What changed in this filing

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Item 1A. Risk Factors

2021-03-22 compared with 2020-03-27 · 761 added, 1025 removed, 29 unchanged (98% of the section changed)

1 unchanged sentence

We have described below a number of uncertainties and risks which, in addition

to uncertainties and risks presented elsewhere in this Annual Report, may adversely affect our business, operating results and

to uncertainties and risks presented elsewhere in this Quarterly Report, may adversely affect our business, operating results and

financial condition.

The uncertainties and risks enumerated below as well as those presented elsewhere in this Annual Report

should be considered carefully in evaluating our company and our business and the value of our securities.

Risks Relating to Our

Stage of Development, Capital Structure, Acquisition and In-Licensing Strategy and Listing of Our Securities

We may not be able to continue as

a going concern if we do not obtain additional financing.

We have incurred losses since our inception

and have not demonstrated an ability to generate revenues from the sales of our proposed products.

Our ability to continue

as a going concern is dependent on raising capital from the sale of our common stock and/or obtaining debt financing.

cash, cash equivalents and short-term investment balance at December 31, 2019 was approximately $5.1 million.

On January 17, 2020

we entered into an agreement with certain accredited investors from our July 30, 2019 underwritten offering.

Pursuant to the agreement,

we agreed to reduce the exercise price of 5,555,554 common stock purchase warrants from $2.70 to $1.36 in consideration for the

immediate exercise of the warrants for cash and issued the investors an aggregate of 5,555,554 replacement warrants having an exercise

price of $1.23 per share.

Of the replacement warrants, 2,777,777 have a term of two years and 2,777,777 have a term of five years.

We received approximately $6.8 million in net proceeds.

Based on our current expected level of operating expenditures, we expect

to be able to fund our operations for more than 12 months from this filing.

Our ability to remain a going concern is wholly dependent

upon our ability to continue to obtain sufficient capital to fund our operations.

Despite our ability to secure capital in

the past, there can be no assurance that additional equity or debt financing will be available to us when needed or that we may

be able to secure funding from any other sources.

In the event that we are not able to secure funding, we may be forced to curtail

operations, delay or stop ongoing clinical trials, cease operations altogether or file for bankruptcy.

Our auditors have expressed substantial

doubt about our ability to continue as a going concern.

Our auditors’ report on our December 31, 2019 consolidated

financial statements expressed an opinion that our capital resources as of the date of their audit report were not sufficient to

sustain operations or complete our planned activities for the upcoming year unless we raised additional funds.

Our current cash

level raises substantial doubt about our ability to continue as a going concern past the third quarter of 2021.

If we do not obtain

additional capital by such time, we may no longer be able to continue as a going concern and may cease operation or seek bankruptcy

we are unable to successfully retain and integrate a new management team, our business could be harmed.

January 1, 2019, we appointed Dr.

Kenneth Carter as our Executive Chairman.

In such role, Dr.

Carter is our Principal Executive

and Accounting Officer.

Our success depends largely on the development and execution of our business strategy by our senior management

We currently have a limited full-time executive team which may adversely affect our business.

Additionally, the loss of any

members or key personnel would likely harm our ability to implement our business strategy and respond to the rapidly changing market

conditions in which we operate.

There can be no assurance that we will be able to retain the current members of our management

Moreover, there may be a limited number of persons with the requisite skills to serve in these positions, and we cannot assure

you that we would be able to identify, employ or retain such qualified personnel on acceptable terms, if at all.

The uncertainties and risks enumerated below as well as those presented elsewhere in this Quarterly

Report should be considered carefully when evaluating our company, business and the value of our securities.

Risks Related to the Merger

The Exchange Ratio is adjustable based on our net cash at

closing and LBS’s Pre-Merger Financing, so the consideration at the closing of the Merger may have a greater or lesser value

than at the time the Merger Agreement was signed.

The relative proportion of the combined company

that our stockholders will own when the Merger closes will be based on the valuations of Seneca and LBS as negotiated by the parties

and as specified in the Merger Agreement.

Assuming a $22.5 million investment in LBS prior to the consummation of the Merger (“Pre-Merger

Financing”), the outstanding equity of Seneca, as calculated on an adjusted fully diluted treasury stock method basis and

after giving effect to such financing, is expected to be held as follows:

equity holders of former LBS capital stock (prior to

the Pre-Merger Financing) will hold approximately 25.2%;

the investor in the Pre-Merger Financing will hold approximately 16.2%;

pre-Merger Seneca equity holders will hold approximately 26.2%;

and approximately 32.4% of the shares will be held in escrow to

be distributed to the investor in the Pre-Merger Financing, or to be distributed to LBS Pre-Merger Financing equity holders.

estimates are based on the anticipated Exchange Ratio and are subject to adjustment as provided in the Merger Agreement.

to the consummation of the Merger, the Exchange Ratio at the closing of the Merger may be subject to either an upward or downward

adjustment based on:

(i) Seneca’s net cash, or (ii) the proceeds of the Pre-Merger Financing.

Failure to complete the Merger may result in us paying a termination

fee to LBS and could harm our common stock price and our future business and operations.

If the Merger is not completed, each of Seneca

and LBS is subject to the following risks:

upon termination of the Merger Agreement, LBS may be required to pay Seneca a termination fee of $1.5 million, under certain circumstances, and/or up to $250,000 in expense reimbursements;

upon termination of the Merger Agreement, Seneca may be required to pay LBS a termination fee of $1.5 million, under certain circumstances, and/or up to $250,000 in expense reimbursements;

the parties will have incurred significant expenses related to the Merger, such as legal and accounting fees, which must be paid even if the Merger is not completed;

Seneca may be forced to cease its operations, dissolve and liquidate its assets.

In addition, if the Merger Agreement is terminated

and our board of directors determines to seek another business combination, there can be no assurance that we will be able to find

a partner willing to provide equivalent or more attractive consideration than the consideration to be provided in the Merger.

If the conditions to the closing of the Merger are not met,

the Merger may not occur.

Even if the change of control and related share

issuance are approved by our stockholders, specified conditions must be satisfied or waived to complete the Merger.

We cannot assure

you that management will succeed in working together as a team.

In the event we are unsuccessful, our business and prospects could

we are unable to execute on our in-licensing and acquisition strategy, our business could be materially impacted.

2019 we initiated an in-licensing and acquisition strategy to further expand our product pipeline.

Our in-licensing strategy consists

of evaluating pre-clinical and clinical stage opportunities in therapeutic areas that can benefit from our current product candidates

or core expertise in drug development.

Although we believe this strategy could diversify some of the risks inherent in focusing

on limited therapeutic areas and could increase our probability of commercial success, it is extremely costly and expensive.

present, we are focusing a majority of our efforts and capital resources on such strategy and have greatly reduced our other development

If we are not ability to successfully execute this strategy, our business will be materially impacted.

may experience intense competition related to the acquisition and/or in-licensing of assets.

expect to encounter intense competition from other entities undertaking similar acquisition and/or in-licensing strategies.

of these entities, including venture capital firms, partnerships and corporations, blind pool companies, large industrial and financial

institutions, small business investment companies and wealthy individuals, are well-established and have extensive experience in

connection with identifying, licensing and/or acquiring therapeutic assets.

Many of these competitors possess greater financial,

technical, human and other resources than us and there can be no assurance that we will have the ability to compete successfully.

Our financial resources will be limited in comparison to those of many of our competitors.

This inherent competitive limitation

may compel us to select certain less attractive prospects.

There can be no assurance that such prospects will permit us to achieve

our stated business objectives.

may be subject to uncertainty in the competitive environment of a target.

the event that we succeed in completing an acquisition and/or the in-licensing of a therapeutic assets, we will, in all likelihood,

become subject to intense competition from competitors developing similar assets and therapies that target the same indication.

In particular, certain indications or therapeutic areas with greater market potential frequently attract a large number of competitors,

including competitors with greater financial, marketing, technical, human and other resources than the initial competitors in the

The degree of competition characterizing the industry of any prospective target asset cannot presently be ascertained.

There can be no assurance that, subsequent to a consummation of a transaction, we will have the resources to compete effectively.

may pursue a target asset outside the United States which would subject us to additional risks relating to doing business in a

foreign country

may effectuate an acquisition and/or in license a target asset from outside the United States.

In such event, we may face the significant

additional risks associated with doing business in that country.

In addition to the language barriers, different presentations

of information, different business practices, different regulatory practices and other cultural differences and barriers, may make

it difficult to evaluate such a target assets, ongoing business risks may result from the internal political situation, uncertain

legal systems and applications of law, prejudice against foreigners, corrupt practices, uncertain economic policies and potential

political and economic instability that may be exacerbated in various foreign countries.

The liquidity

of our common stock and shareholder’s ability to sell their shares has been affected by our recent reverse stock split.

On July 17, 2019

we effected a 1-for-20 reverse stock split.

As a result of the reverse stock split the liquidity of our common stock has decreased

as a result of the corresponding reduction in the number of shares that are outstanding following such split.

In addition, the

reverse stock split increased the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating

the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting

unable to satisfy NASDAQ maintenance requirements, our common stock may be delisted from NASDAQ, which could impair the liquidity

and the value of our common stock.

Our continued

listing on NASDAQ generally requires that we meet certain listing maintenance requirements.

Presently, the price of our common

stock has been below $1.00 per share and accordingly, below the NASDAQ maintenance requirement for minimum bid.

If we are unable

to satisfy NASDAQ’S continued listing requirements, our common stock may be delisted from NASDAQ.

In such event, trading

in our common stock would likely take place on the over-the-counter market on the “OTC Markets” or the “OTC Bulletin

Board.” Consequently, the liquidity of our common stock could be impaired, not only in the number of shares of common stock

which could be bought and sold, but also through delays in the timing of transactions, a reduction in security analysts and new

media coverage and lower prices for our common stock than might otherwise be obtained.

While the shares of our common stock currently

meet NASDAQ listing requirements and are currently listed on The Nasdaq Capital Market, there can be no assurance that we will

continue to meet the criteria for continued listing.

While we continue

to monitor our compliance with the requirements for continued listing on The Nasdaq Capital Market, we cannot assure you that we

will not fail to satisfy one of the criteria in the future.

If that were to occur, NASDAQ may take steps to delist our common stock.

A delisting would likely have a negative effect on the price of our common stock and would likely impair your ability to sell or

purchase our common stock if and when you wish to do so.

In the event of a delisting, we cannot assure you that any action we take

to restore listing would be successful.

Even if successful, we cannot assure you that any such action would stabilize the market

price of our common stock, improve the liquidity of our common stock, or prevent our future non-compliance with NASDAQ listing

requirements.

Further, if we were to be delisted from The Nasdaq Capital Market, our common stock would no longer be recognized

as a “covered security” and we would be subject to regulation in each state in which we offer our securities.

delisting from NASDAQ could adversely affect our ability to raise additional financing through the public or private sale of equity

securities, would significantly impact the ability of investors to trade our securities and would negatively impact the value and

liquidity of our common stock.

Delisting could also have other negative results, including the potential loss of confidence by

employees, the loss of institutional investor interest and fewer business development opportunities.

If our common stock were delisted

from NASDAQ, the Company would be subject to the risks relating to penny stocks .

If our common stock were to be delisted

from trading on the Nasdaq Capital Market and the trading price of our common stock were below $5.00 per share on the date our

common stock is delisted, trading in our common stock would also be subject to the requirements of certain rules promulgated under

the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These rules require additional disclosure by

broker-dealers in connection with any trades involving a stock defined as a "penny stock" and impose various sales practice

requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally

institutions.

These additional requirements may discourage broker-dealers from effecting transactions in securities that are classified

as penny stocks, which could severely limit the market price and liquidity of such securities and the ability of purchasers to

sell such securities in the secondary market.

A penny stock is defined generally as any non-exchange listed equity security that

has a market price of less than $5.00 per share, subject to certain exceptions.

could become the subject to securities litigation.

Commencing in

2017, we have seen a dramatic decrease in the price of our common stock.

