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Item 1A. Risk Factors

2021-05-19 compared with 2020-06-29 · 714 added, 753 removed, 124 unchanged (92% of the section changed)

5 unchanged sentences

have a history of operating losses and expect to continue to incur losses and we may never become profitable.

the fiscal year ended March 31, 2020, the Company incurred a net loss of $4,365,355 and used $3,590,516 of cash in our operating

The Company’s

independent registered public accounting firm has issued a report questioning our ability to continue as a going concern.

the fiscal year ended March 31, 2021, the Company incurred a net loss of $880,851 and used $1,605,076 of cash in our operating activities.

We have incurred losses since inception, resulting in an accumulated deficit of $47,427,709 as of March 31, 2021.

We expect to incur further losses as we continue to develop our business.

We have not yet received significant revenues from sales

of products or services, and have recurring losses from operations, and further losses are anticipated in the development of our

These factors raise

substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date that the

financial statements are issued which are a part of this Annual Report on Form 10-K.

In addition, the Company’s independent registered

public accounting firm, in their report on the Company’s March 31, 2021 audited financial statements, raised substantial doubt

about the Company’s ability to continue as a going concern.

We expect to incur further losses as we continue to develop our

We have not yet received significant revenues from sales of products or services and have recurring losses from operations.

expect to incur substantial losses for the near future, and we may never achieve or maintain profitability.

Even if we succeed

in obtaining regulatory approval to market our products, we may still incur losses for the foreseeable future.

We also expect

to experience negative cash flow for the near future, as we plan to use all available resources to fund our operations and make

significant capital expenditures.

As a result, we would need to generate significant revenues if we are to achieve and maintain

profitability.

We may not be able to generate these revenues or achieve profitability.

Our failure to achieve or maintain profitability

could negatively impact the value of our common stock and you could lose some or all of your investment.

Even if we succeed in obtaining

regulatory approval to market our products, we may still incur losses for the foreseeable future.

We also expect to experience negative

cash flow for the near future, as we plan to use all available resources to fund our operations and if we proceed with an expansion

of our corporate strategy as discussed elsewhere in this Annual Report, to make significant capital expenditures.

we would need to generate significant revenues if we are to achieve and maintain profitability.

We may not be able to generate these

revenues or achieve profitability.

Our failure to achieve or maintain profitability could negatively impact the value of our common stock

and you could lose some or all of your investment.

will need to raise substantial additional capital to operate our business.

If we cannot obtain the capital we need to continue

our operations, our business could fail.

If we cannot obtain the capital we need to continue our operations,

our business could fail.

will need to raise additional funds in order to continue operating our business beyond the near term.

Since inception, we have

primarily funded our operations through equity and debt financings.

Our ability to raise capital is presently negatively impacted

by the “grey market”

trading status of our shares.

If we do issue equity or convertible debt securities to raise additional

funds, our existing stockholders may experience substantial dilution, and the new equity or debt securities may have rights, preferences

and privileges senior to those of our existing stockholders.

If we incur additional debt, it would increase our leverage relative

to our earnings or to our equity capitalization, requiring us to pay additional interest expenses.

Since inception, we have primarily

funded our operations through equity and debt financings.

If we do issue equity or convertible debt securities to raise additional funds,

our existing stockholders may experience substantial dilution, and the new equity or debt securities may have rights, preferences and

privileges senior to those of our existing stockholders.

If we incur additional debt, it would increase our leverage relative to our

earnings, if any, or to our equity capitalization, requiring us to pay additional interest expense.

Obtaining commercial loans,

assuming those loans would be available, would increase our liabilities and future cash commitments.

If we pursue capital through

alternative sources, such as collaborations or other similar arrangements, we may be forced to relinquish rights to our proprietary

compounds, technology or other intellectual property or marketing rights, which could result in our receipt of only a portion

of any revenue that may be generated from a partnered product or business.

Moreover, regardless of the manner in which we seek

to raise capital, we may incur substantial costs in those pursuits, including investment banking fees, legal fees, accounting

If we pursue capital through alternative

sources, such as collaborations or other similar arrangements, we may be forced to relinquish rights to our proprietary compounds, technology

or other intellectual property or marketing rights, which could result in our receipt of only a portion of any revenue that may be generated

from a partnered product or business.

We also may raise funds by selling some or all of our assets.

Regardless of the manner in which

we seek to raise capital, we may incur substantial costs in those pursuits, including investment banking fees, legal fees, accounting

fees, printing and distribution expenses and other related costs.

the 12 months following March 31, 2021, we expect our total operating expenditures to be approximately $1,400,000.

estimate of total expenditures could increase if we encounter unanticipated difficulties.

In addition, our estimates of the amount

of cash necessary to fund our business may prove to be wrong and we could spend our available financial resources much faster

than we currently expect.

Further, our operational expenses may increase substantially during our current fiscal year if we pursue

an expansion of our current operational goals and research and development activities.

If we cannot raise the money that we need

in order to continue to develop our business, we will be forced to delay, scale back or eliminate some or all of our proposed

operations and/or forego other attractive business opportunities that may arise.

If any of these were to occur, there is a substantial

risk that our business would fail.

Sources of additional funds may not be available on acceptable terms or at all.

weak economic and capital market conditions could result in increased difficulties in raising capital for our operations.

not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable, or

If we cannot raise the funds that we need, we will be unable to continue our operations, and our stockholders could lose

their entire investment in our company.

However, our estimate

of total expenditures could increase if we encounter unanticipated difficulties.

In addition, our estimates of the amount of cash necessary

to fund our business may prove to be wrong and we could spend our available financial resources much faster than we currently expect.

Further, our operational expenses may increase substantially during our current fiscal year if we pursue an expansion of our current

operational goals and research and development activities.

If we cannot raise the money that we need in order to continue to develop

our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations and/or forego other attractive

business opportunities that may arise.

If any of these were to occur, there is a substantial risk that our business would fail.

of additional funds may not be available on acceptable terms or at all.

In addition, weak economic and capital market conditions could

result in increased difficulties in raising capital for our operations.

We may not be able to raise money through the sale of our equity

securities or through borrowing funds on terms we find acceptable, or at all.

If we cannot raise the funds that we need, we will be unable

to continue our operations, and our stockholders could lose their entire investment in the Company.

currently face, and will continue to face, significant competition.

major competitors for the development of pharmaceutical products related to cannabinoids and inflammatory disorders include major

pharmaceutical companies, smaller companies, and academic research groups that are devoted to biological or pharmaceutical research

either independently or by providing contract research services.

A number of multinational pharmaceutical companies are developing

products in similar therapeutic areas, including, but not limited to, Biogen, Teva Neuroscience, Pfizer, Purdue Pharma, Endo Pharmaceuticals,

Genzyme, Novartis, Bayer Healthcare, and additional companies such as GW Pharmaceuticals, Arena Pharmaceuticals, Corbus Pharmaceuticals,

Trait Biosciences, and Zynerba Pharmaceuticals are developing cannabinoid pharmaceuticals for treatment of various clinical indications

and commercial applications.

major competitors for the development of pharmaceutical products related to cannabinoids and inflammatory disorders include major pharmaceutical

companies, smaller companies, and academic research groups that are devoted to biological or pharmaceutical research either independently

or by providing contract research services.

A number of multinational pharmaceutical companies are developing products in similar therapeutic

areas, including, but not limited to, Biogen, Teva Neuroscience, Pfizer, Endo Pharmaceuticals, Genzyme, Novartis, Bayer Healthcare, and

additional companies such as GW Pharmaceuticals, Arena Pharmaceuticals, Corbus Pharmaceuticals, Trait Biosciences, and Zynerba Pharmaceuticals

are developing cannabinoid pharmaceuticals for treatment of various clinical indications and commercial applications.

limited operating experience could make our operations inefficient or ineffective.

are an early-stage company with only a limited operating history upon which to base an evaluation of our current business and

future prospects and how we will respond to competitive, financial or technological challenges.

In order to conserve our cash

resources, we have significantly scaled back our product research and development efforts such that we are almost exclusively

focused on pursing the orphan drug designation approval.

are an early-stage company with only a limited operating history upon which to base an evaluation of our current business and future

prospects and how we will respond to competitive, financial or technological challenges.

In order to conserve our cash resources, we

have significantly scaled back our product research and development efforts such that we are almost exclusively focused on pursuing the

orphan drug designation approval and exploring strategic alternatives.

We only recently commenced operations in the development of pharmaceutical

products and have limited experience with these activities and the revenue and income potential of our business is unproven.

addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business,

and limited experience responding to such trends.

We may make errors in predicting and reacting to relevant business trends and

we will be subject to the risks, uncertainties and difficulties frequently encountered by early-stage companies in evolving markets.

We may not be able to successfully address any or all of these risks and uncertainties.

Failure to adequately do so could cause

our business, results of operations and financial condition to suffer or fail.

because of our limited operating history, we have limited insight into trends that may emerge and affect our business, and limited experience

responding to such trends.

We may make errors in predicting and reacting to relevant business trends and we will be subject to the risks,

uncertainties and difficulties frequently encountered by early-stage companies in evolving markets.

We may not be able to successfully

address any or all of these risks and uncertainties.

Failure to adequately do so could cause our business, results of operations and

financial condition to suffer or fail.

coronavirus pandemic is adversely affecting and will continue to adversely affect our business.

coronavirus pandemic is adversely affecting, and is expected to continue to adversely affect, our operations by limiting our employees’

to perform their jobs due to social distancing and other safety measures.

In addition, since inception, the Company has funded

its operations primarily through equity and debt financings.

In the event that the coronavirus pandemic has an adverse financial

effect on our potential sources of financing, our operations would be negatively affected.

The coronavirus pandemic may also make

it more difficult for us to pursue capital through alternative sources, such as collaborations or other similar arrangements,

inception, the Company has funded its operations primarily through equity and debt financings.

In the event that the coronavirus pandemic

has an adverse financial effect on our potential sources of financing, our operations would be negatively affected.

The coronavirus pandemic

may also make it more difficult for us to pursue capital through alternative sources, such as collaborations or other similar arrangements,

since we expect that many potential strategic partners are either suffering financially or operationally as a result of the coronavirus

pandemic or are focused on the development of treatment therapies or vaccines for the coronavirus.

The duration and breadth

of the coronavirus pandemic is uncertain and, as a result, while we expect it to have an adverse effect on our business, financial

condition and operations, the ultimate impact cannot be reasonably estimated at this time.

The duration and breadth of the coronavirus

pandemic is uncertain and the ultimate impact cannot be reasonably estimated at this time.

may not be able to manage our expansion of operations effectively.

we are able to attract additional capital, we may seek to expand our operations.

