PaulRiss:

JeanneRockman:

JonathanMason:

OfferingStatementforPhoenixPharmaLabsIncThisdocumentisgeneratedbyawebsitethatisoperatedbyNetcapitalSystems,LLC("Netcapital"),whichisnotaregisteredbroker-dealer.Netcapitaldoesnotgiveinvestmentadvice,endorsement,analysisorrecommendationswithrespecttoanysecurities.Allsecuritieslistedherearebeingofferedby,andallinformationincludedinthisdocumentaretheresponsibilityof,theapplicableissuerofsuchsecurities.Netcapitalhasnottakenanystepstoverifytheadequacy,accuracyorcompletenessofanyinformation.NeitherNetcapitalnoranyofitsofficers,directors,agentsandemployeesmakesanywarranty,expressorimplied,ofanykindwhatsoeverrelatedtotheadequacy,accuracyorcompletenessofanyinformationinthisdocumentortheuseofinformationinthisdocument.

AllRegulationCFofferingsareconductedthroughNetcapitalFundingPortalInc.("Portal"),anaffiliateofNetcapital,andaFINRA/SECregisteredfunding-portal.ForinquiriesrelatedtoRegulationCFsecuritiesactivity,contactNetcapitalFundingPortalInc.:

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Allnon-RegulationCFsecurities-relatedactivityonnetcapital.com,including,butnotlimitedtoprivateplacementofferingsunderRegulationDandA,areconductedbyLivingstonSecurities,LLC("Livingston"),anon-affiliateofNetcapital,andaregisteredbroker-dealer,andmemberFINRA/SIPC,locatedat626RexCorpPlaza,6thfloor,WestTower,Uniondale,NY11556.Forinquiriesrelatedtonon-RegulationCFsecuritiesactivity,contactLivingstonSecurities:

jeanne@livingstonsecurities.com

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Netcapital,PortalandLivingstondonotmakeinvestmentrecommendationsandnocommunication,throughthiswebsiteorinanyothermedium,shouldbeconstruedasarecommendationforanysecurityofferedonoroffthisinvestmentplatform.Equitycrowdfundinginvestmentsinprivateplacements,RegulationA,DandCFofferings,andstart-upinvestmentsinparticulararespeculativeandinvolveahighdegreeofriskandthoseinvestorswhocannotaffordtolosetheirentireinvestmentshouldnotinvestinstart-ups.Companiesseekingstartupinvestmentsthroughequitycrowdfundingtendtobeinearlierstagesofdevelopmentandtheirbusinessmodel,productsandservicesmaynotyetbefullydeveloped,operationalortestedinthepublicmarketplace.Thereisnoguaranteethatthestatedvaluationandothertermsareaccurateorinagreementwiththemarketorindustryvaluations.Additionally,investorsmayreceiveilliquidand/orrestrictedstockthatmaybesubjecttoholdingperiodrequirementsand/orliquidityconcerns.Inthemostsensibleinvestmentstrategyforstart-upinvesting,start-upsshouldonlybepartofyouroverallinvestmentportfolio.Further,thestart-upportionofyourportfoliomayincludeabalancedportfolioofdifferentstart-ups.Investmentsinstartupsarehighlyilliquidandthoseinvestorswhocannotholdaninvestmentforthelongterm(atleast5-7years)shouldnotinvest.

Theinformationcontainedhereinincludesforward-lookingstatements.Thesestatementsrelatetofutureeventsortofuturefinancialperformance,andinvolveknownandunknownrisks,uncertainties,andotherfactors,thatmaycauseactualresultstobemateriallydifferentfromanyfutureresults,levelsofactivity,performance,orachievementsexpressedorimpliedbytheseforward-lookingstatements.Youshouldnotplaceunduerelianceonforward-lookingstatementssincetheyinvolveknownandunknownrisks,uncertainties,andotherfactors,whichare,insomecases,beyondthecompany’scontrolandwhichcould,andlikelywill,materiallyaffectactualresults,levelsofactivity,performance,orachievements.Anyforward-lookingstatementreflectsthecurrentviewswithrespecttofutureeventsandissubjecttotheseandotherrisks,uncertainties,andassumptionsrelatingtooperations,resultsofoperations,growthstrategy,andliquidity.Noobligationexiststopubliclyupdateorrevisetheseforward-lookingstatementsforanyreason,ortoupdatethereasonsactualresultscoulddiffermateriallyfrom

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thoseanticipatedintheseforward-lookingstatements,evenifnewinformationbecomesavailableinthefuture.

TheCompany

1. Whatisthenameoftheissuer?

PhoenixPharmaLabsInc

Eligibility

2. ThefollowingaretrueforPhoenixPharmaLabsInc:

Organizedunder,andsubjectto,thelawsofaStateorterritoryoftheUnitedStatesortheDistrictofColumbia.

NotsubjecttotherequirementtofilereportspursuanttoSection13orSection15(d)oftheSecuritiesExchangeActof1934.

NotaninvestmentcompanyregisteredorrequiredtoberegisteredundertheInvestmentCompanyActof1940.

NotineligibletorelyonthisexemptionunderSection4(a)(6)oftheSecuritiesActasaresultofadisqualificationspecifiedinRule503(a)ofRegulationCrowdfunding.(Formoreinformationaboutthesedisqualifications,seeQuestion30ofthisQuestionandAnswerformat).

HasfiledwiththeCommissionandprovidedtoinvestors,totheextentrequired,theongoingannualreportsrequiredbyRegulationCrowdfundingduringthetwoyearsimmediatelyprecedingthefilingofthisofferingstatement(orforsuchshorterperiodthattheissuerwasrequiredtofilesuchreports).

Notadevelopmentstagecompanythat(a)hasnospecificbusinessplanor(b)hasindicatedthatitsbusinessplanistoengageinamergeroracquisitionwithanunidentifiedcompanyorcompanies.

3. HastheissueroranyofitspredecessorspreviouslyfailedtocomplywiththeongoingreportingrequirementsofRule202ofRegulationCrowdfunding?

No.

Directors,OfficersandPromotersoftheCompany

4. Thefollowingindividuals(orentities)representthecompanyasadirector,officerorpromoteroftheoffering:

TimmyChou

TimmyChouisVicePresident,ChiefFinancialOfficer,Secretary/TreasurerandBoardMemberofPhoenixPharmaLabs.Mr.Chou’scorporateexperienceincludesservingasaChiefFinancialOfficer,Controller,andCEO,aswellasamanagementconsultantfornumerouscompanies.TimmyhasservedinthisroleforPhoenixPharmLabsforoverthreeyears.HeisafoundingpartnerofSpectraConsultingGroup,whereforover20yearshehasperformedconsultingongrowthissuesinemergingbusinesses,includingspecializedconsultinginstrategicplanning,cashmanagement,capitalstructures,disputemediation,andorganizationalre-engineeringandprocessdevelopment.

TimmyisaserialentrepreneurandcurrentlyservesasanofficerofseveraloperatingpublicandprivatecompaniesandsitsonvariousBoardsasadirector.Hehasparticipatedinarchitectingnumerouscapitalstructuresandhasdevelopedstrategiesfordevelopment-stageenterprisesthathaveproducedsignificantdebtand/orequityinvestment.

LawrenceToll

Dr.LawrenceTollisChiefNeuropharmacologistandBoardMemberofPhoenixPharmaLabs.TimmyhasservedinthisroleforPhoenixPharmLabsforoverthreeyears.Dr.TollearnedhisPh.D.inBiologicalChemistryatUCLAin1978.HestayedonatUCLAasapostdoctoralfellowinBiologicalChemistrythrough1979atwhichtimeheacceptedasecondpostdoctoralfellowshipinPharmacologyatJohnsHopkinsUniversityinMaryland,whereheworkedfortherenownedneuroscientist,Dr.SolomonSnyder.In1981,Dr.TolljoinedSRIInternationalinMenloPark,California,wherehestayeduntil2011.Dr.Toll’sresearchtookhimtoFrancein1994-1995andagainin2004-2005whereheworkedasaVisitingScientist,firstintheLaboratoiredePharmacologieetdeToxicologieFondamentales,CentreNationaldelaRechercheScientifiqueinToulouse,France,andthenattheUniversityofLouisPasteur,InstitutdeGénétiqueetdeBiologieMoléculaireetCellulaireinStrasbourg,France.In2011,Dr.TolljoinedTorreyPinesInstituteforMolecularStudiesasaFullMemberandDirectorofNeuropharmacologyandmovedtoFloridaAtlanticUniversityasaFullProfessorin2018.Dr.Toll’sresearchfocusesonthemanagementofpainanddrugaddictionthroughpharmacologyandnewdrugdiscovery.HisbasicresearchonopioidandNOPsystems,andnicotinicacetylcholinereceptors,aswellashisidentificationandcharacterizationofendogenousneuropeptides,haveopenednewavenuesofresearchandidentifiednoveldrugtargets.Incollaborationwithmedicinalchemists,Dr.Tollseekstoexplorebasicmechanismsandthebiochemicalbasisofchronicpainanddrugaddiction,andtoidentifynovelmedicationsforbothdisorders.Heisinternationallyrecognizedastheco-discovereroftheneuropeptide,nociception,theendogenousligandfortheNOPreceptor,thefourthmemberoftheopioidreceptorfamily.Dr.Toll’sworkhasbeenchronicledinover130publications,and9patentsissuedorpending.HehasbeencontinuallyfundedbytheNationalInstituteonDrugAbusefor30years.

JohnALawson

Dr.JohnA.LawsonisFounder,ChairmanoftheBoardandChiefScientistofPhoenixPharmaLabs.TimmyhasservedinthisroleforPhoenixPharmLabsforoverthreeyears.Dr.Lawsonisanexpertinmedicinalandsyntheticorganicchemistry.AsaseniorMedicinalChemistandProjectManageratStanfordResearchInstitute(SRIInternational)for20years,heheadedtheNeurochemistryR&DGroupwithresponsibilitiesforthediscoveryanddevelopmentofnewcompoundsinneuroscienceareas,includinganalgesics,anti-convulsants,anxiolytics,andstroke.WhileatSRI,LawsoncollaboratedfortenyearswithDr.Toll,adirectorandconsultantforPPL(seebelow),onanalgesicdrugsunderNIHgrantfunding.Duringthisperiod,Dr.Lawsondiscoveredtheinitialclassofopioidscapableofrelievingpainwithoutthetypicalside-effectproblemsofmorphine-likeopioids.

ChrisTew

ChrisTewisVicePresidentandBoardMemberofPhoenixPharmaLabs.TimmyhasservedinthisroleforPhoenixPharmLabsforoverthreeyears.Chrisbringsover25yearsofprofessionalbiosciencesales,marketingandbusinessdevelopmentleadershipexperiencetothecompanyasasales,marketinganddevelopmentexecutivewithAmericanHospitalSupply,CooperVision,andAlcon.Later,Mr.TewjoinedProtocolSystemsasDirectorofU.S.Salesduringthecompany’sstart-upphasesoonbecomingVPofWorldwideSales.Mr.Tewplayedapivotalroleindrivingglobalsalesgrowthfrom$1.5milliontoover$65millionwhenthecompanywassold.Mr.Tewparticipatedintheprocessoftakingthecompanypublicandlaterincompletingthesuccessfulsaleofthecompanyfor$145milliontoWelchAllyn,Inc.Apioneer,Mr.Tewhasbeenresponsiblethroughouthiscareerforchampioningmanysuccessfulsalesandproductinitiativesbothinsideandoutsideofthesecompanies.Inaddition,Mr.Tewco-foundedHealthWareManagementCompany,ahealthcare

Lawson,JohnSecurities:

Class:

VotingPower:

Lawson,JohnSecurities:

Class:

VotingPower:

softwarecompany,whichwassoldataprofittoGlobalSoftware.Hecontinuestoserveasaboardmemberandinanadvisoryroletoavarietyofothercompanies.ChrisTewearnedhisBAofMassCommunicationsfromBrighamYoungUniversityin1976andcompletedanexecutivetrainingprogramatStanfordUniversityin1999.

WilliamWCrossman

WilliamCrossmanisPresident,CEOandBoardMemberofPhoenixPharmaLabs.BillisaseniormanagementprofessionalwithdomesticandinternationalexperienceasCEO,CFOandotherseniormanagementpositionsinenterprisesrangingfromentrepreneurialstart-upstoFortune100levelcompanies.Mr.Crossmanhasaproventrackrecordofsuccessfullycommercializingemergingtechnologies.Hehasassistednumerousearly-stagecompaniestorefinebusinessstrategies,commercializenewproducts,raisecapital,licensetechnologies,scalerevenuesandproduction,andexpandintoglobalmarkets.Crossmanalsohasexpertiseinimplementingleanbusinesspracticesandcontinuousimprovementstrategies.BillholdsaBSdegreefromtheU.S.MerchantMarineAcademyatKingsPointandaMBAfromtheHaasSchoolofBusinessattheUniversityofCalifornia–Berkeley.BillhasbeentheCEOofPhoenixforoverthreeyears.

