Document:

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE
STATE SECURITIES OR “BLUE SKY” LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS
OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
S UNDER SAID ACT.

 

PIMI AGRO CLEANTECH, INC.

10% SECURED CONVERTIBLE DEBENTURE

DUE NOVEMBER 2, 2013

 

	May 2, 2013	$________

 

FOR VALUE RECEIVED,
PIMI AGRO CLEANTECH, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises to
pay to the order of ______________ or his registered assigns (the “Holder”) the sum of $_________ (____________________US
dollars), upon the earlier to occur of (i) November 2, 2013, or (ii) the Borrower raises financing of at least $1,000,000 (one
million US dollars) (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the
rate of ten percent (10%) (the “Interest Rate”) per annum from May 2, 2013 (the “Issue Date”)
until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. Interest shall
commence accruing on the Issue Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed and
shall be payable quarterly in arrears. All payments due hereunder (to the extent not converted into the common stock, $0.01 par
value per share, of the Borrower (the “Common Stock”) in accordance with the terms hereof) shall be made in
lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to
the Borrower by written notice made in accordance with the provisions of this Debenture. Whenever any amount expressed to be due
by the terms of this Debenture is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Debenture is paid
in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest
due on such date.

 

    	 

    	 

    

 

The following terms
shall apply to this Debenture:

 

Article
I. CONVERSION RIGHTS

 

1.1         Holder
Conversion Right.

 

(a)          The
Holder shall have the right from time to time, and at any time on or prior to the earlier of (i) the Maturity Date and (ii) the
date of payment of (i) the outstanding principal amount of this Debenture plus (ii) accrued and unpaid interest, if any,
due hereunder, to convert all or any part of the outstanding principal amount of this Debenture into fully paid and non-assessable
shares of Common Stock, at a conversion price equal to $1.00 per share (the “Conversion Price”), as specified
hereinafter (a “Conversion”).

 

(b)          The
number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing the Conversion
Amount (as defined below) by the Conversion Price as specified in the notice of conversion, in the form attached hereto as Exhibit
A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result
in, notice) to the Borrower on such conversion date (the “Conversion Date”). For the purposes hereof “Conversion
Amount” means, with respect to any conversion of this Debenture, the principal amount to be converted in such conversion
and any accrued and unpaid interest thereunder.

 

1.2         Authorized
Shares

 

The Borrower covenants
that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient
number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Debenture
(the “Reserved Amount”). The Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable.

 

If, at any time a Holder
of this Debenture submits a Notice of Conversion, and the Borrower does not have sufficient authorized but unissued shares of Common
Stock available to effect such conversion in accordance with the provisions of this Article I (a “Conversion Default”)
the Borrower shall issue to the Holder all of the shares of Common Stock which are then available to effect such conversion. The
portion of this Debenture which the Holder included in its Conversion Notice and which exceeds the amount which is then convertible
into available shares of Common Stock (the “Excess Amount”) shall, notwithstanding anything to the contrary
contained herein, not be convertible into Common Stock in accordance with the terms hereof until (and at the Holder’s option
at any time after) the date additional shares of Common Stock are authorized by the Borrower to permit such conversion. The Borrower
shall use its best efforts to authorize a sufficient number of shares of Common Stock as soon as practicable following the earlier
of (i) such time that the Holder notifies the Borrower or that the Borrower otherwise becomes aware that there are or likely will
be insufficient authorized and unissued shares to allow full conversion thereof and (ii) a Conversion Default.

 

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1.3         Method
of Conversion.

 

(a)          Mechanics
of Conversion. Subject to Section 1.3, this Debenture may be converted by the Holder in whole or in part at any time from
time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile or other reasonable
means of communication dispatched on the Conversion Date) and (B) subject to Section 1.3(b), surrendering this Debenture at
the principal office of the Borrower.

 

(b)          Surrender
of Debenture Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Debenture
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Borrower unless
the entire unpaid principal amount of this Debenture is so converted. The Holder and the Borrower shall maintain records showing
the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to
the Holder and the Borrower, so as not to require physical surrender of this Debenture upon each such conversion. In the event
of any dispute or discrepancy, such records of the Borrower shall be controlling and determinative in the absence of manifest error.
Notwithstanding the foregoing, if any portion of this Debenture is converted as aforesaid, the Holder may not transfer this Debenture
unless the Holder first physically surrenders this Debenture to the Borrower, whereupon the Borrower will forthwith issue and deliver
upon the order of the Holder a new Debenture of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Debenture. The Holder
and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture represented by this Debenture
may be less than the amount stated on the face hereof.