To manage this growth, we may need to expand

our facilities, augment our operational, financial and management systems and hire and train qualified personnel.

Our management

will also be required to develop relationships with customers, suppliers and other third parties.

Our current and planned operations,

personnel, systems, and internal procedures and controls may not be adequate to support our future growth.

If we are unable to

manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies or

respond to competitive pressures.

To manage this growth, we may need to expand our facilities,

augment our operational, financial and management systems and hire and train qualified personnel.

Our management will also be required

to develop relationships with customers, suppliers and other third parties.

Our current and planned operations, personnel, systems, and

internal procedures and controls may not be adequate to support our future growth.

If we are unable to manage our growth effectively,

we may not be able to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.

we are unable to hire and retain qualified personnel, we may not be able to implement our business plan.

of June 26, 2020, we employed five full-time employees, including three professionals dedicated to research and development.

of May 18, 2021, we employed three full-time employees, including one professional dedicated to research and development.

and retaining qualified scientific, management and other personnel will be critical to our success.

There is intense competition

for qualified personnel in our area of activities, and we may not be able to attract and retain the qualified personnel necessary

for the development of our business.

In addition, we may have difficulty recruiting necessary personnel as a result of our limited

operating history.

The loss of key personnel or the failure to recruit necessary additional personnel could impede the achievement

of our business objectives.

There is intense competition for

qualified personnel in our area of activities and we may not be able to attract and retain the qualified personnel necessary for the

development of our business.

In addition, we may have difficulty recruiting necessary personnel as a result of our limited operating

The loss of key personnel or the failure to recruit necessary additional personnel could impede the achievement of our business

may choose to hire part-time employees or use consultants.

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may from time to time serve as officers, directors and consultants of other companies.

These other companies may have interests

in conflict with ours.

In addition, we expect to rely on independent organizations, advisors and consultants to provide certain

services, including product testing and development plan construction.

The services of these independent organizations, advisors

and consultants may not be available to us on a timely basis when needed or on acceptable terms, and if they are not available,

we may not be able to find qualified replacements.

If we are unable to retain the services of qualified personnel, independent

organizations, advisors and consultants, we may not be able to implement our business plan.

These other companies may have interests in conflict

In addition, we expect to rely on independent organizations, advisors and consultants to provide certain services, including

product testing and development plan construction.

The services of these independent organizations, advisors and consultants may not

be available to us on a timely basis when needed or on acceptable terms, and if they are not available, we may not be able to find qualified

replacements.

If we are unable to retain the services of qualified personnel, independent organizations, advisors and consultants, we

may not be able to implement our business plan.

we are unable to market and distribute our products effectively, we may be unable to generate significant revenue.

currently have no sales, marketing or distribution capabilities.

We intend to build these capabilities internally, as needed,

and also to pursue collaborative arrangements regarding the sales and marketing of our products, including steps necessary to

commercialize our pharmaceutical products.

However, we may be unable to establish or maintain any such collaborative arrangements,

or if able to do so, they may not provide us with the sales and marketing benefits we expect.

To the extent that we decide not

to, or are unable to, enter into successful collaborative arrangements with respect to the sales and marketing of our cannabinoid

products, significant capital expenditures, management resources and time will be required to establish and develop an in-house

marketing and sales force with appropriate expertise.

We may be unable to establish or maintain relationships with third party

collaborators or develop in-house sales and distribution capabilities.

To the extent that we depend on third parties for marketing

and distribution, any revenues we receive will depend upon the efforts of such third parties and there can be no assurance that

such third parties will establish adequate sales and distribution capabilities or be successful in gaining market acceptance of

any approved product.

If we are not successful in commercializing any product approved in the future, either on our own or through

third parties, our business, financial condition and results of operations could be materially adversely affected.

may seek orphan drug status for our products for the treatment of certain diseases or conditions, but we may be unable to obtain

such designation or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause

our revenue, if any, to be reduced.

authorities in some jurisdictions, including the United States and European Union, may designate drugs for relatively small patient

populations as orphan drugs.

The FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition

that affects fewer than 200,000 individuals annually in the United States, or, if the disease or condition affects more than 200,000

individuals annually in the United States, if there is no reasonable expectation that the cost of developing and making the drug

would be recovered from sales in the United States.

In the European Union, the EMA’s Committee for Orphan Medicinal Products

grants Orphan Drug Designation to promote the development of products that are intended for the diagnosis, prevention or treatment

of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union.

Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a life-threatening, seriously

debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European

Union would be sufficient to justify the necessary investment in developing the drug.

We intend to build these capabilities internally, as needed, and also

to pursue collaborative arrangements regarding the sales and marketing of our products, including steps necessary to commercialize our

pharmaceutical products.

However, we may be unable to establish or maintain any such collaborative arrangements, or if able to do so,

they may not provide us with the sales and marketing benefits we expect.

To the extent that we decide not to, or are unable to, enter

into successful collaborative arrangements with respect to the sales and marketing of our cannabinoid products, significant capital expenditures,

management resources and time will be required to establish and develop an in-house marketing and sales force with appropriate expertise.

We may be unable to establish or maintain relationships with third party collaborators or develop in-house sales and distribution capabilities.

To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of

such third parties and there can be no assurance that such third parties will establish adequate sales and distribution capabilities

or be successful in gaining market acceptance of any approved product.

If we are not successful in commercializing any product approved

in the future, either on our own or through third parties, our business, financial condition and results of operations could be materially

adversely affected.

may seek orphan drug status for our products for the treatment of certain diseases or conditions, but we may be unable to obtain such

designation or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause our revenue,

if any, to be reduced.

authorities in some jurisdictions, including the United States and European Union, may designate drugs for relatively small patient populations

as orphan drugs.

The FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer

than 200,000 individuals annually in the United States, or, if the disease or condition affects more than 200,000 individuals annually

in the United States, if there is no reasonable expectation that the cost of developing and making the drug would be recovered from sales

in the United States.

In the European Union, the EMA’s Committee for Orphan Medicinal Products grants Orphan Drug Designation to

promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating

conditions affecting not more than five in 10,000 persons in the European Union.

Additionally, designation is granted for products intended

for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without

incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing

the United States, Orphan Drug Designation entitles a party to financial incentives, such as opportunities for grant funding towards

clinical trial costs, tax credits for certain research and user fee waivers under certain circumstances.

In addition, if a product

receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to seven years

of market exclusivity, which means the FDA may not approve any other application for the same drug for the same indication for

a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan

Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition,

or the same drug for a different disease or condition.

In the European Union, Orphan Drug Designation also entitles a party to

financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug approval.

period may be reduced to six years if the Orphan Drug Designation criteria are no longer met, including where it is shown that

the product is sufficiently profitable so that market exclusivity is no longer justified.

a result, even if our products receive orphan exclusivity, the FDA or EMA can still approve other drugs that have a different

active ingredient for use in treating the same indication.

Furthermore, the FDA can waive orphan exclusivity if we are unable

to manufacture sufficient supply of our products or the EMA could reduce the term of exclusivity if our products are sufficiently

January 2018, we filed a request with the FDA’s Office of Orphan Products Development (OOPD) for an Orphan Drug Designation

of our VBX-100 prodrug for the treatment of pediatric ulcerative colitis, which was denied in March 2018.

However, in December

2019, we received a letter from the OOPD informing us that the FDA has determined that the Company may be eligible for pediatric-subpopulation

designation because we submitted our original request for an Orphan Drug Designation before the guidance Clarification of Orphan

Designation of Drugs and Biologics for Pediatric Subpopulations of Common Diseases was finalized in July 2018.

we filed a response letter with the OOPD addressing the other deficiencies noted in the Company’s original submission in

January 2018.

we have sought orphan drug designation for our products, exclusive marketing rights in the United States may be limited if we

seek approval for an indication broader than the orphan designated indication and may be lost if the FDA or EMA later determines

that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of

the product to meet the needs of patients with the rare disease or condition.

In addition, we may never receive such designation,

or there may be a delay in receiving such designation that would impact our expected timeframe for clinical development.

are largely dependent on the success of our products, which are still in pre-clinical development and will require significant

capital resources and years of clinical development effort.

In addition, if a product receives

the first FDA approval for the indication for which it has orphan designation, the product is entitled to seven years of market exclusivity,

which means the FDA may not approve any other application for the same drug for the same indication for a period of seven years, except

in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity.

Orphan drug exclusivity

does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease

or condition.

In the European Union, Orphan Drug Designation also entitles a party to financial incentives such as reduction of fees

or fee waivers and ten years of market exclusivity following drug approval.

This period may be reduced to six years if the Orphan Drug

Designation criteria are no longer met, including where it is shown that the product is sufficiently profitable so that market exclusivity

is no longer justified.

a result, even if our products receive orphan exclusivity, the FDA or European Medicines Agency (EMA) can still approve other drugs that

have a different active ingredient for use in treating the same indication.

Furthermore, the FDA can waive orphan exclusivity if we are

unable to manufacture sufficient supply of our products or the EMA could reduce the term of exclusivity if our products are sufficiently

January 2018, we filed a request with the FDA’s Office of Orphan Products Development (OOPD) for an Orphan Drug Designation of

our VBX-100 prodrug for the treatment of pediatric ulcerative colitis, which was denied in March 2018.

However, in December 2019, we

received a letter from the OOPD informing us that the FDA has determined that the Company may be eligible for pediatric-subpopulation

designation because we submitted our original request for an Orphan Drug Designation before the guidance Clarification of Orphan Designation

of Drugs and Biologics for Pediatric Subpopulations of Common Diseases was finalized in July 2018.

In May 2020, we filed a response

letter with the OOPD addressing the other deficiencies noted in the Company’s original submission in January 2018.

In August 2020,

we received a letter from the OOPD informing us that it was unable to grant our request for an Orphan Drug Designation status because

our VBX-100 prodrug was administered before and after colitis was induced in our in vivo mouse studies, which resulted in the

need for more scientific data to support the efficacy of our VBX-100 prodrug in a treatment-only setting.

As a result, we were advised

to perform a second in vivo mouse study in which our VBX-100 prodrug would be administered only after colitis was induced in order

to provide a clear indication that the active drug was released only after ulcerative colitis was present.

In May 2021, we completed

the treatment-only in vivo mouse study and filed a supplemental response letter with the OOPD providing the requested in

vivo treatment-only mouse study results in support of our position that VBX-100 may be effective as a treatment for pediatric

ulcerative colitis.

we have sought orphan drug designation for our VBX-100 prodrug, exclusive marketing rights in the United States may be limited if we

seek approval for an indication broader than the orphan designated indication and may be lost if the FDA or EMA later determines that

the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product

to meet the needs of patients with the rare disease or condition.

