EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

(Signature Page)

 

NEWGEN BIOPHARMA CORP.

506 2ND AVENUE, SUITE 1400

SEATTLE, WA 98104

 

Ladies & Gentlemen:

 

The undersigned (the “Investor”), hereby confirms its agreement with you as
follows:

 

1. This Securities Purchase Agreement, including the Terms and Conditions set
forth in Annex I (the “Terms and Conditions”), the Risk Factors set forth in
Annex II (the “Risk Factors”), and exhibits, which are all attached hereto and
incorporated herein by reference as if fully set forth herein (the “Agreement”),
is made as of the date set forth below between NewGen BioPharma Corp., a Nevada
corporation (the “Company”), and the Investor.

 

2. The Company has authorized the sale and issuance of up to 2,000,000 Units of
the Company securities to certain Investors in a private placement (the
“Offering”). Each Unit each consists of 1 share of the Company’s common stock,
$0.001 par value (the “Shares”), and warrants in the form attached hereto as
Exhibit A (the “Warrants”) exercisable to purchase 1 share of common stock of
the Company at an exercise price of $1.00 per share, exercisable over twelve
(12) months (the “Warrant Shares”) and in accordance with the terms set forth in
the Warrants.

 

3. Pursuant to the Terms and Conditions, the Company and the Investor agree that
the Investor will purchase from the Company and the Company will issue and sell
to the Investor _____________ Units, for a purchase price of $1.00 per Unit, for
an aggregate purchase price of $___________ consisting of ___________ Shares and
___________ Warrants to purchase shares of common stock of the Company. Unless
otherwise requested by the Investor, certificates representing the Common Stock
purchased by the Investor will be registered in the Investor’s name and address
as set forth below.

 

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

 

Date: __________, 20__

Investor:

 

 

 

 

 

By:

 

 

Print Name:

 

 

Title:

 

 

 

 

 

Address:

 

 

 

 

 

 

Phone:

 

 

Fax:

 

 

 

 

Social Security Number or TIN (if applicable):

 

 

 

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ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF UNITS

 

Investment in the Company involves a high degree of risk. Investor should
carefully consider the risk factors set forth in Annex II in addition to the
other information set forth in this Annex I before purchasing securities of the
Company.

 

1. Authorization and Sale of the Units. Subject to these Terms and Conditions,
the Company has authorized the sale of up to 2,000,000 units (“Units”) of the
Company at $1.00 per Unit, each consisting of 1 share of the Company’s common
stock, $0.001 par value (the “Shares”), and a warrant (the “Warrants”)
exercisable to purchase 1 share of common stock of the Company at an exercise
price of $1.00 per share, exercisable over an twelve (12) month period (the
“Warrant Shares”) and in accordance with the terms set forth in the Warrants
(the “Shares” and “Warrants,” collectively, a “Unit”). The Company reserves the
right to increase or decrease this number. All references to currency in this
Securities Purchase Agreement shall refer to the lawful currency of the United
States of America.

 

2. Agreement to Sell and Purchase the Units.

 

2.1 At the Closing (as defined in Section 3 of this Annex I), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Units, if applicable,
set forth in Section 3 of the Signature Page to the Securities Purchase
Agreement at the purchase price set forth thereon.

 

2.2 The Company may enter into the same form of Securities Purchase Agreement
(“Agreement”), including these Terms and Conditions, with other Investors and
expects to complete sales of subsequent Units to other Investors.

 

3. Delivery of the Shares and Warrants at Closing. The completion of the
purchase and sale of the Units (the “Closing”) shall occur at the offices of the
Company upon receipt of cleared funds and fully executed documents for the
purchase of the Units on each date set by the Company, provided that a final
closing shall occur no later than _____________, 2017 which date may be extended
at the sole discretion of the Company. Within seven (7) days after each Closing,
the Company shall deliver to the Investor one or more stock certificates
representing the number of Shares and a Warrant representing the number of
shares of common stock as set forth in Section 3 of the Signature Page to the
Securities Purchase Agreement, each such certificate, certificates or warrant to
be registered in the name of the Investor, as set forth in Section 3 of the
Signature Page to the Securities Purchase Agreement.

 

The Company’s obligation to issue the Shares and Warrants to the Investor shall
be subject to the following conditions, any one or more of which may be waived
by the Company: (a) receipt by the Company of a certified or official bank check
or wire transfer of funds in the full amount of the purchase price for the Units
being purchased hereunder as set forth in Section 3 of Signature Page to the
Securities Purchase Agreement; and (b) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing.

 

The Investor’s obligation to purchase the Units shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(1) the representations and warranties of the Company set forth herein shall be
true and correct as of the Closing Date in all material respects and (2) the
Investor shall have received such documents as such Investor shall reasonably
have requested in connection with its due diligence.

 

4. Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants to, and covenants with, the Investor, as follows:

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4.1 Organization. The Company is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization. The Company has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently contemplated and is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business, properties or operations of the Company (a “Material Adverse Effect”),
and no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.

 

4.2 Due Authorization and Valid Issuance. The Company has all requisite power
and authority to execute, deliver and perform its obligations under the
Agreement, and the Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with their terms,
except as rights to indemnity and contribution may be limited by state or
federal securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Units. The Shares and the shares of Common Stock of the
Company issuable upon exercise of the Warrants being purchased by the Investor
hereunder will, upon issuance and payment therefore pursuant to the terms
hereof, be duly authorized, validly issued, fully-paid and nonassessable.

 

4.3 Non-Contravention. The execution and delivery of the Agreement, the issuance
and sale of the Units under the Agreement, the fulfillment of the terms of the
Agreement and the consummation of the transactions contemplated thereby will not
(A) conflict with or constitute a violation of, or default under, (i) any
material bond, debenture, note or other evidence of indebtedness, lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which it or
its properties are bound, (ii) the charter, by-laws or other organizational
documents of the Company, or (iii) any law, administrative regulation, ordinance
or order of any court or governmental agency, arbitration panel or authority
applicable to the Company or its properties, except in the case of clauses (i)
and (iii) for any such conflicts, violations or defaults which are not
reasonably likely to have a Material Adverse Effect or (B) result in the
creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the material properties or assets of the
Company or an acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any material bond, debenture, note or any other
evidence of indebtedness or any material indenture, mortgage, deed of trust or
any other agreement or instrument to which the Company is a party or by which
any of them is bound or to which any of the material property or assets of the
Company is subject.

 

4.4 Capitalization. As of the date of execution of this Agreement, there are
47,600,000 shares of the Company’s common stock issued and outstanding. Except
as disclosed to the Investor or in documents (the “Exchange Act Documents”)
filed by the Company with the Securities and Exchange Commission (the “SEC”)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
there are no other outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible into or
exchangeable for, any unissued shares of capital stock or other equity interest
in the Company or any contract, commitment, agreement, understanding or
arrangement of any kind to which the Company is a party or of which the Company
has knowledge and relating to the issuance or sale of any capital stock of the
Company, any such convertible or exchangeable securities or any such rights,
warrants or options.

 

4.5 Legal Proceedings. There is no material legal or governmental proceeding
pending or, to the knowledge of the Company, threatened to which the Company is
or may be a party or of which the business or property of the Company is subject
that is not disclosed in the Exchange Act Documents.

 

4.6 No Violations. The Company is not in violation of its charter, bylaws, or
other organizational document, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company, which violation, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect,
or is in default (and there exists no condition which, with the passage of time
or otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company is a party or by which the Company is bound or
by which the properties of the Company are bound, which would be reasonably
likely to have a Material Adverse Effect.

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5. Representations, Warranties and Covenants of the Investor.

 

5.1 The Investor represents and warrants to, and covenants with, the Company
that: (i) the Investor is an “accredited investor” as defined in Rule 501 of
Regulation D under the Securities Act and that the Investor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Units, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Units; (ii) the Investor has
carefully read and fully understands the risks involved with an investment in
the Company including, without limitation, the risks identified on Annex II,
attached hereto, (iii) the Investor is acquiring the number of Units set forth
in Section 3 of the Signature Page to the Securities Purchase Agreement in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Units or any arrangement
or understanding with any other persons regarding the distribution of such
Units; (iv) the Investor will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Units except in compliance
with the Securities Act, applicable state securities laws and the respective
rules and regulations promulgated thereunder; (v) all of the representations
made by the Investor are true, correct and complete as of the date hereof and
will be true, correct and complete as of the Closing Date; and (vi) the Investor
has, in connection with its decision to purchase the number of Units set forth
in Section 3 of the Signature Page to the Securities Purchase Agreement, relied
only upon the Exchange Act Documents and the representations and warranties of
the Company contained herein. There are no suits, pending litigation, or claims
against the undersigned that could materially affect the net worth of the
Investor.