PrincipalSecurityHolders

5. Providethenameandownershiplevelofeachperson,asofthemostrecentpracticabledate,whoisthebeneficialownerof20percentormoreoftheissuer’soutstandingvotingequitysecurities,calculatedonthebasisofvotingpower.Tocalculatetotalvotingpower,includeallsecuritiesforwhichthepersondirectlyorindirectlyhasorsharesthevotingpower,whichincludesthepowertovoteortodirectthevotingofsuchsecurities.Ifthepersonhastherighttoacquirevotingpowerofsuchsecuritieswithin60days,includingthroughtheexerciseofanyoption,warrantorright,theconversionofasecurity,orotherarrangement,orifsecuritiesareheldbyamemberofthefamily,throughcorporationsorpartnerships,orotherwiseinamannerthatwouldallowapersontodirectorcontrolthevotingofthesecurities(orshareinsuchdirectionorcontrol—as,forexample,aco-trustee)theyshouldbeincludedasbeing“beneficiallyowned.”Youshouldincludeanexplanationofthesecircumstancesinafootnotetothe“NumberofandClassofSecuritiesNowHeld.”Tocalculateoutstandingvotingequitysecurities,assumealloutstandingoptionsareexercisedandalloutstandingconvertiblesecuritiesconverted.

4,500,000

CommonStock

20.6%

2,550,000

PreferredA

96.2%

BusinessandAnticipatedBusinessPlan

6. Describeindetailthebusinessoftheissuerandtheanticipatedbusinessplanoftheissuer.

PhoenixPharmaLabs(PPL)isaprivatelyheld,preclinicaldrugdiscoverycompanyfocusedonthedevelopmentandcommercializationofnewpotent,non-addictivetreatmentsforpainaswellastreatmentofaddiction.Thestrategicobjectiveofthecompanyistoenterintolicenseagreementswithappropriatemarketleader(s)thathavetheresourcestomaximizethemarketpotentialofPPL’sdrugs.Suchlicenseswouldlikelybefortreatmentofpain,opioidaddiction,cocaineaddictionandanimalhealth.Thisobjectivewouldbemonitizedthroughpaymentsofupfrontfees,milestonepaymentsand/orroyaltiesfromthein-licensingcompanyorcompanies.Thecompany'sstrategyforout-licensingistoadvancePPL-103asquicklyaspossibleintohumanclinicaltrials,throughPhaseIandintoPhaseIItoProofofConcept(POC)inhumansatwhichpointitwillbeideallypositionedforout-licensing.Itispossible,however,thatthecompanycouldenteroneormorelicenseagreementsoranacquisitionoranIPObeforethatpointisreached.Atanyoneofthosepointsinvestorscouldrealizeareturnontheirinvestment,althoughthereisnoassurancethatanyofthoseexitpointswillbereached.

RiskFactors

Acrowdfundinginvestmentinvolvesrisk.Youshouldnotinvestanyfundsinthisofferingunlessyoucanaffordtoloseyourentireinvestment.

Inmakinganinvestmentdecision,investorsmustrelyontheirownexaminationoftheissuerandthetermsoftheoffering,includingthemeritsandrisksinvolved.Thesesecuritieshavenotbeenrecommendedorapprovedbyanyfederalorstatesecuritiescommissionorregulatoryauthority.Furthermore,theseauthoritieshavenotpassedupontheaccuracyoradequacyofthisdocument.

TheU.S.SecuritiesandExchangeCommissiondoesnotpassuponthemeritsofanysecuritiesofferedorthetermsoftheoffering,nordoesitpassupontheaccuracyorcompletenessofanyofferingdocumentorliterature.

Thesesecuritiesareofferedunderanexemptionfromregistration;however,theU.S.SecuritiesandExchangeCommissionhasnotmadeanindependentdeterminationthatthesesecuritiesareexemptfromregistration.

7. MaterialfactorsthatmakeaninvestmentinPhoenixPharmaLabsIncspeculativeorrisky:

1. Drugdevelopmentofnewchemicalentitiesdependonthesuccessfultransitionofcomplicatedandpainstakingclinicaltrialsandtheassociatedsatisfactorydemonstrationofsafetyandefficacy.AlthoughthemolecularbackboneunderpinningPhoenix'druganalogshasbeenevaluatedextensivelyandispresumedtopossesspredictableevaluationresults,nothingguaranteesthatsomeunknownadverseinteractionorunanticipatedeffectmaybediscovered.AfailureofPPL-103ineitherpre-clinicalstudiesorinhumanclinicaltrialscouldputanendtothefutureofthatdrugandlikelythecompanyaswell.Inthatcaseitislikelythatinvestorsinthecompanywouldlosealloftheirinvestmentprincipal.EvenwiththefundsraisedinthisequityofferingPPL'sfinancialresourceswillbelimited,sothereisnoassurancethatthecompanywillbeabletoadvancePPL-103sufficientlythroughclinicaltrialsforittobesufficientlyattractivetoapharmaceuticalcompanytolicenseoracquirethatassetonfavorablefinancialterms.ItmaybenecessaryforPPLtoraiseadditionalfundsfollowingthisequityofferinginwhichcasetheshareholderswouldbediluted.WeanticipatethatifPPL-103demonstratesthesameorsimilarresultsinhumanclinicaltrialsasithassofarinanimalstudiesthatalargepharmaceuticalcompanywilllicensethedrugoracquirethecompanyonfavorablefinancialtermsthatwouldyieldafavorablereturnforPPLshareholders.However,thereisnoassurancethatsuchalicensedealoracquisitionwillbeaccomplished.

2. Ourshortoperatinghistorymaymakeitdifficultforyoutoevaluatethesuccessofourbusinesstodateandourfutureviability.Start-upinvestingisrisky.Investinginearly-stagecompaniesisveryrisky,highlyspeculative,andshouldnotbemadebyanyonewhocannotaffordtolosetheirentireinvestment.Weareadevelopmentstagebiopharmaceuticalcompanywithaverylimitedoperatinghistory.Developingandcommercializingourcurrentproductcandidateandany

futureproductcandidateswillrequiresignificantpre-clinicalandclinicaltesting,aswellasregulatoryapprovalsforcommercializationandmarketingbeforewewillbeallowedtobeginanysignificantproductsales.Inaddition,commercializationofourproductcandidateslikelywouldrequireustoestablishasalesandmarketingorganizationandcontractualrelationshipstoenableproductmanufacturingandotherrelatedactivities.Consequently,itmaybedifficultforyoutomakeanypredictionsaboutourfuturesuccessorviability.

3. Wehaveincurredsignificantlossessinceinception.Weexpecttocontinuetoincursignificantoperatingexpensesandanticipatethatourexpensesandlosseswillincreaseintheforeseeablefutureasweseekto:•gainregulatoryapprovalsforourproductsthatsuccessfullycompleteclinicaltrials;•maintain,expandandprotectourintellectualpropertyportfolio;•seektocommercializeourproducts;•hireadditionalclinical,regulatory,qualitycontrol,scientificandmanagementpersonnel;and•addoperational,financial,accounting,facilitiesengineering,manufacturingandinformationsystemspersonnel,consistentwithexpandingouroperations.Tobecomeandremainprofitable,wemustsucceedindevelopingandeventuallycommercializingproductswithsignificantmarketpotential.Thiswillrequireustobesuccessfulinarangeofchallengingactivities,includingsuccessfullycompletingpreclinicaltestingandclinicaltrialsofourproducts,obtainingregulatoryapprovalforourproductsandmanufacturing,marketingandsellingourproducts.Weareonlyinthepreliminarystagesofmanyoftheseactivities.Wemayneversucceedintheseactivitiesandmaynevergeneraterevenuesthataresignificantorlargeenoughtoachieveprofitability.Evenifwedoachieveprofitability,wemaynotbeabletosustainorincreaseprofitabilityonaquarterlyorannualbasis.Ourfailuretobecomeandremainprofitablewoulddepressthepriceofourequitysecuritiesandcouldimpairourabilitytoraisecapital,expandourbusinessorcontinueouroperations.

4. Wewillneedsubstantialadditionalfundingandmaybeunabletoraisecapitalwhenneeded,whichwouldforceustodelay,reduceoreliminateourproductdevelopmentprogramsorcommercializationefforts.

5. Weexpectthatourresearchanddevelopmentexpenseswillcontinuetoincreaseinconnectionwithourongoingactivities,particularlyaswecommenceclinicaldevelopmentforourproducts.Wewillneedtoraiseadditionalfundstocompleteourplannedclinicaltrialprograms.Ifwearenotabletoenterintocollaborationagreementsontermsthatareacceptabletous,wewillneedtoraiseadditionalcapitaltofundthesetrialsordelayorabandonthetrials.Inaddition,weexpecttoincursignificantcommercializationexpensesforproductsalesandmarketing.Accordingly,weexpectthatwewillneedsubstantialadditionalfundingandmaybeunabletoraisecapitalwhenneededoronattractiveterms,whichwouldforceustodelay,reduceoreliminateourresearchanddevelopmentprogramsorcommercializationefforts.Ourfuturecapitalrequirementswilldependonmanyfactors,including:•thescope,progressandresultsofourresearchandpreclinicaldevelopmentprograms;•thescope,progress,results,costs,timingandoutcomesoftheclinicaltrialsofourproducts;•thetimingofenteringinto,andthetermsof,oneormorecollaborationagreementswithoneormorethirdpartiesforourproducts;•thetimingofandthecostsinvolvedinobtainingregulatoryapprovalsforourproducts;•thecostsofoperating,expandingandenhancingmanufacturingfacilitiesandcapabilitiestosupportourclinicalactivitiesandourcommercializationactivities;•thecostsofmaintaining,expandingandprotectingourintellectualpropertyportfolio,includingpotentiallitigationcostsandliabilities;•revenuesreceivedfromsalesofourproducts;and•thecostsofadditionalgeneralandadministrativepersonnel,includingaccountingandfinance,legalandhumanresourcesemployees.Asaresultoftheseandotherfactors,weexpectthatwewillseekadditionalfundinginthefuture.Wewouldlikelyseeksuchfundingthroughdebtorequityfinancingsorsomecombinationofthetwo.Wewillalsolikelyseekfundingthroughcollaborativearrangementsifwedeterminethemtobenecessaryorappropriate.Additionalfundingmaynotbeavailableonacceptableterms,oratall.Ifweobtaincapitalthroughcollaborativearrangements,thesearrangementscouldrequireustorelinquishrightstoourtechnologyorproductsandcouldresultinusreceivingonlyaportionoftherevenuesassociatedwiththepartneredproduct.Ifweraisecapitalthroughthesaleofequity,orsecuritiesconvertibleintoequity,itwouldresultindilutiontoourthenexistingequityholders.Ifweraiseadditionalcapitalthroughtheincurrenceofindebtedness,wewouldlikelybecomesubjecttocovenantsrestrictingourbusinessactivities,andholdersofdebtinstrumentswouldhaverightsandprivilegesseniortothoseofourequityinvestors.Inaddition,servicingtheinterestandprincipalrepaymentobligationsunderdebt

facilitiescoulddivertfundsthatwouldotherwisebeavailabletosupportresearchanddevelopment,clinicalorcommercializationactivities.Ifweareunabletoobtainadequatefinancingonatimelybasisinthefuture,wewouldlikelyberequiredtodelay,reduceoreliminateoneormoreproductdevelopmentprograms.

6. Ifwefailtosuccessfullymanageourgrowth,ourbusinesscouldbeadverselyaffected.Weanticipateincreasingthescaleofouroperationsaswedevelopourproducts.Ifweareunabletomanageourgrowtheffectively,ouroperationsandfinancialconditioncouldbeadverselyaffected.Themanagementofourgrowthwilldepend,amongotherthings,uponourabilitytodevelopandimproveouroperational,financialandmanagementcontrols,reportingsystemsandprocedures.Furthermore,wemayhavetomakeinvestmentsinandhireandtrainadditionalpersonnelforouroperations,whichwouldresultinadditionalburdensonoursystemsandresourcesandrequireadditionalcapitalexpenditures.