 

(c)          Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in
the issue and delivery of shares of Common Stock or other securities or property on conversion of this Debenture in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)          Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission (or other reasonable
means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the
Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common
Stock issuable upon such conversion after such receipt (and, solely in the case of conversion of the entire unpaid principal amount
hereof, surrender of this Debenture) in accordance with the terms hereof.

 

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(e)          Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed
to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of
accrued and unpaid interest on this Debenture shall be reduced to reflect such conversion, and, unless the Borrower defaults on
its obligations under this Article I, all rights with respect to the portion of this Debenture being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion.
If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower
to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion
Date so long as the Notice of Conversion is received by the Borrower on such date.

 

(f)          Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower’s transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the
provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent
to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime
Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system, if applicable.

 

1.4         Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Debenture may not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent
shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or
a successor rule) (“Rule 144”). Each certificate for shares of Common Stock
issuable upon conversion of this Debenture shall bear a legend substantially in the following form, as appropriate:

 

“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN
FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SAID ACT.”

 

The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefor free of any transfer legend if (i)
the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration
under the Act and the shares are so sold or transferred, (ii) such Holder provides the Borrower or its transfer agent with reasonable
assurances that the Common Stock issuable upon conversion of this Debenture (to the extent such securities are deemed to have been
acquired on the same date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock issuable upon conversion of
this Debenture, such security is registered for sale by the Holder under an effective registration statement filed under the Act
or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that
can then be immediately sold.

 

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1.5         Trading
Market Limitations. If applicable as of the Conversion Date, unless permitted by the applicable rules and regulations of
the principal securities market on which the Common Stock is then listed or traded, if at all, in no event shall the Borrower issue
upon conversion of or otherwise pursuant to this Debenture more than the maximum number of shares of Common Stock that the Borrower
can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum
Share Amount”), which shall be 19.99% of the total shares outstanding on the Conversion Date, subject to equitable adjustment
from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common
Stock occurring after the date hereof. Once the Maximum Share Amount has been issued (the date of which is hereinafter referred
to as the “Maximum Conversion Date”).

 

1.6         Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of
such converted portion of this Debenture shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Debenture. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) day after delivery of the Notice of Conversion with respect to a conversion
of any portion of this Debenture for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Debenture with respect to such unconverted
portions of this Debenture and the Borrower shall, as soon as practicable, return such unconverted Debenture to the Holder or,
if the Debenture has not been surrendered, adjust its records to reflect that such portion of this Debenture has not been converted.
In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure to convert this Debenture.

 

Article
II. EVENTS OF DEFAULT

 

If any of the following
events of default (each, an “Event of Default”) shall occur:

 

2.1         Failure
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Debenture,
whether at maturity, upon acceleration or otherwise;

 

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2.2         Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens that it will
not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms
of this Debenture (for a period of at least sixty (60) days, if such failure is solely as a result of the circumstances governed
by Section 1.3 and the Borrower is using its best efforts to authorize a sufficient number of shares of Common Stock as soon as
practicable), fails to transfer or cause its transfer agent to transfer (electronically or in certificated form) any certificate
for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Debenture as and when required
by this Debenture, or fails to remove any restrictive legend (or to withdraw any stop transfer instructions in respect thereof)
on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Debenture
as and when required by this Debenture (or makes any announcement, statement or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue uncured (or any announcement, statement or threat not to honor
its obligations shall not be rescinded in writing) for ten (10) days after the Borrower shall have been notified thereof in writing
by the Holder;

 

2.3         Breach
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material respect
when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder
with respect to this Debenture;

 

2.4         Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply
for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed; or

 

2.5         Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower;

 

then, upon the occurrence
and during the continuation of any such Event of Default the Holder may, without further notice to the Borrower, declare the principal
amount of this Debenture at the time outstanding, together with accrued unpaid interest thereon, and all other amounts payable
under this Debenture to be forthwith due and payable, whereupon such principal, interest and all such amounts shall become and
be forthwith due and payable.