 

5.2 The Investor acknowledges that it has had access to the Exchange Act
Documents and has carefully reviewed the same. The Investor further acknowledges
that the Company has made available to it the opportunity to ask questions of
and receive answers from the Company’s officers and directors concerning the
terms and conditions of this Agreement and the business and financial condition
of the Company, and the Investor has received to its satisfaction, such
information about the business and financial condition of the Company and the
terms and conditions of the Agreement as it has requested. The Investor has
carefully considered the potential risks relating to the Company and a purchase
of the Units, and fully understands that the Units are speculative investments,
which involve a high degree of risk of loss of the Investor’s entire investment.
Among others, the undersigned has carefully considered each of the risks
identified under the caption “Risk Factors” in the Exchange Act Documents and
Annex II.

 

5.3 The Investor acknowledges, represents and agrees that no action has been or
will be taken in any jurisdiction outside the United States by the Company that
would permit an offering of the Units, or possession or distribution of offering
materials in connection with the issuance of the Units, in any jurisdiction
outside the United States where legal action by the Company for that purpose is
required. Investor will comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers Units,
Shares, Warrants or Warrant Shares or has in its possession or distributes any
offering material, in all cases at its own expense.

 

5.4 The Investor hereby covenants with the Company not to make any sale of the
Units, Shares, Warrants or Warrant Shares without complying with the provisions
of this Agreement, and the Investor acknowledges that the certificates
evidencing the Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The overall commitment of the Investor
to investments, which are not readily marketable, is not excessive in view of
the Investor’s net worth and financial circumstances, and any purchase of the
Units will not cause such commitment to become excessive. The Investor is able
to bear the economic risk of an investment in the Units.

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5.5 The Investor further represents and warrants to, and covenants with, the
Company that (i) the Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

5.6 Investor will not use any of the restricted Shares or Warrant Shares
acquired pursuant to this Agreement to cover any short position in the Common
Stock of the Company if doing so would be in violation of applicable securities
laws.

 

5.7 The Investor understands that nothing in the Exchange Act Documents, this
Agreement or any other materials presented to the Investor in connection with
the purchase and sale of the Units constitutes legal, tax or investment advice.
The Investor has consulted such legal, tax and investment advisors, as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Units.

 

5.8 The Investor understands that the issuance of the Units to the Investor has
not been registered under the Securities Act in reliance upon one or more
specific exemptions therefrom, including Regulation D and/or Regulation S, which
exemption depends upon, among other things, the accuracy of the Investor’s
representations made in this Agreement. The Investor understands that the Units
must be held indefinitely unless subsequently registered under the Securities
Act and qualified under applicable state securities laws, or unless an exemption
from such registration and qualification requirements is otherwise available.
The Investor acknowledges that the Company has no obligation to register or
qualify the Units or underlying Shares or Warrant Shares for resale. The
Investor acknowledges that the Company will refuse to register any transfer of
Units, Shares or Warrant Shares that is not made in accordance with the
provisions of Regulation S, registered pursuant to the Securities Act or
otherwise exempt from such registration. The Investor further acknowledges that
if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Shares or Warrant Shares, and
requirements relating to the Company which are outside of the Investor’s
control, and which the Company is under no obligation and may not be able to
satisfy. The Investor has been independently advised as to the applicable
holding period imposed in respect of the Shares by securities legislation in the
jurisdiction in which the undersigned resides and confirms that no
representation has been made respecting the applicable holding periods for the
Shares or Warrant Shares in such jurisdiction and it is aware of the risks and
other characteristics of the Units and of the fact that the undersigned may not
resell the Units, Shares or Warrant Shares except in accordance with applicable
securities legislation and regulatory policy.

 

5.9 A copy of the Company’s annual report on Form 10-K, its quarterly reports on
Form 10-Q, current reports on Form 8-K and information statements are available
on the SEC’s website at www.sec.gov.

 

5.10 For purposes of compliance with the Regulation S exemption for the offer
and sale of the Units (defined in this Section 5.10 to include the underlying
Shares and Warrant Shares) to non-U.S. Persons, if the Investor is not a “U.S.
Person,” as such term is defined in Rule 902(k) of Regulation S,[1] the Investor
represents and warrants that the Investor is a person or entity that is outside
the United States, and further represents and warrants as follows:

________________

1 Regulation S provides in part as follows:

 

 

 

1. “U.S. person” means: (i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under the laws of
the United States; (iii) any estate of which any executor or administrator is a
U.S. person; (iv) any trust of which any trustee is a U.S. person; (v) any
agency or branch of a foreign entity located in the United States; (vi) any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and (viii) any partnership or
corporation if: (A) organized or incorporated under the laws of any foreign
jurisdiction; and (B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act of 1933, as
amended, unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a)) who are not natural persons, estates or
trusts.

 

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(a) The Investor is not acting and purchasing (or proposes to purchase) the
Units on behalf of any other persons, entities or accounts and is not acquiring
the Units for the account or benefit of a U.S. Person. The Investor represents
and warrants that the Investor is not a “U.S. Person” (as defined in Rule 902(k)
under the Securities Act) and was located outside the United States at the time
any offer to buy the Units was made and at the time the buy offer was originated
by the undersigned.

 

(b) If the Investor is a legal entity, it has not been formed specifically for
the purpose of investing in the Company.

 

(c) The Investor hereby represents that he, she or it has satisfied and fully
observed the laws of the jurisdiction in which he, she or it is located or
domiciled, in connection with the acquisition of the Units, including (i) the
legal requirements of the Investor’s jurisdiction for the acquisition of the
Units, (ii) any foreign exchange restrictions applicable to such acquisition,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, which may be relevant to the
holding, redemption, sale, or transfer of the Units; and further, the Investor
agrees to continue to comply with such laws as long as he, she or it shall hold
the Units.

 

(d) To the knowledge of the Investor, without having made any independent
investigation, neither the Company nor any person acting for the Company, has
conducted any “directed selling efforts” in the United States as the term
“directed selling efforts” is defined in Rule 902 of Regulation S, which, in
general, means any activity undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the marketing in the
United States for any of the Units being offered. Such activity includes,
without limitation, the mailing of printed material to investors residing in the
United States, the holding of promotional seminars in the United States, and the
placement of advertisements with radio or television stations broadcasting in
the United States or in publications with a general circulation in the United
States, which discuss the offering of the Units. To the knowledge of the
Investor, the Units were not offered to the undersigned through, and the
undersigned is not aware of, any form of general solicitation or general
advertising, including without limitation, (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, and (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.

 

(e) The Investor will offer, sell or otherwise transfer the Units, only (A)
pursuant to a registration statement that has been declared effective under the
Securities Act, (B) pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S in a transaction meeting the
requirements of Rule 904 (or other applicable Rule) under the Securities Act, or
(C) pursuant to another available exemption from the registration requirements
of the Securities Act, subject to the Company’s right prior to any offer, sale
or transfer pursuant to clauses (B) or (C) to require the delivery of an opinion
of counsel, certificates or other information reasonably satisfactory to the
Company for the purpose of determining the availability of an exemption.

_______________

2. The following are not “U.S. persons”: (i) any discretionary account or
similar account (other than an estate or trust) held for the benefit or account
of a non-U.S. person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States; (ii) any
estate of which any professional fiduciary acting as executor or administrator
is a U.S. person if: (A) an executor or administrator of the estate who is not a
U.S. person has sole or shared investment discretion with respect to the assets
of the estate; and (B) the estate is governed by foreign law; (iii) any trust of
which any professional fiduciary acting as trustee is a U.S. person, if a
trustee who is not a U.S. person has sole or shared investment discretion with
respect to the trust assets, and no beneficiary of the trust (and no settlor if
the trust is revocable) is a U.S. person; (iv) an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country; (v)
any agency or branch of a U.S. person located outside the United States if: (A)
the agency or branch operates for valid business reasons; and (B) the agency or
branch is engaged in the business of insurance or banking and is subject to
substantive insurance or banking regulation, respectively, in the jurisdiction
where located; and (vi) the International Monetary Fund, the International Bank
for Reconstruction and Development, the Inter-American Development Bank, the
Asian Development Bank, the African Development Bank, the United Nations, and
their agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension plans.