7. Ourproductdevelopmentprogramswillbebasedonnoveltechnologiesandareinherentlyrisky.Wewillbesubjecttotherisksoffailureinherentinthedevelopmentofproductsbasedonnewtechnologies.TheFDAmaynotapproveourproductsormayapprovethemwithcertainrestrictionsthatmaylimitourabilitytomarketourproducts,andourproductsmaynotbesuccessfullycommercialized,ifatall.

8. Ourclinicaltrialsmaynotbesuccessful.Weintendtoconductclinicalstudies.Preclinicalandclinicaltestingisexpensive,difficulttodesignandimplementandcantakemanyyearstocomplete.Afailureofoneormoreofourpreclinicalstudiesorclinicaltrialscanoccuratanystageoftesting.Wemayexperiencenumerousunforeseeneventsduring,orasaresultof,preclinicaltestingandtheclinicaltrialprocessthatcoulddelayorpreventourabilitytoobtainregulatoryapprovalorcommercializeourproducts,including:•ourpreclinicaltestsorclinicaltrialsmayproducenegativeorinconclusiveresults,andwemaydecide,orregulatorsmayrequireus,toconductadditionalpreclinicaltestingorclinicaltrialsorwemayabandonprojectsthatwecurrentlyexpecttobepromising;•regulatorsorinstitutionalreviewboardsmaynotauthorizeustocommenceaclinicaltrialorconductaclinicaltrialataprospectivetrialsite;•enrollmentinclinicaltrialsmaytakelongerthanexpectedortheclinicaltrialsasdesignedmaynotallowforsufficientpatientaccrualtocompleteenrollmentofthetrial;•conditionsimposedbytheFDAoranynon-USregulatoryauthorityregardingthescopeordesignofourclinicaltrialsmayrequireustosubmitinformationtoregulatoryauthorities,ethicscommitteesorothersforreviewandapproval;•thenumberofpatientsrequiredforourclinicaltrialsmaybelargerthananticipatedorparticipantsmaydropoutofclinicaltrialsatahigherratethananticipated;•thirdpartycontractorsorclinicalinvestigatorsmayfailtocomplywithregulatoryrequirementsorfailtomeettheircontractualobligationsinatimelymanner;•wemayhavetosuspendorterminateclinicaltrialsifwe,regulatorsorinstitutionalreviewboardsdeterminethattheparticipantsarebeingexposedtounacceptablehealthrisks;•wemaynotbeabletodemonstratethatourproductsprovideanadvantageovercurrentstandardofcareorfuturecompetitivetherapiesindevelopment;•regulatorsorinstitutionalreviewboardsmayrequireustohold,suspendorterminateclinicalresearchforvariousreasons,includingnoncompliancewithregulatoryrequirements;•thecostofclinicaltrialsmaybegreaterthananticipated;•thesupplyorqualityofthematerialsnecessarytoconductclinicaltrialsmaybeinsufficientorinadequateorwemaynotbeabletoreachagreementsonacceptabletermswithprospectiveclinicalresearchorganizations;and•theeffectsofourformulationsmaynotbethedesiredeffectsormayincludeundesirablesideeffects.Wehavelimitedexperienceinconductingandmanagingthepreclinicaldevelopmentactivitiesandclinicaltrialsnecessarytoobtainregulatoryapprovals,includingapprovalbytheFDA.Ourlimitedexperiencemightpreventusfromsuccessfullydesigningorimplementingaclinicaltrial.Wehavelimitedexperienceinconductingandmanagingtheapplicationprocessnecessarytoobtainregulatoryapprovalsandmightnotbeabletodemonstratethatourproductsmeettheappropriatestandardsforregulatoryapproval.Ifwearenotsuccessfulinconductingandmanagingourpreclinicaldevelopmentactivitiesorclinicaltrialsorobtainingregulatoryapprovals,wemightnotbeabletocommercializeourproducts,ormightbesignificantlydelayedindoingso,whichwillmateriallyharmourbusiness.

9. Wemaynotbeabletosecureandmaintainrelationshipswithresearchinstitutionsandclinicalinvestigatorsthatarecapableofconductingandhaveaccesstonecessarypatientpopulationsfortheconductofourclinicaltrials.Wewillrelyonresearchinstitutionsandclinicalinvestigatorstoconductourclinicaltrials.Ourrelianceuponresearchinstitutions,includinghospitalsand

clinics,providesuswithlesscontroloverthetimingandcostofclinicaltrialsandtheabilitytorecruitsubjects.Ifweareunabletoreachagreementwithsuitableresearchinstitutionsandclinicalinvestigatorsonacceptableterms,orifanyresultingagreementisterminatedbecause,forexample,theresearchinstitutionand/orclinicalinvestigatorslosetheirlicensesorpermitsnecessarytoconductourclinicaltrials,wemaybeunabletoquicklyreplacetheresearchinstitutionand/orclinicalinvestigatorwithanotherqualifiedresearchinstitutionand/orclinicalinvestigatoronacceptableterms.Wemaynotbeabletosecureandmaintainagreementwithsuitableresearchinstitutionstoconductourclinicaltrials.

10. Ourproductsmaynotgainmarketacceptance,whichwouldhaveanegativeimpactonoursales.Ourproductsmaynotgainmarketacceptancebyphysicians,patients,third-partypayorsandothersinthemedicalcommunity.Iftheproductsdonotachieveanadequatelevelofacceptance,wemaynotgeneratesignificantproductrevenueandmaynotbecomeprofitable.Thedegreeofmarketacceptanceofourproductswilldependonanumberoffactors,including:•Theprevalenceandseverityofanysideeffects,includinganylimitationsorwarningscontainedinapprovedlabeling;•Productpricing;•Thewillingnessofthetargetpatientpopulationtotrynewtherapiesandofphysicianstoprescribethesetherapies;•Thestrengthofmarketinganddistributionsupportandtimingofmarketintroductionofcompetitiveproducts;•Publicityconcerningusorcompetingproductsandtreatments;and•Sufficientthird-partyinsurancecoverageorreimbursement.Oureffortstoeducatethemedicalcommunityandthird-partypayorsonthebenefitsofourproductsmayrequiresignificantresourcesandmayneverbesuccessful.Sucheffortstoeducatethemarketplacemayrequiremoreresourcesthanarerequiredbytheconventionaltechnologiesmarketedbyourcompetitors.

11. Wewillseektopursuepartnershipopportunities,licensingrelationshipsandothercollaborativerelationshipsthatwillexpandandenhanceourproductdevelopmentplans.Relianceonpartnerships,licenses,andcollaborativerelationshipsposesanumberofrisks,however,includingthefollowing:•Wemayfacesignificantcompetitioninseekingappropriatecollaboratorsandlicensees;•Collaborationandlicensingarrangementsarecomplexandtimeconsumingtonegotiate,documentandimplement;•Wemaynotbesuccessfulinoureffortstoestablishandimplementcollaborations,licensesorotheralternativearrangementsthatwemightpursueonfavorableterms;•Wemaynotbeabletoeffectivelycontrolwhetherourpartnerswilldevotesufficientresourcestoourprogramsorproducts;•Disputesmayariseinthefuturewithrespecttotheownershipofrightstotechnologydevelopedwith,licensedtoorlicensedfrompartners;•Disagreementswithpartnersandlicenseesaredifficulttoresolveandcouldresultinlossofintellectualpropertyrights,delayorterminatetheresearch,developmentorcommercializationofproductcandidatesorresultinlitigationorarbitration;•Contractswithpartnersandlicensesmayfailtoprovidesufficientprotectionofourintellectualproperty;and•Wemayhavedifficultyenforcingthecontractsifoneofthesepartnersorlicenseesfailstoperform.Agreatdealofuncertaintyexistsregardingthesuccessofanycollaborativeefforts.Failureoftheseeffortscoulddelay,impairorpreventthedevelopmentandcommercializationofourproductsandadverselyaffectourbusiness,financialcondition,resultsofoperationsandprospects.

12. Ifproductliabilitylawsuitsarebroughtagainstus,wemayincursubstantialliabilitiesandmayberequiredtolimitcommercializationofourproductcandidates.Themanufactureandsaleofhumantherapeuticproductsinvolvesaninherentriskofproductliabilityclaimsandassociatedadversepublicity.Wefaceproductliabilityexposurerelatedtothetestingofourproductcandidatesinhumanclinicaltrials,andclaimscouldbebroughtagainstusifuseormisuseofoneofourproductcandidatescauses,ormerelyappearstohavecaused,personalinjuryordeath.Weintendtoobtainproductliabilityinsuranceforourproductsanddevelopmentprogram,butwedonotknowifwewillbeabletocontinuetoobtainproductliabilityinsuranceonacceptabletermsorwithadequatecoverageagainstpotentialliabilitiesinthefuture.Thistypeofinsuranceisexpensiveandmaynotbeavailableonacceptableterms.Ifweareunabletomaintainsufficientinsurancecoverageonreasonabletermsortootherwiseprotectagainstpotentialproductliabilityclaims,wemaybeunabletocommercializeourproducts.Asuccessfulproductliabilityclaimbroughtagainstusinexcessofitsinsurancecoverage,ifany,mayrequirepaymentofsubstantialamountsandhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsorfutureprospects.

13. Ifweareunabletoprotectourintellectualproperty,ourcompetitivenessandbusinessprospectsmaybemateriallydamaged.Oursuccesswilldependinpartonourabilitytoprotectproprietary

technologyandtoobtainpatentprotectionforourproducts,preventthirdpartiesfrominfringingonourpatentsandrefrainfrominfringingonthepatentsofothers,bothdomesticallyandinternationally.Webelievethatwehaveaccesstothematerialintellectualpropertythatweneedtodevelopandcommercializeourproductcandidatesascurrentlycontemplated,butinthefuturewemayneedaccesstoadditionalintellectualpropertyifourplanschangeorunforeseencircumstancesarise.Anyarrangementwithrespecttosuchintellectualpropertyrightsmayresultindilutiontoourequityholdersandadditionaldebtandroyaltyobligationsandotherpaymentobligationsforus.Inaddition,thepatentsituationinthefieldofbiotechnologyandpharmaceuticalsgenerallyishighlyuncertainandinvolvescomplexlegal,technical,scientificandfactualquestions.Weintendtoactivelypursuepatentprotectionforproductsresultingfromourresearchanddevelopmentactivitiesthathavesignificantpotentialcommercialvalue.Wemaynotbeabletoobtainissuedpatentsrelatingtoourtechnologyorproducts.Evenifissued,patentsissuedtousorourlicensorsmaybechallenged,narrowed,invalidated,heldtobeunenforceableorcircumvented,whichcouldlimitourabilitytostopcompetitorsfrommarketingsimilarproductsorreducethetermofpatentprotectionwemayhaveforourproducts.Therecanbenoassurancethatanypatentsobtainedwillafforduswithadequateprotectionorprovideuswithanymeaningfulcompetitiveadvantagesagainstthesecompetitors.ChangesineitherpatentlawsorininterpretationsofpatentlawsintheUSandothercountriesmaydiminishthevalueofourintellectualpropertyornarrowthescopeofourpatentprotection.Inaddition,anypatentsweprocuremayrequirecooperationwithcompaniesholdingrelatedpatentsandwemayhavedifficultyformingasuccessfulrelationshipwithsuchothercompanies.Thirdpartiesmayclaimthatweareinfringinguponorhavemisappropriatedtheirproprietaryrights.Wecangivenoassurancesastowhetheranyissuedpatentsorpatentsthatmaylaterissuetothirdparties,wouldaffectourcontemplatedcommercializationofourproductcandidates.Wecangivenoassurancesthatsuchpatentscanbeavoided,invalidatedorlicensed.Withrespecttoanyinfringementclaimassertedbyathirdparty,wecangivenoassurancesthatwewillbesuccessfulinthelitigationorthatsuchlitigationwouldnothaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationorprospects.Intheeventofasuccessfulclaimagainstusforinfringementormisappropriationofathirdparty’sproprietaryrights,wemayberequiredto:•Paydamages,includinguptotrebledamages,andtheotherparty’sattorneys’fees,whichmaybesubstantial;•Ceasethedevelopment,manufacture,marketingandsaleofproductsoruseofprocessesthatinfringetheproprietaryrightsofothers;•Expendsignificantresourcestoredesignourproductsorourprocessessothattheydonotinfringetheproprietaryrightsofothers,whichmaynotbepossible;•Redesignourproductsorprocessestoavoidthird-partyproprietaryrights,whichmeanswemaysuffersignificantregulatorydelaysassociatedwithconductingadditionalclinicaltrialsorotherstepstoobtainregulatoryapproval;and•Obtainoneormorelicensesarisingoutofasettlementoflitigationorotherwisefromthirdpartiesfortheinfringedproprietaryrights,whichmaynotbeavailabletousonacceptabletermsoratall.Furthermore,litigationwithanythirdparty,eveniftheallegationsarewithoutmerit,wouldlikelybeexpensiveandtime-consuminganddivertmanagement’sattention.Inaddition,wemayhavetoundertakecostlylitigationtoenforceanypatentsissuedorlicensedtousortodeterminethescopeandvalidityofanotherparty’sproprietaryrights.Anadverseoutcomeinlitigationorinterferenceorotherproceedinginanycourtorpatentofficecouldmateriallyadverselyaffectourabilitytodevelopandcommercializeourproducts.Inadditiontopatents,weandourpartnersalsorelyontradesecretsandproprietaryknow-how.Althoughwehavetakenstepstoprotectourtradesecretsandunpatentedknow-how,includingenteringintoconfidentialityagreementswiththirdparties,andconfidentialinformationandinventionsagreementswithemployees,consultantsandadvisors,thirdpartiesmaystillobtainthisinformationorcomeuponthissameorsimilarinformationindependently.Ifanyoftheseeventsoccurs,orweotherwiseloseprotectionforourtradesecretsorproprietaryknow-how,thevalueofthisinformationmaybegreatlyreduced.

