What changed in this filing

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Item 1. Business

2021-04-02 compared with 2020-04-14 · 617 added, 742 removed, 18 unchanged (99% of the section changed)

Our primary business is the development

of a portfolio of transdermal pharmaceutical products.

Our lead product is our abuse deterrent fentanyl transdermal system which

we are developing to provide clinicians and patients with an extended-release transdermal fentanyl product for use in managing

chronic pain requiring around the clock opioid therapy combined with properties designed to help combat the opioid crisis by deterring

the abuse and misuse of fentanyl patches.

We believe that our abuse deterrent technology can be broadly applied to various transdermal

products and our strategy is to follow the development of our abuse deterrent fentanyl transdermal system with the development

of additional transdermal prescription products for pharmaceuticals that have risks or a history of abuse.

In addition, we are

developing a portfolio of transdermal pharmaceutical products to deliver commercially available drugs or biologics that are typically

delivered by injection but with the potential to improve compliance and therapeutic outcomes.

Because of our financial position, we have

put our development efforts with respect to these products on hold, and our only business is the performance of contract services

for a small number of customers.

Because of both our financial position and the effects of the COVID-19 pandemic, our contract

service business has also been scaled back.

The description of our business in this annual report is based on our ability to raise

significant financing or enter into a joint venture agreement with a third party that has the financial ability to fund the joint

venture’s operations.

We cannot assure you that we will be able to obtain necessary financing or enter into a joint venture

agreement on reasonable, if any, terms.

If we are not able to continue obtain financing or enter into a joint venture agreement,

we may not be able to continue in business.

Through July 31, 2018, we had not generated

any revenue from our business, which was the development and marketing of a range of transdermal consumer patches.

Consumer products

are products that can be sold over-the-counter and do not require a prescription.

Most of our consumer products are considered

drugs in the United States and cannot be marketed in the United States without approval from the FDA.

We have not taken any steps

to seek to obtain FDA approval for any of our consumer products, and we have no plans to do so in the near term.

As a result, we

are not selling our consumer transdermal patch products in the United States.

Any revenue we generate from our consumer products

will be from the sale of the products to distributors for distribution outside of the United States.

We acquired 4P Therapeutics on August 1,

2018 for $2,250,000 consisting of 62,500 shares of common stock, valued at $1,850,000, cash of $400,000, and a 6% royalty on any

revenues we generate or derive from the abuse deterrent intellectual property developed by 4P Therapeutics payable to Steve Damon,

who has been one of our directors since April 2018 and who was the sole equity owner of 4P Therapeutics.

As a result of the acquisition,

the focus of our business has changed from the development and marketing of consumer transdermal products to the development of

4P Therapeutics’

portfolio of pharmaceutical transdermal system, with the lead product being the abuse deterrent fentanyl

transdermal system.

We have received patent protection from the

European Patent Office, the patent offices for Japan, Australia and Russia and the patent office of Mexico has granted a notice

of allowance for abuse deterrent transdermal technology patent used in our lead product, an abuse deterrent fentanyl transdermal

primary business is the development of a portfolio of transdermal pharmaceutical products.

Our lead product is our abuse deterrent

fentanyl transdermal system which we are developing to provide clinicians and patients with an extended-release transdermal fentanyl

product for use in managing chronic pain requiring around the clock opioid therapy combined with our AVERSA®

technology which

we plan to show can reduce the abuse and misuse of fentanyl patches.

We believe that AVERSA®

can be broadly applied to various

transdermal products and our strategy is to follow the development of our abuse deterrent fentanyl transdermal system with the

development of additional transdermal prescription products for pharmaceuticals that have risks or a history of abuse.

we are developing a portfolio of transdermal pharmaceutical products to deliver commercially available drugs or biologics that

are typically delivered by injection but with the potential to improve compliance and therapeutic outcomes.

of our financial position, we have put our development efforts with respect to these products on hold, and our only business is

the performance of contract manufacturing and R&D services.

The description of our business in this annual report is based

on our ability to raise significant financing or enter into a joint venture agreement with a third party that has the financial

ability to fund the joint venture’s operations.

We cannot assure you that we will be able to obtain necessary financing

or enter into a joint venture agreement on reasonable, if any, terms for the development of our prescription pipeline.

July 31, 2018, we had not generated any revenue from our business, which was the development of a range of transdermal consumer

Consumer products are products that can be sold over-the-counter and do not require a prescription.

Most transdermal

patches are considered drugs in the United States and cannot be marketed in the United States without approval from the FDA.

have not taken any steps to seek to obtain FDA approval for any of our consumer products, and we have no plans to do so in the

acquired 4P Therapeutics on August 1, 2018 for $2,250,000 consisting of 62,500 shares of common stock, valued at $1,850,000, cash

of $400,000, and a 6% royalty on any revenues we generate or derive from the abuse deterrent intellectual property developed by

4P Therapeutics payable to Steve Damon, who has been one of our directors since April 2018 and who was the sole equity owner of

4P Therapeutics.

As a result of the acquisition, the focus of our business has changed from the development and marketing of consumer

transdermal products to the development of 4P Therapeutics’

portfolio of pharmaceutical transdermal system, with the lead

product being the abuse deterrent fentanyl transdermal system, AVERSA®.

have received patent protection from the European Patent Office, the patent offices for Japan, Australia and Russia and and the

patent office of Mexico has granted a notice of allowance for abuse deterrent transdermal technology patent used in our lead product,

an abuse deterrent fentanyl transdermal system.

The patent is being prosecuted in the United States and in other countries.

The patent applications were filed by 4P Therapeutics

prior to our acquisition of 4P Therapeutics and any patents issued in respect of these applications will be in the name of 4P Therapeutics.

In addition to applying the technology to developing an abuse deterrent fentanyl transdermal system, we believe that the abuse

deterrent patch technology can be applied to other opioids and pain medication patches where there is a risk of abuse and overdose,

as well as other transdermal pharmaceuticals where we believe our technology can help prevent abuse or accidental misuse.

Our lead product under development is our

abuse deterrent fentanyl transdermal system which we plan to develop to deter the abuse and accidental misuse of fentanyl transdermal

Fentanyl is a potent synthetic opioid that is marketed as a transdermal patch for chronic pain management.

There are currently

a number of generic fentanyl patches on the market but we believe that none of them are abuse deterrent.

We believe that our abuse

deterrent technology containing aversive agents will significantly deter the abuse and accidental misuse of fentanyl from transdermal

In 2017, according to a report from the National Institute on Drug Abuse, of the more than 72,000 drug overdose deaths

in the United States, nearly 30,000 occurred due to overdoses of fentanyl and fentanyl analogues.

The development of our abuse deterrent

fentanyl transdermal system requires preclinical and clinical trials to be conducted for the purposes of obtaining FDA approval.

patent applications were filed by 4P Therapeutics prior to our acquisition of 4P Therapeutics and any patents issued in respect

of these applications will be in the name of 4P Therapeutics.

In addition to applying the technology to developing an abuse deterrent

fentanyl transdermal system, we believe that the abuse deterrent patch technology can be applied to other opioids and pain medication

patches where there is a risk of abuse and overdose, as well as other transdermal pharmaceuticals where we believe our technology

can help prevent abuse or accidental misuse.

lead product under development is our abuse deterrent fentanyl transdermal system which we plan to develop to deter the abuse

and accidental misuse of fentanyl transdermal patches.

Fentanyl is a potent synthetic opioid that is marketed as a transdermal

patch for chronic pain management.

There are currently a number of generic fentanyl patches on the market but we believe that

none of them are abuse deterrent.

We believe that our abuse deterrent technology, AVERSA®, containing aversive agents will

significantly deter the abuse and accidental misuse of fentanyl from transdermal patches.

In 2017, according to a report from

the National Institute on Drug Abuse, of the more than 72,000 drug overdose deaths in the United States, nearly 30,000 occurred

due to overdoses of fentanyl and fentanyl analogues.

development of our abuse deterrent fentanyl transdermal system requires preclinical and clinical trials to be conducted for the

purposes of obtaining FDA approval.

We require funds for these trials.

With the acquisition of 4P Therapeutics,

we acquired a pipeline of other transdermal products, including peptides and proteins such as exenatide for type 2 diabetes and

FSH for infertility, which we anticipate will be the next products for development.

These drugs are off-patent but are currently

only available as injections, and we are evaluating the possibility of developing a transdermal delivery system for these drugs

as an alternative to injection but with improved compliance and safety.

In addition we may develop certain generic transdermal

products where we think we can make an improvement to existing patches and where we believe we can take significant market share

with good profit margins.

One example of such a product candidate is the development of a generic scopolamine patch.

The prioritization

of our portfolio product candidates will be reviewed on an ongoing basis and will take into account technical progress, market

potential and commercial interest.

We cannot assure you that we will be able to develop and obtain FDA approval for any of these

potential products or that we can be successful in marketing any such products.

The FDA approval process can take many years to

complete successfully and we will require substantial funding for each product that goes through the process.

We cannot assure

you that we will obtain FDA marketing approval for any of our products.

Since 4P Therapeutics did not have any products

that it can market, its sole source of revenue to date was derived from the performance of contract research and development and

other services for a small number of clients in the life sciences field on an as-needed basis to support its ongoing operations.

The work varied in nature and includes early stage drug and device preclinical studies, commercial biologic manufacturing support,

clinical-regulatory consulting, drug or device clinical studies and formulation/analytical services relating to the chemistry,

manufacturing and controls function of drug manufacturing.

The current continuing arrangements are varied, from purchase order

supported per animal study fees, to hourly rate research and development services, to flat rate contract research and development

Neither we nor current clients have any long-term commitments, and either party can terminate at any time.

to devote our efforts toward the development and testing of our lead product and other product candidates in our pipeline.

for the near term, we are looking to perform research and development services for third parties although we do not expect to generate

significant revenues from these services.

Our marketing effort with respect to our

consumer transdermal products is presently limited to our distribution agreement dated April 13, 2018 with EMI-Korea (Best Choice),

Inc., whom we refer to as Best Choice, for marketing in certain regions in Asia.

Pursuant to an exclusive distribution agreement,

we granted Best Choice exclusive distribution rights for all of our transdermal consumer products in South Korea, Taiwan (the Republic

of China), the People’s Republic of China and South Asia.

Best Choice is presently planning to market three of our consumer

products only in South Korea, and is responsible for complying with all applicable regulations.

The ability of Best Choice to market

products at the volume we anticipated when we signed the contract with Best Choice was affected be a number of factors, including

its inability to obtain necessary regulatory approval, which, as of the date of this annual report, has not been obtained.

Choice has advised us that it is working with the South Korean Ministry of Food and Drug Safety (“MFDS”) to determine

a classification for our products, which is necessary before Best Choice can obtain approval from the MFDS to market our products

to consumers.

Our supplier had manufacturing problems in the United States because it ran into supply problems for certain foil

components used in the transdermal patches due to the new tariffs on Chinese imports into the United States, design changes in

the pouch, and quality problems with material in the pouch, all of which resulted in manufacturing delays in meeting the first

order for Best Choice.

We solved the problem by delivering the patch in bulk and unpackaged, and Best Choice has the assembly of

the patch completed in South Korea.

Best Choice’s purchases to date were for preliminary marketing activities.

has advised us that its preliminary marketing activities consisted of purchasing inventory in anticipation of obtaining regulatory

approval, meeting with potential distributors and trying to build brand awareness through various marketing approaches most notably

on social media.

Until Best Choice has obtained the necessary regulatory approval, we do not anticipate generating any significant

revenue from Best Choice.

Our agreement with Best Choice agreement had an initial term which expired on April 30, 2019 and was

extended to April 30, 2020.

The agreement provides for an automatic renewal for three years and for five-year periods thereafter

if certain minimum purchases are made.

As of the date of this report, the minimum purchases for the current contract year have

not been met.

Acquisition of 4P Therapeutics

Pursuant to an acquisition agreement dated

April 5, 2018 between us and 4P Therapeutics, on August 1, 2018, we acquired all of the equity interest in 4P Therapeutics from

Steven Damon, the owner of 4P Therapeutics.

The purchase price of $2,250,000, consisting of 62,500 shares of common stock, valued

at $1,850,000, and cash of $400,000, and are to pay Mr.

Damon a 6% royalty on any revenue we receive or derive from our utilization

or sale of the abuse deterrent intellectual property that we acquired as a part of the assets 4P Therapeutics, including partner

license milestones and development payments.

The royalty is payable pursuant to the acquisition agreement and continues as long

as we generate revenue from our utilization or sale of the abuse deterrent intellectual property we acquired as part of the acquisition

the acquisition of 4P Therapeutics, we acquired a pipeline of other transdermal products, including peptides and proteins such

as exenatide for type 2 diabetes and FSH for infertility, which we anticipate will be the next products for development.

drugs are off-patent but are currently only available as injections, and we are evaluating the possibility of developing a transdermal

delivery system for these drugs as an alternative to injection but with improved compliance and safety.

In addition we may develop

certain generic transdermal products where we think we can make an improvement to existing patches and where we believe we can

take significant market share with good profit margins.

One example of such a product candidate is the development of a generic

scopolamine patch.

The prioritization of our portfolio product candidates will be reviewed on an ongoing basis and will take into

account technical progress, market potential and commercial interest.

We cannot assure you that we will be able to develop and

obtain FDA approval for any of these potential products or that we can be successful in marketing any such products.

The FDA approval

process can take many years to complete successfully and we will require substantial funding for each product that goes through

We cannot assure you that we will obtain FDA marketing approval for any of our products.

4P Therapeutics did not have any products that it can market, its sole source of revenue to date was derived from the performance

of contract research and development and other services for a small number of clients in the life sciences field on an as-needed

basis to support its ongoing operations.

The work varied in nature and includes early stage drug and device preclinical studies,

commercial biologic manufacturing support, clinical-regulatory consulting, drug or device clinical studies and formulation/analytical

services relating to the chemistry, manufacturing and controls function of drug manufacturing.

The current continuing arrangements

are varied, from purchase order supported per animal study fees, to hourly rate research and development services, to flat rate

contract research and development projects.

Neither we nor current clients have any long-term commitments, and either party can

terminate at any time.

If we raise financing we intend to devote our efforts toward the development and testing of our lead product

and other product candidates in our pipeline.

However, for the near term, we are looking to perform research and development services

for third parties although we do not expect to generate significant revenues from these services.

have a distribution agreement dated April 13, 2018 with EMI-Korea (Best Choice), Inc., whom we refer to as Best Choice, for marketing

in certain regions in Asia.

Pursuant to an exclusive distribution agreement, we granted Best Choice exclusive distribution rights

for all of our transdermal consumer products in South Korea, Taiwan (the Republic of China), the People’s Republic of China

and South Asia.

We currently have no plans to market our own products in these regions and following our acquisition of Pocono

Pharma we are primarily focused on contract manufacturing services for Best Choice and its partners.

Best Choice is responsible

for complying with all applicable regulations.

of 4P Therapeutics

to an acquisition agreement dated April 5, 2018 between us and 4P Therapeutics, on August 1, 2018, we acquired all of the equity

interest in 4P Therapeutics from Steven Damon, the owner of 4P Therapeutics.

The purchase price of $2,250,000, consisting of 62,500

shares of common stock, valued at $1,850,000, and cash of $400,000, and are to pay Mr.

Damon a 6% royalty on any revenue we receive

or derive from our utilization or sale of the abuse deterrent intellectual property that we acquired as a part of the assets 4P

Therapeutics, including partner license milestones and development payments.

The royalty is payable pursuant to the acquisition

agreement and continues as long as we generate revenue from our utilization or sale of the abuse deterrent intellectual property

we acquired as part of the acquisition of 4P Therapeutics.

The 62,500 shares were issued to Mr.

1 unchanged sentence

Alan Smith (20,750 shares).

In connection

with the acquisition, Mr.

Damon retained any cash and accounts receivable and assumed any liabilities other than those relating

to the ongoing business.

In connection with the acquisition, Mr.

Damon retained any cash and accounts receivable and assumed

any liabilities other than those relating to the ongoing business.

Pursuant to the acquisition agreement, we appointed Mr.

Damon to our board of directors in April 2018,

when we signed the acquisition agreement, and we agreed to pay Mr.

Damon the compensation received by independent board members.

Our Organization

We are a Nevada corporation, incorporated

on January 4, 2016.

In January 2016, we acquired Nutriband Ltd, an Irish company which was formed by Gareth Sheridan, our chief

executive officer, in 2012 to enter the health and wellness market by marketing transdermal patches.

Our corporate headquarters

are located at 121 S.

to our board of directors in April 2018, when we signed the acquisition agreement, and we agreed to pay Mr.

Damon the compensation

received by independent board members.

of Pocono Coated Products

August 31, 2020, the Company acquired from Pocono Coated Products (“PCP”), pursuant to which PCP agreed to sell the

Company certain of the assets and liabilities associated with its Transdermal, Topical, Cosmetic and Nutraceutical business.

in the transaction, the Company acquired 100% of the membership interests of Active Intelligence LLC.

The purchase price for the

acquired assets was (i) $6,085,180 paid in shares of the Company’s common stock of Nutriband at a value of the average price

of the previous 90 days at the date of Closing equal to 608,519 shares;

(ii) a promissory note of the Company in the principal

amount of $1,500,000, which is due upon the earlier of (a) twelve (12) months from issuance, or (b) immediately following a capital

raise of not less than $4,000,000 and/or a public offering of no less than $4,000,000

are a Nevada corporation, incorporated on January 4, 2016.

In January 2016, we acquired Nutriband Ltd, an Irish company which

was formed by Gareth Sheridan, our chief executive officer, in 2012 to enter the health and wellness market by marketing transdermal

Our corporate headquarters are located at 121 S.

Suite 1500, Orlando, Florida 32765, telephone (407) 377-6695.

Our website is www.nutriband.com .

Information contained on or available through our website or any other website does not constitute a portion of this annual report.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion

in revenue during our last fiscal year, we qualify as an “emerging growth company”

as defined in the Jumpstart Our

Business Startups Act of 2012, or the JOBS Act.

An emerging growth company may take advantage of reduced reporting requirements

that are otherwise generally applicable to public companies, although as a smaller reporting company we are taking advantage of

reduced reporting requirements.

Information contained on or available through our website or any other website does not

constitute a portion of this annual report.

of Being an Emerging Growth Company

a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”

as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

An emerging growth company may take advantage

of reduced reporting requirements that are otherwise generally applicable to public companies, although as a smaller reporting

company we are taking advantage of reduced reporting requirements.

In particular, as an emerging growth company, we:

● may present only two years of audited financial statements

and related disclosure under Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A;

● are not required to provide a detailed narrative disclosure

discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives,

which is commonly referred to as “compensation discussion and analysis”;

● are not required to obtain an attestation and report

from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley

● are not required to obtain a non-binding advisory

vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,”

present only two years of audited financial statements and related disclosure under Management’s Discussion and Analysis

of Financial Condition and Results of Operations, or MD&A;

not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing

how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and

analysis”;

not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control

over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements

(commonly referred to as the “say-on-pay,”

“say-on frequency”

and “say-on-golden-parachute”

● are exempt from certain executive compensation disclosure

provisions requiring a pay-for-performance graph and chief executive officer pay ratio disclosure;

● are not be required to conduct an evaluation of our

internal control over financial reporting by our auditors.

We intend to take advantage of all of these

reduced reporting requirements and exemptions.

However, since we have already adopted certain new or revised accounting standards

under §107 of the JOBS Act, we are not able to take advantage of the delayed phase in of the new or revised accounting standards.

Under the JOBS Act, we may take advantage

of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity

pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that

we no longer meet the definition of an emerging growth company.

The JOBS Act provides that we would cease to be an “emerging

growth company”

if we have more than $1.07 billion in annual revenues (as adjusted for inflation), have more than $700 million

in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible

debt over a three-year period.