 

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(f) The Investor will not engage in hedging transactions involving the Units
unless such transactions are in compliance with the Securities Act.

 

(g) The Investor represents and warrants that the undersigned is not a citizen
of the United States and is not, and has no present intention of becoming, a
resident of the United States (defined as being any natural person physically
present within the United States for at least 183 days in a 12-month consecutive
period or any entity who maintained an office in the United States at any time
during a 12-month consecutive period). The Investor understands that the Company
may rely upon the representations and warranty of this paragraph as a basis for
an exemption from registration of the Units under the Securities Act of 1933, as
amended, and the provisions of relevant state securities laws.

 

5.11 The Investor is not a “disqualified organization.” “Disqualified
organization” means (i) the federal government of the United States; (ii) any
state or political subdivision of the United States; (iii) any foreign
government; (iv) any international organization; (v) any agency or
instrumentality of any of the organizations listed in clauses (i), (ii), (iii)
or (iv) above; (vi) any other tax exempt organization, other than a farmer’s
cooperative described in Section 521 of the Code that is exempt from both income
taxation and from taxation under the unrelated business taxable income
provisions of the Code; or (vii) any rural electrical or telephone cooperative.

 

5.12 The Investor understands, acknowledges and agrees that the Company will use
proceeds from Investor’s investment for general working capital and to advance a
portion to NewGen BioPharma Corporation, a New Jersey corporation (“NewGen NJ”)
in connection with that certain binding letter of intent between the Company and
NewGen NJ dated October 27, 2016.

 

5.13 The Investor represents that neither it nor, to the Investor’s knowledge,
any person or entity controlling, controlled by or under common control with the
Investor, nor any person or entity having a beneficial interest in the Investor,
nor any other person or entity on whose behalf the undersigned is acting (i) is
a person or entity listed in the annex to Executive Order No. 13224 (2001)
issued by the President of the United States (Executive Order Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism); (ii) is named on the List of Specially Designated Nationals
and Blocked Persons maintained by the U.S. Office of Foreign Assets Control
(OFAC); (iii) is a non-U.S. shell bank or is providing banking services
indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure
or an immediate family member or close associate of such figure; or (v) is
otherwise prohibited from investing in the Company pursuant to applicable U.S.
anti-money laundering, antiterrorist and asset control laws, regulations, rules
or orders (categories (i) through (v) collectively, a “Prohibited Investor”).
The Investor agrees to provide the Company, promptly upon request, all
information that the Company reasonably deems necessary or appropriate to comply
with applicable U.S. anti-money laundering, antiterrorist and asset control
laws, regulations, rules and orders. The Investor consents to the disclosure to
U.S. regulators and law enforcement authorities by the Company and its
affiliates and agents of such information about the Investor as the Company
reasonably deems necessary or appropriate to comply with applicable U.S.
anti-money laundering, antiterrorist and asset control laws, regulations, rules
and orders. If the Investor is a financial institution that is subject to the
PATRIOT Act, Public Law No. 107-56 (Oct. 26, 2001) (the “Patriot Act”), the
Investor represents that the Investor has met all of its respective obligations
under the Patriot Act. The Investor acknowledges that if, following the
investment in the Company by the Investor, the Company reasonably believes that
the Investor is a Prohibited Investor or is otherwise engaged in suspicious
activity or refuses to provide promptly information that the Company requests,
the Company has the right or may be obligated to prohibit additional
investments, segregate the assets constituting the investment in accordance with
applicable regulations or immediately require Investor to transfer the Units,
Shares, Warrants or Warrant Shares. The Investor further acknowledges that the
Investor will not have any claim against the Company or any of its affiliates or
agents for any form of damages as a result of any of the foregoing actions.

  

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6. Notices. All notices, requests, consents and other communications hereunder
shall be in writing, shall be mailed (A) if within the United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile, or (B) if delivered from
outside the United States, by International Federal Express or facsimile, and
shall be deemed given (i) if delivered by first-class registered or certified
mail, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed,
(iv) if delivered by facsimile, upon electronic confirmation of receipt and
shall be delivered as addressed as follows:

 

 

(a) if to the Company, to:  

 

NewGen BioPharma Corp.

506 2nd Avenue, Suite 1400

Seattle, WA 98104
Attn:       Chief Executive Officer
Phone:    (855) 624-4793

 

    

 

 

(b) with a copy to:

Greenberg Traurig LLP
1201 K Street, Suite 1100
Sacramento, CA 95814
Attn:       Mark C Lee
Phone:    (916) 442-1111
Fax:         (916) 448-1709

 

(c) if to the Investor, at its address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.

 

7. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investor.

 

8. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.

 

9. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

 

10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Nevada, without giving effect
to the principles of conflicts of law.

 

11. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties.

 

12. Rule 144. The Company covenants that it will timely file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of the Investor holding
Shares and Warrant Shares purchased hereunder made after the first anniversary
of the Closing Date, make publicly available such information as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as the Investor may reasonably request, all to the extent
required from time to time to enable such Investor to sell Shares or Warrant
Shares purchased hereunder without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of the Investor, the
Company will deliver to such holder a written statement as to whether it has
complied with such information and requirements.

 

13. Confidential Information. The Investor represents to the Company that, at
all times during the Company’s offering of the Units, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, and covenants that it
will continue to maintain in confidence such information and shall not use such
information for any purpose other than to evaluate the purchase of the Units
until such information (a) becomes generally publicly available other than
through a violation of this provision by the Investor or its agents or (b) is
required to be disclosed in legal proceedings (such as by deposition,
interrogatory, request for documents, subpoena, civil investigation demand,
filing with any governmental authority or similar process), provided, however,
that before making any use or disclosure in reliance on this subparagraph (b)
the Investor shall give the Company at least fifteen (15) days prior written
notice (or such shorter period as required by law) specifying the circumstances
giving rise thereto and will furnish only that portion of the non-public
information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded any
non-public information so furnished.

 

  8

   

 

ANNEX II

 

RISK FACTORS

 

THE RISKS DESCRIBED BELOW ARE THE ONES THE COMPANY BELIEVES ARE THE MOST
IMPORTANT FOR THE INVESTOR TO CONSIDER, ALTHOUGH THESE RISKS ARE NOT THE ONLY
ONES THAT THE COMPANY FACES. IF EVENTS ANTICIPATED BY ANY OF THE FOLLOWING RISKS
ACTUALLY OCCUR, THE COMPANY’S BUSINESS, OPERATING RESULTS OR FINANCIAL CONDITION
COULD SUFFER AND THE TRADING PRICE OF THE COMPANY’S COMMON STOCK COULD DECLINE.

 

FURTHER, THE RISKS DESCRIBED BELOW ASSUME THE CONSUMMATION OF A PROPOSED REVERSE
ACQUISITION TRANSACTION BETWEEN THE COMPANY AND NEWGEN BIOPHARMA CORPORATION, A
NEW JERSEY CORPORATION (“NEWGEN NJ”), PURSUANT TO WHICH NEWGEN NJ WILL MERGE
WITH A CORPORATION WHOLLY-OWNED BY THE COMPANY IN CONSIDERATION FOR THE ISSUANCE
BY THE COMPANY OF SHARES OF COMMON STOCK OF THE COMPANY TO THE STOCKHOLDERS OF
NEWGEN NJ (THE “MERGER TRANSACTION”). NEWGEN NJ OPERATES AS A PHARMACEUTICAL
COMPANY DEVELOPING ENHANCED PHARMACEUTICALS AND COSMACEUTICALS INTENDED TO
IMPROVE BIOAVAILABILITY, SAFETY, EFFICACY, DOSAGE REDUCTIONS AND ELIMINATION OF
FED-FAST VARIABILITY IN DRUGS. ASSUMING THE SUCCESSFUL CLOSING OF THE MERGER
TRANSACTION, NEWGEN NJ SHALL BECOME A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY AND
THE BUSINESS OF THE COMPANY SHALL CONSIST PRIMARILY OF THE BUSINESS OF NEWGEN
NJ.