14. Ifweareunabletosuccessfullymanageourgrowth,ourbusinessmaybeharmed.Oursuccesswilldependupontheexpansionofouroperationsandtheeffectivemanagementofourgrowth,whichwillplaceasignificantstrainonourmanagementandonouradministrative,operationalandfinancialresources.Tomanagethisgrowth,wemustexpandourfacilities,augmentouroperational,financialandmanagementsystemsandhireandtrainadditionalqualifiedpersonnel.Ifweareunabletomanageourgrowtheffectively,ourbusinesswouldbeharmed.

15. Certainaspectsofourbusinesspracticesaresubjecttoscrutinybyregulatoryauthorities,aswellastolawsuitsbroughtbyprivatecitizensunderfederalandstatelaws.Failuretocomplywithapplicablelaworanadversedecisioninlawsuitsmayresultinadverseconsequencestous.ThelawsgoverningourconductintheUnitedStatesareenforceablebycriminal,civilandadministrativepenalties.ViolationsoflawssuchastheFederalFood,DrugandCosmeticAct,theFalseClaimsActandtheAnti-KickbackLawandthePublicHealthServiceAct,andanyregulationspromulgatedundertheirauthority,mayresultinjailsentences,finesorexclusionfromfederalandstateprograms,asmaybedeterminedbyMedicare,MedicaidandtheDepartmentofDefenseandotherregulatoryauthoritiesaswellasbythecourts.Therecanbenoassurancethatouractivitieswillnotcomeunderthescrutinyofregulatorsandothergovernmentauthoritiesorthatourpracticeswillnotbefoundtoviolateapplicablelaws,rulesandregulationsorpromptlawsuitsbyprivatecitizen“relators”underfederalorstatefalseclaimslaws.

16. Becausetheresultsofpreclinicalstudiesandearlyclinicaltrialarenotnecessarilypredictiveoffutureresults,theadvancementofourproductcandidatesintoclinicaltrialsmaynothavefavorableresultsinlaterclinicaltrials,ifany,orreceiveregulatoryapproval.Pharmaceuticalorbiologicdevelopmenthasinherentrisk.Wewillberequiredtodemonstratethroughwell-controlledclinicaltrialsthatourproductcandidatesareeffectivewithafavorablebenefit-riskprofileforuseintheirtargetindicationsbeforewecanseekregulatoryapprovalsfortheircommercialsale.Successinearlyclinicaltrialsdoesnotmeanthatlaterclinicaltrialswillbesuccessfulasaproductcandidateinlater-stagedclinicaltrialsmayfailtodemonstratesufficientsafetyorefficacydespitehavingprogressedthroughinitialclinicaltesting.Companiesfrequentlysuffersignificantsetbacksinadvancedclinicaltrials,evenafterearlierclinicaltrialshaveshownpromisingresults.Inaddition,onlyasmallpercentageofdrugsunderdevelopmentresultinsubmissionofaBLAtotheFDAandevenfewerareapprovedforcommercialization.

17. Anyproductcandidatewemayadvanceintoclinicaldevelopmentissubjecttoextensiveregulation,whichcanbecostlyandtime-consuming,causeunanticipateddelaysorpreventthereceiptoftherequiredapprovalstocommercializeourproductcandidates.Theclinicaldevelopment,manufacturing,labeling,storage,record-keeping,advertising,promotion,import,export,marketinganddistributionofourcurrentproductcandidateoranyfutureproductcandidateissubjecttoextensiveregulationbytheFDAintheUnitedStatesandbycomparablehealthauthoritiesinforeignmarkets.IntheUnitedStates,wearenotpermittedtomarketanyproductcandidatesuntilwereceiveapprovalofaBLAfromtheFDA.TheprocessofobtainingBLAapprovalisexpensive,oftentakesmanyyearsandcanvarysubstantiallybaseduponthetype,complexityandnoveltyoftheproductsinvolved.ApprovalpoliciesorregulationsmaychangeandtheFDAhassubstantialdiscretioninthepharmaceuticalapprovalprocess,includingtheabilitytodelay,limitordenyapprovalofaproductcandidateformanyreasons.Despitethetimeandexpenseinvestedinclinicaldevelopmentofproductcandidates,regulatoryapprovalisneverguaranteed.TheFDAorandotherregulatoryagenciescandelay,limitordenyapprovalofaproductcandidateformanyreasons,including:·theFDAorcomparableforeignregulatoryauthoritiesmaydisagreewiththedesignorimplementationofourclinicaltrials;·wemaybeunabletodemonstratetothesatisfactionoftheFDAthataproductcandidateissafeandeffectiveforanyindication;·theFDAmaynotacceptclinicaldatafromtrialswhichareconductedbyindividualinvestigatorsorincountrieswherethestandardofcareispotentiallydifferentfromtheUnitedStates;·theresultsofclinicaltrialsmaynotmeetthelevelofstatisticalsignificancerequiredbytheFDAforapproval;·wemaybeunabletodemonstratethataproductcandidate’sclinicalandotherbenefitsoutweighitssafetyrisks;·theFDAmaydisagreewithourinterpretationofdatafrompreclinicalstudiesorclinicaltrials;·theFDAmayfailtoapprovethemanufacturingprocessesorfacilitiesofthird-partymanufacturerswithwhichweorourcollaboratorscontractforclinicalandcommercialsupplies;or·theapprovalpoliciesorregulationsoftheFDAmaysignificantlychangeinamannerrenderingourclinicaldatainsufficientforapproval.Withrespecttoforeignmarkets,approvalproceduresvaryamongcountries,and,inadditiontotheaforementionedrisks,caninvolveadditionalproducttesting,administrativereviewperiodsandagreementswithpricingauthorities.Anydelayinobtaining,orinabilitytoobtain,applicableregulatoryapprovalswouldpreventusfromcommercializingourproductcandidates.

18. Delaysinthecommencementofclinicaltrialsanddelaysinthereceiptofdatafrompreclinicalorclinicaltrialsconductedbythirdpartiescouldsignificantlyimpactourproductdevelopment

costsandthetimerequiredtocommercializeourproducts.BeforewecaninitiateclinicaltrialsintheUnitedStatesforanyproductcandidate,weneedtosubmittheresultsofpreclinicaltestingtotheFDAaspartofanIND,alongwithotherinformationincludinginformationaboutproductchemistry,manufacturingandcontrolsandourproposedclinicaltrialprotocol.Wecurrentlyplantorelyonpreclinical,clinicalandqualitydatafromthirdpartiesfortheINDsubmissionforourcurrentproductcandidateandanyfutureproductcandidates.Ifweareunabletousesuchdataforanyreason,includingreasonsoutsideofourcontrol,itwilldelayourplansforINDfilings,andclinicaltrialplans.Ifthosethirdpartiesdonotmakethisdataavailabletous,wewilllikely,onourown,havetodevelopallthenecessarypreclinicalandclinicaldatawhichwillleadtoadditionaldelaysandincreasethecostsofourdevelopmentofproductcandidates.Inaddition,theFDAmayrequireustoconductadditionalpreclinicaltestingforanyproductcandidatebeforeitallowsustoinitiatetheclinicaltestingunderanyIND,whichmayleadtoadditionaldelaysandincreasethecostsofourpreclinicaldevelopment.EvenassuminganactiveINDforaproductcandidate,clinicaltrialscanbedelayedforavarietyofreasons,includingdelaysin:·obtainingregulatoryclearancetocommenceaclinicaltrial;·identifying,recruitingandtrainingsuitableclinicalinvestigators;·reachingagreementonacceptabletermswithprospectivecontractresearchorganizations(“CROs”)andtrialsites,thetermsofwhichcanbesubjecttoextensivenegotiation,maybesubjecttomodificationfromtimetotimeandmayvarysignificantlyamongdifferentCROsandtrialsites;·obtainingsufficientquantitiesofaproductcandidateforuseinclinicaltrials;·obtainingIRBorethicscommitteeapprovaltoconductaclinicaltrialataprospectivesite;·identifying,recruitingandenrollingpatientstoparticipateinaclinicaltrial;and·retainingpatientswhohaveinitiatedaclinicaltrialbutmaywithdrawduetoadverseeventsfromthetherapy,insufficientefficacy,fatiguewiththeclinicaltrialprocessorpersonalissues.Anydelaysinthecommencementofourclinicaltrialswilldelayourabilitytopursueregulatoryapprovalforourproductcandidates.Inaddition,manyofthefactorsthatcause,orleadto,adelayinthecommencementofclinicaltrialsmayalsoultimatelyleadtothedenialofregulatoryapprovalofaproductcandidate.

19. Delaysinthecompletionofclinicaltestingcouldresultinincreasedcoststousanddelayourabilitytogenerateproductrevenues.Onceaclinicaltrialhasbegun,patientrecruitmentandenrollmentmaybeslowerthanweanticipate.Clinicaltrialsmayalsobedelayedasaresultofambiguousornegativeinterimresults.Further,aclinicaltrialmaybesuspendedorterminatedbyus,anIRB,anethicscommitteeoraDataMonitoringCommitteeoverseeingtheclinicaltrial,anyofourclinicaltrialsiteswithrespecttothatsiteortheFDAorotherregulatoryauthoritiesduetoanumberoffactors,including:·failuretoconducttheclinicaltrialinaccordancewithregulatoryrequirementsorourclinicalprotocols;·inspectionoftheclinicaltrialoperationsorclinicaltrialsitebytheFDAorotherregulatoryauthoritiesresultingintheimpositionofaclinicalhold;·unforeseensafetyissuesoranydeterminationthattheclinicaltrialpresentsunacceptablehealthrisks;and·lackofadequatefundingtocontinuetheclinicaltrial.Changesinregulatoryrequirementsandguidancealsomayoccurandwemayneedtoamendclinicaltrialprotocolstoreflectthesechanges.AmendmentsmayrequireustoresubmitourclinicaltrialprotocolstoIRBsforre-examination,whichmayimpactthecosts,timingandthelikelihoodofasuccessfulcompletionofaclinicaltrial.Ifweexperiencedelaysinthecompletionof,orifwemustterminate,anyclinicaltrialofanyproductcandidate,ourabilitytoobtainregulatoryapprovalforthatproductcandidatewillbedelayedandthecommercialprospects,ifany,fortheproductcandidatemaysufferasaresult.Inaddition,manyofthesefactorsmayalsoultimatelyleadtothedenialofregulatoryapprovalofaproductcandidate.