 

Article
III. MISCELLANEOUS

 

3.1         Guarantee
and Collateral. Pimi Agro Cleantech Ltd., an Israeli subsidiary of the Borrower (”Pimi Israel”), hereby guarantees
due and punctual payment and performance of this Debenture by the Borrower. Pimi Israel further agrees that its guarantee hereunder
constitutes a guarantee of payment when due (whether at the stated maturity, by acceleration or otherwise), and waives any right
to require that the Holder proceed against the Borrower. Furthermore, Pimi Israel’ guarantee herein shall be secured by a
security interest and pledge in Pimi Israel’ patents and/or patent applications, which security interest and pledge was granted
by Pimi Israel to the Holder, as memorialized and evidenced by that certain deed of pledge
dated May 2nd, 2013 (the "Deed of Pledge").

 

3.2         Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

 

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3.3         Notices.
Any notice herein required or permitted to be given shall be in writing and may be personally served or delivered by courier or
sent by United States mail and shall be deemed to have been given upon receipt if personally served (which shall include telephone
line facsimile transmission) or sent by courier or three (3) days after being deposited in the United States mail, certified, with
postage pre-paid and properly addressed, if sent by mail. For the purposes hereof, the address of the Holder shall be as shown
on the records of the Borrower; and the address of the Borrower shall be 269 South Beverly Drive, Suite 1091, Beverly Hills, CA
90212. Both the Holder and the Borrower may change the address for service by service of written notice to the other as herein
provided.

 

3.4         Amendments.
This Debenture and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder.
The term “Debenture” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or supplemented.

 

3.5         Assignability.
This Debenture shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder
and its successors and assigns. Each transferee of this Debenture must be an “accredited investor” (as defined in Rule
501(a) of the 1933 Act).

 

3.6         Cost
of Collection. If default is made in the payment of this Debenture, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

3.7         Governing
Law. THIS NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER
HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
ANY DISPUTE ARISING UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY
WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

 

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3.8         Certain
Amounts. Whenever pursuant to this Debenture the Borrower is required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest on such interest, the Borrower
and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Debenture may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Debenture and to earn a return from the sale of shares of Common
Stock acquired upon conversion of this Debenture at a price in excess of the price paid for such shares pursuant to this Debenture.
The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible
loss to the Holder from the receipt of a cash payment without the opportunity to convert this Debenture into shares of Common Stock.

 

3.9         Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Debenture will be inadequate and agrees, in the event of a breach or threatened breach by
the Borrower of the provisions of this Debenture, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Debenture and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

IN WITNESS WHEREOF,
Borrower has caused this Debenture to be signed in its name by its duly authorized officer this 2nd day of May, 2013.

 

	 	PIMI AGRO CLEANTECH, INC.
	 	 
	 	By:	 
	 	Name:
	 	Title:

 

	 	Agreed and Acknowledged:
	 	 
	 	PIMI AGRO CLEANTECH LTD.
	 	 
	 	By:	 
	 	Name:
	 	Title:

 

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EXHIBIT A

 

NOTICE OF CONVERSION

(To be Executed by the Holder in order to Convert the Debenture)

 

The undersigned hereby
irrevocably elects to convert $__________ principal amount of the Debenture (as defined below) into shares of common stock, par
value $0.01 per share (“Common Stock”), of Pimi Agro Cleantech, Inc., a Delaware corporation (the “Borrower”)
according to the conditions of the Convertible Debenture of the Borrower dated as of May __, 2013 (the “Debenture”),
as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of each Debenture is attached hereto (or evidence of loss,
theft or destruction thereof).

 

The Borrower shall electronically
transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with
DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

 

Name of DTC Prime Broker: _______________________________________________________________

Account Number: ________________________________________________________________________

 

In lieu of receiving
shares of Common Stock issuable pursuant to this Notice of Conversion by way of a DWAC Transfer, the undersigned hereby requests
that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are
based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is
necessary, on an attachment hereto:

 

Name: _________________________________________________________________________________

Address: _______________________________________________________________________________

 

The undersigned represents
and warrants that all offers and sales by the undersigned of the securities issuable to the undersigned upon conversion of the
Debenture shall be made pursuant to registration of the securities under the Securities Act of 1933, as amended (the “Act”),
or pursuant to an exemption from registration under the Act.

 

Date of Conversion:___________________________

Applicable Conversion Price: $1.00

Number of Shares of Common Stock
to be Issued Pursuant to

Conversion of the Debenture:______________

Signature:___________________________________

Name:______________________________________

Address:____________________________________

 

The Borrower shall issue and deliver shares
of Common Stock to an overnight courier not later than three business days following receipt of the original Debenture(s) to be
converted, and shall make payments pursuant to the Debenture for the number of business days such issuance and delivery is late.