 

AS USED BELOW, “WE,” “US” AND “our” refer COLLECTIVELY to NEWGEN BIOPHARMA CORP.
and NEWGEN NJ, AND REFERENCES TO the “Company” REFER TO THE COMPANY AFTER GIVING
EFFECT TO THE MERGER TRANSACTION.

 

Risks Relating to our Business and Financial Condition

 

WE LACK OPERATING HISTORY AND HAVE NOT GENERATED ANY REVENUES OR PROFITS TO
DATE, AND WE HAVE INCURRED LOSSES IN PRIOR PERIODS AND MAY INCUR LOSSES IN THE
FUTURE.

 

We cannot be assured that we can achieve or sustain profitability on a quarterly
or annual basis in the future. Our operations are subject to the risks and
competition inherent in the establishment of a business enterprise. There can be
no assurance that future operations will be profitable. We may not achieve our
business objectives and the failure to achieve such goals would have an adverse
impact on us.

 

OUR FUTURE IS DEPENDENT UPON OUR ABILITY TO OBTAIN FINANCING. IF WE DO NOT
OBTAIN SUCH FINANCING, WE MAY HAVE TO CEASE OUR ACTIVITIES AND INVESTORS COULD
LOSE THEIR ENTIRE INVESTMENT.

 

There is no assurance that we will operate profitably or generate positive cash
flow in the future. We will require additional financing in order to proceed
with the development and distribution of our products. We will also require
additional financing to pay the fees and expenses necessary to operate as a
public company. We will also need more funds if the costs of the development and
operation of our existing technologies are greater than we have anticipated. We
will also require additional financing to sustain our business operations if we
are not successful in earning revenues. We may not be able to obtain financing
on commercially reasonable terms or terms that are acceptable to us when it is
required. Our future is dependent upon our ability to obtain financing. If we do
not obtain such financing, our business could fail and investors could lose
their entire investment.

 

BECAUSE WE MAY NEVER EARN REVENUES FROM OUR OPERATIONS, OUR BUSINESS MAY FAIL
AND INVESTORS MAY LOSE ALL OF THEIR INVESTMENT IN OUR COMPANY.

 

  9

   

 

We have no history of revenues from operations. We have yet to generate positive
earnings and there can be no assurance that we will ever operate profitably. Our
company has a limited operating history. If our business plan is not successful
and we are not able to operate profitably, then our stock may become worthless
and investors may lose all of their investment in our company.

 

Prior to obtaining customers and distribution for our products, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the sale
of our products in the future, we will not be able to earn profits or continue
operations. There is no history upon which to base any assumption as to the
likelihood that we will prove successful, and we can provide no assurance that
we will generate any revenues or ever achieve profitability. If we are
unsuccessful in addressing these risks, our business will fail and investors may
lose all of their investment in our company.

 

DRUG DEVELOPMENT IS TIME CONSUMING, EXPENSIVE AND RISKY. TIMING AND RESULTS OF
CLINICAL TRIALS TO DEMONSTRATE SAFETY AND EFFICACY OF PRODUCTS, AS WELL AS THE
FDA’S APPROVAL OF PRODUCTS, INVOLVE INHERENT UNCERTAINTY.

 

We are focused on the development and implementation of nanotechnology platforms
related to new and improved pharmaceutical candidates. Product candidates that
appear promising in the early phases of development often fail to reach the
market for a number of reasons. Clinical trial results are frequently
susceptible to varying interpretations by scientists, medical personnel,
regulatory personnel, statisticians and others, which often delays, limits, or
prevents further clinical development or regulatory approvals of potential
products. Clinical trials can take many years to complete, including the process
of study design, clinical site selection and the recruitment of patients. As a
result, we can experience significant delays in completing clinical studies,
which can increase the cost of developing a drug candidate and shorten the time
that an approved product may be protected by patents. If our drug candidates are
not successful in human clinical trials, we may be forced to curtail or abandon
certain development programs. If we experience significant delays in commencing
or completing our clinical studies, we could suffer from significant cost
overruns, which could negatively affect our capital resources and our ability to
complete these studies.

 

Drug development is an inherently risky and uncertain process. Before obtaining
regulatory approvals for the sale of any new product candidates, we and our
partners must demonstrate through preclinical studies and clinical trials that
the product is safe and effective for each intended use. Preclinical and
clinical studies may fail to demonstrate the safety and effectiveness of a
product. Likewise, we and our partners may not be able to demonstrate through
clinical trials that a product candidate’s therapeutic benefits outweigh its
risks. Even promising results from preclinical and early clinical studies do not
always accurately predict results in later, large scale trials. A failure to
demonstrate safety and efficacy could or would result in the failure to obtain
regulatory approvals.

 

We cannot assure you that the Federal Drug Enforcement Agency (FDA) or foreign
regulatory agencies will approve, clear for marketing or certify any products
developed by us or our partners, on a timely basis, if at all, or, if granted,
that such approval will not subject the marketing of our products to certain
limits on indicated use. The FDA or foreign regulatory authorities may not agree
with the assessment by us or our clinical partners of the clinical data or they
may interpret it differently. Such regulatory authorities may require additional
or expanded clinical trials. Any limitation on use imposed by the FDA or delay
in or failure to obtain FDA approvals or clearances of products developed by us
and our partners would adversely affect the marketing of these products and our
ability to generate product revenue, which would adversely affect our financial
condition and results of operations.

 

Before obtaining regulatory approvals for certain generic products, we and our
partners must conduct limited clinical or other trials to show comparability to
the branded products. A failure to obtain satisfactory results in these trials
would prevent us from obtaining required regulatory approvals.

 

  10

   

 

OUR PRODUCT CANDIDATES ARE IN THE EARLY STAGES OF DEVELOPMENT, AND BECAUSE WE
HAVE A LIMITED OPERATING AND DEVELOPMENT HISTORY, THERE IS A LIMITED AMOUNT OF
INFORMATION UPON WHICH INVESTORS CAN EVALUATE OUR BUSINESS AND PROSPECTS.

 

We have only a limited history upon which one can evaluate our targeted business
and prospects, as our product candidates are still at an early stage of
development. We have limited experience and have not yet demonstrated an ability
to successfully overcome many of the risks and uncertainties frequently
encountered by companies in new and rapidly evolving fields, particularly in the
biopharmaceutical area. In order to execute our business plan, we will need to
successfully execute product development activities using our nanotechnology
platform, build, maintain and protect a strong intellectual property portfolio,
demonstrate safety and efficacy of our drug candidates in clinical studies,
receive FDA approval and gain market acceptance for the development and
commercialization of our drug candidates, develop and maintain successful
strategic relationships with suppliers, distributors, and potentially licensing
partners, and manage our spending and cash requirements as our expenses are
expected to increase in the near term due to pre-clinical and clinical trials.
If we are unsuccessful in accomplishing these objectives, we may not be able to
develop our product candidates, raise capital, expand our business, and continue
our operations.

 

WE WILL REQUIRE SUBSTANTIAL ADDITIONAL FUNDS TO COMPLETE OUR RESEARCH AND
DEVELOPMENT ACTIVITIES.

 

Our business does not currently generate the cash that is necessary to finance
our operations. We will likely need to raise additional capital to:

 

 

· Fund research and development activities, including pre-clinical and clinical
trials and manufacturing;

 

· Fund our general corporate and administrative activities;

 

· Pursue business development activities and strategic partnerships for our
technology platforms and drug candidates;

 

· Build up and protect our intellectual property portfolio; and

 

· Attract and retain senior management and scientists with relevant experience.

 

We will need to raise additional funds through equity offerings, debt
financings, or additional strategic alliances and licensing arrangements in the
future to continue our operations and achieve our research and development
objectives. We may not be able to obtain additional financing on terms that are
commercially acceptable and favorable to us. General market conditions may make
it very difficult for us to seek financing from the capital markets, and the
terms of any financing may adversely affect the holdings or the rights of our
stockholders. Debt financing, if available, may involve restrictive covenants
that could limit our flexibility in conducting future business activities. If
adequate funds are not available, we may have to further delay, reduce or
eliminate one or more of our planned activities, which could adversely affect
the market price of our common stock.

