What changed in this filing

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Item 1A. Risk Factors

2023-03-30 compared with 2022-03-31 · 455 added, 539 removed, 1490 unchanged (40% of the section changed)

Related to Our Business, Financial Condition and Capital Requirements

report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2022

contains an explanatory paragraph relating to our ability to continue as a going concern.

auditor’s opinion on our audited financial statements for the year ended December 31, 2022 includes an explanatory paragraph stating

that the Company does not have revenue generating activities and is dependent on additional financing to fund operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

While we believe that we will be able to raise the capital

we need to continue our operations, there can be no assurances that we will be successful in these efforts or will be able to resolve

our liquidity issues or eliminate our operating losses.

If we are unable to obtain sufficient funding, we would need to significantly

reduce our operating plans and curtail some or all of our product development activities.

Accordingly, our business, prospects, financial

condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.

we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue

as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms

are a clinical-stage pharmaceutical company with a limited operating history.

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Our net loss was $24.2 million for the year ended December

31, 2022 and $29.1 million for the year ended December 31, 2021.

As of December 31, 2022, we had an accumulated deficit of $110.9 million.

We expect to continue to incur significant losses

for the foreseeable future as we continue our research and development of, and seek regulatory approvals for, our product candidates.

We expect to continue to incur significant losses for the foreseeable future as we continue our research and development of, and seek

regulatory approvals for, our product candidates.

we continue to suffer losses as we have since inception, investors may not receive any return on their investment and may lose their

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Other unanticipated

costs may arise in the course of our development efforts.

If we are able to obtain marketing approval for product candidates that we

develop, we would require significant additional amounts of funding in order to launch and commercialize such product candidates.

cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product

candidate we develop and we may require substantial additional funding to complete the development and commercialization of our product

costs may arise during our development efforts.

If we can obtain marketing approval for product candidates that we develop, we would

require significant additional amounts of funding to launch and commercialize such product candidates.

We cannot reasonably estimate

the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop and we

will require substantial additional funding to complete the development and commercialization of our product candidates.

future need for additional funding depends on many factors, including:

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ability to establish collaboration arrangements for the development of our product candidates on favorable terms, if at all;

headcount growth and associated costs as we expand our research and development and establishes a commercial infrastructure;

on financing, our headcount growth and associated costs as we expand our research and development and establishes a commercial infrastructure;

costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including

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believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements

through the third quarter of 2022, while continuing to advance our main product candidates, such as PF614 and PF614 MPAR™, through

clinical development.

Our estimate may prove to be wrong, and we could use our available capital resources, if any, sooner than we currently

Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster

than we currently anticipate, and we may need to seek additional funds sooner than planned.

To the extent this occurs, it could impose

significant dilution on our stockholders.

into the second quarter of 2023, while advancing our main product candidates such as, PF614 and PF614 MPAR™ and nafamostat through

their respective next phases of clinical development.

Our estimate may prove to be wrong, and we could use our available capital resources,

if any, sooner than we currently expect.

Further, changing circumstances, some of which may be beyond our control, could cause us to

consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

extent this occurs, it could impose significant dilution on our stockholders.

may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds

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reduce the scope of, suspend or eliminate one or more of our platforms, programs, planned clinical trials or future commercialization

may incur additional dilution upon repayment of the 2021 Notes with common stock.

the terms of the SPA, we are permitted to repay principal and interest on the 2021 Notes by issuing additional shares of common stock.

In addition, the conversion price of the 2021 Notes, and the exercise price of the warrants issued therewith, are subject to downward

revision in the event we make certain issuances of our common stock at prices below the conversion price.

We have registered shares of

common stock under a Registration Statement on Form S-1 in the event either of these events occur.

In such case, stockholders will have

dilution in amounts exceeding the straight conversion of the 2021 Notes or, with respect to the warrants issued therewith, we

will receive a reduced level of proceeds from the exercise of the warrants.

price of our common stock on the Nasdaq and Public Warrants on the OTC Pink Open Market may be volatile.

price of our common stock on the Nasdaq and our Public Warrants on the OTC Pink Open Market may fluctuate due to a variety of factors,

may incur additional dilution upon repayment of the Investor Notes with common stock.

the terms of the Securities Purchase Agreement, we are permitted to repay principal and interest on the Investor Notes by issuing additional

shares of common stock.

In addition, the conversion price of the Investor Notes, and the exercise price of the Prior Warrants, are subject

to downward revision in the event we make certain issuances of our common stock at prices below the conversion price.

The conversion

price of the 2022 Notes and exercise price of the Prior Warrants have been reset, but not below a price of $2.006 for the Prior Warrants

issued in 2022, $15.60 for the Prior Warrants issued in 2021 and $2.006 for the 2022 Notes (temporarily reduced for the 2022 Notes to

$0.7512 for the period from January 12, 2023 until May 12, 2023).

In such case, stockholders will have dilution in amounts exceeding

the straight conversion of the Investor Notes or, with respect to the Prior Warrants, the Company will receive a reduced level of proceeds

from the exercise of the Prior Warrants.

Please see the discussion of conversion and exercise prices under “ Description of Capital

Stock—Convertible Promissory Notes” and “—Warrants.”

price of our common stock on Nasdaq and Public Warrants on the OTC Pink Open Market may be volatile.

price of our common stock on Nasdaq and our Public Warrants on the OTC Pink Open Market may fluctuate due to a variety of factors, including:

in the industries in which we and our customers operate;

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harm our profitability and reputation.

proceeds under the GEM Agreement may be less than anticipated.

The issuances of common stock pursuant to the GEM Agreement would result

in dilution of existing stockholders and could have a negative impact on the market price of our common stock.

Additionally, the negative

covenants under the GEM Agreement are onerous and any breach by us thereunder may entitle GEM Global and GYBL to indemnification payments,

reimbursements of legal and other expenses and other compensation thereby diverting our time and resources.

are entitled to draw down up to $60.0 million of gross proceeds from GEM Global in exchange for shares of our common stock at a price

we are unable to regain compliance with the listing standards of Nasdaq, our common stock may become delisted, which could have a material

adverse effect on our ability to raise funding, which could negatively impact our business, capital and financial condition.

are not in compliance with Nasdaq listing standards for our common stock and have been granted an exception through June 12, 2023 to

meet a number of obligations before June 12, 2023 that have been imposed by Nasdaq and to meet all listing requirements no later than

June 12, 2023.

If we do not meet all of those obligations by the deadlines imposed, our common stock could be delisted by Nasdaq.

delisting occurs, it could be more difficult to buy or sell our securities and to obtain accurate quotations, and the price of our common

stock could suffer a material decline.

In addition, a delisting would impair our ability to raise capital through the public markets,

could deter broker-dealers from making a market in or otherwise seeking or generating interest in our securities and might deter certain

institutions and persons from investing in our securities.

Any of these could negatively impact our financial condition or our ability

to operate our business and maintain adequate capital.

may be no proceeds under the GEM Agreement or proceeds may be less than anticipated.

The issuances of common stock pursuant to the GEM

Agreement would result in dilution of existing stockholders and could have a negative impact on the market price of our common stock.

Additionally, the negative covenants under the GEM Agreement are onerous and any breach by us thereunder may entitle GEM Global and GYBL

to indemnification payments, reimbursements of legal and other expenses and other compensation thereby diverting our time and resources.

we have raised capital from other sources, we have not used the GEM Facility to date.

Under a Share Purchase Agreement between us, GEM

Global Yield LLC SCS (“ GEM Global ”) and GEM Yield Bahamas Limited (“ GYBL ”), dated as of December

29, 2020, including a Registration Rights Agreement between the same parties and dated as of the same date (the “ GEM Agreement ”),

we are entitled to draw down up to $60 million of gross proceeds from GEM Global in exchange for shares of our common stock at a price

equal to 90% of the average closing bid price of the shares of our common stock on Nasdaq for a 30 day period, subject to meeting the

terms and conditions of the GEM Agreement.

This share subscription facility is available for a period of 36 months from the closing date

of the Merger.

Please see the section entitled “ Business ” for additional information.

The limitations on the amount

and frequency of the draws that we can make under the GEM facility, which include the requirement that (i) there be an effective registration

statement and (ii) size restrictions relating to our trading volume, may affect the ability to draw under the GEM Agreement and result

in proceeds that are less than anticipated.