20. Weintendtorelyonthirdpartiestoconductourclinicaltrials.Ifthesethirdpartiesdonotmeetourdeadlinesorotherwiseconductthetrialsasrequired,ourclinicaldevelopmentprogramscouldbedelayedorunsuccessfulandwemaynotbeabletoobtainregulatoryapprovalfororcommercializeourproductcandidateswhenexpectedoratall.Wedonothavetheabilitytoconductallaspectsofourpreclinicaltestingorclinicaltrialsourselves.WeintendtouseCROstoconductourplannedclinicaltrialsandwillrelyuponmedicalinstitutions,clinicalinvestigatorsandcontractresearchorganizationsandconsultantstoconductourtrialsinaccordancewithourclinicalprotocols.OurfutureCROs,investigatorsandotherthirdpartiesplayasignificantroleintheconductofthesetrialsandthesubsequentcollectionandanalysisofdatafromtheclinicaltrials.ThereisnoguaranteethatanyCROs,investigatorsandotherthirdpartiesuponwhichwerelyforadministrationandconductofourclinicaltrialswilldevoteadequatetimeandresourcestosuchtrialsorperformascontractuallyrequired.Ifanyofthesethirdpartiesfailtomeet

expecteddeadlines,failtoadheretoourclinicalprotocolsorotherwiseperforminasubstandardmanner,ourclinicaltrialsmaybeextended,delayedorterminated.Ifanyofourclinicaltrialsitesterminateforanyreason,wemayexperiencethelossoffollow-upinformationonpatientsenrolledinourongoingclinicaltrialsunlessweareabletotransferthecareofthosepatientstoanotherqualifiedclinicaltrialsite.Inaddition,principalinvestigatorsforourclinicaltrialsmayserveasscientificadvisorsorconsultantstousfromtimetotimeandreceivecashorequitycompensationinconnectionwithsuchservices.Iftheserelationshipsandanyrelatedcompensationresultinperceivedoractualconflictsofinterest,theintegrityofthedatageneratedattheapplicableclinicaltrialsitemaybejeopardized.

21. Ifourcompetitorsdeveloptreatmentsforthetargetindicationsofourproductcandidatesthatareapprovedmorequickly,marketedmoresuccessfullyordemonstratedtobemoreeffectivethanourproductcandidates,ourcommercialopportunitywillbereducedoreliminated.Weoperateinhighlycompetitivesegmentsofthepharmaceuticalmarket.Wefacecompetitionfrommanydifferentsources,includingcommercialpharmaceuticalandbiotechnologyenterprises,academicinstitutions,governmentagencies,andprivateandpublicresearchinstitutions.Ourcurrentproductcandidate,ifsuccessfullydevelopedandapproved,willcompetewithestablishedtherapies,aswellasnewtreatmentsthatmaybeintroducedbyourcompetitors.Manyofourcompetitorshavesignificantlygreaterfinancial,productdevelopment,manufacturingandmarketingresourcesthanus.Largepharmaceuticalcompanieshaveextensiveexperienceinclinicaltestingandobtainingregulatoryapprovalfordrugs.Inaddition,manyuniversitiesandprivateandpublicresearchinstitutesareactiveinmedicalresearch,someindirectcompetitionwithus.Wealsomaycompetewiththeseorganizationstorecruitmanagement,scientistsandclinicaldevelopmentpersonnel.Smallerorearly-stagecompaniesmayalsoprovetobesignificantcompetitors,particularlythroughcollaborativearrangementswithlargeandestablishedcompanies.Newdevelopments,includingthedevelopmentofotherpharmaceuticaltechnologiesandmethodsoftreatingdisease,occurinthepharmaceuticalandlifesciencesindustriesatarapidpace.Developmentsbycompetitorsmayrenderourproductcandidatesobsoleteornoncompetitive.Wewillalsofacecompetitionfromthesethirdpartiesinrecruitingandretainingqualifiedpersonnel,establishingclinicaltrialsitesandpatientregistrationforclinicaltrialsandinidentifyingandin-licensingnewproductcandidates.

22. Werelycompletelyonthirdpartiestomanufactureourpreclinicalandclinicalpharmaceuticalsuppliesandexpecttocontinuetorelyonthirdpartiestoproducecommercialsuppliesofanyapprovedproductcandidate,andourdependenceonthirdpartysupplierscouldadverselyimpactourbusiness.Wearecompletelydependentonthirdpartymanufacturersforproductsupply.Ifathirdpartybecomesunableorunwillingtodeliversufficientquantitiesofaproductcandidatetousonatimelybasisandinaccordancewithapplicablespecificationsandotherregulatoryrequirements,therecouldbeasignificantinterruptionofoursupply,whichwouldadverselyaffectclinicaldevelopmentandcommercializationoftheproduct.Furthermore,ifathird-partysupplieroranyothercontractmanufacturerscannotsuccessfullymanufacturematerialthatconformstoourspecificationsandwithFDAregulatoryrequirements,wewillnotbeabletosecureand/ormaintainFDAapprovalforourproductcandidates.Wewillalsorelyonourmanufacturerstopurchasefromthird-partysuppliersthematerialsnecessarytoproduceourproductcandidatesforouranticipatedclinicaltrials.Thereareasmallnumberofsuppliersforcertaincapitalequipmentandrawmaterialsthatareusedtomanufactureourproductcandidates.Wedonothaveanycontrolovertheprocessortimingoftheacquisitionoftheserawmaterialsbyourmanufacturers.Moreover,wecurrentlydonothaveanyagreementsforthecommercialproductionoftheserawmaterials.Anysignificantdelayinthesupplyofaproductcandidateortherawmaterialcomponentsthereofforanongoingclinicaltrialcouldconsiderablydelaycompletionofourclinicaltrials,producttestingandpotentialregulatoryapprovalofourproductcandidates.Wedonotexpecttohavetheresourcesorcapacitytocommerciallymanufactureanyofourproposedproducts,ifapproved,andwilllikelycontinuetobedependentuponthirdpartymanufacturers.Ourdependenceonthirdpartiestomanufactureandsupplyuswithclinicaltrialmaterialsandanyapprovedproductsmayadverselyaffectourabilitytodevelopandcommercializeourproductsonatimelybasis.

23. Ifweareunabletoestablishsalesandmarketingcapabilitiesorfailtoenterintoagreementswiththird-partiestomarketandsellanyproductswemaysuccessfullydevelop,wemaynotbeabletoeffectivelymarketandsellanysuchproductsandgenerateproductrevenue.Wedonot

currentlyhavetheinfrastructureforthesales,marketinganddistributionofanyproductcandidates,andmustbuildthisinfrastructureormakearrangementswiththirdpartiestoperformthesefunctionsinordertocommercializeanyproductsthatwemaysuccessfullydevelop.Theestablishmentanddevelopmentofasalesforce,eitherbyusorjointlywithadevelopmentpartner,ortheestablishmentofacontractsalesforcetomarketanyproductswemaydevelopwillbeexpensiveandtime-consumingandcoulddelayanyproductlaunch.Ifwe,orourdevelopmentpartners,areunabletoestablishsalesandmarketingcapabilityoranyothernon-technicalcapabilitiesnecessarytocommercializeanyproductswemaysuccessfullydevelop,wewillneedtocontractwiththirdpartiestomarketandsellsuchproducts.Wemaynotbeabletoestablisharrangementswiththird-partiesonacceptableterms,ifatall.

24. Ifanyproductcandidatethatwesuccessfullydevelopdoesnotachievebroadmarketacceptanceamongphysicians,patients,healthcarepayorsandthemedicalcommunity,therevenuesthatitgeneratesfromtheirsaleswillbelimited.Evenifourproductcandidatesreceiveregulatoryapproval,theymaynotgainmarketacceptanceamongphysicians,patients,healthcarepayorsandthemedicalcommunity.Coverageandreimbursementofourproductcandidatesbythird-partypayors,includinggovernmentpayors,generallyisalsonecessaryforcommercialsuccess.Thedegreeofmarketacceptanceofanyapprovedproductswilldependonanumberoffactors,including:·theefficacyandsafetyasdemonstratedinclinicaltrials;·theclinicalindicationsforwhichtheproductisapproved;·acceptancebyphysicians,majoroperatorsofhospitalsandclinicsandpatientsoftheproductasasafeandeffectivetreatment;·thepotentialandperceivedadvantagesofproductcandidatesoveralternativetreatments;·thesafetyofproductcandidatesseeninabroaderpatientgroup,includingitsuseoutsidetheapprovedindications;·thecostoftreatmentinrelationtoalternativetreatments;·theavailabilityofadequatereimbursementandpricingbythirdpartiesandgovernmentauthorities;·relativeconvenienceandeaseofadministration;·theprevalenceandseverityofadverseevents;·theeffectivenessofoursalesandmarketingefforts;and·unfavorablepublicityrelatingtotheproduct.Ifanyproductcandidateisapprovedbutdoesnotachieveanadequatelevelofacceptancebyphysicians,hospitals,healthcarepayorsandpatients,wemaynotgeneratesufficientrevenuefromtheseproductsandmaynotbecomeorremainprofitable.

25. Healthcarereformandrestrictionsonreimbursementsmaylimitourfinancialreturns.Ourabilityortheabilityofourcollaboratorstocommercializeanyofourproductcandidatesthatmayreceivetherequisiteregulatoryapprovalmaydepend,inpart,ontheextenttowhichgovernmenthealthadministrationauthorities,privatehealthinsurersandotherorganizationswillreimburseconsumersforthecostoftheseproducts.Thesethirdpartiesareincreasinglychallengingboththeneedforandthepriceofnewdrugproducts.Significantuncertaintyexistsastothereimbursementstatusofnewlyapprovedtherapeutics.Adequatethird-partyreimbursementmaynotbeavailableforourproductcandidatestoenableusorourcollaboratorstomaintainpricelevelssufficienttorealizeanappropriatereturnontheirandourinvestmentsinresearchandproductdevelopment.

26. Weusebiologicalmaterialsandmayusehazardousmaterials,andanyclaimsrelatingtoimproperhandling,storageordisposalofthesematerialscouldbetimeconsumingorcostly.Wemayusehazardousmaterials,includingchemicalsandbiologicalagentsandcompoundsthatcouldbedangeroustohumanhealthandsafetyortheenvironment.Ouroperationsalsoproducehazardouswasteproducts.Federal,stateandlocallawsandregulationsgoverntheuse,generation,manufacture,storage,handlinganddisposalofthesematerialsandwastes.Compliancewithapplicableenvironmentallawsandregulationsmaybeexpensive,andcurrentorfutureenvironmentallawsandregulationsmayimpairourproductdevelopmentefforts.Inaddition,wecannotentirelyeliminatetheriskofaccidentalinjuryorcontaminationfromthesematerialsorwastes.Wedonotcarryspecificbiologicalorhazardouswasteinsurancecoverageandourpropertyandcasualtyandgeneralliabilityinsurancepoliciesspecificallyexcludecoveragefordamagesandfinesarisingfrombiologicalorhazardouswasteexposureorcontamination.Accordingly,intheeventofcontaminationorinjury,wecouldbeheldliablefordamagesorpenalizedwithfinesinanamountexceedingourresources,andourclinicaltrialsorregulatoryapprovalscouldbesuspended.

27. OurManagingMembersmayhavelimitsonthetimetheyhavetodevotetotheCompany.ThesuccessoftheCompanywilldependinpartupontheskillandexpertiseoftheManagingMembers.TheManagingMembersandtheiraffiliatesmayhaveconflictsofinterestinallocatingmanagementandadministrativetime,services,andfunctionsamongvariousfuture

entities,aswellasotherbusinessventuresinwhichtheyareormaybecomeinvolved.TheManagingMembersandtheiraffiliateswilldevoteonlysomuchoftheirtimetothebusinessoftheCompanyasintheirjudgmentisreasonablyrequired.

28. Anyforecastswemakeaboutouroperationsmayprovetobeinaccurate.Wemust,amongotherthings,determineappropriaterisks,rewards,andlevelofinvestmentinourproductcandidates,respondtoeconomicandmarketvariablesoutsideofourcontrol,respondtocompetitivedevelopmentsandcontinuetoattract,retain,andmotivatequalifiedemployees.Therecanbenoassurancethatwewillbesuccessfulinmeetingthesechallengesandaddressingsuchrisksandthefailuretodosocouldhaveamateriallyadverseeffectonourbusiness,resultsofoperations,andfinancialcondition.Ourprospectsmustbeconsideredinlightoftherisks,expenses,anddifficultiesfrequentlyencounteredbycompaniesintheearlystageofdevelopment.Asaresultoftheserisks,challenges,anduncertainties,thevalueofyourinvestmentcouldbesignificantlyreducedorcompletelylost.InformationprovidedconcerningthisOfferingandtheCompany’sbusinessmaycontainforward-lookingstatements,whichcanbeidentifiedby,amongotherthings,theuseofforward-lookinglanguage,suchasthewords“plans,”“intends,”“believes,”“expects,”“anticipates,”“estimates,”“projects,”“potential,”“may,”“will,”“would,”“could,”“should,”“seeks,”or“scheduledto,”orothersimilarwords,orbydiscussionofstrategyorintentions.Suchforwardlookingstatementsreflectmanagement’scurrentviewwithrespecttofutureeventsandtheCompany’sperformance.Suchforward-lookingstatementsmayincludeprojectionswithrespecttoproductdevelopment,marketsizeandacceptance,revenuesandearnings,marketingandsalesstrategies,andbusinessoperations.TheCompanyoperatesinahighlycompetitivebusinessenvironment.TheCompany’sbusinessisandwillcontinuetobeaffectedbygovernmentregulation,economic,politicalandsocialconditions,responseofthemedicalcommunitytoourproducts,technologicaldevelopmentsand,particularlyinviewofnewtechnologies,theabilitytoprotectintellectualpropertyrights.TheCompany’sactualresultscoulddiffermateriallyfrommanagement’sexpectationsbecauseofchangesinsuchfactors.Otherfactorsandriskscouldalsocauseactualresultstodifferfromthosecontainedinforward-lookingstatements.Duetosuchuncertaintiesandtheriskfactorssetforthherein,prospectiveinvestorsarecautionednottoplaceunduerelianceuponsuchforward-lookingstatements.