 

WE WILL NEED TO ACHIEVE COMMERCIAL ACCEPTANCE OF OUR PRODUCT CANDIDATES TO
GENERATE REVENUES AND ACHIEVE PROFITABILITY.

 

The degree to which the medical community and consumers will adopt any product
we develop is uncertain. The rate and degree of market acceptance of our
products will depend on a number of factors, including the establishment and
demonstration in the medical community of the clinical efficacy and safety of
our products, their potential advantage over alternative treatments, and the
costs to patients and third-party payers, including insurance companies and
Medicare. Recent efforts in the United States and abroad to reduce overall
healthcare spending has put significant pressure on the price of prescription
drugs, and certain companies have been publicly criticized for the relatively
high cost of their therapies. These pressures may force us to sell any approved
pharmaceutical products at a lower price than we or analysts may anticipate, or
may result in lower levels of reimbursement and coverage from third parties.

 

We cannot predict whether significant market acceptance of our products will
ever develop, and we cannot reliably estimate the projected size of any such
potential market. Our revenue generation will depend substantially on our
ability to introduce products that will be accepted by the medical community. If
we are unable to cost-effectively achieve acceptance of our technology among the
medical community, or if the products associated with our technology do not
achieve wide market acceptance, our business will be materially and adversely
affected.

  

  11

   

 

THERE IS SUBSTANTIAL COMPETITION IN THE PRODUCT MARKETS IN WHICH WE OPERATE. IF
WE CANNOT DEVELOP AND MARKET OUR PRODUCTS AS QUICKLY OR COST-EFFECTIVELY AS OUR
COMPETITORS, WE MAY NEVER BE ABLE TO ACHIEVE PROFITABLE OPERATIONS.

 

We face substantial competition in the pharmaceutical industry. Competitive
factors include product quality and price, reputation, service, product safety,
development and efficacy, technological innovation, and access to scientific and
technical information. If we fail to compete successfully in any of these areas,
our business could be adversely affected and we may never be able to achieve
profitable operations.

 

Many of our competitors have significantly greater financial resources and
expertise in research and development, manufacturing, pre-clinical testing,
conducting clinical trials, obtaining regulatory approvals and marketing and
distributing approved products than we do. Competition may increase further as
additional companies begin to enter our markets or modify their existing
products to compete directly with ours. If our competitors respond more quickly
to new or emerging technologies and changes in customer requirements, our
products may be rendered obsolete or non-competitive. If our competitors develop
more effective or affordable products, or achieve earlier patent protection or
product commercialization than we do, our operations will likely be negatively
affected. If we are forced to reduce our prices due to increased competition,
our business could become less profitable.

 

We also face competition for marketing, distribution and collaborative
development agreements, for establishing relationships with academic and
research institutions, and for licenses to intellectual property. In addition,
academic institutions, government agencies and other public and private research
organizations may also conduct research, seek patent protection and establish
collaborative arrangements for discovery, research, clinical development and
marketing of products similar to ours. These companies and institutions compete
with us in recruiting and retaining qualified scientific and management
personnel, as well as in acquiring technologies complementary to our platforms.
If we are unable to successfully compete with these companies and institutions,
our business may suffer.

 

ISSUES WITH PRODUCT QUALITY AND PRODUCT DEFECTS COULD HAVE AN ADVERSE EFFECT
UPON OUR BUSINESS, SUBJECT US TO REGULATORY ACTIONS AND PRODUCT LIABILITY
CLAIMS, AND CAUSE A LOSS OF CUSTOMER CONFIDENCE IN US OR OUR PRODUCTS.

 

Our success depends upon the quality of our proposed products. Quality
management plays an essential role in determining and satisfying requirements,
preventing defects, improving our products and services and maintaining the
integrity of the data that supports the safety and efficacy of our products. Our
future success depends on our ability to maintain and continuously improve our
quality management program. A quality or safety issue may result in adverse
inspection reports, warning letters, product recalls or seizures, monetary
sanctions, injunctions to halt manufacture and distribution of products, civil
or criminal sanctions, costly litigation, refusal of a government to grant
approvals and licenses, restrictions on operations or withdrawal of existing
approvals and licenses. An inability to address a quality or safety issue in an
effective and timely manner may also cause negative publicity, a loss of
customer confidence in us or our current or future products, which may result in
the loss of sales and difficulty in successfully launching new products.

 

The development, manufacture, testing, marketing and sale of pharmaceutical
products are associated with significant risks of product liability claims or
recalls. Side effects or adverse events known or reported to be associated with
the products we develop and market could result in product liability claims
and/or recalls of one or more of our products. We cannot predict the frequency,
outcome or cost to defend any such claims. Product liability insurance coverage
is expensive, can be difficult to obtain, and may not be available in the future
on commercially acceptable or satisfactory terms, and may not cover all the
potential future liabilities we may incur. If we do not have adequate insurance
for product liability or clinical trial claims, then we may be subject to
significant expenses relating to such potential claims. Although we have not
experienced any material claims to date, any such claims could have a material
adverse impact on our business.

 

  12

   

 

WE ARE SUBJECT TO A NUMBER OF EXISTING LAWS AND REGULATIONS, AND OUR FAILURE TO
COMPLY WITH APPLICABLE LAWS AND REGULATORY REQUIREMENTS COULD ADVERSELY AFFECT
OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Our operations and products, and those of our customers, will be regulated by
numerous government agencies, both inside and outside the United States. The
design, development, testing, manufacturing and marketing of pharmaceutical
compounds are subject to regulation by governmental authorities, including the
FDA and comparable regulatory authorities in other countries. The approval
process is generally lengthy, expensive, and subject to unanticipated delays.

 

Any new product must undergo lengthy and rigorous testing and other extensive,
costly and time-consuming procedures mandated by FDA and foreign regulatory
authorities. Changes to products may be subject to vigorous review, and
approvals are not certain. Applicants for FDA approval often must submit
extensive clinical data and supporting information to the FDA. Varying
interpretations of the data obtained from pre-clinical and clinical testing
could delay, limit or prevent regulatory approval of a drug product. Changes in
FDA approval policy during the development period, or changes in regulatory
review for each submitted NDA also may cause delays or rejection of an approval.
Even if the FDA approves a product, the approval may limit the uses or
“indications” for which a product may be marketed, or may require further
studies. The FDA also can withdraw product clearances and approvals for failure
to comply with regulatory requirements or if unforeseen problems follow initial
marketing.

 

The regulatory path for approval of our products may be subject to review by
several centers within the FDA, and there is no assurance that the FDA will not
change its requirements or review processes and standards. Human clinical
testing may be required by the FDA in order to commercialize our products, and
there can be no assurance that such trials will be successful. Such changes in
review processes or the requirement for clinical studies could delay anticipated
launch dates or be at a cost which makes launching the product cost prohibitive
for our company or our partners. Such delay or failure to launch these products
could adversely affect our revenues and future profitability.

 

Failure to comply with the requirements of FDA or other regulatory authorities
could result in adverse inspection reports, warning letters, product recalls or
seizures, monetary sanctions, injunctions to halt the manufacture and
distribution of products, civil or criminal sanctions, refusal of a government
to grant approvals or licenses, restrictions on operations or withdrawal of
existing approvals and licenses. Any of these actions could cause a loss of
customer confidence in us and our products, which could adversely affect our
sales. The requirements of regulatory authorities, including interpretative
guidance, are subject to change and compliance with additional or changing
requirements or interpretative guidance may subject the company to further
review, result in product launch delays or otherwise increase our costs. In
connection with these issues, there can be no assurance that additional costs or
civil and criminal penalties will not be incurred, that additional regulatory
actions with respect to the company will not occur, that the company will not
face civil claims for damages from purchasers or users, that substantial
additional charges or significant asset impairments may not be required, that
sales of other products may not be adversely affected, or that additional
regulation will not be introduced that may adversely affect the Company’s
operations and consolidated financial statements.