In addition, we may never receive such designation, or there may be

a delay in receiving such designation that would impact our expected timeframe for clinical development.

are dependent on the success of our products, which are still in pre-clinical development and will require significant capital resources

and years of clinical development effort.

currently have no pharmaceutical products on the market, and our product candidates are still in pre-clinical development.

business substantially depends on the successful clinical development, regulatory approval and commercialization of our product

candidates, and additional pre-clinical testing and substantial clinical development and regulatory approval efforts will be required

before we are permitted to commence commercialization, if ever.

The clinical trials and manufacturing and marketing of product

candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States

and other jurisdictions where we intend to test and, if approved, market our product candidates.

Before obtaining regulatory approvals

for the commercial sale of any product candidate, we must demonstrate through pre-clinical testing and clinical trials that the

product candidate is safe and effective for use in each target indication, and potentially in specific patient populations.

process can take many years and may include post-marketing studies and surveillance, which would require the expenditures of substantial

resources beyond our current resources.

Of the large number of drugs in development for approval in the United States and the

European Union, only a small percentage successfully complete the FDA or European Medicines Agency (EMA) regulatory approval processes,

as applicable, and are commercialized.

depends on the successful clinical development, regulatory approval and commercialization of our product candidates, and additional pre-clinical

testing and substantial clinical development and regulatory approval efforts will be required before we are permitted to commence commercialization,

The clinical trials and manufacturing and marketing of product candidates will be subject to extensive and rigorous review and

regulation by numerous government authorities in the United States and other jurisdictions where we intend to test and, if approved,

market our product candidates.

Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate

through pre-clinical testing and clinical trials that the product candidate is safe and effective for use in each target indication,

and potentially in specific patient populations.

This process can take many years and may include post-marketing studies and surveillance,

which would require the expenditures of substantial resources beyond our current resources.

Of the large number of drugs in development

for approval in the United States and the European Union, only a small percentage successfully complete the FDA or EMA regulatory approval

processes, as applicable, and are commercialized.

Accordingly, even if we are able to obtain the requisite financing to continue to fund

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or commercialized.

the results of pre-clinical testing are not necessarily predictive of future results, our products may not have favorable results

in our planned clinical trials.

positive results from our pre-clinical testing of our products may not necessarily be predictive of the results from our planned

clinical trials in humans.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks

in clinical trials after achieving positive results in pre-clinical development, and we cannot be certain that we will not face

similar setbacks.

Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and

many companies that believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials nonetheless

failed to obtain FDA or EMA approval.

If we fail to produce positive results in our clinical trials, the development timeline

and regulatory approval and commercialization prospects for our products and, correspondingly, our business and financial prospects,

would be materially adversely affected.

or delays in the completion of our pre-clinical studies or the commencement and completion of our clinical trials could result

in increased costs to us and could delay, prevent or limit our ability to generate revenue and continue our business.

the results of pre-clinical testing are not necessarily predictive of future results, our products may not have favorable results in

our planned clinical trials.

positive results from our pre-clinical testing of our products may not necessarily be predictive of the results from our planned clinical

trials in humans.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials

after achieving positive results in pre-clinical development, and we cannot be certain that we will not face similar setbacks.

pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their

product candidates performed satisfactorily in pre-clinical studies and clinical trials nonetheless failed to obtain FDA or EMA approval.

If we fail to produce positive results in our clinical trials, the development timeline and regulatory approval and commercialization

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

or delays in the completion of our pre-clinical studies or the commencement and completion of our clinical trials could result in increased

costs to us and could delay, prevent or limit our ability to generate revenue and continue our business.

date, we have not completed our pre-clinical animal studies or commenced any clinical trials.

Successful completion of such pre-clinical

animal studies and clinical trials is a prerequisite to submitting an NDA to the FDA or a marketing authorization application

(MAA) to the EMA.

Clinical trials are expensive, difficult to design and implement, can take many years to complete and their

outcomes are uncertain.

animal studies and clinical trials is a prerequisite to submitting an NDA to the FDA or a marketing authorization application (MAA) to

Clinical trials are expensive, difficult to design and implement, can take many years to complete and their outcomes are uncertain.

A product candidate can unexpectedly fail at any stage of clinical development.

The historic failure rate

for product candidates is high due to scientific feasibility, safety, efficacy, changing standards of medical care and other variables.

The commencement and completion of clinical trials can be delayed or prevented for a number of reasons, including, among others:

delays in reaching or failing to reach agreement on acceptable terms with prospective clinical trial sites, the terms of which

can be subject to extensive negotiation and may vary significantly among different clinical trial sites;

The historic failure rate for product candidates is high

due to scientific feasibility, safety, efficacy, changing standards of medical care and other variables.

The commencement and completion

of clinical trials can be delayed or prevented for a number of reasons, including, among others:

delays in reaching or failing to reach agreement on acceptable terms with prospective clinical trial sites, the terms of which can be

subject to extensive negotiation and may vary significantly among different clinical trial sites;

delays or inability in manufacturing or obtaining sufficient quantity or quality of a product candidate or other materials necessary

to conduct clinical trials due to regulatory and manufacturing constraints, including delays or an inability to hire appropriate

staff or consultants with requisite expertise in chemistry and manufacturing controls for pharmaceutical products;

difficulties obtaining IRB, DEA or comparable foreign regulatory authority, or ethics committee approval to conduct a clinical

trial at a prospective site or sites;

challenges in recruiting and enrolling patients to participate in clinical trials, including the size and nature of the patient

population, the proximity of patients to clinical trial sites, eligibility criteria for the clinical trial, the nature of the

clinical trial protocol, the availability of approved effective treatments for the relevant indication and competition from other

clinical trial programs for similar indications;

severe or unexpected toxicities or drug-related side effects experienced by patients in our clinical trials or by individuals

using drugs similar to our product candidates;

DEA or comparable foreign regulatory authority-related recordkeeping, reporting or security violations at a clinical trial site,

leading the DEA, state authorities or comparable foreign regulatory authorities to suspend or revoke the site’s controlled

substance license and causing a delay or termination of planned or ongoing clinical trials;

to conduct clinical trials due to regulatory and manufacturing constraints, including delays or an inability to hire appropriate staff

or consultants with requisite expertise in chemistry and manufacturing controls for pharmaceutical products;

difficulties obtaining Institutional Review Board (IRB), DEA or comparable foreign regulatory authority, or ethics committee approval

to conduct a clinical trial at a prospective site or sites;

challenges in recruiting and enrolling patients to participate in clinical trials, including the size and nature of the patient population,

the proximity of patients to clinical trial sites, eligibility criteria for the clinical trial, the nature of the clinical trial protocol,

the availability of approved effective treatments for the relevant indication and competition from other clinical trial programs for

similar indications;

severe or unexpected toxicities or drug-related side effects experienced by patients in our clinical trials or by individuals using drugs

similar to our product candidates;

DEA or comparable foreign regulatory authority-related recordkeeping, reporting or security violations at a clinical trial site, leading

the DEA, state authorities or comparable foreign regulatory authorities to suspend or revoke the site’s controlled substance license

and causing a delay or termination of planned or ongoing clinical trials;

regulatory concerns with cannabinoid products generally and the potential for abuse of those products;

difficulties retaining patients who have enrolled in a clinical trial who may withdraw due to lack of efficacy, side effects,

personal issues or loss of interest;

difficulties retaining patients who have enrolled in a clinical trial who may withdraw due to lack of efficacy, side effects, personal

issues or loss of interest;

ambiguous or negative interim results;

lack of adequate funding to continue the clinical trial.

addition, a clinical trial may be suspended or terminated by us, the FDA, IRBs, ethics committees, data safety monitoring board

or other foreign regulatory authorities overseeing the clinical trial at issue or other regulatory authorities due to a number

of factors, including, among others:

addition, a clinical trial may be suspended or terminated by us, the FDA, IRBs, ethics committees, data safety monitoring boards or other

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

among others:

failure to conduct the clinical trial in accordance with regulatory requirements or our clinical trial protocols;

inspection of the clinical trial operations, clinical trial sites, or drug manufacturing facilities by the FDA, the DEA, the EMA

or other foreign regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action,

including the imposition of a clinical hold;

inspection of the clinical trial operations, clinical trial sites, or drug manufacturing facilities by the FDA, the DEA, the EMA or other

foreign regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action, including the

imposition of a clinical hold;

unforeseen safety issues, including any safety issues that could be identified in our ongoing toxicology studies;

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changes in government regulations or administrative actions.

intend to focus on prodrugs for certain indications, and may fail to capitalize on other product candidates or other indications

that may be more profitable or for which there is a greater likelihood of success.

we have limited financial and managerial resources, we are focusing on research programs relating to our proprietary products

for certain indications, which concentrates the risk of product failure in the event the products prove to be unsafe, ineffective

or inadequate for clinical development or commercialization.

As a result, we may forego or delay pursuit of opportunities with

other product candidates or for other indications that could later prove to have greater commercial potential.

Our resource allocation

decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Our spending on

proprietary research and development programs relating to our products may not yield any commercially viable products.

not accurately evaluate the commercial potential or target market for our products, we may relinquish valuable rights to our products

through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to

retain sole development and commercialization rights to our products.

regulatory approval processes of the FDA, the EMA and other comparable foreign regulatory authorities are lengthy, time-consuming

and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business

will be substantially harmed.

are not permitted to market our product candidates in the United States or the European Union until we receive approval of an

NDA from the FDA or an MAA from the EMA, respectively, or in any foreign countries until we receive the requisite approval from

such countries.

Prior to submitting an NDA to the FDA or an MAA to the EMA for approval of our product candidates we will need

to complete our ongoing pre-clinical studies, as well as Phase 1, Phase 2 and Phase 3 clinical trials.

We are still conducting

pre-clinical studies and have not yet commenced our clinical program or tested any product in humans.

We plan to submit NDAs for

our products to the FDA upon completion of all requisite clinical trials.

Successfully initiating and completing our clinical

program and obtaining approval of an NDA or MAA is a complex, lengthy, expensive and uncertain process, and the FDA or EMA may

delay, limit or deny approval of our product candidates for many reasons, including, among others, because:

we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction

of the FDA or EMA;

the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or EMA for

marketing approval;

intend to focus on prodrugs for certain indications, and may fail to capitalize on other product candidates or other indications that

may be more profitable or for which there is a greater likelihood of success.

we have limited financial and managerial resources, we are focusing on research programs relating to our proprietary products for certain

indications, which concentrates the risk of product failure in the event the products prove to be unsafe, ineffective or inadequate for

clinical development or commercialization.