TheOffering

PhoenixPharmaLabsInc(“Company”)isofferingsecuritiesunderbothRegulationD,throughLivingstonSecurities,LLC(“Livingston”)andRegulationCF,throughNetcapitalFundingPortalInc.(“Portal”).Livingstonisaregisteredbroker-dealer,andmemberFINRA/SIPC.Livingstonwillreceivecashcompensationequalto4.9%ofthevalueofthesecuritiessoldthroughRegulationD.PortalisaFINRA/SECregisteredfundingportalandwillreceivecashcompensationequalto4.9%ofthevalueofthesecuritiessoldthroughRegulationCF.InvestmentsmadeunderbothRegulationDandRegulationCFinvolveahighdegreeofriskandthoseinvestorswhocannotaffordtolosetheirentireinvestmentshouldnotinvest.

Thisofferingisconsideredaside-by-sideoffering,meaningthattheCompanyisraisingcapitalundertwoofferingtypes.TheCompanyplanstoraisebetween$10,000and$3,500,000throughconcurrentofferingsunderRegulationCFandRegulationD–Rule506(c).Specifically,ifwereachthetargetofferingamountof$10,000,wemayconductthefirstofmultipleorrollingclosingsoftheofferingearlyifweprovidenoticeaboutthenewofferingdeadlineatleastfivebusinessdayspriortosuchnewofferingdeadline(absentamaterialchangethatwouldrequireanextensionoftheofferingandreconfirmationoftheinvestmentcommitment).Oversubscriptionswillbeallocatedonafirstcome,firstservedbasis.Changestotheoffering,materialorotherwise,occurringafteraclosing,willonlyimpactinvestmentswhichhaveyettobeclosed.

IntheeventTheCompanyfailstoreachthecombinedofferingtargetof$10,000,anyinvestmentsmadeundereitherofferingwillbecancelledandtheinvestmentfundswillbereturnedtotheinvestor.

TheCompanymayraiseupto$1,069,999fromnon-accreditedinvestorsunderRegulationCF.

AccreditedinvestorswhohaveprovedtheiraccreditationstatustoPortal,willautomaticallyinvestundertheRegulationD-Rule506(c)offeringtype.AllotherinvestorswillinvestundertheRegulationCFofferingtype.AnaccreditedinvestorwhoprovestheiraccreditationstatuswiththePortalpriorto48hoursoftheofferingclosing,canauthorizetheirinvestmenttobewithdrawnfromtheRegulationCFofferingandautomaticallyreinvestedintheRegulationDoffering.YoumustbeanaccreditedinvestortoinvestunderRegulationD.

8. Whatisthepurposeofthisoffering?

AdditionalfundingbeyondthefundsprovidedbytheArmygrantwilllikelybeusedtoacceleratethescale-upofmanufacturingofPPL-103aswellasspeeduppreclinicalandclinicalstudieswithoutsacrificingqualityorreliability.Shouldthecompanyachievethefundinggoalofthisoffering,itintendstousethefundstoadvancePPL-103throughPhaseIhumanclinicaltrials.StudiesofpotentialsideeffectsareexpectedtoincludeHumanAbuseLiability(HAL)studiesaswellasstudiesofrespiration,constipationandphysicaldependence/withdrawal.Theresultsofthesestudiesareexpectedtobehighlyvaluableforlargepharmaceuticalcompaniestoevaluatepotentiallicense(s)ofPPL-103andvariantsthereof.

9. Howdoestheissuerintendtousetheproceedsofthisoffering?

IfTargetOfferingAmountSold

IfMaximumAmountSold

TotalProceeds $10,000 $3,500,000

Less:OfferingExpenses $490 $171,500

NetProceeds $9,510 $3,328,500

CompensationforDirectors,Officers,andPromoters

$0 $758,500

ContractResearchOrganization-Subcontractors

$9,510 $1,998,145

ConsultingFees&Expense $0 $323,355

Legal/IP/Insurance/MiscOverhead $0 $248,500

TotalUseofNetProceeds $9,510 $3,328,500

10. Howwilltheissuercompletethetransactionanddeliversecuritiestotheinvestors?

InenteringintoanagreementontheNetcapitalFundingPortaltopurchasesecurities,bothinvestorsandPhoenixPharmaLabsIncmustagreethatatransferagent,whichkeepsrecordsofouroutstandingCommonStock(the"Securities"),willissuedigitalSecuritiesintheinvestor’sname(apapercertificatewillnotbeprinted).Similartootheronlineinvestmentaccounts,thetransferagentwillgiveinvestorsaccesstoawebsitetoseethenumberofSecuritiesthattheyowninourcompany.TheseSecuritieswillbeissuedtoinvestorsafterthedeadlinedateforinvestinghaspassed,aslongasthetargetedofferingamounthasbeenreached.Thetransferagentwillrecordtheissuancewhenwehavereceivedthepurchaseproceedsfromtheescrowagentwhoisholdingyourinvestmentcommitment.

11. Howcananinvestorcancelaninvestmentcommitment?

Youmaycancelaninvestmentcommitmentforanyreasonuntil48hourspriortothedeadlineidentifiedintheofferingbyloggingintoyouraccountwithNetcapital,browsingtotheInvestmentsscreen,andclickingtocancelyourinvestmentcommitment.Netcapitalwillnotifyinvestorswhenthetargetofferingamounthasbeenmet.Iftheissuerreachesthetargetofferingamountpriortothe

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deadlineidentifiedintheofferingmaterials,itmayclosetheofferingearlyifitprovidesnoticeaboutthenewofferingdeadlineatleastfivebusinessdayspriortosuchnewofferingdeadline(absentamaterialchangethatwouldrequireanextensionoftheofferingandreconfirmationoftheinvestmentcommitment).Ifaninvestordoesnotcancelaninvestmentcommitmentbeforethe48-hourperiodpriortotheofferingdeadline,thefundswillbereleasedtotheissueruponclosingoftheofferingandtheinvestorwillreceivesecuritiesinexchangeforhisorherinvestment.Ifaninvestordoesnotreconfirmhisorherinvestmentcommitmentafteramaterialchangeismadetotheoffering,theinvestor’sinvestmentcommitmentwillbecancelledandthecommittedfundswillbereturned.

12. CantheCompanyperformmultipleclosingsorrollingclosingsfortheoffering?

Ifwereachthetargetofferingamountpriortotheofferingdeadline,wemayconductthefirstofmultipleclosingsoftheofferingearly,ifweprovidenoticeaboutthenewofferingdeadlineatleastfivebusinessdaysprior(absentamaterialchangethatwouldrequireanextensionoftheofferingandreconfirmationoftheinvestmentcommitment).Thereafter,wemayconductadditionalclosingsuntiltheofferingdeadline.WewillissueSecuritiesinconnectionwitheachclosing.Oversubscriptionswillbeallocatedonafirstcome,firstservedbasis.Changestotheoffering,materialorotherwise,occurringafteraclosing,willonlyimpactinvestmentswhichhaveyettobeclosed.

OwnershipandCapitalStructure

TheOffering

13. Describethetermsofthesecuritiesbeingoffered.

WeareissuingSecuritiesatanofferingpriceof$0.81pershare.

14. Dothesecuritiesofferedhavevotingrights?

TheSecuritiesarebeingissuedwithvotingrights.However,sothatthecrowdfundingcommunityhastheopportunitytoacttogetherandcastavoteasagroupwhenavotingmatterarises,acustodianwillcastyourvoteforyou.Pleaserefertothecustodianagreementthatyousignbeforeyourpurchaseiscomplete.

15. Arethereanylimitationsonanyvotingorotherrightsidentifiedabove?

Youaregivingyourvotingrightstothecustodian,whowillvotetheSecuritiesonbehalfofallinvestorswhopurchasedSecuritiesontheNetcapitalcrowdfundingportal.

16. Howmaythetermsofthesecuritiesbeingofferedbemodified?

Wemaychoosetomodifythetermsofthesecuritiesbeforetheofferingiscompleted.However,ifthetermsaremodified,andwedeemittobeamaterialchange,weneedtocontactyouandyouwillbegiventheopportunitytoreconfirmyourinvestment.Yourreconfirmationmustbecompletedwithinfivebusinessdaysofreceiptofthenoticeofamaterialchange,andifyoudonotreconfirm,yourinvestmentwillbecanceledandyourmoneywillbereturnedtoyou.

RestrictionsonTransferoftheSecuritiesOffered

Thesecuritiesbeingofferedmaynotbetransferredbyanypurchaserofsuchsecuritiesduringtheone-yearperiodbeginningwhenthesecuritieswereissued,unlesssuchsecuritiesaretransferred:

totheissuer;

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toanaccreditedinvestor;

aspartofanofferingregisteredwiththeU.S.SecuritiesandExchangeCommission;or

toamemberofthefamilyofthepurchaserortheequivalent,toatrustcontrolledbythepurchaser,toatrustcreatedforthebenefitofamemberofthefamilyofthepurchaserortheequivalent,orinconnectionwiththedeathordivorceofthepurchaserorothersimilarcircumstance.

Theterm“accreditedinvestor”meansanypersonwhocomeswithinanyofthecategoriessetforthinRule501(a)ofRegulationD,orwhothesellerreasonablybelievescomeswithinanyofsuchcategories,atthetimeofthesaleofthesecuritiestothatperson.Theterm“memberofthefamilyofthepurchaserortheequivalent”includesachild,stepchild,grandchild,parent,stepparent,grandparent,spouseorspousalequivalent,sibling,mother-in-law,father-in-law,son-in-law,daughter-in-law,brother-in-law,orsister-in-lawofthepurchaser,andincludesadoptiverelationships.Theterm“spousalequivalent”meansacohabitantoccupyingarelationshipgenerallyequivalenttothatofaspouse.

DescriptionofIssuer’sSecurities

17. Whatothersecuritiesorclassesofsecuritiesoftheissuerareoutstanding?Describethematerialtermsofanyotheroutstandingsecuritiesorclassesofsecuritiesoftheissuer.

Securities

ClassofSecurity

AmountAuthorized

AmountOutstanding

VotingRights

OtherRights

CommonStock

55,000,000 21,592,388 Yes

PreferredA

5,000,000 2,650,000 Yes PreferredAcarries1.5votespershare,butnootherpriorityrightsovercommon.

Options,WarrantsandOtherRights

None.

18. Howmaytherightsofthesecuritiesbeingofferedbemateriallylimited,dilutedorqualifiedbytherightsofanyotherclassofsecurities?

Theexistingconvertibledebtissubjecttoconversionintoequityundercertaincircumstances,andiftheyconverttheNetcapitalshareholderswillbedilutedbythatconversion.DuringtheyearendedDecember31,2017,theCompanyenteredintozerocouponoriginalissuediscountconvertibledebentureswithnineinvestorsinexchangeforcashtotaling$220,000.ThedebentureagreementsmatureonNovember30,3018andbearinterestrangingfrom5%to8%.TheagreementsprovidetheinvestorswithcertainrightstofutureequityintheCompanyunderthetermsoftheagreements.ThedebentureagreementsbecomeconvertibleintosharesoftheCompany’scommonstockuponanequityfinancingofitscommonstock(asdefinedintheagreements).Thenumberofsharesthedebentureagreementsareconvertibleintoisdeterminedbywhichevercalculationprovidesforthegreaternumberofsharesbetween:A)a20%discounttothepricinginthetriggeringequityfinancing;B)thepriceimpliedbya$5,000,000valuationcapdividedbythecapitalizationoftheCompany(asdefinedintheagreements)atthetriggeringequityfinancing.AsofDecember31,2017,thedebentureagreementshavenotyetconvertedasaqualifyingfinancinghadnotyetoccurred.Thedebentureagreementsarerecordedasaliabilityuntilconversionoccurs.