Under current Securities and Exchange Commission, or SEC, rules however, we will continue to qualify

as a “smaller reporting company”

for so long as we have either (i) a public float (i.e., the market value of common

equity held by non-affiliates) of less than $250 million as of the last business day of our most recently completed second fiscal

quarter or (ii) annual revenues of less than $100 million and a public float of less than $700 million.

Effects of the COVID-19 Pandemic

Our business may be affected by the COVID-19 pandemic and the

response to the pandemic.

Factors which may affect our business include, but are not limited to, the following:

● Our ability to raise financing for our operations and to enter into

a joint venture agreement may be affected by both the willingness and ability of potential financing sources and potential joint

venture partners to invest in an undercapitalized business, particularly at a time when the potential financing source or joint

venture partner may need to devote its resources to existing portfolio companies or joint ventures which may be in need of financing.

decision by investors who would invest in early stage pharmaceutical companies to limit their financing efforts to companies that

are dealing with products or services related to COVID-19 diagnosis or treatment.

● The decision by investors who would invest in early stage pharmaceutical

companies to limit their financing efforts to companies that are dealing with products or services related to COVID-19 diagnosis

or treatment.

● The effect of recent stock market declines on the willingness of investors

to make an investment in our securities.

● The financial health of our potential contract service customers.

● Our ability to perform contract services.

● Our ability to obtain any goods or services which we may need to perform

contract services.

● The ability of our foreign distributors to obtain regulatory approval,

which may be affected by the regulatory agencies giving a low priority to products such as our consumer patches.

● The financial health of Best Choice.

● If regulatory approval is obtained in South Korea, the extent to which

consumers in South Korea purchase our products.

● The extent to which the purchase of our consumer products is a low

priority item for a population whose disposable income may have decreased as a result of COVID-19 and the steps taken by the South

Korean government to curb the spread of infection.

Pharmaceutical Products in Development

We have a pipeline of transdermal pharmaceutical

products that are primarily in the early, preclinical, stages of development.

Our pipeline consists primarily of drug compounds

which have been previously approved by the FDA and are now off-patent.

In many cases, we are developing the first non-injectable

version of the drug utilizing our transdermal technology which represents a new route of administration.

In most cases, we plan

to utilize the 505(b) (2) regulatory pathway provided by the FDA which allows us to reference the safety information on file

at FDA for the approved drug or to reference the published literature instead of having to generate new safety information that

would typically be required for new chemical entities.

However, we cannot assure you that the FDA will concur with our approach

or that we will be able to receive FDA approval to market any of products that we develop.

Our lead product under development is our

abuse deterrent fentanyl transdermal system.

As the United States faces an epidemic of opioid abuse, fentanyl transdermal patches

have become an attractive target for recreational drug abusers due to the drug’s potency and its ease of abuse by the oral

We are looking to utilize our proprietary approach to incorporate aversive agents into the transdermal patch to deter the

abuse of fentanyl patches by the oral, buccal and inhaled routes, which represent as much as 70% of all transdermal fentanyl abuse.

The technology is based on the incorporation of taste and sensory aversive agents into the patch.

We believe that the aversive

agents we selected have several advantages, such as their high potency, established safety, and the potential to prevent accidental

misuse by children and pets.

The aversive agents are formulated in a controlled-release matrix that is coated onto the backing

of a transdermal fentanyl patch.

The controlled release aspect of the technology is designed so that the abuse deterrent properties

are maintained after normal use and during attempts to separate the aversive agents from the fentanyl.

We believe that this structure

provides maximum exposure during oral abuse and during attempts to extract the drug, while preventing exposure of the patient to

the aversive agents during transdermal wear.

We believe that a key differentiating aspect of the technology is that the aversive

agents are physically separated from the drug matrix, meaning that the aversive agents do not have to be formulated in the fentanyl

drug matrix and do not contact the skin.

In addition to the fentanyl patch, this technology has broad applicability to any therapeutic

patch where deterring abuse and accidental misuse by children and pets are valuable attributes.

We believe that our abuse deterrent technology

can be broadly applied to various transdermal products and our strategy is to follow the development of our abuse deterrent fentanyl

transdermal system with the development of additional products for pharmaceuticals that have risks or history of abuse.

we believe that our technology can be utilized in other transdermal products to deter the abuse of other transdermal drugs such

as buprenorphine, an opioid used to treat acute pain and chronic pain, and methylphenidate, a central nervous system stimulant.

Buprenorphine is an opioid used to treat

opioid addiction, acute pain and chronic pain.

It can be used under the tongue, by injection, as a skin patch, or as an implant.

For opioid addiction, it is typically only started when withdrawal symptoms have begun and for the first two days of treatment

under direct observation of a health care provider.

For longer term treatment of addiction, a combination formulation of buprenorphine/naloxone

is recommended to prevent misuse by injection.

Methylphenidate, sold under various trade

names, such as Ritalin in oral form, and in transdermal patch form known as Daytrana, is a central nervous system stimulant of

the phenethylamine and Piperidine classes that is used in the treatment of attention deficit hyperactivity disorder and narcolepsy.

We plan to follow up with transdermal delivery systems for buprenorphine and methylphenidate after we make significant progress

on our abuse deterrent fentanyl transdermal system.

We are also exploring product applications

for our transdermal technology to deliver proteins and peptides such as exenatide for type 2 diabetes and follicle stimulating

hormone (FSH) for infertility.

Presently, these products are only available by injection or oral routes.

We believe that transdermal

delivery has the potential to improve compliance, which can lead to improved therapeutic outcomes associated with these treatments.

Exenatide (exendin-4) is a glucagon-like

peptide-1 (GLP-1) receptor agonist which is approved to improve glycemic control in patients with type 2 diabetes mellitus.

is currently approved as a twice-daily subcutaneous injection or as a once-weekly injection.

However, many patients have a strong

aversion to needles, resist initiation of injections even when oral agents are failing to control their diabetes and struggle with

compliance after starting therapy.

We have performed pre-clinical work on the development of a novel transdermal patch for administration

of exenatide to match the therapeutic plasma levels achieved by subcutaneous injections of exenatide.

However, we need substantial

funds before we can continue these efforts.

In addition to being needle-free, painless and easy-to-use, our proposed exenatide

transdermal system is being designed to incorporate compliance tracking to help providers improve patient outcomes.

that the development of an exenatide patch matching the profile of exenatide injections will follow the 505(b)(2) NDA regulatory

pathway, thereby limiting the extent of safety and efficacy trials required for FDA approval, although we cannot assure you that

the FDA will agree.

exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and chief executive officer

pay ratio disclosure;

not be required to conduct an evaluation of our internal control over financial reporting by our auditors.

intend to take advantage of all of these reduced reporting requirements and exemptions.

However, since we have already adopted

certain new or revised accounting standards under §107 of the JOBS Act, we are not able to take advantage of the delayed

phase in of the new or revised accounting standards.

the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years

after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933,

as amended, or such earlier time that we no longer meet the definition of an emerging growth company.

The JOBS Act provides that

we would cease to be an “emerging growth company”

if we have more than $1.07 billion in annual revenues (as adjusted

for inflation), have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1

billion in principal amount of non-convertible debt over a three-year period.

Under current Securities and Exchange Commission,

or SEC, rules however, we will continue to qualify as a “smaller reporting company”

for so long as we have either

(i) a public float (i.e., the market value of common equity held by non-affiliates) of less than $250 million as of the last business

day of our most recently completed second fiscal quarter or (ii) annual revenues of less than $100 million and a public float

of less than $700 million.

of the COVID-19 Pandemic

business may be affected by the COVID-19 pandemic and the response to the pandemic.

Factors which may affect our business include,

but are not limited to, the following:

ability to raise financing for our operations and to enter into a joint venture agreement

may be affected by both the willingness and ability of potential financing sources and

potential joint venture partners to invest in an undercapitalized business, particularly

at a time when the potential financing source or joint venture partner may need to devote

its resources to existing portfolio companies or joint ventures which may be in need

of financing decision by investors who would invest in early stage pharmaceutical companies

to limit their financing efforts to companies that are dealing with products or services

related to COVID-19 diagnosis or treatment.

decision by investors who would invest in early stage pharmaceutical companies to limit

their financing efforts to companies that are dealing with products or services related

to COVID-19 diagnosis or treatment.

effect of recent stock market declines on the willingness of investors to make an investment

in our securities.

financial health of our potential contract service customers.

ability to perform contract services.

ability to obtain any goods or services which we may need to perform contract services.

ability of our foreign distributors to obtain regulatory approval, which may be affected

by the regulatory agencies giving a low priority to products such as our consumer patches.

financial health of Best Choice.

regulatory approval is obtained in South Korea, the extent to which consumers in South

Korea purchase our products.

extent to which the purchase of our consumer products is a low priority item for a population

whose disposable income may have decreased as a result of COVID-19 and the steps taken

by the South Korean government to curb the spread of infection.

Pharmaceutical

Products in Development

have a pipeline of transdermal pharmaceutical products that are primarily in the early, preclinical, stages of development.

pipeline consists primarily of drug compounds which have been previously approved by the FDA and are now off-patent.

In many cases,

we are developing the first non-injectable version of the drug utilizing our transdermal technology which represents a new route

of administration.

In most cases, we plan to utilize the 505(b) (2) regulatory pathway provided by the FDA which allows us

to reference the safety information on file at FDA for the approved drug or to reference the published literature instead of having

to generate new safety information that would typically be required for new chemical entities.

However, we cannot assure you that

the FDA will concur with our approach or that we will be able to receive FDA approval to market any of products that we develop.

lead product under development is our abuse deterrent fentanyl transdermal system.

As the United States faces an epidemic of opioid

abuse, fentanyl transdermal patches have become an attractive target for recreational drug abusers due to the drug’s potency

and its ease of abuse by the oral route.

We are looking to utilize our proprietary approach to incorporate aversive agents into

the transdermal patch to deter the abuse of fentanyl patches by the oral, buccal and inhaled routes, which represent as much as

70% of all transdermal fentanyl abuse.

The technology is based on the incorporation of taste and sensory aversive agents into

We believe that the aversive agents we selected have several advantages, such as their high potency, established safety,

and the potential to prevent accidental misuse by children and pets.

The aversive agents are formulated in a controlled-release

matrix that is coated onto the backing of a transdermal fentanyl patch.

The controlled release aspect of the technology is designed

so that the abuse deterrent properties are maintained after normal use and during attempts to separate the aversive agents from

the fentanyl.

We believe that this structure provides maximum exposure during oral abuse and during attempts to extract the drug,

while preventing exposure of the patient to the aversive agents during transdermal wear.

We believe that a key differentiating

aspect of the technology is that the aversive agents are physically separated from the drug matrix, meaning that the aversive

agents do not have to be formulated in the fentanyl drug matrix and do not contact the skin.

In addition to the fentanyl patch,

this technology has broad applicability to any therapeutic patch where deterring abuse and accidental misuse by children and pets

are valuable attributes.

believe that our abuse deterrent technology can be broadly applied to various transdermal products and our strategy is to follow

the development of our abuse deterrent fentanyl transdermal system with the development of additional products for pharmaceuticals

that have risks or history of abuse.

For example, we believe that our technology can be utilized in other transdermal products

to deter the abuse of other transdermal drugs such as buprenorphine, an opioid used to treat acute pain and chronic pain, and

methylphenidate, a central nervous system stimulant.

Buprenorphine

is an opioid used to treat opioid addiction, acute pain and chronic pain.

It can be used under the tongue, by injection, as a

skin patch, or as an implant.

For opioid addiction, it is typically only started when withdrawal symptoms have begun and for the

first two days of treatment under direct observation of a health care provider.

For longer term treatment of addiction, a combination

formulation of buprenorphine/naloxone is recommended to prevent misuse by injection.

Methylphenidate,

sold under various trade names, such as Ritalin in oral form, and in transdermal patch form known as Daytrana, is a central nervous

system stimulant of the phenethylamine and Piperidine classes that is used in the treatment of attention deficit hyperactivity

disorder and narcolepsy.

We plan to follow up with transdermal delivery systems for buprenorphine and methylphenidate after we

make significant progress on our abuse deterrent fentanyl transdermal system.

are also exploring product applications for our transdermal technology to deliver proteins and peptides such as exenatide for

type 2 diabetes and follicle stimulating hormone (FSH) for infertility.

Presently, these products are only available by injection

or oral routes.

We believe that transdermal delivery has the potential to improve compliance, which can lead to improved therapeutic

outcomes associated with these treatments.

(exendin-4) is a glucagon-like peptide-1 (GLP-1) receptor agonist which is approved to improve glycemic control in patients with

type 2 diabetes mellitus.

Exenatide is currently approved as a twice-daily subcutaneous injection or as a once-weekly injection.

However, many patients have a strong aversion to needles, resist initiation of injections even when oral agents are failing to

control their diabetes and struggle with compliance after starting therapy.

We have performed pre-clinical work on the development

of a novel transdermal patch for administration of exenatide to match the therapeutic plasma levels achieved by subcutaneous injections

of exenatide.

However, we need substantial funds before we can continue these efforts.

In addition to being needle-free, painless

and easy-to-use, our proposed exenatide transdermal system is being designed to incorporate compliance tracking to help providers

improve patient outcomes.

We believe that the development of an exenatide patch matching the profile of exenatide injections will

follow the 505(b)(2) NDA regulatory pathway, thereby limiting the extent of safety and efficacy trials required for FDA approval,

although we cannot assure you that the FDA will agree.

Transdermal exenatide is currently in the preclinical phase of development.

Follicle-stimulating hormone (FSH) is a

gonadotropin, a glycoprotein polypeptide hormone that is synthesized and secreted by the gonadotropic cells of the anterior pituitary

Follicle stimulating hormone (FSH) is indicated for the treatment of infertility in women and is currently only approved

and marketed as a subcutaneous injection.

FSH is mainly used for ovarian hyperstimulation as part of an in vitro fertilization

(IVF) regimen.

Follicle-stimulating

hormone (FSH) is a gonadotropin, a glycoprotein polypeptide hormone that is synthesized and secreted by the gonadotropic cells

of the anterior pituitary gland.

Follicle stimulating hormone (FSH) is indicated for the treatment of infertility in women and

is currently only approved and marketed as a subcutaneous injection.

FSH is mainly used for ovarian hyperstimulation as part of

an in vitro fertilization (IVF) regimen.

There are several purified and recombinant FSH injections currently on the market.

We are developing a novel transdermal

patch to match the pharmacokinetic profile of FSH subcutaneous injection but without the need for painful injections.

FSH is intended to offer a painless, easy to use one-step application to improve patient compliance with FSH therapy.

FSH will be offered at multiple strengths to match the typical doses prescribed to treat infertility.

We plan to conduct a Phase

1 clinical trial to demonstrate that the transdermal patch can match the pharmacokinetics of subcutaneous injection.

to conduct an irritation and sensitization study to demonstrate the skin safety of the product and a pivotal clinical efficacy

trial to demonstrate that transdermal FSH is not inferior to subcutaneous injection.

We intend to seek to utilize the 505(b)(2)

NDA regulatory pathway to register the product with the FDA which allows us to reference the know safety of FSH on file at FDA

for the reference listed drug and the safety information that has been published in the literature.

We have not yet communicated

with the FDA on our proposed development plan or registration plan and we cannot assure you that the FDA will agree to our use

of the 505(b)(2) pathway.

are developing a novel transdermal patch to match the pharmacokinetic profile of FSH subcutaneous injection but without the need

for painful injections.

Transdermal FSH is intended to offer a painless, easy to use one-step application to improve patient compliance

with FSH therapy.

Transdermal FSH will be offered at multiple strengths to match the typical doses prescribed to treat infertility.

We plan to conduct a Phase 1 clinical trial to demonstrate that the transdermal patch can match the pharmacokinetics of subcutaneous

Then we plan to conduct an irritation and sensitization study to demonstrate the skin safety of the product and a pivotal

clinical efficacy trial to demonstrate that transdermal FSH is not inferior to subcutaneous injection.

We intend to seek to utilize

the 505(b)(2) NDA regulatory pathway to register the product with the FDA which allows us to reference the know safety of FSH

on file at FDA for the reference listed drug and the safety information that has been published in the literature.

yet communicated with the FDA on our proposed development plan or registration plan and we cannot assure you that the FDA will

agree to our use of the 505(b)(2) pathway.

Transdermal FSH is currently in the preclinical phase of development.

In addition, we may seek to develop certain

generic transdermal products where we think we can efficiently make an improvement to existing patches and potentially take significant

market share with good profit margins.

One example of such a product candidate is the development of a generic scopolamine patch.

Transdermal scopolamine (Transderm Scop®)

was developed in the 1970s by Alza Corporation for Ciba-Geigy (now Novartis) for prevention of nausea and vomiting associated with

motion sickness and recovery from anesthesia and surgery.

The product was approved as the first modern transdermal therapeutic

system by the FDA in 1979.

A generic transdermal scopolamine product was approved in 2015 (Perrigo) but was not marketed until

As of November 2018, there was only one generic transdermal scopolamine approved and marketed.

We are looking to develop

what we believe is an improved proprietary generic scopolamine patch.

Product improvements include enhancements to the manufacturing

processes to reduce the manufacturing cost and optimization of the adhesive formulation to reduce cold flow and increase patient

acceptability.

We have performed pre-clinical work on this proposed product, however, we cannot proceed further without significant

We plan to follow the FDA guidance on the product development of a generic transdermal scopolamine patch and plan on utilizing

the ANDA regulatory pathway to obtain FDA approval for marketing.

Transdermal scopolamine is currently in the preclinical phase

of development.

We have not yet determined which product

we will seek to develop after our abuse deterrent fentanyl transdermal system.

The prioritization of our portfolio of product candidates

will be reviewed on an ongoing basis and will take into account technical progress, market potential, available funding and commercial

Our ability to take any meaningful steps to the development of any of these products is determined by our ability to

provide sufficient funding for such purchase.

As stated above, without significant financing or a joint venture agreement we will

not be able to take any steps to the development of any of these products.

Consumer Products

Our consumer transdermal product line consists

of eleven product lines:

an energy patch line, a weight management patch line, a multivitamin patch line, a children’s multivitamin

patch line, an amino acid patch line, an anti-wrinkle patch line, an insect repellent patch line, a detox patch line, a PMS patch

line, a sleep patch line and a nausea and motion sickness patch line.

These products require FDA or EPA (for the insect repellent

line) approval in order to be sold in the United States.

Since we have not received FDA or EPA approval and we have no plans to

do so at this time, and we are limiting our marketing to countries in which we believe that these products can be sold without

significant product development costs for clinical or nonclinical testing and product registration for government approval.

on our initial in-house testing, we modified the formulation of our consumer patches to include non-synthetic ingredients to avoid

any concerns regarding potential skin irritation.

Pursuant to an exclusive distribution dated

April 13, 2018, we granted Best Choice exclusive distribution rights for all of our consumer products in South Korea, Taiwan (the

Republic of China), the People’s Republic of China and South Asia.

Best Choice is presently marketing our products only in

The agreement has an initial term which expired on April 30, 2019 and was extended to April 30, 2020.

The agreement

provides that it automatically renews for an additional three years and for each five year period thereafter if a minimum increase

in sales of 10% per year or a cumulative equivalent or a year by year 10% increase is achieved by the end of the initial term and

each extension period thereafter.

The agreement, as extended, provides a minimum purchase requirement $2.0 million for the initial

term, which is the prior from the commencement date through April 30, 2020.

The minimum purchase requirement increases by 10% each

year after the initial term.

The agreement provides that our price to Best Choice will be no greater than lowest price sold to

anyone plus 5%.

Best Choice has the right to purchase a minimum of 50% of our production capacity.

We give Best Choice a warranty

that we will replace or refund any product which is not in a marketable state, such as damaged packaging and missing product.

agreement may be terminated at any time by Best Choice with or without cause on 90 days’

The agreement may be terminated

by us for cause, which includes Best Choice’s failure to meet the minimum purchase requirements.

While the agreement has

minimum purchase requirements, it does not assure us that Best Choice will meet the minimum purchase requirements or that Best

Choice will not terminate the agreement.

Best Choice has advised us that, subject

to obtaining regulatory approval, it plans to market the energy patch line, vitamin patch line and weight management patch line

products in South Korea.

However, in order for Best Choice to market our products in South Korea, it needs to obtain approval from

Although Best Choice has made modest purchases from us for its preliminary marketing activities, until it receives approval

to market our product in South Korea, we will not generate significant revenue from our consumer products.

Best Choice has advised

us that its preliminary marketing activities consisted of purchasing inventory in anticipation of obtaining regulatory approval,

meeting with potential distributors and trying to build brand awareness through various marketing approaches most notably on social

We cannot assure you that we will generate significant revenue from Best Choice’s activities in South Korea if it

obtains regulatory clearance.

At present, Best Choice has not received the necessary regulatory approval to market our consumer

products in South Korea.

Although Best Choice has advised us that it is working with the MFDS to obtain a classification, if it

is unable to obtain a classification and complete the regulatory procedures, it will be unable to sell our products in South Korea.

If we obtain FDA approval for any of our

pharmaceutical transdermal products, we will need to establish a distribution network in the United States.

We do not anticipate

that we will take any steps toward establishing such a distribution network until we are in the late stages of the FDA approval

addition, we may seek to develop certain generic transdermal products where we think we can efficiently make an improvement to

existing patches and potentially take significant market share with good profit margins.

One example of such a product candidate

is the development of a generic scopolamine patch.

scopolamine (Transderm Scop®) was developed in the 1970s by Alza Corporation for Ciba-Geigy (now Novartis) for prevention

of nausea and vomiting associated with motion sickness and recovery from anesthesia and surgery.

The product was approved as the

first modern transdermal therapeutic system by the FDA in 1979.

A generic transdermal scopolamine product was approved in 2015

(Perrigo) but was not marketed until 2017.

As of November 2018, there was only one generic transdermal scopolamine approved and

We are looking to develop what we believe is an improved proprietary generic scopolamine patch.

Product improvements

include enhancements to the manufacturing processes to reduce the manufacturing cost and optimization of the adhesive formulation

to reduce cold flow and increase patient acceptability.

We have performed pre-clinical work on this proposed product, however,

we cannot proceed further without significant funding.

We plan to follow the FDA guidance on the product development of a generic

transdermal scopolamine patch and plan on utilizing the ANDA regulatory pathway to obtain FDA approval for marketing.

scopolamine is currently in the preclinical phase of development.

have not yet determined which product we will seek to develop after our abuse deterrent fentanyl transdermal system.

The prioritization

of our portfolio of product candidates will be reviewed on an ongoing basis and will take into account technical progress, market

potential, available funding and commercial interest.

Our ability to take any meaningful steps to the development of any of these

products is determined by our ability to provide sufficient funding for such purchase.

As stated above, without significant financing

or a joint venture agreement we will not be able to take any steps to the development of any of these products.

currently have no branded OTC or Consumer products nor do we plan to launch any OTC or Consumer products in the near term as our

focus is primarily on our prescription pipeline and contract services offered by both 4P Therapeutics and Pocono Pharma.

Manufacturing

We have an agreement with Pocono Coated

Products LLC to manufacture our consumer transdermal products.

Pocono manufactures coated film roll stock using a solvent coating

These rolls are then sealed and shipped to South Korea for slitting, die-cutting and pouching of individual patches and

then packaging in boxes of 30 packs or five packs.

Manufacturing of our pharmaceutical transdermal

products will be performed for clinical trials during the development program and for manufacturing of commercial products prior

to FDA approval and for sales and marketing.

Clinical manufacturing for our early stage clinical trials will most likely be performed

at our facilities at 4P Therapeutics.

However, the manufacture of clinical products for later stage pivotal clinical trials and

for commercial manufacturing may either be done by contract manufacturers or done in our commercial facilities.

Manufacture of

clinical and commercial product will be performed in compliance with current FDA Good Manufacturing Procedures (cGMP) and all applicable

local regulations.

All manufacturing processes will be subject to review by the FDA during development, prior to approval and during

subsequent routine FDA inspections.

Government Regulations

United States

The pharmaceutical business is subject

to extensive government regulation.

In the United States, we must comply with the rules and regulations of the FDA.

In other countries

we must comply with the laws and regulations of each country to legally market and sell our products.

Obtaining FDA approval does

not mean that the product will be approved in other countries.

Each country may require that additional clinical and nonclinical

studies be conducted prior to approval.

The process required by the FDA to receive

approval prior to marketing and distributing a drug in the United States generally involves the following.

The definition of drug

is broadly defined, and includes our pharmaceutical products and most of our consumer transdermal patches.

Even though the drug

used in each of our proposed products is currently approved by the FDA in oral or injectable dosage forms, we will still need to

conduct a full development program including preclinical and clinical trials before we receive FDA marketing approval.

also has a number of abbreviated approval pathways which, if we are eligible, could shorten the time for approval.

cannot be certain that we will be able to use any abbreviated approval pathway, in which event we will need to comply with the

full regulatory pathway.

● Preclinical phase .

a drug company can test an experimental treatment in humans, it must prove the drug is safe and effective in animals.

run tests in various animals before presenting the data to the FDA as an investigational new drug application.

For already approved

drugs, an animal study may not be required prior to testing in humans.

In most cases, the company must file an Investigational

New Drug (IND) submission to get clearance to test the product in humans.

● Phase one clinical trial .

the first round of clinical trials, the drug company attempts to establish the drug’s safety in humans.

Drug researchers

administer the treatment to healthy individuals —

instead of patients suffering from the disease or condition the drug is

intended to treat —

and gradually increase the dose to see if the drug is toxic at higher levels or if any possible side

effects occur.

These drug trials are usually small, containing about 20 to 80 participants, according to the FDA.

For drug delivery

products incorporating already approved drugs, Phase 1 studies involve measuring blood levels of the drug to understand the pharmacokinetics

for a new route of administration.

● Phase two clinical trial .

the second round of clinical trials, researchers give the treatment to patients who have the disease to assess the drug’s

The trial is randomized, meaning half of the study participants receive the drug and half receive a placebo.

usually contain hundreds of participants, according to the FDA.

There is about a 30 percent chance of a drug moving on to a phase

three clinical trial, according to data from the biotech trade organization BIO.

For already approved drugs, as is the case with

drug delivery products, a Phase 2 trial may not be necessary as the therapeutic drug doses and blood concentrations are already

However, a Phase 2 may be conducted to inform the design of the Phase 3 clinical trial in regards to the safety and efficacy

of the product when used by patients.

● Phase three clinical trial .

the third phase of clinical trials, researchers work with the FDA to design a larger trial to test the drug’s ideal dosage,

patient population and other factors that could decide whether the drug is approved, according to the report.

These trials usually

contain a few hundred to thousands of participants.

In the case of drug delivery products that utilize an approved drug, Phase

3 trials will typically include a comparison to the already approved reference product.

For example a transdermal patch may be

compared to an injection.

of our pharmaceutical transdermal products will be performed for clinical trials during the development program and for manufacturing

of commercial products prior to FDA approval and for sales and marketing.

Clinical manufacturing for our early stage clinical

trials will most likely be performed at our facilities at 4P Therapeutics.

However, the manufacture of clinical products for later

stage pivotal clinical trials and for commercial manufacturing may either be done by contract manufacturers or done in our commercial

Manufacture of clinical and commercial product will be performed in compliance with current FDA Good Manufacturing

Procedures (cGMP) and all applicable local regulations.

All manufacturing processes will be subject to review by the FDA during

development, prior to approval and during subsequent routine FDA inspections.

December 9, 2020, the Company entered into a License Agreement (the “License Agreement”) with Rambam Med-Tech Ltd.,

Haifa, Israel (“RamBam”), for us to develop the RAMBAM Closed System Transfer Device (CSTD) the (“Medical Products”).

As a part of the transaction with RamBam for the License Agreement, and to assist in the development of the RAMBAM CSTD Device,

on March 10, 2021, the Company finalized a Distribution Agreement (“Distribution Agreement”)_with BPM Inno Ltd., Kiryat,

Israel (“BPM”), providing for distribution of the Medical Products developed and produced under the License Agreement

and a Stock Purchase Agreement (“SPA”), dated December 7, 2020, providing for the purchase by BPM of 81,396 shares

of common stock at a price of $8.60 per share, or $700,000.

The investment by BPM in our common stock under the SPA was

completed on February 26, 2021.

Under the Distribution Agreement, BPM has the right to distribute the Medical Products

in Israel and has a right of first refusal in relation to all other countries/states, other than United States, Korea, China,

Vietnam, Canada and Ecuador, which are termed excluded countries.

As of January 1, 2021, we had five employees, all

of which are officers of the Company, and three of which are full-time and two of which are currently part-time.

We also engage one consultant

who provides services on a part-time basis.

None of our employees is represented by a labor union and we consider our employee relations

pharmaceutical business is subject to extensive government regulation.

In the United States, we must comply with the rules and

regulations of the FDA.

In other countries we must comply with the laws and regulations of each country to legally market and

sell our products.

Obtaining FDA approval does not mean that the product will be approved in other countries.

Each country may

require that additional clinical and nonclinical studies be conducted prior to approval.

process required by the FDA to receive approval prior to marketing and distributing a drug in the United States generally involves

the following.

The definition of drug is broadly defined, and includes our pharmaceutical products and most of our consumer transdermal

Even though the drug used in each of our proposed products is currently approved by the FDA in oral or injectable dosage

forms, we will still need to conduct a full development program including preclinical and clinical trials before we receive FDA

marketing approval.

The FDA also has a number of abbreviated approval pathways which, if we are eligible, could shorten the time

for approval.

However, we cannot be certain that we will be able to use any abbreviated approval pathway, in which event we will

need to comply with the full regulatory pathway.

● Preclinical

Before a drug company can test an experimental treatment in humans, it must prove the drug is

safe and effective in animals.

Scientists run tests in various animals before presenting the data to the FDA as an investigational

new drug application.

a drug company collects and analyzes all data from the clinical trials, it submits a new drug application to the FDA.

The application

includes trial data, preclinical information and details on the drug’s manufacturing process.

If the FDA accepts the application

for review, the agency has ten months —

or six months if the drug has priority review status —

to make a decision,

according to the report.

The FDA can hold an advisory committee meeting where independent experts assess the data and recommend

whether to approve the drug.

From there, the FDA will either approve the drug or give the applicant a complete response letter,

which explains why the drug did not get approved and what steps the applicant must take before resubmitting the application for

The FDA may also require Human Abuse Liability

or Human Abuse Potential clinical studies to evaluate the abuse liability or abuse potential of a new chemical entity for drugs

that affect the central nervous system.

If the abuse deterrent technology renders a product less desirable than conventional formulations,

it is said to convey abuse deterrent properties and can include specific label language indicating this difference.

In other instances, sponsors are required

to evaluate the effectiveness of an Abuse Deterrent Formulation.

For Abuse Deterrent Formulation trials, the objective is to assess

the ability of the new formulation to be tampered with and abused, and is often pursuant to a 505(b)(2) strategy.

Before approving an NDA, the FDA may inspect

the facilities where the product is being manufactured or facilities that are significantly involved in the product development

and distribution process and will not approve the product unless compliance with current good manufacturing processes is satisfactory.

The FDA may deny approval of an NDA if applicable statutory or regulatory criteria are not satisfied, or may require additional

testing or information, which can delay the approval process.

In pursuing FDA approval there may be various delays and it is possible

that approval may never be granted.

In addition, new government requirements may be established that could delay or prevent regulatory

approval of our product candidates under development.

If a product is approved, the FDA may impose

limitations on the indications for use for which the product may be marketed, may require that warning statements be included in

the product labeling, may require that additional studies or trials be conducted following approval as a condition of the approval,

may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan,

or impose other limitations.

Once a product receives FDA approval, marketing

the product for other indicated uses or making certain manufacturing or other changes related to the product will require FDA review

and approval of a supplemental NDA or a new NDA, which may require additional clinical safety and efficacy data and may require

additional review fees.

In addition, further post-marketing testing and surveillance to monitor the safety or efficacy of a product

may be required.

Also, product approvals may be withdrawn if compliance with regulatory standards is not maintained or if safety

or manufacturing problems occur following initial marketing.

With respect to the labeling for our abuse

deterrent transdermal fentanyl system or any other opioid transdermal patch we develop, it is likely that we will need to disclose

the risks of improper use or abuse using language required by the FDA.

FDA Approval Pathways

The FDA has several pathways that can be

followed to obtain FDA approval.

● A stand-alone NDA is an application submitted under

Section 505(b)(1) of the Food, Drug and Cosmetic Act (“FD&C Act”) and approved under Section 505(c) of the FD&C

Act that contains full reports of investigations of safety and effectiveness that were conducted by or for the applicant or for

which the applicant has a right of reference or use.

This is typically the pathway used for new chemical entities.

● A 505(b)(2) application is an NDA submitted under

Section 505(b)(1) and approved under Section 505(c) of the FD&C Act that contains full reports of investigations of safety

and effectiveness, where at least some of the information required for approval comes from studies not conducted by or for the

applicant and for which the applicant has not obtained a right of reference or use.

This is the pathway typically taken for off-patent

drugs that are being development into alternate dosage forms or routes of administration.

● An ANDA is an application for a duplicate of a previously

approved drug product that was submitted and approved under Section 505(j) of the FD&C Act.

An ANDA relies on the FDA’s

finding that the previously approved drug product is safe and effective.

An ANDA generally must contain information to show that

the proposed generic product (1) is the same as the drug with respect to the active ingredients, conditions of use, route of administration,

dosage form, strength and labeling (with certain permissible differences) and (2) is bioequivalent to the referenced drug.

ANDA may not be submitted if studies are necessary to establish the safety and effectiveness of the proposed product.

the pathway taken for generic drugs.

We cannot assure you that we will be able

to take advantage of any of the available abbreviated approval pathways for any of our proposed products.

Post-approval requirements

Any drug products for which we receive

FDA approval will be subject to continuing regulation by the FDA.

Certain requirements include, among other things, record-keeping

requirements, reporting of adverse events with the product, providing the FDA with updated safety and efficacy information on an

annual basis or more frequently for specific events, product sampling and distribution requirements, complying with certain electronic

records and signature requirements and complying with FDA promotion and advertising requirements.

These promotion and advertising

requirements include, among others, standards for direct-to-consumer advertising, prohibitions against promoting drugs for uses

or patient populations that are not described in the drug’s approved labeling, known as “off-label use,”

other promotional activities, such as those considered to be false or misleading.

Failure to comply with FDA regulations can have

negative consequences, including the immediate discontinuation of noncomplying materials, adverse publicity, enforcement letters

from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties.

Such enforcement

may also lead to scrutiny and enforcement by other government and regulatory bodies.

Although physicians may prescribe legally

available drugs for off-label uses, manufacturers may not encourage, market or promote such off-label uses.

As a result, “off-label

promotion”

has formed the basis for litigation under the Federal False Claims Act, violations of which are subject to significant

civil fines and penalties.

In addition, manufacturers of prescription products are required to disclose annually to the Center

for Medicaid and Medicare any payments made to physicians and teaching hospitals in the U.S.

under the federal Physician Payment

Sunshine Act.

Reportable payments may be direct or indirect, in cash or kind, for any reason, and are required to be disclosed

even if the payments are not related to the approved product.

Failure to fully disclose or not in time reporting could lead to

penalties up to $1.15 million per year.

The manufacturing of any of our products

will be required to comply with the FDA’s current good manufacturing process (cGMP) regulations.

These regulations require,

among other things, quality control and quality assurance, as well as the corresponding maintenance of comprehensive records and

documentation.

Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are also required

to register with the FDA their establishments and list any products they make and to comply with related requirements in certain

These entities are further subject to periodic unannounced inspections by the FDA and certain state agencies for compliance

with current good manufacturing processes and other laws.

Accordingly, manufacturers must continue to expend time, money and effort

in the area of production and quality control to maintain cGMP compliance.

Discovery of problems with a product after

approval may result in serious and extensive restrictions on a product, manufacturer or holder of an approved NDA, as well as lead

to potential market disruptions.

These restrictions may include recalls, suspension of a product until the FDA is assured that

quality standards can be met, and continuing oversight of manufacturing by the FDA under a “consent decree,”

frequently includes the imposition of costs and continuing inspections over a period of many years, as well as possible withdrawal

of the product from the market.

In addition, changes to the manufacturing process generally require prior FDA approval before being

Other types of changes to the approved product, such as adding new indications and additional labeling claims, are

also subject to further FDA review and approval.

The FDA also may require post-marketing

testing, or Phase IV testing, as well as risk minimization action plans and surveillance to monitor the effects of an approved

product or place conditions on an approval that could otherwise restrict the distribution or use of our products.

Other Government Regulations

We are subject to government regulations

that are applicable to businesses generally, including those relating to workers’

health and safety, environmental and waste

disposal, wage and hour and labor practices, including sexual harassment laws and regulations, and anti-discrimination laws and

In addition, we must comply with the laws

and regulations governing the research and manufacture of products containing controlled substances such as fentanyl and other

We must be licensed by the Drug Enforcement Agency (DEA) and the state(s) in which we conduct research and development

We currently hold a DEA license and a Georgia State Board of Pharmacy license to support our current research activities

at our facility in Georgia.

As a result we have been inspected by the DEA and the Georgia Board of Pharmacy.

As we enter the manufacturing

phase of development we will need to obtain a DEA manufacturing license and a Georgia Board of Pharmacy manufacturing license and

obtain production quota from the DEA to allocate sufficient amounts of controlled substances to us to conduct our development program.

There is no guarantee that we will be able to obtain sufficient production quota from the DEA to support our manufacturing operations.

We do not sell products in South Korea.

We sell our products to Best Choice and, subject to out extending our agreement with Best Choice, Best Choice will sell the products

in South Korea upon receipt of regulatory approval.

Food and drug products are regulated in South Korea by the MFDS.

market the products in Korea, Best Choice needs to obtain a permit or complete the filing of a report with the MFDS.

It is difficult

to determine the classification of the products, and Best Choice has advised us that it is working with the MFDS to determine a

classification for our products.

It would be necessary to determine whether our products would be treated as health functional

foods, quasi-drugs, over-the-counter drugs or prescription drug.

Each category has a specific approval process, with health functional

foods requiring the least amount of data and prescription drugs requiring the most date.

Health functional foods refer to “foods”

manufactured with functional raw materials or ingredients beneficial to the human body and “functionality”

means controlling

nutrients for the structure or functions of the human body or providing beneficial effects to health purposes, such as physiological

“Quasi-drugs”

refer to any of the following:

fibers, rubber products or similar products used for the purpose

of treating, alleviating, or preventing human or animal diseases;

non-appliance, non-machinery or similar articles that have insignificant

influences on or do not directly act upon human bodies;

and preparations used for sterilization, insecticide, and uses similar

thereto for the purpose of preventing infectious diseases.

An over-the-counter drug is a drug, the misuse or abuse of which is

of little concern, and the safety and efficacy of which may be expected even when used without a prescription by a physician or

or a drug that may be used to cure a disease without a physician’s or dentist’s professional knowledge;

or a drug that has a relatively small side effect on human bodies in light of the dosage form and pharmacological action.

A prescription

drug means a drug that is not an OTC drug.

Regardless of efficacy in pharmacological

actions, based on the overall judgment of the ingredients, shape (container, packaging, design, etc.), name, indicated purpose

of use, efficacy, effects, administration methods, dosage, advertising or explanation for sale, in case it is perceived to be used

for as a health functional food, quasi-drug or prescription drugs, the aforementioned purpose or demonstrated to have medicinal

effects in the perspective of the general public, they all are drugs that are subject to the Pharmaceutical Affairs Act.

in case the products are sold without obtaining the required approval, it will be deemed an act of selling drugs without obtaining

an approval, which is a criminal offense by the person selling without authorization in South Korea.

Europe and Other Countries

If we market our products in any countries

other than the United States, we would be subject to the laws of those countries.

In order to obtain market our products in other

countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and

governing, among other things, clinical trials and commercial sales, pricing and distribution of our products.

The European medicines regulatory system

is based on a network of around 50 regulatory authorities from the 31 countries in the European Economic Area, the European

Commission and the European Medicines Agency.

All medicines must be authorized before they can be placed on the market in the European

For already approved drugs, an animal study may not be required prior to testing in humans.

In most cases,

the company must file an Investigational New Drug (IND) submission to get clearance to test the product in humans.

one clinical trial .

In the first round of clinical trials, the drug company attempts to establish the

drug’s safety in humans.

Drug researchers administer the treatment to healthy individuals —

instead of patients suffering

from the disease or condition the drug is intended to treat —

and gradually increase the dose to see if the drug is toxic

at higher levels or if any possible side effects occur.

These drug trials are usually small, containing about 20 to 80 participants,

according to the FDA.

For drug delivery products incorporating already approved drugs, Phase 1 studies involve measuring blood

levels of the drug to understand the pharmacokinetics for a new route of administration.

two clinical trial .

In the second round of clinical trials, researchers give the treatment to patients

who have the disease to assess the drug’s efficacy.

The trial is randomized, meaning half of the study participants receive

the drug and half receive a placebo.

These trials usually contain hundreds of participants, according to the FDA.

There is about

a 30 percent chance of a drug moving on to a phase three clinical trial, according to data from the biotech trade organization

For already approved drugs, as is the case with drug delivery products, a Phase 2 trial may not be necessary as the therapeutic

drug doses and blood concentrations are already known.

However, a Phase 2 may be conducted to inform the design of the Phase 3

clinical trial in regards to the safety and efficacy of the product when used by patients.

three clinical trial .

In the third phase of clinical trials, researchers work with the FDA to design

a larger trial to test the drug’s ideal dosage, patient population and other factors that could decide whether the drug

is approved, according to the report.

These trials usually contain a few hundred to thousands of participants.

In the case of

drug delivery products that utilize an approved drug, Phase 3 trials will typically include a comparison to the already approved

reference product.

For example a transdermal patch may be compared to an injection.

drug application .

Once a drug company collects and analyzes all data from the clinical trials, it submits

a new drug application to the FDA.

The application includes trial data, preclinical information and details on the drug’s

manufacturing process.

If the FDA accepts the application for review, the agency has ten months —

or six months if the drug

has priority review status —

to make a decision, according to the report.

The FDA can hold an advisory committee meeting

where independent experts assess the data and recommend whether to approve the drug.

From there, the FDA will either approve the

drug or give the applicant a complete response letter, which explains why the drug did not get approved and what steps the applicant

must take before resubmitting the application for approval.

FDA may also require Human Abuse Liability or Human Abuse Potential clinical studies to evaluate the abuse liability or abuse

potential of a new chemical entity for drugs that affect the central nervous system.

If the abuse deterrent technology renders

a product less desirable than conventional formulations, it is said to convey abuse deterrent properties and can include specific

label language indicating this difference.

other instances, sponsors are required to evaluate the effectiveness of an Abuse Deterrent Formulation.

For Abuse Deterrent Formulation

trials, the objective is to assess the ability of the new formulation to be tampered with and abused, and is often pursuant to

a 505(b)(2) strategy.

approving an NDA, the FDA may inspect the facilities where the product is being manufactured or facilities that are significantly

involved in the product development and distribution process and will not approve the product unless compliance with current good

manufacturing processes is satisfactory.

The FDA may deny approval of an NDA if applicable statutory or regulatory criteria are

not satisfied, or may require additional testing or information, which can delay the approval process.

In pursuing FDA approval

there may be various delays and it is possible that approval may never be granted.

In addition, new government requirements may

be established that could delay or prevent regulatory approval of our product candidates under development.

a product is approved, the FDA may impose limitations on the indications for use for which the product may be marketed, may require

that warning statements be included in the product labeling, may require that additional studies or trials be conducted following

approval as a condition of the approval, may impose restrictions and conditions on product distribution, prescribing or dispensing

in the form of a risk management plan, or impose other limitations.

a product receives FDA approval, marketing the product for other indicated uses or making certain manufacturing or other changes

related to the product will require FDA review and approval of a supplemental NDA or a new NDA, which may require additional clinical

safety and efficacy data and may require additional review fees.

In addition, further post-marketing testing and surveillance

to monitor the safety or efficacy of a product may be required.

Also, product approvals may be withdrawn if compliance with regulatory

standards is not maintained or if safety or manufacturing problems occur following initial marketing.

respect to the labeling for our abuse deterrent transdermal fentanyl system or any other opioid transdermal patch we develop,

it is likely that we will need to disclose the risks of improper use or abuse using language required by the FDA.

Approval Pathways

FDA has several pathways that can be followed to obtain FDA approval.

stand-alone NDA is an application submitted under Section 505(b)(1) of the Food, Drug and Cosmetic Act (“FD&C Act”)

and approved under Section 505(c) of the FD&C Act that contains full reports of investigations of safety and effectiveness

that were conducted by or for the applicant or for which the applicant has a right of reference or use.

This is typically the

pathway used for new chemical entities.

505(b)(2) application is an NDA submitted under Section 505(b)(1) and approved under Section 505(c) of the FD&C Act that contains

full reports of investigations of safety and effectiveness, where at least some of the information required for approval comes

from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use.

is the pathway typically taken for off-patent drugs that are being development into alternate dosage forms or routes of administration.

ANDA is an application for a duplicate of a previously approved drug product that was submitted and approved under Section 505(j)

of the FD&C Act.

An ANDA relies on the FDA’s finding that the previously approved drug product is safe and effective.

An ANDA generally must contain information to show that the proposed generic product (1) is the same as the drug with respect

to the active ingredients, conditions of use, route of administration, dosage form, strength and labeling (with certain permissible

differences) and (2) is bioequivalent to the referenced drug.

An ANDA may not be submitted if studies are necessary to establish

the safety and effectiveness of the proposed product.

This is the pathway taken for generic drugs.

cannot assure you that we will be able to take advantage of any of the available abbreviated approval pathways for any of our

proposed products.

Post-approval

drug products for which we receive FDA approval will be subject to continuing regulation by the FDA.

Certain requirements include,

among other things, record-keeping requirements, reporting of adverse events with the product, providing the FDA with updated

safety and efficacy information on an annual basis or more frequently for specific events, product sampling and distribution requirements,

complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements.

These promotion and advertising requirements include, among others, standards for direct-to-consumer advertising, prohibitions

against promoting drugs for uses or patient populations that are not described in the drug’s approved labeling, known as

“off-label use,”

and other promotional activities, such as those considered to be false or misleading.

comply with FDA regulations can have negative consequences, including the immediate discontinuation of noncomplying materials,

adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil

or criminal penalties.

Such enforcement may also lead to scrutiny and enforcement by other government and regulatory bodies.

physicians may prescribe legally available drugs for off-label uses, manufacturers may not encourage, market or promote such off-label

As a result, “off-label promotion”

has formed the basis for litigation under the Federal False Claims Act, violations

of which are subject to significant civil fines and penalties.

In addition, manufacturers of prescription products are required

to disclose annually to the Center for Medicaid and Medicare any payments made to physicians and teaching hospitals in the U.S.

under the federal Physician Payment Sunshine Act.

Reportable payments may be direct or indirect, in cash or kind, for any reason,

and are required to be disclosed even if the payments are not related to the approved product.

Failure to fully disclose or not

in time reporting could lead to penalties up to $1.15 million per year.

manufacturing of any of our products will be required to comply with the FDA’s current good manufacturing process (cGMP)

These regulations require, among other things, quality control and quality assurance, as well as the corresponding

maintenance of comprehensive records and documentation.

Drug manufacturers and other entities involved in the manufacture and

distribution of approved drugs are also required to register with the FDA their establishments and list any products they make

and to comply with related requirements in certain states.

These entities are further subject to periodic unannounced inspections

by the FDA and certain state agencies for compliance with current good manufacturing processes and other laws.

Accordingly, manufacturers

must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

of problems with a product after approval may result in serious and extensive restrictions on a product, manufacturer or holder

of an approved NDA, as well as lead to potential market disruptions.

These restrictions may include recalls, suspension of a product

until the FDA is assured that quality standards can be met, and continuing oversight of manufacturing by the FDA under a “consent

decree,”

which frequently includes the imposition of costs and continuing inspections over a period of many years, as well

as possible withdrawal of the product from the market.

In addition, changes to the manufacturing process generally require prior

FDA approval before being implemented.

Other types of changes to the approved product, such as adding new indications and additional

labeling claims, are also subject to further FDA review and approval.

FDA also may require post-marketing testing, or Phase IV testing, as well as risk minimization action plans and surveillance to

monitor the effects of an approved product or place conditions on an approval that could otherwise restrict the distribution or

use of our products.

Government Regulations

are subject to government regulations that are applicable to businesses generally, including those relating to workers’

health and safety, environmental and waste disposal, wage and hour and labor practices, including sexual harassment laws and regulations,

and anti-discrimination laws and regulations.

addition, we must comply with the laws and regulations governing the research and manufacture of products containing controlled

substances such as fentanyl and other opioids.

We must be licensed by the Drug Enforcement Agency (DEA) and the state(s) in which

we conduct research and development activities.

We currently hold a DEA license and a Georgia State Board of Pharmacy license

to support our current research activities at our facility in Georgia.

As a result we have been inspected by the DEA and the Georgia

Board of Pharmacy.

As we enter the manufacturing phase of development we will need to obtain a DEA manufacturing license and a

Georgia Board of Pharmacy manufacturing license and obtain production quota from the DEA to allocate sufficient amounts of controlled

substances to us to conduct our development program.

There is no guarantee that we will be able to obtain sufficient production

quota from the DEA to support our manufacturing operations.

and Other Countries

we market our products in any countries other than the United States, we would be subject to the laws of those countries.

to obtain market our products in other countries we must comply with numerous and varying regulatory requirements of such countries

regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution

of our products.

European medicines regulatory system is based on a network of around 50 regulatory authorities from the 31 countries in the

European Economic Area, the European Commission and the European Medicines Agency.

All medicines must be authorized before they

can be placed on the market in the European Union.

The European system offers different routes for authorization.

A centralized procedure allows the marketing of a medicine

on the basis of a single European Union assessment and marketing authorization which is valid throughout the European Union.

a majority of medicines authorized in the European Union do not fall within the scope of the centralized procedure, and we do not

know whether our proposed products will fall within the centralized authorization.

We also do not know how the withdrawal of Great

Britain from the European Union will affect the procedure for approval of medicines in the United Kingdom.

If we are not able to

use the centralized procedure, we would need to use one of the following procedures.

One method is the decentralized procedure

where we would apply for the simultaneous authorization in more than one European Union member.

The second method is the mutual-recognition

procedure where we would have a medicine authorized in one European Union country apply for authorization to be recognized in other

European Union countries.

In either case, we would be required to complete clinical trials to demonstrate the safety and efficacy

of the medicine and show and that the medicine is manufactured in accordance with good manufacturing practice based upon European

Union standards.

In countries other than the United States

and the European Union, we would be required to comply with the applicable laws of those countries, which may require us to perform

additional clinical testing.

Failure to obtain regulatory approval in

any country would prevent our product candidates from being marketed in those countries.

In order to market and sell our products

in jurisdictions other than the United States and the European Union, we must obtain separate marketing approvals and comply with

numerous and varying regulatory requirements.

The regulatory approval process outside the United States and the European Union

generally includes all of the risks associated with obtaining FDA and European Union approval, but can involve additional testing.

In addition, in many countries worldwide,

it is required that the product be approved for reimbursement before the product can be approved for sale in that country.

not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all.

Even if we were to receive

approval in the United States or the European Union, approval by the FDA or the European Medicines Agency does not ensure approval

by regulatory authorities in other countries or jurisdictions.

Similarly, approval by one regulatory authority outside the United

States would not ensure approval by regulatory authorities in other countries or jurisdictions.

We may not be able to file for

marketing approvals and may not receive necessary approvals to commercialize our products in any market.

If we are unable to obtain

approval of our product candidates by regulatory authorities in other foreign jurisdictions, the commercial prospects of those

product candidates may be significantly diminished and our business prospects could decline.

Outside the United States, particularly

in member states of the European Union, the pricing of prescription drugs is subject to governmental control.

In these countries,

pricing negotiations or the successful completion of health technology assessment procedures with governmental authorities can

take considerable time after receipt of marketing approval for a product.

In addition, there can be considerable pressure by governments

and other stakeholders on prices and reimbursement levels, including as part of cost containment measures.

Certain countries allow

companies to fix their own prices for medicines, but monitor the pricing.

In addition to regulations in the United

States, if we market outside of the United States, we will be subject to a variety of regulations governing, among other things,

clinical trials and any commercial sales and distribution of our products.

Whether or not we obtain FDA approval for a product,

we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials

or marketing of the product in those countries.

Intellectual Property Rights

4P Therapeutics filed an international

patent application under the Patent Cooperation Treaty for worldwide prosecution of the abuse deterrent transdermal technology

patent used in our lead product, an abuse deterrent fentanyl transdermal system.

The patent is being prosecuted in the United States

and in other countries.

The European Patent Office and the patent offices for Japan, Australia and Russia had granted patent protection

for the patent application filed by 4P Therapeutics for its abuse deterrent transdermal technology and the patent office of Mexico

has granted a notice of allowance.

We have not received any response from the United States Patent and Trademark Office.

to applying the technology to developing an abuse deterrent fentanyl transdermal system, we believe that the abuse deterrent patch

technology can be applied to other opioids and pain medication patches where there is risk of abuse and overdose, as well as other

transdermal pharmaceuticals where we believe our technology can help prevent abuse or accidental misuse.

We have received a trademark for the name

Since our proposed pharmaceutical products

deliver a drug which is off patent and presently available, we will compete with a number of companies who are presently selling

the drug which is generally taken by injection.

In addition, there are a number of companies that market generic transdermal patches,

including fentanyl transdermal patches, and we will compete against those companies that make products with the same drug.

as transdermal patches become more popular, other companies, many of which have significantly greater resources and existing relationships

with physicians and medical personnel, may use their resources to develop improved transdermal delivery systems for the drugs that

are in our pipeline.

We believe that competition is based on such factors as price, insurance/Medicaid and Medicare reimbursement

rates and policies, safety and efficacy, side effects or reduction in side effects and the reliability of the supplier or manufacturer.

Since we are developing our products to meet the needs of the patients, physicians, and the payers, we need to demonstrate advantages

in terms of safety, efficacy, compliance and cost.

If we obtain regulatory approval to market our products, we cannot assure you

that we will be successful in the marketplace.

A centralized

procedure allows the marketing of a medicine on the basis of a single European Union assessment and marketing authorization which

is valid throughout the European Union.

However, a majority of medicines authorized in the European Union do not fall within the

scope of the centralized procedure, and we do not know whether our proposed products will fall within the centralized authorization.

We also do not know how the withdrawal of Great Britain from the European Union will affect the procedure for approval of medicines

in the United Kingdom.

If we are not able to use the centralized procedure, we would need to use one of the following procedures.

One method is the decentralized procedure where we would apply for the simultaneous authorization in more than one European Union

The second method is the mutual-recognition procedure where we would have a medicine authorized in one European Union

country apply for authorization to be recognized in other European Union countries.

In either case, we would be required to complete

clinical trials to demonstrate the safety and efficacy of the medicine and show and that the medicine is manufactured in accordance

with good manufacturing practice based upon European Union standards.

countries other than the United States and the European Union, we would be required to comply with the applicable laws of those

countries, which may require us to perform additional clinical testing.

to obtain regulatory approval in any country would prevent our product candidates from being marketed in those countries.

to market and sell our products in jurisdictions other than the United States and the European Union, we must obtain separate

marketing approvals and comply with numerous and varying regulatory requirements.

The regulatory approval process outside the

United States and the European Union generally includes all of the risks associated with obtaining FDA and European Union approval,

but can involve additional testing.

addition, in many countries worldwide, it is required that the product be approved for reimbursement before the product can be

approved for sale in that country.

We may not obtain approvals from regulatory authorities outside the United States on a timely

basis, if at all.

Even if we were to receive approval in the United States or the European Union, approval by the FDA or the European

Medicines Agency does not ensure approval by regulatory authorities in other countries or jurisdictions.

Similarly, approval by

one regulatory authority outside the United States would not ensure approval by regulatory authorities in other countries or jurisdictions.

We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any

If we are unable to obtain approval of our product candidates by regulatory authorities in other foreign jurisdictions,

the commercial prospects of those product candidates may be significantly diminished and our business prospects could decline.

the United States, particularly in member states of the European Union, the pricing of prescription drugs is subject to governmental

In these countries, pricing negotiations or the successful completion of health technology assessment procedures with

governmental authorities can take considerable time after receipt of marketing approval for a product.

In addition, there can

be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment

Certain countries allow companies to fix their own prices for medicines, but monitor the pricing.

addition to regulations in the United States, if we market outside of the United States, we will be subject to a variety of regulations

governing, among other things, clinical trials and any commercial sales and distribution of our products.

Whether or not we obtain

FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the

commencement of clinical trials or marketing of the product in those countries.

Property Rights

Therapeutics filed an international patent application under the Patent Cooperation Treaty for worldwide prosecution of the abuse

deterrent transdermal technology patent used in our lead product, an abuse deterrent fentanyl transdermal system.

The patent is

being prosecuted in the United States and in other countries.

The European Patent Office and the patent offices for Japan, Australia

and Russia had granted patent protection for the patent application filed by 4P Therapeutics for its abuse deterrent transdermal

technology and the patent office of Mexico has granted a notice of allowance.

In addition to applying the technology to developing

an abuse deterrent fentanyl transdermal system, we believe that the abuse deterrent patch technology can be applied to other opioids

and pain medication patches where there is risk of abuse and overdose, as well as other transdermal pharmaceuticals where we believe

our technology can help prevent abuse or accidental misuse.

have received a trademark and Wordmark for the name Nutriband.

We have also received a trademark for the name AVERSA®

we use for our abuse deterrent technology.

our proposed pharmaceutical products deliver a drug which is off patent and presently available, we will compete with a number

of companies who are presently selling the drug which is generally taken by injection.

In addition, there are a number of companies

that market generic transdermal patches, including fentanyl transdermal patches, and we will compete against those companies that

make products with the same drug.

Further, as transdermal patches become more popular, other companies, many of which have significantly

greater resources and existing relationships with physicians and medical personnel, may use their resources to develop improved

transdermal delivery systems for the drugs that are in our pipeline.

We believe that competition is based on such factors as price,

insurance/Medicaid and Medicare reimbursement rates and policies, safety and efficacy, side effects or reduction in side effects

and the reliability of the supplier or manufacturer.

Since we are developing our products to meet the needs of the patients, physicians,

and the payers, we need to demonstrate advantages in terms of safety, efficacy, compliance and cost.

If we obtain regulatory approval

to market our products, we cannot assure you that we will be successful in the marketplace.

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 1. Business