As a result, we may forego or delay pursuit of opportunities with other product candidates

or for other indications that could later prove to have greater commercial potential.

Our resource allocation decisions may cause us

to fail to capitalize on viable commercial products or profitable market opportunities.

Our spending on proprietary research and development

programs relating to our products may not yield any commercially viable products.

If we do not accurately evaluate the commercial potential

or target market for our products, we may relinquish valuable rights to our products through collaboration, licensing or other royalty

arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to

our products.

regulatory approval processes of the FDA, the EMA and other comparable foreign regulatory authorities are lengthy, time-consuming and

inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will

be substantially harmed.

are not permitted to market our product candidates in the United States or the European Union until we receive approval of an NDA from

the FDA or an MAA from the EMA, respectively, or in any foreign countries until we receive the requisite approval from such countries.

Prior to submitting an NDA to the FDA or an MAA to the EMA for approval of our product candidates we will need to complete our ongoing

pre-clinical studies, as well as Phase 1, Phase 2 and Phase 3 clinical trials.

We are still conducting pre-clinical studies and have

not yet commenced our clinical program or tested any product in humans.

Successfully initiating and completing our clinical program and

obtaining approval of an NDA or MAA is a complex, lengthy, expensive and uncertain process, and the FDA or EMA may delay, limit or deny

approval of our product candidates for many reasons, including, among others, because:

we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction of the

the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or EMA for marketing

the FDA or EMA may disagree with the number, design, size, conduct or implementation of our clinical trials;

the FDA or EMA may require that we conduct additional clinical trials;

the FDA or EMA or other applicable foreign regulatory authorities may not approve the formulation, labeling or specifications

of our product candidates;

the contract research organizations, or CROs, and other contractors that we may retain to conduct our clinical trials may take

actions outside of our control that materially adversely impact our clinical trials;

the FDA or EMA or other applicable foreign regulatory authorities may not approve the formulation, labeling or specifications of our

product candidates;

the contract research organizations, or CROs, and other contractors that we may retain to conduct our clinical trials may take actions

outside of our control that materially adversely impact our clinical trials;

the FDA or EMA may find the data from pre-clinical studies and clinical trials insufficient to demonstrate that our products’

clinical and other benefits outweigh their safety risks;

and other benefits outweigh their safety risks;

the FDA or EMA may disagree with our interpretation of data from our pre-clinical studies and clinical trials;

the FDA or EMA may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy

results from clinical trial sites outside the United States where the standard of care is potentially different from that in the

United States;

if and when our NDAs or MAAs are submitted to the FDA or EMA, as applicable, the regulatory agency may have difficulties scheduling

the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require,

as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution

and use restrictions;

the FDA may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies

beyond the professional labeling to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition

of approval or post-approval, and the EMA may grant only conditional approval or impose specific obligations as a condition for

marketing authorization, or may require us to conduct post-authorization safety studies;

the FDA, EMA, DEA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of

third-party manufacturers with which we contract;

the DEA or other applicable foreign regulatory agency may establish quotas that limit the quantities of controlled substances

available to our manufacturers;

the FDA or EMA may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy results

from clinical trial sites outside the United States where the standard of care is potentially different from that in the United States;

if and when our NDAs or MAAs are submitted to the FDA or EMA, as applicable, the regulatory agency may have difficulties scheduling the

necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require, as a condition

of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;

the FDA may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies beyond

the professional labeling to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition of approval

or post-approval, and the EMA may grant only conditional approval or impose specific obligations as a condition for marketing authorization,

or may require us to conduct post-authorization safety studies;

the FDA, EMA, DEA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of third-party

manufacturers with which we contract;

the DEA or other applicable foreign regulatory agency may establish quotas that limit the quantities of controlled substances available

to our manufacturers;

the FDA or EMA may change their approval policies or adopt new regulations.

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if our products receive regulatory approval, they may still face future development and regulatory difficulties.

we obtain regulatory approval for our products, such approval would be subject to extensive ongoing requirements by the DEA, FDA,

EMA and other foreign regulatory authorities related to the manufacture, quality control, further development, labeling, packaging,

storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and

other post-market information.

The safety profile of any product will continue to be closely monitored by the FDA, EMA and other

comparable foreign regulatory authorities.

If the FDA, EMA or any other comparable foreign regulatory authority becomes aware

of new safety information after approval of any of our product candidates, these regulatory authorities may require labeling changes

or establishment of a REMS, impose significant restrictions on a product’s indicated uses or marketing, impose ongoing requirements

for potentially costly post-approval studies or post-market surveillance, or impose a recall.

addition, manufacturers of therapeutic products and their facilities are subject to continual review and periodic inspections

by the FDA, the EMA and other comparable foreign regulatory authorities for compliance with current good manufacturing practices

(cGMP) regulations.

Our current facilities and full-time staff have never undergone such an inspection, and we currently rely

upon outside consultants and advisors to provide guidance on chemistry and manufacturing controls for pharmaceuticals products.

Further, manufacturers of controlled substances must obtain and maintain necessary DEA and state registrations and registrations

with applicable foreign regulatory authorities, and must establish and maintain processes to ensure compliance with DEA and state

requirements and requirements of applicable foreign regulatory authorities governing, among other things, the storage, handling,

security, recordkeeping and reporting for controlled substances.

If we or a regulatory agency discover previously unknown problems

with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product

is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring

recall or withdrawal of the product from the market or suspension of manufacturing.

If we, our product candidates or the manufacturing

facilities for our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may, among other

we seek and obtain regulatory approval for any of our products, such approval would be subject to extensive ongoing requirements by the

DEA, FDA, EMA and other foreign regulatory authorities related to the manufacture, quality control, further development, labeling, packaging,

storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market

The safety profile of any product will continue to be closely monitored by the FDA, EMA and other comparable foreign regulatory

If the FDA, EMA or any other comparable foreign regulatory authority becomes aware of new safety information after approval

of any of our product candidates, these regulatory authorities may require labeling changes or establishment of a REMS, impose significant

restrictions on a product’s indicated uses or marketing, impose ongoing requirements for potentially costly post-approval studies

or post-market surveillance, or impose a recall.

addition, manufacturers of therapeutic products and their facilities are subject to continual review and periodic inspections by the

FDA, the EMA and other comparable foreign regulatory authorities for compliance with current good manufacturing practices (cGMP) regulations.

Our current facilities and staff have never undergone such an inspection, and we currently rely upon outside consultants and

advisors to provide guidance on chemistry and manufacturing controls for pharmaceutical products.

Further, manufacturers of controlled

substances must obtain and maintain necessary DEA and state registrations and registrations with applicable foreign regulatory authorities,

and must establish and maintain processes to ensure compliance with DEA and state requirements and requirements of applicable foreign

regulatory authorities governing, among other things, the storage, handling, security, recordkeeping and reporting for controlled substances.

If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or

frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product,

the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements,

a regulatory agency may, among other things:

issue untitled letters or warning letters;

mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;

require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs,

required due dates for specific actions and penalties for noncompliance;

require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required

due dates for specific actions and penalties for noncompliance;

seek an injunction or impose civil or criminal penalties or monetary fines;

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products will be subject to controlled substance laws and regulations;

failure to receive necessary approvals may delay the launch

of our products and failure to comply with these laws and regulations may adversely affect the results of our business operations.

failure to receive necessary approvals may delay the launch of

our products and failure to comply with these laws and regulations may adversely affect the results of our business operations.

products will contain controlled substances as defined in the federal Controlled Substances Act of 1970 (CSA).

Controlled substances

that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things,

certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered

that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things, certain

registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA.

The DEA classifies controlled substances into five schedules:

Schedule I, II, III, IV or V substances.

substances by definition have a high potential for abuse, have no currently “accepted medical use”

in the United States,

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

Pharmaceutical

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

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

Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement

quotas, security requirements and criteria for importation.

Schedule I substances by definition

have a high potential for abuse, have no currently “accepted medical use”

in the United States, lack accepted safety for

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

Pharmaceutical products approved for

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

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

Schedule I and II drugs are

subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for

In addition, dispensing of Schedule II drugs is further restricted.

For example, they may not be refilled without a new prescription.

cannabis is a Schedule I controlled substance, products approved for medical use in the United States that contain cannabis or

cannabis extracts must be placed in Schedules II - V, since approval by the FDA satisfies the “accepted medical use”

If and when our products receive FDA approval, the DEA will make a scheduling determination and place them in a schedule

other than Schedule I in order for it to be prescribed to patients in the United States.

If approved by the FDA, we expect the

finished dosage forms of our products to be listed by the DEA as a Schedule II, III, IV or V controlled substance.

Consequently,

their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use will be subject to a significant

degree of regulation by the DEA.

The scheduling process may take additional time after FDA approval, thereby significantly delaying

the launch of our products.

Furthermore, if the FDA, DEA or any foreign regulatory authority determines that our products may

have potential for abuse, it may require us to generate more clinical data than that which is currently anticipated, which could

increase the cost and/or delay the launch of our products.

our products will contain compounds considered to be Schedule I substances, to conduct pre-clinical studies and clinical trials

with our products in the United States prior to approval, each of our research sites must submit a research protocol to the DEA

and obtain and maintain a DEA researcher registration that will allow those sites to procure necessary materials from suppliers,

and to handle and dispense our products.

If the DEA delays or denies the grant of a research registration to one or more research

sites, the pre-clinical studies or clinical trials could be significantly delayed, and we could lose and be required to replace

clinical trial sites, resulting in additional costs.

will also need to identify wholesale distributors with the appropriate DEA registrations and authority to distribute our products

to pharmacies and other healthcare providers, and these distributors would need to obtain Schedule II through V distribution registrations.

For example, they may not be refilled without a new

prescription.

cannabis is a Schedule I controlled substance, products approved for medical use in the United States that contain cannabis or cannabis

extracts must be placed in Schedules II - V, since approval by the FDA satisfies the “accepted medical use”

If and when our products receive FDA approval, the DEA will make a scheduling determination and place them in a schedule other than Schedule

I in order for it to be prescribed to patients in the United States.

If approved by the FDA, we expect the finished dosage forms of our

products to be listed by the DEA as a Schedule II, III, IV or V controlled substance.

Consequently, their manufacture, importation, exportation,

domestic distribution, storage, sale and legitimate use will be subject to a significant degree of regulation by the DEA.

The scheduling

process may take additional time after FDA approval, thereby significantly delaying the launch of our products.

Furthermore, if the FDA,

DEA or any foreign regulatory authority determines that our products may have potential for abuse, it may require us to generate more

clinical data than that which is currently anticipated, which could increase the cost and/or delay the launch of our products.

our products will contain compounds considered to be Schedule I substances, to conduct pre-clinical studies and clinical trials with

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

and maintain a DEA researcher registration that will allow those sites to procure necessary materials from suppliers, and to handle and

dispense our products.

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

studies or clinical trials could be significantly delayed, and we could lose and be required to replace clinical trial sites, resulting

in additional costs.

will also need to identify wholesale distributors with the appropriate DEA registrations and authority to distribute our products to

pharmacies and other healthcare providers, and these distributors would need to obtain Schedule II through V distribution registrations.

The failure to obtain, or delay in obtaining, or the loss of any of those registrations could result in increased costs to us.

If our products are Schedule II drugs, pharmacies would have to maintain enhanced security with alarms and monitoring systems

and they must adhere to recordkeeping and inventory requirements.

Furthermore, state and federal enforcement actions, regulatory

requirements, and legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state

prescription drug monitoring program, may make physicians less willing to prescribe, and pharmacies to dispense, Schedule II products.

products are Schedule II drugs, pharmacies would have to maintain enhanced security with alarms and monitoring systems and they must

adhere to recordkeeping and inventory requirements.

Furthermore, state and federal enforcement actions, regulatory requirements, and

legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state prescription drug monitoring

program, may make physicians less willing to prescribe, and pharmacies to dispense, Schedule II products.

may manufacture the commercial supply of our products, or necessary raw materials, outside of the United States.

If our products

are approved by the FDA and classified as a Schedule II or III substance, an importer can import for commercial purposes if it

obtains from the DEA an importer registration and files an application with the DEA for an import permit for each import.

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

If our products are

each approved by the FDA and classified as a Schedule II or III substance, an importer can import that product for commercial

purposes if it obtains from the DEA an importer registration and files an application with the DEA for an import permit for each importation.

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

controlled substances that the DEA authorizes to be imported.

The failure to identify an importer or obtain the necessary import

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

our business, results of operations and financial condition.

In addition, an application for a Schedule II importer registration

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

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

including specific quantities, could affect the availability of our products and have a material adverse effect on our business, results

of operations and financial condition.

In addition, an application for a Schedule II importer registration must be published in the Federal

states have also established controlled substance laws and regulations.

Although state-controlled substance laws often mirror

federal law, states may schedule our product candidates in a different manner.

While some states automatically schedule a drug

based on federal action, other states schedule drugs through rulemaking or a legislative action.

State scheduling may delay commercial

sale of any product for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect

on the commercial attractiveness of such product.

We or our partners must also obtain separate state registrations, permits or

licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and

failure to meet applicable regulatory requirements could lead to enforcement actions and sanctions by the states in addition to

those from the DEA or otherwise arising under federal law.

Although state-controlled substance laws often mirror federal

law, states may schedule our product candidates in a different manner.

While some states automatically schedule a drug based on federal

action, other states schedule drugs through rulemaking or a legislative action.

State scheduling may delay commercial sale of any product

for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness

of such product.

We or our partners must also obtain separate state registrations, permits or licenses in order to be able to obtain,

handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements

could lead to enforcement actions and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.

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

shipment, import and export of our products and raw materials may require import and export licenses.

In the United States, the

Customs and Border Protection, and in other countries, similar regulatory authorities, regulate the import and export

of pharmaceutical products that contain controlled substances.

Specifically, the import and export process requires the issuance

of import and export licenses by the relevant controlled substance authority in both the importing and exporting country.

not be granted, or if granted, maintain, such licenses from the authorities in certain countries.

Even if we obtain the relevant

licenses, shipments of our products and materials may be held up in transit, which could cause significant delays and may lead

to product batches being stored outside required temperature ranges.

Inappropriate storage may damage the product shipment resulting

in delays in clinical trials or, upon commercialization, a partial or total loss of revenue from one or more shipments of our

A delay in a clinical trial or, upon commercialization, a partial or total loss of revenue from one or more shipments

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

In the United States, the FDA and

Customs and Border Protection, and in other countries, similar regulatory authorities, regulate the import and export of pharmaceutical

products that contain controlled substances.

Specifically, the import and export process requires the issuance of import and export licenses

by the relevant controlled substance authority in both the importing and exporting country.

We may not be granted, or if granted, maintain,

such licenses from the authorities in certain countries.

Even if we obtain the relevant licenses, shipments of our products and materials

may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required temperature

Inappropriate storage may damage the product shipment resulting in delays in clinical trials or, upon commercialization, a partial

or total loss of revenue from one or more shipments of our products.

A delay in a clinical trial or, upon commercialization, a partial

or total loss of revenue from one or more shipments of our products could have a material adverse effect on our business, results of

operations and financial condition.

to obtain regulatory approval in jurisdictions outside the United States and the European Union would prevent our product candidates

from being marketed in those jurisdictions.

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

marketing approvals and comply with numerous and varying regulatory requirements.

The regulatory approval process outside the

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

involve additional testing.

We may need to partner with third parties in order to obtain approvals outside the United States and

the European Union.

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

the product can be approved for sale in that country.

We may not obtain approvals from regulatory authorities outside the United

States and the European Union on a timely basis, if at all.

Even if we were to receive approval in the United States or the European

Union, approval by the FDA or the EMA does not ensure approval by regulatory authorities in other countries or jurisdictions.

Similarly, approval by one regulatory authority outside the United States and the European Union would not ensure approval by

regulatory authorities in other countries or jurisdictions or by the FDA or the EMA.

We may not be able to file for marketing

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

If we are unable to obtain approval

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

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

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

approvals and comply with numerous and varying regulatory requirements.

The regulatory approval process outside the United States and

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

We may need to partner with third parties in order to obtain approvals outside the United States and the European Union.

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

in that country.

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

basis, if at all.

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

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

Similarly, approval by one regulatory authority outside

the United States and the European Union would not ensure approval by regulatory authorities in other countries or jurisdictions or by

the FDA or the EMA.

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

in any market.

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

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

legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty

and cost for us to obtain marketing approval of and commercialize our product candidates.

the United States there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare

system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities

or affect our ability to profitably sell any product candidates for which we obtain marketing approval.

Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable

Care Act, among other things, imposes a significant annual fee on companies that manufacture or import branded prescription drug

It also contains substantial provisions intended to broaden access to health insurance, reduce or constrain the growth

of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for the healthcare

and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers, and impose additional

health policy reforms, any of which could negatively impact our business.

A significant number of provisions are not yet, or have

only recently become effective, but the Affordable Care Act is likely to continue the downward pressure on pharmaceutical and

medical device pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

addition, other legislative changes have been proposed and adopted since passage of the Affordable Care Act.

The Budget Control

Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in

spending reductions.

The Joint Select Committee did not achieve a targeted deficit reduction of an amount greater than $1.2 trillion

for the fiscal years 2012 through 2021, triggering the legislation’s automatic reduction to several government programs.

This included aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, which went into

effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2025 unless

additional Congressional action is taken.

In January 2013, President Obama signed into law the American Taxpayer Relief Act of

2012, which, among other things, reduced Medicare payments to several categories of healthcare providers and increased the statute

of limitations period for the government to recover overpayments to providers from three to five years.

If we ever obtain regulatory

approval and successfully commercialize our products, these new laws may result in additional reductions in Medicare and other

healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations.

expect that the Affordable Care Act, as well as other healthcare reform measures that have been and may be adopted in the future,

may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved

product, and could negatively impact our future revenues.

Any reduction in reimbursement from Medicare or other government programs

the United States there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system

that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities or affect our

ability to profitably sell any product candidates for which we obtain marketing approval.

Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act,

among other things, imposes a significant annual fee on companies that manufacture or import branded prescription drug products.

contains substantial provisions intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending,

enhance remedies against healthcare fraud and abuse, add new transparency requirements for the healthcare and health insurance industries,

impose new taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms, any of which

could negatively impact our business.

We expect that the Affordable Care Act, as well as other healthcare reform measures that have been

and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that

we receive for any approved product, and could negatively impact our future revenues.

Any reduction in reimbursement from Medicare or

other government programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures

or other healthcare reforms may compromise our ability to generate revenue, attain profitability or commercialize our products.

if we are able to commercialize our products, the products may not receive coverage and adequate reimbursement from third-party payors,

which could harm our business.

availability of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments.

Sales of our products, if approved, will depend substantially on the extent to which the costs of these products will be paid by health

maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration

authorities, private health coverage insurers and other third-party payors.

If reimbursement is not available, or is available only to

limited levels, we may not be able to successfully commercialize our products.

Even if coverage is provided, the approved reimbursement

amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, established

the Medicare Part D program and provided authority for limiting the number of drugs that will be covered in any therapeutic class thereunder.

The Medicare Modernization Act, including its cost reduction initiatives, could decrease the coverage and reimbursement rate that we

receive for any of our approved products.

Furthermore, private payors often follow Medicare coverage policies and payment limitations

in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from the Medicare Modernization Act

may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare

reforms may compromise our ability to generate revenue, attain profitability or commercialize our products.

if we are able to commercialize our products, the products may not receive coverage and adequate reimbursement from third-party

payors, which could harm our business.

availability of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive

Sales of our products, if approved, will depend substantially on the extent to which the costs of these products will

be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by

government health administration authorities, private health coverage insurers and other third-party payors.

If reimbursement

is not available, or is available only to limited levels, we may not be able to successfully commercialize our products.

if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing

sufficient to realize a sufficient return on our investment.

the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act,

established the Medicare Part D program and provided authority for limiting the number of drugs that will be covered in any therapeutic

class thereunder.

The Medicare Modernization Act, including its cost reduction initiatives, could decrease the coverage and reimbursement

rate that we receive for any of our approved products.

Furthermore, private payors often follow Medicare coverage policies and

payment limitations in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from the

Medicare Modernization Act may result in a similar reduction in payments from private payors.

is significant uncertainty related to the insurance coverage and reimbursement of newly approved products.

In the United States,

the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services

(CMS), an agency within the U.S.

Department of Health and Human Services (HHS), as CMS decides whether and to what extent a new

medicine will be covered and reimbursed under Medicare.

In the United States, the

principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services (CMS),

an agency within the U.S.

Department of Health and Human Services (HHS), as CMS decides whether and to what extent a new medicine will

be covered and reimbursed under Medicare.

Private payors tend to follow CMS to a substantial degree.

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For example, CMS could initiate a National Coverage Determination

administrative procedure, by which the agency determines which uses of a therapeutic product would and would not be reimbursable

under Medicare.

This determination process can be lengthy, thereby creating a long period during which the future reimbursement

for a particular product may be uncertain.

administrative procedure, by which the agency determines which uses of a therapeutic product would and would not be reimbursable under

This determination process can be lengthy, thereby creating a long period during which the future reimbursement for a particular

product may be uncertain.

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

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

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

In addition, there can

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

Certain countries allow companies to fix their own prices for medicines, but monitor and control company profits.

economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after

reimbursement has been obtained.

Reference pricing used by various European Union member states and parallel distribution, or

arbitrage between low-priced and high-priced member states, can further reduce prices.

In some countries, we or our collaborators

may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to

other available therapies in order to obtain or maintain reimbursement or pricing approval.

Publication of discounts by third-party

payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and

other countries.

If reimbursement of any product candidate approved for marketing is unavailable or limited in scope or amount,

or if pricing is set at unsatisfactory levels, our business, financial condition, results of operations or prospects could be

adversely affected.

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

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

In addition, there can be considerable pressure

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

Certain countries

allow companies to fix their own prices for medicines, but monitor and control company profits.

Political, economic and regulatory developments

may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.

Reference pricing

used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states,

can further reduce prices.

In some countries, we or our collaborators may be required to conduct a clinical trial or other studies that

compare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement or

pricing approval.

Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement

levels within the country of publication and other countries.

If reimbursement of any product candidate approved for marketing is unavailable

or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business, financial condition, results of operations

or prospects could be adversely affected.

relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare

laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and

diminished profits and future earnings.

providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates

for which we obtain marketing approval.

Our future arrangements with third-party payors and customers may expose us to broadly

applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements

and relationships through which we market, sell and distribute our products for which we obtain marketing approval.

As a pharmaceutical

company, 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.

Restrictions under applicable federal and state healthcare laws and regulations

that may affect our ability to operate include the following:

federal healthcare Anti-Kickback Statute impacts our marketing practices, educational programs, pricing policies and

relationships with healthcare providers or other entities, by prohibiting, among other things, persons from knowingly and willfully

soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or

in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for

which payment may be made under a federal healthcare program such as Medicare and Medicaid;

federal civil and criminal false claims laws and civil monetary penalty laws impose criminal and civil penalties, including through

civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented,

to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent (including

through impermissible promotion of our products for off-label uses) or making a false statement or record to avoid, decrease or

conceal an obligation to pay money to the federal government;

federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), imposes criminal and civil liability for

executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and

willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the

delivery of or payment for healthcare benefits, items or services;

HIPAA, and the rules and regulations promulgated thereunder, establish federal standards for maintaining the privacy and security

of certain patient health information known as Protected Health Information (PHI).

As amended by the Health Information Technology

for Economic and Clinical Health Act (HITECH), HIPAA establishes federal standards for administrative, technical and physical

safeguards relevant to the electronic transmission of PHI and imposes notification obligations in the event of a breach of the

privacy or security of PHI.

laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished

profits and future earnings.

providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for

which we obtain marketing approval.

Our future arrangements with third-party payors and customers may expose us to broadly applicable

fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships

through which we market, sell and distribute our products for which we obtain marketing approval.

As a pharmaceutical company, 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.

Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate

include the following:

federal healthcare Anti-Kickback Statute impacts our marketing practices, educational programs, pricing policies and relationships

with healthcare providers or other entities, by prohibiting, among other things, persons from knowingly and willfully soliciting, offering,

receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral

of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal

healthcare program such as Medicare and Medicaid;

federal civil and criminal false claims laws and civil monetary penalty laws impose criminal and civil penalties, including through civil

whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal

government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent (including through impermissible

promotion of our products for off-label uses) or making a false statement or record to avoid, decrease or conceal an obligation to pay

money to the federal government;

federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), imposes criminal and civil liability for executing

a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying,

concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for

healthcare benefits, items or services;

HIPAA, and the rules and regulations promulgated thereunder, establish federal standards for maintaining the privacy and security of

certain patient health information known as Protected Health Information (PHI).

As amended by the Health Information Technology for Economic

and Clinical Health Act (HITECH), HIPAA establishes federal standards for administrative, technical and physical safeguards relevant

to the electronic transmission of PHI and imposes notification obligations in the event of a breach of the privacy or security of PHI.

In addition to adhering to the requirements of HIPAA, entities considered “covered entities”

under HIPAA (such as health plans, healthcare clearinghouses, and certain healthcare providers) are required to obtain assurances

in the form of a written contract from certain business associates to which they transmit PHI (or who create, receive, transmit

or maintain PHI on the covered entity’s behalf) to ensure that the privacy and security of such information is maintained

in accordance with HIPAA requirements.

HITECH made changes to HIPAA including extending the reach of HIPAA beyond HIPAA covered

entities to business associates, increased the maximum civil monetary penalties for violations of HIPAA, and granted enforcement

authority to state attorneys general.

Failure to comply with HIPAA/HITECH can result in civil and criminal liability, including

civil monetary penalties, fines and imprisonment;

federal physician payment transparency requirements under the Affordable Care Act require applicable manufacturers of

covered drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers

of value to physicians, certain other healthcare providers, and teaching hospitals, and ownership and investment interests held

by physicians and certain other healthcare providers and their immediate family members and applicable group purchasing organizations;

under HIPAA (such as health

plans, healthcare clearinghouses, and certain healthcare providers) are required to obtain assurances in the form of a written contract

from certain business associates to which they transmit PHI (or who create, receive, transmit or maintain PHI on the covered entity’s

behalf) to ensure that the privacy and security of such information is maintained in accordance with HIPAA requirements.

changes to HIPAA including extending the reach of HIPAA beyond HIPAA covered entities to business associates, increased the maximum civil

monetary penalties for violations of HIPAA, and granted enforcement authority to state attorneys general.

Failure to comply with HIPAA/HITECH

can result in civil and criminal liability, including civil monetary penalties, fines and imprisonment;

federal physician payment transparency requirements under the Affordable Care Act require applicable manufacturers of covered

drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers of value

to physicians, certain other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians

and certain other healthcare providers and their immediate family members and applicable group purchasing organizations;

analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements

and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines

and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information

related to payments and other transfers of value to physicians and certain other healthcare providers or marketing expenditures.

Additionally, state and foreign laws govern the privacy and security of health information in certain circumstances, many of which

differ from each other in significant ways and often are not preempted by HIPAA/HITECH, thus complicating compliance efforts.

state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the

relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to

payments and other transfers of value to physicians and certain other healthcare providers or marketing expenditures.

Additionally, state

and foreign laws govern the privacy and security of health information in certain circumstances, many of which differ from each other

in significant ways and often are not preempted by HIPAA/HITECH, thus complicating compliance efforts.

laws and regulations exist in the countries within the European Economic Area (EEA).

Although such laws are partially based upon

European Union law, they may vary from country to country.

Healthcare specific, as well as general European Union and national

laws, regulations and industry codes constrain, for example, our interactions with government officials and healthcare practitioners,

and the handling of healthcare data.

Although such laws are partially based upon European

Union law, they may vary from country to country.

Healthcare specific, as well as general European Union and national laws, regulations

and industry codes constrain, for example, our interactions with government officials and healthcare practitioners, and the handling

of healthcare data.

Non-compliance with any of these laws or regulations could lead to criminal or civil liability.

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substantial costs.

It is possible that governmental authorities will conclude that our business practices may not comply with

current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us,

we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government

funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

If any physicians

or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable

laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare

It is possible that governmental authorities will conclude that our business practices may not comply with current

or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.

If our operations

are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant

civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such

as Medicare and Medicaid, and the curtailment or restructuring of our operations.

If any physicians or other healthcare providers or

entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal,

civil or administrative sanctions, including exclusions from government funded healthcare programs.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries

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Our internal control policies

and procedures may not protect us from reckless or negligent acts committed by our employees, future distributors, licensees or

Violations of these laws, or allegations of such violations, could result in fines, penalties or prosecution and have

a negative impact on our business, results of operations and reputation.

products, if approved, may be unable to achieve broad market acceptance and, consequently, limit our ability to generate revenue

from new products.

when product development is successful and regulatory approval has been obtained, our ability to generate significant revenue

depends on the acceptance of our products by physicians and patients.

The market acceptance of any product depends on a number

of factors, including the indication statement and warnings approved by regulatory authorities in the product label, continued

demonstration of efficacy and safety in commercial use, physicians’

willingness to prescribe the product, reimbursement

from third-party payors such as government healthcare systems and insurance companies, the price of the product, the nature of

any post-approval risk management plans mandated by regulatory authorities, competition, and marketing and distribution support.

Any factors preventing or limiting the market acceptance of our product candidates could have a material adverse effect on our

business, results of operations and financial condition.

we receive regulatory approvals, we intend to market our products in multiple jurisdictions where we have limited or no operating

experience and may be subject to increased business and economic risks that could affect our financial results.

we receive regulatory approvals, we plan to market our products in jurisdictions where we have limited or no experience in marketing,

developing and distributing our products.

Certain markets have substantial legal and regulatory complexities that we may not have

experience navigating.

We are subject to a variety of risks inherent in doing business internationally, including risks related

to the legal and regulatory environment in non-U.S.

jurisdictions, including with respect to privacy and data security, trade

control laws and unexpected changes in laws, regulatory requirements and enforcement, as well as risks related to fluctuations

in currency exchange rates and political, social and economic instability in foreign countries.

If we are unable to manage our

international operations successfully, our financial results could be adversely affected.

addition, controlled substance legislation may differ in other jurisdictions and could restrict our ability to market our products

internationally.

Most countries are parties to the Single Convention on Narcotic Drugs 1961, which governs international trade

and domestic control of narcotic substances, including Cannabis extracts.

Countries may interpret and implement their treaty

obligations in a way that creates a legal obstacle to us obtaining marketing approval for our products in those countries.

countries may not be willing or able to amend or otherwise modify their laws and regulations to permit our products to be marketed,

or achieving such amendments to the laws and regulations may take a prolonged period of time.

We would be unable to market our

products in countries with such obstacles in the near future or perhaps at all without modification to laws and regulations.

and procedures may not protect us from reckless or negligent acts committed by our employees, future distributors, licensees or agents.

Violations of these laws, or allegations of such violations, could result in fines, penalties or prosecution and have a negative impact

on our business, results of operations and reputation.

products, if approved, may be unable to achieve broad market acceptance and, consequently, limit our ability to generate revenue from

new products.

when product development is successful and regulatory approval has been obtained, our ability to generate significant revenue depends

on the acceptance of our products by physicians and patients.

The market acceptance of any product depends on a number of factors, including

the indication statement and warnings approved by regulatory authorities in the product label, continued demonstration of efficacy and

safety in commercial use, physicians’

willingness to prescribe the product, reimbursement from third-party payors such as government

healthcare systems and insurance companies, the price of the product, the nature of any post-approval risk management plans mandated

by regulatory authorities, competition, and marketing and distribution support.

Any factor preventing or limiting the market acceptance

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

we receive regulatory approvals, we may market our products in multiple jurisdictions where we have limited or no operating experience

and may be subject to increased business and economic risks that could affect our financial results.

we receive regulatory approvals, we may market our products in jurisdictions where we have limited or no experience in marketing, developing

and distributing our products.

Certain markets have substantial legal and regulatory complexities that we may not have experience navigating.

We are subject to a variety of risks inherent in doing business internationally, including risks related to the legal and regulatory

environment in non-U.S.

jurisdictions, including with respect to privacy and data security, trade control laws and unexpected changes

in laws, regulatory requirements and enforcement, as well as risks related to fluctuations in currency exchange rates and political,

social and economic instability in foreign countries.

If we are unable to manage our international operations successfully, our financial

results could be adversely affected.

addition, controlled substance legislation may differ in other jurisdictions and could restrict our ability to market our products internationally.

Most countries are parties to the Single Convention on Narcotic Drugs 1961, which governs international trade and domestic control of

narcotic substances, including cannabis extracts.

Countries may interpret and implement their treaty obligations in a way that

creates a legal obstacle to us obtaining marketing approval for our products in those countries.

These countries may not be willing or

able to amend or otherwise modify their laws and regulations to permit our products to be marketed, or the approval of such amendments

to the laws and regulations may take a prolonged period of time.

We would be unable to market our products in countries with such obstacles

in the near future or perhaps at all without modification to laws and regulations.

products will contain controlled substances, the use of which may generate public controversy.

our products will contain controlled substances, their regulatory approval may generate public controversy.

Political and social

pressures and adverse publicity could lead to delays in approval of, and increased expenses for, our products.

These pressures

could also limit or restrict the introduction and marketing of our products.

Adverse publicity from Cannabis misuse or

adverse side effects from Cannabis or other cannabinoid products may adversely affect the commercial success or market

penetration achievable by our products.

The nature of our business attracts a high level of public and media interest, and in

the event of any resultant adverse publicity, our reputation may be harmed.

we fail to protect or enforce our intellectual property rights or secure rights to the intellectual property of others, the value

of our intellectual property rights would diminish.

Political and social pressures

and adverse publicity could lead to delays in approval of, and increased expenses for, our products.

These pressures could also limit

or restrict the introduction and marketing of our products.

Adverse publicity from cannabis misuse or adverse side effects from

cannabis or other cannabinoid products may adversely affect the commercial success or market penetration achievable by our products.

The nature of our business attracts a high level of public and media interest, and in the event of any resultant adverse publicity, our

reputation may be harmed.

we fail to protect or enforce our intellectual property rights or secure rights to the intellectual property of others, the value of

our intellectual property rights would diminish.

expect to continue to develop our intellectual property portfolio as we increase our research and development efforts.

be unable to obtain patents or other protection for any technologies we develop, because such technologies are not coverable by

patents or other forms of registered intellectual property, because third parties file patents covering the same claims earlier

than we do, or for other reasons.

If we are able to obtain issued patents, we cannot predict the degree and range of protection

any patents will afford us against competitors, including whether third parties will find ways to invalidate or otherwise circumvent

Others may obtain patents claiming aspects similar to those covered by our patents and patent applications, which

may limit the efficacy of the protections afforded by any patents we may obtain.

success will also depend upon the skills, knowledge and experience of our personnel, our consultants and advisors as well as our

licensors and contractors.

To help protect any proprietary know-how we develop and any inventions for which patents may be unobtainable

or difficult to obtain, we expect to rely on trade secret protection and confidentiality agreements.

To this end, we expect to

require our employees, consultants, advisors and contractors to enter into agreements which prohibit the disclosure of confidential

information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions

important to our business.

These agreements may not provide adequate protection for our trade secrets, know-how or other proprietary

information in the event of any unauthorized use or disclosure or the lawful development by others of such information.

of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other

proprietary rights would be significantly impaired and our business and competitive position would suffer.

we infringe the rights of third parties we could be prevented from selling products and forced to pay damages or defend against

We may be unable

to obtain patents or other protection for any technologies we develop, because such technologies are not coverable by patents or other

forms of registered intellectual property, because third parties file patents covering the same claims earlier than we do, or for other

If we are able to obtain issued patents, we cannot predict the degree and range of protection any patents will afford us against

competitors, including whether third parties will find ways to invalidate or otherwise circumvent our patents.

Others may obtain patents

claiming aspects similar to those covered by our patents and patent applications, which may limit the efficacy of the protections afforded

by any patents we may obtain.

success will also depend upon the skills, knowledge and experience of our personnel, our consultants and advisors as well as our licensors

and contractors.

To help protect any proprietary know-how we develop and any inventions for which patents may be unobtainable or difficult

to obtain, we expect to rely on trade secret protection and confidentiality agreements.

To this end, we expect to require our employees,

consultants, advisors and contractors to enter into agreements which prohibit the disclosure of confidential information and, where applicable,

require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.

These agreements

may not provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized

use or disclosure or the lawful development by others of such information.

If any of our trade secrets, know-how or other proprietary

information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our

business and competitive position would suffer.

we infringe the rights of third parties we could be prevented from selling products and forced to pay damages or defend against litigation.

our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial

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using the subject matter claimed in the patents held by others;

litigation or administrative proceedings, which may be costly whether we win or lose, and which could result in a substantial

diversion of our valuable management resources.

of these outcomes could divert management attention and other resources and could significantly harm our operations and financial

litigation or administrative proceedings, which may be costly whether we win or lose, and which could result in a substantial diversion

of our valuable management resources.

of these outcomes could divert management attention and other resources and could significantly harm our operations and financial condition.

use hazardous materials in our business.

Any claims relating to improper handling, storage or disposal of these materials could

be time consuming and costly.

research and development efforts and our manufacturing processes may involve the controlled storage, use and disposal of certain

hazardous materials and waste products.

We and our suppliers and other collaborators are subject to federal, state and local regulations

governing the use, manufacture, storage, handling and disposal of materials and waste products.

Even if we and these suppliers

and collaborators comply with the standards prescribed by law and regulation, the risk of accidental contamination or injury from

hazardous materials cannot be eliminated.

We may not be able to obtain and maintain insurance on acceptable terms, or at all,

to cover costs associated with any such accidental contamination.

In the event of such an accident, we could be held liable for

any damages that result, and any liability could exceed the limits or fall outside the coverage of any insurance we may obtain

and exceed our financial resources.

We may incur significant costs to comply with current or future environmental laws and regulations.

may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability

Any claims relating to improper handling, storage or disposal of these materials could be time

consuming and costly.

research and development efforts and our manufacturing processes may involve the controlled storage, use and disposal of certain hazardous

materials and waste products.

We and our suppliers and other collaborators are subject to federal, state and local regulations governing

the use, manufacture, storage, handling and disposal of materials and waste products.

Even if we and these suppliers and collaborators

comply with the standards prescribed by law and regulation, the risk of accidental contamination or injury from hazardous materials cannot

be eliminated.

We may not be able to obtain and maintain insurance on acceptable terms, or at all, to cover costs associated with any

such accidental contamination.

In the event of such an accident, we could be held liable for any damages that result, and any liability

could exceed the limits or fall outside the coverage of any insurance we may obtain and exceed our financial resources.

significant costs to comply with current or future environmental laws and regulations.

may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.

we are able to develop and commercialize our proposed products, we could become subject to product liability claims.

not able to successfully defend against such claims, we may incur substantial liabilities or be required to limit commercialization

of our proposed products.

If we are unable to obtain sufficient product liability insurance at an acceptable cost to protect against

potential product liability, claims could prevent or inhibit the commercialization of products we develop, alone or with corporate

collaborators.

Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such

indemnification may not be available or adequate should any claim arise.

If we are not able

to successfully defend against such claims, we may incur substantial liabilities or be required to limit commercialization of our proposed

If we are unable to obtain sufficient product liability insurance at an acceptable cost to protect against potential product

liability, claims could prevent or inhibit the commercialization of products we develop, alone or with collaborators.

if our agreements with any future collaborators entitle us to indemnification against losses, such indemnification may not

be available or adequate should any claim arise.

regulation of our products could increase our costs, prevent us from offering certain products or cause us to recall products.

processing, formulation, manufacturing, packaging, labeling, advertising and distribution of our products is subject to regulation

by one or more federal agencies, and various agencies of the states and localities in which our products are manufactured and

These government regulatory agencies may attempt to regulate any of our products that fall within their jurisdiction.

regulatory agencies may not accept the evidence of safety for any new ingredients that we may want to market, may determine that

a particular product or product ingredient presents an unacceptable health risk, may determine that a particular statement of

nutritional support that we want to use is an unacceptable drug claim or an unauthorized version of a food “health claim,”

may determine that a particular product is an unapproved new drug, or may determine that particular claims are not adequately

supported by available scientific evidence.

Such a determination would prevent us from marketing particular products or using

certain statements of nutritional support on our products.

We also may be unable to disseminate third-party literature that supports

our products if the third-party literature fails to satisfy certain requirements.

processing, formulation, manufacturing, packaging, labeling, advertising and distribution of our products is subject to regulation by

one or more federal agencies, and various agencies of the states and localities in which our products are manufactured and sold.

government regulatory agencies may attempt to regulate any of our products that fall within their jurisdiction.

Such regulatory agencies

may not accept the evidence of safety for any new ingredients that we may want to market, may determine that a particular product or

product ingredient presents an unacceptable health risk, may determine that a particular statement of nutritional support that we want

to use is an unacceptable drug claim or an unauthorized version of a food “health claim,”

may determine that a particular

product is an unapproved new drug, or may determine that particular claims are not adequately supported by available scientific evidence.

Such a determination would prevent us from marketing particular products or using certain statements of nutritional support on our products.

We also may be unable to disseminate third-party literature that supports our products if the third-party literature fails to satisfy

certain requirements.

addition, a government regulatory agency could require us to remove a particular product from the market.

Any product recall or

removal would result in additional costs to us, including lost revenues from any products that we are required to remove from

the market, any of which could be material.

Any such product recalls or removals could lead to liability, substantial costs and

reduced growth prospects.

any of our products contain plants, herbs or other substances not recognized as safe by a government regulatory agency, we may

not be able to market or sell such products in that jurisdiction.