19. Arethereanydifferencesnotreflectedabovebetweenthesecuritiesbeingofferedandeachotherclassofsecurityoftheissuer?

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No.

20. HowcouldtheexerciseofrightsheldbytheprincipalownersidentifiedinQuestion5aboveaffectthepurchasersofSecuritiesbeingoffered?

Onlyoneshareholderholdsgreaterthan20%oftheoutstandingvotingsecurities.ThatisDr.JohnLawson,thefounderandChairmanofthecompanywhoholdsapproximately27%oftheoutstandingstockofthecompany.Aportionofthestockthatheowns(2,550,000shares)arepreferredsharesthathave1.5votespershareofstock.(Thatistheonlypreferenceassociatedwiththatstockclass.)Altogether,Dr.Lawson'svotingrightsequalapproximately30%ofthevotingrightsofalloutstandingvotingsecurities.Therefore,hisvotealonecouldnotaffectthepurchasersofthesecuritiesbeingofferedoranyoftheothershareholdersofthecompany.Asminorityowners,thecrowdfundinginvestorsaresubjecttothedecisionsmadebythemajorityowners.Theissuedandoutstandingsharesofcommonstockgivemanagementvotingcontrolofthecompany.Asaminorityowner,youmaybeoutvotedonissuesthatimpactyourinvestment,suchastheissuanceofnewshares,orthesaleofdebt,convertibledebtorassetsofthecompany.

21. Howarethesecuritiesbeingofferedbeingvalued?Includeexamplesofmethodsforhowsuchsecuritiesmaybevaluedbytheissuerinthefuture,includingduringsubsequentcorporateactions.

Atissuer'sdiscretion.

22. Whataretheriskstopurchasersofthesecuritiesrelatingtominorityownershipintheissuer?

Theholderofamajorityofthevotingrightsinthecompanymaymakedecisionswithwhichyoudisagree,orthatnegativelyaffectthevalueofyourinvestmentinthecompany,andyouwillhavenorecoursetochangethosedecisions.Yourinterestsmayconflictwiththeinterestsofotherinvestors,andthereisnoguaranteethatthecompanywilldevelopinawaythatisadvantageoustoyou.Forexample,themajorityshareholdermaydecidetoissueadditionalsharestonewinvestors,sellconvertibledebtinstrumentswithbeneficialconversionfeatures,ormakedecisionsthataffectthetaxtreatmentofthecompanyinwaysthatmaybeunfavorabletoyou.Basedontherisksdescribedabove,youmayloseallorpartofyourinvestmentinthesecuritiesthatyoupurchase,andyoumayneverseepositivereturns.

23. Whataretheriskstopurchasersassociatedwithcorporateactionsincluding:

additionalissuancesofsecurities,

issuerrepurchasesofsecurities,

asaleoftheissuerorofassetsoftheissueror

transactionswithrelatedparties?

•TheissuanceofadditionalsharesofourstockwilldilutetheownershipoftheNetcapitalinvestors.Asaresult,ifweachieveprofitableoperationsinthefuture,ournetincomepersharewillbereducedbecauseofdilution,andthemarketpriceofourstock,ifthereisamarketprice,coulddeclineasaresultoftheadditionalissuancesofsecurities.•Ifwerepurchasesecurities,sothattheaboveriskismitigated,andtherearefewersharesofstockoutstanding,wemaynothaveenoughcashavailableformarketingexpenses,growth,oroperatingexpensestoreachourgoals.Ifwedonothaveenoughcashtooperateandgrow,weanticipatethemarketpriceofourcommonstockwoulddecline.•Asaleofourcompanyoroftheassetsofourcompanymayresultinanentirelossofyourinvestment.Wecannotpredictthemarketvalueofourcompanyorourassets,andtheproceedsofasalemaynotbecash,butinstead,unmarketablesecurities,oranassumptionofliabilities.Ourcompanycurrentlyhasnegativenetworth(ourliabilitiesexceedourassets)anditisunlikelythatinthenearterm,asalewouldresultinapremiumthatissignificantenoughoverbookvaluetogenerateareturntoourinvestors.•Wemayneedtorenegotiateourrelated-partydebtifourrelated-partylendersdemandthatwebeginmakingprincipalorinterestpayments.Anyrenegotiationmaybeonlessfavorabletermsormayrequirethatwerefinancetherelated-partydebt.Wemayneedtoraiseadditionalfundsthroughpublicorprivatedebtorsaleofequitytopaytherelated-partydebt.Suchfinancingmaynotbeavailablewhenneeded.Evenifsuchfinancingisavailable,itmaybeon

Creditor(s):

AmountOutstanding:

InterestRate:

MaturityDate:

OtherMaterialTerms:

Creditor(s):

AmountOutstanding:

InterestRate:

MaturityDate:

OtherMaterialTerms:

Creditor(s):

AmountOutstanding:

InterestRate:

MaturityDate:

OtherMaterialTerms:

Creditor(s):

AmountOutstanding:

termsthataremateriallyadversetoyourinterestswithrespecttodilutionofbookvalue,dividendpreferences,liquidationpreferences,orotherterms.Noassurancecanbegiventhatsuchfundswillbeavailableor,ifavailable,willbeoncommerciallyreasonabletermssatisfactorytous.Therecanbenoassurancethatwewillbeabletoobtainfinancingifandwhenitisneededontermswedeemacceptable.Ifweareunabletoobtainfinancingonreasonableterms,or,ifourrelated-partylendersdonotcontinuetocooperatewithus,wecouldbeforcedtodiscontinueouroperations.Weanticipatethatanytransactionswithrelatedpartieswillbevettedandapprovedbymanager(s)unaffiliatedwiththerelatedparties.

24. Describethematerialtermsofanyindebtednessoftheissuer:

ZeroCouponCnvtNotes

$220,000

0.0%

November30,2018

DuringtheyearendedDecember31,2017,theCompanyenteredintozerocouponoriginalissuediscountconvertibledebentureswithnineinvestorsinexchangeforcashtotaling$220,000.ThedebentureagreementsmatureonNovember30,3018andbearinterestrangingfrom5%to8%.TheagreementsprovidetheinvestorswithcertainrightstofutureequityintheCompanyunderthetermsoftheagreements.ThedebentureagreementsbecomeconvertibleintosharesoftheCompany’scommonstockuponanequityfinancingofitscommonstock(asdefinedintheagreements).Thenumberofsharesthedebentureagreementsareconvertibleintoisdeterminedbywhichevercalculationprovidesforthegreaternumberofsharesbetween:A)a20%discounttothepricinginthetriggeringequityfinancing;B)thepriceimpliedbya$5,000,000valuationcapdividedbythecapitalizationoftheCompany(asdefinedintheagreements)atthetriggeringequityfinancing.Thedebentureagreementshavenotyetconvertedasaqualifyingfinancinghadnotyetoccurred.Thedebentureagreementsarerecordedasaliabilityuntilconversionoccurs.

WilliamCrossman

$1,370,887

0.0%

December31,2030

Lawson,John

$1,872

0.0%

December31,2030

Yang,Peng

$7,880

InterestRate:

MaturityDate:

OtherMaterialTerms:

Creditor(s):

AmountOutstanding:

InterestRate:

MaturityDate:

OtherMaterialTerms:

Creditor(s):

AmountOutstanding:

InterestRate:

MaturityDate:

OtherMaterialTerms:

DateofOffering:

Exemption:

SecuritiesOffered:

AmountSold:

UseofProceeds:

0.0%

December31,203

Chou,Timmy

$285,910

0.0%

December31,2030

Tew,Chris

$199,000

0.0%

December31,2030

25. WhatotherexemptofferingshasPhoenixPharmaLabsIncconductedwithinthepastthreeyears?

01/2016

Section4(a)(2)

CommonStock

$1,700,000

Ongoingpre-clinicalstudies,administrativecosts,IPandIP-PCTcosts.

26. Wasoristheissueroranyentitiescontrolledbyorundercommoncontrolwiththeissuerapartytoanytransactionsincethebeginningoftheissuer’slastfiscalyear,oranycurrentlyproposedtransaction,wheretheamountinvolvedexceedsfivepercentoftheaggregateamountofcapitalraisedbytheissuerinrelianceonSection4(a)(6)oftheSecuritiesActduringthepreceding12-monthperiod,includingtheamounttheissuerseekstoraiseinthecurrentoffering,inwhichanyofthefollowingpersonshadoristohaveadirectorindirectmaterialinterest:1. anydirectororofficeroftheissuer;2. anypersonwhois,asofthemostrecentpracticabledate,thebeneficialownerof20percentor

moreoftheissuer’soutstandingvotingequitysecurities,calculatedonthebasisofvotingpower;

3. iftheissuerwasincorporatedororganizedwithinthepastthreeyears,anypromoteroftheissuer;or

4. anyimmediatefamilymemberofanyoftheforegoingpersons.

Yes.

Ifyes,foreachsuchtransaction,disclosethefollowing:

SpecifiedPerson RelationshiptoIssuer NatureofInterestinTransaction

AmountofInterest

WilliamCrossman CEO,President AccruedCompensation $1,370,887

TimmyChou CFO,Secretary/Treasurer AccruedCompensation $285,910

ChrisTew VicePresident AccruedCompensation $199,000

FinancialConditionoftheIssuer

27. Doestheissuerhaveanoperatinghistory?

Yes.

28. Describethefinancialconditionoftheissuer,including,totheextentmaterial,liquidity,capitalresourcesandhistoricalresultsofoperations.

Ourlossfromoperationsamountedto$1,084,456fortheyearendedDecember31,2017,ascomparedtoalossfromoperationsof$1,270,142fortheyearendedDecember31,2016.Thedecreaseinouroperatinglosswasprimarilyattributabletoadecreaseinstock-basedcompensationof$156,371to$758,451intheyearendedDecember31,2017,ascomparedto$924,822intheyearendedDecember31,2016.Ourdebt-basedcompensationalsodecreasedto$234,000fortheyearendedDecember31,2017from$249,000fortheyearendedDecember31,2016.Bothourequity-basedanddebt-basedcompensationarenon-cashexpenses.Cashusedinoperatingactivitiesamountedto$98,707intheyearendedDecember31,2017,ascomparedto$115,702intheyearendedDecember31,2016.Inbothyears,thenegativecashflowfromoperationswasfundedbyfinancingactivities.IntheyearendedDecember31,2017,theCompanyissuedconvertiblezero-coupondebenturesforproceedsof$220,000.IntheyearendedDecember31,2016,theCompanyreceived$121,000inproceedsfromtheissuanceofcommonstock.TheCompanyhascashbalancesof$69,456atthetimeofthisofferingstatement.TheCompanymakesoperatingdecisionswithinitsabilitytoraiseadequatefinancingsufficienttofunditspriorities.Wecurrentlyhavenorevenues,andnorevenuesareanticipatedanytimeintheshorttointermediateterm.Ourfixedoverheadcostsareapproximately$30,700permonth,buttheseamountsarecurrentlybeingaccruedasbalancesheetliabilitieswithoutinterest,andthereforeourmonthlycashburnisapproximately$0,otherthansomenon-materialcostssuchaslicensesandpermits,minimuminternetfees,travel,andongoinglegalwork,TheCompanyiscurrentlyreceivingincomeandprosecutingworkundertwoFederalgrants,howeverfundingfromthesegrantsistightlyregulatedandfundingisrestrictedtopayforspecificallyauthorizedpurposesofthegrant,andmaynotbeusedforcostsrelatedtotheOfferingorforgeneralcompensationorotherCompanycosts.Attheendof2017theCompanyelectedtoseekfinancingviaanOfferingthroughNetcapital,anonlineinvestmentportal.SincethentheCompanyhasspent$49,274inexpensesrelatedtothepreparationoftheOffering,andanticipatesthatitwillcontinuetoincurmonthlyexpensesof$4,500permonthforthedurationoftheOffering,estimatedatbeingroughly3-6months.TheDecember31,2017BalanceSheetoftheCompanylistsrelated-partyliabilitiesof$1,645,549.Currentmanagementmembersareaccruingadditionalcompensationonanongoingbasis,totaling$264,000peryear,thereforetheyareowedanadditional$220,000atthetimeoftheOffering,bringingthetotalofrelatedpartyliabilitiesatthetimeofthisofferingto$1,865,549Currentlytheamountsduetorelatedpartiesareaccruingwithnointerest,noraretheybeingamortized,andthereisnoagreementbetweenrelatedpartiesandtheCompanytobegintoamortizepayments.TheCompanydoesnotintendtousefundsraisedfromthisofferingtoreduceoramortizetheseamountsdue,howeverthereisnoagreementinplaceprecludingtheCompanyfrommakingpaymentsifitchooses.TheCompanydoesintendtoceaseaccruingcompensationduetoitsmanagementandbegincashcompensationofitsmanagementfromtheproceedsoftheOfferingaftertheclosing.

CPAReviewReport:

FinancialInformation

29. Includethefinancialinformationspecifiedbyregulation,coveringthetwomostrecentlycompletedfiscalyearsortheperiod(s)sinceinceptionifshorter.

Seeattachments:

reviewletter.pdf

30. Withrespecttotheissuer,anypredecessoroftheissuer,anyaffiliatedissuer,anydirector,officer,generalpartnerormanagingmemberoftheissuer,anybeneficialownerof20percentormoreoftheissuer’soutstandingvotingequitysecurities,calculatedinthesameformasdescribedinQuestion6ofthisQuestionandAnswerformat,anypromoterconnectedwiththeissuerinanycapacityatthetimeofsuchsale,anypersonthathasbeenorwillbepaid(directlyorindirectly)remunerationforsolicitationofpurchasersinconnectionwithsuchsaleofsecurities,oranygeneralpartner,director,officerormanagingmemberofanysuchsolicitor,priortoMay16,2016:1. Hasanysuchpersonbeenconvicted,within10years(orfiveyears,inthecaseofissuers,their

predecessorsandaffiliatedissuers)beforethefilingofthisofferingstatement,ofanyfelonyormisdemeanor:1. inconnectionwiththepurchaseorsaleofanysecurity?2. involvingthemakingofanyfalsefilingwiththeCommission?3. arisingoutoftheconductofthebusinessofanunderwriter,broker,dealer,municipal

securitiesdealer,investmentadviser,fundingportalorpaidsolicitorofpurchasersofsecurities?

2. Isanysuchpersonsubjecttoanyorder,judgmentordecreeofanycourtofcompetentjurisdiction,enteredwithinfiveyearsbeforethefilingoftheinformationrequiredbySection4A(b)oftheSecuritiesActthat,atthetimeoffilingofthisofferingstatement,restrainsorenjoinssuchpersonfromengagingorcontinuingtoengageinanyconductorpractice:1. inconnectionwiththepurchaseorsaleofanysecurity?;2. involvingthemakingofanyfalsefilingwiththeCommission?3. arisingoutoftheconductofthebusinessofanunderwriter,broker,dealer,municipal

securitiesdealer,investmentadviser,fundingportalorpaidsolicitorofpurchasersofsecurities?

3. Isanysuchpersonsubjecttoafinalorderofastatesecuritiescommission(oranagencyorofficerofastateperforminglikefunctions);astateauthoritythatsupervisesorexaminesbanks,savingsassociationsorcreditunions;astateinsurancecommission(oranagencyorofficerofastateperforminglikefunctions);anappropriatefederalbankingagency;theU.S.CommodityFuturesTradingCommission;ortheNationalCreditUnionAdministrationthat:1. atthetimeofthefilingofthisofferingstatementbarsthepersonfrom:

1. associationwithanentityregulatedbysuchcommission,authority,agencyorofficer?2. engaginginthebusinessofsecurities,insuranceorbanking?3. engaginginsavingsassociationorcreditunionactivities?

2. constitutesafinalorderbasedonaviolationofanylaworregulationthatprohibitsfraudulent,manipulativeordeceptiveconductandforwhichtheorderwasenteredwithinthe10-yearperiodendingonthedateofthefilingofthisofferingstatement?

4. IsanysuchpersonsubjecttoanorderoftheCommissionenteredpursuanttoSection15(b)or15B(c)oftheExchangeActorSection203(e)or(f)oftheInvestmentAdvisersActof1940that,atthetimeofthefilingofthisofferingstatement:1. suspendsorrevokessuchperson’sregistrationasabroker,dealer,municipalsecurities

dealer,investmentadviserorfundingportal?2. placeslimitationsontheactivities,functionsoroperationsofsuchperson?3. barssuchpersonfrombeingassociatedwithanyentityorfromparticipatinginthe

offeringofanypennystock?

IfYestoanyoftheabove,explain:

5. IsanysuchpersonsubjecttoanyorderoftheCommissionenteredwithinfiveyearsbeforethefilingofthisofferingstatementthat,atthetimeofthefilingofthisofferingstatement,ordersthepersontoceaseanddesistfromcommittingorcausingaviolationorfutureviolationof:1. anyscienter-basedanti-fraudprovisionofthefederalsecuritieslaws,includingwithout

limitationSection17(a)(1)oftheSecuritiesAct,Section10(b)oftheExchangeAct,Section15(c)(1)oftheExchangeActandSection206(1)oftheInvestmentAdvisersActof1940oranyotherruleorregulationthereunder?

2. Section5oftheSecuritiesAct?

6. Isanysuchpersonsuspendedorexpelledfrommembershipin,orsuspendedorbarredfromassociationwithamemberof,aregisterednationalsecuritiesexchangeoraregisterednationaloraffiliatedsecuritiesassociationforanyactoromissiontoactconstitutingconductinconsistentwithjustandequitableprinciplesoftrade?

7. Hasanysuchpersonfiled(asaregistrantorissuer),orwasanysuchpersonorwasanysuchpersonnamedasanunderwriterin,anyregistrationstatementorRegulationAofferingstatementfiledwiththeCommissionthat,withinfiveyearsbeforethefilingofthisofferingstatement,wasthesubjectofarefusalorder,stoporder,orordersuspendingtheRegulationAexemption,orisanysuchperson,atthetimeofsuchfiling,thesubjectofaninvestigationorproceedingtodeterminewhetherastoporderorsuspensionordershouldbeissued?

8. IsanysuchpersonsubjecttoaUnitedStatesPostalServicefalserepresentationorderenteredwithinfiveyearsbeforethefilingoftheinformationrequiredbySection4A(b)oftheSecuritiesAct,orisanysuchperson,atthetimeoffilingofthisofferingstatement,subjecttoatemporaryrestrainingorderorpreliminaryinjunctionwithrespecttoconductallegedbytheUnitedStatesPostalServicetoconstituteaschemeordeviceforobtainingmoneyorpropertythroughthemailbymeansoffalserepresentations?

PhoenixPharmaLabsIncanswers'NO'toalloftheabovequestions.

OtherMaterialInformation

31. InadditiontotheinformationexpresslyrequiredtobeincludedinthisForm,include:anyothermaterialinformationpresentedtoinvestors;andsuchfurthermaterialinformation,ifany,asmaybenecessarytomaketherequiredstatements,inthelightofthecircumstancesunderwhichtheyaremade,notmisleading.

Non-CashExpenses:TheCompany’sexpensesfortheyearendedDecember31,2017weresignificantlyincreasedbynoncashtransactionsastheresultof$234,000ofexpensesrecognizedontheissuanceofloansand$758,451ofexpensesrecognizedontheissuanceofcommonstockascompensation.Intotal,$992,451oftheCompany’s$1,084,456onthestatementofoperationsfortheyearendedDecember31,2017weretheresultofnon-cashcompensation.TheCompany’sexpensesfortheyearendedDecember31,2016weresignificantlyincreasedbynon-cashtransactionsastheresultof$249,000ofexpensesrecognizedontheissuanceofloansand$924,822ofexpensesrecognizedontheissuanceofcommonstockascompensation.Intotal,$1,173,822oftheCompany’s$1,270,142onthestatementofoperationsfortheyearendedDecember31,2016weretheresultofnon-cashcompensation.Non-cashtransactionsarevaluedusingmanagement’sestimatesandassumptionstodeterminethefairvalueoftheinstrumentsissuedinexchangefortheservicesreceived,whichareinherentlysubjectiveandcoulddifferfromactualresults.GrantAwards:OnJuly26,2018,theNationalInstituteofHealthawardedtheCompanyagrantintheamountof$186,687.OnSeptember17,2018,theUnitedStatesArmyMedicalResearchandMaterialCommandawardedtheCompanyagrantintheamountof$2,724,151.Valuation:PhoenixPharmaLabshasdeterminedapre-moneyvaluationof$20million.Therearecurrently24,620,374sharesoutstanding.Thisyieldsapre-moneySharepriceof$0.81perCommonShare.Iftheentireofferingissubscribed,newShareholdersasagroupwillown14.9%ofthecompanypost-money,andthepost-moneyvaluationofthecompanywillbe$23,500,000.VideoTranscriptcouldtherebeapotentpaintreatment00:01withouttheriskofaddictionit's00:04closerthanyouthink00:05thecrisisisrealin2002therewere00:09roughly10,000opioidrelateddeathsin00:12theu.s.in2017thatnumbergrewto00:16almost

Governance:

CertificateofIncorporation:

CorporateBylaws:

Opportunity:

OfferingPageJPG:

PitchDeck:

Financials:

AdditionalInformation:

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50,000that'sa500%increase00:20opioidsarethemosteffectivedrugsfor00:22treatmentofmoderatetoseverepainyet00:25therearenopotentopioidsonthe00:26marketthatarenonaddictiveandsafe00:30currentopiatesonthemarketprimarily00:32targetthemuirsceptreinthebrainand00:34thenaggressivelystimulatethat00:36receptorthesemewtargetingdrugstreat00:39painbutwhenthemulereceptoris00:41overstimulateditcreatesaeuphoric00:43highwhichleadstoaddictionsowhatis00:46theanswerwhileatStanfordResearch00:49Institutedr.JohnLawsondiscovereda00:53familyofopioidsthatbehaved00:54differentlyfromotherpaindrugshis00:57discoveryisanovelcompoundthat00:59targetsallthreeopioidreceptorsin01:01thebrainmuKappaandDeltaandthen01:04justpartiallystimulatesthemwithonly01:06about10%stimulationofthemule01:08receptorthisdiscoveryisppl103a01:12patentedsafenon-addictivepotent01:15painkillerdr.Lorenztollchief01:18neuropharmacologystandaprofessorat01:20FloridaAtlanticUniversityhas01:22continuedthisresearchwithnumerousin01:24vivostudiesofppl103demonstrating01:27itspotentialwhathehasdiscoveredis01:29it'stentimesmorepotentthanmorphine01:32there'snoeuphoriaordysphoriathere's01:34noaddictionorphysicaldependenceand01:36there'snodeathevenwitha350time01:40overdosethankstotherecognitionand01:42themulti-milliondollargrantfromthe01:44USArmyanadditionalgrantsfromthe01:46NIHandNationalInstituteonDrugAbuse01:48thePhoenixPharmalabsiscompleting01:50preclinicalwork10orhumanphaseone01:53trialstheglobalmarketforpain01:55therapyismorethan100billion01:57annually01:58theopioidsegmentisestimatedto02:00accountfor35billionofthatby202502:04witha5%annualgrowthratethePhoenix02:08Pharmalabsteamisdedicatedto02:10developingadrugthatkillspainnot02:12peopleyoucanhelpbybeinganinvestor02:16initscrowdfundingasppl103moves02:18intohumanclinicaltrialsthisisone02:21waytohelpfindasolutiontothe02:22opioidcrisisthatdominatesour02:24headlineskillsourcitizensandrips02:27apartfamiliesseetheresearchfacts02:30andStudiesonppl103atPhoenixPharma02:33labscalm02:34[Music]

Thefollowingdocumentsarebeingsubmittedaspartofthisoffering:

certificateofincorporation.PDF

corporatebylaws.pdf

offeringpage.jpg

pitchdeck.pdf

otherfinancial.pdf

OngoingReporting

32. TheissuerwillfileareportelectronicallywiththeSecurities&ExchangeCommissionannuallyandpostthereportonitswebsite,nolaterthan120daysaftertheendofeachfiscalyearcoveredbythereport:

Onceposted,theannualreportmaybefoundontheissuer’swebsiteat:www.phoenixpharmalabs.com

Theissuermustcontinuetocomplywiththeongoingreportingrequirementsuntil:

theissuerisrequiredtofilereportsunderSection13(a)orSection15(d)oftheExchangeAct;

theissuerhasfiledatleastoneannualreportpursuanttoRegulationCrowdfundingandhasfewerthan300holdersofrecordandhastotalassetsthatdonotexceed$10,000,000;

theissuerhasfiledatleastthreeannualreportspursuanttoRegulationCrowdfunding;

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theissueroranotherpartyrepurchasesallofthesecuritiesissuedinrelianceonSection4(a)(6)oftheSecuritiesAct,includinganypaymentinfullofdebtsecuritiesoranycompleteredemptionofredeemablesecurities;or

theissuerliquidatesordissolvesitsbusinessinaccordancewithstatelaw.