. in English from North Dakota State University and a PhD in Adult Education.

Daniel Markes.Mr. Markes has served as an executive officer and member of the board of directors of our company since July 2014. ~~He has also served as Vice President, Chief Financial Officer and a member of the board of directors of our subsidiary, VapAria Solutions, since its inception in March 2010.~~ Mr. Markes is an experienced businessman and financial executive and his background includes having served in various capacities as controller, human resources director, business development specialist and member of the board of directors of a number of organizations throughout his professional career. Since 1997 Mr. Markes has been Director, Human Resources, Finance and Administration with Minneapolis-based Plexus Corporation founded by Mr. Chong. He also is an officer of ~~Chong Corporation,~~Xten, serving as its Treasurer/Chief Financial Officer, as well as serving as an officer of 5550 Nicollet LLC, an entity affiliated with Mr. Chong. Mr. Markes received a BBA degree from Brock University. Mr. Markes’ experience as a businessman and a financial executive were factors considered by the board of directors in concluding that he should be serving as a director of our company.

Roger Nielsen.Mr. Nielsen has served as an executive officer of our company since July 2014 and a member of our board of directors since April 2015. ~~He has also served as Vice President of our subsidiary, VapAria Solutions, since its inception in March 2010.~~ Mr. Nielsen is an experienced businessman with broad and lengthy experience in international commerce and world-wide distribution. Mr. Nielsen is a member of the ~~Board~~board of ~~Directors~~directors and Director, Procurement and Facilities, with Minneapolis-based Plexus Corporation founded by Mr. Chong, serving as an officer and director of that company since 1993. Mr. Nielsen and Mr. Chong have worked closely together for over 25 years in various international businesses. He has established global distribution centers throughout Asia Pacific, negotiated and closed distribution agreements with major international manufacturers for export and directed and managed international logistics for a number of global distribution networks. Mr. Nielsen studied Business Administration at Dana College. Mr. Nielsen’s experience in international commerce and world-wide distribution activities were factors considered by the board of directors in concluding that he should be serving as a director of our company.

There are no family relationships between any of the executive officers and directors.

Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the ~~Board~~board of directors increases the number of directors, the ~~Board~~board may fill any vacancy by a vote of a majority of the directors then in office, although less than a quorum exists. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the removal of directors without cause may only be filled by vote of the stockholders.

The board of directors is comprised of members of our management and we do not have any independent directors. Mr. Chong, our Chief Executive Officer, also serves as Chairman of the Board. Given the early stage of our company, our ~~Board~~board believes the current leadership structure is appropriate for our company. As our company grows, we expect to expand our board of directors through the appointment of independent directors.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks we face and have responsibility for the oversight of risk management in their dual roles as directors.

Committees of the board of directors; stockholder nominations; audit committee financial expert

We have not established any committees comprised of members of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committee performing similar functions. The functions of those committees are being undertaken by our board of directors as a whole.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our ~~Board~~board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors. Given the early stage of our business, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our ~~Board~~board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our ~~Board~~board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our ~~Board.~~board.

None of our directors is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or board of directors who:

Our securities are not quoted on an exchange that has requirements that a majority of our ~~Board~~board members be independent, and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our board of directors.

We have adopted a Code of Ethics and Conduct which applies to our board of directors, our executive officers and our employees. The Code of Ethics and Conduct outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:

A copy of our Code of Ethics and Conduct is available without charge, to any person desiring a copy, by written request to us at our principal offices at 5550 Nicollet Avenue, Minneapolis, MN 55419.

Section 16(a) of the Exchange Act, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act during the year ended December 31, 2017 and Forms 5 and amendments thereto furnished to us with respect to the year ended December 31, 2017, as well as any written representation from a reporting person that no Form 5 is required, weWe are ~~not~~ aware that ~~any~~the following officer, director or 10% or greater stockholder failed to file on a timely basis ~~as disclosed~~the following reports: one Form 4 for each of William Bartkowski, Alexander C. Chong, Daniel Markes and Roger J. Nielsen reporting quarterly option grants under the Company’s 2014 Equity Compensation Plan granted in ~~the aforementioned Forms, reports required by Section 16(a) of the Exchange Act of during the year ended December 31, 2017.~~October 2021, were not timely filed, in each case, due to an administrative error.

The following table summarizes all compensation recorded by us in the past two years for:

For definitional purposes, these individuals are sometimes referred to as the “named executive officers.”

⁽¹⁾The amounts included in the “Option Awards” column represent the aggregate grant date fair value of stock options to purchase 2,100,000 shares at an exercise price of $0.25 in December 2016 computed in accordance with ASC Topic 718. The assumptions made in the valuations of the option awards are included in Note 2 of the notes to our consolidated financial statements appear later in this report.

Mr. Chong, who has served as our Chief Executive Officer since July 2014, ~~does~~previously did not ~~presently~~ receive cash compensation for his services to us. ~~In December 2016 we granted him~~Effective August 1, 2020, the board of directors approved an annual salary for Mr. Chong of $98,400 and in October 2020 he was awarded stock options to purchase ~~2,100,000~~175,000 shares of our common stock ~~with~~at an exercise price of ~~$0.25~~$5.31 as additional compensation. In addition, effective August 1, 2020, the board of directors also approved the following salaries: (1) COO, William Bartkowski, of $81,600 per ~~share as compensation for his services in 2016.~~annum; and (2) CFO, Daniel Markes, of $90,000 per annum. The Company did not enter into any written employment agreements with its officers. The amount of compensation we may pay to Mr. Chong from time to time is in the discretion of the board of directors of which he is one of three members. ~~No options were granted during 2017.~~

Effective with the end of the first 2022 pay period, on January 14, 2022, the board approved annual salaries for its: (1) CEO, Alexander Chong, of $325,080 per annum; (2) COO, William Bartkowski, of $125,040 per annum; and (3) CFO, Daniel Markes, of $200,040 per annum. At this time, the Company has not entered into any written employment agreements with these officers.

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, ~~2017:~~2021:

At ~~March 29, 2018,~~April 14, 2022, we had ~~76,260,000~~26,015,595 shares of our common stock issued and outstanding which is our only class of voting securities. The following table sets forth information regarding the beneficial ownership of our common stock as of ~~March 29, 2018~~April 14, 2022 by:

Unless otherwise indicated, the business address of each person listed is in care of 5550 Nicollet Avenue, Minneapolis, MN 55419. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our stockholders as well as any equity compensation plans not approved by our stockholders as of December 31, ~~2017.~~2021.

We currently have two equity compensation plans, our 2014 Equity Compensation Plan (the “2014 Plan”) and our 2019 Equity Compensation Plan (the “2019 Plan”). While the number of shares of our common stock underlying outstanding grants under these plans were proportionally reduced and the exercise price was proportionally increased following the December 26, 2019 effective date of our 1:7 reverse stock split of our common stock, the total number of shares reserved for grants under the plans and the evergreen formulas were not impacted by the reverse split.

On August 19, 2014, our board of directors adopted our 2014 ~~Equity Compensation Plan (the “2014 Plan”)~~ initially covering 10,000,000 shares of common stock. OnThe 2014 Plan was ratified by our shareholders on August 19, ~~2014 the holders of a majority of our issued and outstanding common stock approved the adoption of the 2014 Plan.~~2019. The 2014 Plan also contains an “evergreen formula” pursuant to which the number of shares of common stock available for issuance under the 2014 Plan will automatically increase on the first trading day of January each calendar year during the term of the 2014 Plan, beginning with calendar year 2015, by an amount equal to 1% of the total number of shares of common stock outstanding on the last trading day in December of the immediately preceding calendar year, up to a maximum annual increase of 100,000 shares of common stock.

On November 19, 2019, our board of directors authorized our 2019 Plan and the 2019 Plan was ratified by our stockholders on December 26, 2019. The 2019 Plan covers 2,000,000 shares of common stock. The 2019 Plan also contains an “evergreen formula” pursuant to which the number of shares of common stock available for issuance under the 2019 Plan will automatically increase on January 1 of each calendar year during the term of the 2019 Plan, beginning with calendar year 2020, by an amount equal to 15% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, up to a maximum annual increase of 150,000 shares of common stock.

The other terms of the 2014 Plan and the 2019 Plan are identical. The purpose of each of the ~~2014 Plan~~plans is to enable us to offer to our employees, officers, directors and consultants, whose past, present and/or potential contributions to our company have been, are or will be important to our success, an opportunity to acquire a proprietary interest in our company. The ~~2014 Plan is~~plans are administered by our board of directors. Plan options may either be:

Any option granted under ~~the 2014 Plan~~a plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each plan option and the manner in which it may be exercised is determined by the board of directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. In the event of any stock split of our outstanding common stock, the board of directors in its discretion may elect to maintain the stated amount of shares reserved under the plan without giving effect to such stock split. Subject to the limitation on the aggregate number of shares issuable under the plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

Early in ~~this report under Item 1. Business, we are~~2020 the Company borrowed $2,500 from Xten, a ~~party~~common control entity. On June 24, 2020 the Company repaid $250,000 to Xten. On December 3, 2020 the Company repaid an additional $200,000 to Xten to reduce the debt to Xten, a common control entity. The balance outstanding at December ~~2013 Agreement with Chong Corporation, a related party.~~31, 2020 due Xten was $255,544. The loan is unsecured, noninterest bearing and due on demand. In ~~addition, during 2016~~September 2021 the Company repaid the balance of the loan.

In early 2020 we entered into ~~January 2016 License Agreements~~a short-term research and development agreement with ~~Chong Corporation related~~Xten. Costs to ~~certain additional~~the Company were $427,788 in research and development costs resulting from these activities. This agreement expired September 30, 2020.

On September 30, 2020, the Company entered into an Asset Purchase Agreement with Xten pursuant to which it acquired a portfolio of 29 U.S. and international patents and patent ~~pending technology.~~applications in the areas of devices and technologies for aerosolizing certain remedies and pharmaceutical preparations, as well as the solutions and preparation for inhaled delivery. As consideration for the acquisition, the Company issued Xten common stock purchase warrants exercisable for an aggregate of 21,000,000 shares of its common stock at an exercise price of $5.31 per share (the “Warrants”), including (i) a Series A Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2023 and expiring on September 30, 2026, (ii) a Series B Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2026 and expiring on September 30, 2029, and (iii) a Series C Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2029 and expiring on September 30, 2032. The Company has the right to accelerate or extend the exercise period of each series of Warrants in its discretion. In addition, the exercise period of each series of Warrants automatically accelerates in the event of a “change of control” (as defined in the Warrants) prior to such series of Warrants becoming exercisable by its respective terms. The IP Asset Purchase Agreement contained customary indemnification provisions. The assets have been accounted for at its carrying value of $191,594.

~~As described earlier in this report under Item 2. Description~~On September 30, 2020, the Company entered into an Other Assets Purchase Agreement with Xten to purchase certain assets including: multiple pieces of ~~Property, we lease our principal executive offices from an affiliate~~laboratory and workshop equipment; custom built plume and inhalation testing machine; computers, monitors and accessories; prepaid rent; and, laboratory/workshop supplies, for a purchase price of ~~Mr. Chong.~~$263,512. The Other Assets Asset Purchase Agreement also contained customary indemnification provisions.

During 2014 Chong Corporation loaned us $36,544 for working capital, and during 2015 we repaid $10,000 of this advance. During 2015 Chong Corporation lent us an additional $137,000, and we repaid $10,000 of this advance. In 2016 Chong lent us an additional $214,000 and in 2017 an additional $161,000. The loans are unsecured, non-interest bearing and are due on demand.

None of our directors is considered “independent” within the meaning of meaning of Rule 5605 of the NASDAQ Marketplace Rules.

Our board of directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the ~~Board,~~board, or, in the period between meetings, by a designated member of the ~~Board.~~board. Any such approval by the designated member is disclosed to the entire ~~Board~~board at the next meeting. The audit and tax fees paid to the auditors with respect to ~~2017~~2021 were pre-approved by the entire board of directors.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Each person whose signature appears below hereby constitutes and appoints Alexander ~~Chong~~ his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) and supplements to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

~~VapAria,~~CQENS Technologies, Inc.

~~Minneapolis, MN~~

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ~~VapAria,~~CQENS Technologies, Inc. and its subsidiary (collectively, the “Company”) as of December 31, ~~2017~~2021 and ~~2016,~~2020, and the related consolidated statements of operations, ~~changes in~~ stockholders’ ~~deficit,~~equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2021 and ~~2016,~~2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. ~~Management's~~Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~("PCAOB"~~(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the ~~Company's~~Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits ~~provide~~provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the ~~Company's~~Company’s auditor since ~~2014.~~2013.

~~Houston, Texas~~April 14, 2022

~~March 29, 2018~~

F-1

~~VapAria Corporation~~CQENS Technologies Inc.

~~Consolidated~~ Balance Sheets

							2021			2020
	December 31						December 31
	2017			2016			2021			2020
ASSETS
Current Assets
Cash and cash equivalents	$	7,658		$	4,484		$	3,588,377		$	589,153
Prepaid expenses		2,144			3,740			143,369			59,396
Total Current Assets		9,802			8,224			3,731,746			648,549
Equipment, net								190,005			193,804
Intellectual property, net		239,555			257,039			707,760			643,216
TOTAL ASSETS	$	249,357		$	265,263			4,629,511			1,485,569
LIABILITIES & STOCKHOLDERS’ DEFICIT
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Current Liabilities
Accounts payable	$	8,700		$	37,068		$	82,126		$	44,202
Interest payable		32,232			24,232
Note payable		50,000			50,000
Convertible note		40,000			40,000
Accrued expenses								116,799			36,671
Loan from related party		548,544			387,544			-			255,544
Total Current Liabilities		679,476			538,844			198,925			336,417
TOTAL LIABILITIES		679,476			538,844			198,925			336,417
STOCKHOLDERS’ DEFICIT
Preferred Stock: $0.0001 par value; 10,000,000 shares authorized; 10% Series A Convertible Preferred Stock; 500,000 shares authorized; 500,000 shares issued and outstanding at December 31, 2017 and 2016		50			50
Common Stock: $0.0001 par value; 200,000,000 shares authorized; 75,260,000 and 75,210,000 shares issued and outstanding at December 31, 2017 and 2016, respectively		7,526			7,521
STOCKHOLDERS’ EQUITY
Preferred Stock: $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2021 and December 31, 2020								-			-
Common Stock: $0.0001 par value; 200,000,000 shares authorized; 26,015,595 shares issued and outstanding at December 31, 2021 and 25,397,685 shares issued and outstanding at December 31, 2020								2,602			2,540
Additional paid-in capital		1,131,392			1,119,897			17,737,478			5,990,194
Accumulated deficit		(1,569,087	)		(1,401,049	)		(13,309,494	)		(4,843,582	)
TOTAL STOCKHOLDERS’ DEFICIT		(430,119	)		(273,581	)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT	$	249,357		$	265,263
TOTAL STOCKHOLDERS’ EQUITY								4,430,586			1,149,152
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY							$	4,629,511		$	1,485,569

See accompanying notes to ~~consolidated~~ financial statements

F-2

~~VapAria Corporation~~CQENS Technologies Inc

~~Consolidated~~ Statements of Operations

							2021			2020
	Year ended December 31						Year ended December 31
	2017			2016			2021			2020
Operating Expenses
General and administrative	$	28,013		$	281,349		$	6,848,390		$	1,561,232
Research and development		62,441			122,262			668,751			630,765
Professional fees		57,625			70,693			937,665			340,388
Total Operating Expenses		148,079			474,304			8,454,806			2,532,385
Total Operating Loss								(8,454,806	)		(2,532,385	)
Other (Expense)		(8,459	)		(8,461	)		(11,106	)		(9,147	)
Net Loss	$	(156,538	)	$	(482,765	)	$	(8,465,912	)	$	(2,541,532	)

Preferred dividend		11,500			7,500

Net Loss available to common stockholders		(168,038	)		(490,265	)

Basic and diluted loss per common share	$	(0.00	)	$	(0.01	)		(0.33	)		(0.10	)

Basic and diluted weighted average shares outstanding		75,235,753			73,277,896			25,656,906			25,242,682

See accompanying notes to ~~consolidated~~ financial statements

F-3

~~VapAria Corporation~~CQENS Technologies Inc

~~Consolidated~~ Statements of Changes in Stockholders’ ~~Deficit~~Equity

For the years ended December 31, ~~2017~~2021 and ~~2016~~December 31, 2020

Series A
Preferred Stock Common Stock Additional
Number of shares $0.0001 Par Value Number of Shares $0.0001 Par Value Paid in Capital Accumulated Deficit Total
Balance, December 31, 2015 500,000 $ 50 50,160,000 $ 5,016 $ 761,443 $ (910,784 ) $ (144,275 )

Common stock issued for intangible assets - - 25,000,000 2,500 98,272 - $ 100,772

Common stock issued for dividend - - 50,000 5 7,495 (7,500 ) $ -

Stock options granted - - - - 252,687 - $ 252,687

Net loss - - - - - (482,765 ) $ (482,765 )

Balance December 31, 2016 500,000 $ 50 75,210,000 $ 7,521 $ 1,119,897 $ (1,401,049 ) $ (273,581 )

Common stock issued for dividend - - 50,000 5 11,495 (11,500 ) $ -

Net loss - - - - - (156,538 ) $ (156,538 )

Balance December 31, 2017 500,000 $ 50 75,260,000 $ 7,526 $ 1,131,392 $ (1,569,087 ) $ (430,119 )


	Common Stock
	Number of Shares			$0.0001 Par Value			Additional Paid in Capital			Accumulated Deficit			Total
Balance December 31, 2019		24,837,203		$	2,484		$	1,733,900		$	(2,302,050	)	$	(565,666	)

Common stock for cash		525,470			53			2,599,947			-		$	2,600,000

Common stock for note payable		15,384			1			76,916			-		$	76,917

Common stock for consulting services		41,058			4			205,286			-		$	205,290

Warrants for intellectual property		-			-			191,594			-		$	191,594

Common stock returned to treasury		(21,430	)		(2	)		(2,498	)		-		$	(2,500	)

Capital distribution to common control entity		-			-			(64,519	)		-		$	(64,519	)

Stock options expense		-			-			1,249,568			-		$	1,249,568

Net Loss		-			-			-			(2,541,532	)	$	(2,541,532	)

Balance December 31, 2020		25,397,685		$	2,540		$	5,990,194		$	(4,843,582	)	$	1,149,152
Beginning balance		25,397,685		$	2,540		$	5,990,194		$	(4,843,582	)	$	1,149,152

Common stock issued for cash		555,288			55			4,909,945			-		$	4,910,000

Common stock issued for consulting services		62,622			7			517,997			-		$	518,004

Stock options expense		-			-			6,319,342			-		$	6,319,342

Net Loss		-			-			-			(8,465,912	)	$	(8,465,912	)

Balance December 31, 2021		26,015,595		$	2,602		$	17,737,478		$	(13,309,494	)	$	4,430,586
Ending balance		26,015,595		$	2,602		$	17,737,478		$	(13,309,494	)	$	4,430,586

See accompanying notes to ~~consolidated~~ financial statements

F-4

~~VapAria Corporation~~CQENS Technologies Inc.

~~Consolidated~~ Statements of Cash Flows

	2021			2020
	Year ended December 31
	2021			2020

Cash flows from operating activities
Net loss	$	(8,465,912	)	$	(2,541,532	)
Adjustments to reconcile net loss to net cash used in operations:
Amortization expense		59,649			30,093
Depreciation expense		18,107			4,484
Stock options expense		6,319,342			1,249,568
Common stock issued for consulting services		518,004			205,290
Changes in operating assets and liabilities:
Prepaid expenses		(83,973	)		(57,843	)
Accounts payable		37,924			33,480
Accrued expenses		80,128			29,806
Interest payable		-			(21,315	)
Net cash used in operating activities		(1,516,731	)		(1,067,969	)

Cash flows from investing activities
Additions to intellectual property		(124,193	)		(191,369	)
Additions to furniture and equipment		(14,308	)		(198,288	)
Net cash flows used in investing activities		(138,501	)		(389,657	)

Cash flows from financing activities
Proceeds from issuance of common stock		4,910,000			2,600,000
Repurchase of common stock		-			(2,500	)
Capital contribution from fixed asset purchase - related party		-			(64,519	)
Borrowing on debt with related party		-			2,500
Repayment of related party debt		(255,544	)		(450,000	)
Repayment of convertible note		-			(40,000	)
Net Cash provided by financing activities		4,654,456			2,045,481

Net change in cash and cash equivalents		2,999,224			587,855
Cash and cash equivalents, beginning of period		589,153			1,298
Cash and cash equivalents, end of period	$	3,588,377		$	589,153

Supplementary Information
Interest paid		-			22,323
Income taxes paid		-			-

Supplementary disclosure of non-cash activities:
Warrants issued for intellectual property	$	-		$	191,594
Common stock issued from conversion of note payable and accrued interest	$	-		$	76,917

Year ended December 31
2017 2016

Cash flows from operating activities
Net loss $ (156,538 ) $ (482,765 )
Adjustments to reconcile net loss to net cash used in operations:
Amortized expense 17,484 17,022
Stock options expense - 252,687
Changes in operating assets and liabilities:
Prepaid expenses 1,596 (216 )
Accounts payable (28,368 ) (10,181 )
Interest payable 8,000 8,022
Net cash used by operating activities (157,826 ) (215,431 )

Cash flows from financing activities
Borrowing on debt with related party 161,000 214,000
Net Cash provided by financing activities 161,000 214,000

Net change in cash 3,174 (1,431 )
Cash, beginning of period 4,484 5,915
Cash, end of period $ 7,658 $ 4,484

Supplementary disclosure of non-cash activities:
Dividends on Preferred Series A Stock $ 11,500 $ 7,500
Common stock issued for intangible assets - 100,772

Supplementary Information
Interest paid $ - $ -
Income taxes paid $ - $ -

See accompanying notes to ~~consolidated~~ financial statements

F-5

~~VapAria Corporation~~CQENS Technologies, Inc.

Notes to ~~Consolidated~~ Financial Statements

December 31, ~~2017~~2021 and ~~2016~~2020

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF BASIS OF PRESENTATION

Nature of Business

CQENS Technologies, Inc., formerly VapAria Corporation (“we”, ~~“our”~~“CQENS”, the “Company”) was incorporated under the laws of the State of Delaware on December 21, 2009 under the name OICco Acquisition IV, Inc.

On April 11, 2014 the Company entered into that certain Share Exchange Agreement and Plan of Reorganization (the “Agreement”) with VapAria Solutions, Inc., a Minnesota corporation formerly known as VapAria Corporation (“VapAria Solutions”), and the shareholders of VapAria Solutions (the “VapAria Solutions Shareholders”) pursuant to which we agreed to acquire ~~100%~~100% of the outstanding capital stock of VapAria Solutions from the VapAria Solutions Shareholders in exchange for certain shares of our capital stock. On July 31, 2014 all conditions precedent to the closing were satisfied, including the reconfirmation by the investors of the prior purchase of 1,000,000 shares of our common stock pursuant to the requirements of Rule 419 of the Securities Act of 1933, as amended (the “Securities Act”), and the transaction closed.

At closing, we issued the VapAria Solutions Shareholders ~~36,000,000~~5,142,856 shares of our common stock and 500,000 shares of our 10% Series A Convertible Preferred Stock (“Series A Preferred”) in exchange for the common stock and preferred stock owned by the VapAria Solutions Shareholders.

As a result of the closing of this transaction, VapAria Solutions became a wholly owned subsidiary of our company and its business and operations represent those of our company.

On August 19, 2014 the board of directors of the Company and the holders of a majority of its issued and outstanding common stock approved a Certificate of Amendment to our Amended and Restated Certificate of Incorporation changing the name of our company to VapAria Corporation. The name change was effective on August 19, 2014. Our Board determined it was in our best interests to change our corporate name to better reflect our business and operations following our recent acquisition of VapAria Solutions.

On December 26, 2019 our Board determined it was in our best interest to change our corporate name to better reflect our business and operations and so the Company name was changed from VapAria Corporation to CQENS Technologies Inc. Our board of directors and the Majority Stockholders have approved the Name Change to more accurately reflect the current direction of our company and to eliminate potential market confusion as our business focus is not in the area of unregulated vaping. Further, the board determined it would be in our best interests to dissolve the subsidiary entity, VapAria Solutions which had no activity or operations since July 31, 2014 when the April 11, 2014 Share Exchange Agreement and Plan of Reorganization’s conditions of close were satisfied. The ~~Company~~dissolution of the subsidiary was effective December 30, 2019.

CQENS Technologies, Inc. is a ~~specialty pharmaceutical~~technology company ~~engaged~~with a proprietary method of heating plant-based consumable formulations that produce an aerosol that lead to the effective and efficient inhalation of the plant’s constituents. This is accomplished at a high temperature but without the accompanying constituents of combustion. Our system of heating is a high temperature, non-combustion system. Our Heat-not-Burn Tobacco Product (HTP) system is a patent-pending method of heating plant-based consumables for inhalation that is superior to other methods of ingestion, smoking, vaping, swallowing or via topical application.

In 2020 and 2021 the effects of the COVID-19 pandemic were felt by the Company. While the duration and full impact of the pandemic is unknown at this time, we expect that the pandemic will continue to adversely impact CQENS in several ways. Our business model is dependent upon our ability to enter into strategic partnerships in the ~~research, design~~future, including alliances with consumer product companies, to enhance and accelerate the development and commercialization of ~~methods~~our proposed products. We will also be dependent upon third party manufacturers to produce our proposed products, as well as third party marketing and ~~medicants~~distribution companies. We believe that our business opportunities are international in nature and include potential partnerships in the UK, the EU and Asia, including the People’s Republic of China. The worldwide pandemic caused by COVID-19 have caused certain of these opportunities to ~~address chronic conditions with novel, vapor-centric approaches~~be delayed. Should the pandemic continue and/or be prolonged into 2022 certain of these opportunities might be limited or lost. We also need to ~~pain management, appetite suppression, smoking cessation~~raise additional working capital to provide sufficient funding to bring our proposed products to market. The impact of COVID-19 on the capital markets will make it more difficult for small, pre-revenue companies such as ours to access capital. We will continue to assess the impact of the COVID-19 pandemic on our company, however, at this time we are unable to predict all possible impacts on our company, our operations and ~~various sleep disorders.~~our prospects.

F-6

The execute officers hired by the Company in the third quarter of 2020 continue at December 31, 2021 to be the company’s three employees. Effective December 23, 2021 the Board of Directors approved annual salary increases for its: CEO, Alexander Chong, COO, William Bartkowski and CFO, Daniel Markes, resulting in a new annual combined base of $650,160 per annum compared to $270,000 per annum previously. To date the Company has ~~limited operations and, as of December 31, 2017, had no employees.~~not entered into any written employment agreements with the officers.

The Company has a fiscal year end of December 31.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation-The accompanying financial statements have been prepared by the Company ~~in accordance~~ with accounting principles generally accepted in the United States of America (“GAAP”), and have been consistently applied in the preparation of the financial statements.

Estimates– The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~F-6~~

~~Reclassifications~~– Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

~~Consolidation –~~~~The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All material intercompany balances and transactions have been eliminated.~~

Cash equivalents–All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. As of December 31, 2021 there were 0 cash equivalents.

Earnings per Share Information– Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ~~( “ASC”~~(“ASC”) 260 “Earnings Per Share” provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. ~~Due to the Company’s net losses, diluted loss per share excludes all potential common shares since their effect would be anti-dilutive.~~

Income Tax– Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.

F-7

Long Lived Assets– Assessing long-lived assets for impairment will require us to make assumptions and judgments regarding the carrying value of these assets. We will evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The assets will be considered to be impaired if we determine that the carrying value may not be recoverable based upon our assessment of the following events or changes in circumstances:

If we believe our assets to be impaired, the impairment we will recognize will be the amount by which the carrying value of the assets exceeds the fair value of the assets. Any write down will be treated as permanent reductions in the carrying amount of the asset and an operating loss would be recognized. In addition, we base the useful lives and related amortization or depreciation expense on our estimate of the useful lives of the assets. If a change were to occur in any of the above-mentioned factors or estimates, our reported results could materially change. There was no0 impairment at December 31, ~~2017~~2021 and December 31, ~~2016.~~2020.

Intangible Assets –Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated amortization. For intangible assets purchased in a business combination or received in a non-monetary exchange, the estimated fair values of the assets received (or, for non-monetary exchanged, the estimated fair values of the assets transferred if more clearly evident) are used to establish the cost basis, except when neither of the values of the assets received or the assets transferred in non-monetary exchanges are determinable within reasonable limits. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. Amortization of finite-lived intangible assets is computed over the useful life of the respective assets.

Leases - In February 2016, the FASB issued ASU 2016-02 “Leases” which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payment that depend on an index or rate and certain transition adjustments.

The Company adopted the new standard on January 1, 2019, using the modified-retrospective method. The new standard provides a number of optional practical expedients in transition. The Company has elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the land easements practical expedients as this is not applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, that the Company does not recognize right-of-use assets or lease liabilities for leases with terms of 12 months or less. Certain leases of low-value assets are also not recognized.

The Company will recognize an operating lease asset and operating lease liability for each lease with a contractual term greater than 12 months at the time of lease inception. We will not record leases with an initial term of 12 months or less on our balance sheet but will continue to record rent expense on a straight-line basis over the lease term.

Operating lease assets and liabilities will be recognized at the lease commencement date, which is the date we control the use of the property. Operating lease liabilities represent the present value of lease payments not yet paid.

We made the policy election to combine lease and non-lease components. We will consider fixed CAM as part of our fixed future lease payments; therefore, fixed CAM, if any, will be included in our lease liability. To determine the present value of lease payments not yet paid, we will estimate incremental borrowing rates corresponding to the lease term including reasonably certain renewal periods. We will estimate this rate based on prevailing financial market conditions, credit analysis, and management judgment.

Total lease costs will include fixed operating lease costs, variable lease costs and short-term lease costs. Our real estate lease requires we pay certain expenses, such as CAM costs and insurance, of which the fixed portion will be included in operating lease costs. We will recognize operating lease costs on a straight-line basis over the lease term.

Operating lease assets represent our right to use an underlying asset and will be based upon the operating lease liabilities adjusted for prepayments, initial direct costs, lease incentives, and impairment of operating lease assets.

For operating leases, operating lease assets will be reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability.

Intellectual Property -Intellectual property assets primarily represent rights ~~acquired under technology licenses~~through patent assignments and are generally amortized on a straight-line basis over periods of benefit, ranging up to 17 years. For the fiscal year ended December 31, ~~2017,~~2021, the Company amortized ~~$17,484,~~$59,649 compared to ~~$17,022 for~~$30,093 in the previous year, related to the value of its patent portfolio, acquired in 2013, 2016, 2019 and ~~2016~~2020 from an affiliate (see Note 5).

~~F-7~~

Accrued Research and Development Expenses –As part of the process of preparing our financial statements we are required to estimate our accrued expenses, including research and development expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at the time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows in accruing service fees we estimate the time-period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we will adjust the accrual accordingly. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the cost of these services, our actual expenses could differ from our estimates. We do not anticipate the future settlement of existing accruals to differ materially from our estimates. Research and development expenses are expensed as incurred.

Stock-based Compensation- The Company accounts for stock-based compensation in accordance with the provision of ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. ~~No options were~~We granted ~~in 2017 while in 2016 we granted 3,000,000~~ 428,574 options to the management team in 2021 valued at $4,282,717 compared to 250,000 options to the management team in 2020 valued at $1,249,568.

On February 15, 2021 the Board of Directors determined that it was in the best interest of the Company to grant stock options under the Company’s 2019 Equity Compensation Plan to two consulting engineers involved in our research and development. Each of the consultants was granted options to purchase 200,000 shares at $7.00 per share. 100,000 of the grants are exercisable immediately, with the balance vesting over the next four years in equal installments and subject to certain terms and conditions, including continuing in their consulting roles through the vesting periods. The fair market value of the options at the grant date was determined to be $2,798,086 of which $2,036,625 was expensed in 2021. The options were valued ~~at $252,687.~~

~~The Company accounts for stock-based compensation in accordance~~using the Black Scholes option pricing model with the ~~provision~~following assumptions: 1) a current stock price per share of ~~ASC 505, “Equity Based Payments to Non-Employees”~~$7.00, ~~which requires that such equity instruments are recorded at their fair value~~based on the ~~measurement date.~~price of recent offerings; 2) expected term of 5 years; 3) computed volatility of 303.59%; and 4) the risk-free rate of return of 0.27%. The ~~measurement~~exercise period of ~~stock-based compensation is subject to periodic adjustment as~~ the ~~underlying equity instruments vest..~~immediately exercisable options terminates on February 15, 2026.

F-8

Fair Value of Financial Instruments- Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels:

●

~~Level1:~~Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

	●
	●	Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.

	●
	●	Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

The carrying amounts reported in the ~~consolidated~~ balance sheets for cash and cash equivalents, accounts payable and debt are a reasonable estimate of fair value because of the short period of time between origination of such instruments and their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently ~~available~~ available.

~~Beneficial Conversion Features -~~The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

Recent Accounting Pronouncements–~~In February 2016, the FASB issued ASU 2016-02 “~~~~Leases~~,” which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02

The Company does not ~~significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with~~believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows oraccompanying financial ~~condition.~~statements.

F-9

NOTE 3 – GOING CONCERN

The Company’s financial statements are prepared in accordance with GAAP applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has recurring losses, and although has ~~limited~~ cash and cash equivalents in excess of five hundred thousand dollars, with renewed research and development efforts and with no source of revenue sufficient to cover its operations costs ~~and~~over the next 12 months these may not allow it to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will be dependent upon the raising of additional capital. The financial statements do not include any ~~adjustments~~adjustment that might result from the outcome of this uncertainty.

~~F-8~~

NOTE 4 – INCOME TAXES

We did not provide ~~any~~ current orof deferred U.S. federal income tax provision or benefit for any of the periods presented because we reported no activity the first two years and have experienced ~~operating~~ losses in ~~2017~~2020 and ~~2016.~~2019. Under ACS ~~740 “Income~~740: Income Taxes”, when it is more likely than not that a tax asset, cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period.

The 2017 Tax Cuts and Jobs Act ~~reduces~~reduced the corporate tax rate from 35% to 21% for tax years beginning after December 31, ~~2017.~~2017. For net operating losses (NOLs) arising after December 31, 2017, the 2017 Act limits a taxpayer’s ability to utilize NOL carryforwards to ~~80%~~80% of taxable income. In addition, NOLs arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation. The ~~2017 Act would generally eliminate the carryback of all NOLs arising in a tax year ending after 2017 and instead would permit all such NOLs to be carried forward indefinitely. The~~ component of the Company’s deferred tax asset as of December 31, ~~2017~~2020 and ~~2016~~2019 are as follows:

Component of Deferred Tax Asset

	December 31, 2021			December 31, 2020
Net operating loss carryforward	$	284,218		$	143,123
Valuation allowance	$	(284,218	)	$	(143,123	)
Net deferred asset	$	-		$	-

December 31, 2017 December 31, 2016
Net opening loss carryforward $ 329,508 $ 490,368
Valuation allowance (329,508 ) (490,368 )
Net deferred asset $ - $ -

The Company did not pay any income taxes during the years ended December 31, ~~2017~~2021 or ~~2016.~~2020.

The Company’s cumulative net operating loss carryforward as of December 31, ~~2017~~2021 amounted to ~~$1,569,088~~$1,353,419 of which $50,052 represents net operating losses prior to 2017 and will expire between December 31, 2033and December 31, ~~2037.~~2038. The years going back to 2018 remain open for examination by relevant tax authorities.

NOTE 5 – ~~STOCKHOLDER’S~~STOCKHOLDERS’ EQUITY

~~Common~~On March 15, 2021, we sold a total of 71,429 shares of our common stock for $500,000 to a non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using proceeds for working capital.

On ~~January 28, 2016 the Company entered into five license agreements (the “January 2016 License Agreements”) with Chong Corporation,~~April 21, 2021, we sold a ~~related party, to which we were granted exclusive worldwide licenses for the following patented technology:~~

~~U.S. Patent No.: 8,903228 issued on December 20, 2014 for a vapor delivery device;~~

~~U.S. Patent No.: 8,962,040 issued on February 24, 2015 for appetite suppression (hoodia);~~

~~U.S. Patent App. No.: 13/836,617 filed on March 18, 2013 and subsequently issued as U.S. Patent No. 9,254,002, for low temperature vaporization~~total of ~~a tobacco;~~

~~U.S. Patent App. No.: 13/453,939 filed on April 12, 2012 and subsequently issued as U.S. Patent No. 8,903,228 for an enhanced vapor delivery system; and~~

~~U.S. Patent App. No.: 14/629,279 filed on February 23, 2015 and subsequently issued as U.S. Patent No. 8,962,040 for a sleep aid (melatonin).~~

The terms of each January 2016 License Agreement is identical. Under the agreements, the Company was granted the rights to sublicense and/or produce and market products during the term of the agreement. As consideration for each of these January 2016 License Agreements we issued 5,000,00071,430 shares of our common stock to ~~Chong Corporation,~~two non-U.S. Persons each paying $250,000 for a total of $500,000 in private transactions. We did not pay a commissions or finder’s fees and are using proceeds for working capital.

On May 1, 2021, we entered into a consulting engagement memorandum with an ~~aggregate issuance of 25,000,000 shares. Under each agreement we agreed to pay Chong a royalty~~unrelated third party for the consultant’s guidance and expertise in identifying business opportunities, partners, and other skilled consultants in the ~~amount~~People’s Republic of ~~$50,000 per annum in the first calendar year, and for each year thereafter~~China and/or other territories of Asia. As compensation for the ~~remaining life~~services, we issued this individual 20,000 shares of ~~patent,~~our common stock valued at $140,000. The recipient was a non-U.S. person, and the issuance was exempt from registration under the Securities Act in ~~which the patent is issued and is licensed and/or commercialized~~reliance on an exemption provided by Regulation S promulgated thereunder.

F-10

On May 16, 2021, we entered into a consulting engagement memorandum with an ~~acknowledged embodiment and/or use. Chong Corporation is responsible~~unrelated third party pursuant to which we engaged this party to identify key Asian resources for ~~all expenses and costs associated with protecting the patents from infringement and/or claims of infringement from other parties. The term of the license is~~our company. As compensation for the ~~life~~services, we issued this individual 16,072 shares of our common stock valued at $112,504. The recipient was a non-U.S. person, and the ~~respective patent.~~issuance was exempt from registration under the Securities Act in reliance on an exemption provided by Regulation S promulgated thereunder.

On May 17, 2021, we sold a total of 71,429 shares of our common stock for $500,000 to a non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital.

On September 28, 2021, we sold a total of 296,000 shares of our common stock for $2,960,000 to eleven non-U.S. persons in private transactions. We did not pay a commission or finder’s fees and are using the proceeds for working capital. On September 28, 2021, we sold 5,000 shares of our common stock for $50,000 to an investor in a private transaction. We did not pay a commission or finder’s fee.

On September 30, 2021, we sold 30,000 shares of our common stock for $300,000 to an investor in a private transaction. We did not pay a commission or finder’s fee

On October 18, 2021 we sold 5,000 shares of our common stock for $50,000 to a non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital.

~~In June 2017,~~On November 18, 2021 we entered into a consulting engagement memorandum with an unrelated third party pursuant to which we engaged this party to identify key Asian resources for our company. As compensation for the ~~Company declared~~services, we issued this individual 10,000 shares of our common stock valued at $100,000. The recipient was a non-U.S. person, and the issuance was exempt from registration under the Securities Act in reliance on an exemption provided by Regulation S promulgated thereunder.

On November 23, 2021 we sold 3,000 shares of our common stock for $30,000 to a non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital.

On November 29, 2021 we entered into a consulting engagement memorandum with an unrelated third party pursuant to which we engaged this party to identify key Asian resources for our company. As compensation for the services, we issued ~~50,000~~this individual 16,550 shares of our common stock valued at $165,550. The recipient was a non-U.S. person, and the issuance was exempt from registration under the Securities Act in reliance on an exemption provided by Regulation S promulgated thereunder.

On December 6, 2021 we sold 2,000 shares of our common stock to ~~Chong Corporation~~an investor in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital.

On January 29, 2020 we sold 248,448 shares of our common stock for $1,200,000 to a non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital.

On March 6, 2020, the holder of the $50,000 note that was entered into on May 30, 2013 agreed to convert the principal and accrued unpaid interest totaling $76,917 into shares of CQENS common stock at $5.00 per share. A total of 15,384 shares were issued as satisfaction of this note.

On April 13, 2020 we entered into a ~~2016 dividend on~~consulting engagement memorandum with an unrelated third party pursuant to which we engaged this party to identify key Asian resources for our ~~10% Series A convertible preferred stock. The~~company. As compensation for the services we issued this individual 12,423 shares of our common stock ~~was~~ valued at ~~$0.23 per share.~~$62,115. The recipient was a non-U.S. person.

On April 16, 2020 we entered into a consulting engagement memorandum and agreement with an unrelated third party and engaged this individual to provide certain services to us in connection with the further development of certain of our patents. As compensation, upon execution, we issued this individual 10,000 shares of our common stock valued at $50,000 and are obligated to issue him an additional 10,000 shares at such time as additional patents are issued. The recipient was a non-U.S. person.

On June 1, 2020 we sold a total of 82,818 shares of our common stock for $400,000 to six non-U.S. Persons in private transactions. We did not pay a commission or finder’s fee and are using proceeds for working capital.

On June 4, 2020 we sold 165,632 shares of our common stock for $800,000 to a Non-U.S. Person in a private transaction. We did not pay a commission or finder’s fee and are using the proceeds for working capital and reducing debt.

On June 17,2020, the Company entered into a Stock Purchase Agreement with an unrelated stockholder pursuant to which it agreed to repurchase 21,430 shares of its common stock from the stockholder for $2,500. The Stock Purchase Agreement contained customary terms, including cross general releases. On August 10, 2020, the transaction closed. Following the closing of the transaction, the shares have been cancelled and returned to the status of authorized but unissued shares of common stock.

On July 17, 2020 we entered into a consulting engagement memorandum with an unrelated third party for the consultant’s guidance and expertise in identifying business opportunities, partners and other skilled consultants in the People’s Republic of China and/or other territories of Asia. As compensation for the services we issued this individual 12,423 shares of our common stock valued at $62,115. The recipient was a non-U.S. person.

~~F-9~~F-11

On July 17, 2020 we entered into a consulting engagement memorandum with an unrelated third party for the consultant’s guidance and expertise in identifying potential financiers, partners and other skilled consultants in the People’s Republic of China and/or other territories of Asia. As compensation for the services we issued this individual 6,212 shares of our common stock valued at $31,060. The recipient was a non-U.S. person.

~~Comparatively, in May 2016,~~

On November 18, 2020 we ~~declared and issued 50,000~~sold 28,572 shares of our common stock to ~~Chong Corporation as~~an accredited investor in a ~~2015 dividend on our 10% Series A convertible preferred stock. The stock was valued at $0.15 per share.~~private transaction and we received proceeds of $200,000. We did not pay any commissions or finders’ fees and are using the proceeds for working capital.

OnAs of December 31, ~~2017,~~2021 the Company had ~~75,260,000~~26,015,595 shares of common stock issued and outstanding.

Preferred Stock

There are 0 shares of Series A Preferred issued and outstanding in 2021 or 2020.

~~Under~~

Stock Options

On February 15, 2021, we granted 400,000 options under the ~~terms~~Company’s 2019 Equity Compensation Plan to two consulting engineers involved in our research and development. Each of the ~~10% Series A Convertible Preferred Stock~~consultants was granted options to purchase 200,000 shares at $7.00 per share. 100,000 of the ~~Company pays~~grants are exercisable immediately, with the ~~holder~~balance vesting over the next four years in equal installments and subject to certain terms and conditions, including continuing in their consulting roles through the vesting periods. The fair market value of the options at the grant date was determined to be $2,798,086 of which $2,036,625 was expensed in 2021. The options were valued using the Black Scholes option pricing model with the following assumptions: 1) a ~~10% annual dividend in common~~current stock price per share of $7.00, based on the price of recent offerings; 2) expected term of 5 years; 3) computed volatility of 303.59%; and 4) the ~~preferred becomes convertible to common stock five years from issuance at a conversion~~risk-free rate of ~~one share~~return of 0.27%. The exercise period of the ~~Company’s common stock for each share of the 10% Series A Convertible Preferred Stock.~~ ~~The 10% Series A convertible preferred stock is not redeemable at the holder’s option and has no voting rights.~~immediately exercisable options terminates on February 15, 2026.

The Company analyzed the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity.

~~Stock options~~

~~No stock options were granted in 2017, while in December 2016, the Company,~~On October 21, 2021, in line with the Company’s 2014 Equity Compensation Plan, ~~granted 3,000,000~~428,574 non-qualified stock options were granted to its management. These options were fully vested upon ~~granting~~grant and have an exercise price of ~~$0.25~~$12.00 per share. The fair market value of the options at the grant date was determined to be $4,282,717 which was expensed immediately. The options were valued atusing the ~~common stock’s par value~~Black Scholes option pricing model with the following assumptions: 1) a current stock price per share of ~~$0.0001 per share.~~$10.00, based on the price of companies with profiles similar to ours; 2) expected term of 5 years; 3) computed volatility of 680.81%; and, 4) the risk free rate of return of 1.23%. The exercise period terminates ~~5:00 pm Eastern Time~~on October 21, 2026.

On December 30, 2021, the non-qualified stock options that were granted to management on December 30, 2016, expired without exercise. The result is a reduction of 428,574 to the outstanding and exercisable options.

On October 1, 2020 in line with the Company’s 2019 Equity Compensation Plan, 250,000 non-qualified stock options were granted to its management. These options were fully vested upon grant and have an exercise price of $5.31 per share. The fair market value of the options at the grant date was determined to be $30,849 which was expensed immediately. The options were valued using the Black Scholes option pricing model with the following assumptions: 1) a current stock price per share of $0.15, based on the price of companies with profiles similar to ours; 2) expected term of 2.5 years; 3) computed volatility of 259.87%; and, 4) the risk free rate of return of 1.19%. The exercise period terminates on October 1, 2025.

On December 31, ~~2021.~~2020, the non-qualified stock options that were granted to management on December 31, 2015, expired without exercise. The result is a reduction of 428,574 to the outstanding and exercisable options.

As of December 31, ~~2017,~~2021, the Company has ~~6,000,000~~ 1,757,148 outstanding and exercisable options at a weighted average exercise price of ~~$0.625 per share~~ $5.76 and a weighted average remaining term of ~~6 years. The options have zero~~3.8 years and an intrinsic value of zero.

Warrants

F-12

As consideration for the acquisition, the Company issued Xten common stock purchase warrants exercisable for an aggregate of 21,000,000shares of its common stock at an exercise price of $5.31 per share (the “Warrants”), including (i) a Series A Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2023 and expiring on September 30, 2026, (ii) a Series B Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2026 and expiring on September 30, 2029, and (iii) a Series C Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2029 and expiring on September 30, 2032. The Company has the ~~Company~~right to accelerate or extend the exercise period of each series of Warrants in its discretion. In addition, the exercise period of each series of Warrants automatically accelerates in the event of a “change of control” (as defined in the Warrants) prior to such series of Warrants becoming exercisable by its respective terms. The IP Asset Purchase Agreement contained customary indemnification provisions. The warrants are ~~not actively traded.~~valued at $191,594 based on carrying value of the assets acquired.

NOTE 6 – RELATED PARTY TRANSACTIONS

In ~~2017~~2021 the Company utilized the services of Apparatus Global Solutions, a common control entity that provided accounting support and website development. The total cost was $5,138.

Early in 2020 the Company borrowed ~~$161,000~~ $2,500 from ~~Chong Corporation,~~Xten, a ~~related~~common control entity. On June 24, 2020the Company repaid $250,000 to Xten. On December 3, 2020 the Company repaid an additional $200,000 to Xten to reduce the debt to Xten, a common control entity. The balance outstanding at December 31, ~~2017~~2020 due Xten is ~~$548,544.~~$255,544. The loan is unsecured, noninterest bearing and due on demand.

In September 2021 the Company repaid the balance of the loan of $255,544 to Xten Capital Group, a common control entity. The result was the elimination of this debt.

We maintain our corporate offices at 5550 Nicollet Avenue, Minneapolis, MN 55419. We lease ~~these~~the premises from 5550 Nicollet, LLC, ~~an affiliate of~~a company owned by Mr. Chong. Annual rent was $9,300 for each of the years ended December 31, 2021 and 2020. In December ~~2017,~~2020 we ~~renewed the~~entered into a new month-to-month lease ~~for an additional 12-month term ending December 31, 2018 at the annual~~that began January 1, 2021 with a monthly rental rate of ~~$9,300. Rent was $9,180 and $9,000 each year ending December 31, 2017 and December 31, 2016 respectively.~~$775. As of December 31, ~~2017, $4,590~~2021, there is no outstanding balance for rent due to 5550 Nicollet LLC.

In early 2020 we entered into a short-term Research and Development Agreement with Xten, a common control entity, pursuant to this signed Agreement, Xten provided research and development related expertise and services specific to HnB technologies, devices and intellectual property. Costs to the Company were $427,788 in research and development costs resulting from these activities. This Agreement expired September 30, 2020.

On September 30, 2020 the Company entered into an Asset Purchase Agreement with Xten, a common control entity, pursuant to which it acquired a portfolio of 29 U.S. and international patents and patent applications in the areas of devices and technologies for aerosolizing certain remedies and pharmaceutical preparations, as well as the solutions and preparation for inhaled delivery. As consideration for the acquisition, the Company issued Xten common stock purchase warrants exercisable for an aggregate of 21,000,000 shares of its common stock at an exercise price of $5.31 per share (the “Warrants”), including (i) a Series A Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2023 and expiring on September 30, 2026, (ii) a Series B Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2026 and expiring on September 30, 2029, and (iii) a Series C Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2029 and expiring on September 30, 2032. The Company has the right to accelerate or extend the exercise period of each series of Warrants in its discretion. In addition, the exercise period of each series of Warrants automatically accelerates in the event of a “change of control” (as defined in the Warrants) prior to such series of Warrants becoming exercisable by its respective terms. The IP Asset Purchase Agreement contained customary indemnification provisions. The assets have been accounted for at its carrying value of $191,594.

F-13

In the third quarter of 2020 the Company procured the services of Plexus Corporation, a common control entity, to create, design and deliver an online interactive presentation in English and Simplified Chinese for use in presentations to potential investors. Cost to the Company for this service was $5,500.

On September 30, 2020 the Company entered into an Other Assets Purchase Agreement with Xten, a common control entity, to purchase certain assets including: multiple pieces of laboratory and workshop equipment; custom built plume and inhalation testing machine; computers, monitors and accessories; prepaid rent; and, laboratory/workshop supplies, for a purchase price of $263,512. The Other Assets Asset Purchase Agreement also contained customary indemnification provisions.

See other related party transactions in Note 9 – ~~Commitments~~Commitment and ~~Contingencies.~~Contingencies

NOTE 7 – NOTE PAYABLE

~~As of December 31, 2017,~~On May 20, 2013 the Company ~~has an unsecured~~issued a $50,000 note ~~payable in the amount of $50,000 due~~ to an ~~individual. The~~unrelated third party. On March 6, 2020, this note ~~was issued on May 30, 2013~~ and ~~bears eight per cent (8%) annual interest. The note was due December 31, 2017 but~~accrued unpaid interest, upon agreement by the ~~due date has been amended and, all~~noteholder, were fully satisfied through the conversion of the principal and accrued interest ~~is due and payable on July 31, 2018.~~

~~The Company analyzed~~totaling $76,917 into 15,384 common shares of our stock at a rate of $5.00 per share. No gain or loss was recognized from the ~~modification~~conversion of this note to the term under ASC 470-60 “Trouble Debt Restructurings” and ASC 470-50 “Extinguishment of Debt”. The Company determined the modification is not substantial and the transaction should not be accounted for as an extinguishment with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate.Company’s common stock.

NOTE 8 – CONVERTIBLE NOTE

~~The Company assumed an unsecured convertible note for $40,000 that was issued on~~On July 14, 2014 the Company issued a $40,000 convertible note to an unrelated third party that was originally issued July 14, 2014as part of the ~~share exchange with the~~acquisition of VapAria ~~Solutions Shareholders. Following amendment to the date of maturity, the~~Solutions. This convertible note now matures on July 31, 2018 and continues to bear interest at 10% per annum. The note is convertible into shares of our common stock at $0.08 per share. The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does not have a beneficial conversion feature.

~~F-10~~

The note was originally due on September 1, 2014. The Company entered into a note amendment on September 1, 2014 and the due date was extended to December 1, 2014. On December 1, 2014, the Company extended the note again to December 31, 2015. On December 31, 2015, the note was again extended to July 31, 2016 andmatured on December 31, ~~2016 the note was extended to August 31, 2017. It was subsequently extended to December 31, 2017~~2019. In February 10, 2020we fully satisfied any and ~~most recently was extended to July 31, 2018. The Company analyzed the modification~~all obligations of the ~~term under ASC 470-60 “Trouble Debt Restructurings”~~convertible note through repayment of the principal and ~~ASC 470-50 “Extinguishment~~accrued interest of Debt”. The Company determined the modification is not substantial and the transaction should not be accounted for as an extinguishment with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate.$62,323.

NOTE 9 – ~~COMMITMENTS~~COMMITMENT AND CONTINGENCIES

The Asset Purchase Agreement entered into September 30, 2020 by the Company and Xten, a common control entity, where the Company acquired certain patents and patent applications, replaces the 2013 and 2016 License Agreements effectively eliminating the commitment and contingencies of these previous agreements.

Note 10 – SUBSEQUENT EVENTS

In January 2022 we entered into a consulting agreement with an unrelated third party whereby the consultant will provide introductions to manufacturers and advice and counsel regarding potential manufacturers for the products of the Company in the Peoples Republic of China and/or other territories of Asia and general business plan and strategy in the region as required by the Company. Further the consultant will identify and introduce high net worth capital sources (qualified non-U.S. investors) to the Company. In exchange the Company paid a consulting fee of $333,000.

~~Relating~~

In March 2022 we entered into a three-year lease agreement commencing April 15, 2022 through April 30, 2025 at an initial annual rate of $57,400 paid in monthly installments of $4,800. We have an option to extend for an additional five-year period. Annual increases are tied to the ~~December 2013 License Agreement with Chong Corporation, a related party, beginning in~~U.S. Consumer Price Index of the ~~calendar year in which~~Bureau of Labor Statistics of the ~~first licensed products or licensed services takes place, but not prior to January 1, 2015, the Company is required to pay to Chong Corporation, a related entity, a 3% royalty~~Department of Labor for ~~revenues with a $50,000 annual minimum royalty commitment.~~all Urban Consumers for San Francisco-Oakland-San Jose area.

The December 2013 License Agreement with Chong Corporation also requires us to pay for the costs associated with maintaining the patent applications and patents licensed to us. For the fiscal years ended December 31, 2017 and 2016, Chong reported it did not incur any costs associated with this December 2013 License Agreement.

~~F-11~~F-14

5550 Nicollet Avenue, Minneapolis, MN		55419
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		Not applicable		Not applicable

Large accelerated filer	~~[ ]~~☐	Accelerated filer	~~[ ]~~☐
Non-accelerated filer	~~[ ]~~☒	Smaller reporting company	~~[X]~~☒
		Emerging growth company	~~[X]~~	☐

		Page No.
Part I

Item 1.	Business.	4
Item 1A.	Risk Factors.	107
Item 1B.	Unresolved Staff Comments.	1411
Item 2.	Properties.	1411
Item 3.	Legal Proceedings.	1411
Item 4.	Mine Safety Disclosures.	1411

Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	1512
Item 6.	Selected Financial Data.	1512
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1512
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	1814
Item 8.	Financial Statements and Supplementary Data.	1814
Item 9.	Changes in and Disagreements ~~With~~with Accountants on Accounting and Financial Disclosure.	1814
Item 9A.	Controls and Procedures.	1815
Item 9B.	Other Information.	1916

Part III

Item 10.	Directors, Executive Officers and Corporate Governance.	1916
Item 11.	Executive Compensation.	2219
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	2320
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	2522
Item 14.	Principal Accounting Fees and Services.	2523

Part IV

Item 15.	Exhibits, Financial Statement Schedules.	2324
Item 16.	Form 10-K Summary	25

Name	Age	Positions
Alexander Chong	5357	Chairman of the Board of Directors, Chief Executive Officer
William P. Bartkowski	6670	President, Chief Operating Officer
Daniel Markes	5660	Vice President, Chief Financial Officer, director
Roger Nielsen	7175	Vice President, Secretary, director

●	●		~~our lack of products or revenues and the substantial~~financial risks, ~~inherent in the establishment of a new business venture~~including:
	●
	●	~~our very limited operating history and our unproven business plan;~~

	●	our history of ~~losses;~~losses, lack of revenues and insufficient working capital;
	●
	●	our ability to continue as a going concern; and
	●
	●	our ability to raise ~~capital to fund our business plan, pay our operating expense and satisfy our obligations;~~capital.
●			business risks, including:
	●	our limited operating history and lack of products;
	●	lack of operating history of Leap Technology;
	●	the joint venture with the Barker Group/Firebird Manufactures remains to be finalized;
	●	potential conflicts of interest ~~facing certain~~ of our ~~officers and directors;~~management;
	●	reliance on third-parties;
	●	~~future reliance on third party manufacturers;~~potential FDA oversight;
	●	lack of marketing and distribution experience;
	●	~~our future ability to comply with government regulations;~~

	●	~~our lack of experience in selling, marketing or distributing products;~~

	●	~~our future ability~~possible inability to establish and maintain strategic partnerships; and
	●
	●	~~our~~ possible ~~future~~ dependence on licensing or collaboration ~~agreements;~~agreements.
●
	●	~~the inability of Chong Corporation~~risks related to ~~protect the intellectual property which is licensed to us, and risks of possible third-party infringement of intellectual property rights;~~

	●	~~anti-takeover provisions of Delaware law;~~

	●	~~the dilution impact of the issuance of shares of~~ our common stock, ~~upon a conversion of shares of our Series A 10% convertible preferred stock and as payment for dividends; and~~including:
	●	lack of public market for our common stock; and
	●	~~the~~possible impact of ~~penny stock rules~~Delaware’s anti-takeover statutes on ~~the future trading in~~ our ~~common stock.~~stockholders.

	●	~~Device Patent Application 20130199528~~ - A control system for a hand-held vapor delivery device, comprising: a circuit configured to provide a precise amount of power from a power source to heat a heating element to a minimum required temperature to completely vaporize a predetermined volume of a liquid, and control a precise duration of time to supply the precise amount of power to completely vaporize the predetermined volume of liquid at the required temperature. The application also utilizes alkaline battery chemistry and an enclosed cartridge that eliminates leaking and reduces the risks of oxidation, contamination and adulteration- making the device suitable for pharmaceutical applications; and

	●	~~Vaporized Medicants and Methods of Use Patent Application 20130072577~~ - Medicant solutions, i.e. suitable for vaporization at a low temperature: Medicants or active ingredients that are covered by the application include energy boosters, analgesics, sleep aids, motion sickness remedies and erectile dysfunction remedies.

	●	~~U.S. Patent No.: 8,903,228 issued on December 20, 2014 for a vapor delivery device;~~

	●	~~U.S. Patent No.: 8,962,040 issued on February 24, 2015 for appetite suppression (hoodia);~~

	●	~~U.S. Patent App. No.: 13/846,617 filed on March 18, 2013 and subsequently issued as U.S. Patent No. 9,254,002, for low temperature vaporization of tobacco;~~

	●	~~U.S. Patent App. No.: 13/453,939 filed on April 12, 2012 and subsequently issued as U.S. Patent No. 8,903,228, for an enhanced vapor delivery system; and~~

	●	~~U.S. Patent App. No.: 14/629,279 filed on February 23, 2015 and subsequently issued as U.S. Patent No. 8,962,040, for a sleep aid (melatonin).~~

	●	~~Authenticating and verifying the user;~~

	●	~~Authenticating and verifying the active ingredient being dispensed;~~

	●	~~Producing consistent, accurate “dosages” of an active ingredient;~~

	●	~~Measuring, monitoring and metering dosages on a per use (activation) basis;~~

	●	~~Controlling the amount and duration of power and temperature- eliminating the risk of “cracking” the excipient molecules and producing unwanted chemical byproducts in the vapor;~~

	●	~~Offering environmentally friendly power options;~~

	●	~~Allowing for expanded categories of excipients- more delicate excipients require lower, controlled temperatures;~~

	●	~~Controlling the size of the vapor molecule;~~

	●	~~Utilizing a totally encapsulated fluid reservoir that cannot be adulterated and that restricts oxidation and contamination; and~~

	●	~~Minimizing leakage of any kind.~~

	●	the provisional patent application filed by Xten on January 3, 2018, the non-provisional patent application filed by Xten on June 28, 2018 and the Patent Cooperation Treaty (“PCT”) application filed by Xten on January 3, 2019;

	●	all documents and files related to device and tobacco consumable development;

	●	all versions of prototyped embodiments, consisting of both device and tobacco consumable embodiments; and

	●	all files, correspondence, communication, data and test results related to the toxicology testing undertaken by Xten related to the CQENS System.

	●	our ability to build and finance our products at our targeted scale on a cost-effective basis and in the time frame we anticipate;

	●	technical challenges developing our commercial production processes or systems that we are unable to overcome;

	●	reliance on third-party manufacturers for fabricating and assembling our products;

	●	our ability to establish markets for our products;

	●	our ability to obtain financing;

	●	our ability to meet our potential customers’ requirements or specifications;

	●	our ability to secure and maintain all necessary regulatory approvals and to comply with applicable laws and regulations for our products;

	●	our ability to establish new relationships, or maintain and expand our existing relationships, with strategic partners, including strategic partners that will manufacture and market our products; and

	●	actions of direct and indirect competitors or that may seek to compete with the products that we develop.

	●	we may be unable to identify manufacturers on acceptable terms or at all;

	●	our third-party manufacturers might be unable to formulate and manufacture our products in the volume and quality required to meet our needs;

	●	our contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to successfully produce, store and distribute our products; and

	●	our manufacturers may fail to comply with federal or state regulations.

	●	the development of certain of our proposed products may be terminated or delayed;

	●	our cash expenditures related to development of certain of our proposed products would increase significantly and we may need to seek additional financing;

	●	we may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted;

	●	we will bear all of the risk related to the development of any such products; and

	●	the competitiveness of any product that is commercialized could be reduced.

	●	~~obtain licenses, which may not be available on commercially reasonable terms, if at all;~~

	●	~~abandon proposed products;~~

	●	~~redesign our proposed products or processes to avoid infringement;~~

	●	~~stop using the subject matter claimed in the patents held by others;~~

	●	~~pay damages; and~~

	●	~~defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources.~~

	December 31, 2021			December 31, 2020
Net cash (used) in operating activities	$	(1,516,731	)	$	(1,067,969	)
Net cash (used) in investing activities	$	(138,501	)	$	(389,657	)
Net cash provided by financing activities	$	4,654,456		$	2,045,481

	●	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

	●	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

	●	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

	●	understands generally accepted accounting principles and financial statements;

	●	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;

	●	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;

	●	understands internal controls over financial reporting; and

	●	understands audit committee functions.

	●	conflicts of interest;

	●	corporate opportunities;

	●	public disclosure reporting;

	●	confidentiality;

	●	protection of company assets;

	●
	●	health and safety; and

	●	~~conflicts of interest; and~~

	●	compliance with applicable laws.

●	our principal executive officer or other individual serving in a similar capacity;

●	our two most highly compensated named executive officers at December 31, ~~2017~~2021 whose annual compensation exceeded $100,000; and

●	up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, ~~2017.~~2021.

Summary Compensation Table
Name and principal position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		No equity incentive plan compensation ($)		Non-qualified deferred compensation earnings ($)		All other compensation ($)		Total ($)

Alexander Chong,		2017
Chief Executive Officer⁽¹⁾		2016		0		0		0		176,881		0		0		0		176,881

Summary Compensation Table
Name and principal position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)			No equity incentive plan compensation ($)		Non-qualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Alexander Chong,		2021		98,400		-		-		2,997,883	⁽¹⁾		-		-		-		3,096,283
Chief Executive Officer		2020		49,200		25,000		-		874,697	⁽¹⁾		-		-		-		948,897

Daniel Markes, Chief Financial Officer		2021		90,000		-		-		428,277	⁽²⁾		-		-		-		518,277
		2020		45,000		25,000		-		124,956	⁽²⁾		-		-		-		194,956

(1)	The amounts represent the aggregate grant date fair value of stock options to purchase (i) 300,000 shares of common stock at an exercise price of $12.00 per share awarded to Mr. Chong in December 2021 and (ii) 175,000 shares of common stock at an exercise price of $5.31 per share awarded to Mr. Chong in October 2020 as additional compensation. The assumptions made in the valuations of the option awards are included in Note 2 of the notes to our financial statements appearing later in this report.

(2)	The amounts represent the aggregate grant date fair value of stock options to purchase (i) 42,858 shares of common stock at an exercise price of $12.00 per share awarded to Mr. Markes in December 2021 and (ii) 25,000 shares of common stock at an exercise price of $5.31 per share awarded to Mr. Markes in October 2020 as additional compensation.

OPTION AWARDS										STOCK AWARDS
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)

Alexander Chong		2,100,000		-		-		1.00	12/31/20		-		-		-		-
		2,100,000		-		-		0.25	12/31/21		-		-		-		-

OPTION AWARDS										STOCK AWARDS
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)

Alexander Chong, CEO		300,000		-		-		1.40	12/21/23		-		-		-		-
		175,000		-		-		1.00	12/31/24		-		-		-		-
		175,000		-		-		5.31	10/1/25		-		-		-		-
		300,000		-		-		12.00	10/20/26		-		-		-		-

Dan Markes, CFO		42,858		-		-		1.40	12/31/23		-		-		-		-
		25,000		-		-		1.00	12/31/24		-		-		-		-
		25,000		-		-		5.31	10/1/25		-		-		-		-
		42,858		-		-		12.00	10/20/26		-		-		-		-

	●	each person known by us to be the beneficial owner of more than 5% of our common stock;

	●	each of our directors;

	●	each of our named executive officers; and

	●	our named executive officers, directors and director nominees as a group.

	Common Stock
Name and Address of Beneficial Owner	Shares		%

Alexander Chong⁽¹⁾		43,950,000		55.40	%
William P. Bartkowski⁽²⁾		600,000		≤1	%
Daniel Markes⁽³⁾		2,780,000		3.3	%
Roger Nielsen⁽⁴⁾		2,800,000		3.3	%
All officers and directors as a group (four persons)^(1)(2)(3)(4)		47,120,000		62.0	%

	⁽²⁾	Includes (i) ~~300,000~~42,858 shares of common stock underlying options with an exercise price of $1.40 per share; (ii) 25,000 shares of common stock underlying options with an exercise price of $1.00 per share; (iii) 25,000 shares of common stock underlying options with an exercise price of $5.31; and (iv) 42,858 shares of our common stock of common stock underlying options with an exercise price of $12.00 per share.

	⁽³⁾	Includes (i) 168,572 shares of our common stock; (ii) 42,858 shares of common stock underlying options with an exercise price of $1.40 per share; (iii) 25,000 shares of common stock underlying options with an exercise price of $1.00 per share; (iv) 25,000 shares of common stock underlying options with an exercise price of $5.31; (v) 42,858 shares of common stock underlying options with an exercise price of $12.00 per share; and (vi) 142,858 shares of our common stock owned by Paula Markes, his spouse.

	⁽⁴⁾	Includes (i) 285,715 shares of our common stock; (ii) 42,858 shares of common stock underlying options with an exercise price of $1.40 per share; (iii) 25,000 shares of common stock underlying options with an exercise price of $1.00 per share; (iv) 25,000 shares of common stock underlying options with an exercise price of $5.31; and (v) 42,858 shares of our common stock underlying options with an exercise price of ~~$1.00~~$12.00 per ~~share; and (ii) 300,000 shares of our common stock with an exercise price of $0.25 per share~~

	⁽³⁾	Includes: (i) 300,000 shares of our common stock underlying options with an exercise price of $1.00 per share; (ii) 300,000 shares of our common stock with an exercise price of $0.25 per share; and (ii) 1,000,000 shares of our common stock owned by Paula Markes, his spouse.

	⁽⁴⁾	~~Includes (i) 300,000 shares of our common stock underlying options with an exercise price of $1.00 per share; and (ii) 300,000 shares of our common stock with an exercise price of $0.25 per~~ share.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Plans not approved by our stockholders:		0		-		-
Plans approved by stockholders:
2014 Equity Compensation Plan		6,000,000	$	0.625		4,300,000

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Plans not approved by our stockholders:		0		-		-
Plans approved by stockholders:
2014 Equity Compensation Plan		857,148	$	6.70		671,432
2019 Equity Compensation Plan		900,000	$	5.29		1,400,000

	●	incentive stock options (ISOs),

	●	non-qualified options (NSOs),

	●	awards of our common stock, or

	●	rights to make direct purchases of our common stock which may be subject to certain restrictions.

	2021		2020

Audit Fees	$	45,000	$	27,500
Audit-Related Fees				-
Tax Fees				-
All Other Fees				-
Total	$	45,000	$	27,500