In addition, while the 2021 Notes are outstanding, any draws under the GEM facility would

require approval from the convertible note holders.

occurrence of the Merger triggered (i) payment of a commitment fee of $1.2 million to GEM Global payable in either our common stock or

cash and (ii) the issuance of a warrant granting GYBL the right to purchase 1,106,108 shares of our common stock, at a strike price per

share of $10.01, the closing bid price for such common shares on the closing date of the Merger.

This equity line facility is available for a period of 36 months from the closing date of

However, we have not been able to make use of the GEM Facility and we may not be able to do so before it expires.

see the section entitled “ Business ” for additional information.

The limitations on the amount and frequency of the

draws that we can make pursuant to the GEM Agreement, which include the requirement that (i) there be an effective registration statement

and (ii) size restrictions relating to our trading volume, may affect the ability to draw under the GEM Agreement and result in proceeds

that are less than anticipated.

addition, the occurrence of the Merger triggered (i) payment of a commitment fee of $1.2 million to GEM Global payable in either our

common stock or cash, of which all has been satisfied with 46,062 shares of common stock transferred from related parties in July

2022 and an additional 533,334 shares of common stock issued in January 2023 and (ii) the issuance of a warrant granting GYBL the

right to purchase 55,306 shares of our common stock, at a strike price per share of $0.7512 as of January 12, 2023.

The number of shares underlying the

warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split,

stock dividend, reverse stock splits and certain issuances of additional shares of our common stock.

warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock

split, stock dividend, reverse stock splits and certain issuances of additional shares of our common stock.

issuances of shares at discount under the GEM Agreement and the anti-dilution protection granted to GEM Global in connection with issuances

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price of our common stock and our ability to obtain equity financing.

An adjustment in the price of the GEM Warrant to $4.50 occurred

in connection with our offering of the 2021 Notes.

In addition, terms of the 2021 Notes currently limit our ability to draw on

the GEM facility while the 2021 Notes remain outstanding.

addition, the negative covenants under the GEM Agreement are onerous and any breach thereof may trigger indemnification, reimbursement

of losses and other liability for us thereby diverting our time and resources.

additional capital could cause dilution to our stockholders, adversely affect the market price of our common stock, restrict our operations

or require us to relinquish rights to our technologies or product candidates.

such time, if ever, as we can generate substantial revenues, we will be required to obtain further funding through public or private

equity offerings, debt financings, collaborations and licensing arrangements or other sources, which may dilute our stockholders or restrict

our operating activities.

Adequate additional financing may not be available to us on acceptable terms, or at all.

To the extent that

we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the

terms may include liquidation or other preferences that adversely affect your rights as a stockholder.

addition, we may sell securities in the public or private equity markets if and when conditions are favorable, or at prices per share

below the current market price of our common stock, even if we do not have an immediate need for additional capital at that time.

of substantial amounts of shares of our common stock, or the perception that such sales could occur, could adversely affect the prevailing

market price of our shares and our ability to raise capital.

We may issue additional shares of common stock in future financing transactions

or as incentive compensation for our executive management and other key personnel, consultants and advisors.

Issuing any equity securities

would be dilutive to the equity interests represented by our then-outstanding shares of common stock.

Moreover, sales of substantial

amounts of shares in the public market, or the perception that such sales could occur, may adversely affect the prevailing market price

of our common stock and make it more difficult for us to raise additional capital.

financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability

to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions,

selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments, declaring dividends or

encumbering our assets to secure future indebtedness.

Such restrictions could adversely impact our ability to conduct our operations

and execute our business plan.

we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations, strategic alliances or

marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or

intellectual property, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit,

reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates

that we would otherwise prefer to develop and market ourselves.

To date, we have not used the GEM facility to raise capital.

business is highly dependent on the success of our product candidates.

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years, is dependent on our ability to successfully develop, obtain regulatory approval for and commercialize one or more of our product

A Phase 1b study of PF614 was initiated in 2021, and Part A of the study completed enrollment in December 2021.

trial was also initiated for PF614-MPAR™ in December 2021.

All of our other product candidates are in earlier stages of development

and will require substantial additional investment for manufacturing, preclinical testing, clinical development, regulatory review and

approval in one or more jurisdictions.

If any of our product candidates encounter safety or efficacy problems, development delays or

regulatory issues or other problems, our development plans and business would be materially harmed.

A Phase 1b study of PF614 was initiated in 2021.

Part A of the study completed enrollment in December 2021 and Part B was

completed mid-year 2022.

A Phase 1 trial was also initiated for PF614-MPAR™ in December 2021 and the clinical portion of Part A

of that trial was completed in December 2022.

All of our other product candidates are in earlier stages of development and will require

substantial additional investment for manufacturing, preclinical testing, clinical development, regulatory review and approval in one

or more jurisdictions.

If any of our product candidates encounter safety or efficacy problems, development delays or regulatory issues

or other problems, our development plans and business would be materially harmed.

may not have the financial resources to continue development of our product candidates.

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commercialization of PF614 or any other product candidate that we may discover, in-license, develop or acquire in the future.

even if we obtain regulatory approval for P614, we will still need to develop a commercial organization, or collaborate with third parties

even if we obtain regulatory approval for PF614, we will still need to develop a commercial organization, or collaborate with third parties

for the commercialization of PF614, establish commercially viable pricing and obtain approval for adequate reimbursement from third-party

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product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

the future, we may also seek to in-license or acquire product candidates or the underlying technology.

The process of proposing, negotiating

and implementing a license or acquisition is lengthy and complex.

Other companies, including many with substantially greater financial,

marketing and sales resources, may compete with us for the license or acquisition of product candidates.

We have limited resources to

identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into our

current infrastructure.

Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed,

or we may fail to realize the anticipated benefits of such efforts.

We may not be able to acquire the rights to additional product candidates

on terms that we find acceptable, or at all.

addition, future acquisitions may entail numerous operational and financial risks, including:

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to motivate key employees of any acquired businesses.

we are unsuccessful in identifying and developing additional product candidates, either through internal development or licensing or

acquisition from third parties, our potential for growth and achieving our strategic objectives may be impaired.

we are unsuccessful in identifying and developing additional product candidates, either through internal development or acquisition from

third parties, our potential for growth and achieving our strategic objectives may be impaired.

we do not achieve our projected development and commercialization goals within the timeframes we expect, the development and commercialization

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specialty pharmaceutical companies and biotechnology companies worldwide.

There are a number of large pharmaceutical and biotechnology

companies that currently market and sell drugs or are pursuing the development of product candidates for the treatment of the indications

that we are pursuing.

There are several large pharmaceutical and biotechnology companies

that currently market and sell drugs or are pursuing the development of product candidates for the treatment of the indications that

we are pursuing.

These companies include, but are not limited to, Purdue Pharma, LP, and Collegium Pharmaceutical, Inc.

competitors include not only pharmaceutical companies but also academic institutions, government agencies and other public and private

research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development,

manufacturing and commercialization.

Potential competitors

include companies developing novel non-opioid pain drug candidates such as pharmaceutical companies and academic institutions, government

agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative

arrangements for research, development, manufacturing and commercialization.

believe that a significant number of product candidates are currently under development for the same indications that we are currently

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We compete for key personnel with other companies, healthcare institutions, academic institutions, government entities and other organizations.

We do not have written employment agreements with our Chief Executive Officer.

Our ability to maintain and expand our business may be

impaired if we are unable to retain our current key personnel or hire or retain other qualified personnel in the future.

currently only have six full-time employees and six consultants and we expect to add additional employees.

Our future success also depends

on our ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical and regulatory

Our ability to maintain and expand our business may be impaired if we are unable to retain our current key personnel or hire or retain

other qualified personnel in the future.

currently only have seven full-time employees and five consultants and we expect to add additional employees.

Our future success also

depends on our ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical

and regulatory personnel.

for such individuals, particularly in the United States, is intense, and we may not be able to hire sufficient personnel to support our

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Activities subject to these laws also involve the improper use or misrepresentation

of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

It is not always possible to identify and deter third-party misconduct, and the precautions we take to detect and prevent this activity

may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other

actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

If any such actions are instituted against

us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business

of information obtained during clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

not always possible to identify and deter third-party misconduct, and the precautions we take to detect and prevent this activity may

not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions

or lawsuits stemming from a failure to be in compliance with such laws or regulations.

If any such actions are instituted against us,

and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business

and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines,

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future research and development programs, we may apply for additional grant funding from these or similar governmental agencies in the

However, funding by these, and other, governmental agencies may be significantly reduced or eliminated in the future for a number

However, funding by these, and other, governmental agencies may be significantly reduced or eliminated in the future for several

For example, some programs are subject to a yearly appropriations process in Congress.

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of our product candidates and the introduction of new products.

expect to expand our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

expect to experience growth in the number of our employees and the scope of our operations.

To manage these growth activities, we must

continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and

train additional qualified personnel.

Our management may need to devote a significant amount of their attention to managing these growth

Due to our limited financial resources and the limited experience of our management team in managing a company with such

anticipated growth, we may not be able to effectively manage the expansion of our operations, retain key employees, or identify, recruit

on financing, we expect to expand our organization, and as a result, we may encounter difficulties in managing our growth, which could

disrupt our operations.

on financing, we expect to experience growth in the number of our employees and the scope of our operations.

To manage these growth activities,

we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit

and train additional qualified personnel.

Our management may need to devote a significant amount of their attention to managing these

growth activities.

Due to our limited financial resources and the limited experience of our management team in managing a company with

such anticipated growth, we may not be able to effectively manage the expansion of our operations, retain key employees, or identify,

recruit and train additional qualified personnel.

Our inability to manage the expansion of our operations effectively may result in weaknesses

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business strategy, including the successful commercialization of our product candidates.

The failure of financial

institutions or transactional counterparties could adversely affect our current and projected business operations and our financial condition

and results of operations.

8, 2023, Silvergate Bank announced that it would self liquidate.

On March 10, 2023, Silicon Valley Bank was closed by the California

Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation (“FDIC”) appointed as receiver.

On March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services, with the FDIC appointed as

The standard deposit insurance amount is up to $250,000 per depositor, per insured bank, for specified account categories.

Although we do not have any funds deposited with the above-named banks, we regularly maintain cash balances with other financial institutions

in excess of the FDIC insurance limit.

A failure of a depository institution to return deposits could impact access to our invested cash

or cash equivalents and could adversely impact our liquidity and financial performance.

Related to Our Dependence on Third-Party Providers

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We have entered into a Manufacturing Agreement (the “ Recro

Agreement ”) with Recro Gainesville LLC (“ Recro ”) for the production of PF614 capsules and other materials

and services with respect to our clinical studies.

In addition, we do not have the capability to encapsulate any of our product candidates

as a finished product for commercial distribution.

As a result, we expect to be obligated to rely on contract manufacturers, like Recro,

if and when any of our product candidates are approved for commercialization.

In the event that Recro is unable to perform its obligations

under the Recro Agreement, we may be unable to replace the Recro Agreement on terms as favorable to us.

We have not entered into an agreement

with any contract manufacturers for commercial supply and may not be able to engage a contract manufacturer for commercial supply of

any of our product candidates on favorable terms to us, or at all.

Agreement ”) with Recro Gainesville LLC (“ Recro ”) now known as Societal CDMO, (“ Societal ”)

for the production of PF614 capsules and other materials and services with respect to our clinical studies.

In addition, we do not have

the capability to encapsulate any of our product candidates as a finished product for commercial distribution.

As a result, we expect

to be obligated to rely on contract manufacturers, like Societal , if and when any of our product candidates are approved for commercialization.

In the event that Societal is unable to perform its obligations under the Recro Agreement, we may be unable to replace the Societal

Agreement on terms as favorable to us.

We have not entered into an agreement with any contract manufacturers for commercial supply

and may not be able to engage a contract manufacturer for commercial supply of any of our product candidates on favorable terms to us,

processes used by our contract manufacturers to manufacture our product candidates must be approved by the FDA or comparable foreign

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and record keeping relating to our product candidates.

If our contract manufacturers, including Recro, do not successfully manufacture

material that conforms to our specifications and the strict regulatory requirements of the FDA or others, our product candidates may

not be approved.

If these facilities do not maintain a compliance status acceptable to the FDA, Drug Enforcement Agency, or DEA, or comparable

regulatory authorities, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop,

obtain regulatory approval for or market our product candidates, if approved.

contract manufacturers, including Recro, will be subject to ongoing periodic unannounced inspections by the FDA, DEA and corresponding

If our contract manufacturers, including Societal , do not successfully

manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, our product candidates

may not be approved.

If these facilities do not maintain a compliance status acceptable to the FDA, Drug Enforcement Agency, or DEA,

or comparable regulatory authorities, we may need to find alternative manufacturing facilities, which would significantly impact our

ability to develop, obtain regulatory approval for or market our product candidates, if approved.

contract manufacturers, including Societal , will be subject to ongoing periodic unannounced inspections by the FDA, DEA and corresponding

state and foreign agencies for compliance with cGMPs, security, recordkeeping and similar regulatory requirements.

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standards could adversely affect our ability to develop, obtain regulatory approval for or market any of our product candidates.

for any reason, these third parties, including Recro, are unable or unwilling to perform, we may not be able to terminate our agreements

with them, and we may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with them and

we cannot be certain that any such third parties will have the manufacturing capacity to meet future requirements.

If these manufacturers

or any alternate manufacturer of finished drug product experiences any significant difficulties in its respective manufacturing processes

for our ingredients or finished products or should cease doing business with us, we could experience significant interruptions in the

supply of any of our product candidates or may not be able to create a supply of our product candidates at all.

Our inability to coordinate

the efforts of our third-party manufacturing partners, or the lack of capacity available at our third-party manufacturing partners, could

impair our ability to supply any of our product candidates at required levels.

Because of the significant regulatory requirements that

we would need to satisfy in order to qualify a new bulk or finished product manufacturer, if we face these or other difficulties with

our current manufacturing partners, we could experience significant interruptions in the supply of any of our product candidates if we

decide to transfer the manufacture of any of our product candidates to one or more alternative manufacturers in an effort to deal with

the difficulties.

manufacturing problem or the loss of a contract manufacturer, including Recro, could be disruptive to our operations and delay development

of our investigational products.

Additionally, we rely on third parties to supply the raw materials needed to manufacture our potential

Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced

control over production costs, delivery schedules, reliability and quality.

Any unanticipated disruption to a future contract manufacturer

caused by problems at suppliers could delay shipment of any of our investigational products and, if approved, product candidates.

for any reason, these third parties, including Societal , are unable or unwilling to perform, we may not be able to terminate our

agreements with them, and we may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with

them and we cannot be certain that any such third parties will have the manufacturing capacity to meet future requirements.

manufacturers or any alternate manufacturer of finished drug product experiences any significant difficulties in its respective manufacturing

processes for our ingredients or finished products or should cease doing business with us, we could experience significant interruptions

in the supply of any of our product candidates or may not be able to create a supply of our product candidates at all.

Our inability

to coordinate the efforts of our third-party manufacturing partners, or the lack of capacity available at our third-party manufacturing

partners, could impair our ability to supply any of our product candidates at required levels.

Because of the significant regulatory

requirements that we would need to satisfy in order to qualify a new bulk or finished product manufacturer, if we face these or other

difficulties with our current manufacturing partners, we could experience significant interruptions in the supply of any of our product

candidates if we decide to transfer the manufacture of any of our product candidates to one or more alternative manufacturers in an effort

to deal with the difficulties.

manufacturing problem or the loss of a contract manufacturer, including Societal , could be disruptive to our operations and delay

development of our investigational products.

Additionally, we rely on third parties to supply the raw materials needed to manufacture

our potential products.

Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials

and reduced control over production costs, delivery schedules, reliability and quality.

Any unanticipated disruption to a future contract

manufacturer caused by problems at suppliers could delay shipment of any of our investigational products and, if approved, product candidates.

cannot guarantee that our future manufacturing and supply partners will be able to reduce the costs of commercial scale manufacturing

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and approved.

FDA has the authority to grant an Emergency Use Authorization (“ EUA ”) to allow unapproved medical products to be used

in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions when, based on the totality of scientific

evidence, there is evidence of effectiveness of the medical product, and there are no adequate, approved, and available alternatives.

Based on the outcomes of our clinical testing for nafamostat, Ensysce expects to apply for an EUA for use against coronaviral infections,

which would permit us to commercialize nafamostat prior to FDA approval of an NDA.

However, commercialization under an EUA is permitted

only during the period of time that FDA determines that the statutory criteria for EUA are met, meaning that we would be required to

obtain NDA approval to continue marketing the product.

Furthermore, the FDA may revoke an EUA based on a determination that the product

no longer satisfies the criteria for issuance of an EUA—for example, if there is no longer evidence of effectiveness of the product

or there are other adequate, approved alternatives.

Accordingly, we cannot predict how long, if at all, an EUA for nafamostat or any

other product candidates may remain in place.

Any termination or revocation of an EUA (if any) for nafamostat or any other product candidates

could adversely impact our business in a variety of ways, including if nafamostat is not yet approved by the FDA and if we and our manufacturing

partners have invested in the supply chain to provide nafamostat under an EUA.

our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties,

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For example, preclinical studies showed

that PF614 does not readily convert into oxycodone in the blood stream and the Phase 1 trial we have conducted with TAAP prodrug (a medication

or compound that, after administration, is metabolized (i.e., converted within the body) into a pharmacologically active drug, or “prodrug”)

PF614, demonstrated that, after oral administration of the TAAP prodrug, the corresponding opioid was measured in the subjects’

Furthermore, our product candidates may not be able to demonstrate similar activity or adverse event profiles as other product

candidates that we believe may have similar profiles.

that PF614 does not readily convert into oxycodone in the blood stream following direct injection, and the Phase 1 trial we have conducted

with TAAP prodrug PF614 (“ prodrug ”:

a medication or compound that, after administration, is metabolized, i.e., converted

within the body into a pharmacologically active drug), demonstrated that, after oral administration, the corresponding opioid was measured

in the subjects’ blood.

Furthermore, our product candidates may not be able to demonstrate similar activity or adverse event profiles

as other product candidates that we believe may have similar profiles.

can be no assurance that any of our clinical trials will ultimately be successful or support further clinical development of any of our

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may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially

product candidate for which we obtain marketing approval will be subject to ongoing enforcement of post-marketing requirements by regulatory

agencies, and we could be subject to substantial penalties, including withdrawal of our product from the market, if we fail to comply

with all regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.

product candidate for which we obtain marketing approval, as well as the manufacturing processes, post-approval clinical data, labeling,

advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other

regulatory authorities.

These requirements include, but are not limited to, restrictions governing promotion of an approved product,

submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating

to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding

drug distribution and the distribution of samples to physicians and recordkeeping.

FDA also may impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy

of a product, including the adoption and implementation of risk evaluation and mitigation strategies.

The FDA and other federal and state

agencies, including the Department of Justice, closely regulate compliance with all requirements governing drug products, including requirements

pertaining to marketing and promotion of drugs in accordance with the provisions of the approved labeling and manufacturing of products

in accordance with cGMP requirements.

For example, the FDA and other agencies actively enforce the laws and regulations prohibiting the

promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

Violations of such requirements may lead to investigations alleging violations of the Federal Food, Drug, and Cosmetic Act and other

statutes, including the False Claims Act and other federal and state healthcare fraud and abuse laws as well as state consumer protection

Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems

with our products, manufacturers or manufacturing processes, may yield various results, including:

involving patients using our products;

on such products, manufacturers or manufacturing processes;

on the labeling or marketing of a product;

on distribution or use;

to conduct post-marketing studies or clinical trials;

or untitled letters;

or recall of the product from the market;

to approve pending applications or supplements to approved applications that Ensysce submits;

restitution or disgorgement of profits or revenues;

or withdrawal of marketing approvals;

to relationships with any potential collaborators;

press coverage and damage to our reputation;

to permit the import or export of our products;

or the imposition of civil or criminal penalties.

Non-compliance

by us or any future collaborator with regulatory requirements, including safety monitoring or pharmacovigilance, and with requirements

related to the development of our products can also result in significant financial penalties.

employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors

may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could

have an adverse effect on our results of operations.

are exposed to the risk that our employees and contractors, including principal investigators, consultants, commercial collaborators,

service providers and other vendors may engage in fraudulent or other illegal activity.

Misconduct by these parties could include intentional,

reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar

regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies;

manufacturing standards;

federal and state healthcare fraud and abuse and health regulatory laws and other similar foreign fraudulent

misconduct laws;

or laws that require the true, complete and accurate reporting of financial information or data.

Activities subject

to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could

result in regulatory sanctions and serious harm to our reputation.

It is not always possible to identify and deter third-party misconduct,

and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses

or in protecting Ensysce from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with

such laws or regulations.

If any such actions are instituted against us, and we are not successful in defending ourselves or asserting

our rights, those actions could have a significant impact on our business and financial results, including the imposition of significant

civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and

other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of our operations, any

of which could adversely affect our ability to operate our business and our results of operations.

may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the preclinical and clinical studies

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given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical

trials at a higher rate than we anticipates;

trials at a higher rate than we anticipate;

third-party contractors, including those manufacturing our product candidates or conducting clinical trials on our behalf, may fail

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clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial

site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects,

failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions, or lack of adequate

funding to continue the clinical trial.

Negative or inconclusive results from our clinical trials or preclinical studies could mandate

repeated or additional clinical trials and, to the extent we choose to conduct clinical trials in other indications, could result in

changes to or delays in clinical trials of our product candidates in such other indications.

We do not know whether any clinical trials

that we conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market our product candidates for the

indications that we are pursuing.

If later-stage clinical trials do not produce favorable results, our ability to obtain regulatory approval

for our product candidates will be adversely impacted.

site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold (such as the clinical hold placed on PF614-MPAR

in January 2021), safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental

regulations or administrative actions, or lack of adequate funding to continue the clinical trial.

Negative or inconclusive results from

our clinical trials or preclinical studies could mandate repeated or additional clinical trials and, to the extent we choose to conduct

clinical trials in other indications, could result in changes to or delays in clinical trials of our product candidates in such other

We do not know whether any clinical trials that we conduct will demonstrate adequate efficacy and safety to result in regulatory

approval to market our product candidates for the indications that we are pursuing.

If later-stage clinical trials do not produce favorable

results, our ability to obtain regulatory approval for our product candidates will be adversely impacted.

failure to successfully initiate and complete clinical trials and to demonstrate the efficacy and safety necessary to obtain regulatory

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may experience difficulties in patient enrollment in our clinical trials for a variety of factors, including:

effects of COVID-19 on our ability to recruit and retain patients, including as a result of potential heightened exposure to COVID-19,

prioritization of hospital resources toward the pandemic and unwillingness by patients to enroll or comply with clinical trial protocols

if quarantines or travel restrictions impede patient movement or interrupt healthcare services;

patient eligibility criteria defined in the protocol;

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patients to our trials and patients may drop out of our trials.

inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or might require us to

abandon one or more clinical trials or our development efforts altogether.

Delays in patient enrollment may result in increased costs,

negatively affect the timing or outcome of the planned clinical trials, delay the product candidate development and approval process

and jeopardize our ability to seek and obtain the regulatory approval required to commence product sales and generate revenue, which

could cause our value to decline and limit our ability to obtain additional financing if needed.

track designation by the FDA for PF614 may not lead to a faster development or regulatory review or approval process and does not assure

FDA approval.

have obtained fast track designation for PF614 that will enable us to facilitate the development and expedite the review of PF614.

track designation does not ensure that PF614 will receive marketing approval or that approval will be granted within any particular timeframe.

As a result, we may not experience a faster development process, review or approval compared to conventional FDA procedures.

the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development

Fast track designation does not guarantee that an NDA will obtain priority review designation.

If any of these events occur,

it could require us to conduct more extensive clinical trials and go through more extensive FDA review, which could substantially increase

expenses and delay the time for commercializing our products.

inability to enroll enough patients for our clinical trials would result in significant delays or might require us to abandon one or

more clinical trials or our development efforts altogether.

Delays in patient enrollment may result in increased costs, negatively affect

the timing or outcome of the planned clinical trials, delay the product candidate development and approval process and jeopardize our

ability to seek and obtain the regulatory approval required to commence product sales and generate revenue, which could cause our value

to decline and limit our ability to obtain additional financing if needed.

track designation by the FDA for PF614 for chronic pain may not lead to a faster development or regulatory review or approval process

and does not assure FDA approval.

have obtained fast track designation for PF614 for management of moderate to severe chronic pain when a continuous, around-the-clock

analgesic is needed for an extended period of time.