 

The sales, marketing and pricing of products and relationships that
pharmaceutical companies have with healthcare providers are under increased
scrutiny by federal, state and foreign government agencies. Compliance with the
Anti-Kickback Statute, False Claims Act, Food, Drug and Cosmetic Act (including
as these laws relate to off-label promotion of products) and other healthcare
related laws, as well as competition, data and patient privacy and export and
import laws is under increased focus by the agencies charged with overseeing
such activities, including FDA, Office of Inspector General, Department of
Justice (DOJ) and the Federal Trade Commission. The DOJ and the Securities and
Exchange Commission have also increased their focus on the enforcement of the
U.S. Foreign Corrupt Practices Act (FCPA), particularly as it relates to the
conduct of pharmaceutical companies. The FCPA and similar anti-bribery laws
generally prohibit companies and their employees, contractors or agents from
making improper payments to government officials for the purpose of obtaining or
retaining business. Healthcare professionals in many countries are employed by
the government and consequently are considered government officials. Foreign
governments have also increased their scrutiny of pharmaceutical companies’
sales and marketing activities and relationships with healthcare providers and
competitive practices generally. The laws and standards governing the promotion,
sale and reimbursement of our proposed products and those governing our
relationships with healthcare providers and governments can be complicated, are
subject to frequent change and may be violated unknowingly. Violations, or
allegations of violations, of these laws may result in large civil and criminal
penalties, debarment from participating in government programs, diversion of
management time, attention and resources and may otherwise have an adverse
effect on our business, financial condition and results of operations.

 

  13

   

 

WE ARE SUSCEPTIBLE TO A CHANGING REGULATORY ENVIRONMENT. CHANGES IN APPLICABLE
LAWS, REGULATIONS, AND POLICIES MAY IMPACT OUR BUSINESS IN WAYS THAT WE CANNOT
CURRENTLY PREDICT, AND THESE CHANGES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND FINANCIAL CONDITION.

 

The laws and regulations discussed above are broad in scope and subject to
evolving interpretations, which could require us to incur substantial costs
associated with compliance and may subject us to enforcement actions which could
adversely affect our business, financial condition and results of operations.
Changes in healthcare laws, implementing regulations and policies could impact
our business in ways that we cannot currently predict. Such changes could have a
material adverse effect on our business and financial condition.

 

THE IMPLEMENTATION OF HEALTHCARE REFORM IN THE UNITED STATES MAY ADVERSELY
AFFECT OUR BUSINESS.

 

The Patient Protection and Affordable Care Act (the “Healthcare Reform Act”),
which was signed into law in March 2010, includes several provisions which may
impact our business in the United States, including increased Medicaid rebates,
reimbursement changes, and an expansion of the 340B Drug Pricing Program which
provides certain qualified entities, such as hospitals serving disadvantaged
populations, with discounts on the purchase of drugs for outpatient use and an
excise tax on the sale of certain drugs and medical devices. We may also
experience downward pricing pressure on our proposed products as the Healthcare
Reform Act reduces Medicare and Medicaid payments to hospitals. While the
Healthcare Reform Act is intended to expand health insurance coverage and
increase access to medical care generally, the long-term impact of the Act on
our business and the demand of our products is uncertain. These changes will
impact existing government healthcare programs and will result in the
development of new programs. We cannot predict the impact of the additional
regulations that need to be established to implement many of the Healthcare
Reform Act’s provisions.

 

THE SUCCESSFUL COMMERCIALIZATION OF OUR PRODUCT CANDIDATES WILL DEPEND IN PART
ON THE EXTENT TO WHICH GOVERNMENT AUTHORITIES AND HEALTH INSURERS ESTABLISH
ADEQUATE REIMBURSEMENT LEVELS AND PRICING POLICIES. IF REIMBURSEMENT FOR OUR
FUTURE PRODUCTS IS REDUCED OR MODIFIED IN THE UNITED STATES OR ABROAD, OUR
BUSINESS COULD SUFFER.

 

Sales of our proposed products depend, in part, on the extent to which the costs
of our products are paid by both public and private parties, and the
availability of coverage and reimbursement from third-party payers such as
government insurance programs, including Medicare and Medicaid, private health
insurers, health maintenance organizations and other healthcare related
organizations. These public and private payers are increasingly challenging the
prices charged for medical products and services. Cost control initiatives may
decrease coverage and payment levels for any new drug and, in turn, the price
that we will be able to charge. We are unable to predict all the changes to the
coverage or reimbursement methodologies that will be applied by private or
public third-party payers. Any denial of third-party coverage or inadequate
reimbursement could harm our business and reduce our revenue. The downward
pricing pressures we may experience from third-party payers could result in an
adverse effect on our business, financial condition and operational results.

 

Austerity measures or other reforms by foreign governments may limit, reduce or
eliminate payments for our products and adversely affect both our pricing
flexibility and demand for our products. Accordingly, reimbursement may not be
available or sufficient to allow us to sell our products on a competitive basis.
Legislation and regulations affecting reimbursement for our products may change
at any time and in ways that may be adverse to us. If future reimbursement for
our approved product candidates is substantially less than we project, or if
rebate obligations associated with our products are substantially increased, our
business and commercial opportunities could be materially and adversely
affected.

 

IF WE ARE UNABLE TO PROTECT OUR PATENTS OR OTHER PROPRIETARY RIGHTS, OR IF WE
INFRINGE THE PATENTS OR OTHER PROPRIETARY RIGHTS OF OTHERS, OUR COMPETITIVENESS
AND BUSINESS PROSPECTS MAY BE MATERIALLY DAMAGED.

 

Patent and other proprietary rights are essential to our business. Our success
depends to a significant degree on our ability to obtain and enforce
intellectual property rights relating to or incorporated in our technology and
products. We cannot guarantee that any proposed or pending patent applications
will result in issued patents, that patents issued or licensed will not be
challenged or circumvented by competitors, that our patents will not be found to
be invalid, or that the intellectual property rights of others will not prevent
the company from developing and marketing certain products or including key
features in the company’s products.

 

  14

   

 

Our issued and future patents may be challenged, narrowed, invalidated or
circumvented, which could limit our ability to stop competitors from marketing
similar technology or products or limit the length of terms of patent protection
we may have for our technology or products. Changes in patent laws or their
interpretation in the United States and other countries could also diminish the
value of our intellectual property or narrow the scope of our patent protection.
In addition, the legal systems of certain countries do not favor the aggressive
enforcement of patents, and the laws of foreign countries may not protect our
rights to the same extent as the laws of the United States. As a result, our
patent portfolio may not provide us with sufficient rights to exclude others
from commercializing technology or products similar or identical to ours.

 

In order to preserve and enforce our patent and other intellectual property
rights, we may need to make claims or file lawsuits against third parties. There
also can be no assurance that third parties will not assert that our technology
or products infringe their patent or other intellectual property rights. This
can entail significant costs to us and divert our management’s attention from
developing and commercializing our technology or products. Any such claims, with
or without merit, could be time-consuming, result in costly litigation, divert
the efforts of our technical and management personnel, and/or require us to pay
substantial damages. A loss in any of these types of cases could result in a
loss of patent protection or the ability to market products, which could
materially affect future results of operations.

 

In addition to patented technology, we will also rely on unpatented proprietary
technology, trademarks, copyrights, trade secrets and know-how to develop,
maintain and strengthen our competitive positions. Third parties may know,
discover or independently develop equivalent proprietary information or
techniques, or they may gain access to our trade secrets or disclose our trade
secrets to the public. We generally seek to protect this type of proprietary
information through confidentiality agreements with our employees, consultants,
scientific advisors, contractors and third parties. However, these agreements
may be breached, and we may not have adequate remedies for any such breach. In
addition, our trade secrets may otherwise become known or be independently
developed by competitors. To the extent that our employees, consultants,
scientific advisors or contractors use intellectual property owned by others in
their work for us, disputes may arise as to the rights in related or resulting
know-how and inventions. Misappropriation or other loss of our intellectual
property would have an adverse effect on our competitive position, may cause us
to incur substantial costs, and may have a material impact on our business and
financial condition.

 

WE MAY BE UNABLE TO ATTRACT REVENUE-GENERATING COLLABORATIONS WITH OTHER
PHARMACEUTICAL AND BIOTECH COMPANIES TO ADVANCE OUR TECHNOLOGY AND PRODUCTS. IF
OUR BUSINESS DEVELOPMENT ACTIVITIES ARE UNSUCCESSFUL, OUR BUSINESS COULD SUFFER,
AND OUR FINANCIAL PERFORMANCE COULD BE ADVERSELY AFFECTED.