More recently, in July of 2019 we effected a 1-for-20

reverse stock split and completed an underwritten public offering of our securities.

Commencing from the time our reverse stock

split became effective, we have seen an even more drastic decrease in the price of our common stock.

Plaintiffs have often initiated

securities class action litigation against a company following periods of significant decreases in the market price of the company’s

As a result, we may become the target of litigation.

Securities litigation could result in substantial costs and liabilities

and could divert management’s attention and resources from our operations and business.

have a history of losses.

you that all of the conditions will be satisfied or waived.

If the conditions are not satisfied or waived, the Merger may not occur

or will be delayed, we may lose some or all the intended benefits of the Merger.

The Merger may be completed even though material adverse changes

may result from the announcement of the Merger, industry-wide changes and/or other causes.

In general, either Seneca or LBS can refuse

to complete the Merger if there is a material adverse change affecting the other party between the date of the Merger Agreement,

and the closing of the Merger.

However, certain types of changes do not permit either party to refuse to complete the Merger, even

if such change could be said to have a material adverse effect on Seneca or LBS, including:

general business or economic conditions generally affecting the industry in which LBS or Seneca operate;

the taking of any action, or the failure to take any action, by the either party that is required to comply with the terms of Merger Agreement;

any natural disaster or epidemics, pandemics (including COVID-19 or other outbreaks of diseases or quarantine restrictions), or other force majeure events, or any act or threat of terrorism or war, any armed hostilities or terrorist activities;

any change in, or any compliance with or action taken for the purpose of complying with, any law or GAAP (or interpretations of any law or GAAP).

If adverse changes occur and Seneca and LBS

still complete the Merger, the stock price of the combined company following the closing of the Merger may suffer.

may reduce the value of the Merger to the stockholders of Seneca, LBS or both.

Some executive officers and directors of Seneca and LBS have

interests in the Merger that are different from the respective stockholders of Seneca and LBS and that may influence them to support

or approve the Merger without regard to the interests of the respective stockholders of Seneca and LBS.

Some officers and directors of Seneca and LBS

are parties to arrangements that provide them with interests in the Merger that are different from the respective stockholders

of Seneca and LBS, including, among others, service as an officer or director of the combined company following the closing of

the Merger, severance benefits, the acceleration of equity award vesting, and continued indemnification.

Based on the terms of their respective agreements,

Seneca’s recently terminated executive officers may be entitled to receive a total value of $3,425,613 (collectively, not

individually) in connection with the consummation of the Merger, the associated termination of their employment from Seneca and

the cancelation of their stock options.

Additionally, Seneca’s recently terminated senior vice president of research and

development will be entitled to receive a total value of $865,438.

In addition, in connection with the Merger, the executive officers

of LBS entered into new employment agreements and are entitled to receive cash bonuses, certain executive officers are entitled

to receive equity grants, and members of the LBS Board are entitled to receive cash bonuses.

The market price of Seneca Common Stock following the Merger

may decline as a result of the Merger.

The market price of Seneca Common Stock may

decline as a result of the Merger for a number of reasons, including if:

investors react negatively to the prospects of the combined company’s business and prospects following the closing of the Merger;

the effect of the Merger on the combined company’s business and prospects following the closing of the Merger is not consistent with the expectations of financial or industry analysts;

the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by stockholders or financial or industry analysts.

LBS and Seneca securityholders will have a reduced ownership

and voting interest in, and will exercise less influence over the management of, the combined company following the closing of

the Merger as compared to their current ownership and voting interest in the respective companies.

After the completion of the Merger, the current

securityholders of LBS and Seneca will own a smaller percentage of the combined company than their ownership in their respective

companies prior to the Merger.

Immediately after the Merger, it is currently estimated that the former LBS equity holders immediately

before the Merger (including the investor in the Pre-Merger Financing) are expected to hold approximately 73.8% of the capital

stock of Seneca outstanding immediately following the Merger and the equity holders of Seneca immediately before the Merger are

expected to hold approximately 26.2% of the Seneca capital stock outstanding immediately following the Merger, in each case, as

calculated on an adjusted fully diluted treasury stock method basis and after giving effect to the Pre-Merger Financing, but including

50% of the shares subject to the Equity Warrants.

These estimates are based on the anticipated Exchange Ratio and are subject to

adjustment as provided in the Merger Agreement.

During the pendency of the Merger, Seneca and LBS may not

be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement,

which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the

ability of Seneca and LBS to make acquisitions, subject to specified exceptions relating to fiduciary duties, or complete other

mergers, sales of assets (other than the sale of the Seneca Legacy Technology) or other business combinations that are not in the

ordinary course of business pending completion of the Merger.

As a result, if the Merger is not completed, the parties may be at

a disadvantage to their competitors during that period.

In addition, while the Merger Agreement is in effect, each party is generally

prohibited from soliciting, initiating, encouraging or entering into specified extraordinary transactions, such as a merger, sale

of assets or other business combination, with any third party, subject to specified exceptions, even if any such transaction could

be favorable to such party’s stockholders.

Certain provisions of the Merger Agreement may discourage

third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by

the Merger Agreement.

The terms of the Merger Agreement prohibit

each of Seneca and LBS from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except

in limited circumstances when such party’s board of directors determines in good faith, after consultation with its independent

financial advisor, if any, and outside counsel, that an unsolicited competing proposal constitutes, or would reasonably be expected

to result in, a superior competing proposal and that failure to take such action would result in a breach of the fiduciary duties

of the board of directors.

In addition, if Seneca or LBS terminate the Merger Agreement under specified circumstances, including

terminating because of a decision of a board of directors to recommend a superior competing proposal, LBS may be required to pay

Seneca a termination fee of $1.5 million and/or $250,000 in expense reimbursements or Seneca may be required to pay LBS a

termination fee of $1.5 million, or up to $250,000 in expense reimbursements.

Because the lack of a public market for LBS’s capital

stock makes it difficult to evaluate the fairness of the Merger, the shareholders of LBS may receive consideration in the Merger

that is less than the fair market value of LBS’s capital stock and/or Seneca may pay more than the fair market value of LBS’s

capital stock.

The outstanding capital stock of LBS is privately

held and is not traded in any public market.

The lack of a public market makes it extremely difficult to determine the fair market

value of LBS’s capital stock.

Because the percentage of Seneca equity to be issued to LBS shareholders was determined based

on negotiations between the parties, it is possible that the value of the Seneca Common Stock to be received by LBS shareholders

will be less than the fair market value of LBS’s capital stock, or Seneca may pay more than the aggregate fair market value

for LBS’s capital stock.

The combined organization will incur significant transaction costs as a result of the Merger, including

investment banking, legal and accounting fees.

In addition, the combined organization will incur significant operating expenses

which cannot be accurately estimated at this time.

Actual transaction costs may substantially exceed the Party’s estimates

and may have an adverse effect on the combined organization’s financial condition and operating results.

If Nasdaq does not approve our listing application for the

combined company and we continue with the Merger, we may be subject to delisting.

Seneca has filed an initial listing application

with Nasdaq pursuant to Nasdaq’s “reverse merger” rules.

In the event our application is not accepted by the

Nasdaq and the parties proceed with the merger, the combined company will be subject to delisting proceedings and could be delisted.

If Seneca’s shares lose their status on the Nasdaq Capital Market, Seneca believes that its shares would likely be eligible

to be quoted on the inter-dealer electronic quotation and trading system operated by Pink OTC Markets Inc., commonly referred to

as the Pink Sheets and now known as the OTCQB market.

These markets are generally considered not to be as efficient as, and not

as broad as, the Nasdaq Capital Market.

If Seneca’s common stock is delisted, this would, among other things, substantially

impair its ability to raise additional funds and could result in a loss of institutional investor interest and fewer development

opportunities for Seneca.

Additionally, investors would find it more difficult to buy and sell shares of Seneca Common Stock.

Risks Related to Seneca’s Capital Requirements, Finances

and Operations in the event the Merger is Not Completed

There is no assurance that the proposed Merger will be completed

in a timely manner or at all.

If the Merger is not consummated, our business could suffer materially, and its stock price could

The consummation of the Merger is subject to

a number of closing conditions, including approval by Seneca’s and LBS’s respective stockholders and other customary

closing conditions.

The parties are targeting a closing of the transaction in the first half of 2021, however, there can be no

assurance that the merger will be consummated within this desired timeframe, or at all.

If the Merger is not consummated, we may be

subject to a number of material risks, and our business and stock price could be adversely affected, as follows:

We have incurred and expect to continue to incur significant expenses related to the Merger, even if the Merger is not consummated;

We could be obligated to pay a $1.5 million termination fee and expense reimbursements up to $250,000 in connection with the termination of the Merger Agreement, depending on the reason for the termination;

The market price of our Common Stock may decline to the extent that the current market price reflects a market assumption that the Merger will be completed;

Nasdaq could determine to delist our Common Stock, which could have an adverse effect on the value of our Common Stock and any future ability to raise capital.

If the Merger is not completed, we may be unsuccessful in

completing an alternative transaction on terms that are as favorable as the terms of the proposed transaction, or at all, and we

may be unable to reestablish a viable operating business.

We have generated limited revenue to date from

royalties under a settlement agreement and have not generated revenue from any product sales.

Our assets currently consist primarily

of cash, cash equivalents and short-term investments, our intellectual property portfolio, a settlement agreement pursuant to which

it has received royalties, its remaining assets and its listing on The Nasdaq Stock Market.

While we have entered into the Merger

Agreement, the consummation of the Merger may be delayed or may not occur at all.

If the Merger is not completed, our board of

directors may elect to pursue an alternative strategic transaction which is similar to the proposed Merger.

Attempting to complete

an alternative transaction will be costly and time consuming.

If the Merger is not completed and our board of directors determines

to pursue an alternative transaction, the terms of any such alternative transaction may not be as favorable to Seneca and its stockholders

as the terms of the Merger.

We can make no assurances that such an alternative transaction would occur at all.

Further, if the

Merger is not completed, given the level of investment and time that would be required to redesign its products or pursue the development

of products and services pursuant to its collaboration agreements, it is unlikely that we would be able to obtain the funding required

to recommence its product development activities on terms favorable to its stockholders, or at all.

If the Merger is not completed, our board of directors may

decide to pursue a dissolution and liquidation of our business.

In such an event, the amount of cash available for distribution

to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved

for commitments and contingent liabilities.

There can be no assurance that the Merger will

be completed.

If the Merger is not completed, our board of directors may decide to pursue a dissolution and liquidation of our

In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of

such decision, as with the passage of time the amount of cash available for distribution will be reduced as we continue to fund

our operations.

In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a dissolution

and liquidation of Seneca, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to

make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to its stockholders.

As a result of this requirement, our remaining cash may need to be reserved pending the resolution of such obligations.

we may be subject to litigation or other claims related to a dissolution and liquidation of our business.

If a dissolution and

liquidation were pursued, our board of directors, would need to evaluate these matters and make a determination about a reasonable

amount to reserve.

Accordingly, holders of our Common Stock could lose all or a significant portion of their investment in the

event of a liquidation, dissolution or winding up.

If we were to continue to advance our research and development

activities and pursue development of any of our pipeline products, it would require substantial additional funding.

Raising additional

capital would cause dilution to our existing stockholders and may restrict our operations or require us to relinquish rights to

our technologies or to a product candidate.

We currently do not have any committed source

of funds and do not expect to generate any commercial revenue in the foreseeable future.

We believe in the event the Merger is

not consummated that our existing cash, cash equivalents and marketable securities and interest thereon will be sufficient to fund

our projected operating requirements under our current operating plan through at least March 2022.

We have based our estimates

on assumptions that may prove to be wrong, and it may use its available capital resources sooner than it currently expects if its

operating plans change.

If the Merger is not completed and Seneca decides to pursue further research and development activities,

it will require substantial additional funding to operate, and would expect to finance these cash needs through a combination of

equity offerings, debt financings, government or other third-party funding and licensing or collaboration arrangements.

To the extent that we raise additional capital

through the sale of equity or convertible debt, the ownership interests of our stockholders will be diluted.