Any such prohibition could materially adversely affect our results

of operations and financial condition.

Further, if more stringent statutes are enacted, or if more stringent regulations are promulgated,

we may not be able to comply with such statutes or regulations without incurring substantial expense, or at all.

are not able to predict the nature of future laws, regulations, repeals or interpretations or to predict the effect additional

governmental regulation, if and when it occurs, would have on our business in the future.

Such developments could, however, require

reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated,

additional record-keeping requirements, increased documentation of the properties of certain products, additional or different

labeling, additional scientific substantiation, or other new requirements.

Any such developments could involve substantial additional

costs to us, which we may not be able to fund, and could have a material adverse effect on our business operations and financial

Any product recall or removal

would result in additional costs to us, including lost revenues from any products that we are required to remove from the market, any

of which could be material.

Any such product recalls or removals could lead to liability, substantial costs and reduced growth prospects.

any of our products contain plants, herbs or other substances not recognized as safe by a government regulatory agency, we may not be

able to market or sell such products in that jurisdiction.

Any such prohibition could materially adversely affect our results of operations

and financial condition.

Further, if more stringent statutes are enacted, or if more stringent regulations are promulgated, we may not

be able to comply with such statutes or regulations without incurring substantial expense, or at all.

are not able to predict the nature of future laws, regulations, repeals or interpretations or to predict the effect additional governmental

regulation, if and when it occurs, would have on our business in the future.

Such developments could, however, require reformulation

of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping

requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific

substantiation, or other new requirements.

Any such developments could involve substantial additional costs to us, which we may not be

able to fund, and could have a material adverse effect on our business operations and financial condition.

Related to our Common Stock

common stock is illiquid and the price of our common stock may be negatively impacted by any negative operational results and

factors unrelated to our operations.

November 2018, our common stock was quoted on the OTCQB.

From and after November 21, 2018, our common stock is now trading on

the “grey market,”

where trading is moderated by a broker and done between consenting individuals.

common stock is illiquid and the price of our common stock may be negatively impacted by any negative operational results and factors

unrelated to our operations.

common stock is quoted on the OTC and trading on the OTC is frequently highly volatile, with low trading volume.

We have experienced

significant fluctuations in the price and trading volume of our common stock, which may be caused by factors relating to our business

and operational results and/or factors unrelated to our company, including general market conditions.

A sufficient market for

our common stock may never develop, in which case it could be difficult for stockholders to sell their stock.

The market price

of our common stock could continue to fluctuate substantially and there can be no assurance that our common stock will ever resume

trading on the OTCQB or on any other exchange.

and operational results and/or factors unrelated to the Company, including general market conditions.

An active market for our common

stock may never develop, in which case it could be difficult for stockholders to sell their common stock.

The market price of

our common stock could continue to fluctuate substantially.

of our stock is restricted by the SEC’s “penny stock”

regulations and certain FINRA rules, which may limit a

stockholder’s ability to buy and sell our common stock.

regulations and certain FINRA rules, which may limit a stockholder’s

ability to buy and sell our common stock.

securities are covered by certain “penny stock”

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who sell low-priced securities to persons other than established customers and accredited investors.

For transactions covered

by these rules, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s

written consent to the transaction prior to sale, among other things.

These rules may affect the ability of broker-dealers and

holders to sell our common stock and may negatively impact the level of trading activity for our common stock.

To the extent our

common stock remains subject to the penny stock regulations, such regulations may discourage investor interest in and adversely

affect the market liquidity of our common stock.

Financial Industry Regulatory Authority (FINRA) has adopted rules that require a broker-dealer, when recommending an investment

to a customer, to have reasonable grounds for believing that the investment is suitable for that customer.

Prior to recommending

speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain

information about the customer’s financial status, tax status, investment objectives and other information.

Under interpretations

of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for

at least some customers.

FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our

common stock, which may limit an investor’s ability to buy and sell our stock and could have an adverse effect on the market

for our shares.

we issue and sell additional shares of our common stock in the future, our existing stockholders will be diluted and our stock

price could fall.

articles of incorporation authorize the issuance of up to 1,000,000,000 shares of common stock, of which, as of June 26, 2020,

50,840,147 were outstanding and 11,870,760 were reserved for issuance under our stock incentive plan or outstanding options,

warrants or other convertible securities.

As a result, we have a large number of shares of common stock that are authorized for

issuance and are not outstanding or otherwise reserved, and could be issued at the discretion of our Board of Directors.

to seek additional financing in the future in order to fund our operations, and if we issue additional shares of common stock

or securities convertible into common stock, our existing stockholders will be diluted.

Our Board of Directors may also choose

to issue shares of our common stock or securities convertible into or exercisable for our common stock to acquire assets or companies,

for compensation to employees, officers, directors, consultants and advisors, to fund capital expenditures and to enter into strategic

partnerships.

Additionally, shares of common stock could be issued for anti-takeover purposes or to delay or prevent changes in

control or management of the Company.

Our Board of Directors may determine to issue shares of our common stock on terms that our

stockholders do not believe enhance stockholder value, or that may ultimately have an adverse effect on our business or the trading

price of our common stock.

Further, the issuance of any such shares may cause further dilution to the ownership interest of our

current stockholders, reduce the book value per share of our common stock and may contribute to a reduction in the market price

for our common stock.

principal stockholders and management own a significant percentage of our stock and will be able to exert significant control

over matters subject to stockholder approval.

of our executive officers, directors and large stockholders own a significant percentage of our outstanding capital stock.

of June 26, 2020, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates

beneficially owned approximately 38.3% of our outstanding shares of common stock.

Accordingly, our directors, executive officers

and large stockholders have significant influence over our affairs due to their substantial ownership coupled with their positions

on our management team and have substantial voting power to approve matters requiring the approval of our stockholders.

these stockholders may be able to control or influence elections of directors, amendments of our organizational documents, or

approval of any merger, sale of assets, or other major corporate transaction.

For transactions covered by these

rules, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written

consent to the transaction prior to sale, among other things.

These rules may affect the ability of broker-dealers and holders to sell

our common stock and may negatively impact the level of trading activity for our common stock.

To the extent our common stock remains

subject to the penny stock regulations, such regulations may discourage investor interest in and adversely affect the market liquidity

of our common stock.

Financial Industry Regulatory Authority (FINRA) has adopted rules that require a broker-dealer, when recommending an investment to a

customer, to have reasonable grounds for believing that the investment is suitable for that customer.

Prior to recommending speculative

low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the

customer’s financial status, tax status, investment objectives and other information.

Under interpretations of these rules, FINRA

believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.

requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit an investor’s

ability to buy and sell our common stock and could have an adverse effect on the market for our shares.

we issue and sell additional shares of our common stock in the future, our existing stockholders will be diluted and our stock price

articles of incorporation authorize the issuance of up to 1,000,000,000 shares of common stock, of which, as of May 18, 2021,

50,840,147 shares were outstanding and 13,204,504 shares were reserved for issuance under our stock incentive plan or other

outstanding options or warrants.

As a result, we have a large number of shares of common stock that are authorized for issuance and are

not outstanding or otherwise reserved, and could be issued at the discretion of our Board of Directors.

We expect to seek additional

financing in the future in order to fund our operations, and if we issue additional shares of common stock or securities convertible

into common stock, our existing stockholders will be diluted.

Our Board of Directors may also choose to issue shares of our common stock

or securities convertible into or exercisable for our common stock to acquire assets or companies, for compensation to employees, officers,

directors, consultants and advisors, to fund capital expenditures and to enter into strategic partnerships.

Additionally, shares of common

stock could be issued for anti-takeover purposes or to delay or prevent changes in control or management of the Company.

Directors may determine to issue shares of our common stock on terms that our stockholders do not believe enhance stockholder value,

or that may ultimately have an adverse effect on our business or the trading price of our common stock.

Further, the issuance of any

such shares may cause further dilution to the ownership interest of our current stockholders, reduce the book value per share of our

common stock and may contribute to a reduction in the market price for our common stock.

principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters

subject to stockholder approval.

of our executive officers, directors and stockholders own a significant percentage of our outstanding capital stock.

As of May 18,

2021, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially

owned approximately 40.4% of our outstanding shares of common stock.

Accordingly, our directors, executive officers and certain stockholders

have significant influence over our affairs due to their substantial stock ownership coupled with their positions on our management team.

For example, these stockholders may be able to control or influence elections of directors, amendments of our organizational documents,

or approval of any merger, sale of assets, or other major corporate transaction.

This concentration of ownership may prevent or discourage

unsolicited acquisition proposals or offers for our common stock that some of our stockholders may believe is in their best interest.

are subject to the reporting requirements of federal securities laws, compliance with which involves significant time, expense

and expertise.

are a public reporting company in the United States, and, accordingly, are subject to the information and reporting requirements

of the Exchange Act and other federal securities laws, including the obligations imposed by the Sarbanes-Oxley Act of 2002.

ongoing costs associated with preparing and filing annual, quarterly and current reports, proxy statements and other information

with the SEC in the ordinary course, as well as preparing and filing audited financial statements, are significant and may cause

unexpected increases in operational expenses.

Our present management team is relatively small and may be unable to manage the

ongoing costs and compliance effectively.

It may be time consuming, difficult and costly for us to hire additional financial reporting,

accounting and other finance staff in order to build and retain a management team with adequate expertise and experience in operating

a public company.

are subject to the reporting requirements of federal securities laws, compliance with which involves significant time, expense and expertise.

are a public reporting company and are subject to the information and reporting requirements of the Exchange Act and other federal securities

laws, including the obligations imposed by the Sarbanes-Oxley Act of 2002.

The ongoing costs associated with preparing and filing annual,

quarterly and current reports, proxy statements and other information with the SEC in the ordinary course, as well as preparing and filing

audited financial statements, are significant and may cause unexpected increases in operational expenses.

Our present management team

is relatively small and may be unable to manage the ongoing costs and compliance effectively.

It may be time consuming, difficult and

costly for us to hire additional financial reporting, accounting and other finance staff in order to build and retain a management team

with adequate expertise and experience in operating a public company.

have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.

continued operation and expansion of our business will require substantial funding.

Investors seeking cash dividends in the foreseeable

future should not purchase our common stock.

We have paid no cash dividends on any of our capital stock to date and we currently

intend to retain our available cash to fund the development and growth of our business.

Any determination to pay dividends in

the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition,

contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

not anticipate paying any cash dividends on our common stock in the foreseeable future.

We have paid no cash dividends on any of our capital

stock to date and we currently intend to retain our available cash to fund the development and growth of our business.

Any determination

to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, financial

condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Any return to stockholders will therefore

2 unchanged sentences

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