 

    	9SECURITIES PURCHASE AGREEMENT

(Signature Page)

 

ALMAH, INC.

Pembroke House 

28-32 Pembroke St Upper

Dublin 2, Ireland

 

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
Almah, Inc., a Nevada corporation (the “Company”), and the Investor.

2.The Company has
authorized the sale and issuance of up to 4,000,000 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 $0.75 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 $0.50 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: __________, 2013	Investor:	 
	 	 	 

	 	By: 	 

	 	Print Name:	 

	 	Title:	 
	 	 	 

	 	Address:	 

	 	 	 
	 	 	 
	 	 	 
	 	Phone:	 

	 	Fax:	 
	 	 	 
	 	Social Security Number or TIN (if applicable):

 

 

    	 

    	 

    

 

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 4,000,000 units
(“Units”) of the Company at $0.50 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 $0.75 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.

 

2.1At 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.

 

2.2The 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 June 30, 2014 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:

 

4.1Organization.
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.

    	 

    	 

    

 

4.2Due 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.

 

4.3Non-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.

 

4.4Capitalization.
As of the date of execution of this Agreement, there are 6,030,000 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.

 

4.5Legal 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.

 

4.6No 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.

    	 

    	 

    

 

5.Representations,
Warranties and Covenants of the Investor.

 

5.1The 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.

 

5.2The 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.

 

5.3The 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.

 

5.4The 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.

 

5.5The 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).

 

    	 

    	 

    

5.6Investor 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.

 

5.7The 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.

 

5.8The 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.

 

5.9A 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.

 

5.10For 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.

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.

    	 

    	 

    

 

(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.

 

(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.

 

5.11The 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.

 

5.12The 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 Arch Therapeutics, Inc., a Massachusetts corporation (“Arch”) in connection with that certain
binding letter of intent between the Company and Arch dated April 19, 2013.

 

5.13The 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.

 

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:	Almah, Inc.
	 	 	 	Pembroke House
	 	 	 	28-32 Pembroke St Upper
	 	 	 	Dublin 2, Ireland
	 	 	 	Attn: Chief Executive Officer
	 	 	 	Phone:  (353) 871536401
	 	 	 	 
	 	(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.

 

 

    	 

    	 

    

 

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 ARCH THERAPEUTICS,
INC., a MASSACHUSETTS CORPORATION (“ARCH”), PURSUANT TO WHICH ARCH 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 ARCH (THE “MERGER TRANSACTION”). ARCH OPERATES AS A LIFE SCIENCE COMPANY DEVELOPING
POLYMERS CONTAINING PEPTIDES INTENDED TO FORM GEL-LIKE BARRIERS OVER WOUNDS TO STOP OR CONTROL BLEEDING. ASSUMING
THE SUCCESSFUL CLOSING OF THE MERGER TRANSACTION, ARCH SHALL BECOME A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY AND THE BUSINESS OF
THE COMPANY SHALL CONSIST PRIMARILY OF THE BUSINESS OF ARCH.

 

AS USED BELOW, “WE,” “US”
AND “our” refer COLLECTIVELY to ALMAH, Inc. and ARCH, 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 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 manufacture and distribution of our products. We will also require additional financing to pay the fees and expenses necessary
to become and 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.

 

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.

 

 

We
will not be successful if the medical community AND OTHER POTENTIAL CUSTOMERS DO not adopt our productS.

 

Our success will depend on the acceptance
by the medical community and other potential customers of our proposed products.  We cannot predict how quickly, if at
all, the medical community or other potential customers will accept our products, or, if accepted, the continuation or extent of
their use.  Our potential customers must:

 

		·	believe that our products offer benefits compared to the methodologies and/or devices that they
are currently using;

		·	use our products and obtain acceptable clinical outcomes;

		·	believe that our products are worth the price that they will be asked to pay; and

		·	be willing to commit the time and resources required to change their current methodology.

 

Because we will be selling a new technology,
we have limited ability to predict the level of growth or timing in sales of these products. If we encounter difficulties in growing
our sales of our new medical products in the United States or internationally, our business will be seriously harmed.

 

If
we do not successfully train a sufficient number of surgeons to use our products, demand for our products could be adversely affected.

 

It is critical to the commercial success
of our products that we succeed in training a sufficient number of surgeons and in providing them adequate instruction in the use
of our products. This training requires a commitment of time and money by surgeons which they may be unwilling to give. Even if
surgeons are willing, if they are not properly trained, they may misuse or ineffectively use our products. This may result in unsatisfactory
patient outcomes, patient injury, negative publicity or lawsuits against us, any of which could damage our business, reduce product
sales and subject us to claims and other liabilities.

 

We
are subject to a number of existing laws and regulations, non-compliance with which could adversely affect our business, financial
condition and results of operations, and we are susceptible to a changing regulatory environment.

 

As a participant in the healthcare industry,
our operations and products, and those of our customers, will be regulated by numerous government agencies, both inside and outside
the United States. The impact of this on us is direct, to the extent we are subject to these laws and regulations, and indirect
in that in a number of situations, even though we may not be directly regulated by specific healthcare laws and regulations, our
products must be capable of being used by our customers in a manner that complies with those laws and regulations.

 

The manufacture, distribution, marketing
and use of our products will be subject to extensive regulation and increased scrutiny by the Federal Drug Enforcement Agency (FDA)
and other regulatory authorities globally. Any new product, including our hemostatic nanostructured synthetic peptide, 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, including additional 510(k) and other regulatory submissions, and approvals
are not certain. Our facilities must be approved and licensed prior to production and remain subject to inspection from time to
time thereafter. Failure to comply with the requirements of FDA or other regulatory authorities, including a failed inspection
or a failure in our adverse event reporting system, 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 and medical device 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.

 

The laws and regulations discussed above
are broad in scope and subject to evolving interpretations, which could require us to incur substantial cost associated with compliance
or to alter one or more of our sales and marketing practices and may subject us to enforcement actions which could adversely affect
our business, financial condition and results of operations.

 

Issues
with product quality could have an adverse effect upon our business, subject us to regulatory actions 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 meeting customer requirements, preventing
defects, improving the company’s 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
implementation of healthcare reform in the United States may adversely affect our business.

 

The Patient Protection and Affordable Care
Act (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 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 Act reduces Medicare and Medicaid payments to hospitals. While it 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.
Similarly, we cannot predict the impact of the additional regulations that need to be established to implement many of the Act’s
provisions.

 

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 payors. These payors include Medicare,
Medicaid, and private health care insurers in the United States and foreign governments and third-party payors outside the United
States. Public and private payors are increasingly challenging the prices charged for medical products and services. We may experience
downward pricing pressures from third-party payors which 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.

 

There
is substantial competition in the product markets in which we operate and in the development of alliances with research, academic
and governmental institutions.

 

We face substantial competition in healthcare
and pharmaceutical companies of all sizes. Competition is primarily focused on cost-effectiveness, price, service, product performance,
and technological innovation. 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 programs.
If we are unable to successfully compete with these companies and institutions, our business may suffer.

 

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 patents and licenses,
such as our license from the Massachusetts Institute of Technology relating to the hemostatic nanostructured synthetic peptide.
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 selling certain products or including key features in the company’s
products.

 

The patent position of a healthcare company
is often uncertain and involves complex legal and factual questions. Significant litigation concerning patents and products
is pervasive in our industry. Patent claims include challenges to the coverage and validity of our patents on products or processes
as well as allegations that our products infringe patents held by competitors or other third parties. 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 lead to a significant loss
of sales, or otherwise materially affect future results of operations.

 

We will rely on 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. Misappropriation or other loss of our intellectual property would have an adverse effect on our competitive position
and may cause us to incur substantial litigation costs.

 

If
our business development activities are unsuccessful, our business could suffer and our financial performance 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.

 

IMPACT OF CREDIT MARKET UNCERTAINTY.

 

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. 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 ARCH THERAPEUTICS, INC. 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 Arch 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 Arch, the U.S. economy, our ability
to obtain financing to complete the merger with Arch, and Arch board of directors and stockholders approval of the potential merger.
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 Arch, dated as of April 19, 2013, which contains various conditions, including approval by Arch’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.

 

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 March 31, 2013, 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 quarter ended
March 31, 2013, 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.

 

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. 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 Articles of Incorporation 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.

 

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, and no trades of our common stock have taken place on the OTCBB.  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.  If trading of our securities commences on the OTCBB, the trading volume we
will develop 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.

 

Even if our common stock will in the future
trade on the OTCBB, the price of such 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 300,000,000 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.

 

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 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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