In addition, the terms

of any equity or convertible debt that we agree to issue may include liquidation or other preferences that adversely affect the

rights of our stockholders.

Convertible debt financing, if available, may involve agreements that include covenants limiting or

restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring

dividends, and may impose limitations on our ability to acquire, sell or license intellectual property rights and other operating

restrictions that could adversely impact our ability to conduct our business.

Additional funds may not be available to us

when we need them on terms that are acceptable to us, or at all.

Furthermore, the novel coronavirus (“COVID-19”) pandemic

continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

If the disruption

persists and deepens, we could experience an inability to access additional capital, when and if needed.

If adequate funds are

not available to us on a timely basis, we may be required to curtail or cease its operations.

If the Merger is not completed, raising additional funding

through debt or equity financing could be difficult or not successful at all, would be dilutive and may cause the market price

of our Common Stock to further decline.

If the Merger is not completed, raising additional

funding through debt or equity financing could be difficult or unavailable altogether given the turbulent financial markets.

the extent that Seneca raises additional capital through the sale of equity or convertible debt securities, the issuance of those

securities would result in substantial dilution to our current stockholders and the terms may include liquidation or other preferences

that adversely affect the rights of our current stockholders.

Furthermore, the issuance of additional securities, whether equity

or debt, or the possibility of such issuance, may cause the market price of its common stock to decline further and existing stockholders

may not agree with its financing plans or the terms of such financings.

Risks Related to Seneca

We have a history of

inception in 1996 through December 31, 2020, we have accumulated losses totaling approximately $238 million.

2 unchanged sentences

Our net losses for the two most recent fiscal years have been approximately $16 million and $8 million for 2020 and 2019, respectively.

date, we have not generated any revenue from the commercial sale of our proposed products.

No assurances can be given as to exactly

when, if at all, we will be able to fully develop, commercialize, market, sell and/or derive any, let alone material, revenues

from our proposed products.

will need to raise additional capital to continue operations.

Since our inception, we have funded our

operations through the sale of our securities, credit facilities, the exercise of options and warrants, and to a lesser degree,

from grants and research contracts and other revenue generating activities such as licensing.

As of December 31, 2019, we had

cash, cash equivalents and short-term investments on hand of approximately $5.1 million.

In January 2020, as a result of certain

investors exercising outstanding common stock purchase warrants, we were able to raise an additional $6.8 million, net.

We anticipate

that based upon our cash position on December 31, 2019, and taking into account the $6.8 million in cash that we received in January,

we will be able to fund our operations for more than 12 months after this filing.

We cannot assure you that we will be able to

secure additional capital through financing transactions, including issuance of debt, licensing agreements or grants.

Our inability

to license our intellectual property, obtain grants or secure additional financing will materially impact our ability to fund

our current and planned operations.

We have spent

and expect to continue spending substantial cash in the research, development, clinical and pre-clinical testing of our proposed

products with the goal of ultimately obtaining FDA approval and equivalent international approvals to market such products.

will require additional capital to conduct research and development, establish and conduct clinical and pre-clinical trials, enter

into commercial-scale manufacturing arrangements and to provide for marketing and distribution of our products.

We cannot assure

you that financing will be available if needed.

If additional financing is not available, we may not be able to fund our operations,

develop or enhance our technologies, take advantage of business opportunities or respond to competitive market pressures.

exhaust our cash reserves and are unable to secure additional financing, we may be unable to meet our obligations which could result

in us initiating bankruptcy proceedings or delaying or eliminating some or all our research and product development programs.

Relating to Our Business

business is dependent on the successful development of our product candidates.

Our business is

significantly dependent on our product candidates which are currently at different phases of pre-clinical and clinical development

or that we may acquire or in-license in the future.

The process to approve our product candidates is time-consuming, involves substantial

expenditures of resources, and depends upon a number of factors, including the availability of alternative treatments, and the

risks and benefits demonstrated in our clinical trials.

Our success will depend on our ability to achieve scientific and technological

advances and to translate such advances into FDA-approvable, commercially competitive products on a timely basis.

Failure can occur

at any stage of the process.

If we are not successful in developing our current or future product candidates, we will have invested

substantial amounts of time and money without developing revenue-producing products.

Our current and

future product candidates are not likely to be commercially available for at least several years, if at all.

Our development schedules

for our current and future product candidates may be affected by a variety of factors, including difficulties in identifying and

in-licensing or acquiring such future products candidates, technological difficulties, clinical trial failures, regulatory hurdles,

competitive products, intellectual property challenges and/or changes in governmental regulation, many of which will not be within

Any delay in the development, introduction or marketing of our product candidates could result either in such products

being marketed at a time when their cost and performance characteristics would not be competitive in the marketplace or in the

shortening of their commercial lives.

In light of the long-term nature of our projects, the unproven technology involved, and the

other factors described elsewhere in this section, there can be no assurance that we will be able to successfully complete the

development or marketing of any of our proposed product candidates.

business relies on technologies that we may not be able to commercially develop.

We have allocated

most of our resources to the development of our stem cell and small molecule technologies.

Our ability to generate revenue and

operate profitably will depend on being able to develop these technologies for human applications.

These are emerging technologies

that may have limited human application.

We cannot guarantee that we will be able to develop our current or future technologies

or that if developed, our technologies will result in commercially viable products or have any commercial utility or value.

anticipate that the commercial sale of our proposed products and/or royalty/licensing fees related to our technologies, will be

our primary sources of revenue.

If we are unable to develop our technologies, we may never realize any significant revenue.

Additionally,

given the uncertainty of our technologies, product candidates and the need for government regulatory approval, we cannot predict

when, or if ever, we will be able to realize revenues related to our products.

As a result, we will be primarily dependent on our

ability to raise capital through the sale of our securities for the foreseeable future.

Our stem cell therapy programs rely

on experimental surgical devices and highly invasive experimental surgical procedures.

We are subject to the risks inherent in

the use and development of experimental surgical devices and procedures.

We have limited experience with medical devices and must

rely on outside consultants and manufacturers to develop and seek any required approvals for the device we use in connection with

our stem cell therapy program.

Additionally, the surgical procedures required to administer stem cell therapies are experimental,

highly invasive and is required to be performed by highly experienced neurosurgeons who have received special training.

guarantee consistent and safe performance of these devices or the surgical procedures.

A surgery related adverse event may result

in a clinical hold and may have long-term and damaging effects on our ability to complete development of the stem cell therapy

programs, including the completion of any ongoing or planned clinical trials.

Even if one or more of our programs is successful

and receives marketing approval from a regulatory authority, due to the specialized nature of the device and surgical procedure,

there may not be sufficient train surgeons to administer our therapy.

We are unable

to predict when or if we will be able to earn significant revenues.

Given the uncertainty

of our technologies and the need for government regulatory approval, we cannot predict when, or if ever, we will be able to realize

revenues related to our products.

Our proposed products are not likely to be commercially available for at least several or more

years, if ever.

we have not generated any revenue from the commercial sale of our proposed products.

No assurances can be given as to exactly when,

if at all, we will be able to fully develop, commercialize, market, sell and/or derive any, let alone material, revenues from our

proposed products.

We will need to raise

additional capital to continue operations.

Since our inception, we have funded our operations

through the sale of our securities, credit facilities, the exercise of options and warrants, and to a lesser degree, from grants

and research contracts and other revenue generating activities such as licensing.

As of December 31, 2020, we had cash, cash equivalents

and short-term investments on hand of approximately $10.5 million.

We anticipate that in the event the Merger is not consummated,

and based on our cash position at December 31, 2020, we will be able to fund our operations

beyond 12 months from this filing.

We cannot assure you that we will be able to secure additional capital through financing transactions,

including issuance of debt, licensing agreements or grants.

Our inability to license our intellectual property, obtain grants or

secure additional financing will materially impact our ability to fund our current and planned operations.

We are substantially dependent on our remaining employees

and consultants to facilitate the consummation of the Merger.

As of March 17, 2021, as a result of entering

into separation agreements with four employees, including our executive chairman, chief operating officer, chief financial officer,

and Senior VP of R&D, we had only three full-time employees.

Such remaining employees’

employment will be terminated

upon the closing of the Merger.

While we were able to secure consulting agreements with certain recently separated employees, our

ability to successfully complete the Merger depends in large part on our ability to retain certain of our remaining personnel.

Despite our efforts to retain these employees and consultants, one or more may terminate their employment or consulting agreements

on short notice.

The loss of the services of any of these employees or consultants could potentially harm our ability to consummate

the Merger, to run our day-to-day business operations, as well as to fulfill our reporting obligations as a public company.

Management transition creates uncertainties and could harm

Seneca’s business.

We have in the past, and expect to in the future,

experience significant changes in executive leadership.

Changes to company strategy, which can often times occur with the appointment

of new executives, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately

be unsuccessful.

In addition, executive leadership transition periods are often difficult as the new executives gain detailed knowledge

of Seneca’s operations, and friction can result from changes in strategy and management style.

Management transition inherently

causes some loss of institutional knowledge, which can negatively affect strategy and execution.

Until we integrate new personnel,

and unless they are able to succeed in their positions, we may be unable to successfully manage and grow our business, and our

results of operations and financial condition could suffer as a result.

In any event, changes in our organization as a result of

executive management transition may have a disruptive impact on our ability to implement its strategy and could have a material

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

The pendency of the Merger could have an adverse effect on

the trading price of Seneca’s Common Stock and Seneca’s business, financial condition and prospects.

While there have been no significant adverse

effects to date, the pendency of the Merger could disrupt Seneca’s business in many ways, including:

the attention of our remaining management and employees may be directed toward the completion of the Merger and related matters and may be diverted from our day-to-day business operations;

third parties may seek to terminate or renegotiate their relationships with us as a result of the Merger, whether pursuant to the terms of their existing agreements or otherwise.

Should they occur, any of these matters could

adversely affect the trading price of our Common Stock or harm our business, financial condition and prospects.

We may not be able to continue as a going concern if we do

not obtain additional financing.

We have incurred losses since inception and

have not demonstrated an ability to generate revenues from the sales of our proposed products.

Our ability to continue as

a going concern is dependent on raising capital from the sale of its common stock and/or obtaining debt financing.

cash equivalents and short-term investment balance at December 31, 2020 was approximately $10.5 million.

Based on our current expected

level of operating expenditures, and assuming the Merger is not consummated, we expect to be able to fund our operations beyond

12 months from this filing.

Our ability to remain a going concern is wholly dependent upon our ability to continue to obtain sufficient

capital to fund our operations.

Despite our ability to secure capital in the past, there can be no assurance that additional equity

or debt financing will be available to us when needed or that we may be able to secure funding from any other sources.

that we are not able to secure funding, we may be forced to curtail operations, cease operations altogether or file for bankruptcy.

Our auditors have expressed substantial doubt about our ability

to continue as a going concern.

Our auditors’

report on our December

31, 2020 consolidated financial statements included an explanatory paragraph that expressed substantial doubt about its ability

to continue as a going concern.

Our current cash level raises substantial doubt about our ability to continue as a going concern

at least through March 2022.

If we do not obtain additional capital, we may no longer be able to continue as a going concern and

may cease operation or seek bankruptcy protection.

We are involved in litigation in connection with the Merger

and insurance coverage may not be sufficient to cover all related costs and damages.

Stockholder litigation frequently follows the announcement of certain

significant business transactions, such as a business combination transaction.

As of March 16, 2021, there were nine complaints

filed by purported Seneca stockholders, Sheridan v.

Seneca Biopharma, Inc., et al., Case No.

1:21-cv-00166 (the “Sheridan

Complaint”);

Seneca Biopharma, Inc., et al., Case No.

1:21-cv-00172 (the “Pirjamaat Complaint”);

Seneca Biopharma, Inc., et al., Case No.

1:21-cv-00310 (the “Johnson Complaint”);

Seneca Biopharma,

Inc., et al., Case No.

1:21-cv-00242 (the “Mathews Complaint”);

Seneca Biopharma, Inc., et al., Case No.

1:21-cv-00585 (the “Pechal Complaint”), Curtis v.