 

We do not possess all of the financial and developmental resources necessary to
develop and commercialize the products that may result from our technologies.
Accordingly, we will need to make arrangements with strategic partners to
develop and commercialize product candidates that may be approved. Our business
strategy includes obtaining collaborations with other pharmaceutical and biotech
companies to support the development of our nanotechnology platforms and drug
candidates. We may not be able to attract such partnerships, and even if we are
able to enter into such strategic partnerships, the terms may be less favorable
than anticipated. Furthermore, entering into such partnership arrangements may
limit our commercialization options and flexibility, and the overall success of
the development and commercialization of product candidates under such
arrangements will depend largely on the efforts of third parties. If we do not
find appropriate partners, or if our existing arrangements or future agreements
are not successful, our ability to develop and commercialize products could be
adversely affected.

 

As part of our long-term strategy, we are engaged in business development
activities including evaluating acquisitions, joint development opportunities,
technology licensing arrangements and other opportunities. These activities may
result in substantial investment of our resources. Our success developing
products or expanding into new markets from such activities will depend on a
number of factors, including our ability to find suitable opportunities for
acquisition, investment or alliance; whether we are able to complete an
acquisition, investment or alliance on terms that are satisfactory to us; the
strength of the other company’s underlying technology, products and ability to
execute its business strategies; any intellectual property and litigation
related to these products or technology; and our ability to successfully
integrate the acquired company, business, product, technology or research into
our existing operations, including the ability to adequately fund acquired
in-process research and development projects. If we are unsuccessful in our
business development activities, we may be unable to meet our financial targets
and our financial performance could be adversely affected.

 

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CREDIT MARKET UNCERTAINTY COULD HAVE A SIGNIFICANT IMPACT ON OUR BUSINESS.

 

Significant deterioration in the financial condition of large financial
institutions in recent years resulted in a severe loss of liquidity and
available credit in global credit markets and in more stringent borrowing terms.
Accordingly, we may be limited in our ability to borrow funds to finance our
operations in the future. An inability to obtain sufficient financing at
cost-effective rates could have a materially adverse effect on our planned
business operations and financial condition.

 

OUR BUSINESS IS SUBJECT TO RISKS OF TERRORIST ACTS, ACTS OF WAR, POLITICAL
UNREST, PUBLIC HEALTH CONCERNS, LABOR DISPUTES AND NATURAL DISASTERS.

 

Terrorist acts, acts of war, political unrest, public health concerns, labor
disputes or national disasters may disrupt our operations, as well as those of
our customers. These types of acts have created, and continue to create,
economic and political uncertainties and have contributed to global economic
instability. Future terrorist activities, military or security operations, or
natural disasters could weaken the domestic and global economies and create
additional uncertainties, thus forcing our customers to reduce their capital
spending, or cancel or delay already planned construction projects, which could
have a material adverse impact on our business, operating results and financial
condition, including loss of sales or customers.

 

THE EXPECTED RESULTS FROM OUR PREVIOUSLY DISCLOSED POTENTIAL MERGER WITH NEWGEN
BIOPHARMA CORPORATION MAY VARY SIGNIFICANTLY FROM OUR EXPECTATIONS, AND WE CAN
PROVIDE NO ASSURANCE THAT SUCH POTENTIAL MERGER WILL BE COMPLETED.

 

The expected results from our potential merger transaction with NewGen NJ might
vary materially from those anticipated and disclosed by us, and we can provide
no assurance that such potential merger will be completed. These expectations
are inherently subject to uncertainties and contingencies. These assumptions may
be impacted by factors that are beyond our control, including the business of
NewGen NJ, the U.S. economy, our ability to obtain financing to complete the
merger with NewGen NJ, and the approval of the potential merger by NewGen NJ’s
board of directors and stockholders. Any one of these factors may result in our
failure to complete the potential merger and such failure to complete the
potential merger may have significant adverse consequences on our ability to
operate and survive as a viable entity.

 

THERE CAN BE NO ASSURANCE THAT THE PROPOSED MERGER WILL IN FACT BE CONSUMMATED,
AND ANY FAILURE TO CONSUMMATE SUCH A TRANSACTION MAY ADVERSELY IMPACT OUR
ABILITY TO GENERATE LIQUIDITY FOR OUR STOCKHOLDERS AND TO RAISE NECESSARY
CAPITAL.

 

We have entered into a binding letter of intent with NewGen NJ, dated as of
October 27, 2016, which contains various conditions, including approval by
NewGen NJ’s stockholders and the entry into definitive agreements. There can be
no assurance that the proposed merger transaction will be consummated. Even if
we are able to close the potential merger transaction, there is no assurance
that we will be able to attract the attention of major brokerage firms and/or
that a public market for its securities will develop.

 

Risks Relating to our Securities and our Status as a Public Company

 

THE RELATIVE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM MAY PUT US
AT A COMPETITIVE DISADVANTAGE.

 

Our management team lacks public company experience and is generally unfamiliar
with the requirements of the United States securities laws and U.S. Generally
Accepted Accounting Principles, which could impair our ability to comply with
legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of
2002. The individual who holds all of the principal officer positions of the
company has never had responsibility for managing a publicly traded company.
Such responsibilities include complying with federal securities laws and making
required disclosures on a timely basis. Our senior management may not be able to
implement programs and policies in an effective and timely manner that
adequately responds to such increased legal, regulatory compliance and reporting
requirements. Our failure to comply with all applicable requirements could lead
to the imposition of fines and penalties and distract our management from
attending to the growth of our business.

 

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SHARES OF OUR COMMON STOCK THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, REGARDLESS OF WHETHER SUCH SHARES ARE RESTRICTED OR
UNRESTRICTED, ARE SUBJECT TO RESALE RESTRICTIONS IMPOSED BY RULE 144, INCLUDING
THOSE SET FORTH IN RULE 144(I) WHICH APPLY TO A “SHELL COMPANY.” IN ADDITION,
ANY SHARES OF OUR COMMON STOCK THAT ARE HELD BY AFFILIATES, INCLUDING ANY
RECEIVED IN A REGISTERED OFFERING, WILL BE SUBJECT TO THE RESALE RESTRICTIONS OF
RULE 144(I).

 

Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a
“shell company” is defined as a company that has no or nominal operations; and,
either no or nominal assets; assets consisting solely of cash and cash
equivalents; or assets consisting of any amount of cash and cash equivalents and
nominal other assets. As such, we may be deemed a “shell company” pursuant to
Rule 144 prior to the potential merger, and as such, sales of our securities
pursuant to Rule 144 are not able to be made until a period of at least twelve
months has elapsed from the date on which our Current Report on Form 8-K is
filed with the SEC reflecting our status as a non-“shell company.” Therefore,
any restricted securities we sell in the future or issue to consultants or
employees, in consideration for services rendered or for any other purpose will
have no liquidity until and unless such securities are registered with the SEC
and/or until a year after the date of the filing of our Current Report on Form
8-K and we have otherwise complied with the other requirements of Rule 144. As a
result, it may be harder for us to fund our operations and pay our employees and
consultants with our securities instead of cash. Furthermore, it will be harder
for us to raise funding through the sale of debt or equity securities unless we
agree to register such securities with the SEC, which could cause us to expend
additional resources in the future. Our previous status as a “shell company”
could prevent us from raising additional funds, engaging employees and
consultants, and using our securities to pay for any acquisitions (although none
are currently planned), which could cause the value of our securities, if any,
to decline in value or become worthless. Lastly, any shares held by affiliates,
including shares received in any registered offering, will be subject to the
resale restrictions of Rule 144(i).

 

WE WILL BE REQUIRED TO INCUR SIGNIFICANT COSTS AND REQUIRE SIGNIFICANT
MANAGEMENT RESOURCES TO EVALUATE OUR INTERNAL CONTROL OVER FINANCIAL REPORTING
AS REQUIRED UNDER SECTION 404 OF THE SARBANES-OXLEY ACT, AND ANY FAILURE TO
COMPLY OR ANY ADVERSE RESULT FROM SUCH EVALUATION MAY HAVE AN ADVERSE EFFECT ON
OUR STOCK PRICE.

 

As a smaller reporting company as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended, we are required to evaluate our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act of
2002 (“Section 404”). Section 404 requires us to include an internal control
report with our Annual Report on Form 10-K. This report must include
management’s assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year. This report must also
include disclosure of any material weaknesses in internal control over financial
reporting that we have identified. Failure to comply, or any adverse results
from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the trading price of our equity
securities. As of October 31, 2016, the management of the Company assessed the
effectiveness of the Company’s internal control over financial reporting based
on the criteria for effective internal control over financial reporting
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance
on conducting such assessments. Management concluded, as of the year ended
October 31, 2016, that its internal controls and procedures were effective to
detect the inappropriate application of U.S. GAAP rules. Achieving continued
compliance with Section 404 may require us to incur significant costs and expend
significant time and management resources. No assurance can be given that we
will be able to fully comply with Section 404 or that we and our independent
registered public accounting firm would be able to conclude that our internal
control over financial reporting is effective at fiscal year end. As a result,
investors could lose confidence in our reported financial information, which
could have an adverse effect on the trading price of our securities, as well as
subject us to civil or criminal investigations and penalties. In addition, our
independent registered public accounting firm may not agree with our
management’s assessment or conclude that our internal control over financial
reporting is operating effectively.

 

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IF WE LOSE OUR KEY MANAGEMENT PERSONNEL, WE MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE OUR BUSINESS OR ACHIEVE OUR OBJECTIVES, AND SUCH LOSS COULD ADVERSELY
AFFECT OUR BUSINESS, FUTURE OPERATIONS AND FINANCIAL CONDITION.

 

Our future success depends in large part upon the leadership and performance of
our executive management team and key consultants, and upon our ability to
attract and retain senior management and scientists with relevant expertise. If
we lose the services of one or more of our executive officers or key
consultants, or if one or more of them decides to join a competitor or otherwise
compete directly or indirectly with us, we may not be able to successfully
manage our business or achieve our business objectives. We do not have “Key-Man”
life insurance policies on our key executives. If we lose the services of any of
our key consultants, we may not be able to replace them with similarly qualified
personnel, which could harm our business. The loss of our key executives or our
inability to attract and retain additional highly skilled employees may
adversely affect our business, future operations, and financial condition.

 

THE ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES UNDER NEVADA LAW AND THE EXISTENCE OF INDEMNIFICATION RIGHTS TO OUR
DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN SUBSTANTIAL EXPENDITURES BY OUR
COMPANY AND MAY DISCOURAGE LAWSUITS AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES.

 

Our Bylaws contain a provision permitting us to eliminate the personal liability
of our directors to our company and stockholders for damages for breach of
fiduciary duty as a director or officer to the extent provided by Nevada law.
The foregoing indemnification obligations could result in the Company incurring
substantial expenditures to cover the cost of settlement or damage awards
against directors and officers, which we may be unable to recoup. These
provisions and resultant costs may also discourage our Company from bringing a
lawsuit against directors and officers for breaches of their fiduciary duties,
and may similarly discourage the filing of derivative litigation by our
stockholders against our directors and officers even though such actions, if
successful, might otherwise benefit our company and stockholders.

 

OUR STOCK IS CATEGORIZED AS A PENNY STOCK. TRADING OF OUR STOCK MAY BE
RESTRICTED BY THE SEC’S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER’S
ABILITY TO BUY AND SELL OUR STOCK.

 

Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which
generally defines “penny stock” to be any equity security that has a market
price (as defined) less than US$ 5.00 per share or an exercise price of less
than US$ 5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and accredited investors. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer’s account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer’s confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

 

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FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER’S ABILITY TO BUY
AND SELL OUR STOCK.

 

In addition to the “penny stock” rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must 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. The FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

 

TO DATE, WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID
IN THE FORESEEABLE FUTURE.

 

We do not anticipate paying cash dividends on our common stock in the
foreseeable future and we may not have sufficient funds legally available to pay
dividends. Even if the funds are legally available for distribution, we may
nevertheless decide not to pay any dividends. We presently intend to retain all
earnings for our operations.

 

OUR COMMON STOCK IS NOT LISTED ON ANY STOCK EXCHANGE AND THERE IS NO ESTABLISHED
MARKET FOR SHARES OF OUR COMMON STOCK. EVEN IF A MARKET FOR OUR COMMON STOCK
DEVELOPS, OUR COMMON STOCK COULD BE SUBJECT TO WIDE FLUCTUATIONS.

 

Our common stock is not listed on any stock exchange. Although our common stock
is quoted on the OTCBB, there is no established public market for shares of our
common stock. Even if the shares of our common stock may in the future trade on
the OTCBB, the liquidity and price of our common stock is expected to be more
limited than if such securities were quoted or listed on a national exchange. No
assurances can be given that an active public trading market for our common
stock will develop or be sustained. The trading volume we develop on the OTCBB
may be limited by the fact that many major institutional investment funds,
including mutual funds, as well as individual investors, follow a policy of not
investing in bulletin board stocks and certain major brokerage firms restrict
their brokers from recommending bulletin board stocks because they are
considered speculative, volatile and thinly traded. Lack of liquidity will limit
the price at which stockholders may be able to sell our common stock.

 

The price of our common stock could be subject to wide fluctuations, in response
to quarterly variations in our operating results, announcements by us or others,
developments affecting us, and other events or factors. In addition, the stock
market has experienced extreme price and volume fluctuations in recent years.
These fluctuations have had a substantial effect on the market prices for many
companies, often unrelated to the operating performance of such companies, and
may adversely affect the market prices of the securities. Such risks could have
an adverse affect on the stock’s future liquidity.

 

IF WE ISSUE ADDITIONAL SHARES IN THE FUTURE, IT WILL RESULT IN THE DILUTION OF
OUR EXISTING STOCKHOLDERS.

 

Our articles of incorporation authorize the issuance of up to 75,000,000 shares
of common stock with a par value of $0.001 per share. Our Board of Directors may
choose to issue some or all of such shares to acquire one or more companies or
assets and to fund our overhead and general operating requirements. The issuance
of any such shares may reduce the book value per share and may contribute to a
reduction in the market price of the outstanding shares of our common stock. If
we issue any such additional shares, such issuance will reduce the proportionate
ownership and voting power of all current stockholders. Further, such issuance
may result in a change of control of our corporation.

 

  19

   

 

WE MAY NOT QUALIFY TO MEET LISTING STANDARDS TO LIST OUR STOCK ON AN EXCHANGE.

 

The SEC approved listing standards for companies using reverse acquisitions to
list on an exchange may limit our ability to become listed on an exchange. We
would be considered a reverse acquisition company (i.e., an operating company
that becomes an Exchange Act reporting company by combining with a shell
Exchange Act reporting company) that cannot apply to list on NYSE, NYSE Amex or
Nasdaq until our stock has traded for at least one year on the U.S. OTC market,
a regulated foreign exchange or another U.S. national securities market
following the filing with the SEC or other regulatory authority of all required
information about the potential merger, including audited financial statements.
We would be required to maintain a minimum $4 share price ($2 or $3 for NYSE
Amex) for at least thirty (30) of the sixty (60) trading days before our
application and the exchange’s decision to list. We would be required to have
timely filed all required reports with the SEC (or other regulatory authority),
including at least one annual report with audited financials for a full fiscal
year commencing after filing of the above information. Although there is an
exception for a firm underwritten IPO with proceeds of at least $40 million, we
do not anticipate being in a position to conduct an IPO in the foreseeable
future. To the extent that we cannot qualify for a listing on an exchange, our
ability to raise capital will be diminished.

 

WE HAVE NOT RETAINED INDEPENDENT PROFESSIONALS FOR INVESTORS.

 

We have not retained any independent professionals to review or comment on the
offering or otherwise protect the interests of the Investors hereunder. Although
the Company has retained its own counsel, such firm has not made any independent
examination of any factual matters represented by management herein, and
purchasers of the securities offered hereby should not rely on such firm so
retained with respect to any matters herein described. Potential investors are
encouraged to review all applicable documents with their advisors and conduct
such due diligence regarding their potential investment in the Company as they
deem appropriate.

 

THE FOREGOING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE EXPLANATION OF ALL OF
THE RISKS INVOLVED IN PURCHASING THE UNITS OFFERED HEREIN. POTENTIAL INVESTORS
SHOULD READ THIS MEMORANDUM IN ITS ENTIRETY AND REVIEW THE COMPANY’S EXCHANGE
ACT DOCUMENTS BEFORE DETERMINING WHETHER TO PURCHASE THE UNITS.

 

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