What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-31 · 478 added, 404 removed, 1298 unchanged (40% of the section changed)

Related to Our Business

Related to Our Business and Financial Condition

independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern as of

December 31, 2022.

We will be unable to continue to operate for the foreseeable future without additional capital.

independent registered public accounting firm issued a report dated March 31, 2023 in connection with the audit of our consolidated financial

statements as of December 31, 2022, which included an explanatory paragraph describing the existence of conditions that raise substantial

doubt about our ability to continue as a going concern including our recurring losses, cash used in operations, and need to raise additional

funds to meet our obligations and sustain our operations.

In addition, the notes to our financial statements for the year ended December

31, 2022, included in this Annual Report on Form 10-K, contain a disclosure describing the existence of conditions that raise substantial

doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to obtain

substantial additional funding in connection with our continuing operations.

Adequate additional financing may not be available to us

in the necessary timeframe, in the amounts we require, on terms that acceptable to us, or at all.

If we are unable to raise additional

capital our business, prospectus, financial condition and results of operations will be materially and adversely affected and we may

be unable to continue as a going concern.

For example, we anticipate that our existing cash will enable us to maintain our current operations

through December 31, 2023, but not beyond.

If we are not able to continue as a going concern, we may have to liquidate our assets and

may receive less than the value at which those assets are carried on our consolidated financial statements and/or seek protection under

federal bankruptcy law, and it is likely that holders of our common stock and holders of securities convertible into our common stock

will lose all of their investment.

If 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 or at all.

such, there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial

doubt about our ability to continue as a going concern.

are dependent on the success of our prospective product candidates, which are in early stages of development, and there can be no assurances

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success will depend on our ability to successfully develop and commercialize our prospective product candidates through our development

We intend to develop at least three product candidates by undergoing the long, costly clinical-trial process for each candidate

We intend to develop at least two product candidates by undergoing the long, costly clinical-trial process for each candidate

under an IND application and, eventually, obtaining FDA approval under an NDA before proceeding to market.

proceed with development of our pharmaceutical product candidates under the NDA pathway, we must obtain the FDA’s approval of our

IND application and conduct preclinical and clinical trials in compliance with the applicable IND regulations, clinical-study protocols,

and other applicable regulations and related requirements.

We may never be able to develop products which are commercially viable or

receive regulatory approval in the U.S.

In order to proceed with development

of our pharmaceutical product candidates under the NDA pathway, we must obtain the FDA’s approval of our IND application and conduct

preclinical and clinical trials in compliance with the applicable IND regulations, clinical-study protocols, and other applicable regulations

and related requirements.

We may never be able to develop products which are commercially viable or receive regulatory approval in the

or elsewhere.

There can be no assurance that the FDA or any other regulatory authority will approve

of our current or future product candidates.

There can be no assurance that the FDA or any other regulatory authority will approve of our current or future product

the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act, or “FDCA,” and implementing regulations.

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generally involves the following:

of preclinical laboratory tests, animal studies, and formulation studies according to Good Laboratory Practices and other applicable

to the FDA of an IND application, which must become effective before human clinical trials may begin in the United States;

of adequate and well-controlled human clinical trials according to the FDA’s current good clinical practices, or GCPs, which

sufficiently demonstrate the safety and efficacy of the proposed drug or biologic for its intended uses;

of preclinical laboratory tests, animal studies, and formulation studies according to Good

Laboratory Practices and other applicable regulations;

to the FDA of an IND application, which must become effective before human clinical trials

may begin in the United States;

● Performance

of adequate and well-controlled human clinical trials according to the FDA’s current

good clinical practices, or GCPs, which sufficiently demonstrate the safety and efficacy

of the proposed drug or biologic for its intended uses;

to the FDA of a New Drug Application, or an NDA, for a new drug product;

completion of an FDA inspection of the manufacturing facility or facilities where the drug or biologic is to be produced to assess

compliance with the FDA’s current good manufacturing practice standards, or cGMP, to assure that the facilities, methods and

controls are adequate to preserve the drug’s or biologic’s identity, strength, quality and purity;

FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA or biologics license application;

● Satisfactory

completion of an FDA inspection of the manufacturing facility or facilities where the drug

or biologic is to be produced to assess compliance with the FDA’s current good manufacturing

practice standards, or cGMP, to assure that the facilities, methods and controls are adequate

to preserve the drug’s or biologic’s identity, strength, quality and purity;

FDA audit of the nonclinical and clinical trial sites that generated the data in support

of the NDA or biologics license application;

review and, potentially, approval of the NDA.

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progress, or any other development or commercialization activities, including (among others):

or difficulties in enrolling patients in clinical trials, specifically since many of the patients are considered immunocompromised;

or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial

sites and hospital staff supporting the conduct of our clinical trials;

of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by

federal or state governments, employers and others;

in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees

or their families or the desire of employees to avoid contact with large groups of people;

in receiving approval from local regulatory authorities to initiate our planned clinical trials;

or difficulties in enrolling patients in clinical trials, specifically since many of the

patients are considered immunocompromised;

or difficulties in clinical site initiation, including difficulties in recruiting clinical

site investigators and clinical site staff;

of healthcare resources away from the conduct of clinical trials, including the diversion

of hospitals serving as our clinical trial sites and hospital staff supporting the conduct

of our clinical trials;

● interruption

of key clinical trial activities, such as clinical trial site monitoring, due to limitations

on travel imposed or recommended by federal or state governments, employers and others;

● limitations

in employee resources that would otherwise be focused on the conduct of our clinical trials,

including because of sickness of employees or their families or the desire of employees to

avoid contact with large groups of people;

in receiving approval from local regulatory authorities to initiate our planned clinical

in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical

in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical

trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations

in employee resources or forced furlough of government employees;

in the timing of interactions with the FDA due to absenteeism by federal employees or by the diversion of their efforts and attention

to approval of other therapeutics or other activities related to COVID-19;

of the FDA to accept data from clinical trials in affected geographies outside the United States.

● interruption

in global shipping that may affect the transport of clinical trial materials, such as investigational

drug product used in our clinical trials

in local regulations as part of a response to the COVID-19 outbreak which may require us

to change the ways in which our clinical trials are conducted, which may result in unexpected

costs, or to discontinue the clinical trials altogether;

in necessary interactions with local regulators, ethics committees and other important agencies

and contractors due to limitations in employee resources or forced furlough of government

in the timing of interactions with the FDA due to absenteeism by federal employees or by

the diversion of their efforts and attention to approval of other therapeutics or other activities

related to COVID-19;

of the FDA to accept data from clinical trials in affected geographies outside the United

addition, the COVID-19 pandemic could disrupt our operations due to absenteeism by infected or ill members of management or other employees,

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and treat the disease.

economic, and military instability in Israel may impede our development programs, which could have a material adverse effect on our business.

plan to conduct a clinical cancer study consisting of a Phase 1/2 study in Israel of oral synthetic CBD extract, given alone or in combination

with clomiphene concurrently with dose-dense Temolozomide chemotherapy for patients with recurrent or progressive GBM, designed as an

open label, two-arm, randomized prospective study.

We are currently waiting on primary approval from the Israeli Ministry of Health,

Center for Cannabis (Yakar) to proceed with such study.

Since the establishment of the State of Israel in 1948, a number of armed conflicts

have taken place between Israel and its neighboring countries.

In May 2021, hostilities between Israel and Hamas escalated and an eleven

day war between Israel and Hamas ensued, including rocket attacks targeting Tel Aviv, where some of our key partners for the planned

GBM study are located.

Since then, the deadlock between Israel and the Palestinian movement has returned to its pre-war status quo, although

localized incidents continue to thwart the efforts to reach a stable ceasefire.

The ongoing conflict and any hostilities involving Israel

or political, economic, and military conditions in Israel and the surrounding region may directly affect our ability to obtain approvals

needed for our GBM study and cause interruptions or delays in conducting such study or future studies we may conduct in Israel for an

indeterminate time.

Any armed conflicts, terrorist activities, or political instability in the region could impeded our development programs,

which could have a material adverse effect on our business.

have significant and increasing liquidity needs and may require additional funding.

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amount and timing of our future funding requirements will depend on many factors, including, but not limited to:

scope, number, initiation, progress, timing, costs, design, duration, delays (if any), and results of preclinical and clinical studies

for our current or future product candidates;

outcome, timing and cost of regulatory reviews, approvals or other actions to meet regulatory requirements established by the FDA,

and comparable foreign regulatory authorities;

timing and amount of revenue generated or received, including any revenue from grants or other sources;

scope, number, initiation, progress, timing, costs, design, duration, delays (if any), and

results of preclinical and clinical studies for our current or future product candidates;

outcome, timing and cost of regulatory reviews, approvals or other actions to meet regulatory

requirements established by the FDA, and comparable foreign regulatory authorities;

timing and amount of revenue generated or received, including any revenue from grants or

other sources;

rate of progress and cost of our clinical trials and other product development programs;

of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights associated with our current

and future product candidates;

of filing, prosecuting, defending and enforcing any patent claims and other intellectual

property rights associated with our current and future product candidates;

effect of competing technological and market developments;

facilities and equipment requirements;

terms and timing of any additional collaborative, licensing, co-promotion or other arrangements that we may establish.

terms and timing of any additional collaborative, licensing, co-promotion or other arrangements

that we may establish.

we expect to fund our future capital requirements from financing arrangements, we cannot assure you that any such financing arrangements

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the Company does not have sufficient unreserved, authorized shares to secure an equity investment of a sufficient amount, based on the

Company’s currently traded price per share, and the Company will require shareholder approval to increase the amount of authorized shares.

Company’s currently traded price per share, and the Company will require shareholder approval to increase the amount of authorized

If we are not able to raise capital, we could be required to postpone, scale back or eliminate some, or all, of our development

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to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement

has been limited study on the effects of medical cannabinoids, and future clinical research studies may lead to conclusions that dispute

or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing, and social acceptance

of cannabinoids.

relating to the medical benefits, viability, safety, efficacy, and dosing of cannabinoids remains in relatively early stages.

been few clinical trials on the benefits of cannabinoids conducted by us or by others.

Future research and clinical trials may draw opposing

conclusions to statements contained in the articles, reports and studies we have relied on, or could reach different or negative

conclusions regarding the medical benefits, viability, safety, efficacy, dosing or other facts and perceptions related to cannabinoids,

which could adversely affect social acceptance of cannabinoids and the demand for our product candidates.

has been limited study on the effects of medical cannabinoids and psychedelics, and future clinical research studies may lead to conclusions that

dispute or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing, and

social acceptance of cannabinoids and psychedelics.

relating to the medical benefits, viability, safety, efficacy, and dosing of cannabinoids and psychedelics remains in relatively

early stages.

There have been few clinical trials on the benefits of cannabinoids and psychedelics conducted by us or by others.

Future research and clinical trials may draw opposing conclusions to statements contained in the articles, reports and studies we

have relied on, or could reach different or negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing

or other facts and perceptions related to cannabinoids and psychedelics, which could adversely affect social acceptance of

cannabinoids and psychedelics and the demand for our product candidates.

limited resources may lead us to pursue a particular candidate and fail to capitalize on product candidates that may be more profitable

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therein may not yield any commercially viable products.

Inaccurate evaluation of potential may result in relinquishment of valuable

product candidate opportunity.

Inaccurate evaluation of potential may result in relinquishment of valuable product

candidate opportunity.

expect to face intense competition, often from companies with greater resources and experience than us.

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studies in Israel, and plan to conduct clinical studies for one or more product candidates in Israel or other non-U.S.

the extent we do not conduct these clinical trials in accordance under an IND application, the FDA may not accept data

from such trials.

Although the FDA may accept data from clinical trials conducted outside the United States that are not conducted under

an IND application, the FDA’s acceptance of the data is subject to certain conditions.

For example, the clinical trial must

be well designed and conducted and performed by qualified investigators in accordance with ethical principles and all applicable FDA

The trial population must also adequately represent the intended U.S.

population, and the data must be applicable to the

the extent we do not conduct these clinical trials in accordance under an IND application, the FDA may not accept data from such trials.

Although the FDA may accept data from clinical trials conducted outside the United States that are not conducted under an IND application,

the FDA’s acceptance of the data is subject to certain conditions.

For example, the clinical trial must be well designed and conducted

and performed by qualified investigators in accordance with ethical principles and all applicable FDA regulations.

The trial population

must also adequately represent the intended U.S.

population, and the data must be applicable to the U.S.

population and U.S.

medical practice in ways that the FDA deems clinically meaningful.

In general, the patient population for any

clinical trials conducted outside of the United States must be representative of the population for whom we intend to market the product

candidate in the United States, if approved.

In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance

of the data will be dependent upon our ability to verify the data and our determination that the trials also complied with all applicable

practice in ways that the FDA deems clinically meaningful.

In general, the patient population for any clinical trials conducted outside

of the United States must be representative of the population for whom we intend to market the product candidate in the United States,

In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependent

upon our ability to verify the data and our determination that the trials also complied with all applicable U.S.

laws and regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state

and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state and foreign statutes and

regulations requires the expenditure of substantial time and financial resources.

cannot guarantee that the FDA will accept data from trials conducted outside of the United States.

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phases of development may fail to reach the market for several reasons including, without limitation:

study results that may show the product to be less effective than desired (e.g., the study failed to meet our primary objectives)

or to have harmful or problematic side effects;

● preclinical

study results that may show the product to be less effective than desired (e.g., the study

failed to meet our primary objectives) or to have harmful or problematic side effects;

to receive the necessary regulatory approvals or a delay in receiving such approvals.

Among other things, such delays may be caused

by slow enrollment in clinical studies, length of time to achieve study endpoints, additional time requirements for data analysis

or an IND and later NDA, preparation, discussions with the FDA, an FDA request for additional preclinical or clinical data or unexpected

safety or manufacturing issues;

other things, such delays may be caused by slow enrollment in clinical studies, length of

time to achieve study endpoints, additional time requirements for data analysis or an IND

and later NDA, preparation, discussions with the FDA, an FDA request for additional preclinical

or clinical data or unexpected safety or manufacturing issues;

● manufacturing

costs, pricing, or reimbursement issues or other factors that make the product not economical;

proprietary rights of others and their competing products and technologies that may prevent the product from being commercialized.

proprietary rights of others and their competing products and technologies that may prevent

the product from being commercialized.

positive results from our preclinical testing of our prospective product candidates may not necessarily be predictive of the results

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candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or other regulatory approvals.

If we fail to produce positive results in our planned clinical trial for our product candidates for the treatment of GBM, or our future

clinical trials, the development timeline and regulatory approval and commercialization prospects for such product candidates, and, correspondingly,

our business and financial prospects, would be materially adversely affected.

Similarly, undesirable side effects caused by our product

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We expect to manage and maintain this data utilizing on-site systems.

This data includes a wide variety of business-critical

information including research and development information, commercial information and business and financial information.

This data includes a wide variety of business-critical information

including research and development information, commercial information and business and financial information.

secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy,

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operating results may vary significantly in future periods.

are in the early stages of product development and expects to focus substantial efforts for, at least, the next several years on preclinical

are in the early stages of product development and expect to focus substantial efforts for, at least, the next several years on preclinical

and clinical trials and other research and development activities.

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Our financial results are unpredictable and may fluctuate, for among other reasons, due to:

scope, number, progress, duration, endpoints, cost, results, and timing of our preclinical testing and clinical studies of current

or potential future product candidates;

scope, number, progress, duration, endpoints, cost, results, and timing of our preclinical

testing and clinical studies of current or potential future product candidates;

ability to obtain additional funding to develop product candidates;

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or obtain funds on less favorable terms than the Company would otherwise accept.

To the extent that external sources of capital

become limited or unavailable or available on onerous terms, the Company’s intangible assets and its ability to continue its business

To the extent that external sources of capital become

limited or unavailable or available on onerous terms, the Company’s intangible assets and its ability to continue its business

plans may become impaired, and the Company’s assets, liabilities, business, financial condition and results of operations may be

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development activities with our Psychedelic Derivatives and other product candidates.

Preclinical activities include “in

vivo” studies providing access to specific disease models, pharmacology and toxicology studies, and assay development.

development activities include trial design, regulatory submissions, clinical patient recruitment, clinical trial monitoring, clinical

data management and analysis, safety monitoring and project management.

If there is any dispute or disruption in its relationship with

third parties, or if such third parties are unable to provide quality services in a timely manner and at a feasible cost, or if such

third parties fail to meet certain development milestones, our active development programs may face delays.

if any of these third parties fails to perform as wed expects or if their work fails to meet regulatory requirements, the testing and

Preclinical activities include “in vivo”

studies providing access to specific disease models, pharmacology and toxicology studies, and assay development.

Clinical development

activities include trial design, regulatory submissions, clinical patient recruitment, clinical trial monitoring, clinical data management

and analysis, safety monitoring and project management.

If there is any dispute or disruption in its relationship with third parties,

or if such third parties are unable to provide quality services in a timely manner and at a feasible cost, or if such third parties fail

to meet certain development milestones, our active development programs may face delays.

if any of these third parties fails to perform as we expect or if their work fails to meet regulatory requirements, the testing and

eventual development of viable Psychedelic Derivative drug candidates could be delayed, cancelled or rendered ineffective.

reliance on third party contract manufacturers

our completion of the “in vitro” portion of the preclinical testing we intend to conduct, when only lab-grade and

lab-scale psychedelic molecules are required, we intend to manufacture the required psychedelic molecules at our facilities in Calgary.

However, when larger quantities and higher quality psychedelic molecules are required ( e.g., for animal model testing), we intend

to contract with appropriate third party contract manufacturing organizations (“CMOs”) to, among other things, supply

the active pharmaceutical ingredients (“API”) used in its Psychedelic Derivatives over which we may have limited control.

We intend to rely on CMOs to supply APIs in compliance with local GMP regulations applicable to its Psychedelic Derivatives.

our completion of the “in vitro” portion of the preclinical testing we intend to conduct, when only lab-grade and lab-scale

psychedelic molecules are required, we intend to manufacture the required psychedelic molecules at our facilities in Calgary.

when larger quantities and higher quality psychedelic molecules are required (e.g., for animal model testing), we intend to contract

with appropriate third party contract manufacturing organizations (“CMOs”) to, among other things, supply the active pharmaceutical

ingredients (“API”) used in its Psychedelic Derivatives over which we may have limited control.

We intend to rely on CMOs

to supply APIs in compliance with local GMP regulations applicable to its Psychedelic Derivatives.

applicable jurisdictions, including Health Canada, and the FDA, ensure the quality of drug products by carefully monitoring drug manufacturers’

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In addition, the API they

supply to us may not meet our specifications and quality policies and procedures or they may not be able to supply the API in

commercial quantities.

If we are unable to arrange for alternative third-party supply sources on commercially reasonable terms or in

a timely manner, it may delay the development of its Psychedelic Derivatives and could have a material adverse effect on our business

operations and financial condition.

supply to us may not meet our specifications and quality policies and procedures or they may not be able to supply the API in commercial

If we are unable to arrange for alternative third-party supply sources on commercially reasonable terms or in a timely manner,

it may delay the development of its Psychedelic Derivatives and could have a material adverse effect on our business operations and financial

the failure of CMOs to operate in compliance with GMP regulations could result in, among other things, certain product liability claims

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or non-renewal of key licenses and agreements

Our business is highly dependent

on a number of key licenses and agreements which expire in a short time period.

Specifically, in conducting research and preclinical

studies in compliance with current legislation, we substantially rely on:

(i) the Facchini Drug License which expires on December 31,

business is highly dependent on a number of key licenses and agreements which expire in a short time period.

Specifically, in conducting

research and preclinical studies in compliance with current legislation, we substantially rely on:

(i) the Facchini Drug License which

expires on December 31, 2023;

and (ii) the two material contracts with the Governors of the University of Calgary, which expire on November

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Health Canada renews drug licenses annually and Dr.

has held the Facchini Drug License since October 5, 1995 and it has been renewed each year without issue.

Until MagicMed obtains its

own Dealer’s License or Section 56 Exemption necessary for its business, the termination, non-renewal or hinderance of use, as

applicable of the Facchini Drug License or the Calgary Agreements would have a material adverse effect on MagicMed’s ability to

develop Psychedelic Derivatives, conduct research or operate its business as it currently does.

This could have a material adverse impact

on MagicMed’s financial condition.

held the Facchini Drug License since October 5, 1995 and it has been renewed each year without issue.

Until MagicMed obtains its own

Dealer’s License or Section 56 Exemption necessary for its business, the termination, non-renewal or hinderance of use, as applicable

of the Facchini Drug License or the Calgary Agreements would have a material adverse effect on MagicMed’s ability to develop Psychedelic

Derivatives, conduct research or operate its business as it currently does.

This could have a material adverse impact on MagicMed’s

financial condition.

results from clinical trials or studies of others and adverse safety events involving our Psychedelic Derivatives

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A product/compound candidate may fail for safety or efficacy reasons at any stage of the testing process.

A major risk we face is the possibility that none of the products containing our Psychedelic Derivatives will successfully gain

market approval from Health Canada, the FDA or other regulatory authorities, resulting in our inability to derive any royalty-based

revenue from them.

A major risk we face is the possibility that none of the products containing our Psychedelic Derivatives will successfully gain market

approval from Health Canada, the FDA or other regulatory authorities, resulting in our inability to derive any royalty-based revenue

materials requiring regulatory approval

raw materials used by us will require regulatory approval by Health Canada because the plant or fungi may contain a controlled substance.

While we believe that we can acquire, or indirectly make use of, the requisite licenses to conduct our intended research and development

activities, there is a risk that Health Canada can either reject or require further action to approve the requisite licenses which would

cause delays or result in losses for us and could result in the abandonment of a specific research programs.

Raw materials and supplies

are generally available in quantities to meet the needs of our business.

An inability to obtain raw materials or product supply could

have a material adverse impact on our business, financial condition, and results of operations.

raw materials used by us will require regulatory approval by Health Canada and the FDA because the plant or fungi may contain a

controlled substance.

While we believe that we can acquire, or indirectly make use of, the requisite licenses to conduct our

intended research and development activities, there is a risk that Health Canada and the FDA can either reject or require further

action to approve the requisite licenses which would cause delays or result in losses for us and could result in the abandonment of

a specific research programs.

Raw materials and supplies are generally available in quantities to meet the needs of our business.

inability to obtain raw materials or product supply could have a material adverse impact on our business, financial condition, and

results of operations.

increase in costs beyond what is currently expected as a result of regulatory review

Canada has not yet determined whether our Psychedelic Derivatives will be scheduled as controlled substances.

In the event Health Canada

determines that these products are controlled substances and therefore, require regulatory approval, (a) our licensees will be required

to obtain such approval;

and (b) to the extent that we produce Psychedelic Derivatives, we will require similar regulatory approval.

Canada and the FDA have not yet determined whether our Psychedelic Derivatives will be scheduled as controlled substances.

event Health Canada or the FDA determine that these products are controlled substances and therefore, require regulatory approval, (a) our

licensees will be required to obtain such approval;

and (b) to the extent that we produce Psychedelic Derivatives, we will require

similar regulatory approval.

Such additional regulatory requirements may increase our costs and cause a delay in our operations.

Further, if Health Canada requires

that we perform additional preclinical studies, or if we determine that additional preclinical studies are required for our Psychedelic

Derivatives, our expenses would further increase beyond what is currently expected and the anticipated timing of any potential approval

of our Psychedelic Derivatives or licensing out agreements would likely be delayed.

Further, if Health Canada or the FDA require that we perform additional preclinical studies, or if we determine that additional preclinical

studies are required for our Psychedelic Derivatives, our expenses would further increase beyond what is currently expected and the

anticipated timing of any potential approval of our Psychedelic Derivatives or licensing out agreements would likely be

have never been profitable, have no products approved for commercial sale, and to date have not generated any revenue

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Since inception, we have an accumulated deficit of $79.2 million and accumulated other comprehensive losses of $0.5 million.

To date, we have devoted most of our financial resources to research and development, including drug discovery research, preclinical

development activities, patent application filing and media relation efforts, as well as corporate overhead.

we have devoted most of our financial resources to research and development, including drug discovery research, preclinical development

activities, patent application filing and media relation efforts, as well as corporate overhead.

have not generated any revenues since inception, we expect to continue to incur losses for the foreseeable future, and expect these losses

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in completing our preclinical studies or the development of any of our Psychedelic Derivatives or other products.

The amount of

future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues.

The amount of future

net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues.

have no licensing, marketing or distribution experience and will have to invest significant resources to develop those capabilities or

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to invest significant amounts of financial and management resources, some of which will need to be committed prior to any confirmation

that our Psychedelic Derivatives will be approved by the FDA and Health Canada for Psychedelic Derivatives where we decide to

perform licensing, marketing and distribution functions itself or through third parties, we could face a number of additional risks,

including that we or our third-party collaborators may not be able to build and maintain an effective marketing or sales force.

use third parties to market and license our Psychedelic Derivatives, we may have limited or no control over our licensing, marketing

and distribution activities on which our future revenues may depend.

that our Psychedelic Derivatives will be approved by the FDA and Health Canada for Psychedelic Derivatives where we decide to perform

licensing, marketing and distribution functions itself or through third parties, we could face a number of additional risks, including

that we or our third-party collaborators may not be able to build and maintain an effective marketing or sales force.

If we use third

parties to market and license our Psychedelic Derivatives, we may have limited or no control over our licensing, marketing and distribution

activities on which our future revenues may depend.

may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights

may from time to time seek to enforce our intellectual property rights against infringers when we determine that a successful

outcome is probable and may lead to an increase in the value of the intellectual property.

If we choose to enforce our patent rights

against a party, then that individual or company has the right to ask the court to rule that such patents are invalid or should not be

may from time to time seek to enforce our intellectual property rights against infringers when we determine that a successful outcome

is probable and may lead to an increase in the value of the intellectual property.

If we choose to enforce our patent rights against

a party, then that individual or company has the right to ask the court to rule that such patents are invalid or should not be enforced.

Additionally, the validity of our patents and the patents we have licensed may be challenged if a petition for post grant proceedings

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expansion of the use of psychedelics in the medical industry may require new clinical research into effective medical therapies

in Canada and internationally regarding the medical benefits, viability, safety, efficacy, addictiveness, dosing and social acceptance

of psychedelic and psychoactive products remains in early stages.

There have been relatively few clinical trials on the benefits of such

Although we believe that the articles, reports and studies support our beliefs regarding the medical benefits, viability, safety,

efficacy, dosing and social acceptance of psychedelic and psychoactive products, future research and clinical trials may prove such statements

to be incorrect, or could raise concerns regarding, and perceptions relating to, psychedelic and psychoactive products.

Given these risks,

uncertainties and assumptions, readers should not place undue reliance on such articles and reports.

Future research studies and clinical

trials may draw opposing conclusions to those stated in this proxy statement/prospectus or reach negative conclusions regarding the medical

benefits, viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to psychedelic and psychoactive

products, which could have a material adverse effect on the demand for our Psychedelic Derivatives with the potential to lead to a material

adverse effect on the Company’s business, financial condition and results of operations.

in United States and internationally regarding the medical benefits, viability, safety, efficacy, addictiveness, dosing and social

acceptance of psychedelic and psychoactive products remains in early stages.

There have been relatively few clinical trials on the

benefits of such products.

Although we believe that the articles, reports and studies support our beliefs regarding the medical

benefits, viability, safety, efficacy, dosing and social acceptance of psychedelic and psychoactive products, future research and

clinical trials may prove such statements to be incorrect, or could raise concerns regarding, and perceptions relating to,

psychedelic and psychoactive products.

Given these risks, uncertainties and assumptions, readers should not place undue reliance on

such articles and reports.

Future research studies and clinical trials may draw opposing conclusions to those stated in this Annual

Report on Form 10-K or reach negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing, social

acceptance or other facts and perceptions related to psychedelic and psychoactive products, which could have a material adverse

effect on the demand for our Psychedelic Derivatives with the potential to lead to a material adverse effect on the Company’s

business, financial condition and results of operations.

psychedelic therapy industry is difficult to quantify and investors will be reliant on their own estimates of the accuracy of market

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As a result of all of these factors, our competitors may succeed in obtaining patent

protection and/or Health Canada or discovering, developing and commercializing Psychedelic Derivatives before we do or may develop Psychedelic

protection or discovering, developing and commercializing Psychedelic Derivatives before we do or may develop Psychedelic

Derivatives that are deemed to be more effective or gain greater market acceptance than those of the Company.

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practices, health and safety, the conduct of operations and preclinical trials.

In addition to FDA and Health Canada restrictions

on the marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain marketing

In addition to FDA and Health Canada restrictions on

the marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain marketing

practices in the pharmaceutical and medical industries in recent years, as well as consulting or other service agreements with physicians

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The DEA regulates chemical compounds as Schedule I, II, III, IV or V substances.

I substances by-definition have a high potential for abuse, have no currently accepted medical use in the United States, lack

accepted safety for use under medical supervision, and may not be prescribed marketed or sold in the United States.

Pharmaceutical products

approved for use in the United States may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the

highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances.

I and II substances are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements

I substances by-definition have a high potential for abuse, have no currently accepted medical use in the United States, lack accepted

safety for use under medical supervision, and may not be prescribed marketed or sold in the United States.

Pharmaceutical products approved

for use in the United States may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest

potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances.

Schedule I and II

substances are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements

and criteria for importation.

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registration and inspection of facilities.

Facilities conducting research, manufacturing, distributing, importing or exporting, or

dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping,

reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion.

All these facilities must renew their

registrations annually, except dispensing facilities, which must renew every three years.

The DEA conducts periodic inspections of

certain registered establishments that handle controlled substances.

Obtaining and maintaining the necessary registrations may result

in delay of the importation, manufacturing or distribution of product candidates.

Furthermore, failure to maintain compliance with

the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse

Facilities conducting research, manufacturing,

distributing, importing or exporting, or dispensing controlled substances must be registered

(licensed) to perform these activities and have the security, control, recordkeeping, reporting

and inventory mechanisms required by the DEA to prevent drug loss and diversion.

facilities must renew their registrations annually, except dispensing facilities, which must

renew every three years.

The DEA conducts periodic inspections of certain registered establishments

that handle controlled substances.

Obtaining and maintaining the necessary registrations

may result in delay of the importation, manufacturing or distribution of product candidates.

Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting

in loss or diversion, can result in regulatory action that could have a material adverse

effect on our business, financial condition and results of operations.

The DEA may seek civil penalties, refuse to renew necessary

registrations, or initiate proceedings to restrict, suspend or revoke those registrations.

In certain circumstances, violations could

lead to criminal proceedings.

The DEA may seek civil

penalties, refuse to renew necessary registrations, or initiate proceedings to restrict,

suspend or revoke those registrations.

In certain circumstances, violations could lead to

criminal proceedings.

controlled-substances laws.

Individual U.S.

states have also established controlled substance laws and regulations.

Though state-controlled

substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule product candidates.

While some states automatically schedule a drug based on federal action, other states schedule drugs through rule making or a legislative

State scheduling may delay commercial sale of any product for which we obtain federal regulatory approval and adverse scheduling

states have also established controlled substance

laws and regulations.

Though state-controlled substances laws often mirror federal law, because

the states are separate jurisdictions, they may separately schedule product candidates.

some states automatically schedule a drug based on federal action, other states schedule

drugs through rule making or a legislative action.

State scheduling may delay commercial

sale of any product for which we obtain federal regulatory approval and adverse scheduling

could have a material adverse effect on the commercial attractiveness of such product.

We or any partners must also obtain separate

state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical

trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the

states in addition to those from the DEA or otherwise arising under federal law.

Because some of our current and future product candidates contain Schedule I controlled substances, to conduct clinical trials

in the United States prior to approval, each of our research sites must submit a research protocol to the DEA and obtain and maintain

a DEA researcher registration that will allow those sites to handle and dispense such product candidates and to obtain the product

from our importer.

If the DEA delays or denies the grant of a researcher registration to one or more research sites, the clinical

trial could be significantly delayed, and we could lose clinical trial sites.

If any of our product candidates is approved and classified as a Schedule II, III or IV substance, an importer can only import it

for commercial purposes if it obtains an importer registration and files an application for an import permit for each import.

DEA provides annual assessments/estimates to the International Narcotics Control Board, which guides the DEA in the amounts of controlled

or any partners must also obtain separate state registrations, permits or licenses in order

to be able to obtain, handle, and distribute controlled substances for clinical trials or

commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement

and sanctions by the states in addition to those from the DEA or otherwise arising under

Because some of our current and future product candidates contain Schedule I controlled

substances, to conduct clinical trials in the United States prior to approval, each of our

research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher

registration that will allow those sites to handle and dispense such product candidates and

to obtain the product from our importer.

If the DEA delays or denies the grant of a researcher

registration to one or more research sites, the clinical trial could be significantly delayed,

and we could lose clinical trial sites.

● Importation.

If any of our product candidates is approved and classified as a Schedule II, III or IV substance,

an importer can only import it for commercial purposes if it obtains an importer registration

and files an application for an import permit for each import.

The DEA provides annual assessments/estimates

to the International Narcotics Control Board, which guides the DEA in the amounts of controlled

substances that the DEA authorizes to be imported.

The failure to identify an importer or obtain the necessary import authority,

including specific quantities, could affect the availability of our product candidates and have a material adverse effect on our

business, results of operations and financial condition.

In addition, an application for a Schedule II importer registration must

be published in the Federal Register, and there is a waiting period for third-party comments to be submitted.

It is always possible

that adverse comments may delay the grant of an importer registration.

If, because of a Schedule II classification or voluntarily, we were to conduct manufacturing or repackaging/relabeling in the United

States, our contract manufacturers would be subject to the DEA’s annual manufacturing and procurement quota requirements.

The failure to identify an importer or

obtain the necessary import authority, including specific quantities, could affect the availability

of our product candidates and have a material adverse effect on our business, results of

operations and financial condition.

In addition, an application for a Schedule II importer

registration must be published in the Federal Register, and there is a waiting period for

third-party comments to be submitted.

It is always possible that adverse comments may delay

the grant of an importer registration.

● Manufacture.

If, because of a Schedule II classification or voluntarily, we were to conduct manufacturing

or repackaging/relabeling in the United States, our contract manufacturers would be subject

to the DEA’s annual manufacturing and procurement quota requirements.

● Distribution.

If any of our product candidates is approved for marketing and scheduled under Schedule II, III or IV, we would also need to identify

wholesale distributors with the appropriate DEA registrations and authority to possess and distribute or dispense such products.

If any of our product candidates is approved for marketing and scheduled under Schedule II,

III or IV, we would also need to identify wholesale distributors with the appropriate DEA

registrations and authority to possess and distribute or dispense such products.

psychedelic APIs we intend to utilize are listed as Schedule I controlled substances under the CSA in the United States and under similar

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respect to psilocybin and psilocin does not absolve us of potential liability under U.S.

federal law, the Canadian law or EU law,

nor provide a defense to any proceeding which may be brought against us.

Any such proceedings brought against us may adversely affect

our operations and financial performance.

federal law, the Canadian law or EU law, nor

provide a defense to any proceeding which may be brought against us.

Any such proceedings brought against us may adversely affect our

operations and financial performance.

prospective products will be subject to the various federal and state laws and regulations relating to health and safety.

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to differing interpretations.

currently have four product candidates that are in preclinical development for indications such as Radiation Dermatitis and other side-effects

of cancer, including cancer-related distress.

We intend to develop additional drug candidates targeting other indications, including,

for example, pain and post-traumatic-stress disorder (PTSD).

After completing the requisite preclinical testing, submissions to FDA (namely

IND applications), internal review board (“IRB”) review, and any other applicable obligations that must be completed before

clinical testing may begin in the United States, we must conduct extensive clinical trials to demonstrate the safety and efficacy of

our product candidates.

Clinical testing is expensive, time consuming, and uncertain as to outcome.

We cannot guarantee that any clinical

trials will be conducted as planned or completed on schedule, or at all.

Failures in connection with one or more clinical trials can

occur at any stage of testing.

currently have two product candidates that are in preclinical development for indications such as Radiation Dermatitis and other

side-effects of cancer, including anxiety.

We intend to develop additional drug candidates targeting other

indications, including, for example, pain and post-traumatic-stress disorder (PTSD).

After completing the requisite preclinical

testing, submissions to FDA (namely IND applications), internal review board (“IRB”) review, and any other applicable

obligations that must be completed before clinical testing may begin in the United States, we must conduct extensive clinical trials

to demonstrate the safety and efficacy of our product candidates.

Clinical testing is expensive, time consuming, and uncertain as to

We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, or at all.

connection with one or more clinical trials can occur at any stage of testing.

FDA and other applicable regulatory agencies may analyze or interpret the results of clinical trials differently than us.

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in reaching a consensus with regulatory authorities on trial design;

in reaching agreement on acceptable terms with prospective contract research organization (“CRO”) and clinical trial

in sourcing materials and research animals for preclinical testing and correlated testing windows at the appropriate CRO facilities;

in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site;

in reaching agreement on acceptable terms with prospective contract research organization

(“CRO”) and clinical trial sites;

in sourcing materials and research animals for preclinical testing and correlated testing

windows at the appropriate CRO facilities;

in opening clinical trial sites or obtaining required IRB or independent ethics committee

approval at each clinical trial site;

or perceived lack of effectiveness of any product candidate during clinical trials;

of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues, such as drug interactions,

including those which cause confounding changes to the levels of other concomitant medications;

of serious or unexpected toxicities or side effects experienced by trial participants or

other safety issues, such as drug interactions, including those which cause confounding changes

to the levels of other concomitant medications;

than expected rates of subject recruitment and enrollment rates in clinical trials;

in retaining subjects for the entire duration of applicable clinical studies (as study subjects may withdraw at any time due to adverse

side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason;

or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing

in retaining subjects for the entire duration of applicable clinical studies (as study subjects

may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy,

fatigue with the clinical trial process or for any other reason;

or inability in manufacturing or obtaining sufficient quantities of materials for use in

clinical trials due to regulatory and manufacturing constraints;

of or changes in our manufacturing process or product candidate formulation;

in obtaining regulatory authorizations, such as INDs and any others that must be obtained, maintained, and/or satisfied to commence

a clinical trial, including “clinical holds” or delays requiring suspension or termination of a trial by a regulatory

agency, such as the FDA, before or after a trial is commenced;

in applicable regulatory policies and regulation, including changes to requirements imposed on the extent, nature or timing of studies;

or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective clinical trial sites;

in obtaining regulatory authorizations, such as INDs and any others that must be obtained,

maintained, and/or satisfied to commence a clinical trial, including “clinical holds”

or delays requiring suspension or termination of a trial by a regulatory agency, such as

the FDA, before or after a trial is commenced;

in applicable regulatory policies and regulation, including changes to requirements imposed

on the extent, nature or timing of studies;

or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols

with prospective clinical trial sites;

● uncertainty

regarding proper dosing;

or failure to supply product for use in clinical trials which conforms to regulatory specification;

● unfavorable

results from ongoing preclinical studies and clinical trials;

of our CROs, or other third-party contractors to comply with all contractual requirements or to perform their services in a timely

or acceptable manner;

by us, our employees, our CROs or their employees to comply with all applicable FDA or other regulatory requirements relating to

the conduct of clinical trials;

of our CROs, or other third-party contractors to comply with all contractual requirements

or to perform their services in a timely or acceptable manner;

by us, our employees, our CROs or their employees to comply with all applicable FDA or other

regulatory requirements relating to the conduct of clinical trials;

conflicts with participating clinicians and clinical institutions;

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concerns with cannabinoid products or psychedelics, generally, and the potential for abuse;

● insufficient

data to support regulatory approval;

or unwillingness of medical investigators to follow our clinical protocols;

in maintaining contact with patients during or after treatment, which may result in incomplete data;

in maintaining contact with patients during or after treatment, which may result in incomplete

clinical holds placed on company by regulatory agencies during review process;

or failure to supply psychedelic product for use in clinical trials due to cross-border or inter-continental shipment or customs

handling and processing of controlled substances;

finding clinical trials sites whose investigators possess the requisite credentials to oversee clinical trials involving a Schedule

or failure to supply psychedelic product for use in clinical trials due to cross-border or

inter-continental shipment or customs handling and processing of controlled substances;

finding clinical trials sites whose investigators possess the requisite credentials to oversee

clinical trials involving a Schedule I substance.

of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

third-parties we rely on to conduct our operations are subject to regulatory requirements

rely on third parties to conduct our preclinical studies and clinical trials.

We rely on CROs and clinical data management organizations

to design, conduct, supervise and monitor our preclinical studies and clinical trials.

We and our CROs are required to comply with various

regulations, including GCP, which are enforced by regulatory agencies, to ensure that the health, safety and rights of patients are protected

in clinical development and clinical trials, and that trial data integrity is assured.

Regulatory authorities ensure compliance with

these requirements through periodic inspections of trial sponsors, principal investigators and trial sites.

Our reliance on third parties

that we do not control does not relieve us of these responsibilities and requirements.

If we or any of our CROs fail to comply with applicable

requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or other comparable foreign regulatory

authorities may require us to perform additional clinical trials before approving our marketing applications.

Because we rely on third

parties, our internal capacity to perform these functions is limited.

Outsourcing these functions involves risk that third parties may

not perform to our standards, may not produce results in a timely manner or may fail to perform at all.

rely on third parties to conduct our preclinical studies and expect to use clinical studies in the future.

We rely on CROs and clinical data

management organizations to design, conduct, supervise and monitor our preclinical studies and clinical trials.

We and our CROs are

required to comply with various regulations, including GCP, which are enforced by regulatory agencies, to ensure that the health,

safety and rights of patients are protected in clinical development and clinical trials, and that trial data integrity is assured.

Regulatory authorities ensure compliance with these requirements through periodic inspections of trial sponsors, principal

investigators and trial sites.

Our reliance on third parties that we do not control does not relieve us of these responsibilities

and requirements.

If we or any of our CROs fail to comply with applicable requirements, the clinical data generated in our clinical

trials may be deemed unreliable and the FDA or other comparable foreign regulatory authorities may require us to perform additional

clinical trials before approving our marketing applications.

Because we rely on third parties, our internal capacity to perform

these functions is limited.

Outsourcing these functions involves risk that third parties may not perform to our standards, may not

produce results in a timely manner or may fail to perform at all.

rely on third parties to supply the materials for, and manufacture, our research and development, and preclinical and clinical trial

supplies and APIs, and we expect to continue to rely on third-party

manufacturers if we receive regulatory approval for any product candidate.

To the extent that we have existing, or enter into future,

manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner

consistent with contractual and regulatory requirements, including those related to quality control and assurance.

supplies and APIs, and we expect to continue to rely on third-party manufacturers if we receive regulatory approval for any product candidate.

To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third

parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related

to quality control and assurance.

or delays in enrolling patients in clinical trials may result in delay or prevention of necessary regulatory approvals.

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to approve pending applications or supplements to approved applications submitted by us;

restrictions on our operations, including by requiring us to enter in to a Corporate Integrity Agreement or closing our contract

manufacturers’ facilities, if any;

restrictions on our operations, including by requiring us to enter in to a Corporate Integrity

Agreement or closing our contract manufacturers’ facilities, if any;

or detain products or require a product recall.

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authorities may deny regulatory approval of our future product candidates;

authorities may require certain labeling statements, such as warnings or contraindications or limitations on the indications for

use, and/or impose restrictions on distribution in the form of a Risk Evaluation and Mitigation Strategy (“REMS”) in

connection with approval or post-approval;

authorities may withdraw their approval, require more onerous labeling statements, impose a more restrictive REMS, or require it

to recall any product that is approved;

may be required to change the way the product is administered or conduct additional clinical trials;

authorities may require certain labeling statements, such as warnings or contraindications

or limitations on the indications for use, and/or impose restrictions on distribution in

the form of a Risk Evaluation and Mitigation Strategy (“REMS”) in connection

with approval or post-approval;

authorities may withdraw their approval, require more onerous labeling statements, impose

a more restrictive REMS, or require it to recall any product that is approved;

may be required to change the way the product is administered or conduct additional clinical

relationships with our collaboration partners may suffer;

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reputation may suffer.

The reputational risk is heightened with respect to those of our future product candidates that are being

developed for pediatric indications.

The reputational risk is heightened with respect to those of our future

product candidates that are being developed for pediatric indications.

may voluntarily suspend or terminate our clinical trials if at any time we believe that the product candidates present an unacceptable

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from the commercialization of these products either by us or by our collaboration partners.

success of our prospective product candidates and future approved products, if any, especially those containing hemp-derived CBD, is

subject to a number of constantly-evolving state and federal laws, regulations, and enforcement policies pertaining to hemp-derived CBD

and/or cannabis more generally.

success of our prospective product candidates and any naturally derived or synthetic cannabinoid-containing candidates we may

develop or approved products we may market, if any, in the future, is subject to a number of constantly-evolving

state and federal laws, regulations, and enforcement policies pertaining to CBD, THC, and/or cannabis more

Agriculture Improvement Act of 2018, or the “2018 Farm Bill,” was signed into law on December 20, 2018.

This 2018 Farm Bill

expressly excluded “hemp” from the federal Controlled Substances Act of 1970 and the Controlled Substances Import and Export

Act’s, as amended (the “CSA”)’s definition of marijuana and, accordingly, declassified substances derived from

expressly excluded “hemp” from the federal CSA’s definition of marijuana and, accordingly, declassified substances derived from

or containing any part(s) of the cannabis plant containing not more than 0.3% THC on a dry-weight basis from Schedule I.

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2018 Farm Bill legalized the cultivation and commercial sale of hemp in the United States, subject to applicable state laws and regulations

and applicable FDCA provisions, including any implementing regulations, as interpreted and enforced by the FDA.

addition, on October 31, 2019, The U.S.

Department of Agriculture, or USDA, issued an Interim Final Rule, or IFR, establishing the Domestic

Hemp Production Program.

This program provides the parameters for federal licensing of hemp production, as well as guidelines for approval

of licensing plans established by states and Native American tribes.

Under the IFR, and confirmed by the Final Rule issued by the USDA

on January 19, 2021, hemp containing THC levels greater than 0.3 percent remains a Schedule I controlled substance.

Notwithstanding

the removal of plant-derived hemp from the CSA, the 2018 Farm Bill did not alter the FDA’s authority to regulate products containing

cannabis or cannabis-derived compounds under the FDC Act.

Hemp products including cannabinoids that qualify as drugs, food, dietary supplements,

veterinary products, and cosmetics for example, will continue to be subject to regulation by the FDA under the applicable regulatory

Following passage of the 2018 Farm Bill, the FDA reaffirmed its enforcement authority and reiterated the requirement that

a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit implicitly or explicitly attributed

to, or based on, the presence of the cannabinoid as an ingredient, or any other health/medical claim, be approved by the FDA for its

intended use(s) before it may be introduced into interstate commerce.

Currently, the FDA treats cannabidiol as a pharmaceutical product,

and any therapeutic product containing cannabidiol must go through the drug approval process and demonstrate the safety and efficacy

of the formulation at issue to receive FDA approval.

To date, the FDA has approved one cannabis-derived drug product, Epidiolex, and

three synthetic cannabis-related drug products (Marinol (dronabinol), Syndros (dronabinol), and Cesamet (nabilone)).

state, federal, and international hemp and CBD laws and regulations are broad in scope and subject to evolving interpretations, which

could require us to incur substantial costs associated with compliance requirements.

In addition, violations of these laws, or allegations

of such violations, could disrupt our business and result in a material adverse effect on our operations.

In addition, it is possible

that regulations may be enacted in the future that will be directly applicable to our proposed business regarding cannabinoid production.

It is also possible that the federal government will begin strictly enforcing existing laws, which may limit the legal uses of the hemp

plant and its derivatives and extracts, such as cannabinoids.

and applicable FDCA provisions and regulations interpreted and enforced by the FDA.

Notwithstanding the removal of hemp from Schedule I of the CSA, the 2018

Farm Bill did not alter the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds under the FDCA.

Currently, any therapeutic product containing cannabidiol or other cannabinoids must demonstrate safety and efficacy for the applicable

intended use(s) via the FDA’s new-drug approval process to be lawfully marketed in the United States.

We currently intend to pursue

FDA approval via the NDA pathway for all cannabinoid candidates we may develop.

To date, the FDA has only approved one drug with a naturally

derived cannabinoid as the active ingredient and three drugs containing synthetic cannabinoids.

There can be no assurance that our product

candidates containing cannabinoids (as the active drug ingredient(s)) will be similarly approved for commercialization in the United States

at any time in the near or distant future.

and federal laws pertaining to cannabis, including those relating to hemp and CBD, as well as those governing marijuana for medical and/or

recreational uses, as applicable, are broad in scope and subject to evolving interpretations, and we could ultimately incur substantial

costs in connection with determining the applicability of the various, overlapping laws and regulations in this area and compliance.

In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse

effect on our operations.

In addition, it is possible that regulations may be enacted in the future that will be directly applicable

to our current or future cannabinoid-related operations.

We cannot predict the nature of any future laws, regulations, interpretations,

or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when

and if promulgated, could have on our activities in the cannabis industry.

prospective product candidates are currently intended for development under an IND application and, eventually, approval under

an NDA, which will mean that, if approved, we can market such products with claims about their proven medical benefits for the applicable

indications for use to the extent consistent with the product’s NDA.

or applications, pertaining to any cannabinoids with which we may work in connection with the development and/or marketing of any drug

products we may develop and/or market.

we believe that the 2018 Farm Bill and analogous state legislation has reduced the amount of DEA oversight of hemp-derived cannabinoids,

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law and substantial uncertainty remains as to the future of federal and state regulation of cannabinoid

In addition, the FDA has approved only one natural cannabis-based drug product, which contains only hemp-derived CBD.

can be no assurance that our product candidates containing cannabinoids (as the active drug ingredient(s)) will be similarly approved

for commercialization in the United States at any time in the near or distant future.

Any regulations the FDA issues relating to the

sale, marketing, and/or other activities involving cannabinoid or certain cannabinoid-containing products could have a material adverse

effect on our business, financial condition and results of operations.

the uncertainty surrounding future state regulations and the continuing barriers that still exist for cannabinoids in certain product

categories due to FDA regulation, it is unknown what impact the removal of hemp from the CSA, and any resulting commercialization of

hemp products, may have on our business.

Any regulations the FDA issues relating to the sale, marketing, and/or other activities involving cannabinoid or certain cannabinoid-containing

products could have a material adverse effect on our business, financial condition, and results of operations.

associated with compliance with numerous laws and regulations could impact our financial results.

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affect our ability to operate our business or our financial results.

to comply with any applicable FDA requirements, relating to CBD or otherwise, may result

in, among other things, injunctions, product withdrawals, recalls, product seizures, fines

and criminal prosecutions.

to comply with any applicable FDA requirements, relating to CBD or otherwise, may result in, among other things, injunctions, product

withdrawals, recalls, product seizures, fines and criminal prosecutions.

Our advertising is also subject to regulation by the Federal

Trade Commission (the “FTC”) under the Federal Trade Commission Act.

Additionally,

analogous state advertising and labeling laws are often enforced by state attorneys general,

and any state or federal enforcement action based on potentially misleading or deceptive

advertising is often followed by costly class-action complaints under state consumer-protection

Additionally, analogous state advertising and labeling

laws are often enforced by state attorneys general, and any state or federal enforcement action based on potentially misleading or deceptive

advertising is often followed by costly class-action complaints under state consumer-protection laws.

FDA, on its own and in collaboration with the FTC, has issued numerous warning letters to companies offering for sale of topical, oral,

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opioid use disorder, and other serious diseases, without sufficient evidence and the legally required FDA approval.”

FDA has continuously demonstrated its commitment to taking action against companies making medical claims about products containing

CBD (as the active ingredient), as selling unapproved products with unsubstantiated therapeutic claims can put patients and consumers

FDA has continuously demonstrated its commitment to taking action against companies making medical claims about products containing CBD

(as the active ingredient), as selling unapproved products with unsubstantiated therapeutic claims can put patients and consumers at

The FDA does not believe CBD has been shown to be safe and effective for any therapeutic use, except as used in Epidiolex, the

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risks related to Psychedelic Derivatives

execution of our strategy is contingent, in part, upon compliance with regulatory requirements from time to time enacted by governmental

authorities and obtaining all regulatory approvals, where necessary, for the development and license of our Psychedelic Derivatives.

Health Canada has not yet determined whether our Psychedelic Derivatives will be scheduled as controlled substances.

The psychedelic

therapy industry is a new and emerging industry with ambiguous existing regulations and uncertainty as to future regulations;

predict the impact of the ever-evolving compliance regime in respect of this industry.

In the event Health Canada determines that our

Psychedelic Derivatives are controlled substances and therefore, require regulatory approval, to the extent that we produce Psychedelic

Derivatives, we will be required to obtain such regulatory approval.

execution of our strategy is contingent, in part, upon compliance with regulatory requirements from time to time enacted by

governmental authorities and obtaining all regulatory approvals, where necessary, for the development and license of our Psychedelic

Health Canada and the FDA have not yet determined whether our Psychedelic Derivatives will be scheduled as controlled

The psychedelic therapy industry is a new and emerging industry with ambiguous existing regulations and uncertainty as

to future regulations;

We cannot predict the impact of the ever-evolving compliance regime in respect of this industry.

Health Canada or the FDA determine that our Psychedelic Derivatives are controlled substances and therefore, require regulatory

approval, to the extent that we produce Psychedelic Derivatives, we will be required to obtain such regulatory approval.

we may not be able to predict the time required to secure all appropriate regulatory approvals for our Psychedelic Derivatives, or the

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control over financial reporting.

management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021

and concluded our internal control over financial reporting was not effective as of December 31, 2021 due to the material weakness

related to segregation of duties.

As of December 31, 2021, there were control deficiencies which constituted a material weakness

in our internal control over financial reporting.

Management has taken, and is taking steps to strengthen our internal control over financial

we have conducted evaluation of the material weakness to determine the appropriate remedy and have established procedures

for documenting disclosures and disclosure controls.

management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022 and

concluded our internal control over financial reporting was not effective as of December 31, 2022 due to the material weakness related

to segregation of duties.

As of December 31, 2022, there were control deficiencies which constituted a material weakness in our internal

control over financial reporting.

Management has taken, and is taking steps to strengthen our internal control over financial reporting:

we have conducted evaluation of the material weakness to determine the appropriate remedy and have established procedures for documenting

disclosures and disclosure controls.

to the small size of our Company, we do not maintain sufficient segregation of duties to ensure the processing, review and authorization

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we may not be able to realize anticipated cost savings or synergies.

third parties claim that intellectual property used by us infringes upon their intellectual

property, our operating profits could be adversely affected.

third parties claim that intellectual property used by us infringes upon their intellectual property, our operating profits could be

adversely affected.

is a substantial amount of litigation, both within and outside the U.S., involving patent and other intellectual property rights in the

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capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain, if any, for the foreseeable future.

the event that we fail to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted, which could affect

our market price and liquidity.

common stock is listed on Nasdaq.

For continued listing on Nasdaq, we will be required to comply with the continued listing requirements,

including the minimum market capitalization standard, the corporate governance requirements and the minimum closing bid price requirement,

among other requirements.

On February 18, 2022, we received a letter from the Listing Qualifications Department of Nasdaq indicating

that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between January

5, 2022, through February 17, 2022, the Company did not meet the minimum bid price of $1.00 per share required for continued listing

on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

The letter also indicated that the Company will be provided

with a compliance period of 180 calendar days, or until August 17, 2022 (the “Compliance Period”), in which to regain compliance

pursuant to Nasdaq Listing Rule 5810(c)(3)(A).

the event that we fail to satisfy any of the listing requirements of Nasdaq, or fail to regain compliance with Nasdaq’s minimum

bid price requirement within the Compliance Period, our common stock may be delisted.

the event that we fail to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted, which could affect our

market price and liquidity.

Our common stock is listed on Nasdaq.

For continued listing on Nasdaq,

we will be required to comply with the continued listing requirements, including the minimum market capitalization standard, the corporate

governance requirements and the minimum closing bid price requirement, among other requirements.

On February 18, 2022, we received a letter

from the Listing Qualifications Department of Nasdaq indicating that, based upon the closing bid price of the Company’s common stock

for the 30 consecutive business day period between January 5, 2022, through February 17, 2022, the Company did not meet the minimum bid

price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

29, 2022, we received a letter from the Nasdaq staff stating that for the last 10 consecutive business days, from July 15 to July 28,

2022, the closing bid price of our common stock had been at $1.00 per share or greater.

Accordingly, we regained compliance with Listing

Rule 5550(a)(2).

the event that we fail to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted.

If we are unable to list on Nasdaq, we would likely

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listing of our common stock on Nasdaq does not assure that a meaningful, consistent and liquid trading market exists.

market for our common stock does continue, it may be difficult for investors to sell their shares without depressing the market

price for the shares or at all.

If an active market

for our common stock does continue, it may be difficult for investors to sell their shares without depressing the market price for the

shares or at all.

We maintain our cash at financial institutions,

often in balances that exceed federally insured limits.

The majority of our cash is held

in accounts at U.S.

banking institutions that we believe are of high quality.

Cash held in non-interest-bearing and interest-bearing operating

accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

If such banking institutions were

to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations.

While the FDIC took control of

one such banking institution, Silicon Valley Bank (“SVB”), on March 10, 2023, and the FDIC also took control of Signature

Bank (“Signature Bank”) on March 12, 2023, we did not have any accounts with SVB or Signature Bank and therefore did not experience

any specific risk of loss.

The FDIC also announced that account holders would be made whole.

Thus, we do not view the risk as material

to our financial condition.

However, as the FDIC continues to address the situation with SVB, Signature Bank and other similarly situated

banking institutions, the risk of loss in excess of insurance limitations has generally increased.

Any material loss that we may experience

in the future could have an adverse effect on our ability to pay our operational expenses or make other payments and may require us to

move our accounts to other banks, which could cause a temporary delay in making payments to our vendors and employees and cause other

operational inconveniences.

There are risks associated with the completion

of the planned spin-off of our cannabinoid clinical development business.

As previously announced, we plan to conduct a Spin-Off

of our cannabinoid clinical development business into Akos Biosciences, Inc., which will operate independently as a publicly listed company.

There is no assurance we will be able to successfully complete the Spin-Off.

In the event the Company does not complete the Spin-Off,

it could incur write-offs related to the legal, tax and regulatory costs of the transaction.

put right we granted to the investor in Akos if the spin-off has not occurred by May 5, 2023 may have an adverse impact on us.

May 5, 2022, Akos issued 1,000 shares of Series A Preferred Stock to an investor.

The Akos Series A Preferred Certificate of Designations

provides that upon the earlier of (i) the one-year anniversary of May 5, 2022, and only in the event that the Spin-Off has not occurred;

or (ii) such time that Akos and the Company have abandoned the Spin-Off or the Company is no longer pursuing the Spin-Off in good faith,

the holder of the Akos Series A Preferred Stock shall have the right (the “Put Right”), but not the obligation, to cause

Akos to purchase all or a portion of the Akos Series A Preferred Stock for a purchase price equal to $1,000 per share, subject to certain

adjustments as set forth in the Akos Series A Preferred Certificate of Designations, plus all the accrued but unpaid dividends per share.

Pursuant to the Akos Purchase Agreement, the Company has guaranteed the payment of the purchase price for the shares purchased under

the Put Right.

the Spin-Off does not occur by May 5, 2023, the Put Right will be in effect and if exercised, it could adversely impact our liquidity

and capital resources.

may acquire businesses or products, or form strategic alliances, in the future, and may not realize the benefits of such acquisitions.

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could result in a material adverse effect on our business and prospects.

Reverse Stock Split may decrease the liquidity of the shares of our common stock.

liquidity of the shares of our common stock may be affected adversely by the Reverse Stock Split given the reduced number of shares that

are outstanding following the Reverse Stock Split.

In addition, the Reverse Stock Split would have increased the number of stockholders

who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in

the cost of selling their shares and greater difficulty effecting such sales.

Unresolved Staff Comments

principal corporate office is located at 4851 Tamiami Trail N, Suite 200 Naples, FL 34103.

The Company believes our office is in good

condition and is sufficient to conduct our operations.

Our principal corporate office is held under a month-to-month operating lease.

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