Seneca Biopharma, Inc., et al.

1:21-cv-00292 (the

“Curtis Complaint”);

Seneca Biopharma, Inc., et al.

1:21-cv-00980 (the “Valdez Complaint”);

Seneca Biopharma, Inc., et al.

1:21-cv-00326 (the “Anderson

Complaint”);

and McIntire v.

Seneca Biopharma, Inc., et al.

1:21-cv-01869 (the “Anderson Complaint”

and, together with the Sheridan Complaint, the Pirjamaat Complaint, the Johnson Complaint, the Matthews Complaint, the Curtis Complaint,

the Valdez Complaint, and the Anderson Complaint, the “Stockholder Complaints”).

The Stockholder Complaints assert

claims against us, the members of our board of directors as defendants under Section 14(a) of the Exchange Act and Rule 14a-9 promulgated

thereunder for allegedly false and misleading statements in in the registration statement filed on Form S-4 in February 2021 and

Section 20(a) of the Exchange Act for alleged “control person”

liability with respect to such allegedly false and misleading

The Stockholder Complaints assert claims against Seneca, the members of the Seneca Board, and LBS as defendants under

Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder for allegedly false and misleading statements in this proxy

statement/prospectus/information statement and Section 20(a) of the Exchange Act for alleged “control person”

with respect to such allegedly false and misleading statements.

The Johnson Complaint also asserts that the members of the Seneca

Board breached their fiduciary duties of candor/disclosure in connection with the Merger by purportedly failing to disclose material

information about the Merger.

Each of the Stockholder Complaints seek, among

other relief, injunctive relief, including enjoining the Merger unless and until the defendants disclose the allegedly omitted

material information, as well as an award of attorneys’

and experts’

The Mathews Complaint also seeks to enjoin

any vote on the Merger;

the Sheridan Complaint, the Johnson Complaint, and the McIntire Complaint seek damages;

the Sheridan Complaint,

the Pirjamaat Complaint, the Mathews Complaint, the Curtis Complaint, the Valdez Complaint, and the Anderson Complaint, seek,

in the event the defendants consummate the merger, rescission of the Merger or an award of rescissory damages;

the Pirjamaat Complaint,

the Curtis Complaint, and the Valdez Complaint seek an order directing the Seneca Board to disseminate a revised registration

statement in compliance with Sections 14(a) and/or 20(a) of the Exchange Act and Rule 14a-9;

and the Pirjamaat Complaint, the

Mathews Complaint, the Curtis Complaint, the Valdez Complaint, and the Anderson Complaint seek a declaration that defendants violated

Sections 14(a) and/or 20(a) of the Exchange Act and Rule 14a-9.

We believe the allegations in the Stockholder Complaints are without

Other stockholders may file additional lawsuits challenging the

Merger, which may name us as well as members of our boards of directors and/or others as defendants.

No assurance can be made as

to the outcome of such lawsuits or the Stockholder Complaints, including the amount of costs associated with defending, or any

other liabilities that may be incurred in connection with the litigation of, such claims.

Litigation often is expensive and diverts

management’s attention and resources, which could adversely affect our business.

At present, we are unable to estimate potential

losses, if any, related to the lawsuit.

Risks Relating to Seneca’s

Seneca’s business

is dependent on the successful development of product candidates that it has yet to acquire or license.

Our business is significantly dependent on

the successful development of product candidates that we have yet to acquire or license.

If we are successful in-licensing or acquiring

product candidates, the process to approve of such product candidates is time-consuming, involves substantial expenditures of resources,

and depends upon a number of factors, including the availability of alternative treatments, and the risks and benefits demonstrated

in its clinical trials.

Our success will depend on our ability to achieve scientific and technological advances and to translate

such advances into FDA-approvable, commercially competitive products on a timely basis.

Failure can occur at any stage of the process.

If we are not successful in our in-licensing and acquisition strategy, we will have invested substantial amounts of time and money

without developing revenue-producing products.

Any product candidate we are able to license

or acquire will likely not be commercially available for at least several years, if at all.

Development schedules for future product

candidates may be affected by a variety of factors, including difficulties in identifying and in-licensing or acquiring such future

products candidates, technological difficulties, clinical trial delays or failures, regulatory hurdles, competitive products, intellectual

property challenges and/or changes in governmental regulation, many of which will not be within our control.

In light of the long-term

nature of these types of projects, the technology potentially involved, and the other factors there can be no assurance that we

will be able to successfully complete the development or marketing of any product candidates.

The technologies we

intend to out-license may not be able to be commercially developed.

We have allocated most of our resources to

the development of our stem cell and small molecule technologies.

These are emerging technologies which may be deemed to have limited

human application.

If potential licensees or acquirors believe that these technologies have limited human applications, we may

not be able to out-license, on acceptable terms or at all, our technologies.

Failure to out-license or sell our stem cell or small

molecule technologies may materially impact the value of its business.

We are unable to predict when or if we will be able to earn

significant revenues.

Given that we have yet to in-license or acquire

new technologies, it cannot predict when, or if ever, we will be able to realize revenues related to our future products.

if in-licensed or acquired, these products are not likely to be commercially available for at least several or more years, if ever.

Accordingly, we do not foresee generating any significant revenue during such time.

As a result, we will be primarily

dependent on our ability to raise capital through the sale of our securities to fund our operations for the foreseeable future.

on third parties to manufacture and store our stem cells and small molecule compounds could adversely impact our business.

We currently outsource

most of the manufacturing related to our current product candidates to third party contractors and as such have limited ability

to adequately control the manufacturing process and the safe storage thereof.

Additionally, we may also outsource manufacturing

related to any future product candidates that are in-licensed or acquired.

Any manufacturing or storage irregularity, error, or

failure to comply with applicable regulatory procedure would require us to find new third parties to outsource our manufacturing

and storage responsibilities or our business would be impacted.

we are unable to complete pre-clinical and clinical testing and trials or if clinical trials of our current or future product candidates

are prolonged, delayed, suspended, terminated or fail to reach their endpoints, our business and results of operations could be

materially harmed.

Prior to being

able to commercialize any of our current or future product candidates, we will need to complete clinical trials.

If we are unable

to satisfactorily complete our other trials, or if such trials also yield unsatisfactory results, we may be unable to obtain regulatory

approval for and commercialize our proposed products.

No assurances can be given that our clinical trials will be completed or

result in successful outcomes.

A number of events, including any of the following, could delay the completion of our planned clinical

trials and negatively impact our ability to obtain regulatory approval for, and to market and sell, a particular product candidate:

• conditions imposed on us by the FDA or any foreign regulatory

authority regarding the scope or design of our clinical trials;

• delays in obtaining, or our inability to obtain, required

approvals from institutional review boards, or IRBs, or other reviewing entities at clinical sites selected for participation in

our clinical trials;

• insufficient supply or deficient quality of our product

candidates or other materials necessary to conduct our clinical trials;

• delays in obtaining regulatory agency agreement for the

conduct of our clinical trials;

• lower than anticipated enrollment and retention rate of

subjects in clinical trials;

• serious and unexpected side effects experienced by patients

in our clinical trials which are related to the use of our product candidates;

• failure of our third-party contractors to meet their contractual

obligations to us in a timely manner.

trials may also be delayed or terminated as a result of ambiguous or negative interim results.

In addition, a clinical trial may

be suspended or terminated by us, the FDA, clinical trial site IRB’s, or a data safety monitoring board, or DSMB, overseeing

the clinical trial at issue, or other regulatory authorities due to a number of factors.

Additionally, changes in regulatory requirements

and guidance may occur and we may need to amend clinical trial protocols to reflect these changes.

Amendments may require us to

resubmit our clinical trial protocols to IRBs for reexamination, which may impact the cost, timing or successful completion of

a clinical trial.

We do not know whether our clinical trials will be conducted as planned, will need to be restructured or will

be completed on schedule, if at all.

Delays in our clinical trials will result in increased development costs for our drug candidates.

In addition, if we experience delays in the completion of, or if we terminate, any of our clinical trials, the commercial prospects

for our drug candidates may be harmed and our ability to generate product revenues will be jeopardized.

Furthermore, many of the

factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial

of regulatory approval of a drug candidate.

If regulatory authorities do not approve our products or if we fail to maintain regulatory

compliance, we would be unable to commercialize our proposed products, and our business and results of operations could be materially

results of pre-clinical studies and clinical trials may not be predictive of the results of our later-stage clinical trials and

our proposed products may not have favorable results in later-stage clinical trials or receive regulatory approval.

Seemingly positive

results from pre-clinical or clinical studies should not be relied upon as evidence that our clinical trials will succeed.

if our product candidates achieve positive results in pre-clinical studies or during our Phase 1 and Phase 2 studies, we will be

required to demonstrate through further clinical trials that our product candidates are safe and effective for use in a diverse

population before we can seek regulatory approvals for their commercial sale.

There is typically an extremely high rate of attrition

from the failure of product candidates as they proceed through clinical trials.

If any product candidate fails to demonstrate sufficient

safety and efficacy in any clinical trial, then we may experience potentially significant delays in, or be required to abandon

development of that product candidate.

Additionally, failure to demonstrate safety and efficacy results acceptable to the FDA in

later stage trials could impair our development prospects and even prevent regulatory approval of our current and future product

Any such delays or abandonment in our development efforts of any of our product candidates would materially impair

our ability to generate revenues.

are subject to numerous risks inherent in conducting clinical trials.

We outsource the

management of our clinical trials to third parties.

Agreements with clinical investigators and medical institutions for clinical

testing and with other third parties for data management services, place substantial responsibilities on these parties that, if

unmet, could result in delays in, or termination of, our clinical trials.

For example, if any of our clinical trial sites fail

to comply with FDA-approved good clinical practices, we may be unable to use the data gathered at those sites.

If these clinical

investigators, medical institutions or other third parties do not carry out their contractual duties or obligations or fail to

meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to

adhere to our clinical protocols or for other reasons, our clinical trials may be extended, delayed or terminated, and we may be

unable to obtain regulatory approval for, or successfully commercialize, our proposed products.

Delays in recruitment, lack of

clinical benefit or unacceptable side effects would delay or prevent the completion of our clinical trials.

We or our regulators

may suspend or terminate our clinical trials for a number of reasons.

We may voluntarily suspend or terminate our clinical trials

if at any time we believe they present an unacceptable risk to the patients enrolled in our clinical trials or do not demonstrate

clinical benefit.

In addition, regulatory agencies may order the temporary or permanent discontinuation of our clinical trials

at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements

or that they present an unacceptable safety risk to the patients enrolled in our clinical trials.

Our clinical trial

operations are subject to regulatory inspections at any time.

If regulatory inspectors conclude that we or our clinical trial sites

are not in compliance with applicable regulatory requirements for conducting clinical trials, we may receive reports of observations

or warning letters detailing deficiencies, and we will be required to implement corrective actions.

If regulatory agencies deem

our responses to be inadequate, or are dissatisfied with the corrective actions we or our clinical trial sites have implemented,

our clinical trials may be temporarily or permanently discontinued, we may be fined, we or our investigators may be precluded from

conducting any ongoing or any future clinical trials, the government may refuse to approve our marketing applications or allow

us to manufacture or market our products, and we may be criminally prosecuted.

The lengthy approval

process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval

for our proposed products, which would materially harm our business, results of operations and prospects.

subject to litigation that will be costly to defend or pursue and uncertain in its outcome.

Our business may

bring us into conflict with licensees, licensors, or others with whom we have contractual or other business relationships or with

our competitors or others whose interests differ from ours.

If we are unable to resolve these conflicts on terms that are satisfactory

to all parties, we may become involved in litigation brought by or against such parties.

Any litigation is likely to be expensive

and may require a significant amount of management's time and attention, at the expense of other aspects of our business.

of litigation is always uncertain, and in some cases, could include judgments against us which could have a materially adverse

effect on our business.

be able to obtain government or third-party payor coverage and reimbursement.

Our ability to

successfully commercialize our product candidates, if approved, depends to a significant degree on the ability of patients to be

reimbursed for the costs of such products and related treatments.