We believe that fast track designation will enable us to facilitate the development

and expedite the review of PF614.

Fast track designation does not ensure that PF614 will receive marketing approval or that approval

will be granted within any particular timeframe.

As a result, we may not experience a faster development process, review or approval

compared to conventional FDA procedures.

In addition, the FDA may withdraw fast track designation if it believes that the designation

is no longer supported by data from our clinical development program.

Fast track designation does not guarantee that an NDA will obtain

priority review designation.

If any of these events occur, it could require us to conduct more extensive clinical trials and go through

more extensive FDA review, which could substantially increase expenses and delay the time for commercializing our products.

the FDA does not conclude that certain of our product candidates satisfy the requirements for the Section 505(b)(2) regulatory approval

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standards for regulatory approval.

For example, the FDA may not agree that we have provided a scientific bridge, through, for example,

comparative bioavailability data, to demonstrate that reliance on the prior findings of safety or efficacy for a listed drug is justified.

If this were to occur, the time and financial resources required to obtain FDA approval for this product candidate, and complications

and risks associated with this product candidate, would likely substantially increase.

We could need to obtain additional funding, which

could result in significant dilution to the ownership interests of our then existing stockholders to the extent we issue equity securities

For example, the FDA may not agree that we have provided a scientific bridge, through comparative

bioavailability data, to demonstrate that reliance on the prior findings of safety or efficacy for a listed drug is justified.

were to occur, the time and financial resources required to obtain FDA approval for this product candidate, and complications and risks

associated with this product candidate, would likely substantially increase.

We could need to obtain additional funding, which could

result in significant dilution to the ownership interests of our then existing stockholders to the extent we issue equity securities

or convertible debt.

We cannot assure you that we would be able to obtain such additional financing on terms acceptable to us, if at

Moreover, the inability to pursue the Section 505(b)(2) regulatory pathway would likely result in new competitive products reaching

the market more quickly than our product candidates, which would likely materially adversely impact of our competitive position and prospects.

Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure our stockholders that our product candidates

will receive the requisite approvals for commercialization.

Moreover, the inability to pursue the Section 505(b)(2) regulatory pathway may result in new competitive products reaching the market

more quickly than our product candidates, which would likely materially adversely impact of our competitive position and prospects.

if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure our stockholders that our product candidates will

receive the requisite approvals for commercialization.

addition, notwithstanding the approval of a number of products by the FDA under Section 505(b)(2) over the last few years, certain brand-name

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the FDA from approving any NDA that we submit under Section 505(b)(2).

In addition, the pharmaceutical industry is highly competitive,

and Section 505(b)(2) NDAs are subject to special requirements designed to protect the patent rights of sponsors of previously approved

drugs that are referenced in a Section 505(b)(2) NDA.

These requirements may give rise to patent litigation and mandatory delays in approval

of our NDAs for up to 30 months or longer depending on the outcome of any litigation.

The pharmaceutical industry is highly competitive, and Section

505(b)(2) NDAs are subject to special requirements designed to protect the patent rights of sponsors of previously approved drugs that

are referenced in a Section 505(b)(2) NDA.

These requirements may give rise to patent litigation and mandatory delays in approval of

our NDAs for up to 30 months or longer depending on the outcome of any litigation.

It is not uncommon for a manufacturer of an approved

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greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects.

evolving standards for the approval of opioid products may delay or prevent approval of our product candidates.

has identified addressing misuse and abuse of opioid drugs as one of its highest priorities.

As part of its plan, the agency has established

new standards for the development of prescription opioids with abuse-deterrent formulations and has published two sets of guidance.

the publication of the second guidance in November 2017, FDA has not approved any new abuse–deterrent opioid drugs.

If we are unable

to meet FDA’s new and evolving standards for approving opioid products, we will not be able to market our products.

liability lawsuits against us or any of our future collaborators could divert our resources and attention, cause us to incur substantial

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In addition, each manufacturer of active pharmaceutical ingredient, or API or dosage forms must obtain an individual

manufacturing or production quota that limits the amount of product that a company can produce and/or distribute in a given year.

DEA allocates manufacturing quota issued to companies so as to not exceed the aggregate quota established for a given year.

companies must demonstrate the need for procurement quota based on expected demand and sales of the controlled substance the DEA requires

the submission of substantial evidence of expected legitimate medical and scientific need for the drug product before assigning its aggregate

production quotas, or manufacturing and procurement quotas to manufacturers.

The DEA has decreased the aggregate quota for certain narcotic

drugs, including oxycodone over the last five years.

Also, in October 2018, Congress passed the SUPPORT Act which requires the DEA to

consider potential diversion in establishing quotas for narcotic drugs which could lead to continued decreases in quota available to

API manufacturers and dosage form manufacturers of these substances.

manufacturing or production quota that limits the amount of product that a company can produce and/or distribute each year.

The DEA allocates

manufacturing quota issued to companies so as to not exceed the aggregate quota established for a given year.

Moreover, companies must

demonstrate the need for procurement quota based on expected demand and sales of the controlled substance the DEA requires the submission

of substantial evidence of expected legitimate medical and scientific need for the drug product before assigning its aggregate production

quotas, or manufacturing and procurement quotas to manufacturers.

The DEA has decreased the aggregate quota for certain narcotic drugs,

including oxycodone over the last five years.

Also, in October 2018, Congress passed the SUPPORT Act which requires the DEA to consider

potential diversion in establishing quotas for narcotic drugs which could lead to continued decreases in quota available to API manufacturers

and dosage form manufacturers of these substances.

future years, we may need greater amounts of controlled substances that are subject to the DEA’s quota system to sustain our development

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property rights with respect to our current and any future product candidates and technology, including interference or derivation proceedings,

post grant review and inter partes review before the United States Patent and Trademark Office, or USPTO, or similar adversarial proceedings

or litigation in other jurisdictions seeking to challenge the validity of our intellectual property rights, claiming that we have misappropriated

the trade secrets of others, or claiming that our technologies, products or activities infringe the intellectual property rights of others.

post grant review and inter partes review before the United States Patent and Trademark Office, or USPTO, or similar adversarial

proceedings or litigation in other jurisdictions seeking to challenge the validity of our intellectual property rights, claiming that

we have misappropriated the trade secrets of others, or claiming that our technologies, products or activities infringe the intellectual

property rights of others.

have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical

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that our product candidates are able to become profitable.

of our patents relating to PF614 and the use of nafamostat for treating respiratory diseases will expire in less than ten years.

we are seeking additional patent coverage which may protect the technology underlying these patents, there can be no assurances that

such additional patent protection will be granted, or if granted, that these patents will not be infringed upon or otherwise held enforceable.

of our patents relating to PF614 will expire in 2030.

In addition, certain of our patents relating to the use of nafamostat for treating

respiratory diseases will expire in 2028.

While we are seeking additional patent coverage which may protect the technology underlying

these patents, there can be no assurances that such additional patent protection will be granted, or if granted, that these patents will

not be infringed upon or otherwise held enforceable.

Even if we are successful in obtaining a patent, patents have a limited lifespan.

In the United States, the normal statutory term of

a patent is generally 20 years after it is filed.

In the United States, the natural expiration of a utility patent is generally 20 years after it is filed.

Various extensions may be available;

however, the life of a patent, and the protection

it affords, is limited.

Without patent protection of our product candidates, we may be open to competition from generic versions of such

methods and compositions.

however, the life of a patent, and the protection it affords, is limited.

Without patent protection of our product candidates, we may

be open to competition from generic versions of such methods and compositions.

we do not obtain protection under the Hatch-Waxman Amendments by extending the patent term, our business may be harmed.

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manufacturing the product.

However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent

regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to

grant extensions to our patents, or may grant more limited extensions than we request.

We may not be granted an extension because of,

for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing

to satisfy applicable requirements.

Moreover, the applicable time-period or the scope of patent protection afforded could be less than

Even if we are able to obtain an extension, the patent term may still expire before or shortly after we receive FDA marketing

If we are unable to extend the expiration date of our existing patents or obtain new patents with longer expiry dates, our

competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical

data to obtain approval of competing products following our patent expiration and launch their product earlier than might otherwise be

If we are unable to extend the expiration date of our existing patents or obtain new patents with longer expiry

dates, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical

and preclinical data to obtain approval of competing products following our patent expiration and launch their product earlier than might

otherwise be the case.

may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.

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a patent owner may be compelled to grant licenses to third parties.

In certain jurisdictions, such as in the Russian Federation, our

patents may not be honored since patent holders in the United States may be deemed “unfriendly countries”.

In those countries

and jurisdictions, we and our licensees or any future licensors may have limited remedies if patents are infringed or if we or our licensees

or any future licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents.

In those countries, We and our licensees or any future licensors

may have limited remedies if patents are infringed or if we or our licensees or any future licensors are compelled to grant a license

to a third party, which could materially diminish the value of those patents.

This could limit our potential revenue opportunities.

Accordingly, we and our licensees’ or any future licensors’ efforts

to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual

property that we own or license.

we and our licensees’ or any future licensors’ efforts to enforce intellectual property rights around the world may be inadequate

to obtain a significant commercial advantage from the intellectual property that we own or license.

in European law have caused uncertainty about our European patent portfolio and may result in additional costs to us.

2012, the European Patent Package, or EU Patent Package, regulations were passed with the goal of providing for a single pan-European

Unitary Patent, and a new European Unified Patent Court, or UPC, for litigation of European patents.

The EU Patent Package was ratified

in February 2023 and currently covers 17 member states.

On June 1, 2023, all European patents, including those issued prior to ratification,

will by default automatically fall under the jurisdiction of the UPC and allow for the possibility of obtaining pan-European injunctions,

and further will be at risk of a central revocation proceeding at the UPC in participating UPC states.

Under the EU Patent Package, patent

holders are permitted to “opt out” of the UPC on a patent-by-patent basis during an initial seven year period after the EU

Patent Package is ratified, with the proviso that an “opt-out” is no longer available for EP patents for which a revocation

has been initiated before the UPC.

Owners of European patent applications who receive notice of grant after the EU Patent Package is

ratified could, for the UPC contracting states, either obtain a Unitary Patent or validate the patent nationally and file an opt-out

The EU Patent Package may increase the uncertainties and costs surrounding the enforcement or defense of our issued European

patents and pending applications.

The full impact on future European patent filing strategy and the enforcement or defense of our issued

European patents in member states and/or the UPC is not known.

may be subject to claims that we or our employees, consultants, contractors or advisors have infringed, misappropriated or otherwise

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In addition, we have not updated the records in the patent offices to reflect our ownership

of our patent filings obtained as a result of the merger with Signature, including patent filings relating to PF614 and other technologies.

Failure to update such ownership may result in an innocent purchaser potentially acquiring rights in such patents that are adverse to

our interests.

Furthermore, as noted above, we have not obtained assignments for certain patent applications relating to abuse-resistant

amphetamines.

We could be subject to ownership disputes arising, for example, from conflicting obligations of consultants or others who

are involved in developing our product candidates.

Litigation may be necessary to defend against any claims challenging inventorship

or ownership.

If we fail in defending any such claims, we may have to pay monetary damages and may lose valuable intellectual property

rights, such as exclusive ownership of, or right to use, intellectual property, which could adversely impact our business, results of

operations and financial condition.

of our patent filings relating to PF614 and other technologies.

Failure to update such ownership may result in an innocent purchaser

potentially acquiring rights in such patents that are adverse to our interests.

Furthermore, as noted above, we have not obtained assignments

for certain patent applications relating to abuse-resistant amphetamines.

We could be subject to ownership disputes arising, for example,

from conflicting obligations of consultants or others who are involved in developing our product candidates.

Litigation may be necessary

to defend against any claims challenging inventorship or ownership.

If we fail in defending any such claims, we may have to pay monetary

damages and may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property, which

could adversely impact our business, results of operations and financial condition.

may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent,

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that are necessary or useful for developing and protecting our product candidates.

have acquired all intellectual property rights from Signature and Mucokinetica, with the exception of our pending application directed

to the use of orally administered nafamostat to treat coronaviruses.

Any future collaboration agreements or license agreements we enter

into are likely to impose various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent

prosecution and enforcement or other obligations on us.

If we breach any such material obligations, or use the intellectual property

licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license,

which could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology, or having

to negotiate new or reinstated licenses on less favorable terms, or enable a competitor to gain access to the licensed technology.

have acquired all intellectual property rights from Signature and Mucokinetica, Ltd.

(“ Mucokinetica ”), with the exception

of our pending application directed to the use of orally administered nafamostat to treat coronaviruses.

Any future collaboration agreements

or license agreements we enter into are likely to impose various development, commercialization, funding, milestone, royalty, diligence,

sublicensing, insurance, patent prosecution and enforcement or other obligations on us.

If we breach any such material obligations, or

use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the

right to terminate the license, which could result in us being unable to develop, manufacture and sell products that are covered by the

licensed technology, or having to negotiate new or reinstated licenses on less favorable terms, or enable a competitor to gain access

to the licensed technology.

property rights do not necessarily address all potential threats to our business.

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a third party may challenge the current patents, or patents that may be issued in the future, within our portfolio which could result

in the invalidation of some or all of the patents that might otherwise be eligible for listing in the Orange Book for one of our products.

in the invalidation of some or all the patents that might otherwise be eligible for listing in the Orange Book for one of our products.

If a third party successfully challenges all of the patents that might otherwise be eligible for listing in the Orange Book for one of

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with our product candidates.

we do not obtain protection under the Hatch-Waxman Amendments by obtaining data exclusivity, our business may be harmed.

commercial success will largely depend on our ability to obtain and market exclusivity in the United States and other countries with

respect to our product candidates.

Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates,

certain of our product candidates may be eligible for marketing exclusivity.

FDC Act provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval

of an NDA or Section 505(b)(2) NDA for a new chemical entity, or NCE.

A drug is an NCE if the FDA has not previously approved any other

new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.

exclusivity is granted for an NCE, during the exclusivity period, the FDA may not accept for review or approve an abbreviated new drug

application, or ANDA, or a Section 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does

not own or have a legal right of reference to all the data required for approval.

However, an application may be submitted after four

years if it contains a certification of patent invalidity or non-infringement to one of the patents listed in the FDA’s publication

Approved Drug Products with Therapeutic Equivalence Evaluations, which we refer to as the Orange Book, with the FDA by the innovator

FDC Act also provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations,

other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval

of the application, for example new indications, dosages, dosage forms or strengths of an existing drug.

This three-year exclusivity

covers only the conditions associated with the new clinical investigations and prohibits the FDA from approving an ANDA, or a Section

505(b)(2) NDA submitted by another company with overlapping conditions associated with the new clinical investigations for the three-year

Three-year exclusivity does not prohibit the FDA from approving ANDAs for drugs containing the original conditions of use.

and three-year exclusivity will not delay the submission or approval of an NDA for the same drug.

However, an applicant submitting an

NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical

trials necessary to demonstrate safety and effectiveness.

we are unable to obtain such marketing exclusivity for our product candidates, our competitors may be able to take advantage of our investment

in development and clinical trials by referencing our approval to obtain approval of competing products and launch their product earlier

than might otherwise be the case.

Cyber-attacks

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Related to the Ownership of Common Stock and Financial Reporting

additional capital could cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies

or product candidates.

additional capital has caused, and may in the future cause, dilution to our stockholders, adversely affect the market price of our common

stock, restrict our operations or require us to relinquish rights to our technologies or product candidates.

expect our expenses to increase in connection with our planned operations.

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operating plans.

For example, the subsequent conversion of the 2021 Notes sold on September 24, 2021 and November 5, 2021 into common

stock would result in dilution to stockholders.

the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, our

stockholders’ ownership interest may be diluted.

In addition, debt financing, if available, may result in fixed payment obligations

and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional

debt, making capital expenditures, creating liens, redeeming stock or declaring dividends, that could adversely impact our ability to

conduct our business.

In addition, securing financing could require a substantial amount of time and attention from our management and

may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s

ability to oversee the development of our product candidates.

Further, we may incur additional dilution from repayment of the 2021 Notes

in common stock or resetting the conversion price of the 2021 Notes if we issue equity at a price below the conversion price of the 2021

Also, we will receive reduced proceeds if the exercise price of the warrants granted in connection with the 2021 Notes is reduced.

we raise additional capital through collaborations or marketing, distribution or licensing arrangements with third parties, we may have

to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not

be favorable to us.

If we are unable to raise additional capital when needed, we may be required to grant to third parties rights to

develop and market our product candidates that we would otherwise prefer to develop and market ourselves.

addition, any issuances of common stock pursuant to the GEM Agreement would result in dilution of the ownership interest of our stockholders.

the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities as we

have done in the past, our stockholders’ ownership interest has been, and may in the future be, diluted.

In addition, debt financing,

if available, may result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability

to take specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming stock or declaring

dividends, that could adversely impact our ability to conduct our business.

In addition, securing financing could require a substantial

amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities,

which may adversely affect our management’s ability to oversee the development of our product candidates.

The possible issuance

of additional shares of common stock at lower conversion prices in repayment of the 2022 Notes or obligations arising under the 2022

Notes could have a negative impact on the price of our common stock.

Also, we will receive reduced proceeds if the exercise price of

the Prior Warrants is reduced.

The conversion price of the 2022 Notes and exercise price of the Prior Warrants issued in 2022 were reset

to a price of $2.006 and we have, from time to time, temporarily lowered the conversion price such that a greater amount of principal

on the 2022 Notes could be extinguished for shares.

The conversion price of the 2022 Notes is $0.7512 for the period from January 12,

2023 until May 12, 2023.

In the future, to conserve cash necessary for us to conduct operations, we may do similarly for amounts owed

in connection with the 2022 Notes or other notes.

The exercise price of the Prior Warrants issued in 2021 were reset to a price of $15.60.

Because of a decline in the price of our common stock since issuance of the 2022 Notes and the ability of holders of the 2022 Notes to

convert amounts payable under the 2022 Notes into additional shares of our common stock, we are required to register for resale with

the SEC additional shares of common stock.

We are obligated to register a sufficient number of shares of common stock for resale and

our failure to timely register sufficient additional shares of common stock could cause us to default in our payments and result in our

payment of additional shares and/or cash to the holders of the 2022 Notes.

addition, we may sell securities in the public or private equity markets if and when conditions are favorable, or at prices per share

below the current market price of our common stock, even if we do not have an immediate need for additional capital at that time.

of substantial amounts of shares of our common stock, or the perception that such sales could occur, could adversely affect the prevailing

market price of our shares and our ability to raise capital.

We may issue additional shares of common stock in future financing transactions

or as incentive compensation for our executive management and other key personnel, consultants and advisors.

Moreover, sales of substantial

amounts of shares in the public market, or the perception that such sales could occur, may adversely affect the prevailing market price

of our common stock and make it more difficult for us to raise additional capital.

financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability

to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions,

selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments, declaring dividends or

encumbering our assets to secure future indebtedness.

Such restrictions could adversely impact our ability to conduct our operations

and execute our business plan.

The Investor Notes contain such restrictions.

we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations, strategic alliances or

marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or

intellectual property, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit,

reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates

that we would otherwise prefer to develop and market ourselves.

addition, any issuances of common stock pursuant to the GEM Agreement would result in dilution of the ownership interest of our shareholders.

Any such issuances may also have a negative impact on the market price of our common stock because of the discount at issuance.

require substantial additional funding.

If we are unable raise capital when needed, we could be forced to delay, reduce or terminate

our product discovery and development programs or commercialization efforts ” for description of risks related to additional

price resets of the GEM Warrants would also dilute our shareholders.

See “— We require substantial additional funding.

If we are unable raise capital when needed, we could be forced to delay, reduce or terminate our product discovery and development programs

or commercialization efforts ” for description of risks related to additional funding.

internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of Sarbanes-Oxley Act,

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and inappropriate level of supervision and review due to the limited number of accounting personnel.

While we have taken steps to remediate

While we are taking steps to remediate

the material weaknesses in our internal controls over financial reporting, including hiring a Chief Financial Officer in February 2021,

we may not be successful in remediating such weaknesses.

the Merger, our management has significant requirements for enhanced financial reporting and internal controls as a public company.

process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate and react

to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal

controls that is adequate to satisfy our reporting obligations as a public company.

If we are unable to establish or maintain appropriate

internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis or

result in material misstatements in our consolidated financial statements, which could harm our operating results.

In addition, we are

required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness

the Business Combination, our management has significant requirements for enhanced financial reporting and internal controls as a public

The process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate

and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system

of internal controls that is adequate to satisfy our reporting obligations as a public company.

If we are unable to establish or maintain

appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely

basis or result in material misstatements in our consolidated financial statements, which could harm our operating results.

we are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness

of our internal controls over financial reporting.

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on an annual basis.

However, while we remain an emerging growth company, we will not be required to include an attestation report on

internal control over financial reporting issued by our independent registered public accounting firm.

If we are not able to complete

an initial assessment of our internal controls and otherwise implement the requirements of Section 404 of the Sarbanes-Oxley Act in a

timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy

of our internal controls over financial reporting.

However, while we remain an emerging growth company, we are not required to include an attestation report on internal

control over financial reporting issued by our independent registered public accounting firm.

If we are not able to complete an initial

assessment of our internal controls and otherwise implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner

or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal

controls over financial reporting.

impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us

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us and lead to a decline in the market price of our common stock.

Related to Our Securities and to Being a Public Company

are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of

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this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public

are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage

of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging

are an “ emerging growth company ” within the meaning of the Securities Act, as modified by the JOBS Act, and we may

take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging

growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404

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we are a “ smaller reporting company ” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take

advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held

by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, and (ii)

our annual revenues are greater than or equal to $100 million during the last completed fiscal year and the market value of our common

stock held by non-affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter.

To the extent we take

advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies

difficult or impossible.

Smaller reporting companies may

take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial

We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common

stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter,

and (ii) our annual revenues are greater than or equal to $100 million during the last completed fiscal year and the market value of

our common stock held by non-affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter.

extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public

companies difficult or impossible.

amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate significantly or fall below the

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Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide, if any.

the Nasdaq delists our common stock and/or our Public Warrants do not continue to trade on the OTC Pink Open Market, this could limit

investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Nasdaq delists our common stock and/or our Public Warrants do not continue to trade on the OTC Pink Open Market, as applicable, from

trading on their exchanges for failure to meet the listing standards, our stockholders could face significant material adverse consequences

limited availability of market quotations for our securities;

liquidity for our securities;

determination that our common stock is a “penny stock” which will require brokers trading in such securities to adhere

to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

limited amount of news and analyst coverage;

decreased ability to issue additional securities or obtain additional financing in the future, including our inability to obtain

financing under the GEM Agreement.

for shares of our common stock, if exercised, will increase the number of shares eligible for future resale in the public market and

result in dilution to our stockholders.

are Public Warrants currently exercisable for an aggregate of approximately 10,000,000 shares of our common stock at an exercise price

of $11.50 per share.

In addition, there are private warrants exercisable for an aggregate of 11,090,873 shares of our common stock at

a weighted-average exercise price of $10.36 per share.

To the extent such warrants are exercised, additional shares of our common stock

will be issued, which will result in dilution to the holders of shares of our common stock and increase the number of shares of common

stock eligible for resale in the public market.

Sales of substantial numbers of such shares of common stock in the public market or the

fact that such warrants may be exercised could adversely affect the market price of our common stock.

are Public Warrants exercisable for an aggregate of approximately 500,000 shares of our common stock with an exercise price of $230.00

There are LACQ Warrants exercisable for an aggregate of approximately 351,663 shares of our common stock with a weighted average

exercise price of $227.87 per share.

In addition, there are GEM Warrants exercisable for 55,306 shares of our common stock (subject to

possible adjustment for anti-dilution events) with an exercise price of $0.7512 per share as of January 12, 2023.

There are also Prior

Warrants from 2021 exercisable for an aggregate of 54,174 shares of our common stock (subject to possible adjustment for anti-dilution

events) with an exercise price of $15.60 per share.

In addition, Prior Warrants from 2022 are exercisable for an aggregate of 466,788

shares of our common stock (subject to possible adjustment for anti-dilution events) with an exercise price of $14.17 per share.

exercise price of the Prior Warrants issued in 2022 were reset to a price of $2.006.

To the extent such warrants are exercised, additional

shares of our common stock will be issued, which will result in dilution to the holders of shares of our common stock and increase the

number of shares of common stock eligible for resale in the public market.

Sales of substantial numbers of such shares of common stock

in the public market or the fact that such Warrants may be exercised could adversely affect the market price of our common stock.

blocks of our total outstanding shares may be sold into the market.

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Shares held by our directors, executive officers and other affiliates are subject to restrictions on resale under the Securities

Act and may be subject to various vesting agreements.

of our initial stockholders have agreed, subject to certain exceptions, not to transfer, pledge, assign, sell or otherwise dispose of

any of our common stock held by them immediately after the Merger until the earlier to occur of (a) one year after the Merger and (b)

the date on which we complete a liquidation, merger, share exchange or other similar transaction after closing that results in all of

our stockholders having the right to exchange their common shares for cash, securities or other property.

However, if the closing price

of our common shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations

and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Merger, the shares of those

initial stockholders will be released from the lock-up.

Act, lock up agreements and may be subject to various vesting agreements.

In addition, the rights of holders of the 2022 Notes to convert

amounts payable under the 2022 Notes into shares of our common stock has required us to register a substantial number of shares of common

stock and we are required to register an additional substantial amount of shares of common stock for possible resale by holders of those

market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common

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issuance of additional capital stock in connection with financings, acquisitions, investments, our 2021 Omnibus Incentive Plan and to

repay interest or principal on the 2021 Notes or otherwise will dilute all other stockholders.

repay interest or principal on the Investor Notes or otherwise will dilute all other stockholders.

expect to issue additional capital stock in the future that will result in dilution to all other stockholders.

We expect to grant equity

awards to employees, directors, and consultants under our 2021 Omnibus Incentive Plan.

We may use our common stock to make repayment

of some or all of the principal and interest on the 2021 Notes.

We may also raise capital through equity financings in the future.

part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity

securities to pay for any such acquisition or investment.

Any such issuances of additional capital stock may cause stockholders to experience

significant dilution of their ownership interests and the per share value of our common stock to decline.

We have granted equity

awards to employees, directors, and consultants under our 2021 Omnibus Incentive Plan and plan to do so in the future.

We have used,

and may in the future use, our common stock to make repayment of some or all of the principal and interest on the Investor Notes.

may also raise capital through equity financings in the future.

As part of our business strategy, we may acquire or make investments

in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.

such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and

the per share value of our common stock to decline.

on the OTC Pink Open Market is volatile and sporadic, which could depress the market price of the Public Warrants and make it difficult

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These factors may result in investors having difficulty reselling any Public Warrants.

LACQ determined that the Public Warrants should be classified as equity and its private warrants will be treated as equity on

a pro forma basis, due to the uncertainty with respect to classification of warrants issued by SPACs as equity or indebtedness, there

can be no assurance that future guidance might not require us to change this position and restate our financial statements and have other

adverse consequences.

LACQ’s financial statements were restated to classify its private warrants as liabilities, we have determined that it is appropriate

to continue to classify the Public Warrants as equity.

We reviewed the terms of the warrant agreement related to the

Public Warrants and concluded that they do not include any provision requiring the Public Warrants to be classified as liabilities.

In this respect, it should be noted that the warrant agreement included a provision that in the event of a tender or exchange offer made

to and accepted by holders of more than 50% of the outstanding shares of a single class of common shares, all holders of the warrants

could be entitled to receive cash for their warrants (the “ tender offer provision ”).

This tender offer provision was

similar to one of the examples referred to in the SEC Statement as a basis for concluding that warrants issued by a SPAC should be classified

as liabilities and not equity.

LACQ concluded that, while the SEC Statement did not expressly refer to a multi-class structure (such

as a structure where a SPAC had two classes of common stock), the SEC Statement with respect to a tender offer provision in a warrant

agreement applied to a multi-class structure (such as a Class A and Class B structure) and not a single class structure like the Public

Certain other SPACs, including those with single class structures, have taken different approaches in their public filings

with the SEC and have classified similar warrants as liabilities.

classified its private warrants as liabilities because they provided for potential changes to the settlement amounts dependent upon the

characteristics of the holder of the warrant (i.e., certain rights differ if the warrants are held by the original holder and its permitted

transferees or by a subsequent transferee).

LACQ entered into agreements with the holders of its private warrants under which each holder

exchanged its private warrants for warrants on the same terms as the private warrants, except that they are non-transferable except

to certain permitted transferees.

LACQ believed that as a result of the exchange, the private warrants would be appropriately classified

as equity and not liabilities subsequent to the date of such agreements.

accounting treatment of warrants issued in SPAC transactions is subject to substantial uncertainty and there can be no

assurance that future guidance might not require us to change LACQ’s position and restate our financial statements or treat private

warrants as liabilities, which could have a material adverse effect on us.

common stock could be delisted from Nasdaq and may become subject to “penny stock” rules, which could damage our reputation

and the ability of investors to sell their shares.

can be no assurance that our common stock will maintain our listing on Nasdaq which could have a material adverse effect on us.

any delisting, our common stock could become subject to the regulations of the SEC relating to the market for penny stocks.

are securities with a price of less than $5.00 per share unless (i) the securities are traded on a “recognized” national

exchange or (ii) the issuer has Net Tangible Assets less than $2,000,000 (if the issuer has been in continuous operation for at least

three years) or $5,000,000 (if in continuous operation for less than three years), or with average annual revenues of less than $6,000,000

for the last three years.

we are unable to regain compliance with the listing standards of Nasdaq, our common stock could be delisted and may become subject to

“penny stock” rules, which could have a material adverse effect on the liquidity of our common stock, the ability of investors

to sell their shares and our ability to raise funding.

January 27, 2023, we received a notice in the form of a letter (the “Deficiency Letter”) from the listing qualifications

department staff of The Nasdaq Stock Market (“Nasdaq”) stating that the Company was not in compliance with Nasdaq Listing

Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share (the Minimum Bid Price”)

for the previous 30 consecutive business days.

Company’s Minimum Value of Listed Securities (“MVLS”) is below the minimum of $35 million required for continued listing

Because we did not regain compliance by the deadline set forth in a June 16, 2022 Notice we received from Nasdaq we requested

a hearing before a Nasdaq Hearings Panel (the “Panel”).

That hearing was held on January 26, 2023 and on February 14, 2023,

our request for continued listing by means of exception was granted through June 12, 2023, subject to, at various dates in the interim,

obtaining shareholder approval for a reverse split, eliminating outstanding convertible notes, meeting the Minimum Bid Price requirement

for at least 10 consecutive trading days, filing a registration statement with the SEC for a public offering to raise additional capital

and regaining compliance with the MVLS.

There can be no assurance that the Company will be able to meet these requirements or be able

to maintain compliance thereafter with Nasdaq listing standards.

de-listing of our common stock on Nasdaq could have a material adverse effect on us, including on our ability to raise capital through

alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors,

suppliers, customers and employees and fewer business development opportunities.

Upon any delisting, our common stock could become subject

to the regulations of the SEC relating to the market for penny stocks.

Penny stocks are securities with a price of less than $5.00 per

share unless (i) the securities are traded on a “recognized” national exchange or (ii) the issuer has net tangible assets

less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation

for less than three years), or with average annual revenues of less than $6,000,000 for the last three years.

procedures applicable to penny stocks requires a broker-dealer to (i) obtain from the investor information concerning his financial situation,

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common stock in the secondary market.

directors and executive officers own a significant percentage of our common stock and will be able to exert significant control over

matters subject to stockholder approval.

of December 31, 2021, our executive officers and directors beneficially owned approximately 52.0% of our common stock.

These stockholders,

acting together, may be able to control matters requiring stockholder approval.

For example, they may be able to control elections of

directors, changes to equity incentive plans, amendments of our organizational documents or approval of any merger, sale of assets or

other major corporate transactions.

This concentration of ownership control may delay, discourage or prevent a change of control, including

unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders,

entrench our management and board of directors or delay or prevent a merger, consolidation, takeover or other business combination involving

us that other stockholders may desire.

The interests of this group of stockholders may not always coincide with your interests or the

interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders,

including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors