SEC v. APPLIED BIOSCIENCES CORP., No. 1:20-cv-03729, Southern District of New York (May 14, 2020) — Complaint

MARC P.  BERGER
REGIONAL DIRECTOR
Lara S. Mehraban
Thomas P. Smith, Jr.
Dugan Bliss
Kristine M. Zaleskas
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
212-336-0971 (Bliss  )
[email protected]
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
      Plaintiff,
-against-
APPLIED BIOSCIENCES CORP.,
Defe
ndant  .
COMPLAINT
20 Civ.  3729
JURY TRIAL DEMANDED
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
Defendant Applied BioSciences Corp. (“APPB”), alleges as follows:
SUMMARY
1.Seeking to exploit the COVID-19 pandemic for profit, microcap company APPB
dramatically shifted its focus in late March 2020 from cannabinoid-based products to pandemic-
related products.  On March 25, 2020, as news about the COVID-19 pandemic dominated the
public’s attention, APPB announced that it had pivoted its manufacturing resources to build
products that would help battle the spread of COVID-19, including hand sanitizer.  Then, on

2
March 31, 2020, APPB issued a materially misleading press release in which it falsely claimed to
be offering and shipping a COVID-19 home test kit to the general public for private use.
2. Specifically, APPB announced in a headline to a press release that it had begun
“Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19,” that the
company had begun shipping a line of “Home Test Kits” to “be used for Homes . . . or anyone
wanting immediate and private results” and touted results in under 15 minutes using only a
finger prick.  In fact, APPB did not offer or intend to sell the test kit for home or private use by
the general public, and it had not begun shipping any test kits.  Instead APPB intended to screen
potential purchasers only to allow purchases in connection with use by nursing homes, schools,
military, and first responders, in each case in consultation with a medical professional.
Additionally, APPB’s press release was materially misleading because it failed to disclose that
the FDA had not approved or authorized the sale of any COVID-19 at-home test kits.
3. The false and misleading press release caused APPB’s stock price and trading
volume to soar.
VIOLATIONS
4. By virtue of the foregoing conduct and as alleged further herein, Defendant APPB
has violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
5. Unless Defendant is  restrained and enjoined, it will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
6. The Commission brings this action pursuant to the authority conferred upon it by

3
Exchange Act Section 21(d) [15 U.S.C. § 78u(d)].
7. The Commission seeks a final judgment: (a) permanently enjoining Defendant
from violating the federal securities laws and rules this Complaint alleges it has violated;
(b)  ordering Defendant to pay civil money penalties pursuant to Exchange Act Section 21(d)(3)
[15 U.S.C. § 78u(d)(3)]; and (c) ordering any other and further relief the Court may deem just
and proper.
JURISDICTION AND VENUE
8. This Court has jurisdiction over this action pursuant to Exchange Act Section 27
[15 U.S.C. § 78aa].
9. Defendant, directly and indirectly, has made use of the means or instrumentalities
of interstate commerce or of the mails in connection with the transactions, acts, practices, and
courses of business alleged herein.
10. Venue lies in this District under Exchange Act Section 27 [15 U.S.C. § 78aa].
Defendant may be found in, is an inhabitant of, or transacts business in the Southern District of
New York, and certain of the acts, practices, transactions, and courses of business alleged in this
Complaint occurred within this District.  Notably, APPB is  headquartered in this District, a
member of APPB’s board of directors works for APPB in this District, and APPB offered its
products and securities for sale in this District.
DEFENDANT
11. APPB, incorporated in 2014 in Nevada, has its principal place of business in New
York, NY.  Until May 1, 2020, APPB had a class of common stock registered pursuant to
Section 12(g) of the Exchange Act.  Until that time, APPB was subject to the reporting
obligations found under Section 12(g) of the Exchange Act.  As of its last Form 10-Q, filed on

4
February 14, 2020, APPB had 14,292,956 shares of common stock outstanding.
OTHER RELEVANT INDIVIDUALS AND ENTITY
12. The   Director is a member of the board of directors of APPB and performs work
for APPB in New York, NY.
13. Essential Oil Company is a Nevada corporation with a principal place of
business of Beverly Hills, California.  The company’s website sells “vitamin essential oil
aromatherapy diffuser sticks.”  On April 11, 2020, a related entity was incorporated in Nevada.
That company’s website began offering a COVID-19 test for bulk sales at or before March 2020.
14. Essential Oil Executive is the sole officer of Essential Oil Company.  His
background is in acting and modeling.
FACTS
I.    BACKGROUND OF APPB
A.   APPB’s Business and Financial Condition
15. APPB’s Form 10-K for the year ended March 31, 2019, filed on July 1, 2019,
stated that APPB’s business focuses “on the development of science-driven Cannabinoid
therapeutics/biopharmaceuticals, and delivering high-quality CBD products as well as state -of-
the-art testing and analytics capabilities to our customers.”
II.   APPB  ISSUED MISLEADING PRESS RELEASES TO EXPLOIT THE COVID-19
PANDEMIC, INCLUDING A MATERIALLY MISLEADING PRESS RELEASE
ON MARCH 31, 2020.

A. The   March 25, 2020 Press Release
16. As consumer demand for products to combat COVID-19 grew, APPB announced
a pivot in its business from cannabinoid-related products to pandemic-related products.  First, on
March 25, 2020, APPB announced in a press release titled “[APPB] Announces Launch of . . .

5
Product Line to Combat Spread of COVID-19” that the company had “diverted manufacturing
resources to build products that will help battle the spread of the coronavirus (COVID-19).”  The
press release included a hyperlink to an APPB-affiliated online store that sold hand sanitizer and
other products.   The press release further stated that APPB “has formulated its sanitizing blends
according to the CDC guidelines to make them as effective as possible in killing harmful germs
and bacteria.”
17. APPB’s March 25, 2020 press release was misleading because APPB neither
diverted “manufacturing resources” nor “formulated its sanitizing blends” in connection with the
hand sanitizer it sold, but rather a third-party manufactured the hand sanitizer sold by APPB.
B. The   March 31, 2020 Press Release
18. On March 31, 2020, APPB announced in a press release titled “[APPB] Begins
Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19” that the
company had “begun shipping” a line of home kits for coronavirus detection, specifically that
“further to its recent March 25th, 2020 press release regarding the Company’s diversion of
production production [sic] capacity to product [sic] hand sanitizer, it has begun shipping
Coronavirus Test Kits (the ‘Kits’ or the ‘Tests’) in the United States.”
19. The press release stated, with emphasis supplied:
These Coronavirus Tests Kits are CE certified, accurate, affordable
and reliable results in under 15 minutes [sic]. . . .  This is an
expansion of products that will help battle the spread of the
coronavirus (“COVID-19”).

These CE certified Kits can be used for Homes, Schools,
Hospitals, Law Enforcement, Military, Public Servants or anyone
wanting immediate and private results.

The Home Test Kits can be found on the Company’s online
store. . . .

6
20. The March 31, 2020 press release was reviewed and approved by the Director.
C. The   Materially Misleading Nature of the March 31, 2020 Press Release
21. APPB’s March 31, 2020 press release was materially misleading in a number of
ways.  First, by stating that “further to its recent March 25th, 2020 press release regarding the
Company’s diversion of production production [sic] capacity to product [sic] hand sanitizer, it
has begun shipping Coronavirus Test Kits[,]” APPB misled the public by implying that APPB
had some role in the production of the test kits.  In fact, APPB had simply entered into an
agreement to purchase test kits from the Essential Oil Company, a company that prior to the
COVID-19 pandemic sold “vitamin essential oil aromatherapy diffuser sticks[,]” and whose sole
officer has a background in acting and modeling.  The Essential Oil Company in turn sourced the
test kits from a manufacturer in China.  APPB knew or was reckless in not knowing these
material facts, yet it misrepresented or did not disclose them.
22. Second, the March 31, 2020 press release claimed that it had “begun shipping”
the test kits, which were “Home Test Kits” offered to the “General Public” and that “can be used
for Homes . . . or anyone wanting immediate and private results.”  In fact, APPB had not begun
shipping the test kits and now claims it did not offer, sell or intend to sell the test kit for home or
private use, but rather APPB intended to screen potential purchasers only to allow purchases in
connection with use by nursing homes, schools, military, first responders, or in consultation with
a medical professional.  APPB knew or was reckless in not knowing these material facts, yet it
misrepresented or did not disclose them.
23. Third, APPB’s March 31, 2020 press release misleadingly failed to disclose that
the FDA had not approved or authorized the sale of any at-home test kits, despite the fact that
APPB knew that the test kits were subject to FDA review.  Just days earlier, the FDA announced

7
on its website on March 20, 2020 that no home-based coronavirus tests had been approved
(emphasis supplied):
[T]he agency is beginning to see unauthorized fraudulent test kits
that are being marketed to test for COVID-19 in the home.
We want to alert the American public that, at this time, the
FDA has not authorized any test that is available to purchase
for testing yourself at home for COVID-19. The FDA sees the
public health value in expanding the availability of COVID-19
testing through safe and accurate tests that may include home
collection, and we are actively working with test developers in this
space.

24. In a “Consumer Update” included in a March 24, 2020 “Coronavirus (COVID-19)
Update,” the FDA further emphasized that no home-based coronavirus tests have been
authorized, in a release entitled “Beware of Fraudulent Coronavirus Tests, Vaccines and
Treatments” (emphasis supplied):
The FDA has also seen unauthorized fraudulent test kits for
COVID-19 being sold online. Currently, the only way to be tested
for COVID-19 is to talk to your health care provider.
At this time, the FDA has not authorized any COVID-19 test to
be completely used and processed at home. The FDA has
authorized the first COVID-19 test for home collection of samples,
but those samples are to be sent to a laboratory for processing and
test reporting.

25. The FDA also posted a list of all approved coronavirus-related in vitro
(laboratory) test kits on its website, including the manufacturer or laboratory that produced the
test.   That list did not include APPB or the test kit it offered to sell, because the test kit was not
authorized by the FDA, which APPB also failed to disclose in its press release.
26. APPB knew or was reckless in not knowing that it was offering to sell a test kit
that was subject to FDA review but that had not been approved by the FDA for home use, yet
APPB did not disclose that material fact.  APPB has explained that prior to the March 31, 2020
press release, the Essential Oil Company Executive told the Director that the test kit offered by

8
APPB was approved by the FDA.  However, APPB conceded that it performed no further
diligence to confirm whether the test kit had been approved by the FDA.  Even a minimal
amount of diligence by APPB would have revealed that the test kit was not approved by the
FDA.
D. The   April 24    and 27  , 2020 Press Releases
27. On April 24, 2020, APPB issued a press release announcing that it had terminated
its agreement with its COVID-19 test supplier, the Essential Oil Company.  The release further
stated that:
while at the time of publication of the March 31, 2020 press
release, the [FDA] did not disallow use of the test kit for home use
without the administration of the test by a qualified medical
professional, subsequent to publication of the March 31, 2020
press release, by April 1, 2020, the FDA notified the supplier of
the test kit that home use of the test kit by a qualified medical
professional was not allowed.

28. While the April 24, 2020 press release attempted to correct the March 31, 2020
press release, that correction itself was misleading because the COVID-19 test kit offered for
sale by APPB was never authorized for home use, with or without the administration by a
qualified medical professional.
29. The April 24, 2020 press release also stated that “[o]n April 1, 2020, immediately
after the supplier of the test kit notified the Company that the FDA had informed it that the test
kit was not allowed for home use, the Company supplemented its March 31, 2020 press release
to remove reference to home use.”  That statement was misleading because the company never
“supplemented its March 31, 2020 press release.”  In fact, on April 27, 2020, APPB issued a
press release to correct that misstatement, stating that it “should have stated that the Company
revised its website (not supplemented the March 31, 2020 press release). . . .”

9
III.   APPB’S STOCK PRICE AFTER THE MARCH 31, 2010 PRESS RELEASE AND
SUBSEQUENT TRADING SUSPENSION

30.  After the materially misleading March 31, 2020 press release, APPB’s price and
volume both increased notably.  The press release was issued before the market opened on
March 31.  During trading on March 31, APPB’s stock price increased almost 80 percent from
the previous day (from $0.45 to $0.80), and its volume increased by a factor of 85 (136,300
shares sold, versus 1600 shares sold on the previous day).  From March 31, 2020 through April
7, 2020, APPB’s closing stock price ranged from $0.45 to $0.80, with an average trading volume
of 48,985 shares.  In contrast, from January 2, 2020 through March 30, 2020, APPB’s closing
stock price ranged from $0.24 to $0.69, with an average trading volume of 3,635 shares.
31. On April 13, 2020, the Commission suspended trading in APPB’s securities for
ten trading days, effective April 14, 2020.
CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder

32. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 31.
33. Defendant, directly or indirectly, singly or in concert, in connection with the
purchase or sale of securities and by the use of means or instrumentalities of interstate
commerce, or the mails, or the facilities of a national securities exchange, knowingly or
recklessly has (i) employed one or more devices, schemes, or artifices   to defraud, (ii) made one
or more untrue statements of a material fact or omitted to state one or more material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon other persons.

10
34. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert,
has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining APPB and its agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
Exchange Act Section 10(b) [15 U.S.C. §§ 78j(b)], and Rule 10b-5(b) thereunder [17 C.F.R.
§§ 240.10b-5(b)];
II.
Ordering Defendant to pay civil monetary penalties under Exchange Act Section 21(d)(3)
[15 U.S.C. § 78u(d)(3)]; and
III.
Granting any other and further relief this Court may deem just and proper.

11
Dated:  New York, New York
May 14, 2020
s/Marc P. Berger_______________
MARC P. BERGER
REGIONAL DIRECTOR
Lara S. Mehraban
Thomas P. Smith, Jr.
Dugan Bliss
Kristine M. Zaleskas
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
212-336-0971 (Bliss)
[email protected]

MARC P. BERGER  
REGIONAL DIRECTOR 
Lara S. Mehraban 
Thomas P. Smith, Jr. 
Dugan Bliss 
Kristine M. Zaleskas 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
212-336-0971 (Bliss)
[email protected]

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE 
COMMISSION, 

      Plaintiff, 

-against-

APPLIED BIOSCIENCES CORP.,  

Defendant. 

COMPLAINT 

20 Civ.  3729

JURY TRIAL DEMANDED 

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

Defendant Applied BioSciences Corp. (“APPB”), alleges as follows: 

SUMMARY 

1. Seeking to exploit the COVID-19 pandemic for profit, microcap company APPB

dramatically shifted its focus in late March 2020 from cannabinoid-based products to pandemic-

related products.  On March 25, 2020, as news about the COVID-19 pandemic dominated the 

public’s attention, APPB announced that it had pivoted its manufacturing resources to build 

products that would help battle the spread of COVID-19, including hand sanitizer.  Then, on 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 1 of 11



 2 

March 31, 2020, APPB issued a materially misleading press release in which it falsely claimed to 

be offering and shipping a COVID-19 home test kit to the general public for private use.   

2. Specifically, APPB announced in a headline to a press release that it had begun 

“Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19,” that the 

company had begun shipping a line of “Home Test Kits” to “be used for Homes . . . or anyone 

wanting immediate and private results” and touted results in under 15 minutes using only a 

finger prick.  In fact, APPB did not offer or intend to sell the test kit for home or private use by 

the general public, and it had not begun shipping any test kits.  Instead APPB intended to screen 

potential purchasers only to allow purchases in connection with use by nursing homes, schools, 

military, and first responders, in each case in consultation with a medical professional.  

Additionally, APPB’s press release was materially misleading because it failed to disclose that 

the FDA had not approved or authorized the sale of any COVID-19 at-home test kits.   

3. The false and misleading press release caused APPB’s stock price and trading 

volume to soar. 

VIOLATIONS 

4. By virtue of the foregoing conduct and as alleged further herein, Defendant APPB 

has violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

5. Unless Defendant is restrained and enjoined, it will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, 

and courses of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

6. The Commission brings this action pursuant to the authority conferred upon it by 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 2 of 11



 3 

Exchange Act Section 21(d) [15 U.S.C. § 78u(d)].  

7. The Commission seeks a final judgment: (a) permanently enjoining Defendant 

from violating the federal securities laws and rules this Complaint alleges it has violated; 

(b)  ordering Defendant to pay civil money penalties pursuant to Exchange Act Section 21(d)(3) 

[15 U.S.C. § 78u(d)(3)]; and (c) ordering any other and further relief the Court may deem just 

and proper.  

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Exchange Act Section 27 

[15 U.S.C. § 78aa].  

9. Defendant, directly and indirectly, has made use of the means or instrumentalities 

of interstate commerce or of the mails in connection with the transactions, acts, practices, and 

courses of business alleged herein. 

10. Venue lies in this District under Exchange Act Section 27 [15 U.S.C. § 78aa]. 

Defendant may be found in, is an inhabitant of, or transacts business in the Southern District of 

New York, and certain of the acts, practices, transactions, and courses of business alleged in this 

Complaint occurred within this District.  Notably, APPB is headquartered in this District, a 

member of APPB’s board of directors works for APPB in this District, and APPB offered its 

products and securities for sale in this District. 

DEFENDANT 

11. APPB, incorporated in 2014 in Nevada, has its principal place of business in New 

York, NY.  Until May 1, 2020, APPB had a class of common stock registered pursuant to 

Section 12(g) of the Exchange Act.  Until that time, APPB was subject to the reporting 

obligations found under Section 12(g) of the Exchange Act.  As of its last Form 10-Q, filed on 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 3 of 11



 4 

February 14, 2020, APPB had 14,292,956 shares of common stock outstanding. 

OTHER RELEVANT INDIVIDUALS AND ENTITY 

12. The Director is a member of the board of directors of APPB and performs work 

for APPB in New York, NY. 

13. Essential Oil Company is a Nevada corporation with a principal place of 

business of Beverly Hills, California.  The company’s website sells “vitamin essential oil 

aromatherapy diffuser sticks.”  On April 11, 2020, a related entity was incorporated in Nevada. 

That company’s website began offering a COVID-19 test for bulk sales at or before March 2020. 

14. Essential Oil Executive is the sole officer of Essential Oil Company.  His 

background is in acting and modeling. 

FACTS 

I. BACKGROUND OF APPB 

A. APPB’s Business and Financial Condition  

15. APPB’s Form 10-K for the year ended March 31, 2019, filed on July 1, 2019, 

stated that APPB’s business focuses “on the development of science-driven Cannabinoid 

therapeutics/biopharmaceuticals, and delivering high-quality CBD products as well as state -of-

the-art testing and analytics capabilities to our customers.”   

II. APPB ISSUED MISLEADING PRESS RELEASES TO EXPLOIT THE COVID-19 
PANDEMIC, INCLUDING A MATERIALLY MISLEADING PRESS RELEASE 
ON MARCH 31, 2020. 

 
A. The March 25, 2020 Press Release 

16. As consumer demand for products to combat COVID-19 grew, APPB announced 

a pivot in its business from cannabinoid-related products to pandemic-related products.  First, on 

March 25, 2020, APPB announced in a press release titled “[APPB] Announces Launch of . . . 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 4 of 11



 5 

Product Line to Combat Spread of COVID-19” that the company had “diverted manufacturing 

resources to build products that will help battle the spread of the coronavirus (COVID-19).”  The 

press release included a hyperlink to an APPB-affiliated online store that sold hand sanitizer and 

other products.   The press release further stated that APPB “has formulated its sanitizing blends 

according to the CDC guidelines to make them as effective as possible in killing harmful germs 

and bacteria.” 

17. APPB’s March 25, 2020 press release was misleading because APPB neither 

diverted “manufacturing resources” nor “formulated its sanitizing blends” in connection with the 

hand sanitizer it sold, but rather a third-party manufactured the hand sanitizer sold by APPB. 

B. The March 31, 2020 Press Release  

18. On March 31, 2020, APPB announced in a press release titled “[APPB] Begins 

Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19” that the 

company had “begun shipping” a line of home kits for coronavirus detection, specifically that 

“further to its recent March 25th, 2020 press release regarding the Company’s diversion of 

production production [sic] capacity to product [sic] hand sanitizer, it has begun shipping 

Coronavirus Test Kits (the ‘Kits’ or the ‘Tests’) in the United States.” 

19. The press release stated, with emphasis supplied: 

These Coronavirus Tests Kits are CE certified, accurate, affordable 
and reliable results in under 15 minutes [sic]. . . .  This is an 
expansion of products that will help battle the spread of the 
coronavirus (“COVID-19”). 
 
These CE certified Kits can be used for Homes, Schools, 
Hospitals, Law Enforcement, Military, Public Servants or anyone 
wanting immediate and private results.  
 
The Home Test Kits can be found on the Company’s online 
store. . . . 

 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 5 of 11



 6 

20. The March 31, 2020 press release was reviewed and approved by the Director. 

C. The Materially Misleading Nature of the March 31, 2020 Press Release  

21. APPB’s March 31, 2020 press release was materially misleading in a number of 

ways.  First, by stating that “further to its recent March 25th, 2020 press release regarding the 

Company’s diversion of production production [sic] capacity to product [sic] hand sanitizer, it 

has begun shipping Coronavirus Test Kits[,]” APPB misled the public by implying that APPB 

had some role in the production of the test kits.  In fact, APPB had simply entered into an 

agreement to purchase test kits from the Essential Oil Company, a company that prior to the 

COVID-19 pandemic sold “vitamin essential oil aromatherapy diffuser sticks[,]” and whose sole 

officer has a background in acting and modeling.  The Essential Oil Company in turn sourced the 

test kits from a manufacturer in China.  APPB knew or was reckless in not knowing these 

material facts, yet it misrepresented or did not disclose them. 

22. Second, the March 31, 2020 press release claimed that it had “begun shipping” 

the test kits, which were “Home Test Kits” offered to the “General Public” and that “can be used 

for Homes . . . or anyone wanting immediate and private results.”  In fact, APPB had not begun 

shipping the test kits and now claims it did not offer, sell or intend to sell the test kit for home or 

private use, but rather APPB intended to screen potential purchasers only to allow purchases in 

connection with use by nursing homes, schools, military, first responders, or in consultation with 

a medical professional.  APPB knew or was reckless in not knowing these material facts, yet it 

misrepresented or did not disclose them. 

23. Third, APPB’s March 31, 2020 press release misleadingly failed to disclose that 

the FDA had not approved or authorized the sale of any at-home test kits, despite the fact that 

APPB knew that the test kits were subject to FDA review.  Just days earlier, the FDA announced 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 6 of 11



 7 

on its website on March 20, 2020 that no home-based coronavirus tests had been approved 

(emphasis supplied):  

[T]he agency is beginning to see unauthorized fraudulent test kits 
that are being marketed to test for COVID-19 in the home. 
We want to alert the American public that, at this time, the 
FDA has not authorized any test that is available to purchase 
for testing yourself at home for COVID-19. The FDA sees the 
public health value in expanding the availability of COVID-19 
testing through safe and accurate tests that may include home 
collection, and we are actively working with test developers in this 
space.  
 

24. In a “Consumer Update” included in a March 24, 2020 “Coronavirus (COVID-19) 

Update,” the FDA further emphasized that no home-based coronavirus tests have been 

authorized, in a release entitled “Beware of Fraudulent Coronavirus Tests, Vaccines and 

Treatments” (emphasis supplied):  

The FDA has also seen unauthorized fraudulent test kits for 
COVID-19 being sold online. Currently, the only way to be tested 
for COVID-19 is to talk to your health care provider. 
At this time, the FDA has not authorized any COVID-19 test to 
be completely used and processed at home. The FDA has 
authorized the first COVID-19 test for home collection of samples, 
but those samples are to be sent to a laboratory for processing and 
test reporting. 
 

25. The FDA also posted a list of all approved coronavirus-related in vitro 

(laboratory) test kits on its website, including the manufacturer or laboratory that produced the 

test.   That list did not include APPB or the test kit it offered to sell, because the test kit was not 

authorized by the FDA, which APPB also failed to disclose in its press release.   

26. APPB knew or was reckless in not knowing that it was offering to sell a test kit 

that was subject to FDA review but that had not been approved by the FDA for home use, yet 

APPB did not disclose that material fact.  APPB has explained that prior to the March 31, 2020 

press release, the Essential Oil Company Executive told the Director that the test kit offered by 

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 8 

APPB was approved by the FDA.  However, APPB conceded that it performed no further 

diligence to confirm whether the test kit had been approved by the FDA.  Even a minimal 

amount of diligence by APPB would have revealed that the test kit was not approved by the 

FDA. 

D. The April 24 and 27, 2020 Press Releases 

27. On April 24, 2020, APPB issued a press release announcing that it had terminated 

its agreement with its COVID-19 test supplier, the Essential Oil Company.  The release further 

stated that:  

while at the time of publication of the March 31, 2020 press 
release, the [FDA] did not disallow use of the test kit for home use 
without the administration of the test by a qualified medical 
professional, subsequent to publication of the March 31, 2020 
press release, by April 1, 2020, the FDA notified the supplier of 
the test kit that home use of the test kit by a qualified medical 
professional was not allowed. 
 

28. While the April 24, 2020 press release attempted to correct the March 31, 2020 

press release, that correction itself was misleading because the COVID-19 test kit offered for 

sale by APPB was never authorized for home use, with or without the administration by a 

qualified medical professional.   

29. The April 24, 2020 press release also stated that “[o]n April 1, 2020, immediately 

after the supplier of the test kit notified the Company that the FDA had informed it that the test 

kit was not allowed for home use, the Company supplemented its March 31, 2020 press release 

to remove reference to home use.”  That statement was misleading because the company never 

“supplemented its March 31, 2020 press release.”  In fact, on April 27, 2020, APPB issued a 

press release to correct that misstatement, stating that it “should have stated that the Company 

revised its website (not supplemented the March 31, 2020 press release). . . .” 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 8 of 11



 9 

III. APPB’S STOCK PRICE AFTER THE MARCH 31, 2010 PRESS RELEASE AND 
SUBSEQUENT TRADING SUSPENSION 

 
30.  After the materially misleading March 31, 2020 press release, APPB’s price and 

volume both increased notably.  The press release was issued before the market opened on 

March 31.  During trading on March 31, APPB’s stock price increased almost 80 percent from 

the previous day (from $0.45 to $0.80), and its volume increased by a factor of 85 (136,300 

shares sold, versus 1600 shares sold on the previous day).  From March 31, 2020 through April 

7, 2020, APPB’s closing stock price ranged from $0.45 to $0.80, with an average trading volume 

of 48,985 shares.  In contrast, from January 2, 2020 through March 30, 2020, APPB’s closing 

stock price ranged from $0.24 to $0.69, with an average trading volume of 3,635 shares.   

31. On April 13, 2020, the Commission suspended trading in APPB’s securities for 

ten trading days, effective April 14, 2020.   

CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

 
32. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 31. 

33. Defendant, directly or indirectly, singly or in concert, in connection with the 

purchase or sale of securities and by the use of means or instrumentalities of interstate 

commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly has (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one 

or more untrue statements of a material fact or omitted to state one or more material facts 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon other persons. 

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 9 of 11



 10 

34. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining APPB and its agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Exchange Act Section 10(b) [15 U.S.C. §§ 78j(b)], and Rule 10b-5(b) thereunder [17 C.F.R. 

§§ 240.10b-5(b)];  

II. 

Ordering Defendant to pay civil monetary penalties under Exchange Act Section 21(d)(3) 

[15 U.S.C. § 78u(d)(3)]; and 

III. 

Granting any other and further relief this Court may deem just and proper. 

 
 
 
 
  

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 11 

Dated: New York, New York 
May 14, 2020 

s/Marc P. Berger_______________   
MARC P. BERGER 
REGIONAL DIRECTOR  
Lara S. Mehraban 
Thomas P. Smith, Jr. 
Dugan Bliss 
Kristine M. Zaleskas 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
212-336-0971 (Bliss) 
[email protected] 
  

Case 1:20-cv-03729   Document 1   Filed 05/14/20   Page 11 of 11


	Marc P. Berger
	Regional Director
	Lara S. Mehraban
	Thomas P. Smith, Jr.
	Dugan Bliss
	Kristine M. Zaleskas
	Attorneys for Plaintiff
	SECURITIES AND EXCHANGE COMMISSION
	New York Regional Office
	Brookfield Place
	200 Vesey Street, Suite 400
	New York, New York 10281-1022
	212-336-0971 (Bliss)
	[email protected]
	Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against Defendant Applied BioSciences Corp. (“APPB”), alleges as follows:
	SUMMARY
	1. Seeking to exploit the COVID-19 pandemic for profit, microcap company APPB dramatically shifted its focus in late March 2020 from cannabinoid-based products to pandemic-related products.  On March 25, 2020, as news about the COVID-19 pandemic domin...
	2. Specifically, APPB announced in a headline to a press release that it had begun “Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19,” that the company had begun shipping a line of “Home Test Kits” to “be used for Homes...
	3. The false and misleading press release caused APPB’s stock price and trading volume to soar.
	VIOLATIONS
	4. By virtue of the foregoing conduct and as alleged further herein, Defendant APPB has violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
	5. Unless Defendant is restrained and enjoined, it will engage in the acts, practices, transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and courses of business of similar type and object.
	NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
	6. The Commission brings this action pursuant to the authority conferred upon it by Exchange Act Section 21(d) [15 U.S.C. § 78u(d)].
	7. The Commission seeks a final judgment: (a) permanently enjoining Defendant from violating the federal securities laws and rules this Complaint alleges it has violated; (b)  ordering Defendant to pay civil money penalties pursuant to Exchange Act Se...
	JURISDICTION AND VENUE
	8. This Court has jurisdiction over this action pursuant to Exchange Act Section 27 [15 U.S.C. § 78aa].
	9. Defendant, directly and indirectly, has made use of the means or instrumentalities of interstate commerce or of the mails in connection with the transactions, acts, practices, and courses of business alleged herein.
	10. Venue lies in this District under Exchange Act Section 27 [15 U.S.C. § 78aa]. Defendant may be found in, is an inhabitant of, or transacts business in the Southern District of New York, and certain of the acts, practices, transactions, and courses...
	DEFENDANT
	11. APPB, incorporated in 2014 in Nevada, has its principal place of business in New York, NY.  Until May 1, 2020, APPB had a class of common stock registered pursuant to Section 12(g) of the Exchange Act.  Until that time, APPB was subject to the rep...
	OTHER RELEVANT INDIVIDUALS AND ENTITY
	12. The Director is a member of the board of directors of APPB and performs work for APPB in New York, NY.
	13. Essential Oil Company is a Nevada corporation with a principal place of business of Beverly Hills, California.  The company’s website sells “vitamin essential oil aromatherapy diffuser sticks.”  On April 11, 2020, a related entity was incorporated...
	14. Essential Oil Executive is the sole officer of Essential Oil Company.  His background is in acting and modeling.
	A. APPB’s Business and Financial Condition
	15. APPB’s Form 10-K for the year ended March 31, 2019, filed on July 1, 2019, stated that APPB’s business focuses “on the development of science-driven Cannabinoid therapeutics/biopharmaceuticals, and delivering high-quality CBD products as well as s...
	II. APPB ISSUED MISLEADING PRESS RELEASES TO EXPLOIT THE COVID-19 PANDEMIC, INCLUDING A MATERIALLY misleading press release ON MARCH 31, 2020.
	A. The March 25, 2020 Press Release
	16. As consumer demand for products to combat COVID-19 grew, APPB announced a pivot in its business from cannabinoid-related products to pandemic-related products.  First, on March 25, 2020, APPB announced in a press release titled “[APPB] Announces L...
	17. APPB’s March 25, 2020 press release was misleading because APPB neither diverted “manufacturing resources” nor “formulated its sanitizing blends” in connection with the hand sanitizer it sold, but rather a third-party manufactured the hand sanitiz...
	B. The March 31, 2020 Press Release
	18. On March 31, 2020, APPB announced in a press release titled “[APPB] Begins Offering Coronavirus Test Kit to the General Public to Combat Spread of COVID-19” that the company had “begun shipping” a line of home kits for coronavirus detection, speci...
	19. The press release stated, with emphasis supplied:
	These Coronavirus Tests Kits are CE certified, accurate, affordable and reliable results in under 15 minutes [sic]. . . .  This is an expansion of products that will help battle the spread of the coronavirus (“COVID-19”).
	These CE certified Kits can be used for Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results.
	The Home Test Kits can be found on the Company’s online
	store. . . .
	20. The March 31, 2020 press release was reviewed and approved by the Director.
	C. The Materially Misleading Nature of the March 31, 2020 Press Release
	21. APPB’s March 31, 2020 press release was materially misleading in a number of ways.  First, by stating that “further to its recent March 25th, 2020 press release regarding the Company’s diversion of production production [sic] capacity to product [...
	22. Second, the March 31, 2020 press release claimed that it had “begun shipping” the test kits, which were “Home Test Kits” offered to the “General Public” and that “can be used for Homes . . . or anyone wanting immediate and private results.”  In fa...
	23. Third, APPB’s March 31, 2020 press release misleadingly failed to disclose that the FDA had not approved or authorized the sale of any at-home test kits, despite the fact that APPB knew that the test kits were subject to FDA review.  Just days ear...
	[T]he agency is beginning to see unauthorized fraudulent test kits that are being marketed to test for COVID-19 in the home.
	We want to alert the American public that, at this time, the FDA has not authorized any test that is available to purchase for testing yourself at home for COVID-19. The FDA sees the public health value in expanding the availability of COVID-19 testin...
	24. In a “Consumer Update” included in a March 24, 2020 “Coronavirus (COVID-19) Update,” the FDA further emphasized that no home-based coronavirus tests have been authorized, in a release entitled “Beware of Fraudulent Coronavirus Tests, Vaccines and ...
	25. The FDA also posted a list of all approved coronavirus-related in vitro (laboratory) test kits on its website, including the manufacturer or laboratory that produced the test.   That list did not include APPB or the test kit it offered to sell, be...
	26. APPB knew or was reckless in not knowing that it was offering to sell a test kit that was subject to FDA review but that had not been approved by the FDA for home use, yet APPB did not disclose that material fact.  APPB has explained that prior to...
	D. The April 24 and 27, 2020 Press Releases
	27. On April 24, 2020, APPB issued a press release announcing that it had terminated its agreement with its COVID-19 test supplier, the Essential Oil Company.  The release further stated that:
	while at the time of publication of the March 31, 2020 press release, the [FDA] did not disallow use of the test kit for home use without the administration of the test by a qualified medical professional, subsequent to publication of the March 31, 20...
	28. While the April 24, 2020 press release attempted to correct the March 31, 2020 press release, that correction itself was misleading because the COVID-19 test kit offered for sale by APPB was never authorized for home use, with or without the admin...
	29. The April 24, 2020 press release also stated that “[o]n April 1, 2020, immediately after the supplier of the test kit notified the Company that the FDA had informed it that the test kit was not allowed for home use, the Company supplemented its Ma...
	III. APPB’S Stock Price After The MARCH 31, 2010 Press Release AND SUBSEQUENT TRADING SUSPENSION
	30.  After the materially misleading March 31, 2020 press release, APPB’s price and volume both increased notably.  The press release was issued before the market opened on March 31.  During trading on March 31, APPB’s stock price increased almost 80 ...
	31. On April 13, 2020, the Commission suspended trading in APPB’s securities for ten trading days, effective April 14, 2020.
	Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
	32. The Commission re-alleges and incorporates by reference here the allegations in paragraphs 1 through 31.
	33. Defendant, directly or indirectly, singly or in concert, in connection with the purchase or sale of securities and by the use of means or instrumentalities of interstate commerce, or the mails, or the facilities of a national securities exchange, ...
	34. By reason of the foregoing, Defendant, directly or indirectly, singly or in concert, has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
	PRAYER FOR RELIEF
	Dated: New York, New York
	Lara S. Mehraban
	Thomas P. Smith, Jr.
	Dugan Bliss
	Kristine M. Zaleskas
	Attorneys for Plaintiff
	SECURITIES AND EXCHANGE COMMISSION
	New York Regional Office
	Brookfield Place
	200 Vesey Street, Suite 400
	New York, New York 10281-1022
	[email protected]