We cannot assure you that reimbursement in the U.S.

or in foreign

countries will be available for any products developed, or, if available, will not decrease in the future, or that reimbursement

amounts will not reduce the demand for, or the price of, our products.

There is considerable pressure to reduce the cost of therapeutic

Government and other third-party payors are increasingly attempting to contain health care costs by limiting both coverage

and the level of reimbursement for new therapeutic products and by refusing, in some cases, to provide any coverage for uses of

approved products for disease indications for which the FDA or other relevant authority has not granted marketing approval.

in some cases, government and other third-party payors have refused to provide reimbursement for uses of approved products for

disease indications for which the FDA or other relevant authority has granted marketing approval.

Significant uncertainty exists

as to the reimbursement status of newly approved health-care products or novel therapies such as ours.

We cannot predict what additional

regulation or legislation relating to the health care industry or third-party coverage and reimbursement may be enacted in the

future or what effect such regulation or legislation may have on our business.

If additional regulations are overly onerous or

expensive or if healthcare related legislation makes our business more expensive or burdensome than originally anticipated, we

may be forced to significantly downsize our business plans or completely abandon the current business model.

Our products may not be profitable

due to manufacturing costs and our inability to receive favorable pricing.

Our current and

future product candidates may be significantly more expensive to manufacture than other drugs or therapies currently on the market

Even if we can receive approval for the reimbursement of our proposed products the amount of reimbursement may be significantly

less than the manufacturing costs of our products.

Additionally, other market factors may limit the price which we can charge for

our proposed products while still being competitive.

Accordingly, even if we are successful in developing our proposed products,

we may not be able to charge a high enough price for us to earn a profit.

We depend on a limited number

of employees and consultants for our continued operations and future success.

We are highly

dependent on a limited number of employees and outside consultants.

Although we have entered into employment and consulting

agreements with these parties, these agreements can be terminated at any time.

The loss of any of our employees or consultants

could adversely affect our opportunities and materially harm our future prospects.

In addition, we anticipate growth

and expansion into areas and activities requiring additional expertise, such as clinical testing, regulatory compliance, manufacturing

and marketing.

We anticipate the need for additional management personnel as well as the development of additional expertise

by existing management personnel.

There is intense competition for qualified personnel in the areas of our present and planned

activities, and there can be no assurance that we will be able to attract and retain the qualified personnel necessary for the

development our business.

into employment contracts with members of our senior management team that contain significant anti-termination provisions which

could make future changes in management difficult or expensive.

We have entered

into employment agreements with members of our senior management team.

These agreements may require the payment of severance in

the event one of these employees ceases to be employed.

These provision makes the replacement of these employees very costly and

could cause difficulty in effecting any required changes in management or a change in control.

competition has significantly greater experience and financial resources.

The biotechnology

industry is characterized by rapid technological developments and a high degree of competition.

We compete against numerous companies,

many of which have substantially greater resources.

Several such enterprises have initiated cell therapy research programs and/or

efforts to treat the same diseases which we target.

Given our current stage of development and resources, it may be extremely difficult

for us to compete against more developed companies.

As a result, our

proposed products could become obsolete before we recoup any portion of our related research and development and commercialization

Competition in the biopharmaceutical industry is based significantly on scientific and technological factors.

These factors

include the availability of patent and other protection for technology and products, the ability to commercialize technological

developments and the ability to obtain governmental approval for testing, manufacturing and marketing.

We compete with specialized

biopharmaceutical firms in the United States, Europe and elsewhere, as well as a growing number of large pharmaceutical companies

that are applying biotechnology to their operations.

Many major pharmaceutical companies have developed or acquired internal biotechnology

capabilities or made commercial arrangements with other biopharmaceutical companies.

These companies, as well as academic institutions

and governmental agencies and private research organizations, also compete with us in recruiting and retaining highly qualified

scientific personnel and consultants.

Our ability to compete successfully with other companies in the pharmaceutical field will

also depend to a considerable degree on the continuing availability of capital to us.

We believe that

our proposed products under development and in pre-clinical testing and clinical trials will address unmet medical needs for those

indications for which we are focusing our development efforts.

Our competition will be determined in part by the potential indications

for which our proposed products are developed and ultimately approved by regulatory authorities.

Additionally, the timing of market

introduction of some of our proposed products or of competitors’ products may be an important competitive factor.

the relative speed with which we can develop our proposed products, complete preclinical testing, clinical trials and approval

processes and supply commercial quantities to market is expected to be important competitive factors.

We expect that competition

among products approved for sale will be based on various factors, including product efficacy, safety, reliability, availability,

price and patent position.

Our outsource model depends on

third parties to assist in developing and testing our proposed products.

Our strategy for

the development, clinical and pre-clinical testing and commercialization of our proposed products is based on an outsource model.

This model requires us to engage third parties in order to further develop our technology and products as well as for the day to

day operations of our business.

In the event we are not able to enter into such relationships in the future, our ability to operate

and develop products may be seriously hindered or we may be required to spend considerable time and resources to bring such functions

Either outcome could result in our inability to develop a commercially feasible product or in the need for substantially

more working capital to complete the research in-house.

rely heavily upon third party FDA-regulated manufacturers and suppliers for our products

We currently manufacture

our cells both in-house and on an outsource basis.

We outsource the manufacturing of our pharmaceutical compound to third party

manufacturers.

We manufacture cells in-house which are not required to meet stringent FDA requirements.

We use these cells in our

research and collaborative programs.

At present, we outsource all the manufacturing and storage of our stem cells and pharmaceuticals

compound to be used in clinical testing, and which are subject to higher FDA requirements, to Charles River Laboratories, Inc.,

of Wilmington, Massachusetts (stem cells) and Albany Molecular Resources, Inc.

(small molecule).

Failure by our contract manufacturer

to achieve and maintain high manufacturing standards could result in patient injury or death, product recalls or withdrawals, delays

or failures in testing or delivery, cost overruns, or other problems that could seriously hurt our business.

Contract manufacturers

may encounter difficulties involving production yields, quality control, and quality assurance.

These manufacturers are subject

to ongoing periodic and unannounced inspections by the FDA and corresponding state and foreign agencies to ensure strict compliance

with cGMPs, GTPs and other applicable government regulations and corresponding foreign standards;

however, we do not have control

over third-party manufacturers’ compliance with these regulations and standards.

Because manufacturing

facilities are subject to regulatory oversight and inspection, failure to comply with regulatory requirements could result in material

manufacturing delays and product shortages, which could delay or otherwise negatively impact our clinical trials and product development.

Moreover, we do not have quantity or volume commitment orders from these manufacturers, and we cannot assure you that the manufacturers

will be able to manufacture in the quantity we require on a timely basis or at all.

In the event we are required to seek alternative

third-party suppliers or manufacturers, they may require us to purchase a minimum amount of materials or could require other unfavorable

Any such event would materially impact our business prospects and could delay the development of our products.

there can be no assurance that any manufacturer or supplier that we select will be able to supply our products in a timely or cost-effective

manner or in accordance with applicable regulatory requirements or our specifications.

In addition, due to the novelty of our products

and product development, there can be no assurances that we would be able to find other suitable third-party FDA-regulated manufacturers

on a timely basis and at terms reasonable to us.

Even if we were to locate alternative manufacturers there may be delays before

they are able to begin manufacturing.

Failure to secure such third-party manufacturers or suppliers would materially impact our

rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costs and delays

that prevent us from successfully commercializing our product candidates.

We currently do

not have the in-house capability to conduct clinical trials for our current or future product candidates.

We rely, and will rely

in the near future, on medical institutions, clinical investigators, contract research organizations, contract laboratories, and

collaborators to perform data collection and analysis and other aspects of our clinical trials.

Our reliance on these third parties

for clinical development activities results in reduced control over these activities.

Furthermore, these third parties may also

have relationships with other entities, some of which may be our competitors.

Our preclinical activities or clinical trials conducted

in reliance on third parties may be delayed, suspended, or terminated if:

• the third parties do not successfully carry out their contractual

• the third parties fail to meet FDA and other regulatory

obligations or expected deadlines;

• we replace a third party for any reason;

• the quality or accuracy of the data obtained by third parties

is compromised due to their failure to adhere to clinical protocols, regulatory requirements, or for other reasons.

Third party performance

failures may increase our development costs, delay our ability to obtain regulatory approval, and delay or prevent the commercialization

of our product candidates.

While we believe that there are numerous alternative sources to provide these services, in the event

that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional

or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.

Broad-based business

or economic disruptions could adversely affect our ongoing or planned research and development activities as well as the execution

of our acquisition and/or in-licensing strategy.

For example, in December 2019 an outbreak of a novel strain of coronavirus originated

in Wuhan, China, and has since spread around the world, including to the United States.

To date, this outbreak has already resulted

in extended shutdowns of many businesses around the world, including in the United States.

Global health concerns, such as coronavirus,

could also result in social, economic, and labor instability in the countries in which we or the third parties with whom we engage

We cannot presently predict the scope, severity and longevity of any potential business shutdowns or disruptions, but

if we or any of the third parties with whom we engage or plan to engage, including the suppliers, clinical trial sites, regulators

and other third parties with whom we conduct business or plan to conduct business, were to experience shutdowns or other business

disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and

negatively impacted.

It is also possible that global health concerns such as this one could disproportionately impact the hospitals

and clinical sites in which we conduct or plan to conduct any of our clinical trials, which could have a material adverse effect

on our business and our results of operation and financial condition.

The increasing use of social media platforms presents new risks and challenges.

Social media is increasingly being used to communicate information

about our products and the diseases that our therapies are designed to treat.

Social media practices in our industry continue to

evolve and regulations related to such use are not always clear.

This evolution creates uncertainty and risk of noncompliance with

regulations applicable to our business.

For example, patients and others may use social media channels to comment on the effectiveness

of a product or to report an alleged adverse event.

When such disclosures occur, we may fail to monitor and comply with applicable

adverse event reporting obligations or we may not be able to defend against political and market pressures generated by social

media due to restrictions on what we may say about our products.

There is also a risk of inappropriate disclosure of sensitive

information or negative or inaccurate comments about us on any social networking website.

If any of these events were to occur

or we otherwise fail to comply with applicable regulations, we could incur liability, face overly restrictive regulatory actions

or incur other harm to our business.

Relating to Intellectual Property

We may not be able to withstand

challenges to our intellectual property rights.

We rely on our

intellectual property, including issued and applied-for patents, as the foundation of our business.

Our intellectual property rights

may come under challenge.

No assurances can be given that our current and potential future patents will survive such challenges.

These cases are complex, lengthy, expensive, and could potentially be adjudicated adversely to our interests, removing the protection

afforded by an issued patent.

As a result, we will be primarily dependent

on its ability to raise capital through the sale of its securities to fund its operations for the foreseeable future.

We may be subject to litigation that will be costly to defend

or pursue and uncertain in its outcome.

Our business may bring us into conflict with

licensees, licensors, or others with whom we have contractual or other business relationships or with our competitors or others

whose interests differ from ours.

If we are unable to resolve these conflicts on terms that are satisfactory to all parties, we

may become involved in litigation brought by or against such parties.

Any litigation is likely to be expensive and may require

a significant amount of management’s time and attention, at the expense of other aspects of our business.

The outcome of

litigation is always uncertain, and in some cases, could include judgments against us which could have a materially adverse effect

on our business.

We depend on a limited number of employees and consultants

for our continued operations and future success.

We are highly dependent on a limited number

of employees and outside consultants.

The loss of any of our employees or consultants could adversely affect our opportunities

and materially harm our future prospects.

In the event the Merger is not completed, and our board of directors elects

to continue our business, we will need additional management personnel as well as the development of additional expertise by existing

management personnel.

There can be no assurance that we will be able to attract and retain the qualified personnel necessary for

the development of our business.

We have entered into employment contracts with members of

our senior management team that contain significant anti-termination provisions.

We have entered into employment agreements

with members of its senior management team.

These agreements require the payment of severance in the event one of these employees

ceases to be employed.

These provisions make the replacement of these employees very costly and could cause difficulty in effecting

any required changes in management or a change in control.

In the event the Merger is consummated, we will be obligated to pay

members of our management team an aggregate of $4,291,051.

Please see the Section of the Annual Report Entitled “Executive

Compensation.”

Business or economic disruptions, or global health concerns

could seriously harm our development efforts and increase our costs and expenses.

Broad-based business or economic disruptions

could adversely affect our planned research and development activities as well as the execution of our acquisition and/or in-licensing

For example, in December 2019 an outbreak of a novel strain of coronavirus originated in Wuhan, China, and has since

spread around the world, including to the United States.

To date, this outbreak has already resulted in extended shutdowns of many

businesses around the world, including in the United States.

At this time, the impact on our business has been that employees who

previously worked in our corporate office and who traveled are now limited to home office work and virtual meetings.

Global health

concerns, such as coronavirus, could also result in social, economic, and labor instability in the countries in which we or the

third parties with whom we engage operate.

We cannot presently predict the scope, severity and longevity of any potential business

shutdowns or disruptions, but if we or any of the third parties with whom it engages or plans to engage, including the suppliers,

clinical trial sites, regulators and other third parties with whom we conduct business or plan to conduct business, were to experience

shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned

could be materially and negatively impacted.

It is also possible that global health concerns such as this one could disproportionately

impact the hospitals and clinical sites in which we may conduct any of its clinical trials, which could have a material adverse

effect on our business and results of operation and financial condition.

The increasing use of social media platforms presents

new risks and challenges.

Social media is increasingly being used to

communicate information about our products and the diseases that our therapies are designed to treat.

Social media practices in

our industry continue to evolve and regulations related to such use are not always clear.

This evolution creates uncertainty and

risk of noncompliance with regulations applicable to our business.

For example, patients and others may use social media channels

to comment on the effectiveness of a product or to report an alleged adverse event.

When such disclosures occur, we may fail to

monitor and comply with applicable adverse event reporting obligations or we may not be able to defend against political and market

pressures generated by social media due to restrictions on what we may say about our products.

There is also a risk of inappropriate

disclosure of sensitive information or negative or inaccurate comments about us on any social networking website.

If any of these

events were to occur or Seneca otherwise fails to comply with applicable regulations, it could incur liability, face overly restrictive

regulatory actions or incur other harm to its business.

Risks Relating to Seneca’s

Intellectual Property

We may not be able to withstand challenges to our intellectual

property rights.

We rely on our intellectual property, including

issued and applied-for patents, as the foundation of our business.

Our intellectual property rights may come under challenge.

assurances can be given that our current and potential future patents will survive such challenges.

These cases are complex, lengthy,

expensive, and could potentially be adjudicated adversely to our interests, removing the protection afforded by an issued patent.

The viability of our business would suffer if such patent protection were limited or eliminated.

Moreover, the costs associated with defending or settling intellectual property claims would likely have a material adverse effect

on our business and future prospects.

We may not be able to adequately

protect against the piracy of the intellectual property in foreign jurisdictions.

We conduct research

in countries outside of the U.S., including through our subsidiary in the People’s Republic of China.

Several of our competitors

are located in these countries and may be able to access our technology or test results.

The laws protecting intellectual property

in some of these countries may not adequately protect our trade secrets and intellectual property.

The misappropriation of our

intellectual property may materially impact our position in the market and any competitive advantages, if any, that we may have.

We may infringe

the intellectual property rights of others and may not be able to obtain necessary licenses to third-party patents and other rights.

A number of companies,

universities and research institutions have filed patent applications or have received patents relating to technologies in our

We cannot predict which, if any, of these applications will issue as patents or how many of these issued patents will be

found valid and enforceable.

There may also be existing issued patents on which we would infringe by the commercialization of our

product candidates.

If so, we may be prevented from commercializing these products unless the third party is willing to grant a

license to us.

We may be unable to obtain licenses to the relevant patents at a reasonable cost, if at all, and may also be unable

to develop or obtain alternative non-infringing technology.

If we are unable to obtain such licenses or develop non-infringing

technology at a reasonable cost, our business could be significantly harmed.

Also, any infringement lawsuits commenced against

us may result in significant costs, divert our management’s attention and result in an award against us for substantial damages,

or potentially prevent us from continuing certain operations.

Relating to Our Common Stock

The market price for our common

shares is particularly volatile.

The market for

our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share

price will continue to be more volatile than those of a seasoned issuer.

The volatility in our share price is attributable to a

number of factors.

Mainly however, we are a speculative or “risky” investment due to our limited operating history,

lack of significant revenues to date and the uncertainty of FDA approval.

By way of example, in July of 2019, we completed a firm

commitment underwritten public offering of our securities.

During the marketing of the offering and post-closing, the market price

or our common stock decreased substantially.

As a consequence of this enhanced risk, more risk-adverse investors may, under the

fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their

shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.

Additionally,

in the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility

in the market price of its securities.

We may in the future be the target of similar litigation.

Securities litigation could result

in substantial costs and liabilities and could divert management’s attention and resources.

The following

factors may add to the volatility in the price of our common shares:

actual or anticipated variations in our quarterly or annual

operating results;

the results of clinical trials for our product candidates;

FDA’s determination with respect to filings

for new clinical studies, new drug applications and new indications;

Moreover, the costs associated

with defending or settling intellectual property claims would likely have a material adverse effect on our business and future

We may not be able to adequately protect against the piracy

of the intellectual property in foreign jurisdictions.

We have conducted research in countries outside

of the U.S., including through our subsidiary in the People’s Republic of China.

Several of our competitors are located in

these countries and may be able to access our technology or test results.

The laws protecting intellectual property in some of

these countries may not adequately protect our trade secrets and intellectual property.

The misappropriation of our intellectual

property may materially impact our position in the market and any competitive advantages, if any, that it may have.

We may infringe on the intellectual property

rights of others and may not be able to obtain necessary licenses to third-party patents and other rights.

A number of companies, universities and research

institutions have filed patent applications or have received patents relating to technologies in our field.

We cannot predict which,

if any, of these applications will issue as patents or how many of these issued patents will be found valid and enforceable.

may also be existing issued patents on which we would infringe by the commercialization of our product candidates.

If so, we may

be prevented from commercializing these products unless the third party is willing to grant us a license.

We may be unable to obtain

licenses to the relevant patents at a reasonable cost, if at all, and may also be unable to develop or obtain alternative non-infringing

If we are unable to obtain such licenses or develop non-infringing technology at a reasonable cost, our business could

be materially harmed.

Any infringement lawsuits commenced against us may result in significant costs, divert its management’s

attention and result in an award against it for substantial damages, or potentially prevent it from continuing certain operations.

Risks Related to Ownership of Our Common Stock

The market price for our common shares is particularly volatile.

The market for our common shares is characterized

by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more

volatile than those of a seasoned issuer.

The volatility in our share price is attributable to a number of factors.

Mainly however,

we are a speculative or “risky” investment due to our limited operating history, lack of significant revenues to date

and the uncertainty of FDA approval.

By way of example, in July of 2019, we completed a firm commitment underwritten public offering

of our securities.

During the marketing of the offering and post-closing, the market price or our common stock decreased substantially.

As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment

in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater

discounts than would be the case with the stock of a seasoned issuer.

Additionally, in the past, plaintiffs have often initiated

securities class action litigation against a company following periods of volatility in the market price of its securities.

litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

The following factors may add to the volatility

in the price of our common shares:

actual or anticipated variations in our quarterly or annual operating results;

the results of

clinical trials for our product candidates;

FDA’s determination with respect to filings for new clinical studies, new drug

applications and new indications;

government regulations;

announcements of significant acquisitions,

strategic partnerships or joint ventures;

announcements of significant acquisitions, strategic partnerships or

joint ventures;

our capital commitments;

offerings of our securities and additions or departures of our

key personnel.

Many of these factors are beyond our control and may decrease the market price of our common shares, regardless

of our operating performance.

We cannot make any predictions or projections as to what the prevailing market price for our common

shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect

the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.

of our common stock could cause our stock price to fall.

offerings of our securities and additions or departures of key personnel.

Many of these

factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance.

We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time,

including as to whether our common shares will sustain their current market prices, or as to what effect the sale of shares or

the availability of common shares for sale at any time will have on the prevailing market price.

If Seneca’s common stock were delisted from Nasdaq,

Seneca would be subject to the risks relating to penny stocks .

If Seneca’s common stock were to be delisted

from trading on the Nasdaq Capital Market and the trading price of its common stock were below $5.00 per share on the date its

common stock is delisted, trading in Seneca’s common stock would also be subject to the requirements of certain rules promulgated

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These rules require additional disclosure

by broker-dealers in connection with any trades involving a stock defined as a “penny stock”

and impose various sales

practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors,

generally institutions.

These additional requirements may discourage broker-dealers from effecting transactions in securities that

are classified as penny stocks, which could severely limit the market price and liquidity of such securities and the ability of

purchasers to sell such securities in the secondary market.

A penny stock is defined generally as any non-exchange listed equity

security that has a market price of less than $5.00 per share, subject to certain exceptions.

Future sales of our common stock could cause our stock price

In January 2020, we completed an inducement

4 unchanged sentences

In addition, the lack of a robust trading market may require a stockholder who desires to sell a large number of shares

of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales on the market price of our

of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales on the market price of Seneca’s

If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, substantial

2 unchanged sentences

Sales of a substantial number of shares of our common stock may make it more difficult

for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

may become involved in securities class action litigation that could divert management’s attention and harm our business.

Certain of our outstanding common

stock purchase warrants contain price protection provisions (anti-dilution protection) in the event that we sell our securities

at prices lower than the current exercise price of such warrants, which may have a negative impact on the trading price of our

common stock or impair our ability to raise capital.

As of December 31, 2019, we had 149,149

common stock purchase warrants outstanding that were issued in our May 2016 registered offering, May 2016 private placement and

August 2017 registered offering that all contain price protection provisions in the event that we sell securities at a price per

share below their respective exercise prices (collectively “Price Protection Warrants”).

Pursuant to our January 2020

inducement offering, the Price Protection Warrants all had their exercise prices adjusted to $1.14 per share.

for us to sell equity or equity-related securities on terms that we deem reasonable or appropriate.

Certain of our outstanding common stock purchase warrants

contain price protection provisions (anti-dilution protection) in the event that we sell securities at prices lower than the current

exercise price of such warrants.

As of December 31, 2020, we had 149,149 common

stock purchase warrants outstanding that were issued in our May 2016 registered offering, May 2016 private placement and August

2017 registered offering.

All of such warrants contain price protection provisions in the event that we sell securities at a price

per share below their respective exercise prices (collectively “Price Protection Warrants”).

Pursuant to our May 2020

common stock offering, the Price Protection Warrants all had their exercise prices adjusted to $0.90 per share.

In the event that

we sell securities at a price per share lower than the current exercise price of the Price Protection Warrants, their exercise

Seneca sells securities at a price per share lower than the current exercise price of the Price Protection Warrants, their exercise

prices will be further reduced.

Any future adjustments to the exercise prices of the Price Protection Warrants may have a negative

impact on the trading price of our common stock.

Additionally, raising additional capital with new investors may be difficult as

a result of the adjustment feature.

requirements of being a public company may strain our resources, divert management’s attention and affect our ability to

attract and retain qualified board members.

As a public company,

we incur significant legal, accounting and other expenses that we would not incur as a private company, including costs associated

with public company reporting requirements.

We also incur costs associated with the Sarbanes-Oxley Act of 2002, as amended, the

Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented or to be implemented by the SEC and the

The expenses incurred by public companies generally for reporting, insurance and corporate governance purposes have been

We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities

more time-consuming and costly.

These laws and regulations could also make it more difficult or costly for us to obtain certain

types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and

coverage or incur substantially higher costs to obtain the same or similar coverage.

These laws and regulations could also make

it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as

our executive officers and may divert management’s attention.

Furthermore, if we are unable to satisfy our obligations as

a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially

civil litigation.

have never paid a cash dividend and do not intend to pay cash dividends on our common stock in the foreseeable future.

We have never

paid a cash dividend, nor do we anticipate paying cash dividends in the foreseeable future.

Accordingly, any return on your investment

will be as a result of the appreciation of our common stock if any.

Our anti-takeover

provisions may delay or prevent a change of control, which could adversely affect the price of our common stock.

Our amended and

restated certificate of incorporation and amended and restated bylaws contain provisions that may make it difficult to remove our

board of directors and management and may discourage or delay “change of control” transactions, which could adversely

affect the price of our common stock.

impact on the trading price of Seneca’s common stock.

Additionally, raising additional capital with new investors may be

difficult as a result of the adjustment feature.

Certain of our outstanding common stock purchase options contain

provisions (anti-dilution protection) in the event that we issue additional securities, which may have a negative impact on its

capital structure and may result in significant dilution to our shareholders or impair our ability to raise capital.

As of December 31, 2020, we had 1,686,466 outstanding

common stock purchase options held by certain members of its senior management team.

These options contain provisions which have

resulted in the adjustment of the shares underlying such options in order that the holder maintains his proportionate ownership.

Any future adjustments to the number of shares may have a negative impact on our capital structure and dilute our other shareholders.

Additionally, raising additional capital with new investors may be difficult as a result of the adjustment feature.

As of the date

hereof, each of the option holders have agreed, subject to entering into definitive agreements, to cancel their respective outstanding

options in exchange for certain cash payments.

Our anti-takeover provisions may delay or prevent a change

of control, which could adversely affect the price of its common stock.

Our amended and restated certificate of incorporation

and amended and restated bylaws contain provisions that may make it difficult to remove its board of directors and management and

may discourage or delay “change of control” transactions, which could adversely affect the price of its common stock.

These provisions include, among others:

• our board of directors is divided into three classes, with

each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors

at an annual meeting;

• advance notice procedures that stockholders must comply

with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our

stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s

own slate of directors or otherwise attempting to obtain control of our company;

• our board of directors may, without stockholder approval,

issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting

power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.

securities or industry analysts do not publish research reports, or publish unfavorable research about our business, the price

and trading volume of our common stock could decline.

The trading market

for our common stock will depend in part on the research and reports that securities or industry analysts publish about us and

our business.

We currently have limited research coverage by securities and industry analysts.

In the event an analyst downgrades

our securities the price of our securities would likely decline.

If analysts cease to cover us or fails to publish regular reports

on us, interest in our securities could decrease, which could cause the price of our common stock and other securities and their

trading volume to decline.

board of directors has broad discretion to issue additional securities, which might dilute the net tangible book value per share

of our common stock for existing stockholders.

We are entitled

under our certificate of incorporation to issue up to 300,000,000 shares of common stock and 7,000,000 “blank check”

shares of preferred stock.

Shares of our blank check preferred stock provide our board of directors with broad authority to determine

voting, dividend, conversion, and other rights.

As of December 31, 2019, we have issued and outstanding 3,866,457 shares of common

stock and we have 7,479,777 shares of common stock reserved for future grants under our equity compensation plans and for issuances

upon the exercise or conversion of currently outstanding options, warrants and convertible securities.

As of December 31, 2019,

we had 200,000 shares of preferred stock issued and outstanding which are convertible into 38,873 shares of our common stock.

as of December 31, 2019, we are entitled to issue up to 288,653,766 additional shares of common stock and 6,000,000 additional

shares of “blank check” preferred stock.

Our board may generally issue those common and preferred shares, or convertible

securities to purchase those shares, without further approval by our shareholders.

Any preferred shares we may issue will have

such rights, preferences, privileges and restrictions as may be designated from time-to-time by our board, including preferential

dividend rights, voting rights, conversion rights, redemption rights and liquidation provisions.

It is likely that we will be required

to issue a large amount of additional securities to raise capital in order to further our development and marketing plans.

also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants

as compensatory grants in connection with their services, both in the form of stand-alone grants or under our various stock plans.

The issuance of additional securities may cause substantial dilution to our shareholders.

Risks Related

to Government Regulation and Approval of our Product Candidates.

The regulatory

approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and

our products may not receive regulatory approval.

The time required to obtain approval by

the FDA and comparable foreign authorities is inherently unpredictable but typically takes many years following the commencement

of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.

approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course

of a drug candidate’s clinical development and may vary among jurisdictions and countries.

We have not obtained regulatory

approval for any product candidate and it is possible that none of our existing product candidates or any product candidates we

may seek to develop in the future will ever obtain regulatory approval.

Our drug candidates could fail to receive regulatory approval

for many reasons, including the following:

• the FDA or comparable foreign regulatory authorities may disagree with the design or

implementation of our clinical trials;

• we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign

regulatory authorities that a product candidate is safe and effective for its proposed indication;

• the results of clinical trials may not meet the level of statistical significance

required by the FDA or comparable foreign regulatory authorities for approval;

• we may be unable to demonstrate that a product candidate’s clinical and other

benefits outweigh its safety risks;

• the FDA or comparable foreign regulatory authorities may disagree with our interpretation

of data from preclinical studies or clinical trials;

• the data collected from clinical trials of our product candidates may not be sufficient

to support the submission of a BLA, NDA or other submission or to obtain regulatory approval in the United States or elsewhere;

• the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing

processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;

• the approval policies or regulations of the FDA or comparable foreign regulatory

authorities may significantly change in a manner rendering our clinical data insufficient for approval.

We cannot assure

you that we will successfully complete any clinical trials in connection with such INDs.

Further, we cannot predict

when we might first submit any product license application (NDA or BLA) for FDA approval or whether any such product license application

will be granted on a timely basis, if at all.

Any delay in obtaining, or failure to obtain, such approvals could have

a material adverse effect on the marketing of our products and our ability to generate product revenue.

of our product candidates is subject to extensive government regulation.

Our research and

development efforts, as well as any future clinical trials, and the manufacturing and marketing of any products we may develop,

will be subject to, and restricted by, extensive regulation by governmental authorities in the U.S.

and foreign countries.

process of obtaining FDA and other necessary regulatory approvals is lengthy, expensive and uncertain.

FDA and other legal and

regulatory requirements applicable to our proposed products, both in the U.S.

Our board of directors are divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting;

Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Seneca;

Our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.

If securities or industry

analysts do not publish research reports, or publish unfavorable research about our business, the price and trading volume of our

common stock could decline.

The trading market for our common stock will

depend in part on the research and reports that securities or industry analysts publish about us and our business.

have limited research coverage by securities and industry analysts.

In the event an analyst downgrades our securities, the price

of our securities would likely decline.

If analysts cease to cover us or fail to publish regular reports, interest in our securities

could decrease, which could cause the price of our common stock and other securities and their trading volume to decline.

Our board of directors

has broad discretion to issue additional securities, which might dilute the net tangible book value per share of our common stock

for existing stockholders.

We are entitled under our certificate of incorporation

to issue up to 300,000,000 shares of common stock and 7,000,000 “blank check” shares of preferred stock.

our blank check preferred stock provide our board of directors with broad authority to determine voting, dividend, conversion,

and other rights.

As of December 31, 2020, we had issued and outstanding 17,295,703 shares of common stock and 6,750,287 shares

of common stock reserved for future grants under its equity compensation plans and for issuances upon the exercise or conversion

of currently outstanding options, warrants and convertible securities.

As of December 31, 2020, we had 200,000 shares of preferred

stock issued and outstanding which are convertible into 38,873 shares of common stock.

Accordingly, as of December 31, 2020, we

are entitled to issue up to 275,954,010 additional shares of common stock and 6,800,000 additional shares of “blank check”

preferred stock.

Our board of directors may generally issue those common and preferred shares, or convertible securities to purchase

those shares, without further approval by our shareholders.

Any preferred shares we may issue will have such rights, preferences,

privileges and restrictions as may be designated from time-to-time by our board, including preferential dividend rights, voting

rights, conversion rights, redemption rights and liquidation provisions.

It is likely that we will be required to issue a large

amount of additional securities to raise capital in order to further its development and marketing plans.

It is also likely that

we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory

grants in connection with their services, both in the form of stand-alone grants or under our various stock plans.

of additional securities may cause substantial dilution to our existing shareholders.

Unstable market and economic conditions may have serious adverse

consequences on Seneca’s business, financial condition and stock price.

From time to time, including recently as a

result of the COVID-19 pandemic, global credit and financial markets have experienced extreme volatility and disruptions, including

severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases

in unemployment rates and uncertainty about economic stability.

Seneca’s general business strategy may be adversely affected

by any such economic downturn, volatile business environment and continued unpredictable and unstable market conditions.

equity and credit markets deteriorate it may make any necessary debt or equity financing more difficult to complete, more costly,

and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse

effect on Seneca’s growth strategy, financial performance and stock price and could require Seneca to delay or abandon clinical

development plans.

In addition, there is a risk that one or more of Seneca’s current service providers, manufacturers and

other partners may not survive an economic down-turn, which could directly affect Seneca’s ability to attain Seneca’s

operating goals on schedule and on budget.

Risks Related to Government Regulation

and Approval of Therapeutic Product Candidates.

The regulatory approval processes

of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and our products may not

receive regulatory approval.

The time required to obtain approval by the FDA and comparable foreign

authorities is inherently unpredictable but typically takes many years following the commencement of clinical trials and depends

upon numerous factors, including the substantial discretion of the regulatory authorities.

In addition, approval policies, regulations,

or the type and amount of clinical data necessary to gain approval may change during the course of a drug candidate’s clinical

development and may vary among jurisdictions and countries.

If we are successful in in-licensing or acquiring therapeutic drug candidates, we could

fail to receive regulatory approval for many reasons, including the following:

FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate

is safe and effective for its proposed indication;

results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory

authorities for approval;

may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical

data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA, NDA or

other submission or to obtain regulatory approval in the United States or elsewhere;

FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party

manufacturers with which we contract for clinical and commercial supplies;

approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner

rendering our clinical data insufficient for approval.

We cannot assure you that we will successfully

in-license or acquire any technologies or complete any clinical trials in connection with such technologies.

we cannot predict when we might first submit any product license application (NDA or BLA) for FDA approval or whether any such

product license application will be granted on a timely basis, if at all.

Any delay in obtaining, or failure to obtain,

such approvals could have a material adverse effect on the marketing of our products and our ability to generate product revenue.

Development of therapeutics product

candidates is subject to extensive government regulation.

The process of obtaining FDA and other

necessary regulatory approvals is lengthy, expensive and uncertain.

FDA and other legal and regulatory requirements applicable

to our proposed products, both in the U.S.

and in foreign countries could substantially change.

We may fail to obtain the necessary approvals to commence clinical testing or to manufacture or market our potential products in

reasonable time frames, if at all.

We may fail to obtain the necessary

approvals to commence clinical testing or to manufacture or market our potential products in reasonable time frames, if at all.

In addition, the U.S.

Congress and other legislative bodies may enact regulatory reforms or

restrictions on the development of new therapies that could adversely affect the regulatory environment in which we operate or

the development of any products we may develop.

A substantial

portion of our research and development entails the use of stem cells obtained from human tissue.

federal and state governments

and other jurisdictions impose restrictions on the acquisition and use of human tissue, including those incorporated in federal

Good Tissue Practice, or “GTP,” regulations.

These regulatory and other constraints could prevent us from obtaining

cells and other components of our products in the quantity or of the quality needed for their development or commercialization.

These restrictions change from time to time and may become more onerous.

Additionally, we may not be able to identify or develop

reliable sources for the cells necessary for our potential products — that is, sources that follow all state and federal

laws and guidelines for cell procurement.

Certain components used to manufacture our stem and progenitor cell product candidates

will need to be manufactured in compliance with the FDA’s GMP.

Accordingly, we will need to enter into supply agreements

with companies that manufacture these components to GMP standards.

There is no assurance that we will be able to enter into any

such agreements.

Noncompliance

with applicable regulatory requirements can subject us, our third party suppliers and manufacturers and our other collaborators

to administrative and judicial sanctions, such as, among other things, warning letters, fines and other monetary payments, recall

or seizure of products, criminal proceedings, suspension or withdrawal of regulatory approvals, interruption or cessation of clinical

trials, total or partial suspension of production or distribution, injunctions, limitations on or the elimination of claims we

can make for our products, refusal of the government to enter into supply contracts or fund research, or government delay in approving

or refusal to approve new drug applications.

We cannot predict if or when

we will be able to commercialize our products due to regulatory constraints.

Federal, state

and local governments and agencies in the U.S.

(including the FDA) and governments in other countries have significant regulations

in place that govern many of our activities.

We are, or may become, subject to various federal, state and local laws,

regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use

of animals and the use and disposal of hazardous or potentially hazardous substances used in connection with its research and development

The preclinical testing and clinical trials of our proposed products are subject to extensive government regulation that

may prevent us from creating commercially viable products.

In addition, our sale of any commercially viable product will be subject

to government regulation from several standpoints, including manufacturing, advertising, marketing, promoting, selling, labeling

and distributing.

If, and to the extent that, we are unable to comply with these regulations, our ability to earn revenues,

if any, will be materially and negatively impacted.

If our clinical

trials fail to demonstrate that any of our product candidates are safe and effective for the treatment of particular diseases,

the FDA may require us to conduct additional clinical trials or may not grant us marketing approval for such product candidates

for those diseases.

We are not permitted

to market our product candidates in the United States until we receive approval of a BLA or NDA from the FDA.

Before obtaining

regulatory approvals for the commercial sale of any product candidate for a target indication, we must demonstrate with evidence

gathered in preclinical and well-controlled clinical trials, and, with respect to approval in the United States, to the satisfaction

of the FDA and, with respect to approval in other countries, similar regulatory authorities in those countries, that the product

candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls

used to produce the product are compliant with applicable statutory and regulatory requirements.

Our failure to adequately demonstrate

the safety and effectiveness of any of our product candidates for the treatment of particular diseases may delay or prevent our

receipt of the FDA’s approval and, ultimately, may prevent commercialization of our product candidates for those diseases.

The FDA has substantial discretion in deciding whether, based on the benefits and risks in a particular disease, any of our product

candidates should be granted approval for the treatment of that particular disease.

Even if we believe that a clinical trial or

trials has demonstrated the safety and statistically significant efficacy of any of our product candidates for the treatment of

a disease, the results may not be satisfactory to the FDA.

Preclinical and clinical data can be interpreted by the FDA and other

regulatory authorities in different ways, which could delay, limit or prevent regulatory approval.

If regulatory delays are significant

or regulatory approval is limited or denied altogether, our financial results and the commercial prospects for those of our product

candidates involved will be harmed, and our prospects for profitability will be significantly impaired.

Satisfaction of

these and other regulatory requirements is costly, time consuming, uncertain, and subject to unanticipated delays.

efforts, our drug candidates may not:

• offer improvement over existing comparable products;

• be proven safe and effective in clinical trials;

• meet applicable regulatory standards.

In addition, in

the course of its review of a BLA or NDA or other regulatory application, the FDA or other regulatory authorities may conduct audits

of the practices and procedures of a company and its suppliers and contractors concerning manufacturing, clinical study conduct,

non-clinical studies and several other areas.

If the FDA and/or other regulatory authorities conducts an audit relating to a BLA,

NDA or other regulatory application and finds a significant deficiency in any of these or other areas, the FDA or other regulatory

authorities could delay or not approve such BLA, NDA or other regulatory application.

If regulatory delays are significant or regulatory

approval is limited or denied altogether, our financial results and the commercial prospects for those of our products or product

candidates involved will be harmed, and our prospects for profitability will be significantly impaired.

and after marketing approval, our product candidates are subject to extensive and rigorous ongoing regulatory requirements and

continued regulatory review, and if we fail to comply with these continuing requirements, we could be subject to a variety of sanctions.

Both before and

after the approval of our product candidates, we, our product candidates, our operations, our facilities, our suppliers, and our

contract manufacturers, contract research organizations, and contract testing laboratories are subject to extensive regulation

by governmental authorities in the United States and other countries, with regulations differing from country to country.

United States, the FDA regulates, among other things, the pre-clinical testing, clinical trials, manufacturing, safety, efficacy,

potency, labeling, packaging, adverse event reporting, storage, record keeping, quality systems, advertising, promotion, sale and

distribution of therapeutic products.

These requirements include submissions of safety and other post-marketing information and

reports, registration, as well as continued compliance with cGMP, requirements and current good clinical practice, or cGCP, requirements

for any clinical trials that we conduct post-approval.

Failure to comply with applicable requirements could result in, among other

things, one or more of the following actions:

restrictions on the marketing of our products or their manufacturing processes, notices

of violation, untitled letters, warning letters, civil penalties, fines and other monetary penalties, unanticipated expenditures,

delays in approval or refusal to approve a product candidate, suspension or withdrawal of regulatory approvals, product, seizure

or detention, voluntary or mandatory product recalls and related publicity requirements, interruption of manufacturing or clinical

trials, operating restrictions, injunctions, import or export bans, and criminal prosecution.

We or the FDA, or an institutional

review board, may suspend or terminate human clinical trials at any time on various grounds, including a finding that subjects

are being exposed to an unacceptable health risk.

The FDA’s policies may change, and

additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates.

If we are slow or unable to adapt to changes in existing or new requirements or policies, or if we are not able to maintain regulatory

compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects

and ability to achieve or sustain profitability.

If side effects are identified during

the time our drug candidates are in development or after they are approved and on the market, we may choose or be required to perform

lengthy additional clinical trials, discontinue development of the affected drug candidate, change the labeling of any such products,

or withdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues.

Undesirable side effects caused by our

drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more

restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.

side effects could affect patient recruitment or the ability of enrolled patients to complete a trial or result in potential product

liability claims.

Any of these occurrences may harm our business, financial condition and prospects significantly.

of our drug candidates receives marketing approval, as greater numbers of patients use a drug following its approval, an increase

in the incidence of side effects or the incidence of other post-approval problems that were not seen or anticipated during pre-approval

clinical trials could result in a number of potentially significant negative consequences, including:

• regulatory authorities may withdraw their approval of the product;

• regulatory authorities may require the addition of labeling statements, such as

warnings or contradictions;

• we may be required to change the way the product is administered, conduct additional

clinical trials or change the labeling of the product;

• we could be sued and held liable for harm caused to patients;

• our reputation may suffer.

Any of these events could substantially

increase the costs and expenses of developing, commercializing and marketing any such drug candidates or could harm or prevent

sales of any approved products.

Even if our product candidates receive

regulatory approval in the United States, we may never receive approval or commercialize our products outside of the United States.

In order to market any products outside

of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding

safety and efficacy.

Approval procedures vary among countries and can involve additional product testing and additional administrative

review periods.

The time required to obtain approval in other countries might differ from that required to obtain FDA approval.

The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United

States as well as other risks.

Regulatory approval in one country does not ensure regulatory approval in another, but a failure

or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.

to obtain regulatory approval in other countries or any delay or setback in obtaining such approval would impair our ability to

develop foreign markets for our drug candidates.

Our product candidates for which

we intend to seek approval as biologic products may face competition sooner than anticipated.

We expect our stem cell product candidates

to be regulated by the FDA as biologic products and we intend to seek approval for these products pursuant to the BLA pathway.

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for the approval of biosimilar

and interchangeable biologic products.

The abbreviated regulatory pathway establishes legal authority for the FDA to review and

approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its

similarity to an existing brand product.

Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA

until 12 years after the original branded product was approved under a BLA.

The law is complex and is still being interpreted and

implemented by the FDA.

As a result, its ultimate impact, implementation, and meaning are subject to uncertainty.

While it is uncertain

when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse

effect on the future commercial prospects for our biologic products.

We believe that

any of our product candidates approved as a biologic product under a BLA should qualify for the 12-year period of exclusivity.

However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will

not consider our drug candidates to be reference products for competing products, potentially creating the opportunity for generic

competition sooner than anticipated.

Moreover, the extent to which a biosimilar, once approved, will be substituted for any one

of our reference products in a way that is similar to traditional generic substitution for non-biologic products is not yet clear,

and will depend on a number of marketplace and regulatory factors that are still developing.

We are subject to healthcare laws,

regulation and enforcement and our failure to comply with those laws could adversely affect our business, operations and financial

Even though we do not and will not control

referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state

healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business.

We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states

in which we conduct our business.

The regulations that may affect our ability to operate include, without limitation:

• the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly

and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral

of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under

federal healthcare programs such as the Medicare and Medicaid programs;

• the federal False Claims Act, which prohibits, among other things, individuals or entities from

knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the

federal government, and which may apply to entities that provide coding and billing advice to customers;

• federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program

or making false statements relating to healthcare matters;

• the federal physician sunshine requirements under the ACA, which require manufacturers of drugs,

devices, biologics, and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related

to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment

interests held by physicians and other healthcare providers and their immediate family members;

• HIPAA, which governs the conduct of certain electronic healthcare transactions and protects the

security and privacy of protected health information.

In addition, recent healthcare reform legislation

has strengthened these laws.

For example, the ACA, among other things, amended the intent requirement of the Federal Anti-Kickback

Statute and criminal healthcare fraud statutes.

A person or entity no longer needs to have actual knowledge of the statute or specific

intent to violate it.

In addition, the ACA provides that the government may assert that a claim including items or services resulting

from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims

These laws and regulations are broad in

scope and they are subject to change and evolving interpretations, which could require us to incur substantial costs associated

with compliance or to alter one or more of our sales or marketing practices.

In addition, any action against us for violation of

these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s

attention from the operation of our business.

If our operations are found to be in violation of any of the laws described above

or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties,

damages, fines, the exclusion from participation in federal and state healthcare programs, imprisonment, or the curtailment or

restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.

Failure to comply with domestic and international

privacy and security laws can result in the imposition of significant civil and criminal penalties.

The costs of compliance with

these laws, including protecting electronically stored information from cyberattacks, and potential liability associated with failure

to do so could adversely affect our business, financial condition and results of operations.

We are subject to various domestic

and international privacy and security regulations, including but not limited to HIPAA.

HIPAA mandates, among other things, the

adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards

relating to the privacy and security of individually identifiable health information, which require the adoption of administrative,

physical and technical safeguards to protect such information.

In addition, many states have enacted comparable laws addressing

the privacy and security of health information, some of which are more stringent than HIPAA.

Congress and other legislative bodies may enact regulatory reforms or restrictions on the development of

new therapies that could adversely affect the regulatory environment in which we operate or the development of any products we

Noncompliance with applicable regulatory

requirements can subject us, our third party suppliers and manufacturers and our other collaborators to administrative and judicial

sanctions, such as, among other things, warning letters, fines and other monetary payments, recall or seizure of products, criminal

proceedings, suspension or withdrawal of regulatory approvals, interruption or cessation of clinical trials, total or partial suspension

of production or distribution, injunctions, limitations on or the elimination of claims we can make for our products, refusal of

the government to enter into supply contracts or fund research, or government delay in approving or refusal to approve new drug

applications.

We cannot predict if or when we will be able to commercialize

our products due to regulatory constraints.

Federal, state and local governments and

agencies in the U.S.

(including the FDA) and governments in other countries have significant regulations in place that govern many

of our activities.

We are, or may become, subject to various federal, state and local laws, regulations and recommendations

relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals and the use and disposal

of hazardous or potentially hazardous substances used in connection with its research and development work.

The preclinical testing

and clinical trials of our proposed products are subject to extensive government regulation that may prevent us from creating commercially

viable products.

In addition, our sale of any commercially viable product will be subject to government regulation from several

standpoints, including manufacturing, advertising, marketing, promoting, selling, labeling and distributing.

to the extent that, we are unable to comply with these regulations, our ability to earn revenues, if any, will be materially and

negatively impacted.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors